Document:

Exhibit 4.38

 

SUPPLEMENT NO. 2 TO THE

SECURITY AGREEMENT (ABL)

 

SUPPLEMENT NO. 2 dated as of
December 31, 2007, to the Security Agreement dated as of July 6, 2007,
as previously supplemented (the “Security Agreement”), among Dollar
General Corporation, a Tennessee corporation (the “Parent Borrower”), each subsidiary of the Parent Borrower party to the Credit
Agreement (as defined below) (each such subsidiary, a “Subsidiary Borrower”
together with the Parent Borrower, the “Borrowers”) and each subsidiary
of the Parent Borrower that became a party thereto pursuant to Section 8.13
of the Security Agreement) (each such subsidiary individually a “Subsidiary Grantor” and, collectively, the “Subsidiary Grantors”;
the Subsidiary Grantors, the Subsidiary Borrowers and the Parent Borrower are
referred to collectively herein as the “Grantors”), and
The CIT Group/Business Credit, Inc. (“CIT”), as collateral agent
(in such capacity, the “Collateral
Agent”) under the
Credit Agreement referred to below.

 

A.            Reference is made to that
certain ABL Credit Agreement, dated as of July 6, 2007 (as the same may be
amended, restated, supplemented or otherwise modified, refinanced or replaced
from time to time, the “Credit Agreement”) among the Parent Borrower, the
Subsidiary Borrowers, the lenders or other financial institutions or entities
from time to time party thereto (the “Lenders”), The CIT Group/Business
Credit, Inc. (“CIT”), as Administrative Agent and Collateral Agent.

 

B.            Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Security Agreement.

 

C.            The Grantors have entered
into the Security Agreement in order to induce the Administrative Agent, the
Collateral Agent, the Letter of Credit Issuer,  and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make the Loans to the Borrowers and the
Letter of Credit Issuer to issue Letters of Credit under the Credit Agreement
and to induce one or more Cash Management Banks and Hedge Banks to enter into Secured
Cash Management Agreements and Secured Hedge Agreements with the Borrowers
and/or their respective Subsidiaries.

 

D.            Section 9.11 of the
Credit Agreement and Section 8.13 of the Security Agreement provide that
each Subsidiary of the Parent Borrower that is required to become a party to
the Security Agreement pursuant to Section 9.11 of the Credit Agreement
shall become a Grantor, with the same force and effect as if originally named
as a Grantor therein, for all purposes of the Security Agreement upon execution
and delivery by such Subsidiary of an instrument in the form of this
Supplement.  Each undersigned Subsidiary
(each a “New Grantor”) is executing this Supplement in accordance with
the requirements of the Security Agreement to become a Subsidiary Grantor or
Subsidiary Borrower under the Security Agreement in order to induce the Lenders
to make additional Loans and the Letter of Credit Issuer to issue Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.

 

 

Accordingly, the Collateral
Agent and the New Grantors agree as follows:

 

SECTION 1.        In accordance with Section 8.13
of the Security Agreement, each New Grantor by its signature below becomes a
Grantor under the Security Agreement with the same force and effect as if
originally named therein as a Grantor and each New Grantor hereby (a) agrees
to all the terms and provisions of the Security Agreement applicable to it as a
Grantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Grantor thereunder are true and correct on and
as of the date hereof.  In furtherance of
the foregoing, each New Grantor, as security for the payment and performance in
full of the Obligations, does hereby bargain, sell, convey, assign, set over,
mortgage, pledge, hypothecate and transfer to the Collateral Agent for the benefit
of the Secured Parties, and hereby grants to the Collateral Agent for the benefit
of the Secured Parties, a security interest in all of the Collateral of such
New Grantor, in each case whether now or hereafter existing or in which it now
has or hereafter acquires an interest. 
Each reference to a “Grantor” in the Security Agreement shall be deemed
to include each New Grantor.  The
Security Agreement is hereby incorporated herein by reference.

 

SECTION 2.        Each New Grantor represents
and warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to the effects of bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and general equitable
principles.

 

SECTION 3.        This Supplement may be executed
by one or more of the parties to this Supplement on any number of separate
counterparts (including by facsimile or other electronic transmission), and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.  A set of the copies of
this Supplement signed by all the parties shall be lodged with the Collateral
Agent and the Parent Borrower.  This
Supplement shall become effective as to each New Grantor when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of such New Grantor and the Collateral Agent.

 

SECTION 4.        Such New Grantor hereby
represents and warrants that set forth on Schedule I hereto is (i) the
legal name of such New Grantor, (ii) the jurisdiction of incorporation or
organization of such New Grantor, (iii) the identity or type of
organization or corporate structure of such New Grantor and (iv) the
Federal Taxpayer Identification Number and organizational number of such New
Grantor.

 

SECTION 5.        Except as expressly
supplemented hereby, the Security Agreement shall remain in full force and
effect.

 

SECTION 6.       THIS SUPPLEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

 

SECTION 7.        Any provision of this
Supplement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof and in the Security
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.  The parties hereto shall endeavor
in good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 8.        All notices, requests and
demands pursuant hereto shall be made in accordance with Section 13.2 of
the Credit Agreement.  All communications
and notices hereunder to each New Grantor shall be given to it in care of the Parent
Borrower at the Parent Borrower’s address set forth in Section 13.2 of the
Credit Agreement.

 

 

IN WITNESS WHEREOF, each New
Grantor and the Collateral Agent have duly executed this Supplement to the
Security Agreement as of the day and year first above written.

 

	
   

  	
  RETAIL RISK SOLUTIONS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Dollar General Corporation, Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Wade Smith

  
	
   

  	
   

  	
   

  	
  Wade Smith, Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  CIT GROUP/BUSINESS CREDIT, INC., as

  
	
   

  	
  Collateral
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adrian Avalos

  	
   

  
	
   

  	
   

  	
  Name:   Adrian Avalos

  
	
   

  	
   

  	
  Title:     Vice President

  
					

 

 

SCHEDULE I

TO SUPPLEMENT NO. 2 TO THE

SECURITY AGREEMENT

 

COLLATERAL

 

	
  Legal Name

  	
   

  	
  Jurisdiction of

  Incorporation or

  Organization

  	
   

  	
  Type of

  Organization or

  Corporate

  Structure

  	
   

  	
  Federal Taxpayer

  Identification

  Number and

  Organizational

  Identification

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NONEExhibit 10.28

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”), effective as of January 11,
2008, is made and entered into by and between DOLLAR
GENERAL CORPORATION (the “Company”) and Richard Dreiling (“Executive”).

 

W
I T N E S S E T H:

 

WHEREAS, the Company desires to employ Executive upon the terms and
subject to the conditions hereinafter set forth, and Executive desires to
accept such employment;

 

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

 

1.             Effective Date.  This
Agreement is effective as of the date first above written, but Executive shall
commence employment with the Company on January 21, 2008 (the “Effective
Date”).

 

2.             Employment; Term.  Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive as Chief Executive Officer of
Dollar General Corporation.  The term of
this Agreement shall begin on the Effective Date and shall continue until the
fifth anniversary of the Effective Date, on the terms and subject to the
conditions set forth in this Agreement; provided, however, that
commencing with the fifth anniversary of the Effective Date and on each such
successive anniversary thereof (each an “Extension Date”), the Executive’s
period of employment hereunder shall be automatically extended for an
additional one-year period, unless the Company or Executive provides the other
party hereto 60 days prior written notice before the next Extension Date that
the period of employment shall not be so extended.  The initial five-year period of employment as
may be extended hereunder shall be the “Term.”

 

3.             Position, Duties and Administrative Support.

 

a.             Position.  While employed hereunder, Executive shall
serve as Chief Executive Officer, and while so employed will also serve as a
member of the Board of Directors of the Company (the “Board”).  In such position, Executive shall be the most
senior executive of the Company and all other senior executives of the Company
(including the President of the Company) shall report to Executive.  Executive shall report to the Board and
perform such duties and responsibilities as may be prescribed from time to time
by the Board, which shall be consistent with the responsibilities of chief
executive officers of comparable companies in similar lines of business. The
Company intends to appoint Executive to serve as Chairman of the Board by no
later than the first anniversary of the Effective Date.  Any such Board service shall be without
additional compensation.

 

b.             Full-Time
Efforts.  Executive shall perform and
discharge faithfully, diligently and to the best of his ability such duties and
responsibilities and shall devote his full business-time and efforts to the
business and affairs of the Company. Executive agrees to promote the best
interests of the Company.

 

 

c.             Administrative
Support.  Executive shall be provided
with office space and administrative support commensurate with his position as
Chief Executive Officer of the Company.

 

d.             No
Interference With Duties.  Executive
shall not devote time to other activities which would inhibit or otherwise
interfere with the proper performance of Executive’s duties and shall not be
directly or indirectly concerned or interested in any other business
occupation, activity or interest other than by reason of holding a
non-controlling interest as a shareholder, securities holder or debenture
holder in a corporation quoted on a nationally recognized exchange (subject to
any limitations in the Company’s Code of Business Conduct and Ethics).  Executive may not serve as a member of a
board of directors of a for-profit company, other than the Company or any of
its subsidiaries or affiliates, without the express approval of the Board of
Directors; provided, however, that it shall not be a violation of
this Agreement for Executive to manage personal business interests and
investments and to engage in charitable and civic activities, so long as such
activities do not interfere with the performance of Executive’s
responsibilities under this Agreement.

 

4.             Work Standard.  Executive hereby agrees that he shall at all
times comply with and abide by all terms and conditions set forth in this
Agreement, and all applicable work policies, procedures and rules as may
be issued by the Company.  Executive also
agrees that he shall comply with all federal, state and local statutes, regulations
and public ordinances governing the performance of his duties hereunder.

 

5.             Compensation and Benefits.

 

a.             Base
Salary.  Subject to the terms and
conditions set forth in this Agreement, so long as Executive is employed
hereunder, the Company shall pay Executive, and Executive shall accept, an
annual rate of base salary (“Base Salary”) in the amount of One Million
Dollars ($1,000,000.00) for pay periods beginning on or after the Effective
Date.  The Base Salary shall be paid in
accordance with the Company’s normal payroll practices and may be increased
(and not decreased) from time to time at the sole discretion of the Board, and
each such increase (if any) shall thereafter be regarded as Executive’s “Base
Salary” for all purposes under this Agreement.

 

b.             Annual
Bonus.  With respect to each full
fiscal year of the Company occurring during the Term, commencing with the 2008
fiscal year of the Company, Executive shall be eligible to earn an annual bonus
award (the “Annual Bonus”) in a target amount equal to 100% of his Base
Salary (the “Target Bonus”), based upon the achievement by the Company
of annual performance targets established by the Board within the first three (3) months
of each fiscal year occurring during the Term and payable within two and
one-half (2-1/2) months after the last day of the performance year or such
other date as is provided under the applicable Annual Bonus plan and conforms
to the requirements of Section 409A of the Internal Revenue Code of 1986,
as amended (“Code”).  As the
actual amount payable to Executive as an Annual Bonus will be dependent upon
the achievement of performance goals referred to in this Section 5(b),
Executive’s actual Annual Bonus may be less than, greater than or equal to the
Target Bonus; provided, that Executive shall be eligible for an Annual
Bonus of 50% of Executive’s Base Salary (the “Threshold Bonus”) upon
attainment of minimum annual performance targets and up

 

 

to not less than 200% of Executive’s Base
Salary upon exceeding the performance targets (the “Maximum Bonus”).  In respect of the 2008 fiscal year, Executive
is guaranteed a payment of the Threshold Bonus. In respect of the 2007 fiscal
year, Executive shall be eligible to earn an Annual Bonus equal to the product
of (i) the amount (whether the Threshold Bonus, Target Bonus, Maximum
Bonus, or some amount between any of the foregoing), if any, that Executive
would have received if he had been employed with the Company in the position
identified in Section 3(a) above during the entire 2007 fiscal year
of the Company, multiplied by (ii) a fraction, the numerator of which is
the number of days during which Executive was employed by the Company in fiscal
year 2007, and the denominator of which is 365.

 

c.             Signing
Bonus.  The Company shall pay to
Executive a cash signing bonus of $2,000,000 within 30 days following the
Effective Date (the “Signing Bonus”).

 

d.             Equity
Grants.

 

(i)            Options.  Executive shall receive the grant of an
option to acquire 2,500,000 authorized shares or outstanding treasury shares of
the Company’s common stock (“Common Stock”), at an exercise price equal
to $5.00 per share (the “Option”) in accordance with the 2007 Stock
Incentive Plan for Key Executives of Dollar General Corporation and its
Subsidiaries and Affiliates (the “Plan”), having a term of ten (10) years
and vesting (A) as to 1,250,000 shares at the rate of 250,000 shares per
fiscal year for each of the fiscal years 2007 through 2011 and (B) as to
the other 1,250,000 shares upon the attainment of certain performance targets
during the fiscal years 2007 through 2011 (or cumulatively).

 

(ii)           Restricted
Stock.  The Company shall grant to
Executive on the Effective Date 890,000 shares of restricted Common Stock
pursuant to the Plan (“Restricted Stock”), which Restricted Stock shall
vest 100% upon the earliest to occur of (1) a Change in Control (as
defined in the Equity Documents), (2) an initial Public Offering (as
defined in the Equity Documents), (3) Executive’s termination of
employment without Cause (as defined below) by the Company or due to his death
or Disability (as defined below) or by Executive for Good Reason (as defined
below) and (4) the last day of the Company’s 2011 fiscal year.  Except as otherwise provided herein, all
unvested restricted stock shall be forfeited upon Executive’s termination of
employment with the Company prior to the occurrence of any of the foregoing
vesting events, unless the Company and Executive otherwise agree in writing.

 

(iii)          Equity
Documents.  The foregoing equity
arrangements shall be governed by the terms and conditions of certain
documents, including a Management Stockholder’s Agreement, the Plan, Stock
Option Agreement, Restricted Stock Award Agreement, Sale Participation
Agreement, and Registration Rights Agreement, in the forms attached hereto as
Exhibits A, B, C, D, E and F (collectively, the “Equity Documents”).
Terms not defined herein shall be as defined in the Equity Documents.  In the event of any inconsistency between (A) any
of this Agreement, the Stock Option Agreement or Restricted Stock Award
Agreement and (B) the Plan, this Agreement, the Stock Option Agreement or
Restricted Stock Award Agreement, as the case may be, shall govern.

 

 

e.             Incentive,
Savings and Retirement Plans.  During
the Term, Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
senior executive officers of the Company (“Peer Executives”), and on the
same basis as such Peer Executives, except as to benefits that are specifically
applicable to Executive pursuant to this Agreement.

 

f.              Welfare
Benefit Plans.  During the Term,
Executive and Executive’s eligible dependents shall be eligible for
participation in, and shall receive all benefits under, the welfare benefit
plans, practices, policies and programs provided by the Company (including,
without limitation, medical, prescription, dental, disability, Executive life,
group life, accidental death and travel accident insurance plans and programs)
(“Welfare Plans”) to the extent applicable generally to Peer
Executives.  The Company shall pay the
premiums required to continue the long-term disability insurance coverage for
Executive under Executive’s existing portable long-term disability insurance
policy.

 

g.             Vacation.  Upon the Effective Date and each anniversary
thereafter for so long as Executive is employed hereunder, Executive shall be
granted four (4) weeks’ paid vacation.

 

h.             Business
Expenses.  Executive shall be
reimbursed for all reasonable business expenses incurred in carrying out the
work hereunder. Executive shall follow the Company’s expense procedures that
generally apply to other Company Executives in accordance with the policies,
practices and procedures of the Company to the extent applicable generally to
Peer Executives.  The Company shall pay Executive’s
legal fees incurred to negotiate and prepare this Agreement and the Equity
Documents (up to $35,000), “grossed up” for all federal and state income and
employment taxes (and for such taxes on such gross-up payment), to the extent
any such amount is taxable to Executive, no later than the end of the
applicable calendar year in which the expenses were incurred.

 

i.              Perquisites.  Executive shall be entitled to receive such
executive perquisites, fringe and other benefits as are provided to Peer
Executives and their families under any of the Company’s plans and/or programs
in effect from time to time and such other benefits as are customarily
available to executives of the Company and their families.  Perquisites shall include up to nine round
trips annually (at a frequency of not more than one round trip per six weeks)
of personal use for Executive and his spouse of the Company’s plane for travel
to and from the Company’s headquarters and Executive’s primary residence in
California (any income from which shall be imputed to Executive at SIFL rates
in accordance with Treasury Regulation Section 1.61-21(g)(5)).  During the Term, the Company shall pay on
behalf of the Executive, the monthly membership fees and costs related to
Executive’s membership in professional clubs selected by Executive.  To the extent the Company’s payment or
reimbursement of Executive’s expenses in relation to his professional club
memberships are required to be included in the Executive’s income for income
tax purposes or as wages for employment tax purposes, the Company will pay to
the Executive an amount necessary to “gross-up” Executive for state and federal
income and employment tax purposes (and for such taxes on such gross-up
payment), which gross-up amount shall be paid to Executive no later than the
end of the applicable calendar year in which the expenses were incurred.

 

 

j.              Moving
Expenses.  The Company will reimburse
Executive for reasonable and customary relocation expenses (as described on
Schedule A attached to this Agreement) directly related to Executive’s
relocation from the New York metropolitan area to the Nashville, Tennessee
area.  To the extent the Company’s
payment or reimbursement of such expenses are required to be included in the
Executive’s income for income tax purposes or as wages for employment tax
purposes, the Company will pay to the Executive an amount necessary to “gross
up” Executive for state and federal income and employment tax purposes (and for
such taxes on such gross-up payment), which gross up amount shall be paid to
Executive no later than the end of the applicable calendar year in which the
expenses were incurred.

 

6.             Termination for Cause.  This Agreement may be terminated immediately
at any time by the Company without any liability owing to Executive or
Executive’s beneficiaries under this Agreement, except Base Salary through the
date of termination and benefits under any plan or agreement covering Executive
which shall be governed by the terms of such plan or agreement, under the
following conditions, each of which shall constitute “Cause” or “Termination
for Cause”:

 

a.             Any
act (other than a de minimis act) of fraud or dishonesty in connection with
Executive’s performance of his duties;

 

b.             Any
material breach of any securities or other law or regulation or any Company
policy governing trading or dealing with stocks, securities, investments and
the like or with inappropriate disclosure or “tipping” relating to any stock,
security or investment;

 

c.             Other
than as required by law, the carrying out of any activity or the making of any
public statement which prejudices or reduces the good name and standing of the
Company or any of its affiliates (including any limited partner of any parent entity
of the Company) or would bring any one of these into public contempt or
ridicule;

 

d.             Attendance
at work in a state of intoxication or being found with any drug or substance
possession of which would amount to a criminal offense;

 

e.             Assault
or other act of violence; or

 

f.              Conviction
of or plea of guilty or nolo contendere to
a crime constituting (i) any felony whatsoever or (ii) any
misdemeanor that would prelude employment under the Company’s hiring policy.

 

A termination
for Cause shall be effective when the Company has given Executive written
notice of its intention for Cause, describing those acts or omissions that are
believed to constitute Cause, and has given Executive an opportunity to
respond.

 

7.             Termination Upon Death.  Notwithstanding anything herein to the
contrary, this Agreement shall terminate immediately upon Executive’s death,
and the Company shall have no further liability to Executive or his
beneficiaries under this Agreement, other than for payment of Accrued
Obligations (as defined in Section 9(a)(i)), the timely payment or
provision of Other Benefits (as defined in Section 9(a)(vi)), including
without limitation benefits under such plans,

 

 

programs, practices and policies relating to
death benefits, if any, as are applicable to Executive on the date of his
death, and for any rights of indemnification set forth in this Agreement.

 

8.             Disability.

 

a.             If
the Company determines in good faith that the Disability of Executive has
occurred during the Term (pursuant to the definition of Disability set forth
below), the Company may give to Executive written notice of its intention to
terminate Executive’s employment.  In
such event, Executive’s employment with the Company shall terminate effective
on the date provided in such notice (the “Disability Effective Date”).  If Executive’s employment is terminated by
reason of his Disability, this Agreement shall terminate without further
obligations to Executive, except that the Company shall provide Executive with
the following: (a) payment of Accrued Obligations (as defined in Section 9(a)(i));
(b) the payment or provision of Other Benefits (as defined in Section 9(a)(vi)),
including without limitation benefits under such plans, programs, practices and
policies relating to disability benefits, if any, as are applicable to
Executive on the Disability Effective Date; (c) a lump sum payment, in
cash, payable at such time as annual bonuses are paid to other senior
executives of the Company, of a pro-rata portion of the Annual Bonus, if any,
that Executive would have been entitled to receive pursuant to Section 5(b) hereof
for the fiscal year of termination, if such termination had not occurred (for
which Executive shall be deemed to have satisfied at a Target Bonus level any
subjective performance goals thereunder), multiplied by a fraction, the
numerator of which is the number of days during which Executive was employed by
the Company in the fiscal year of Executive’s termination, and the denominator
of which is 365 (the “Pro-Rata Bonus”); and (d) for any rights of
indemnification set forth in this Agreement.

 

b.             For
purposes of this Agreement, “Disability” shall mean: (i) a
long-term disability entitling Executive to receive benefits under the Company’s
long-term disability plan as then in effect or under Executive’s portable
long-term disability insurance policy; or (ii) if no such plan or
Executive’s portable long-term disability insurance policy is then in effect
or, in the case of the plan, the plan is in effect but does not apply to
Executive, Executive’s inability to perform the duties under this Agreement in
accordance with the Company’s expectations because of a medically determinable
physical or mental impairment that (x) can reasonably be expected to
result in death or (y) has lasted or can reasonably be expected to last
longer than ninety (90) consecutive days. 
Under this Section 8, unless otherwise required by law, the
existence of a Disability shall be determined by the Company, only upon receipt
of a written medical opinion from a qualified physician selected by or
acceptable to the Company.  In this
circumstance, to the extent permitted by law, Executive shall, if reasonably
requested by the Company, submit to a physical examination by that qualified
physician. Nothing in this Section 8 is intended to nor shall it be deemed
to broaden or modify the definition of “disability” in the Company’s long-term
disability plan.

 

9.             Termination by the Company without Cause or by
Executive for Good Reason.   If Executive’s employment is terminated by the Company without Cause or
by Executive for Good Reason (as defined below) prior to the expiration of the
Term (it being understood by the parties that termination by death or
Disability shall not constitute a termination without Cause), then Executive shall
be entitled to the following benefits upon the execution and effectiveness of
the Release attached hereto and made a part hereof (the “Release”).  For all purposes under Section 8

 

 

and this Section 9, any payments due to
Executive solely as a result of a termination of his employment that is not a “separation
from service” shall be postponed until the occurrence of a “separation from
service” (or such earlier permitted event) to the extent necessary to satisfy Section 409A
of the Code.

 

a.             On
the later of the date of termination or the execution and effectiveness of the
Release, the Company shall provide Executive with the following:

 

(i)            A lump sum in cash equal to the sum of (A) Executive’s
Base Salary and unused vacation accrued through the date of termination to the
extent not theretofore paid, payable within 30 days after such date, (B) to
the extent earned, but not yet paid, the Annual Bonus accrued in respect of the
previously completed fiscal year of the Company, payable when annual bonuses are
paid to other senior executives of the Company, (C) any expenses but not
theretofore paid, payable in accordance with applicable Company expense
reimbursement policy, and (D) unless Executive has elected a different
payout date in a prior deferral election, any compensation previously deferred
by Executive (together with any accrued interest or earnings thereon) to the
extent not theretofore paid, payable in accordance with the terms thereof, (the
sum of the amounts described in subsections (A), (B), (C) and (D) shall
be referred to in this Agreement as the “Accrued Obligations”);

 

(ii)           Payment
in installments ratably over twenty-four (24) months after such date in
accordance with the Company’s normal payroll cycle and procedures, with the
first such payment on the first such payroll date after the effective date of
the Release, an amount equal to the product of (x) two (2) multiplied
by (y) the sum of (A) Executive’s annual Base Salary in effect as of
the date of termination, and (B) Executive’s Target Bonus;

 

(iii)          A
Pro-Rata Bonus;

 

(iv)          Benefits,
on the same basis as provided to senior executives of the Company who are
actively employed during the Severance Period (as defined below) under the
Company’s group health plans, to Executive, his spouse and eligible dependents
(to the extent covered immediately prior to such termination) until the earlier
of (x) two years from the date of termination of Executive’s employment
(the “Severance Period”), to the extent that Executive was eligible to
participate in such plans immediately prior to the date of termination, or (y) until
Executive is, or becomes, eligible for comparable coverage (determined on a
coverage-by-coverage basis) under the group health plans of a subsequent
employer.  The COBRA health care continuation
coverage period under Section 4980B of the Code, or any replacement or
successor provision of United States tax law, shall run concurrently with the
Severance Period;

 

(v)           Outplacement
services, provided by the Company, with a senior executive-level outplacement
firm, for one year after such date or until other employment is secured,
whichever comes first; and

 

 

(vi)          To
the extent not theretofore paid or provided to Executive any other accrued
amounts or accrued benefits required to be paid or provided or which Executive
is eligible to receive under any plan, program, policy or practice or contract
or agreement of the Company (such other amounts and benefits shall be referred
to in this Agreement as the “Other Benefits”).

 

b.             In
the event that there is a material breach by Executive of any continuing
obligations under this Agreement or the Release after termination of
employment, any unpaid amounts under this Section 9 shall be
forfeited.  Any payments or
reimbursements under this Section 9 shall not be deemed the continuation
of Executive’s employment for any purpose. 
Except as specifically enumerated in the Release, the Company’s payment
obligations under this Section 9 will not negate or reduce (i) any
amounts otherwise due but not yet paid to Executive by the Company, (ii) any
other amounts payable to Executive outside this Agreement, (iii) those
benefits owed under any other plan or agreement covering Executive which shall
be governed by the terms of such plan or agreement or (iv) any amounts due
to Executive under his rights of indemnification hereunder or otherwise.

 

c.             For
purposes of this Agreement, “Good Reason” shall mean:

 

(i)            A reduction by the Company in Executive’s
Base Salary or Target Bonus;

 

(ii)           The
Company shall fail to continue in effect any significant Company-sponsored
compensation plan or benefit (without replacing it with a similar plan or with
a compensation equivalent), unless such action is in connection with
across-the-board plan changes or terminations similarly affecting at least
ninety-five percent (95%) of all executive employees of the Company;

 

(iii)          The Company’s principal executive offices
shall be moved to a location outside the middle-Tennessee area, or Executive is
required to be based anywhere other than the Company’s principal executive
offices;

 

(iv)          Without
Executive’s written consent, the assignment to Executive by the Company of
duties inconsistent with, or the significant reduction of the title, powers and
functions associated with, Executive’s position, titles or offices as described
in Section 3 above;

 

(v)           Any
material breach by the Company of this Agreement; or

 

(vi)          The
failure of any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.

 

Good Reason shall not include Executive’s death, Disability or
Termination for Cause or any isolated, insubstantial and inadvertent failure by
the Company that is not in bad faith and is cured within ten (10) business
days after the Executive gives the Company notice of such event.

 

 

d.             Respecting
all amounts due to Executive under this Section 9 or under Section 10,
Executive shall not be obliged to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement, nor shall the amount of any payment
hereunder be reduced by any compensation earned by the Executive as a result of
employment by another employer, except as specifically set forth in this
Agreement.

 

10.          Non-Renewal of Term.     In the event the Company elects not to extend
the Term pursuant to Section 2, unless Executive’s employment is earlier
terminated pursuant to Sections 6, 7, 8 or 9 of this Agreement, the expiration
of the Term and Executive’s termination of employment hereunder shall occur on
the close of business on the day immediately preceding the next scheduled
Extension Date and Executive shall be entitled to receive the payments and
benefits applicable to an involuntary termination of Executive’s employment
without Cause pursuant to Section 9. 
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

 

11.          Publicity; No Disparaging Statement.  Except as otherwise provided in Section 12
hereof, Executive and the Company covenant and agree that they shall not engage
in any communications to persons outside the Company which shall disparage one
another or interfere with their existing or prospective business relationships.

 

12.          Confidentiality and Legal Process.  Executive agrees to keep the proprietary
terms of this Agreement confidential and to refrain from disclosing any
information concerning this Agreement to anyone other than Executive’s
immediate family and personal agents or advisors.  Notwithstanding the foregoing, nothing in
this Agreement is intended to prohibit Executive or the Company from performing
any duty or obligation that shall arise as a matter of law.  Specifically, Executive and the Company shall
continue to be under a duty to truthfully respond to any legal and valid
subpoena or other legal process.  This
Agreement is not intended in any way to proscribe Executive’s or the Company’s
right and ability to provide information to any federal, state or local agency
in response or adherence to the lawful exercise of such agency’s authority.

 

13.          Business Protection Provision Definitions.

 

a.             Preamble.  As a material inducement to the Company to
enter into this Agreement, and in recognition of the valuable experience,
knowledge and proprietary information Executive has gained or will gain while
employed, Executive agrees to abide by and adhere to the business protection
provisions in Sections 13, 14, 15, 16, 17 and 18 herein.

 

b.             Definitions.  For purposes of Sections 13, 14, 15, 16 and
17 herein:

 

(i)            “Competitive Position” shall mean
any employment, consulting, advisory, directorship, agency, promotional or
independent contractor arrangement between Executive and (x) any person or
Entity engaged wholly or in material part in the business in which the Company
is engaged (i.e., the deep discount consumable basics retail business),
including but not limited to such other similar businesses as Wal Mart, Target,

 

 

K-Mart, Family
Dollar Stores, Fred’s, the 99 Cents Stores, Dollar Tree Stores, Costco, BJ’s
Wholesale Club, Casey’s General Stores, Inc., and Pantry Inc. or (y) any
person or Entity then attempting or planning to enter the deep discount
consumable basics retail business, whereby Executive is required to perform
services on behalf of or for the benefit of such person or Entity which are
substantially similar to the services Executive provided or directed at any
time while employed by the Company or any of its affiliates.

 

(ii)           “Confidential
Information” shall mean the proprietary or confidential data, information,
documents or materials (whether oral, written, electronic or otherwise)
belonging to or pertaining to the Company, other than “Trade Secrets” (as
defined below), which is of tangible or intangible value to the Company and the
details of which are not generally known to the competitors of the
Company.  Confidential Information shall
also include any items marked “CONFIDENTIAL” or some similar designation or
which are otherwise identified as being confidential.

 

(iii)          “Entity” or “Entities”
shall mean any business, individual, partnership, joint venture, agency,
governmental agency, body or subdivision, association, firm, corporation,
limited liability company or other entity of any kind.

 

(iv)          “Restricted Period”
shall mean two (2) years following Executive’s termination date.

 

(v)           “Territory”
shall include those states in which the Company maintains stores at Executive’s
termination date or those states in which the Company has specific and
demonstrable plans to open stores within six months of Executive’s termination
date.

 

(vi)          “Trade Secrets”
shall mean information or data of or about the Company, including, but not
limited to, technical or non-technical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data,
financial plans, product plans or lists of actual or potential customers or
suppliers that:  (A) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; (B) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy; and (C) includes
any other information which is defined as a “trade secret” under applicable
law.

 

(vii)         “Work Product”
shall mean all tangible work product, property, data, documentation, “know-how,”
concepts or plans, inventions, improvements, techniques and processes relating
to the Company that were conceived, discovered, created, written, revised or
developed by Executive while employed by the Company.

 

14.          Nondisclosure: 
Ownership of Proprietary Property.

 

a.             In
recognition of the Company’s need to protect its legitimate business interests,
Executive hereby covenants and agrees that, for the Term and thereafter (as
described below), Executive shall regard and treat Trade Secrets and
Confidential Information as strictly confidential and wholly-owned by the
Company and shall not, for any reason, in any fashion, either directly or
indirectly, use, sell, lend, lease, distribute, license, give, transfer,
assign, show,

 

 

disclose,
disseminate, reproduce, copy, misappropriate or otherwise communicate any Trade
Secrets or Confidential Information to any person or Entity for any purpose
other than in accordance with Executive’s duties under this Agreement or as
required by applicable law. This provision shall apply to each item
constituting a Trade Secret at all times it remains a “trade secret” under
applicable law and shall apply to any Confidential Information, during
employment and for the Restricted Period thereafter.

 

b.             Executive
shall exercise best efforts to ensure the continued confidentiality of all
Trade Secrets and Confidential Information and shall immediately notify the
Company of any unauthorized disclosure or use of any Trade Secrets or
Confidential Information of which Executive becomes aware.  Executive shall assist the Company, to the
extent reasonably requested, in the protection or procurement of any
intellectual property protection or other rights in any of the Trade Secrets or
Confidential Information.

 

c.             All
Work Product shall be owned exclusively by the Company.  To the greatest extent possible, any Work
Product shall be deemed to be “work made for hire” (as defined in the Copyright
Act, 17 U.S.C.A. § 101 et seq., as amended), and Executive hereby
unconditionally and irrevocably transfers and assigns to the Company all right,
title and interest Executive currently has or may have by operation of law or
otherwise in or to any Work Product, including, without limitation, all
patents, copyrights, trademarks (and the goodwill associated therewith), trade
secrets, service marks (and the goodwill associated therewith) and other
intellectual property rights.  Executive
agrees to execute and deliver to the Company any transfers, assignments,
documents or other instruments which the Company may deem necessary or
appropriate, from time to time, to protect the rights granted herein or to vest
complete title and ownership of any and all Work Product, and all associated
intellectual property and other rights therein, exclusively in the Company.

 

15.          Non-Interference with Executives.  Through the Term and thereafter throughout
the Restricted Period, Executive will not, either directly or indirectly, alone
or in conjunction with any other person or Entity:  actively recruit, solicit, attempt to
solicit, induce or attempt to induce any person who is an exempt Executive of
the Company or any of its subsidiaries or affiliates to leave or cease such
employment for any reason whatsoever;

 

16.          Non-Interference with Business Relationships.

 

a.             Executive
acknowledges that, in the course of employment, Executive will learn about the
Company’s business, services, materials, programs and products and the manner
in which they are developed, marketed, serviced and provided.  Executive knows and acknowledges that the
Company has invested considerable time and money in developing its product
sales and real estate development programs and relationships, vendor and other service
provider relationships and agreements, store layouts and fixtures, and
marketing techniques and that those things are unique and original.  Executive further acknowledges that the
Company has a strong business reason to keep secret information relating to the
Company’s business concepts, ideas, programs, plans and processes, so as not to
aid the Company’s competitors. 
Accordingly, Executive acknowledges and agrees that the protection
outlined in (b) below is necessary and reasonable.

 

 

b.             During
the Restricted Period, Executive will not, on Executive’s own behalf or on
behalf of any other person or Entity, solicit, contact, call upon, or
communicate with any person or entity or any representative of any person or
entity who has a business relationship with the Company and with whom Executive
had contact while employed, if such contact or communication would likely
interfere with the Company’s business relationships or result in unfair
competitive advantage over the Company.

 

17.          Agreement Not to Work in Competitive Position.  Executive covenants and agrees not to accept,
obtain or work in a Competitive Position within the Territory for the
Restricted Period.

 

18.          Acknowledgements Regarding Sections 12 – 17.

 

a.             Executive
and the Company expressly covenant and agree that the scope, territorial, time
and other restrictions contained in Sections 12 through 17 of this Agreement
constitute the most reasonable and equitable restrictions possible to protect
the business interests of the Company given: (i) the business of the
Company; (ii) the competitive nature of the Company’s industry; and (iii) that
Executive’s skills are such that Executive could easily find alternative,
commensurate employment or consulting work in Executive’s field which would not
violate any of the provisions of this Agreement.

 

b.             Executive
acknowledges that the compensation and benefits described in Sections 5 and 9
are also in consideration of his/her covenants and agreements contained in
Sections 12 through 17 hereof.

 

c.             Executive
acknowledges and agrees that a breach by Executive of the obligations set forth
in Sections 12 through 17 will likely cause the Company irreparable injury and
that, in such event, the Company shall be entitled to injunctive relief in
addition to such other and further relief as may be proper.

 

d.             The
parties agree that if, at any time, a court of competent jurisdiction
determines that any of the provisions of Section 12 through 17 are
unreasonable under Tennessee law as to time or area or both, the Company shall
be entitled to enforce this Agreement for such period of time or within such
area as may be determined reasonable by such court.

 

19.          Return of Materials.  Upon Executive’s termination, Executive shall
return to the Company all written, electronic, recorded or graphic materials of
any kind belonging or relating to the Company or its affiliates, including any
originals, copies and abstracts in Executive’s possession or control.  Executive’s rolodex (or other tangible or
electronic address book) and his cellular telephone number are Executive’s
personal property.

 

20.          General Provisions.

 

a.             Amendment.  This Agreement may be amended or modified
only by a writing signed by both of the parties hereto.

 

b.             Binding
Agreement.  This Agreement shall
inure to the benefit of and be binding upon Executive, his/her heirs and
personal representatives, and the Company and its successors and assigns.  In the event of Executive’s death prior to
payment of all amounts due to Executive

 

 

under this Agreement, the remaining unpaid
amounts shall be paid to Executive’s estate as and when such amounts would have
been paid to Executive had he survived.

 

c.             Waiver
Of Breach.  The waiver of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any other breach.

 

d.             Indemnification.

 

(i)            The Company agrees that if Executive is
made a party or threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”)
relating to a claim by Executive’s prior employer (the “Prior Employer”)
that Executive has breached or attempted to breach the covenants (e.g.,
covenants not to compete and not to disclose confidential information) to which
Executive is bound as a result of his employment arrangements with the Prior
Employer, Executive shall be indemnified and held harmless by the Company to
the fullest extent authorized by applicable law from and against any and all
liabilities, amounts paid in settlement, costs, claims and expenses, including
all costs and expenses incurred in defense of any such Proceeding (including
attorneys’ fees).  Costs and expenses
incurred by Executive in defense of such Proceeding (including attorneys’ fees)
shall be paid by the Company in advance of the final disposition of such
litigation upon receipt by the Company of (a) a written request for
payment, (b) appropriate documentation evidencing the incurrence, amount
and nature of the costs and expenses for which payment is being sought, and (c) an
undertaking adequate under applicable law made by or on behalf of Executive to
repay the amounts so paid if it shall ultimately be determined that Executive
is not entitled to be indemnified by the Company under this Agreement.  Notwithstanding the foregoing, if as a result
of such Proceeding Executive is prohibited from continuing his employment with
the Company, the Company shall pay to Executive his Base Salary until the
earliest to occur of (i) the date upon which Executive ceases to be so
prohibited, (ii) the date, if any, upon which Executive becomes employed
by a subsequent employer and (iii) the first anniversary of the effective
date of such prohibition.

 

(ii)           The
Company shall indemnify and hold Executive harmless for all acts and omissions
occurring during his employment or service as a member of the Board (or both)
to the maximum extent provided under the Company’s charter, by-laws and
applicable law.  During the Term and for
a term of six years thereafter, the Company, or any successor to the Company shall
purchase and maintain, at its own expense, directors and officers liability
insurance providing coverage for Executive in the same amount as for members of
the Board.

 

(iii)          Executive
shall provide his reasonable cooperation in connection with any Proceeding (or
any appeal from any Proceeding) referenced above, as well as any Proceeding
which relates to events occurring during Executive’s employment hereunder.

 

e.             Unsecured
General Creditor.  The Company shall
neither reserve nor specifically set aside funds for the payment of its
obligations under this Agreement, and such obligations shall be paid solely
from the general assets of the Company.

 

 

f.              No
Effect On Other Arrangements.  It is
expressly understood and agreed that the payments made in accordance with this
Agreement are in addition to any other benefits or compensation to which
Executive may be entitled or for which Executive may be eligible.

 

g.             Tax
Withholding.  There shall be deducted
from each payment under this Agreement the amount of any tax required by any
governmental authority to be withheld and paid over by the Company to such
governmental authority for the account of Executive.

 

h.             Section 280G.

 

(i)            If the Company is not an entity whose stock
is readily tradable on an established securities market (or otherwise) at the
time that a “change of ownership or effective control of the Company or of the
ownership of a substantial portion of the assets of the Company” under Section 280G
of the Code (“280G CiC”), Executive and the Company shall use their
respective reasonable best efforts as to the more favorable to Executive of (A) reducing
payments due to Executive to avoid the imposition of any excise tax imposed by Section 4999
of the Code on Executive in connection with such an event and (B) retaining
such payments on an after-tax basis upon imposition of such excise tax.

 

(ii)           If
the Company is an entity whose stock is readily tradable on an established
securities market (or otherwise) at the time that 280G CiC occurs, the
provisions of Exhibit I shall apply and are hereby incorporated herein by
reference.

 

i.              Notices.

 

(i)            All notices and all other communications
provided for herein shall be in writing and delivered personally to the other
designated party, or mailed by certified or registered mail, return receipt
requested, or delivered by a recognized national overnight courier service, as
follows:

 

	
  If to Company to:

  	
  Dollar General Corporation

  
	
   

  	
  Attn: General Counsel

  
	
   

  	
  100 Mission Ridge

  
	
   

  	
  Goodlettsville, TN 37072-2171

  
	
   

  	
  ATTN: General Counsel

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Simpson
  Thacher & Bartlett LLP

  
	
   

  	
  425
  Lexington Avenue

  
	
   

  	
  New York,
  New York 10017

  
	
   

  	
  Attention:
  Andrea K. Wahlquist

  
	
   

  	
   

  
	
  If to Executive to:

  	
  (Last address of Executive on the payroll records of

  the Company unless otherwise directed in writing

  by Executive)

  

 

 

	
   

  	
   

  
	
  with a copy
  to:

  	
  Vedder Price Kaufman & Kammholz, P.C.

  
	
   

  	
  222 North LaSalle Street

  
	
   

  	
  Suite 2600

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention:
  Robert Simon

  

 

(ii)           All notices sent under this Agreement shall
be deemed given twenty-four (24) hours after sent by courier, seventy-two (72)
hours after sent by certified or registered mail and when delivered if by
personal delivery.

 

(iii)          Either
party hereto may change the address to which notice is to be sent hereunder by
written notice to the other party in accordance with the provisions of this
Section.

 

j.              Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Tennessee
(without giving effect to conflict of laws).

 

k.             Arbitration.  If any contest or dispute arises between the
parties with respect to this Agreement, such contest or dispute shall be
submitted to binding arbitration for resolution in Nashville, Tennessee in
accordance with the rules and procedures of the Employment Dispute
Resolution Rules of the American Arbitration Association then in
effect.  The Company and the Executive
shall each bear 50% of the costs related to such arbitration.  If the arbitrator determines that the
Executive is the prevailing party in the dispute, then the Company shall
reimburse Executive for his reasonable legal or other fees and expenses
incurred in such arbitration subject to and within ten days after his request
for reimbursement accompanied by evidence that the fees and expenses were
incurred.  Any reimbursement hereunder
shall be paid to Executive promptly and in no event later than the end of the
year next following the date the expense was incurred.  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.
Notwithstanding the foregoing, the Executive acknowledges and agrees that the
Company, its subsidiaries and any of their respective affiliates shall be
entitled to injunctive or other relief in order to enforce the covenant not to
compete, covenant not to solicit and/or confidentiality covenants as set forth
in Sections 12 through 17 of this Agreement.

 

l.              Entire
Agreement.  This Agreement contains the
full and complete understanding of the parties hereto with respect to the
subject matter contained herein and, unless specifically provided herein, this
Agreement supersedes and replaces any prior agreement, either oral or written,
which Executive may have with the Company that relates generally to the same
subject matter.    In the event of any
inconsistency between this Agreement and any other plan, program, practice of
or agreement with the Company, this Agreement shall control unless such other
plan, program, practice or agreement provides otherwise by specific reference
to this Section 18(l).

 

m.            Assignment.  This Agreement may not be assigned by
Executive, and any attempted assignment shall be null and void and of no force
or effect.

 

n.             Severability.  If any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or

 

 

unenforceable, then the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect, and to that end the provisions hereof shall be deemed
severable.

 

o.             Survival.  The provisions of Sections 7, 8, 9, 10, 11,
12, 13, 14, 15, 16, 17, 18, 19 and 20 shall survive any termination of
Executive’s employment and any termination of this Agreement.

 

p.             Section Headings.  The Section headings set forth herein
are for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement whatsoever.

 

q.             Voluntary
Agreement.  Executive and the Company
represent and agree that each has reviewed all aspects of this Agreement, has
carefully read and fully understands all provisions of this Agreement, and is
voluntarily entering into this Agreement. 
Each party represents and agrees that such party has had the opportunity
to review any and all aspects of this Agreement with legal, tax or other
adviser(s) of such party’s choice before executing this Agreement.

 

r.              Nonqualified
Deferred Compensation Omnibus Provision.  It is intended that any payment or benefit
which is provided pursuant to or in connection with this Agreement which is
considered to be a deferral of within the meaning of Section 409A of the
Code shall be paid and provided in a manner, and at such time and in such form,
as complies with the applicable requirements of Section 409A of the Code
to avoid the unfavorable tax consequences provided therein for non-compliance.  In connection with effecting such compliance
with Section 409A of the Code, the following shall apply:

 

(i)            Notwithstanding any other provision of this
Agreement, the Company is authorized to amend this Agreement, to void or amend
any election made by Executive under this Agreement and/or to delay the payment
of any monies and/or provision of any benefits in such manner as may be
necessary to comply, or to evidence or further evidence required compliance,
with Section 409A of the Code (including any transition or grandfather rules thereunder);
provided, no such amendment shall be effective without Executive’s consent to
the extent reducing the economic value of the Agreement to Executive (as
determined on a pre-tax basis).

 

(ii)           Neither
Executive nor the Company shall take any action to accelerate or delay the
payment of any monies and/or provision of any benefits in any manner which
would not be in compliance with Section 409A of the Code (including any
transition or grandfather rules thereunder).  Notwithstanding the foregoing:

 

(A)          Payment may be delayed for a reasonable
period in the event the payment is not administratively practical due to events
beyond the recipient’s control such as where the recipient is not competent to
receive the benefit payment, there is a dispute as to the amount due or the
proper recipient of such benefit payment, additional time is needed to
calculate the amount payable, or the payment would jeopardize the solvency of
the Company; and

 

 

(B)           Payments shall be delayed in the following
circumstances:  (1) where the
Company reasonably anticipates that the payment will violate the terms of a
loan agreement to which the Company is a party and that the violation would
cause material harm to the Company; or (2) where the Company reasonably
anticipates that the payment will violate federal securities laws or other
applicable laws; provided that any payment delayed by operation of this
clause (B) will be made at the earliest date at which the Company
reasonably anticipates that the payment will not be limited or cause the
violations described;

 

Provided, such delay in payment shall occur only in a manner that
satisfies the requirements of Section 409A of the Code and regulations
thereunder.

 

(iii)          If at the time of any separation from service
Executive is a specified employee at a time in which the Company (or successor)
is a publicly traded corporation, within the meaning of Section 409A(a)(2)(B)(i) of
the Code and regulations thereunder, to the minimum extent required to satisfy Section 409A(a)(2)(B)(i) of
the Code and regulations thereunder, any payment or provision of benefits to
Executive in connection with his separation from service (as determined for
purposes of Section 409A of the Code) shall be postponed and paid in a
lump sum on the first business day following the date that is six months after
Executive’s separation from service (the “409A Deferral Period”), and
the remaining payments due to be made in installments or periodically after
409A Deferral Period shall be made as otherwise scheduled.  In the event benefits are required to be so
postponed, any such benefit may be provided during the 409A Deferral Period at
Executive’s expense, with Executive having a right to reimbursement from the
Company promptly after the 409A Deferral Period ends, and the balance of the
benefits shall be provided as otherwise scheduled.

 

(iv)          If
a 280G CiC occurs which does not constitute a change in ownership of the
Company or in the ownership of a substantial portion of the assets of the
Company as provided in Section 409A(a)(2)(A)(v) of the Code, then
payment of any amount or provision of any benefit payable pursuant to such 280G
CiC under this Agreement which is considered to be a deferral of compensation
subject to Section 409A of the Code shall be postponed until another
permissible payment event contained in Section 409A of the Code occurs
(e.g., death, disability, separation from service from the Company and its
affiliated companies as defined for purposes of Section 409A of the Code),
including any deferral of payment or provision of benefits for the 409A
Deferral Period as provided above.

 

[Signature Page Follows This Page]

 

 

IN WITNESS WHEREOF, the parties hereto have executed, or caused their
duly authorized representatives to execute this Agreement to be effective as of
the first date set forth above.

 

 

	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  DOLLAR GENERAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Challis M. Lowe

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice Pres., HR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  
	
   

  	
  /s/ Richard Dreiling

  
	
   

  	
   RICHARD DREILING

  

 

18

 

Exhibit I

 

The provisions in this Exhibit I shall apply in respect of any
280G CiC that occurs while the Company is an entity whose stock is readily
tradable on an established securities market (or otherwise).

 

Paragraph 1.  In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the Company, any
of its affiliates, or one or more trusts established by the Company for the
benefit of its employees, to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a “Payment”) is subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, hereinafter collectively
referred to as the “Excise Tax”), Executive shall be entitled to receive
an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
federal, state and local income and employment taxes (and any interest and
penalties imposed with respect thereto) and the Excise Tax imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payment.

 

Paragraph 2.  All determinations required to be made under
this Exhibit I, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Deloitte &
Touche LLP or such other nationally recognized certified public accounting
firm as may be designated by the Company (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and
Executive within ten business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is reasonably requested by
the Company; provided that for purposes of determining the amount of any
Gross-Up Payment, Executive shall be deemed to pay federal income tax at the
highest marginal rates applicable to individuals in the calendar year in which
any such Gross-Up Payment is to be made and deemed to pay state and local
income taxes at the highest effective rates applicable to individuals in the
state or locality of Executive’s residence or place of employment in the
calendar year in which any such Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes that can be obtained from deduction
of such state and local taxes, taking into account limitations applicable to
individuals subject to federal income tax at the highest marginal rates.   All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Exhibit I,
shall be paid by the Company to Executive (or to the appropriate taxing
authority on Executive’s behalf) when due but in no event later than the end of
Executive’s taxable year next following Executive’s taxable year in which
Executive remitted the related taxes.  If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall so indicate to Executive in writing. 
Any determination by the Accounting Firm shall be binding upon the
Company and Executive (subject to the following provisions of this
Paragraph 2 and of Paragraph 3).  As
a result of the uncertainty in the application of Section 4999 of the
Code, it is possible that the amount of the Gross-Up Payment determined by the
Accounting Firm to be due to (or on behalf of) Executive was lower than the
amount actually due (“Underpayment”). 
In the event that the Company exhausts its remedies

 

19

 

pursuant to Paragraph 3 of Exhibit I and Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive (no later than the calendar year following the calendar year in which
such tax was payable).  For the avoidance
of doubt, in the event of any such Underpayment, the Company shall reimburse
Executive for any interests and penalties he may incur as a result thereof.

 

Paragraph 3.  Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of any Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to
the expiration of the thirty day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall (i) give the Company any information reasonably requested
by the Company relating to such claim, (ii) take such action in connection
with contesting such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company, (iii) cooperate with the Company in good faith in order to
effectively contest such claim and (iv) permit the Company to participate
in any proceedings relating to such claim; provided, however,
that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the
foregoing provisions of this Paragraph 3, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, further, that if the Company
directs Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; provided, further, that if Executive is
required to extend the statute of limitations to enable the Company to contest
such claim, Executive may limit this extension solely to such contested
amount.  The Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

 

Paragraph 4.  If, after the receipt by Executive of an
amount paid or advanced by the Company

 

20

 

pursuant to this Exhibit I, Executive becomes entitled to receive
any refund with respect to a Gross-Up Payment, Executive shall (subject to the
Company’s complying with the requirements of Paragraph 3 of this Exhibit I)
promptly pay to the Company the amount of such refund received (together with
any interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by Executive of an
amount advanced by the Company pursuant to Paragraph 3 of this Exhibit I,
a determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of the Gross-Up Payment required to be paid.

 

21

 

Addendum
to Employment

Agreement
with [       ]

 

RELEASE AGREEMENT

 

THIS RELEASE (“Release”)
is made and entered into by and between                          (“Executive”)
and DOLLAR GENERAL CORPORATION,
and its successor or assigns (“Company”).

 

WHEREAS, Executive
and Company have agreed that Executive’s employment with Dollar General
Corporation shall terminate on                              ;

 

WHEREAS, Executive
and the Company have previously entered into that certain Employment Agreement,
effective                            (“Agreement”),
in which the form of this Release is incorporated by reference;

 

WHEREAS, Executive
and Company desire to delineate their respective rights, duties and obligations
attendant to such termination and desire to reach an accord and satisfaction of
all claims arising from Executive’s employment, and termination of employment,
with appropriate releases, in accordance with the Agreement;

 

WHEREAS, the Company
desires to compensate Executive in accordance with the Agreement for service
Executive has provided and/or will provide for the Company;

 

NOW, THEREFORE, in
consideration of the premises and the agreements of the parties set forth in
this Release, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby covenant and agree as follows:

 

21.          Claims Released Under This Agreement.

 

In exchange for receiving the benefits described in Section 9 of
the Agreement (other than Accrued Obligations and Other Benefits), Executive
hereby voluntarily and irrevocably waives, releases, dismisses with prejudice,
and withdraws all claims, complaints, suits or demands of any kind whatsoever
(whether known or unknown) which Executive ever had, may have, or now has
against Company and other current or former subsidiaries or affiliates of the
Company and their past, present and future officers, directors, Executives,
agents, insurers and attorneys (collectively, the “Releasees”), arising from or
relating to (directly or indirectly) Executive’s employment or the termination
of employment or other events that have occurred as of the date of execution of
this Agreement, including but not limited to:

 

a.             claims
for violations of Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Fair Labor Standards Act, the Civil
Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the
Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor
Relations Act, the Labor Management Relations Act, Executive Order 11246,
Executive Order 11141, the Rehabilitation Act of 1973, or the Executive
Retirement Income Security Act;

 

b.             claims
for violations of any other federal or state statute or regulation or local
ordinance;

 

22

 

c.             claims
for lost or unpaid wages, compensation, or benefits, defamation, intentional or
negligent infliction of emotional distress, assault, battery, wrongful or
constructive discharge, negligent hiring, retention or supervision, fraud,
misrepresentation, conversion, tortious interference, breach of contract, or
breach of fiduciary duty;

 

d.             claims
to benefits under any bonus, severance, workforce reduction, early retirement,
outplacement, or any other similar type plan sponsored by the Company (except
for those benefits owed under any other plan or agreement covering Executive
which shall be governed by the terms of such plan or agreement); or

 

e.             any
other claims under state law arising in tort or contract.

 

22.          Claims Not Released Under This Agreement.

 

In signing this Release, Executive is not releasing any claims that may
arise under Section 9 or 10, as applies, Section 20(d) or Section 20(h) of
the Agreement or the terms of this Release or which may arise out of events
occurring after the date Executive executes this Release.  Executive also is not releasing claims to
benefits that Executive is already entitled to receive under any other plan or
agreement covering Executive which shall be governed by the terms of such plan
or agreement.  However, Executive
understands and acknowledges that nothing herein is intended to or shall be
construed to require the Company to institute or continue in effect any particular
plan or benefit sponsored by the Company, and the Company hereby reserves the
right to amend or terminate any of its benefit programs at any time in
accordance with the procedures set forth in such plans.

 

Nothing in this Release shall prohibit Executive from engaging in
activities required or protected under applicable law or from communicating,
either voluntarily or otherwise, with any governmental agency concerning any
potential violation of the law.

 

23.          No Assignment of Claim.  Executive represents that Executive has not
assigned or transferred, or purported to assign or transfer, any claims or any
portion thereof or interest therein to any party prior to the date of this
Release.

 

24.          Compensation.  In accordance with the Agreement, the Company
agrees to pay Executive or, if Executive becomes eligible for payments under Section 5
and Section 9 but dies before receipt thereof, Executive’s spouse or
estate, as the case may be, the amount provided in Section 5 and Section 9
of the Agreement.

 

25.          Publicity; No Disparaging Statement.  Except as otherwise provided in Section 11
of the Agreement, Section 2 of this Release, and as privileged by law,
Executive and the Company covenant and agree that they shall not engage in any
communications with persons outside the Company which shall disparage one
another or interfere with their existing or prospective business relationships.

 

26.          No Admission Of Liability.  This Release shall not in any way be
construed as an admission by the Company or Executive of any improper actions
or liability whatsoever as to one another, and each specifically disclaims any
liability to or improper actions against the other or any other person.

 

23

 

27.          Voluntary Execution.  Executive warrants, represents and agrees
that Executive has been encouraged in writing to seek advice regarding this
Release from an attorney and tax advisor prior to signing it; that this Release
represents written notice to do so; that Executive has been given the
opportunity and sufficient time to seek such advice; and that Executive fully
understands the meaning and contents of this Release. Executive further
represents and warrants that Executive was not coerced, threatened or otherwise
forced to sign this Release, and that Executive’s signature appearing
hereinafter is voluntary and genuine.  EXECUTIVE UNDERSTANDS THAT EXECUTIVE MAY TAKE UP
TO TWENTY-ONE (21) DAYS TO CONSIDER WHETHER TO ENTER INTO THIS RELEASE.

 

28.          Ability to Revoke Agreement.  EXECUTIVE UNDERSTANDS THAT THIS RELEASE MAY BE
REVOKED BY EXECUTIVE BY NOTIFYING THE COMPANY IN WRITING OF SUCH REVOCATION
WITHIN SEVEN (7) DAYS 

OF EXECUTIVE’S EXECUTION OF THIS RELEASE AND
THAT THIS RELEASE IS NOT EFFECTIVE UNTIL THE EXPIRATION OF SUCH SEVEN (7) DAY
PERIOD.  EXECUTIVE UNDERSTANDS THAT UPON
THE EXPIRATION OF SUCH SEVEN (7) DAY PERIOD THIS RELEASE WILL BE BINDING
UPON EXECUTIVE AND EXECUTIVE’S HEIRS, ADMINISTRATORS, REPRESENTATIVES,
EXECUTORS, SUCCESSORS AND ASSIGNS AND WILL BE IRREVOCABLE.

 

24

 

Acknowledged and Agreed To:

 

	
   

  	
   

  
	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  DOLLAR GENERAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  

 

 

I
UNDERSTAND THAT BY SIGNING THIS RELEASE, I AM GIVING UP RIGHTS I MAY HAVE.  I UNDERSTAND THAT I DO NOT HAVE TO SIGN THIS
RELEASE.

 

 

	
   

  	
   

  	
  “EXECUTIVE”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  WITNESSED BY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  

 

25

 

Schedule A

 

Relocation Expenses

 

1.               All expenses for packing and
transporting Executive’s furnishings and personal belongings and one vehicle.

 

2.               At least two house hunting trips for
Executive and his wife.

 

3.               Temporary living expenses for 120 days
from the Effective Date.

 

4.               A miscellaneous non-itemized cash
allowance of $25,000.

 

5.               All closing costs and expenses,
including, without limitation, broker’s fees, loan origination fees not to
exceed two (2%) percent and reasonable attorneys fees, incurred to sell
Executive’s residence in New York City and to purchase a residence in the
vicinity of the Company.

 

26

 

Exhibit A

 

[Attach
Management Stockholders Agreement]

 

27

 

Exhibit B

 

[Attach Plan]

 

28

 

Exhibit C

 

[Attach Stock
Option Agreement]

 

29

 

Exhibit D

 

[Attach
Restricted Stock Award Agreement]

 

30

 

Exhibit E

 

[Attach Sale
Participation Agreement]

 

31

 

Exhibit F

 

[Attach
Registration Rights Agreement]

 

32

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