Dollar General 2008 Annual Report Download - page 112

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($0.7 million net of tax) and less than $0.1 million, respectively. At January 30, 2009 and
February 1, 2008, the total compensation cost related to nonvested restricted stock awards not yet
recognized was approximately $3.3 million and $4.4 million, respectively.
11. Related party transactions
Affiliates of certain of the Investors participated as (i) lenders in the Company’ s 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 7 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.
Affiliates of KKR (among other entities) are lenders under, and Citicorp North America,
Inc. serves as administrative agent and collateral agent for, the Company’ s $2.3 billion senior
secured term loan facility. The amount of principal outstanding under this term loan facility at
all times since the Merger was $2.3 billion, and the Company paid no principal and
approximately $133.4 million of interest on the senior secured term loan during 2008. The
Company paid $0.2 million to Citicorp North America, Inc. for its services relating to this
facility in 2008 as further discussed in Note 6.
Goldman, Sachs & Co. is a counterparty to an amortizing interest rate swap totaling
$433.3 million as of January 30, 2009, entered into in connection with the Company’ s senior
secured term loan facility. The Company paid Goldman, Sachs & Co. approximately $9.5
million in 2008 pursuant to the interest rate swap as further discussed in Note 7.
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, initial 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 management fees and other expenses incurred for the Successor periods ended January 30,
2009 and February 1, 2008 totaled $6.6 million and $2.9 million, respectively. The management
fee increases 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 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