Exhibit 10.2

                              EMPLOYMENT AGREEMENT

     THIS  EMPLOYMENT  AGREEMENT  (the  "Agreement"),  dated as of September 22,
1999,  between Donald S. Shaffer (the "Executive") and Heilig-Meyers  Company, a
Virginia corporation (the "Company"), recites and provides as follows:

     WHEREAS,  the Board of Directors of the Company (the "Board")  expects that
the Executive will continue to make substantial  contributions to the growth and
prospects of the Company; and

     WHEREAS,  the Board  desires  that the Company  retain the  services of the
Executive,  and the  Executive  desires  to  continue  his  employment  with the
Company, all on the terms and subject to the conditions set forth herein.

     NOW,  THEREFORE,  in consideration of the foregoing premises and the mutual
covenants herein contained, the Company and the Executive agree as follows:

     1. Employment  Period.  The Company hereby agrees to continue the Executive
in its employ,  and the  Executive  hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement,  for the
period  commencing  on the date of this  Agreement  (the  "Effective  Date") and
ending on the third anniversary of such date (the "Employment Period").  Subject
to the provisions of Section 3 hereof, the Employment Period shall be a constant
rolling period of three (3) years,  commencing on the Effective  Date,  with the
result  that,  for each day after the  Effective  Date the  Executive's  term of
employment  shall be  extended  for an  additional  day so that at all times the
remaining  period  of the  Executive's  term of  employment  shall be three  (3)
years.

     2. Terms of Employment.

          a) Position and Duties.

               i) During the Employment  Period,  (A) the  Executive's  position
          (including  status,  offices,  titles  and  reporting   requirements),
          authority,  duties and responsibilities shall be at least commensurate
          in all  material  respects  with the most  significant  of those held,
          exercised   and  assigned  at  any  time  during  the  90-day   period
          immediately  preceding  the  Effective  Date  and (B) the  Executive's
          services  shall be performed at the location  where the  Executive was
          employed immediately  preceding the Effective Date or any office which
          is less than 35 miles from such location.

               ii) During the  Employment  Period,  and excluding any periods of
          vacation and leave to which the  Executive is entitled,  the Executive
          agrees to devote reasonable  attention and time during normal business
          hours to the  business  and affairs of the Company  and, to the extent
          necessary to discharge the responsibilities  assigned to the Executive
          hereunder,  to use the Executive's  reasonable best efforts to perform
          faithfully  and   efficiently   such   responsibilities.   During  the
          Employment  Period it shall not be a violation of this  Agreement  for
          the Executive to (A) serve on corporate, civic, charitable,  furniture
          industry association or professional  association boards or committees
          (provided the Executive  obtains prior approval by the Chief Executive
          Officer  of the  Company),  (B)  deliver  lectures,  fulfill  speaking
          engagements  or  teach  at  educational  institutions  and (C)  manage
          personal investments,  so long as such activities do not significantly
          interfere with the performance of the Executive's  responsibilities as
          an employee of the Company in accordance  with this  Agreement.  It is
          expressly  understood  and  agreed  that to the  extent  that any such
          activities have been conducted by the Executive prior to the Effective
          Date,  the  continued  conduct of such  activities  (or the conduct of
          activities  similar in nature  and scope  thereto)  subsequent  to the
          Effective  Date shall not  thereafter be deemed to interfere  with the
          performance of the Executive's  responsibilities  to the  Company.

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          b) Compensation.

               i) Base Salary. During the Employment Period, the Executive shall
          receive an annual base salary  ("Annual Base Salary"),  which shall be
          paid in equal  installments  on a  monthly  basis,  at least  equal to
          twelve  times the highest  monthly  base salary paid or payable to the
          Executive  by the Company and its  affiliated  companies in respect of
          the twelve-month  period immediately  preceding the month in which the
          Effective Date occurs.  During the Employment  Period, the Annual Base
          Salary  shall be reviewed at least  annually and shall be increased at
          any time and from  time to time as shall be  substantially  consistent
          with increases in base salary generally awarded in the ordinary course
          of business to other peer executives of the Company and its affiliated
          companies. Any increase in Annual Base Salary shall not serve to limit
          or reduce any other  obligation to the Executive under this Agreement.
          Annual Base Salary  shall not be reduced  after any such  increase and
          the term Annual Base Salary as utilized in this Agreement  shall refer
          to Annual Base Salary as so increased. As used in this Agreement,  the
          term "affiliated  companies" shall include any company  controlled by,
          controlling   or  under   common   control   with   the   Company.

               ii)  Annual  Bonus.  In  addition  to  Annual  Base  Salary,  the
          Executive shall be awarded, for each fiscal year during the Employment
          Period,  an annual bonus  opportunity  (the "Annual  Bonus") under the
          Company's  Annual  Performance-Based  Bonus Plan at least equal to his
          bonus opportunity immediately preceding the Effective Date or, if more
          favorable to the Executive,  under any plans, practices,  programs and
          policies of the Company and its affiliates in effect  generally at any
          time after the Effective Date with respect to other peer executives of
          the Company and its affiliated companies.

               iii)  Incentive,   Savings  and  Retirement  Plans.   During  the
          Employment  Period,  the Executive shall be entitled to participate in
          all  incentive  (including,   without  limitation,  stock  incentive),
          savings  and  retirement  plans,  practices,   policies  and  programs
          applicable  generally to other peer  executives of the Company and its
          affiliated  companies,  but in no event shall such  plans,  practices,
          policies   and  programs   provide  the   Executive   with   incentive
          opportunities  (measured  with  respect to both  regular  and  special
          incentive opportunities,  to the extent, if any, that such distinction
          is  applicable),   savings   opportunities   and  retirement   benefit
          opportunities,  in each case, less favorable,  in the aggregate,  than
          the most favorable of those provided by the Company and its affiliated
          companies for the Executive under such plans, practices,  policies and
          program as in effect at any time during the 90-day period  immediately
          preceding the Effective  Date or if more  favorable to the  Executive,
          those provided generally from time to time after the Effective Date to
          other peer executives of the Company and its affiliated companies.

               iv) Welfare  Benefit  Plans.  During the Employment  Period,  the
          Executive and/or the Executive's  family, as the case may be, shall be
          eligible for  participation  in and shall  receive all benefits  under
          welfare benefit plans,  practices,  policies and programs  provided by
          the  Company  and  its  affiliated   companies   (including,   without
          limitation,   medical,   prescription,   dental,  disability,   salary
          continuance,  employee life,  group life,  accidental death and travel
          accident  insurance  plans  and  programs)  to the  extent  applicable
          generally to other peer  executives of the Company and its  affiliated
          companies,  but in no event shall such plans, practices,  policies and
          programs provide the Executive with benefits which are less favorable,
          in the aggregate,  than the most  favorable of such plans,  practices,
          policies and  programs in effect for the  Executive at any time during
          the 90-day period immediately preceding the Effective Date or, if more
          favorable to the Executive,  those provided  generally at from time to
          time after the Effective Date to other peer  executives of the Company
          and  its  affiliated  companies.

               v) Expenses. During the Employment Period, the Executive shall be
          entitled to receive prompt reimbursement for all reasonable employment
          expenses  incurred  by the  Executive  in  accordance  with  the  most
          favorable  policies,  practices and  procedures of the Company and its
          affiliated  companies  in effect for the  Executive at any time during
          the 90-day period immediately preceding the Effective Date or, if more
          favorable to the Executive,  as in effect  generally from time to time
          after the Effective Date with respect to other peer  executives of the
          Company  and its  affiliated  companies.

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               vi) Fringe Benefits.  During the Employment Period, the Executive
          shall be  entitled  to fringe  benefits  in  accordance  with the most
          favorable plans,  practices,  programs and policies of the Company and
          its  affiliated  companies  in effect  for the  Executive  at any time
          during the 90-day period immediately  preceding the Effective Date or,
          if more favorable to the Executive,  as in effect  generally from time
          to time after the Effective Date with respect to other peer executives
          of the Company and its  affiliated  companies.

               vii) Office and Support Staff.  During the Employment Period, the
          Executive shall be entitled to an office or offices of a size and with
          furnishings  and  other   appointments,   and  to  exclusive  personal
          secretarial and other assistance, at least equal to the most favorable
          of the  foregoing  provided  to the  Executive  by the Company and its
          affiliated  companies at any time during the 90-day period immediately
          preceding the Effective  Date or, if more  favorable to the Executive,
          as provided  generally from time to time after the Effective Date with
          respect to other peer  executives  of the Company  and its  affiliated
          companies.

               viii) Vacation. During the Employment Period, the Executive shall
          be entitled to paid  vacation in  accordance  with the most  favorable
          plans,  policies,  programs  and  practices  of the  Company  and  its
          affiliated companies as in effect for the Executive at any time during
          the 90-day period immediately preceding the Effective Date or, if more
          favorable to the Executive,  as in effect  generally from time to time
          after the Effective Date with respect to other peer  executives of the
          Company and its affiliated companies.

          3. Termination of Employment.

               a)  Death  or  Disability.   The  Executive's   employment  shall
          terminate   automatically   upon  the  Executive's  death  during  the
          Employment  Period.  If the Company  determines in good faith that the
          Disability of the Executive has occurred during the Employment  Period
          (pursuant to the  definition  of Disability  set forth below),  it may
          give to the Executive  written notice in accordance with Section 11(b)
          of its  intention to terminate  the  Executive's  employment.  In such
          event,  the  Executive's  employment  with the Company shall terminate
          effective  on the  30th  day  after  receipt  of  such  notice  by the
          Executive (the "Disability Effective Date"), provided that, within the
          30 days after such receipt,  the Executive  shall not have returned to
          full-time  performance of the Executive's duties. For purposes of this
          Agreement,  "Disability"  shall mean the absence of the Executive from
          the  Executive's  duties with the Company on a full-time basis for 180
          consecutive  business days as a result of incapacity  due to mental or
          physical  illness  which is  determined to be total and permanent by a
          physician  selected by the Company or its insurers and  acceptable  to
          the Executive or the Executive's legal  representative (such agreement
          as   to   acceptability   not   to  be   withheld   unreasonably).

               b) Cause.  The Company may terminate the  Executive's  employment
          during  the  Employment   Period  for  Cause.  For  purposes  of  this
          Agreement,  "Cause" shall mean (i) a material  breach by the Executive
          of the  Executive's  obligations  under  Section 2(a) (other than as a
          result of  incapacity  due to  physical  or mental  illness)  which is
          demonstrably  willful and deliberate on the Executive's part, which is
          committed in bad faith or without  reasonable  belief that such breach
          is in the best interests of the Company and which is not remedied in a
          reasonable  period of time after  receipt of written  notice  from the
          Company specifying such breach or (ii) the conviction of the Executive
          of  a  felony  involving  moral  turpitude.

               c) Notice of  Termination.  Any  termination  by the  Company for
          Cause,  or by the  Executive,  shall  be  communicated  by  Notice  of
          Termination to the other party hereto given in accordance with Section
          11(b). For purposes of this Agreement, a "Notice of Termination" means
          a  written  notice  which  (i)  indicates  the  specific   termination
          provision  in  this  Agreement   relied  upon,   (ii)  to  the  extent
          applicable,   sets   forth  in   reasonable   detail   the  facts  and
          circumstances  claimed  to  provide  a basis  for  termination  of the
          Executive's  employment  under the provision so indicated and (iii) if
          the Date of  Termination  (as defined below) is other than the date of
          receipt of such notice,  specifies  the  termination  date (which date
          shall be not more than 15 days after the giving of such  notice).  The
          failure by the  Executive or the Company to set forth in the Notice of
          Termination any fact or circumstance  shall not waive any right of the
          Executive or the Company  hereunder  or preclude the  Executive or the
          Company from  asserting  such fact or  circumstance  in enforcing  the
          Executive's or the Company's rights hereunder.

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               d) Date of Termination.  "Date of  Termination"  means (i) if the
          Executive's  employment is terminated by the Company for Cause,  or by
          the Executive, the date of receipt of the Notice of Termination or any
          later  date  specified  therein,  as the  case  may  be,  (ii)  if the
          Executive's  employment  is  terminated  by the Company other than for
          Cause  or  Disability,  the Date of  Termination  shall be the date on
          which the Company notifies the Executive of such termination and (iii)
          if the  Executive's  employment  is  terminated  by reason of death or
          Disability,  the Date of Termination shall be the date of death of the
          Executive or the  Disability  Effective  Date,  as the case may be.

          4.   Obligations of the Company upon Termination.

               a) Other than for Cause or Death.  The Company may  terminate the
          Executive's  employment  during the  Employment  Period for other than
          Cause or death.  If, during the Employment  Period,  the Company shall
          terminate the Executive's  employment other than for Cause or death or
          the Executive shall terminate employment:

                    i) The Company  shall pay to the  Executive in a lump sum in
               cash within 30 days after the Date of Termination  the sum of (1)
               the   Executive's   Annual  Base  Salary   through  the  Date  of
               Termination to the extent not theretofore paid; (2) to the extent
               not  theretofore  paid, the product of (A) the greater of (x) the
               Annual  Bonus  paid  or  payable,  including  by  reason  of  any
               deferral,  to the Executive  (and  annualized for any fiscal year
               consisting  of less  than  twelve  full  months  or for which the
               Executive has been employed for less than twelve full months) for
               the most  recently  completed  fiscal year during the  Employment
               Period,  if any, and (y) the average  annualized  (for any fiscal
               year  consisting  of less than twelve full months or with respect
               to which the  Executive  has been  employed  for less than twelve
               full  months)  bonus paid or payable,  including by reason of any
               deferral,  to the  Executive  by the Company  and its  affiliated
               companies  in  respect  of the  three  fiscal  years  immediately
               preceding the fiscal year in which the Date of Termination occurs
               (such  greater  amount  shall be  hereinafter  referred to as the
               "Highest  Annual  Bonus") and (B) a fraction,  the  numerator  of
               which is the number of days in the current  fiscal  year  through
               the Date of Termination, the denominator of which is 365; (3) any
               compensation  previously deferred by the Executive (together with
               any  accrued  interest  or  earnings  thereon)  to the extent not
               therefore  paid; and (4) any accrued  vacation pay, to the extent
               not therefore  paid (the sum of the amounts  described in clauses
               (1),  (2),  (3) and (4) shall be  hereinafter  referred to as the
               "Accrued Obligations"); and

                    ii) The Company  shall pay to the Executive in a lump sum in
               cash within 30 days after the Date of Termination  the sum of the
               Executive's  Annual Base Salary and Highest  Annual Bonus payable
               to the Executive  from the Date of  Termination to the end of the
               Employment Period; and

                    iii) For the  remainder of the  Employment  Period,  or such
               longer  period  as any plan,  program,  practice  or  policy  may
               provide,  the Company  shall  continue  benefits to the Executive
               and/or the Executive's family at least equal to those which would
               have  been  provided  to  them  in  accordance  with  the  plans,
               programs, practices and policies described in Section 2(b)(iv) if
               the Executive's  employment had not been terminated in accordance
               with the most favorable plans, practices, programs or policies of
               the  Company  and  its  affiliated  companies  as in  effect  and
               applicable  generally to other peer executives and their families
               during the 90-day period immediately preceding the Effective Date
               or, if more favorable to the Executive, as in effect generally at
               any time  thereafter with respect to other peer executives of the
               Company  and  its  affiliated   companies  and  their   families,
               provided,  however, that if the Executive becomes reemployed with
               another  employer  and is  eligible  to receive  medical or other
               welfare  benefits  under another  employer - provided  plan,  the
               medical and other  welfare  benefits  described  herein  shall be
               secondary  to those  provided  under such other plan  during such
               applicable  period  of  eligibility  (such  continuation  of such
               benefits  for the  applicable  period  herein set forth  shall be
               hereinafter referred to as "Welfare Benefit  Continuation").  For
               purposes of determining  eligibility of the Executive for retiree
               benefits  pursuant  to  such  plans,   practices,   programs  and
               policies,  the  Executive  shall be  considered  to have remained
               employed  until  the  end of the  Employment  Period  and to have
               retired on the last day of such period; and

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                    iv) To the  extent not  theretofore  paid or  provided,  the
               Company shall timely pay or provide to the  Executive  and/or the
               Executive's  family any other amounts or benefits  required to be
               paid or provided or which the  Executive  and/or the  Executive's
               family is eligible  to receive  pursuant  to this  Agreement  and
               under any  plan,  program,  policy or  practice  or  contract  or
               agreement  of the  Company  and its  affiliated  companies  as in
               effect and  applicable  generally  to other peer  executives  and
               their families during the 90-day period immediately preceding the
               Effective  Date or, if more  favorable  to the  Executive,  as in
               effect generally thereafter with respect to other peer executives
               of the Company and its  affiliated  companies and their  families
               (such other amounts and benefits shall be hereinafter referred to
               as the "Other  Benefits").

               b) Death. If the  Executive's  employment is terminated by reason
          of the Executive's death during the Employment Period,  this Agreement
          shall terminate  without further  obligations to the Executive's legal
          representatives  under  this  Agreement,  other  than for  payment  of
          Accrued  Obligations (which shall be paid to the Executive's estate or
          beneficiary,  as  applicable,  in a lump sum in cash within 30 days of
          the Date of  Termination)  and the timely  payment or provision of the
          Welfare Benefit Continuation and Other Benefits.

               c) Cause. If the Executive's  employment  shall be terminated for
          Cause during the Employment  Period,  this Agreement  shall  terminate
          without further obligations to the Executive other than the obligation
          to pay to the  Executive  his Annual Base  Salary  through the Date of
          Termination plus the amount of any compensation previously deferred by
          the  Executive,  in each case to the  extent  theretofore  unpaid.

               d) Time of Payment.  The Company shall make all payments required
          by this Section 4 within the time periods  provided in Sections  4(a),
          4(b) and 4(c);  provided,  however,  that in the  event  that any such
          payments would be  non-deductible  to the Company under the provisions
          of Section  162(m) of the Internal  Revenue  Code of 1986,  as amended
          (the "Code"),  and the Executive is a "covered employee" as defined in
          Treas. Reg. Section 1.162-27(c)(2) for the taxable year of the Company
          during which the Date of Termination  occurred or for the  immediately
          preceding  year,  the Company  shall make any such payment not earlier
          than 90 days  following the end of the  Company's  taxable year during
          which the Executive last was a "covered  employee."

          5. Nonexclusivity of Rights. Expect as provided in Sections 4(a)(iii),
     4(b) and  4(c),  nothing  in this  Agreement  shall  prevent  or limit  the
     Executive's continuing or future participation in any plan, program, policy
     or practice provided by the Company or any of its affiliated  companies and
     for which the Executive  may qualify,  nor shall  anything  herein limit or
     otherwise  affect such rights as the  Executive may have under any contract
     or agreement with the Company or any of its affiliated  companies.  Amounts
     which are vested  benefits or which the Executive is otherwise  entitled to
     receive under any plan,  policy,  practice or program of or any contract or
     agreement  with  the  Company  or  any of its  affiliated  companies  at or
     subsequent to the Date of Termination  shall be payable in accordance  with
     such plan,  policy,  practice or program or contract or agreement except as
     explicitly  modified by this  Agreement.

          6. Full  Settlement;  Resolution or  Disputes.

               a) The Company's  obligation to make the payments provided for in
          this  Agreement  and  otherwise to perform its  obligations  hereunder
          shall  not be  affected  by  any  set-off,  counterclaim,  recoupment,
          defense or other  claim,  right or action  which the  Company may have
          against the  Executive or others.  In no event shall the  Executive be
          obligated to seek other  employment or take any other action by way of
          mitigation of the amounts  payable to the  Executive  under any of the
          provisions  of this  Agreement  and,  except as  provided  in  Section
          4(a)(iii)  with respect to Welfare  Benefit  Continuation  and Section
          8(a)  with  respect  to  non-competition,  such  amounts  shall not be
          reduced  whether or not the Executive  obtains other  employment.  The
          Company  agrees  to pay to the  full  extent  permitted  by  law,  all
          reasonable  legal fees and expenses  which the  Executive may incur to
          enforce this Agreement and that result from a breach of this Agreement
          by the Company;  provided however, that the reasonableness of the fees
          and expenses must be determined by an  independent  arbitrator,  using
          standard legal principles, mutually agreed upon by the Company and the
          Executive  in  accordance   with  rules  set  forth  by  the  American
          Arbitration  Association.

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               b) If there  shall be any  dispute  between  the  Company and the
          Executive  in  the  event  of  any   termination  of  the  Executive's
          employment by the Company or by the Executive,  then, unless and until
          there  is a final,  nonappealable  judgment  by a court  of  competent
          jurisdiction  declaring  that  such  termination  was for  Cause,  the
          Company  shall pay all  amounts,  and  provide  all  benefits,  to the
          Executive and/or the Executive's family or other beneficiaries, as the
          case may be,  that the  Company  would be  required  to pay or provide
          pursuant  to  Section  4(a) as  though  such  termination  were by the
          Company without Cause or by the Executive; provided, however, that the
          Company shall not be required to pay any disputed  amounts pursuant to
          this  paragraph  except upon receipt of an  undertaking  (which may be
          unsecured)  by or on behalf of the Executive to repay all such amounts
          to which the Executive is ultimately  adjudged by such court not to be
          entitled.

          7. Confidential  Information.

               a) The  Executive  shall  hold in a  fiduciary  capacity  for the
          benefit  of  the  Company  all  secret  or  confidential  information,
          knowledge  or data  relating to the  Company or any of its  affiliated
          companies,  and their  respective  businesses,  which  shall have been
          obtained b the  Executive  during the  Executive's  employment  by the
          Company or any of its  affiliated  companies and which shall not be or
          become  public  knowledge  (other  than by acts  by the  Executive  or
          representatives  of the  Executive in  violation  of this  Agreement).
          After termination of the Executive's  employment with the Company, the
          Executive shall not,  without the prior written consent of the Company
          or  except  as may  otherwise  be  required  by law or legal  process,
          communicate  or divulge  any such  information,  knowledge  or data to
          anyone other than the Company and those  designated by it. In no event
          shall an  asserted  violation  of the  provisions  of this  Section  7
          constitute a basis for deferring or withholding any amounts  otherwise
          payable to the Executive under this  Agreement.

          8.  Non-Compete;  Non-Solicitation.

               a) Except as is set forth below,  for a period  commencing on the
          date  hereof  and  ending  on the date 36 months  after the  Executive
          ceases to be employed by the Company (the  "Non-Competition  Period"),
          the Executive  shall not in the United States of America,  directly or
          indirectly,  either for  himself  or any other  person,  own,  manage,
          control,  materially  participate in, invest in, permit his name to be
          used by, act as consultant or advisor to, render material services for
          (alone or in association with any person,  firm,  corporation or other
          business  organization)  or otherwise  assist in any manner any entity
          that engages in or owns,  invests in,  manages or controls any venture
          or enterprise  engaged in the retail furniture  industry (or any other
          business of the type that  constitutes  a  substantial  portion of the
          Company's  business at the date the Executive ceases to be employed by
          the Company) (collectively,  a "Competitor");  provided, however, that
          the restrictions set forth above shall immediately terminate and shall
          be of no further  force or effect (i) in the event of a default by the
          Company in the  payment of any  compensation  or benefits to which the
          Executive is entitled hereunder, which default is not cured within ten
          (10) days after written notice thereof, or (ii) at the election of the
          Executive if the  Executive's  employment  has been  terminated by the
          Company  other than for Cause and if the  Executive  (A) gives written
          notice  to the  Company  during  the  Non-Competition  Period  that he
          desires to accept  employment  with a Competitor;  and (B) agrees that
          the  severance  payment  specified in Section  4(a)(i) and (ii) hereof
          shall be  mitigated  by the amount of salary and pro rata target bonus
          payable  to  the  Executive  by the  Competitor  and  attributable  to
          employment during the Non-Competition Period (it being understood that
          the amount of such mitigated  severance shall be paid by the Executive
          to the Company in a lump-sum payment within thirty (30) days after the
          Executive  commences  employment with the Competitor).  Nothing herein
          shall  prohibit the  Executive  from being a passive owner of not more
          than 2% of the  equity  securities  of a  corporation  engaged in such
          business  which  is  publicly  traded,  so  long  as he has no  active
          participation in the business of such corporation.

               b) During the  Non-Competition  Period,  the Executive shall not,
          directly or indirectly,  (i) induce or attempt to induce or aid others
          in  inducing  an  employee  of the  Company to leave the employ of the
          Company,  or in any way interfere  with the  relationship  between the
          Company and an employee of the Company  except in the proper  exercise
          of the  Executive's  authority,  or (ii) in any way interfere with the
          relationship between the Company and any customer,  supplier, licensee
          or other  business  relation  of the  Company.

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<PAGE>
             c) If,  at the time of  enforcement  of this  Section  8, a court
          shall hold that the duration, scope, area or other restrictions stated
          herein are unreasonable under circumstances then existing, the parties
          agree that the maximum  duration,  scope,  area or other  restrictions
          reasonable  under  such  circumstances  shall be  substituted  for the
          stated duration, scope, area or other restrictions.

               d) The covenants  made in this Section 8 shall be construed as an
          agreement  independent of any other provisions of this Agreement,  and
          shall  survive  the  termination  of  this  Agreement.  Moreover,  the
          existence of any claim or cause of action of the Executive against the
          Company or any of its  affiliates,  whether or not predicated upon the
          terms  of this  Agreement,  shall  not  constitute  a  defense  to the
          enforcement  of these  covenants.

          9.  Indemnity.  The  Company  will  indemnify  the  Executive,  in his
     capacity as an officer and director of the Company,  to the fullest  extent
     permitted  by  the  Company's  Articles  of  Incorporation  and  Bylaws.

          10. Successors.

               a) This  Agreement is personal to the  Executive  and without the
          prior  written  consent of the Company  shall not be assignable by the
          Executive   otherwise  than  by  will  or  the  laws  of  descent  and
          distribution.  This  Agreement  shall  inure to the  benefit of and be
          enforceable   by   the    Executive's    legal    representatives.

               b) This  Agreement  shall  inure to the benefit of and be binding
          upon the Company and its successors and assigns.

               c) The Company  will  require any  successor  (whether  direct or
          indirect, by purchase,  merger,  consolidation or otherwise) to all or
          substantially  all of the  business  and/or  assets of the  Company to
          assume  expressly  and agree to  perform  this  Agreement  in the same
          manner and to the same extent  that the  Company  would be required to
          perform  it if no such  succession  had taken  place.  As used in this
          Agreement,  "Company" shall mean the Company as  hereinbefore  defined
          and any  successor to its business  and/or  assets as aforesaid  which
          assumes and agrees to perform  this  Agreement by operation of law, or
          otherwise.

          11.  Miscellaneous.

               a)  This  Agreement   shall  be  governed  by  and  construed  in
          accordance  with the laws of the  Commonwealth  of  Virginia,  without
          reference  to  principles  of conflict of laws.  The  captions of this
          Agreement  are not part of the  provisions  hereof  and shall  have no
          force  or  effect.  This  Agreement  may not be  amended  or  modified
          otherwise than by a written  agreement  executed by the parties hereto
          or  their   respective   successors  and  legal   representatives.

               b) All notices  and other  communications  hereunder  shall be in
          writing  and shall be given by hand  delivery to the other party or by
          registered  or  certified  mail,  return  receipt  requested,  postage
          prepaid,  addressed  as  follows:

          If to the Executive to:               If to the Company to:

          Donald S. Shaffer                     Heilig-Meyers Company
                                                12560 West Creek Parkway
                                                Richmond, Virginia  23238

                                                Attention:  Corporate Secretary

          or to such other  address as either party shall have  furnished to the
          other in writing in  accordance  herewith.  Notice and  communications
          shall  be  effective  when  actually  received  by the  addressee.

               c) The  invalidity or  unenforceability  of any provision of this
          Agreement shall not affect the validity or enforceability of any other
          provision of this Agreement.

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<PAGE>
               d) The Company may withhold  from any amounts  payable under this
          Agreement  such  Federal,  state,  local or foreign  taxes as shall be
          required  to  be  withheld   pursuant   to  any   applicable   law  or
          regulation.

               e) The Executive's or the Company's failure to insist upon strict
          compliance  with any provision  hereof or any other  provision of this
          Agreement  or the  failure  to assert any right the  Executive  or the
          Company may have hereunder, shall not be deemed to be a waiver of such
          provision   or  right  or  any  other   provision  or  right  of  this
          Agreement.

               f) Any  entitlements to the Executive  created under Section 2(b)
          shall be contract rights to the extent not prohibited by law. However,
          the Company shall not be required to amend,  or refrain from amending,
          any of its plans,  practices,  policies and programs to so provide the
          contract  rights.

               g) The  Executive  and the  Company  agree  that  as of the  date
          hereof,   this  Agreement   supersedes  and  terminates  any  existing
          employment  agreement between the Company and the Executive.

     IN WITNESS  WHEREOF,  the Executive has hereunto set the  Executive's  hand
and, pursuant to the authorization from its Board of Directors,  the Company has
caused  these  presents to be executed in its name on its behalf,  all as of the
day and year  first  above  written.

                                        HEILIG-MEYERS COMPANY
                                        By:  / s / Robert L. Burrus, Jr.
                                             -----------------------------
                                        Robert L. Burrus,  Jr.
                                        Chairman, Compensation Committee
                                        Board of Directors

                                        / s / Donald S. Shaffer
                                        ---------------------------------
                                        Donald S. Shaffer



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