Document:

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                                                                   EXHIBIT 10.94

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                          GOODY'S FAMILY CLOTHING, INC.

                                       AND

                                  THOMAS CAREY

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                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                                <C>
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
</TABLE>

<PAGE>

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement"), by and between GOODY'S
FAMILY CLOTHING, INC., a Tennessee corporation (the "Company"), and THOMAS CAREY
(the "Executive"), shall be effective as of the 15th day of August, 2002.

                                    RECITALS:

         Whereas, the Company plans to hire the Executive as the Senior Vice
President, Marketing and Advertising of the Company and the Executive desires to
accept such employment upon the terms and 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).

                  (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

<PAGE>

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.

                  (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 the Executive
as the Senior Vice President, Marketing and Advertising of the Company.

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                  3.       Term. The Executive's employment will commence on
August 15, 2002. 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.

                  (a)      Position and Duties. The Executive shall serve as
Senior Vice President, Marketing and Advertising 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 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:

                  (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 $250,000. 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

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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 allowance of $500 per month
shall be paid by the Company together with gasoline expenses for such automobile
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 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

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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)      Relocation 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 (up to a maximum of
                           $20,000) of moving the Executive's household
                           possessions (and, if applicable, temporarily storing
                           of the Executive's household possessions for up to 60
                           days) from his Weston, Florida residence (the "Weston
                           Residence") to the Executive's new temporary or
                           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 Weston Residence (including reasonable
                           attorney's fees) and all reasonable standard closing
                           costs associated with the purchase of the Executive's
                           Knoxville Residence (including reasonable attorney's
                           fees), up to a maximum reimbursement of $30,000;

                           (iii)    the Company will arrange and pay for
                           temporary housing in the Knoxville area for the
                           Executive and his immediate family until November 14,
                           2002.

                  (h)      Premium Reimbursement. The Company will reimburse the
Executive a sum of money equal to one (1) month of the Executive's current COBRA
premium payment (upon presentation of documents supporting his COBRA premium and
payment).

                  (i)      Sign-on Bonus. As additional compensation, the
Company shall pay the Executive a sign-on bonus of $25,000, payable within five
(5) days after the date his employment with the Company commences.

                  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

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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).

                  (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:

                  (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

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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:

                           (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

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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.

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<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.

                  (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.

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<PAGE>

                  (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.

                  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.

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<PAGE>

                  (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.

                  (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 (including, without
limitation, the Existing Employment Agreement) shall have no further effect;
provided, however, that except as specifically provided herein, the terms of
this Agreement do not supercede the terms of any grant or award to the Executive
under any stock option program of the Company except as specifically set forth
in Section 7(a) with respect to the vesting and exercisability of stock options.

                  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.

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<PAGE>

                                 GOODY'S FAMILY CLOTHING, INC.

                                 By:
                                    -------------------------------
                                        Robert M. Goodfriend
                                 Title: Chairman and Chief Executive Officer
ATTEST:

---------------------------
Title:
      ---------------------

(CORPORATE SEAL)

                                 EXECUTIVE:  Thomas Carey

                                 ---------------------------------
                                 Name: Thomas Carey

                                 Address:

                                       12

<PAGE>
                            SCHEDULE A - THOMAS CAREY

                  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.

<TABLE>
<CAPTION>
COVERAGE TYPE                                                   BENEFIT AMOUNT
<S>                          <C>     <C>                        <C>

Group Life Insurance         --      Basic                      $
                                     High Option                $

Group Disability Insurance   --      Basic 2 year
                                     High Option
                                     (benefit for 5 years)
</TABLE>

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.

                                       13<PAGE>
                                                                   EXHIBIT 10.95

                              SEPARATION AGREEMENT

         THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into
as of October 16, 2002, by and between LANA CAIN KRAUTER (hereinafter referred
to as "Employee") and GOODY'S FAMILY CLOTHING, INC. (hereinafter referred to as
the "Company").

                               STATEMENT OF FACTS

         Employee is currently employed as the President and Chief Merchandising
Officer of the Company pursuant to an Employment Agreement, dated as of January
10, 2000, as amended (the "Employment Agreement"; unless otherwise defined
herein all capitalized terms used herein shall have the respective meanings
attributed to them in the Employment Agreement), between Employee and the
Company. Each of Employee and the Company desire to terminate the Employment
Agreement on the terms and conditions contained herein.

                               STATEMENT OF TERMS

         In consideration of the premises and mutual promises herein contained,
it is agreed as follows:

         SECTION 1.        TERMINATION OF EMPLOYMENT.

                           (a)      Employee and the Company agree that
Employee's employment with the Company will terminate as of January 10, 2003
(the "Date of Termination"). Except as modified by this Agreement, the
Employment Agreement shall remain in full force and effect until the Date of
Termination. If Employee dies prior to January 10, 2003, the date of her death
shall be deemed the Date of Termination.

                           (b)      Upon execution of this Agreement, Employee
shall deliver to the Company her resignation from all officer positions and
directorships she has with the Company and its subsidiaries, affiliates and
divisions (including, without limitation, as President and Chief Merchandising
Officer of the Company) in the form attached hereto as Exhibit 1. From the date
hereof until the Date of Termination, Employee shall remain an employee of the
Company and have such duties and responsibilities during regular business hours
and in the City of Knoxville, Tennessee regarding special projects (including,
without limitation, cooperating and providing assistance in the due diligence
investigation of the Company in connection with the Company's recent execution
of a letter of intent for its acquisition by a private equity group) as may
reasonably be assigned to her by the Chief Executive Officer of the Company, the
Chief Financial Officer of the Company or the Board of Directors of the Company
from time to time (provided that such duties and responsibilities are those
which are customarily associated with the duties and responsibilities of an
officer). Notwithstanding the foregoing, Employee may be required to travel
beyond the Knoxville area at reasonable times reasonably convenient to Employee
as may be reasonably required to perform her duties hereunder and the Company
shall reimburse her for any reasonable travel expenses incurred by her in
connection therewith in accordance with its policies and procedures. Employee
shall devote such time as reasonably necessary to perform faithfully the duties
and responsibilities so assigned to her.

<PAGE>

         SECTION 2.        CONSIDERATION.

                           (a)      Employee Compensation and Benefits. From the
date hereof and through the Date of Termination, Employee shall continue to
receive her Base Salary (less applicable tax withholding and other standard
deductions), as currently in effect, payable in such installments as are
provided by the Company for employees generally. From the date hereof and
through the Date of Termination, Employee also shall continue to receive her
current benefits and perquisites (less applicable tax withholding and other
standard deductions) to the extent they remain available to the executives of
the Company generally as well as those additional benefits and perquisites (less
applicable tax withholding and other standard deductions) provided to Employee
in accordance with Section 5(d) and 5(e) of the Employment Agreement. The
Company shall use its reasonable commercial efforts to transfer to Employee the
cell telephone number she currently uses; provided, however, that if the cell
telephone number cannot be readily transferred to Employee, then Employee may
use the cell phone provided to her by the Company and the currently assigned
telephone number at the Company's expense through the Date of Termination,
except that Employee shall promptly reimburse the Company for personal use of
the cell phone. Employee also shall be entitled to receive (i) the $100,000
guaranteed annual bonus for fiscal 2002 (the "Guaranteed Bonus"), payable at
such time as provided in the Employment Agreement, and (ii) the Incentive Bonus
(if any) payable to her for fiscal 2002 (which Incentive Bonus, if any, shall be
reduced by the Guaranteed Bonus), payable to her at such time and otherwise in
accordance with the terms of the Incentive Plan even though Employee will no
longer be an employee of the Company after the Date of Termination, in each case
less applicable tax withholding and other standard deductions). The Incentive
Bonus which may be earned by Employee for fiscal 2002 is described on Schedule
A.

                           (b)      Severance Payment. In addition to all of the
Company's remaining payment obligations under the Employment Agreement (as
modified by this Agreement), on the Date of Termination, the Company shall pay
Employee, by wire transfer to Employee's account to be provided by Employee to
the Company, a severance payment (the "Fixed Severance") in the total gross
amount of ONE MILLION DOLLARS ($1,000,000), less applicable tax withholding and
other standard deductions. Provided that the Company complies with its remaining
payment obligations under the Employment Agreement (as modified by this
Agreement), such amount shall be in full settlement of any claims Employee may
have under the Employment Agreement or by reason of her employment relationship
with the Company, including, without limitation, to wages, bonuses (inclusive of
annual guaranteed bonuses (other than the bonus referred to in Section 2(a)),
and compensation and bonuses in regard to a Change of Control, if and when any
of such amounts would be payable) and any accrued and unused vacation days,
holiday pay, sick pay and severance pay of any kind, and Employee expressly
waives all claims and demands for alleged compensation or any other claims for
or arising out of wages, bonuses and any accrued and unused vacation days,
holiday pay, sick pay and severance pay of any kind.

                           (c)      Continuing Benefits. After the Date of
Termination, Employee may, and hereby does, exercise her right under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") to continue, at
Employee's cost and expense, her health coverage and her spouse's health
coverage through the Company's existing group health plan, provided

                                      -2-
<PAGE>

Employee exercises such rights in accordance with, and otherwise complies with,
the terms and conditions of COBRA.

                           (d)      Other Benefit Plans. The Company has awarded
Employee certain stock options under the Company's 1997 Stock Option Plan (the
"1997 Plan") described on Schedule B. In addition, Employee is a participant in
the Company's 401(k) Retirement Plan (the"401(k)"). Notwithstanding anything to
the contrary in this Agreement, Employee's rights, if any, under the 1997 Plan
(and these stock options) and the 401(k) (and the contributions made thereto on
her behalf) shall be governed solely by the terms and conditions of the 1997
Plan (and the applicable stock option agreements) and the 401(k). Employee
acknowledges and agrees that, in accordance with the terms and conditions of the
1997 Plan and the applicable stock option agreements, any of such stock options
which have not vested as of the Date of Termination will terminate as of the
Date of Termination, and any of such stock options which have vested as of the
Date of Termination will terminate thirty (30) days following the Date of
Termination. As of the Date of Termination, all of the stock options will have
vested.

         SECTION 3.        CESSATION OF AUTHORITY.

         Employee understands and agrees that, effective as of the date hereof,
she may no longer hold herself out as an officer of the Company and may not
incur any debts, obligations or liabilities, or make any commitments on behalf
of the Company, except as expressly authorized by the Chief Executive Officer of
the Company or the Board of Directors of the Company. Employee agrees to submit
to the Company within twenty (20) days from the Date of Termination any and all
unreimbursed expenses incurred by her through the Date of Termination. Such
expenses shall be paid by the Company in accordance with its existing policies
and procedures.

         SECTION 4.        RETURN OF COMPANY MATERIALS AND PROPERTY.

         Employee understands and agrees that she will turn over to the Company,
on or before the Date of Termination (unless earlier requested by the Chief
Executive Officer of the Company), all files, memoranda, records, keys, credit
cards, computers and other documents, physical or personal property which she
received from the Company and/or which she used in the course of her employment
with the Company and which are the property of the Company.

         SECTION 5.        EMPLOYMENT AGREEMENT.

         Employee understands and agrees that the terms of Section 12 of the
Employment Agreement regarding covenants of confidentiality, non-solicitation
and non-competition are fully enforceable and remain in full force and effect as
modified by Section 6 of this Agreement. The Employment Agreement is modified in
the following respects:

                           (a)      Section 2 of the Employment Agreement is
modified to reflect that Employee shall be an employee of the Company with the
duties and responsibilities set forth in Section 1(b) of this Agreement.

                           (b)      Section 4(a) of the Employment Agreement is
replaced by Section 1(b) of this Agreement.

                                      -3-
<PAGE>

                           (c)      Section 3 of the Employment Agreement is
modified as set forth in Section 1(a) of this Agreement.

                           (d)      Section 12 of the Employment Agreement is
modified as set forth in Section 6 of this Agreement.

                           (e)      Sections 4(b), 4(e)(iii), 5(f), 6, 7 and 8
of the Employment Agreement are deleted. (For the sake of clarity, the parties
further acknowledge and agree that Employee shall have no obligation to repay
the Relocation Allowance.)

         SECTION 6.        NO OBLIGATION.

         Employee agrees and understands that her entitlement to receive the
consideration set forth above is conditioned upon her execution of this
Agreement and her compliance with the terms of this Agreement and the terms of
Section 12 of the Employment Agreement regarding covenants of confidentiality,
non-solicitation and non-competition. The parties acknowledge and agree that any
non-payment by the Company of this consideration by reason of Employee's
non-compliance with any of such terms shall not render unenforceable any
provision of this Agreement, including, without limitation, the release recited
in Section 10(a) of this Agreement; provided, however, that in such event, the
release recited in Section 10(a) of this Agreement shall not be applicable to
any claims brought by Employee to enforce or to claim damages under this
Agreement. The parties further acknowledge and agree that (i) the covenants
regarding confidentiality and non-solicitation contained in Section 12 of the
Employment Agreement shall survive the termination of Employee's employment by
the Company and the termination of the Employment Agreement as provided in
Section 12 of the Employment Agreement, and (ii) the covenant regarding
non-competition contained in Section 12 of the Employment Agreement shall only
remain in full force and effect through the Date of Termination and shall
thereafter terminate.

         SECTION 7.        SEVERABILITY.

         The provisions of this Agreement are severable, and if any part of it
is found to be unenforceable, the other paragraphs shall remain fully valid and
enforceable. This Agreement shall survive the termination of any arrangements
contained herein.

         SECTION 8.        CONSULTATION WITH AN ATTORNEY.

         The Company advises Employee to consult with an attorney prior to
executing this Agreement. Employee agrees that she has had the opportunity to
consult counsel if she chose to do so. Employee further acknowledges that she
has had ample time in which to execute this Agreement, and that she has had
sufficient time to read and consider this Agreement before executing it.
Employee acknowledges that she is responsible for any costs and fees resulting
from her attorney reviewing this Agreement. Employee agrees that she has
carefully read this Agreement and understands its contents, that she signs this
Agreement voluntarily, with a full understanding of its significance, and
intending to be bound by its terms.

                                      -4-
<PAGE>

         SECTION 9.        PERIOD OF CONSIDERATION; RIGHT TO REVOKE.

         Employee acknowledges that in further consideration of her release of
any claims under the Age Discrimination in Employment Act, and in compliance
with such Act, she may take up to twenty-one (21) days to decide whether she
wants to accept and sign this Agreement. Employee acknowledges that if she signs
this Agreement within less than twenty-one (21) days, such decision was knowing
and voluntary on her part and in no way was coerced by the Company. If Employee
signs this Agreement, Employee may revoke and cancel this Agreement at any time
within seven (7) days after each party's execution of this Agreement by
providing written notice of revocation to the Company. If Employee does so
revoke, this Agreement will be null and void. This Agreement shall not become
effective and enforceable until after the expiration of this seven (7) day
revocation period; after such time, if there has been no revocation, the
Agreement shall be fully effective and enforceable on the day following such
seven (7) day revocation period.

         SECTION 10.       COMPLETE RELEASE; PROMISE NOT TO SUE ON CLAIMS
                           RELEASED.

                           (a)      Release by Employee. As a material
inducement to the Company to enter into this Agreement and, except as provided
in Section 6 of this Agreement, subject to (i) the payment of all compensation
which shall become due and owing under the Employment Agreement (as modified
herein) through the Date of Termination and (ii) the payment of the Fixed
Severance, Employee, for herself and her heirs, executors, administrators,
personal representatives and members of her immediate family, hereby
voluntarily, irrevocably and unconditionally releases, acquits and forever
discharges the Company and its officers, directors, employees, agents, advisors,
shareholders, independent contractors, consultants, attorneys, successors and
assigns, and all persons acting by, through, under or in concert with any of
them (each individually, a "Releasee" and collectively, the "Releasees"), both
individually and in their official capacities with the Company, of and from any
and all actions or causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, covenants, claims, charges, complaints,
contracts, agreements, trespasses, damages, judgments, commissions, executions,
demands and promises whatsoever, in law or equity, that she or her heirs,
executors, administrators, personal representatives or members of her immediate
family may now have or hereafter can, shall, or may have for, upon, or by reason
of any and all matters, causes or things whatsoever, including, but not limited
to, any and all matters arising out of or relating to Employee's employment
relationship with the Company, including, but not limited to, (a) any claims for
any compensation, consideration or monies, (b) any claims for or rights arising
out of any alleged intentional or negligent infliction of emotional distress or
"outrage"; defamation; interference with employment; wrongful discharge;
invasion of privacy, or other alleged violations or breaches of any contracts,
express or implied, or any tort, or any legal restrictions on the Company's
right to terminate employees, or (c) any claims for or rights arising out of any
alleged violations of Title VII of the Civil Rights Act of 1964, as amended; the
Employee Retirement Income Security Act of 1974; the Age Discrimination in
Employment Act of 1967, as amended; 42 U.S.C. P. 1981; the Vocational
Rehabilitation Act; the Equal Pay Act of 1963; the National Labor Relations Act;
the Americans with Disabilities Act; 29 U.S.C. P. 206(d)(1); Executive Order
11246; Executive Order 11141; Section 503 of the Rehabilitation Act of 1973, or
any other alleged violation of any local, state, or federal statutory or common
law, regulation or ordinance, and/or public policy, contract or tort law, having
any bearing whatsoever on

                                      -5-
<PAGE>

Employee's relationship with the Company, including, without limitation, the
terms and conditions of her employment; provided, however, that Employee does
not release the Company from any claims related to a breach by the Company of
its obligations hereunder. This release is for any relief, no matter how
denominated, including, but not limited to, wages, back pay, front pay,
compensatory damages or punitive damages. Employee understands, acknowledges and
agrees that by signing this Agreement she is waiving the right to recover in any
proceeding she may bring before the U.S. Equal Employment Opportunity Commission
or in any proceeding brought by the U.S. Equal Employment Opportunity Commission
on her behalf. Employee further agrees that she will not file or permit to be
filed on her behalf any such claim. Employee expressly acknowledges and agrees
that the payments being offered to her hereby exceed the amount to which she
would otherwise be contractually entitled to receive and constitute
consideration for the foregoing release. Nothing herein shall be deemed to be a
release of Employee's rights, if any, to indemnification pursuant to any Company
insurance contract, or provision of the Company's Charter or the Company's
Bylaws which purports to create, for the benefit of Employee, rights to
indemnification. Employee's rights, if any, to such indemnification shall
survive termination of the Employment Agreement and this Agreement.
Notwithstanding anything contained herein to the contrary, except as provided in
Section 6 of this Agreement, the effectiveness of the release recited in this
Section 10(a) is conditioned upon the effectiveness of the release by the
Company recited in Section 10(b) of this Agreement.

         Employee acknowledges that the payments recited in Section 2 of this
Agreement are further being given to her in return for her promise not to
initiate any court or judicial-type or administrative proceeding against the
Company or any Releasee that involves any claim that is covered by this Section
10(a) (and, subject to Section 12(c) of this Agreement, not to participate,
cooperate or otherwise assist in any proceeding initiated by any other party)
and that if she breaches her promise not to sue (or to so participate, cooperate
or assist) she will pay all costs and expenses of defending against such suit
incurred by the Company or any Releasee. In addition, Employee represents,
warrants and covenants to the Company that she has not heretofore initiated any
court or judicial-type or administrative proceeding against the Company or any
Releasee that involves any claim that she has released in this Section 10(a) and
she has not participated, cooperated or otherwise assisted in any proceeding
initiated by any other party.

         For the sake of clarity, on the Date of Termination prior to the
receipt of the Fixed Severance, Employee (or her heirs, executors,
administrators or personal representatives, as applicable) shall execute another
general release in the form of Exhibit 2.

                           (b)      Release by the Company. As a further
material inducement to Employee to enter into this Agreement, the Company, its
successor and assigns, and its officers and directors (in their official
capacities with the Company) hereby voluntarily, irrevocably and unconditionally
releases, acquits and forever discharges Employee of and from any and all
actions or causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, covenants, claims, charges, complaints, contracts,
agreements, trespasses, damages, judgments, commissions, executions, demands and
promises whatsoever, in law or equity, now known or unknown to the Company
arising from or relating to Employee's employment relationship with the Company;
provided, however, that the Company does not release Employee from any claims
(i) related to a breach by Employee of her obligations hereunder, or (ii) which
are not known to the Company on the date hereof and may hereafter become known
to the Company and arise

                                      -6-
<PAGE>

from or relate to (x) Employee's breach of her fiduciary duties to the Company
or its shareholders or (y) Employee's breach or other violation of the Company's
Code of Ethics and Standards of Conduct or (z) other malfeasance by Employee.
Notwithstanding anything contained herein to the contrary, the effectiveness of
the release recited in this Section 10(b) is conditioned upon the effectiveness
of the release by Employee recited in Section 10(a) of this Agreement.

         The Company has not and promises not to initiate any court or
judicial-type proceeding against Employee that involves any claim that it has
released in this Section 10(b) and if the Company breaches its promise not to
sue, the Company will pay all costs and expenses of defending against such suit
incurred by Employee.

         SECTION 11.       CONFIDENTIALITY.

         Employee agrees not to disclose any of the details, discussions or
circumstances related to the preparation, negotiation and execution of this
Agreement to anyone, other than to her spouse, her attorneys, accountants and/or
tax advisers, and federal and state taxing authorities, who must be advised of
and agree to be bound by this confidentiality provision, except, as to each such
person, as is required by law, rule or regulation. The Company, on behalf of
itself and its officers, directors and employees, likewise agrees not to
disclose any of the details, discussions or circumstances related to the
preparation, negotiation and execution of this Agreement to anyone, other than
to those individuals (including the Company's lenders and other financing
sources, external accounting firms, law firms and financial advisors) who have a
"need to know" in the furtherance of their official duties or in furtherance of
the Company's business interest, who must be advised of and agree to be bound by
this confidentiality provision, except, as to each such entity/person, as is
required by law, rule or regulation. Employee agrees and acknowledges that the
Company intends to issue a press release in the form attached as Exhibit 3.

         SECTION 12.       NON-DISPARAGEMENT; COOPERATION.

                           (a)      Non-Disparagement by Employee. Employee
agrees that she will not make any statements that may be reasonably construed to
disparage the reputation or character of the Company or any of its employees,
officers or directors or its controlling shareholder.

                           (b)      Non-Disparagement by the Company. The
Company agrees and represents and warrants that the Company and the controlling
shareholder will not (and will use its reasonable best efforts to cause its
officers and directors not to) make any statements that may be reasonably
construed to disparage the reputation or character of Employee. Upon request
from future potential employers, the Company agrees to provide a reference
(consistent with the Company's current policy) reflecting Employee's date of
hire, the Date of Termination, and her position with the Company.

                           (c)      Litigation. Nothing herein shall prohibit
any party from giving truthful testimony in any litigation or administrative
proceedings either between Employee and

                                      -7-
<PAGE>

the Company or in connection with which the party is subpoenaed and required by
law to give testimony.

                           (d)      Cooperation. Employee agrees to cooperate,
without additional compensation (except for Employee's reasonable out-of-pocket
expenses such as travel, meals and lodging), with the Company and its attorneys
in the defense of all claims or actions (whether in an administrative agency or
in court) involving the Company. Such cooperation shall include, but not be
limited to, making herself available as reasonably requested to meet with the
Company's attorneys to discuss her knowledge of pertinent facts and to prepare
for her testimony concerning those facts, appearing as required at deposition or
trial to testify as to those facts, and testifying truthfully to the best of her
abilities. In the event that she is required to testify at deposition or at
trial in connection with any such action, the Company will provide her legal
representation at the deposition and/or trial.

         SECTION 13.       NON-ADMISSION OF LIABILITY.

         This Agreement shall not in any way be construed as an admission by
either party that such party (or, in the case of the Company, its officers,
directors, employees or agents) has acted wrongfully with respect to the other
party or any other person, or that either party has any rights whatsoever
against the other party or, in the case of Employee, any rights against the
Company's officers, directors, employees or agents (except as expressly recited
in this Agreement). Each of the Company, on the part of itself and its officers,
directors, employees and agents, and Employee, on the part of herself,
specifically disclaims any liability to or wrongful acts against the other party
or any other person.

         SECTION 14.       NO OTHER REPRESENTATIONS.

                           (a)      Employee represents and acknowledges that in
executing this Agreement she does not rely, and has not relied, upon any
representation or statement not set forth herein made by any of the Releasees or
by any of the Releasees' agents, representatives or attorneys with regard to the
subject matter, basis or effect of this Agreement or otherwise.

                           (b)      The Company represents and acknowledges that
in executing this Agreement it does not rely, and has not relied, upon any
representation or statement not set forth herein made by Employee or any of her
agents, representatives, advisors or attorneys with regard to the subject
matter, basis or effect of this Agreement or otherwise.

         SECTION 15.       CHOICE OF LAW.

         This Agreement shall be construed and interpreted according to the
internal laws of the State of Tennessee, without regard to conflict of laws
provisions.

         SECTION 16.       SOLE AND ENTIRE AGREEMENT.

         This Agreement sets forth the entire agreement between the parties
hereto, and supersedes any and all prior agreements or understandings between
the parties pertaining to the subject matter hereof except for the terms of the
Employment Agreement which remain in effect except as modified by this
Agreement.

                                      -8-
<PAGE>

         SECTION 17.       INJUNCTION.

         Each party acknowledges that in the event of any breach or threatened
breach by such party of any of the provisions of Section 10, 11 or 12 of this
Agreement (or of the provisions of Section 12 of the Employment Agreement
regarding covenants of confidentiality, non-solicitation and non-competition),
the other party would have no adequate remedy at law and could suffer
substantial and irreparable damage. Accordingly, each party hereby agrees that,
in such event, the other party shall be entitled, and notwithstanding any
election by the other party to claim damages, to obtain a temporary and/or
permanent injunction (without proving a breach therefor) to restrain any such
breach or threatened breach or to obtain specific performance of any such
provisions, all without prejudice to any and all other remedies the other party
may have at law or in equity.

                                      -9-
<PAGE>

         Employee warrants that she has had ample time to consider this
Agreement, that she understands its provisions, and that she enters into this
Agreement voluntarily and after having the opportunity to receive the advice and
counsel of her attorney.

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A GENERAL RELEASE BY EMPLOYEE OF
ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING THOSE ARISING OUT OF OR RELATING TO
EMPLOYEE'S EMPLOYMENT RELATIONSHIP WITH THE COMPANY.

Executed at Knoxville, Tennessee this 16th day of October, 2002.

                                         ----------------------------
                                         Lana Cain Krauter

Sworn to and subscribed before me this 16th day of October, 2002.

-------------------
NOTARY PUBLIC

My Commission Expires:
                       -------------------
[NOTARY SEAL]

Executed at Knoxville, Tennessee this 16th day of October, 2002.

                                           GOODY'S FAMILY CLOTHING, INC.

                                           By:
                                              -----------------------------
                                           Name:
                                           Title:

Sworn to and subscribed before me this 16th day of October, 2002.

-------------------
NOTARY PUBLIC

My Commission Expires:
                       -------------------

[NOTARY SEAL]

                                      -10-

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