FAMILY DOLLAR STORES, INC.

                               2006 INCENTIVE PLAN
                               -------------------

                     Guidelines for Annual Cash Bonus Awards
                     ---------------------------------------

1.       Purpose

Family Dollar Stores, Inc. (the "Company") maintains for the benefit of eligible
individuals  the Family Dollar  Stores,  Inc. 2006  Incentive Plan (the "Plan"),
which is  intended  to provide  flexibility  to the  Company  in its  ability to
motivate,  attract,  and  retain the  services  of such  individuals  upon whose
judgment,  interest,  and special effort the successful conduct of the Company's
operation is largely  dependent.  These  Guidelines for Annual Cash Bonus Awards
(the  "Guidelines")  are  intended to implement  the Plan by providing  eligible
Associates of the Company an opportunity to participate in the Company's success
by earning annual  incentive  compensation  in the form of a cash bonus based on
the  Company's  achievement  of  pre-tax  earnings  goals  and  the  Associates'
contributions to meeting such goals.

These Guidelines are adopted pursuant to relevant provisions of the Plan and are
to be  interpreted  and  applied  in  accordance  with the terms and  provisions
thereof.   Specifically,   these   Guidelines   provide   for   the   grant   of
Performance-Based  Cash Awards under  Article 9 of the Plan and, with respect to
Covered Employees, the grant of Qualified Performance-Based Awards under Article
14 of the Plan.  Unless  otherwise  provided herein,  capitalized  terms used in
these Guidelines will have the meaning given such terms in the Plan.

2.       Scope

The  Guidelines  cover  eligible  Associates  as described in Section 3 of these
Guidelines.  The Guidelines  cover the Company's fiscal (not calendar) year that
is the  12-month  period that  generally  runs from  approximately  September to
August. The actual dates for the fiscal year are determined and announced by the
Company prior to the beginning of each fiscal year.

3.       Eligibility

Eligibility  for  participation  in the Plan  under  these  Guidelines  shall be
determined by any of the Chairman and Chief Executive Officer,  the President or
the Senior Vice President, Human Resources (or their designees) and communicated
to department heads. Additional eligibility requirements are as follows:

     o    An Associate must be classified as a regular,  full-time  employee for
          the entire fiscal year or the Associate's  entire employment period in
          the fiscal year if the Associate was hired subsequent to the beginning
          of the fiscal year.
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     o    An  Associate  must be hired and on the active  payroll as a full-time
          employee as of the first  business day after May 31 of the  applicable
          fiscal year in order to participate during that fiscal year.

     o    If an  Associate,  whose  position was  previously  not  identified as
          eligible for  participation in the Plan under these Guidelines and who
          was eligible to  participate  in another  bonus plan, is promoted to a
          position  eligible to participate  in the Plan under these  Guidelines
          during the relevant  fiscal year,  such Associate will  participate in
          each  plan,  subject  to its  conditions,  on a  prorated  basis.  The
          prorated  calculation  will be based  upon  the  number  of weeks  and
          respective salary in each position.

     o    If an Associate's  position is changed during the relevant fiscal year
          and as a result of that change the bonus percentage  applied in his or
          her individual bonus  calculation  under these Guidelines is affected,
          such  Associate  will  participate  on a prorated  basis at each bonus
          percentage level based upon the number of weeks and respective  salary
          in each position.

     o    Except  as  otherwise  provided  below,  an  Associate  must be on the
          payroll in a regular,  full-time,  active status when bonus checks are
          issued  in  order  to  receive  payment  under  these  Guidelines.  An
          Associate on leave of absence,  regardless  of type,  will receive the
          bonus payment only upon return to regular,  full-time,  active status;
          provided,  however,  that  Associates  on a  Company  approved  family
          medical leave or approved military leave will be issued payment at the
          time  bonus  checks  are  issued  even if they  have not  returned  to
          regular, full-time, active status at that time.

     o    An Associate  whose  employment  with the Company  terminates  for any
          reason,   other  than  death  or  termination  of  employment  due  to
          Disability or  Retirement,  prior to the issuance of bonus checks will
          forfeit any bonus such Associate otherwise would have been entitled to
          receive.

     o    An Associate  who dies or terminates  employment  due to Disability or
          Retirement after the end of the fiscal year but before the issuance of
          bonus checks will not forfeit the bonus which the Associate would have
          otherwise been entitled to receive.

     o    An  Associate  who dies or  terminates  employment  due to  Disability
          during a fiscal year will participate on a prorated basis in the bonus
          program based upon the number of weeks of employment  with the Company
          during such fiscal year and based upon an assumed  performance  rating
          of Satisfactory.

     o    An Associate who  terminates  employment  due to  Retirement  during a
          fiscal year will  participate on a prorated basis in the bonus program
          based upon the number of weeks of employment  with the Company  during
          such fiscal year;  provided that the Associate's term of employment is
          at least  one-half of the fiscal  year.  An Associate  who  terminates
          employment due to Retirement in the first half of the fiscal year will

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          not receive any bonus amounts  pursuant to these  Guidelines  for such
          fiscal year.

     o    These  Guidelines  do not in any  manner  restrict  the  right  of the
          Company or the Associate to terminate  employment at any time, for any
          reason, with or without cause.

     o    An Associate otherwise meeting all of the eligibility  requirements of
          these Guidelines,  but whose performance rating for the fiscal year is
          at the  Unsatisfactory/Does  Not  Meet  Expectations  level,  will not
          participate  in the Plan under these  Guidelines  or be  eligible  for
          bonus for that fiscal year.

4.       Target Bonus Amount and Adjustments for Performance

The target  bonus  amount  for an  Associate  under  these  Guidelines  equals a
percentage of the Associate's base compensation  received in the relevant fiscal
year,  generally  ranging  from 10% to  100%.  (See  above  for  changes  in the
Associate's  position during the fiscal year.) The applicable  percentage for an
Associate will be established by Human Resources and  communicated to department
heads.  The actual bonus amount for the fiscal year,  if any, will be determined
as a percentage of the target bonus amount  depending on Company and  individual
performance as follows:

          A. Company pre-tax earnings vs. Target

               o    The Board of Directors of the Company  determines  prior to,
                    or within 90 days after the beginning of, each fiscal year a
                    pre-tax earnings goal for the fiscal year.

               o    In addition,  under  relevant  provisions  of the Plan,  the
                    pre-tax  earnings  goal for the relevant  fiscal year may be
                    further   adjusted  to  reflect   extraordinary   events  or
                    circumstances  affecting the Company or its business,  which
                    render such goal unsuitable.

               o    Achievement  of the pre-tax  earnings  goal  determines  the
                    first part of the bonus  calculation under these Guidelines.
                    Achievement  at the 100% level would  provide for payment at
                    the Guidelines'  "target" payout percentage (a percentage of
                    the Associate's base salary times an established  individual
                    performance multiplier - See B below).

               o    If the pre-tax  earnings goal is exceeded,  the target bonus
                    amount will  increase by 3.33% for each 1% by which the goal
                    is  exceeded,  to a  maximum  of 50%  additional  bonus  for
                    exceeding the goal by 15%, and  thereafter  will increase by
                    5% for each 1% by which the goal is  exceeded,  to a maximum
                    of an  additional  50%  bonus  (up to a total of  200%)  for
                    exceeding the goal by 25%.

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               o    If the pre-tax  earnings  goal is not  achieved,  the target
                    bonus amount will decrease by 3.33% for each 1% by which the
                    goal is not achieved, with no bonus being payable if pre-tax
                    earnings are less than 85% of the goal.

               o    Calculation  of  the  target  bonus  payout   percentage  as
                    described in the previous two paragraphs is reflected in the
                    following chart:

               ------------------------------ ----------------------------
                Performance  Level  Against    Payout as  Percent (%) of
                Pre-Tax Earnings Goal *        Target Bonus Opportunity
               ------------------------------ ----------------------------
                >= 125%                        200%
               ------------------------------ ----------------------------
                115%                           150%
               ------------------------------ ----------------------------
                100%                           100%
               ------------------------------ ----------------------------
                85%                            50%
               ------------------------------ ----------------------------
                < 85%                          0%
               ------------------------------ ----------------------------
               * Linear interpolation will be used for performance between
                 stated levels.

          B.   Individual  Associate  performance  level for the fiscal  year as
               determined  on a  five  point  rating  scale  and  the  incentive
               grouping / position level of the Associate.

               o    A  performance  multiplier  is applied  to the target  bonus
                    amount for which an  individual  Associate is  eligible,  as
                    determined by the Associate's position level. The multiplier
                    is  determined  using two  factors:  individual  performance
                    level  and  incentive   level   grouping  as  determined  by
                    position.

               o    Six incentive  groupings  have been  established  based upon
                    position levels within the Company.  The higher the position
                    level,   the  more  heavily  weighted  the  Company  pre-tax
                    earnings  performance becomes. The following ratios are used
                    to establish the multiplier:

                     1.  Incentive Group 1
                     80/20 (80% individual performance, 20% Company performance)
                     2.  Incentive Group 2
                     60/40 (60% individual performance, 40% Company performance)
                     3.  Incentive Group 3
                     40/60 (40% individual performance, 60% Company performance)
                     4.  Incentive Group 4
                     20/80 (20% individual performance, 80% Company performance)
                     5.  Incentive Group 5
                     10/90 (10% individual performance, 90% Company performance)
                     6.  Incentive Group 6
                     100% (100% Company performance), subject to additional
                     rules set forth below.

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               o    A  matrix  is   developed   annually  by  the  Company  that
                    incorporates  the Company payout ratio, the incentive groups
                    outlined  above,  and the  eligible  individual  performance
                    ratings ranging from Outstanding  (Exceeds  Expectations) to
                    Needs Improvement (Meets Most  Expectations).  The resulting
                    multiplier is a function of these elements and is reflective
                    of individual eligibility and performance level.

          C. Qualified Performance-Based Awards

         Notwithstanding  anything  in these  Guidelines  to the  contrary,  the
         following  provisions  will  apply to any  Associate  who is a  Covered
         Employee for purposes of benefiting  from the Section 162(m)  Exemption
         applicable  to Qualified  Performance-Based  Awards under Article 14 of
         the Plan. Please refer to the Plan document for further information.

               o    All  determinations  under these  Guidelines will be made by
                    the  Committee  which,  pursuant to section 4.1 of the Plan,
                    will  consist  of  all  the  members  of  the   Compensation
                    Committee who are "outside  directors" within the meaning of
                    Section 162(m) of the Code.

               o    The  Committee  will  establish  the target bonus amount for
                    each  Associate  covered by this Section 4.C and the pre-tax
                    earnings goal for the fiscal year.

               o    Notwithstanding the foregoing, the Committee will adjust the
                    pre-tax  earnings  goal for the fiscal year with  respect to
                    each  Associate  covered by this  Section 4.C to  adequately
                    reflect the  occurrence,  during such fiscal year, of any of
                    the events described in Section 14.4 of the Plan.

               o    Payment  of any cash bonus  under  these  Guidelines  to any
                    Associate  covered by this Section 4.C is  conditioned  upon
                    the  written   certification   of  the  Committee  that  the
                    performance   goals  and  any  other   material   conditions
                    applicable to such award were satisfied.

               o    The Committee  will retain the  discretion to decrease,  but
                    not increase, the amount of any cash bonus otherwise payable
                    to any  Associate  covered by this Section 4.C in accordance
                    with the applicable  performance  formula  described  above.
                    Specifically,  with respect to any Associate covered by this
                    Section  4.C who is not a member  of the  Incentive  Group 6
                    described  above (and whose bonus therefore is calculated in
                    part   on   the   basis   of  the   Associate's   individual
                    performance),   the  Committee  will  use  the   Associate's
                    individual  performance  level for the relevant  fiscal year
                    solely for purposes of decreasing  (to the extent  permitted

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                    by the performance  formula  described  above) the amount of
                    any cash bonus  otherwise  payable to the Associate,  if the
                    Committee deems it appropriate in its discretion.

               o    In no event  will the  amount  of any cash  bonus  otherwise
                    payable  to any  Associate  covered by this  Section  4.C in
                    accordance with the applicable performance formula described
                    above exceed $1,000,000.

               o    Payment  of any cash bonus  under  these  Guidelines  to any
                    Associate  covered by this Section 4.C is  conditioned  upon
                    the Plan having been previously approved by the shareholders
                    of the Company.

6.       Additional Rules

               o    Notwithstanding   anything  in  these   Guidelines   to  the
                    contrary,  the total annual bonus pool  available for awards
                    made   pursuant  to  these   Guidelines   to   participating
                    Associates  in the relevant  fiscal year shall be determined
                    by the  Committee  (subject  to the  rules  described  above
                    relating to Qualified  Performance-Based  Awards)  after the
                    end of such fiscal  year,  and will in no event exceed 7% of
                    the net profit realized by the Company and its  subsidiaries
                    during such fiscal year,  computed on a  consolidated  basis
                    determined  in  accordance   with  the  generally   accepted
                    accounting  principles,  before any deduction for federal or
                    state income  taxes and before any  deduction in respect of,
                    or provision for, (i)  appropriations or distributions  made
                    or to be made under these Guidelines,  or (ii) payments made
                    to officers or other  employees under any agreement or other
                    arrangements  based  upon  or  relating  to  profits  of the
                    Company or any of its  subsidiaries,  years of service  with
                    the Company or any of its subsidiaries or performance of the
                    Company's  retail  stores;  provided  that the Committee may
                    make the same  adjustments to such net profit as may be made
                    by the Committee  with respect to the pre-tax  earnings goal
                    to  recognize or to exclude any  adjustment  as set forth in
                    Section 14.4 of the Plan.

               o    Bonuses  earned  under these  Guidelines  are expected to be
                    paid within  seventy-five (75) days following the end of the
                    month in which the fiscal year comes to an end.

               o    All bonus  payments  under these  Guidelines  are considered
                    supplemental  pay and will be  taxed  as  such.  Appropriate
                    withholding and deductions will be taken from such payments.
                    Percentages will be rounded to the nearest 1/10 of a percent
                    (for example,  10.3%). Amount of bonus will be rounded up to
                    the nearest whole dollar.

               o    The amount of an  Associate's  earnings  for the fiscal year
                    which have actually been paid to the Associate  will be used
                    in determining the calculation.  This  calculation  excludes

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                    the salary elements for Company  Aircraft,  Company Car, GTL
                    Imputed  Income,  or any bonus  payments  issued  during the
                    fiscal year.

               o    These  Guidelines  cannot be changed or modified by a verbal
                    communication  or course of  dealing,  but only by a written
                    communication  signed  by  the  Chairman,   Chief  Executive
                    Officer or President of the Company.

               o    In the event of major economic changes, catastrophic events,
                    or any other  circumstances  not contemplated by the Company
                    (but  subject  to the  rules  described  above  relating  to
                    Qualified  Performance-Based Awards), the Committee reserves
                    the right to alter, amend, or terminate these Guidelines and
                    any awards hereunder.

               o    The Chairman,  Chief  Executive  Officer or President of the
                    Company   will  make  all  final   decisions,   rulings  and
                    interpretations under these Guidelines (subject to the rules
                    described  above  relating  to  Qualified  Performance-Based
                    Awards,  which  may  require  action by the  Committee).  By
                    participating  in the  Plan  under  these  Guidelines,  each
                    Associate   agrees   that  such   decisions,   rulings   and
                    interpretations  will be final and that each  Associate will
                    be bound by them. Each Associate  further agrees that if and
                    when any  circumstances  arise relating to these  Guidelines
                    which are not covered by this  description  of the Plan, the
                    Associate  will be bound by the  final  decision,  ruling or
                    interpretation  of the Chairman,  Chief Executive Officer or
                    President of the Company.

               o    In the event the  Company  restates  its  financial  results
                    within  twelve  (12)  months of the payment of a bonus under
                    these  Guidelines  due  to  material  non-compliance  by the
                    Company with any  financial  reporting  requirements  of the
                    federal   securities   laws,  as  a  result  of  intentional
                    misconduct  (as  determined  by the members of the Board who
                    are "independent" under the Company's  Corporate  Governance
                    Guidelines),   the  Company's   executive   officers   shall
                    reimburse the Company the difference  between (x) the amount
                    of the bonus actually  awarded to the executive  officer and
                    (y) the amount of the bonus  such  executive  officer  would
                    have  received  had the amount of the bonus been  calculated
                    based on the restated financial statements.

     Adopted by the Compensation Committee: October 3, 2006
     Amended August 28, 2007, November 5, 2007