Dollar General 2011 Annual Report Download - page 28

Proxy
Relationships with Management. Simultaneously with the closing of our 2007 merger and
thereafter through May 2011, we, Buck Holdings L.P. and certain of our employees (collectively,
‘‘management shareholders’’) entered into shareholder’s agreements (each, a ‘‘Management
Stockholder’s Agreement’’) that impose significant restrictions on transfer of covered shares of our
common stock held by the management shareholders. Generally, shares are nontransferable prior to the
fifth anniversary of either the closing date of our 2007 merger or a later specified date (depending on
the terms of the applicable agreement) except (i) sales pursuant to an effective registration statement
filed by us under the Securities Act of 1933 (the ‘‘Securities Act’’) in accordance with the Management
Stockholder’s Agreement, (ii) a sale to certain permitted transferees, or (iii) as otherwise permitted by
our Board of Directors or pursuant to a waiver of the transfer restrictions; provided, that, in the event
KKR or its affiliates transfer their limited partnership units to a third party, such transfer restrictions
shall lapse with respect to the same proportion of shares of common stock owned by a management
shareholder as the proportion of limited partnership units transferred by KKR and such affiliates
relative to the aggregate number of limited partnership units they owned prior to such transfer.
Following our initial public offering in 2009, we amended the Management Stockholder’s Agreements
to exclude from the transfer restrictions any shares acquired in the open market or through the
directed share program administered as part of the initial public offering. Shares acquired by executive
officers in the open market or through the directed share program will still be subject to any lock-up
arrangements with the underwriters of any public offering of shares. Limited waivers of the transfer
restrictions on a limited percentage of the shares subject to the Management Stockholder’s Agreement
have been granted since 2009.
In the event that a registration statement is filed with respect to our common stock, the
Management Stockholder’s Agreement prohibits management shareholders from selling shares not
included in the registration statement from receipt of notice that we have filed or intend to file such
registration statement until 180 days (in the case of an initial public offering) or 90 days (in the case of
any other public offering) of the effective date of the registration statement, unless the underwriters, if
any, agree to a shorter period. The Management Stockholder’s Agreement also enables the
management shareholder to cause us to repurchase his or her covered stock and vested options (and
vested restricted stock, with respect to Mr. Dreiling) in the event of the management shareholder’s
death or disability, and enables us to cause the management shareholder to sell his covered stock or
options back to us upon certain termination events, all for the period of time specified in the
Management Stockholder’s Agreement. These transfer restrictions and put and call rights are scheduled
to expire for a significant number of the management shareholders, including some of our executive
officers, in July 2012.
Certain members of senior management, including the executive officers (the ‘‘Senior
Management Shareholders’’), have limited ‘‘piggyback’’ registration rights with respect to their shares of
our common stock in the event that certain investors sell, or cause to be sold, shares of our common
stock in a public offering. Such rights may be voluntarily extended to other members of management as
determined by our Board in connection with any given future such sale by certain investors. See the
description of the registration rights agreement under ‘‘Relationships with the Investors’’ below. During
2010, we amended these rights to allow for the accumulation of such rights by any employee entitled,
but who elects not, to exercise such rights in a given offering. The Senior Management Shareholders
waived their piggyback registration rights arising from our initial public offering in 2009 in
consideration of our releasing them from the transfer restrictions contained in the Management
Stockholder’s Agreements after the expiration of a 180-day restricted period with respect to a number
of shares of our common stock equal to the number of shares that such Senior Management
Shareholders could have required us to register in connection with our initial public offering.
Interlocks. Mr. Dreiling serves as a manager of Buck Holdings, LLC for which
Messrs. Calbert, Agrawal and Jones (three of our CNG Committee members) serve as managers.
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