EMPLOYMENT AGREEMENT


                                     BETWEEN



                                FAC REALTY, INC.


                                       AND


                               PATRICK M. MINIUTTI

<PAGE>


                              EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT is entered into as of the 1st day of March, 1997
between FAC REALTY, INC., a Delaware corporation (the "Company"), and PATRICK M.
MINIUTTI (the "Executive") for employment commencing on the Effective Date (as
hereinafter defined).

                                  WITNESSETH:

     WHEREAS, the Executive has been employed by the Company as Executive Vice
President and Chief Financial Officer under that certain Employment Agreement
between FAC Realty, Inc. and dated August 26, 1996 (the "Original Employment
Agreement"); and

     WHEREAS, the Company desires to employ the Executive as its Executive Vice
President and Chief Financial Officer and to terminate the Original Employment
Agreement, and the Executive desires to be so employed on the terms and subject
to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:

1. Employment

          (a) The Company hereby employs the Executive as Executive Vice
     President and Chief Financial Officer and the Executive hereby accepts such
     employment, on the terms and subject to the conditions hereinafter set
     forth. The Original Employment Agreement is hereby terminated

          (b) During the term of his employment under this Employment Agreement
     and any extension hereof (all references herein to the term of this
     Employment Agreement shall include any extension hereof), the Executive
     shall be and have the title of Executive Vice President and Chief financial
     Officer and shall devote his entire business time and all reasonable
     efforts to his employment and perform diligently such duties as are
     customarily performed by presidents and chief executive officers of
     companies similar in size to the Company, together with such other duties
     as may be reasonably requested from time to time by the Board of Directors
     of the Company (the "Board"), which duties shall be consistent with his
     title and position as set forth above and as provided in Paragraph 2;
     provided, however, that business activities by the Executive with respect
     to passive investments, so long as such activities do not, alone or in the
     aggregate, materially interfere with the Executive's performance of his
     duties as described in this Paragraph 1(b). will not be deemed inconsistent
     with the requirements of this Paragraph 1(b).

     2. Term and Positions.

          (a) Subject to the provisions for extension or termination hereinafter
     stated, the term of this Employment Agreement shall begin as of March 1,
     1997 (the "Effective Date") and shall continue through February 29, 2000
     (the "Expiration Date"). As of the March 1, 1998 and each


                                      -2-
<PAGE>

     successive anniversary thereof, such term automatically shall be extended
     for one (1) additional year, unless: (i) this Employment Agreement is
     terminated as provided in Paragraph 5 or (ii) either the Company or the
     Executive shall give written notice to the other at least thirty (30) days
     before the first anniversary of the Effective Date or any subsequent annual
     anniversary thereof, that this Employment Agreement shall not be so
     extended but shall terminate upon the expiration of the then-existing term
     (for example, unless such written notice of non-extension is given on Or
     prior to January 28, 1998, the term of this Employment Agreement
     automatically will be extended, effective March 1, 1998, until February 28,
     2001). In the event of a "change of control" (as hereinafter defined) the
     term of this Employment Agreement shall automatically be extended for a
     term of two (2) years from the then existing Termination Date.

          (b) The Executive shall be entitled to serve as Executive Vice
     President and Chief Financial Officer of the Company. For service as a
     director, officer and employee of the Company, the Executive shall be
     entitled to the full protection of the applicable indemnification
     provisions of the Restated Certificate of Incorporation and Bylaws of the
     Company, as the same may be amended from time to time, which
     indemnifications shall remain effective after termination of this
     Employment Agreement with respect to Executive's actions and inactions
     during the term hereof. Without limiting the generality of any of the
     foregoing, except as hereafter expressly agreed in writing by the
     Executive, during and throughout the term of his employment under this
     Employment Agreement: (i) all employees of the Company shall report
     directly or indirectly to the Executive; and (ii) unless the Board of
     Directors shall otherwise direct, the Executive shall have the authority to
     make operating decisions regarding day-to-day operation of the business.

          (c) If:

               (i) the Company materially changes the Executive's duties and
          responsibilities as set forth in Paragraphs 1(b) and 2(b) without his
          consent;

               (ii) the Executive's place of employment or the principal
          executive offices of the Company are located more than fifty (50)
          miles from the geographical center of Cary, North Carolina;

               (iii) there occurs a material breach by the Company of any of its
          obligations under this Employment Agreement, which breach has not been
          cured in all material respects within ten (10) days after the
          Executive gives notice thereof to the Company;

               (iv) there occurs a "change in control" (as hereinafter defined)
          of the Company during the term of this employment Agreement; or



                                      -3-
<PAGE>


               (v) after the Effective Date, the Executive is not at all times
          during his employment hereunder a member of the Board of Directors,
          or, if the Board of Directors constitutes an Executive Committee, the
          Executive is not at all times during his employment hereunder a member
          of such Executive Committee;

     then in any such event the Executive shall have the right to terminate his
     employment with the Company, but such termination shall not be considered a
     voluntary resignation or termination of such employment or of this
     Employment Agreement by the Executive but rather a discharge of the
     Executive by the Company "without cause" (as defined in Paragraph 5 (a)).
     The Executive may exercise such right of termination at any time within
     three (3) months following the occurrence of the applicable event described
     in (i) and (iii) of this Paragraph 2(c), and within six (6) months
     following the occurrence of the applicable event described in (ii), (iv)
     and (v) of this Paragraph 2(c).

          (d) The Executive shall be deemed not to have consented to any written
     proposal calling for a material change in his duties and responsibilities
     unless he shall give written notice of his consent thereto to the Board of
     the Company within fifteen (15) days after receipt of such written
     proposal. If the Executive shall not have given such consent, the Company
     shall have the opportunity to withdraw such proposed material change by
     written notice to the Executive given within ten (10) days after the end of
     said fifteen (15) day period.

          (e) The term "change in control" means the first to occur of the
     following events:

               (i) any person or group of commonly controlled persons owns or
          controls, directly or indirectly, fifty percent (50%) or more
          (directly or indirectly, including convertible shares or convertible
          partnership units) of the voting control or value of the capital stock
          of the Company following the Effective Date;

               (ii) any person or group of commonly controlled persons owning
          less than five percent (5%) of the voting control or value of the
          capital stock of the Company within 30 days following the Effective
          Date owns or controls, directly or indirectly, more than twenty
          percent (20%) (directly or indirectly, including convertible shares or
          convertible partnership units) of the voting control or value of the
          capital stock of the Company; or

               (iii) following the Effective Date, the stockholders of the
          Company approve an agreement to merge or consolidate with another
          corporation or other entity resulting (whether separately or in
          connection with a series of transactions) in a change in ownership of
          twenty percent (20%) or more (directly or indirectly, including
          convertible shares or convertible partnership units) of the voting
          control or value of the capital stock of the Company, or an agreement
          to sell or otherwise dispose of all or substantially all of the
          Company's assets (including without limitation, a plan of liquidation
          or dissolution), or otherwise approve of a fundamental alteration in
          the nature of the Company's business; provided, however, a pledge,
          hypothecation or other similar disposition for the purpose of
          providing collateral security made at the time the Company enters into
          a bona fide financing


                                      -4-
<PAGE>


          transaction with a party which at the time of such transaction is not
          an affiliate of the Company would not constitute a change in control.

Notwithstanding the foregoing provisions of this Paragraph 2, the ownership or
acquisition of capital stock by the Executive, J. Dixon Fleming, Jr., Patrick M.
Miniutti, Christopher G. Gavrelis, Connell L. Radcliffe and/or their respective
affiliates, shall not be deemed to result in a "change in control" of the
Company.

     3. Compensation.

     During the term of his employment under this Employment Agreement the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in this Paragraph 3. All
restricted stock given as compensation shall be subject to the Company's 1996
Restricted Stock Plan.

          (a) The Company shall pay to the Executive a base salary payable in
     accordance with the Company's usual pay practices (and in any event no less
     frequently than monthly) of (i) cash payments of Two Hundred Twenty-Five
     Thousand and No/100 Dollars ($225,000.00) per annum; (ii) Common Stock of
     the Company equivalent to $100,000 based on the market price of the Common
     Stock on March 1, 1997 and each subsequent annual anniversary, rounded down
     to the nearest 1,000 shares (for example, $100,000 divided by $6.625 per
     share would result in 15,000 shares issued), which shares shall
     automatically vest on the subsequent annual anniversary (for example, March
     1, 1998 for shares issued March 1. 1997) unless the Executive voluntarily
     terminates his employment prior to such anniversary date or his employment
     is terminated for "cause" (see Paragraph 5 (a) (iii)); (iii) Common Stock
     of the Company equivalent to $18,750 based on the market price of the
     Common Stock on March 1, 1997 and each subsequent annual anniversary
     rounded up to the nearest 1,000 shares plus 50% (for example, $18,750
     divided by $6.625 per share would result in 3,000 shares issued plus 50%,
     or a total of 4,500 shares), which shares shall automatically vest on the
     third anniversary of the date of issuance (for example, March 1, 2000 for
     shares issued March 1, 1997) unless the Executive voluntarily terminates
     his employment prior to such anniversary date or his employment is
     terminated for "cause" (see Paragraph 5 (a) (iii)); and (iv) such increases
     (but not decreases) from time to time (based upon the performance of the
     Company and the Executive) as determined by the Board or the Company's
     Executive Compensation Committee payable in the form of Common Stock of the
     Company similar to (iii) above,

          (b) The Company may pay to the Executive bonus compensation on a
     calendar year basis pursuant to the terms of the incentive compensation
     plan established by the board from time to time, not later than March 1
     following each calendar year. Such bonus compensation may be payable in the
     form of cash or Common Stock of the Company. In the event such bonus is
     paid in the form of Common Stock, the determination of shares issued may be
     based on the cash equivalent divided by the market price of the Common
     Stock on or about the date of determination of the bonus compensation by
     the Board. Such Shares will be increased by 50% and shall automatically
     vest on the third anniversary of the date of




                                      -5-
<PAGE>

     issuance (for example, March 1, 2001 for shares issued March 1, 1998)
     unless the Executive voluntarily terminates his employment prior to such
     anniversary date or his employment is terminated for "cause" (see Paragraph
     5 (a) (iii)).

          (c) The Company shall provide to the Executive such medical,
     hospitalization and dental insurance for himself, his spouse and eligible
     family members, as may be available to other officers of the Company and
     term life insurance in the amount of not less than $1,000,000.

          (d) The Executive shall participate in all retirement and other
     benefit plans of the Company generally available from time to time to
     officers of the Company and for which the Executive qualifies under the
     terms thereof (and nothing in this Employment Agreement shall or shall be
     deemed to in any way affect the Executive's rights and benefits thereunder
     except as expressly provided herein).

          (e) The Executive shall be entitled to such periods of vacation and
     sick leave allowance each year as are determined by the Company's Executive
     Compensation Committee for officers generally; provided that Executive
     shall be entitled to not less than four weeks (twenty days) of vacation
     each year.

          (f) The Executive shall be entitled to participate in any equity or
     other employee benefit plan that is generally available to senior executive
     officers, as distinguished from general management, of the Company. The
     Executive's participation in and benefits under any such plan shall be on
     the terms and subject to the conditions specified in the governing document
     of the particular plan.

          (g) The Company shall reimburse the Executive or provide him with an
     expense allowance during the term of this Employment Agreement for travel,
     entertainment and other expenses reasonably and necessarily incurred by the
     Executive in connection with the Company's business. The Executive shall
     furnish such documentation with respect to reimbursement to be paid
     hereunder as the Company shall reasonably request.

          (h) The Company shall (i) pay to the Executive an annual automobile
     allowance of $8,000 payable on a pro rata monthly basis; (ii) pay or
     reimburse the Executive for country club initiation fees of up to $10,000
     plus periodic dues; and (iii) pay or reimburse the Executive up to $2,500
     annually for expenses of financial, estate or tax planning.

     4 Payment in the Event of Death or Permanent Disability.

          (a) In the event of the Executive's death or "permanent disability"
     (as hereinafter defined) during the term of his employment under this
     Employment Agreement, the Company shall pay to the Executive (or his
     personal representatives, heirs, successors and assigns in the event of his
     death) an amount equal to two (2) times the Executive's then effective
     annual base salary, as determined under Paragraph 3(a), plus a pro rata
     portion of the bonus applicable to the calendar year in which such death or
     permanent disability occurs,


                                      -6-
<PAGE>


     as such bonus is determined under Paragraph 3(b).

          (b) The pro rata portion of the bonus described in Paragraph 4(a)
     shall be paid when and as provided in Paragraph 3(b). The remainder of the
     benefit to be paid pursuant to Paragraph 4(a) shall be paid within ninety
     (90) days after the date of death or permanent disability, as the case may
     be.

          (c) Except as otherwise provided in Paragraphs 2(b), 3(d), 4(a) and
     4(b), in the event of the Executive's death or permanent disability, the
     Executive's employment hereunder shall terminate and the Executive shall be
     entitled to no further compensation or other benefits under this Employment
     Agreement, except as to that portion of any unpaid salary and other
     benefits accrued and earned by him hereunder up to and including the date
     of such death or permanent disability, as the case may be.

          (d) For purposes of this Employment Agreement, the Executive's
     "permanent disability" shall be deemed to have occurred after one hundred
     twenty (120) days in the aggregate during any consecutive twelve (12) month
     period, or after ninety (90) consecutive days, during which one hundred
     twenty (120) or ninety (90) days, as the case may be, the Executive, by
     reason of his physical or mental disability or illness, shall have been
     unable to discharge his duties under this Employment Agreement. The date of
     permanent disability shall be such one hundred twentieth (120th) or
     ninetieth (90th) day, as the case may be. In the event either the Company
     or the Executive, after receipt of notice of the Executive's permanent
     disability from the other, dispute that the Executive's permanent
     disability shall have occurred, the Executive shall promptly submit to a
     physical examination by the chief of medicine of any major accredited
     hospital in the Raleigh, North Carolina, area and, unless such physician
     shall issue his written statement to the effect that in his opinion, based
     on his diagnosis, the Executive is capable of resuming his employment and
     devoting his full time and energy to discharging his duties within thirty
     (30) days after the date of such statement, such permanent disability shall
     be deemed to have occurred.

     5. Termination

          (a) The Employment of the Executive under this Employment Agreement,
     and the term hereof, may be terminated by the Company:

               (i) on the death or permanent disability (as defined above) of
          the Executive;

               (ii) for "cause" at any time by action of the Board; or

               (iii) "without cause" at any time by action of the Board.

      For purposes hereof, the term "cause" shall mean:





                                      -7-
<PAGE>


                    (A) The Executive's fraud, commission of a felony,
               commission of an act or series of repeated acts of dishonesty
               which fraud, felony or dishonesty is materially inimical to the
               best interests of the Company, or which results in material
               injury to the business reputation of the Company, or the
               Executive's willful and repeated failure to perform his duties
               under this Employment Agreement, which failure has not been cured
               within fifteen (15) days after the Company gives notice thereof
               to the Executive; or

                    (B) The Executive's material breach of any material
               provision of this Employment Agreement, which breach has not been
               cured in all substantial respects within ten (10) days after the
               Company gives notice thereof to the Executive.

          For purposes hereof, the term "without cause" shall mean any reason
          other than those set forth in subparagraphs (a)(i) and (a)(ii) of this
          Paragraph 5.

     The exercise by the Company of its rights of termination under this
     Paragraph 5 shall be the Company's sole remedy in the event of the
     occurrence of the event as a result of which such right to terminate
     arises. Upon any termination of this Employment Agreement, the Executive
     shall be deemed to have resigned from all offices and directorships held by
     the Executive in the Company.

          (b) In the event of a termination claimed by the Company to be for
     "cause" pursuant to Paragraph 5(a)(ii), the Executive shall have the right
     to have the justification for said termination determined by arbitration in
     Raleigh, North Carolina. In order to exercise such right, the Executive
     shall serve on the Company within thirty (30) days after termination a
     written request for arbitration. The Company immediately shall request the
     appointment of a single arbitraitor by the American Arbitration Association
     and thereafter the question of "cause" shall be determined under the rules
     of the American Arbitration Association, and the decision of the arbitrator
     shall be final and binding on both parties. The parties shall use all
     reasonable efforts to facilitate and expedite the arbitration and shall act
     to cause the arbitration to be completed as promptly as possible. During
     the pendency of the arbitration, the Executive shall continue to receive
     all compensation and benefits to which he is entitled hereunder, and if at
     any time during the pendency of such arbitration the Company fails to pay
     and provide all compensation and benefits to the Executive in a timely
     manner the Company shall be deemed to have automatically waived whatever
     rights it then may have had to terminate the Executive's employment for
     cause. Expenses of the arbitration shall be borne equally by the parties.

          (c) In the event of termination pursuant to subparagraph (a)(i) or
     (a)(ii) of this Paragraph 5, except as otherwise provided in Paragraphs
     2(b), 3(d), 4(a) and 4(b), as applicable, the Executive shall be entitled
     to no further compensation or other benefits under this Employment
     Agreement, except as to that portion of any unpaid salary and other
     benefits accrued and earned by him hereunder up to and including the
     effective date of such termination.

          (d) In the event of termination pursuant to Paragraph 2(c), or
     subparagraph (a)(iii) of this paragraph 5, the Executive shall be entitled
     to


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<PAGE>


               (i) severance pay payable within five (5) days of such
          termination in a lump sum equal to the sum of (A) the greater of (x)
          the total amount of unpaid base salary for the then-unexpired portion
          of the term of this Employment Agreement, including any extended term
          as provided by Section 2(a) hereof at the then-effective annual rate
          of salary, as determined under Paragraph 3(a) and (y) the amount of
          one year's base salary at the then-effective annual rate of salary,
          and (B) the product of the number of years (including fractions)
          representing the unexpired term of this Employment Agreement (but not
          less than one) times an amount equal to the average of the annual
          bonuses payable to the Executive under Paragraph 3(b) for the three
          (3) full calendar years immediately prior to termination of this
          Employment Agreement in which a bonus was payable or such lesser
          number of full calendar years during which the Executive was employed
          hereunder in which a bonus was payable,

               (ii) during a period equal to the greater of one (1) year or the
          unexpired term of this Employment Agreement, all other benefits to
          which the Executive would have been entitled during the term of this
          Employment Agreement had the Executive's employment not been
          terminated.

               (iii) during a period equal to the greater of one (1) year or the
          unexpired term of this Employment Agreement, the continuing use of a
          secretary and office space to be provided by the Company, and

               (iv) other benefits accrued and earned by him hereunder up to and
          including the effective date of such termination.

          (e) In the event of the termination of his employment pursuant to
     Paragraph 2(c) or Paragraph 5(a)(iii), the Executive shall have the option
     to be released from his obligations under Paragraph 6(a)(i) for the one (1)
     year period following the termination of his employment, by releasing the
     Company from its obligations under Paragraph 5(d) hereof (other than those
     provided in Paragraph 5(d)(iv)) Such option may be exercised by the
     Executive giving the Company notice thereof within five (5) days of such
     termination.

          (f) In no event shall the Executive have or be deemed to have any duty
     to seek employment or otherwise mitigate damages with respect to any
     amounts or benefits due to him upon termination of this Employment
     Agreement as provided in this Paragraph 5, nor shall any such amount or
     benefits be reduced by reason of any other compensation or benefits which
     the Executive may earn following termination of this Employment Agreement.

     6. Covenants and Confidential Information.

          (a) The Executive acknowledges the Company's reliance and expectation
     of the Executive's continued commitment to performance of his duties and
     responsibilities during the time when he is employed under this Employment
     Agreement. In light of such reliance and expectation on the part of the
     Company (but subject to Paragraph 5(d), 5(e) and 5(f) above), during the
     time when he is employed under this Employment Agreement and for a period
     of one (1) year after the


                                      -9-
<PAGE>

     termination of such employment for any reason other than the expiration of
     the term hereof in accordance with Paragraph 2(a)(ii) hereof (and, as to
     clause (ii) of this subparagraph (a), at any time during and after the term
     of this Employment Agreement), the Executive shall not, directly or
     indirectly, do either of the following:

               (i) Own, manage, control or participate in the ownership,
          management, or control of, or be employed or engaged by or otherwise
          affiliated or associated as a consultant, independent contractor or
          otherwise with, any other corporation, partnership, proprietorship,
          firm, association or other business entity engaged in the business of,
          or otherwise engage in the business of, acquiring, owning, developing
          or managing factory outlet shopping centers; provided, however, that
          the ownership of not more than one percent (1%) of any class of
          publicly traded securities of any entity; or

               (ii) Disclose, divulge, discuss, copy or otherwise use or suffer
          to be used in any manner, in competition with, or contrary to the
          interests of, the Company, any confidential information relating to
          the Company's operations, properties or otherwise to its particular
          business or other trade secrets of the Company, it being acknowledged
          by the Executive that all such information regarding the business of
          the Company compiled or obtained by, or furnished to, the Executive
          while the Executive shall have been employed by or associated with the
          Company is confidential information and the Company's exclusive
          property; provided, however, that the foregoing restrictions shall not
          apply to the extent that such information (A) is obtainable in the
          public domain or known in the industry generally, (B) becomes
          obtainable in the public domain or known in the industry generally,
          except by reason of the breach by the Executive of the terms hereof,
          (C) was not acquired by the Executive in connection with his
          employment or affiliation with the Company, (D) was not acquired by
          the Executive from the Company or its representatives, or (E) is
          required, to be disclosed by rule of law or by order of a court or
          governmental body or agency.

          (b) The Executive agrees and understands that the remedy at law for
     any breach by him of this Paragraph 6 may be inadequate and that the
     damages flowing such breach are not readily susceptible to being measured
     in monetary terms. Accordingly, it is acknowledged that, upon adequate
     proof of the Executives violation of any legally enforceable provision of
     this Paragraph 6, the Company may be entitled to immediate injunctive
     relief and may obtain a temporary order restraining any threatened or
     further breach. Nothing in this Paragraph 6 shall be deemed to limit the
     Company's remedies at law or in equity for any breach by the Executive of
     any of the provisions of this Paragraph 6 which may be pursued or availed
     of by the Company.

          (c) The Executive has carefully considered the nature and extent of
     the restrictions upon him and the rights and remedies conferred upon the
     Company under this Paragraph 6, and hereby acknowledges and agrees that the
     same are reasonable in time and territory, are designed to eliminate
     competition which otherwise would be unfair to the Company, do not stifle
     the inherent skill and experience of the Executive, would not operate as a
     bar to the Executive's sole means of support, are fully required to protect
     the legitimate interests of the Company and do not confer a benefit upon
     the Company disproportionate to the detriment to the Executive.



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     7. Stock Options. The Executive shall receive stock options under the
Company's 1993 Employee Stock Incentive Plan as amended as more fully described
in that certain Nonqualified Stock Option Agreement and that certain Incentive
Stock Option Agreement dated February 14, 1996 the terms and conditions of which
are incorporated herein by reference.

     8. Restricted Stock. The Executive shall receive a grant of 120,000 shares
(the "Restricted Shares") of restricted common stock of the Company ("Common
Stock") granted under the Company's 1996 Restricted Stock Plan. Prior to
vesting, the Restricted Shares will be registered under the Securities Act on
Form S-8, will be listed on the NYSE and following vesting thereof will be
freely tradable subject to applicable provisions of Rule 144 promulgated under
the Securities Act. With respect to said grant, the Company and the Executive
shall enter into a Restricted Stock Agreement in a form mutually agreed upon by
the Company and the Executive providing that (i) the Restricted Shares shall
vest in ten (10) equal installments of ten percent (10%) per year (provided as
to each installment that the Executive continues to be employed by the Company),
commencing on the Effective Date and thereafter on the first through ninth
anniversaries of the Effective Date provided (ii) all unvested Restricted Shares
shall immediately vest upon the Executive's death or permanent disability (as
defined in Paragraph 4(d)) during his employment by the Company; or termination
of the Executive's employment by the Company due to the Company's election not
to extend this Employment Agreement as permitted in Paragraph 2(a); or pursuant
to Paragraph 5(a)(iii) if such termination occurs within three (3) months prior
to, at the time of, or within one (1) year following a "change of control's (as
defined in Section 2(e) hereof) or provided that such change is effected, the
execution of a definitive agreement therefor (notwithstanding the requirement of
continued employment in subparagraph (i) above, upon such termination of
employment). The Executive shall be entitled to dividends on any those
Restricted Shares which have vested as of the record date of any dividend
payment.

     9. Tax Adjustment Payments. If all or any portion of the amounts payable to
the Executive under this Employment Agreement (together with all other payments
of cash or property, whether pursuant to this Employment Agreement or otherwise,
including, without limitation, the issuance of common stock of the Company, or
the granting, exercise or termination of options therefor) constitutes "excess
parachute payments" within the meaning of Section 280G of the Code that are
subject to the excise tax imposed by Section 4999 of the Code (or any similar
tax or assessment), the amounts payable hereunder shall be increased (in the
same manner, to the extent applicable, without duplication, as provided in (i),
(ii) and (iii) below) to the extent necessary to place the Executive in the same
after-tax position as he would have been in had no such tax assessment been
imposed on any such payment paid or payable to the Executive under this
Employment Agreement or any other payment that the Executive may receive in
connection therewith. The determination of the amount of any such tax or
assessment and the incremental payment required hereby in connection therewith
shall be made by the accounting firm employed by the Executive within thirty
(30) calendar days after such payment and said incremental payment shall be made
within five (5) calendar days after such determination has been made. If, after
the date upon which the payment required by this Paragraph 8 has been made, it
is determined (pursuant to final regulations or published rulings of the
Internal Revenue Service, final judgment of a court of competent jurisdiction,
Internal Revenue Service audit assessment, or otherwise) that the amount of
excise or other similar taxes or assessments payable by the Executive is greater
than the amount



                                      -11-
<PAGE>


initially so determined, then the Company shall pay the Executive an amount
equal to the sum of: (i) such additional excise or other taxes, plus (ii) any
interest, fines and penalties resulting from such underpayment, plus (iii) an
amount necessary to reimburse the Executive for any income, excise or other tax
assessment payable by the Executive with respect to the amounts specified in (i)
and (ii) above, and the reimbursement provided by this clause (iii), in the
manner described above in this Paragraph 8. Payment thereof shall be made within
five (5) calendar days after the date upon which such subsequent determination
is made.

     10. Representations and Warranties of the Company.

          (a) The Company is a corporation duly organized, validly existing and
     in good standing under the laws of the State of Delaware and has all
     requisite corporate power and authority to enter into, execute and deliver
     this Employment Agreement, fulfill its obligations hereunder and consummate
     the transactions contemplated hereby.

          (b) The execution and delivery of, performance of obligations under,
     and consummation of the transactions contemplated by, this Employment
     Agreement have been duly authorized and approved by all requisite corporate
     action by or in respect of the Company, and this Employment Agreement
     constitutes the legally valid and binding obligation of the Company,
     enforceable by the Executive in accordance with its terms.

          (c) No provision of the Company's governing documents or any agreement
     to which it is a party or by which it is bound or of any material law or
     regulation of the kind usually applicable and binding upon the Company
     prohibits or limits its ability to enter into, execute and deliver this
     Employment Agreement, fulfill its respective obligations hereunder and
     consummate the transactions contemplated hereby.

     11. Miscellaneous.

          (a) The Executive represents and warrants that he is not a party to
     any agreement, contract or understanding, whether employment or otherwise,
     which would restrict or prohibit him from undertaking or performing
     employment in accordance with the terms and conditions of this Employment
     Agreement.

          (b) The provisions of this Employment Agreement are severable and if
     any one or more provisions may be determined to be illegal or otherwise
     unenforceable, in whole or in part, the remaining provisions and any
     partially unenforceable provision to the extent enforceable nevertheless
     shall be binding and enforceable.

          (c) The rights and obligations of the Company under this Employment
     Agreement shall inure to the benefit of, and shall be binding on, the
     Company and its successors and assigns, and the rights and obligations of
     the Executive under this Employment Agreement shall inure to the benefit
     of, and shall be binding upon, the Executive (other than obligations to
     perform services and to refrain from competition and disclosure of
     confidential information) and his heirs, personal representatives and
     assigns.


                                      -12-
<PAGE>


          (d) Any controversy or claim arising out of or relating to this
     Employment Agreement, or the breach thereof, shall be settled by
     arbitration in accordance with the Rules of the American Arbitration
     Association then pertaining in the City of Raleigh, North Carolina, and
     judgment upon the award rendered by the arbitrator or arbitrators may be
     entered in any court having jurisdiction thereof. The arbitrator or
     arbitrators shall be deemed to possess the powers to issue mandatory orders
     and restraining orders in connection with such arbitration; provided,
     however, that nothing in this Paragraph 11(d) shall be construed so as to
     deny the Company the right and power to seek and obtain injunctive relief
     in a court of equity for any breach or threatened breach by the Executive
     of any of his covenants contained in Paragraph 6 hereof.

          (e) Any notice to be given under this Employment Agreement shall be
     personally delivered in writing or shall have been deemed duly given when
     received after it is posted in the United States mail, postage prepaid,
     registered or certified return receipt requested, and if mailed to the
     Company, shall be addressed to its principal place of business, attention:
     Chairman, and if mailed to the Executive, shall be addressed to him at his
     home address last known on the records of the Company, or at such other
     address or addresses as either the Company or the Executive may hereafter
     designate in writing to the other. All notices provided for hereunder to
     the parties shall be accompanied by simultaneous copy of such notice sent
     to the attorneys for such parties, as follows:

          If to the Executive;


          If to the Company;

                FAG Realty, Inc.
                11000 Regency Parkway.
                Third Floor East Tower
                Cary, North Carolina 27511
                Attention: General Counsel

     Notices sent by Federal Express or similar overnight delivery service or by
     facsimile transmissions shall also constitute due notice under this
     paragraph 11(e), effective upon receipt thereof.

          (f) The failure of either party to enforce any provision or provisions
     of this Employment Agreement shall not in any way be construed as a waiver
     of any such provision or provisions as to any future violations thereof,
     for prevent that party thereafter front enforcing each and every other
     provision of this Employment Agreement. The rights granted the parties
     herein are cumulative and the waiver of any single remedy shall not
     constitute a waiver of such party's right to assert all other legal
     remedies available to it under the circumstances.

          (g) This Employment Agreement supersedes all prior agreements and
     understandings between the parties made prior to the date hereof and may
     not be modified or terminated orally. No modification, termination or
     attempted waiver shall be valid unless in writing and signed by the party
     against whom the same is sought to be enforced.



                                      -13-
<PAGE>


          (h) This Employment Agreement shall be governed by and construed
     according to the laws of the State of North Carolina.

          (i) Captions and paragraph headings used herein are for convenience
     and are not a part of this Employment Agreement and shall not be used in
     construing it.

          (j) Where necessary or appropriate to the mean hereof, the singular
     and plural shall be deemed to include each other, and the masculine,
     feminine and neuter shall be deemed to Include each other.

          (k) This Employment Agreement may be executed in multiple
     counterparts, each of which will be deemed an original, but all of which
     together will constitute one and the same instrument. This Employment
     Agreement may be executed by facsimile signature.

     IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the day and year first set forth above.


                                        FAC REALTY, INC., a Delaware corporation

                                        By: /s/ C. CARNMACK MORTON 
                                          -----------------------------------
                                          C. Carnmack Morton 
                                          President
                                          Chief Executive Officer


                                        By: /s/ THEODIRE E. HAIGLER, JR.
                                          -----------------------------------
                                          Theodire E. Haigler, Jr.
                                          Chairman of Executive Compensation
                                          Committee


                                        /s/ PATRICK M. MINIUTTI           (SEAL)
                                        ----------------------------------------
                                        Patrick M. Miniutti 


                                      -14-