EMPLOYMENT AND COMPENSATION AGREEMENT



         This EMPLOYMENT AND COMPENSATION AGREEMENT  ("Agreement") is made as of
the 1st day of July,  1996, by and between  ALLSTATE  FINANCIAL  CORPORATION,  a
Virginia corporation having its principal place of business at 2700 South Quincy
Street,  Suite 540, Arlington,  Virginia 22206 (the "Company"),  and Lawrence M.
Winkler of Arlington, Virginia (the "Employee"). The Company and the Employee in
consideration  of the  mutual  premises  contained  herein,  mutually  agree  as
follows:

         1. EMPLOYMENT. The Company employs the Employee and the Employee agrees
to serve the Company as  Secretary/Treasurer  and Chief Financial  Officer.  The
Employee shall devote the Employee's  full business time and best efforts to the
affairs of the Company,  except as may otherwise be consented to by the Board of
Directors.  Employee  shall  perform  such other  duties  commensurate  with the
Employee's  position as may be specified  from time to time by the  President of
the corporation or the Board of Directors.

          2. TERM.  The term of this  Agreement  shall  commence on the date set
forth  above,  and shall end at the close of business on June 30,  1998,  unless
further extended or sooner terminated as hereinafter provided (the "Term").

          3. SALARY.  During the Term, the Company shall pay to the Employee the
Employee's  salary at an annual rate of One Hundred Sixty Thousand Seven Hundred
Fifty and 00/100 Dollars

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($160,750.00), which amount may be increased from time to time at the discretion
of the Board of Directors of the Company.

          4. OTHER COMPENSATION. The Company shall provide the Employee with the
following   additional   compensation:   (i)  Subject  to  meeting   eligibility
provisions,  any and all  general  Employee  benefit  plans,  including  without
limitation medical,  health, life and disability  insurance,  pension and profit
sharing plans,  now or hereafter  granted by the Company to the employees of the
Company as a group, shall be granted to the Employee.  If a disability insurance
plan is not  provided to all  employees,  the Company  will provide a reasonable
substitute  for Employee.  (ii) Employee shall be eligible to participate in any
employee  stock  option  plans  and any  performance  based  compensation  plans
(whether  cash,  stock or otherwise)  that may be adopted by the Company.  (iii)
Yearly  bonuses  to be  paid to  Employee  at the  discretion  of the  Board  of
Directors of the Company.  (iv) Use of a  Company-owned  automobile and coverage
under  customary  and  appropriate  Company-paid  hazard,  liability  and  other
insurance  (or  receipt  of an  automobile  allowance  of  equivalent  value  as
reasonably determined by the Company).

          5.  REIMBURSEMENT.  Usual and normal monetary allowances for bona fide
business expenses incurred by the Employee in


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connection  with the  performance of the Employee's  duties  hereunder  shall be
reimbursed by the Company.  Such allowances shall,  without limitation,  include
expenses such as travel,  entertainment,  meals, hotels,  telephone,  telegraph,
postage and such other normal and customary business expenses.

          6.  VACATION.  The  Employee  shall be entitled to four (4) weeks paid
vacation  per year  during the term of  employment  hereunder.  The dates of any
vacation  periods  shall be arranged in order that such  vacation days shall not
materially hinder the normal functioning of the Company's business activities.

          7. TRADE SECRETS; NON-COMPETITION.

          (a) In the course of the Employee's employment, the Employee will have
access to confidential  records,  data, pricing information,  lists of customers
and prospective customers,  lists of vendors, books and promotional  literature,
leases and  agreements,  policies and similar  material and  information  of the
Company or used in the course of its business (hereinafter collectively referred
to as "confidential  information").  All such confidential information which the
Employee  shall use or come into contact with shall remain the sole  property of
the Company. The Employee will not, directly or indirectly,  disclose or use any
such  confidential  information,  except  as  required  in the  course  of  such
employment.  The Employee  shall not for a period of one (1) year  following the
end of the Term, disclose or use in any fashion any confidential  information of
the Company or any of its subsidiaries or affiliates, whether such confidential


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information is in the Employee's memory or embodied in writing or other physical
form,  PROVIDED,  that  the  foregoing  requirements  shall  not  apply  to  any
information (i) that (prior to disclosure by the Employee) has been disclosed by
the  Company  or any third  party or (ii)  that  Employee  discloses  (A) to any
branch, agency or regulatory authority of any federal, state or local government
to comply with any statute,  regulation,  rule, order or ordinance or (B) to any
federal, state or local court, tribunal or other adjudicatory body in connection
with any suit,  claim or question  arising before such court,  tribunal or other
adjudicatory body or otherwise.

          In the event of a breach or a threatened breach by the Employee of the
provisions  of this  subparagraph  (a),  the  Company  shall be  entitled  to an
injunction  restraining the Employee from  disclosing any of the  aforementioned
confidential  information.  Nothing  contained  herein  shall  be  construed  as
prohibiting  the Company  from  pursuing  any other  remedies  available  to the
Company for such breach or threatened breach,  including the recovery of damages
from the Employee.

          Subject to  subparagraph  (c) below,  this provision shall survive the
termination of this Agreement.

         (b) The  Employee  further  agrees  that,  during the Term (or,  if the
Employee's employment is terminated prior to the end of the Term (whether by the
Company or the Employee), during the period prior to such termination) and for a
period of one (1) year thereafter, the Employee will not, except with the prior

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written  consent  of the  Board  of  Directors,  (i) be  employed  either  as an
employee,   consultant,   officer  or  director,  by  any  other  non-bank-owned
commercial finance company,  (ii) solicit any business from or have any business
dealings  with,  either  directly or  indirectly  or through  corporate or other
entities or associates, any customer or client of the Company (or any subsidiary
or affiliate of the  Company),  (iii)  initiate any action,  either  directly or
indirectly  or through  corporate or other  entities or  associates,  that would
reasonably  be expected to encourage or to induce any employee of the Company or
of any subsidiary or affiliate of the Company to leave the employ of the Company
or of any such subsidiary or affiliate or (iv) solicit any business from or have
any business dealings  whatsoever with, either directly or indirectly or through
corporate  entities or  associates,  any brokers or referral  sources  that have
within the preceding  year referred  transactions  to the Company.  The Employee
specifically  acknowledges  the necessity for this  subparagraph  (b), given the
nature of the Company's business.  The Employee agrees that the Company shall be
entitled to injunctive relief in the event of a breach of the provisions of this
subparagraph  (b), the legal  remedies  being  inadequate  to fully  protect the
Company.  Nothing contained herein shall be construed as prohibiting the Company
from  pursuing  any other  remedies  available  to the Company for such  breach,
including the recovery of damages from the Employee.

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         Subject to  subparagraph  (c) below,  this provision  shall survive the
termination of this Agreement.

         (c) In the event of a Business  Combination  or Change of  Control  (as
defined  below)  involving the Company  (whether or not the  Company's  Board of
Directors recommends such Business Combination or Change of Control for approval
by the Company's  shareholders),  subparagraphs  (a) and (b) of this Paragraph 7
shall,  at  the  time  such  Business   Combination  or  Change  of  Control  is
consummated,  but only in the  event  Employee's  employment  is  terminated  in
connection  therewith  under the terms of  subparagraph  8(c) below, be null and
void  and of no  further  force  or  effect.  For  purposes  of this  Agreement,
"Business  Combination"  shall  mean (i) a  merger,  consolidation  or any other
business  combination  of the Company with any  non-affiliated  party,  (ii) the
disposition of all or substantially all of the securities, business or assets of
the Company or (iii) a joint venture,  reorganization  or other  transaction (or
series of  transactions)  as a result of which all or  substantially  all of the
business or assets of the Company are  transferred,  with or without a Change of
Control, or any other similar corporate combination or transaction (or series of
related  transactions).  For purposes of this  Agreement,  a "Change of Control"
shall mean a transaction (or series of  transactions)  or other event (or series
of events)  that results in the  acquisition  of a  controlling  interest in the
Company by a person or entity (or group of persons and/or entities) that did not
have a controlling

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interest in AFC prior to such  transaction (or series of  transactions) or event
(or series of events). As used in the preceding sentence,  the term "controlling
interest" means possession,  directly or indirectly, of power to direct or cause
the  direction of management or policies  (whether  through  ownership of voting
securities,  by contract or otherwise);  provided that, in any event, any person
or entity (or group of persons and/or  entities)  which  beneficially  acquires,
directly  or  indirectly,  25% or more (in  number of  votes) of the  securities
having  ordinary voting power for the election of directors of the Company shall
be  conclusively  presumed to have a controlling  interest in the Company.  This
provision  shall be  construed  so that if a Business  Combination  or Change of
Control  (as defined  herein)  occurs on more than one  occasion,  the terms and
provisions of this Agreement shall apply to the most recent Business Combination
or Change in Control.

          8.  PAYMENTS UPON  TERMINATION.  The Company shall pay to the Employee
upon termination of employment during the Term, as follows:

         (a) If the  Employee's  employment is terminated by death,  the Company
shall  continue  to pay and provide to the estate of the  Employee  for a period
equal to the lesser of (i) one year and (ii) the  remainder of the Term (but not
less than six months) the Employee's then applicable base salary pursuant to the
provisions of Paragraph 3 for such period, in bi-monthly installments.


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         In addition,  the Company, as soon as reasonably possible, but not past
the end of the fiscal year of the death of the  Employee,  shall also pay to the
estate of the  Employee  (on a pro rata  basis up to the date of the  Employee's
death) compensation  otherwise due and unpaid to the Employee as of the date of,
or in  connection  with,  the  Employee's  death,  pursuant  and  subject to the
provisions of subparagraphs 4(i), 4(ii) and 4(iii) herein.

         (b) In the event the  Employee's  employment is  terminated  because of
permanent disability (as defined below), for a period equal to the lesser of (i)
one year and (ii) the remainder of the Term (but not less than six months),  the
Company shall  continue to pay and provide to the Employee the  Employee's  then
applicable  salary for such period in bi-monthly  installments,  pursuant to the
provisions  of  Paragraph  3  herein,  and  benefits  for such  period as if the
Employee  were  still  employed  to be paid not later  than the last day of such
period under  subparagraphs  4(i), 4(ii) and 4(iii) herein. As used herein,  the
Employee  shall be  deemed to be  permanently  disabled  in the  event  that the
Employee has not been able (due to mental or physical  illness or incapacity) to
render  services  required  by  this  Agreement  for a  period  of  ninety  (90)
consecutive days.

         Any salary  payments to be made by the Company under the  provisions of
this subparagraph (b) are to be offset by payments, if any, made to the Employee
under any disability insurance plan maintained by the Company.


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         Payments  of  compensation  to  the  Employee  as  set  forth  in  this
subparagraph  (b)  shall  be made by the  Company  to the  Employee  only if the
Employee is not otherwise subject to termination for Cause (defined below).

         (c) In the event that (i) the  employment of the Employee is terminated
by the Company other than under the provisions as set forth in Paragraph 8(a) or
(b) herein or (ii) following a Business  Combination  or Change of Control,  (A)
the Employee is not offered a position  with the Company that  involves  duties,
responsibilities,  powers  and  functions  comparable  to those  enjoyed  by the
Employee  immediately prior to such Business Combination or Change of Control at
an annual  rate of  compensation  at least equal to that annual rate paid to the
Employee immediately prior to such Business Combination or Change of Control and
(B) the  Employee's  employment  is  terminated  prior  to the  end of the  Term
(whether by the  Employee  or the  Company),  then the Company  shall pay to the
Employee in addition to any other amounts  otherwise  payable to the Employee as
of the date of, or in connection  with,  such  termination,  on the date of such
termination  a lump sum payment  equal to the  Employee's  base salary (on a pro
rata  basis) for the lesser of (i) one year and (ii) the  remainder  of the Term
(but not less than six months). In addition, for a period equal to the lesser of
(i) one year and (ii) the  remainder of the Term (but not less than six months),
the Company  shall  provide to the  Employee  benefits for such period as if the
Employee were still employed to be paid not


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later  than the last day of such  period  under  subparagraphs  4(i),  4(ii) and
4(iii) hereof.

         Notwithstanding  anything else contained in this  subparagraph  (c), no
compensation shall be payable under this subparagraph (c) or subparagraph (b) if
the Employee's  employment was or is terminated for Cause (as defined below). As
used herein,  the term "Cause" shall mean (i) the  Employee's  conviction of (or
entry of a plea of nolo  contendre  with  respect  to) a felony  or other  crime
involving moral turpitude or (ii) a willful,  substantial and continual  failure
by  the   Employee  in  breach  of  this   Agreement   to  perform  the  duties,
responsibilities  or obligations  assigned to the Employee pursuant to the terms
hereof and the  failure to cure such  breach  within 15 days  following  written
notice from the Company  containing  specific findings by the Board of Directors
of the Company detailing such failures.

         9.  VALIDITY.  In the  event  that any  provision  or  portion  of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining  provisions and portions of this Agreement shall be unaffected thereby
and shall  remain in full force and effect to the fullest  extent  permitted  by
law.

         10.  AMENDMENT AND WAIVER.  This Agreement constitutes the
entire agreement between the parties as to employment by the
Company of the Employee and may not be changed orally but only by
a written document signed by both parties.

         No waiver by either party hereto at any time of any breach by the other
party hereto of any condition or provision of this


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Agreement  to be  performed  by such other party shall be deemed a waiver of any
other  breach by such party at that time or any other  time.  No  agreements  or
representations,  oral or  otherwise,  express or implied,  with  respect to the
subject  matter  hereof  have been made by either  party which are not set forth
expressly in this Agreement.

         11. ARBITRATION. Any dispute whatsoever relating to the interpretation,
validity,  or performance of this Agreement and any other dispute arising out of
this Agreement  which cannot be resolved by the parties to such a dispute shall,
upon  thirty  (30)  days  written  notice  by  either  party,  be  settled  upon
application of any such party by arbitration in Arlington County,  Virginia,  in
accordance  with  the  rules  then   prevailing  of  the  American   Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered  in any court of  competent  jurisdiction.  The cost of any  arbitration
proceedings  under this paragraph shall be shared equally by the parties to such
a dispute.

          12.  APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the  Commonwealth of Virginia  (without regard to
conflicts of law principles).

          13. BINDING EFFECT.  This Agreement shall be binding upon and inure to
the  benefit  of  the  parties  hereto  and  their   respective   heirs,   legal
representatives,   successors  and  assigns  and  shall  become  effective  upon
execution by the Company.


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         14. NOTICE. All notices, and other communications made pursuant to this
Agreement  shall be made in  writing  and shall be deemed to have been  given if
delivered personally or mailed,  postage prepaid, to the applicable party hereto
at the applicable address first above written,  or in either case, to such other
address as the Company or Employee shall have specified by written notice to the
other party.

          15. PARAGRAPH HEADINGS. All paragraph headings are included herein for
convenience  and  are  not  intended  to  affect  in  any  way  the  meaning  or
interpretation of this Agreement.

          16.  COUNTERPARTS.  This  Agreement  may be  executed  in one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

         17. PRIOR AGREEMENT(S)  SUPERSEDED.  In the event that the Employee has
heretofore  entered into an  employment  agreement  with the Company,  then this
Agreement hereby revokes, replaces and supersedes the prior employment agreement
between the Company and the Employee.


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         IN WITNESS  WHEREOF,  the parties have  executed  this  agreement,  the
Company  acting herein by its duly  authorized  officer,  the day and year first
above written.



                                                     COMPANY:

                                 ALLSTATE FINANCIAL CORPORATION


                                 By:_________________________
                                    Craig Fishman, President


                                 EMPLOYEE:


                                 _______________________________
                                 Lawrence M. Winkler



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