Dollar General 2007 Annual Report Download - page 92

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EPA policies. After additional discussions with the EPA, the Company and the EPA agreed on
January 17, 2008 to resolve this matter through the Company’ s payment of a $155,826 penalty.
The Company paid this penalty in the fourth quarter of fiscal 2007 and has received full
reimbursement from the product vendor.
Subsequent to the announcement of the agreement relating to the Merger, the Company
and its directors were named in seven putative class actions alleging claims for breach of
fiduciary duty arising out of the Company’ s proposed sale to KKR. Each of the complaints
alleged, among other things, that the Company’ s directors engaged in “self-dealing” by agreeing
to recommend the transaction to the Company’ s shareholders and that the consideration available
to such shareholders in the transaction is unfairly low. On motion of the plaintiffs, each of these
cases was transferred to the Sixth Circuit Court for Davidson County, Twentieth Judicial
District, at Nashville. By order dated April 26, 2007, the seven lawsuits were consolidated in the
court under the caption, “In re: Dollar General,” Case No. 07MD-1. On June 13, 2007, the court
denied the Plaintiffs’ motion for a temporary injunction to block the shareholder vote that was
then held on June 21, 2007. On June 22, 2007, the Plaintiffs filed their amended complaint
making claims substantially similar to those outlined above. The matter is currently in discovery.
The Company believes that the foregoing lawsuit is without merit and continues to defend the
action vigorously; however, if the Company is not successful in that defense, its resolution could
have a material adverse effect on the Company’ s financial statements as a whole.
From time to time, the Company is a party to various other legal actions involving claims
incidental to the conduct of its business, including actions by employees, consumers, suppliers,
government agencies, or others through private actions, class actions, administrative
proceedings, regulatory actions or other litigation, including under federal and state employment
laws and wage and hour laws. 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 adverse 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 results of operations or
financial position. In addition, certain of these lawsuits, if decided adversely to the Company or
settled by the Company, may result in liability material to the Company’ s financial position or
may negatively affect our operating results if changes to the Company’ s business operation are
required.
8. Benefit plans
The Dollar General Corporation 401(k) Savings and Retirement Plan, which became
effective on January 1, 1998, 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,