Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (this “Agreement”), dated as of       , 2008, is
made by and between Family Dollar Stores, Inc., a Delaware corporation (the
“Company”) and                (the “Indemnitee”).

 

WHEREAS, the Indemnitee is a member of the Company’s Board of Directors and, as
a member of the Board, performs a valuable service for the Company;

 

WHEREAS, it is important that the Company retain and attract qualified and
capable individuals to serve on the Company’s Board of Directors;

 

WHEREAS, the Company and the Indemnitee understand the risks of litigation and
other legal proceedings currently facing directors of public corporations and
the related exposure of directors to liability for the expenses associated with
such litigation and other legal proceedings;

 

WHEREAS, The Company’s Bylaws require the Company to indemnify its directors to
the fullest extent permitted by applicable law as it presently exists or may be
amended, with the limited exceptions provided therein;

 

WHEREAS, The Bylaws contemplate that agreements may be entered into between the
Company and its directors with respect to indemnification;

 

WHEREAS, Section 145 of the Delaware General Corporation Law (“DGCL”) under
which the Company is organized, empowers the Company to indemnify its directors
by agreement and to indemnify persons who serve, at the request of the Company,
as the directors or agents of other corporations or enterprises, and expressly
provides that the indemnification provided by Section 145 is not exclusive;

 

WHEREAS, Section 102(b)(7) of the DGCL allows a Company to include in its
certificate of incorporation a provision limiting or eliminating the personal
liability of a director  and the Company has so provided in its Certificate of
Incorporation that each director shall be exculpated from such liability to the
maximum extent permitted by law;

 

WHEREAS, The parties have determined that contractual indemnification as set
forth herein is reasonable and prudent and that such indemnification promotes
stability on the Board, and therefore promotes the best interests of the Company
and its stockholders;

 

WHEREAS, The Company desires that the Indemnitee serve or continue to serve as a
director of the Company free from undue concern for damages and expenses arising
out of or related to such services to the Company; and

 

WHEREAS, the Indemnitee is willing to serve, continue to serve or to provide
additional service for or on behalf of the Company on the condition that he or
she is furnished the indemnity and right to advancement of expenses provided for
herein.

 

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NOW, THEREFORE, in consideration of the above premises and of director’s
continued service as a member of the Board, the parties hereto agree as follows:

 

1.                                       INDEMNIFICATION.

 

(a)                      Subject to the limitations set forth in this Agreement,
the Company shall indemnify and hold harmless, to the fullest extent permitted
by applicable law as it presently exists or may hereafter be amended, the
Indemnitee if the Indemnitee was or is made or is threatened to be made a party
to or is otherwise involved in any pending, threatened or completed action,
suit, arbitration, alternative dispute resolution proceeding, investigation,
administrative hearing, or other proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”) by reason of the fact that the
Indemnitee is or was a director of the Company or is or was serving at the
request of the Company as a director of another company or of a partnership,
joint venture, trust, nonprofit entity, or other enterprise, including service
with respect to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys’ fees) reasonably incurred by such person.

 

(b)                     The indemnification provided by this Section 1 shall
include all expenses (including attorneys’ fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the Indemnitee or on the
Indemnitee’s behalf in connection with any Proceeding and any appeal therefrom,
provided however, that the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(c)                      The termination of any Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
good faith and in a manner which the Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the
Indemnitee’s conduct was unlawful.

 

2.                                       Advancement of Expenses. Subject to the
limitations set forth in this Agreement, the Company shall pay the expenses
(including reasonable attorneys' fees) incurred by the Indemnitee in defending
any Proceeding in advance of its final disposition, provided, however, that such
advancement of expenses shall be made only upon receipt of an undertaking by the
Indemnitee, substantially in the form attached hereto as Exhibit A or in such
other form as the parties may approve, to repay all amounts advanced if it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified. 

 

3.                                       Repayment of Expenses.  The Indemnitee
agrees to reimburse the Company for all reasonable expenses advanced under
Section 2 in the event and only to the extent it shall ultimately be determined
by a final adjudication that the Indemnitee is not entitled to be indemnified by
the Company for such expenses.

 

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4.                                       Claims for Indemnification or
Advancement; Determination of Eligibility.

 

(a) Any claim by the Indemnitee for indemnification or advancement of expenses
under this Agreement shall be made in a writing delivered to the Company,
setting forth in reasonable detail the basis for such indemnification or
advancement and the amount requested, and accompanied by appropriate
documentation to support the amount so requested (or, in the case of advancement
of expenses to be incurred, the basis on which such amount is to be
determined).  A claim for advancement may include future expenses reasonably
expected to be incurred, provided they are generally described in the claim, and
provided that the Company shall not be required to advance particular expenses
covered by the claim until it has received appropriate substantiation that those
expenses have been incurred and are appropriately included within the advances
approved by the Company pursuant to this Section 4.

 

(b) Promptly upon its receipt of a written claim for advancement of expenses to
which the Indemnitee is entitled hereunder, and within sixty days after its
receipt of a written claim for indemnity to which the Indemnitee is entitled
hereunder, the Company shall pay such advancement (and any future related
submissions for advancement of expenses as they are incurred) or such claim for
indemnity in full to or as directed by the Indemnitee.  If and to the extent it
is required by law that the Company make any particular determination as to the
Indemnitee’s eligibility to receive such advancements or indemnity, or whether
the Indemnitee has met the standards set forth in Section 1(b) hereof, the
Company shall make such determination as promptly as practicable in good faith
and in accordance with such requirements of law, and in any event within sixty
days after its receipt of the claim from the Indemnitee.  In the event that the
Company fails to make such determination as to the Indemnitee’s eligibility, or
makes a determination that the Indemnitee is ineligible for indemnification or
advancement of expenses hereunder, within such sixty day period, then the
Indemnitee may seek such determination from a court of competent jurisdiction. 
In any such proceeding, the Company shall have the burden of proving that the
Indemnitee was not entitled to the requested indemnification or advancement of
expenses, and any prior determination by the Company to the contrary shall be to
no effect and shall not be given any weight by the court, it being the intention
of the parties that any determination by the court as to the Indemnitee’s
eligibility for and entitlement to indemnification or advancement of expenses
hereunder shall be made de novo based upon the terms of this Agreement and the
evidence presented to such court.

 

5.                                       Further Limitations on
Indemnification.  In addition to the limitations on Indemnification set forth in
Section 1(b) above, the Company shall not be obligated pursuant to this
Agreement:

 

                                                                                               
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to the
Indemnitee with respect to a Proceeding initiated by the Indemnitee, except
(i) for Proceedings authorized or consented to by the Board of Directors of the
Company; or (ii) in the event a claim for indemnification or payment of expenses
(including attorneys’ fees) made under this Agreement is not paid in full within
sixty days after a written claim therefor has been received by the Company, the
Indemnitee may file suit to recover the

 

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unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim, including attorneys’
fees.  In any such action the Company shall have the burden of proving that the
Indemnitee was not entitled to the requested indemnification or payment of
expenses under applicable law or this Agreement.

 

(b) Action for Indemnification. To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any Proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, unless the Indemnitee is
successful in establishing the Indemnitee’s right to indemnification in such
Proceeding, in whole or in part; provided, however, that nothing in this
Section 5(b) is intended to limit the Company’s obligation with respect to the
advancement of expenses to the Indemnitee in connection with any Proceeding
instituted by the Indemnitee to enforce or interpret this Agreement, as provided
in Section 4 hereof.

 

(c) Certain Plans and Agreements.  To indemnify the Indemnitee in connection
with proceedings or claims involving the enforcement of the provisions of any
employment, severance or compensation plan or agreement that the Indemnitee may
be a party to, or beneficiary of, with the Company or any of the Company’s
subsidiaries.

 

6.                                       Non-Exclusivity of Rights.  The right
conferred on the Indemnitee by this Agreement shall not be exclusive of any
other rights which the Indemnitee may have or hereafter acquire under any
statute, provision of the Company’s Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, or
under any insurance maintained by the Company; but such rights in the aggregate
shall not entitle the Indemnitee to duplicative multiple recoveries.  The
Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting
as a director of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.

 

7.                                       Savings Clause.

 

(a)          If any provision or provisions of this Agreement shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify the Indemnitee as to costs, charges and
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company, to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated and to the full extent
permitted by applicable law.

 

(b)  No amendment or alteration of the Company’s Certificate of Incorporation or
Bylaws or any other agreement shall adversely affect the rights provided to the
Indemnitee under this Agreement.

 

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8.                                       Modification and Waiver.  No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.

 

9.                                       Successor and Assigns.  All of the
terms and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and their respective
successors, assigns, heirs, executors, administrators and legal representatives.
The Company shall require and cause any direct or indirect successor (whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company, by written agreement in form and substance
reasonably satisfactory to the Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.

 

10.                                 Governing Law.  This Agreement shall be
governed exclusively by and construed according to the laws of the State of
Delaware, as applied to contracts between Delaware residents entered into and to
be performed entirely within Delaware.  If a court of competent jurisdiction
shall make a final determination that the provisions of the law of any state
other than Delaware govern indemnification by the Company of its directors or
former directors, then the indemnification provided under this Agreement shall
in all instances be enforceable to the fullest extent permitted under such law,
notwithstanding any provision of this Agreement to the contrary.

 

11.                                 Agreement Construction.   This Agreement has
been negotiated at arms length and constitutes a fair and reasonable agreement
amongst the parties.  No party shall be deemed to be the drafter of this
Agreement or of any particular provision or provisions, and no part of the
Agreement shall be construed against any party on the basis of that party’s
identity as the drafter of this Agreement.

 

12.                                 Headings. The section and subsection
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be
effective as of the date first above written.

 

 

FAMILY DOLLAR STORES, INC.

 

By

 

 

Name:

Title:

 

 

INDEMNITEE:

 

By

 

 

Name:

 

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Exhibit A

 

FORM OF AFFIRMATION AND UNDERTAKING AGREEMENT IN
CONNECTION WITH ADVANCEMENT OF EXPENSES

 

The Undersigned has requested that the Company pay for or reimburse the
attorney’s fees, disbursements, and other costs and expenses actually and
reasonably incurred by the Undersigned in connection with the defense of [name
of Proceeding] (the “Proceeding”) and matters that may arise in connection
therewith.

 

1.                                       The Undersigned hereby affirms [his or
her] good faith belief that, with respect to the Proceeding and all matters
giving rise to the Proceeding or in connection therewith during [his or her]
service as a director of the Company, [he or she]:  (i) acted in good faith;
(ii) has acted in a manner [he or she] reasonably believed to be in, or not
opposed to, the best interests of the Company; and (iii) with respect to any
criminal action or proceeding, had no reasonable cause to believe that [his or
her]  conduct was unlawful.

 

2.                                       The Undersigned hereby agrees to repay
to the Company any funds (i) advanced to the Undersigned in connection with the
Proceeding and matters that may arise in connection therewith or (ii) paid on
behalf of the Undersigned in advance of the final disposition of the Proceeding
and matters that may arise in connection therewith in the event that it is
ultimately determined by a final non-appealable judgment by a court of competent
jurisdiction that the Undersigned is not entitled to indemnification of expenses
in connection with the defense of the Proceeding.

 

 

Dated:

 

 

 

 

 

 

 

Signature of Director or Former Director

 

 

 

 

 

Typed or Printed Name

 

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