Exhibit 10.16


 


FORM OF


NON-EMPLOYEE DIRECTOR STOCK
OPTION AGREEMENT


 


THIS AGREEMENT (the “Agreement”) is made effective as of [ · ], 2009 (the “Grant Date”), between Dollar
General Corporation, a Tennessee corporation (hereinafter called the “Company”),
and [                ],
hereinafter referred to as the “Optionee.”  Capitalized terms not otherwise defined
herein shall have the same meanings as in the Amended and Restated 2007 Stock
Incentive Plan for Key Employees of Dollar General Corporation and its Affiliates,
as amended from time to time (the “Plan”), the terms of which are hereby
incorporated by reference and made a part of this Agreement.


 


WHEREAS, the Company desires to grant the Optionee an option to
purchase shares of Common Stock (the “Option”) pursuant to the terms and
conditions of the Plan and this Agreement; and


 


WHEREAS, the committee of the Company’s Board appointed to administer
the Plan (the “Committee”) has determined that it would be to the
advantage and in the best interest of the Company and its shareholders to grant
the Option provided for herein to the Grantee;


 


NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:


 


ARTICLE
I


 


DEFINITIONS


 


Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary.


 


Section 1.1.  
Cause


 


“Cause” shall mean, with respect
to the Optionee: (i) any act of the Optionee involving fraud or
dishonesty, or any willful failure to perform reasonable duties as assigned to
a member of the Board, which failure is not cured within 10 business days after
receipt from the Board of written notice of such failure; (ii) any
material breach by the Optionee of any securities or other law or regulation or
any Company policy governing trading or dealing with stock, securities,
investments or the like, inappropriate disclosure or “tipping” relating to any
stock, securities or investments or the like, (iii) other than as required
by law, the carrying out by the Optionee of any activity, or the Optionee
making any public statement, which prejudices or ridicules the good name and
standing of the Company or its affiliates (including any limited partner of
Parent) or would bring such persons into public contempt or ridicule; (iv) performance
of services to the Company in a state of intoxication or the Optionee otherwise
being found in possession at the Optionee’s place of work (whether for the
Company or any employer of the Optionee) of any prohibited drug or substance,
possession of which would amount to a criminal 


 

















 


offense; (v) any assault or other
act of violence by the Optionee; or (vi) the Optionee being indicted for
any crime constituting (x) any felony whatsoever or (y) any
misdemeanor that would preclude employment under the Company’s hiring policy.


 


Section 1.2.  
Disability


 


“Disability” shall have the meaning as provided under Section 409A(a)(2)(C)(i) of
the Code.


 


Section 1.3.  
Option


 


“Option” shall mean the Option to purchase shares of Common Stock
granted under Section 2.1 of this Agreement.


 


ARTICLE
II


 


GRANT
OF OPTION


 


Section 2.1.  
Grant of Option


 


Subject to Section 2.4, on and as of the date hereof, the Company
irrevocably grants to the Optionee an Option to purchase any part or all of an
aggregate of the number of shares set forth on Schedule A
hereof of its Common Stock upon the terms and conditions set forth in this
Agreement.


 


Section 2.2.  
Exercise Price


 


Subject to Section 2.4, the exercise price of the shares of Common
Stock covered by the Option shall be the price per share set forth on Schedule A hereof as the “Exercise Price” (which is
the Fair Market Value per share of the Common Stock on the Grant Date).


 


Section 2.3.  
Optionee’s Continued Service on the Board


 


Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Optionee guarantees that the Optionee will continue
to serve as a member of the Board for any specified period of time.


 


Section 2.4.  
 Adjustments to Option


 


The Option shall be subject to the adjustment
provisions of Section 9 of the Plan, provided, however, that
in the event of the payment of an extraordinary dividend by the Company to its
shareholders, then the Exercise Price of the Option shall be reduced by the
amount of the dividend paid, but only to the extent the Committee determines it
to be permitted under applicable tax laws and to not have adverse tax
consequences to the Optionee under Section 409A of the Code; and, if such
reduction cannot be fully effected due to such tax laws and it will not have
adverse tax consequences to the Optionee, then the Company shall pay to the Optionee
a cash payment, on a per Share basis, equal to the balance of the amount of the
dividend not permitted to be applied to reduce the Exercise Price of the
applicable Option as 


 

















 


follows: (a) for each Share subject to a vested
Option, immediately upon the date of such dividend payment; and (b), for each
Share subject to an unvested Option, on the date on which such Option becomes
vested and exercisable with respect to such Share.


 


ARTICLE
III


 


PERIOD
OF EXERCISABILITY


 


Section 3.1.  
Exercisability of Option


 


(a)           So long as the Optionee continues to
be a member of the Board, the Option shall become exercisable pursuant to the
following schedule:


 


	
  Date Option

  Becomes Exercisable

  	
   

  	
  Percentage of

  Shares As to Which

  Option Is Exercisable

  	
   

  
	
  On or after the first anniversary of the Grant Date

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the second anniversary of the Grant Date

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the third anniversary of the Grant Date

  	
   

  	
  75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the fourth anniversary of the Grant Date

  	
   

  	
  100

  	
  %

  



 


(b)         Notwithstanding any of the foregoing, if the Optionee ceases
to serve on the Board at any time by reason of death or Disability that 25%
portion of the Option that would have become exercisable on the next
anniversary date of the Grant Date if the Optionee had continued to serve on
the Board through such date will become vested and exercisable;


 


(c)         Notwithstanding
any of Section 3.1(a) or (b) above, upon the earlier occurrence
of a Change in Control, the Option shall become immediately exercisable as to
100% of the shares of Common Stock subject to such Option immediately prior to
a Change in Control (but only to the extent such Option has not otherwise
terminated or become exercisable);


 


(d)           Notwithstanding the foregoing (but
except as provided in 3.1(b)), if the Optionee’s service on the Board
terminates for any reason, the Option shall not become exercisable as to any
additional shares of Common Stock following the cessation of such service and
any Option, which is unexercisable as of such date, shall be immediately
cancelled without payment therefor.


 

















 


Section 3.2.  
Expiration of Option


 


The Optionee may not exercise any vested portion of the Option to any
extent after the first to occur of the following events:


 


(a)           The tenth anniversary of the Grant
Date; or


 


(b)           The first anniversary of the date the
Optionee ceases to be a member of the Board by reason of death or Disability
(unless earlier terminated as provided in Section 3.2(e) below);


 


(c)            Immediately
upon the date the Optionee ceases to be a member of the Board for Cause;


 


(d)           Ninety (90) days after the date the
Optionee ceases to be a member of the Board for any reason other than as
provided in Section 3.2(b) or (c) above; or


 


(e)           At
the discretion of the Company, if
the Committee so determines pursuant to Section 9 of the Plan.


 


ARTICLE
IV


 


EXERCISE
OF OPTION


 


Section 4.1.  
Person Eligible to Exercise


 


During the lifetime of the Optionee, only the Optionee (or his or her
duly authorized legal representative) may exercise an Option or any portion
thereof.  After the death of the
Optionee, any exercisable portion of an Option may, prior to the time when an
Option becomes unexercisable under Section 3.2, be exercised by his or her
personal representative or by any person empowered to do so under the Optionee’s
will or under the then applicable laws of descent and distribution.


 


Section 4.2.  
Partial Exercise


 


Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section 3.2;
provided, however, that any partial exercise shall be for whole
shares of Common Stock only.


 


Section 4.3.  
Manner of Exercise


 


An Option, or any exercisable portion thereof, may be exercised solely
by delivering to the Secretary or his or her designee all of the following
prior to the time when the Option or such portion becomes unexercisable under Section 3.2:


 

















 


(a)           Notice in writing signed by the
Optionee or the other person then entitled to exercise the Option or portion
thereof, stating that the Option or portion thereof is thereby exercised, such
notice complying with all applicable rules established by the Committee;


 


(b)           (i) Full payment (in cash, by
check or by a combination thereof) of the Option exercise price for the shares
identified in Section 4.3(a) above, with respect to which such Option
or portion thereof is exercised or
(ii) indication that the Optionee elects to have the number of shares that
would otherwise be issued to the Optionee reduced by a number of shares having
an equivalent Fair Market Value to the payment that would otherwise be made by
Optionee to the Company pursuant to clause (i) of this subsection (b);
provided, that for the
avoidance of doubt, full payment is deemed made if the Company receives cash in
respect of the Option exercise price within three business days following the
date on which the Option is exercised in the event of a cashless exercise;


 


(c)           A bona fide written representation
and agreement, in a form satisfactory to the Committee, signed by the Optionee
or other person then entitled to exercise such Option or portion thereof,
stating that the shares of Common Stock are being acquired for his own account,
for investment and without any present intention of distributing or reselling
said shares or any of them except as may be permitted under the Securities Act
of 1933, as amended (the “Act”), and then applicable rules and
regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability resulting
to the Company if any sale or distribution of the shares by such person is contrary
to the representation and agreement referred to above; provided, however, that
the Committee may, in its reasonable discretion, take whatever additional
actions it deems reasonably necessary to ensure the observance and performance
of such representation and agreement and to effect compliance with the Act and
any other federal or state securities laws or regulations; and


 


(d)           In the event the Option or portion
thereof shall be exercised pursuant to Section 4.1 by any person or
persons other than the Optionee, appropriate proof of the right of such person
or persons to exercise the Option.


 


Without limiting the generality of the foregoing, the Committee may
require an opinion of counsel acceptable to it to the effect that any
subsequent transfer of shares acquired on exercise of an Option does not
violate the Act, and may issue stop-transfer orders covering such shares.  Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of subsection (c) above and the agreements herein. The written
representation and agreement referred to in subsection (c) above shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Act, and such registration is then effective in
respect of such shares.


 


Section 4.4.  
Conditions to Issuance of Stock Certificates


 


The shares of Common Stock deliverable upon the exercise of an Option,
or any portion thereof, may be either previously authorized but unissued shares
or issued shares, which have then been reacquired by the Company.  Such shares shall be fully paid and
nonassessable.  The Company shall not be
required to issue or deliver any certificate or certificates for shares of 


 

















 


Common Stock purchased upon the exercise of an
Option or portion thereof prior to fulfillment of all of the following
conditions:


 


(a)           The obtaining of approval or other
clearance from any state or federal governmental agency which the Committee
shall, in its reasonable and good faith discretion, determine to be necessary
or advisable; and


 


(b)           The lapse of such reasonable period
of time following the exercise of the Option as the Committee may from time to
time establish for reasons of administrative convenience or as may otherwise be
required by applicable law.


 


Section 4.5.  
Rights as Shareholder


 


Except as otherwise provided in Section 2.4 of this Agreement, the
holder of an Option shall not be, nor have any of the rights or privileges of,
a shareholder of the Company in respect of any shares of Common Stock
purchasable upon the exercise of the Option or any portion thereof unless and
until a certificate or certificates representing such shares shall have been
issued by the Company to such holder or, if the Common Stock is listed on a
national securities exchange, a book entry representing such shares has been
made by the registrar of the Company.


 


ARTICLE
V


 


MISCELLANEOUS


 


Section 5.1.  
Administration


 


The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules.  All actions taken
and all interpretations and determinations made by the Committee shall be final
and binding upon the Optionee, the Company and all other interested
persons.  No member of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Option.  In its absolute discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement.


 


Section 5.2.  
Option Not Transferable


 


Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.


 

















 


Section 5.3.  
Notices


 


Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary or designee, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto.  By a
notice given pursuant to this Section 5.3, either party may hereafter
designate a different address for notices to be given to him.  Any notice, which is required to be given to
the Optionee, shall, if the Optionee is then deceased, be given to the Optionee’s
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.3.  Any notice shall have been deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.


 


Section 5.4.  
Titles; Pronouns


 


Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.  The masculine pronoun shall include the
feminine and neuter, and the singular the plural, where the context so
indicates.


 


Section 5.5.  
Applicability of Plan


 


The Option and the shares of Common Stock issued to the Optionee upon
exercise of the Option shall be subject to all of the terms and provisions of
the Plan, to the extent applicable to the Option and such shares.  In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control.


 


Section 5.6.  
Amendment


 


Subject to Section 10 of the Plan, this Agreement may be amended
only by a writing executed by the parties hereto, which specifically states
that it is amending this Agreement.


 


Section 5.7.  
Governing Law


 


The laws of the State of Delaware shall
govern the interpretation, validity and performance of the terms of this
Agreement regardless of the law that might be applied under principles of
conflicts of laws.


 


Section 5.8.  
Arbitration


 


In
the event of any controversy among the parties hereto arising out of, or
relating to, this Agreement which cannot be settled amicably by the parties,
such controversy shall be finally, exclusively and conclusively settled by
mandatory arbitration conducted expeditiously in accordance with the American
Arbitration Association rules, by a single independent arbitrator.  Such arbitration process shall take place
within the Nashville, Tennessee metropolitan area.  The decision of the arbitrator shall be final
and binding upon all parties hereto and shall be rendered pursuant to a written
decision, which contains a detailed recital of the arbitrator’s reasoning.  Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.


 

















 


Each party shall bear its own legal fees and
expenses, unless otherwise determined by the arbitrator.


 


Section 5.9.  
Taxes


 


The Optionee shall have full responsibility,
and the Company shall have no responsibility, for satisfying any liability for
any federal, state or local income or other taxes required by law to be paid
with respect to the exercise of the Option. 
The Optionee is hereby advised to seek his or her own tax counsel
regarding the taxation of the exercise of the Option hereunder.


 


Section 5.10.  
Signature in Counterparts


 


This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.


 


[Signatures on next page.]


 

















 


[Signature page to
IPO Stock Option Agreement]


 


IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.


 


	
   

  	
  DOLLAR GENERAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  
				



 

















 


Schedule A


 


	
  Exercise Price:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Aggregate number of shares
  of Common Stock for which the Option is granted: