Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensation Arrangements of Certain Officers
A. On July 20, 2016, Golden Enterprises, Inc. (“Golden
Enterprises” or the “Company”), executed Retention Bonus Agreements with Mark W. McCutcheon, Chief Executive
Officer, Paul R. Bates, Executive Vice President, David A. Jones, Executive Vice President and Patty R. Townsend, Chief Financial
Officer (the “Key Employees” or singularly, “Key Employee”). Upon the terms and subject to the conditions
set forth in the Retention Bonus Agreements, Key Employees are paid to remain in the employment of the Company or its wholly-owned
subsidiary, after the Company merges with a wholly-owned subsidiary of Utz Quality Foods, Inc. (“Utz”).
Pursuant to the Retention Bonus Agreements, upon the merging
of Company and a wholly-owned subsidiary of Utz (the “Merger”), a Key Employee will receive, upon satisfaction of certain
conditions, a retention bonus in the amount of seventy-five percent (75%) of their base salary as of July 18, 2016. Such payment
will be made at the end of the “Retention Period” which is one (1) year after the Merger. Payment of the retention
bonus is contingent on satisfaction of three (3) conditions:
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1.
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The Key Employee must not have resigned from employment with the Company at any time from the date of the execution of the
Retention Bonus Agreement through the last day of the Retention Period.
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2.
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The Company must not have terminated the Key Employee’s employment at any time from the date of the execution of the
Retention Bonus Agreement through the end of the Retention Period for “cause”.
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3.
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Following the last day of the Retention Period, the Key Employee must deliver to the Company a general release as set forth
on Schedule A to the Retention Bonus Agreement.
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For purposes of the Retention Bonus Agreement,
termination for “cause” includes termination for willful, material breach or failure to comply with the Company’s
written policies, procedures or instructions if such failure has a material adverse impact on the Company, willful, material misconduct
or dishonest act or fraud in the performance of duties with the Company which has a material adverse impact on the Company, and
indictment for, or conviction of, or pleading guilty or
no lo contendere
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to a felony or a crime involving moral
turpitude, fraud, or embezzlement.
A Key Employee is given the right to cure
such cause within ten (10) business days or receipt of notice from the Company.
Notwithstanding the Retention Bonus Agreement,
each Key Employee specifically remains an employee at will which the Company may terminate with or without cause at any time.
B. As previously discussed
in the Form 8-K dated July 19, 2016, pursuant to the Merger Agreement, the Company agreed to terminate each incentive stock option
(“Stock Option”) outstanding prior to the effective time of the Merger (the “Option Cancellation Agreement”).
The Option Cancellation Agreement will provide that each holder of a Stock Option shall be entitled to receive, in consideration
of the cancellation of such options held by such Stock Option Holder, subject to the consummation of the Merger, a cash payment
per share equal to the product of (x) the aggregate number of shares of Company Common Stock subject to such Company Stock Option,
whether or not the Stock Option is currently exercisable, multiplied by (y) the excess, if any, of the Merger Consideration, as
defined in the Merger Agreement, over the per share exercise price of the Company Stock Options, less any taxes required to be
withheld in accordance with the Merger Agreement.
On July 20, 2016, Golden
Enterprises entered into Option Cancellation Agreements with each of the Key Employees. As a result of entering into the Option
Cancellation Agreements, at the time of Merger each Key Employee will be entitled to receive the amount determined by the formula
set forth above.
The disclosures contained herein are intended merely as summaries,
do not purport to be complete and are qualified in their entirety by reference to the full texts of the Retention Bonus Agreements
and Option Cancellation Agreements attached as exhibits hereto.