Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, made and entered into effective the 18th day of August, 2005, by
and between FAMILY DOLLAR STORES, INC., a Delaware corporation (hereinafter
referred to as the “Company”); and HOWARD R. LEVINE (hereinafter referred to as
the “Employee”);

 

WITNESSETH:

 

WHEREAS, the Company desires to employ the Employee and the Employee desires to
be employed by the Company;

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
Company and the Employee agree as follows:

 

1.                                       Definitions.  When used in this
Agreement, these words shall be defined as follows:

 

1.01.                        “Affiliate” – Any corporation, or other entity,
directly or indirectly controlling, controlled by or under the common control of
or with the Company.

 

1.02.                        “Cause” –

 

(1)  conviction of a felony, any act involving moral turpitude, or a misdemeanor
where imprisonment is imposed, (2)  commission of any act of theft, fraud,
dishonesty, or falsification of any employment or Company records, (3)  improper
disclosure of the Company’s confidential or proprietary information, (4)  the
Employee’s failure to comply with reasonable written directives of the Chairman
of the Board or the Board of Directors of the Company, (5)  a course of conduct
amounting to gross incompetence, (6) chronic and unexcused absenteeism, or
(7) 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.

 

1.03.                        “Competitive Company” – A corporation, partnership,
proprietorship or any other legal entity operating discount retail stores in the
Territory, the majority of which stores each have 30,000 square feet or less of
total space, including non-selling

 

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areas, and that sell or offer for sale merchandise similar or identical to the
merchandise sold by the Group.

 

1.04.                        “Confidential Information” – Any information
(including, without limitation, any method of operation, source of supply,
organizational details, personnel information, information regarding real estate
activities, including landlords, prospective landlords and lease data, business
secret, or any formula, pattern, patent, device, plan, process or compilation of
information) which (a) is, or is designed to be, used in the business of any
member of the Group, (b) is private or confidential in that it is not generally
known or available to the public, and (c) gives any member of the Group an
opportunity to obtain a significant advantage over competitors who do not know
or use it.

 

1.05.                        “Group” – The Company and all Affiliates.

 

1.06.                        “Territory” – All counties, towns and cities in
States in which the Company does business at any time while the Employee is
employed by the Company.

 

1.07.                        “Medical Disability” – An illness or medical
condition preventing the Employee from being able to actively and regularly
perform his duties and responsibilities under this Agreement for period of
ninety (90) work days or longer during any fiscal year of the Company.

 

2.  Term.  The Employee shall be employed by the Company and any Affiliate in
the capacity provided for in Paragraph 3 for the period commencing upon the
effective date of this Agreement, and unless earlier terminated as provided
herein in paragraph 6, the Employee’s employment hereunder shall be for a
rolling term of one year (the “Term”) commencing on the date hereof.  This
agreement shall be deemed to extend each month for an additional month
automatically without any action on behalf of either party hereto; provided,
however, that either party may, by written notice to the other, cause this
Agreement to cease to extend automatically and upon such notice, the “Term” of
this Agreement shall be the one year following the date of such notice, and this
Agreement shall terminate upon the expiration of such Term, or upon the
termination of this Agreement as provided in Paragraph 6.

 

3.  Duties and Responsibilities.  The Employee shall be employed as Chairman of
the Board and Chief Executive Officer of the Company and shall perform such
reasonable duties and responsibilities as the Board of Directors of the Company
may,

 

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from time to time, assign to the Employee.  The 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, the Employee shall serve as a director and officer of
the Company and any corporation in the Group, if appropriately elected.  During
the period of his employment, the 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.

 

4.                                       Covenant Not to Compete, Solicit, or
Disclose Confidential Information.

 

4.01.                        The Employee will not, directly or indirectly, for
a period of one (1) year from the date of the termination of his employment with
the Company, whether such termination is voluntary or involuntary or due to the
expiration of the term of this Agreement, (a) engage in competition with the
Company, any Affiliates, or their successors or assigns, for or on behalf of any
Competitive Company, or (b) provide information to, or travel, canvass,
advertise, solicit or sell for, or acquire an interest in, become employed by,
act as agent for, or in any manner assist, any Competitive Company; provided
that the Employee may become employed by or act as agent or consultant for, in
any capacity, a Competitive Company when his duties and responsibilities with
the Competitive Company do not, directly or indirectly, involve any business
activity in the Territory; or (c) directly or indirectly approach, solicit,
offer employment to or in any manner induce or seek to induce any employee of
the Group to become employed by a Competitive Company or to otherwise interfere
with the Company’s relationship with any employee in the Group.

 

The foregoing provisions, however, shall not prohibit the Employee from making
investments in any securities listed on the New York or American Stock Exchanges
or actively traded in the over-the-counter market in amounts not exceeding 1% of
any single class of such securities outstanding, nor prohibit the Employee from
making investments of any nature in any securities of the Company.

 

4.02.                        The Employee acknowledges that the signing of this
Agreement is a condition of employment and understands that in the performance
of his services

 

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hereunder, he may have access to and obtain knowledge of Confidential
Information (as hereinbefore defined) relating to the business and activities of
the Group.  The Employee shall not, without the written consent of the Company,
either during the period of his employment or thereafter, divulge, communicate,
use to the detriment of the Group, or for the benefit of any other person, or
misuse in any way, any Confidential Information, or authorize anyone else to do
such things, at any time subsequent hereto.  Any Confidential Information
acquired by the Employee shall be deemed a valuable, special and unique asset of
the Group received by the Employee in confidence and as a fiduciary, and the
Employee shall remain a fiduciary to the Group with respect to all of such
information.

 

5.                                       Compensation.

 

5.01.                        In consideration of the services to be rendered by
the Employee pursuant to this Agreement, the Company shall pay, or cause to be
paid, to the 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 this
Agreement, 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 the 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.

 

5.02.                        In addition, the Employee shall be entitled to:

 

(a) Participate in the Company’s Target 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.  The Target Bonus Plan generally will
give the Employee the opportunity to earn a bonus equal to a percentage of the
Employee’s base salary actually received in a given year, the precise percentage
to be set by the Board of Directors of the Company, subject to the Company’s
achievement of certain financial goals to be established, the Employee’s
performance, and all terms and conditions of the Target Bonus Plan as in effect
for any such fiscal year; provided that the amount of bonus paid may not be
increased by the annual individual performance rating

 

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of the Employee.  The Employee acknowledges that he has received a copy of the
form of the Target 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 Target
Bonus Plan at any time for any reason.  The Employee further acknowledges that,
except as provided in Section 6.03, pursuant to the terms of the Target Bonus
Plan, in the event the Employee is not employed by the Company, for whatever
reason, at the time the bonus for the fiscal year is actually paid to
participants in the Target Bonus Plan following the end of the fiscal year, the
Employee will not be entitled to receive the bonus.

 

(b)  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.

 

6.                                      
Termination.                             Employee’s employment under this
Agreement may be terminated as follows:

 

6.01.

 

(a)                                  Death.  In the event of Employee’s death,
Employee’s employment shall be deemed to have terminated effective as of the
date of Employee’s death.  Upon the death of the Employee, the Company shall pay
to his widow if he is married or his estate if he is not married or his wife
predeceases him only such amount as was due and payable to the Employee at the
time of his death.

 

(b)                                 Disability.  The Company may also terminate
this Agreement should the Employee experience a Medical Disability, which
termination shall be effective upon the Company’s giving written notice to the
Employee following the expiration of the Medical Disability period.

 

(c)                                  By Company for Cause.  The Company may
terminate this Agreement at any time, without notice, for Cause.

 

(d)                                 For Other Reasons.  It is agreed that the
Company, or Employee, may terminate this Agreement for any reason at any time
upon written notice to the other party.  Except as provided in Paragraph 4, this
Agreement shall no longer be

 

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of any force and effect as of the date of such notice or such other date as may
be agreed by the Company and the Employee (herein called the “Termination
Date”).  If either party terminates this Agreement, the Company may relieve the
Employee of all duties and responsibilities effective on the date of notice.

 

6.02.                        Upon termination of this Agreement by the Company,
except for the provisions of Paragraph 4, the Employee’s employment under the
terms of this Agreement and all other agreements and contracts between the
Employee, the Company and the Company’s Affiliate and subsidiary corporations,
shall be terminated effective on the Termination Date.  Should the Company
terminate this Agreement prior to the end of the term of this Agreement, for
reasons other than for Cause or Medical Disability, it shall pay to the
Employee, one year of the base salary set forth in Paragraph 5.01 above in
effect on the date of the notice (which shall constitute payment in full of the
compensation due to the Employee hereunder).  Any such payments shall be made in
twelve (12) equal monthly installments with the first such installment due and
payable not later than thirty (30) days after the Termination Date.  Such
payments made by the Company to the Employee are herein called “Termination
Compensation.”  In the event the Employee accepts or begins other employment as
an employee, consultant or in any other capacity prior to the date on which the
twelfth monthly installment of Termination Compensation is due and payable, the
monthly payments of any unpaid balance of the Termination Compensation as of the
date of such new employment shall be (i) eliminated if the monthly base salary
and all other monthly remuneration and compensation from the new employment
exceeds the monthly base salary of the Employee in effect on the date of the
notice, or (ii) reduced to the amount by which the monthly base salary of the
Employee in effect on the date of the notice exceeds the monthly base salary and
all other monthly remuneration and compensation from the new employment.  The
Employee agrees to pursue reasonable, good faith efforts to obtain other
employment in a position suitable to his background and experience.  Moreover,
the Employee agrees to notify the Company within three business days of
obtaining other employment during the time period in which he is receiving
Termination Compensation.

 

6.03.                        Notwithstanding any other provision of this
Agreement, if the Company terminates this Agreement for reasons other than for
Cause, or if the

 

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Agreement is terminated as a result of the Employee’s Death or Medical
Disability, the Employee shall be entitled to receive as additional Termination
Compensation an amount equal to the pro rata share of the bonus, or the full
bonus, as the case may be, if any, under and subject to the terms and conditions
of the Target Bonus Plan referred to in Section 5.02(a).  This payment is equal
to the amount, if any, the Employee would have received following the end of the
fiscal year if the Target Bonus Plan did not have a requirement that the
Employee be employed by the Company at the time the bonus is customarily paid. 
Such payment shall be made to the Employee at the same time the Company makes
payments to other participants in the Target Bonus Plan.

 

6.04.                        On the Termination Date or at the end of the term
of this Agreement, the Employee agrees that he will resign as an officer and
director of the Company, its Affiliate and subsidiary corporations (if and when
elected), and from any other positions, which resignations shall become
effective on the Termination Date.

 

6.05.                        After the Termination Date or the end of the term
of this Agreement, the 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 him on matters handled by and through him while
employed by the Company or of which he 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 his 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 his assistance;
provided, that he shall be paid reasonable compensation by the Company in the
event he is required to expend time in the performance of such services; and
provided further, that the Employee may perform such services in a manner that
does not unreasonably interfere with other employment obtained by the Employee. 
The Employee shall be reimbursed for any expenses incurred by him in the
performance of the covenants herein set forth in this Section 6.05.

 

In addition, the 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, the Employee’s

 

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assistance or cooperation is needed.  The 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 the Employee’s
schedule, shall reimburse the Employee (unless prohibited by law) for any actual
loss wages in connection therewith, shall provide the Employee with reasonable
notice in advance of the times in which the Employee’s cooperation or assistance
is needed, and shall reimburse the Employee for any reasonable expenses incurred
in connection with such matters.

 

6.06.                        After the Termination Date or the end of the term
of this Agreement, the Employee agrees not to make any statements to the
Company’s employees, customers or suppliers or to any public or media source,
whether written or oral, regarding the 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.  The 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 Group or any of their employees,
officers, directors, or customers, or place the Group or such individuals in any
negative light.

 

7.                                       Special Provisions.     This Agreement
shall inure to the benefit of any successor to or assignee of the Company, and
the 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.

 

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,

 

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but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.

 

8.                                       Enforcement.     Because the Employee’s
services are unique and because the Employee has access to Confidential
Information, the parties agree that money damages would be an inadequate remedy
for any breach by the Employee of any of the provisions of paragraph 4 of this
Agreement.  In the event of a breach or threatened breach of any of the
provisions of paragraph 4 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
and/or injunctive relief or other equitable relief in order to enforce or
prevent any violations of any such provision (without posting a bond or other
security).  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 the Employee violates any provision of paragraph 4 of this
Agreement, any compensation, benefits and/or Termination Compensation then or
thereafter due from the Company to the Employee shall be terminated forthwith
and the Company’s obligation to pay or provide and the Employee’s right to
receive such compensation, benefits and/or Termination Compensation shall
terminate and be of no further force or effect, in each case without limiting or
affecting the Employee’s obligations under such paragraphs 4 or the Company’s
other rights and remedies available at law or in equity.

 

9.                                       Governing Law and Forum Selection.  The
Employee agrees that any claim against the Company or any of its Affiliates or
their employees arising out of or relating in any way to this Agreement or to
the Employee’s employment with the Company, shall be brought exclusively in the
Superior Court of Mecklenburg County, North Carolina or the United States
District Court for the Western District of North Carolina, and in no other
forum.  Employee hereby irrevocably consents to the personal and subject matter
jurisdiction of these courts for the purpose of adjudicating any claims subject
to this forum selection clause.  Employee also agrees that any dispute of any
kind arising out of or relating to this Agreement or to the Employee’s
employment shall at the Company’s sole election or demand be submitted to final,
conclusive and binding arbitration before a single arbitrator and according to
the rules then prevailing of the

 

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American Arbitration Association in Mecklenburg County, North Carolina, which
election or demand may be made by the Company at any time prior to the last day
to answer and/or respond to a summons and/or complaint or counterclaim made by
the Employee.  The results of any such arbitration proceeding shall be final and
binding both upon the Company and upon the Employee, and shall be subject to
judicial confirmation as provided by the Federal Arbitration Act or the North
Carolina Arbitration Act, including specifically the terms of N.C. Gen. Stat.
§ 1-567.2, which are incorporated herein by reference.  This Agreement shall be
construed according to the substantive laws of the State of North Carolina,
without regard to conflict of laws principles.

 

10.                                 Notices.     Any notice or other
communications to be given hereunder shall be deemed to have been given or
delivered when delivered by hand to the individuals named below or when
deposited in United States mail, registered or certified, with proper postage
and registration or certification fees prepaid, addressed to the parties as
follows (or to such other address as one party shall give the other in the
manner provided herein):

 

Family Dollar Stores, Inc.

 

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

 

 

 

Howard R. Levine

 

Family Dollar Stores, Inc.

(name of employee)

 

Post Office Box 1017

 

 

Charlotte, NC 28201-1017

 

11. Novation of Prior Agreement. This Agreement revokes and supercedes all prior
or contemporaneous agreements, representations, promises and understandings,
whether written or oral, between the parties, including, without limitation,
that certain

 

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Employment Agreement dated April 29, 1997 (and all amendments thereto) between
the Company and the Employee.

 

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

 

 

 

FAMILY DOLLAR STORES, INC.

 

 

 

 

 

By:

/s/ Janet G. Kelley

 

 

Title: Senior Vice President and General
Counsel

Attest:

 

 

 

/s/ Janice B. Burris

 

 

Assistant Secretary

 

 

 

 

EMPLOYEE

 

 

 

/s/ Howard R. Levine

 

 

HOWARD R. LEVINE

 

 

Witness:

 

 

 

/s/ Michael P. Mullican

 

 

 

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