EXHIBIT 10 (ii)
Amended as of
January 17, 2002

FAMILY DOLLAR STORES, INC.
1989 NON-QUALIFIED STOCK OPTION PLAN

        1.     Purpose.    The purpose of the 1989 Non-Qualified Stock Option
Plan (the “Plan”) of Family Dollar Stores, Inc. is to encourage ownership of a
stock interest in Family Dollar Stores, Inc. by certain officers and other key
employees of the Company (as such term is defined below) as an added incentive
to remain in the employ of the Company and to increase their efforts on its
behalf, and in order for the Company to retain and attract persons of
competence, and to gain for the organization the advantages inherent in key
employees having a sense of proprietorship.

        The term “subsidiary” as used herein, shall mean any business entity in
which Family Dollar Stores, Inc. owns or controls, directly or indirectly
(through one or more business entities), 50 percent or more of the voting,
equity or other ownership interest. The term “Company”, as used herein, shall
include Family Dollar Stores, Inc. and any present or future subsidiary therof.

        2.     The Stock.    The shares of stock which may be issued and sold
under the Plan shall not, except as such number may be adjusted pursuant to
Article 10 hereof, exceed 2,936,900 shares of Common Stock of Family Dollar
Stores, Inc. which may be either authorized and unissued shares or issued shares
reacquired by Family Dollar Stores, Inc. Any shares subjected to an option under
the Plan which terminates, is cancelled or expires for any reason unexercised as
to such shares may again be subjected to an option under the Plan
notwithstanding the above limitation.

         3.     Eligibility.     Options shall be granted only to officers and
other key employees (including those who are also directors) who, at the time of
the grant of the option, (a) are employees of the Company and (b) are primarily
responsible for the management and growth of the Company or who otherwise
materially contribute to the conduct and direction of its business and affairs.
A person eligible to receive an option under the Plan is hereinafter sometimes
referred to as an “employee” and a person to who an option is granted hereunder
is hereinafter sometimes referred to as an “optionee.”

        4.      Grant of Options.    The Stock Option Committee (the
“Committee”) of the Board of Directors of Family Dollar Stores, Inc. (the
“Board”) shall determine the employees who are to be granted options under the
Plan, the number of shares subject to each option and the consideration to the
Company for the granting of options under the Plan, as well as the conditions,
if any, which it may deem appropriate to insure that such consideration will be
received by, or will accrue to, the Company. In the discretion of the Committee,
such consideration need not be the same but may vary for options granted under
the Plan at the same time or from time to time.

        The Committee may grant more than one option to an employee during the
life of the plan and such option may be in addition to, or in substitution for,
an option or options, previously granted. The maximum aggregate number of shares
of Common Stock of Family Dollar Stores, Inc. subject to options which may be
granted under the Plan to any optionee during any twelve-month period is
450,000. No options shall be granted under the Plan after November 30, 2008.

        Each option granted pursuant to the Plan shall be evidenced by a written
option agreement between Family Dollar Stores, Inc. and the optionee which shall
contain such provisions, terms and conditions (which need not be the same for
all options) as the Committee shall in its discretion determine to be
appropriate and within the contemplation of the Plan. Each option agreement
shall provide that the option granted thereby will not be treated as an
“incentive stock option” within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.

         5.    Option Price.    (a) The price or prices per share for shares of
Common Stock of Family Dollar Stores, Inc. to be sold pursuant to an option
shall be such as shall be fixed by the Committee, but not less in any case than
100 percent of the fair market value per share for such stock on the date of the
granting of the option, subject to adjustment as provided in Article 10 hereof.

        For the purpose hereof, the term “fair market value” per share shall
mean the mean between the average high bid and low asked prices quoted by the
National Quotations Bureau Inc. for the over-the-counter market on the date of
the grant of such option or, if no bid and asked prices are quoted on such day,
then on the next preceding day on which there were such quotations, or if such
stock is listed on a national securities exchange, then the average of the
highest price and the lowest price at which the Common Stock shall have been
sold regular way on the national securities exchange on the date of the grant of
such option or, if no sales occur on such day, then on the next preceding day on
which there were such sales of Common Stock or, if any time the Common Stock
shall not be quoted by the National Quotations Bureau Inc. for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange, the Committee shall determine the fair value on the basis
of available prices for such stock or in such manner as the Board may deem
reasonable.

        (b)     For the purposes of Articles 5 and 6 hereof, the date of the
granting of an option under the Plan shall be the date fixed by the Committee as
the date for such option for the employee who is to be the recipient thereof.

         6.    Period of Option and Certain Limitations on Right to Exercise.

        Options will be exercisable over the Option Period, which, in the case
of each option, shall be a period of not more than five years from the date of
the grant of such option, as follows:

         (i)    at any time during the third year of the Option Period the
optionee may purchase up to 40 percent of the total number of shares to which
his option relates (adjusted, if a fraction of a share would otherwise result
thereby, to the nearest full number of shares);

         (ii)    at any time during the Option Period after the end of the third
year the optionee may purchase on a cumulative basis up to 70 percent of the
total number of shares to which his option relates (adjusted, if a fraction of a
share would otherwise result thereby, to the nearest full number of shares); and

         (iii)    at any time during the Option Period after the end of the
fourth year the optionee may purchase on a cumulative basis up to 100 percent of
the total number of shares to which his option relates; provided, however, that
except as provided in Articles 8 and 9 hereof, no option may be exercised unless
the optionee is then in the employ of the Company and shall have been
continuously so employed since the date of the grant of his option. Absence on
leave approved by the Committee shall not be considered an interruption of
employment for any purpose of the Plan. Family Dollar Stores, Inc. may, if it or
its counsel shall deem it necessary or desirable for any reason, require the
optionee (or the purchaser acting under Article 9 hereof) to represent in
writing to Family Dollar Stores, Inc. at the time of the exercise of such option
that it is his then intention to acquire the shares of Common Stock as to which
his option is then being exercised for investment and not with a view to the
distribution thereof.

        7.     Non-Transferability of Option.    No option granted under the
Plan to an employee shall be transferable by him otherwise than by will or by
the laws of descent and distribution, and such option shall be exercisable,
during his lifetime, only by him or by his guardian or legal representative.

        8.     Termination of Employment.    If an optionee shall cease to be
employed by the Company for any reason (other than death or discharge for
cause), he may, but only within three months after the date he ceases to be an
employee of the Company (and in no event after the expiration of the Option
Period), exercise his option to the extent that he was entitled to exercise it
at the date of such cessation. The Plan shall not confer upon any optionee any
right with respect to continuation of employment by the Company, nor shall it
interfere in any way with his right or the Company’s right to terminate his
employment at any time. Notwithstanding any of the provisions hereinabove set
forth, in the event that any optionee shall be discharged for cause, he shall
forthwith forfeit all rights under any options granted to him under the Plan.
“Cause” shall be deemed to include, but not be limited to, dishonesty, the
proved commission of crime, disclosure of the Company’s affairs to competitors
or other unfaithfulness to the interests of the Company, continued absence
except on account of the illness or disability, or gross insubordination.

        9.     Death of Optionee.    If an optionee dies while in the employ of
the Company, or within three months after the date he ceases to be an employee
of the Company (other than by reason of discharge for cause), the option
theretofore granted to him shall be exercisable by the estate of the optionee,
or by a person who acquired the right to exercise such option by bequest or
inheritance or by reason of the death of the optionee, but only within a period
of fifteen calendar months next succeeding such death (and in no event after
expiration of the Option Period), and then only if and to the extent that he was
entitled to exercise it at the date of his death, except as the number of shares
may be adjusted in accordance with the provisions of Article 10 hereof.

         10.    Stock Adjustments.

        (a) In the event of a recapitalization, stock split, reverse stock
split, stock dividend, reclassification, or merger, consolidation, or
reorganization in which the Company is the surviving corporation, or any other
change in the corporate structure or Common Stock of the Company, the Committee
shall make such adjustments, if any, proportionate to such change, as it may
deem appropriate in the number of shares authorized by the Plan, in the number
of shares covered by the options granted, and in the option price.

        (b)      In the event of dissolution or liquidation of the Company, or a
reorganization, merger or consolidation of the Company with one or more
corporations in which the Company is not the surviving corporation, or a sale of
substantially all the property or more than eighty percent (80%) of the then
outstanding stock of the Company to another corporation, the Plan shall
terminate and any option heretofore granted pursuant to the Plan shall terminate
unless provision be made in writing in connection with such transaction for the
continuance of the Plan and/or for the assumption of options theretofore
granted, or the substitution for such options of new options covering the stock
of a successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, in which
event the Plan and options theretofore granted shall continue in the manner and
under the terms so provided.

        (c)      Adjustments under Article 10 hereof shall be made by the
Committee whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares of
Common Stock shall be issued pursuant to any such adjustment, and any fraction
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.

        11.     Administration of the Plan.    The Plan shall be administered by
the Committee. The Committee shall consist of two or more members of the Board
who are appointed to the Committee by the Board, and each of whom is an “outside
director” as such term is defined in Section 162(m) of the Internal Revenue Code
and any regulations thereunder. If any member of the Committee does not meet the
qualifications for an “outside director,” then that member shall be replaced
with another director meeting such qualifications such that the Committee shall
always be comprised of at least two persons meeting such qualifications. The
Committee is authorized to establish such rules and regulations for the proper
administration of the Plan as it may deem advisable and not inconsistent with
the provisions of the Plan. All questions arising under the Plan or under any
rule or regulation with respect to the Plan adopted by the Committee, whether
such questions involve an interpretation of the Plan or otherwise, shall be
decided by the Committee.

        12.     Payment for Shares.    Payment for shares purchased shall be
made in full at the time of the exercise of the option. No loan or advance shall
be made by the Company for the purpose of financing, in whole or in part, the
purchase of optioned shares. An optionee or his legal representatives shall have
none of the rights of a stockholder with respect to shares subject to option
until such shares shall be issued upon exercise of the option.

         13.    Amendment and Termination of Plan.

        (a)      The Board may at any time suspend or terminate the Plan. The
Board may also at any time amend or revise the terms of the Plan or any option
to be granted thereunder, provided that no such amendment or revision shall
affect the determination of officers and directors to participate in the Plan or
of the timing, pricing and amount of a grant, all of which determinations and
amendments and revisions thereof shall be made by the Committee, and provided
further that, without stockholder approval, no such amendment or revision shall:

                  (i) materially increase the benefits accruing to employees
under the Plan; or

                  (ii) increase the number of shares subject to the Plan (except
as permitted under the provisions of Article 10 hereof); or

                  (iii) materially modify the requirements as to eligibility for
participation in the Plan.

        (b) No amendment, suspension or termination of the Plan shall, without
the consent of the optionee, alter or impair any rights or obligations under any
option theretofore granted under the Plan.

        14.     Compliance with Law and Other Conditions.    No shares shall be
issued pursuant to the exercise of any option granted under the Plan prior to
compliance by Family Dollar Stores, Inc. to the satisfaction of its counsel with
any applicable laws.

        15.     Withholding of Taxes.    Each optionee who exercises an option
shall agree that no later than the date of such exercise or receipt of shares
pursuant thereto he will pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any federal, state or local taxes of any
kind required by law to be withheld with respect to the transfer to him of such
shares of Common Stock.

        16.     Approval by Stockholders.    The Plan shall become effective
December 1, 1988, subject to approval thereof by vote (in person or by proxy) of
the holders of a majority of all outstanding shares of Common Stock of Family
Dollar Stores, Inc. entitled to vote at the annual meeting of stockholders on
January 19, 1989, called to take action thereon.

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