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                                 LEW MAGRAM LTD.

                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT made as of this 13th day of January, 1998
by and between LEW MAGRAM LTD., a New York corporation (hereinafter referred to
as "Employer"), a wholly-owned subsidiary of Diplomat Corporation, a Delaware
corporation ("Parent") and IRVING MAGRAM, (hereinafter referred to as
"Employee");

                              W I T N E S S E T H:

                  WHEREAS, Employer desires to employ Employee as President; and

                  WHEREAS, Employee is willing to be employed as President in
the manner provided for herein, and to perform the duties of President of
Employer upon the terms and conditions herein set forth;

                  NOW, THEREFORE, in consideration of the promises and mutual
covenants herein set forth it is agreed as follows:

                  1. Employment of Employee. Employer hereby employs Employee as
President.

                  2. Term. The term of this Agreement shall commence on the
execution hereof (the "Commencement Date") and expire three (3) years from such
date (which, with renewals, if any, the "Term"). Each 12 month period from the
Commencement Date forward during the Term shall be referred to as an "Annual
Period." After three years from the Commencement Date, this Agreement shall
automatically renew annually unless either Employer or Employee gives notice not
to renew at least one hundred eighty (180) days prior to the end of the
applicable Annual Period. During the Term, Employee shall devote substantially
all of his business time and efforts to Employer and its subsidiaries and
affiliates.

                  3. Duties. Employee hereby agrees that, throughout the period
of his employment hereunder, he shall devote his business time, attention,
knowledge and skills, diligently in furtherance of the business of Employer,
shall perform the duties assigned to him by the Board of Directors of Employer
(the "Board") consistent with his executive position at Lew Magram Ltd.
immediately prior to the date hereof, and shall observe and carry out such rules
and regulations, policies and directions as Employer may from time to time
establish to the extent consistent herewith. During the term of this Agreement,
Employee shall do such traveling as may be reasonably required of him in the
performance of his duties on behalf of Employer consistent with travel during
periods prior to the date hereof. Employee shall be available to confer and
consult with and advise the officers and directors of Employer at such times
during business hours that may be required reasonably by Employer. Employee
shall report directly and solely to the Board of Directors of Employer.



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                  4.       Compensation.

                           (a) Employee shall be paid a minimum of $200,000 for
each Annual Period such amount to be increased, if Parent is profitable for the
fiscal year ending September 30, 1998, in an amount determined by the majority
of the noninterested members of the Board excluding Employee at the Board's
discretion. Employee shall be paid periodically in accordance with the policies
of the Employer during the term of this Agreement, but not less frequently than
monthly. Employee is eligible for an annual bonus, if any, which will be
determined and paid in accordance with policies set from time to time by the
Board in addition to amounts received from the Total Bonus Pool pursuant to
Section 10 hereof.

                           (b) Employee shall be entitled to participate in and
receive the benefits of all pension, profit-sharing, deferred compensation,
retirement, hospitalization, insurance, medical or dental or other benefit plan
or arrangement generally available to executive employees of Parent or Employer
as may now or hereafter exist; provided that Employer shall provide Employee
medical benefits consistent with Lew Magram Ltd.'s former practices. Employee
shall also be entitled to participate in or receive all other benefits and
perquisites generally available to senior executives of Employer or Parent that
may be in effect from time to time during the Employee's employment hereunder.
Employer shall be under no obligation to institute or continue the existence of
any such employee plan, benefit or perquisite. Parent shall consider adopting a
deferred compensation/retirement benefits plan, in which, upon adoption,
Employee will be permitted to participate.

                  5. Expenses. Employer shall reimburse Employee, promptly upon
presentation of receipts or vouchers thereof, for all expenses reasonably
incurred by him in connection with the performance of his duties hereunder and
the business of Employer, in accordance with policies of Employer from time to
time in effect. Until expiration of the current automobile lease, Employer shall
furnish Employee a luxury automobile for so long as Employee shall remain in the
employ of Employer for his exclusive use in connection with the business of
Employer by paying the existing lease payments, insurance, and all costs
incident to the maintenance and operation of such automobile. After the current
lease expires, Employee will be entitled to a similar automobile procedurally
consistent with Parent's policies. Employer shall pay all expenses incident to
the maintenance and operation of such automobile, including, without limitation,
insurance, gasoline, oil, and repairs, the costs of furnishing such automobile
and of such maintenance and operation not to exceed $20,000 per Annual Period.
Employer shall also pay the cost of a parking space for Employee's automobile in
a facility as proximate to Employer's New York office as is practicable, where
needed. Employer shall also provide Employee with a cellular phone.

                  6. Vacation. Employee shall be entitled to receive three (3)
weeks paid vacation time after each year of employment upon dates agreed upon by
Employer. Upon separation of employment, for any reason, vacation time accrued
and not used shall be paid at the salary rate of Employee in effect at the time
of employment separation.



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                  7. Employee's Representations. Employee is free to enter into
this Employment Agreement and to perform each of the provisions contained
herein. Employee represents and warrants that Employee is not restricted or
prohibited, contractually or otherwise, from entering into and performing this
Employment Agreement, and that Employee's execution and performance of this
Employment Agreement is not a violation or breach of any agreement between
Employee and any other person or entity.

                  8. Nondisclosure of Confidential Information; Ownership of
Intellectual Property Rights; Non Competition; Covenant Not to Compete.

                           (a) Nondisclosure of Confidential Information. During
the term of this Employment Agreement and at all times thereafter, Employee will
keep confidential and will not directly or indirectly divulge to anyone nor use
or otherwise appropriate for Employee's own benefit, or on behalf of any other
person, firm, partnership or corporation by whom Employee might subsequently be
employed or otherwise associated or affiliated with, any Confidential
Information (as defined herein). For this purpose, "Confidential Information"
means any and all trade secrets or other confidential information of any kind,
nature or description relating to the business of Employer, provided that such
information is not and does not in the future become known or available to third
parties or general economic trade information known to the industry generally,
both of which does not arise as a result of a disclosure by Employee or his
agents.

                           (b) Employer Materials. All reports and analysis,
designs, drawings, contracts, contractual arrangements, specifications, computer
software, computer hardware and other equipment, computer printouts, computer
disks, documents, memoranda, notebooks, correspondence, files, lists and other
records, and the like, and all photocopies or other reproductions thereof,
relating to the business of Employer which Employee shall prepare, use,
construct, observe, possess or control, except Employee copies of all such
documents which pertain to Employee ("Employee Materials"), shall be and remain
the sole property of Employer. Upon termination of this Employment Agreement,
Employee shall deliver promptly to Employer all such Employer Materials.

                           (c) Certain Restrictions on Business Activities.
During the term of this Employment Agreement, Employee agrees that:

                                    (i) Business Activities. He will not,
directly or indirectly, own an interest in, operate, join, control or
participate in, or be connected as an officer, employee, agent, independent
contractor, partner, shareholder or principal of any corporation, partnership,
proprietorship, firm, association, person or other entity providing services
and/or products or a combination thereof which directly or indirectly compete
with Employer's business, and he will not undertake planning for or organization
of any business activity directly competitive with Employer's business, except

for the period after notice of non-renewal of Employee's employment, or combine
or conspire with other employees or representatives of Employer's business for
the purpose of

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organizing any such competitive business activity, except the purchase of less
than four percent (4%) of the stock of a publicly traded company which is not
affiliated with Employer.

                                    (ii) Solicitation of Employees, Etc. During
the term of this Agreement and six (6) months thereafter, he will not, directly
or indirectly or by action in concert with others, induce or influence (or seek
to induce or influence) any person who is engaged (as an employee, agent,
independent contractor or otherwise) by Employer to terminate his or her
employment or engagement.

                           (d) Covenant Not to Compete. Employee covenants and
agrees that, if Employee's employment with Employer is terminated other than by
Employer without Cause (as defined herein) at any time, for a period of six (6)
months after the date of such termination, Employee will not engage or be
engaged, in any capacity, directly or indirectly, including but not limited as
employee, agent, consultant, manager, executive, owner or stockholder (except as
a passive investor holding less than a four percent (4%) equity interest in any
enterprise the securities of which are publicly traded) in any business entity
doing business in the United States engaged in direct competition with the
business conducted by Employer on the date of termination. This Covenant Not to
Compete shall survive the termination or expiration of the other provisions of
this Employment Agreement. If any court determines that this Covenant Not to
Compete, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable.

                           (e) Severability. Employee agrees, in the event that
any provision of this Section 8 or any word, phrase, clause, sentence or other
portion thereof shall be held to be unenforceable or invalid for any reason,
such provision or portion thereof shall be modified or deleted in such a manner
so as to make this Section 8 as modified legal and enforceable to the fullest
extent permitted under applicable laws. The validity and enforceability of the
remaining provisions or portions thereof shall not be affected thereby and shall
remain valid and enforceable to the fullest extent permitted under applicable
laws. A waiver of any breach of the provisions of this Section 8 shall not be
construed as a waiver of any subsequent breach of the same or any other
provision.

                  9.        Termination.

                           (a) Termination by Employer.


                                    (i) Employer may terminate this Agreement
upon written notice for Cause. For purposes hereof, "Cause" shall mean (A)
engaging by the Employee in conduct that constitutes activity in direct
competition with Employer's businesses; (B) the conviction of Employee for the
commission of a felony; (C) the habitual abuse of alcohol or controlled
substances; (D) deliberate actions taken by Employee to the material detriment
of Employer; and/or (E) material breach of this Agreement. Notwithstanding
anything to the contrary in this Section 9(a)(i), Employer may not terminate
Employee's employment under this Agreement for Cause unless Employee shall

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have first received notice from the Board advising Employee of the specific acts
or omissions alleged to constitute Cause, and such acts or omissions continue
after Employee shall have had a reasonable opportunity (at least 20 days from
the date Employee receives the notice from the Board) to correct the acts or
omissions so complained of.

                                    (ii) In the event that during the term of
his employment with Employer, Employee shall become Disabled (as that term is
defined herein), Employer may terminate this Agreement and Employee's employment
hereunder at any time upon 10 days' written notice to Employee and Employee
shall be entitled to receive disability payments during the succeeding 12-month
period at a rate equal to one-half of the rate of the base salary as provided in
Section 4(a) to which he was theretofore entitled, payable in equal installments
no less frequently than monthly. For the purposes of this Agreement, Employee
shall be deemed to have become Disabled when by reason of his physical or mental
incapacity, Employee shall not perform his duties hereunder for a period of four
consecutive months or for an aggregate of 120 days in any consecutive period of
six months. Any proceeds of disability insurance policies or plans maintained by
Employer, in addition to the contributory state mandated minimum coverage
policy, for the benefit of Employee shall be paid to Employee and shall reduce
on a dollar for dollar basis the obligations of Employer under this Section 9.

                                    (iii) This Employment Agreement and
Employer's obligations hereunder shall terminate upon Employee's death. Upon
termination for death, Employer shall continue to pay the compensation payments
pursuant to Section 4(a) to the surviving spouse of Employee (or if there is
none to Employee's estate) for the succeeding six (6) months.

                           (b) Termination by Employee. Employee shall have the
right to terminate his employment under this Agreement upon 30 days' notice to
Employer given within 90 days following the occurrence of any of the following
events:

                                    (A) Employer acts to materially reduce
Employee's duties and responsibilities hereunder.

                                    (B) A reduction in Employee's rate of base
compensation, the failure to pay Employee a bonus due under Section 10 hereof,

or material reduction in Employee's other benefits; or

                                    (C) A material breach of this Agreement by
Employer, which is not cured within thirty (30) days of written notice of such
breach by Employer.

If Employer shall terminate Employee's employment other than due to his death or
disability or for Cause (as defined in Section 9(a)(i) of this Agreement), or if
Employee shall terminate this Agreement under Section 9(b), Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the

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amount of compensation he may earn with respect to any other employment he may
obtain for the remainder of the Term as it may be extended from time to time.

                  10. Bonus. Each of Employee, Warren Golden and Stephanie Sobel
(collectively the "Total Bonus Pool Participants") shall be entitled to a
portion of an amount equal to ten percent (10%) of Employer's earnings before
income taxes up to a maximum of $150,000 per Annual Period ("Total Bonus Pool").
The allocation of the Total Bonus Pool to each Total Bonus Pool Participant
shall be as follows: Employee - 40%; Warren Golden-40%; Stephanie Sobel-20%. The
Total Bonus Pool shall be payable within 90 days after the end of Employer's
fiscal year commencing with the fiscal year ended September 30, 1998. So long as
any Total Bonus Pool Participant is an employee of Employer, the full amount of
the Total Bonus Pool shall be dispersed to the Total Bonus Pool Participants
annually.

                  11. Excise Tax. In the event that any payment or benefit
received or to be received by Employee in connection with a termination of his
employment with Employer would constitute a "parachute payment" within the
meaning of Code Section 280G or any similar or successor provision to 280G
and/or would be subject to any excise tax imposed by Code Section 4999 or any
similar or successor provision then Employer shall assume all liability for the
payment of any such tax and Employer shall immediately reimburse Employee on a
"grossed-up" basis for any income taxes attributable to Employee by reason of
such Employer payment and reimbursements.

                  12. Arbitration. Any controversies between Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement, save and except for any breaches
arising out of Sections 7 and 8 hereof, shall on the written request of either
party served on the other be submitted to arbitration. Such arbitration shall
comply with and be governed by the rules of the American Arbitration
Association. An arbitration demand must be made within one (1) year of the date
on which the party demanding arbitration first had notice of the existence of
the claim to be arbitrated, or the right to arbitration along with such claim
shall be considered to have been waived. An arbitrator shall be selected
according to the procedures of the American Arbitration Association. The cost of

arbitration shall be born by the losing party or in such proportions as the
arbitrator shall decide. The arbitrator shall have no authority to add to,
subtract from or otherwise modify the provisions of this Agreement, or to award
punitive damages to either party.

                  13. Attorneys' Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.

                  14. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to

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Employee's employment by Employer. The unenforceability of any provision of this
Agreement shall not effect the enforceability of any other provision. This
Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future rights.

                  15. Assignment. This Agreement shall not be assigned to other
parties.

                  16. Governing Law. This Agreement and all the amendments
hereof, and waivers and consents with respect thereto shall be governed by the
internal laws of the State of New York.

                  17. Notices. All notices, responses, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been given when (a) delivered by hand; (b) sent be telex or telefax, (with
receipt confirmed), provided that a copy is mailed by registered or certified
mail, return receipt requested; or (c) received by the addressee as sent be
express delivery service (receipt requested) in each case to the appropriate
addresses, telex numbers and telefax numbers as the party may designate to
itself by notice to the other parties:

                        (i) if to the Employer:

                           Diplomat Corporation 
                           25 Kay Fries Drive 
                           Stony Point, New York 10980 
                           Attention: Jonathan Rosenberg 
                           Telefax: (914) 786-8727 
                           Telephone: (914) 786-5552

                           With a copy to:


                           Gersten, Savage, Kaplowitz & Fredericks, LLP
                           101 East 52nd Street
                           New York, New York 10022
                           Attention:  Jay M. Kaplowitz, Esq.
                           Telefax: (212) 980-5192
                           Telephone: (212) 752-9700


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                        (ii) if to the Employee:

                             Irving Magram
                             56 Huyler Landing
                             Cresskill, New Jersey 07626
                             Telefax:
                             Telephone:

                             With a copy to:

                             Rosenman & Colin LLP
                             575 Madison Avenue
                             New York, New York 10022
                             Attention: Joel Yunis
                             Telefax: (212) 940-8776
                             Telephone: (212) 940-8800

                  18. Severability of Agreement. Should any part of this
Agreement for any reason be declared invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining
portion, which remaining provisions shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties that they would have
executed the remaining portions of this Agreement without including any such
part, parts or portions which may, for any reason, be hereafter declared
invalid.

                  19. Guarantee. In order to induce Employee to execute and
deliver this Agreement, Parent hereby irrevocably and unconditionally guarantees
the full, prompt and complete performance of each and every obligation and
liability of Employer under this Agreement.

                  IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.

                                 LEW MAGRAM LTD.



                                 By:   /s/ 
                                       --------------------------------------  

                                         Jonathan Rosenberg, Vice President


                                      /s/ 
                                      ---------------------------------------
                                          Irving Magram

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                                      As to Section 19.


                                      DIPLOMAT CORPORATION



                                      By: /s/ 
                                      ---------------------------------------
                                           Jonathan Rosenberg, President


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