Chocolate Industry

Relevant Rocky Mountain Shareholders File Final Proxy Statement for Rocky Mountain Chocolate Factory 2021 Annual Meeting

WESTFIELD, New Jersey – (COMMERCIAL THREAD) – AB Value Management LLC, collectively with its affiliates (“AB Value”), and the other participants in this solicitation (collectively, the “Relevant Rocky Mountain Shareholders”) representing approximately 14.63% of the outstanding shares of Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the “Company”), today filed its definitive proxy statement with the United States Securities and Exchange Commission (the “SEC”) to solicit proxies for the election of their five highly qualified independent members. nominee directors — Andrew T. Berger, Mary Kennedy Thompson, Mark Riegel, Sandra Elizabeth Taylor and Rhonda J. Parish — at the 2021 Annual Meeting of Shareholders of the Company (the “2021 Annual Meeting”).

“We have proposed director appointments because while we believe the Company has enormous potential, it has been beset by haphazard and responsive leadership and governance. This responsiveness has only grown in the last few months leading up to the 2021 Annual Meeting, ”commented Andrew Berger, Managing Member of AB Value.

Affected Rocky Mountain shareholders believe the company’s proxy documents continue to fuel a series of false and misleading statements regarding the company’s actions and engagement with affected Rocky Mountain shareholders. Below are some of the more egregious fictions contained in the documents filed by the company and how these false claims can be combated with facts that show the company is manipulating the truth for its own benefit:

CORPORATE FICTION # 1: The Company’s Board of Directors (the “Board”) has successfully implemented a program of continuous refreshment over the past few years.

MADE: The Council took defensive and reactionary steps after our public participation. The first time the Company publicly mentioned the “Board Refresh” was on July 22, 2021, less than a month after AB Value submitted its notice of appointment. The Company also fails to mention that the turnover of the Board was not motivated by a deliberate long-term plan of the Company, but by the continuous agitation of the shareholders:

  • Tariq Farid – joined the Board of Directors in January 2020 as part of a strategic alliance with Edible Arrangements, LLC;

  • Andrew Berger and Mary Kennedy Thompson — appointed to the Board by the Company pursuant to a settlement agreement in December 2019; and

  • Jeffrey R. Geygan — Appointed August 2021 to the Board of Directors to settle a proxy contest led by affiliates of Mr. Geygan.

CORPORATE FICTION # 2: The Board has entered into a substantial dialogue in good faith with AB Value.

MADE: AB Value and the Company had entered into a nearly fully negotiated settlement agreement with a one-year standstill clause which had been accepted in principle by the Company’s General Counsel, who indicated that the agreement had also been approved. by the CEO, but that it was deemed unacceptable. by a contingency of the Board and abandoned by the Company. The company’s next “engagement” with AB Value regarding a potential settlement, more than six weeks later, included a four-year standstill provision that would enshrine existing directors for several years and the board’s refusal to change its composition. in connection with any settlement with AB Value (despite its willingness to do so during settlement with Global Value Investment Corp. (“Global Value”), which had recently pursued a takeover bid for the Company’s shares). By refusing to put Mr Berger on its list, the company is attempting to remove the director who championed the governance improvements the company subsequently implemented (and magnified in a public relations campaign).

CORPORATE FICTION # 3: The Company is committed to adopting first-class governance.

MADE: The Board makes the daily decision to retain a a decade poison pill, passed without shareholder approval, which will expire in March 2025. Despite the qualified and timely advice of affected Rocky Mountain shareholders of its non-binding proposal to buy back the pill, the board, headed by Rahul Mewawalla, did not didn’t even have the guts to include our proposal on his proxy card for shareholders to consider at the 2021 annual meeting.

CORPORATE FICTION # 4: The company’s nominees, six of whom are independent, constitute the appropriate board of directors with the depth and breadth of qualifications necessary to drive the company’s growth strategy.

MADE: With the exception of the board, none of Mr. Mewawalla, Gabriel Arreaga or Brett Seabert has ever served on a public board. Mr. Mewawalla also lacks C-level experience with a public company and experience in the food and beverage industry. Likewise, neither Mr. Seabert nor Mr. Geygan had any experience in the confectionery industry prior to joining the Board.

The facts also support the questioning of the ability of Messrs. Seabert and Geygan to exercise independent judgment. Mr. Geygan and Global Value recently attempted a takeover bid for a controlling stake in the Company, threatened to replace the near majority of the Board and made multiple signs of their desire to take control of the Company. .1 Mr. Seabert, on the other hand, shares a close and intimate bond with the CEO of the company, Mr. Seabert may have found a man of honor in Mr. Merryman, but that doesn’t make Mr. Seabert the best man on the board.2

CORPORATE FICTION # 5: The purpose of the special committee is to oversee the process of identifying new qualified and independent directors.

MADE: The Company’s own legal counsel has confirmed that the special committee was formed in response to and to deal with the proxy contest at the 2021 annual meeting. If the Company disputes this, we believe the board resolutions drafted to create the special committee eliminates any doubt as to the real purpose and scope of the committee.

CORPORATE FICTION # 6: AB Value candidates (with the exception of Ms. Thompson) do not have the experience, skills or expertise required to drive the strategy of the Company.

MADE: As the largest group of shareholders in the Company, affected Rocky Mountain shareholders are aligned to act in the best interests of all shareholders. The majority of our candidates have worked in public companies and bring a wide range of backgrounds: corporate social responsibility, expertise in the restaurant and clothing industry, sophisticated financial analysis and judgment, and a successful track record including consulting desperately needed to increase shareholder value. Indeed, the Company has conveniently changed its opinion of Mr. Berger since it issued its 2020 and 2019 proxy statements, in which it told shareholders that “[the Company] to believe[s] that Mr. Berger’s experience in investment management, in particular his experience in the food industry and franchising, qualifies him to serve as a director of the Company.

It is clear to concerned Rocky Mountain shareholders that his campaign has inspired reactionary, albeit haphazard, changes within the company, but there is still work to be done. If elected, our nominees will bring to the board a better knowledge of shareholders, knowledge of shareholders that is not marred by a historically demonstrated desire to seek personal rewards at the expense of all other shareholders. The nominees of affected Rocky Mountain shareholders are committed to ensuring increased accountability and decisions made in the best interests of shareholders. Relevant Rocky Mountain shareholders are encouraging shareholders to arm themselves with all the facts and to take the Company’s fictions for what they are: attempts to salvage the seats of some incumbent directors. We are convinced that shareholders armed with the facts will vote the BLUE card for new, honest leadership within the company.

1 These indications include two implied attempts resulting from oral conversations between GVIC and representatives of the Company approximately five and ten years ago (both were recently confirmed by Mr. Geygan to AB Value) and a written offer made on June 8, 2021. , as disclosed in the Company’s Final Power of Attorney Statement filed with the SEC on September 9, 2021.

2 Mr. Merryman was Mr. Seabert’s witness at his wedding. The Reno Gazette-Journal wedding announcement can be found here: