Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


This
Employment Agreement (this “Agreement”) is effective this 7th day of October,
2008 (the “Date of this Agreement”), by and between HOWARD 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 contract of employment, dated August 18,
2005, as amended by agreement dated August 17, 2006 (as amended, 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 in such modified capacity, and 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 effective as of September 7, 2008, (iii) an award opportunity
under the Company’s Incentive Bonus Plan for the fiscal year beginning August 31,
2008, (iv) an award of Performance Share Rights under the 2006 Incentive
Plan for the 3-year performance period commencing August 31, 2008, and (v) an
award of stock options under the 2006 Incentive Plan with a grant date of October 7,
2008.


 


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,
including without limitation the Previous Employment Agreement between Employee
and the Company.


 


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


 


A.            “Cause” –  i.  At
any time after a Change in Control, Cause means any of the following acts by Employee,
as determined by the Compensation Committee of the Board of Directors of the
Company:  (a) gross neglect of duty,
(b) prolonged absence from duty without 


 





















 


the consent of the Company, (c) intentionally
engaging in any activity that is in conflict with or adverse to the business,
reputation or other interests of the Company, or (d) willful misconduct,
misfeasance or malfeasance of duty which is reasonably determined to be
detrimental to the Company. The determination of the Compensation Committee as
to the existence of “Cause” shall be conclusive on Employee and the Company.


 


ii.             At any time prior to a Change in
Control, Cause means any of the following: (a) conviction of a felony, any
act involving moral turpitude, or a misdemeanor where imprisonment is imposed, (b) commission
of any act of theft, fraud, dishonesty, or falsification of any employment or
Company records, (c) improper disclosure of the Company’s confidential or
proprietary information, (d) Employee’s failure to comply with reasonable
written directives of the Chairman of the Board or the Board of Directors of
the Company, (e) a course of conduct amounting to gross incompetence, (f) chronic
and unexcused absenteeism, or (g) misconduct in connection with the
performance of any of Employee’s duties, including, without limitation,
misappropriation of funds or property of the Company, securing or attempting to
secure personally any profit in connection with any transaction entered into on
behalf of the Company, misrepresentation to the Company, or any violation of
law or regulations on Company premises or to which the Company is subject.


 


B.            “Change in Control” – Change in
Control shall have the meaning set forth in Section 2.1(f) of the
2006 Incentive Plan; provided, however, that to the extent
applicable under Section 409A of the Code, for purposes of paying certain
severance payments within 24 months after a Change in Control under Paragraph 4
below, Change in Control shall have the same meaning as set forth in any
regulations, revenue procedure, revenue rulings or other pronouncements issued
by the Secretary of the United States Treasury pursuant to 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 offer for sale, low-cost, basic merchandise for family and
home needs, including perishable and non-perishable goods.


 


E.             “Competitive Position” –
Competitive Position means any employment with or activity or service performed
for a Competitor (whether as owner, member, manager, lender, partner,
shareholder, member, consultant, agent, employee, co-venturer or otherwise) in
which (i) Employee will use or could reasonably be expected to use any
Confidential Company Information or Trade Secrets of the Company for the
benefit of a Competitor in competition with the Company; or (ii) Employee
will hold a position, have duties, or perform services for such Competitor that
is or are the same as or substantially similar to Employee’s position with,
duties for, or services actually performed for the Company during Employee’s
employment with the Company.


 


F.             “Competitor” – Competitor means (i) any
person or entity whose business is the same as or substantially similar to the
Company’s Business; (ii) any person or entity who 


 


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


 


G.            “Confidential Company Information” –
Confidential Company Information means, unless otherwise available to the
public, (i) any and all information relating to the Company’s methods of
operation, source of merchandise supply, organizational details, personnel
information, marketing plans, 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
time and whether in electronic, print or other form and all copies, notes, or
other reproductions thereof.


 


H.            “Disability” –  Disability shall
have the meaning set forth in Section 2.1(m) of the 2006 Incentive
Plan.


 


I.              “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.


 


J.             “Good Reason” – Good Reason means
any of the following acts by the Company, without the consent of Employee (in
each case, other than an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by Employee): (i) a reduction by the Company in
Employee’s base salary; (ii) a direct or indirect material reduction by
the Company in Employee’s aggregate annual and long-term incentive compensation
opportunities, such as through a reduction in target or maximum award
opportunities, a change in the performance goals or formulas for earning awards
resulting in a material increase in the degree of difficulty of achieving
target performance, or similar changes; (iii) a material reduction in
Employee’s position, duties and responsibilities, assignment to duties
inconsistent with such position or material adverse change in reporting
relationships, (iv) with respect to an employee who is stationed at the
Company’s headquarters in Charlotte, North Carolina, or in Matthews, North
Carolina, the Company requiring Employee, without his or her consent, to be
based at any office 


 


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or location more than 35 miles
from the location at which Employee was stationed immediately prior to a Change
in Control, or (v) the continuing material breach by the Company of any
employment agreement between Employee and the Company after the expiration of
any applicable period for cure.


 


K.            “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.


 


L.             “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, or (ii) the Company is planning to conduct
the Company’s Business on Employee’s Termination Date and Employee has
knowledge, or should have knowledge, of such Company plans.


 


M.           “Target Bonus” – Target Bonus means
Employee’s “target bonus” for the applicable fiscal year within the meaning of Section 4
of the Incentive Bonus Plan.


 


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


 


O.            “2006 Incentive Plan” – 2006
Incentive Plan means the Family Dollar Stores, Inc. 2006 Incentive Plan,
as in effect from time to time.


 


3.             Employment. 
The Company hereby continues the employment of Employee, in such
modified capacity, 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 be employed as Chairman of the
Board and Chief Executive Officer of the Company and shall perform such
reasonable duties and responsibilities as the Board of Directors of the Company
may, from time to time, assign to Employee. 
Employee agrees to accept this employment and to devote his full time
and attention and his best efforts, ability and fidelity to the performance of
the duties attaching to such employment. 
In addition, 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 written consent of the Company.


 


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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 weekly
base salary as established by the Board of Directors of the Company.  The base salary shall be reviewed annually by
the Board in connection with its annual review of executive compensation, unless
Employee’s employment shall have been terminated earlier pursuant to the
Agreements, to determine if such base salary should be increased for the
following year in recognition of services to the Company and shall initially be
set at a rate not less than Employee’s current annual salary.  The salary shall be payable at such intervals
in conformity with the Company’s prevailing practice as such practice shall be
established or modified from time to time.


 


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 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.             Employee shall be entitled to
participate in any group life insurance plan, group health and 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 Employee’s complying with 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.            Additional benefits and/or
compensation in such form and in such manner and at such times as the Board of
Directors of the Company, in the exercise of its absolute discretion, shall
determine, and/or as otherwise provided by the Company, consistent with
benefits and/or compensation currently provided to Company employees in similar
positions.


 


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 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 annually reviewed and established by the Compensation
Committee; provided that the Company shall impute income to Employee as taxable
compensation as required by Internal Revenue Code of 1986, as amended, 


 


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with respect to such usage and
further provided 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 Prior to a
Change in Control.   Subject to the provisions of Paragraphs 8 and
11 hereunder, in the event of Employee’s termination by the Company without
Cause or due to Employee’s Disability or death, in each case prior to a Change
in Control, the Company shall provide Employee with the following severance
benefits:


 


(i)            The Company shall continue the payment of Employee’s base
salary in effect on the date of such termination of employment 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 the date of termination over said period, commencing as soon as
administratively practicable, but in no event more than sixty (60) days,
following the Participant’s date of termination of employment (except as
otherwise required by Paragraph 17). 
Such salary continuation payments shall not be considered eligible
compensation under any of the Company’s employee benefit plans.


 


(ii)           If Employee’s date of termination of employment 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 the date of termination of employment 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.


 


(iii)          For the number of months set forth in clause (i) above
after Employee’s date of termination of employment, but not to exceed 18 months,
the Company shall continue to provide health insurance coverage and benefits to
Employee and Employee’s dependents as if Employee’s employment had not been
terminated, including but not limited to the provision of the Company’s Medical
Expense Reimbursement Plan (the “MERP”). Any period during which health
benefits are continued pursuant to this Paragraph shall be considered to be in
satisfaction of the Company’s obligation to provide “continuation coverage”
pursuant to Section 4980B of the Code, and the period of coverage required
under said Section 4980B shall be reduced by the period during which
health benefits were provided pursuant to this Paragraph.


 


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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.”  Such Termination Compensation shall be
reduced, in whole or in part, by: (x) all other salary, bonus, consulting
fees or other compensation received by or payable to Employee for services
rendered in any capacity to any third party during the period that such
Termination Compensation is paid; (y) all disability or life insurance
payments made pursuant to disability or life insurance policies provided by and
paid for by the Company to Employee and which payments are received during the
period that such Termination Compensation is paid; and (z) comparable
health insurance coverage actually received by Employee for services rendered
in any capacity to any third party during the period that such Termination
Compensation is paid.  Employee agrees to
pursue reasonable, good faith efforts to obtain other employment in a position
suitable to Employee’s background and experience. Moreover, Employee agrees to
notify the Company within three business days of obtaining other employment
during the time period in which Employee is receiving Termination
Compensation.  Notwithstanding any of the
foregoing, Employee’s Termination Compensation shall be subject to forfeiture
as set forth below in Paragraphs 8 and 11.


 


7.             Severance Payable in connection with a Change in
Control.  In the event of a
Change in Control and a termination of Employee’s employment within 24 months after
such Change in Control either by the Company without Cause or by Employee for
Good Reason, the Company shall provide Employee with the following severance
benefits:


 


(i)            The Company shall pay to Employee in a lump sum in cash
within 30 days after the date of such termination of employment an amount equal
to the product of (x) thirty-six (36) months and (y) the sum of (A) Employee’s
monthly base salary at the highest 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)           For the number of months represented by the multiple set
forth in clause (i) (x) above after Employee’s date of termination of
employment, but not to exceed 18 months, the Company shall continue to provide
health insurance coverage and benefits to Employee and Employee’s dependents as
if Employee’s employment had not been terminated, including but not limited to
the provision of the Company’s Medical Expense Reimbursement Plan (the “MERP”).
Any period during which health benefits are continued pursuant to this
Paragraph shall be considered to be in satisfaction of the Company’s obligation
to provide “continuation coverage” pursuant to Section 4980B of the Code,
and the period of coverage required under said Section 4980B shall be
reduced by the period during which health benefits were provided pursuant to
this Paragraph.  Such health insurance
coverage shall be subject to offset as provided in Paragraph 3 above for
comparable coverage received by Employee from a third party during the
continuation period.


 


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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 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 in that these restrictions are limited to the multi-merchandise
retail industry and to the legitimate protection of the Company’s Business, and
that they 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:


 


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 or period(s) of time required for
litigation to enforce the provisions of this Paragraph 8.A(i)) (the “Restricted
Period”), Employee shall not, without the prior written consent of the Company,
directly or indirectly, accept, obtain, or hold a Competitive Position within
the Restricted Territory with a Competitor. 
Notwithstanding the foregoing, the provisions of this Paragraph 8.A(i) shall
not apply from and after a Change in Control.


 


ii.             Employee agrees that in the event
Employee, without the Company’s prior written consent, directly or indirectly
accepts, obtains, or holds a Competitive Position within the Restricted
Territory with a Competitor during the period between the expiration date of
the Restricted Period and the date of the Company’s final payment to Employee
of any Termination Compensation under this Agreement (the “Concluding
Compensation Period”), the Company shall be entitled to terminate any
compensation, benefits, and/or remaining payments of the Termination
Compensation otherwise payable to Employee under this Agreement and Employee
forfeits such Termination Compensation. 
Notwithstanding the foregoing, the provisions of this Paragraph 8.A(ii) shall
not apply from and after a Change in Control.


 


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iii.            Notwithstanding the foregoing,
Employee may, 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 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 Company’s prior written consent, directly or indirectly, (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; or (C) otherwise interfere with the Company’s
relationship with any Company employee. 
Notwithstanding the foregoing, the provisions of this Paragraph 8.B(i) shall
not apply from and after a Change in Control.


 


ii.             Employee agrees that in the event
Employee, without the Company’s prior written consent, directly or indirectly, (A) solicits
or recruits for employment; hires; attempts to solicit or recruit for
employment; attempts to hire; or accepts as an employee, consultant,
contractor, or otherwise, any Company employee, or (B) urges; encourages;
induces; or attempts to urge, encourage, or induce, any Company employee to
terminate his or her employment with Company; or (C) otherwise interferes
with the Company’s relationship with any Company employee during the Concluding
Compensation Period, the Company shall be entitled to terminate any
compensation, benefits, and/or remaining payments of the Termination
Compensation otherwise payable to Employee under this Agreement and Employee
forfeits such Termination Compensation. 
Notwithstanding the foregoing, the provisions of this Paragraph 8.B(ii) shall
not apply from and after a Change in Control.


 


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, 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.


 


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


 


B.            Upon Employee’s Termination Date,
Employee agrees not to make any statements to the Company’s employees,
customers, vendors, or suppliers or to any public or media source, whether
written or oral, regarding Employee’s employment or termination from the
Company’s employment, except as may be approved in writing by an executive
officer of the Company in advance. 
Employee further agrees not to make any statement (including to any
media source, or to the Company’s suppliers, customers or employees) or take
any action that would disrupt, impair, embarrass, harm or affect adversely the
Company or any of the employees, officers, directors, or customers of the
Company or place the Company or such individuals in any negative light.


 


C.            Following Employee’s Termination
Date, Employee covenants to render further advice and assistance to the Company
as may be required from time to time, and to provide all information available
to Employee on matters handled by and through Employee while employed by the
Company or of which Employee has personal knowledge, and by making available to
the Company at reasonable times and circumstances, upon request by the Company,
information pertinent to its operations in Employee’s possession; and, to the
extent that it is necessary, to cooperate with and assist the Company to
conclude any matters that are pending and which may require Employee’s
assistance; provided, that he shall be paid reasonable compensation by the
Company in the event Employee is required to expend time in the performance of
such services; and provided further, that Employee may perform such services in
a manner that does not unreasonably interfere with other employment obtained by
Employee.  Employee shall be reimbursed
for any expenses incurred by Employee in the performance of the covenants
herein set forth in this Paragraph 9.C.


 


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D.            In addition, Employee agrees to
cooperate with and provide assistance to the Company and its legal counsel in
connection with any litigation (including arbitration or administrative
hearings) or investigation affecting the Company, in which, in the reasonable
judgment of the Company’s counsel, Employee’s assistance or cooperation is
needed.  Employee shall, when requested
by the Company, provide testimony or other assistance and shall travel at the
Company’s request in order to fulfill this obligation.  In connection with such litigation or
investigation, the Company shall attempt to accommodate 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, computer disks 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
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 shall be terminated forthwith; (ii) the
Company’s obligation to pay or provide and Employee’s right to receive such
compensation, benefits and/or Termination Compensation 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 compensation, benefits and/or
Termination Compensation previously paid by the Company because of not being
informed or aware of Employee’s violation of a provision of Paragraphs 8.A(i),
8.B(i), 8.C, or 9 of 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 


 


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rights and remedies available at law or in equity, and provided that at
least $20,000 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 12 of this Agreement.


 


12.           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 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 substantially in a form then used by
and agreeable to the Company and which shall fully and irrevocably release and
discharge the Company, its directors, officers, and employees from any and all
claims, charges, complaints, liabilities of any kind, known or unknown, owed to
Employee.


 


13.           Special Provisions.  This Agreement shall inure to the benefit of
any successor to or assignee of the Company, and Employee specifically agrees
on demand to execute any and all necessary documents in connection with the
performance of this Agreement.  No waiver
by either party of any breach by the other of any provision hereof shall be
deemed to be a waiver of any later or other breach thereof or as a waiver of
any such or other provision of this Agreement. 
If any provision of this Agreement shall be declared invalid or
unenforceable as a matter of law, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision of this Agreement
or of the remainder of this Agreement as a whole.


 


14.           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, including without limitation the previous Employment Agreement
between Employee and the Company dated August 18, 2005, as amended by
agreement dated August 17, 2006.


 


15.           Choice of Law; Consent to Jurisdiction.  This Agreement shall be governed
by and construed under the laws of the State of North Carolina without regard
to its choice of law or conflict of law principles.  Employee hereby expressly and irrevocably
consents  to the 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.


 


16.           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 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):


 


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  Family Dollar Stores, Inc.

  	
   

  	
  Chairman 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

  



 


17.           Compliance with Code Section 409A.  This Agreement is intended to comply with
Code Section 409A, to the extent applicable.  Notwithstanding any provision herein to the
contrary, this Agreement shall be interpreted, operated and administered
consistent with this intent.  Each
separate installment under this Agreement shall be treated as a separate
payment for purposes of determining whether such payment is subject to or
exempt from compliance with the requirements of Code Section 409A.  In addition, in the event that Employee is a “specified
employee” within the meaning of Section 409A of the Code (as determined in
accordance with the methodology established by the Company as in effect on the
date of termination of Employee’s employment), any payment or benefits
hereunder that are nonqualified deferred compensation subject to the
requirements of Section 409A of the Code shall be provided to Employee no
earlier than six (6) months after the date of Employee’s “separation from
service” within the meaning of Section 409A of the Code.


 


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/ R. James Kelly

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
				



 


	
  Attest:

  	
   

  
	
   

  	
   

  
	
  /s/ Janet G. Kelley

  	
   

  	
   

  
	
  Secretary

  	
   

  
			



 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  /s/ Howard R. Levine

  



 


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