FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT
10.8
FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this “Agreement”), made and entered into as of the day of
April, 1998, by and between ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a Colorado corporation (the
“Corporation”), and
(“Officer”).
W I T N E S S E T H:
WHEREAS, it is essential to the Corporation to retain and attract as officers the most capable
persons available;
WHEREAS, Officer is an officer of the Corporation;
WHEREAS, both the Corporation and Officer recognize the risk of litigation and other claims
being asserted against officers of public companies; and
WHEREAS, in recognition of Officer’s need for substantial protection against personal
liability in order to maintain continued service to the Corporation in an effective manner and to
provide Officer with specific contractual assurance that the protection will be available to
Officer, the Corporation desires to provide in this Agreement for the indemnification of and the
advancement of expenses to Officer to the full extent permitted by law, as set forth in this
Agreement;
NOW THEREFORE, in consideration of the premises and mutual agreements contained herein,
including Officer’s continued service to the Corporation, the Corporation and Officer hereby agree
as follows:
Section 1. Definitions. The following terms, as used herein, shall have the following
respective meanings:
“C.B.C.A.” means the Colorado Business Corporation Act, as currently in effect or as amended
from time to time.
“Change In Control” means a change in control of the Corporation after the date of this
Agreement in any one of the following circumstances: (a) there shall have occurred an event that
would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Corporation is then
subject to such reporting requirement; (b) any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) (an “Acquiring Person”) shall have become the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the Corporation’s then
outstanding voting securities (a “Share Acquisition”); (c) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or (d) during any period of
two consecutive years, individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or nomination for election by
the Corporation’s stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors; provided, however, that an event
described in clause (a) or (b) shall not be deemed a Change In Control if such event is approved,
prior to its occurrence or within 60 days thereafter, by at least two-thirds of the members of the
Board of Directors in office immediately prior to such occurrence. In addition to the
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foregoing, a Change In Control shall be deemed to have occurred if, after the occurrence of a Share
Acquisition that has been approved by a two-thirds vote of the Board as contemplated in the proviso
to the preceding sentence, the Acquiring Person shall have become the beneficial owner, directly or
indirectly, of securities of the Corporation representing an additional 5% or more of the combined
voting power of the Corporation’s then outstanding voting securities (a “Subsequent Share
Acquisition”) without the approval prior thereto or within 60 days thereafter of at least
two-thirds of the members of the Board of Directors who were in office immediately prior to such
Subsequent Share Acquisition and were not appointed, nominated or recommended by, and do not
otherwise represent the interests of, the Acquiring Person on the Board. Each subsequent
acquisition by an Acquiring Person of securities of the Corporation representing an additional 5%
or more of the combined voting power of the Corporation’s then outstanding voting securities shall
also constitute a Subsequent Share Acquisition (and a Change In Control unless approved as
contemplated by the preceding sentence) if the approvals contemplated by this paragraph were given
with respect to the initial Share Acquisition and all prior Subsequent Share Acquisitions by such
Acquiring Person. The Board approvals contemplated by the two preceding sentences and by the
proviso to the first sentence of this paragraph may contain such conditions as the members of the
Board granting such approval may deem advisable and appropriate, the subsequent failure or
violation of which shall result in the rescission of such approval and cause a Change In Control to
be deemed to have occurred as of the date of the Share Acquisition or Subsequent Share Acquisition,
as the case may be. Notwithstanding the foregoing, a Change In Control shall not be deemed to have
occurred for purposes of clause (b) of the first sentence of this paragraph with respect to any
Acquiring Person meeting the requirements of clauses (i) and (ii) of Rule 13d-l(b)(1) promulgated
under the Exchange Act.
“Expenses” shall include reasonable attorneys’ fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing to prosecute or
defend, investigating or being or preparing to be a witness in a Proceeding.
“Independent Counsel” means a law firm, or member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the five years previous to his or her
selection or appointment has been, retained to represent: (a) the Corporation or Officer in any
matter material to either such party, (b) any other party to the Proceeding giving rise to a claim
for indemnification hereunder or (c) the beneficial owners, directly or indirectly, of securities
of the Corporation representing 5% or more of the combined voting power of the Corporation’s then
outstanding voting securities.
“Matter” is a claim, a material issue, or a substantial request for relief.
“Proceeding” includes any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, and whether formal or
informal, including without limitation one initiated by Officer pursuant to Section 10 of this
Agreement to enforce his rights under this Agreement.
Section 2. Indemnification. The Corporation shall indemnify, and advance Expenses to, Officer
to the fullest extent permitted by applicable law in effect on the date of the effectiveness of
this Agreement, and to such greater extent as applicable law may thereafter permit. The rights of
Officer provided under the preceding sentence shall include, but not be limited to, the right to be
indemnified to the fullest extent permitted by ss. 7-109-102(4) and (5) of the C.B.C.A. in
Proceedings by or in the right of the Corporation and to the fullest
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extent permitted by ss. 7-109- 102(1)-(3) of the C.B.C.A. in all other Proceedings, in each case as
permitted by ss. 7-109-107(b) of the C.B.C.A. To the fullest extent permitted by applicable law,
such right to be indemnified shall survive and continue following the termination of Officer’s
service as an officer of the Corporation, with respect to conduct and actions taken, and decisions
made, by Officer in his capacity as an officer of the Corporation. The provisions set forth below
in this Agreement are provided in furtherance, and not by way of limitation, of the obligations
expressed in this Section 2.
Section 3. Expenses Related to Proceedings. If Officer is, by reason of his status as an
officer of the Corporation, a witness in or a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Officer is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to any Matter in such Proceeding,
the Corporation shall indemnify Officer against all Expenses actually and reasonably incurred by
him or on his behalf relating to each Matter. The termination of any Matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result as to such Matter.
Section 4. Advancement of Expenses. The Corporation shall pay or reimburse Officer for the
Expenses incurred by Officer in advance of the final disposition of a Proceeding within ten days
after Officer requests such payment or reimbursement, to the fullest extent permitted by, and
subject to compliance with, xx.xx. 0-000-000 and 0-000-000(b) of the C.B.C.A.
Section 5. Request for Indemnification. To obtain indemnification Officer shall submit to the
Corporation a written request with such information as is reasonably available to Officer. The
Secretary of the Corporation shall promptly advise the Board of Directors of such request.
Section 6. Determining Entitlement to Indemnification if No Change In Control. If there has
been no Change In Control at the time the request for Indemnification is sent, Officer’s
entitlement to indemnification shall be determined in accordance with xx.xx. 0-000-000 and 7-109-
107(b) of the C.B.C.A. If entitlement to indemnification is to be determined by Independent
Counsel, the Corporation shall furnish notice to Officer within ten days after receipt of the
request for indemnification, specifying the identity and address of Independent Counsel. Officer
may, within 14 days after receipt of such written notice of selection, deliver to the Corporation a
written objection to such selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of Independent Counsel and the
objection shall set forth with particularity the factual basis of such assertion. If there is an
objection to the selection of Independent Counsel, either the Corporation or Officer may petition
any court of competent jurisdiction for a determination that the objection is without a reasonable
basis and/or for the appointment of Independent Counsel selected by the court.
Section 7. Determining Entitlement to Indemnification if Change In Control. If there has been
a Change In Control at the time the request for indemnification is sent, Officer’s entitlement to
indemnification shall be determined in a written opinion by Independent Counsel selected by
Officer. Officer shall give the Corporation written notice advising of the identity and address of
the Independent Counsel so selected. The Corporation may, within seven days after receipt of such
written notice of selection, deliver to Officer a written objection to such selection. Officer may,
within five days after the receipt of such objection from the Corporation, submit the name of
another Independent Counsel and the Corporation may, within seven days after receipt of such
written notice of selection, deliver to Officer a written objection to such selection. Any
objection is subject to the limitations in Section 6 of this Agreement. Officer may petition any
court of competent jurisdiction for a
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determination that the Corporation’s objection to the first and/or second selection of Independent
Counsel is without a reasonable basis and/or for the appointment as Independent Counsel of a person
selected by the court.
Section 8. Procedures of Independent Counsel. If there has been a Change In Control before the
time the request for indemnification is sent by Officer, Officer shall be presumed (except as
otherwise expressly provided in this Agreement) to be entitled to indemnification upon submission
of a request for indemnification in accordance with Section 5 of this Agreement, and thereafter the
Corporation shall have the burden of proof to overcome the presumption in reaching a determination
contrary to the presumption. The presumption shall be used by Independent Counsel as a basis for a
determination of entitlement to indemnification unless the Corporation provides information
sufficient to overcome such presumption by clear and convincing evidence or the investigation,
review and analysis of Independent Counsel convinces him or herby clear and convincing evidence
that the presumption should not apply.
Except in the event that the determination of entitlement to indemnification is to be made by
Independent Counsel, if the person or persons empowered under Section 6 or 7 of this Agreement to
determine entitlement to indemnification shall not have made and furnished to Officer in writing a
determination within 60 days after receipt by the Corporation of the request therefor, the
requisite determination of entitlement to indemnification shall be deemed to have been made and
Officer shall be entitled to such indemnification unless Officer misrepresented a material fact in
connection with the request for indemnification or such indemnification is prohibited by law. The
termination of any Proceeding or of any Matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of Officer to
indemnification or create a presumption that (a) Officer did not act in good faith and in a manner
that he reasonably believed, in the case of conduct in his official capacity as an officer of the
Corporation, to be in the best interests of the Corporation or in all other cases that his conduct
was at least not opposed to the Corporation’s best interests, or (b) with respect to any criminal
Proceeding, that Officer had reasonable cause to believe that his conduct was unlawful.
Section 9. Expenses of Independent Counsel. The Corporation shall pay any and all reasonable
fees and expenses of Independent Counsel incurred acting pursuant to this Agreement and in any
proceeding to which it is a party or witness in respect of its investigation and written report and
shall pay all reasonable fees and expenses incident to the procedures in which such Independent
Counsel was selected or appointed. No Independent Counsel may serve if a timely objection has been
made to his or her selection until a court has determined that such objection is without a
reasonable basis.
Section 10. Trial De Novo. In the event that (a) a determination is made pursuant to Section 6
or 7 of this Agreement that Officer is not entitled to indemnification under this Agreement, (b)
advancement of Expenses is not timely made pursuant to Section 4 of this Agreement, (c) Independent
Counsel has not made and delivered a written opinion determining the request for indemnification
(i) within 90 days after being appointed by a court, (ii) within 90 days after objections to his or
her selection have been overruled by a court or (iii) within 90 days after the time for the
Corporation or Officer to object to his or her selection or (d) payment of indemnification is not
made within five days after a determination of entitlement to indemnification has been made or
deemed to have been made pursuant to Section 6, 7 or 8 of this Agreement, Officer shall be entitled
to an adjudication in any court of competent jurisdiction of his entitlement to such
indemnification or advancement of Expenses. In the event that a determination shall have been made
that Officer is not entitled to indemnification, any judicial proceeding (including any
arbitration) commenced pursuant to this Section 10 shall be conducted in all respects as a de novo
trial
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on the merits, and Officer shall not be prejudiced by reasons of that adverse determination. If a
Change In Control shall have occurred, in any judicial proceeding commenced pursuant to this
Section 10, the Corporation shall have the burden of proving that Officer is not entitled to
indemnification or advancement of Expenses, as the case may be. If a determination shall have been
made or deemed to have been made that Officer is entitled to indemnification, the Corporation shall
be bound by such determination in any judicial proceeding commenced pursuant to this Section 10, or
otherwise, unless Officer knowingly misrepresented a material fact in connection with the request
for indemnification, or such indemnification is prohibited by law.
The Corporation shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court that the Corporation is bound by all
provisions of this Agreement. In the event that Officer, pursuant to this Section 10, seeks a
judicial adjudication to enforce his rights under, or to recover damages for breach of, this
Agreement, Officer shall be entitled to recover from the Corporation, and shall be indemnified by
the Corporation against, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication, but only if he prevails therein. If it shall be determined in such judicial
adjudication that Officer is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by Officer in connection with such judicial
adjudication shall nevertheless be paid by the Corporation.
Section 11. Non-Exclusivity. The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which
Officer may at any time be entitled under applicable law, the Certificate of Incorporation, Bylaws,
a vote of stockholders, a resolution of the Board of Directors or otherwise. No amendment or
modification of this Agreement or any provision hereof shall be effective as to Officer for acts,
events and circumstances that occurred, in whole or in part, before such amendment or modification.
The provisions of this Agreement shall continue as to Officer notwithstanding any termination of
his status as an officer of the Corporation and shall inure to the benefit of his heirs, executors
and administrators.
Section 12. Insurance and Subrogation. To the extent the Corporation maintains an insurance
policy or policies providing liability insurance for directors or officers of the Corporation or of
any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Corporation, Officer shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of coverage available for
any such director or officer under such policy or policies.
In the event of any payment hereunder, the Corporation shall be subrogated to the extent of
such payment to all the rights of recovery ofOfficer, who shall execute all papers required and
take all action necessary to secure such rights, including execution of such documents as are
necessary to enable the Corporation to bring suit to enforce such rights.
The Corporation shall not be liable under this Agreement to make anypayment of amounts
otherwise indemnifiable hereunder if, and to the extent that, Officer has otherwise actually
received such payment under any insurance policy, contract, agreement or otherwise.
Section 13. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby;
and, to the fullest extent possible, the
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provisions of this Agreement shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal or unenforceable.
Section 14. Circumstances When Officer is Not Entitled to Indemnification. Officer shall not
be entitled to indemnification or advancement of Expenses under this Agreement with respect to any
Proceeding, or any Matter therein, brought or made by Officer against the Corporation, other than a
Proceeding, or Matter therein, brought by Officer to enforce his rights under this Agreement and in
which Officer is successful, in whole or in part.
Section 15. Notices. Any communication required or permitted to the Corporation shall be
addressed to the Secretary of the Corporation and any such communication to Officer shall be given
in writing by depositing the same in the United States mail, with postage thereon prepaid,
addressed to the person to whom such notice is directed at the address of such person on the
records of the Corporation, and such notice shall be deemed given at the time when the same shall
be so deposited in the United States mail.
Section 16. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.
Section 17. Consent to Jurisdiction. THE CORPORATION AND OFFICER EACH HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF COLORADO FOR ALL PURPOSES IN CONNECTION
WITH ANY ACTION OR PROCEEDING WHICH ARISES OUT OF OR RELATES TO THIS AGREEMENT AND AGREE THAT ANY
ACTION INSTITUTED UNDER THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF THE STATE OF
COLORADO.
Section 18. Amendment. No amendment, modification, termination orcancellation of this
Agreement shall be effective unless made in a writing signed by each of the parties hereto.
IN WITNESS WHEREOF, the Corporation and Officer have executed this Agreement as of the day and
year first above written.
| ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. | ||||||
| By: | ||||||
| Xxxxxxxx X. Xxxxx | ||||||
| President and Chief Executive Office | ||||||
| (Officer) | ||||||
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