Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is effective this 28th day of
December, 2012 (the “Date of this Agreement”), by and between HOWARD R. LEVINE
(“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 previous
contract of employment, effective October 7, 2008, (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 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 as of the date of this Agreement, retroactively
effective as of October 14, 2012; (iii) an award opportunity under the

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Company’s Incentive Bonus Plan for the fiscal year beginning August 26, 2012;
(iv) an award of Performance Share Rights under the 2006 Incentive Plan for the
3-year performance period commencing August 26, 2012; and (v) an award of stock
options under the 2006 Incentive Plan with a grant date of October 9, 2012.

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 related to the subject matter herein, including
without limitation the Previous Employment Agreement.

2. Definitions. When used in this Agreement the following terms and provisions
shall have the meanings set forth herein:

A. “Cause” – “Cause” means any of the following acts by Employee: (a) gross
neglect of duty that is materially harmful to the business or reputation of the
Company; (b) intentionally engaging in any activity that is materially harmful
to the business or reputation of the Company; (c) engaging in any action
involving moral turpitude; (d) conviction of (or plea of nolo contendere to) a
felony, or of a misdemeanor where active imprisonment is imposed;
(e) falsification of any Company records or engaging in any misappropriation,
fraud, breach of fiduciary duty or dishonesty that is materially harmful to the
business or reputation of the Company; (f) disclosure of the Company’s
confidential or proprietary information in violation of

 

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this Agreement or applicable law that either is willful or is materially harmful
to the business or reputation of the Company; (g) Employee’s failure to comply
with reasonable written directives of the Board of Directors of the Company that
is not remedied within thirty (30) days after receipt of written notice from the
Board of Directors specifying such failure and referring to this Agreement;
(h) chronic and unexcused absenteeism that is materially harmful to the business
or reputation of the Company; (i) willful or intentional violation of any law or
regulations to which the Company is subject; (j) failure to comply with the
material terms of this Agreement that is not remedied within thirty (30) days
after receipt of written notice from the Board of Directors specifying such
failure and referring to this Agreement; (k) the willful and material violation
of the Company’s policies, including its Code of Ethics, that is materially
harmful to the business or reputation of the Company; and (l) the willful
failure to reasonably cooperate with any investigation authorized by the Board
of Directors of the Company that is not remedied within thirty (30) days after
receipt of written notice from the Board of Directors specifying such failure
and referring to this Agreement. Employee’s employment shall not be terminated
for Cause until Employee has been provided written notice from the Board
specifying the Cause grounds and basis therefor, the Employee has an opportunity
to be heard before a quorum of the Board, and, after such hearing, a majority of
the full Board has voted to terminate Employee’s employment for Cause. For
purposes of this Paragraph 2.A, no conduct shall be considered “willful” if
Employee acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company and had no reasonable cause to
believe that his conduct was in violation of the relevant policy, directive,
regulation, or law. For purposes of this Paragraph 2.A, conduct (whether by
commission or omission) “that is materially harmful to the business or

 

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reputation of the Company” includes but is not limited to conduct constituting a
breach of fiduciary duty under applicable law.

B. “Change in Control” – Change in Control shall have the meaning set forth in
the last paragraph of Section 2.1(f) of the 2006 Incentive Plan and in
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 that offer for sale
basic merchandise for family and home needs, including perishable and
non-perishable goods.

E. “Competitor” – Competitor means:

(i) any of the following entities: Dollar General; Dollar Tree; Fred’s; Big
Lots; 99 Cent Stores; Walgreens; CVS; Rite Aid; Wal-Mart; Kmart; Five Below; and
Target;

(ii) any person or entity who owns or operates multi merchandise retail stores
that have 25,000 square feet, or less, of total selling space, and that sell, or
offer for sale, merchandise that is the same or substantially similar to
merchandise sold or offered for sale by the Company; and/or

 

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(iii) any person or entity who owns or operates or has developed 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 offered for sale by the
Company.

F. “Confidential Company Information” – Confidential Company Information means,
unless otherwise available to the public (provided the information has not
become available to the public as a result of any unauthorized action on the
part of Employee) (i) any and all information relating to the Company’s methods
of operation, source of merchandise supply, organizational details, personnel
information (including, but not limited to, information related to employee
compensation), marketing plans, marketing assessments, 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

 

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time and whether in electronic, print or other form and all copies, notes, or
other reproductions thereof.

G. “Disability” – Disability shall mean any physical or mental impairment that
prevents Employee, with or without reasonable accommodation, from performing for
a period of 120 days during any twenty-four-month period (whether or not
consecutive) the essential functions of his position as Chief Executive Officer,
including such reasonable duties and responsibilities commensurate with that
position as the Board of Directors of the Company may assign to Employee.

H. “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.

I. “Good Reason” – Good Reason means any of the following conditions (each a
“Condition”) that arises without the consent of Employee and the condition has
not been cured as set out below:

i. A material diminution in Employee’s base compensation.

ii. A material diminution in Employee’s authority, duties, or responsibilities
(including the Employee no longer reporting solely and directly to the Board of
Directors of the Company).

iii. A material diminution in the budget over which Employee retains authority.

 

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iv. Requiring Employee to relocate his place of employment more than 25 miles
from Mecklenburg County, North Carolina.

v. Any other action or inaction that constitutes a material breach by the
Company of this Agreement.

Within forty-five (45) days of Employee’s knowledge of the initial existence of
the Condition (or the date on which Employee reasonably would be expected to
have knowledge of the initial existence of the Condition), Employee must provide
notice to the Company of the existence of the Condition, and the Company shall
have forty-five (45) days following receipt of such notice to cure the
Condition. If the Condition is cured within forty-five (45) days of such notice,
Employee is not entitled to any payment as the result of a termination of
employment based on that occurrence of the circumstances that would otherwise
constitute Good Reason. If the Condition is not cured within forty-five
(45) days following such notice, Employee may resign from employment for Good
Reason.

J. “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.

K. “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; (ii) the
Company is conducting the Company’s Business on the Date of this Agreement; or
(iii) the Company has existing plans to conduct the Company’s Business on
Employee’s Termination Date and Employee has knowledge, or should have
knowledge, of such Company plans. For purposes of this definition,

 

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the District of Columbia and each of any commonwealths, territories, or
possessions of the United States shall be regarded as a “state of the United
State of America.”

L. “Target Bonus” – Target Bonus means Employee’s “target bonus” for the
applicable fiscal year within the meaning of the Incentive Bonus Plan.

M. “Trade Secret” – Trade Secret means any item of Confidential Company
Information that constitutes a trade secret under the common law or statutory
law of the State of Delaware or 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.

N. “2006 Incentive Plan” – 2006 Incentive Plan means the Family Dollar Stores,
Inc. 2006 Incentive Plan, as in effect from time to time, as amended, or any
successor to such plan.

3. Employment. The Company hereby continues the employment of Employee 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 serve as Chairman of
the Board and be employed as Chief Executive Officer of the Company and shall
perform such reasonable duties and responsibilities commensurate with that
position as the Board of Directors of the Company may, from time to time, assign
to Employee. Employee agrees to accept this employment and to devote his full
working time and attention and his reasonable best efforts, ability and fidelity
to the performance of the duties attaching to such employment. In addition, the
Company shall nominate Employee for election to the Board of Directors as a
member of the

 

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management slate at each annual meeting of stockholders during the of term of
Employee’s employment with the Company, and 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
approval of the Board of Directors of the Company. Notwithstanding the
preceding, it shall not be a violation of this Agreement for Employee to
(i) serve on industry trade boards or committees, (ii) deliver lectures or
fulfill speaking engagements, or (iii) manage personal investments or engage in
community activities, so long as such services or activities do not interfere
with Employee’s duties and responsibilities under this Agreement.

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 base salary
as established by the Board of Directors of the Company. From and after the Date
of this Agreement, and retroactively effective as of October 14, 2012, unless
otherwise adjusted as provided below, Employee shall be paid an annual base
salary of One Million One Hundred and 00/100 Dollars ($1,100,000.00). 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. 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. Employee’s salary shall only be

 

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decreased if the decrease is commensurate with a reduction in compensation for
the executive management team and is made effective by the Board of Directors
following consultation with Employee.

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 (if applicable) 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. Participate in any group life insurance plan, group health, disability or
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 satisfaction of 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. Participate in the Company’s long-term incentive plans and arrangements
established for its senior executives, and the Board of Directors (or the
appropriate committee of the Board of Directors) shall grant Employee future
equity incentives (and other long-term incentives) commensurate with his status
as Chief Executive Officer of the Company taking into consideration Employee’s
performance, the Company’s performance, and the

 

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Company’s equity incentive grants (and other long-term incentive grants) for
other senior executives of the Company.

iv. Participate in or receive benefits under any employee benefit plan or other
arrangement made available by the Company to other senior executives of the
Company, on terms at least as favorable as those on which any other senior
executive of the Company shall participate; provided, however, that Employee
shall be entitled to no less than five weeks of paid vacation each calendar
year, exclusive of Company holidays, which if not used in a particular year will
be forfeited and not carried over or accumulated from year to year and which
will be forfeited and not paid out at the end of employment.

C. The Company shall withhold all appropriate income and employment taxes from
any compensation or other payments otherwise due to Employee hereunder.

D. Employee shall be expected to incur various reasonable business expenses
customarily incurred by persons holding like positions, including but not
limited to traveling, entertainment and similar expenses incurred for the
benefit of the Company. The Company shall reimburse Employee for such expenses
in accordance with and subject to the Company’s policies regarding business
expense reimbursement, as they may exist from time to time.

E. The Company shall provide Employee with directors’ and officers’ insurance
coverage to the same extent as provided to other senior executives and directors
of the Company. The Company shall also indemnify and hold Employee harmless and
advance litigation expenses to Employee for acts and omissions in Employee’s
capacity as an officer or employee of the Company in the same manner as provided
for Directors under the Form of Indemnity Agreement attached as Exhibit 10.1 to
the Form 8-K filing signed by the Company on

 

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November 21, 2008, as that Form of Indemnity Agreement may be amended from time
to time for the indemnification of Directors. Employee is already, in his
capacity as a Director, party to that Agreement. All such rights extended to
Employee in his capacity as an officer, employee or Director shall continue as
to the Employee even if he has ceased to be an officer, employee or Director of
the Company and shall inure to the benefit of Employee’s heirs, executors and
administrators.

F. Employee shall have the use of the Company’s airplane(s) for any and all
business related travel. In addition, in recognition of the personal security,
safety and efficiency issues associated with the use of alternative
transportation, Employee shall have the non-exclusive right to use of the
Company’s airplane(s) for personal travel for himself and/or his family and
guests with such limits and/or conditions as may be reviewed and established
from time to time by the Board or its designated committee; provided (1) that
any changes from the practice in place for Employee as of the date of this
Agreement shall be made only after consultation with Employee, (2) that the
Company shall impute income to Employee as taxable compensation as required by
the Code with respect to such usage, and (3) that the Company is under no
obligation to increase its number of airplanes or to charter additional
airplanes for this purpose.

6. Severance Upon Termination Without Cause, Not Within Two Years Following a
Change in Control. Subject to the provisions of this Agreement, in the event of
the termination of Employee’s employment (a) by the Company without Cause,
(b) by Employee for Good Reason, (c) following Employee’s Disability or (d) upon
Employee’s death, in each case prior to a Change in Control or more than
twenty-four (24) months after 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 Employee’s Termination Date for a period of thirty (30) 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 Employee’s Termination Date over said period, commencing on the
sixtieth (60th) day following Employee’s Termination Date (except as otherwise
required by paragraph 19), and the first such payment shall include all of the
base salary payments that would otherwise have been paid during the period
starting on the Termination Date and ending on the sixtieth (60th) day following
the Termination Date. Such salary continuation payments shall not be considered
eligible compensation under any of the Company’s employee benefit plans. The
salary continuation payments shall not be subject to forfeiture or reduction,
except as provided in paragraph 11 and except in the following circumstances:

(a) Salary continuation payments shall be reduced on a dollar-per-dollar basis
by amounts earned by Employee for services performed by Employee after the
one-year anniversary of the Termination Date if such services would have been
prohibited under paragraph 8.A had such services been performed during the first
twelve (12) months after the Termination Date;

(b) Salary continuation payments made on account of Employee’s death shall be
reduced on a dollar-per-dollar basis by any amounts actually received by
Employee’s estate, survivors, or other beneficiaries pursuant to any life
insurance contract purchased by the Company and under which all premiums have
been paid solely by the Company or its affiliates; and

 

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(c) Salary continuation payments made on account of Employee’s Disability shall
be reduced on a dollar-per-dollar basis by any amounts actually received by
Employee under a Company-sponsored disability benefit plan for which the cost of
Employee’s coverage has been paid solely by the Company or its affiliates,
provided that such plan covers a substantial number of the Company’s employees
and was established before Employee incurred a Disability. In no event shall the
reduction described in this paragraph 6(i)(c) modify in any way the time for
payment of the salary continuation payments.

(ii) If Employee’s Termination Date 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 Employee’s Termination Date 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. Notwithstanding the preceding or any
provision

 

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of the Incentive Bonus Plan to the contrary, any bonus payment pursuant to the
Incentive Bonus Plan payable to Employee under the terms of that plan and/or
this Agreement shall be paid as soon as administratively practicable following
the end of the relevant performance period but in no event later than two and
one half (2 1/2) months following the end of the Company’s fiscal year in which
the relevant performance period ends.

(iii) The Company shall pay Employee a single lump sum cash payment equal to the
total premiums Employee would be required to pay for eighteen (18) months of
COBRA continuation coverage under the Company’s health benefit plan (i.e.,
medical, dental and vision coverage), determined using the COBRA premium rate in
effect for the level of coverage that Employee has in place immediately prior to
the Employee’s Termination Date (the “COBRA Payment”). Employee shall not be
required to purchase COBRA continuation coverage in order to receive the COBRA
Payment, nor shall Employee be required to apply the COBRA Payment towards any
payment of applicable premiums for COBRA continuation coverage. The payment
shall be made on the sixtieth (60th) day following Employee’s Termination Date
(except as otherwise required by Paragraph 19).

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”
and are subject to forfeiture as set forth below in Paragraphs 8 and 11.

7. Severance Upon Termination Without Cause Within Two Years Following a Change
in Control. Subject to the provisions of this Agreement, in the event of the
termination of Employee’s employment (a) by the Company without Cause, (b) by
Employee for Good

 

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Reason, (c) following Employee’s Disability or (d) upon Employee’s death, in
each case within twenty-four (24) months after a Change in Control, the Company
shall provide Employee with the following severance benefits:

(i) The Company shall pay to Employee in a lump sum in cash on the sixtieth
(60th) day following Employee’s Termination Date (except as otherwise required
by Paragraph 19) an amount equal to the product of (x) thirty-six (36) and
(y) the sum of (A) Employee’s base monthly salary at the highest annual 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) The Company shall pay Employee a single lump sum cash payment equal to the
total premiums Employee would be required to pay for eighteen (18) months of
COBRA continuation coverage under the Company’s health benefit plan (i.e.,
medical, dental and vision coverage), determined using the COBRA premium rate in
effect for the level of coverage that Employee has in place immediately prior to
the Employee’s Termination Date. Employee shall not be required to purchase
COBRA continuation coverage in order to receive the COBRA Payment, nor shall
Employee be required to apply the COBRA Payment towards any payment of
applicable premiums for COBRA continuation coverage. The payment shall be made
on the sixtieth (60th) day following Employee’s Termination Date (except as
otherwise required by Paragraph 19).

 

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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 or such successor provisions 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 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 to legitimately protect the Company’s
Business, and 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:

 

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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) (the “Restricted
Period”), Employee shall not, without the prior written authorization of the
Board of Directors of the Company: (a) accept, obtain, or hold a position as an
employee, consultant, agent or contractor or invest in or provide financing to a
Competitor within the Restricted Territory; or (b) perform any services within
the Restricted Territory for a Competitor that are the same as or substantially
similar to any services Employee performed for the Company in the course of
Employee’s employment with the Company.

ii. Should Employee violate any of the provisions of Paragraph 8.A(i), the
Company shall be entitled to remedies set forth in Paragraph 11 hereof, as well
as to all other remedies allowed by law.

iii. Notwithstanding the foregoing, Employee may, solely 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

 

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not be 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 prior written consent of the Board of Directors, directly or through
any other person: (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 (unless such
encouragement occurs within the scope of Employee’s duties for the Company and
for the Company’s benefit); or (C) otherwise interfere with the Company’s
relationship with any Company employee.

ii. Should Employee violate the provisions of Paragraph 8.B(i), the Company
shall be entitled to remedies set forth in Paragraph 11 hereof, as well as to
all other remedies allowed by law.

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,

 

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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. Notwithstanding the preceding, nothing in this Agreement shall prohibit
Employee from any disclosure required by applicable law or regulation or valid
legal process, provided Employee, to the fullest extent permitted by applicable
law, provides the Company advance notice of any potential disclosure under this
sentence and cooperates with the Company, at its expense and to the extent
lawful, in seeking appropriate protections from or limitations to such
disclosure.

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 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

 

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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
affiliated with the Company, with such resignations to be effective upon
Employee’s Termination Date.

B. For a period of 12 months following Employee’s Termination Date, Employee
covenants to provide further advice and assistance to the Company as may be
reasonably requested 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 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; provided that
Employee shall be paid reasonable compensation by the Company in the event
Employee is required to expend substantial time in the performance of such
services; provided that Employee may perform such services in a manner that does
not unreasonably interfere with Employee’s schedule or other employment obtained
by Employee; and provided that Employee shall be reimbursed for any expenses
reasonably incurred by Employee in the performance of the covenants herein set
forth in this Paragraph 9.B.

C. In addition, Employee agrees that he will, following his Termination Date,
reasonably cooperate with and provide reasonable 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

 

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counsel, Employee’s assistance or cooperation is needed. Employee shall, when
requested by the Company, provide testimony or other reasonable 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 accommodate
to the fullest extent practicable 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 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, laptop(s) computer disks, flash
drives, 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

 

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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 under this Agreement shall be
terminated forthwith; (ii) the Company’s obligation to pay or provide and
Employee’s right to receive such post-separation compensation, benefits and/or
Termination Compensation under this Agreement 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 post-separation compensation, benefits and/or
Termination Compensation previously paid by the Company under 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 $20,000.00 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 13 of this
Agreement.

 

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12. Employee’s Disclosure Obligation. Employee shall notify any prospective
employer with whom Employee seeks to be employed of the restrictive covenants
included in this Agreement. Absent such notification by Employee, the Company
may provide the prospective employer with notification.

13. 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 in no event later than 60 days after Employee’s
Termination Date, 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 in the form attached hereto as Appendix A (or as may be
modified if required by applicable law to accomplish the purposes of Appendix A,
and only to the extent so required) and which shall fully and irrevocably
release and discharge the Company, its directors, officers, agents and employees
from any and all claims, charges, complaints, liabilities of any kind, known or
unknown, owed to Employee; provided, however, that the Company delivers to
Employee an execution-ready version of such release no later than the seventh
(7th) day following Employee’s Termination Date.

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

 

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15. 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 related to the subject matter herein, including
without limitation the Previous Employment Agreement.

16. Choice of Law; Consent to Jurisdiction.

A. This Agreement shall be governed by and construed under the substantive laws
of the State of Delaware without regard to its choice of law or conflict of law
principles.

B. Employee and the Company hereby expressly and irrevocably consent to the
exclusive 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 for purposes of any action to enforce the provisions of
paragraphs 8 or 9 as contemplated by paragraph 11.

C. Employee and the Company hereby expressly and irrevocably agree that all
disputes between them other than those covered by paragraph 16.B (and,
correspondingly, by paragraphs 8, 9 or 11) shall be submitted to binding
arbitration for resolution in Charlotte, North Carolina in accordance with the
rules and procedures of the Employment Arbitration Rules and Mediation
Procedures of the American Arbitration Association then in effect. The Company
and Employee shall each bear 50% of the costs of arbitration. The decision of
the arbitrator(s) shall be final and binding upon the parties and shall be
rendered pursuant to a written decision that

 

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contains a detailed recital of the arbitrator’s reasoning. Each party shall pay
its own attorneys’ fees.

17. 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 addressed
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.    Lead Director 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

18. Section 280G Policy. In accordance with the Family Dollar Stores, Inc.
Policy Regarding Tax Adjustments for Certain Severance Benefits, dated
November 18, 2008, notwithstanding anything in this Agreement or the 2006
Incentive Plan to the contrary, in the event it shall be determined that any
payment or distribution of any type to Employee, pursuant to this Agreement or
the 2006 Incentive Plan, is or will be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such
excise tax, such payments shall be reduced (but not below zero) if and to the
extent that such reduction would result in Employee retaining a larger amount,
on an after-tax basis (taking into account federal, state and local income taxes
and the imposition of the excise tax), than if Employee received all of the
payments. The Company shall reduce or eliminate the payments, by first reducing
or

 

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eliminating the portion of the payments which are not payable in cash and then
by reducing or eliminating cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the determination. All determinations concerning the application of this
Section shall be made by a nationally recognized firm of independent accountants
or any nationally recognized financial planning and benefits consulting company,
selected by the Company and reasonably satisfactory to Employee, whose
determination shall be conclusive and binding on all parties. The fees and
expenses of such accountants shall be borne by the Company. The Company shall
hold in confidence and not disclose, without Employee’s prior written consent,
any information with regard to Employee’s tax position which the Company obtains
pursuant to this provision.

19. Compliance with Code Section 409A. It is intended that any payment or
benefit which is provided pursuant to or in connection with this Agreement which
is considered to be nonqualified deferred compensation subject to Code
Section 409A shall be paid and provided in a manner, and at such time, including
without limitation payment and provision of benefits only in connection with the
occurrence of a permissible payment event contained in Code Section 409A (e.g.
death, disability, separation from service from the Company and its affiliates
as defined for purposes of Code Section 409A), and in such form, as complies
with the applicable requirements of Code Section 409A to avoid the unfavorable
tax consequences provided therein for non-compliance. In connection with
effecting such compliance with Code Section 409A, the following shall apply:

A. Notwithstanding any other provision of this Agreement, the Company is
authorized to amend this Agreement, to void or amend any election made by
Employee under this Agreement and/or to delay the payment of any monies and/or
provision of any benefits in

 

27

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such manner as may be determined by it to be necessary or appropriate to comply,
or to evidence or further evidence required compliance, with Code Section 409A
(including any transition or grandfather rules thereunder); provided, however,
that before the Company may take any of such actions, the Company shall provide
notice to Employee reasonably in advance of such actions explaining the basis
for its determination that such actions are necessary and appropriate.

B. Neither Employee nor the Company shall take any action to accelerate or delay
the payment of any monies and/or provision of any benefits in any manner which
would not be in compliance with Code Section 409A (including any transition or
grandfather rules thereunder).

C. If Employee is a specified employee for purposes of Code
Section 409A(a)(2)(B)(i), any payment or provision of benefits that is
nonqualified deferred compensation subject to Code Section 409A and that is made
in connection with a separation from service payment event (as determined for
purposes of Code Section 409A) shall not be paid prior to the earlier of (x) the
expiration of the six-month period measured from the date of Employee’s
separation from service or (y) the date of Employee’s death (the “409A Deferral
Period”). In the event such payments are otherwise due to be made in
installments or periodically during the 409A Deferral Period, the payments which
would otherwise have been made in the 409A Deferral Period shall be accumulated
and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance
of the payments shall be made as otherwise scheduled. In the event benefits are
required to be deferred, any such benefit may be provided during the 409A
Deferral Period at Employee’s expense, with Employee having a right to
reimbursement from the Company once the 409A Deferral Period ends, and the
balance of the benefits shall be provided as otherwise scheduled.

 

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D. For purposes of this Agreement, all rights to payments and benefits hereunder
shall be treated as rights to receive a series of separate payments and benefits
to the fullest extent allowed by Code Section 409A. If under this Agreement, an
amount is to be paid in two or more installments, for purposes of Code
Section 409A, each installment shall be treated as a separate payment. In the
event any payment payable upon termination of employment would be exempt from
Code Section 409A under Treas. Reg. § 1.409A-1(b)(9)(iii) but for the amount of
such payment, the determination of the payments to Employee that are exempt
under such provision shall be made by applying the exemption to payments of
deferred compensation based on chronological order beginning with the payments
paid closest in time on or after such termination of employment.

E. For purposes of determining time of (but not entitlement to) payment or
provision of deferred compensation under this Agreement under Code Section 409A
in connection with a termination of employment, termination of employment will
be read to mean a “separation from service” within the meaning of Code
Section 409A.

F. With respect to any payments or benefits provided to Employee under this
Agreement which are subject either in whole or in part to Code Section 409A, the
Company shall discharge its obligations under this Agreement with respect to
such payments or benefits in compliance with all applicable requirements of Code
Section 409A. If Employee incurs any taxes or interest as a result of failure by
the Company or any agent of the Company to discharge its obligations under this
Agreement in compliance with the requirements of Code Section 409A, the Company
shall reimburse Employee in full for the amount of such taxes and interest (and
for the amount of any additional taxes payable with respect to such
reimbursement) so that

 

29

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Employee is restored to the same after-tax position in which Employee would have
been in had the noncompliance with Code Section 409A not occurred.

G. With regard to any provision herein that provides for reimbursement of
expenses or in-kind benefits that are subject to Code Section 409A, except as
permitted by Code Section 409A, (x) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit, and
(y) the amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year of Employee shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
taxable year of Employee, provided that the foregoing clause (y) shall not be
violated with regard to expenses reimbursed under any arrangement covered by
Code Section 105(b) solely because such expenses are subject to a limit related
to the period the arrangement is in effect. All reimbursements shall be
reimbursed in accordance with the Company’s reimbursement policies but in no
event later than Employee’s taxable year following Employee’s taxable year in
which the related expense is incurred.

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/ Mark R. Bernstein

Title:   

Lead Director

EMPLOYEE

/s/ Howard R. Levine

 

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Appendix A

Form of Release (“Release”)

                    , (“Executive”), for himself, and his assigns, heirs and
executors and for all persons claiming by or through him, does hereby forever
and unconditionally release Family Dollar Stores, Inc. (the “Company”) together
with its affiliated corporations or entities and their benefit plans, and each
of their respective past or present officers, directors, executives, employees,
agents and attorneys, from any and all claims or obligations whether known or
unknown, arising out of any matter, cause or thing occurring before the date
hereof, including without limitation all claims relating to or arising out of
Executive’s employment with the Company, alleged discrimination (including age
discrimination), retaliation, harassment, compensation, benefits, perquisites,
severance, outplacement, vacation pay, automobile expense, business expenses,
reimbursements of any kind, attorney’s fees, wages or bonuses owed to him, and
all claims or obligations arising out of his departure from the Company. This
Release covers any injuries, damages or claims not now known by Executive that
arise in any way out of events occurring prior to the date of the execution of
this Release. Provided, however, this Release shall not include any claims
relating to (i) the obligations of the Company to Executive that expressly
continue and survive under the Employment Agreement dated December     , 2012
(or any authorized amendment thereto); (ii) the Company’s obligation to
indemnify Executive under and pursuant to its existing indemnity policies;
(iii) Executive’s vested and accrued rights under the Company’s employee benefit
plans; (iv) Executive’s vested and accrued rights under the Company’s long-term
and annual incentive plans or (v) any rights or obligations of the Company that
cannot be released under applicable law.

Executive is advised of his right to have legal counsel review the terms of this
Release, and is provided a period of twenty-one (21) days in which to execute
this Release. Executive understands that he may execute this document prior to
the expiration of twenty-one (21) days from the date it has been presented to
him. This Release will not become effective until seven (7) days after the date
signed by Executive. Executive shall have a period of seven (7) days to revoke
his agreement to the provisions hereof. In the event that Executive revokes his
execution of this Release, all terms hereof will be null and void.

Executive represents that he (i) has had a reasonable amount of time in which to
review and consider this Release prior to signature, (ii) has in fact read the
terms of this Release, (iii) has the full legal capacity to enter into this
Release and has had the opportunity to consult with legal counsel before signing
this Release, (iv) fully and completely understands the meaning, intent, and
legal effect of this Release, and (v) has knowingly and voluntarily executed
this Release.

This Release is being provided by Executive under and pursuant to the terms of
the Employment Agreement dated December     , 2012 (or any authorized amendment

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thereto), as a condition to the receipt of valuable compensation and benefits
not otherwise owed by the Company to Executive.

This the      day of             , 20    .

[Executive’s Signature]