Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is effective this 7th day of
October, 2008 (the “Date of this Agreement”), by and between R. JAMES KELLY
(“Employee”) and Family Dollar Stores, Inc., and its successors, subsidiaries
and affiliated companies (collectively, the “Company”).  For and in
consideration of the premises, the mutual covenants and agreements hereinafter
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Employee, intending to be
legally bound, hereby agree and covenant as follows.

 

1.             RECITALS.  EMPLOYEE AND THE COMPANY RECITE THE FOLLOWING:

 

A.            EMPLOYEE HAS HERETOFORE BEEN EMPLOYED BY THE COMPANY IN A POSITION
OF SENIOR MANAGEMENT UP TO AND THROUGH THE DATE OF THIS AGREEMENT, PURSUANT TO A
CONTRACT OF EMPLOYMENT, DATED AUGUST 18, 2005, AS AMENDED BY AGREEMENT DATED
AUGUST 17, 2006 (AS AMENDED, THE “PREVIOUS EMPLOYMENT AGREEMENT”), AND,
UNDERSTANDING AND ACCEPTING THE TERMS AND CONDITIONS OF EMPLOYEE’S EMPLOYMENT AS
SET FORTH HEREIN, DESIRES TO CONTINUE TO BE EMPLOYED BY THE COMPANY IN SUCH
MODIFIED CAPACITY, AND UNDER THE TERMS AND RESTRICTIONS AS SET FORTH HEREIN.

 

B.            THE COMPANY DESIRES TO OBTAIN THE AGREEMENT OF EMPLOYEE TO CERTAIN
RESTRICTIVE COVENANTS AND OTHER PROVISIONS AS SET FORTH HEREIN IN EXCHANGE FOR
EMPLOYEE’S RECEIPT OF GOOD AND VALUABLE CONSIDERATION TO WHICH EMPLOYEE WAS NOT
PREVIOUSLY ENTITLED, INCLUDING WITHOUT LIMITATION: (I) THE COMPANY’S AGREEMENT
TO PROVIDE CERTAIN SEVERANCE PAYMENTS AS DESCRIBED HEREIN, (II) AN INCREASE IN
EMPLOYEE’S RATE OF BASE SALARY EFFECTIVE AS OF SEPTEMBER 7, 2008, (III) AN AWARD
OPPORTUNITY UNDER THE COMPANY’S INCENTIVE BONUS PLAN FOR THE FISCAL YEAR
BEGINNING AUGUST 31, 2008, (IV) AN AWARD OF PERFORMANCE SHARE RIGHTS UNDER THE
2006 INCENTIVE PLAN FOR THE 3-YEAR PERFORMANCE PERIOD COMMENCING AUGUST 31,
2008, AND (V) AN AWARD OF STOCK OPTIONS UNDER THE 2006 INCENTIVE PLAN WITH A
GRANT DATE OF OCTOBER 7, 2008.

 

C.            NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT, THE COMPANY AND
EMPLOYEE AGREE THAT EMPLOYEE’S EMPLOYMENT WITH THE COMPANY IS “AT WILL” AND MAY
BE TERMINATED AT ANY TIME WITH OR WITHOUT “CAUSE” WITHOUT ANY LIABILITY OR
OBLIGATION OF THE COMPANY EXCEPT AS EXPRESSLY SET FORTH HEREIN.

 

D.            THIS AGREEMENT REVOKES AND SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS
EMPLOYMENT AGREEMENTS, REPRESENTATIONS, PROMISES AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, BETWEEN THE PARTIES, INCLUDING WITHOUT LIMITATION THE PREVIOUS
EMPLOYMENT AGREEMENT BETWEEN EMPLOYEE AND THE COMPANY.

 

2.             DEFINITIONS.  WHEN USED IN THIS AGREEMENT THE FOLLOWING TERMS AND
PROVISIONS SHALL HAVE THE MEANINGS SET FORTH HEREIN:

 

A.            “CAUSE” –  I.  AT ANY TIME AFTER A CHANGE IN CONTROL, CAUSE MEANS
ANY OF THE FOLLOWING ACTS BY EMPLOYEE, AS DETERMINED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY:  (A) GROSS NEGLECT OF DUTY,
(B) PROLONGED ABSENCE FROM DUTY WITHOUT

 

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THE CONSENT OF THE COMPANY, (C) INTENTIONALLY ENGAGING IN ANY ACTIVITY THAT IS
IN CONFLICT WITH OR ADVERSE TO THE BUSINESS, REPUTATION OR OTHER INTERESTS OF
THE COMPANY, OR (D) WILLFUL MISCONDUCT, MISFEASANCE OR MALFEASANCE OF DUTY WHICH
IS REASONABLY DETERMINED TO BE DETRIMENTAL TO THE COMPANY. THE DETERMINATION OF
THE COMPENSATION COMMITTEE AS TO THE EXISTENCE OF “CAUSE” SHALL BE CONCLUSIVE ON
EMPLOYEE AND THE COMPANY.

 

II.             AT ANY TIME PRIOR TO A CHANGE IN CONTROL, CAUSE MEANS ANY OF THE
FOLLOWING: (A) CONVICTION OF A FELONY, ANY ACT INVOLVING MORAL TURPITUDE, OR A
MISDEMEANOR WHERE IMPRISONMENT IS IMPOSED, (B) COMMISSION OF ANY ACT OF THEFT,
FRAUD, DISHONESTY, OR FALSIFICATION OF ANY EMPLOYMENT OR COMPANY RECORDS,
(C) IMPROPER DISCLOSURE OF THE COMPANY’S CONFIDENTIAL OR PROPRIETARY
INFORMATION, (D) EMPLOYEE’S FAILURE TO COMPLY WITH REASONABLE WRITTEN DIRECTIVES
OF THE CHAIRMAN OF THE BOARD OR THE BOARD OF DIRECTORS OF THE COMPANY, (E) A
COURSE OF CONDUCT AMOUNTING TO GROSS INCOMPETENCE, (F) CHRONIC AND UNEXCUSED
ABSENTEEISM, OR (G) MISCONDUCT IN CONNECTION WITH THE PERFORMANCE OF ANY OF
EMPLOYEE’S DUTIES, INCLUDING, WITHOUT LIMITATION, MISAPPROPRIATION OF FUNDS OR
PROPERTY OF THE COMPANY, SECURING OR ATTEMPTING TO SECURE PERSONALLY ANY PROFIT
IN CONNECTION WITH ANY TRANSACTION ENTERED INTO ON BEHALF OF THE COMPANY,
MISREPRESENTATION TO THE COMPANY, OR ANY VIOLATION OF LAW OR REGULATIONS ON
COMPANY PREMISES OR TO WHICH THE COMPANY IS SUBJECT.

 

B.            “CHANGE IN CONTROL” – CHANGE IN CONTROL SHALL HAVE THE MEANING SET
FORTH IN SECTION 2.1(F) OF THE 2006 INCENTIVE PLAN; PROVIDED, HOWEVER, THAT TO
THE EXTENT APPLICABLE UNDER SECTION 409A OF THE CODE, FOR PURPOSES OF PAYING
CERTAIN SEVERANCE PAYMENTS WITHIN 24 MONTHS AFTER A CHANGE IN CONTROL UNDER
PARAGRAPH 4 BELOW, CHANGE IN CONTROL SHALL HAVE THE SAME MEANING AS SET FORTH IN
ANY REGULATIONS, REVENUE PROCEDURE, REVENUE RULINGS OR OTHER PRONOUNCEMENTS
ISSUED BY THE SECRETARY OF THE UNITED STATES TREASURY PURSUANT TO SECTION 409A
OF THE CODE.

 

C.            “CODE” – CODE MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
FROM TIME TO TIME, AND INCLUDES A REFERENCE TO THE UNDERLYING FINAL REGULATIONS.

 

D.            “COMPANY’S BUSINESS” – THE COMPANY’S BUSINESS MEANS THE OPERATION
OF MULTI-MERCHANDISE RETAIL STORES, THE MAJORITY OF WHICH STORES EACH HAVE
25,000 SQUARE FEET OR LESS OF TOTAL SELLING SPACE, AND THAT SELL, OR OFFER FOR
SALE, LOW-COST, BASIC MERCHANDISE FOR FAMILY AND HOME NEEDS, INCLUDING
PERISHABLE AND NON-PERISHABLE GOODS.

 

E.             “COMPETITIVE POSITION” – COMPETITIVE POSITION MEANS ANY
EMPLOYMENT WITH OR ACTIVITY OR SERVICE PERFORMED FOR A COMPETITOR (WHETHER AS
OWNER, MEMBER, MANAGER, LENDER, PARTNER, SHAREHOLDER, MEMBER, CONSULTANT, AGENT,
EMPLOYEE, CO-VENTURER OR OTHERWISE) IN WHICH (I) EMPLOYEE WILL USE OR COULD
REASONABLY BE EXPECTED TO USE ANY CONFIDENTIAL COMPANY INFORMATION OR TRADE
SECRETS OF THE COMPANY FOR THE BENEFIT OF A COMPETITOR IN COMPETITION WITH THE
COMPANY; OR (II) EMPLOYEE WILL HOLD A POSITION, HAVE DUTIES, OR PERFORM SERVICES
FOR SUCH COMPETITOR THAT IS OR ARE THE SAME AS OR SUBSTANTIALLY SIMILAR TO
EMPLOYEE’S POSITION WITH, DUTIES FOR, OR SERVICES ACTUALLY PERFORMED FOR THE
COMPANY DURING EMPLOYEE’S EMPLOYMENT WITH THE COMPANY.

 

F.             “COMPETITOR” – COMPETITOR MEANS (I) ANY PERSON OR ENTITY WHOSE
BUSINESS IS THE SAME AS OR SUBSTANTIALLY SIMILAR TO THE COMPANY’S BUSINESS;
(II) ANY PERSON OR ENTITY WHO

 

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OWNS OR OPERATES MULTI-MERCHANDISE RETAIL STORES THAT EACH HAVE 25,000 SQUARE
FEET, OR LESS, OF TOTAL SELLING SPACE, AND THAT SELL, OR OFFER FOR SALE,
MERCHANDISE THAT IS THE SAME AS OR SUBSTANTIALLY SIMILAR TO MERCHANDISE SOLD OR
OFFERED FOR SALE BY THE COMPANY; OR (III) ANY PERSON OR ENTITY WHO PLANS TO OWN
OR OPERATE MULTI-MERCHANDISE RETAIL STORES THAT HAVE 25,000 SQUARE FEET, OR
LESS, OF TOTAL SELLING SPACE, AND THAT WILL SELL, OR OFFER FOR SALE, MERCHANDISE
THAT IS THE SAME AS OR SUBSTANTIALLY SIMILAR TO MERCHANDISE SOLD OR OFFERED FOR
SALE BY THE COMPANY.

 

G.            “CONFIDENTIAL COMPANY INFORMATION” – CONFIDENTIAL COMPANY
INFORMATION MEANS, UNLESS OTHERWISE AVAILABLE TO THE PUBLIC, (I) ANY AND ALL
INFORMATION RELATING TO THE COMPANY’S METHODS OF OPERATION, SOURCE OF
MERCHANDISE SUPPLY, ORGANIZATIONAL DETAILS, PERSONNEL INFORMATION, MARKETING
PLANS, BUSINESS PLANS, STRATEGIC PLANS, FORECASTS, OR FINANCIAL INFORMATION OR
DATA; (II) ANY AND ALL INFORMATION RELATING TO THE COMPANY’S REAL ESTATE
ACTIVITIES INCLUDING, BUT NOT LIMITED TO, LANDLORDS, PROSPECTIVE LANDLORDS, AND
LEASE DATA; (III) THE SPECIFIC TERMS OF THE COMPANY’S AGREEMENTS OR ARRANGEMENTS
WITH ANY OFFICERS, DIRECTORS, EMPLOYEES, VENDORS, SUPPLIERS, OR ANY OTHER ENTITY
WITH WHICH THE COMPANY MAY BE AFFILIATED FROM TIME TO TIME, INCLUDING, BUT NOT
LIMITED TO, THE VALUE OF ANY CONSIDERATION PROVIDED OR RECEIVED BY THE COMPANY
OR THE EXPIRATION DATE OF ANY SUCH AGREEMENT OR ARRANGEMENT; AND (IV) ANY AND
ALL INFORMATION OF A TECHNICAL OR PROPRIETARY NATURE DEVELOPED BY OR ACQUIRED BY
THE COMPANY OR MADE AVAILABLE TO THE COMPANY AND ITS EMPLOYEES BY VENDORS,
SUPPLIERS, CONTRACTORS, OR OTHER EMPLOYEES OF THE COMPANY, ON A CONFIDENTIAL
BASIS, INCLUDING, BUT NOT LIMITED TO, IDEAS, CONCEPTS, DESIGNS, SPECIFICATIONS,
PROTOTYPES, TECHNIQUES, TECHNICAL DATA OR KNOW-HOW, FORMULAE, METHODS, RESEARCH
AND DEVELOPMENT, AND INVENTIONS, AS SUCH CONFIDENTIAL COMPANY INFORMATION MAY
EXIST FROM TIME TO TIME AND WHETHER IN ELECTRONIC, PRINT OR OTHER FORM AND ALL
COPIES, NOTES, OR OTHER REPRODUCTIONS THEREOF.

 

H.            “DISABILITY” – DISABILITY SHALL HAVE THE MEANING SET FORTH IN
SECTION 2.1(M) OF THE 2006 INCENTIVE PLAN.

 

I.              “EMPLOYEE’S TERMINATION DATE” – EMPLOYEE’S TERMINATION DATE
MEANS THE DATE OF EMPLOYEE’S TERMINATION OF EMPLOYMENT WITH THE COMPANY,
REGARDLESS OF:  (I) THE DATE, CAUSE, OR MANNER OF SUCH TERMINATION OF
EMPLOYMENT; (II) WHETHER SUCH TERMINATION IS WITH OR WITHOUT CAUSE OR IS A
RESULT OF EMPLOYEE’S RESIGNATION; OR (III) WHETHER THE COMPANY PROVIDES
SEVERANCE BENEFITS TO EMPLOYEE UNDER THIS AGREEMENT.

 

J.             “GOOD REASON” – GOOD REASON MEANS ANY OF THE FOLLOWING ACTS BY
THE COMPANY, WITHOUT THE CONSENT OF EMPLOYEE (IN EACH CASE, OTHER THAN AN
ISOLATED, INSUBSTANTIAL AND INADVERTENT ACTION NOT TAKEN IN BAD FAITH AND WHICH
IS REMEDIED BY THE COMPANY PROMPTLY AFTER RECEIPT OF NOTICE THEREOF GIVEN BY
EMPLOYEE): (I) A REDUCTION BY THE COMPANY IN EMPLOYEE’S BASE SALARY; (II) A
DIRECT OR INDIRECT MATERIAL REDUCTION BY THE COMPANY IN EMPLOYEE’S AGGREGATE
ANNUAL AND LONG-TERM INCENTIVE COMPENSATION OPPORTUNITIES, SUCH AS THROUGH A
REDUCTION IN TARGET OR MAXIMUM AWARD OPPORTUNITIES, A CHANGE IN THE PERFORMANCE
GOALS OR FORMULAS FOR EARNING AWARDS RESULTING IN A MATERIAL INCREASE IN THE
DEGREE OF DIFFICULTY OF ACHIEVING TARGET PERFORMANCE, OR SIMILAR CHANGES;
(III) A MATERIAL REDUCTION IN EMPLOYEE’S POSITION, DUTIES AND RESPONSIBILITIES,
ASSIGNMENT TO DUTIES INCONSISTENT WITH SUCH POSITION OR MATERIAL ADVERSE CHANGE
IN REPORTING RELATIONSHIPS, (IV) WITH RESPECT TO AN EMPLOYEE WHO IS STATIONED AT
THE COMPANY’S HEADQUARTERS IN CHARLOTTE, NORTH CAROLINA, OR IN MATTHEWS, NORTH
CAROLINA, THE COMPANY REQUIRING EMPLOYEE, WITHOUT HIS OR HER CONSENT, TO BE
BASED AT ANY OFFICE

 

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OR LOCATION MORE THAN 35 MILES FROM THE LOCATION AT WHICH EMPLOYEE WAS STATIONED
IMMEDIATELY PRIOR TO A CHANGE IN CONTROL, OR (V) THE CONTINUING MATERIAL BREACH
BY THE COMPANY OF ANY EMPLOYMENT AGREEMENT BETWEEN EMPLOYEE AND THE COMPANY
AFTER THE EXPIRATION OF ANY APPLICABLE PERIOD FOR CURE.

 

K.            “INCENTIVE BONUS PLAN” – INCENTIVE BONUS PLAN MEANS THE ANNUAL
CASH INCENTIVE BONUS PLAN ESTABLISHED PURSUANT TO THE GUIDELINES FOR ANNUAL CASH
BONUS ADOPTED UNDER THE 2006 INCENTIVE PLAN.

 

L.             “RESTRICTED TERRITORY” – RESTRICTED TERRITORY MEANS ANY STATE IN
THE UNITED STATES OF AMERICA, OR ANY STATE IN MEXICO, IN WHICH (I) THE COMPANY
IS CONDUCTING THE COMPANY’S BUSINESS ON EMPLOYEE’S TERMINATION DATE, OR (II) THE
COMPANY IS PLANNING TO CONDUCT THE COMPANY’S BUSINESS ON EMPLOYEE’S TERMINATION
DATE AND EMPLOYEE HAS KNOWLEDGE, OR SHOULD HAVE KNOWLEDGE, OF SUCH COMPANY
PLANS.

 

M.           “TARGET BONUS” – TARGET BONUS MEANS EMPLOYEE’S “TARGET BONUS” FOR
THE APPLICABLE FISCAL YEAR WITHIN THE MEANING OF SECTION 4 OF THE INCENTIVE
BONUS PLAN.

 

N.            “TRADE SECRET” – TRADE SECRET OF THE COMPANY MEANS ANY ITEM OF
CONFIDENTIAL COMPANY INFORMATION THAT CONSTITUTES A TRADE SECRET UNDER THE
COMMON LAW OR STATUTORY LAW OF THE STATE OF NORTH CAROLINA, NAMELY N.C. GEN.
STAT. §§ 66-152 ET SEQ., BUT SUCH DEFINITION OF “TRADE SECRET” SHALL NOT ALTER
EITHER THE COMPANY’S RIGHTS OR EMPLOYEE’S OBLIGATIONS UNDER ANY STATE OR FEDERAL
STATUTORY OR COMMON LAW REGARDING TRADE SECRETS AND UNFAIR TRADE PRACTICES.

 

O.            “2006 INCENTIVE PLAN” – 2006 INCENTIVE PLAN MEANS THE FAMILY
DOLLAR STORES, INC. 2006 INCENTIVE PLAN, AS IN EFFECT FROM TIME TO TIME.

 

3.             EMPLOYMENT.  THE COMPANY HEREBY CONTINUES THE EMPLOYMENT OF
EMPLOYEE, IN SUCH MODIFIED CAPACITY, AND UNDER THE TERMS, CONDITIONS AND
RESTRICTIONS AS SET FORTH HEREIN, EFFECTIVE AS OF THE DATE OF THIS AGREEMENT,
AND EMPLOYEE HEREBY ACCEPTS SUCH EMPLOYMENT.

 

4.             POSITION, DUTIES AND RESPONSIBILITIES.  EMPLOYEE SHALL BE
EMPLOYED AS PRESIDENT AND CHIEF OPERATING OFFICER OF THE COMPANY AND SHALL
PERFORM SUCH REASONABLE DUTIES AND RESPONSIBILITIES AS THE CHAIRMAN OF THE
COMPANY OR BOARD OF DIRECTORS OF THE COMPANY OR THE CHIEF EXECUTIVE OFFICER OF
THE COMPANY MAY, FROM TIME TO TIME, ASSIGN TO EMPLOYEE.  EMPLOYEE AGREES TO
ACCEPT THIS EMPLOYMENT AND TO DEVOTE HIS FULL TIME AND ATTENTION AND HIS BEST
EFFORTS, ABILITY AND FIDELITY TO THE PERFORMANCE OF THE DUTIES ATTACHING TO SUCH
EMPLOYMENT.  IN ADDITION, EMPLOYEE SHALL SERVE AS A DIRECTOR AND OFFICER OF THE
COMPANY OR ANY OF ITS CONSTITUENT ENTITIES, IF APPROPRIATELY ELECTED.  DURING
THE PERIOD OF HIS EMPLOYMENT, EMPLOYEE SHALL NOT, FOR REMUNERATION OR PROFIT,
DIRECTLY OR INDIRECTLY, RENDER ANY SERVICE TO, OR UNDERTAKE ANY EMPLOYMENT FOR,
ANY OTHER PERSON, FIRM OR CORPORATION, WHETHER IN AN ADVISORY OR CONSULTING
CAPACITY OR OTHERWISE, WITHOUT FIRST OBTAINING THE WRITTEN CONSENT OF THE
COMPANY.

 

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5.             COMPENSATION.

 

A.            IN CONSIDERATION OF THE SERVICES TO BE RENDERED BY EMPLOYEE
PURSUANT TO THIS AGREEMENT, THE COMPANY SHALL PAY, OR CAUSE TO BE PAID, TO
EMPLOYEE A WEEKLY BASE SALARY AS ESTABLISHED BY THE BOARD OF DIRECTORS OF THE
COMPANY.  THE BASE SALARY SHALL BE REVIEWED ANNUALLY BY THE BOARD IN CONNECTION
WITH ITS ANNUAL REVIEW OF EXECUTIVE COMPENSATION, UNLESS EMPLOYEE’S EMPLOYMENT
SHALL HAVE BEEN TERMINATED EARLIER PURSUANT TO THE AGREEMENTS, TO DETERMINE IF
SUCH BASE SALARY SHOULD BE INCREASED FOR THE FOLLOWING YEAR IN RECOGNITION OF
SERVICES TO THE COMPANY AND SHALL INITIALLY BE SET AT A RATE NOT LESS THAN
EMPLOYEE’S CURRENT ANNUAL SALARY.  THE SALARY SHALL BE PAYABLE AT SUCH INTERVALS
IN CONFORMITY WITH THE COMPANY’S PREVAILING PRACTICE AS SUCH PRACTICE SHALL BE
ESTABLISHED OR MODIFIED FROM TIME TO TIME.

 

B.            IN ADDITION, EMPLOYEE SHALL BE ENTITLED TO:

 

I.              PARTICIPATE IN THE COMPANY’S INCENTIVE BONUS PLAN, AS IT MAY BE
AMENDED OR MODIFIED IN ANY RESPECT, INCLUDING ACHIEVEMENT OF ESTABLISHED GOALS,
AS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER.  EMPLOYEE ACKNOWLEDGES
THAT HE HAS RECEIVED A COPY OF THE FORM OF THE INCENTIVE BONUS PLAN AND RELATED
GUIDELINES FOR THE OPERATION OF SUCH PLAN AND IS FAMILIAR WITH THE TERMS AND
CONDITIONS THEREOF.  NOTHING CONTAINED HEREIN SHALL LIMIT THE COMPANY’S RIGHT TO
ALTER, AMEND OR TERMINATE THE INCENTIVE BONUS PLAN AT ANY TIME FOR ANY REASON.

 

II.             EMPLOYEE SHALL BE ENTITLED TO PARTICIPATE IN ANY GROUP LIFE
INSURANCE PLAN, GROUP HEALTH AND ACCIDENT PLAN, VACATION PLAN, AND RETIREMENT
PLAN OR OTHER BENEFIT PLAN OR ARRANGEMENT WHICH THE COMPANY HAS OR MAY FROM TIME
TO TIME HEREAFTER ESTABLISH FOR THE BENEFIT OF ITS EMPLOYEES UPON EMPLOYEE’S
COMPLYING WITH ALL COMPANY POLICIES REGARDING PARTICIPATION IN ANY SUCH PLAN OR
ARRANGEMENT, PROVIDED HOWEVER THAT SUCH PARTICIPATION BY EMPLOYEE MUST BE
PERMISSIBLE UNDER SUCH PLAN OR ARRANGEMENT AND ABLE TO BE IMPLEMENTED WITHOUT
INORDINATE EXPENSE

 

III.            ADDITIONAL BENEFITS AND/OR COMPENSATION IN SUCH FORM AND IN SUCH
MANNER AND AT SUCH TIMES AS THE BOARD OF DIRECTORS OF THE COMPANY, IN THE
EXERCISE OF ITS ABSOLUTE DISCRETION, SHALL DETERMINE, AND/OR AS OTHERWISE
PROVIDED BY THE COMPANY, CONSISTENT WITH BENEFITS AND/OR COMPENSATION CURRENTLY
PROVIDED TO COMPANY EMPLOYEES IN SIMILAR POSITIONS.

 

C.            THE COMPANY SHALL WITHHOLD ALL APPROPRIATE INCOME AND EMPLOYMENT
TAXES FROM ANY COMPENSATION OR OTHER PAYMENTS OTHERWISE DUE TO EMPLOYEE
HEREUNDER.

 

6.             SEVERANCE UPON TERMINATION WITHOUT CAUSE PRIOR TO A CHANGE IN
CONTROL.   SUBJECT TO THE PROVISIONS OF PARAGRAPHS 8 AND 11 HEREUNDER, IN THE
EVENT OF EMPLOYEE’S TERMINATION BY THE COMPANY WITHOUT CAUSE OR DUE TO
EMPLOYEE’S DISABILITY OR DEATH, IN EACH CASE PRIOR TO A CHANGE IN CONTROL, THE
COMPANY SHALL PROVIDE EMPLOYEE WITH THE FOLLOWING SEVERANCE BENEFITS:

 

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(I)            THE COMPANY SHALL CONTINUE THE PAYMENT OF EMPLOYEE’S BASE SALARY
IN EFFECT ON THE DATE OF SUCH TERMINATION OF EMPLOYMENT FOR A PERIOD OF
TWENTY-FOUR (24) MONTHS.  SUCH SALARY CONTINUATION PAYMENTS SHALL BE PAID IN A
SERIES OF SUBSTANTIALLY EQUAL INSTALLMENTS IN ACCORDANCE WITH THE REGULAR
PAYROLL PRACTICES OF THE COMPANY AS IN EFFECT AS OF THE DATE OF TERMINATION OVER
SAID PERIOD, COMMENCING AS SOON AS ADMINISTRATIVELY PRACTICABLE, BUT IN NO EVENT
MORE THAN SIXTY (60) DAYS, FOLLOWING THE PARTICIPANT’S DATE OF TERMINATION OF
EMPLOYMENT (EXCEPT AS OTHERWISE REQUIRED BY PARAGRAPH 17).  SUCH SALARY
CONTINUATION PAYMENTS SHALL NOT BE CONSIDERED ELIGIBLE COMPENSATION UNDER ANY OF
THE COMPANY’S EMPLOYEE BENEFIT PLANS.

 

(II)           IF EMPLOYEE’S DATE OF TERMINATION OF EMPLOYMENT IS AFTER THE END
OF THE COMPANY’S FISCAL YEAR BUT PRIOR TO THE PAYMENT DATE OF ANY BONUS UNDER
THE INCENTIVE BONUS PLAN FOR SUCH FISCAL YEAR, THE COMPANY SHALL PAY EMPLOYEE
THE PORTION OF THE TARGET BONUS EARNED BY EMPLOYEE FOR SUCH FISCAL YEAR
ACCORDING TO THE TERMS OF THE INCENTIVE BONUS PLAN (I.E., BASED ON THE COMPANY’S
APPLICABLE PERFORMANCE LEVEL), WITHOUT REGARD TO ANY REQUIREMENT IN THE
INCENTIVE BONUS PLAN OTHERWISE REQUIRING EMPLOYEE TO REMAIN EMPLOYED THROUGH THE
BONUS PAYMENT DATE.  IN ADDITION, EMPLOYEE SHALL BE ELIGIBLE TO RECEIVE A PRO
RATED BONUS UNDER THE INCENTIVE BONUS PLAN FOR THE FISCAL YEAR OF THE COMPANY IN
WHICH SUCH TERMINATION OF EMPLOYMENT OCCURS, WITHOUT REGARD TO ANY REQUIREMENT
IN THE INCENTIVE BONUS PLAN OTHERWISE REQUIRING EMPLOYEE TO REMAIN EMPLOYED
THROUGH THE BONUS PAYMENT DATE, BASED ON THE NUMBER OF COMPLETED WEEKS DURING
THE APPLICABLE FISCAL YEAR THROUGH THE DATE OF TERMINATION OF EMPLOYMENT AND
FURTHER BASED ON THE COMPANY’S APPLICABLE PERFORMANCE LEVEL FOR THE FISCAL
YEAR.  ANY SUCH PAYMENT SHALL BE MADE TO EMPLOYEE AT THE SAME TIME THE COMPANY
MAKES PAYMENTS TO OTHER PARTICIPANTS IN THE INCENTIVE BONUS PLAN.

 

(III)          FOR THE NUMBER OF MONTHS SET FORTH IN CLAUSE (I) ABOVE AFTER
EMPLOYEE’S DATE OF TERMINATION OF EMPLOYMENT, BUT NOT TO EXCEED 18 MONTHS, THE
COMPANY SHALL CONTINUE TO PROVIDE HEALTH INSURANCE COVERAGE AND BENEFITS TO
EMPLOYEE AND EMPLOYEE’S DEPENDENTS AS IF EMPLOYEE’S EMPLOYMENT HAD NOT BEEN
TERMINATED, INCLUDING BUT NOT LIMITED TO THE PROVISION OF THE COMPANY’S MEDICAL
EXPENSE REIMBURSEMENT PLAN (THE “MERP”). ANY PERIOD DURING WHICH HEALTH BENEFITS
ARE CONTINUED PURSUANT TO THIS PARAGRAPH SHALL BE CONSIDERED TO BE IN
SATISFACTION OF THE COMPANY’S OBLIGATION TO PROVIDE “CONTINUATION COVERAGE”
PURSUANT TO SECTION 4980B OF THE CODE, AND THE PERIOD OF COVERAGE REQUIRED UNDER
SAID SECTION 4980B SHALL BE REDUCED BY THE PERIOD DURING WHICH HEALTH BENEFITS
WERE PROVIDED PURSUANT TO THIS PARAGRAPH.

 

Such payments and benefits provided by the Company to Employee as set forth in
Paragraphs 6(i), (ii) and (iii) are herein called “Termination Compensation.” 
Such Termination Compensation shall be reduced, in whole or in part, by: (x) all
other salary, bonus, consulting fees or other compensation received by or
payable to Employee for services rendered in any capacity to any third party
during the period that such Termination Compensation is paid; (y) all disability
or life insurance payments made pursuant to disability or life insurance
policies provided by and paid for by the Company to Employee and which payments
are received during the period that such Termination Compensation is paid; and
(z) comparable health insurance coverage actually received by Employee for
services rendered in any capacity to any third party during the period that such
Termination Compensation is paid.  Employee agrees to pursue

 

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reasonable, good faith efforts to obtain other employment in a position suitable
to Employee’s background and experience. Moreover, Employee agrees to notify the
Company within three business days of obtaining other employment during the time
period in which Employee is receiving Termination Compensation.  Notwithstanding
any of the foregoing, Employee’s Termination Compensation shall be subject to
forfeiture as set forth below in Paragraphs 8 and 11.

 

7.             SEVERANCE PAYABLE IN CONNECTION WITH A CHANGE IN CONTROL.  IN THE
EVENT OF A CHANGE IN CONTROL AND A TERMINATION OF EMPLOYEE’S EMPLOYMENT WITHIN
24 MONTHS AFTER SUCH CHANGE IN CONTROL EITHER BY THE COMPANY WITHOUT CAUSE OR BY
EMPLOYEE FOR GOOD REASON, THE COMPANY SHALL PROVIDE EMPLOYEE WITH THE FOLLOWING
SEVERANCE BENEFITS:

 

(I)            THE COMPANY SHALL PAY TO EMPLOYEE IN A LUMP SUM IN CASH WITHIN 30
DAYS AFTER THE DATE OF SUCH TERMINATION OF EMPLOYMENT AN AMOUNT EQUAL TO THE
PRODUCT OF (X) THIRTY (30) MONTHS AND (Y) THE SUM OF (A) EMPLOYEE’S MONTHLY BASE
SALARY AT THE HIGHEST RATE IN EFFECT DURING THE PERIOD BEGINNING IMMEDIATELY
PRIOR TO THE CHANGE IN CONTROL THROUGH THE DATE OF EMPLOYEE’S TERMINATION OF
EMPLOYMENT AND (B) THE MONTHLY EQUIVALENT OF THE AVERAGE OF THE BONUSES, IF ANY,
PAID OR PAYABLE TO EMPLOYEE UNDER THE INCENTIVE BONUS PLAN FOR EACH OF THE THREE
(3) FISCAL YEARS PRECEDING THE FISCAL YEAR IN WHICH EMPLOYEE’S TERMINATION OF
EMPLOYMENT OCCURS (OR SUCH FEWER NUMBER OF FISCAL YEARS FOR WHICH EMPLOYEE WAS
ELIGIBLE TO RECEIVE A BONUS UNDER THE INCENTIVE BONUS PLAN).

 

(II)           FOR THE NUMBER OF MONTHS REPRESENTED BY THE MULTIPLE SET FORTH IN
CLAUSE (I) (X) ABOVE AFTER EMPLOYEE’S DATE OF TERMINATION OF EMPLOYMENT, BUT NOT
TO EXCEED 18 MONTHS, THE COMPANY SHALL CONTINUE TO PROVIDE HEALTH INSURANCE
COVERAGE AND BENEFITS TO EMPLOYEE AND EMPLOYEE’S DEPENDENTS AS IF EMPLOYEE’S
EMPLOYMENT HAD NOT BEEN TERMINATED, INCLUDING BUT NOT LIMITED TO THE PROVISION
OF THE COMPANY’S MEDICAL EXPENSE REIMBURSEMENT PLAN (THE “MERP”). ANY PERIOD
DURING WHICH HEALTH BENEFITS ARE CONTINUED PURSUANT TO THIS PARAGRAPH SHALL BE
CONSIDERED TO BE IN SATISFACTION OF THE COMPANY’S OBLIGATION TO PROVIDE
“CONTINUATION COVERAGE” PURSUANT TO SECTION 4980B OF THE CODE, AND THE PERIOD OF
COVERAGE REQUIRED UNDER SAID SECTION 4980B SHALL BE REDUCED BY THE PERIOD DURING
WHICH HEALTH BENEFITS WERE PROVIDED PURSUANT TO THIS PARAGRAPH.  SUCH HEALTH
INSURANCE COVERAGE SHALL BE SUBJECT TO OFFSET AS PROVIDED IN PARAGRAPH 3 ABOVE
FOR COMPARABLE COVERAGE RECEIVED BY EMPLOYEE FROM A THIRD PARTY DURING THE
CONTINUATION PERIOD.

 

Employee’s right in connection with or following a Change in Control to receive
a pro rata bonus under the Incentive Bonus Plan or any other incentive
compensation program under the 2006 Incentive Plan shall be determined in
accordance with the provisions of Section 15.7 of the 2006 Incentive Plan.

 

8.             RESTRICTIVE COVENANTS; NON-DISCLOSURE OBLIGATIONS; FORFEITURE OF
TERMINATION COMPENSATION.  EMPLOYEE AND THE COMPANY UNDERSTAND AND AGREE THAT
THE PURPOSE OF THE PROVISIONS OF THIS PARAGRAPH 8 IS TO PROTECT THE LEGITIMATE
BUSINESS INTERESTS OF THE COMPANY, ESPECIALLY WITHIN THE MULTI-MERCHANDISE
RETAIL INDUSTRY, IN LIGHT OF EMPLOYEE’S LEADERSHIP POSITION WITH THE COMPANY AND
EXPOSURE AND ACCESS TO CONFIDENTIAL COMPANY INFORMATION AND TRADE SECRETS. 
EMPLOYEE AND THE COMPANY FURTHER AGREE AND UNDERSTAND THAT

 

7

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THE MULTI-MERCHANDISE RETAIL INDUSTRY AND THE COMPANY’S BUSINESS ARE NATIONAL IN
SCOPE AND THAT THE COMPANY HAS PLANS TO EXPAND THE COMPANY’S BUSINESS
INTERNATIONALLY.  EMPLOYEE ACKNOWLEDGES THAT THE EMPLOYMENT AND POST-EMPLOYMENT
RESTRICTIONS SET FORTH IN THIS PARAGRAPH 8 ARE THEREFORE REASONABLE IN THAT
THESE RESTRICTIONS ARE LIMITED TO THE MULTI-MERCHANDISE RETAIL INDUSTRY AND TO
THE LEGITIMATE PROTECTION OF THE COMPANY’S BUSINESS, AND THAT THEY DO NOT, AND
WILL NOT, UNDULY IMPAIR EMPLOYEE’S ABILITY TO EARN A LIVING DURING OR AFTER
EMPLOYEE’S EMPLOYMENT WITH THE COMPANY.  AS A RESULT OF EMPLOYEE’S EDUCATIONAL
BACKGROUND, PRIOR WORK EXPERIENCE, AND EMPLOYEE’S EMPLOYMENT AND POSITION WITH
THE COMPANY, EMPLOYEE POSSESSES GENERAL SKILLS AND KNOWLEDGE ENABLING EMPLOYEE,
IF NEED BE, TO PURSUE PROFITABLE WORK IN BUSINESSES NOT COMPETITIVE WITH THE
COMPANY’S BUSINESS.

 

Therefore, in consideration of good and valuable consideration to which Employee
was not previously entitled, including, without limitation, as is set forth in
Paragraph 1.B above, Employee agrees as follows:

 

A.            COVENANT NOT TO COMPETE.

 

I.              EMPLOYEE AGREES THAT DURING EMPLOYEE’S EMPLOYMENT WITH THE
COMPANY AND FOR THE PERIOD OF TWELVE (12) MONTHS IMMEDIATELY FOLLOWING
EMPLOYEE’S TERMINATION DATE (SUCH PERIOD NOT TO INCLUDE ANY PERIOD(S) OF
VIOLATION OR PERIOD(S) OF TIME REQUIRED FOR LITIGATION TO ENFORCE THE PROVISIONS
OF THIS PARAGRAPH 8.A(I)) (THE “RESTRICTED PERIOD”), EMPLOYEE SHALL NOT, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMPANY, DIRECTLY OR INDIRECTLY, ACCEPT,
OBTAIN, OR HOLD A COMPETITIVE POSITION WITHIN THE RESTRICTED TERRITORY WITH A
COMPETITOR.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS PARAGRAPH
8.A(I) SHALL NOT APPLY FROM AND AFTER A CHANGE IN CONTROL.

 

II.             EMPLOYEE AGREES THAT IN THE EVENT EMPLOYEE, WITHOUT THE
COMPANY’S PRIOR WRITTEN CONSENT, DIRECTLY OR INDIRECTLY ACCEPTS, OBTAINS, OR
HOLDS A COMPETITIVE POSITION WITHIN THE RESTRICTED TERRITORY WITH A COMPETITOR
DURING THE PERIOD BETWEEN THE EXPIRATION DATE OF THE RESTRICTED PERIOD AND THE
DATE OF THE COMPANY’S FINAL PAYMENT TO EMPLOYEE OF ANY TERMINATION COMPENSATION
UNDER THIS AGREEMENT (THE “CONCLUDING COMPENSATION PERIOD”), THE COMPANY SHALL
BE ENTITLED TO TERMINATE ANY COMPENSATION, BENEFITS, AND/OR REMAINING PAYMENTS
OF THE TERMINATION COMPENSATION OTHERWISE PAYABLE TO EMPLOYEE UNDER THIS
AGREEMENT AND EMPLOYEE FORFEITS SUCH TERMINATION COMPENSATION.  NOTWITHSTANDING
THE FOREGOING, THE PROVISIONS OF THIS PARAGRAPH 8.A(II) SHALL NOT APPLY FROM AND
AFTER A CHANGE IN CONTROL.

 

III.            NOTWITHSTANDING THE FOREGOING, EMPLOYEE MAY, AS A PASSIVE
INVESTOR, OWN CAPITAL STOCK OF A PUBLICLY HELD CORPORATION, WHICH IS ACTIVELY
TRADED IN THE OVER-THE-COUNTER MARKET OR IS LISTED AND TRADED ON A NATIONAL
SECURITIES EXCHANGE, WHICH CONSTITUTES OR IS AFFILIATED WITH A COMPETITOR, SO
LONG AS EMPLOYEE’S OWNERSHIP IS NOT IN EXCESS OF FIVE PERCENT (5%) OF THE TOTAL
OUTSTANDING CAPITAL STOCK OF THE COMPETITOR.

 

B.            NON-SOLICITATION OF COMPANY EMPLOYEES.

 

I.              EMPLOYEE UNDERSTANDS AND AGREES THAT THE RELATIONSHIP BETWEEN
THE COMPANY AND EACH OF ITS EMPLOYEES CONSTITUTES A VALUABLE ASSET OF THE
COMPANY AND MAY NOT BE

 

8

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CONVERTED TO EMPLOYEE’S OWN USE OR BENEFIT, OR FOR THE USE OR BENEFIT OF ANY
OTHER THIRD PARTY.  ACCORDINGLY, EMPLOYEE HEREBY AGREES THAT DURING EMPLOYEE’S
EMPLOYMENT AND DURING THE RESTRICTED PERIOD, EMPLOYEE SHALL NOT, WITHOUT THE
COMPANY’S PRIOR WRITTEN CONSENT, DIRECTLY OR INDIRECTLY, (A) SOLICIT OR RECRUIT
FOR EMPLOYMENT; HIRE; ATTEMPT TO SOLICIT OR RECRUIT FOR EMPLOYMENT; ATTEMPT TO
HIRE; OR ACCEPT AS AN EMPLOYEE, CONSULTANT, CONTRACTOR, OR OTHERWISE, ANY
COMPANY EMPLOYEE, OR (B) URGE; ENCOURAGE; INDUCE; OR ATTEMPT TO URGE, ENCOURAGE,
OR INDUCE, ANY COMPANY EMPLOYEE TO TERMINATE HIS OR HER EMPLOYMENT WITH COMPANY;
OR (C) OTHERWISE INTERFERE WITH THE COMPANY’S RELATIONSHIP WITH ANY COMPANY
EMPLOYEE.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS PARAGRAPH
8.B(I) SHALL NOT APPLY FROM AND AFTER A CHANGE IN CONTROL.

 

II.             EMPLOYEE AGREES THAT IN THE EVENT EMPLOYEE, WITHOUT THE
COMPANY’S PRIOR WRITTEN CONSENT, DIRECTLY OR INDIRECTLY, (A) SOLICITS OR
RECRUITS FOR EMPLOYMENT; HIRES; ATTEMPTS TO SOLICIT OR RECRUIT FOR EMPLOYMENT;
ATTEMPTS TO HIRE; OR ACCEPTS AS AN EMPLOYEE, CONSULTANT, CONTRACTOR, OR
OTHERWISE, ANY COMPANY EMPLOYEE, OR (B) URGES; ENCOURAGES; INDUCES; OR ATTEMPTS
TO URGE, ENCOURAGE, OR INDUCE, ANY COMPANY EMPLOYEE TO TERMINATE HIS OR HER
EMPLOYMENT WITH COMPANY; OR (C) OTHERWISE INTERFERES WITH THE COMPANY’S
RELATIONSHIP WITH ANY COMPANY EMPLOYEE DURING THE CONCLUDING COMPENSATION
PERIOD, THE COMPANY SHALL BE ENTITLED TO TERMINATE ANY COMPENSATION, BENEFITS,
AND/OR REMAINING PAYMENTS OF THE TERMINATION COMPENSATION OTHERWISE PAYABLE TO
EMPLOYEE UNDER THIS AGREEMENT AND EMPLOYEE FORFEITS SUCH TERMINATION
COMPENSATION.  NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS PARAGRAPH
8.B(II) SHALL NOT APPLY FROM AND AFTER A CHANGE IN CONTROL.

 

C.            NON-DISCLOSURE OF CONFIDENTIAL COMPANY INFORMATION; TRADE SECRET
PROTECTIONS.  EMPLOYEE RECOGNIZES AND ACKNOWLEDGES THAT DURING THE COURSE OF
EMPLOYEE’S EMPLOYMENT, THE COMPANY HAS PROVIDED AND WILL CONTINUE TO PROVIDE
EMPLOYEE WITH EXPOSURE AND ACCESS TO CONFIDENTIAL COMPANY INFORMATION AND TRADE
SECRETS OF THE COMPANY, OR CONFIDENTIAL INFORMATION BELONGING TO OTHER THIRD
PARTIES WHO MAY HAVE FURNISHED SUCH INFORMATION TO THE COMPANY UNDER OBLIGATIONS
OF CONFIDENTIALITY.  EMPLOYEE, THEREFORE, AGREES THAT DURING EMPLOYEE’S
EMPLOYMENT WITH THE COMPANY AND AT ALL TIMES AFTER EMPLOYEE’S TERMINATION DATE,
EMPLOYEE SHALL NOT DISCLOSE ANY SUCH CONFIDENTIAL COMPANY INFORMATION OR TRADE
SECRETS, OR OTHER INFORMATION SUBJECT TO AN OBLIGATION OF THE COMPANY TO KEEP
CONFIDENTIAL, TO ANY THIRD PARTY NOT EMPLOYED BY OR OTHERWISE EXPRESSLY
AFFILIATED WITH THE COMPANY FOR ANY REASON OR PURPOSE WHATSOEVER, AND SHALL NOT
USE SUCH CONFIDENTIAL COMPANY INFORMATION OR TRADE SECRETS EXCEPT ON BEHALF OF
THE COMPANY.

 

D.            EMPLOYEE ACKNOWLEDGEMENT.  EMPLOYEE ACKNOWLEDGES AND AGREES THAT
(I) THE RESTRICTIVE COVENANTS IN THIS PARAGRAPH 8 ARE REASONABLE IN TIME,
TERRITORY AND SCOPE, AND IN ALL OTHER RESPECTS; (II) SHOULD ANY PART OR
PROVISION OF ANY COVENANT BE HELD INVALID, VOID OR UNENFORCEABLE IN ANY COURT OF
COMPETENT JURISDICTION, SUCH INVALIDITY, VOIDNESS, OR UNENFORCEABILITY SHALL NOT
RENDER INVALID, VOID OR UNENFORCEABLE ANY OTHER PART OR PROVISION OF THIS
AGREEMENT; AND (III) IF ANY PORTION OF THE FOREGOING PROVISIONS IS FOUND TO BE
INVALID OR UNENFORCEABLE BY A COURT OF COMPETENT JURISDICTION BECAUSE ITS
DURATION, TERRITORY, DEFINITION OF ACTIVITIES OR DEFINITION OF INFORMATION
COVERED IS CONSIDERED TO BE INVALID OR UNREASONABLE IN SCOPE, THE INVALID OR
UNREASONABLE TERMS SHALL BE REDEFINED, OR A NEW ENFORCEABLE TERM PROVIDED, SUCH
THAT THE INTENT OF THE COMPANY AND EMPLOYEE IN AGREEING TO THE PROVISIONS OF
THIS AGREEMENT WILL NOT BE IMPAIRED AND THE PROVISION IN QUESTION SHALL BE
ENFORCEABLE TO THE FULLEST

 

9

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EXTENT OF THE APPLICABLE LAWS.  THE RESTRICTIVE COVENANTS CONTAINED HEREIN SHALL
BE CONSTRUED AS AGREEMENTS INDEPENDENT OF ANY OTHER PROVISION IN THIS AGREEMENT
AND THE EXISTENCE OF ANY CLAIM OR CAUSE OF ACTION OF EMPLOYEE AGAINST THE
COMPANY, WHETHER PREDICATED ON THIS AGREEMENT OR OTHERWISE, SHALL NOT CONSTITUTE
A DEFENSE TO THE ENFORCEMENT BY THE COMPANY OF THIS RESTRICTIVE COVENANT.  ANY
DECISION IN ONE STATE OR JURISDICTION INVALIDATING OR HOLDING UNENFORCEABLE ANY
PROVISION OF THIS PARAGRAPH 8 SHALL NOT BE BINDING IN ANY OTHER STATE OR
JURISDICTION.

 

9.             OTHER POST-TERMINATION COVENANTS.

 

A.            EMPLOYEE AGREES THAT EMPLOYEE SHALL RESIGN AND DOES RESIGN FROM
ALL POSITIONS AS AN OFFICER AND DIRECTOR OF THE COMPANY AND FROM ANY OTHER
POSITIONS, WITH SUCH RESIGNATIONS TO BE EFFECTIVE UPON EMPLOYEE’S TERMINATION
DATE.

 

B.            UPON EMPLOYEE’S TERMINATION DATE, EMPLOYEE AGREES NOT TO MAKE ANY
STATEMENTS TO THE COMPANY’S EMPLOYEES, CUSTOMERS, VENDORS, OR SUPPLIERS OR TO
ANY PUBLIC OR MEDIA SOURCE, WHETHER WRITTEN OR ORAL, REGARDING EMPLOYEE’S
EMPLOYMENT OR TERMINATION FROM THE COMPANY’S EMPLOYMENT, EXCEPT AS MAY BE
APPROVED IN WRITING BY AN EXECUTIVE OFFICER OF THE COMPANY IN ADVANCE.  EMPLOYEE
FURTHER AGREES NOT TO MAKE ANY STATEMENT (INCLUDING TO ANY MEDIA SOURCE, OR TO
THE COMPANY’S SUPPLIERS, CUSTOMERS OR EMPLOYEES) OR TAKE ANY ACTION THAT WOULD
DISRUPT, IMPAIR, EMBARRASS, HARM OR AFFECT ADVERSELY THE COMPANY OR ANY OF THE
EMPLOYEES, OFFICERS, DIRECTORS, OR CUSTOMERS OF THE COMPANY OR PLACE THE COMPANY
OR SUCH INDIVIDUALS IN ANY NEGATIVE LIGHT.

 

C.            FOLLOWING EMPLOYEE’S TERMINATION DATE, EMPLOYEE COVENANTS TO
RENDER FURTHER ADVICE AND ASSISTANCE TO THE COMPANY AS MAY BE REQUIRED FROM TIME
TO TIME, AND TO PROVIDE ALL INFORMATION AVAILABLE TO EMPLOYEE ON MATTERS HANDLED
BY AND THROUGH EMPLOYEE WHILE EMPLOYED BY THE COMPANY OR OF WHICH EMPLOYEE HAS
PERSONAL KNOWLEDGE, AND BY MAKING AVAILABLE TO THE COMPANY AT REASONABLE TIMES
AND CIRCUMSTANCES, UPON REQUEST BY THE COMPANY, INFORMATION PERTINENT TO ITS
OPERATIONS IN EMPLOYEE’S POSSESSION; AND, TO THE EXTENT THAT IT IS NECESSARY, TO
COOPERATE WITH AND ASSIST THE COMPANY TO CONCLUDE ANY MATTERS THAT ARE PENDING
AND WHICH MAY REQUIRE EMPLOYEE’S ASSISTANCE; PROVIDED, THAT HE SHALL BE PAID
REASONABLE COMPENSATION BY THE COMPANY IN THE EVENT EMPLOYEE IS REQUIRED TO
EXPEND TIME IN THE PERFORMANCE OF SUCH SERVICES; AND PROVIDED FURTHER, THAT
EMPLOYEE MAY PERFORM SUCH SERVICES IN A MANNER THAT DOES NOT UNREASONABLY
INTERFERE WITH OTHER EMPLOYMENT OBTAINED BY EMPLOYEE.   EMPLOYEE SHALL BE
REIMBURSED FOR ANY EXPENSES INCURRED BY EMPLOYEE IN THE PERFORMANCE OF THE
COVENANTS HEREIN SET FORTH IN THIS PARAGRAPH 9.C.

 

D.            IN ADDITION, EMPLOYEE AGREES TO COOPERATE WITH AND PROVIDE
ASSISTANCE TO THE COMPANY AND ITS LEGAL COUNSEL IN CONNECTION WITH ANY
LITIGATION (INCLUDING ARBITRATION OR ADMINISTRATIVE HEARINGS) OR INVESTIGATION
AFFECTING THE COMPANY, IN WHICH, IN THE REASONABLE JUDGMENT OF THE COMPANY’S
COUNSEL, EMPLOYEE’S ASSISTANCE OR COOPERATION IS NEEDED.  EMPLOYEE SHALL, WHEN
REQUESTED BY THE COMPANY, PROVIDE TESTIMONY OR OTHER ASSISTANCE AND SHALL TRAVEL
AT THE COMPANY’S REQUEST IN ORDER TO FULFILL THIS OBLIGATION.  IN CONNECTION
WITH SUCH LITIGATION OR INVESTIGATION, THE COMPANY SHALL ATTEMPT TO ACCOMMODATE
EMPLOYEE’S SCHEDULE, SHALL REIMBURSE EMPLOYEE (UNLESS PROHIBITED BY LAW) FOR ANY
ACTUAL LOSS OF WAGES IN CONNECTION THEREWITH, SHALL PROVIDE EMPLOYEE WITH
REASONABLE NOTICE IN ADVANCE OF THE TIMES IN WHICH EMPLOYEE’S

 

10

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COOPERATION OR ASSISTANCE IS NEEDED, AND SHALL REIMBURSE EMPLOYEE FOR ANY
REASONABLE EXPENSES INCURRED IN CONNECTION WITH SUCH MATTERS.

 

10.           DELIVERY OF PROPERTY UPON TERMINATION.  UPON EMPLOYEE’S
TERMINATION DATE, EMPLOYEE SHALL, AS SOON AS POSSIBLE BUT NO LATER THAN TWO
(2) DAYS FROM EMPLOYEE’S TERMINATION DATE, SURRENDER TO THE COMPANY ALL
CONFIDENTIAL COMPANY INFORMATION AND TRADE SECRETS IN EMPLOYEE’S POSSESSION AND
RETURN TO THE COMPANY ALL COMPANY PROPERTY IN EMPLOYEE’S POSSESSION OR CONTROL,
INCLUDING BUT NOT LIMITED TO, ALL PAPER RECORDS AND DOCUMENTS, COMPUTER DISKS
AND ACCESS CARDS AND KEYS TO ANY COMPANY FACILITIES.

 

11.           ENFORCEMENT OF RESTRICTIONS IN PARAGRAPHS 8 AND 9.  BECAUSE
EMPLOYEE’S SERVICES TO THE COMPANY ARE SPECIAL AND UNIQUE AND BECAUSE EMPLOYEE
HAS BEEN EXPOSED TO AND HAS HAD ACCESS TO CONFIDENTIAL COMPANY INFORMATION AND
TRADE SECRETS, EMPLOYEE AND THE COMPANY AGREE THAT ANY BREACH OR THREATENED
BREACH OF THE PROVISIONS OF PARAGRAPHS 8.A(I), 8.B(I), 8.C, AND 9 WOULD CAUSE
IRREPARABLE INJURY TO THE COMPANY AND THAT MONEY DAMAGES WOULD NOT PROVIDE AN
ADEQUATE REMEDY TO THE COMPANY.  IN THE EVENT OF A BREACH OR THREATENED BREACH
OF PARAGRAPHS 8.A(I), 8.B(I), 8.C, OR 9 OF THIS AGREEMENT, THE COMPANY OR ITS
SUCCESSORS OR ASSIGNS MAY, IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES EXISTING
IN THEIR FAVOR, APPLY TO ANY COURT OF COMPETENT JURISDICTION FOR SPECIFIC
PERFORMANCE; TEMPORARY, PRELIMINARY, AND PERMANENT INJUNCTIVE RELIEF; EXPEDITED
DISCOVERY; OR OTHER EQUITABLE RELIEF IN ORDER TO ENFORCE OR PREVENT ANY
VIOLATIONS OF ANY SUCH PROVISIONS (WITHOUT POSTING A BOND OR OTHER SECURITY). 
THE COMPANY SHALL BE SPECIFICALLY ENTITLED TO AN INJUNCTION RESTRAINING EMPLOYEE
FROM DISCLOSING ANY CONFIDENTIAL COMPANY INFORMATION OR TRADE SECRETS, AND,
FURTHER, FROM ACCEPTING OR CONTINUING ANY EMPLOYMENT WITH OR RENDERING ANY
SERVICES, OR CONTINUING TO RENDER SERVICES, TO ANY SUCH THIRD-PARTY TO WHOM ANY
CONFIDENTIAL COMPANY INFORMATION OR TRADE SECRET HAS BEEN DISCLOSED OR IS
THREATENED TO BE DISCLOSED BY EMPLOYEE.

 

In addition to the foregoing and not in any way in limitation thereof, or in
limitation of any right or remedy otherwise available to the Company, if
Employee violates any provision of Paragraphs 8.A(i), 8.B(i), 8.C, and 9 of this
Agreement: (i) any compensation, benefits and/or Termination Compensation then
or thereafter due from the Company to Employee shall be terminated forthwith;
(ii) the Company’s obligation to pay or provide and Employee’s right to receive
such compensation, benefits and/or Termination Compensation shall terminate and
be of no further force or effect; and (iii) upon demand by the Company, Employee
shall repay to the Company any such compensation, benefits and/or Termination
Compensation previously paid by the Company because of not being informed or
aware of Employee’s violation of a provision of Paragraphs 8.A(i), 8.B(i), 8.C,
or 9 of this Agreement; in each case without limiting or affecting Employee’s
obligations under such Paragraphs 8.A(i), 8.B(i), 8.C, or 9 or the Company’s
other rights and remedies available at law or in equity, and provided that at
least $20,000 of such compensation, benefits and/or Termination Compensation
shall be retained by Employee representing the consideration Employee received
in exchange for Employee’s release and waiver of rights or claims under
Paragraph 12 of this Agreement.

 

12.           WAIVER AND RELEASE.  IN CONSIDERATION FOR THE PAYMENTS AND
BENEFITS PROVIDED AND TO BE PROVIDED HEREUNDER, EMPLOYEE AGREES THAT EMPLOYEE
WILL, UPON TERMINATION OF EMPLOYMENT AND AS A CONDITION TO THE COMPANY’S
OBLIGATION TO PAY ANY SEVERANCE BENEFITS UNDER THIS AGREEMENT, DELIVER TO THE
COMPANY A FULLY EXECUTED RELEASE AGREEMENT SUBSTANTIALLY IN A

 

11

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FORM THEN USED BY AND AGREEABLE TO THE COMPANY AND WHICH SHALL FULLY AND
IRREVOCABLY RELEASE AND DISCHARGE THE COMPANY, ITS DIRECTORS, OFFICERS, AND
EMPLOYEES FROM ANY AND ALL CLAIMS, CHARGES, COMPLAINTS, LIABILITIES OF ANY KIND,
KNOWN OR UNKNOWN, OWED TO EMPLOYEE.

 

13.           SPECIAL PROVISIONS.  THIS AGREEMENT SHALL INURE TO THE BENEFIT OF
ANY SUCCESSOR TO OR ASSIGNEE OF THE COMPANY, AND EMPLOYEE SPECIFICALLY AGREES ON
DEMAND TO EXECUTE ANY AND ALL NECESSARY DOCUMENTS IN CONNECTION WITH THE
PERFORMANCE OF THIS AGREEMENT.  NO WAIVER BY EITHER PARTY OF ANY BREACH BY THE
OTHER OF ANY PROVISION HEREOF SHALL BE DEEMED TO BE A WAIVER OF ANY LATER OR
OTHER BREACH THEREOF OR AS A WAIVER OF ANY SUCH OR OTHER PROVISION OF THIS
AGREEMENT.  IF ANY PROVISION OF THIS AGREEMENT SHALL BE DECLARED INVALID OR
UNENFORCEABLE AS A MATTER OF LAW, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT
OR OF THE REMAINDER OF THIS AGREEMENT AS A WHOLE.

 

14.           COMPLETE AGREEMENT.  THIS AGREEMENT SETS FORTH ALL OF THE TERMS OF
THE UNDERSTANDING BETWEEN THE PARTIES WITH REFERENCE TO THE SUBJECT MATTER SET
FORTH HEREIN AND MAY NOT BE WAIVED, CHANGED, DISCHARGED OR TERMINATED ORALLY OR
BY ANY COURSE OF DEALING BETWEEN THE PARTIES, BUT ONLY BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTY AGAINST WHOM ANY WAIVER, CHANGE, DISCHARGE OR
TERMINATION IS SOUGHT.  THIS AGREEMENT REVOKES AND SUPERSEDES ALL PRIOR OR
CONTEMPORANEOUS AGREEMENTS, REPRESENTATIONS, PROMISES AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES, INCLUDING WITHOUT LIMITATION THE
PREVIOUS EMPLOYMENT AGREEMENT BETWEEN EMPLOYEE AND THE COMPANY DATED AUGUST 18,
2005, AS AMENDED BY AGREEMENT DATED AUGUST 17, 2006.

 

15.           CHOICE OF LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO ITS CHOICE OF LAW OR CONFLICT OF LAW PRINCIPLES.  EMPLOYEE HEREBY
EXPRESSLY AND IRREVOCABLY CONSENTS TO THE VENUE AND JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA, OR ANY STATE
COURT IN MECKLENBURG COUNTY, NORTH CAROLINA.

 

16.           NOTICES.  ALL NOTICES, REQUESTS, DEMANDS AND OTHER COMMUNICATIONS
HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN IF
PERSONALLY DELIVERED, IF MAILED BY REGISTERED, CERTIFIED OR EXPRESS MAIL,
POSTAGE PREPAID, OR IF DELIVERED TO A RECOGNIZED COURIER SERVICE, ADDRESSED TO
EMPLOYEE AT THE ADDRESS SHOWN ON THE COMPANY’S RECORDS FOR TAX REPORTING
PURPOSES OR TO THE COMPANY AS FOLLOWS (OR IN EITHER CASE TO SUCH OTHER ADDRESS
AS ONE PARTY SHALL GIVE THE OTHER IN THE MANNER PROVIDED HEREIN):

 

Family Dollar Stores, Inc.

 

Chairman of the Board

 

 

Post Office Box 1017

 

 

Charlotte, NC  28201-1017

 

 

 

With copy to:

 

General Counsel

 

 

Family Dollar Stores, Inc.

 

 

Post Office Box 1017

 

 

Charlotte, NC  28201-1017

 

17.           COMPLIANCE WITH CODE SECTION 409A.  THIS AGREEMENT IS INTENDED TO
COMPLY WITH CODE SECTION 409A, TO THE EXTENT APPLICABLE.  NOTWITHSTANDING ANY
PROVISION HEREIN TO THE

 

12

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CONTRARY, THIS AGREEMENT SHALL BE INTERPRETED, OPERATED AND ADMINISTERED
CONSISTENT WITH THIS INTENT.  EACH SEPARATE INSTALLMENT UNDER THIS AGREEMENT
SHALL BE TREATED AS A SEPARATE PAYMENT FOR PURPOSES OF DETERMINING WHETHER SUCH
PAYMENT IS SUBJECT TO OR EXEMPT FROM COMPLIANCE WITH THE REQUIREMENTS OF CODE
SECTION 409A.  IN ADDITION, IN THE EVENT THAT EMPLOYEE IS A “SPECIFIED EMPLOYEE”
WITHIN THE MEANING OF SECTION 409A OF THE CODE (AS DETERMINED IN ACCORDANCE WITH
THE METHODOLOGY ESTABLISHED BY THE COMPANY AS IN EFFECT ON THE DATE OF
TERMINATION OF EMPLOYEE’S EMPLOYMENT), ANY PAYMENT OR BENEFITS HEREUNDER THAT
ARE NONQUALIFIED DEFERRED COMPENSATION SUBJECT TO THE REQUIREMENTS OF
SECTION 409A OF THE CODE SHALL BE PROVIDED TO EMPLOYEE NO EARLIER THAN SIX
(6) MONTHS AFTER THE DATE OF EMPLOYEE’S “SEPARATION FROM SERVICE” WITHIN THE
MEANING OF SECTION 409A OF THE CODE.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement all as of
the day and year first above written.

 

 

 

FAMILY DOLLAR STORES, INC.

 

 

 

 

 

By:

/s/ Howard R. Levine

 

 

 

 

 

Title:

Chairman and CEO

 

 

 

Attest:

 

 

 

 

 

/s/ Janet G. Kelley

 

 

Secretary

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

/s/ R. James Kelly

 

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