EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT,  dated as of March 30, 1998, by and
among General Textiles, a California  corporation which has its principal office
at 4000 Ruffin Road, San Diego, California, ("General Textiles"); Family Bargain
Corporation, a Delaware corporation which indirectly owns all of the outstanding
shares of capital stock of General Textiles and has its principal office at 4000
Ruffin Road, San Diego,  California ("FBC");  and Michael Searles, who currently
resides at 11 Farnham Way, Farmington, Connecticut ("Executive").

                                           W I T N E S S E T H:

                  WHEREAS,  General Textiles,  FBC and Executive desire to enter
into an  agreement  (the  "Agreement")  setting  forth the terms of  Executive's
employment  by General  Textiles  for a term  beginning  on March 30,  1998 (the
"Effective Date").

                  NOW,  THEREFORE,  in  consideration of the promises and mutual
covenants  contained herein and for other good and valuable  consideration,  the
parties agree as follows:

                  1. Term of  Employment.  Except upon  earlier  termination  as
provided in Section 9 hereof,  Executive's employment under this Agreement shall
be for a five year term  commencing on the  Effective  Date and  terminating  on
March 29, 2003 (the "Employment Term").

                  2. Positions. (a) Executive shall serve as President and Chief
Executive  Officer of General  Textiles.  Executive shall report to the Board of
Directors  of General  Textiles  (the  "Board")  and shall have such  duties and
authority,  consistent  with his  position  as the Chief  Executive  Officer  of
General Textiles as shall be assigned to him from time to time by the Board.

            (b) During the Employment Term,  Executive shall, without additional
compensation,  also (i) serve on the Board of  Directors of FBC and perform such
executive  and  consulting  services  for,  or on behalf of, FBC and one or more
other  affiliates  of General  Textiles  and FBC as the Board may,  from time to
time, request.  General Textiles,  FBC and such other affiliates are hereinafter
referred to, collectively, as the "Company" and, individually, as a "Constituent
Corporation".  For purposes of this Agreement,  the term "affiliate"  shall have
the meaning ascribed thereto in the Securities  Exchange Act of 1934, as amended
(the "Act").


<PAGE> 22

                     (c)      During the Employment Term, Executive shall devote
substantially  all of his business  time and efforts to the  performance  of his
duties hereunder;  provided,  however, that Executive shall be permitted, to the
extent that such activities do not materially  interfere with the performance of
his duties and responsibilities  hereunder, to manage his personal financial and
legal  affairs  and to  serve on  corporate,  civic,  or  charitable  boards  or
committees.  Notwithstanding the foregoing, the Executive shall not serve on any
corporate  board  of  directors  or  similar  body  if  such  service  would  be
inconsistent with his fiduciary  responsibilities to any Constituent Corporation
and in no event  shall  Executive  serve on any such board or other body  unless
approved by the Board, which approval shall not be unreasonably withheld.

                  3. Base Salary.  During the Employment Term,  General Textiles
shall pay to the Executive a base salary at the annual rate of not less than six
hundred thousand dollars ($600,000).  Base salary shall be payable in accordance
with the usual payroll  practices of General  Textiles.  Executive's base salary
shall be  subject  to  annual  review by the  Board or its  designee  and may be
increased, but not decreased,  from time to time. The base salary, as determined
as aforesaid from time to time,  shall  constitute "Base Salary" for purposes of
this Agreement.

                  4. Annual Bonus.  Executive's annual bonus will be targeted at
50% of the Base  Salary.  The  Board  and the  Executive  will  agree on  annual
targets,  with final  discretion  residing  with the Board.  If the  targets are
exceeded,  the Board may  increase  the bonus.  If the targets are not met,  the
Board may reduce or withhold the bonus entirely.  The Board will annually review
whether a merit increase of the annual bonus is warranted.

                  5.  Equity  Compensation.  (a) FBC  will  grant  to  Executive
options under its incentive stock option plan ("ISO Plan")  entitling  Executive
to acquire a total of three hundred  thousand  (300,000)  shares of FBC's common
stock at a price equal to the closing market price of such common stock on March
10, 1998, the date upon which General Textiles, FBC and the Executive came to an
agreement as to the terms of this  Agreement.  The options  granted to Executive
pursuant to this Section 5 shall vest in increments of sixty  thousand  (60,000)
shares on each of the first five anniversaries of the Effective Date.

                  (b) As promptly as practicable  following the Effective  Date,
the Executive  shall purchase from FBC, at a purchase price of $1,000 per share,
one thousand four hundred  (1,400) shares of FBC's Series B preferred stock (the
"Executive  Stock").  FBC will lend to Executive,  upon the terms and subject to
the  conditions  set  forth in  Exhibit A  hereto,  an amount  equal to the cost
incurred by the Executive for the acquisition of the Executive Stock.


<PAGE> 23

                  (c)  Executive  will  grant to FBC an  option  (the  "Buy-back
Option") entitling FBC to acquire the Executive Stock, or the common shares into
which  the  Executive  Stock  has been  converted  ("Conversion  Shares"),  from
Executive  in the event that  Executive's  employment  under this  Agreement  is
terminated for any reason other than pursuant to Section 9(a)(i),  (ii) or (iii)
hereof.  The price at which FBC will be entitled to exercise the Buy-back Option
shall be determined by reference to the following table:

================================================================================
Number of years elapsed     1          2          3         4          5
from the Effective Date
================================================================================
--------------------------------------------------------------------------------
Percentage of Executiv     80%        60%        40%       20%         0%
Stock (or Conversion
Shares) subject to the
Buy-back Option
--------------------------------------------------------------------------------
Exercise Price of the    $1.75      $2.00      $2.25     $2.50         -
Buy-back Option,
assuming conversion into
common stock
================================================================================

The number of shares of  Executive  Stock or  Conversion  Shares  subject to the
Buy-Back  Option  and  the  exercise  price  of the  Buy-Back  Option  shall  be
determined by  interpolation in the event of any exercise of the Buy-Back Option
on any date other than an anniversary of the Effective Date.

                  (d) FBC will grant to Executive, effective as of the Effective
Date, further options (the "Further Options")  entitling  Executive to acquire a
total of nine hundred thousand (900,000) shares of FBC's common stock at a price
of two dollars ($2.00) per share. The Executive will be entitled to exercise the
Further Options prior to the sixth  anniversary of the Effective Date,  provided
that:

             (i) the  Executive  shall not be entitled  to  exercise  any of the
Further  Options  unless the closing market price of FBC's shares shall equal or
exceed six  dollars  ($6.00)  per share on sixty (60)  trading  days  during any
twelve (12) month period  commencing  at any time after the  Effective  Date and
terminating prior to the termination,  for any reason, of Executive's employment
hereunder;

              (ii) the  Executive  shall be entitled  to exercise  not more than
four hundred  fifty  thousand  (450,000)  of the Further  Options if the closing
market price of FBC's shares shall equal or exceed six dollars ($6.00) per share
on, but shall fail to exceed seven dollars and fifty cents ($7.50) per share, on
sixty (60)


<PAGE> 24

trading  days during any twelve (12) month period  commencing  at any time after
the Effective Date and terminating prior to the termination,  for any reason, of
Executive's employment hereunder; and

                (iii) the  Executive  shall be entitled  to exercise  all of the
Further  Options if the  closing  market  price of FBC's  shares  shall equal or
exceed seven  dollars and fifty cents ($7.50) for sixty (60) trading days during
any twelve (12) month period commencing at any time after the Effective Date and
terminating prior to the termination,  for any reason, of Executive's employment
hereunder.

                  6. Employee  Benefits and Vacation.  (a) During the Employment
Term,  Executive  shall be entitled to participate  in all pension,  retirement,
savings,  welfare  and other  pension  and welfare  employee  benefit  plans and
arrangements  and fringe  benefits and perquisites  generally  maintained by the
Company from time to time for the benefit of senior  executives  of the Company,
in accordance with their  respective terms as in effect from time to time (other
than any special arrangement entered into by contract with an executive).

                  (b) During the Employment Term, Executive shall be entitled to
vacation each year in accordance with the Company's policies in effect from time
to time,  but in no event less than four (4) weeks paid  vacation  per  calendar
year. The Executive  shall also be entitled to such sick leave as is customarily
provided by the Company for its senior executive employees.

                  7. Moving Expenses.  The Executive shall be reimbursed,  on an
after-tax basis, for expenses incurred by the Executive in the relocation of his
family to San Diego for the purpose of commencing  Executive's  employment  with
General Textiles pursuant to this Agreement.

                  8. Business  Expenses.  The Executive  shall be reimbursed for
the travel,  entertainment  and other business expenses incurred by Executive in
the performance of his duties hereunder,  in accordance with policies  generally
applicable to senior executives of the Company as in effect from time to time.

                  9.    Termination.  (a) The employment of Executive under this
Agreement shall terminate upon the occurrence of any of the following events:

                     (i)      the death of Executive;

                     (ii)     the termination by General Textiles of Executive's
employment due to Executive's Disability pursuant to Section 9(b) hereof,


<PAGE> 25

                (iii)     the termination by Executive of Executive's employment
for Good Reason pursuant to Section 9(c) hereof;

                (iv)     the termination by General Textiles of Executive's
employment without Cause;

                (v) the  termination  by  Executive  of  Executive's  employment
without Good Reason upon sixty (60) days prior written notice; or

                (vi)  the   termination  by  General   Textiles  of  Executive's
employment for Cause pursuant to Section 9(e) hereof.

                  (b) Disability.  If, by reason of the same or related physical
or mental reasons, Executive is unable to carry out his material duties pursuant
to this  Agreement  for more than six (6) months in any twelve (12)  consecutive
month  period,   General  Textiles  may  terminate  Executive's  employment  for
Disability upon thirty (30) days prior written notice, by a Notice of Disability
Termination.

                  (c) Termination for Good Reason. A Termination for Good Reason
means a termination by Executive by written notice given within ninety (90) days
after the occurrence of the Good Reason event.  For purposes of this  Agreement,
"Good Reason" shall mean the occurrence or failure to cause the  occurrence,  as
the case may be, without  Executive's  express  written  consent,  of any of the
following circumstances,  unless such circumstances are fully corrected prior to
the date of termination  specified in the Notice of Termination  for Good Reason
(as defined in Section 9(d) hereof):  (i) the material  branch by the Company of
any of its  obligations  to  Executive  under this  Agreement  or the failure of
General  Textiles  to make  timely  payments of  compensation  or  reimbursement
pursuant to Section 3, 4, 7 or 8 hereof; (ii) any material diminution, after the
Effective Date, of Executive's positions,  duties or responsibilities hereunder,
as of the Effective Date (except in each case in connection with the termination
of Executive's  employment for Cause or Disability or as a result of Executive's
death,  or temporarily  as a result of Executive's  illness or other absence and
provided  that a  reduction  in the size or  number of the  units  reporting  to
Executive as a result of dispositions,  shall not be a material diminution),  or
the assignment to Executive of duties or responsibilities  that are inconsistent
with Executive's  position as the Chief Executive  Officer of General  Textiles;
(iii) removal of, or the  nonreelection  of, the Executive  from his position as
the Chief  Executive  Officer of General  Textiles;  or (iv) a relocation of the
principal  executive  offices  of  General  Textiles  to a  location  more  than
twenty-five  (25) miles from San Diego,  California or a relocation of Executive
away from such principal executive office.

                  (d)      Notice of Termination for Good Reason.  A Notice of
Termination for Good Reason shall mean a notice that shall indicate the specific


<PAGE> 26

termination  provision  in  Section  9(c)  relied  upon and  shall  set forth in
reasonable  detail  the facts and  circumstances  claimed to provide a basis for
Termination for Good Reason. The failure by Executive to set forth in the Notice
of Termination for Good Reason any fact or circumstance which contributes to the
showing  of Good  Reason  shall not waive any right of  Executive  hereunder  or
preclude  Executive from asserting  such fact or  circumstance  in enforcing his
rights hereunder.  The Notice of Termination for Good Reason shall provide for a
date of  termination  not less than ten (10) nor more than sixty (60) days after
the date such Notice of Termination  for Good Reason is given,  provided that in
the case of the events set forth in  Section  9(c)(ii)  or (iii) the date may be
two (2) days after the giving of such notice.

                  (e) Cause.  Subject to the notification  provisions of Section
9(f)  below,  Executive's  employment  hereunder  may be  terminated  by General
Textiles for Cause.  For purposes of this  Agreement,  the term "Cause" shall be
limited to (i) willful misconduct by Executive with regard to the Company;  (ii)
the refusal of Executive to follow the proper written  direction of the Board or
the Board of Directors of FBC;  provided,  however,  that the foregoing  refusal
shall not be "Cause" if Executive in good faith  believes that such direction is
illegal,  unethical  or immoral and  promptly  so notifies  the entity or person
giving the direction;  (iii)  Executive  being  convicted of a felony;  (iv) the
willful  breach by  Executive  of any  fiduciary  duty owed by  Executive to any
Constituent  Corporation which has a material adverse effect on the Company;  or
(v) Executive's material fraud with regard to any Constituent Corporation.

                  (f) Notice of  Termination  for Cause. A Notice of Termination
for Cause  shall mean a notice  that shall  indicate  the  specific  termination
provision in Section 10(e) relied upon and shall set forth in reasonable  detail
the facts and  circumstances  which provide a basis for  Termination  for Cause.
Further,  a  Notification  for Cause shall  include a copy of a resolution  duly
adopted  by at least a  majority  of the  entire  membership  of the  Board at a
meeting  of the Board  which was  called for the  purpose  of  considering  such
termination and which Executive and his  representative  had the right to attend
and address the Board,  finding  that,  in the good faith  opinion of the Board,
Executive  engaged in conduct set forth in the  definition  of Cause  herein and
specifying the particulars thereof in reasonable detail. The date of termination
for a  Termination  for  Cause  shall be the date  indicated  in the  Notice  of
Termination. Any purported Termination for Cause which is held by a court not to
have  been  based on the  grounds  set  forth in this  Agreement  or not to have
followed  the  procedures  set  forth  in  this  Agreement  shall  be  deemed  a
Termination without Cause.

                  10.  Consequences of Termination of Employment. (a) Death. If
Executive's employment is terminated during the Employment Term by reason of
Executive's death, the employment period under this Agreement shall terminate


<PAGE> 27

without further obligations to the Executive's legal  representatives under this
Agreement except for (i) any compensation earned but not yet paid, including and
without limitation,  any declared but unpaid bonus, any amount of Base Salary or
deferred  compensation  accrued or earned but unpaid,  any accrued  vacation pay
payable  pursuant  to the  Company's  policies  and  any  unreimbursed  business
expenses  payable pursuant to Section 8, which amounts shall be promptly paid in
a lump sum to  Executive's  estate;  (ii) the  product of (x) the target  annual
bonus for the fiscal year of  Executive's  death,  multiplied by (y) a fraction,
the  numerator of which is the number of days of the current  fiscal year during
which Executive was employed by General  Textiles,  and the denominator of which
is 365,  which bonus shall be paid when  bonuses for such period are paid to the
other  executives;  (iii)  full  accelerated  vesting,  with  a  waiver  of  all
performance  based targets,  under all  outstanding  equity-based  and long-term
incentive  plans (with  options  remaining  outstanding  as  provided  under the
applicable  stock  option  plan  and a pro rata  payment  under  any  long  term
incentive  plans based on actual  coverage under such plans at the time payments
normally would be made under such plans); (iv) subject to Section 11 hereof, any
other amounts or benefits owing to Executive under the then applicable  employee
benefit plans or policies of the Company, which shall be paid in accordance with
such plans or policies;  (v) payment on a monthly basis of twelve (12) months of
Base  Salary,  which  shall  be  paid to  Executive's  spouse,  or if she  shall
predecease  him,  then to  Executive's  children  (or their  guardian  if one is
appointed)  in equal  shares;  and (vi) payment of the spouse's and  dependent's
COBRA coverage premiums to the extent,  and so long as, they remain eligible for
COBRA coverage, but in no event more than three (3) years.

                  (b)  Disability.  If  Executive's  employment is terminated by
reason of  Executive's  Disability,  Executive  shall be entitled to receive the
payments  and  benefits  to which his  representatives  would be entitled in the
event of a termination  of employment by reason of his death;  provided that the
payment of Base Salary shall be reduced by the projected amount he would receive
under any  long-term  disability  policy or program  maintained  by the  Company
during the twelve (12) month period during which Base Salary is being paid.

                  (c)  Termination by Executive for Good Reason or for Change in
Control.  If (i) Executive  terminates his employment  hereunder for Good Reason
during the  Employment  Term,  or (ii) a Change in Control  occurs and within 90
days thereafter  Executive  terminates his employment for any reason,  Executive
shall  be  entitled  to  receive  the   payments   and  benefits  to  which  his
representatives would be entitled in the event of a termination of employment by
reason of his death.

                  (d) Termination  with Cause or Voluntary  Resignation  without
Good Reason.  If Executive's  employment  hereunder is terminated (i) by General
Textiles for Cause or (ii) by Executive  without  Good Reason  except  within 90
days following


<PAGE> 28

a Change in Control,  the  Executive  shall be entitled to receive only his Base
Salary  through the date of  termination,  any earned but unpaid bonus,  and any
unreimbursed business expenses payable pursuant to Section 8. All other benefits
(including  without  limitation  restricted  stock and  options)  due  Executive
following such  termination of employment shall be determined in accordance with
the plans, policies and practices applicable to Executive.

                  (e)  Termination by the Company  Without Cause. If Executive's
employment  is  terminated  by the Company  without  cause,  Executive  shall be
entitled to receive the payments and benefits to which his representatives would
be entitled in the event of a termination  of employment by reason of his death;
provided,  however,  that Executive shall not be entitled to receive the benefit
set forth in clause (iii) of Paragraph 10(a) hereof.

                  11. No Mitigation; No Set-Off. In the event of any termination
of employment  under Section 9,  Executive  shall be under no obligation to seek
other  employment and there shall be no offset against any amounts due Executive
under  this  Agreement  on  account  of  any  remuneration  attributable  to any
subsequent  employment that Executive may obtain.  Any amounts due under Section
10 are in the nature of severance payments,  or liquidated damages, or both, and
are not in the nature of a penalty.  Such amounts are  inclusive  and in lieu of
any  amounts  payable  under any other  salary  continuation  or cash  severance
arrangement of General Textiles or any affiliate  thereof and to the extent paid
or provided under any other such arrangement shall be offset from the amount due
hereunder.

                  12.  Change in  Control.  (a)  Subject  to the  provisions  of
Section  12(b)  hereof,  for  purposes of this  Agreement,  the term  "Change in
Control"  shall mean (a) the sale of all or  substantially  all of the assets of
the  Company in the  aggregate,  whether  pursuant  to a single  transaction  or
pursuant to a series of transactions  and whether through an asset sale or stock
sale,  other than to an affiliate;  (b) any "person" (as defined in the Act) not
an affiliate of FBC on the  Effective  Date becomes the  "beneficial  owner" (as
defined in Rule 13d-3 under the Act),  directly or indirectly,  of securities of
FBC representing  fifty (50%) or more of the combined voting power of FBC's then
outstanding  securities;  (c)  during  any  period  of  two  consecutive  years,
individuals  who at the  beginning  of  such  period  constitute  the  Board  of
Directors,  and any new director  (other than a director  designated by a person
who has entered into an agreement with FBC to effect a transaction  described in
this  paragraph)  whose  election by the Board of Directors of FBC or nomination
for election by FBC's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the  two-year  period  or whose  election  or  nomination  for  election  was
previously  so approved,  cease for any reason to constitute at least a majority
of the  Board of  Directors;  (d) the  stockholders  of FBC  approve a merger or
consolidation of FBC with any other


<PAGE> 29

corporation,  other than a merger or  consolidation  which  would  result in the
voting  securities of FBC outstanding  immediately  prior thereto  continuing to
represent  (either by remaining  outstanding  or by being  converted into voting
securities  of the  surviving  entity)  more  than  fifty  percent  (50%) of the
combined voting power of the voting  securities of FBC or such surviving  entity
outstanding  immediately  after  such  merger  or  consolidation;   or  (e)  the
stockholders  of  FBC  approve  a  plan  of  complete  liquidation  of FBC or an
agreement  for the sale or  disposition  by FBC of all or  substantially  all of
FBC's  assets other than the sale of all or  substantially  all of the assets of
FBC to a person or persons who  beneficially  own,  directly or  indirectly,  at
least  fifty  percent  (50%)  or  more  of  the  combined  voting  power  of the
outstanding voting securities of FBC at the time of the sale.

                  (b) General Textiles, FBC and Searles acknowledge that General
Textiles and FBC currently have under consideration the possibility of effecting
a restructuring of such corporations.  Notwithstanding  anything to the contrary
set  forth  herein,  it  is  agreed  that  no  restructuring,  recapitalization,
reorganization,  merger,  consolidation or similar transaction involving General
Textiles, FBC or any affiliate thereof (but not involving any unaffiliated third
party) shall be deemed to constitute a Change of Control hereunder unless,  upon
consummation  thereof, an actual change in control over the Company,  within the
meaning of the Act, from that in effect on the  Effective  Date shall have taken
place.

                  13.    Confidential    Information,     Non-Competition    and
Non-Solicitation  of the Company.  (a) (i)  Executive  acknowledges  that,  as a
result  of  his   employment   hereunder,   Executive  will  obtain  secret  and
confidential  information of the Company and the Company will suffer substantial
damage,  which would be difficult  to ascertain  and in an amount which would be
difficult  to  compute,  if  Executive  should  use  any  of  such  confidential
information and that because of the nature of the information that will be known
to Executive it is necessary for the Company to be protected by the  prohibition
against  Competition  as set  forth  herein,  as  well  as  the  Confidentiality
restrictions set forth herein.

                    (ii)Executive acknowledges that the retention of nonclerical
employees  of the  Company,  in which the Company has  invested  training and on
which the Company depends for the operation of its business, is important to the
businesses of the Company;  Executive will obtain unique  information as to such
employees as an executive of the Company and will develop a unique  relationship
with  such  persons  as a result  of being an  executive  of the  Company;  and,
therefore,  it is  necessary  for the Company to be protected  from  Executive's
Solicitation of such employees as set forth below.

                    (iii)Executive acknowledges that the provisions of this
Agreement are reasonable and necessary for the protection of the business of the


<PAGE> 30

Company  and that part of the  compensation  paid under this  Agreement  and the
agreement to pay  severance in certain  instances  is in  consideration  for the
agreements in this Section 13.

                  (b) As used herein,  "Competition" shall mean:  participating,
directly or  indirectly,  as an  individual  proprietor,  partner,  stockholder,
officer, employee,  director, joint venturer, investor, lender, consultant or in
any capacity  whatsoever  (within the United States of America,  or in any other
country  where any  Constituent  Corporation  does  business)  in a business  in
competition with any business conducted any Constituent  Corporation;  provided,
however, that such participation shall not include (i) the ownership of not more
than one percent (1%) of the total outstanding stock of a publicly-held company;
or any activity engaged in with the prior written approval of the Board.

                  (c) As used  herein,  "Solicitation"  shall  mean  recruiting,
soliciting or inducing any nonclerical  employee of any Constituent  Corporation
to  terminate  his  or  her  employment  with,  or  otherwise  cease  his or her
relationship with, such Constituent  Corporation or hiring, or assisting another
person  or  entity  to  hire,  any  nonclerical   employee  of  any  Constituent
Corporation  or any  person  who,  within  six (6)  months  before,  had  been a
nonclerical  employee of any Constituent  Corporation,  unless the employment of
such  person by a  Constituent  Corporation  was  terminated  involuntarily  and
without cause.

                  (d) If any restriction set forth with regard to Competition or
Solicitation is found by any court of competent jurisdiction,  or an arbitrator,
to be unenforceable because it extends for too long a period of time or over too
great a range of  activities  or in too  broad a  geographic  area,  it shall be
interpreted  to extend over the maximum  period of time,  range of activities or
geographic  area as to which it may be  enforceable.  If any  provision  of this
Section 13 shall be  declared  to be invalid  or  unenforceable,  in whole or in
part,  as a result of the  foregoing,  as a result  of public  policy or for any
other reason, such invalidity shall not affect the remaining  provisions of this
Section which shall remain in full force and effect.

                  (e) During and after the Employment Term, Executive shall hold
in  a  fiduciary  capacity  for  the  benefit  of  the  Company  all  secret  or
confidential  information,  knowledge  or data  relating  to the Company and its
business, including any confidential information as to suppliers (i) obtained by
Executive  during his  employment  by the Company and (ii) not  otherwise in the
public  domain.  Executive  shall  not,  without  prior  written  consent of the
Company, unless compelled pursuant to the order of a court or other governmental
or legal 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. In the event  Executive  is  compelled by order of a court or
other governmental or legal body to communicate or


<PAGE> 31

divulge  any  such  information,  knowledge  or data to  anyone  other  than the
foregoing,  he shall promptly  notify the Company of any such order and he shall
cooperate  fully with the Company in  protecting  such  information  to the full
extent possible under applicable law.

                  (f) Upon termination of his employment with General  Textiles,
or at any time General Textiles may request,  Executive will promptly deliver to
General Textiles, as requested,  all documents (whether prepared by the Company,
Executive  or a third  party)  relating to the Company or any of its business or
property which he may possess or have under his direction or control, other than
his personal employment and personnel records.

                  (g)  During  the   Employment   Term  and  for  one  (1)  year
thereafter,  Executive  will  not  enter  into  Competition  with  the  Company.
Furthermore,  in the event of any termination of Executive's  employment for any
reason whatsoever, whether by the Company or by the Executive and whether or not
for Cause,  Good Reason or expiration of the Employment Term, the Executive will
not engage in Solicitation for three (3) years thereafter.

                  (h)  Executive  acknowledges  that in the event of a breach of
this Section 13, the Company will be caused irreparable injury and money damages
may not be an adequate remedy.  Consequently,  Executive agrees that the Company
shall be entitled to  injunctive  relief (in  addition to its other  remedies at
law) to have the provisions of this Section 13 enforced.

                  14. Indemnification.  (a) The Company agrees that if Executive
is made a party  to or  threatened  to be made a party  to any  action,  suit or
proceeding,   whether  civil,  criminal,   administrative  or  investigative  (a
"Proceeding"),  by reason of the fact that he is or was a director or officer of
any  Constituent  Corporation  or is or  was  serving  at  the  request  of  any
Constituent Corporation as a director,  officer, member, employee,  fiduciary or
agent of another corporation or of a partnership,  joint venture, trust or other
enterprise,  including,  without  limitation,  service  with respect to employee
benefit plans,  whether or not the basis of such Proceeding is alleged action in
an official  capacity as a director,  officer,  member,  employee,  fiduciary or
agent while  serving as a director,  officer,  member,  employee,  fiduciary  or
agent,  he shall be indemnified  and held harmless by the applicable  company to
the fullest extent authorized by applicable law against all Expenses incurred or
suffered by Executive in connection  therewith,  and such indemnification  shall
continue  as to  Executive  even  if  Executive  has  ceased  to be an  officer,
director,  member, fiduciary or agent, or is no longer employed by such company,
and shall inure to the benefit of his heirs, executors and administrators.


<PAGE> 32

                  (b) As used in  this  Agreement,  the  term  "Expenses"  shall
include, without limitation,  damages, losses,  judgments,  liabilities,  fines,
penalties,  excise taxes,  settlements and costs,  attorneys' fees, accountants'
fees,   and   disbursements   and  costs  of   attachment   or  similar   bonds,
investigations,  and any  expenses of  establishing  a right to  indemnification
under this Agreement.

                  (c)  Expenses  incurred by Executive  in  connection  with any
Proceeding  shall be paid in advance upon request of Executive and the giving by
the Executive of any undertakings required by applicable law.

                  (d) Executive  shall give the Company notice of any claim made
against him for which indemnity will or could be sought under this Agreement. In
addition,  Executive shall give the Company such  information and cooperation as
it may reasonably  require and as shall be within  Executive's power and at such
times and places as are reasonably convenient for Executive.

                  (e) With  respect  to any  Proceeding  as to  which  Executive
notifies the Company of the commencement thereof:

                  (i) The Company will be entitled to participate therein at its
own expense; and

                  (ii) Except as otherwise provided below, to the extent that it
may wish,  the Company  will be entitled  to assume the  defense  thereof,  with
counsel reasonably satisfactory to Executive, in which case Executive also shall
have the right to employ his own counsel in such action, suit or proceeding, but
only at his own cost  and  expense,  provided  that the  Company  shall  only be
permitted to assume  defense of a  Proceeding  if (1) the  Proceeding  could not
result in imposition of criminal penalties against Executive and (2) the Company
acknowledges  that it is liable  to  indemnify  Executive  with  respect  to all
Expenses with respect to such  Proceedings,  except as provided  earlier in this
sentence with regard to Executive's own counsel.

                  (f) The  Company  shall not be liable to  indemnify  Executive
under this  Agreement  for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner  which  would  impose any  penalty  on  Executive  (except a
penalty in respect of which Executive is fully  indemnified  hereunder)  without
Executive's written consent. Neither the Company nor Executive will unreasonably
withhold or delay consent to any proposed settlement.

                  (g) The right to  indemnification  and the payment of expenses
incurred in defending a Proceeding in advance of its final disposition conferred
in this Section 14 shall not be exclusive of any other right which Executive may
have or


<PAGE> 33

hereafter  may  acquire  under any  statute,  provision  of the  certificate  of
incorporation or by-laws of the any company, agreements, vote of stockholders or
disinterested directors or otherwise.

                  (h) The Company  shall obtain  officer and director  liability
insurance policies covering Executive in the same aggregate amount and under the
same terms as are maintained by the Company for senior officers and directors.

                  15.      Miscellaneous.

                  (a)  Entire  Agreement/Amendments.   This  Agreement  and  the
instruments contemplated herein, contain the entire understanding of the parties
with  respect  to the  employment  of  Executive  by the  Company.  There are no
restrictions,   agreements,  promises,  warranties,  covenants  or  undertakings
between the parties with respect to the subject  matter  hereof other than those
expressly  set forth  herein and  therein.  This  Agreement  may not be altered,
modified, or amended except by written instrument signed by the parties hereto.

                  (b) No Waiver.  The  failure of a party to insist  upon strict
adherence to any term of this  Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict  adherence to that term or any other term of this  Agreement.
Any such  waiver  must be in writing and signed by  Executive  or an  authorized
officer of General Textiles, as the case may be.

                  (c)  Assignment.  This  Agreement  shall not be  assignable by
Executive.  This Agreement shall be assignable by General Textiles,  but only to
another  Constituent  Corporation  and  only  if  such  Constituent  Corporation
promptly  assumes  all of the  obligations  hereunder  of General  Textiles in a
writing  delivered to the Executive and otherwise  complies with the  provisions
hereof with regard to such assumption.  Upon such assignment and assumption, all
obligations of General  Textiles herein shall be the obligations of the assignee
entity or  acquiror,  as the case may be,  but  General  Textiles  shall  remain
secondarily liable for the obligations hereunder.

                  (d) Successors;  Binding Agreement. This Agreement shall inure
to the benefit of and be binding  upon the  personal  or legal  representatives,
executors,  administrators,  successors, heirs, distributees,  devisees legatees
and permitted assignees of the parties hereto.

                  (e) Communications. For the purpose of this Agreement, notices
and all other communications  provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when faxed or delivered, or (ii)
two


<PAGE> 34

business days after being mailed by United States  registered or certified mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the initial page of this  Agreement,  provided  that all notices to
General  Textiles  or FBC  shall be  directed  to the  Chairman  of the Board of
Directors of General  Textiles and FBC or to such other address as any party may
have furnished to the other in writing in accordance herewith.  Notice of change
of address shall be effective only upon receipt.

                  (f) Withholding  Taxes.  The Company may withhold from any and
all amounts  payable under this Agreement to Executive  such Federal,  state and
local taxes as may be required to be withheld  pursuant to any applicable law or
regulation.

                  (g) Survival.  The  respective  rights and  obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to the agreed preservation of such rights and obligations.

                  (h)   Counterparts.   This   Agreement   may  be   signed   in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

                  (i) Headings.  The headings of the sections  contained in this
Agreement are for convenience  only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

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

GENERAL TEXTILES



By:/s/ James D. Somerville

FAMILY BARGAIN CORPORATION


By:/s/ James D. Somerville


   /s/ Michael Searles
       Michael Searles


<PAGE> 35

                                     EXHIBIT A

                                  Terms of Loan

Principal Amount:            $1,400,000

Interest Rate:               8%, to accrue and be paid at maturity

Principal Amortization:      Annual repayments of principal in an amount
                             equal to 16.25% of the annual bonus paid to the
                             borrower by General Textiles

Maturity:                    Five years from the date of the loan

Security and Recourse:       The loan will be secured by a pledge of the shares
                             purchased with the proceeds of the loan.  Personal
                             recourse against the borrower will be limited to
                             the amount of $600,000.