EMPLOYMENT AGREEMENT



                                     BETWEEN


                                FAC REALTY, INC.


                                       AND


                               PATRICK M. MINIUTTI
























<PAGE>



                              EMPLOYMENT AGREEMENT


     THIS  EMPLOYMENT  AGREEMENT  is entered into as of the 21st day of October,
1996 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).

                              W I T N E S S E T H:

         WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, 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.

                  (b) During the term of his employment under this Employment
Agreement, 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 executive vice presidents and chief financial 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 l(b), will not be deemed inconsistent with the requirements of this
Paragraph l(b).

         2.       Term and Positions.

                  (a) Subject to the provisions for termination hereinafter
stated, the term of this Employment Agreement shall begin retroactively as of
August 26, 1996 (the "Effective Date") and shall continue through August 25,
1999 (the "Expiration Date"). As of the August 25, 1997 and each 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 Expiration 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 July 26, 1997, the term of this Employment Agreement automatically will be
extended, effective August 26, 1997, until August 25, 2000).



<PAGE>




                  (b) The Executive shall be entitled to serve as Executive Vice
President and Chief Financial Officer of the Company. For service as an officer
and employee of the Company, and, upon election by the Company's Board of
Directors as a director, 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.

                  (c)  If:

                           (i) the Company  materially  changes the  Executive's
         duties and  responsibilities  as set forth in Paragraphs  l(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; or

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

                           (v) after his initial election to the Company's Board
         of Directors,  the Executive is not at all times during his  employment
         hereunder a member of the Board of Directors.

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) (iii)). 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.



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<PAGE>



                  (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 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%) 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 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 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., C. Cammack Morton, Connell L. Radcliff, 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.

                  (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 Two Hundred Thousand and
         No/100 Dollars ($200,000.00) per annum, to be increased to Two Hundred
         Twenty-Five Thousand and No/100 Dollars ($225,000.00) per annum on
         February 1, 1997 and thereafter to be increased (but not decreased)
         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.



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<PAGE>



                  (b) The Company shall 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 30 days following the completion of the audit of the Company's
         financial statements for each calendar year, prorated on a per diem
         basis for partial calendar years in which the Executive was employed
         hereunder.

                  (c) The Company shall provide to the Executive such life,
         medical, hospitalization and dental insurance for himself, his spouse
         and eligible family members, as may be available to other officers of
         the Company.

                  (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 provide to the Executive a relocation
         allowance in the amount of Fifty Thousand and No/100 Dollars
         ($50,000.00) which shall be paid to Executive in accordance with the
         terms of that Promissory Note attached hereto as Exhibit A.

                  (i) The Company shall either reimburse Executive for, or
         provide direct payment to applicable providers as to, Executive's
         relocation costs including those for temporary housing and moving
         expenses incurred through September 30, 1996.

         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,

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<PAGE>



         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, 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 (9Oth) 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.



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<PAGE>



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

                                    (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  arbitrator 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.



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                  (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

                           (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, 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) and 5(e) above), during the

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time when he is employed under this Employment Agreement and for a period of one
(1) year after the 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 (A) not more than one percent
         (1%) of any class of publicly traded securities of any entity of (B)
         any interest disclosed in the Company's Registration Statement on form
         S-11 shall not be deemed a violation of this covenant; 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
Executive's 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

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the Company and do not confer a benefit upon the Company disproportionate to the
detriment to the Executive.

         7. Stock Options. The Executive shall receive stock options under the
Company's 1993 Employee Stock Incentive Plan (the "Option Plan") to purchase up
to 200,000 shares of the Company's common stock. To the extent permitted under
the Internal Revenue Code of 1986, as amended ("the Code"), such options shall
be eligible to qualify as "incentive stock options" under Section 422 of the
Code. The Company shall cause the shares underlying such options to be
registered on Form S-8 as soon as practicable after the date of grant. The
shares will be listed on the New York Stock Exchange (the "NYSE") and will be
freely tradable subject to the applicable provisions of Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). As soon as
practicable following approval of the option grant by the Company's Executive
Compensation Committee, the Company and the Executive shall enter into a Stock
Option Agreement in a form mutually agreed upon by the Company and the Executive
providing that such options shall vest at the rate of twenty percent (20%) on
the date of grant and an additional twenty percent (20%) on each of the next
four anniversaries of the date of grant, provided that at each date of vesting
he is employed by the Company, and upon vesting shall be exercisable at any time
or times during the ten year period following the date of grant at an option
price equal $8.63 which was the closing price of the Company's common stock on
the NYSE on August 26, 1996.

         8. Restricted Stock. The Executive shall receive a grant of 90,000
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 eight installments (provided as to each installment that the Executive
continues to be employed by the Company) with the first being of thirty percent
(30%), commencing on the three-year anniversary date of the Effective Date
followed by seven (7) equal installments of ten percent (10%) each year
thereafter on the fourth through tenth year anniversaries of the Effective Date
provided (ii) such amount of the dividends paid on any unvested Restricted
Shares less an amount necessary to pay all applicable taxes associated with the
vesting of the Restricted Shares and such dividends shall be used by the
Executive to purchase additional shares of Common Stock within thirty (30) days
after each dividend payment to Executive or as soon thereafter as the Executive
may purchase shares of Common Stock without penalty under the Federal Securities
laws; and (iii) 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" (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).


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         9.       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.

         10.      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.

                  (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 9(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.

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<PAGE>



                  (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:

                            (No counsel selected as of the date hereof)




                  If to the Company:

                  prior to December 1, 1996

                           FAC Realty, Inc.
                           230 North Equity Drive
                           Smithfield, North Carolina 27577
                           Attention: General Counsel

                  from and after December 1, 1996

                           FAC 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
9(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,
nor prevent that party thereafter from 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.




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                  (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.

                  (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. Cammack Morton  (SEAL)
                                       C. Cammack Morton
                                       President & COO



                                       PATRICK M. MINIUTTI


                                       /s/ Patrick M. Miniutti     (SEAL)
                                       Patrick M. Miniutti

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