Exhibit 10.2


 


Family Dollar Stores, Inc. (the “Company”)


Policy Regarding Tax Adjustments for Certain
Severance Benefits


 


1.             Background.  Certain senior officers of the Company (the “Employees”)
have entered into Employment Agreements or Severance Agreements with the
Company (the “Agreements”).  These
Agreements provide for certain severance payments and benefits in case of a
qualifying termination following a change in control of the Company.  In addition, under the Company’s 2006
Incentive Plan (the “Plan”), the vesting of certain equity compensation awards
of the Employees may be accelerated in case of a qualifying termination of
employment following a change in control. 
The purpose of this Policy is to describe the circumstances in which the
severance payments or benefits under the Agreements and the Plan may be cut
back in order to prevent the application of certain excise taxes under federal
income tax rules related to severance payments or benefits that are
contingent upon a change in control.


 


2.             Adjustments to
Payments.  Notwithstanding anything
in an Agreement or the Plan to the contrary, in the event it shall be
determined that any payment or distribution of any type to an Employee,
pursuant to the Employee’s Agreement or the Plan, including accelerated
vesting, to or for the benefit of the Employee, by the Company or any Person
(as the term “person” is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended) who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company’s assets (within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder)
or any Affiliate of such Person, whether paid or payable or distributed or
distributable pursuant to the terms of the Employee’s Agreement, the Plan, or
otherwise (the “Payments”), 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
excise tax, together with any such interest and penalties, are collectively
referred to as the “Excise Tax”), the Payments shall be reduced (but not below
zero) if and to the extent that such reduction would result in the 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 the
Employee received all of the Payments. 
The Company shall reduce or eliminate the Payments, by first reducing or
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 Policy 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 the 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 the
Employee’s prior written consent, any information with regard to the Employee’s
tax position which the Company obtains pursuant to this Policy.


 


3.             Employee Consent.  The 
Company shall obtain the consent of each Employee to the application of
this Policy to the Employee’s Agreement and awards under the Plan.


 

















 


                IN WITNESS
WHEREOF, the Company has adopted this Policy as of November 18, 2008.


 


 


	
   

  	
  Family Dollar Stores, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


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Family Dollar Stores, Inc. (the “Company”)


Policy Regarding Tax Adjustments for Certain
Severance Benefits


 


Employee Consent


 


The undersigned Employee hereby consents and agrees to the application
to Employee of the Company’s Policy Regarding Tax Adjustments for Certain
Severance Benefits (a copy of which has been previously furnished), including
without limitation to any severance payments or benefits that may be applicable
under Employee’s “Agreement” or the “Plan” (as such terms are defined in the
Policy).  Employee further agrees that in
the event of any material amendment to the Internal Revenue Code, the Policy
may be further amended by the Company, provided such amendment does not
materially reduce the payments to the Employee pursuant to the Agreement and/or
the Plan, as modified by this Policy.


 


 


	
   

  	
  Employee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Date: