RESTRICTED STOCK AGREEMENT


     THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made and entered into
as of the 26th day of August,  1996  (hereinafter  referred to as the "Effective
Date"),  by  and  between  FAC  REALTY,   INC.,  a  Delaware   corporation  (the
"Corporation"), and PATRICK M. MINIUTTI (the "Participant").

     WHEREAS, the Corporation's 1996 Restricted Stock Plan (the "Plan") has been
adopted by the Executive  Compensation  Committee (the "Committee") of the Board
of Directors of the Corporation (the "Board") and the Board; and

     WHEREAS,  the Committee has determined that it is desirable and in the best
interest of the Corporation to make an award (the "Award" ) of certain shares of
common  stock,  par value $.01 per share of the  Corporation  ("Common  Stock"),
under the Plan, to the Participant, subject to certain restrictions as specified
below; and

     WHEREAS,  in order to enforce the  aforesaid  restrictions  Participant  is
required under the terms of the Award to immediately  deposit the certificate(s)
for the shares of Common Stock subject to the Award,  together with stock powers
appropriately  endorsed in blank,  with the  Corporation in accordance  with the
requirements of this Agreement.

     NOW, THEREFORE, the Corporation and the Participant agree as follows:

     1. Date of Award.  The date of making the Award under this Agreement is the
26th day of August, 1996 (the "Effective Date") .

     2. Receipt by Participant.  The Participant  acknowledges  receipt from the
Corporation  of 90,000  shares of Common  Stock  (the  "Restricted  Stock" ) and
agrees to the execution of stock powers or such other transfer authorizations as
the Corporation  shall request,  in blank,  covering the Restricted  Stock to be
held by the Corporation,  prior to the distribution of certificates representing
the Restricted Stock to the Participant as hereinafter provided.

     3. Investment Representation; Transfer Restrictions, and Registration

     (a) Investment  Representation.  Participant  represents to the Corporation
that the  Participant is taking the Restricted  Stock for investment and without
any present  intention to sell,  transfer or otherwise dispose of the Restricted
Stock.

     (b)  Securities  Law   Restrictions.   The  Participant   agrees  with  the
Corporation  that the  Restricted  Stock shall be subject to such stop  transfer
orders and other  restrictions  as the  Committee may deem  advisable  under the
rules,  regulations,  and other  requirements  of the  Securities  and  Exchange
Commission,  any stock  exchange  upon which Common Stock is then listed and any
other applicable federal or state securities laws, rules or regulations, and the
Committee  may  cause a  legend  or  legends  to be  placed  on any  certificate
representing any of the shares of Restricted Stock to make appropriate 


<PAGE>


reference to such restrictions.

     (c)  Other  Transfer   Restrictions.   The  Participant   agrees  with  the
Corporation that each  certificate  representing any of the shares of Restricted
Stock may bear a legend, substantially in the form attached as Exhibit A hereto,
to the effect  that the  shares of  Restricted  Stock  represented  thereby  are
subject to potential  forfeiture  and may not be sold,  exchanged,  transferred,
pledged,  hypothecated  or otherwise  disposed of except in accordance  with the
terms of this  Agreement,  and shall be subject to such stop transfer orders and
other  restrictions as the Committee  shall deem advisable to ensure  compliance
with the terms of this Agreement.

     (d)  Registration.  Prior to vesting  pursuant to  Paragraph  5 below,  the
Corporation  shall  cause  the  Restricted  Stock  to be  registered  under  the
Securities  Act of 1933 and to be listed  on the New York  Stock  Exchange  (the
"NYSE" ).

     4. Receipt by the Corporation.  The Corporation  acknowledges  receipt from
the Participant of certificates representing the Restricted Stock, registered in
the name of the Participant,  and acknowledges  receipt of stock powers executed
in blank by the Participant  covering all of the Restricted Stock.  Certificates
representing  the  Restricted  Stock  shall  be  held  by  the  Corporation  and
distributed or transferred as directed by the Committee in accordance  with this
Agreement.

     5. Vesting and Delivery of Restricted Stock by the Corporation

     (a) Periodic  Vesting.  Subject to subparagraph  5(b) below, the Restricted
Stock shall vest and become  nonforfeitable  in  accordance  with the  following
schedule:

   On the third anniversary of the Effective Date:                    30% Vested
   On the fourth anniversary of the Effective Date an additional:     10% Vested
   On the fifth anniversary of the Effective Date an additional:      10% Vested
   On the sixth anniversary of the Effective Date an additional:      10% Vested
   On the seventh anniversary of the Effective Date an additional:    10% Vested
   On the eighth anniversary of the Effective Date an additional:     10% Vested
   On the ninth anniversary of the Effective Date an additional:      10% Vested
   On the tenth anniversary of the Effective Date an additional:      10% Vested

     (b) Accelerated Vesting

          (i)  Notwithstanding  the  requirement  of  continued   employment  in
     subparagraph 5 (a) above,  all Restricted  Stock not previously  vested and
     subject to forfeiture  shall vest and the right of the  Participant to such
     shares of Restricted Stock shall become  nonforfeitable upon the occurrence
     of any of the following:


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<PAGE>



          (i) the Participant's  death during his employment by the Corporation;
     or

          (ii) the Participant's  disability (as defined in the Plan) during his
     employment by the Corporation; or

          (iii) termination of the  Participant's  employment by the Corporation
     due  to  the  Corporation's   election  not  to  extend  the  Participant's
     employment agreement (with the Corporation with an Effective Date of August
     26,  1996,  as the same  may be  amended  "the  Employment  Agreement")  as
     permitted in Paragraph 2(a) thereof; or

          (iv) the  termination of  Participant's  employment by the Corporation
     "without cause"  pursuant to 5(a)(iii) of the Employment  Agreement 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) of the Employment Agreement or, provided that such change is effected,
     the execution of a definitive agreement therefor.

     (c) Delivery of Restricted Stock  Certificates to the  Participant.  Within
thirty (30) days after a date on which  shares of  Restricted  Stock have become
vested as provided in  subparagraphs  5 (a) or 5 (b) above,  the Committee shall
instruct  the  appropriate   officer  of  the  Corporation  to  deliver  to  the
Participant, the Participant's designee, or such other person as shall have been
designated as  Participant's  beneficiary in accordance with this Agreement,  as
applicable,  certificates representing the shares of Restricted Stock which have
become vested and  nonforfeitable,  free from any  restrictions  imposed by this
Agreement other than such restrictions and conditions as may be deemed necessary
by the Committee to assure compliance with all applicable  securities laws rules
regulations and listing requirements as set forth in subparagraph 3 (b) above.

     (d) Delivery of Forfeited Restricted Stock. If the Participant's employment
with the Corporation  terminates for any reason other than one of those provided
in  subparagraph 5 (b) above,  before all of the shares of Restricted  Stock are
vested in accordance with  subparagraphs 5 (a) and 5 (b) above,  all such shares
then subject to forfeiture  shall be deemed forfeited by the Participant and the
Committee shall instruct the appropriate  officer of the Corporation  concerning
the disposition of such forfeited shares. Thereafter such forfeited shares shall
cease to be subject to this Agreement.

     (e) Limitation on Shares of Restricted Stock.  Except as otherwise provided
in Paragraph 6 (a) or 9 of this  Agreement,  the  aggregate  number of shares of
Restricted  Stock which the  Participant  may be entitled to receive  under this
Agreement shall not exceed 90,000.

     6. Voting Rights; Dividends; Other Distributions

     (a) The Participant shall have the full power to vote all of the Restricted
Stock


                                      -3-
<PAGE>


held by the  Corporation  in his name from time to time and shall be entitled to
receive all cash dividends declared upon any of the Restricted Stock held by the
Corporation  in his name from time to time.  All shares of Common Stock or other
securities,  including but not limited to stock dividends,  issued in respect of
the Restricted Stock or in substitution  thereof,  whether by the Corporation or
by another issuer,  shall be held by the Corporation and shall be subject to all
terms  and  conditions  of  this  Agreement  and  shall  be  redelivered  to the
Participant  or  delivered  as  instructed  by  the  Committee  under  the  same
circumstances  as the Restricted  Stock with respect to, or in substitution  for
which  they were  issued;  provided,  however,  that if the  Participant  should
receive  rights,  warrants  or  fractional  interests  in  respect of any of the
Restricted  Stock held by the  Corporation in his name,  such rights or warrants
may be held,  exercised,  sold or  otherwise  disposed  of, and such  fractional
interests may be settled,  by the Participant free and clear of the restrictions
herein set forth.

     (b) The  Participant  shall  use the cash  dividends  paid on any  unvested
shares of Restricted Stock, less an amount necessary to pay all applicable taxes
associated  with the  vesting of the  Restricted  Stock and such  dividends,  to
purchase additional shares of Common Stock within thirty (30) days of payment or
as soon  thereafter  as the  Participant  may  purchase  shares of Common  Stock
without penalty under the Federal securities laws.

     7. Designation of Beneficiary.  The Participant may file with the Committee
a written  designation  of one or more persons as the  beneficiary  who shall be
entitled  to  receive  the  Restricted  Stock,  if  any,  distributable  to  the
Participant upon his death.

The  Participant  may,  from  time to time,  revoke or  change  his  beneficiary
designation  without the consent of any prior  beneficiary,  if any, by filing a
new designation with the Committee.  The last such  designation  received by the
Committee  shall be controlling;  provided,  however,  that no  designation,  or
change  or  revocation  thereof,  shall  be  effective  unless  received  by the
Committee  prior  to the  Participant's  death,  and  in no  event  shall  it be
effective as of a date prior to such receipt.

     If no  such  beneficiary  designation  is in  effect  at  the  time  of the
Participant's  death, or if no designated  beneficiary survives the Participant,
or if such  designation  conflicts with law, the  Participant's  estate shall be
deemed to have been  designated his beneficiary and shall receive the Restricted
Stock, if any, distributable to the Participant upon the Participant's death. If
the  Committee  is in  doubt as to the  right  of any  person  to  receive  such
distribution, the Committee may direct an appropriate officer of the Corporation
to retain the Restricted  Stock,  without  liability for any interest in respect
thereof,  until the rights thereto are  determined,  or the Committee may direct
the transfer of such Restricted Stock into any court of appropriate jurisdiction
and such transfer shall be deemed a complete discharge of the obligations of the
Corporation hereunder.

     8.  Effect of Award on Status  of  Participant.  The fact that an Award has
been made to the Participant under this Plan shall not confer on the Participant
any right to continued  employment with the Corporation;  nor shall it limit the
right of the Corporation to terminate the Participant's employment at any time.


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<PAGE>


     9. Adjustment Upon Chances in Capitalization: Dissolution or Liquidation

     (a) In the  event of a change  in the  number  or type of  shares of Common
Stock outstanding (or in the event of an exchange of such shares) by reason of a
reclassification recapitalization,  reorganization, merger, or consolidation, or
other similar capital adjustment, merger or consolidation of the Corporation, or
the sale by the  Corporation of all or a substantial  portion of its assets,  or
the occurrence of any other event which could affect the  implementation  of the
Plan and the  realization  of its  objectives,  the  Committee  shall  make such
adjustments in the terms,  conditions,  or restrictions of this Agreement as are
equitable and just.

     (b) The making of the Award under this Agreement does not affect in any way
the right or power of the  Corporation or its  stockholders to make or authorize
any  adjustment,  recapitalization,  reorganization,  or  other  change  in  the
Corporation's  capital structure or its business, or any merger or consolidation
of the Corporation, or to issue bonds, debentures, preferred or other preference
stock  ahead  of or  affecting  Common  Stock  or  the  rights  thereof  or  the
dissolution or liquidation of the Corporation, or any sale or transfer of all or
any part of the Corporation's assets or business.

     10.  Nontransferability.  The Restricted Stock may not be sold,  exchanged,
transferred,  pledged, hypothecated, or otherwise disposed of by the Participant
until  transferred to the  Participant by the Corporation in accordance with the
terms of this  Agreement.  Nothing  herein shall preclude the  Participant  from
making a gift of any Restricted Stock to a spouse, child, stepchild, grandchild,
parent,  sibling,  or legal  dependent of the Participant or to a trust of which
the  beneficiary  or  beneficiaries  of the  trust  shall  be  either  a  person
designated  herein or the Participant,  provided,  however,  that any Restricted
Stock so  given  shall  remain  subject  to the  restrictions,  obligations  and
conditions set forth in this Agreement. In addition, the Restricted Stock may be
tendered in response to a tender offer for or a request or  invitation to tender
of greater than fifty percent (50%) of the common stock of the  Corporation  and
may be surrendered in a merger,  consolidation  or share exchange  involving the
Corporation;  provided, however, in each case, that except as otherwise provided
in Paragraph 6 above, the security or other  consideration  received in exchange
therefor  shall  thereafter be subject to the  restrictions  and  conditions set
forth in this Agreement.

     11. Taxes. All Restricted Stock distributed pursuant to this Agreement, and
any amounts  distributed  with respect  thereto  prior to  distribution  of such
Restricted  Stock by the  Corporation,  shall be subject to applicable  federal,
state and local  withholding for taxes. The Participant  expressly  acknowledges
and agrees to such  withholding  without regard to whether the Restricted  Stock
may then be sold or otherwise transferred by the Participant.

         12. Notices. Any notices or other communications  required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been  sufficiently  given  if  delivered  personally  or  when  delivered  to  a
nationally  recognized  overnight  courier  service or  deposited  in the United
States mail as Certified Mail, return receipt requested,  properly addressed and
postage prepaid, if to the Corporation at its principal office prior to December
1, 1996 at 230 North Equity Drive,  Smithfield,  North  Carolina 27577 (from and
after December 1, 1996 at 11000 Regency Parkway,  Third Floor East Tower,  Cary,
North Carolina 27511; and, if to the Participant,


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<PAGE>


at his last address  appearing on the books of the Corporation.  The Corporation
and the  Participant  may change their  address or  addresses by giving  written
notice of such  change as  provided  herein.  Any notice or other  communication
hereunder shall be deemed to have been given on the date actually delivered,  as
of the first (1st)  business day following  delivery to a nationally  recognized
overnight  courier  service or as of the third (3rd)  business day following the
date mailed, as the case may be.

     13.  Construction  Controlled by Plan. This Agreement shall be construed so
as to be consistent  with the Plan; and except as  specifically  provided herein
the  provisions of the Plan shall be deemed to be  controlling in the event that
any provision hereof should appear to be inconsistent therewith. The Participant
hereby acknowledges receipt of a copy of the Plan from the Corporation.

     14. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be valid and enforceable  under applicable
law, but if any provision of this  Agreement is determined to be  unenforceable,
invalid or illegal,  the validity of any other provision or part thereof,  shall
not be affected  thereby and this Agreement  shall continue to be binding on the
parties hereto as if such  unenforceable,  invalid or illegal  provision or part
thereof had not been included herein.

     15.  Modification  of Agreement;  Waiver.  This  Agreement may be modified,
amended, suspended or terminated,  and any terms,  representations or conditions
may be waived,  but only by a written  instrument  signed by each of the parties
hereto.  No waiver  hereunder  shall  constitute  a waiver  with  respect to any
subsequent  occurrence or other transaction  hereunder or of any other provision
hereof .

     16.  Cautions  and  Headings;  Gender and Number.  Captions  and  paragraph
headings  used  herein  are for  convenience  only,  do not modify or affect the
meaning of any provision herein are not a part hereof,  and shall not serve as a
basis for  interpretation or in construction of this Agreement.  As used herein,
the masculine gender shall include the feminine and neuter,  the singular number
the plural, and vice versa, whenever such meanings are appropriate.

     17. Governing Law: Venue and Jurisdiction. Without regard to the principles
of conflicts of laws,  the laws of the state of North  Carolina shall govern and
control  the  validity  interpretation,  performance,  and  enforcement  of this
Agreement.  The parties  hereto  agree that any suit or action  relating to this
Agreement  shall be  Instituted  and  prosecuted  in the courts of the County of
Johnston, State of North Carolina, and each party hereby does waive any right or
defense relating to such jurisdiction and venue.

     18. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the  Corporation,  and its successors  and assigns,  and shall be
binding  upon and  inure  to the  benefit  of the  Participant,  and his  heirs,
legatees, personal representatives, executors and administrators.


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<PAGE>


     19. Entire  Agreement.  This Agreement  constitutes and embodies the entire
understanding  and  agreement  of the parties  hereto and,  except as  otherwise
provided hereunder, there are no other agreements or understandings,  written or
oral in effect  between the  parties  hereto  relating to the matters  addressed
herein.

     20.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which  when  executed  and  delivered  shall be deemed an
original,  but all of which taken  together  shall  constitute  one and the same
instrument.

     IN WITNESS  WHEREOF,  the  Corporation  has caused  this  instrument  to be
executed in its corporate name by a duly authorized officer, and attested by its
Secretary or any of its  Assistant  Secretaries,  and its  corporate  seal to be
hereto affixed, all by authority of its Board of Directors first duly given; and
the individual parties hereto have hereunto set his hand and adopted as his seal
the typewritten word "SEAL" appearing beside his name, all done this the day and
year first above written.

                                         FAC REALTY, INC.



                                         By: ____________________________(SEAL)
                                                  C. Cammack Morton
                                                  President and COO

ATTEST:

___________________

___________________ Secretary

      [Corporate Seal]


                                        ____________________________(SEAL)
                                          Patrick M. Miniutti



                                      -7-
<PAGE>


                                    EXHIBIT A

                                 Form of Legend


     The shares  represented by this  certificate are subject to restrictions on
transfer  and  potential  forfeiture  under  the  terms  of a  Restricted  Stock
Agreement  dated April 4, 1996, a copy of which  agreement  may be obtained from
the issuer by writing to:

                  prior to December 1, 1996

                           FAC Realty, Inc.
                           230 North Equity Drive
                           Smithfield, NC  27577
                           Attention: Corporate Secretary

                  from and after December 1, 1996

                           FAC Realty, Inc.
                           11000 Regency Parkway
                           Third Floor East Tower
                           Cary, North Carolina 27511
                           Attention: Corporate Secretary



                                      -8-
<PAGE>



ASSIGNMENT SEPARATE FROM CERTIFICATE


     FOR VALUE RECEIVED, Patrick M. Miniutti hereby sells, assigns and transfers
in accordance with the terms of that Restricted Stock Agreement dated August 26,
1996    between    himself    and    the    Company    (hereinafter     defined)
unto___________________  (_____________)  unvested Shares of the Common Stock of
FAC  REALTY,  INC.  (the  "Company")  standing  in his name on the  books of the
Company represented by Certificate(s)  No.____________ herewith, and does hereby
irrevocably  constitute  and  appoint  the  Company as his  attorney-in-fact  to
transfer  the  said  stock  on the  books  of the  Company  with  full  power of
substitution in the same.

Dated ___________________________


IN THE PRESENCE OF:

____________________________________________

____________________________________________ (SEAL)
            Patrick M. Miniutti



                                      -9-