Exhibit
10(iii)


 


	
  STATE OF NORTH CAROLINA

  	
   

  	
  AMENDMENT TO

  
	
   

  	
   

  	
  EMPLOYMENT AGREEMENT

  
	
   

  	
   

  	
   

  
	
  COUNTY OF MECKLENBURG

  	
   

  	
   

  



 


THIS AMENDMENT, made and
entered into effective the 29th day of August 2004, by and between FAMILY
DOLLAR STORES, INC., a Delaware corporation (hereinafter referred to as the
“Company”); and R. James Kelly (hereinafter referred to as the “Employee”);


 


W I T N E S S E T H:


 


WHEREAS, the Company and the
Employee entered into an Employment Agreement effective December 17, 1996, as
amended by Amendments to Employment Agreement effective June 21, 1999,
September 2, 2001, September 1, 2002, and August 31, 2003 (hereinafter referred
to as the “Agreement”); and


 


WHEREAS, the Company and the
Employee desire to amend the Agreement;


 


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


 


1.                    Section
1.04 of the Agreement is amended by adding “Idaho” to the list of states
constituting the “Present Territory.”


 


2.                    Section
2 of the Agreement is deleted and the following is substituted in lieu thereof:


 


“2.     Employment.  The Employee shall be employed by the
Company and any Affiliate in the capacity provided for in Paragraph 3 for the
period commencing August 29, 2004 (the “Commencement Date”), and ending on
August 27, 2005, or upon the termination of this Agreement as provided in
Paragraph 6.”


 


3.                    The first sentence of Section 5.01 of the
Agreement is deleted and the following sentence is substituted in lieu thereof.


 


“5.01                          In consideration of the services to be
rendered by the Employee pursuant to this Agreement, the Company shall pay, or
cause to be paid, to the Employee a weekly base salary from August 29, 2004 to
August 27, 2005, of $8,846.16 ($460,000.00 per annum).”


 


4.                    Subparagraph (a) of Section 5.02 of the
Agreement is deleted and the following subparagraphs are substituted in lieu
thereof:


 


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


 


(a)
Participate in the Company’s Target Bonus Plan, as it may be amended or
modified in any respect, including achievement of established goals, as Vice
Chairman for the fiscal year commencing August 29, 2004.  The Target Bonus Plan generally will give
the Employee the opportunity to earn a bonus of up to sixty-five (65%) percent
of the Employee’s base salary actually received for services on and after
August 29, 2004, through August 27, 2005, for the fiscal year ending August 27,
2005, subject to the Company’s achievement of certain financial goals to be
established, the Employee’s performance, and all terms and conditions of the
Target Bonus Plan as in effect for such fiscal year; provided that the amount
of bonus paid may not be increased by the annual individual performance rating
of the employee by the Chairman of the Board. 
The Employee acknowledges that he has received a copy of the form of the
Target Bonus Plan and Bonus Conditions and is familiar with the terms and
conditions thereof.  Nothing contained
herein shall limit the Company’s right to alter, amend or terminate the Target
Bonus Plan at any time for any reason. 
The Employee further acknowledges that, as provided in the Target Bonus
Plan, in the event the Employee is not employed


 

















 


by the Company, for whatever reason, at the
time the bonus for the fiscal year is actually paid to participants in the
Target Bonus Plan following the end of the fiscal year, the Employee will not
be entitled to receive the bonus.


 


5.                    Section 5.02 (c) of the Agreement is deleted
and the following is substituted in lieu thereof:


 


“(c) Take twenty days
(exclusive of Saturdays, Sundays and paid Company holidays) of vacation during
the twelve month period commencing August 29, 2004.  Vacation time will accrue ratably during the course of said
period and cannot be accumulated from year to year except that up to five days
of vacation not taken in said twelve month period may be carried over to the
next twelve month period.”


 


6.       Section 6.02 of the Agreement is deleted and the following is
substituted in lieu thereof:


 


“6.02.  Upon termination of this Agreement by the Company,
other than for Cause, except for the provisions of Paragraph 4, the Employee’s
employment under the terms of this Agreement and all other agreements and
contracts between the Employee, the Company and the Company’s Affiliate and
subsidiary corporations, shall be terminated effective on the Termination
Date.  In the event the Company
terminates this Agreement prior to August 27, 2005, for reasons other than for
Cause or Medical Disability, the Company shall pay to the Employee one hundred
eighty (180) days of the base salary set forth in Paragraph 5.01 above (which
shall constitute payment in full of the compensation due to the Employee
hereunder).  Any such payments shall be
made in six (6) equal monthly installments with the first installment due and
payable not later than thirty (30) days after the Termination Date.  Payments made by the Company to the Employee
under this Paragraph 6.02 are herein called “Termination Compensation.”  In the event the Employee accepts or begins
other employment as an employee, consultant or in any other capacity prior to
the date on which the last monthly installment of Termination Compensation is
due and payable, the monthly payments of any unpaid balance of the Termination
Compensation as of the date of such new employment shall be (i) eliminated if
the monthly base salary and all other monthly remuneration and compensation
from the new employment exceeds the monthly base salary of the Employee in
effect on the date of the notice, or (ii) reduced to the amount by which the
monthly base salary of the Employee in effect on the date of the notice exceeds
the monthly base salary and all other monthly remuneration and compensation
from the new employment.  The Employee
agrees to pursue reasonable, good faith efforts to obtain other employment in a
position suitable to his background and experience.


 


In the event this Agreement is not terminated by the
Company or the Employee for any reason prior to August 27, 2005, and the
Company and the Employee do not agree in writing before August 27, 2005, to
extend the term of this Agreement beyond August 27, 2005, or to enter into a
new agreement to extend the employment relationship beyond August 27, 2005,
this Agreement shall terminate automatically on August 27, 2005, which shall be
the Termination Date, and the Company shall pay to the Employee sixty (60) days
of the base salary set forth in Paragraph 5.01 (which shall constitute payment
in full of the compensation due to the Employee hereunder).  Any such payments shall be made in two (2)
equal monthly installments with the first installment due and payable not later
than thirty (30) days after the Termination Date.”


 


7.                    In Section 8
of the Agreement in the first sentence, delete the date “August 28, 2004” and
substitute in lieu thereof the date “August 27, 2005,” and in the eighth line
delete “sixty (60%)” and substitute in lieu thereof “sixty-five (65%).”


 


8.                    All other terms and provisions of the
Agreement shall remain in full force and effect.


 


2

















 


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


 


	
   

  	
  FAMILY DOLLAR STORES, INC.

  
	
   

  	
   

  
	
  Attest:

  	
  By

  	
  /s/ Howard R. Levine

  	
   

  
	
   

  	
   

  	
  Chairman of the Board

  
	
  /s/ George R. Mahoney,
  Jr.

  	
   

  	
   

  
	
  Secretary

  	
   

  
	
   

  	
   

  
	
  (Corporate Seal)

  	
   

  
	
   

  	
   

  	
  /s/ R. James Kelly 

  	
   (SEAL)

  
	
   

  	
   

  	
  R. James Kelly

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
  /s/ Florence W. Stanley

  	
   

  	
   

  



 


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