Dollar General 2007 Annual Report Download - page 22

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• payable on or before July 20, 2006 to common shareholders of record on July 6,
2006;
• payable on or before October 19, 2006 to common shareholders of record on October
5, 2006;
• payable on or before January 18, 2007 to common shareholders of record on January
4, 2007; and
• payable on or before April 19, 2007 to common shareholders of record on April 5,
2007.
Our Board of Directors did not declare a dividend thereafter. See Item 7, “Management’ s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and
Capital Resources” for a description of the restrictions on our ability to pay dividends.
Unregistered Sales of Equity Securities. In connection with the Merger, our officer-level
employees were offered the opportunity to roll over portions of their equity and/or stock options
and to purchase additional equity of Dollar General. In connection with such opportunity, on
July 6, 2007 these individuals purchased a total of 635,207 shares of common stock having an
aggregate value of approximately $3,176,035 and exchanged a total of 2,225,175 stock options
outstanding prior to the Merger for 1,920,543 vested options to purchase shares of common stock
(the “Rollover Options”) in the surviving company (the “Rollover”). The Rollover Options
remain outstanding in accordance with the terms of the governing stock incentive plan and grant
agreements pursuant to which the holder originally received the stock option grants. However,
immediately after the Merger, the exercise price and number of shares underlying the Rollover
Options were adjusted as a result of the Merger and the exercise price for all of the options was
adjusted to $1.25 per option.
We subsequently offered certain other employees a similar investment opportunity to
participate in our common equity. As a result, on September 20, 2007 and October 5, 2007, we
sold 15,000 shares and 558,000 shares, respectively, of our common stock to those employees
for a purchase price of $5 per share.
In connection with the investment discussed above and the Merger, our Board of
Directors adopted a new stock incentive plan pursuant to which certain of our officer-level and
other employees also were granted, on July 6, 2007, September 20, 2007 and October 5, 2007,
respectively, new non-qualified stock options to purchase 13,110,000 shares, 130,000 shares and
4,150,000 shares of our common stock at a per share exercise price of $5, which represented the
fair market value of one share of our common stock on the grant date. Effective January 21,
2008, our Board also granted to our CEO, Mr. Dreiling, non-qualified stock options to purchase
2.5 million shares of our common stock pursuant to the terms of the new stock incentive plan.
All of these new options expire no later than 10 years following the grant date. In addition, half
of the options will vest ratably on each of the five anniversaries of July 6, 2007 solely based
upon continued employment over that time period, while the other half of the options will vest
based both upon continued employment and upon the achievement of predetermined