Management Change/Compensation - Form 8-K

As previously announced on January 28, 2024, the board of directors (the "Board") of Rocky Mountain Chocolate Factory (the "Company") appointed Starlette B. Johnson to the position of Interim Chief Executive Officer, effective as of January 29, 2024 (the "Start Date").

On March 25, 2024, Ms. Johnson and the Company entered into an offer letter (the "Offer Letter") in connection with her appointment as Interim Chief Executive Officer, which provides that Ms. Johnson will receive (i) an annual base salary of $390,000, (ii) performance-based annual cash bonuses (the "Annual Bonus"), as described below, (iii) equity awards, as described below, and (iv) customary employee benefits. Pursuant to the Offer Letter, Ms. Johnson will continue as at "at-will" employee of the Company and will have no specified term as Interim Chief Executive Officer.

Subject to the terms and conditions set forth in the Offer Letter, Ms. Johnson will be eligible to receive her initial Annual Bonus for the Company's fiscal year ended February 28, 2025 at an initial target of 75% of Ms. Johnson's annual base salary ("Annual Target Bonus"), 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. Ms. Johnson's Annual Bonus will be prorated based on the number of days during the fiscal year for which she serves as Interim Chief Executive Officer.

In connection with her appointment, Ms. Johnson will be awarded a special equity incentive grant with a grant date fair value of $390,000 in the form of restricted stock units ("RSUs"). The RSUs will vest monthly over 36 months beginning on the Start Date, subject to Ms. Johnson's continued service as Interim Chief Executive Officer through the applicable vesting date. The RSUs will be governed by the terms of the Company's 2007 Equity Incentive Plan (as amended from time to time) and the award agreement evidencing the RSU grant. Ms. Johnson will be eligible for additional long-term equity incentive grants annually, as approved by the Compensation Committee of the Board, in its sole discretion.

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