EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“Agreement”), effective April 1, 2006
(“Effective Date”), is made and entered into by and
between DOLLAR GENERAL CORPORATION (the
“Company”), and Susan Lanigan
(“Employee”).
W I T N E S S E T
H:
WHEREAS, Company
desires to employ Employee upon the terms and subject to the
conditions hereinafter set forth, and Employee 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:
Employment
Terms
1.
Employment
.
Subject to the
terms and conditions of this Agreement, the Company agrees to
employ Employee as EVP, General Counsel of Dollar General
Corporation.
2.
Term . The term of this Agreement
shall be until the third annual anniversary of the Effective Date
(“Term” ) , unless otherwise terminated
pursuant to Sections 7, 8, 9, 10, 11 or 12 hereof.
3.
Position, Duties
and Administrative Support .
a.
Position
. Employee shall
serve as EVP, General Counsel and shall perform such duties and
responsibilities as Employee’s supervisor or the
Company’s CEO may direct.
b.
Full-Time
Efforts .
Employee shall perform and discharge faithfully and
diligently such duties and responsibilities and shall devote
Employee’s full-time efforts to the business and affairs of
Company. Employee agrees to promote the best interests of the
Company and to take no action that is likely to damage the public
image or reputation of the Company, its subsidiaries or its
affiliates.
c.
Administrative
Support .
Employee shall be provided with office space and
administrative support.
d.
No Interference With
Duties .
Employee shall not devote time to other activities which
would inhibit or otherwise interfere with the proper performance of
Employee’s duties and shall not be directly or indirectly
concerned or interested in any other
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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). Employee 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 CEO and the Nominating and Corporate
Governance Committee of the Board. Under no circumstances may
Employee serve on more than one other board of a for-profit
company.
4.
Work
Standard . Employee agrees to comply with
all terms and conditions set forth in this Agreement, as well as
all applicable Company work policies, procedures and rules.
Employee also agrees to comply with all federal, state and
local statutes, regulations and public ordinances governing
Employee’s performance hereunder.
5.
Compensation
.
a.
Base
Salary .
Subject to the terms and conditions set forth in this
Agreement, the Company shall pay Employee, and Employee shall
accept an annual base salary (“Base Salary”) of no less
than Four Hundred and Ten Thousand Dollars ($410,000). The
Base Salary shall be paid in accordance with Company’s normal
payroll practices and may be increased from time to time at the
sole discretion of the Company.
b.
Incentive
Bonus .
Employee’s incentive compensation for the Term of this
Agreement shall be determined under the Company’s bonus
program for officers, as it may be amended from time to time.
The actual bonus paid pursuant to this Section 5(b), if any,
shall be based on criteria established by the Compensation
Committee and/or the CEO, as applicable, in accordance with the
terms and conditions of the bonus program for officers.
c.
Stock Based
Compensation . Employee shall be eligible
for award grants from time to time consistent with the award grants
made to similarly-situated officers of the Company as governed by
the terms of the 1998 Employee Stock Incentive Plan, as may be
amended, or any successor plan thereof (the “Stock
Plan”), as determined in the sole discretion of the
Compensation Committee.
d.
Vacation
. Employee shall
be entitled to three weeks paid vacation time within the first year
of employment. After five years of employment, Employee shall be
entitled to four weeks paid vacation. Vacation time is granted on
the anniversary of
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Employee’s hire
date each year. Any available but unused vacation as of the annual
anniversary of employment date or at Employee’s termination
date shall be forfeited.
e.
Business
Expenses .
Employee shall be reimbursed for all reasonable business
expenses incurred in carrying out the work hereunder.
Employee shall adhere to the Company’s expense
reimbursement policies and procedures.
f.
Perquisites . Employee shall be entitled
to receive such other executive perquisites, fringe and other
benefits as are provided to similarly-situated officers and their
families under any of the Company’s plans and/or programs in
effect from time to time.
6.
Benefits
.
During the Term,
Employee (and, where applicable, Employee’s eligible
dependents) shall be eligible to participate in those various
Company welfare benefit plans, practices and policies in place
during the Term, if any, (including, without limitation, medical,
prescription, dental, vision, disability, employee life, accidental
death and travel accident insurance plans and programs, if any) to
the extent and in accordance with the terms of those plans.
In addition, Employee shall be eligible to participate,
pursuant to their terms, in any other benefit plans offered by the
Company to similarly-situated officers or other employees during
the Term (excluding plans applicable solely to certain officers of
the Company in accordance with the express terms of such plans),
including, without limitation, the 401(k) Retirement and Savings
Plan and CDP/SERP Plan. Collectively the plans and
arrangements described in this Section 6 and as they may be amended
or modified in accordance with their terms are hereinafter referred
to as the “Benefits Plans.” Notwithstanding the
above, Employee understands and acknowledges that Employee is not
eligible for benefits under the Dollar General Corporation
Severance Plan and that the only severance benefits Employee is
entitled to are set forth in this Agreement.
7.
Termination for
Cause . This Agreement may be
terminated at any time by either party, with or without cause. If
this Agreement is terminated by Company for “Cause”
(Termination for Cause) as that term is defined below, it will be
without any liability owing to Employee or Employee’s
dependents and beneficiaries under this Agreement, except for those
benefits owed under any other plan or agreement covering Employee
which shall be governed by the terms of such plan or agreement. Any
one of the following conditions or Employee conduct shall
constitute “Cause”:
a.
Any act involving fraud
or dishonesty;
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b.
Any material breach of
any SEC 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 Company or any of its affiliates 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 contendre to any felony whatsoever or any
misdemeanor that would preclude employment under the
Company’s hiring policy.
A termination for Cause
shall be effective when the Company has given Employee written
notice of its intention to terminate for Cause, describing those
acts or omissions that are believed to constitute Cause, and has
given Employee an opportunity to respond.
8.
Termination upon
Death . Notwithstanding anything
herein to the contrary, this Agreement shall terminate immediately
upon Employee’s death, and the Company shall have no further
liability to Employee or Employee’s dependents and
beneficiaries under this Agreement, except for those benefits owed
under any other plan or agreement covering Employee which shall be
governed by the terms of such plan or agreement.
9.
Disability
.
If a Disability
(as defined below) of Employee occurs during the Term, unless
otherwise prohibited by law, the Company may notify Employee of the
Company’s intention to terminate Employee’s employment.
In that event, employment shall terminate effective on the
termination date provided in such notice of termination (the
“Disability Effective Date”), and this Agreement shall
terminate without further liability to Employee, Employee’s
dependents and beneficiaries, except for those benefits owed under
any other plan or agreement covering Employee which shall be
governed by the terms of such plan or agreement. In this
Agreement, “Disability” means:
a.
A long-term disability,
as defined in the Company’s applicable long-term disability
plan as then in effect, if any; or
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b.
Employee’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 (i) can reasonably
be expected to result in death or (ii) has lasted or can reasonably
be expected to last longer than ninety (90) consecutive days.
Under this provision 9(b), 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, Employee shall, if
reasonably requested by the Company, submit to a physical
examination by that qualified physician. Nothing in this subsection
(b) is intended to nor shall it be deemed to broaden or modify the
definition of “disability” in the Company’s
long-term disability plan.
10.
Employee’s
Termination of Employment .
a.
Notwithstanding
anything herein to the contrary, Employee may terminate employment
and this Agreement at any time, for no reason, with thirty (30)
days written notice to Company. Upon such termination,
Employee shall be entitled to prorata Base Salary through the date
of termination and such other vested benefits under any other plan
or agreement covering Employee which shall be governed by the terms
of such plan or agreement. Employee shall not be entitled to those
payments and benefits listed in Sections 11 or 12 below, unless
Employee terminates employment for Good Reason, as defined
below.
b.
Good
Reason shall
mean any of the following actions taken by the Company:
(i)
A reduction by the
Company in Employee’s Base Salary or target bonus
level;
(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 Employee is required to be based
anywhere other than the Company’s principal executive
offices;
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(iv)
Without
Employee’s written consent, the assignment to Employee by the
Company of duties inconsistent with, or the significant reduction
of the title, powers and functions associated with,
Employee’s position, titles or offices as described in
Section 3 above, unless such action is the result of a
restructuring or realignment of duties and responsibilities by the
Company, for business reasons, that leaves Employee at the same
compensation and officer level (i.e., Vice President, Senior Vice
President, or Executive Vice President, etc.) and with a similar
level of responsibility, or unless such action is the result of
Employee’s failure to meet pre-established and objective
performance criteria;
(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 Employee’s death, Disability or Termination for
Cause. The Company shall have the opportunity to cure any
claimed event of Good Reason within thirty (30) days after
receiving written notice from Employee specifying the
same.
11.
Termination
without Cause or by Employee for Good Reason
.
a.
The continuation of
Base Salary and other payments and benefits described in section
11(b) shall be triggered only upon one or more of the
following circumstances:
(i)
The Company terminates
Employee (as it may do at any time) without Cause; it being
understood that termination by death or Disability does not
constitute termination without Cause;
(ii)
Employee terminates for
Good Reason;
(iii)
The Company fails to
offer to renew, extend or replace this Employment Agreement before,
at, or within sixty (60) days after, the end of its Term and
Employee resigns from employment with the Company within sixty (60)
days after such failure, unless such failure is accompanied by a
mutually agreeable
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severance arrangement
between the Company and Employee or is the result of
Employee’s voluntary retirement or termination from the
Company.
b.
In the event of one of
the triggers referenced in subsections 11(a)(i) through (iii)
above, then, upon the execution and effective date of the Release
attached hereto and made a part hereof and in lieu of and not in
addition to the payments referenced in Section 12 below, Employee
shall be entitled to the following:
(i)
Continuation of
Employee’s Base Salary as of the date immediately preceding
the termination for 24 months, payable in accordance with the
Company’s normal payroll cycle and procedures.
(ii)
Lump sum payment of two
times Employee’s target incentive bonus then in
effect;
(iii)
A lump sum payment in
an amount equal to two times the annual contribution made by the
Company for Employee’s participation in the Company’s
medical, dental and vision benefits program.
(iv)
Outplacement services,
provided by the Company, for one year or until other employment is
secured, whichever comes first.
Unless otherwise
permitted by Section 409A of the Internal Revenue Code of 1986, as
amended (the “Internal Revenue Code”), with regard to
any payment or benefit under this Section 11 which is nonqualified
deferred compensation covered by Section 409A of the Internal
Revenue Code, no such payment or benefit shall be provided to
Employee pursuant to this Section if the Release attached hereto is
not provided to the Company, without revocation thereof, no later
than forty-five (45) days after Employee’s termination date;
and no payment or benefit hereunder shall be provided to Employee
prior to the Company’s receipt of the Release and the
expiration of the period of revocation provided in the
Release.
c.
In the event that there
is a material breach by Employee of any continuing obligations
under this Agreement or the Release after termination of
employment, any unpaid amounts under this Section 11 shall be
forfeited. Any payments or reimbursements under this Section
11 shall not be deemed the continuation of Employee’s
employment for any purpose. Except as specifically enumerated
in the Release, the Company’s payment obligations under this
Section 11 will not negate or reduce (i) any amounts otherwise due
but
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not yet paid to
Employee by the Company, or (ii) any other amounts payable to
Employee outside this Agreement, or (iii) those benefits owed under
any other plan or agreement covering Employee which shall be
governed by the terms of such plan or agreement. Subject to
any applicable prohibition on acceleration of payment under Section
409A of the Internal Revenue Code, the Company may, at any time and
in its sole discretion, make a lump-sum payment of all amounts, or
all remaining amounts, due to Employee under this Section
11.
12.
Effect of Change
in Control .
a.
If within two (2) years
following a Change in Control (as hereinafter defined), the Company
(or any successor to the Company) terminates Employee’s
employment without Cause or Employee terminates for Good Reason,
then upon the execution and the effectiveness of the Release
attached hereto and made a part hereof, the Company shall pay to
Employee (in lieu of the payments referenced in Section 11 above
and not in addition to):
(i)
A lump sum payment
equal to two times Employee’s Base Salary in effect
immediately prior to the Change in Control plus two times the
amount of Employee’s target incentive bonus payment in effect
immediately prior to the Change in Control;
(ii)
A lump sum payment in
an amount equal to two times the annual contribution made by
Company for Employee’s participation in the Company’s
medical, dental and vision benefits program;
(iii)
Outplacement services,
provided by the Company, for one year or until other employment is
secured, whichever comes first; and
(iv)
If such Change in
Control also constitutes a change in control under the Stock Plan,
Employee’s awards, if any, granted pursuant to that plan
shall fully vest and shall remain exercisable in accordance with
the terms of that plan.
Unless otherwise
permitted by Section 409A of the Internal Revenue Code for any
payment or benefit hereunder which is nonqualified deferred
compensation covered by Section 409A of the Internal Revenue Code,
no such payment or benefit shall be provided to Employee pursuant
to this Section if the Release attached hereto is not provided to
the Company, without revocation thereof, no later than forty-five
(45) days after Employee’s termination
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date; and no payment or
benefit hereunder shall be provided to Employee prior to the
Company’s receipt of the Release and the expiration of the
period of revocation therefore.
b.
Anything in this
Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined as provided below that
any payment or distribution by the Company to or for the benefit of
Employee (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under
this Section 12(b)) (a “Payment”) would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code
or any interest or penalties are incurred by Employee with respect
to such excise tax (collectively referred to as the “Excise
Tax”), then Employee shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount
such that after Employee pays all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any Excise, income or other tax (and any interest and
penalties imposed with respect thereto), Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing, if the Net After-tax
Benefit to Employee resulting from receiving the Gross-Up Payment
is less than $25,000 greater than the Net After-tax Benefit to
Employee resulting from having the Payments reduced to the Reduced
Amount, then no Gross-Up Payment shall be made and the Payments
shall be reduced to the Reduced Amount. For purposes
hereof:
(v)
“Net After-tax
Benefit” shall mean the Present Value of a Payment net of all
taxes (including any Excise Tax imposed on Employee) with respect
thereto, determined by applying the highest marginal rate(s)
applicable to an individual for Employee’s taxable year in
which the Change in Control occurs.
(vi)
“Present
Value” shall mean such value determined in accordance with
Section 280G(d)(4) of the Internal Revenue Code.
(vii)
“Reduced
Amount” shall be an amount expressed as a Present Value which
maximizes the aggregate Present Value of Payments without causing
any Payment to be subject to excise tax under Section 4999 of the
Internal Revenue Code or the deduction limitation of Section 280G
of the Internal Revenue Code.
Unless Employee and the
Company shall otherwise agree (provided such agreement does not
cause any payment or benefit hereunder which is nonqualified
deferred compensation
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covered by Section 409A
of the Internal Revenue Code to be in non-compliance with Section
409A of the Internal Revenue Code), in the event the Payments are
to be reduced, the Company shall reduce or eliminate the Payments
to Employee by first reducing or eliminating those payments or
benefits which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning
with payments or benefits which are to be paid the farthest in time
from the Change in Control Date. Any reduction pursuant to
the preceding sentence shall take precedence over the provisions of
any other plan, arrangement or agreement governing Employee’s
rights and entitlements to any benefits or compensation.
c.
All determinations
required to be made under this Section 12, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be used in arriving at such
determination, shall be made by the tax department of an
independent public accounting firm (the “Accounting
Firm”) which shall be engaged by the Company prior to the
time of the first Payment to Employee. The Accounting Firm
selected shall not be serving as accountant or auditor for the
individual, entity or group effecting the Change in Control. The
Accounting Firm shall prepare and provide detailed supporting
calculations both to the Company and Employee within fifteen (15)
business days of the later of (i) the Accounting Firm’s
engagement to make the required calculations or (ii) the date
the Accounting Firm obtains al
