Dollar General 2010 Annual Report Download - page 30

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releasing them from the transfer restrictions contained in the Management Stockholder’s Agreements
after the expiration of the 180-day restricted period contained in the underwriting agreement with
respect to that number of shares of our common stock equal to the number of shares of our common
stock that such Senior Management Shareholders could have required us to register in connection with
our initial public offering.
In connection with his promotion to Executive Vice President in April 2010, Mr. Flanigan was
offered the opportunity, and elected, to purchase 5,388 shares of Dollar General common stock under
our 2007 Stock Incentive Plan. The shares were purchased at a per share price that equaled the closing
price of our common stock on the NYSE on the effective date of purchase ($29.38), for an aggregate
purchase price of $158,299. Without such purchase, the stock options granted to Mr. Flanigan in March
2010, as disclosed in the Grants of Plan-Based Awards table under ‘‘Executive Compensation’’ below,
would not be eligible to become exercisable. The shares purchased by Mr. Flanigan are subject to
certain transfer limitations and repurchase rights by Dollar General as set forth in a Management
Stockholder’s Agreement between us and Mr. Flanigan.
Interlocks. Mr. Dreiling serves as a manager of Buck Holdings, LLC for which
Messrs. Calbert, Agrawal and Jones (three of our Compensation Committee members) serve as
managers.
Relationships with the Investors. In connection with our initial public offering in November
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 the 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.
On July 6, 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 the sponsor advisory agreement entered into between us and such
parties in connection with our 2007 merger (which agreement was terminated in connection with our
initial public offering in November 2009).
In connection with our 2007 merger, we entered into a registration rights agreement with Buck
Holdings, L.P., Buck Holdings, LLC (the general partner of Buck Holdings, L.P.), 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 commencing 180 days after our initial public offering in November
2009. Pursuant to such demand registration rights, we are required to register the shares of common
stock beneficially owned by them through Buck Holdings L.P. with the SEC 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
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