Exhibit 10.24


 




Conformed Copy





 


Family
Dollar Stores, Inc.


Family Dollar, Inc.


 


$169,000,000
5.41% Series 2005-A Senior Notes, Tranche A, due September 27, 2015


 


$81,000,000
5.24% Series 2005-A Senior Notes, Tranche B, due September 27, 2015


 


 










 


Note Purchase Agreement


 










 


Dated as of September 27, 2005


 




 





 





















 


Table
of Contents


 


	
  Section

  	
   

  	
  Heading

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Authorization
  of Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Description of Notes

  	
   

  
	
  Section 1.2.

  	
   

  	
  Interest Rate

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Sale and
  Purchase of Notes

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Series A Notes

  	
  2

  
	
  Section 2.2.

  	
   

  	
  Additional Series of Notes

  	
  2

  
	
  Section 2.3.

  	
   

  	
  Subsidiary Guaranty

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Closing

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Conditions
  to Closing

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Representations and
  Warranties

  	
  5

  
	
  Section 4.2.

  	
   

  	
  Performance; No Default

  	
  5

  
	
  Section 4.3.

  	
   

  	
  Compliance Certificates

  	
  5

  
	
  Section 4.4.

  	
   

  	
  Opinions of Counsel

  	
  6

  
	
  Section 4.5.

  	
   

  	
  Purchase Permitted By
  Applicable Law, Etc

  	
  6

  
	
  Section 4.6.

  	
   

  	
  Sale of Other Notes

  	
  6

  
	
  Section 4.7.

  	
   

  	
  Payment of Special Counsel
  Fees

  	
  6

  
	
  Section 4.8.

  	
   

  	
  Private Placement Number

  	
  6

  
	
  Section 4.9.

  	
   

  	
  Changes in Corporate
  Structure

  	
  6

  
	
  Section 4.10.

  	
   

  	
  Subsidiary Guaranty

  	
  7

  
	
  Section 4.11.

  	
   

  	
  Funding Instructions

  	
  7

  
	
  Section 4.12.

  	
   

  	
  Proceedings and Documents

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Representations
  and Warranties of the Obligors

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Organization; Power and
  Authority

  	
  7

  
	
  Section 5.2.

  	
   

  	
  Authorization, Etc

  	
  7

  
	
  Section 5.3.

  	
   

  	
  Disclosure

  	
  8

  
	
  Section 5.4.

  	
   

  	
  Organization and Ownership
  of Shares of Subsidiaries; Affiliates

  	
  8

  
	
  Section 5.5.

  	
   

  	
  Financial Statements;
  Material Liabilities

  	
  9

  
	
  Section 5.6.

  	
   

  	
  Compliance with Laws, Other
  Instruments, Etc

  	
  9

  
	
  Section 5.7.

  	
   

  	
  Governmental Authorizations,
  Etc

  	
  9

  
	
  Section 5.8.

  	
   

  	
  Litigation; Observance of
  Agreements, Statutes and Orders

  	
  9

  
	
  Section 5.9.

  	
   

  	
  Taxes

  	
  10

  
	
  Section 5.10.

  	
   

  	
  Title to Property; Leases

  	
  10

  
	
  Section 5.11.

  	
   

  	
  Licenses, Permits, Etc

  	
  10

  
	
  Section 5.12.

  	
   

  	
  Compliance with ERISA

  	
  11

  



 


i





















 


	
  Section 5.13.

  	
   

  	
  Private Offering by the
  Obligors

  	
  11

  
	
  Section 5.14.

  	
   

  	
  Use of Proceeds; Margin
  Regulations

  	
  12

  
	
  Section 5.15.

  	
   

  	
  Existing Debt; Future Liens

  	
  12

  
	
  Section 5.16.

  	
   

  	
  Foreign Assets Control
  Regulations, Etc

  	
  12

  
	
  Section 5.17.

  	
   

  	
  Status under Certain
  Statutes

  	
  13

  
	
  Section 5.18.

  	
   

  	
  Environmental Matters

  	
  13

  
	
  Section 5.19.

  	
   

  	
  Notes Rank Pari Passu

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Representations
  of the Purchaser

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Purchase for Investment

  	
  14

  
	
  Section 6.2.

  	
   

  	
  Accredited Investor

  	
  14

  
	
  Section 6.3.

  	
   

  	
  Source of Funds

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Information
  as to Obligors

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Financial and Business
  Information

  	
  16

  
	
  Section 7.2.

  	
   

  	
  Officer’s Certificate

  	
  18

  
	
  Section 7.3.

  	
   

  	
  Visitation

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Payment of
  the Notes

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Required Prepayments of
  Series A Notes

  	
  19

  
	
  Section 8.2.

  	
   

  	
  Optional Prepayments with Make-Whole
  Amount

  	
  20

  
	
  Section 8.3.

  	
   

  	
  Allocation of Partial
  Prepayments

  	
  20

  
	
  Section 8.4.

  	
   

  	
  Maturity; Surrender, Etc.

  	
  20

  
	
  Section 8.5.

  	
   

  	
  Purchase of Notes

  	
  20

  
	
  Section 8.6.

  	
   

  	
  Make-Whole Amount for the
  Series A Notes

  	
  21

  
	
  Section 8.7.

  	
   

  	
  Change in Control

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Affirmative
  Covenants

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Compliance with Law

  	
  24

  
	
  Section 9.2.

  	
   

  	
  Insurance

  	
  25

  
	
  Section 9.3.

  	
   

  	
  Maintenance of Properties

  	
  25

  
	
  Section 9.4.

  	
   

  	
  Payment of Taxes and Claims

  	
  25

  
	
  Section 9.5.

  	
   

  	
  Corporate Existence, Etc

  	
  25

  
	
  Section 9.6.

  	
   

  	
  Designation of Subsidiaries

  	
  26

  
	
  Section 9.7.

  	
   

  	
  Notes to Rank Pari Passu

  	
  26

  
	
  Section 9.8.

  	
   

  	
  Additional Subsidiary Guarantors

  	
  26

  
	
  Section 9.9.

  	
   

  	
  Books and Records

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Negative
  Covenants

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Consolidated Debt to
  Consolidated Total Capitalization

  	
  27

  
	
  Section 10.2.

  	
   

  	
  Fixed Charges Coverage Ratio

  	
  27

  
	
  Section 10.3.

  	
   

  	
  Priority Debt

  	
  27

  
	
  Section 10.4.

  	
   

  	
  Limitation on Liens

  	
  27

  
	
  Section 10.5.

  	
   

  	
  Sales of Asset

  	
  29

  



 


ii





















 


	
  Section 10.6.

  	
   

  	
  Merger and Consolidation

  	
  30

  
	
  Section 10.7.

  	
   

  	
  Restricted Subsidiaries

  	
  31

  
	
  Section 10.8.

  	
   

  	
  Transactions with Affiliates

  	
  31

  
	
  Section 10.9.

  	
   

  	
  Terrorism Sanctions Regulations

  	
  31

  
	
  Section 10.10.

  	
   

  	
  Line of Business

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Events of
  Default

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Remedies on
  Default, Etc

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  Acceleration

  	
  34

  
	
  Section 12.2.

  	
   

  	
  Other Remedies

  	
  34

  
	
  Section 12.3.

  	
   

  	
  Rescission

  	
  35

  
	
  Section 12.4.

  	
   

  	
  No Waivers or Election of
  Remedies, Expenses, Etc

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Registration;
  Exchange; Substitution of Notes

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Registration of Notes

  	
  35

  
	
  Section 13.2.

  	
   

  	
  Transfer and Exchange of Notes

  	
  36

  
	
  Section 13.3.

  	
   

  	
  Replacement of Notes

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Payments on
  Notes

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
   

  	
  Place of Payment

  	
  37

  
	
  Section 14.2.

  	
   

  	
  Home Office Payment

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Expenses, Etc

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
   

  	
  Transaction Expenses

  	
  37

  
	
  Section 15.2.

  	
   

  	
  Survival

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Survival of
  Representations and Warranties; Entire Agreement

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Amendment and
  Waiver

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.1.

  	
   

  	
  Requirements

  	
  38

  
	
  Section 17.2.

  	
   

  	
  Solicitation of Holders of Notes

  	
  39

  
	
  Section 17.3.

  	
   

  	
  Binding Effect, Etc

  	
  39

  
	
  Section 17.4.

  	
   

  	
  Notes Held by Obligors, Etc

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Notices

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Reproduction
  of Documents

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Confidential
  Information

  	
  41

  



 


iii





















 


	
  Section 21.

  	
   

  	
  Substitution
  of Purchaser

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Miscellaneous

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 22.1.

  	
   

  	
  Successors and Assigns

  	
  42

  
	
  Section 22.2.

  	
   

  	
  Payments Due on Non-Business
  Days

  	
  43

  
	
  Section 22.3.

  	
   

  	
  Accounting Terms

  	
  43

  
	
  Section 22.4.

  	
   

  	
  Severability

  	
  43

  
	
  Section 22.5.

  	
   

  	
  Construction

  	
  43

  
	
  Section 22.6.

  	
   

  	
  Counterparts

  	
  43

  
	
  Section 22.7.

  	
   

  	
  Governing Law

  	
  43

  
	
  Section 22.8.

  	
   

  	
  Jurisdiction and Process; Waiver
  of Jury Trial

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Guaranty

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Representations
  and Warranties

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Subsidiary
  Guarantor’s Obligations Unconditional

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Full
  Recourse Obligations; Pari Passu Ranking

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Waiver

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Waiver of
  Subrogation

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Subordination

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Effect of
  Bankruptcy Proceedings, Etc

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Term
  of Guaranty

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Contribution

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Limitation
  of Liability

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Negative
  Pledge

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Supplemental
  Agreement

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Definitions
  and Terms Generally

  	
  15

  



 


iv





















 


	
  Section
  15.

  	
   

  	
  Notices

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  16.

  	
   

  	
  Amendments,
  Etc

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Consent to
  Jurisdiction; Service of Process

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Waiver of Jury
  Trial

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Survival

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Severability

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Successors
  and Assigns

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Table of
  Contents; Headings

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Counterparts

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Governing
  Law

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Covenant
  Compliance

  	
  18

  



 


v





















 


	
  Schedule A

  	
   

  	
  —

  	
  Information Relating to Purchasers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule B

  	
   

  	
  —

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 4.9

  	
   

  	
  —

  	
  Changes in
  Corporate Structure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 5.4

  	
   

  	
  —

  	
  Subsidiaries
  of the Obligors, Ownership of Subsidiary Stock, Affiliates

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 5.5

  	
   

  	
  —

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 5.11

  	
   

  	
  —

  	
  Licenses, Permits, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 5.15

  	
   

  	
  —

  	
  Existing Debt

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 10.4

  	
   

  	
  —

  	
  Existing Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 1-(a)

  	
   

  	
  —

  	
  Form of 5.41%
  Series 2005-A Senior Notes, Tranche A due September 27, 2015

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 1-(b)

  	
   

  	
  —

  	
  Form of 5.24%
  Series 2005-A Senior Notes, Tranche B due September 27, 2015

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 2.3

  	
   

  	
  —

  	
  Form of Subsidiary
  Guaranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(a)

  	
   

  	
  —

  	
  Form of
  Opinion of General Counsel to the Obligors

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(b)

  	
   

  	
  —

  	
  Form of
  Opinion of Special Counsel to the Obligors

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 4.4(c)

  	
   

  	
  —

  	
  Form of
  Opinion of Special Counsel to the Purchasers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit S

  	
   

  	
  —

  	
  Form of Supplement to Note Purchase
  Agreement

  	
   

  



 


vi





















 


Family
Dollar Stores, Inc.


Family Dollar, Inc.


10401 Monroe Road


Charlotte, North Carolina  28201


 


$169,000,000 5.41% Series 2005-A
Senior Notes, Tranche A

due September 27, 2015



$81,000,000 5.24% Series 2005-A Senior Notes, Tranche B

due September 27, 2015


 


Dated as of

September 27, 2005


 


To the Purchasers listed in


the
attached Schedule A:


 


Ladies
and Gentlemen:


 


Family Dollar Stores, Inc.,
a Delaware corporation (“FDSI”), and Family Dollar, Inc., a North Carolina
corporation (“FDI” and, together with FDSI,
the “Obligors”) jointly and severally agree
with the Purchasers listed in the attached Schedule A (the “Purchasers”) to this Note Purchase Agreement (this “Agreement”) as follows:


 


Section 1.                Authorization
of Notes.


 


Section 1.1.           Description
of Notes.  The Obligors will
authorize the issue and sale of the following Senior Notes:


 


	
  Issue

  	
   

  	
  Series and/or

  Tranche

  	
   

  	
  Aggregate Principal

  Amount

  	
   

  	
  Interest Rate

  	
   

  	
  Maturity Date

  	
   

  
	
  Senior Notes

  	
   

  	
  Series 2005-A,
  Tranche A

  	
   

  	
  $

  	
  169,000,000

  	
   

  	
  5.41

  	
  %

  	
  September 27, 2015

  	
   

  
	
  Senior Notes

  	
   

  	
  Series 2005-A,
  Tranche B

  	
   

  	
  $

  	
  81,000,000

  	
   

  	
  5.24

  	
  %

  	
  September 27, 2015

  	
   

  



 


The
Series 2005-A, Tranche A Senior Notes (the “Tranche A
Notes”) and the Series 2005-A, Tranche B Senior Notes (the
“Tranche B Notes”) described above
(collectively, the “Series A Notes”)
together with each Series of Additional Notes which may from time to time be
issued pursuant to the provisions of Section 2.2 are collectively referred to
as the


 





















 


“Notes” (such term shall also
include any such notes issued in substitution therefor pursuant to Section 13
of this Agreement).  The Tranche A Notes
and Tranche B Notes shall be substantially in the form set out in Exhibit 1(a)
and Exhibit 1(b), respectively, with such changes therefrom, if any, as may be
approved by the Purchasers and the Obligors. 
Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.


 


Section 1.2.           Interest
Rate.  The Series A Notes shall bear
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal thereof from the date of issuance at their respective
stated rate of interest payable semi-annually in arrears on the 27th day of
March and September in each year and at maturity, commencing on March 27, 2006,
until such principal sum shall have become due and payable (whether at
maturity, upon notice of prepayment or otherwise) and interest (so computed) on
any overdue principal, interest or Make-Whole Amount from the due date thereof
(whether by acceleration or otherwise) at the Default Rate until paid.


 


Section 2.                Sale and
Purchase of Notes.


 


Section 2.1.           Series
A Notes.  Subject to the terms and
conditions of this Agreement, the Obligors will issue and sell to each
Purchaser and each Purchaser will purchase from the Obligors, at the Closing
provided for in Section 3, the Series A Notes in the principal amount
specified opposite such Purchaser’s name in Schedule A at the purchase price of
100% of the principal amount thereof. 
The obligations of each Purchaser hereunder are several and not joint
obligations and each Purchaser shall have no obligation and no liability to any
Person for the performance or nonperformance by any other Purchaser hereunder.


 


Section 2.2.           Additional
Series of Notes.  The Obligors may,
from time to time, in their sole discretion but subject to the terms hereof,
issue and sell one or more additional Series of their unsecured promissory
notes under the provisions of this Agreement pursuant to a supplement (a “Supplement”) substantially in the form of Exhibit S
(with such amendments or modifications thereto as may be agreed to by the
parties).  Each additional Series of
Notes (the “Additional Notes”) issued pursuant to a
Supplement shall be subject to the following terms and conditions:


 


(i)            each
Series of Additional Notes, when so issued, shall be differentiated from all
previous Series by sequential alphabetical designation inscribed thereon;


 


(ii)           Additional
Notes of the same Series may consist of more than one different and separate
tranches and may differ with respect to outstanding principal amounts, maturity
dates, interest rates and premiums, if any, and price and terms of redemption
or payment prior to maturity, but all such different and separate tranches of
the same Series shall vote as a single class and constitute one Series;


 


(iii)          each
Series of Additional Notes shall be dated the date of issue, bear interest at
such rate or rates, mature on such date or dates, be subject to such mandatory
and optional prepayment on the dates and at the premiums, if any, have such
additional or


 


2





















 


different conditions precedent to closing, such
representations and warranties and such additional covenants as shall be
specified in the Supplement under which such Additional Notes are issued and
upon execution of any such Supplement, this Agreement shall be amended (a) to
reflect such additional covenants without further action on the part of the
holders of the Notes outstanding under this Agreement, provided,
that any such additional covenants shall inure to the benefit of all holders of
Notes so long as any Additional Notes issued pursuant to such Supplement remain
outstanding, and (b) to reflect such representations and warranties as are
contained in such Supplement for the benefit of the holders of such Additional
Notes in accordance with the provisions of Section 16;


 


(iv)          each
Series of Additional Notes issued under this Agreement shall be in
substantially the form of Exhibit 1 to Exhibit S hereto with such
variations, omissions and insertions as are necessary or permitted hereunder;


 


(v)           the
minimum principal amount of any Note issued under a Supplement shall be
$100,000, except as may be necessary to evidence the outstanding amount of any
Note originally issued in a denomination of $100,000 or more;


 


(vi)          all
Additional Notes shall constitute Senior Debt of the Obligors and shall rank pari passu with all other outstanding Notes; and


 


(vii)         no
Additional Notes shall be issued hereunder if at the time of issuance thereof
and after giving effect to the application of the proceeds thereof, any Default
or Event of Default shall have occurred and be continuing.


 


The obligations of the Additional Purchasers to
purchase any Additional Notes shall be subject to the following conditions
precedent, in addition to the conditions specified in the Supplement pursuant
to which such Additional Notes may be issued:


 


(a)           Compliance Certificate. 
A duly authorized Senior Financial Officer shall execute and deliver to
each Additional Purchaser and each holder of Notes an Officer’s Certificate
dated the date of issue of such Series of Additional Notes stating that such
officer has reviewed the provisions of this Agreement (including any
Supplements hereto) and setting forth the information and computations (in
sufficient detail) required in order to establish whether after giving effect
to the issuance of the Additional Notes and after giving effect to the
application of the proceeds thereof, the Obligors are in compliance with the
requirements of Section 10.1 on such date (based upon the financial
statements for the most recent fiscal quarter ended prior to the date of such
certificate).


 


(b)           Execution and Delivery of Supplement.  The Obligors and each such Additional
Purchaser shall execute and deliver a Supplement substantially in the form of
Exhibit S hereto  (with such
amendments or modifications thereto as may be agreed to by the parties).


 


(c)           Representations of Additional Purchasers.  Each Additional Purchaser shall have
confirmed in the Supplement that the representations set forth in
Section 6 are


 


3





















 


true with respect to such Additional Purchaser on and
as of the date of issue of the Additional Notes.


 


(d)           Execution and Delivery of Guaranty Ratification.  Provided a Collateral Release
shall not have occurred, each Subsidiary Guarantor shall execute and deliver a
Guaranty Ratification in the form attached to the Subsidiary Guaranty.


 


Section 2.3.           Subsidiary
Guaranty.  (a) The payment by
the Obligors of all amounts due with respect to the Notes and the performance
by the Obligors of their obligations under this Agreement will be absolutely
and unconditionally guaranteed by the Subsidiary Guarantors pursuant to the
Subsidiary Guaranty Agreement dated as of even date herewith, which shall be
substantially in the form of Exhibit 2.3 attached hereto, and otherwise in
accordance with the provisions of Section 9.6 hereof (the “Subsidiary
Guaranty”).


 


(b)           The
holders of the Notes agree to discharge and release any Subsidiary Guarantor
from the Subsidiary Guaranty upon the written notice of the Obligors, provided that (i) such Subsidiary Guarantor has been
released and discharged (or will be released and discharged concurrently with
the release of such Subsidiary Guarantor under the Subsidiary Guaranty) as an
obligor and guarantor under and in respect of the Bank Credit Agreement and the
Obligors so certify to the holders of the Notes in a certificate of a
Responsible Officer, (ii) at the time of such release and discharge, the
Obligors shall deliver a certificate of a Responsible Officer to the holders of
the Notes stating that no Default or Event of Default exists, and (iii) if
any fee or other form of consideration is given to any holder of Debt of the
Obligors expressly for the purpose of such release, holders of the Notes shall
receive equivalent consideration (a “Collateral Release”).


 


Section 3.                Closing.


 


The sale and purchase of the Series A Notes to be
purchased by each Purchaser shall occur at the offices of Chapman and Cutler
LLP, 111 West Monroe Street, Chicago, Illinois 60603 at 10:00 a.m. Central
time, at a closing (the “Closing Date”)
on September 27, 2005 or on such other Business Day thereafter on or prior
to September 27, 2005 as may be agreed upon by the Obligors and the
Purchasers.   On the Closing Date, the
Obligors will deliver to each Purchaser the Series A Notes to be purchased by
such Purchaser in the form of a single Tranche A Note or Tranche B
Note, as applicable (or such greater number of Tranche A or Tranche B
Notes, as applicable, in denominations of at least $100,000 as such Purchaser
may request) dated the date of the Closing Date and registered in such
Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery
by such Purchaser to the Obligors or its order of immediately available funds
in the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Obligors to Account Number                                 ,
at Bank of America, NA, 11170 N. Central Expressway, Dallas, Texas, ABA Number                                 ,
in the Account Name of “Family Dollar Stores, Inc.”  If, on the Closing Date, the Obligors shall
fail to tender such Series A Notes to any Purchaser as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to any Purchaser’s satisfaction, such Purchaser shall, at
such Purchaser’s election, be


 


4





















 


relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
such nonfulfillment.


 


Section 4.                Conditions to
Closing.


 


Each Purchaser’s obligation to purchase and pay for
the Series A Notes to be sold to such Purchaser at the Closing is subject to
the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing,
of the following conditions applicable to the Closing Date:


 


Section 4.1.           Representations
and Warranties.


 


(a)           Representations and Warranties of the Obligors.  The representations and warranties
of each Obligor in this Agreement shall be correct when made and at the time of
the Closing.


 


(b)           Representations and Warranties of the Subsidiary Guarantors. The
representations and warranties of the Subsidiary Guarantors in the Subsidiary
Guaranty shall be correct when made and at the time of the Closing.


 


Section 4.2.           Performance;
No Default.  Each Obligor and each Subsidiary Guarantor
shall have performed and complied with all agreements and conditions contained
in this Agreement and the Subsidiary Guaranty required to be performed or
complied with by the Obligors and each such Subsidiary Guarantor prior to or at
the Closing, and after giving effect to the issue and sale of the Series A
Notes (and the application of the proceeds thereof as contemplated by
Section 5.14), no Default or Event of Default shall have occurred and be
continuing.  Neither any Obligor nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Section 10 hereof had such
Sections applied since such date.


 


Section 4.3.           Compliance
Certificates.


 


(a)           Officer’s Certificate of the Obligors.  The Obligors shall have delivered to such
Purchaser an Officer’s Certificate, dated the Closing Date, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.


 


(b)           Secretary’s Certificate of the Obligors.  Each Obligor shall have delivered to such
Purchaser a certificate, dated the Closing Date, certifying as to the
resolutions attached thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Series A Notes and this Agreement.


 


(c)           Officer’s Certificate of the Subsidiary Guarantors.  Each Subsidiary Guarantor shall
have delivered to such Purchaser an Officer’s Certificate, dated the Closing
Date, certifying that the conditions specified in Sections 4.1(b), 4.2 and 4.9
have been fulfilled.


 


(d)           Secretary’s Certificate of the Subsidiary Guarantors.  Each Subsidiary Guarantor shall
have delivered to such Purchaser a certificate, dated the Closing Date, certifying
as to the


 


5





















 


resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Subsidiary Guaranty.


 


Section 4.4.           Opinions
of Counsel.  Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the
Closing Date (a) from Janet G. Kelley, General Counsel of the Obligors,
covering the matters set forth in Exhibit 4.4(a) and covering such other
matters incident to the transactions contemplated hereby as such Purchaser or
its counsel may reasonably request (and the Obligors hereby instruct their
counsel to deliver such opinion to the Purchasers), (b) from Alston &
Bird LLP, special counsel for the Obligors, covering the matters set forth in
Exhibit 4.4(b) and covering such other matters incident to the
transactions contemplated hereby as such Purchaser or its counsel may
reasonably request (and the Obligors hereby instruct their counsel to deliver
such opinion to the Purchasers), and (c) from Chapman and Cutler LLP, the
Purchasers’ special counsel in connection with such transactions, substantially
in the form set forth in Exhibit 4.4(c) and covering such other matters
incident to such transactions as such Purchaser may reasonably request.


 


Section 4.5.           Purchase
Permitted By Applicable Law, Etc.  On the date of the Closing such
Purchaser’s purchase of Series A Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve
System) and (c) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof.  If requested by such Purchaser, such
Purchaser shall have received an Officer’s Certificate certifying as to such
matters of fact as such Purchaser may reasonably specify to enable such
Purchaser to determine whether such purchase is so permitted.


 


Section 4.6.           Sale
of Other Notes.  Contemporaneously with the Closing the
Obligors shall sell to each other Purchaser and each other Purchaser shall
purchase the Series A Notes to be purchased by it at the Closing as specified
in Schedule A.


 


Section 4.7.           Payment
of Special Counsel Fees.  Without
limiting the provisions of Section 15.1, the Obligors shall have paid on
or before the Closing Date, the reasonable fees, reasonable charges and
reasonable disbursements of the Purchasers’ special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Obligors at least one Business Day prior to the Closing Date.


 


Section 4.8.           Private
Placement Number.  A Private Placement Number issued
by Standard & Poor’s CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Series A Notes.


 


Section 4.9.           Changes
in Corporate Structure.  Neither any Obligor
nor any Subsidiary Guarantor shall have changed its jurisdiction of
organization or, except as reflected in Schedule 4.9, been a party to any
merger or consolidation, or shall have succeeded to all or any substantial


 


6





















 


part of the liabilities of any other entity, at any time following the
date of the most recent financial statements referred to in Schedule 5.5.


 


Section 4.10.        Subsidiary
Guaranty.  The Subsidiary Guaranty shall
have been duly authorized, executed and delivered by each Subsidiary Guarantor,
shall constitute the legal, valid and binding contract and agreement of each
Subsidiary Guarantor and such Purchaser shall have received a true, correct and
complete copy thereof.


 


Section 4.11.        Funding
Instructions.  At least three Business Days prior
to the date of the Closing, each Purchaser shall have received written
instructions signed by a Responsible Officer on letterhead of an Obligor
confirming the information specified in Section 3 including (i) the
name and address of the transferee bank, (ii) such transferee bank’s ABA
number and (iii) the account name and number into which the purchase price
for the Series A Notes is to be deposited.


 


Section 4.12.        Proceedings
and Documents.  All corporate and other
organizational proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser and its special counsel, and such
Purchaser and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as such Purchaser or
such special counsel may reasonably request.


 


Section 5.           Representations and Warranties of
the Obligors.


 


Each Obligor represents and warrants to each Purchaser
on the date hereof and the Closing Date that:


 


Section 5.1.           Organization;
Power and Authority.  Each Obligor is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.  Each Obligor has the corporate
power and authority to own or hold under lease the properties it purports to
own or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the Series A Notes and to
perform the provisions hereof and thereof.


 


Section 5.2.           Authorization,
Etc.  This Agreement and the Notes to be
issued on the Closing Date have been duly authorized by all necessary corporate
action on the part of each Obligor, and this Agreement constitutes, and upon
execution and delivery thereof each such Note upon issuance will constitute, a
legal, valid and binding obligation of each Obligor enforceable against each
Obligor in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).


 


7





















 


Section 5.3.           Disclosure. 
The Obligors, through their agent, Banc of America Securities
LLC, have delivered to each Purchaser a copy of a Private Placement Memorandum,
dated August, 2005 (the “Memorandum”),
relating to the transactions contemplated hereby.  The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Obligors and their Restricted Subsidiaries.  This Agreement, the Memorandum, the
documents, certificates or other writings delivered to the Purchasers by or on
behalf of an Obligor in connection with the transactions contemplated hereby
and the financial statements listed in Schedule 5.5, in each case,
delivered to the Purchasers prior to September 6, 2005 (this Agreement,
the Memorandum and such documents, certificates or other writings and such
financial statements being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. 
Except as disclosed in the Disclosure Documents, since August 28,
2004, there has been no change in the financial condition, operations, business
or properties of the Obligors or any of their Restricted Subsidiaries except
changes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.  There
is no fact known to any Obligor that would reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the Disclosure
Documents.


 


Section 5.4.           Organization
and Ownership of Shares of Subsidiaries; Affiliates.  (a) Schedule 5.4
contains (except as noted therein) complete and correct lists (i) of the
Obligors’ Restricted and Unrestricted Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Obligors and each other Subsidiary, and all
other Investments of the Obligors and their Restricted Subsidiaries,
(ii) of the Obligors’ Affiliates, other than Subsidiaries, and
(iii) of the Obligors’ directors and senior officers.


 


(b)           All of the
outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 5.4 as being owned by the Obligors and their
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Obligors or another Subsidiary free and clear of any Lien (except
as otherwise disclosed in Schedule 5.4).


 


(c)           Each
Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Each such Subsidiary has
the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.


 


(d)           No
Subsidiary is a party to, or otherwise subject to, any legal restriction or any
agreement (other than this Agreement, the agreements listed on
Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to any Obligor or any of


 


8





















 


its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.


 


Section 5.5.           Financial
Statements; Material Liabilities.  The Obligors have delivered to
each Purchaser copies of the financial statements of FDSI and its Subsidiaries
listed on Schedule 5.5.  All of said
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the FDSI and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for
the respective periods so specified and have been prepared in accordance with
GAAP consistently applied throughout the periods involved except as set forth
in the notes thereto (subject, in the case of any interim financial statements,
to normal year-end adjustments).  The
Obligors and its Subsidiaries do not have any Material liabilities that are not
disclosed on such financial statements or otherwise disclosed in the Disclosure
Documents.


 


Section 5.6.           Compliance
with Laws, Other Instruments, Etc.  The execution, delivery and
performance by any Obligor of this Agreement and the Series A Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of any Obligor or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement
or instrument to which any Obligor or any Subsidiary is bound or by which any
Obligor or any Subsidiary or any of their respective properties may be bound or
affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to any Obligor or any
Subsidiary, or (c) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to the
Obligors or any Subsidiary.


 


Section 5.7.           Governmental
Authorizations, Etc.  No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by any Obligor of this Agreement or the Series A Notes (other than the filing
of a Form 8-K with the Securities and Exchange Commission pursuant to the
Securities and Exchange Act of 1934 (as amended)).


 


Section 5.8.           Litigation;
Observance of Agreements, Statutes and Orders.  (a) Except for
the FLSA Litigation, there are no actions, suits, investigations or proceedings
pending or, to the knowledge of any Obligor, threatened against or affecting
any Obligor or any Restricted Subsidiary or any property of any Obligor or any
Restricted Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.


 


(b)           The
FLSA Litigation, individually or in the aggregate, would not reasonably be
expected to have a Limited Material Adverse Effect.


 


(c)           Neither
any Obligor nor any Restricted Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental


 


9





















 


Laws or the USA Patriot Act) of any Governmental Authority, which
default or violation, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.


 


Section 5.9.           Taxes. 
Each Obligor and its Subsidiaries have filed all Material tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the
amount of which is not individually or in the aggregate Material or
(b) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which an
Obligor or a Subsidiary, as the case may be, has established adequate reserves
in accordance with GAAP.  No Obligor
knows of any basis for any other tax or assessment that would reasonably be
expected to have a Material Adverse Effect. 
The charges, accruals and reserves on the books of the Obligors and
their Subsidiaries in respect of federal, state or other taxes for all fiscal
periods are adequate in all Material respects. 
The federal income tax liabilities of the Obligors and their
Subsidiaries have been finally determined (whether by reason of completed audits
or the statute of limitations having run, other than for allegations of fraud)
for all fiscal years up to and including the fiscal year ended September 1,
2001.


 


Section 5.10.        Title
to Property; Leases.  Each Obligor and its Restricted
Subsidiaries have good and sufficient title to their respective properties
which the Obligors and their Restricted Subsidiaries own or purport to own that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in
Section 5.5 or purported to have been acquired by the Obligors or any
Restricted Subsidiary after said date (except as sold or otherwise disposed of
in the ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement.  All leases
that individually or in the aggregate are Material are valid and subsisting and
are in full force and effect in all material respects.


 


Section 5.11.        Licenses,
Permits, Etc.  Except as disclosed in
Schedule 5.11,


 


(a)           the
Obligors and their Restricted Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, proprietary software,
service marks, trademarks and trade names, or rights thereto, that individually
or in the aggregate are Material, without known conflict with the rights of
others;


 


(b)           to
the best knowledge of each Obligor, no product of such Obligor or any of its
Restricted Subsidiaries infringes in any respect any license, permit,
franchise, authorization, patent, copyright, proprietary software, service
mark, trademark, trade name or other right owned by any other Person that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect; and


 


(c)           to
the best knowledge of each Obligor, there is no violation by any Person of any
right of such Obligor or any of its Restricted Subsidiaries with respect to any
patent, copyright, proprietary software, service mark, trademark, trade name or
other right


 


10





















 


owned or used by such Obligor or any of its Restricted
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.


 


Section 5.12.        Compliance
with ERISA.  (a) Each Obligor and each
ERISA Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and would not reasonably be expected to result in a Material Adverse
Effect.  Neither any Obligor nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in section 3 of ERISA), and no event,
transaction or condition has occurred or exists that would reasonably be expected
to result in the incurrence of any such liability by any Obligor or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights, properties or
assets of any Obligor or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax provisions or to
section 401(a)(29) or 412 of the Code or section 4068 of ERISA, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.


 


(b)           The
present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most
recently ended plan year on the basis of the actuarial assumptions specified
for funding purposes in such Plan’s most recent actuarial valuation report, did
not exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities.  The term “benefit liabilities” has the meaning specified in section
4001 of ERISA and the terms “current value”
and “present value” have the meaning
specified in section 3 of ERISA.


 


(c)           No Obligor
nor any of its ERISA Affiliates has incurred any withdrawal liabilities (and
are not subject to contingent withdrawal liabilities) under section 4201
or 4204 of ERISA in respect of Multiemployer Plans that individually or in the
aggregate are Material.


 


(d)           The
expected post-retirement benefit obligation (determined as of the last day of
FDSI’s most recently ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B of the
Code) of FDSI and its Subsidiaries is not Material.


 


(e)           The
execution and delivery of this Agreement and the issuance and sale of the
Series A Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax
would be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code.  The representation by each Obligor in the first
sentence of this Section 5.12(e) is made in reliance upon and subject to
the accuracy of each Purchaser’s representation in Section 6.3 as to the
sources of the funds to be used to pay the purchase price of the Series A Notes
to be purchased by such Purchaser.


 


Section 5.13.        Private
Offering by the Obligors.  Neither any Obligor nor anyone
acting on any Obligor’s behalf has offered the Series A Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers and not more than 45 other Institutional Investors, each of
which has been offered the Series A Notes in connection with a private sale for


 


11





















 


investment.  Neither any Obligor
nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Series A Notes to the registration
requirements of Section 5 of the Securities Act or to the registration
requirements of any securities or blue sky laws of any applicable jurisdiction.


 


Section 5.14.        Use
of Proceeds; Margin Regulations.  The Obligors will apply the
proceeds of the sale of the Series A Notes to repurchase shares of common stock
of FDSI, which shares will be retired upon such repurchase, and for other
general corporate purposes of the Obligors. 
No part of the proceeds from the sale of the Series A Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to involve
any Obligor in a violation of Regulation X of said Board (12 CFR 224)
or to involve any broker or dealer in a violation of Regulation T of said
Board (12 CFR 220).  Margin stock
does not constitute more than 5% of the value of the consolidated assets of
FDSI and its Subsidiaries and no Obligor has any present intention that margin
stock will constitute more than 5% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said
Regulation U.


 


Section 5.15.        Existing
Debt; Future Liens.  (a) Except
as described therein, Schedule 5.15 sets forth a complete and correct list
of all outstanding Debt of the Obligors and their Restricted Subsidiaries as of
June 30, 2005, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Obligors or their Restricted Subsidiaries.  Neither any Obligor nor any Restricted
Subsidiary is in default and no waiver of default is currently in effect, in
the payment of any principal or interest on any Debt of an Obligor or such
Restricted Subsidiary, and no event or condition exists with respect to any
Debt of an Obligor or any Restricted Subsidiary, that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.


 


(b)           Except as
disclosed in Schedule 5.15, neither an Obligor nor any Restricted
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by
Section 10.4.


 


(c)           Neither
any Obligor nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Debt of an Obligor or such
Subsidiary, any agreement relating thereto or any other agreement (including,
but not limited to, its charter or other organizational document) which limits
the amount of, or otherwise imposes restrictions on the incurring of, Debt of
an Obligor, except as specifically indicated in Schedule 5.15.


 


Section 5.16.        Foreign
Assets Control Regulations, Etc.  (a) Neither the sale of the
Series A Notes by any Obligor hereunder nor its use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United


 


12





















 


States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto.


 


(b)           Neither
any Obligor nor any Subsidiary is a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of
Foreign Assets Control or in Section 1 of the Anti-Terrorism Order.  Each Obligor and its Subsidiaries are in
compliance, in all material respects, with the USA Patriot Act.


 


(c)           No part of
the proceeds from the sale of the Series A Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for political
office, or anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended, assuming in
all cases that such Act applies to the Obligors.


 


Section 5.17.        Status
under Certain Statutes.  Neither any Obligor nor any
Restricted Subsidiary is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.


 


Section 5.18.        Environmental
Matters.  (a) Neither any
Obligor nor any Restricted Subsidiary has knowledge of any liability or has
received any notice of any liability, and no proceeding has been instituted
raising any liability against any Obligor or any of its Restricted Subsidiaries
or any of their respective real properties now or formerly owned, leased or
operated by any of them, or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as would not reasonably be expected to result in a Material Adverse Effect.


 


(b)           Neither
any Obligor nor any Restricted Subsidiary has knowledge of any facts which
would give rise to any liability, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
would not reasonably be expected to result in a Material Adverse Effect.


 


(c)           Neither
any Obligor nor any of its Restricted Subsidiaries has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any
of them or has disposed of any Hazardous Materials in each case in a manner
contrary to any Environmental Laws in each case in any manner that would
reasonably be expected to result in a Material Adverse Effect.


 


(d)           All
buildings on all real properties now owned, leased or operated by the Obligors
or any of their Restricted Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply would not reasonably be
expected to result in a Material Adverse Effect.


 


13





















 


Section 5.19.        Notes
Rank Pari Passu.  The obligations of
the Obligors under this Agreement and the Notes rank pari passu
in right of payment with all other senior unsecured Debt (actual or contingent)
of the Obligors, including, without limitation, all senior unsecured Debt of
the Obligors described in Schedule 5.15 hereto.


 


Section 6.                Representations
of the Purchaser.


 


Section 6.1.           Purchase
for Investment.  Each Purchaser severally
represents that it is purchasing the Series A Notes for its own account or for
one or more separate accounts maintained by it or for the account of one or
more pension or trust funds and not with a view to the distribution thereof
(other than any Notes purchased by Banc of America Securities LLC on the
Closing Date which are intended to be resold to a “qualified institutional
buyer” pursuant to Rule 144A of the Securities Act), provided
that the disposition of such Purchaser’s or such pension or trust funds’
property shall at all times be within such Purchaser’s or such pension or trust
funds’ control.  Each Purchaser
understands that the Series A Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Obligors are not required to register the Series
A Notes.


 


Section 6.2.           Accredited
Investor.  Each Purchaser represents
that it is an “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act acting for its own account (and
not for the account of others) or as a fiduciary or agent for others (which
others are also “accredited investors”).  
Each Purchaser further represents that such Purchaser has had the
opportunity to ask questions of the Obligors and received answers concerning
the terms and conditions of the sale of the Series A Notes.


 


Section 6.3.           Source
of Funds.  Each Purchaser severally
represents that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”)
to be used by such Purchaser to pay the purchase price of the Series A Notes to
be purchased by such Purchaser hereunder:


 


(a)           the
Source is an “insurance company general account” (as the term is defined in the
United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance companies
approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account
contract(s) held by or on behalf of any employee benefit plan together with the
amount of the reserves and liabilities for the general account contract(s) held
by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do not exceed 10% of the total reserves and
liabilities of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with such
Purchaser’s state of domicile; or


 


14





















 


(b)           the
Source is a separate account that is maintained solely in connection with such
Purchaser’s fixed contractual obligations under which the amounts payable, or
credited, to any employee benefit plan (or its related trust) that has any
interest in such separate account (or to any participant or beneficiary of such
plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or


 


(c)           the
Source is either (i) an insurance company pooled separate account, within the
meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning
of the PTE 91-38 and, except as disclosed by such Purchaser to an Obligor in
writing pursuant to this clause (c), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or


 


(d)           the
Source constitutes assets of an “investment fund” (within the meaning of Part V
of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by
the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g)
of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of “control” in Section V(e)
of the QPAM Exemption) owns a 5% or more interest in an Obligor and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to an Obligor
in writing pursuant to this clause (d); or


 


(e)           the
Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”)) managed by an
“in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM
exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a person controlling or controlled by the
INHAM (applying the definition of “control” in Section IV(d) of the INHAM
Exemption) owns a 5% or more interest in an Obligor and (i) the identity of
such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets
constitute the Source have been disclosed to an Obligor in writing pursuant to
this clause (e); or


 


(f)            the
Source is a governmental plan; or


 


(g)           the
Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been
identified to any Obligor in writing pursuant to this clause (g); or


 


15





















 


(h)           the
Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.


 


As
used in this Section 6.3, the terms “employee benefit plan,”
“governmental plan,” and “separate account” shall have the respective meanings
assigned to such terms in section 3 of ERISA.


 


Section 7.                Information as
to Obligors.


 


Section 7.1.           Financial
and Business Information.  The
Obligors shall deliver to each holder of Notes that is an Institutional
Investor:


 


(a)           Quarterly Statements — within 60 days after the end of each
quarterly fiscal period in each fiscal year of FDSI (other than the last
quarterly fiscal period of each such fiscal year),


 


(i)            a
consolidated balance sheet of FDSI and its Subsidiaries as at the end of such
quarter, and


 


(ii)           consolidated
statements of income, changes in shareholders’ equity and cash flows of FDSI
and its Subsidiaries, for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter,


 


setting forth in each case in comparative form the
figures for the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided
that filing with the Securities and Exchange Commission within the time period
specified above FDSI’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor shall be deemed to satisfy the
requirements of this Section 7.1(a);


 


(b)           Annual Statements — within 105 days after the end of each
fiscal year of FDSI,


 


(i)            a
consolidated balance sheet of FDSI and its Subsidiaries, as at the end of such
year, and


 


(ii)           consolidated
statements of income, changes in shareholders’ equity and cash flows of FDSI
and its Subsidiaries, for such year,


 


setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing,


 


16





















 


which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that filing with the Securities and Exchange
Commission within the time period specified above of FDSI’s Annual Report on
Form 10-K for such fiscal year (together with FDSI’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor shall be deemed to
satisfy the requirements of this Section 7.1(b);


 


(c)           SEC and Other Reports — except for filings referred to in
Section 7.1(a) and (b) above, promptly upon their becoming available and,
to the extent applicable, one copy of (i) each financial statement,
report, notice or proxy statement sent by FDSI or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto filed by FDSI or
any Subsidiary with the Securities and Exchange Commission and of all press
releases and other statements made available generally by FDSI or any
Subsidiary to the public concerning developments that are Material; provided
that filing of Form 8-K with the Securities and Exchange Commission within the
time periods required by the Securities and Exchange Act of 1934 (as amended)
and the posting of press releases on FDSI’s website shall satisfy the
obligations under this Section 7.1(c);


 


(d)           Notice of Default or Event of Default — promptly, and in any
event within five Business Days after a Responsible Officer becomes aware of
the existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder or
that any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice
specifying the nature and period of existence thereof and what action the
Obligors are taking or proposes to take with respect thereto;


 


(e)           ERISA Matters — promptly, and in any event within five
Business Days after a Responsible Officer becomes aware of any of the following
that would reasonably be expected to have a Material Adverse Effect, a written
notice setting forth the nature thereof and the action, if any, that an Obligor
or an ERISA Affiliate proposes to take with respect thereto:


 


(i)            with
respect to any Plan, any reportable event, as defined in Section 4043(c)
of ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date thereof; or


 


(ii)           the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under Section 4042 of ERISA for the


 


17





















 


termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by any Obligor or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan; or


 


(iii)          any
event, transaction or condition that would result in the incurrence of any
liability by any Obligor or any ERISA Affiliate pursuant to Title I or IV
of ERISA or the imposition of a penalty or excise tax under the provisions of
the Code relating to employee benefit plans, or the imposition of any Lien on
any of the rights, properties or assets of any Obligor or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing;


 


(f)            Notices from Governmental Authority — promptly, and in any
event within 30 days of receipt thereof, copies of any notice to any Obligor or
any Subsidiary from any federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that would reasonably be
expected to have a Material Adverse Effect;


 


(g)           Supplements  —
promptly and in any event within 10 Business Days after the execution and
delivery of any Supplement, a copy thereof; and


 


(h)           Requested Information — with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of any Obligor or any of its
Subsidiaries or relating to the ability of any Obligor to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.


 


Notwithstanding the foregoing, in the event that one
or more Unrestricted Subsidiaries shall either (i) own more than 10% of the
total consolidated assets of FDSI and its Subsidiaries, or (ii) account for
more than 10% of the consolidated gross revenues of FDSI and its Subsidiaries,
determined in each case in accordance with GAAP, then, within the respective
periods provided in Section 7.1(a) and (b) above, the Obligors shall deliver to
each holder of Notes that is an Institutional Investor, unaudited financial
statements of the character and for the dates and periods as in said Sections
7.1(a) and (b) covering such group of Unrestricted Subsidiaries (on a
consolidated basis), together with a consolidating statement reflecting
eliminations or adjustments required to reconcile the financial statements of
such group of Unrestricted Subsidiaries to the financial statements delivered
pursuant to Sections 7.1(a) and (b).


 


Section 7.2.           Officer’s
Certificate.  Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:


 


18





















 


(a)           Covenant Compliance — the information required in order to
establish whether the Obligors were in compliance with the requirements of
Section 10.1 through Section 10.7 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and


 


(b)           Event of Default — a statement that such officer has
reviewed the relevant terms hereof such review shall not have disclosed the
existence during the quarterly or annual period covered by the statements then
being furnished of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Obligors shall have taken or proposes to take with respect thereto.


 


Section 7.3.           Visitation.  Each Obligor shall permit the representatives
of each holder of Notes that is an Institutional Investor:


 


(a)           No Default — if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to an Obligor,
to visit the principal executive office of any Obligor, to discuss the affairs,
finances and accounts of any Obligor and its Subsidiaries with any Obligor’s
officers, and (with the consent of the Obligors, which consent will not be
unreasonably withheld) its independent public accountants, and (with the
consent of the Obligors, which consent will not be unreasonably withheld) to
visit the other offices and properties of any Obligor and each Restricted
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and


 


(b)           Default — if a Default or Event of Default then exists, at
the expense of the Obligors, to visit and inspect any of the offices or
properties of any Obligor or any Restricted Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (and
by this provision any Obligor authorizes said accountants to discuss the
affairs, finances and accounts of any Obligor and its Subsidiaries), all at
such times and as often as may be requested.


 


Section 8.                Payment of the
Notes.


 


Section 8.1.           Required
Prepayments of Series A Notes.  (a) The
entire unpaid principal amount of the Tranche A Notes shall become due and
payable on September 27, 2015.


 


(b)           On
September 27, 2011 and on each September 27 thereafter to and
including September 27, 2015 the Obligors will prepay $16,200,000
principal amount (or such lesser principal amount as shall then be outstanding)
of the Tranche B Notes at par and without payment of the Make-Whole Amount
or any premium, provided that upon any partial


 


19





















 


prepayment of the Notes pursuant to Section 8.2 or Section 8.7,
the principal amount of each required prepayment of the Tranche B Notes
becoming due under this Section 8.1(b) on and after the date of such
prepayment shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such prepayment


 


Section 8.2.           Optional
Prepayments with Make-Whole Amount. 
The Obligors may, at their option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 10% of the original aggregate principal amount of the Notes then
outstanding in the case of a partial prepayment (or such lesser amount as shall
be required to effect a partial prepayment resulting from an offer of
prepayment pursuant to Section 10.5, which is without any Make-Whole
Amount), at 100% of the principal amount so prepaid, together with interest
accrued thereon to the date of such prepayment, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount of
each Note then outstanding.  The Obligors
will give each holder of Notes written notice of each optional prepayment under
this Section 8.2 not less than 20 days and not more than 60 days prior to
the date fixed for such prepayment.  Each
such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by
such holder to be prepaid (determined in accordance with Section 8.3), and
the interest to be paid on the prepayment date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a Senior
Financial Officer as to the estimated respective Make-Whole Amount due in
connection with such prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of such
computation.  Two Business Days prior to
such prepayment, the Obligors shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of each
such Make-Whole Amount as of the specified prepayment date.


 


Section 8.3.           Allocation
of Partial Prepayments.  In the case
of each partial prepayment of the Notes pursuant to the provisions of
Section 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof.  All regularly scheduled partial prepayments
made with respect to any Series of Additional Notes pursuant to any Supplement
shall be allocated as provided therein.


 


Section 8.4.           Maturity;
Surrender, Etc.  In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of
each Note to be prepaid shall mature and become due and payable on the date
fixed for such prepayment, together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount.  From and after such date, unless the Obligors
shall fail to pay such principal amount when so due and payable, together with
the interest and Make-Whole Amount as aforesaid, interest on such principal
amount shall cease to accrue.  Any Note
paid or prepaid in full shall be surrendered to an Obligor and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.


 


Section 8.5.           Purchase
of Notes.  No Obligor will or will
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes of any Series except (a) upon the
payment or prepayment of the Notes of any Series in


 


20





















 


accordance with the terms of this Agreement (including any Supplement
hereto) and the Notes or (b) pursuant to a written offer to purchase any
outstanding Notes of any Series made by the Obligors or an Affiliate pro rata
to the holders of the Notes of such Series upon the same terms and conditions
(except that if such Series has more than one separate tranche, such written
offer shall be allocated among all of the separate tranches of such Series at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof but such written offer may otherwise differ
among such separate tranches and such written offer shall be made pro rata to
the holders of the same tranches of such Series upon the same terms and
conditions).  The Obligors will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.


 


Section 8.6.           Make-Whole
Amount for the Series A Notes.  The
term “Make-Whole Amount” means with respect
to any Series A Note an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Series A Note, minus the
amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings with respect to the
Called Principal of such Series A Note:


 


“Called Principal” means, the
principal of the Series A Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.


 


“Discounted Value” means, the
amount obtained by discounting all Remaining Scheduled Payments from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest
on such Series A Note is payable) equal to the Reinvestment Yield.


 


“Reinvestment Yield” means, 0.50%
plus the yield to maturity calculated by using (i) the yields reported, as
of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date on screen “PX-1” on the Bloomberg Financial
Market Service (or such other information service as may replace Bloomberg) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date.  In either case,
the yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly on a straight line basis
between (1) the actively traded U.S. Treasury security with the maturity
closest to and greater than the Remaining Average


 


21





















 


Life and (2) the
actively traded U.S. Treasury security with the maturity closest to and less
than the Remaining Average Life.


 


“Remaining Average Life” means,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment by (b) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date and the
scheduled due date of such Remaining Scheduled Payment.


 


“Remaining Scheduled Payments”
means, all payments of such Called Principal and interest thereon that would be
due after the Settlement Date if no payment of such Called Principal were made
prior to its scheduled due date, provided that
if such Settlement Date is not a date on which interest payments are due to be
made under the terms of such Series A Note, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.


 


“Settlement Date” means, the date
on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.


 


Section 8.7.           Change
in Control.   (a) Notice of Change in Control or Control Event.  The Obligors will, within 15 Business
Days after any Responsible Officer has knowledge of the occurrence of any
Change in Control or Control Event, give written notice of such Change in
Control or Control Event to each holder of Notes unless
notice in respect of such Change in Control (or the Change in Control
contemplated by such Control Event) shall have been given pursuant to
subparagraph (b) of this Section 8.7. 
If a Change in Control has occurred, such notice shall contain and
constitute an offer to prepay Notes of each Series as described in subparagraph
(c) of this Section 8.7 and shall be accompanied by the certificate
described in subparagraph (g) of this Section 8.7.


 


(b)           Condition to Obligor Action. 
The Obligors will not take any action that consummates or finalizes a
Change in Control unless (i) at least 15 Business Days prior to such
action it shall have given to each holder of Notes written notice containing
and constituting an offer to prepay Notes as described in subparagraph (c) of
this Section 8.7, accompanied by the certificate described in subparagraph
(g) of this Section 8.7, and (ii) contemporaneously with such action,
it prepays all Notes required to be prepaid in accordance with this
Section 8.7.


 


(c)           Offer to Prepay Notes. 
The offer to prepay Notes contemplated by subparagraphs (a) and (b) of
this Section 8.7 shall be an offer to prepay, in accordance with and
subject to this Section 8.7, all, but not less than all, the Notes held by
each holder (in this case only, “holder” in
respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified in such
offer (the “Proposed Prepayment Date”).  If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of this
Section 8.7, such date shall be not less than 20 days and not more
than


 


22





















 


30 days after the date of such offer (if the Proposed Prepayment
Date shall not be specified in such offer, the Proposed Prepayment Date shall
be the 20th day after the date of such offer).


 


(d)           Acceptance.  A holder
of Notes may accept the offer to prepay made pursuant to this Section 8.7
by causing a notice of such acceptance to be delivered to any Obligor at least
5 Business Days prior to the Proposed Prepayment Date.  A failure by a holder of Notes to respond to
an offer to prepay made pursuant to this Section 8.7 shall be deemed to
constitute a rejection of such offer by such holder.


 


(e)           Prepayment. 
Prepayment of the Notes to be prepaid pursuant to this Section 8.7
shall be at 100% of the principal amount of such Notes, together with interest
on such Notes accrued to the date of prepayment and without any Make-Whole
Amount.  The prepayment shall be made on
the Proposed Prepayment Date except as provided in subparagraph (f) of this
Section 8.7.


 


(f)            Deferral Pending Change in Control.  The obligation of the Obligors to prepay
Notes pursuant to the offers required by subparagraph (b) and accepted in
accordance with subparagraph (d) of this Section 8.7 is subject to
the occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made.  In the
event that such Change in Control does not occur on the Proposed Prepayment
Date in respect thereof, the prepayment shall be deferred until and shall be
made on the date on which such Change in Control occurs.  The Obligors shall keep each holder of Notes
reasonably and timely informed of (i) any such deferral of the date of
prepayment, (ii) the date on which such Change in Control and the
prepayment are expected to occur, and (iii) any determination by the
Obligors that efforts to effect such Change in Control have ceased or been
abandoned (in which case the offers and acceptances made pursuant to this
Section 8.7 in respect of such Change in Control shall be deemed
rescinded).


 


(g)           Officer’s Certificate.  Each offer to prepay the Notes pursuant to this
Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of an Obligor and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.7; (iii) the principal amount of each Note
offered to be prepaid; (iv) the interest that would be due on each Note
offered to be prepaid, accrued to the Proposed Prepayment Date; (v) that
the conditions of this Section 8.7 have been fulfilled; and (vi) in
reasonable detail, the nature and date or proposed date of the Change in
Control.


 


(h)           Effect on Required Payments. 
The amount of each payment of the principal of the Notes made pursuant
to this Section 8.7 shall be applied against and reduce each of the then
remaining principal payments due pursuant to Section 8.7 by a percentage
equal to the aggregate principal amount of the Notes so paid divided by the
aggregate principal amount of the Notes outstanding immediately prior to such
payment.


 


(i)            “Change in Control” Defined. 
“Change in Control” means (1) any sale,
lease, exchange or other transfer (in a single transaction or a series of
related transactions) of all or substantially all of the assets of FDSI to any
Person or “group” (within the meaning of the Exchange Act and the rules of the
Securities and Exchange Commission thereunder in effect on


 


23





















 


the date hereof) other than a Restricted Subsidiary in accordance with
clause (4) below; (2) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or “group” (within the
meaning of the Exchange Act and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) of 51% or more of the
outstanding shares of the voting capital stock of FDSI; (3) the first day on
which a majority of the members of the Board of Directors of FDSI are not
Continuing Directors; or (4) a merger, consolidation or sale of all or
substantially all of the assets of FDSI in respect of which FDSI is not the
successor corporation (other than a Restricted Subsidiary which assumes the
obligations under this Agreement and the Notes).


 


(j)            “Control Event” Defined. 
“Control Event” means:


 


(i)            the execution by FDSI or any of its
Subsidiaries or Affiliates of any agreement or letter of intent with respect to
any proposed transaction or event or series of transactions or events which,
individually or in the aggregate, may reasonably be expected to result in a
Change in Control,


 


(ii)           the execution of any written
agreement which, when fully performed by the parties thereto, would result in a
Change in Control, or


 


(iii)          the making of any written offer by any
person (as such term is used in section 13(d) and section 14(d)(2) of the
Exchange Act as in effect on the date of the Closing) or related persons
constituting a group (as such term is used in Rule 13d-5 under the Exchange Act
as in effect on the date of the Closing) to the holders of the voting capital
stock of FDSI, which offer, if accepted by the requisite number of holders,
would result in a Change in Control.


 


(k)           “Continuing Director” Defined.  “Continuing Director”
means, as of any date of determination, any member of the board of directors of
FDSI who: (i) was a member of such board of directors on the date hereof; or
(ii) was nominated for election or elected to such board of directors with the
approval of a majority of the Continuing Directors who were members of such
board at the time of such nomination or election.


 


Section 9.                                                 Affirmative
Covenants.


 


Each Obligor
covenants that so long as any of the Notes are outstanding:


 


Section 9.1.           Compliance
with Law.  Without
limiting Section 10.8, each Obligor will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to
the extent necessary to ensure that non-compliance with such laws, ordinances
or governmental rules or regulations or failures to obtain or maintain in
effect such licenses,


 


24





















 


certificates, permits, franchises and other governmental authorizations
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.


 


Section 9.2.           Insurance.  Each Obligor will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated except for any non-maintenance that would not
reasonably be expected to have a Material Adverse Effect.


 


Section 9.3.           Maintenance
of Properties.  Each
Obligor will, and will cause each of its Restricted Subsidiaries to, maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair (similar to other comparable retailers), working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that this Section shall not prevent an Obligor
or any Restricted Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Obligors have concluded that such
discontinuance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.


 


Section 9.4.           Payment
of Taxes and Claims. 
Each Obligor will, and will cause each of its Subsidiaries to, file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of any Obligor or any Subsidiary not
permitted by Section 10.4, provided that
neither any Obligor nor any Subsidiary need pay any such tax or assessment or
claims if (i) the amount, applicability or validity thereof is contested
by any Obligor or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and such Obligor or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of such Obligor
or such Subsidiary or (ii) the non-filing or nonpayment, as the case may
be, of all such taxes and assessments in the aggregate would not reasonably be
expected to have a Material Adverse Effect.


 


Section 9.5.           Corporate
Existence, Etc. 
Subject to Sections 10.5 and
10.6, each Obligor will at all times preserve and keep in full force and effect
its corporate existence, and will at all times preserve and keep in full force
and effect the corporate existence of each of its Restricted Subsidiaries
(unless such Restricted Subsidiary is merged into an Obligor or a Restricted
Subsidiary) and all rights and franchises of the Obligors and their Restricted
Subsidiaries unless, in the good faith judgment of the Obligors, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the aggregate,
to have a Material Adverse Effect.


 


25





















 


Section 9.6.           Designation
of Subsidiaries.  The
Obligors may from time to time cause any Subsidiary (other than a Subsidiary
Guarantor) to be designated as an Unrestricted Subsidiary or any Unrestricted
Subsidiary to be designated a Restricted Subsidiary; provided,
however, that at the time of such designation and immediately after
giving effect thereto, (a) no Default or Event of Default would exist under the
terms of this Agreement, and (b) the Obligors and their Restricted Subsidiaries
would be in compliance with all of the covenants set forth in this Section 9
and Section 10 (including, without limitation, Section 10.5) if tested on
the date of such action and provided, further,
that once a Subsidiary has been designated an Unrestricted Subsidiary, it shall
not thereafter be redesignated as a Restricted Subsidiary on more than one
occasion.  Within ten (10) days following
any designation described above, the Obligors will deliver to the holders of
the Notes a notice of such designation accompanied by a certificate signed by a
Senior Financial Officer of the Obligors certifying compliance with all
requirements of this Section 9.6 and setting forth all information required in
order to establish such compliance.


 


Section 9.7.           Notes
to Rank Pari Passu. The Notes and all other obligations under
this Agreement of the Obligors are and at all times shall remain direct and
unsecured obligations of the Obligors ranking pari passu
as against the assets of the Obligors with all other Notes from time to time
issued and outstanding hereunder without any preference among themselves and pari passu with all other present and future unsecured Debt
(actual or contingent) of the Obligors which is not expressed to be subordinate
or junior in rank to any other unsecured Debt of the Obligors.


 


Section 9.8.           Additional
Subsidiary Guarantors.  The Obligors will cause any
Subsidiary which is required by the terms of the Bank Credit Agreement to
become a party to, or otherwise guarantee, Debt in respect of the Bank Credit
Agreement, to enter into the Subsidiary Guaranty and deliver to each of the
holders of the Notes (concurrently with the incurrence of any such obligation
pursuant to the Bank Credit Agreement) the following items:


 


(a)           a joinder agreement in respect of the
Subsidiary Guaranty;


 


(b)           a certificate signed by an authorized
Responsible Officer of the Obligors making representations and warranties to
the effect of those contained in Sections 5.4, 5.6 and 5.7, with respect
to such Subsidiary and the Subsidiary Guaranty, as applicable; and


 


(c)           an opinion of counsel (who may be
in-house counsel for an Obligor) addressed to each of the holders of the Notes
satisfactory to the Required Holders, to the effect that the Subsidiary
Guaranty by such Person has been duly authorized, executed and delivered and
that the Subsidiary Guaranty constitutes the legal, valid and binding contract
and agreement of such Person enforceable in accordance with its terms, except
as an enforcement of such terms may be limited by bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles.


 


Section 9.9.           Books
and Records. Each Obligor will, and will cause each of its
Restricted Subsidiaries to, maintain proper books of record and account in
conformity with GAAP and all


 


26





















 


applicable requirements of any Governmental Authority having legal or
regulatory jurisdiction over such Obligor or such Restricted Subsidiary, as the
case may be.


 


Section 10.                                           Negative
Covenants.


 


Each Obligor covenants that so long as any of the
Notes are outstanding:


 


Section 10.1.        Consolidated
Debt to Consolidated Total Capitalization. The Obligors will
not at any time permit the ratio of Consolidated Debt to Consolidated Total
Capitalization to exceed 60%.


 


Section 10.2.        Fixed
Charges Coverage Ratio. 
The Obligors will not permit the ratio of Consolidated EBITDAR to
Consolidated Fixed Charges for each period of four consecutive fiscal quarters
(calculated as at the end of each fiscal quarter of FDSI for the four
consecutive fiscal quarters then ended) to be less than 2.00 to 1.00.


 


Section 10.3.        Priority
Debt. The Obligors will not at any time permit the aggregate
amount of all Priority Debt to exceed 20% of Consolidated Net Worth, determined
as of the end of the then most recently ended fiscal quarter of FDSI.


 


Section 10.4.        Limitation
on Liens.    The Obligors
will not, and will not permit any of their Restricted Subsidiaries to, directly
or indirectly create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any property or asset
(including, without limitation, any document or instrument in respect of goods
or accounts receivable) of any Obligor or any such Restricted Subsidiary,
whether now owned or held or hereafter acquired, or any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits
(unless the Obligors make, or cause to be made, effective provision whereby the
Notes will be equally and ratably secured with any and all other obligations
thereby secured, such security to be pursuant to an agreement reasonably
satisfactory to the Required Holders and, in any such case, the Notes shall
have the benefit, to the fullest extent that, and with such priority as, the
holders of the Notes may be entitled under applicable law, of an equitable Lien
on such property), except:


 


(a)           Liens for taxes, assessments or other
governmental charges that are not yet due and payable or the payment of which
is not at the time required by Section 9.4;


 


(b)           any attachment or judgment Lien, if
the judgment it secures shall either (i) have been discharged, bonded or
execution thereof stayed pending appeal within 60 days after the entry thereof
or shall have been discharged within 60 days after the expiration of any such
stay or (ii) be covered by insurance and the insurer has acknowledged in
writing that it is obligated to pay such judgment;


 


(c)           (i) Liens incidental to the
conduct of business or the ownership of properties and assets (including
landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s and other
similar Liens for sums not yet due and payable), (ii) Liens, deposits and
pledges to secure the performance of bids, tenders, leases, or trade contracts,


 


27





















 


or, (iii) Liens to secure statutory obligations (including obligations
under workers compensation, unemployment insurance and other social security
legislation) and under liability insurance, (iv) Liens to secure surety or
appeal bonds or performance bonds, (v) other Liens incurred in the
ordinary course of business and not in connection with the borrowing of money
or (vi) Liens securing letters of credit that are issued to secure any of
the foregoing obligations described in this Section 10.4(c);


 


(d)           leases or subleases granted to
others, easements, rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to the ownership of property or assets or
the ordinary conduct of the business of an Obligor or any of its Restricted
Subsidiaries, on Liens incidental to minor survey exceptions and the like, provided that such Liens do not, in the aggregate,
materially detract from the value of such property;


 


(e)           Liens securing Debt or other
obligations of a Restricted Subsidiary to an Obligor or to a Restricted
Subsidiary;


 


(f)            Liens existing as of the date of
Closing and reflected in Schedule 10.4;


 


(g)           Liens incurred after the date of
Closing given to secure the payment of the purchase price incurred in
connection with the acquisition, construction or improvement of property (other
than accounts receivable but including inventory) useful and intended to be
used (or sold as inventory) in carrying on the business of an Obligor or a
Restricted Subsidiary, including Liens existing on such property at the time of
acquisition or construction thereof or Liens incurred within 365 days of such
acquisition or completion of such construction or improvement, provided that (i) the Lien shall attach solely to the
property acquired, purchased, constructed or improved and the proceeds thereof;
(ii) at the time of acquisition, construction or improvement of such
property (or, in the case of any Lien incurred within three hundred sixty-five
(365) days of such acquisition or completion of such construction or
improvement, at the time of the incurrence of the Debt secured by such Lien),
the aggregate amount remaining unpaid on all Debt secured by Liens on such
property, whether or not assumed by an Obligor or a Restricted Subsidiary,
shall not exceed the lesser of (y) the cost of such acquisition, construction
or improvement or (z) the Fair Market Value of such property (as
determined in good faith by one or more officers of an Obligor to whom
authority to enter into the transaction has been delegated by the board of
directors of such Obligor); and (iii) at the time of such incurrence and
after giving effect thereto, no Default or Event of Default would exist;


 


(h)           any Lien existing on property of a
Person immediately prior to its being consolidated with or merged into an
Obligor or a Restricted Subsidiary or its becoming a Restricted Subsidiary, or
any Lien existing on any property acquired by an Obligor or any Restricted
Subsidiary at the time such property is so acquired (whether or not the Debt
secured thereby shall have been assumed), provided that
(i) no such Lien shall have been created or assumed in contemplation of
such consolidation or merger or such Person’s becoming a Restricted Subsidiary
or such acquisition of property, (ii) each such Lien shall extend solely
to the item or items of property so acquired and, if required by the


 


28





















 


terms of the instrument originally creating such Lien,
other property which is an improvement to or is acquired for specific use in
connection with such acquired property, and (iii) at the time of such
incurrence and after giving effect thereto, no Default or Event of Default
would exist;


 


(i)            any extensions, renewals or
replacements of any Lien permitted by the preceding subparagraphs (e), (f) and
(g) of this Section 10.4, provided that
(i) no additional property shall be encumbered by such Liens,
(ii) the unpaid principal amount of the Debt or other obligations secured
thereby shall not be increased on or after the date of any extension, renewal
or replacement, and (iii) at such time and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing;
and


 


(j)            in addition to the Liens described
above, any other Liens securing Debt or other obligations not permitted above,
including Liens securing Priority Debt of an Obligor or any Restricted
Subsidiary, provided that such Priority Debt does
not exceed the limitations set forth in Section 10.3.


 


Section 10.5.        Sales
of Assets.  The
Obligors will not, and will not permit any Restricted Subsidiary to, sell,
lease or otherwise dispose of any substantial part (as defined below) of the
assets of the Obligors and their Restricted Subsidiaries; provided,
however, that an Obligor or any Restricted Subsidiary may sell,
lease or otherwise dispose of assets constituting a substantial part of the
assets of the Obligors and their Restricted Subsidiaries if such assets are
sold in an arms length transaction and, at such time and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing
and an amount equal to the net proceeds received from such sale, lease or other
disposition (but only with respect to that portion of such assets that exceeds
the definition of “substantial part” set forth below) shall be used within 365
days of such sale, lease or disposition, in any combination:


 


(1)           to acquire productive assets used or
useful in carrying on the business of the Obligors and their Restricted
Subsidiaries and having a value at least equal to the value of such assets sold,
leased or otherwise disposed of (or FDSI or any Restricted Subsidiary is
contractually obligated to acquire such productive assets pursuant to a binding
contract entered into within such 365 day period so long as such productive
assets shall have been acquired within 60 days following such 365 day period);
and/or


 


(2)           to prepay or retire Senior Debt of
any Obligor and/or its Restricted Subsidiaries, provided
that (i) the Obligors shall offer to prepay
each outstanding Note ratably with all such Senior Debt prepaid or retired, and
(ii) any such prepayment of the Notes shall be made in accordance with the
terms of Section 8.2 (at par and without the payment of any Make-Whole
Amount or any other premium).  If any
holder of a Note fails to accept such offer of prepayment, then, for purposes
of the preceding sentence only, the Obligors nevertheless will be deemed to
have paid Senior Debt in an amount equal to the ratable portion for such Note.


 


29





















 


As used in this Section 10.5, a sale, lease or
other disposition of assets shall be deemed to be a “substantial
part” of the assets of the Obligors and their Restricted
Subsidiaries if the book value of such assets, when added to the book value of
all other assets sold, leased or otherwise disposed of by the Obligors and
their Restricted Subsidiaries during any fiscal year, exceeds 15% of the book
value of Consolidated Total Assets, determined as of the end of the fiscal
quarter immediately preceding such sale, lease or other disposition; provided that there shall be excluded from any
determination of a “substantial part” any (i) sale or disposition of
assets in the ordinary course of business of the Obligors and their Restricted
Subsidiaries, (ii) any transfer of assets from an Obligor to any other
Obligor or a Restricted Subsidiary or from any Restricted Subsidiary to an
Obligor or another Restricted Subsidiary and (iii) any sale or transfer of
property acquired by any Obligor or any Restricted Subsidiary after the date of
this Agreement to any Person within 365 days following the acquisition or
construction of such property by such Obligor or any Restricted Subsidiary if
an Obligor or a Restricted Subsidiary shall concurrently with such sale or
transfer, lease such property, as lessee.


 


For purposes of this Agreement, at any time a
Restricted Subsidiary is designated an Unrestricted Subsidiary in accordance
with Section 9.6 of this Agreement, the book value of all of the assets of such
Subsidiary shall be deemed to be sold for purposes of this Section 10.5 as
of the effective date of such designation and such sale of assets shall be
subject to the provisions set forth in this Section 10.5.


 


Section 10.6.        Merger
and Consolidation.  The
Obligors will not, and will not permit any of its Restricted Subsidiaries to,
consolidate with or merge with any other Person or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person; provided that:


 


(1)           any Restricted Subsidiary of an
Obligor may (x) consolidate with or merge with, or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to, (i) an Obligor or a Restricted Subsidiary so long as in any
merger or consolidation involving an Obligor, such Obligor shall be the
surviving or continuing corporation or (ii) any other Person so long as the
survivor is the Restricted Subsidiary, or (y) convey, transfer or lease
all of its assets in compliance with the provisions of Section 10.5; and


 


(2)           the foregoing restriction does not
apply to the consolidation or merger of any Obligor with, or the conveyance,
transfer or lease of substantially all of the assets of any Obligor in a single
transaction or series of transactions to, any Person so long as:


 


                (a)           the successor formed by such
consolidation or the survivor of such merger or the Person that acquires by
conveyance, transfer or lease substantially all of the assets of an Obligor as
an entirety, as the case may be (the “Successor Corporation”),
shall be a solvent entity organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;


 


(b)           if such Obligor is not the Successor
Corporation, such Successor Corporation shall have executed and delivered to
each holder of Notes its


 


30





















 


assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement (and each
Supplement thereto) and the Notes (pursuant to such assumption agreements and
instruments as shall be reasonably satisfactory to the Required Holders), and
the Successor Corporation shall have caused to be delivered to each holder of
Notes (A) an opinion of nationally recognized independent counsel, to the
effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and (B) an acknowledgment from
each Subsidiary Guarantor that the Subsidiary Guaranty continues in full force
and effect; and


 


(c)           immediately after giving effect to
such transaction no Default or Event of Default would exist.


 


No
such conveyance, transfer or lease of substantially all of the assets of any
Obligor shall have the effect of releasing any Obligor or any successor entity
from its liability under this Agreement or the Notes.


 


Section 10.7.        Restricted
Subsidiaries.  FDSI and
its Restricted Subsidiaries shall at all times account for 75% of the
consolidated total assets of FDSI and all of its Subsidiaries and 75% of the
consolidated gross revenues of the FDSI and all of its Subsidiaries.


 


Section 10.8.        Transactions
with Affiliates.  The
Obligors will not and will not permit any Restricted Subsidiary to enter into
directly or indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than an Obligor or another Restricted Subsidiary), except in
the ordinary course and upon fair and reasonable terms that are not materially
less favorable to the Obligors or such Restricted Subsidiary, taken as a whole,
than would be obtainable in a comparable arm’s-length transaction with a Person
not an Affiliate.


 


Section 10.9.        Terrorism Sanctions Regulations.  No Obligor will or will permit any Subsidiary
to (a) become a Person described or designated in the Specially Designated
Nationals and Blocked Persons List of the Office of Foreign Assets Control or
in Section 1 of the Anti-Terrorism Order or (b) engage in any
dealings or transactions with any such Person.


 


Section 10.10.      Line
of Business.  The
Obligors will not and will not permit any Restricted Subsidiary to engage in
any business if, as a result, the general nature of the business in which the
Obligors and the Restricted Subsidiaries, taken as a whole, would then be
engaged would be substantially changed from the general nature of the business
in which the Obligors and the Restricted Subsidiaries, taken as a whole, are
engaged on the date of this Agreement.


 


Section 11.                                           Events of
Default.


 


An “Event of Default” shall exist if any of the following
conditions or events shall occur and be continuing:


 


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(a)           any Obligor defaults in the payment
of any principal or Make-Whole Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise; or


 


(b)           any Obligor defaults in the payment
of any interest on any Note for more than five Business Days after the same
becomes due and payable; or


 


(c)           any Obligor defaults in the
performance of or compliance with any term contained in Section 10 or any
covenant in a Supplement which specifically provides that it shall have the
benefit of this paragraph (c) or any Subsidiary Guarantor defaults in the
performance of or compliance with any term of the Subsidiary Guaranty beyond
any period of grace or cure period provided with respect thereto; or


 


(d)           any Obligor defaults in the
performance of or compliance with any term contained herein or in any
Supplement (other than those referred to in paragraphs (a), (b) and (c) of this
Section 11) and such default is not remedied within 30 days after the earlier
of (i) a Responsible Officer obtaining actual knowledge of such default or
(ii) any Obligor receiving written notice of such default from any holder
of a Note (any such written notice to be identified as a “notice of default”
and to refer specifically to this paragraph (d) of Section 11); or


 


(e)           any Subsidiary Guaranty of a Material
Subsidiary ceases to be a legally valid, binding and enforceable obligation or
contract of a Subsidiary Guarantor (other than upon a release of any Subsidiary
Guarantor from a Subsidiary Guaranty in accordance with the terms of
Section 2.3(b) hereof), or any Subsidiary Guarantor that is a Material
Subsidiary or any party by, through or on account of any such Person,
challenges the validity, binding nature or enforceability of any such
Subsidiary Guaranty of a Material Subsidiary; or


 


(f)            any representation or warranty made
in writing by or on behalf of any Obligor or Subsidiary Guarantor that is a
Material Subsidiary in this Agreement or any Subsidiary Guaranty or by any
officer of any Obligor or any Subsidiary Guarantor that is a Material
Subsidiary in any writing furnished in connection with the transactions
contemplated hereby or by any Subsidiary Guaranty proves to have been false or
incorrect in any material respect on the date as of which made; or


 


(g)           (i) any Obligor or any
Restricted Subsidiary is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole amount or
interest (in the payment amount of at least $100,000) on any Debt other than
the Notes that is outstanding in an aggregate principal amount of at least
$25,000,000 beyond any period of grace provided with respect thereto, or
(ii) any Obligor or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any instrument, mortgage,
indenture or other agreement relating to any Debt other than the Notes in an
aggregate principal amount of at least $25,000,000 or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared, due and payable, or (iii) as a consequence of the
occurrence or


 


32





















 


continuation of any event or condition (other than the
passage of time or the right of the holder of Debt to convert such Debt into
equity interests), any Obligor or any Restricted Subsidiary has become
obligated to purchase or repay Debt other than the Notes before its regular
maturity or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $25,000,000; or


 


(h)           any Obligor or any Material
Subsidiary (i) is generally not paying, or admits in writing its inability
to pay, its debts as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the benefit
of its creditors, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (v) is adjudicated
as insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or


 


(i)            a court or governmental authority of
competent jurisdiction enters an order appointing, without consent by an
Obligor or any of its Material Subsidiaries, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of any Obligor or any of its Material Subsidiaries, or any such petition
shall be filed against any Obligor or any of its Material Subsidiaries and such
petition shall not be dismissed within 60 days; or


 


(j)            a final judgment or judgments at any
one time outstanding for the payment of money aggregating in excess of $25,000,000
(except to the extent of any third party insurance policies in which the
insurer has agreed in writing that it is obligated to pay for the amount of
such judgment) and which are rendered against one or more of any Obligor, its
Restricted Subsidiaries or any Subsidiary Guarantor and which judgments are
not, within 60 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 60 days after the expiration of such stay;
or


 


(k)           if (i) any Plan shall fail to
satisfy the minimum funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under Section 412 of the Code, (ii) a
notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under Section 4042 of ERISA to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified any Obligor or any ERISA
Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate “amount of unfunded benefit liabilities” (within the
meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $25,000,000, (iv) any
Obligor or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to


 


33





















 


Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) any Obligor
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) any
Obligor or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that could
increase the liability of any Obligor or any Subsidiary thereunder; and any
such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect.


 


As
used in Section 11(k), the terms “employee benefit plan”
and “employee welfare benefit plan” shall
have the respective meanings assigned to such terms in Section 3 of ERISA.


 


Section 12.                                           Remedies on Default,
Etc.


 


Section 12.1.        Acceleration.  (a) If an Event of Default with respect
to any Obligor described in paragraph (h) or (i) of Section 11 (other than
an Event of Default described in clause (i) of paragraph (h) or described in
clause (vi) of paragraph (h) by virtue of the fact that such clause encompasses
clause (i) of paragraph (h)) has occurred, all the Notes of every Series then
outstanding shall automatically become immediately due and payable.


 


(b)           If
any other Event of Default has occurred and is continuing, any holder or
holders of more than 50% in aggregate principal amount of the Notes of any
Series at the time outstanding may at any time at its or their option, by
notice or notices to any Obligor, declare all the Notes of such Series then outstanding
to be immediately due and payable.


 


(c)           If
any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing with respect to any Notes, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at any
time, at its or their option, by notice or notices to the Obligors, declare all
the Notes held by such holder or holders to be immediately due and payable.


 


Upon any Note’s
becoming due and payable under this Section 12.1, whether automatically or
by declaration, such Note will forthwith mature and the entire unpaid principal
amount of such Note, plus (i) all accrued and unpaid interest thereon
(including, but not limited to, interest accrued thereon at the Default Rate)
and (ii) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived.  Each Obligor acknowledges, and the parties
hereto agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by any Obligor (except as herein
specifically provided for) and that the provision for payment of a Make-Whole
Amount by the Obligors in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.


 


Section 12.2.        Other
Remedies.  If any
Default or Event of Default has occurred and is continuing, and irrespective of
whether any Notes have become or have been declared


 


34





















 


immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.


 


Section 12.3.        Rescission.  At any time after the Notes have been
declared due and payable pursuant to clause (b) or (c) of
Section 12.1, the holders of not less than 51% in aggregate principal
amount of the Notes of any Series then outstanding, by written notice to the
Obligors, may rescind and annul any such declaration and its consequences if
(a) the Obligors have paid all overdue interest on the Notes of such
Series, all principal of and Make-Whole Amount on any Notes of such Series that
are due and payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and Make-Whole Amount and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes of such Series, at the Default Rate, (b) neither any Obligor nor any
other Person shall have paid any amounts which have become due solely by reason
of such declaration, (c) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17,
and (d) no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to any Notes of such Series.  No rescission and annulment under this
Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.


 


Section 12.4.        No
Waivers or Election of Remedies, Expenses, Etc.  No course of dealing and no delay on the part
of any holder of any Note in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice such holder’s rights, powers
or remedies.  No right, power or remedy
conferred by this Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise.  Without limiting the obligations of the
Obligors under Section 15, the Obligors will pay to the holder of each
Note on demand such further amount as shall be sufficient to cover all costs
and expenses of such holder incurred in any enforcement or collection under
this Section 12, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.


 


Section 13.                                                              Registration;
Exchange; Substitution of Notes.


 


Section 13.1.        Registration
of Notes.  The Obligors
shall keep at their principal executive office a register for the registration
and registration of transfers of Notes. 
The name and address of each holder of one or more Notes, each transfer
thereof and the name and address of each transferee of one or more Notes shall
be registered in such register.  Prior to
due presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Obligors shall not be affected by any notice
or knowledge to the contrary.  The
Obligors shall give to any holder of a Note that is an Institutional Investor
promptly upon request therefor, a complete and correct copy of the names and
addresses of all registered holders of Notes.


 


35





















 


Section 13.2.        Transfer
and Exchange of Notes. 
Upon surrender of any Note to any Obligor at the address and to the
attention of the designated officer (all as specified in Section 18(iv)),
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or such holder’s attorney duly
authorized in writing and accompanied by the relevant name, address and other
information for notices of each transferee of such Note or part thereof),
within ten Business Days thereafter, the Obligors shall execute and deliver, at
the Obligors’ expense (except as provided below), one or more new Notes (as
requested by the holder thereof) of the same Series (and of the same tranche if
such Series has separate tranches) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered
Note.  Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of the Note of such Series originally issued hereunder or pursuant to
any Supplement.  Each such new Note shall
be dated and bear interest from the date to which interest shall have been paid
on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. 
The Obligors may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of
Notes.  Notes shall not be transferred in
denominations of less than $500,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000.  Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.3, provided,
that in lieu thereof such holder may (in reliance upon information provided by
the Obligors, which shall not be unreasonably withheld) make a representation
to the effect that the purchase by any holder of any Note will not constitute a
non-exempt prohibited transaction under section 406(a) of ERISA.


 


The Notes have not
been registered under the Securities Act or under the securities laws of any
state and the holders of the Notes agree that such Notes may not be transferred
or resold unless registered under the Securities Act and all applicable state
securities laws or unless an exemption from the requirement for such
registration is available.


 


Section 13.3.        Replacement
of Notes.  Upon receipt
by an Obligor at the address and to the attention of the designated officer
(all as specified in Section 18(iv)) of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and


 


(a)           in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it (provided
that if the holder of such Note is, or is a nominee for, an original Purchaser
or another holder of a Note with a minimum net worth of at least $50,000,000 or
a Qualified Institutional Buyer, such Person’s own unsecured agreement of
indemnity shall be deemed to be satisfactory), or


 


(b)           in the case of mutilation, upon surrender
and cancellation thereof,


 


the
Obligors at its own expense shall execute and deliver not more than five
Business Days following satisfaction of such conditions, in lieu thereof, a new
Note of the same Series (and of


 


36





















 


the
same tranche if such Series has separate tranches), dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.


 


Section 14.                                           Payments on
Notes.


 


Section 14.1.        Place
of Payment.  Subject to
Section 14.2, payments of principal, Make-Whole Amount and interest
becoming due and payable on the Notes shall be made in New York,
New York at the principal office of Bank of America, N.A. in such
jurisdiction.  The Obligors may at any
time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of
an Obligor in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.


 


Section 14.2.        Home
Office Payment.  So
long as any Purchaser or Additional Purchaser or such Purchaser’s nominee or
such Additional Purchaser’s nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Obligors will pay all sums becoming due on such Note for
principal, Make-Whole Amount and interest by the method and at the address
specified for such purpose for such Purchaser on Schedule A hereto or, in
the case of any Additional Purchaser, Schedule A attached to any Supplement
pursuant to which such Additional Purchaser is a party, or by such other method
or at such other address as such Purchaser or Additional Purchaser shall have
from time to time specified to the Obligors in writing for such purpose,
without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Obligors made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, such Purchaser or Additional Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to FDSI at its
principal executive office or at the place of payment most recently designated
by the Obligors pursuant to Section 14.1. 
Prior to any sale or other disposition of any Note held by any Purchaser
or Additional Purchaser or such Person’s nominee, such Person will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Obligors in exchange for a new Note or Notes pursuant to Section 13.2.  The Obligors will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note.


 


Section 15.                                           Expenses, Etc.


 


Section 15.1.        Transaction
Expenses.  Whether or
not the transactions contemplated hereby are consummated, the Obligors will pay
reasonable attorneys’ fees of one special counsel referred to in
Section 4.7 for the Purchasers or any Additional Purchasers and, if
reasonably required by any Additional Purchasers, one local counsel selected by
such Additional Purchasers.  In addition,
the Obligors will pay all fees and expenses of the Purchasers, any Additional
Purchasers and any other holder of a Note, including reasonable attorneys’ fees
of one special counsel for the holders of the Notes and, if reasonably required
by the Required Holders, one local counsel for the Holders of the Notes
selected by such Required Holders, in connection with any amendments, waivers
or consents under or in respect of this Agreement (including any


 


37





















 


Supplement) or the Notes (whether or not such amendment, waiver or
consent becomes effective), including, without limitation: (a) the costs
and expenses incurred in enforcing or defending (or determining whether or how
to enforce or defend) any rights under this Agreement (including any
Supplement) or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement (including any Supplement) or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses, incurred in connection
with the insolvency or bankruptcy of an Obligor or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes.  The Obligors
will pay, and will save each Purchaser, each Additional Purchaser and each
other holder of a Note harmless from, all claims in respect of any fees, costs
or expenses if any, of brokers and finders (other than those, if any, retained
by a Purchaser or other holder in connection with its purchase of the Notes).


 


Section 15.2.        Survival.  The obligations of the Obligors under this
Section 15 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement, any
Supplement or the Notes, and the termination of this Agreement or any
Supplement.


 


Section 16.                                           Survival of
Representations and Warranties; Entire Agreement.


 


All
representations and warranties contained herein or in any Supplement shall
survive the execution and delivery of this Agreement, such Supplement and the
Notes, the purchase or transfer by any Purchaser or any Additional Purchaser of
any such Note or portion thereof or interest therein and the payment of any
Note may be relied upon by any subsequent holder of any such Note, regardless
of any investigation made at any time by or on behalf of any Purchaser or any
Additional Purchaser or any other holder of any such Note.  All statements contained in any certificate
or other instrument delivered by or on behalf of the Obligors pursuant to this
Agreement or any Supplement shall be deemed representations and warranties of
the Obligors under this Agreement; provided, that
the representations and warranties contained in any Supplement shall only be
made for the benefit of the Additional Purchasers which are party to such
Supplement and the holders of the Notes issued pursuant to such Supplement,
including subsequent holders of any Note issued pursuant to such Supplement,
and shall not require the consent of the holders of existing Notes.  Subject to the preceding sentence, this
Agreement (including every Supplement) and the Notes embody the entire
agreement and understanding between the Purchasers and the Additional
Purchasers and the Obligors and supersede all prior agreements and
understandings relating to the subject matter hereof.


 


Section 17.                                           Amendment and
Waiver.


 


Section 17.1.        Requirements.  (a) This Agreement (including any Supplement)
and the Notes may be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Obligors and the Required Holders, except that
(i) no amendment or waiver of any of the provisions of Section 1, 2,
3, 4, 5, 6 or 21 hereof or the corresponding provision of any Supplement, or
any defined term (as it is used in any such Section or such corresponding
provision of any Supplement), will be effective as to any holder of Notes unless
consented to by such holder of


 


38





















 


Notes in writing, and (ii) no such amendment or waiver may,
without the written consent of all of the holders of Notes at the time
outstanding affected thereby, (A) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or
time of any prepayment or payment of principal of, or reduce the rate or change
the time of payment or method of computation of interest (if such change results
in a decrease in the interest rate) or of the Make-Whole Amount on, the Notes,
(B) change the percentage of the principal amount of the Notes the holders
of which are required to consent to any such amendment or waiver, or
(C) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.


 


(b)           Supplements.  Notwithstanding
anything to the contrary contained herein, the Obligors may enter into any
Supplement providing for the issuance of one or more Series of Additional Notes
consistent with Sections 2.2 and 4.14 hereof without obtaining the consent of
any holder of any other Series of Notes.


 


Section 17.2.        Solicitation
of Holders of Notes.


 


(a)           Solicitation.  The
Obligors will provide each holder of the Notes (irrespective of the amount of
Notes then owned by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof, any Supplement or of the
Notes.  The Obligors will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.


 


(b)           Payment.  No Obligor
will directly or indirectly pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or otherwise, or grant any
security or provide other credit support, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof or
any Supplement unless such remuneration is concurrently paid, or security is
concurrently granted or other credit support is concurrently provided, on the
same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.


 


(c)           Consent in Contemplation
of Transfer.  Any consent made
pursuant to this Section 17 by a holder of Notes that has transferred or has
agreed to transfer its Notes to any Obligor, any Subsidiary or any Affiliate of
any Obligor and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force or effect except
solely as to such holder, and any amendments effected or waivers granted or to
be effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be void and of
no force or effect except solely as to such holder.


 


Section 17.3.        Binding
Effect, Etc.  Any
amendment or waiver consented to as provided in this Section 17 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Obligors without regard to whether such Note
has been


 


39





















 


marked to indicate such amendment or waiver.  No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon.  No course of dealing between any Obligor and
the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note.  As used herein, the term “this
Agreement” and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.


 


Section 17.4.        Notes
Held by Obligors, Etc. 
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by any Obligor or any of
its Affiliates shall be deemed not to be outstanding.


 


Section 18.                                           Notices.


 


All notices and
communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice
by a recognized overnight delivery service (charges prepaid), or (b) by a
recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:


 


(i)            if to a Purchaser or such Purchaser’s
nominee, to such Purchaser or such Purchaser’s nominee at the address specified
for such communications in Schedule A to this Agreement, or at such other
address as such Purchaser or such Purchaser’s nominee shall have specified to
any Obligor in writing pursuant to this Section 18;


 


(ii)           if to an Additional Purchaser or such
Additional Purchaser’s nominee, to such Additional Purchaser or such Additional
Purchaser’s nominee at the address specified for such communications in
Schedule A to any Supplement, or at such other address as such Additional
Purchaser or such Additional Purchaser’s nominee shall have specified to any
Obligor in writing,


 


(iii)          if to any other holder of any Note, to
such holder at such address as such other holder shall have specified to any
Obligor in writing pursuant to this Section 18, or


 


(iv)          if to any Obligor, to such Obligor at
its address set forth at the beginning hereof to the attention of Chief
Financial Officer, with a copy to the General Counsel, or at such other address
as such Obligor shall have specified to the holder of each Note in writing.


 


Notices
under this Section 18 will be deemed given only when actually received.


 


40





















 


Section 19.                                           Reproduction of
Documents.


 


This Agreement and
all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by any Purchaser at the Closing or by any
Additional Purchaser (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to any Purchaser or any Additional Purchaser, may be reproduced by such
Purchaser or such Additional Purchaser by any photographic, photostatic,
electronic, digital, or other similar process and such Purchaser or such
Additional Purchaser may destroy any original document so reproduced.  Each Obligor agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser or such Additional Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.  This Section 19 shall not
prohibit any Obligor or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.


 


Section 20.                                           Confidential
Information.


 


For the purposes of this Section 20, “Confidential Information” means information delivered to
any Purchaser or any Additional Purchaser by or on behalf of any Obligor or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of an Obligor or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to such Purchaser or such
Additional Purchaser prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such
Purchaser or such Additional Purchaser or any Person acting on such Purchaser’s
or such Additional Purchaser’s behalf, (c) otherwise becomes known to such
Purchaser or such Additional Purchaser other than through disclosure by an Obligor
or any Subsidiary or (d) constitutes financial statements delivered to
such Purchaser or such Additional Purchaser under Section 7.1 that are
otherwise publicly available.  Each
Purchaser and each Additional Purchaser will maintain the confidentiality of
such Confidential Information in accordance with procedures adopted by such
Purchaser or such Additional Purchaser in good faith to protect confidential
information of third parties delivered to such Purchaser or such Additional
Purchaser, provided that such Purchaser or such
Additional Purchaser may deliver or disclose Confidential Information to
(i) such Purchaser’s or such Additional Purchaser’s directors, trustees,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such Purchaser’s or such Additional Purchaser’s Notes),
(ii) such Purchaser’s or such Additional Purchaser’s financial advisors
and other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor
to which such Purchaser or such Additional Purchaser sells or offers to sell
such Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the


 


41





















 


provisions of this Section 20), (v) any Person from which
such Purchaser or such Additional Purchaser offers to purchase any security of
an Obligor (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having
jurisdiction over such Purchaser or such Additional Purchaser, (vii) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about such Purchaser’s or such Additional Purchaser’s investment portfolio, or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to such Purchaser or such Additional Purchaser,
(x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such Purchaser or such Additional
Purchaser is a party or (z) if an Event of Default has occurred and is
continuing, to the extent such Purchaser or such Additional Purchaser may
reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under such Purchaser’s or such Additional Purchaser’s Notes, the Subsidiary
Guaranty and this Agreement.  Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though
it were a party to this Agreement.  On
reasonable request by an Obligor in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
an Obligor embodying the provisions of this Section 20.


 


Section 21.                                           Substitution of
Purchaser.


 


Each Purchaser and each Additional Purchaser shall
have the right to substitute any one of its Affiliates as the purchaser of the
Notes that it has agreed to purchase hereunder, by written notice to an
Obligor, which notice shall be signed by both such Purchaser or such Additional
Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section
6.  Upon receipt of such notice, any
reference to such Purchaser or such Additional Purchaser in this Agreement
(other than in this Section 21), shall be deemed to refer to such Affiliate in
lieu of such original Purchaser or such original Additional Purchaser.  In the event that such Affiliate is so
substituted as a Purchaser or an Additional Purchaser hereunder and such
Affiliate thereafter transfers to such original Purchaser or such original
Additional Purchaser all of the Notes then held by such Affiliate, upon receipt
by an Obligor of notice of such transfer, any reference to such Affiliate as a “Purchaser”
or an “Additional Purchaser” in this Agreement (other than in this Section 21),
shall no longer be deemed to refer to such Affiliate, but shall refer to such
original Purchaser or such original Additional Purchaser, and such original
Purchaser or such original Additional Purchaser shall again have all the rights
of an original holder of the Notes under this Agreement.


 


Section 22.                                           Miscellaneous.


 


Section 22.1.        Successors
and Assigns.  All
covenants and other agreements contained in this Agreement (including all
covenants and other agreements contained in any Supplement) by


 


42





















 


or on behalf of any of the parties hereto bind and inure to the benefit
of their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.


 


Section 22.2.        Payments
Due on Non-Business Days. 
Anything in this Agreement or the Notes to the contrary notwithstanding
(but without limiting the requirement in Section 8.4 that the notice of
any optional prepayment specify a Business Day as the date fixed for such
prepayment), any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day;
provided that if the maturity date of any Note is a date other than a Business Day,
the payment otherwise due on such maturity date shall be made on the next
succeeding Business Day and shall include the additional days elapsed in the
computation of interest payable on such next succeeding Business Day.


 


Section 22.3.        Accounting
Terms.  All accounting
terms used herein which are not expressly defined in this Agreement have the
meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided
herein, (i) all computations made pursuant to this Agreement shall be made
in accordance with GAAP, and (ii) all financial statements shall be
prepared in accordance with GAAP.


 


Section 22.4.        Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.


 


Section 22.5.        Construction.  Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. 
Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.


 


For the avoidance of doubt, all Schedules and Exhibits
attached to this Agreement shall be deemed to be a part hereof.


 


Section 22.6.        Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument.  Each
counterpart may consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.


 


Section 22.7.        Governing
Law.  This Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such State that would permit the
application of the laws of a jurisdiction other than such State.


 


43





















 


Section 22.8.        Jurisdiction
and Process; Waiver of Jury Trial.  (a) Each Obligor irrevocably submits to
the non-exclusive jurisdiction of any New York State or federal court sitting
in the Borough of Manhattan, The City of New York, over any suit, action or
proceeding arising out of or relating to this Agreement or the Notes.  To the fullest extent permitted by applicable
law, each Obligor irrevocably waives and agrees not to assert, by way of
motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.


 


(b)           Each
Obligor consents to process being served by or on behalf of any holder of Notes
in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other
address of which such holder shall then have been notified pursuant to said
Section.  Each Obligor agrees that such
service upon receipt (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and
(ii) shall, to the fullest extent permitted by applicable law, be taken
and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.


 


(c)           Nothing
in this Section 22.8 shall affect the right of any holder of a Note to
serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against any Obligor
in the courts of any appropriate jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction.


 


(d)           The parties hereto hereby waive trial by jury
in any action brought on or with respect to this Agreement, the Notes or any
other document executed in connection herewith or therewith.


 


*   *  
*   *   *


 


44





















 


The execution hereof by the Purchasers shall
constitute a contract among the Obligors and the Purchasers for the uses and
purposes hereinabove set forth.  This
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Family Dollar Stores, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ R. James
  Kelly

  	
   

  
	
   

  	
  Name: R. James Kelly

  
	
   

  	
  Title: Vice Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Family Dollar, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ R. James
  Kelly

  	
   

  
	
   

  	
  Name: R. James Kelly

  
	
   

  	
  Title: Vice Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
					



 


45





















 


Accepted as of the date
first written above.


 


	
   

  	
  The Prudential Insurance
  Company of

  America

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Billy
  Green

  	
   

  
	
   

  	
  Name: Billy Green

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Gibraltar Life Insurance
  Co., Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Prudential Private Placement Investors, L.P.

  (as Investment Advisor)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  Prudential Private Placement Investors, Inc.

  (as its General Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/ Billy
  Green

  	
   

  
	
   

  	
   

  	
  Name: Billy Green

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  American Bankers Insurance
  Company of

  Florida, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, L.P. (as
  Investment Advisor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Prudential Private Placement Investors, Inc. (as its
  General Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   /s/ Billy
  Green

  	
   

  
	
   

  	
   

  	
  Name: Billy Green

  
	
   

  	
   

  	
  Title: Senior Vice President

  
										



 


46





















 


	
   

  	
  American Memorial Life
  Insurance

  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, L.P.

  (as Investment Advisor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, Inc.

  (as its General Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/ Billy
  Green

  	
   

  
	
   

  	
   

  	
  Name: Billy Green

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Union Security Insurance
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, L.P. (as
  Investment Advisor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, Inc. (as its
  General Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Billy Green

  	
   

  
	
   

  	
   

  	
  Name: Billy Green

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Time Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, L.P. (as
  Investment Advisor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Prudential Private Placement Investors, Inc. (as its
  General Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/ Billy
  Green

  	
   

  
	
   

  	
   

  	
  Name: Billy Green

  
	
   

  	
   

  	
  Title: Senior Vice President

  
								



 


47





















 


	
   

  	
  ING USA Annuity and Life
  Insurance

  Company

  
	
   

  	
  ReliaStar Life Insurance
  Company

  
	
   

  	
  ING Life Insurance and
  Annuity Company

  
	
   

  	
  Security Life of Denver
  Insurance

  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  ING Investment Management LLC, as

  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   /s/
  Christopher P. Lyons

  	
   

  
	
   

  	
   

  	
  Name: Christopher P. Lyons

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Allstate Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Carrie A.
  Cazolas

  	
   

  
	
   

  	
  Name: Carrie A. Cazolas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Jerry D.
  Zinkula

  	
   

  
	
   

  	
  Name: Jerry D. Zinkula

  
	
   

  	
  Authorized Signatories

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Allstate Life Insurance
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Carrie A.
  Cazolas

  	
   

  
	
   

  	
  Name: Carrie A. Cazolas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Jerry D.
  Zinkula

  	
   

  
	
   

  	
  Name: Jerry D. Zinkula

  
	
   

  	
  Authorized Signatories

  
							



 


48





















 


	
   

  	
  Allstate Life Insurance
  Company of New

  York

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Carrie A.
  Cazolas

  	
   

  
	
   

  	
  Name: Carrie A. Cazolas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Jerry D.
  Zinkula

  	
   

  
	
   

  	
  Name: Jerry D. Zinkula

  
	
   

  	
  Authorized Signatories

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Midland National Life
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Michael
  Damaso

  	
   

  
	
   

  	
  Name: Michael Damaso

  
	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  North American Company for
  Life and

  Health Insurance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Michael
  Damaso

  	
   

  
	
   

  	
  Name: Michael Damaso

  
	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Transamerica Life Insurance
  and Annuity Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Debra R.
  Thompson

  	
   

  
	
   

  	
  Name: Debra R. Thompson

  
	
   

  	
  Title: Vice President

  
									



 


49





















 


	
   

  	
  Transamerica Occidental
  Life Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Debra R.
  Thompson

  	
   

  
	
   

  	
  Name: Debra R. Thompson

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thrivent Financial for Lutherans

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Glen J.
  Vanic

  	
   

  
	
   

  	
  Name: Glen J. Vanic

  
	
   

  	
  Title: Portfolio Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  United of Omaha Life
  Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Edwin H.
  Garrison, Jr.

  	
   

  
	
   

  	
  Name: Edwin H. Garrison, Jr.

  
	
   

  	
  Title: First Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Banc of America Securities
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ John J.
  DeCoursey

  	
   

  
	
   

  	
  Name: John J. DeCoursey

  
	
   

  	
  Title: Principal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Modern Woodmen of America

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ G.P.
  Odean

  	
   

  
	
   

  	
  Name: G.P. Odean

  
	
   

  	
  Title: National Secretary

  
							



 


50





















 


	
   

  	
  Security Financial Life
  Insurance Co.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Kevin W.
  Hammond

  	
   

  
	
   

  	
  Name: Kevin W. Hammond

  
	
   

  	
  Title: Senior Director - Investments

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Assurity Life Insurance
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Victor
  Weber

  	
   

  
	
   

  	
  Name: Victor Weber

  
	
   

  	
  Title: Senior Director - Investments

  
						



 


51





















 


Schedule A


 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ING USA ANNUITY AND LIFE INSURANCE COMPANY

  c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia 30327-4349

  Attention: Private Placements

  Fax Number: (770) 690-5057

  	
   

  	
  A

  	
   

  	
  $12,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


BFN:                          
(for scheduled principal and interest payments) OR


BFN:                          
(for all payments other than scheduled principal and interest)


ABA #                


Ref.:  ING USA Annuity and Life Company, Acct. No.                
and PPN 30704@ AA 2


 


Notices


 


All
notices with respect to payments and written confirmation of each such payment
to be addressed:


 


ING Investment Management LLC


5780 Powers Ferry Road, NW, Suite 300


Atlanta, Georgia 
30327-4349


Attention: 
Operations/Settlements


Fax Number: 
(770) 690-4886


 


All
other notices and communications to be addressed as follows with a copy to the
address first provided above:


 


ING Investment Management LLC


100 Washington Avenue South, Suite 1635


Minneapolis, Minnesota 
55401-2121


Attention:  Jen
Wilson


Phone Number: 
(612) 342-7156


Fax Number: 
(612) 372-5368


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  41-0991508


 


SCHEDULE A


(to Note Purchase
Agreement)


 





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RELIASTAR LIFE INSURANCE COMPANY

  c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  A

  	
   

  	
  $12,000,000

  	
   

  



 


Payments


 


All payments
on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Family Dollar Stores,
Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes, Tranche A due
September 27, 2015 PPN 30704@ AA 2, principal, premium or interest”) to:


 


The Bank of New York


BFN:                          
(for scheduled principal and interest payments) OR


BFN:                          (for
all payments other than scheduled principal and interest)


ABA #                       


Ref.:  ReliaStar Life Insurance Company, Acct. No.                 
and PPN 30704@ AA 2


 


Notices


 


All
notices with respect to payments and written confirmation of each such payment
to be addressed:


 


ING Investment Management LLC


5780 Powers Ferry Road, NW, Suite 300


Atlanta, Georgia 
30327-4349


Attention: 
Operations/Settlements


Fax Number: 
(770) 690-4886


 


All
other notices and communications to be addressed as follows with a copy to the
address first provided above:


 


ING Investment Management LLC


100 Washington Avenue South, Suite 1635


Minneapolis, Minnesota 
55401-2121


Attention:  Jen
Wilson


Phone Number: 
(612) 342-7156


Fax Number: 
(612) 372-5368


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  41-0451140


 


A-2





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ING LIFE INSURANCE AND ANNUITY COMPANY

  c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  A

  	
   

  	
  $12,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


BFN:                         
(for scheduled principal and interest payments) OR


BFN:                         
(for all payments other than scheduled principal and interest)


ABA #                        


Attention:  P&I Department


Ref.: ING Life Insurance
and Annuity Company, Acct. No.                    
and PPN 30704@ AA 2


 


Notices


 


All
notices with respect to payments and written confirmation of each such payment
to be addressed:


 


ING Investment Management LLC


5780 Powers Ferry Road, NW, Suite 300


Atlanta, Georgia 
30327-4349


Attention: 
Operations/Settlements


Fax Number: 
(770) 690-4886


 


All
other notices and communications to be addressed as follows with a copy to the
address first provided above:


 


ING Investment Management LLC


100 Washington Avenue South, Suite 1635


Minneapolis, Minnesota 
55401-2121


Attention:  Jen
Wilson


Phone Number: 
(612) 342-7156


Fax Number: 
(612) 372-5368


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  71-0294708


 


A-3





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECURITY LIFE OF DENVER INSURANCE COMPANY

  c/o ING Investment Management LLC

  5780 Powers Ferry Road NW, Suite 300

  Atlanta, Georgia  30327-4349

  Attention:  Private Placements

  Fax Number:  (770) 690-5057

  	
   

  	
  A

  	
   

  	
  $4,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


BFN:                          
(for scheduled principal and interest payments) OR


BFN:                          
(for all payments other than scheduled principal and interest)


ABA #                      


Attention: 
P&I Department


Reference: 
Security Life of Denver Insurance Company, Account No.                
and

PPN 30704@ AA 2


 


Notices


 


All
notices with respect to payments and written confirmation of each such payment
to be addressed:


 


ING Investment Management LLC


5780 Powers Ferry Road NW, Suite 300


Atlanta, Georgia 
30327-4349


Attention: 
Operations/Settlements


Fax Number: 
(770) 690-4886


 


All
other notices and communications to be addressed as follows with a copy to
address first provided above:


 


ING Investment Management LLC


100 Washington Avenue South, Suite 1635


Minneapolis, Minnesota 
55401-2121


Attention:  Jen
Wilson


Phone:  (612)
342-7156


Fax Number: 
(612) 372-5368


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  84-0499703


 


A-4





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLSTATE LIFE INSURANCE COMPANY

  3075 Sanders Road, STE G5D

  Northbrook, Illinois  60062-7127

  Attention:  Private Placements
  Department

  Telephone Number:  (847) 402-7117

  Telecopier Number:  (847) 402-3092

  	
   

  	
  A

  	
   

  	
  $5,000,000

  $5,000,000

  $2,400,000

  	
   

  



 


Payments


 


All
payments by Fedwire transfer of immediately available funds or ACH payments,
identifying the name of the Issuer, the Private Placement Number and the
payment as principal, interest or premium in the format as follows:


 


Bank:


ABA#:


Account name:


Account #:


Reference:             OBI
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.41
Series 2005-A Senior Notes, Tranche A due September 27, 2015, Payment Due Date
(09/27/2015) and the type and amount of payment being made.


For Example:


P            
(enter “P” and the amount of principal being remitted, for example,
P5000000.00)


I            
(enter “I” and the amount of interest being remitted, for example, I225000.00)


 


Notices


 


All
notices of scheduled payments and written confirmation of each such payment, to
be addressed:


 


Allstate Insurance
Company


Investment
Operations—Private Placements


3075 Sanders Road, STE
G4A


Northbrook, Illinois  60062-7127


Telephone:  (847) 402-6672 Private Placements


Telecopy:  (847) 326-7032


 


All
financial reports, compliance certificates and all other written
communications, including notice of prepayments to be sent by email
(privatecompliance@allstate.com) or hard copy addressed as first provided
above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D. Number:  36-2554642


 


A-5





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLSTATE INSURANCE COMPANY

  c/o Allstate Investments LLC

  Attention: Private Placements Department

  3075 Sanders Road, STE G5D

  Northbrook, Illinois 60062-7127

  Telephone: (847) 402-7117

  Telecopy: (847) 402-3092

  	
   

  	
  A

  	
   

  	
  $2,600,000

  	
   

  



 


Payments


 


All
payments by Fedwire transfer of immediately available funds or ACH payments,
identifying the name of the Issuer, the Private Placement Number and the
payment as principal, interest or premium in the format as follows:


 


Bank:


ABA#:


Account name:


Account #:


Reference:             OBI
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.41
Series 2005-A Senior Notes, Tranche A due September 27, 2015, Payment Due Date
(09/27/2015) and the type and amount of payment being made.


For Example:


P               
(enter “P” and the amount of principal being remitted, for example,
P5000000.00)


I               
(enter “I” and the amount of interest being remitted, for example, I225000.00)


 


Notices


 


All notices of scheduled payments and written
confirmation of such wire transfer to be sent to:


 


Allstate Investments LLC


Investment
Operations—Private Placements


3075 Sanders Road, STE
G4A


Northbrook, Illinois  60062-7127


Telephone:  (847) 402-6672 Private Placements


Telecopy:  (847) 326-7032


Email:  PrivateIOD@allstate.com


 


All
financial reports, compliance certificates and all other written
communications, including notice of prepayments to be sent by email
(privatecompliance@allstate.com) or hard copy addressed as first provided
above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  36-0719665


 


A-6





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIDLAND NATIONAL LIFE INSURANCE COMPANY

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $10,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                        


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref:  PPN 30704@
AA 2, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A
Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All
notices of payment on or in respect of the Notes and written confirmation of
each such payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be
addressed as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


A-7





















 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  46-0164570


 


A-8





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIDLAND NATIONAL LIFE INSURANCE COMPANY

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $10,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                         


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref: 
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar,
Inc., 5.41 Series 2005-A Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All
notices of payment on or in respect of the Notes and written confirmation of
each such payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be
addressed as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


A-9





















 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D. Number:  46-0164570


 


A-10





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIDLAND NATIONAL LIFE INSURANCE COMPANY

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $6,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                          


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref: 
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar,
Inc., 5.41 Series 2005-A Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All
notices of payment on or in respect of the Notes and written confirmation of
each such payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be
addressed as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


A-11





















 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  46-0164570


 


A-12





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIDLAND NATIONAL LIFE INSURANCE COMPANY

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $3,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                       


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref: 
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar,
Inc., 5.41 Series 2005-A Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All
notices of payment on or in respect of the Notes and written confirmation of
each such payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be
addressed as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  46-0164570


 


A-13





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NORTH AMERICAN COMPANY FOR LIFE AND

  HEALTH INSURANCE

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $3,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                      


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref: 
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar,
Inc., 5.41 Series 2005-A Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All notices
of payment on or in respect of the Notes and written confirmation of each such
payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be
addressed as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


A-14





















 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  36-2428931


 


A-15





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NORTH AMERICAN COMPANY FOR LIFE AND

  HEALTH INSURANCE

  c/o Midland Advisors Company

  200 East 10th Street, Suite 301

  Sioux Falls, SD 57104

  Attention;  Melissa Carlson

  Phone:  (605) 782-1943

  Fax:  (605) 782-1929

  	
   

  	
  A

  	
   

  	
  $3,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                        


BNF:


100 Church Street, 7th Floor


New York, NY 10286


Attn:  Principal
& Interest Dept.


Ref: 
PPN 30704@ AA 2, Family Dollar Stores, Inc. and Family Dollar,
Inc., 5.41 Series 2005-A Senior Notes, Tranche A due September 27, 2015


 


Notices


 


All
notices of payment on or in respect of the Notes and written confirmation of
each such payment to be addressed as first provided above with a copy to:


 


The Bank of New York


F/A/O:


P.O. Box 19266


Newark, NJ 07195


Attention: 
Principal & Interest Department


 


All
notices and communications other than those in respect to payments to be addressed
as first provided above.


 


Settlements
and documentation:


 


Guggenheim Partners


135 East 57th Street, 23rd Floor


New York, New York 
10022


Attention: Kaitlin Trinh/John Nelson


Phone:  (212)
651-0840 / (212) 381-7559


Fax:  (212)
644-8396


 


A-16





















 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  36-2428931


 


A-17





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TRANSAMERICA LIFE INSURANCE AND

   ANNUITY COMPANY

  c/o AEGON USA Investment Management, LLC

  4333 Edgewood Road, N.E.

  Cedar Rapids, Iowa  52499-5335

  Attention:  Director of Private
  Placements

  Phone:  (319) 369-2432

  Fax:  (319) 369-2666

  	
   

  	
  A

  	
   

  	
  $30,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41% Series 2005-A Senior
Notes, Tranche A due September 27, 2015 PPN 30704@ AA 2, principal,
premium or interest”) to:


 


Boston Safe Deposit Trust


ABA #                         


Credit DDA Account #


Attention:


Custody Account:


 


Notices


 


All
notices and confirmation of Payment
information with respect of the Notes should be sent to:


 


Email: 
paymentnotifications@aegonusa.com


AEGON USA Investment Management, LLC


Attention: Custody Operations-Privates


4333 Edgewood Road N.E.


Cedar Rapids, Iowa 
52499-7013


 


All
other notices and communications (including financial statement and reporting)
to be addressed as first provided above with a copy to:


 


AEGON USA Investment Management, LLC


Attention: 
Debbie Thompson – Private Placements


400 West Market Street, 10th Floor


Louisville, Kentucky 
40202


Phone:  (502)
560-2961


Fax:  (502)
560-2030


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer
I.D. Number:  95-6140222


 


A-18





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THRIVENT FINANCIAL FOR LUTHERANS

  625 Fourth Avenue South

  Minneapolis, Minnesota  55415

  Attention:  Investment Division

  Fax Number:  (612) 340-5776

  	
   

  	
  A

  	
   

  	
  $15,000,000

  	
   

  



 


Payments


 


All
payments of principal, premium or interest on the account of the Notes shall be
made by bank wire transfer (in immediately available funds) to:


 


ABA #                    


State Street Bank & Trust Co.


DDA # A/C —


Fund Number:


Fund Name: 
Thrivent Financial for Lutherans


 


All payments must include the following information:
Family Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior
Notes, Tranche A due September 27, 2015 PPN 30704@ AA 2, Reference Purpose
of Payment and Interest and/or Principal Breakdown


 


Notices


 


All
notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:


 


Thrivent Financial for Lutherans


625 Fourth Avenue South


Minneapolis, Minnesota 
55415


Attention: 
Investment Division


Fax:  (612)
340-5776


 


with a copy to:


 


Thrivent Accounts


State Street Kansas City


801 Pennsylvania


Kansas City, Missouri 
64105


Attention:  Bart
Woodson


Fax:  (816)
691-3610


 


Name
of Nominee in which Notes are to be issued: 
Swanbird & Co.


 


Taxpayer
I.D. Number for Swanbird & Co.: 
04-3475606


Taxpayer I.D. Number for
Thrivent Financial for Lutherans: 
39-0123480


 


A-19





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UNITED OF OMAHA LIFE INSURANCE COMPANY

  Mutual of Omaha Plaza

  Omaha, Nebraska  68175-1011

  Attention:  4-Investment Loan
  Administration

  	
   

  	
  A

  	
   

  	
  $16,000,000

  	
   

  



 


Payments


 


All
principal and interest payments on or in respect of the Notes shall be made by
wire transfer of immediately available funds to:


 


JPMorgan Chase Bank


ABA #                      


Private Income Processing


 


For credit to: 
United of Omaha Life Insurance Company


Account Number


a/c


PPN:  30704@ AA
2


Interest Amount:
                                                            


Principal Amount:
                                                         


 


Notices


 


All
notices of payments of principal and interest, on or in respect of the Notes
and written confirmation of each such payment, corporate actions and reorganization
notifications to:


 


JPMorgan Chase Bank


14201 Dallas Parkway, 13th Floor


Dallas, Texas 
75254-2917


Attention: Income Processing - G. Ruiz


a/c:


 


All
other notices and communications (i.e.,
quarterly/annual reports, tax filings, modifications, waivers regarding the
indenture) to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  47-0322111


 


A-20





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANC OF AMERICA SECURITIES LLC

  214 North Tryon Street

  NC1-027-14-01

  Charlotte, NC 28255

  Phone:  (704) 386-4534

  Facsimile:  (704) 388-9269

  	
   

  	
  A

  	
   

  	
  $5,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or interest”)
to:


 


The Bank of New York


ABA #                         


A/C:


FFC:


Ref:  Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2


 


Notices


 


All
notices and communications to be addressed as first provided above with a copy
to:


 


John J. DeCoursey


Banc of America Securities, LLC


9 W. 57th Street


NY1-302-02-01


New York, NY 10019


Phone:  (212)
933-3115


Facsimile: 
(212) 583-8570


 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  56-2058405


 


A-21





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANC OF AMERICA SECURITIES LLC

  214 North Tryon Street

  NC1-027-14-01

  Charlotte, NC 28255

  Phone:  (704) 386-4534

  Facsimile:  (704) 388-9269

  	
   

  	
  A

  	
   

  	
  $4,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Bank of New York


ABA #                       


A/C:


FFC:


Ref:  Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2


 


Notices


 


All
notices and communications to be addressed as first provided above with a copy
to:


 


John J. DeCoursey


Banc of America Securities, LLC


9 W. 57th Street


NY1-302-02-01


New York, NY 10019


Phone:  (212)
933-3115


Facsimile: 
(212) 583-8570


 


Name
of Nominee in which Notes are to be issued: 
Hare & Co.


Taxpayer I.D.
Number:  56-2058405


 


A-22





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MODERN WOODMEN OF AMERICA

  1701 First Avenue

  Rock Island, Illinois  61201

  Attention:  Investment Department

  Investment.Department@Modern-Woodmen.org

  	
   

  	
  A

  	
   

  	
  $6,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


The Northern Trust Company


50 South LaSalle Street


Chicago, Illinois 
60675


ABA #                         


Account Name: 
Modern Woodmen of America


Account Number


 


Notices


 


All
notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed Attention:  Investment
Accounting Department


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  36-1493430


 


A-23





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECURITY FINANCIAL LIFE INSURANCE CO.

  4000 Pine Lake Road

  P. O. Box 82248

  Lincoln, Nebraska  68501-2248

  	
   

  	
  A

  	
   

  	
  $2,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.41 Series 2005-A Senior Notes,
Tranche A due September 27, 2015 PPN 30704@ AA 2, principal, premium or
interest”) to:


 


Union Bank & Trust Company


4732 Calvert Street


Lincoln, Nebraska 
68501-2535


ABA #                           


Account of: 
Security Financial Life Insurance Co.


Account Number:


 


Notices


 


All
notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment
to be addressed:


 


Security Financial Life Insurance Co.


4000 Pine Lake Road


Lincoln, Nebraska 
68516


Attention: 
Investment Division


Fax:  (402)
458-2170


Phone:  (402)
437-3600


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  47-0293990


 


A-24





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount to be 

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSURITY LIFE INSURANCE COMPANY

  Attention: Investment Division

  4000 Pine Lake Road

  Lincoln, Nebraska  68516

  	
   

  	
  A

  	
   

  	
  $1,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds to:


 


US Bank National Association


13th and M Street


Lincoln, Nebraska 
68508


ABA #                        


For credit to Assurity Life Insurance Company


Account Number:


 


With sufficient notation to identify the source of the
funds.


 


All
notices of payments on or in respect of the Notes and written confirmation of
each such payment to be addressed to:


 


Assurity Life Insurance Company


Attention: 
Investment Division


Overnight Mailing Address:


4000 Pine Lake Road


Lincoln, Nebraska 
68516


Regular Mailing Address:


P.O. Box 82248


Lincoln, Nebraska 
68501-2248


 


All notices and communications other than those in
respect to payments to be addressed to:


 


Assurity Life Insurance Company


Attention:  Vic
Weber


P.O. Box 82248


Lincoln, Nebraska 
68501-2248


Phone:  (402)
437-3682


Fax: (402) 458-2170


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  38-1843471


 


A-25





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of

  Series B Notes to be

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GIBRALTAR LIFE INSURANCE CO., LTD.

  c/o Prudential Capital Group

  Gateway Center 3, 18th Floor

  100 Mulberry Street

  Newark, New Jersey  07102-4077

  Attention:  Albert Trank, Managing Director

  Phone:  (973) 802-8608

  Facsimile:  (973) 367-3234

  Email:  albert.trank@prudential.com

  	
   

  	
  B

  	
   

  	
  $21,500,000

  	
   

  



 


Payments


 


All
payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


JPMorgan Chase Bank


New York, New York


ABA No.:                      


Account No.:


Account Name:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All
notices with respect to payments, and written confirmation of each such
payment, to be addressed to:


 


The Gibraltar Life Insurance Co., Ltd.


2-13-10, Nagatacho


Chiyoda-ku, Tokyo 100-8953, Japan


Attention: 
Yoshiki Saito, Vice President of Investment Operations Team


Telephone: 
81-3-5501-6680


Facsimile: 
81-3-5501-6432


Email: 
yoshiki.saito@gib-life.co.jp


 


All
other notices and communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  98-0408643


 


A-26





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of

  Series B Notes to be

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE
  PRUDENTIAL INSURANCE COMPANY

  OF AMERICA

  c/o Prudential Capital
  Group

  1170 Peachtree Street, Suit 500

  Atlanta, GA 30309

  Attention:  Managing Director

  	
   

  	
  B

  	
   

  	
  $12,100,000

  	
   

  



 


Payments


 


All
payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


Account No.:


Account Name:


JPMorgan Chase Bank


New York, New York


ABA No.:                               


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All
notices with respect to payments, and written confirmation of each such
payment, to be addressed to:


 


The Prudential Insurance Company of America


c/o Investment Operations Group


Gateway Center Two, 10th Floor


100 Mulberry Street


Newark, New Jersey 
07102-4077


Attention: 
Manager, Billings and Collections


 


Recipient of telephonic prepayment notices:


 


Manager, Trade Management Group


Telephone: 
(973) 367-3141


Facsimile:  (800)
224-2278


 


All
other notices and communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  22-1211670


 


A-27





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of

  Series B Notes to be

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN
  BANKERS INSURANCE COMPANY

  OF FLORIDA, INC.

  c/o Prudential Private
  Placement Investors, L.P.

  Gateway Center 3, 18th Floor

  100 Mulberry Street

  Newark, New Jersey  07102

  Attention:  Albert Trank, Managing
  Director

  Telephone:  (973) 802-8608

  Facsimile: (973) 624-6432

  	
   

  	
  B

  	
   

  	
  $4,000,000

  	
   

  



 


Payments


 


All
payments on account of the Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


JP Morgan Chase Bank


ABA No.:                   


Account No.:


Account Name: JP Morgan Chase


For further credit to Account No.:


Account Name:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All notices of payments and written confirmations of
such wire transfers:


 


JP Morgan Chase Bank


Investor Services


3 Chase Metrotech Center


North America Insurance, 5S5


Brooklyn, New York 
11245


Attention:  Anna
Marie Mazza


Telephone: 
(718) 242-5399


Facsimile: 
(718) 242-8328


 


and


 


A-28





















 


Fortis, Inc.


One Chase Manhattan Plaza


New York, New York 10005


Attention: 
Kevin P. Mahoney


   AVP,
Investment Accounting & Treasury Operations


Telephone: 
(212) 859-7184


Facsimile: 
(212) 859-7043


 


Address
for all other communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer
I.D. Number:  59-0593886


 


A-29





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of

  Series B Notes to be

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TIME INSURANCE COMPANY

  c/o Prudential Private Placement Investors, L.P.

  Gateway Center 3, 18th Floor

  100 Mulberry Street

  Newark, New Jersey  07102

  Attention:  Albert Trank, Managing
  Director

  Telephone:  (973) 802-8608

  Facsimile: (973) 624-6432

  	
   

  	
  B

  	
   

  	
  $4,000,000

  	
   

  



 


Payments


 


All
payments on account of the Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


M&I Marshall & Ilsley Bank


Milwaukee, WI


ABA No.:


DDA Account No.:


Account Name:


For further credit to Account No.:


Account Name:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All notices of payments and written confirmations of
such wire transfers:


 


Marshall & Ilsley Trust Company


1000 North Water Street


Milwaukee, WI 53202


Attention:  Kim
Palleon


Telephone: 
(414) 287-7084


Facsimile: 
(414) 287-7125


 


and


 


Fortis, Inc.


One Chase Manhattan Plaza


New York, New York 10005


Attention: 
Kevin P. Mahoney


    AVP,
Investment Accounting & Treasury Operations


Telephone: 
(212) 859-7184


Facsimile: 
(212) 859-7043


 


A-30





















 


Address
for all other communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer
I.D. Number:  39-0658730


 


A-31





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of 

  SERIES B Notes to be 

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UNION SECURITY INSURANCE COMPANY

  c/o Prudential Private Placement Investors, L.P.

  Gateway Center 3, 18th Floor

  100 Mulberry Street

  Newark, New Jersey  07102

  Attention:  Albert Trank, Managing
  Director

  Telephone:  (973) 802-8608

  Facsimile: (973) 624-6432

  	
   

  	
  B

  	
   

  	
  $1,400,000

  	
   

  



 


Payments


 


All
payments on account of the Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


M&I Marshall & Ilsley Bank


Milwaukee, WI


ABA No.:


DDA Account No.:


Account Name:


For further credit to Account No.:


Account Name:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All notices of payments and written confirmations of
such wire transfers:


 


Marshall & Ilsley Trust Company


1000 North Water Street


Milwaukee, WI 53202


Attention:  Kim
Palleon


Telephone: 
(414) 287-7084


Facsimile: 
(414) 287-7125


 


and


 


Fortis, Inc.


One Chase Manhattan Plaza


New York, New York 10005


 


A-31





















 


Attention: 
Kevin P. Mahoney


   AVP,
Investment Accounting & Treasury Operations


Telephone: 
(212) 859-7184


Facsimile: 
(212) 859-7043


 


Address
for all other communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer
I.D. Number:  81-0170040


 


A-32





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of 

  SERIES B Notes to be 

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

  c/o Prudential Capital Group

  1170 Peachtree Street, Suite 500

  Atlanta, GA 30309

  Attention:  Managing Director 

  	
   

  	
  B

  	
   

  	
  $1,000,000

  	
   

  



 


Payments


 


All
payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


Account No.:


Account Name:


JPMorgan Chase Bank


New York, New York


ABA No.:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All
notices with respect to payments, and written confirmation of each such
payment, to be addressed to:


 


The Prudential Insurance Company of America


c/o Investment Operations Group


Gateway Center Two, 10th Floor


100 Mulberry Street


Newark, New Jersey 
07102-4077


Attention: 
Manager, Billings and Collections


 


Recipient of telephonic prepayment notices:


 


Manager, Trade Management Group


Telephone: 
(973) 367-3141


Facsimile: 
(800) 224-2278


 


All
other notices and communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer I.D.
Number:  22-1211670


 


A-33





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of 

  SERIES B Notes to be 

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN MEMORIAL LIFE INSURANCE COMPANY

  c/o Prudential Private Placement Investors, L.P.

  Gateway Center 3, 18th Floor

  100 Mulberry Street

  Newark, New Jersey  07102

  Attention:  Albert Trank, Managing
  Director

  Telephone:  (973) 802-8608

  Facsimile: (973) 624-6432

  	
   

  	
  B

  	
   

  	
  $1,000,000

  	
   

  



 


Payments


 


All
payments on account of the Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:


 


M&I Marshall & Ilsley Bank


Milwaukee, WI


ABA No.:


DDA Account No.:


Account Name:


For further credit to Account No.:


Account Name:


 


Each
such wire transfer shall set forth the name of the Company, a reference to “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0” and the due date
and application (as among principal, interest and Make-Whole Amount) of the
payment being made.


 


Notices


 


All notices of payments and written confirmations of
such wire transfers:


 


Marshall & Ilsley Trust Company


1000 North Water Street


Milwaukee, WI 53202


Attention:  Kim
Palleon


Telephone: 
(414) 287-7084


Facsimile: 
(414) 287-7125


 


and


 


Fortis, Inc.


One Chase Manhattan Plaza


 


A-34





















 


New York, New York 10005


Attention: 
Kevin P. Mahoney


   AVP,
Investment Accounting & Treasury Operations


Telephone: 
(212) 859-7184


Facsimile: 
(212) 859-7043


 


Address
for all other communications to be addressed as first provided above.


 


Name
of Nominee in which Notes are to be issued: 
None


 


Taxpayer
I.D. Number:  46-0260270


 


A-35





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes 

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLSTATE LIFE INSURANCE COMPANY

  3075 Sanders Road, STE G5D

  Northbrook, Illinois  60062-7127

  Attention:  Private Placements
  Department

  Telephone Number:  (847) 402-8922

  Telecopier Number:  (847) 402-3092

  	
   

  	
  B

  	
   

  	
  $5,000,000

  $5,000,000

  $5,600,000

  	
   

  



 


Payments


 


All
payments by Fedwire transfer of immediately available funds or ACH payments,
identifying the name of the Issuer, the Private Placement Number and the
payment as principal, interest or premium in the format as follows:


 


Bank:


ABA#:


Account name:


Account #:


Reference:      OBI
PPN 30704@ AB 0, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.24%
Series 2005-A Senior Notes, Tranche B due September 27, 2015, Payment
Due Date (09/27/2015) and the type and amount of payment being made.


For Example:


P           
(enter “P” and the amount of principal being remitted, for example,
P5000000.00)


I           
(enter “I” and the amount of interest being remitted, for example, I225000.00)


 


Notices


 


All
notices of scheduled payments and written confirmation of each such payment, to
be addressed:


 


Allstate Insurance
Company


Investment
Operations—Private Placements


3075 Sanders Road, STE
G4A


Northbrook, Illinois  60062-7127


Telephone:  (847) 402-6672 Private Placements


Telecopy:  (847) 326-7032


 


All
financial reports, compliance certificates and all other written
communications, including notice of prepayments to be sent by email
(privatecompliance@allstate.com) or hard copy addressed as first provided
above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  36-2554642


 


A-36





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes 

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLSTATE
  LIFE INSURANCE COMPANY OF NEW YORK

  c/o Allstate Investments LLC

  3075 Sanders Road, STE G5D

  Northbrook, Illinois  60062-7127

  Attention:  Private Placements
  Department

  Telephone Number:  (847) 402-7117

  Telefacsimile Number:  (847) 402-3092

  	
   

  	
  B

  	
   

  	
  $5,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds or ACH Payment, identifying the name of the Issuer,
the Private Placement Number and the payment as principal, interest or premium,
in the format as follows:


 


Bank:


ABA #:


Account Name:


Account #:


Reference:        OBI
PPN 30704@ AB 0, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.24%
Series 2005-A Senior Notes, Tranche B due September 27, 2015, Payment
Due Date (09/27/2015) and the type and amount of payment being made.


For Example:


P        
(enter “P” and the amount of principal being remitted, for example,
P5000000.00)


I        
(enter “I” and the amount of interest being remitted, for example, I225000.00)


 


Notices


 


All
notices of scheduled payments and written confirmation of each such payment, to
be addressed:


 


Allstate Investments LLC


Investment
Operations—Private Placements


3075 Sanders Road, STE
G4A


Northbrook, IL  60062-7127


Telephone:  (847) 402-6672 Private Placements


Telecopy:  (847) 326-7032


Email:  PrivateIOD@allstate.com


 


All
financial reports, compliance certificates and all other written
communications, including notice of prepayments to be sent by email
(privatecompliance@allstate.com) or hard copy addressed as first provided
above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  36-2608394


 


A-37





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes 

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ALLSTATE
  INSURANCE COMPANY

  c/o Allstate Investments LLC

  Attention:  Private Placements
  Department

  3075 Sanders Road, STE G5D

  Northbrook, Illinois  60062-7127

  Telephone:  (847) 402-7117

  Telecopy:  (847) 402-3092

  	
   

  	
  B

  	
   

  	
  $4,400,000

  	
   

  



 


Payments


 


All
payments by Fedwire transfer of immediately available funds or ACH payments,
identifying the name of the Issuer, the Private Placement Number and the
payment as principal, interest or premium in the format as follows:


 


Bank:


ABA#:


Account name:


Account #:


Reference:       OBI
PPN 30704@ AB 0, Family Dollar Stores, Inc. and Family Dollar, Inc., 5.24%
Series 2005-A Senior Notes, Tranche B due September 27, 2015, Payment
Due Date (09/27/2015) and the type and amount of payment being made.


For Example:


P        
(enter “P” and the amount of principal being remitted, for example,
P5000000.00)


I        
(enter “I” and the amount of interest being remitted, for example, I225000.00)


 


Notices


 


All notices of scheduled payments and written
confirmation of such wire transfer to be sent to:


 


Allstate Investments LLC


Investment
Operations—Private Placements


3075 Sanders Road, STE
G4A


Northbrook, Illinois  60062-7127


Telephone:  (847) 402-6672 Private Placements


Telecopy:  (847) 326-7032


Email:  PrivateIOD@allstate.com


 


All financial
reports, compliance certificates and all other written communications,
including notice of prepayments to be sent by email
(privatecompliance@allstate.com) or hard copy addressed as first provided
above.


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  36-0719665


 


A-38





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes 

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TRANSAMERICA OCCIDENTAL LIFE
  INSURANCE COMPANY

  c/o AEGON USA Investment Management, LLC

  4333 Edgewood Road N.E.

  Cedar Rapids, Iowa  52499-5335

  Attention:  Director of Private
  Placements

  Phone:  (319) 369-2432

  Fax:  (319) 369-2666

  	
   

  	
  B

  	
   

  	
  $5,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as “Family
Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior Notes,
Tranche B due September 27, 2015, PPN 30704@ AB 0, principal, premium
or interest”) to:


 


Boston Safe Deposit Trust


ABA             


Credit DDA Account:


Attention:  MBS
Income


Custody Account No. 


 


Notices


 


All
notices and confirmation of Payment
information with respect of the Notes should be sent to:


 


Email: 
paymentnotifications@aegonusa.com


AEGON USA Investment Management, LLC


Attention: Custody Operations-Privates


4333 Edgewood Road N.E.


Cedar Rapids, Iowa 
52499-7013


 


All
other notices and communications (including financial statement and reporting)
to be addressed as first provided above with a copy to:


 


AEGON USA Investment Management, LLC


Attention: 
Debbie Thompson — Private Placements


400 West Market Street, 10th Floor


Louisville, Kentucky 
40202


Phone:  (502)
560-2961


Fax:  (502)
560-2030


 


Name
of Nominee in which Notes are to be issued:  None


 


Taxpayer I.D. Number: 
95-1060502


 


A-39





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount of Notes 

  to be Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THRIVENT
  FINANCIAL FOR LUTHERANS

  625 Fourth Avenue South

  Minneapolis, Minnesota  55415

  Attention:  Investment Division

  Fax Number:  (612) 340-5776

  	
   

  	
  B

  	
   

  	
  $5,000,000

  	
   

  



 


Payments


 


All
payments of principal, premium or interest on the account of the Notes shall be
made by bank wire transfer (in immediately available funds) to:


 


ABA #


State Street Bank & Trust Co.


DDA # A/C —


Fund Number:


Fund Name: 
Thrivent Financial for Lutherans


 


All payments must include the following information:
Family Dollar Stores, Inc. and Family Dollar, Inc., 5.24% Series 2005-A Senior
Notes, Tranche B due September 27, 2015, PPN 30704@ AB 0, Reference
Purpose of Payment and Interest and/or Principal Breakdown


 


Notices


 


All
notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:


 


Thrivent Financial for Lutherans


625 Fourth Avenue South


Minneapolis, Minnesota 
55415


Attention: 
Investment Division


Fax:  (612)
340-5776


 


with a copy to:


 


Thrivent Accounts


State Street Kansas City


801 Pennsylvania


Kansas City, Missouri 
64105


Attention:  Bart
Woodson


Fax:  (816)
691-3610


 


Name
of Nominee in which Notes are to be issued: 
Swanbird & Co.


 


Taxpayer
I.D. Number for Swanbird & Co.: 
04-3475606


Taxpayer I.D. Number for
Thrivent Financial for Lutherans: 
39-0123480


 


A-40





















 


	
  Name
  of Purchaser

  	
   

  	
  Tranche

  	
   

  	
  Principal Amount to be

  Purchased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSURITY
  LIFE INSURANCE COMPANY

  Attention: Investment Division

  4000 Pine Lake Road

  Lincoln, Nebraska  68516

  	
   

  	
  B

  	
   

  	
  $1,000,000

  	
   

  



 


Payments


 


All
payments on or in respect of the Notes to be by bank wire transfer of Federal
or other immediately available funds to:


 


US Bank National Association


13th and M Street


Lincoln, Nebraska 
68508


ABA #


For credit to Assurity Life Insurance Company


Account Number:


 


With sufficient notation to identify the source of the
funds.


 


All
notices of payments on or in respect of the Notes and written confirmation of
each such payment to be addressed to:


 


Assurity Life Insurance Company


Attention: 
Investment Division


Overnight Mailing Address:


4000 Pine Lake Road


Lincoln, Nebraska 
68516


Regular Mailing Address:


P.O. Box 82248


Lincoln, Nebraska 
68501-2248


 


All notices and communications other than those in
respect to payments to be addressed to:


 


Assurity Life Insurance Company


Attention:  Vic
Weber


P.O. Box 82248


Lincoln, Nebraska 
68501-2248


Phone:  (402)
437-3682


Fax: (402) 458-2170


 


Name
of Nominee in which Notes are to be issued: 
None


Taxpayer I.D.
Number:  38-1843471


 


A-41





















 


Defined Terms


 


As used herein, the following terms have the
respective meanings set forth below or set forth in the Section hereof
following such term:


 


“Additional Notes” is defined in
Section 2.2.


 


“Additional Purchasers” means
purchasers of Additional Notes.


 


“Administrative Agent” means Bank
of America, N.A. in its capacity as administrative agent under the Bank Credit
Agreement, together with its successors and assigns in such capacity.


 


“Affiliate” means, at any time,
and with respect to any Person, (a) any other Person that at such time
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and
(b) any Person beneficially owning or holding, directly or indirectly, 10%
or more of any class of voting or equity interests of an Obligor or any
Subsidiary or any Person of which an Obligor and its Subsidiaries beneficially
own or hold, in the aggregate, directly or indirectly, 10% or more of any class
of voting or equity interests.  As used
in this definition, “Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.  Unless the context otherwise clearly
requires, any reference to an “Affiliate” is
a reference to an Affiliate of an Obligor.


 


“Anti-Terrorism Order” means
Executive Order No. 13,224 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.


 


“Bank Credit Agreement” means the
Amended and Restated Credit Agreement dated as of May 31, 2001 by and
among the Obligors, certain Subsidiaries of the Obligors named therein, Bank of
America, N.A., as administrative agent, and the other financial institutions
party thereto, as amended, restated, joined, supplemented or otherwise modified
from time to time, and any renewals, extensions or replacements thereof, which
constitute the primary bank credit facility of the Obligors and its
Subsidiaries.


 


“Bank Lenders” means the banks
and financial institutions party to the Bank Credit Agreement.


 


“Business Day” means any day
other than a Saturday, a Sunday or a day on which commercial banks in New York,
New York are required or authorized to be closed.


 


“Capital Lease” means, at any
time, a lease with respect to which the lessee is required concurrently to
recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.


 


SCHEDULE B


(to Note Purchase
Agreement)


 





















 


“Capital Lease Obligation” means,
with respect to any Person and a Capital Lease, the amount of the obligation of
such Person as the lessee under such Capital Lease which would, in accordance
with GAAP, appear as a liability on a balance sheet of such Person.


 


“Change of Control” is defined in
Section 8.7.


 


“Closing” is defined in
Section 3.


 


“Code” means the Internal Revenue
Code of 1986, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time.


 


“Confidential Information” is
defined in Section 20.


 


“Consolidated Debt” means as of
any date of determination the total amount of all Debt of the Obligors and
their Restricted Subsidiaries determined on a consolidated basis in accordance
with GAAP.


 


“Consolidated EBITDAR” shall
mean, for any period, Consolidated Net Income for such period plus (to the
extent deducted or added in computing such Consolidated Net Income and without
duplication) (a) depreciation, depletion, if any, and amortization expense
for such period, (b) income tax expense for such period, (c) other
non-cash items for such period, including without limitation, charges associated
with store closings, (d) Consolidated Interest Expense and Lease Rentals
for such period, and (e) non-recurring items, all as determined on a
consolidated basis in accordance with GAAP.


 


“Consolidated Fixed Charges”
shall mean, for any period, the Consolidated Interest Expense for such period
plus Lease Rentals for such period, determined on a consolidated basis in
accordance with GAAP.


 


“Consolidated Interest Expense”
shall mean, for any period, the gross interest expense of FDSI and its
Restricted Subsidiaries deducted in the calculation of Consolidated Net Income
for such period, determined on a consolidated basis in accordance with GAAP.


 


“Consolidated Net Income” shall
mean, for any period, the consolidated net income (or loss) of FDSI and its
Restricted Subsidiaries for such period, exclusive of “extraordinary items” (as
defined by GAAP), determined on a consolidated basis in accordance with GAAP.


 


“Consolidated Net Worth” shall
mean the consolidated stockholder’s equity of FDSI and its Restricted
Subsidiaries, as defined according to GAAP.


 


“Consolidated Total Assets”
means, as of any date of determination, the total amount of all assets of FDSI
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.


 


“Consolidated Total
Capitalization” means, at any time, the sum of (i) Consolidated Net
Worth and (ii) Consolidated Debt.


 


B-2





















 


“Continuing Directors” is defined
in Section 8.7.


 


“Control Event” is defined in
Section 8.7.


 


“Debt” means, with respect to any
Person, without duplication,


 


(a)           its
liabilities for borrowed money;


 


(b)           its
liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable and other accrued liabilities arising in the ordinary
course of business but including, without limitation, all liabilities created
or arising under any conditional sale or other title retention agreement with
respect to any such property);


 


(c)           its
Capital Lease Obligations;


 


(d)           its
liabilities for borrowed money secured by any Lien with respect to any property
owned by such Person (whether or not it has assumed or otherwise become liable
for such liabilities); and


 


(e)           Guarantees
by such Person with respect to liabilities of a type described in any of
clauses (a) through (d) hereof.


 


Debt of any Person shall include all obligations of
such Person of the character described in clauses (a) through (e) to the extent
such Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.


 


For purposes of this Agreement, Debt shall not include
reimbursement obligations under trade letters of credit incurred in connection
with the acquisition of inventory in the ordinary course of business, provided
that any draws under such trade letters of credit are reimbursed within 30 days
thereof.


 


“Default” means an event or
condition the occurrence or existence of which would, with the lapse of time or
the giving of notice or both, become an Event of Default.


 


“Default Rate” means with respect
to the Notes of any Series that rate of interest that is 2% per annum above the
rate of interest stated in clause (a) of the first paragraph of the Notes of
such Series (and of such tranche if such Series has separate tranches).


 


“Environmental Laws” means any
and all federal, state, local, and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to
pollution and the protection of the environment or the release of any materials
into the environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public systems.


 


B-3





















 


“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time in effect.


 


“ERISA Affiliate” means any trade
or business (whether or not incorporated) that is treated as a single employer
together with any Obligor under section 414 of the Code.


 


“Event of Default” is defined in
Section 11.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended.


 


“Fair Market Value” means, at any
time and with respect to any property, the sale value of such property that
would be realized in an arm’s-length sale at such time between an informed and
willing buyer and an informed and willing seller (neither being under a
compulsion to buy or sell), as reasonably determined in the good faith opinion
of the Obligors’ board of directors.


 


“FDSI” means Family Dollar
Stores, Inc., a Delaware corporation.


 


“FDI” means Family Dollar, Inc.,
a North Carolina corporation.


 


“FLSA Litigation” means any
existing or future litigations regarding whether any employees of FDSI or any
of its Subsidiaries are “exempt employees” (such that such employees are not
entitled to receive overtime compensation) under the Fair Labor Standards Act
(as amended) or any other similar federal or state law, including but not
limited to the litigation as further described in the Memorandum.


 


“GAAP” means those generally
accepted accounting principles as in effect from time to time in the United
States of America.


 


“Governmental Authority” means


 


(a)           the
government of


 


(i)            the
United States of America or any state or other political subdivision thereof,
or


 


(ii)           any
jurisdiction in which any Obligor or any Restricted Subsidiary conducts all or
any part of its business, or which has jurisdiction over any properties of any
Obligor or any Restricted Subsidiary, or


 


(b)           any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.


 


“Guaranty” means, with respect to
any Person, any obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Debt, dividend or other obligation
of any other 


 


B-4





















 


Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:


 


(a)           to
purchase such Debt or obligation or any property constituting security therefor
primarily for the purpose of assuring the owner of such Debt or obligation of
the ability of any other Person to make payment of the Debt or obligation;


 


(b)           to
advance or supply funds (i) for the purchase or payment of such Debt or
obligation, or (ii) to maintain any working capital or other balance sheet
condition or any income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of such Debt or
obligation;


 


(c)           to
lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such Debt or obligation of the ability of any
other Person to make payment of the Debt or obligation; or


 


(d)           otherwise
to assure the owner of such Debt or obligation against loss in respect thereof.


 


In any computation of the Debt or other liabilities of
the obligor under any Guaranty, the Debt or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor, provided that the amount of such Debt
outstanding for purposes of this Agreement shall not exceed the maximum amount
of Debt that is the subject of such Guaranty.


 


“Hazardous Material” means any and
all pollutants, toxic or hazardous wastes or other substances that might pose a
hazard to health and safety, the removal of which may be required or the
generation, manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage or filtration of which is or shall be restricted, prohibited
or penalized by any applicable law including, but not limited to, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum,
petroleum products, lead based paint, radon gas or similar restricted,
prohibited or penalized substances.


 


“holder” means, with respect to
any Note, the Person in whose name such Note is registered in the register
maintained by the Obligors pursuant to Section 13.1.


 


“Institutional Investor” means
(a) any original purchaser of a Note, (b) any holder of more than
$2,000,000 of the aggregate principal amount of the Notes then outstanding, and
(c) any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial institution or
entity, regardless of legal form.


 


“Investments” shall mean all
investments, in cash or by delivery of property made, directly or indirectly in
any Person, whether by acquisition of shares of capital stock, Debt or other
obligations or securities or by loan, advance, capital contribution or
otherwise.


 


B-5





















 


“Lease Rentals” shall mean, for
any period, the aggregate amount of fixed rental or operating lease expense
payable by FDSI and its Restricted Subsidiaries with respect to leases of real
and personal property (excluding Capital Lease Obligations) determined in
accordance with GAAP.


 


“Lien” means, with respect to any
Person, any mortgage, lien, pledge, charge, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title
retention agreement (other than an operating lease) or Capital Lease, upon or
with respect to any property or asset of such Person (including, in the case of
stock, shareholder agreements, voting trust agreements and all similar
arrangements).


 


“Limited Material Adverse Effect”
means a material adverse effect on (a) the ability of the Obligors and the
Subsidiary Guarantors to perform their obligations under this Agreement
(including any Supplement), the Notes or the Subsidiary Guaranties, taken as a
whole or (b) the validity or enforceability of this Agreement (including
any Supplement), the Notes or the Subsidiary Guaranty, taken as a whole.


 


“Make-Whole Amount” shall have
the meaning (i) set forth in Section 8.6 with respect to any Series A Note
and (ii) set forth in the applicable Supplement with respect to any other
Series of Notes.


 


“Material” means material in
relation to the business, operations, affairs, financial condition, assets or
properties of the Obligors and their Restricted Subsidiaries taken as a whole.


 


“Material Adverse Effect” means a
material adverse effect on (a) the business, operations, affairs,
financial condition, assets or properties of the Obligors and their Restricted
Subsidiaries taken as a whole, or (b) the ability of the Obligors and the
Subsidiary Guarantors to perform their obligations under this Agreement
(including any Supplement), the Notes or the Subsidiary Guaranties, taken as a
whole or (c) the validity or enforceability of this Agreement (including
any Supplement), the Notes or the Subsidiary Guaranty, taken as a whole.


 


“Material Subsidiary” means, at
any time, any Restricted Subsidiary of FDSI which, together with all other
Restricted Subsidiaries of such Restricted Subsidiary, accounts for more than
(i) 5% of the consolidated assets of the Obligors and their Restricted
Subsidiaries or (ii) 5% of consolidated revenue of the Obligors and their
Restricted Subsidiaries.


 


“Memorandum” is defined in
Section 5.3.


 


“Moody’s” shall mean Moody
Investors Service, Inc.


 


“Multiemployer Plan” means any
Plan that is a “multiemployer plan” (as such term is defined in
Section 4001(a)(3) of ERISA).


 


“Notes” is defined in
Section 1.


 


B-6





















 


“Officer’s Certificate” means a
certificate of a Senior Financial Officer or of any other officer of an Obligor
whose responsibilities extend to the subject matter of such certificate.


 


“PBGC” means the Pension Benefit
Guaranty Corporation referred to and defined in ERISA or any successor thereto.


 


“Person” means an individual,
partnership, corporation, limited liability company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.


 


“Plan” means an “employee benefit
plan” (as defined in Section 3(3) of ERISA) that is or, within the
preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by any Obligor or any ERISA Affiliate or with respect to
which any Obligor or any ERISA Affiliate may have any liability.


 


“Priority Debt” means (without
duplication), as of the date of any determination thereof, the sum of
(i) all unsecured Debt of Restricted Subsidiaries (including all
Guaranties of Debt of any Obligor but excluding (w) Debt owing to any Obligor
or any other Restricted Subsidiary, (x) Debt outstanding at the time such
Person became a Restricted Subsidiary (other than an Unrestricted Subsidiary
which is designated as a Restricted Subsidiary pursuant to Section 9.6
hereof), provided that such Debt shall have not been incurred in contemplation
of such person becoming a Restricted Subsidiary, (y) all Guaranties of
Debt of any Obligor by any Restricted Subsidiary which has also guaranteed the
Notes, and (z) Debt of FDI in which FDI is a co-obligor with FDSI under
the agreement or instrument pursuant to which such Debt is incurred (including
without limitation the Bank Credit Agreement), and (ii) all Debt or other
obligations of the Obligors and their Restricted Subsidiaries secured by Liens
other than Debt or obligations secured by Liens permitted by
subparagraphs (a) through (i), inclusive, of Section 10.4.


 


“property” or “properties” means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.


 


“Purchasers” means the purchasers
of the Notes named in Schedule A hereto.


 


“QPAM Exemption” means Prohibited
Transaction Class Exemption 84-14 issued by the United States Department of
Labor.


 


“Qualified Institutional Buyer” means
any Person who is a qualified institutional buyer within the meaning of such
term as set forth in Rule 144(a)(1) under the Securities Act.


 


“Required Holders” means, at any
time, the holders of not less than 51% in principal amount of the Notes of each
Series at the time outstanding (exclusive of Notes then owned by any Obligor or
any of its Affiliates and any Notes held by parties who are contractually
required to abstain from voting with respect to matters affecting the holders
of the Notes).


 


B-7





















 


“Responsible Officer” means any
Senior Financial Officer and any other officer of an Obligor with
responsibility for the administration of the relevant portion of this
Agreement.


 


“Restricted Subsidiary” means any
Subsidiary in which: (i) at least a majority of the voting securities are owned
by any Obligor and/or one or more Restricted Subsidiaries and (ii) the
Obligors have not designated an Unrestricted Subsidiary by notice in writing
given to the holders of the Notes; provided that
FDI shall at all times remain a Restricted Subsidiary.


 


“S&P” means Standard &
Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.


 


“Securities Act” means the
Securities Act of 1933, as amended from time to time.


 


“Senior Debt” means, as of the
date of any determination thereof, all Consolidated Debt, other than
Subordinated Debt.


 


“Senior Financial Officer” means
the chief financial officer or principal accounting officer of an Obligor.


 


“Series” means any series of
Notes issued pursuant to this Agreement or any Supplement hereto.


 


“Series A Notes” is defined in
Section 1 of this Agreement.


 


“Subordinated Debt” means all
unsecured Debt of an Obligor that shall contain or have applicable thereto
subordination provisions providing for the subordination thereof to other Debt
of such Obligor (including, without limitation, subordinated to the obligations
of such Obligor under this Agreement, any Supplement or the Notes).


 


“Subsidiary” means, as to any
Person, any corporation, association or other business entity in which such
Person or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or them
(as a group) ordinarily, in the absence of contingencies, to elect a majority
of the directors (or Persons performing similar functions) of such entity, and
any partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can
and does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). 
Unless the context otherwise clearly requires, any reference to a “Subsidiary”
is a reference to a Subsidiary of an Obligor.


 


“Subsidiary Guarantor” means each
Subsidiary which is party to the Subsidiary Guaranty.


 


“Subsidiary Guaranty” is defined
in Section 2.3 of this Agreement.


 


“Supplement” is defined in
Section 2.2 of this Agreement.


 


B-8





















 


“tranche” means all Notes of a
Series having the same maturity, interest rate and schedule for mandatory
prepayments.


 


“Unrestricted Subsidiary” means
any Subsidiary so designated by the Obligors.


 


“USA Patriot Act” means United
States Public Law 107-56, Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT) Act of 2001, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.


 


B-9





















 


[FORM OF SERIES 2005-A,
TRANCHE A NOTE]


 


Family Dollar Stores, Inc.

Family Dollar, Inc.


 


5.41% Series 2005-A Senior Note,
Tranche A due September 27, 2015


 


	
  No.
  [        ]

  	
  [Date]

  
	
  $[             ]

  	
  PPN 30704@ AA 2

  



 


For Value Received,
each of the undersigned, Family Dollar
Stores, Inc. (herein called “FDSI”), a
corporation organized and existing under the laws of the State of Delaware, and
Family Dollar, Inc., a
corporation organized and existing under the laws of the State of North
Carolina, jointly and severally hereby promises to pay to [                      ]
or registered assigns, the principal sum of [                    ]
Dollars (or so much thereof as
shall not have been prepaid) on September 27, 2015 with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance hereof at the rate of 5.41% per annum from the date hereof, payable
semi-annually, on the 27th day of March and September in each year and at
maturity, commencing on March 27, 2006, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law, at the
Default Rate, on any overdue payment of interest and, during the continuance of
an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable semiannually as aforesaid (or, at the option of
the registered holder hereof, on demand).


 


Payments of principal of, interest on and any
Make-Whole Amount with respect to this Note are to be made in lawful money of
the United States of America at the principal office of Bank of America, N.A.
in New York, New York.


 


This Note is one of a series of Senior Notes (herein
called the “Notes”) issued pursuant to the Note
Purchase Agreement, dated as of September 27, 2005 (as from time to time
amended, supplemented or modified, the “Note Purchase Agreement”),
between the Obligors and the respective Purchasers named therein and is
entitled to the benefits thereof.  Each
holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20
of the Note Purchase Agreement and (ii) made the representations set forth
in Sections 6.2 and 6.3 of the Note Purchase Agreement, provided, that in lieu thereof such holder may (in reliance
upon information provided by the Obligors, which shall not be unreasonably
withheld) make a representation to the effect that the purchase by any holder
of any Note will not constitute a non-exempt prohibited transaction under
section 406(a) of ERISA.  Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.


 


This Note is a registered Note and, as provided in the
Note Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note for a like principal amount will be issued
to, and registered in the name of, the transferee.  Prior to due presentment for registration of
transfer, the 


 


EXHIBIT 1(a)


(to Note Purchase
Agreement)


 





















 


Obligors may treat the person in whose name this Note is registered as
the owner hereof for the purpose of receiving payment and for all other
purposes, and the Obligors will not be affected by any notice to the contrary.


 


This Note is subject to optional prepayment, in whole
or from time to time in part, at the times and on the terms specified in the
Note Purchase Agreement, but not otherwise.


 


Pursuant to the Subsidiary Guaranty Agreement dated as
of September 27, 2005 (as amended, restated or otherwise modified from
time to time, the “Subsidiary Guaranty”), certain
Subsidiaries of the Obligors have absolutely and unconditionally guaranteed
payment in full of the principal of, Make-Whole Amount, if any, and interest on
this Note and the performance by the Obligors of its obligations contained in
the Note Purchase Agreement all as more fully set forth in said Subsidiary
Guaranty.


 


If an Event of Default, as defined in the Note
Purchase Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in
the Note Purchase Agreement.


 


This Note shall be construed and enforced in
accordance with, and the rights of the issuer and holder hereof shall be
governed by, the law of the State of New York excluding choice-of-law principles
of the law of such State that would require the application of the laws of a
jurisdiction other than such State.


 


 


	
   

  	
  Family Dollar Stores, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name: R. James Kelley

  
	
   

  	
   

  	
  Title: Vice Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Family Dollar, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name: R. James Kelley

  
	
   

  	
   

  	
  Title: Vice Chairman, Chief Financial

  Officer and Chief Administrative Officer

  



 


2





















 


[FORM OF SERIES 2005-A, TRANCHE B NOTE]


 


FAMILY DOLLAR STORES, INC.

FAMILY DOLLAR, INC.


 


5.24% SERIES 2005-A SENIOR NOTE, TRANCHE B DUE SEPTEMBER 27,
2015


 


	
  No. [                 ]

  	
   

  	
  [Date]

  
	
  $[                      ]

  	
   

  	
  PPN 30704@ AB 0

  



 


For Value Received, each
of the undersigned, Family Dollar
Stores, Inc. (herein called “FDSI”), a
corporation organized and existing under the laws of the State of Delaware, and
Family Dollar, Inc., a
corporation organized and existing under the laws of the State of North Carolina,
jointly and severally hereby promises to pay to
[                               ]
or registered assigns, the principal sum of
[                        ]
Dollars (or so much thereof as
shall not have been prepaid) on September 27, 2015 with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance hereof at the rate of 5.24% per annum from the date hereof, payable
semi-annually, on the 27th day of March and September in each year and at
maturity, commencing on March 27, 2006, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law, at the
Default Rate, on any overdue payment of interest and, during the continuance of
an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable semiannually as aforesaid (or, at the option of
the registered holder hereof, on demand).


 


Payments of principal of, interest on and any
Make-Whole Amount with respect to this Note are to be made in lawful money of
the United States of America at the principal office of Bank of America, N.A.
in New York, New York.


 


This Note is one of a series of Senior Notes (herein
called the “Notes”) issued pursuant to the Note
Purchase Agreement, dated as of September 27, 2005 (as from time to time
amended, supplemented or modified, the “Note Purchase Agreement”),
between the Obligors and the respective Purchasers named therein and is
entitled to the benefits thereof.  Each
holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20
of the Note Purchase Agreement and (ii) made the representations set forth
in Sections 6.2 and 6.3 of the Note Purchase Agreement, provided, that in lieu thereof such holder may (in reliance
upon information provided by the Obligors, which shall not be unreasonably
withheld) make a representation to the effect that the purchase by any holder
of any Note will not constitute a non-exempt prohibited transaction under
section 406(a) of ERISA.  Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.


 


This Note is a registered Note and, as provided in the
Note Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note for a like principal amount will be issued
to, and 


 


EXHIBIT 1(b)


(to Note Purchase Agreement)


 





















 


registered in the name of, the
transferee.  Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.


 


The Obligors will make required prepayments of
principal on the date and in the amounts specified in the Note Agreement.  This Note is subject to optional prepayment,
in whole or from time to time in part, at the times and on the terms specified
in the Note Purchase Agreement, but not otherwise.


 


Pursuant to the Subsidiary Guaranty Agreement dated as
of September 27, 2005 (as amended, restated or otherwise modified from
time to time, the “Subsidiary Guaranty”), certain
Subsidiaries of the Obligors have absolutely and unconditionally guaranteed
payment in full of the principal of, Make-Whole Amount, if any, and interest on
this Note and the performance by the Obligors of its obligations contained in
the Note Purchase Agreement all as more fully set forth in said Subsidiary
Guaranty.


 


If an Event of Default, as defined in the Note
Purchase Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in
the Note Purchase Agreement.


 


This Note shall be construed and enforced in
accordance with, and the rights of the issuer and holder hereof shall be
governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.


 


 


	
   

  	
  FAMILY
  DOLLAR STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  R.
  James Kelley

  
	
   

  	
   

  	
  Title:  Vice
  Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAMILY
  DOLLAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  R.
  James Kelley

  
	
   

  	
   

  	
  Title:  Vice
  Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
						



 


2





















 




 





FAMILY DOLLAR STORES, INC.


FAMILY DOLLAR, INC.


 


[NUMBER] SUPPLEMENT TO NOTE PURCHASE AGREEMENT


 


Dated as of                               


 


 


	
  Re:

  	
   

  	
  $                                    % Series
               
  Senior Notes

  
	
  Due                

  





 





 


EXHIBIT S


(to Note Purchase Agreement)


 





















 


Family
Dollar Stores, Inc.


Family Dollar, Inc.


10401 Monroe Road


Charlotte, North Carolina 28201


 


	
  Dated as of

  
	
   

  
	
   

  	
                                           ,
  20   

  
	
   

  
	
  To the
  Purchaser(s) named in

  
	
  Schedule A
  hereto

  



 


Ladies
and Gentlemen:


 


This [Number] Supplement to Note Purchase Agreement
(the “Supplement”) is between Family Dollar Stores, Inc., a Delaware
corporation (the “FDSI”), and Family Dollar, Inc., a North Carolina
corporation (the “FDI” and collectively with
FDSI,, the “Obligors”), and the institutional
investors named on Schedule A attached hereto (the “Purchasers”).


 


Reference is hereby made to that certain Note Purchase
Agreement dated as of September 27, 2005 (the “Note
Purchase Agreement”) between the Obligors and the purchasers listed
on Schedule A thereto.  All
capitalized terms not otherwise defined herein shall have the same meaning as
specified in the Note Purchase Agreement. 
Reference is further made to Section 4.14 of the Note Purchase
Agreement which requires that, prior to the delivery of any Additional Notes,
the Obligors and each Additional Purchaser shall execute and deliver a
Supplement.


 


Each Obligor hereby agrees with the Purchaser(s) as
follows:


 


1.                                       The
Obligors have authorized the issue and sale of $                    
aggregate principal amount of its
                %
Series                
Senior Notes due                          ,
             (the “Series                      Notes”).  The Series
        Notes, together with the Series A
Notes [and the
Series           Notes]
initially issued pursuant to the Note Purchase Agreement [and the                       
Supplement] and each series of Additional Notes which may from time to time
hereafter be issued pursuant to the provisions of Section 2.2 of the Note
Purchase Agreement, are collectively referred to as the “Notes” (such term shall also include any such notes issued in
substitution therefor pursuant to Section 13 of the Note Purchase
Agreement).  The
Series            Notes
shall be substantially in the form set out in Exhibit 1 hereto with such
changes therefrom, if any, as may be approved by the Purchaser(s) and the
Obligors.


 


2.                                       Subject
to the terms and conditions hereof and as set forth in the Note Purchase
Agreement and on the basis of the representations and warranties hereinafter
set forth, the Obligors agree to issue and sell to each Purchaser, and each
Purchaser agrees to purchase from the Obligors, Series
            Notes in the
principal amount set forth opposite such Purchaser’s


 





















 


name on Schedule A hereto at a price of 100% of
the principal amount thereof on the closing date hereinafter mentioned.


 


3.                                       The
sale and purchase of the
Series                  
Notes to be purchased by each Purchaser shall occur at the offices of [                                           ]
at 10:00 a.m. Chicago time, at a
closing (the “Closing”) on
       ,
         or on such other Business Day
thereafter on or prior to             ,
             as may
be agreed upon by the Obligors and the Purchasers.  At the Closing, the Obligors will deliver to each
Purchaser the Series
             
Notes to be purchased by such Purchaser in the form of a single
Series             
Note (or such greater number of Series                  
Notes in denominations of at least $100,000 as such Purchaser may request)
dated the date of the Closing and registered in such Purchaser’s name (or in
the name of such Purchaser’s nominee), against delivery by such Purchaser to
the Obligors or their order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Obligors to account number [                                                  ]
at                         
Bank, [Insert Bank address, ABA number for wire transfers,
and any other relevant wire transfer information].  If, at the Closing, the Obligors shall fail
to tender such
Series                
Notes to any Purchaser as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to any
Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s election,
be relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.


 


4.                                       The
obligation of each Purchaser to purchase and pay for the
Series                 
Notes to be sold to such Purchaser at the Closing is subject to the fulfillment
to such Purchaser’s satisfaction, prior to the Closing, of the conditions set
forth in Section 4 of the Note Purchase Agreement with respect to the
Series                  
Notes to be purchased at the Closing, and to the following additional
conditions:


 


(a)                                  Except
as supplemented, amended or superceded by the representations and warranties
set forth in Exhibit A hereto, each of the representations and warranties of
the Obligors set forth in Section 5 of the Note Purchase Agreement shall be
correct as of the date of Closing and the Obligors shall have delivered to each
Purchaser an Officer’s Certificate, dated the date of the Closing certifying that
such condition has been fulfilled.


 


(b)                                 Contemporaneously
with the Closing, the Obligors shall sell to each Purchaser, and each Purchaser
shall purchase, the
Series                  
Notes to be purchased by such Purchaser at the Closing as specified in Schedule
A.


 


5.                                       [Here
insert special provisions for
Series                 
Notes including prepayment provisions applicable to Series               
Notes (including Make-Whole Amount) and closing conditions applicable to Series
            
Notes].


 


6.                                       Each
Purchaser represents and warrants that the representations and warranties set
forth in Section 6 of the Note Purchase Agreement are true and correct on
the date hereof with respect to the purchase of the Series             
Notes by such Purchaser.


 


2





















 


7.                                       Each
Obligor and each Purchaser agree to be bound by and comply with the terms and
provisions of the Note Purchase Agreement as fully and completely as if such
Purchaser were an original signatory to the Note Purchase Agreement.


 


The execution hereof shall constitute a contract
between the Obligors and the Purchaser(s) for the uses and purposes hereinabove
set forth, and this agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together only one
agreement.


 


 


	
   

  	
  FAMILY
  DOLLAR STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAMILY
  DOLLAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted as
  of
                       ,
            

  	
   

  
	
   

  	
   

  
	
   

  	
  [VARIATION]

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
									



 


3





















 


Supplemental
Representations


 


Each
Obligor represents and warrants to each Purchaser that except as hereinafter
set forth in this Exhibit A, each of the representations and warranties set
forth in Section 5 of the Note Purchase Agreement is true and correct in all
material respects as of the date hereof with respect to the Series             
Notes with the same force and effect as if each reference to “Series A Notes”
set forth therein was modified to refer the “Series             
Notes” and each reference to “this Agreement” therein was modified to refer to
the Note Purchase Agreement as supplemented by the             
Supplement.  The Section references hereinafter
set forth correspond to the similar sections of the Note Purchase Agreement
which are supplemented hereby:


 


Section 5.3.                                Disclosure.  The Obligors, through their agent, Banc of
America Securities LLC has delivered to each Purchaser a copy of a Private
Placement Memorandum, dated                          
(the “Memorandum”), relating to the
transactions contemplated by the             
Supplement.  The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Obligors and their Restricted Subsidiaries.  The Note Purchase Agreement, the Memorandum,
the documents, certificates or other writings delivered to each Purchaser by or
on behalf of the Obligors in connection with the transactions contemplated by
the Note Purchase Agreement and the                  
Supplement and the financial statements listed in Schedule 5.5 to the             
Supplement, taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they were
made.  Since                              ,
there has been no change in the financial condition, operations, business,
properties or prospects of the Obligors or any Restricted Subsidiary except
changes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.  There
is no fact known to any Obligor that would reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in the Memorandum
or in the other documents, certificates and other writings delivered to each
Purchaser by or on behalf of any Obligor specifically for use in connection
with the transactions contemplated hereby.


 


Section 5.4.                                Organization
and Ownership of Shares of Subsidiaries. 
(a) Schedule 5.4 to the
            
Supplement contains (except as noted therein) complete and correct lists of
(i) the Obligors’ Restricted and Unrestricted Subsidiaries, and showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock
or similar equity interests outstanding owned by the Obligors and each other
Subsidiary, and all other Investments of the Obligors and their Restricted
Subsidiaries, (ii) the Obligors’ Affiliates, other than Subsidiaries, and (iii)
the Obligors’ directors and senior officers.


 


Section 5.13.                         
Private Offering by the Obligors. 
Neither any Obligor nor anyone acting on its behalf has offered the
Series       Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than the
Purchasers and not more than [            ]
other Institutional Investors, each of which has been offered the Series             
Notes at a private sale for investment. 
Neither any Obligor nor anyone acting on its behalf has taken, or will
take, any action that would subject


 


EXHIBIT A


(to Supplement)


 





















 


the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.


 


Section 5.14.                         Use
of Proceeds; Margin Regulations.  The
Obligors will apply the proceeds of the sale of the Series         
Notes to                                                           
and for general corporate purposes. No part of the proceeds from the sale of
the Series                 
Notes pursuant to the                 
Supplement will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve any Obligor in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of said
Board (12 CFR 220).  Margin stock does
not constitute more than 2% of the value of the consolidated assets of any
Obligor and its Subsidiaries and no Obligor has any present intention that
margin stock will constitute more than 2% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said
Regulation U.


 


Section 5.15.                         Existing
Debt; Future Liens. 
(a) Schedule 5.15 to the                 
Supplement sets forth a complete and correct list of all outstanding Debt of
the Obligors and their Restricted Subsidiaries as of                                 ,
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Obligors or its Restricted Subsidiaries. 
Neither any Obligor nor any Restricted Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Debt of any Obligor or such Subsidiary and no event or
condition exists with respect to any Debt of any Obligor or any Restricted
Subsidiary that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Debt to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.


 


[Add any additional Sections as appropriate at the
time the Series                 
Notes are issued]


 


2





















 


[FORM OF SERIES          
NOTE]


 


FAMILY DOLLAR STORES, INC.


 


      % SERIES             
SENIOR NOTE DUE                     


 


	
  No. [                      ]

  	
   

  	
  [Date]

  
	
  $[                           ]

  	
   

  	
  PPN [                     ]

  



 


For Value Received,
each of the undersigned, Family Dollar Stores, Inc., a corporation organized and existing under the laws of the
State of Delaware (herein called the “FDSI”), and
Family Dollar, Inc., a
corporation organized and existing under the laws of the State of North
Carolina (herein called the “FDI”), hereby
promises to pay to [                                        ],
or registered assigns, the principal sum of [                                       ]
Dollars (or so much thereof as
shall not have been prepaid) on                                        ,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance hereof at the rate of
            % per annum
from the date hereof, payable semiannually, on the
            day of
            and
           in each year,
commencing on the first of such dates after the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law, at a rate per annum from time to time equal to [2% above the
stated rate], on any overdue payment of interest and, during the continuance of
an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable [semiannually] as aforesaid (or, at the option
of the registered holder hereof, on demand).


 


Payments of principal of, interest on and any
Make-Whole Amount with respect to this Note are to be made in lawful money of
the United States of America at Bank of America, N.A. in New York.


 


This Note is one of a series of Senior Notes (the “Notes”) issued pursuant to a Supplement to the Note
Purchase Agreement dated as of
September        , 2005 (as from time
to time amended, supplemented or modified, the “Note
Purchase Agreement”), between the Obligors, the Purchasers named
therein and Additional Purchasers of Notes from time to time issued pursuant to
any Supplement to the Note Purchase Agreement. 
This Note and the holder hereof are entitled equally and ratably with
the holders of all other Notes of all series from time to time outstanding
under the Note Purchase Agreement to all the benefits provided for thereby or
referred to therein.  Each holder of this
Note will be deemed, by its acceptance hereof, to have (i) agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) made the representations set forth in Sections 6.2
and 6.3 of the Note Purchase Agreement, provided that
such holder may (in reliance upon information provided by the Obligors, which
shall not be unreasonably withheld) make a representation to the effect that
the purchase by such holder of any Note will not constitute a non-exempt
prohibited transaction under Section 406(a) of ERISA.  Unless otherwise indicated, capitalized terms
used in this Note shall have the respective meanings ascribed to such terms in
the Note Purchase Agreement.


 


EXHIBIT 1


(to Supplement)


 





















 


This Note is registered with the Obligors and, as
provided in the Note Purchase Agreement, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such holder’s
attorney duly authorized in writing, a new Note of the same series for a like
principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.


 


[The Obligors will make required prepayments of
principal on the dates and in the amounts specified in the Note Purchase
Agreement.]  [This Note is not subject to
regularly scheduled prepayments of principal.] This Note is [also] subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreement, but not otherwise.


 


Pursuant to the Subsidiary Guaranty Agreement dated as
of September      , 2005 (as amended or modified
from time to time, the “Subsidiary Guaranty”),
certain Subsidiaries of the Obligors have absolutely and unconditionally
guaranteed payment in full of the principal of, Make-Whole Amount, if any, and
interest on this Note and the performance by the Obligors of its obligations
contained in the Note Purchase Agreement all as more fully set forth in said
Subsidiary Guaranty.


 


If an Event of Default, as defined in the Note
Purchase Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in
the Note Purchase Agreement.


 


This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.


 


2





















 


	
   

  	
  FAMILY
  DOLLAR STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAMILY
  DOLLAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 


3





















 


CONFORMED COPY




 





SUBSIDIARY
GUARANTY AGREEMENT


 


 


Dated
as of September 27, 2005


 


 


from


 


 


THE
SUBSIDIARY GUARANTORS NAMED HEREIN


 


 


for
the benefit of


 


 


THE
HOLDERS OF THE NOTES


 


RE:


 


$169,000,000
5.41% SERIES 2005-A SENIOR NOTES, TRANCHE A, DUE SEPTEMBER 27, 2015


 


$81,000,000
5.24% SERIES 2005-A SENIOR NOTES, TRANCHE B, DUE SEPTEMBER 27, 2015


 


OF


 


FAMILY
DOLLAR STORES, INC.

AND

FAMILY DOLLAR, INC.




 





 





















 


Table of Contents


 


	
  SECTION

  	
   

  	
  HEADING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Guaranty

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Representations and Warranties

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Subsidiary Guarantor’s Obligations Unconditional

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Full Recourse Obligations; Pari Passu Ranking

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Waiver

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Waiver of Subrogation

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Subordination

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Effect of Bankruptcy Proceedings, Etc

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Term of Guaranty

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Contribution

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Limitation
  of Liability

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Negative
  Pledge

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Supplemental
  Agreement

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Definitions
  and Terms Generally

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  15.

  	
   

  	
  Notices

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section
  16.

  	
   

  	
  Amendments,
  Etc

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Consent to
  Jurisdiction; Service of Process

  	
  16

  



 


i





















 


	
  Section 18.

  	
   

  	
  Waiver of Jury Trial

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Survival

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Severability

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Successors and Assigns

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Table of Contents; Headings

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Counterparts

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Governing Law

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Covenant Compliance

  	
  18

  



 


ii





















 


Subsidiary Guaranty Agreement,
dated as of September 27, 2005 (the “Guaranty”),
from each of:


 


(i)                                   Family
Dollar Services, Inc., a North Carolina corporation;


(ii)                                Family
Dollar Operations, Inc., a North Carolina corporation;


(iii)                             Family
Dollar Trucking, Inc., a North Carolina corporation; and


(iv)                            such
Subsidiaries as shall become parties hereto in accordance with Section 13
hereof (each a “Subsidiary Guarantor” and collectively
the “Subsidiary Guarantors”),


 


for
the benefit of the holders from time to time of the Notes (as defined below)
(the “Holders”).  Capitalized terms used herein are defined in
Section 14 hereof or the Note Purchase Agreement referred to below.


 


Whereas, Family Dollar
Stores, Inc., a Delaware corporation, and Family Dollar, Inc., a North Carolina
corporation (each individually an “Obligor” and,
collectively, the “Obligors”) will authorize the
issue and sale of (i) $169,000,000 5.41% Series 2005-A Senior Notes, Tranche A
due September 27, 2015 (the “Tranche A Notes”),
and (ii) $81,000,000 5.24% Series 2005-A Senior Notes, Tranche B due
September 27, 2015 (the “Tranche B Notes”
and, together with the Tranche A Notes, the “Series
2005-A Notes”), pursuant to a Note Purchase Agreement, dated as of
the date hereof (as amended, modified or supplemented from time to time, the “Note Purchase Agreement”) among the Obligors and the
purchasers named therein.


 


Whereas, the Obligors
are authorized to issue Additional Notes (as such term is defined in the Note
Purchase Agreement) of one or more separate series from time to time pursuant
to Section 2.2 of the Note Purchase Agreement.


 


Whereas, the
Additional Notes together with the Series 2005-A Notes are collectively
referred to as the “Notes”.


 


Whereas, each of the
Subsidiary Guarantors is a Subsidiary of the Obligors.


 


Whereas, the Obligors
have agreed that their Subsidiaries will guarantee their respective obligations
under the Notes and the Note Purchase Agreement.


 


Whereas, the
Subsidiary Guarantors each acknowledge that they will derive substantial
benefits from the issuance of the Notes.


 


Now, Therefore, in
consideration of the premises and to induce the Holders to purchase the Notes,
each of the Subsidiary Guarantors, intending to be legally bound, hereby agrees
for the benefit of the Holders, as follows:


 





















 


Section 1.                                                 Guaranty.


 


Each Subsidiary Guarantor with all other Subsidiary
Guarantors, hereby absolutely,
unconditionally and irrevocably guarantees, jointly and severally, as a primary
obligor and not merely as a surety, to each Holder and its successors and
assigns, the full and punctual payment and performance when due, whether at
stated maturity, by acceleration or otherwise, of the principal of and Make-Whole
Amount, Prepayment Premium, LIBOR Breakage Amount, and interest on (including,
without limitation, interest, whether or not an allowable claim, accruing after
the date of filing of any petition in bankruptcy, or the commencement of any
bankruptcy, insolvency or similar proceeding relating to any Obligor) the Notes
and all other amounts under the Note Purchase Agreement and all other
obligations, agreements and covenants of the Obligors now or hereafter existing
under the Note Purchase Agreement whether for principal, Make-Whole Amount,
Prepayment Premium, LIBOR Breakage Amount, interest (including interest
accruing or becoming owing both prior to and subsequent to the commencement of
any proceeding against or with respect to any Obligor under any chapter of the
Bankruptcy Code), indemnification payments, expenses (including reasonable
attorneys’ fees and expenses) or otherwise, and all reasonable costs and
expenses, if any, incurred by any Holder in connection with enforcing any
rights under this Guaranty (all such obligations being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable expenses
incurred by each Holder in enforcing this Guaranty; provided
that, notwithstanding anything contained herein or in the Note Purchase
Agreement to the contrary, the maximum liability of each Subsidiary Guarantor
hereunder and under the Note Purchase Agreement shall in no event exceed such
Guarantor’s Maximum Guaranteed Amount, and provided further,
each Subsidiary Guarantor shall be unconditionally required to pay all amounts
demanded of it hereunder prior to any determination of such Maximum Guaranteed
Amount and the recipient of such payment, if so required by a final
non-appealable order of a court of competent jurisdiction, shall then be liable
for the refund of any excess amounts.  If
any such rebate or refund is ever required, all other Subsidiary Guarantors
(and the Obligors) shall be fully liable for the repayment thereof to the
maximum extent allowed by applicable law. 
This Guaranty is an absolute, unconditional, present and continuing
guaranty of payment and not of collectibility and is in no way conditioned upon
any attempt to collect from the Obligors or any other action, occurrence or
circumstance whatsoever.  Each Subsidiary
Guarantor agrees that the Guaranteed Obligations may at any time and from to
time exceed the Maximum Guaranteed Amount of such Subsidiary Guarantor without
impairing this Guaranty or affecting the rights and remedies of the Holders
hereunder.


 


Notwithstanding any stay, injunction or other
prohibition preventing such action against any Obligor, if for any reason
whatsoever any Obligor shall fail or be unable duly, punctually and fully to
perform and (in the case of the payment of Guaranteed Obligations) pay such amounts
as and when the same shall become due (subject to any applicable grace periods
under the Note Purchase Agreement) and (in the case of the payment of
Guaranteed Obligations) payable or to perform or comply with any other
Guaranteed Obligation, whether or not such failure or inability shall
constitute an “Event of Default” under the Note Purchase Agreement or the
Notes, each Subsidiary Guarantor will forthwith (in the case of the payment of
Guaranteed Obligations) pay or cause to be paid such amounts to the Holders, in
lawful money of the United States of America, at the place specified in the
Note Purchase Agreement, or perform or comply with such Guaranteed Obligations
or cause such Guaranteed Obligations to be performed or


 


2





















 


complied with, (in the case of the payment of
Guaranteed Obligations) together with interest (in the amounts and to the
extent required under such Notes) on any amount due and owing.


 


Section 2.                                                 Representations
and Warranties.


 


Each Subsidiary Guarantor hereby represents and
warrants as follows:


 


(a)                                  All
representations and warranties contained in the Note Purchase Agreement that
relate to such Subsidiary Guarantor are true and correct in all respects and
are incorporated herein by reference with the same force and effect as though
set forth herein in full.


 


(b)                                 Such
Subsidiary Guarantor acknowledges that, any default in the due observance or
performance by such Subsidiary Guarantor of any covenant, condition or
agreement contained herein (if, after the running of any applicable notice and
opportunity to cure periods provided in the Note Purchase Agreement, such
default or event of default remains uncured) shall constitute an Event of
Default.


 


(c)                                  There
are no conditions precedent to the effectiveness of this Guaranty that have not
been satisfied or expressly waived.


 


(d)                                 Such
Subsidiary Guarantor has, independently and without reliance upon the Holders
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Guaranty.  Such Subsidiary Guarantor has investigated
fully the benefits and advantages which will be derived by it from execution of
this Guaranty, and the Board of Directors of such Subsidiary Guarantor has
decided that a direct and/or an indirect benefit will accrue to such Subsidiary
Guarantor by reason of the execution of this Guaranty.


 


(e)                                  (i) This
Guaranty is not given with actual intent to hinder, delay or defraud any Person
to which such Subsidiary Guarantor is or will become, on or after the date
hereof, indebted; (ii) such Subsidiary Guarantor has received at least a
reasonably equivalent value in exchange for the giving of this Guaranty;
(iii) such Subsidiary Guarantor is not insolvent on the date hereof and
will not become insolvent as a result of the giving of this Guaranty;
(iv) such Subsidiary Guarantor is not engaged in a business or
transaction, nor is about to engage in a business or transaction, for which any
property remaining with such Subsidiary Guarantor constitutes an unreasonably
small amount of capital; and (v) such Subsidiary Guarantor does not intend
to incur debts that will be beyond such Subsidiary Guarantor’s ability to pay
as such debts mature.


 


(f)                                    Each
Subsidiary Guarantor is a corporation or other legal
entity duly organized and validly existing under the laws of its state of
organization, and has the requisite power, authority and legal right under the
laws of its state of organization to conduct its business as presently
conducted and to execute,  deliver and
perform its obligations under this Guaranty.


 


(g)                                 The
execution, delivery and performance of this Guaranty have been duly authorized
by all necessary corporate action on the
part of each Subsidiary Guarantor, and does


 


3





















 


not require any consent
or approval of, or the giving of notice to, or the taking of any other action
in respect of, any stockholder or trustee or holder of any indebtedness or
obligations of such Subsidiary Guarantor. 
This Guaranty constitutes a legal, valid and binding obligation of each
Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms, except that such
enforceability is subject to any limitations arising from bankruptcy,
insolvency, liquidation, moratorium, reorganization and other similar laws of
general application relating to or affecting the rights of creditors or
pledgees and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).


 


(h)                                 The
execution, delivery and performance of this Guaranty does not and will not
conflict with or result in any violation of or default under any provision of
the Articles of Incorporation or by-laws or partnership agreement, as the case
may be, of any Subsidiary Guarantor, or any indenture, mortgage, deed of trust,
instrument, law, rule or regulation binding on any Subsidiary Guarantor or to
which a Subsidiary Guarantor is a party.


 


(i)                                     The
execution, delivery and performance of this Guaranty does not and will not
result in violation of any judgment or order applicable to any Subsidiary
Guarantor or result in the creation or imposition of any Lien on any of the
properties or revenues of any Subsidiary Guarantor pursuant to any requirement
of law or any indenture, mortgage, deed of trust or other instrument to which
such Subsidiary Guarantor is a party.


 


(j)                                     The
execution, delivery and performance of this Guaranty do not and will not
conflict with and do not and will not require any consent, approval or
authorization of, or registration or filing with, any governmental authority or
agency of the state of organization of any Subsidiary Guarantor or of the
United States or any State.


 


(k)                                  There
are no pending or, to the knowledge of any Subsidiary Guarantor, threatened
actions or proceedings against or affecting such Subsidiary Guarantor or any of
its properties by or before any court or administrative agency or arbiter that
would adversely affect the ability of such Subsidiary Guarantor to perform its
obligations hereunder or call into question the validity or enforceability of
this Guaranty.


 


(l)                                     Each
Subsidiary Guarantor’s obligations under this Guaranty are at least pari passu in right of payment with all other unsecured
claims against the general creditors of such Subsidiary Guarantor.


 


(m)                               Each
Subsidiary Guarantor has validly and irrevocably submitted to the jurisdiction
of the Supreme Court of the State of New York, New York County, and the United
States District Court for the Southern District of New York.


 


(n)                                 The
choice of the laws of the State of New York to govern this Guaranty is valid
and binding.


 


(o)                                 No
Subsidiary Guarantor is in breach of or default under or with respect to any
instrument, document or agreement binding upon such Subsidiary Guarantor which
breach or default is reasonably probable to have a Material Adverse Effect or
result in the creation of a


 


4





















 


Lien on any property of
such Subsidiary Guarantor other than Liens permitted under Section 10.4 of
the Note Purchase Agreement.  Each
Subsidiary Guarantor is in compliance with all applicable requirements of law
except such non-compliance as would not have a Material Adverse Effect.


 


(p)                                 The
execution, delivery and performance by each Subsidiary Guarantor of this
Guaranty will not render such Subsidiary Guarantor insolvent, nor is it being
made in contemplation of such Subsidiary Guarantor’s insolvency, and the
Subsidiary Guarantor does not have an unreasonably small capital.


 


Section 3.                                                 Subsidiary
Guarantor’s Obligations Unconditional.


 


(a)                                  This
Guaranty shall constitute a guarantee of payment, performance and compliance
and not of collection, and each Subsidiary Guarantor specifically agrees that
it shall not be necessary, and that such Subsidiary Guarantor shall not be
entitled to require, before or as a condition of enforcing the liability of
such Subsidiary Guarantor under this Guaranty or requiring payment or
performance of the Guaranteed Obligations by any Subsidiary Guarantor
hereunder, or at any time thereafter, that any Holder:  (a) file suit or proceed to obtain or
assert a claim for personal judgment against any Obligor or any other Person
that may be liable for or with respect to any Guaranteed Obligation;
(b) make any other effort to obtain payment or performance of any
Guaranteed Obligation from any Obligor or any other Person that may be liable
for or with respect to such Guaranteed Obligation, except for the making of the
demands, when appropriate, described in Section 1; (c) foreclose
against, or seek to realize upon security now or hereafter existing for such
Guaranteed Obligations; (d) except to the extent set forth in Section 1,
exercise or assert any other right or remedy to which such Holder is or may be
entitled in connection with any Guaranteed Obligation or any security or other
guaranty therefor; or (e) assert or file any claim against the assets of
any Obligor or any other Person liable for any Guaranteed Obligation.  Each Subsidiary Guarantor agrees that this
Guaranty shall be continuing, and that the Guaranteed Obligations will be paid
and performed in accordance with their terms and the terms of this Guaranty,
and are the primary, absolute and unconditional obligations of such Subsidiary
Guarantor, irrespective of the value, genuineness, validity, legality,
regularity or enforceability or lack thereof of any part of the Guaranteed
Obligations or any agreement or instrument relating to the Guaranteed
Obligations or this Guaranty, or the existence of any indemnities with respect
to the existence of any other guarantee of or security for any of the
Guaranteed Obligations, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this Section
3 that the obligations of each Subsidiary Guarantor hereunder shall be
irrevocable, primary, absolute and unconditional under any and all
circumstances.


 


(b)                                 Each
Subsidiary Guarantor hereby expressly waives notice of acceptance of and
reliance upon this Guaranty, diligence, presentment, demand of payment or
performance, protest and all other notices (except as otherwise provided for in
Section 1) whatsoever, any requirement that the Holders exhaust any right,
power or remedy or proceed against the Obligors or against any other Person
under any other guarantee of, or security for, or any other agreement,
regarding


 


5





















 


any of the Guaranteed Obligations.  Each Subsidiary Guarantor further agrees
that, subject solely to the requirement of making demands under Section 1, the
occurrence of any event or other circumstance that might
otherwise vary the risk of the Obligors or such Subsidiary Guarantor or
constitute a defense (legal or
equitable) available to, or a discharge of, or a counterclaim or right of set-off
by, any Obligor or such Subsidiary Guarantor (other than the full and
indefeasible due payment and performance of the Guaranteed Obligations), shall
not affect the liability of the Subsidiary Guarantor hereunder.


 


(c)                                  The
obligations of each Subsidiary Guarantor under this Guaranty are not subject to
any counterclaim, set-off, deduction, diminution, abatement, recoupment,
suspension, deferment or defense based upon any claim such Subsidiary Guarantor
or any other Person may have against any Obligor, any Holder or any other
Person, and shall remain in full force and effect without regard to, and shall
not be released, discharged or in any way affected by, any circumstances or
condition whatsoever (whether or not such Subsidiary Guarantor or any Obligor
shall have any knowledge or notice thereof), including:


 


(i)                                     any
renewal, extension, modification, increase, decrease, alteration or
rearrangement of all or any part of the Guaranteed Obligations or any instrument
executed in connection therewith, or any contract or understanding with any
Obligor, the Holders, or any of them, or any other Person, pertaining to the
Guaranteed Obligations;


 


(ii)                                  any
adjustment, indulgence, forbearance or compromise that might be granted or
given by any Holder to any Obligor or any other Person liable on the Guaranteed
Obligations, or the failure of any Holder to assert any claim or demand or to
exercise any right or remedy against any Obligor or any other Person under the
provisions of the Note Purchase Agreement, the Notes or otherwise; or any
rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of, the Note Purchase Agreement, the Notes, any
guarantee or any other agreement;


 


(iii)                               the
insolvency, bankruptcy arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of any Obligor or any other Person at
any time liable for the payment of all or part of the Guaranteed Obligations;
or any dissolution of any Obligor or any other such Person, or any change,
restructuring or termination of the partnership structure or existence of any
Obligor or any other such Person, or any sale, lease or transfer of any or all
of the assets of any Obligor or any other such Person, or any change in the
shareholders, partners, or members of any Obligor or any other such Person; or
any default, failure or delay, willful or otherwise, in the performance of the
Guaranteed Obligations;


 


(iv)                              the
invalidity, illegality or unenforceability of all or any part of the Guaranteed
Obligations, or any document or agreement executed in connection with the
Guaranteed Obligations, for any reason whatsoever, including the fact that the
Guaranteed Obligations, or any part thereof, exceed the amount permitted by
law, the act of creating the Guaranteed Obligations or any part is ultra vires, the officers or representatives executing the
documents or otherwise creating the Guaranteed Obligations acted in excess of
their authority, the Guaranteed Obligations violate 


 


6





















 


applicable usury laws, any Obligor or any other Person
has valid defenses, claims or offsets (whether at law, in equity or by
agreement) which render the Guaranteed Obligations wholly or partially
uncollectible from any Obligor or any other Person, the creation, performance
or repayment of the Guaranteed Obligations (or the execution, delivery and
performance of any document or instrument representing part of the Guaranteed
Obligations or executed in connection with the Guaranteed Obligations or given
to secure the repayment of the Guaranteed Obligations) is illegal,
uncollectible, legally impossible or unenforceable, or the documents or
instruments pertaining to the Guaranteed Obligations have been forged or
otherwise are irregular or not genuine or authentic;


 


(v)                                 any
full or partial release of the liability of any Obligor on the Guaranteed
Obligations or any part thereof, of any co-guarantors, or of any other Person
now or hereafter liable, whether directly or indirectly, jointly, severally, or
jointly and severally, to pay, perform, guarantee or assure the payment of the
Guaranteed Obligations or any part thereof, it being recognized, acknowledged
and agreed by each Subsidiary Guarantor that such Subsidiary Guarantor may be
required to pay the Guaranteed Obligations in full without assistance or
support of any other Person, and such Subsidiary Guarantor has not been induced
to enter into this Guaranty on the basis of a contemplation, belief,
understanding or agreement that any parties other than the Obligors will be
liable to perform the Guaranteed Obligations, or that the Holders will look to
other parties to perform the Guaranteed Obligations;


 


(vi)                              the
taking or accepting of any other security, collateral or guaranty, or other
assurance of payment, for all or any part of the Guaranteed Obligations;


 


(vii)                           any
release, surrender, exchange, subordination, deterioration, waste, loss or
impairment (including negligent, unreasonable or unjustifiable impairment) of
any collateral, property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the Guaranteed
Obligations;


 


(viii)                        the
failure of any Holder or any other Person to exercise diligence or reasonable
care in the preservation, protection, enforcement, sale or other handling or
treatment of all or any part of such collateral, property or security;


 


(ix)                                the
fact that any collateral, security, security interest or lien contemplated or
intended to be given, created or granted as security for the repayment of the
Guaranteed Obligations shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security interest or
lien, it being recognized and agreed by each Subsidiary Guarantor that such
Subsidiary Guarantor is not entering into this Guaranty in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectibility
or value of any of the collateral;


 


(x)                                   any
payment by any Obligor to any Holder being held to constitute a preference
under any Fraudulent Conveyance Law, or for any reason any Holder being
required to refund such payment or pay such amount to any Obligor or someone
else;


 


7





















 


(xi)                                any
other action taken or omitted to be taken with respect to the Guaranteed
Obligations, or the security and collateral therefor, whether or not such
action or omission prejudices such Subsidiary Guarantor or increases the likelihood
that such Subsidiary Guarantor will be required to pay the Guaranteed
Obligations pursuant to the terms hereof, it being the unambiguous and
unequivocal intention of such Subsidiary Guarantor that it shall be obligated
to pay the Guaranteed Obligations when due, notwithstanding any occurrence,
circumstance, event, action or omission whatsoever, whether or not
contemplated, and whether or not otherwise or particularly described herein,
except for the full and final payment and satisfaction of the Guaranteed
Obligations in cash;


 


(xii)                             the
fact that all or any of the Guaranteed Obligations cease to exist by operation
of law, including by way of a discharge, limitation or tolling thereof under
applicable bankruptcy laws;


 


(xiii)                          any
other circumstance (including any statute of limitations) that might in any
manner or to any extent otherwise constitute a defense available to, vary the
risk of, or operate as a discharge of, any Obligor or any Person as a matter of
law or equity;


 


(xiv)                         any
merger or consolidation of any Obligor or any Subsidiary Guarantor into or with
any other Person or any sale, lease or transfer of any of the assets of any
Obligor to any other Person;


 


(xv)                            any
change in the ownership of any shares of capital stock of any Obligor, or any
change in the relationship between any Obligor and such Subsidiary Guarantor or
any termination of any such relationship;


 


(xvi)                         any
default, failure or delay, willful or otherwise, in the performance by any
Obligor, any Subsidiary Guarantor or any other Person of any obligations of any
kind or character whatsoever under the Note Purchase Agreement or any other
agreement;


 


(xvii)                      any
merger or consolidation of any Obligor or any Subsidiary Guarantor or any other
Person into or with any other Person or any sale, lease, transfer or other
disposition of any of the assets of any Obligor, any Subsidiary Guarantor or
any other Person to any other Person, or any change in the ownership of any
shares or partnership interests of any Obligor, any Subsidiary Guarantor or any
other Person;


 


(xviii)                   in
respect of any Obligor, any Subsidiary Guarantor or any other Person, any
change of circumstances, whether or not foreseen or foreseeable, whether or not
imputable to any Obligor, any Subsidiary Guarantor or any other Person, or
other impossibility of performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not declared), civil
commotion, acts of God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any Federal or state
regulatory body or agency, change of law or any other causes affecting
performance, or any other force majeure,
whether or not beyond the


 


8





















 


control of any Obligor, any Subsidiary Guarantor or
any other Person and whether or not of the kind hereinbefore specified; or


 


(xix)                           any
other occurrence, circumstance, or event whatsoever, whether similar or
dissimilar to the foregoing, whether foreseen or unforeseen, and any other
circumstance which might otherwise constitute a legal or equitable defense or
discharge of the liabilities of a guarantor or surety or which might otherwise
limit recourse against such Subsidiary Guarantor;


 


provided that
the specific enumeration of the above-mentioned acts, failures or omissions
shall not be deemed to exclude any other acts, failures or omissions, though
not specifically mentioned above, it being the purpose and intent of this
Guaranty and the parties hereto that the obligations of each Subsidiary
Guarantor shall be absolute and unconditional and shall not be discharged,
impaired or varied except by the payment and performance of all obligations of
the Obligors under the Note Purchase Agreement and the Notes in accordance with
their respective terms as each may be amended or modified from time to
time.  Without limiting the foregoing, it
is understood that repeated and successive demands may be made and recoveries
may be had hereunder as and when, from time to time, any Obligor or any
Subsidiary Guarantor shall default under or in respect of the terms of the Note
Purchase Agreement and that notwithstanding recovery hereunder for or in
respect of any given default or defaults by any Obligor or any Subsidiary
Guarantor under the Note Purchase Agreement, this Guaranty shall remain in full
force and effect and shall apply to each and every subsequent default.  All waivers herein contained shall be without
prejudice to the Holders at their respective options to proceed against any Obligor,
any Subsidiary Guarantor or other Person, whether by separate action or by
joinder.


 


(d)                                 Each
Subsidiary Guarantor hereby consents and agrees that any Holder or Holders from
time to time, with or without any further notice to or assent from any other
Subsidiary Guarantor may, without in any manner affecting the liability of any
Subsidiary Guarantor under this Guaranty, and upon such terms and conditions as
any such Holder or Holders may deem advisable:


 


(i)                                     extend
in whole or in part (by renewal or otherwise), modify, change, compromise,
release or extend the duration of the time for the performance or payment of
any debt, liability or obligation of any Obligor or any Subsidiary Guarantor or
of any other Person secondarily or otherwise liable for any debt, liability or
obligations of any Obligor on the Note Purchase Agreement or the Notes, or
waive any Default or Event of Default with respect thereto, or waive, modify,
amend or change any provision of any other agreement or waive this Guaranty; or


 


(ii)                                  sell,
release, surrender, modify, impair, exchange or substitute any and all
property, of any nature and from whomsoever received, held by, or for the
benefit of, any such Holder as direct or indirect security for the payment or
performance of any debt, liability or obligation of any Obligor, any Subsidiary
Guarantor or of any other Person secondarily or otherwise liable for any debt,
liability or obligation of any Obligor on the Note Purchase Agreement or the
Notes; or


 


9





















 


(iii)                               settle,
adjust or compromise any claim of any Obligor or any Subsidiary Guarantor
against any other Person secondarily or otherwise liable for any debt,
liability or obligation of any Obligor on the Note Purchase Agreement or the
Notes; or


 


(iv)                              purchase
Additional Notes form time to time from the Obligors pursuant to the terms and
provisions of the Note Purchase Agreement.


 


Each Subsidiary Guarantor
hereby ratifies and confirms any such extension, renewal, change, sale,
release, waiver, surrender, exchange, modification, amendment, impairment,
substitution, settlement, adjustment, compromise or purchase Additional Notes
and that the same shall be binding upon it, and hereby waives, to the fullest
extent permitted by law, any and all defenses, counterclaims or offsets which
it might or could have by reason thereof, it being understood that such
Subsidiary Guarantor shall at all times be bound by this Guaranty and remain
liable hereunder.


 


(e)                                  All
rights of any Holder may be transferred or assigned at any time in accordance
with the Note Purchase Agreement and shall be considered to be transferred or
assigned at any time or from time to time upon the transfer of such Note in
accordance with the Note Purchase Agreement without the consent of or notice to
the Subsidiary Guarantors under this Guaranty.


 


(f)                                    No
Holder shall be under any obligation: 
(i) to marshal any assets in favor of the Subsidiary Guarantors or
in payment of any or all of the liabilities of any Obligor or any Subsidiary
Guarantor under or in respect of the Notes or the obligations of any Obligor
and the Subsidiary Guarantors under the Note Purchase Agreement or (ii) to
pursue any other remedy that the Subsidiary Guarantors may or may not be able
to pursue themselves and that may lighten the Subsidiary Guarantors’ burden,
any right to which each Subsidiary Guarantor hereby expressly waives.


 


Section 4.                                                 Full Recourse
Obligations; Pari Passu Ranking.


 


Subject to the Maximum Guaranteed Amount specified
above, the obligations of each Subsidiary Guarantor set forth herein constitute
the full recourse obligations of such Subsidiary Guarantor enforceable against
it to the full extent of all its assets and properties.


 


The respective obligations under this Guaranty of the
Subsidiary Guarantors are and at all times shall remain direct and unsecured
obligations of the Subsidiary Guarantors ranking pari passu
as against the assets of the Subsidiary Guarantors without any preference among
themselves and pari passu with all other present
and future unsecured Debt (actual or contingent) of the Subsidiary Guarantors
which is not expressed to be subordinate or junior in rank to any other
unsecured Debt of the Subsidiary Guarantors.


 


Section 5.                                                 Waiver.


 


Each Subsidiary Guarantor unconditionally waives, to
the extent permitted by applicable law:


 


10





















 


(a)                                  notice
of any of the matters referred to in Section 3;


 


(b)                                 notice
to such Subsidiary Guarantor of the incurrence of any of the Guaranteed
Obligations, notice to such Subsidiary Guarantor of any breach or default by
any Obligor or such Subsidiary Guarantor with respect to any of the Guaranteed
Obligations or any other notice that may be required, by statute, rule of law
or otherwise, to preserve any rights of any Holder against such Subsidiary
Guarantor;


 


(c)                                  presentment
to any Obligor or such Subsidiary Guarantor or of payment from any Obligor or
such Subsidiary Guarantor with respect to any Note or other Guaranteed
Obligation or protest for nonpayment or dishonor;


 


(d)                                 any
right to the enforcement, assertion, exercise or exhaustion by any Holder of
any right, power, privilege or remedy conferred in any Note, the Note Purchase
Agreement or otherwise;


 


(e)                                  any
requirement of diligence on the part of any Holder;


 


(f)                                    any
requirement to mitigate the damages resulting from any default under the Notes
or the Note Purchase Agreement;


 


(g)                                 any
notice of any sale, transfer or other disposition of any right, title to or
interest in any Note or other Guaranteed Obligation by any Holder, assignee or
participant thereof, or in the Note Purchase Agreement;


 


(h)                                 any
release of any Subsidiary Guarantor from its obligations hereunder resulting
from any loss by it of its rights of subrogation hereunder; and


 


(i)                                     any
other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety or which might
otherwise limit recourse against such Subsidiary Guarantor.


 


Section 6.                                                 Waiver of
Subrogation.


 


Notwithstanding any payment or payments made by any
Subsidiary Guarantor hereunder, or any application by any Holder of any
security or of any credits or claims, no Subsidiary Guarantor will assert or
exercise any rights of any Holder or of such Subsidiary Guarantor against any
Obligor to recover the amount of any payment made by such Subsidiary Guarantor
to any Holder hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Subsidiary Guarantor shall not have any right of recourse to or any claim
against assets or property of any Obligor, in each case unless and until the
Guaranteed Obligations have been paid in full. 
Until such time (but not thereafter), each Subsidiary Guarantor hereby
expressly waives any right to exercise any claim, right or remedy which such
Subsidiary Guarantor may now have or hereafter acquire against any Obligor or
any other Subsidiary Guarantor that arises under the Notes, the Note Purchase
Agreement or from the


 


11





















 


performance by any Subsidiary Guarantor of the
guaranty hereunder including any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification or participation in
any claim, right or remedy of any Holder against any Obligor or any Subsidiary
Guarantor, or any security that any Holder now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise. 
If any amount shall be paid to a Subsidiary Guarantor by any Obligor or
another Subsidiary Guarantor after payment in full of the Guaranteed Obligations,
and all or any portion of the Guaranteed Obligations shall thereafter be
reinstated in whole or in part and any Holder is required to repay any sums
received by any of them in payment of the Guaranteed Obligations, this Guaranty
shall be automatically reinstated and such amount shall be held in trust for
the benefit of the Holders and shall forthwith be paid to the Holders to be
credited and applied to the Guaranteed Obligations, whether matured or
unmatured.  The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of the Obligors by virtue of any payment, court order or any
Federal or state law.


 


Section 7.                                                 Subordination.


 


If any Subsidiary Guarantor is or becomes the holder
of any indebtedness payable by any Obligor or another Subsidiary Guarantor,
each Subsidiary Guarantor hereby subordinates all indebtedness owing to it from
any Obligor or such other Subsidiary Guarantor to all indebtedness of the
Obligors to the Holders, and agrees that, during the continuance of any Event of
Default, it shall not accept any payment on the same until payment in full of
the Guaranteed Obligations and shall in no circumstance whatsoever attempt to
set-off or reduce any obligations hereunder because of such indebtedness.  If any amount shall nevertheless be paid in
violation of the foregoing to a Subsidiary Guarantor by any Obligor or another
Subsidiary Guarantor prior to payment in full of the Guaranteed Obligations,
such amount shall be held in trust for the benefit of the Holders and shall forthwith
be paid to the Holders to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured.


 


Section 8.                                                 Effect of
Bankruptcy Proceedings, Etc.


 


(a)                                  If
after receipt of any payment of, or proceeds of any security applied (or
intended to be applied) to the payment of all or any part of, the Guaranteed
Obligations, any Holder is for any reason compelled to surrender or voluntarily
surrenders (under circumstances in which it believes it could reasonably be
expected to be so compelled if it did not voluntarily surrender), such payment
or proceeds to any Person (i) because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or
(ii) for any other similar reason, including, without limitation,
(x) any judgment, decree or order of any court or administrative body
having jurisdiction over any Holder or any of their respective properties or
(y) any settlement or compromise of any such claim effected by any Holder
with any such claimant (including any Obligor), then the Guaranteed Obligations
or part thereof intended to be satisfied shall be reinstated and continue, and
this Guaranty shall continue in full force as if such payment or proceeds had
not been received, notwithstanding any revocation thereof or the cancellation
of any Note or any other instrument evidencing any


 


12





















 


Guaranteed Obligations or otherwise, and the Subsidiary Guarantors,
jointly and severally, shall be liable to pay the Holders, and hereby do
indemnify the Holders and hold them harmless for, the amount of such payment or
proceeds so surrendered and all expenses (including reasonable attorneys’ fees,
court costs and expenses attributable thereto) incurred by any Holder in
defense of any claim made against any of them that any payment or proceeds
received by any Holder in respect of all or part of the Guaranteed Obligations
must be surrendered.  The provisions of
this paragraph shall survive the termination of this Guaranty, and any
satisfaction and discharge of any Obligor by virtue of any payment, court order
or any Federal or state law.


 


(b)                                 If
an event permitting the acceleration of the maturity of any of the Guaranteed
Obligations shall at any time have occurred and be continuing, and such
acceleration shall at such time be prevented by reason of the pendency against
any Obligor or any other Person of any case or proceeding contemplated by
Section 8(a) hereof, then, for the purpose of defining the obligation of
any Subsidiary Guarantor under this Guaranty, the maturity of the principal
amount of the Guaranteed Obligations shall be deemed to have been accelerated
with the same effect as if an acceleration had occurred in accordance with the
terms of such Guaranteed Obligations, and such Subsidiary Guarantor shall
forthwith pay such principal amount, all accrued and unpaid interest thereon,
and all other Guaranteed Obligations, due or that would have become due but for
such case or proceeding, without further notice or demand.


 


Section 9.                                                 Term of
Guaranty.


 


This Guaranty and all guarantees, covenants and
agreements of each Subsidiary Guarantor contained herein shall continue in full
force and effect and shall not be discharged until such time as all of the
principal of and interest on the Notes, the other Guaranteed Obligations and
other independent payment obligations of such Subsidiary Guarantor under this
Guaranty shall be paid in cash and performed in full, and all of the agreements
of each of the other Subsidiary Guarantors hereunder shall be duly paid in cash
and performed in full.


 


Section 10.                                           Contribution.


 


In order to provide for just and equitable
contribution among the Subsidiary Guarantors, each Subsidiary Guarantor agrees
that, to the extent any Subsidiary Guarantor makes any payment hereunder on any
date which, when added to all preceding payments made by such Subsidiary Guarantor
hereunder, would result in the aggregate payments by such Subsidiary Guarantor
hereunder exceeding its Percentage (as defined below) of all payments then or
theretofore made by all Subsidiary Guarantors hereunder, such Subsidiary
Guarantor shall have a right of contribution against each other Subsidiary
Guarantor whose aggregate payments then or theretofore made hereunder are less
than its Percentage of all payments by all Subsidiary Guarantors then or
theretofore made hereunder, in an amount such that, after giving effect to any
such contribution rights, each Subsidiary Guarantor will have paid only its
Percentage of all payments by all Subsidiary Guarantors then or theretofore
made hereunder.  A Subsidiary Guarantor’s
“Percentage” on any date shall mean the percentage obtained by dividing
(a) the Adjusted Net Assets of such Subsidiary Guarantor on such date by
(b) the sum of the Adjusted Net Assets of all Subsidiary Guarantors on
such date.  “Adjusted
Net Assets” means, for each


 


13





















 


Subsidiary Guarantor on any date, the lesser of
(i) the amount by which the fair value of the property of such Subsidiary
Guarantor exceeds the total amount of liabilities, including contingent
liabilities, but excluding liabilities under this Guaranty, of such Subsidiary
Guarantor on such date and (ii) the amount by which the present fair
salable value of the assets of such Subsidiary Guarantor on such date exceeds
the amount that will be required to pay the probable liability of such
Subsidiary Guarantor on its debts, excluding debt in respect of this Guaranty,
as they become absolute and matured.


 


Section 11.                                           Limitation of
Liability.


 


Each Subsidiary Guarantor hereby confirms that it is
the intention of such Subsidiary Guarantor that the guarantee by such
Subsidiary Guarantor pursuant to this Guaranty not constitute a fraudulent
transfer or conveyance for purposes of Title 11 of the United States Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar applicable Federal or state law (all such statutes and laws are
collectively referred to as “Fraudulent Conveyance
Laws”).  To effectuate the
foregoing intention, each Subsidiary Guarantor hereby irrevocably agrees that
the obligations of such Subsidiary Guarantor under this Guaranty shall be
limited to the amount as will, after giving effect to all rights to receive any
collections from or payments by or on behalf of any other Subsidiary Guarantor
in respect of the obligations of such other Subsidiary Guarantor pursuant to
Section 10 hereof, result in the obligations of such Subsidiary Guarantor
under this Guaranty not constituting such a fraudulent transfer or
conveyance.  In the event that the liability
of any Subsidiary Guarantor hereunder is limited pursuant to this
Section 11 to an amount that is less than the total amount of the
Guaranteed Obligations, then it is understood and agreed that the portion of
the Guaranteed Obligations for which such Subsidiary Guarantor is liable hereunder
shall be the last portion of the Guaranteed Obligations to be repaid.


 


Section 12.                                           Negative
Pledge.


 


Except as permitted under Section 10.4 of the
Note Purchase Agreement, no Subsidiary Guarantor will create any Lien on its
assets to any other Person during the pendency of this Guaranty except for
Liens permitted by Section 10.4 of the Note Purchase Agreement.


 


Section 13.                                           Supplemental
Agreement.


 


Upon execution and delivery by a Subsidiary of a
Supplemental Agreement substantially in the form of Exhibit A hereto, such
Subsidiary shall become a Subsidiary Guarantor hereunder with the same force
and effect as if originally named as a Subsidiary Guarantor herein.  The execution and delivery of any such
instrument shall not require the consent of any other Subsidiary Guarantor
hereunder.  The rights and obligations of
each Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Guaranty.


 


14





















 


Section 14.                                           Definitions and
Terms Generally.


 


(a)                                  Unless
otherwise defined herein, capitalized terms defined in the Note Purchase
Agreement are used herein as defined therein. 
In addition, the following terms shall have the following meanings.


 


“Adjusted Net Assets” has the
meaning specified in Section 10 hereof.


 


“Fraudulent Conveyance Laws” has
the meaning specified in Section 11 hereof.


 


“Guaranteed Obligations” has the
meaning specified in Section 1 hereof.


 


“Guaranty” has the meaning
specified in the introduction hereto.


 


“Holders” has the meaning
specified in the introduction hereto.


 


“Material Adverse Effect” means a
material adverse effect (a) on the business, financial condition,
operations or Properties of a Subsidiary Guarantor taken as a whole or
(b) on its ability to perform its obligations hereunder.


 


“Maximum Guaranteed Amount” shall
mean, for each Subsidiary Guarantor, the maximum amount which any Subsidiary
Guarantor could pay under this Guaranty without having such payment set aside
as a fraudulent transfer or conveyance or similar action under Fraudulent
Conveyance Law.


 


“Note Purchase Agreement” has the
meanings specified in the Recitals hereto.


 


“Notes” has the meanings
specified in the Recitals hereto.


 


“Percentage” has the meaning
specified in Section 10 hereof.


 


“Required Holders” is has the
meaning specified in the Note Purchase Agreement.


 


“Subsidiary Guarantor” has the
meaning specified in the introduction hereto.


 


(b)                                 Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  All
references herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Guaranty unless the context shall otherwise require.


 


Section 15.                                           Notices.


 


All notices under the terms and provisions hereof
shall be in writing (with charges prepaid), and shall be delivered or sent by
hand, by telecopy, by express courier service or by registered or certified
mail, return receipt requested, postage prepaid, addressed,


 


15





















 


(a)                                  if
to any Holder, at the address set forth in the Note Purchase Agreement, or at
such other address as any such Holder shall from time to time designate to the
Obligors,


 


(b)                                 if
to a Subsidiary Guarantor, at the address of such Subsidiary Guarantor set
forth on the signature pages hereto or at such other address as such Subsidiary
Guarantor shall from time to time designate in writing to each Holder.


 


A
notice or communication shall be deemed to have been duly given and effective:


 


(a)                                  when
delivered (whether or not accepted), if personally delivered;


 


(b)                                 five
business days after being deposited in the mail, postage prepaid, if delivered
by first-class mail (whether or not accepted);


 


(c)                                  when
sent, if sent via facsimile;


 


(d)                                 when
delivered if sent by registered or certified mail (whether or not accepted);
and


 


(e)                                  on
the next Business Day if timely delivered by an overnight air courier, with
charges prepaid (whether or not accepted).


 


Section
16.                                           Amendments,
Etc.


 


No amendment, alteration, modification or waiver of
any term or provision of this Guaranty, nor consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and consented to by the Required Holders provided, however, that
any amendment, alteration, modification or waiver of the terms and conditions
contained in Section 1 hereof shall require consent from all Holders, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.


 


Section 17.                                           Consent to Jurisdiction;
Service of Process..


 


(a)                                  Each
Subsidiary Guarantor irrevocably submits to the nonexclusive in personam jurisdiction of any New York State or federal
court sitting in New York City, over any suit, action or proceeding arising out
of or relating to this Guaranty or the Notes. 
To the fullest extent it may effectively do so under applicable law,
each Subsidiary Guarantor irrevocably waives and agrees not to assert, by way
of motion, as a defense or otherwise, any claim that it is not subject to the in personam jurisdiction of any such court, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.


 


16





















 


(b)                                 Each
Subsidiary Guarantor agrees, to the fullest extent it may effectively do so
under applicable law, that a final judgment in any suit, action or proceeding
of the nature referred to in paragraph (a) of this Section 17 brought in
any such court shall be conclusive and binding upon such party, subject to
rights of appeal and may be enforced in the courts of the United States of America
or the State of New York (or any other courts to the jurisdiction of which such
party is or may be subject) by a suit upon such judgment.


 


(c)                                  Each
Subsidiary Guarantor consents to process being served in any suit, action or
proceeding of the nature referred to in paragraph (a) of this Section 17
by mailing a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the address of each Subsidiary Guarantor specified
in Section 15 or at such other address of which you shall then have been
notified pursuant to said Section or to any agent for service of process
appointed pursuant to the provisions of Section 27.  Each Subsidiary Guarantor agrees that such
service upon receipt (i) shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding and (ii) shall, to
the full extent permitted by law, be taken and held to be valid personal
service upon and personal delivery to such party.  Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service.


 


(d)                                 Nothing
in this Section 17 shall affect the right of any holder of Notes to serve
process in any manner permitted by law, or limit any right that the holders of
any of the Notes may have to bring proceedings against any Subsidiary Guarantor
in the courts of any appropriate jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction.


 


Section 18.                                           Waiver of Jury
Trial.


 


Each Subsidiary Guarantor and by
its acceptance hereof each holder, to the fullest extent permitted by
applicable law, irrevocably and unconditionally waives the right to trial by
jury in any legal or equitable action, suit or proceeding arising out of or
relating to this Guaranty or the Note Purchase Agreement or any transaction
contemplated hereby or thereby or the subject matter of any of the foregoing.


 


Section 19.                                           Survival.


 


All warranties, representations and covenants made by
each Subsidiary Guarantor herein or in any written certificate or other
instrument required to be delivered by it or on its behalf hereunder or under
the Note Purchase Agreement shall be considered to have been relied upon by the
Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any Holder or on such Holder’s
behalf.  All statements in any such
certificate or other instrument shall constitute warranties and representations
by such Subsidiary Guarantor hereunder.


 


17





















 


Section 20.                                           Severability.


 


Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.  To the extent
permitted by applicable law, each Subsidiary Guarantor hereby waives any
provision of law that renders any provisions hereof prohibited or unenforceable
in any respect.


 


Section 21.                                           Successors and
Assigns.


 


The terms of this Guaranty shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall inure to the
benefit of the Holders and their respective successors and assigns.


 


Section 22.                                           Table of
Contents; Headings.


 


The section and paragraph headings in this Guaranty
and the table of contents are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof, and all
references herein to numbered sections, unless otherwise indicated, are to
sections in this Guaranty.


 


Section 23.                                           Counterparts.


 


This Guaranty may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.


 


Section 24.                                           Governing Law.


 


This Guaranty shall in all respects be governed by,
and construed and interpreted in accordance with, the laws of the State of New
York, without regard to the conflicts of laws principles of such state.


 


Section 25.                                           Covenant
Compliance.


 


Each Subsidiary Guarantor agrees to comply with each
of the covenants contained herein and in the Note Purchase Agreement that
imposes or purports to impose, by reference to such Subsidiary Guarantor,
express or otherwise, through agreements with the Obligors, restrictions or
obligations on such Subsidiary Guarantor.


 


18





















 


In Witness Whereof, each
party hereto has caused this Subsidiary Guaranty Agreement to be duly executed
as of the date first above written.


 


	
   

  	
  Family Dollar Services, Inc.,
  a North

  Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ R.
  James Kelly

  	
   

  
	
   

  	
   

  	
  Name:  R.
  James Kelly

  
	
   

  	
   

  	
  Title:  Vice
  Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Family Dollar Operations, Inc.,
  a North

  Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ R.
  James Kelly

  	
   

  
	
   

  	
   

  	
  Name:  R.
  James Kelly

  
	
   

  	
   

  	
  Title:  Vice
  Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Family Dollar Trucking, Inc., a North

  Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ R.
  James Kelly

  	
   

  
	
   

  	
   

  	
  Name:  R.
  James Kelly

  
	
   

  	
   

  	
  Title:  Vice
  Chairman, Chief Financial

  Officer and Chief Administrative Officer

  
						



 


19





















 


Exhibit
A


Form
of Supplemental Agreement


 


Supplemental Agreement
dated as of                           ,
           from
                           ,
a
                 
corporation (the “New Subsidiary”), for the
benefit of the Holders (as defined in the Guaranty referred to below).  Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Subsidiary Guaranty Agreement, dated as of September 27, 2005 (the “Guaranty”), from: (i) [names of guarantors]
(        ) such other Subsidiaries (as
defined below) as shall become parties thereto in accordance therewith, for the
benefit of the Holders (as such term is defined in such Guaranty).


 


Whereas, Family Dollar
Stores, Inc., a Delaware corporation, and Family Dollar, Inc., a North Carolina
corporation (each individually an “Obligor” and,
collectively, the “Obligors”) has authorized the
issue and sale of (i) $169,000,000 5.41% Series 2005-A Senior Notes, Tranche A
due September 27, 2015 (the “Tranche A Notes”),
and (ii) $81,000,000 5.24% Series 2005-A Senior Notes, Tranche B due
September 27, 2015 (the “Tranche B Notes”
and, together with the Tranche A Notes, the “Series
2005-A Notes”), pursuant to a Note Purchase Agreement, dated as of
September 27, 2005 (as amended, modified or supplemented from time to
time, the “Note Purchase Agreement”) among the
Obligors and the purchasers named therein.


 


Whereas, the Obligors
are authorized to issue Additional Notes (as such term is defined in the Note
Purchase Agreement) of one or more separate series from time to time pursuant
to Section 2.2 of the Note Purchase Agreement.


 


Whereas, the
Additional Notes together with the Series 2005-A Notes are collectively
referred to as the “Notes”.


 


Whereas, the New
Subsidiary is a Subsidiary of the Obligors.


 


Whereas, the existing
Subsidiaries of the Obligors have entered into the Guaranty.


 


Whereas, the Note
Purchase Agreement requires that certain Subsidiaries become party to the
Guaranty (as a Subsidiary Guarantor).


 


Whereas, the New
Subsidiary acknowledges that it has derived or will derive substantial benefits
from the issuance of the Notes.


 


Whereas, the Guaranty
specifies that additional Subsidiaries may become Subsidiary Guarantors under
such Guaranty by execution and delivery of an instrument in the form of this
Agreement.  The undersigned Subsidiary is
executing this Agreement in accordance with the requirements of the Note
Purchase Agreement in order to become a Subsidiary Guarantor under the Guaranty
as consideration for the Notes previously purchased.


 


Now, Therefore, the
New Subsidiary Guarantor agrees as follows:


 





















 


Section 1.                                          Guaranty.  In accordance with Section 13 of the
Guaranty, the New Subsidiary by its signature hereto shall become a Subsidiary
Guarantor under such Guaranty with the same force and effect as if originally
named therein as a Subsidiary Guarantor and the New Subsidiary hereby
(a) agrees to all the terms and provisions of such Guaranty applicable to
it as a Subsidiary Guarantor thereunder, (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor under
Section 2 of the Subsidiary Guaranty are true and correct on and as of the
date hereof, (c) acknowledges receipt of a copy of and agrees to be obligated
and bound by the terms of such Guaranty, and (d) agrees that each reference to
a “Subsidiary Guarantor” in such Guaranty
shall be deemed to include the New Subsidiary.


 


Section 2.                                          Enforceability.  The New Subsidiary hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered
by the New Subsidiary and constitutes a legal, valid and binding obligation of
the New Subsidiary enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the applicability of
creditors’ rights generally and by equitable principles of general
applicability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).


 


Section 3.                                          Effect
on Guaranty.  Except as expressly
supplemented hereby, the Guaranty shall continue in full force and effect.


 


Section 4.                                          Governing Law.  This
Agreement shall in all respects be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, without regard to the
conflicts of laws principles of such state.


 


Section 5.                                          Savings
Clause.  To the fullest extent
permitted under applicable law, in the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect with respect to the New Subsidiary, no party hereto shall be
required to comply with such provision for so long as such provision is held to
be invalid, illegal or unenforceable, and the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired.  The parties
shall endeavor in good-faith negotiations to replace any invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.


 


Section 6.                                          Notices.  All communications to the New Subsidiary
shall be given to it at the address or telecopy number set forth under its
signature hereto.


 


2





















 


In Witness Whereof, the New Subsidiary has duly executed
this Agreement as of the day and year first above written.


 


 


	
   

  	
  [NEW
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopy:

  



 


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