Document:

Unassociated Document

DIGITAL CINEMA DESTINATIONS CORP.

 

2012 STOCK OPTION AND INCENTIVE PLAN

 

1. Purpose and Eligibility

 

 The purpose of this 2012 Stock Option and Incentive Plan (the “Plan”) of Digital Cinema Destinations Corp., a Delaware corporation (the “Company”) , is to provide stock options, restricted stock grants, restricted stock units and stock awards,  in the Company (each, an “Award”) to employees, officers, directors, consultants, advisors and other persons performing services to the Company and its Subsidiaries (as defined below), all of whom are eligible to receive Awards under the Plan. Any person to whom an Award has been granted under the Plan is called a “Participant”. Additional definitions are contained in Section 9.

 

2. Administration

 

a. Administration with Respect to Directors and Officers. With respect to grants of Awards to directors or Employees who are also Officers or directors of the Company, the Plan shall be administered by (A) the board of directors of the Company (the “Board”) or (B) a committee designated by the Board, which committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b- 3 under the Exchange Act.  Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the Board.

 

b. Administration With Respect to Consultants and Other Employees.  With respect to grants of Awards to Employees or consultants who are neither directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a committee designated by the Board, which committee shall be constituted in such a manner as to satisfy the Applicable Laws.  Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the Board.  The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time.  Except for the power to amend the Plan as provided in Section 9(e) and except for determinations regarding Employees who are subject to Section 16 of the Exchange Act or certain key Employees who are, or may become, as determined by the Board or such committee, subject to Section 162(m) of the Code compensation deductibility limit, and except as may otherwise be required under applicable stock exchange rules, the Board or such committee may delegate any or all of its duties, powers and authority under the Plan pursuant to such conditions or limitations as the Board or such committee may establish to any Officer or Officers of the Company

 

3. Stock Available for Awards

 

 a. Number of
Shares. Subject to adjustment under Section 3(c), the aggregate number of shares of Class A common stock of the Company (the “Common Stock”) that may be issued pursuant to the Plan is 400,000 shares of
Class A common stock, provided that no more than 100,000 shares may be issued during the 12-month period commencing on the effective date of the Plan. If any Award expires, or is terminated, surrendered or forfeited, in whole or in part, the unissued Common Stock covered by such Award shall again be available for the grant of Awards under the Plan.
If shares of Common Stock issued pursuant to the Plan are repurchased by, or are surrendered or forfeited to, the Company at no more than cost, such shares of Common Stock shall again be available for the grant of Awards
under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

  

  

  

 

 b. Participant Limit. Subject to adjustment under Section 3(c), no Participant may be granted Awards during any one fiscal year to purchase or otherwise acquire more than 100,000 shares of Common Stock.

 

 c. Adjustment to Common Stock. In the event of any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or event, (i) the number and class of securities available for Awards under the Plan and the per-Participant share limit, (ii) the number and class of securities, vesting schedule and exercise price per share subject to each outstanding Option, (iii) the repurchase price per security subject to repurchase, and (iv) the terms of each other outstanding stock-based Award shall be adjusted by the Company (or substituted Awards may be made) to the extent the Administrator shall determine, in good faith, that such an adjustment (or substitution) is appropriate. If Section 8(d)(i) applies for any event, this Section 3(c) shall not be applicable.

 

4. Stock Options

 

 a. General. Subject to the provisions of the Plan, the Administrator may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option and the Common Stock issued upon the exercise of each Option, including vesting provisions, repurchase provisions and restrictions relating to applicable federal or state securities laws, as it considers advisable.  Each Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Administrator may deem appropriate.  Options granted to employees of the Company shall expire 90 days after termination of employment with the Company for whatever reason, unless the agreement with respect to any such Option provides for a shorter period of time.  All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant.

 

 b. Incentive Stock Options. An Option that the Administrator intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall be granted only to Employees including those who are Officers of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Administrator and the Company shall have no liability if an Option or any part thereof that is intended to be an Incentive Stock Option does not qualify as such. An Option or any part thereof that does not qualify as an Incentive Stock Option is referred to herein as a “Nonstatutory Stock Option.”

 

  

  

  

 

c. Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 4(e) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

 

d. Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory Stock Option granted shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted.

 

e. Ten Percent Stockholder.  No Ten Percent Stockholder shall be eligible for the grant of an Incentive Stock Option unless the exercise price is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

 

 f. Duration of Options. Subject to the provisions of Section 4(e) regarding Ten Percent Stockholders, each Option shall be exercisable at such times and subject to such terms and conditions as the Administrator may specify in the applicable option agreement, provided that no Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

 

g. Exercise of Option. Options may be exercised only by delivery to the Company of a written notice of exercise signed by the proper person together with payment in full as specified in Section 4(i) for the number of shares for which the Option is exercised.

 

h. Limits on Incentive Stock Options.  The aggregate Fair Market Value of all shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant in any one calendar year, under this Plan or any other stock option plan maintained by the Company (or by any Subsidiary or parent of the Company), shall not exceed $100,000.

 

 i. Payment Upon Exercise. Common Stock purchased upon the exercise of an Option shall be paid for by one or any combination of the following forms of payment as determined by the Administrator:

 

	
  

	
(i)

	
by check payable to the order of the Company;

 

	
  

	
(ii)

	
except as otherwise explicitly provided in the applicable option agreement, and only if the Common Stock is then publicly traded, delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price, or delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; or

 

  

  

  

 

	 	
(iii)

	
to the extent explicitly provided in the applicable option agreement, by (a) delivery of shares of Common Stock owned by the Participant valued at Fair Market Value, (b) delivery of a promissory note of the Participant to the Company (and delivery to the Company by the Participant of a check in an amount equal to the par value of the shares purchased), or (c) payment of such other lawful consideration as the Administrator may determine.

 

5. Restricted Stock

 

 a. Grants. The Administrator may grant Awards entitling recipients to acquire shares of Common Stock, subject to (i) delivery to the Company by the Participant of cash or other lawful consideration in an amount at least equal to the par value of the shares purchased, and (ii) the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price from the Participant in the event that conditions specified by the Administrator in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Administrator for such Award (each, a “Restricted Stock Award”).

 

 b. Terms and Conditions. The Administrator shall determine the terms and conditions of any such Restricted Stock Award. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Administrator, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or, if the Participant has died, to the beneficiary designated by a Participant, in a manner determined by the Administrator, to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate.

 

6. Restricted Stock Units.

 

The Administrator may grant Awards which consist of the right to receive shares of Common Stock, cash or other Awards or a combination thereof at the end of a specified deferral period (each, a “Restricted Stock Unit” or an “RSU”).  Restricted Stock Awards shall be subject to such risk of forfeiture and other restrictions, if any, as the Administrator may impose.   The grant, issuance, retention, vesting risk of forfeiture and other restrictions and/or settlement of RSUs shall occur at such time and in such installments as determined by the Administrator or under criteria established by the Administrator. The Administrator shall have the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of RSUs subject to continued employment, passage of time and/or such performance conditions as deemed appropriate by the Administrator at the date of grant or thereafter.

 

  

  

  

 

7.  Bonus Stock and Awards in Lieu of Obligations.

 

The Administrator is authorized to grant shares of Common Stock as a bonus, in consideration for services rendered or to be rendered to the Company or a Subsidiary or affiliate of the Company, or to grant shares of Common Stock or other Awards in lieu of obligations of the Company or a Subsidiary or affiliate, to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Administrator.

 

8. General Provisions Applicable to Awards

 

a. Transferability of Awards. Except as the Administrator may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

 

b. Documentation. Each Award under the Plan shall be evidenced by a written instrument in such form as the Administrator shall determine or as executed by an Officer pursuant to authority delegated by the Administrator. Each Award may contain terms and conditions in addition to those set forth in the Plan provided that such terms and conditions do not contravene the provisions of the Plan.

 

c. Administrator Discretion. The terms of each type of Award need not be identical, and the Administrator need not treat Participants uniformly.

 

d. Acquisition of the Company

 

	
  

	
(i)

	
Acquisition Defined. An “Acquisition” shall mean: (x) the sale of the Company by merger in which the shareholders of the Company in their capacity as such no longer own a majority of the outstanding equity securities of the Company (or its successor); or (y) any sale of all or substantially all of the assets or capital stock of the Company (other than in a spin-off or similar transaction) ; or (z) any other acquisition of the business of the Company, as determined by the Administrator.

 

	
  

	
(ii)

	
Consequences of an Acquisition. Upon the consummation of an Acquisition, the Administrator or the board of directors of the surviving or acquiring entity (as used in this Section 8(d)(ii), also the “Administrator”), shall, as to outstanding Awards (on the same basis or on different bases as the Administrator shall specify), make appropriate provision for the continuation of such Awards by the Company or the assumption of such Awards by the surviving or acquiring entity and by substituting on an equitable basis for the shares then subject to such Awards either (a) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (b) shares of stock of the surviving or acquiring corporation or (c) such other securities or other consideration as the Administrator deems appropriate, the fair market value of which (as determined by the Administrator in its sole discretion) shall not materially differ from the fair market value of the shares of Common Stock subject to such Awards immediately preceding the Acquisition. In addition to or in lieu of the foregoing, with respect to outstanding Options, the Administrator may, on the same basis or on different bases as the Administrator shall specify, upon written notice to the affected optionees, provide that one or more Options then outstanding must be exercised, in whole or in part, within a specified number of days of the date of such notice, at the end of which period such Options shall terminate, or provide that one or more Options then outstanding, in whole or in part, shall be terminated in exchange for a cash payment equal to the excess of the fair market value (as determined by the Administrator in its sole discretion) for the shares of Common Stock subject to such Options over the exercise price thereof. Unless otherwise determined by the
Administrator (on the same basis or on different bases as the Administrator shall specify), any repurchase rights or other rights of the Company that relate to an Option or other Award shall continue to apply to consideration, including cash, that has been substituted, assumed or amended for an Option or other Award pursuant to this paragraph. The Company may hold in escrow all or any portion of any such consideration in order to effectuate any continuing restrictions.

 

  

  

  

 

	 	
(iii)

	
Assumption of Options Upon Certain Events. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Administrator may grant Awards under the Plan in substitution for stock and stock-based awards issued by such entity or an affiliate thereof. The substitute Awards shall be granted on such terms and conditions as the Administrator considers appropriate in the circumstances.

 

 e. Withholding. Each Participant shall pay to the Company, or make provisions satisfactory to the Company for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. The Administrator may allow Participants to satisfy such tax obligations in whole or in part by transferring shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their fair market value (as determined by the Administrator or as determined pursuant to the applicable option agreement). The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant.

 

 f. Amendment of Awards. The Administrator may amend, modify or terminate any outstanding Award including, but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Administrator determines that the action, taking into account any related action, would not materially and adversely affect the Participant.

 

 g. Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

 

  

  

  

 

 h. Acceleration. The Administrator may provide that, upon consummation of a Change In Control or the death of a Participant, any Options shall become immediately exercisable in full or in part, any Restricted Stock Awards shall be free of some or all restrictions, any Common Stock which is the subject of a Restricted Stock Award or Restricted Stock Unit shall be granted to the Participant subject to some or no restrictions or that any Awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may (i) cause the application of Sections 280G and 4999 of the Code if a Change In Control of the Company occurs, or (ii) disqualify all or part of the Option as an Incentive Stock Option. In the event of the acceleration of the exercisability of one or more outstanding Options, including pursuant to Section 8 (d)(ii), the Administrator may provide, as a condition of full exercisability of any or all such Options, that the Common Stock or other substituted consideration, including cash, as to which exercisability has been accelerated shall be restricted and subject to forfeiture back to the Company at the option of the Company at the cost thereof upon termination of employment or other relationship, with the timing and other terms of the vesting of such restricted stock or other consideration being equivalent to the timing and other terms of the superseded exercise schedule of the related Option.

 

9. Miscellaneous

 

 a. Definitions.

 

	
  

	
(i)

	
“Administrator” means the Board or any committee thereof appointed to administer the Plan.

 

	
  

	
(ii)

	
“Applicable Laws” means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein.

 

	
  

	
(iii)

	
“Committee” means any committee appointed by the Board to administer the Plan.

 

	
  

	
(iv)

	
“Company” for purposes of eligibility under the Plan, shall include any present or future  subsidiaries of the Company, as defined in Section 424(f) of the Code (a “Subsidiary”), and any present or future parent corporation of Digital Cinema Destinations Corp., as defined in Section 424(e) of the Code. For purposes of Awards other than Incentive Stock Options, the term “Company” shall include any other business venture in which the Company has a direct or indirect significant interest, as determined by the Administrator in its sole discretion.

 

	
  

	
(v)

	
“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

	
  

	
(vi)

	
“Change In Control” means any of the following transactions, but excluding any such transaction that the Administrator, in its sole and absolute discretion determines not to constitute a Change In Control:

 

  

  

  

 

	
  

	
(a)

	
a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;

 

	
  

	
(b)

	
the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations) in connection with the complete liquidation or dissolution of the Company;

 

	
  

	
(c)

	
any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or

 

	
  

	
(d)

	
an acquisition by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding voting securities.

 

	
  

	
(vii)

	
“Employee” means (a) an employee of the Company and (b) for purposes of eligibility under the Plan (but not for purposes of Section 4(b)), a person to whom an offer of employment has been extended by the Company.

 

	
  

	
(viii)

	
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

	
  

	
(ix)

	
“Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

 

	
  

	
(a)

	
If the Common Stock is listed on any established stock exchange or traded on the Nasdaq markets, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

 

  

  

  

 

	
  

	
(b)

	
In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

 

	
  

	
(x)

	
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

	
  

	
(xi)

	
“Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company.

 

  b. No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan.

 

 c. No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or authorized transferee shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the beneficial holder thereof.

 

 d. Effective Date and Term of Plan. The Plan shall become effective on the consummation of the Company’s initial public offering of shares of Common Stock under the Securities Act of 1933, but no Option shall be exercised and no Restricted Stock Award shall be granted until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months after date the Plan is adopted by the Board.  No Awards shall be granted under the Plan after the completion of ten years from the date on which the Plan was adopted by the Board, but Awards previously granted may extend beyond that date.

 

 e. Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time.  However, except as provided in Section 3(c) relating to adjustments upon changes in stock, no amendment shall be effective unless approved by stockholders of the Company to the extent stockholder approval is required under Delaware law, the Code, United States securities laws and regulations, or Nasdaq or exchange listing requirements.  Notwithstanding the foregoing, the Administrator may amend the plan or any Award agreement for the purposes of conforming the Plan or Award agreement to the requirements of law, including the requirements of Section 490A of the Code.

 

 f. Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of Delaware, without regard to any applicable conflicts of law, and applicable federal law.EXHIBIT 10.1
    

    
      SEVERANCE AGREEMENT
    

    
      This Severance Agreement is effective this 5th day of April, 2012 by and
      between Mary Winston (“Employee”) and Family Dollar Stores, Inc., and
      its subsidiaries and affiliated companies (collectively, the “Company”).
    

    
      1.             Recitals.  Employee
      and the Company recite the following:  
    

    
          A.       Employee is employed by the Company in a position of senior
      leadership.
    

    
          B.       The Company desires to obtain the agreement of Employee to
      certain restrictive covenants and other provisions as set forth herein
      in exchange for Employee’s receipt of good and valuable consideration to
      which Employee was not previously entitled, including without
      limitation: (i) the Company’s agreement to provide certain severance
      payments as described herein, (ii) the Company’s employment of Employee,
      (iii) a base salary, (iv) an award opportunity under the Company’s 2006
      Incentive Plan Guidelines for Annual Cash Bonus Awards for the fiscal
      year beginning August 28, 2011, (v) an award of Performance Share Rights
      under the 2006 Incentive Plan, and (vi) an award of stock options under
      the 2006 Incentive Plan with a grant date of June 2012.  
    

    
          C.       Notwithstanding any provision of this Severance Agreement,
      the Company and Employee agree that Employee’s employment with the
      Company is “at will” and may be terminated at any time with or without
      “Cause” without any liability or obligation of the Company except as
      expressly set forth herein.  
    

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

    
         A.       “Cause” –  (i) At any time after a Change in Control, Cause
      means any of the following acts by Employee, as determined by the
      Compensation Committee of the Board of Directors of the
      Company:  (a) gross neglect of duty, (b) prolonged absence from duty
      without the consent of the Company, (c) intentionally engaging in any
      activity that is in conflict with or adverse to the business, reputation
      or other interests of the Company, or (d) willful misconduct,
      misfeasance or malfeasance of duty which is reasonably determined to be
      detrimental to the Company. The determination of the Compensation
      Committee as to the existence of “Cause” shall be conclusive on Employee
      and the Company.   
    

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

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

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

    
      C.       “Code” – Code means the Internal Revenue Code of 1986, as
      amended from time to time, and includes a reference to the underlying
      final regulations.
    

    
      D.       “Company’s Business” – The Company’s Business means the
      operation of multi-merchandise retail stores, the majority of which
      stores each have 25,000 square feet or less of total selling space, and
      that sell, or offer for sale, low-cost, basic merchandise for family and
      home needs, including perishable and non-perishable goods.  
    

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

    
      F.       “Competitor” – Competitor means (i) any person or entity whose
      business is the same as or substantially similar to the Company’s
      Business; (ii) any person or entity who owns or operates
      multi-merchandise retail stores that each have 25,000 square feet, or
      less, of total selling space, and that sell, or offer for sale,
      merchandise that is the same as or substantially similar to merchandise
      sold or offered for sale by the Company; or (iii) any person or entity
      who plans to own or operate multi-merchandise retail stores that have
      25,000 square feet, or less, of total selling space, and that will sell,
      or offer for sale, merchandise that is the same as or substantially
      similar to merchandise sold or offered for sale by the Company.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      G.       “Confidential Company Information” – Confidential Company
      Information means, unless otherwise available to the public, (i) any and
      all information relating to the Company’s methods of operation, source
      of merchandise supply, organizational details, personnel information,
      marketing plans, business plans, strategic plans, forecasts, or
      financial information or data; (ii) any and all information relating to
      the Company’s real estate activities including, but not limited to,
      landlords, prospective landlords, and lease data; (iii) the specific
      terms of the Company’s agreements or arrangements with any officers,
      directors, employees, vendors, suppliers, or any other entity with which
      the Company may be affiliated from time to time, including, but not
      limited to, the value of any consideration provided or received by the
      Company or the expiration date of any such agreement or arrangement; and
      (iv) any and all information of a technical or proprietary nature
      developed by or acquired by the Company or made available to the Company
      and its employees by vendors, suppliers, contractors, or other employees
      of the Company, on a confidential basis, including, but not limited to,
      ideas, concepts, designs, specifications, prototypes, techniques,
      technical data or know-how, formulae, methods, research and development,
      and inventions, as such Confidential Company Information may exist from
      time to time and whether in electronic, print or other form and all
      copies, notes, or other reproductions thereof.  
    

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

    
      I.        “Employee’s Termination Date” – Employee’s Termination Date
      means the date of Employee’s termination of employment with the Company,
      regardless of:  (i) the date, cause, or manner of such termination of
      employment; (ii) whether such termination is with or without Cause or is
      a result of Employee’s resignation; or (iii) whether the Company
      provides severance benefits to Employee under this Agreement.  
    

    
      J.        "Good Reason" shall mean any of the following conditions (each
      a “Condition”) that arises without the consent of the Employee, and the
      Employee’s Termination Date occurs no later than a period of time not
      exceeding two years immediately following the initial existence of the
      Condition:
    

    
      i.         A material diminution in the Employee’s base compensation.
    

    
      ii.        A material diminution in the Employee’s authority, duties, or
      responsibilities.
    

    
      iii.       A material diminution in the budget over which the Employee’s
      retains authority.
    

    
      iv.       A material change in the geographic location at which the
      Employee must perform the services required pursuant to this Agreement.
    

    
      v.        Any other action or inaction that constitutes a material
      breach by the Company of this Agreement.
    

    
      Within thirty (30) days of the initial existence of the Condition, the
      Employee must provide notice to the Company of the existence of the
      Condition, and the Condition must not be remedied within forty-five (45)
      days after such notice.  If the Condition is cured within forty-five
      (45) days of such notice, the Employee is not entitled to any payment as
      the result of a termination of employment based on that occurrence of
      the circumstances constituting Good Reason.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      K.       “Incentive Bonus Plan” – The annual cash incentive bonus plan
      established pursuant to the Guidelines for Annual Cash Bonus adopted
      under the 2006 Incentive Plan.
    

    
      L.       “Restricted Territory” – Restricted Territory means:
    

    
      (i) each state of the United States of America in which the Company is
      conducting the Company’s Business on Employee’s Termination Date,
    

    
      (ii) each state of the United States of America in which, as of the
      Employee’s Termination Date, the Company is planning to conduct the
      Company’s Business if Employee had knowledge, or should have had
      knowledge, of such Company plans on or before Employee’s Termination
      Date,
    

    
      (iii) each state of Mexico in which the Company is conducting the
      Company’s Business on Employee’s Termination Date, and
    

    
      (iv) each state of Mexico in which, as of the Employee’s Termination
      Date, the Company is planning to conduct the Company’s Business if
      Employee had knowledge, or should have had knowledge, of such Company
      plans on or before Employee’s Termination Date.
    

    
      For purposes of the foregoing definition, the District of Columbia and
      each of any commonwealths, territories, or possessions shall be regarded
      as a “state of the United States of America.”
    

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

    
      N.       “Trade Secret” – Trade Secret of the Company means any item of
      Confidential Company Information that constitutes a trade secret under
      the common law or statutory law of the State of North Carolina, namely
      N.C. Gen. Stat. §§ 66-152 et seq., but such definition
      of “Trade Secret” shall not alter either the Company’s rights or
      Employee’s obligations under any state or federal statutory or common
      law regarding trade secrets and unfair trade practices.
    

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

    
      3.         Severance Upon
      Termination without Cause Prior to a Change in Control – Subject to
      the provisions of Paragraphs 5, 8 and 14 hereunder, in the event of
      Employee’s termination by the Company without Cause or due to Employee’s
      Disability or death, in each case prior to a Change in Control, the
      Company shall provide Employee with the following severance benefits:
    

    
        A.        The Company shall continue the payment of Employee’s base
      salary in effect on the Employee’s Termination Date for a period of
      twenty-four (24) months.  Such salary continuation payments shall be
      paid in a series of substantially equal installments in accordance with
      the regular payroll practices of the Company as in effect as of the
      Employee’s Termination Date over said period, commencing as soon as
      administratively practicable, but in no event more than sixty (60) days,
      following the Employee’s Termination Date (except as otherwise required
      by Paragraph 14).  In the event that the amount calculated pursuant to
      the first sentence of this Section 3.A becomes payable because of the
      Employee’s termination of employment by the Company without Cause or on
      account of Employee’s Disability, such amount shall be divided into two
      amounts, as follows:

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      i.        An amount (the “Permitted Amount”) equal to the lesser of (x)
      twice the limitation applicable to qualified retirement plans pursuant
      to Section 401(a)(17) of the Code during the calendar year in which the
      Employee’s Termination Date occurs, or (y) one-fourth of the amount
      calculated pursuant to the first sentence of this Section 3.A, which
      shall be paid in installments over a period of (6) consecutive months
      beginning with the first day of the month next following Employee’s
      Termination Date, in a series of substantially equal installments,
      without interest, in accordance with the regular payroll practices of
      the Company as in effect as of the Employee’s Termination Date over said
      period, commencing on first regular payroll date following the beginning
      of the 6 month period.
    

    
      ii.       An amount (the “Remaining Amount”) equal to (x) the amount
      calculated pursuant to the first sentence of this Section 3.A minus (y)
      the Permitted Amount.  The Remaining Amount shall be paid in
      installments over a period of (18) consecutive months beginning with the
      first day of the month next following sixth months plus one day after
      the Employee’s Termination Date, in a series of substantially equal
      installments, without interest, in accordance with the regular payroll
      practices of the Company as in effect as of the Employee’s Termination
      Date over said period, commencing on first regular payroll date
      following the beginning of the 18 month period.
    

    
      Such salary continuation payments shall not be considered eligible
      compensation under any of the Company’s employee benefit plans.
    

    
      B.        If Employee’s Termination Date is after the end of the
      Company’s fiscal year but prior to the payment date of any bonus under
      the Incentive Bonus Plan for such fiscal year, the Company shall pay
      Employee the portion of the Target Bonus earned by Employee for such
      fiscal year according to the terms of the Incentive Bonus Plan (i.e.,
      based on the Company’s applicable performance level and, to the extent
      applicable, Employee’s performance rating for the fiscal year), without
      regard to any requirement in the Incentive Bonus Plan otherwise
      requiring Employee to remain employed through the bonus payment
      date.  In addition, Employee shall be eligible to receive a pro rated
      bonus under the Incentive Bonus Plan for the fiscal year of the Company
      in which such termination of employment occurs, without regard to any
      requirement in the Incentive Bonus Plan otherwise requiring Employee to
      remain employed through the bonus payment date, based on the number of
      completed weeks during the applicable fiscal year through the Employee’s
      Termination Date and further based on the Company’s applicable
      performance level for the fiscal year and, if available and to the
      extent applicable, Employee’s performance rating for the fiscal year (or
      if no such performance rating is available, assuming a performance
      rating of “satisfactory” or its equivalent).  Any such payment shall be
      made to Employee at the same time the Company makes payments to other
      participants in the Incentive Bonus Plan.  Notwithstanding the preceding
      or any provision of the Incentive Bonus Plan to the contrary, any bonus
      payment pursuant to the Incentive Bonus Plan payable to Employee under
      the terms of that Plan and/or this Agreement shall be paid as soon as
      administratively practicable following the end of the relevant
      performance period but in no event later than two and one half (21⁄2)
      months following the end of the Company’s fiscal year in which the
      relevant performance period ends.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
      C.        If Employee elects continuing group health coverage under a
      group health plan sponsored by the Company pursuant to the Consolidated
      Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then
      for the number of months set forth in clause A above after Employee’s
      Termination Date, but not to exceed 18 months, the Company shall pay for
      the same proportion of the monthly cost of such COBRA continuation
      coverage as the Company paid for the monthly cost of group health
      coverage under such plan during the last calendar month prior to the
      Employee’s Termination Date for Employee and Employee’s dependents who
      elect COBRA continuation coverage, subject to applicable laws and the
      provisions of the group health plan, as amended from time to time by the
      Company at its sole discretion.
    

    
      Such payments and benefits provided by the Company to Employee as set
      forth in Paragraphs 3 A, B and C are herein called “Termination
      Compensation.”  Such Termination Compensation shall be reduced, in whole
      or in part, by: (x) all other salary, bonus, consulting fees or other
      compensation received by or payable to Employee for services rendered in
      any capacity to any third party during the period that such Termination
      Compensation is paid, with the exception of any compensation received
      for service on a board of directors or other similar arrangement; (y)
      all disability or life insurance payments made pursuant to disability or
      life insurance policies provided by and paid for by the Company to
      Employee and which payments are received during the period that such
      Termination Compensation is paid; and (z) comparable health insurance
      coverage actually received by Employee for services rendered in any
      capacity to any third party during the period that such Termination
      Compensation is paid.  The Employee agrees to pursue reasonable, good
      faith efforts to obtain other employment in a position suitable to
      Employee’s background and experience. Moreover, Employee agrees to
      notify the Company within three business days of obtaining other
      employment during the time period in which Employee is receiving
      Termination Compensation.  Notwithstanding any of the foregoing,
      Employee’s Termination Compensation shall be subject to forfeiture as
      set forth below in Paragraph Five.  
    

    
      4.        Severance Payable
      in connection with a Change in Control – Subject to the provisions
      of Paragraph 14 hereunder, in the event of a Change in Control and a
      termination of Employee’s employment within 24 months after such Change
      in Control either by the Company without Cause or by Employee for Good
      Reason, the Company shall provide Employee with the following severance
      benefits:   

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      A.        The Company shall pay to Employee in a lump sum in cash within
      30 days after the date of such termination of employment an amount equal
      to the product of (x) two (2) and (y) the sum of (A) Employee’s base
      salary at the highest annual rate in effect during the period beginning
      immediately prior to the Change in Control through the Employee’s
      Termination Date and (B) the average of the bonuses, if any, paid or
      payable to Employee under the Incentive Bonus Plan for each of the three
      (3) fiscal years preceding the fiscal year in which Employee’s
      Termination Date occurs (or such fewer number of fiscal years for which
      Employee was eligible to receive a bonus under the Incentive Bonus Plan).
    

    
      B.        If Employee elects continuing group health coverage under a
      group health plan sponsored by the Company pursuant to the Consolidated
      Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then
      for the number of years represented by the multiple set forth in clause
      A (x) above after Employee’s Termination Date, but not to exceed 18
      months, the Company shall pay for the same proportion of the monthly
      cost of such COBRA continuation coverage as the Company paid for the
      monthly cost of group health coverage under such plan during the last
      calendar month prior to the Employee’s Termination Date for Employee and
      Employee’s dependents who elect COBRA continuation coverage, subject to
      applicable laws and the provisions of the group health plan as amended
      from time to time by the Company at its sole discretion.  Such health
      insurance coverage shall be subject to offset as provided in Paragraph 3
      above for comparable coverage received by Employee from a third party
      during the continuation period.
    

    
      The Employee’s right in connection with or following a Change in Control
      to receive a pro rata bonus under the Incentive Bonus Plan or any other
      incentive compensation program under the 2006 Incentive Plan shall be
      determined in accordance with the provisions of Section 15.7 of the 2006
      Incentive Plan. Notwithstanding the preceding or any provision of the
      Incentive Bonus Plan to the contrary, any bonus payment pursuant to the
      Incentive Bonus Plan payable to Employee under the terms of that Plan
      and/or this Agreement shall be paid as soon as administratively
      practicable following the end of the relevant performance period but in
      no event later than two and one half (21⁄2) months following the end of
      the Company’s fiscal year in which the relevant performance period
      ends.      
    

    
      5.                 Restrictive
      Covenants; Non-Disclosure Obligations; Forfeiture of Termination
      Compensation. Employee and the Company understand and agree that the
      purpose of the provisions of this Paragraph 5 is to protect the
      legitimate business interests of the Company, especially within the
      multi-merchandise retail industry, in light of Employee’s leadership
      position with the Company and exposure and access to Confidential
      Company Information and Trade Secrets.  Employee and the Company further
      agree and understand that the multi-merchandise retail industry and the
      Company’s Business are national in scope and that the Company has plans
      to expand the Company’s Business internationally.  Employee acknowledges
      that the employment and post-employment restrictions set forth in this
      Paragraph 5 are therefore reasonable in that these restrictions are
      limited to the multi-merchandise retail industry and to the legitimate
      protection of the Company’s Business, and that they do not, and will
      not, unduly impair Employee’s ability to earn a living during or after
      Employee’s employment with the Company.  As a result of Employee’s
      educational background, prior work experience, and Employee’s employment
      and position with the Company, Employee possesses general skills and
      knowledge enabling Employee, if need be, to pursue profitable work in
      businesses not competitive with the Company’s Business.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
                Therefore, in consideration of good and valuable consideration
      to which Employee was not previously entitled, including, without
      limitation, as is set forth in Paragraph 1.B above, Employee agrees as
      follows:
    

    
      A.             Covenant
      Not to Compete.  
    

    
                                    (i)       Employee agrees that during
      Employee’s employment with the Company and for the period of twelve (12)
      months immediately following Employee’s Termination Date (such period
      not to include any period(s) of violation or period(s) of time required
      for litigation to enforce the provisions of this Paragraph 5.A(i)) (the
      “Restricted Period”), Employee shall not, without the prior written
      consent of the Company, directly or indirectly, accept, obtain, or hold
      a Competitive Position within the Restricted Territory with a
      Competitor.  Notwithstanding the foregoing, the provisions of this
      Paragraph 5.A(i) shall not apply from and after a Change in
      Control.
    

    
                                    (ii)      Employee agrees that in the
      event Employee, without the Company’s prior written consent, directly or
      indirectly accepts, obtains, or holds a Competitive Position within the
      Restricted Territory with a Competitor during the period between the
      expiration date of the Restricted Period and the date of the Company’s
      final payment to Employee of any Termination Compensation under this
      Agreement (the “Concluding Compensation Period”), the Company shall be
      entitled to terminate any compensation, benefits, and/or remaining
      payments of the Termination Compensation otherwise payable to Employee
      under this Agreement and Employee forfeits such Termination
      Compensation.  Notwithstanding the foregoing, the provisions of this
      Paragraph 5.A (ii) shall not apply from and after a Change in
      Control.
    

    
                                    (iii)     Notwithstanding the foregoing,
      Employee may, as a passive investor, own capital stock of a publicly
      held corporation, which is actively traded in the over-the-counter
      market or is listed and traded on a national securities exchange, which
      constitutes or is affiliated with a Competitor, so long as Employee’s
      ownership is not in excess of five percent (5%) of the total outstanding
      capital stock of the Competitor.
    

    
      B.             Non-Solicitation
      of Company Employees.  
    

    
                                    (i)       Employee understands and agrees
      that the relationship between the Company and each of its employees
      constitutes a valuable asset of the Company and may not be converted to
      Employee’s own use or benefit, or for the use or benefit of any other
      third party.  Accordingly, Employee hereby agrees that during Employee’s
      employment and during the Restricted Period, Employee shall not, without
      the Company’s prior written consent, directly or indirectly, (A) solicit
      or recruit for employment; hire; attempt to solicit or recruit for
      employment; attempt to hire; or accept as an employee, consultant,
      contractor, or otherwise, any Company employee, or (B) urge; encourage;
      induce; or attempt to urge, encourage, or induce, any Company employee
      to terminate his or her employment with Company; or (C) otherwise
      interfere with the Company’s relationship with any Company
      employee.  Notwithstanding the foregoing, the provisions of this
      Paragraph 5.B(i) shall not apply from and after a Change in
      Control.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
                                    (ii)      Employee agrees that in the
      event Employee, without the Company’s prior written consent, directly or
      indirectly, (A) solicits or recruits for employment; hires; attempts to
      solicit or recruit for employment; attempts to hire; or accepts as an
      employee, consultant, contractor, or otherwise, any Company employee, or
      (B) urges; encourages; induces; or attempts to urge, encourage, or
      induce, any Company employee to terminate his or her employment with
      Company; or (C) otherwise interferes with the Company’s relationship
      with any Company employee during the Concluding Compensation Period, the
      Company shall be entitled to terminate any compensation, benefits,
      and/or remaining payments of the Termination Compensation otherwise
      payable to Employee under this Agreement and Employee forfeits such
      Termination Compensation.  Notwithstanding the foregoing, the provisions
      of this Paragraph 5.B(ii) shall not apply from and after a Change
      in Control.
    

    
      C.       Non-Disclosure of
      Confidential Company Information; Trade Secret Protections.  Employee
      recognizes and acknowledges that during the course of Employee’s
      employment, the Company has provided and will continue to provide
      Employee with exposure and access to Confidential Company Information
      and Trade Secrets of the Company, or confidential information belonging
      to other third parties who may have furnished such information to the
      Company under obligations of confidentiality.  Employee, therefore,
      agrees that during Employee’s employment with the Company and at all
      times after Employee’s Termination Date, Employee shall not disclose any
      such Confidential Company Information or Trade Secrets, or other
      information subject to an obligation of the Company to keep
      confidential, to any third party not employed by or otherwise expressly
      affiliated with the Company for any reason or purpose whatsoever, and
      shall not use such Confidential Company Information or Trade Secrets
      except on behalf of the Company.
    

    
      D.       Employee Acknowledgement.  Employee
      acknowledges and agrees that (i) the restrictive covenants in this
      Paragraph 5 are reasonable in time, territory and scope, and in all
      other respects; (ii) should any part or provision of any covenant be
      held invalid, void or unenforceable in any court of competent
      jurisdiction, such invalidity, voidness, or unenforceability shall not
      render invalid, void or unenforceable any other part or provision of
      this Agreement; and (iii) if any portion of the foregoing provisions is
      found to be invalid or unenforceable by a court of competent
      jurisdiction because its duration, territory, definition of activities
      or definition of information covered is considered to be invalid or
      unreasonable in scope, the invalid or unreasonable terms shall be
      redefined, or a new enforceable term provided, such that the intent of
      the Company and Employee in agreeing to the provisions of this Agreement
      will not be impaired and the provision in question shall be enforceable
      to the fullest extent of the applicable laws.  The restrictive covenants
      contained herein shall be construed as agreements independent of any
      other provision in this Agreement and the existence of any claim or
      cause of action of Employee against the Company, whether predicated on
      this Agreement or otherwise, shall not constitute a defense to the
      enforcement by the Company of this restrictive covenant.  Any decision
      in one state or jurisdiction invalidating or holding unenforceable any
      provision of this Paragraph 5 shall not be binding in any other state or
      jurisdiction.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
               6.        Other
      Post-Termination Covenants.
    

    
                         A.         Employee agrees that Employee shall resign
      and does resign from all positions as an officer and director of the
      Company and from any other positions, with such resignations to be
      effective upon Employee’s Termination Date.
    

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

    
                          C.         Following Employee’s Termination Date,
      Employee covenants to render further advice and assistance to the
      Company as may be required from time to time, and to provide all
      information available to Employee on matters handled by and through
      Employee while employed by the Company or of which Employee has personal
      knowledge, and by making available to the Company at reasonable times
      and circumstances, upon request by the Company, information pertinent to
      its operations in Employee’s possession; and, to the extent that it is
      necessary, to cooperate with and assist the Company to conclude any
      matters that are pending and which may require Employee’s assistance;
      provided, that he shall be paid reasonable compensation (according to
      the Company’s regular payroll practices for Executive Vice Presidents)
      by the Company in the event Employee is required to expend time in the
      performance of such services; and provided further, that Employee may
      perform such services in a manner that does not unreasonably interfere
      with other employment obtained by Employee.  The Employee shall be
      reimbursed for any expenses incurred by Employee in the performance of
      the covenants herein set forth in this Paragraph 6.C, provided,
      however, that the Company shall not have any duty to reimburse any
      expenses unless such expenses are documented (in a manner required of
      Executive Vice Presidents making claims for reimbursement of
      business-related expenses) within 90 days of being incurred.  Expenses
      payable pursuant to the immediately preceding sentence shall be paid on
      the 30th day following Company’s receipt of the required
      documentation.
    

    
                In addition, Employee agrees to cooperate with and provide
      assistance to the Company and its legal counsel in connection with any
      litigation (including arbitration or administrative hearings) or
      investigation affecting the Company, in which, in the reasonable
      judgment of the Company’s counsel, Employee’s assistance or cooperation
      is needed.  The Employee shall, when requested by the Company, provide
      testimony or other assistance and shall travel at the Company’s request
      in order to fulfill this obligation.  In connection with such litigation
      or investigation, the Company shall attempt to accommodate Employee’s
      schedule, shall reimburse Employee (unless prohibited by law) for any
      actual loss of wages in connection therewith, shall provide Employee
      with reasonable notice in advance of the times in which Employee’s
      cooperation or assistance is needed, and shall reimburse Employee for
      any reasonable expenses incurred in connection with such matters, provided,
      however, that the Company shall not have any duty to reimburse any
      loss of wages and/or expenses unless such wages and/or expenses are
      documented (in a manner required of Executive Vice Presidents making
      claims for reimbursement of business-related expenses) within 90 days of
      being incurred.  Lost wages and/or expenses payable pursuant to the
      immediately preceding sentence shall be paid on the 30th day
      following Company’s receipt of the required documentation.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      7.                 Delivery of Property upon Termination.  Upon
      Employee’s Termination Date, Employee shall, as soon as possible but no
      later than two (2) days from Employee’s Termination Date, surrender to
      the Company all Confidential Company Information and Trade Secrets in
      Employee’s possession and return to the Company all Company property in
      Employee’s possession or control, including but not limited to, all
      paper records and documents, computer disks and access cards and keys to
      any Company facilities.
    

    
      8.                 Enforcement
      of Restrictions in Paragraphs 5 and 6.  Because Employee’s services
      to the Company are special and unique and because Employee has been
      exposed to and has had access to Confidential Company Information and
      Trade Secrets, Employee and the Company agree that any breach or
      threatened breach of the provisions of Paragraphs 5.A(i), 5.B(i), 5.C,
      and 6 would cause irreparable injury to the Company and that money
      damages would not provide an adequate remedy to the Company.  In the
      event of a breach or threatened breach of Paragraphs 5.A(i), 5.B(i),
      5.C, or 6 of this Agreement, the Company or its successors or assigns
      may, in addition to any other rights and remedies existing in their
      favor, apply to any court of competent jurisdiction for specific
      performance; temporary, preliminary, and permanent injunctive relief;
      expedited discovery; or other equitable relief in order to enforce or
      prevent any violations of any such provisions (without posting a bond or
      other security).  The Company shall be specifically entitled to an
      injunction restraining Employee from disclosing any Confidential Company
      Information or Trade Secrets, and, further, from accepting or continuing
      any employment with or rendering any services, or continuing to render
      services, to any such third-party to whom any Confidential Company
      Information or Trade Secret has been disclosed or is threatened to be
      disclosed by Employee.  
    

    
                In addition to the foregoing and not in any way in limitation
      thereof, or in limitation of any right or remedy otherwise available to
      the Company, if Employee violates any provision of Paragraphs 5.A(i),
      5.B(i), 5.C, and 6 of this Agreement: (i) any compensation, benefits
      and/or Termination Compensation then or thereafter due from the Company
      to Employee shall be terminated forthwith; (ii) the Company’s obligation
      to pay or provide and Employee’s right to receive such compensation,
      benefits and/or Termination Compensation shall terminate and be of no
      further force or effect; and (iii) upon demand by the Company, Employee
      shall repay to the Company any such compensation, benefits and/or
      Termination Compensation previously paid by the Company because of not
      being informed or aware of Employee’s violation of a provision of
      Paragraphs 5.A(i), 5.B(i), 5.C, or 6 of this Agreement; in each case
      without limiting or affecting Employee’s obligations under such
      Paragraphs 5.A(i), 5.B(i), 5.C, or 6 or the Company’s other rights and
      remedies available at law or in equity, and provided that at least
      $20,000 of such compensation, benefits and/or Termination Compensation
      shall be retained by Employee representing the consideration Employee
      received in exchange for Employee’s release and waiver of rights or
      claims under Paragraph 9 of this Agreement.

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    
      9.                 Waiver
      and Release.  In consideration for the payments and benefits
      provided and to be provided hereunder, Employee agrees that Employee
      will, upon termination of employment and as a condition to the Company’s
      obligation to pay any severance benefits under this Agreement, deliver
      to the Company a fully executed release agreement substantially in a
      form then used by and agreeable to the Company and which shall fully and
      irrevocably release and discharge the Company, its directors, officers,
      and employees from any and all claims, charges, complaints, liabilities
      of any kind, known or unknown, owed to Employee.
    

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

    
      11.             Complete
      Agreement.  This Agreement sets forth all of the terms of the
      understanding between the parties with reference to the subject matter
      set forth herein and may not be waived, changed, discharged or
      terminated orally or by any course of dealing between the parties, but
      only by an instrument in writing signed by the party against whom any
      waiver, change, discharge or termination is sought. This Agreement
      revokes and supersedes all prior or contemporaneous agreements,
      representations, promises and understandings, whether written or oral,
      between the parties.
    

    
      12.             Choice
      of Law; Consent to Jurisdiction.  This Agreement shall be
      governed by and construed under the laws of the State of North Carolina
      without regard to its choice of law or conflict of law
      principles.  Employee hereby expressly and irrevocably consents
      to the venue and jurisdiction of the United States District Court
      for the Western District of North Carolina, or any state court in
      Mecklenburg County, North Carolina.
    

    
      13.              Notices.  All
      notices, requests, demands and other communications hereunder shall be
      in writing and shall be deemed to have been duly given if personally
      delivered, if mailed by registered, certified or express mail, postage
      prepaid, or if delivered to a recognized courier service, addressed to
      Employee at the address shown on the Company’s records for tax reporting
      purposes or to the Company as follows (or in either case to such other
      address as one party shall give the other in the manner provided herein):

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      

    

    	
           
        	
          
            Family Dollar Stores, Inc.
          

        	
          
            Chairman of the Board
          

        
	

        	

        	
          
            Post Office Box 1017
          

        
	

        	

        	
          
            Charlotte, NC  28201-1017
          

        
	

        	

        	
           
        
	

        	
          
            With copy to:
          

        	
          
            General Counsel
          

        
	

        	

        	
          
            Family Dollar Stores, Inc.
          

        
	

        	

        	
          
            Post Office Box 1017
          

        
	

        	

        	
          
            Charlotte, NC  28201-1017
          

        
	

        	

        	
           
        

    

    

    

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

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

    

    	
           
        	
           
        	
          
            FAMILY DOLLAR STORES, INC.
          

        
	

        	

        	
           
        
	

        	

        	
          
            By:  /s/ Howard R. Levine
          

        
	

        	

        	
           
        
	

        	

        	
          
            Title: Chairman and Chief Executive Officer
          

        

    

    
      Attest:
    

    
      /s/ Beth R. MacDonald Assistant Secretary         
    

    	
           
        	
           
        	
          
            EMPLOYEE
          

        
	

        	

        	
           
        
	

        	

        	
          
            /s/ Mary Winston
          

        
	

        	

        	
          
            Mary Winston

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