Dollar General 2011 Annual Report Download - page 138

10-K
Prepayments. The senior secured credit agreement for the Term Loan Facility requires us to
prepay outstanding term loans, subject to certain exceptions, with:
• 50% of our annual excess cash flow (as defined in the credit agreement) which will be reduced
to 25% and 0% if we achieve and maintain a total net leverage ratio of 6.0 to 1.0 and 5.0 to 1.0,
respectively;
• 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of
property in excess of $25.0 million in the aggregate and subject to our right to reinvest the
proceeds; and
• 100% of the net cash proceeds of any incurrence of debt, other than proceeds from debt
permitted under the senior secured credit agreement.
The mandatory prepayments discussed above will be applied to the Term Loan Facility as directed
by the senior secured credit agreement. No prepayments have been required under the prepayment
provisions listed above. The Term Loan Facility can be prepaid in whole or in part at any time.
In addition, the senior secured credit agreement for the ABL Facility requires us to prepay the
ABL Facility, subject to certain exceptions, as follows:
• With 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions
of Revolving Facility Collateral (as defined below) in excess of $1.0 million in the aggregate and
subject to our right to reinvest the proceeds; and
• To the extent such extensions of credit exceed the then current borrowing base (as defined in
the senior secured credit agreement for the ABL Facility).
The mandatory prepayments discussed above will be applied to the ABL Facility as directed by the
senior secured credit agreement for the ABL Facility. No prepayments have been required under the
prepayment provisions listed above.
An event of default under the senior secured credit agreements will occur upon a change of
control as defined in the senior secured credit agreements governing our Credit Facilities. Upon an
event of default, indebtedness under the Credit Facilities may be accelerated, in which case we will be
required to repay all outstanding loans plus accrued and unpaid interest and all other amounts
outstanding under the Credit Facilities.
Amortization. The original terms of the Term Loan Facility required quarterly payments of
principal beginning September 30, 2009. As a result of voluntary prepayments under the Term Loan
Facility, no further quarterly principal installments will be required prior to maturity of the Term Loan
on July 6, 2014. There is no amortization under the ABL Facility.
Guarantee and Security. All obligations under the Credit Facilities are unconditionally guaranteed
by substantially all of our existing and future domestic subsidiaries (excluding certain immaterial
subsidiaries and certain subsidiaries designated by us under our senior secured credit agreements as
‘‘unrestricted subsidiaries’’), referred to, collectively, as U.S. Guarantors.
All obligations and related guarantees under the Term Loan Facility are secured by:
• a second-priority security interest in all existing and after-acquired inventory, accounts
receivable, and other assets arising from such inventory and accounts receivable, of our company
and each U.S. Guarantor (the ‘‘Revolving Facility Collateral’’), subject to certain exceptions;
• a first-priority security interest in, and mortgages on, substantially all of our and each U.S.
Guarantor’s tangible and intangible assets (other than the Revolving Facility Collateral); and
• a first-priority pledge of 100% of the capital stock held by us, or any of our domestic
subsidiaries that are directly owned by us or one of the U.S. Guarantors and 65% of the voting
capital stock of each of our existing and future foreign subsidiaries that are directly owned by us
or one of the U.S. Guarantors.
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