Dollar General 2007 Annual Report Download - page 102

100
10. Related party transactions
Affiliates of certain of the Investors participated as (i) lenders in the Company’ s New
Credit Facilities discussed in Note 6; (ii) initial purchasers of the Company’ s notes discussed in
Note 6; (iii) counterparties to certain interest rate swaps discussed in Note 1 and (iv) as advisors
in the Merger. Certain fees were paid upon closing of the Merger to affiliates of certain of the
Investors. These fees primarily included underwriting fees, advisory fees, equity commitment
fees, syndication fees, merger and acquisition fees, sponsor fees, costs of raising equity, and out
of pocket expenses. The aggregate fees paid to these related parties during the Successor period
ended February 1, 2008 totaled $134.9 million, portions of which have been capitalized as debt
financing costs or as direct acquisition costs.
The Company entered into a monitoring agreement, dated July 6, 2007, with affiliates of
certain of the Investors pursuant to which those entities will provide management and advisory
services to the Company. Under the terms of the monitoring agreement, among other things, the
Company is obliged to pay to those entities an aggregate annual management fee of $5.0 million
payable in arrears at the end of each calendar quarter plus all reasonable out of pocket expenses
incurred in connection with the provision of services under the agreement upon request. The
fees incurred for the Successor period ended February 1, 2008 totaled $2.9 million. After the
completion of the Company’ s first fiscal year, the management fee will increase at a rate of 5%
per year. Those entities also are entitled to receive a fee equal to 1% of the gross transaction
value in connection with certain subsequent financing, acquisition, disposition, and change in
control transactions, as well as a termination fee in the event of an initial public offering or under
certain other circumstances. In addition, on July 6, 2007, the Company also entered into a
separate indemnification agreement with the parties to the monitoring agreement, pursuant to
which the Company agreed to provide customary indemnification to such parties and their
affiliates.
The Company uses Capstone Consulting, LLC, a team of executives who work
exclusively with KKR portfolio companies providing certain consulting services. The Chief
Executive Officer of Capstone serves on our Board. Although neither KKR nor any entity
affiliated with KKR owns any of the equity of Capstone, prior to January 1, 2007 KKR had
provided financing to Capstone. The aggregate fees incurred for Capstone services for the
Successor period ended February 1, 2008 totaled $1.9 million.
The Company purchased a total of $25 million of the 11.857%/12.625% senior
subordinated notes held by Goldman Sachs & Co. as further discussed in Note 6 and paid a
commission of less than $0.1 million in connection therewith.
11. Capital stock
Prior to the Merger, the Company had a Shareholder Rights Plan (the “Rights Plan”)
under which Series B Junior Participating Preferred Stock Purchase Rights (the “Rights”) were
issued for each outstanding share of common stock. The Rights were attached to all common
stock outstanding as of March 10, 2000. On May 8, 2000, the Company effected a five for four
stock split at which time, pursuant to the adjustment provisions contained in the Rights