# **EXHIBIT 10**

#  

# Amendedas of

January 16, 2003

 

**FAMILYDOLLAR STORES, INC.**

**1989NON-QUALIFIED STOCK OPTION PLAN**

 

1.  Purpose.  The purpose of the 1989 Non-Qualified StockOption Plan (the “Plan”) of Family Dollar Stores, Inc. is to encourageownership of a stock interest in Family Dollar Stores, Inc. by certain officersand other key employees of the Company (as such term is defined below) as anadded incentive to remain in the employ of the Company and to increase theirefforts on its behalf, and in order for the Company to retain and attractpersons of competence, and to gain for the organization the advantages inherentin key employees having a sense of proprietorship.

 

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

 

2.  TheStock.  The shares of stock whichmay be issued and sold under the Plan shall not, except as such number may beadjusted pursuant to Article 10 hereof, exceed 7,374,010 shares of Common Stockof Family Dollar Stores, Inc. which may be either authorized and unissuedshares or issued shares reacquired by Family Dollar Stores, Inc.  Any shares subjected to an option under thePlan which terminates, is cancelled or expires for any reason unexercised as tosuch shares may again be subjected to an option under the Plan notwithstandingthe above limitation.

 

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

 

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

 

The Committee may grant more than one option to anemployee during the life of the plan and such option may be in addition to, orin substitution for, an option or options, previously granted.  The maximum aggregate number

 

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of shares of Common Stock of Family Dollar Stores,Inc. subject to options which may be granted under the Plan to any optioneeduring any twelve-month period is 450,000. No options shall be granted under the Plan after November 30, 2008.

 

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

 

5.  OptionPrice.  (a) The price or prices pershare for shares of Common Stock of Family Dollar Stores, Inc. to be soldpursuant to an option shall be such as shall be fixed by the Committee, but notless in any case than 100 percent of the fair market value per share for suchstock on the date of the granting of the option, subject to adjustment asprovided in Article 10 hereof.

 

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

 

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

 

6.               Period of Optionand Certain Limitations on Right to Exercise.

 

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

 

(i)  at anytime during the third year of the Option Period the optionee may purchase up to40 percent of the total number of shares to which his option relates (adjusted,if a fraction of a share would otherwise result thereby, to the nearest fullnumber of shares);

 

(ii)  at any time during the Option Period afterthe end of the third year the optionee may purchase on a cumulative basis up to70 percent of the total number of shares to which his option relates (adjusted,if a fraction

 

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of a share would otherwise result thereby, to the nearest full numberof shares); and

 

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

 

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

 

8.  Terminationof Employment.  If an optionee shallcease to be employed by the Company for any reason (other than death ordischarge for cause), he may, but only within three months after the date heceases to be an employee of the Company (and in no event after the expirationof the Option Period), exercise his option to the extent that he was entitledto exercise it at the date of such cessation. The Plan shall not confer upon any optionee any right with respect tocontinuation of employment by the Company, nor shall it interfere in any waywith his right or the Company’s right to terminate his employment at any time.  Notwithstanding any of the provisionshereinabove set forth, in the event that any optionee shall be discharged forcause, he shall forthwith forfeit all rights under any options granted to himunder the Plan.  “Cause” shall be deemedto include, but not be limited to, dishonesty, the proved commission of crime,disclosure of the Company’s affairs to competitors or other unfaithfulness tothe interests of the Company, continued absence except on account of theillness or disability, or gross insubordination.

 

9.  Death ofOptionee.  If an optionee dies whilein the employ of the Company, or within three months after the date he ceasesto be an employee of the Company (other than by reason of discharge for cause),the option theretofore granted to him shall be exercisable by the estate of theoptionee, or by a person who acquired the right to exercise such option bybequest or inheritance or by reason of the death of the optionee, but onlywithin a period of fifteen calendar months next succeeding such death (and inno event after expiration of the Option Period), and then only if and to theextent that he was entitled to exercise it at the date of his death, except asthe number of shares may be adjusted in accordance with the provisions ofArticle 10 hereof.

 

10.  Stock Adjustments.

 

(a)  In the event of a recapitalization, stocksplit, reverse stock split, stock dividend, reclassification, or merger,consolidation, or reorganization in which the Company is the survivingcorporation, or any

 

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other change in the corporate structure or Common Stock of the Company,the Committee shall make such adjustments, if any, proportionate to suchchange, as it may deem appropriate in the number of shares authorized by thePlan, in the number of shares covered by the options granted, and in the optionprice.

 

(b)  In theevent of dissolution or liquidation of the Company, or a reorganization, mergeror consolidation of the Company with one or more corporations in which theCompany is not the surviving corporation, or a sale of substantially all theproperty or more than eighty percent (80%) of the then outstanding stock of theCompany to another corporation, the Plan shall terminate and any optionheretofore granted pursuant to the Plan shall terminate unless provision bemade in writing in connection with such transaction for the continuance of thePlan and/or for the assumption of options theretofore granted, or thesubstitution for such options of new options covering the stock of a successoremployer corporation, or a parent or subsidiary thereof, with appropriateadjustments as to the number and kind of shares and prices, in which event thePlan and options theretofore granted shall continue in the manner and under theterms so provided.

 

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

 

11.  Administrationof the Plan.  The Plan shall beadministered by the Committee.  TheCommittee shall consist of two or more members of the Board who are appointedto the Committee by the Board, and each of whom is an “outside director” assuch term is defined in Section 162(m) of the Internal Revenue Code and anyregulations thereunder.  If any memberof the Committee does not meet the qualifications for an “outside director,”then that member shall be replaced with another director meeting suchqualifications such that the Committee shall always be comprised of at leasttwo persons meeting such qualifications. The Committee is authorized to establish such rules and regulations forthe proper administration of the Plan as it may deem advisable and notinconsistent with the provisions of the Plan. All questions arising under the Plan or under any rule or regulationwith respect to the Plan adopted by the Committee, whether such questionsinvolve an interpretation of the Plan or otherwise, shall be decided by theCommittee.

 

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

 

13.  Amendmentand Termination of Plan.

 

(a)  The Boardmay at any time suspend or terminate the Plan. The Board may also at any time amend or revise the terms of the Plan orany option to be granted thereunder, provided that no such amendment orrevision shall affect the determination of officers and directors toparticipate in the Plan or of the timing, pricing and amount of a grant, all ofwhich determinations and amendments and revisions thereof shall be made by the

 

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Committee, and provided further that, without stockholder approval, nosuch amendment or revision shall:

 

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

 

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

 

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

 

(b)  Noamendment, suspension or termination of the Plan shall, without the consent ofthe optionee, alter or impair any rights or obligations under any optiontheretofore granted under the Plan.

 

14.  Compliancewith Law and Other Conditions.  Noshares shall be issued pursuant to the exercise of any option granted under thePlan prior to compliance by Family Dollar Stores, Inc. to the satisfaction ofits counsel with any applicable laws.

 

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

 

16.  Approvalby Stockholders.  The Plan shallbecome effective December 1, 1988, subject to approval thereof by vote (inperson or by proxy) of the holders of a majority of all outstanding shares ofCommon Stock of Family Dollar Stores, Inc. entitled to vote at the annualmeeting of stockholders on January 19, 1989, called to take action thereon.

 

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