Dollar General 2006 Annual Report Download - page 77

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alleging claims for breach of fiduciary duty arising out of the proposed sale of the Company to
KKR. The cases are captioned City of Miami General Employees’ & Sanitation Employees’
Retirement Trust and Louisiana Sheriffs’ Pension and Relief Fund v. David A. Perdue, et al (the
“City of Miami Complaint”), Lee S. Grubman v. Dollar General Corporation, et al (the
“Grubman Complaint”), William Hochman, IRA v. Dollar General Corporation, et al (the
“Hochman Complaint”), Helene Hutt v. Dollar General Corporation, et al (the “Hutt
Complaint”), Shalom Rechnieder v. David L. Beré, et al (the “Rechnieder Complaint”),
Catherine Rubbery v. Dollar General Corporation, et al (the “Rubbery Complaint”), and David
B. Shaev, IRA v. David A. Perdue, et al, Case No. 07-559 (the “Shaev Complaint”). The City of
Miami Complaint, the Grubman Complaint, the Hochman Complaint, the Hutt Complaint, the
Rubbery Complaint, and the Shaev Complaint were each brought in the Chancery Court for
Davidson County, Tennessee, and the Rechnieder Complaint was brought in the Circuit Court of
Davidson County, Tennessee. Each of the complaints allege, among other things, that the $22
per share price of the proposed transaction is inadequate and that the process leading to the
transaction was unfair. The plaintiffs seek, among other things, an injunction enjoining
completion of the transaction and, in certain cases, compensatory damages.
The Company believes that each of the foregoing lawsuits is without merit and intends to
defend these actions vigorously.
In addition to the matters described above, the Company is involved in other legal actions
and claims arising in the ordinary course of business. The Company believes, based upon
information currently available, that such other litigation and claims, both individually and in the
aggregate, will be resolved without a material effect on the Company’s financial statements as a
whole. However, litigation involves an element of uncertainty. Future developments could cause
these actions or claims to have a material adverse effect on the Company’ s financial statements
as a whole.
9. Benefit plans
The Dollar General Corporation 401(k) Savings and Retirement Plan became effective on
January 1, 1998. The 401(k) plan is a safe harbor defined contribution plan and is subject to the
Employee Retirement and Income Security Act (“ERISA”).
Participants are permitted to contribute between 1% and 25% of their pre-tax annual
eligible compensation as defined in the 401(k) plan document, subject to certain limitations
under the Internal Revenue Code. Employees who are over age 50 are permitted to contribute
additional amounts on a pre-tax basis under the catch-up provision of the 401(k) plan subject to
Internal Revenue Code limitations. The Company currently matches employee contributions,
including catch-up contributions, at a rate of 100% of employee contributions, up to 5% of
annual eligible salary, after an employee has been employed for one year and has completed a
minimum of 1,000 hours of service.
A participant’ s right to claim a distribution of his or her account balance is dependent on
ERISA guidelines and Internal Revenue Service regulations. All active employees are fully
vested in all contributions to the 401(k) plan. During 2006, 2005 and 2004, the Company
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