Document:

Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (this “Agreement”), dated as of
      , 2008, is made by and between Family
Dollar Stores, Inc., a Delaware corporation (the “Company”) and
              
(the “Indemnitee”).

 

WHEREAS, the Indemnitee is a member of the Company’s Board of Directors
and, as a member of the Board, performs a valuable service for the Company;

 

WHEREAS, it is important that the Company retain and attract qualified
and capable individuals to serve on the Company’s Board of Directors;

 

WHEREAS, the Company and the Indemnitee understand the risks of
litigation and other legal proceedings currently facing directors of public
corporations and the related exposure of directors to liability for the
expenses associated with such litigation and other legal proceedings;

 

WHEREAS, The Company’s Bylaws require the Company to indemnify its
directors to the fullest extent permitted by applicable law as it presently
exists or may be amended, with the limited exceptions provided therein;

 

WHEREAS, The Bylaws contemplate that agreements may be entered into
between the Company and its directors with respect to indemnification;

 

WHEREAS, Section 145 of the Delaware General Corporation Law (“DGCL”)
under which the Company is organized, empowers the Company to indemnify its
directors by agreement and to indemnify persons who serve, at the request of
the Company, as the directors or agents of other corporations or enterprises,
and expressly provides that the indemnification provided by Section 145 is
not exclusive;

 

WHEREAS, Section 102(b)(7) of the DGCL allows a Company to
include in its certificate of incorporation a provision limiting or eliminating
the personal liability of a director  and
the Company has so provided in its Certificate of Incorporation that each
director shall be exculpated from such liability to the maximum extent
permitted by law;

 

WHEREAS, The parties have determined that contractual indemnification
as set forth herein is reasonable and prudent and that such indemnification
promotes stability on the Board, and therefore promotes the best interests of
the Company and its stockholders;

 

WHEREAS, The Company desires that the Indemnitee serve or continue to
serve as a director of the Company free from undue concern for damages and
expenses arising out of or related to such services to the Company; and

 

WHEREAS, the Indemnitee is willing to serve, continue to serve or to
provide additional service for or on behalf of the Company on the condition
that he or she is furnished the indemnity and right to advancement of expenses
provided for herein.

 

 

NOW, THEREFORE, in consideration of the above premises and of director’s
continued service as a member of the Board, the parties hereto agree as
follows:

 

1.                                       INDEMNIFICATION.

 

(a)                      Subject
to the limitations set forth in this Agreement, the Company shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, the Indemnitee if the Indemnitee
was or is made or is threatened to be made a party to or is otherwise involved
in any pending, threatened or completed action, suit, arbitration, alternative
dispute resolution proceeding, investigation, administrative hearing, or other
proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”)
by reason of the fact that the Indemnitee is or was a director of the Company
or is or was serving at the request of the Company as a director of another
company or of a partnership, joint venture, trust, nonprofit entity, or other
enterprise, including service with respect to employee benefit plans, against
all liability and loss suffered and expenses (including attorneys’ fees)
reasonably incurred by such person.

 

(b)                     The
indemnification provided by this Section 1 shall include all expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee or on the Indemnitee’s
behalf in connection with any Proceeding and any appeal therefrom, provided
however, that the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(c)                      The
termination of any Proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create
a presumption that the Indemnitee did not act in good faith and in a manner
which the Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the Indemnitee’s conduct was
unlawful.

 

2.                                       Advancement
of Expenses. Subject to the limitations set forth in this Agreement, the
Company shall pay the expenses (including reasonable attorneys' fees) incurred
by the Indemnitee in defending any Proceeding in advance of its final disposition,
provided, however, that such advancement of expenses shall be made only upon
receipt of an undertaking by the Indemnitee, substantially in the form attached
hereto as Exhibit A or in such other form as the parties may approve, to
repay all amounts advanced if it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified. 

 

3.                                       Repayment
of Expenses.  The
Indemnitee agrees to reimburse the Company for all reasonable expenses advanced
under Section 2 in the event and only to the extent it shall ultimately be
determined by a final adjudication that the Indemnitee is not entitled to be
indemnified by the Company for such expenses.

 

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4.                                       Claims
for Indemnification or Advancement;  Determination of Eligibility.

 

(a) Any claim by the Indemnitee for indemnification or advancement
of expenses under this Agreement shall be made in a writing delivered to the
Company, setting forth in reasonable detail the basis for such indemnification
or advancement and the amount requested, and accompanied by appropriate
documentation to support the amount so requested (or, in the case of
advancement of expenses to be incurred, the basis on which such amount is to be
determined).  A claim for advancement may
include future expenses reasonably expected to be incurred, provided they are
generally described in the claim, and provided that the Company shall not be
required to advance particular expenses covered by the claim until it has
received appropriate substantiation that those expenses have been incurred and
are appropriately included within the advances approved by the Company pursuant
to this Section 4.

 

(b) Promptly upon its receipt of a written claim for
advancement of expenses to which the Indemnitee is entitled hereunder, and
within sixty days after its receipt of a written claim for indemnity to which
the Indemnitee is entitled hereunder, the Company shall pay such advancement
(and any future related submissions for advancement of expenses as they are
incurred) or such claim for indemnity in full to or as directed by the
Indemnitee.  If and to the extent it is
required by law that the Company make any particular determination as to the
Indemnitee’s eligibility to receive such advancements or indemnity, or whether
the Indemnitee has met the standards set forth in Section 1(b) hereof,
the Company shall make such determination as promptly as practicable in good
faith and in accordance with such requirements of law, and in any event within
sixty days after its receipt of the claim from the Indemnitee.  In the event that the Company fails to make
such determination as to the Indemnitee’s eligibility, or makes a determination
that the Indemnitee is ineligible for indemnification or advancement of
expenses hereunder, within such sixty day period, then the Indemnitee may seek
such determination from a court of competent jurisdiction.  In any such proceeding, the Company shall
have the burden of proving that the Indemnitee was not entitled to the
requested indemnification or advancement of expenses, and any prior
determination by the Company to the contrary shall be to no effect and shall
not be given any weight by the court, it being the intention of the parties
that any determination by the court as to the Indemnitee’s eligibility for and
entitlement to indemnification or advancement of expenses hereunder shall be
made de novo based upon the terms of this Agreement and the evidence presented
to such court.

 

5.                                       Further
Limitations on Indemnification.  In
addition to the limitations on Indemnification set forth in Section 1(b) above,
the Company shall not be obligated pursuant to this Agreement:

 

                                                                                                (a) Claims
Initiated by Indemnitee. To indemnify or advance expenses to the Indemnitee
with respect to a Proceeding initiated by the Indemnitee, except (i) for
Proceedings authorized or consented to by the Board of Directors of the
Company; or (ii) in the event a claim for indemnification or payment of expenses (including attorneys’
fees) made under this Agreement is not paid in full within sixty days after a
written claim therefor has been received by the Company, the Indemnitee may
file suit to recover the 

 

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unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of  prosecuting such claim, including
attorneys’ fees.  In any such action the
Company shall have the burden of proving that the Indemnitee was not entitled
to the requested indemnification or payment of expenses under applicable law or
this Agreement.

 

(b) Action for Indemnification. To indemnify the Indemnitee
for any expenses incurred by the Indemnitee with respect to any Proceeding
instituted by the Indemnitee to enforce or interpret this Agreement, unless the
Indemnitee is successful in establishing the Indemnitee’s right to
indemnification in such Proceeding, in whole or in part; provided, however,
that nothing in this Section 5(b) is intended to limit the Company’s
obligation with respect to the advancement of expenses to the Indemnitee in
connection with any Proceeding instituted by the Indemnitee to enforce or
interpret this Agreement, as provided in Section 4 hereof.

 

(c) Certain Plans and Agreements.  To indemnify the Indemnitee in connection
with proceedings or claims involving the enforcement of the provisions of any
employment, severance or compensation plan or agreement that the Indemnitee may
be a party to, or beneficiary of, with the Company or any of the Company’s
subsidiaries.

 

6.                                       Non-Exclusivity
of Rights.  The right conferred on
the Indemnitee by this Agreement shall not be exclusive of any other rights
which the Indemnitee may have or hereafter acquire under any statute, provision
of the Company’s Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, or under any insurance
maintained by the Company; but such rights in the aggregate shall not entitle
the Indemnitee to duplicative multiple recoveries.  The Indemnitee’s rights hereunder shall
continue after Indemnitee has ceased acting as a director of the Company and
shall inure to the benefit of the heirs, executors and administrators of the
Indemnitee.

 

7.                                       Savings
Clause.

 

(a)          If
any provision or provisions of this Agreement shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify the Indemnitee as to costs, charges and expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of the
Company, to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated and to the full extent permitted
by applicable law.

 

(b)  No amendment or alteration of the Company’s Certificate of
Incorporation or Bylaws or any other agreement shall adversely affect the
rights provided to the Indemnitee under this Agreement.

 

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8.                                       Modification
and Waiver.  No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. 
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

 

9.                                       Successor
and Assigns.  All of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and their respective
successors, assigns, heirs, executors, administrators and legal
representatives. The Company shall require and cause any direct or indirect
successor (whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by written
agreement in form and substance reasonably satisfactory to the Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place.

 

10.                                 Governing
Law.  This Agreement shall be
governed exclusively by and construed according to the laws of the State of
Delaware, as applied to contracts between Delaware residents entered into and
to be performed entirely within Delaware. 
If a court of competent jurisdiction shall make a final determination
that the provisions of the law of any state other than Delaware govern indemnification
by the Company of its directors or former directors, then the indemnification
provided under this Agreement shall in all instances be enforceable to the
fullest extent permitted under such law, notwithstanding any provision of this
Agreement to the contrary.

 

11.                                 Agreement
Construction.   This Agreement has
been negotiated at arms length and constitutes a fair and reasonable agreement
amongst the parties.  No party shall be
deemed to be the drafter of this Agreement or of any particular provision or
provisions, and no part of the Agreement shall be construed against any party
on the basis of that party’s identity as the drafter of this Agreement.

 

12.                                 Headings.
The section and subsection headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
to be effective as of the date first above written.

 

 

FAMILY DOLLAR STORES, INC.

 

	
  By

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

 

INDEMNITEE:

 

	
  By

  	
   

  	
   

  
	
  Name:

  

 

6

 

Exhibit A

 

FORM OF AFFIRMATION AND UNDERTAKING
AGREEMENT IN 

CONNECTION WITH ADVANCEMENT OF EXPENSES

 

The Undersigned has requested that the Company pay for or reimburse the
attorney’s fees, disbursements, and other costs and expenses actually and
reasonably incurred by the Undersigned in connection with the defense of [name
of Proceeding] (the “Proceeding”) and matters that may arise in connection
therewith.

 

1.                                       The
Undersigned hereby affirms [his or her] good faith belief that, with respect to
the Proceeding and all matters giving rise to the Proceeding or in connection
therewith during [his or her] service as a director of the Company, [he or
she]:  (i) acted in good faith; (ii) has
acted in a manner [he or she] reasonably believed to be in, or not opposed to,
the best interests of the Company; and (iii) with respect to any criminal
action or proceeding, had no reasonable cause to believe that [his or her]  conduct was unlawful.

 

2.                                       The
Undersigned hereby agrees to repay to the Company any funds (i) advanced
to the Undersigned in connection with the Proceeding and matters that may arise
in connection therewith or (ii) paid on behalf of the Undersigned in
advance of the final disposition of the Proceeding and matters that may arise
in connection therewith in the event that it is ultimately determined by a
final non-appealable judgment by a court of competent jurisdiction that the
Undersigned is not entitled to indemnification of expenses in connection with
the defense of the Proceeding.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Director or Former Director

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  Typed or Printed Name

  
				

 

7Exhibit 10.2

 

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

Policy Regarding Tax Adjustments for Certain
Severance Benefits

 

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

 

2.             Adjustments to
Payments.  Notwithstanding anything
in an Agreement or the Plan to the contrary, in the event it shall be
determined that any payment or distribution of any type to an Employee,
pursuant to the Employee’s Agreement or the Plan, including accelerated
vesting, to or for the benefit of the Employee, by the Company or any Person
(as the term “person” is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended) who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company’s assets (within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder)
or any Affiliate of such Person, whether paid or payable or distributed or
distributable pursuant to the terms of the Employee’s Agreement, the Plan, or
otherwise (the “Payments”), is or will be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are collectively
referred to as the “Excise Tax”), the Payments shall be reduced (but not below
zero) if and to the extent that such reduction would result in the Employee
retaining a larger amount, on an after-tax basis (taking into account federal,
state and local income taxes and the imposition of the Excise Tax), than if the
Employee received all of the Payments. 
The Company shall reduce or eliminate the Payments, by first reducing or
eliminating the portion of the Payments which are not payable in cash and then
by reducing or eliminating cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the determination.  All
determinations concerning the application of this Policy shall be made by a
nationally recognized firm of independent accountants or any nationally
recognized financial planning and benefits consulting company, selected by the
Company and reasonably satisfactory to the Employee, whose determination shall
be conclusive and binding on all parties. The fees and expenses of such
accountants shall be borne by the Company. 
The Company shall hold in confidence and not disclose, without the
Employee’s prior written consent, any information with regard to the Employee’s
tax position which the Company obtains pursuant to this Policy.

 

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

 

 

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

 

 

	
   

  	
  Family Dollar Stores, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

2

 

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

Policy Regarding Tax Adjustments for Certain
Severance Benefits

 

Employee Consent

 

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

 

 

	
   

  	
  Employee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Date:

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