Document:

Exhibit - 10.82

                          GOODY'S FAMILY CLOTHING, INC.
                   DISCOUNTED STOCK OPTION PLAN FOR DIRECTORS
                 (as amended on June 19, 1996 and June 21, 2000)

         1.  Purpose.  The  purpose of this  Discounted  Stock  Option  Plan for
Directors ("Plan") of Goody's Family Clothing, Inc. (the "Company"), a Tennessee
corporation,  is to permit the  granting of stock  options to  Directors  of the
Company who are not employees of the Company ("Directors" or a "Director") at an
exercise  price less than market value at the date of grant as an alternative to
the payment of Directors' fees in cash,  thereby  advancing the interests of the
Company by  encouraging  and  enabling  the  acquisition  of its common stock by
Directors  whose  judgment  and  ability  are relied upon by the Company for the
attainment of its long-term  growth and  development.  Accordingly,  the Plan is
intended  to  promote a close  identity  of  interests  among the  Company,  the
Directors,  and its  shareholders,  as well as to provide a means to attract and
retain well-qualified Directors.

         2.  Effective  Date and Term of Plan.  The Plan shall become  effective
upon such date as it may be  approved  by the  shareholders  of the  Company and
shall remain in effect until July 7, 2003 or until  termination  by the Board of
Directors of the Company (the "Board"), whichever occurs first.

         3. Stock  Subject to the Plan.  There are  authorized  for  issuance or
delivery  upon the exercise of options to be granted from time to time under the
Plan an aggregate of 300,000 shares of the Company's  common stock, no par value
("Common  Stock"),  subject to adjustment as provided  hereinafter in Section 6.
Such  shares  may be, as a whole or in part,  authorized  but  unissued  shares,
whether now or hereafter authorized, or issued shares which have been reacquired
by the Company. If any option issued under this Plan shall expire,  terminate or
be cancelled for any reason without having been exercised in full, the shares of
common  Stock  which  have not been  purchased  thereunder  shall  again  become
available for the purposes of this Plan.

         4.       Plan Administration.

                  (a)  The  Plan  shall  be  administered  by  the  Compensation
         Committee (the  "Committee"),  which shall consist of not less than two
         Directors appointed by the Board.

                  (b) The  Committee  shall  have  full and final  authority  to
         interpret  the Plan,  adopt,  amend and rescind  rules and  regulations
         relating to the Plan,  and make all other  determinations  and take all
         other actions  necessary and  advisable for the  administration  of the
         Plan.

                  (c)  Decisions  and  determinations  of the  Committee  on all
         matters  relating to the Plan shall be in its sole discretion and shall
         be  conclusive.  No member  of the  Committee  shall be liable  for any
         action  taken or decision  made in good faith  relating to this Plan or
         any grant hereunder.

                  (d) An  Administrator  of the plan  may  from  time to time be
         appointed by the Committee.  If appointed,  such Administrator shall be
         responsible for the general administration of the Plan under the policy
         guidance of the Committee.  The Administrator shall be in the employ of
         the Company,  and shall be compensated for services and expenses by the
         Company according to its normal employment  policies without special or
         additional compensation,  other than reimbursement of expenses, if any,
         for his or her services as the Administrator.

     5. Terms and Conditions: Stock Option Awards. Each option granted under the
Plan  shall  be  evidenced  by a  written  award  document  in  such  form,  not
inconsistent  with this Plan, as the Committee  shall approve from time to time,
which  document  shall  comply  with and be subject to the  following  terms and
conditions:

                  (a) Option  Grant  Dates.  Options  shall be granted as of the
         date of the annual  organizational  meeting of the Board  which is held
         following the Company's annual meeting of shareholders, to any Director
         who,  no later than the date of such annual  organizational  meeting of
         the Board (and subject to such other rules as the  Committee  may adopt
         from time to time), has filed with the Company an irrevocable  election
         to  receive  a  stock  option  in lieu  of all or a  specified  portion
         (expressed in terms of a percentage of Annual Director Compensation) of
         the Annual  Director  Compensation  (as  defined in  Subsection  5 (b))
         expected  to be  earned  by such  Director  for a  twelve-month  period
         beginning on the first day of the third  fiscal  quarter of the Company
         and ending on the last day of the second fiscal  quarter of the Company
         ("Plan  Year").  A separate  election  must be made for each Plan Year,
         although a Director may specify that a particular  election shall apply
         to future Plan Years unless amended or revoked; provided, however, that
         no amendment or revocation  may be made during a Plan Year with respect
         to such Plan Year.  The  Director  shall not be  entitled to receive in
         cash any  portion  of the  Annual  Director  Compensation  for which an
         election has been made to receive an option.

                  (b)  Option  Formula.  The  number of  shares of Common  Stock
         subject to each option granted to any Director for a Plan Year shall be
         equal to the nearest  number of whole  shares of Common Stock with cash
         payment  for  fractional  shares,  determined  in  accordance  with the
         following formula.

                           Annual Director Compensation
                          Fair Market Value minus Option    = Number of Shares
                                    Exercise Price

         "Option Exercise Price" and "Fair Market Value" shall be defined as set
         forth in Subsection 5(c). "Annual Director Compensation" shall mean the
         amount of fees which the Director will be entitled to receive  during a
         Plan Year for serving as a Director or as a member of any  committee of
         the  Board  pursuant  to the  policy  in  effect  for each  Plan  Year,
         including  retainers paid  periodically and fees paid for attendance at
         or  participation  in meetings of the Board or any  committee  thereof;
         provided,  however, that if a Director elects to receive a stock option
         in lieu of only a portion  of the  Annual  Director  Compensation,  the
         Annual  Director  Compensation  for purposes of the  foregoing  formula
         shall equal the portion of the Annual Director Compensation so elected.
         To the extent that a portion of Annual Director  Compensation  includes
         fees for  attending  or  participating  in meetings of the Board or any
         committee thereof,  for purposes of the election to be made pursuant to
         Subsection  5(b), the Committee shall advise each Director,  in advance
         of the next Plan Year, of the number of such meetings anticipated to be
         held during such Plan Year and the  election  may take the fees related
         thereto into account.  To the extent fewer or greater such meetings are
         actually held during the Plan Year, an appropriate  adjustment shall be
         made in the  number of shares of Common  Stock  subject  to any  option
         awarded.  For  Purposes of this Plan,  "Annual  Director  Compensation"
         shall not include expenses  reimbursed by the company for attendance at
         or participation in meetings of the Board or any committee of the Board
         or fees for any other services to be provided to the Company.

                  (c) Option Exercise Price.  The "Option Exercise Price" refers
         to the pershare  purchase price for common Stock subject to each option
         granted under the Plan and that per share purchase price shall be fifty
         percent  (50%) of the Fair Market Value of the Common Stock on the date
         the option is granted.  "Fair Market Value" with regard to a date means
         the closing price at which a share of Common Stock shall have been sold
         on the last trading date prior to that date as reported by the National
         Association of Securities Dealers Automated Quotation System ("NASDAQ")
         (or,  if  applicable,  as reported  by a national  securities  exchange
         selected by the  Committee on which the shares of Common Stock are then
         actively traded) and published in The Wall Street Journal.

                  (d) Term and Exercise of Option. Options may be exercised only
         by  written  notice to the  Company.  Payment  for all shares of Common
         Stock purchased  pursuant to exercise of an option shall be made (a) in
         cash;  (b) by  delivery  to the Company of a number of shares of Common
         Stock which have been  beneficially  owned by the option  holder for at
         least six (6) months prior to the date of exercise  having an aggregate
         Fair Market  Value of not less than the product of the  exercise  price
         multiplied  by the  number of  shares  the  option  holder  intends  to
         purchase upon exercise of the option on the date of delivery; or (c) in
         a cashless exercise through a broker. Payment shall be made at the time
         that the option or any part thereof is  exercised,  and no shares shall
         be issued or  delivered  upon  exercise of an option until full payment
         has been made by the option  holder.  No option  granted under the Plan
         may be exercised before the  twelve-month  anniversary of the date upon
         which it was granted; provided,  however, that any option granted under
         the Plan shall become  immediately  exercissable upon the retirement of
         the Director  because of age,  death or  disability.  No option granted
         under the Plan shall be  exercisable  after  expiration of twenty years
         from the date upon which it is granted. Each option shall be subject to
         termination  before its date of expiration as  hereinafter  provided in
         Subsections 5(e) and 5(f).

                  (e) Termination of  Directorship.  Except as herein  provided,
         the rights of a Director or the Director's  permitted  transferee in an
         option granted under the Plan shall not terminate upon such  Director's
         termination as a Director for any reason (including  retirement because
         of age, death or  disability).  That portion of an option granted under
         the Plan which is  attributable  to any portion of the Annual  Director
         Compensation which is not earned due to termination as a Director or as
         a member of a  committee  of the Board  (for any  reason) or because of
         lack of attendance or  participation in any meeting of the Board or any
         committee thereof shall automatically abate and be cancelled.

                  (f) Death of  Director.  Any option  granted to a Director and
         outstanding  on the date of his or her  death may be  exercised  by the
         administrator of such Director's  estate, the executor under his or her
         will,  or the  person or  persons  to whom the  option  shall have been
         validly  transferred  in accordance  with Section 8, but not beyond the
         first to occur of (i) the first anniversary of the Director's death, or
         (ii) the specified  expiration date of the option;  provided,  however,
         that an option that is not exercised prior to the first  anniversary of
         the Director's death shall be deemed exercised on the first anniversary
         of the date of death to the extent the then aggregate Fair Market Value
         of the shares  subject  to the  option  exceeds  the  aggregate  Option
         Exercise  Price and payment of such exercise price shall be effected by
         withholding  a number  of shares of  Common  Stock  otherwise  issuable
         pursuant  to the  option  the  Fair  Market  Value  of  which  on  such
         anniversary is equal to the exercise price. If the Fair Market Value of
         the Stock on the first anniversary of the Director's death equals or is
         less than the option exercise price, then the option shall be deemed to
         have expired unexercised.

         6. Changes in Capitalization. If the outstanding shares of Common Stock
are increased,  decreased or exchanged for a different  number or kind of shares
or other  securities,  or if  additional  shares of other  property  (other than
ordinary cash dividends) are  distributed  with respect to such shares of Common
Stock  or  other  securities,  through  merger,  consolidation,  sale  of all or
substantially   all   of   the   assets   of   the   Company,    reorganization,
recapitalization, reclasssification, dividend, stock split, reverse stock split,
spin-off,  split-off or other distribution with respect to such shares of common
stock, or other securities,  an appropriate and proportionate  adjustment may be
made in (i) the maximum  number and kind of shares  reserved for issuance  under
the Plan, (ii) the number and kind of shares or other securities subject to then
outstanding  options under the Plan,  and (iii) the price for each share subject
to any then  outstanding  options under the Plan.  No fractional  shares will be
issued under the Plan on account of any such adjustments.

<PAGE>

         7.  Limitation of Rights:

                  (a) No Right to Continue as a Director.  Neither the Plan, nor
         the granting of an option,  nor any other action taken  pursuant to the
         Plan,  shall  constitute  evidence of any  agreement or  understanding,
         express or implied,  that the Company  will retain a  participant  as a
         Director  for  any  period  of  time,  or at  any  particular  rate  of
         compensation.

                  (b) No  Shareholders'  Rights  for  Options.  The holder of an
         option  granted  under the Plan shall  have no rights as a  shareholder
         with respect to the shares covered by his or her options until the date
         of the issuance to such holder of a stock certificate therefor,  and no
         adjustment  will be made for  dividends  or other  rights for which the
         record date is prior to the date such certificate is issued.

                  (c)  No  Right  to  Participate  as an  Employee  Director.  A
         Director's  right  to  participate  in  the  Plan  shall  automatically
         terminate  if and when a Director  becomes an employee of the  Company.
         That portion of an option granted under the Plan which is  attributable
         to any Unearned Annual Director  Compensation shall automatically abate
         and be cancelled.  "Unearned Annual Director  Compensation"  shall mean
         any portion of Annual Director Compensation which relates to attendance
         or participation  in any meeting of the Board or any committee  thereof
         occurring  after  the date the  Director's  employment  by the  Company
         commences, or which consists of a retainer earned after such date.

         8. Transferability. Options are transferable by a Director: (i) through
will or the laws of lineal descent; (ii) to the spouse or any lineal ancestor or
descendant of the Director;  (iii) to any trust, the sole beneficiaries of which
are  any one or all of such  Director,  such  Director's  spouse  or any  lineal
ancestors  or  descendants  of such  Director;  and (iv) to any other  person or
entity as the  Committee  may  approve.  A holder of an  Option  other  than the
Director may not  transfer  such option other than by will or the laws of lineal
descent.

         9. Amendment,  Modification and Termination.  The Board at any time may
terminate and in any respect amend or modify the Plan; provided,  however,  that
no such action by the Board, without approval of the Company's  shareholders may
(i) increase the total number of shares of Common Stock available under the Plan
in the  aggregate  (except as otherwise  provided in Section 6), (ii) extend the
period  during which any option may be  exercised,  (iii) extend the term of the
Plan, (iv) change the option price or (v) alter the class of persons eligible to
receive options. No amendment,  modification or termination of the Plan shall in
any manner  adversely  affect the rights of any  participant  with respect to an
option previously granted.

     10.  Notice.  Any  written  notice to the  Company  required  by any of the
provisions  of the Plan shall be  addressed  to the  Corporate  Secretary of the
Company and shall become effective when it is received.

         11. Restrictions on Delivery and Sale of Shares;  Legends.  Each option
is  subject  to  the  condition  that  if at  any  time  the  Committee,  in its
discretion,  shall determine that the listing,  registration or qualification of
the shares  covered by such  option  upon any  securities  exchange or under any
state  or  federal  law  is  necessary  or  desirable  as a  condition  of or in
connection  with the  granting  of such  option or the  purchase  or delivery of
shares thereunder, the delivery of any or all shares pursuant to such option may
be withheld unless and until such listing,  registration or qualification  shall
have been  effected.  If a  registration  statement  is not in effect  under the
Securities Act of 1933 or any applicable  state  securities laws with respect to
the shares of Common Stock  purchasable or otherwise  deliverable  under options
then outstanding,  the Committee may require,  as a condition of exercise of any
option or as a condition to any other  delivery of Common  Stock  pursuant to an
option, that the option holder represent,  in writing,  that the shares received
pursuant to the option are being  acquired for investment and not with a view to
distribution  and agree that the shares will not be disposed of except  pursuant
to an effective registration  statement,  unless the Company shall have received
an opinion of counsel  that such  disposition  is exempt  from such  requirement
under the Securities Act of 1933 and any applicable  state  securities laws. The
Company may include on  certificates  representing  shares issued pursuant to an
option such legends referring to the foregoing  representations  or restrictions
or  any  other  applicable  restrictions  on  resale  as  the  Company,  in  its
discretion, shall deem appropriate.

IN WITNESS  WHEREOF,  the Company has caused this Amended Plan to be executed in
this form on June 21, 2000.

                                                 GOODY'S FAMILY CLOTHING, INC.

                                            By:      /s/ Robert M. Goodfriend
                                                      Chairman of the Board

         ATTEST:

                  /s/ Regis J. Hebbeler
         Asst. Secretary

         [CORPORATE SEAL]

H:Stock\Director's Plan\Amended and Restated.doc

<PAGE>Exhibit 10.83

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                          GOODY'S FAMILY CLOTHING, INC.

                                       AND

                                                     JOHN A. PAYNE

<PAGE>

                                TABLE OF CONTENTS

1.       Definitions......................................................1
         -----------

2.       Employment.......................................................3
         ----------

3.       Term.............................................................3
         ----

4.       Position and Duties; Business Time...............................3
         ----------------------------------

5.       Compensation.....................................................3
         ------------

6.       Termination of Employment........................................5
         -------------------------

7.       Obligations of the Company Upon Termination......................6
         -------------------------------------------

8.       Change of Control................................................8
         -----------------

9.       Non-exclusivity of Rights........................................8
         -------------------------

10.      Full Settlement..................................................8
         ---------------

11.      Arbitration of Disputes..........................................8
         -----------------------

12.      Confidential Information and Nonsolicitation.....................9
         --------------------------------------------

13.      Successors.......................................................9
         ----------

14.      Miscellaneous....................................................10
         -------------

<PAGE>

97295-11 ~ 03833-0 ~ 08/16/00 ~ 03:38PM
                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, by and between GOODY'S FAMILY CLOTHING,  INC., a
Tennessee  corporation  (the  "Company"),  and JOHN A. PAYNE (the  "Executive"),
shall be effective as of the 18th_ day of July, 2000.
                                      ----

                                    RECITALS:

         WHEREAS,  the Company  plans to hire the  Executive  as the Senior Vice
President - General Merchandise  Manager for Men's,  Children's and Shoes of the
Company and the Executive desires to accept such employment,  upon the terms and
subject to the conditions set forth in this Agreement.

         NOW,  THEREFORE,  in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:

                  1.       Definitions.
                           -----------

                  (a) "Accrued  Obligations" shall mean (i) the Executive's Base
Salary  through  the Date of  Termination,  (ii)  any  amounts  deferred  by the
Executive and not yet paid by the Company  pursuant to a valid election to defer
the receipt of all or a portion of such  payments  made in  accordance  with any
plan of deferred compensation sponsored by the Company and any earned but unpaid
vacation pay for the current  year,  (iii) any amounts or benefits  owing to the
Executive or to the Executive's beneficiaries under the then applicable employee
benefit  plans or policies  of the  Company  and (iv) any  amounts  owing to the
Executive  for  reimbursement  of expenses  properly  incurred by the  Executive
through the Date of Termination  and which are  reimbursable  in accordance with
the reimbursement policy of the Company described in Section 5(e).

<PAGE>

                                        8
97295-11 ~ 03833-0 ~ 08/16/00 ~ 03:38PM
      (b)      "Base Salary" shall have the meaning set forth in Section 5(a).
                -----------

      (c)      "Board" shall mean the Board of Directors of the Company.
                -----

                  (d) "Cause" shall mean that the Executive has, in the judgment
of a majority of the Board (i) committed a felony, or committed an act of fraud,
embezzlement  or theft in connection  with his duties with the Company or in the
course of his  employment  with the Company;  (ii)  willfully  caused  damage to
property of the Company;  (iii) been convicted of a criminal  offense  (either a
misdemeanor  involving  acts of  dishonesty,  theft  or  moral  turpitude,  or a
felony);  or (iv)  engaged in a willful and material  breach of his  obligations
under Section 4 of this  Agreement  which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice,  and which has
not been cured to the reasonable  satisfaction  of the Board within a reasonable
period of time, which shall not be less than ten (10) days, nor more than thirty
(30) days, following receipt of such written notice by the Executive.  The Board
shall provide the Executive  with an opportunity to meet with the Board in order
to provide the Executive an  opportunity  to refute or explain acts or omissions
referred to in such written notice.  For the purpose of this Section,  no act or
omission  shall be considered  willful  unless done or omitted to be done in bad
faith and without  reasonable  belief that such act or omission  was done in the
best interest of the Company.

                  (e) A "Change of Control" of the Company  shall mean and shall
be deemed to have  occurred  if (i) any person or group  (within  the meaning of
Rule  13d-3 of the  rules  and  regulations  promulgated  under  the  Securities
Exchange Act of 1934, as amended (the "1934 Act  Rules")),  other than Robert M.
Goodfriend,  members of his immediate family, his affiliates,  trusts or private
foundations  established  by or on his  behalf,  and  the  heirs,  executors  or
administrators  of Robert M.  Goodfriend,  shall  acquire  in one or a series of
transactions,  whether  through  sale of stock or  merger,  more than 50% of the
outstanding  voting  securities  of the Company or any  successor  entity of the
Company, (ii) all or substantially all of the Company's assets are sold or (iii)
the shareholders of the Company approve a complete liquidation or dissolution of
the Company.

                  (f) "Change of Control  Date" shall mean (i) the closing  date
on which a Change of Control shall have occurred,  (ii) in the case of a sale of
all or substantially  all of the Company's  assets,  the closing date on which a
Change of Control shall have occurred after shareholder approval is obtained, or
(iii) in the case of complete  liquidation or  dissolution  of the Company,  the
date on which shareholder approval is obtained.

<PAGE>
(g)      "Date of Termination" shall have the meaning set forth in Section 6(e).
          -------------------

                  (h) "Disability"  shall mean disability  whereby the Executive
is unable to render the  services  provided  for by this  Agreement by reason of
illness,   injury  or  incapacity  (whether  physical,   mental,   emotional  or
psychological)  for a period of either (i) ninety (90)  consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred  sixty-five (365)
day period.

 (i)      "Incentive Bonus" shall have the meaning as set forth in Section 5(b).
           ---------------

 (j)      "Incentive Plan" shall have the meaning as set forth in Section 5(b).
           --------------

 (k)"Notice of Termination" shall have the meaning as set forth in Section 6(d).
     ----------------------

                  (l) "Qualified Plan" shall mean any retirement plan maintained
by the  Company  which is  intended  to meet the  requirements  of the  Internal
Revenue Code of 1986, as amended.

  (m)      "Subsidiary" shall mean any majority-owned subsidiary of the Company.
            ----------

 (n)      "Supplemental Payment Date" shall have the same meaning as set forth
in Section 7(c).

     2.  Employment.  The Company hereby  employs as the Senior Vice  President,
General Merchandise  Manager for Men's,  Children's and Shoes of the
Company and the Executive hereby accepts such employment.

     3. Term.  The  Executive's  employment  will commence on July 18, 2000. The
Executive shall be considered an at-will employee and his employment may be
terminated by either party subject to the  obligations  of the parties upon such
termination as set forth in this Agreement.

  4.       Position and Duties; Business Time.
           ----------------------------------

<PAGE>

                  (a)  Position and Duties.  The  Executive  shall  continue his
service  as Senior  Vice  President,  General  Merchandise  Manager  for  Men's,
Children's and Shoes of the Company or another position which shall be either of
comparable rank or a promotion and shall continue to have such  responsibilities
and duties as assigned to him by the Chief Executive Officer of the Company, the
President  of the  Company,  the Chief  Operating  Officer of the Company or the
Board from time to time.

                  (b) Business  Time.  The  Executive  agrees to devote his full
business  time to the  business  and  affairs of the Company and to use his best
efforts to perform faithfully and efficiently the  responsibilities  assigned to
him  hereunder,  to the extent  necessary  to discharge  such  responsibilities,
except for:

     (i) time spent in managing his  personal,  financial  and legal affairs and
serving on corporate,  civic or charitable  boards or  committees,  in each case
only if and to the extent not substantially  interfering with the performance of
such responsibilities, and

     (ii)  periods of vacation to which he is  entitled,  periods of illness and
other absences beyond his control.

It is  expressly  understood  and  agreed  that  the  continued  service  by the
Executive on any boards and  committees  on which he is serving or with which he
is otherwise associated immediately preceding the date hereof, or his service on
any other  boards  and  committees  shall not be  deemed to  interfere  with the
performance of the Executive's  services to the Company;  provided,  that in the
case of boards or committees on which the Executive is not currently serving the
Executive  provides  written  notice  of his  intention  to serve  and the Board
thereafter  approves such service  (other than  non-compensatory  positions with
local boards or  committees  e.g.  charitable,  chamber of commerce or homeowner
associations which shall not require approval).

     5.  Compensation.   The  Executive  shall  be  entitled  to  the  following
compensation and benefits for as long as the Executive  remains an
employee of the Company:

<PAGE>

                  (a) Base Salary.  The  Executive  shall  receive a base salary
(the "Base  Salary")  payable  in equal  bi-weekly  installments  (or such other
installments  as are  provided  by the Company for  employees  generally)  at an
annual  rate  of   $225,000.00.   The  Company  shall  review  the  Base  Salary
periodically and in light of such review may, in its sole  discretion,  increase
(but not  decrease)  the Base  Salary  taking  into  account  any  change in the
Executive's responsibilities, increases in compensation of other executives with
comparable  responsibilities,  performance of the Executive and other  pertinent
factors,  and such adjusted Base Salary shall then  constitute the "Base Salary"
for purposes of this Agreement.

                  (b)  Short  Term  Incentive   Plan  Bonus.   The  Company  has
established a "Short Term Incentive Plan" (the "Incentive Plan") under which the
Executive  shall be  eligible to  participate  for each fiscal year he holds the
position  stated  in  Section  2 and  shall be  eligible  to  receive  an annual
incentive  target  bonus of not  less  than 60% of the  Base  Salary  earned  by
Executive  during  each  fiscal  year based on  performance  and other  specific
objectives  adopted by the  Compensation  Committee of the Board (the "Incentive
Bonus").

                  (c) Incentive and Savings Plans;  Retirement and Death Benefit
Programs.  The Executive  shall be entitled to  participate in all incentive and
savings plans and programs,  including stock option plans and other equity-based
compensation  plans, and in all employee  retirement,  executive  retirement and
executive  death  benefit  plans on a basis no less  favorable  than that  basis
generally available to executives of the Company holding comparable positions or
having comparable responsibilities.

                  (d) Other Benefit Plans.  The Executive,  his spouse and their
eligible  dependents  (as  defined  in,  and to the  extent  permitted  by,  the
applicable  plan), as the case may be, shall be entitled to participate in or be
covered under all medical,  dental,  group  disability,  group life,  severance,
accidental death and travel accident insurance plans and programs of the Company
to the extent such plans and programs are  generally  available to executives of
the Company holding comparable positions or having comparable responsibilities.

          (e)      Other Perquisites.  The Executive shall also be entitled to:
                   -----------------

     (i)  prompt  reimbursement  for all  reasonable  expenses  incurred  by the
Executive in accordance with the policies and procedures of the Company;

     (ii) three (3) weeks paid vacation, such paid vacation time to be increased
(but not decreased) in accordance with Company policy;

     (iii) an  automobile  shall be provided by the Company with  expenses to be
paid in  accordance  with the  Company's  policies and  procedures  with respect
thereto; and
     (iv)  an  office  or  offices  suitable  for  an  executive   officer  with
secretarial  and  other  assistance  as  shall  reasonably  be  required  by the
Executive.

                  (f)  Equity  Opportunity.  The  Executive  shall be  granted a
non-qualified  stock  option under the  Company's  1997 Stock Option Plan on the
date of commencement of his employment with the Company to purchase an aggregate
of thirty thousand (30,000) shares of common stock of the Company at an exercise
price equal to the closing  sales price of the common  stock on the business day
immediately  preceding the date of grant,  which option shall vest in annual 20%
increments  beginning  one year from the date of grant and expire ten (10) years
from the date of grant,  and shall be upon such other  terms and  conditions  as
contained in the Company's standard form of option agreement.

     (g) Sign-on Bonus.  As additional  compensation,  the Company shall pay the
Executive  a sign-on bonus of $10,000,  payable  within five (5)
days after the date his employment with the Company commences.

                  (h) Relocation  and Temporary  Lodging  Expenses.  The Company
will  reimburse the Executive  (upon  presentation  of  appropriate  vouchers or
receipts in accordance with the Company's expense  reimbursement  policies) for,
or pay directly, the following costs and expenses relating to his relocation:

     (i) all reasonable expenses of moving the Executive's  possessions from his
Gastonia, North Carolina residence (the "Gastonia Residence") to the Executive's
new  permanent   residence  in  the  Knoxville   (the   "Knoxville   Residence")
metropolitan area;

     (ii) all reasonable standard fees, commissions, closing costs and brokerage
fees associated with the sale of the Gastonia Residence;

     (iii) all reasonable standard closing costs associated with the purchase of
the  Executive's  Knoxville  Residence,  as well  as  $5,000  for  miscellaneous
expenses for the Knoxville Residence; and

     (iv) all reasonable lease or rental payments  incurred by the Executive for
temporary  lodging of the  Executive for a period of ninety (90) days during the
first six (6) months of the term of this Agreement.

                  6.       Termination of Employment.
                           -------------------------

                  (a)   Disability;   Death.   The  Company  may  terminate  the
Executive's employment after having established the Executive's  Disability,  by
giving  to the  Executive  written  notice of its  intention  to  terminate  his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.

                  (b) Voluntary  Termination by the  Executive.  Notwithstanding
anything in this  Agreement to the contrary,  the  Executive  may, upon not less
than thirty (30) days'  written  notice to the  Company,  voluntarily  terminate
employment for any reason (including retirement under the terms of the Company's
retirement plan as in effect from time to time).

<PAGE>

     (c)  Termination by the Company.  The Company at any time may terminate the
Executive's employment for Cause or without Cause.

                  (d) Notice of Termination.  Any termination by the Company for
Cause  or by  the  Executive  shall  be  communicated  by a  written  Notice  of
Termination  to the other party hereto given in accordance  with Section  14(c).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given in the case of a  termination  for Cause which (i)  indicates the specific
termination  provision  in this  Agreement  relied  upon,  (ii)  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 termination  date is other than the date of receipt of such notice,
specifies  the  termination  date (which date shall be not more than thirty (30)
days after the receipt of such notice).

                  (e) Date of  Termination.  For the purpose of this  Agreement,
the term "Date of Termination"  means (i) in the case of a termination for which
a Notice of  Termination  is  required,  the date of receipt  of such  Notice of
Termination or, if later,  the date specified  therein,  as the case may be, and
(ii) in all other  cases,  the actual date on which the  Executive's  employment
terminates.

     7.  Obligations of the Company Upon  Termination.  Upon  termination of the
Executive's employment with the Company, the Company shall have the following
obligations:

<PAGE>

                  (a)  Death,  Disability  and  Retirement.  If the  Executive's
employment is  terminated by reason of the  Executive's  death,  Disability,  or
retirement on or after the attainment of age sixty-five  (65), the Company shall
have no further obligations to the Executive's legal  representatives under this
Agreement  other than  payment of the Accrued  Obligations.  If the  Executive's
employment is terminated by reason of the Executive's  death or Disability,  the
Company  shall  have the  additional  obligation,  subject  to the  terms of the
Incentive Plan and further  provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable  fiscal year, to pay
a cash  amount  equal to a portion  of the  Incentive  Bonus,  the  product of a
fraction,  the  numerator of which is the number of days elapsed  since the date
the Incentive Plan began for the applicable  fiscal year through the date of the
Disability or the date of death of the Executive,  and the  denominator of which
is the total  number of days of the  applicable  fiscal year for such  Incentive
Plan.  Unless  otherwise  directed  by the  Executive  (or,  in the  case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified  Plan) all Accrued  Obligations  shall be paid to the  Executive,  his
beneficiaries or his estate, as applicable,  in a lump sum in cash within thirty
(30) days of the Date of  Termination.  In the event of the  termination  of the
Executive by reason of retirement on or after the  attainment of age  sixty-five
(65), death or Disability,  he and/or his named  beneficiaries,  as the case may
be, shall be entitled to the benefits  available  through the Company  sponsored
plans and programs  designated  for such category of  termination on Schedule A.
With  regard  to the  termination  of the  Executive's  employment  by reason of
retirement on or after the attainment of age sixty-five (65) or Disability,  the
Company shall pay the premiums (to the same extent paid prior to the termination
of employment) for the continued  participation of the Executive for a period of
six (6) months after the Date of Termination  in any  individual  life insurance
policy on the same terms as the  Executive  and the Company  were  participating
prior to the Date of Termination. Further, with regard to the termination of the
Executive's  employment  by reason of the  Executive's  death,  retirement on or
after the  attainment of age sixty-five  (65) or Disability,  the Company shall,
for a period of six (6) months after the Executive's  Date of  Termination,  pay
the entire COBRA premium under any Company  medical and dental  program that the
Executive (and his spouse and eligible dependents) was participating in prior to
the  termination  of  employment.  The  Company's  premium  obligations  in  the
preceding two sentences shall exclude normal employee  contributions paid by the
Executive prior to the Date of Termination. In addition to the foregoing, in the
event of  termination  of the  Executive's  employment by reason of the death or
Disability of the  Executive,  all unvested  stock options held by the Executive
shall  become fully  vested,  effective  on the Date of  Termination,  and shall
thereafter be  exercisable  in accordance  with the provisions of the applicable
Option Plan (including, without limitation, Sections 5 and 6 thereof) and Option
Agreement.

                  (b)  Termination  by  the  Company  for  Cause  and  Voluntary
Termination by the Executive.  If the Executive's employment shall be terminated
for Cause or  voluntarily  terminated by the Executive the Company shall pay the
Executive the Accrued Obligations.  The Executive shall be paid all such Accrued
Obligations  in a lump  sum in cash  within  thirty  (30)  days  of the  Date of
Termination  and the Company shall have no further  obligations to the Executive
under this Agreement, unless otherwise required by a Qualified Plan or specified
pursuant  to a valid  election  to defer the receipt of all or a portion of such
payments made in accordance with any plan of deferred compensation  sponsored by
the Company.

     (c)  Other  Termination  of  Employment.  If  the  Company  terminates  the
Executive's  employment other  than for Cause,
death or  Disability,  the Company  shall pay and provide to the  Executive  the
following:

<PAGE>

     (i) Severance Payment. The Company shall pay to the Executive in a lump sum
in cash or certified check within fifteen (15) days after the
Date of  Termination  a  severance  payment  equal  to the sum of the  following
amounts (other than amounts payable from the Incentive Plan or Qualified  Plans,
non-qualified  retirement plans and deferred  compensation  plans, which amounts
shall be paid in accordance with the terms of such plans):

                                    (A)     all Accrued Obligations;

     (B) a cash amount equal to six (6) months of the Executive's Base Salary at
the rate in effect as of the date when the Notice of Termination was given;

     (C) subject to the terms of the  Incentive  Plan and further  provided that
the  Executive  has been employed by the Company for the first six (6) months of
the then  applicable  fiscal  year,  a cash  amount  equal to a  portion  of the
Incentive Bonus, the product of a fraction, the numerator of which is the number
of days  elapsed  since the date the  Incentive  Plan  began for the  applicable
fiscal year through the date of such  Termination or termination  without Cause,
and the  denominator  of which is the  total  number  of days of the  applicable
fiscal year for such Incentive Plan.

In addition,  if the  Executive  has not accepted  employment  from a subsequent
employer  prior  to the  date  which  is  seven  (7)  months  from  the  Date of
Termination (the  "Supplemental  Payment Date"),  commencing on the Supplemental
Payment  Date the  Company  shall pay the  Executive  an  amount  equal to fifty
percent  (50%) of his  monthly  Base Salary at the rate in effect as of the date
when the Notice of Termination was given in equal monthly installments until the
earlier of (i) the payment of the sixth (6th) monthly  installment;  or (ii) the
date of the Executive's acceptance of employment from a subsequent employer. The
Executive shall notify the Company  immediately  upon his acceptance of any such
new  employment  if secured  prior to the payment by the Company of such six (6)
additional monthly installments.

                  (d)  Release.  As a condition  precedent to the receipt of any
termination  benefits  payable  to the  Executive  under  this  Section  7,  the
Executive  agrees to execute a general release among other things  releasing the
Company from any obligation or liability (other than those contained in Sections
7, 8, 9, 10, 11, 13 and 14 hereof,  to the extent an  obligation  under any such
section arose at or prior to the Date of Termination  and remains  unfulfilled).
Such release shall exclude the Executive's rights under any Qualified Plan.

                  (e)  Discharge  of  Company's  Obligations.   Subject  to  the
performance  of its  obligations  under Sections 7, 8, 9, 10, 11, 13 and 14 (and
then, only to the extent an obligation  under any such section arose at or prior
to the Date of Termination and remains  unfulfilled),  the Company shall have no
further  obligations  to the  Executive  under this  Agreement in respect of any
termination of employment.

<PAGE>

                  8.  Change  of  Control.  Upon the  occurrence  of a Change of
Control, the Company shall pay the Executive, as consideration for assisting the
Company in bringing  about a successful  transaction,  an amount equal to twelve
(12)  months  of the  Executive's  Base  Salary  at the rate in effect as of the
Change of Control  Date.  Such amount  shall be payable in a lump sum in cash or
certified check within five (5) days after the Change of Control Date.

                  9. Non-exclusivity of Rights.  Nothing in this Agreement shall
prevent  or limit the  Executive's  continuing  or future  participation  in any
benefit,  bonus,  incentive or other plan or program provided by the Company and
for  which  the  Executive  may  qualify,  nor shall  anything  herein  limit or
otherwise  prejudice  such  rights  as the  Executive  may have  under any other
agreements  with  the  Company,  including,  but not  limited  to  stock  option
agreements.  Amounts  which  are  vested  benefits  or which  the  Executive  is
otherwise  entitled  to receive  under any plan or program of the  Company at or
subsequent to the Date of Termination  shall be payable in accordance  with such
plan or program.

     10. Full  Settlement.  The  Executive  shall not be obligated to seek other
employment by way  of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement.

                  11.  Arbitration  of  Disputes.  In the event that a claim for
payment or  benefits  under this  Agreement  is  disputed,  the  Company and the
Executive  agree to submit such  dispute to final and binding  arbitration  with
United States Arbitration and Mediation,  Inc. ("USAM") in Knoxville,  Tennessee
or such other  arbitration  firm as the Company and the Executive shall mutually
agree.  Either party wishing to arbitrate any claim  hereunder  shall notify the
other party and USAM in writing whereupon USAM shall select a neutral arbitrator
and shall schedule an arbitration  hearing within thirty (30) days of receipt of
such notice of  arbitration.  The  arbitration  shall be conducted in accordance
with the rules and procedures of USAM.  The parties agree that any  arbitrator's
award may be presented to a court of competent jurisdiction and judgment entered
thereon.

                  12.      Confidential Information and Nonsolicitation.
                           --------------------------------------------

<PAGE>

                  (a) The Executive  shall hold in a fiduciary  capacity for the
benefit of the  Company all secret or  confidential  information,  knowledge  or
data,  including without limitation all trade secrets,  relating to the Company,
and its  business,  (i) obtained by the Executive  during his  employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an  unauthorized  act by the  Executive)  and is  subject  to  efforts  that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's  employment with the Company,  the Executive shall not,  without
the prior written consent of the Company,  unless compelled pursuant to an order
of a court or other body having  jurisdiction  over such matter,  communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.

                  (b) Upon  termination  of the  Executive's  employment for any
reason, the Executive,  for the twelve (12) month period following the Notice of
Termination,  shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly  solicit or aid in the  solicitation  of any employees of
the Company to leave their employment.  In the event the Executive  violates the
terms of Section  12(a) or this Section  12(b),  the Employee  shall forfeit the
right to all salary and benefits  that the Executive  and/or his family  members
were otherwise  entitled  pursuant to the terms of Section 7. Also, in the event
that this Section 12 is  determined  to be  unenforceable  in part,  it shall be
construed to be enforceable to the maximum extent permitted by law.

                  (c) The Executive agrees that the covenants of confidentiality
and non-solicitation contained in this Section 12 are reasonable covenants under
the circumstances and necessary to protect the business interests and properties
of the Company.  The Executive  agrees that  irreparable loss and damage will be
suffered  by the  Company  should  the  Executive  breach  any of the  covenants
contained  in this  Section  12.  Accordingly,  the  Executive  agrees  that the
Company,  in addition  to all  remedies  provided at law or in equity,  shall be
entitled  to  a  temporary   restraining   order  and  temporary  and  permanent
injunctions to prevent a breach or  contemplated  breach of any of the covenants
contained in this Section 12.

                  13.      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.  The  Company  shall  require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Company,  whether  direct  or  indirect,  by  purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.

<PAGE>

                  14       Miscellaneous.
                           -------------

     (a) Applicable  Law. This  Agreement  shall be governed by and construed in
accordance  with  the laws of the State of  Tennessee,  applied
without reference to principles of conflict of laws.
                  (b) Amendments.  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.

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

        If to the Executive:      at the address listed on the last page hereof

        If to the Company:        Goody's Family Clothing, Inc.
                                  400 Goody's Lane
                                  P.O. Box 22000
                         Knoxville, Tennessee 37933-2000
                           Attention: General Counsel

(with a copy to the  attention  of the  Secretary  or to such  other  address as
either  party  shall  have  furnished  to the  other in  writing  in  accordance
herewith).  Communications  delivered by hand or by overnight  delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified  mail  shall be deemed  received  three (3)  business  days  after the
sending thereof.

     (d) Tax  Withholding.  The Company may  withhold  from any amounts  payable
under this Agreement  such  federal,  state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

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

     (f) Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

<PAGE>

                  (g) Entire  Agreement.  This  Agreement  expresses  the entire
understanding  and agreement of the parties  regarding the terms and  conditions
governing the Executive's  employment with the Company, and all prior agreements
governing  the  Executive's  employment  with the Company  shall have no further
effect.

<PAGE>

                            Draft - 08/29/00 10:08 AM
9

                  IN WITNESS  WHEREOF,  the  Executive has hereunto set his hand
and the  Company  has caused  this  Agreement  to be executed in its name on its
behalf,  and its  corporate  seal to be  hereunto  affixed  and  attested by its
Secretary, all effective as of the day and year first above written.

                                       GOODY'S FAMILY CLOTHING, INC.

                                By:___/s/ Robert M. Goodfriend____________
                                     ------------------------
                                          Robert M. Goodfriend
                                Title:   Chairman and Chief Executive Officer
ATTEST:

______/s/ Regis J. Hebbeler_________
      ---------------------
Title:____Asst. Sec._______________
          ----------

(CORPORATE SEAL)

                                                     EXECUTIVE:  John A. Payne

                                       ______/s/ John A. Payne_______________
                                            -----------------
                                            Name:    John A. Payne

                                    Address:

<PAGE>

                                          SCHEDULE A -JOHN A. PAYNE

                  The  following is a summary list of benefits  available to the
Executive upon termination of the Executive's employment by reason of retirement
on or after the attainment of age sixty-five (65),  death or Disability  through
Company  sponsored plans and programs as of the date of this Agreement.  Nothing
herein  shall  preclude  the  Company  from  amending,   altering,   suspending,
discontinuing  or terminating  any of such plans and programs in compliance with
applicable law and regulation.

COVERAGE TYPE                                                   BENEFIT AMOUNT

Group Life Insurance                --      Basic
                                            High Option

Group Disability Insurance --       Basic 2 year
                                            High Option
                                              (benefit for 5 years)

Coverage  by group  life  and  disability  insurance  policies  terminates  upon
termination of the Executive's  employment for any reason,  except death (in the
case of life  insurance) and  disability (in the case of disability  insurance).
The  Executive's  beneficiaries  are  entitled to benefits  under the group life
insurance  policy if the  Executive  dies  during  the  period  he is  receiving
disability payments as a result of such disability.

In  addition,  the  Company  has a  401(k)  plan  in  which  the  Executive  may
participate on a voluntary basis.  Company  contributions  therein on his behalf
vest in accordance  with the terms of the 401(k) plan,  which provides that such
contributions become immediately vested in the event of death during the term of
employment.  Upon  termination  for any reason,  the Executive must withdraw his
vested funds by the end of the following fiscal quarter.

<PAGE>

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