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Washington, D.C. 20549

 

 

 

 

Date of Report (Date of earliest event reported): July 18, 2022

 

 

 

 

 

Durango, Colorado 81303

 

Registrant’s telephone number, including area code: (970) 259-0554

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

On July 18, 2022, Allen Arroyo was appointed as Chief Financial Officer of Rocky Mountain Chocolate Factory, Inc. (the “Company”), effective August 1, 2022 (the “Start Date”). Mr. Arroyo succeeds Bryan J. Merryman as Chief Financial Officer after his retirement from the Company after 24 years of service with the Company.

 

Mr. Arroyo, age 62, has over 30 years of experience in the franchising and foodservice industries. Mr. Arroyo most recently served as the Chief Financial Officer of Nevoa Life Sciences, Inc., which creates disinfecting solutions for the healthcare industry, from September 2020 to July 2022. From 2017 to 2020, Mr. Arroyo served as an advisor or Chief Financial Officer of Concept Entertainment Group (2019 to 2020), a hospitality management company, Due North Holdings LLC (2017 to 2019), a holding company that owned and franchised multiple restaurant brands, and FTR Hospitality (2020), which provides back-office accounting and technology services for multi-unit restaurant organizations. Mr. Arroyo also previously served as Chief Financial Officer of various private companies in the food industry, such as Blaze Pizza, LLC (2014 to 2017), Z’Tejas, Inc. (2011 to 2013) and Mastro’s Restaurants, LLC (2007 to 2011). From 2000 to 2007, Mr. Arroyo served as Corporate Controller of IHOP Corp., the predecessor company of Dine Brands Global, Inc. (NYSE: DIN). Mr. Arroyo holds a Bachelor of Science in Accounting from California State Northridge University and Master of Business Administration from Pepperdine University.

 

In connection with his appointment, the Company and Mr. Arroyo entered into an offer letter (the “Offer Letter”), which provides that Mr. Arroyo will receive an annual base salary of $275,000, (ii) performance-based annual cash bonuses, as described below, (iii) equity awards, as described below, and (iv) customary employee benefits. Subject to the terms and conditions set forth in the Offer Letter, the initial annual cash incentive bonus (the “Annual Bonus”) target will be 30% of Mr. Arroyo’s annual base salary (“Annual Target Bonus”), with the opportunity to receive up to 100% of his annual base salary, subject to achievement of Company performance goals established by the Compensation Committee of the Board for the applicable fiscal year and reduced by standard payroll deductions and tax withholdings. Mr. Arroyo’s Annual Bonus payment in respect of the Company’s fiscal year ending February 2023 will be the higher of (a) $50,000 and (b) the earned amount pro-rated based on the Start Date.

 

In connection with his appointment, Mr. Arroyo will be awarded a special equity incentive grant with a grant date fair value of $192,500 at target performance, 70% in the form of restricted stock units vesting based on achievement of specified performance goals, as described below (the “RSUs”), and 30% in the form of stock options, vesting with respect to one-third of the shares on the last day of the Company’s fiscal year ending February 2023, with the remaining two-thirds vesting quarterly thereafter until Mr. Arroyo is fully vested on the last day of the Company’s fiscal year ending February 2025 (the “Stock Options”), subject to his continued service through the applicable vesting date. The RSUs will vest following the end of the Company’s fiscal year ending February 2025 with respect to the target number RSUs if the Company achieves an annualized total shareholder return of 12.5% for the performance period commencing on the Start Date and ending at the end of the Company’s fiscal year ending February 2025, subject to Mr. Arroyo’s continued service through the end of the performance period. The Board has discretion to determine the number of RSUs between 0-200% of the target number that will vest based on achievement of performance below or above the target performance goal. Both the Stock Options and RSUs will be governed by the terms of the Company’s 2007 Equity Incentive Plan (as amended from time to time, the “Plan”) and the award agreements evidencing the grants. Mr. Arroyo will be eligible for additional long-term equity incentive grants annually, as approved by the Compensation Committee of the Board, in its sole discretion.

 

Subject to the terms and conditions set forth in the Offer Letter, if, at any time, the Company terminates Mr.  Arroyo’s employment without Cause (as defined in the Offer Letter) (other than as a result of his death or Disability (as defined in the Offer Letter)) or he terminates his employment for Good Reason (as defined in the Offer Letter) (such termination, a “Qualifying Termination”), then he will receive the Accrued Amounts (as defined below) and the Company will provide him with the following severance benefits (the “Severance Benefits”):

 

 

 

 

 

For purposes of the Offer Letter, “Accrued Amounts” means, collectively, (i) Mr. Arroyo’s base salary accrued through his last day of employment, (ii) any unused paid time off accrued through his last day of employment in accordance with the Company policy, (iii) any earned but unpaid Annual Bonus for the fiscal year ended immediately prior to his Qualifying Termination date (provided that any such Annual Bonus will be paid at the same time it would have been paid had his employment not terminated), and (iv) reimbursement of any unreimbursed business expenses.

 

The foregoing description of the Offer Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Offer Letter, which is attached as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.

 

 

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.