EMPLOYMENT AND COMPENSATION AGREEMENT



This EMPLOYMENT AND COMPENSATION AGREEMENT ("Agreement") is made as of the first
day of  September,  1998,  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 C. Fred
Jackson, (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
Senior Vice  President  and Chief Credit  Officer of the  Company.  The Employee
shall  devote the  Employee's  full  business  time and best  efforts to Company
business.  Employee  shall  perform  such  other  duties  commensurate  with the
Employee's  position as may be specified from time to time by the Chairman,  the
Chief Executive  Officer or the Board of Directors of the Company.  2. Term. The
initial term of this Agreement  shall commence on the date set forth above,  and
shall  end  at  the  close  of  business  on  August   31,1999   (the   "Term").
Notwithstanding the foregoing, the Term shall extend one day at the end of every
day  during  its  length,  and the new  closing  date of the term  shall be that
additional  day,  unless  either party may notify the other of its  intention to
stop such  extensions,  in which case the closing  date of the Term shall be one
year from the date of such notice

3.  Compensation.  During the Term,  the Company  shall pay to the  Employee the
Employee's salary at an annual rate of one hundred seventy five thousand dollars
($175,000)  per annum,  which amount may be  increased  from time to time at the
discretion of the Board of Directors of the Company. In addition, Employee shall
receive on the date of  execution  of this  Agreement  options  (which  shall be
incentive  stock  options  within the  meaning of  Section  422 of the  Internal
Revenue Code of 1966,as amended) under the Allstate Financial  Corporation Stock
Option Plan (a copy of which has been  provided  to  Employee)  (the  "Plan") to
purchase  30,000 shares of the  Company's  stock at a price equal to 100% of the
highest  trading  price of such shares on the date of  issuance of such  options
(according to the NASDAQ,)  15,000 of which shall be  exercisable  upon issuance
and 15,000 of which  shall be  exercisable  one year from the date of  issuance.
Said  options  will  expire on the  earlier  of (i) ten  years  from the date of
issuance and (ii) in connection with any  termination of Employee's  employment,
the date provided  under the terms and  provisions  of the Plan or  subparagraph
8(c) hereunder.  4. Other  Compensation.  The Company shall provide the Employee
with the  following  additional  compensation  during the Term:  (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, or to the executive officers 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) Yearly  bonuses to be paid to Employee at the  discretion of
the Board of  Directors  of the  Company;  and (iii)  Receipt  of an  automobile
allowance  of $500.00 per month.  5.  Reimbursement.  Usual and normal  monetary
allowances  for  bona  fide  business  expenses  incurred  by  the  Employee  in
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, 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  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  (A) that (prior to  disclosure  by the  Employee)  has been
disclosed by the Company or any third party or (B) that  Employee  discloses (i)
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
(ii) 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 written
consent of the Board of Directors,  (i) be employed 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 (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.  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.  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 or the employee's  duties and
responsibilities  are  substantially  reduced 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 (iii)
a merger,  consolidation  or any other business  combination of the Company with
any  non-affiliated  party, (ivi) 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  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 of 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 three  months,
Employee's then applicable base salary pursuant to the provisions of Paragraph 3
for such period, in semi-monthly installments. 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 six months,  the Company
shall continue to pay and provide to the Employee the Employee's then applicable
salary for such period in semi-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.

(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  (including  commission  rate) 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 for one year.  In  addition,  for one year,  the Company
shall  provide to the Employee  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) hereof. (d)  Notwithstanding  anything else
contained in  subparagraphs  (b) or (c) above, no compensation  shall be payable
under  subparagraphs  (b) or (c) above 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  contendere
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 lawful duties, responsibilities or obligations assigned
to the Employee pursuant to the terms hereof and the failure to cure such breach
within  fifteen (15) days following  written notice from the Company  containing
specific  findings  by the Board of  Directors  of the  Company  detailing  such
failures.  (e) Except as  specifically  set forth above,  and except any amounts
that  may  otherwise  be  payable  to the  Employee  as of the  date  of,  or in
connection with, any  termination,  the Company shall have no obligation to make
any payments to Employee in the event the  Employee's  employment  is terminated
prior to the end of the Term.  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  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.  Nothing
contained  in  this  paragraph  shall  limit  the  Company's  rights  to  obtain
injunctive  relief to enforce the provisions of paragraphs  7(a) and 7(b) above.
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.

     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  Agreements  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.


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.
ALLSTATE FINANCIAL CORPORATION


By:
  David W. Campbell, Chairman of the Board


EMPLOYEE:



C. Fred Jackson

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