Dollar General 2011 Annual Report Download - page 29

Proxy
Relationships with the Investors. In connection with our initial public offering in 2009, we
entered into a shareholders’ agreement with affiliates of each of KKR and Goldman, Sachs & Co.
Among its other terms, the shareholders’ agreement establishes certain rights with respect to our
corporate governance, including the designation of directors. For additional information regarding those
rights, see ‘‘How are directors identified and nominated’’ elsewhere in this document. The shareholders’
agreement also provides that, as long as Buck Holdings, L.P. owns at least 35% of our outstanding
shares of common stock, the following actions require approval of the KKR shareholders party to the
shareholders’ agreement: hiring and firing of our CEO, any change of control as defined in the
shareholders’ agreement, entering into any agreement providing for the acquisition or divestiture of
assets for aggregate consideration in excess of $1 billion, and any issuance of equity securities for an
aggregate consideration in excess of $100 million.
In July 2007, we and Buck Holdings, L.P. entered into an indemnification agreement with KKR
and Goldman, Sachs & Co. pursuant to which we agreed to provide customary indemnification to such
parties and their affiliates in connection with certain claims and liabilities incurred in connection with
certain transactions involving such parties, including the financing for our 2007 merger and pursuant to
services provided under our sponsor advisory agreement with such parties that was entered into in 2007
and terminated in 2009.
In connection with our 2007 merger, we entered into a registration rights agreement with Buck
Holdings, L.P., Buck Holdings, LLC, KKR and Goldman, Sachs & Co. (and certain of their affiliated
investment funds), among certain other parties. Pursuant to this agreement, investment funds affiliated
with KKR have an unlimited number of demand registration rights and investment funds affiliated with
Goldman, Sachs & Co. have two demand registration rights which can be exercised once a year.
Pursuant to such demand registration rights, we are required to register with the SEC the shares of
common stock beneficially owned by them through Buck Holdings L.P. for sale by them to the public,
provided that each of them hold at least $100 million in registrable securities and such registration is
reasonably expected to result in aggregate gross proceeds of $50 million. We are not obligated to file a
registration statement relating to any request to register shares pursuant to such demand registration
rights without KKR’s consent within a period of 180 days after the effective date of any other
registration statement we file pursuant to such demand registration rights. In addition, in the event that
we are registering additional shares of common stock for sale to the public, whether on behalf of us or
the investment funds as described above, we must give notice of such registration to all parties to the
registration rights agreement, including the Senior Management Shareholders, and such persons have
piggyback registration rights providing them the right to have us include the shares of common stock
owned by them in any such registration. In each such event, we are required to pay the registration
expenses.
Pursuant to this registration rights agreement and the demand registration rights thereunder,
secondary offerings of our common stock were completed in September 2011, December 2011 and
April 2012 for which affiliates of KKR and of Goldman, Sachs & Co. served as underwriters. Dollar
General did not sell shares of common stock, receive proceeds, or pay any underwriting fees in
connection with any of these secondary offerings, but paid resulting aggregate expenses of
approximately $0.8 million in connection with the September and December 2011 secondary offerings
and expects to pay resulting aggregate expenses of approximately $0.4 million with respect to the April
2012 offering. Certain members of our management, including certain of our executive officers,
exercised registration rights in connection with such offerings.
As part of an overall Board-authorized share repurchase program, concurrent with the closing
of the December 2011 secondary offering and pursuant to a Share Repurchase Agreement between
Dollar General and Buck Holdings L.P., dated December 4, 2011, Dollar General purchased 4,915,637
shares of Common Stock from Buck Holdings, L.P. for an aggregate purchase price of $185 million, or
$37.635 per share which represents the per share price to the public in the secondary offering less
21