EMPLOYMENT AGREEMENT



                                     BETWEEN


                                 FAC REALTY, IN

                                       AND


                                SONA A. THORBURN


<PAGE>


                              EMPLOYMENT AGREEMENT


     THIS  EMPLOYMENT  AGREEMENT  is entered into as of the 13th day of October,
1997 between FAC REALTY, INC., a Delaware corporation (the "Company"),  and Sona
A. THORBURN (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 Vice  President and Chief
Accounting  Officer and the Executive  hereby  accepts such  employment,  on the
terms and subject to the conditions hereinafter set forth.

     (b) During the term of her employment under this Employment Agreement,  the
Executive  shall be and have the title of Vice  President  and shall  devote her
entire  business time and all  reasonable  efforts to her employment and perform
diligently  such  duties as are  customarily  performed  by vice  presidents  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 her 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 her 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 on October 13, 1997 (the  "Effective
Date") and shall continue  through October 1, 1998. In the event of a "change in
control" (as thereinafter  defined) the term of this Employment  Agreement shall
be extended through October 1, 1999.

     (b) The  Executive  shall be  entitled  to serve as Vice  President  of the
Company.  For service as an officer and employee of the Company,  the  Executive
shall be  entitled  to the full  protection  of the  applicable  indemnification
provisions of the 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:


                                      -2-
<PAGE>


          (i)  the  Company   materially  changes  the  Executive's  duties  and
     responsibilities  as set  forth in  Paragraphs  l(b) and 2(b)  without  her
     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 Smithfield, North Carolina; or

          (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;

then in any such  event the  Executive  shall  have the right to  terminate  her
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) 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 her duties and responsibilities unless
he shall give written notice of her consent thereto to the Executive  Management
Committee 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 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,



                                      -3-
<PAGE>


     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, and/or any other person who is or
was an officer of the Company as of the Effective  Date 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 her  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 One Hundred Ten Thousand Dollars  ($110,000.00)
     per annum,  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.

          (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  may be  increased  by fifty  percent  (50%)  and
     automatically  vest on the third  anniversary  of the date of issuance (for
     example  October  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 life,  medical,
     hospitalization  and dental insurance for himself,  her 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,  however,  the
     Executive shall be entitled to


                                      -4-
<PAGE>


     not less than three weeks of vacation per year.

          (f) The Executive  shall be entitled to  participate  in any equity or
     other  employee  benefit plan that is generally  available to 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.

     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 her employment  under this  Employment
Agreement,  the Company shall pay or cause its  insurance  company to pay to the
Executive (or her personal representatives, heirs, successors and assigns in the
event  of her  death)  an  amount  equal  to not less  than  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 her  physical  or
mental  disability  or illness,  shall have been unable to discharge  her 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


                                      -5-
<PAGE>


Raleigh,  North  Carolina,  area and,  unless such physician shall issue his/her
written  statement  to the  effect  that in  his/her  opinion,  based on his/her
diagnosis,  the Executive is capable of resuming her employment and devoting her
full time and energy to discharging her 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:

               (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 her 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


                                      -6-
<PAGE>

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 subparagraph (i), (ii) or (iii)
of 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 greater of (A) the total amount of unpaid
base  salary  for the  then-unexpired  portion  of the  term of this  Employment
Agreement,  at the  theneffective  annual rate of salary,  as  determined  under
Paragraph  3(a),  and (B) the  amount  of six  months  base  salary  at the then
effective annual rate of salary,  (ii) a pro rata portion of the bonus described
in Paragraph  4(a)  applicable  to the calendar  year in which such  termination
occurs,  as such bonus is  determined  under  Paragraph  3(b),  and (iii)  other
benefits  accrued and earned by him  hereunder up to and including the effective
date of such termination.

     (e) 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  provided in
this  Paragraph  5, nor shall any such amount or benefit 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  her  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,
during the time when he is employed under this  Employment  Agreement and if the
Executive's  employment  is  terminated  voluntarily  by the Executive or by the
Company  pursuant to Paragraph  5(a)(ii),  for the period after such termination
through the date this Employment  Agreement would have otherwise  terminated but
for such termination  (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 


                                      -7-
<PAGE>


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

     7. Purposely Omitted..

     8.  Restricted  Stock.  The Executive shall receive a grant of 3,871 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 three equal  installments of thirty-three and one-third  percent (331/3)
per year  provided  the  Executive  continues  to be  employed  by the  Company,
commencing on the one-year anniversary date of the Effective Date and (ii) upon


                                      -8-
<PAGE>


the  Executive's  death or permanent  disability (as defined in Paragraph  4(d))
during  her  employment  by  the  Company  or  termination  of  the  Executive's
employment pursuant to (or, in the case of termination at any time following the
expiration of this Employment Agreement, for the reasons set forth in) Paragraph
2(c)  or   Paragraph   5(a)(iii),   all   unvested   Restricted   Shares   shall
(notwithstanding  the requirement of continued  employment in  subparagraph  (i)
above), upon such termination of employment, immediately vest.

     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 her
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,


                                      -9-
<PAGE>


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 her
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 her 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:

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

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.

     (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


                                      -10-
<PAGE>


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


                             (SEAL)  By: _____________________________________
Sona A. Thorburn                         C. Cammack Morton
                                         President and Chief Executive Officer



                                      -11-