EMPLOYMENT AND COMPENSATION AGREEMENT




This EMPLOYMENT AND COMPENSATION AGREEMENT  ("Agreement") is made as of the 20th
day of January, 1999, 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 Charles G. Johnson, an
individual having a residence at 11 Harleston Green,  Hilton Head, SC 29928 (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  President  and Chief  Executive  Officer of the  Company.  It is
intended that the Employee  shall serve as a member of the board of directors of
the Company  (the  "Board").  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 of the Board or the Board.

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  December  31,  2001,  (the
"Term").  Notwithstanding the foregoing, commencing on January 1, 2001, 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 shall
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. Salary.  During the Term, the Company shall pay to the Employee a base salary
at a rate of One Hundred  Eighty Five  Thousand  dollars  ($185,000)  per annum,
which amount may be increased  from time to time at the discretion of the Board.
4. Benefits and Other Compensation.  The Company shall provide the Employee with
the following additional compensation during the Term:

(a)               Subject  to  meeting  eligibility  provisions,   any  and  all
                  existing and future 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.

 
(b)               An annual management incentive bonus to be paid to Employee at
                  the  discretion of the Board of Directors of the Company in an
                  amount up to 100% of Employee's  then current base  annualized
                  salary,   predicated  on  the  achievement  of  the  company's
                  business  plan.  Such bonus shall be paid in a combination  of
                  Company  stock and cash,  with the cash portion to be at least
                  50%  unless  the  Employee  elects a lesser  amount be paid in
                  cash.  Bonus  for any  calendar  year  shall be  deemed  fully
                  accrued  as of  December  31 of the  applicable  year (or,  if
                  later,  the date of the Board  determines  the  amount of such
                  bonus)  and  shall  be  paid no  later  than  March  31 of the
                  following year.

(c)               Receipt of an automobile allowance of $500 per month.

(d)                 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  at a price  equal to $6.50  and  30,000  shares at a
                    price equal to the higher of (i) $4.00,  or (ii) the average
                    trading  price of such shares over the five (5) trading days
                    immediately  preceding  the date of issuance of such options
                    (according to the NASDAQ). All 60,000 share options shall be
                    exercisable  upon issuance.  Said options will expire on the
                    earlier of (i) seven years from the date of issuance or (ii)
                    in connection with any termination of Employee's employment,
                    the date provided under the terms and provisions of the Plan
                    or subparagraph 9(c) hereunder.

(e)               Interim  housing  expense  reimbursement  prior to  Employee's
                  permanent  relocation  to the  Company's  headquarters  office
                  location. Such housing expenses shall be limited to $15,000.

(f)               Reimbursement  for the  movement  and short term  storage  (if
                  necessary) of household goods from Employee's residence to the
                  Company's headquarters location. Such moving expenses shall be
                  limited to $10,000.

(g)               Housing   and   moving   reimbursements    provided   for   in
                  subparagraphs 4(e) and 4(f) shall be "gross-up" to provide tax
                  equalization  of any taxable  income  interpreted  by Federal,
                  State, or local taxing authorities as taxable income.

5.  Reimbursement.  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 other
normal and customary business expenses.


6. Commercial Finance  Association.  During the Term of this Agreement,  Company
shall  continue  to be a  member  in good  standing  of the  Commercial  Finance
Association  ("CFA"),  the trade association of secured lenders and factors, and
Employee shall serve as the Company's Director Representative to CFA. Employee's
involvement  in CFA  activities  may include  serving as an  Officer,  Director,
Committee Member, Committee Chairman,  President and Chairman of CFA. During the
Term,  while  Employee  holds  national  office  as a member  of the  Management
Committee of CFA,  Company shall  support and encourage  Employee to fulfill the
duties of such CFA offices by providing  reimbursement  to the Employee for bona
fide  travel  and  entertainment  expenses  incurred  in  conjunction  with  CFA
activities up to $25,000 annually.


7. Vacation.  During the term, Employee shall be entitled to four (4) weeks paid
vacation per year. 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.

8.       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  clients  and  prospective
                    clients, 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  (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.



<PAGE>


                    (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  commercial  finance or
                    factoring  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
                    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.



<PAGE>


                    (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  8  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 Salary,  Benefits and Other  Compensation  and/or
                    duties and responsibilities are substantially reduced and/or
                    changed  in   connection   therewith   under  the  terms  of
                    subparagraph  9(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, a 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  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.

9.  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)  the  Benefits  and  Other   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(a),  4(b) and
                    4(c) herein.  In addition,  the Board will  consider in good
                    faith the  payment of an  incentive  bonus for the  calendar
                    year in which the  termination  occurs,  taking into account
                    the portion of the year completed prior to such termination,
                    the Company's  performance  for the year, and the Employee's
                    contributions to that performance.



<PAGE>


                         (b)  In  the  event  the   Employee's   employment   is
                    terminated  because  of  permanent  disability  (as  defined
                    below),  then following such  termination  the Company shall
                    continue  to pay and  provide to the  Employee  for a period
                    equal to six months,  the Employee's then applicable  salary
                    for such period in  semi-monthly  installments,  pursuant to
                    the  provisions of Paragraph 3 herein,  and the Benefits and
                    Other  Compensation  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(a), 4(b) and 4(c) herein.
                    In  addition,  the Board  will  consider  in good  faith the
                    payment of an incentive bonus for the calendar year in which
                    the termination  occurs,  taking into account the portion of
                    the year completed prior to such termination,  the Company's
                    performance  for the year, and the Employee's  contributions
                    to that performance.  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.



<PAGE>


(c)               In the event the  Employee's  employment is terminated  (i) by
                  the company other than for the Cause,  or (ii) by the Employee
                  for Good  Reason,  as  defined  in  Section  9(d)  below,  the
                  Employee shall receive:

(1)                        a lump sum payment,  payable  within thirty (30) days
                           following such termination without discount, equal to
                           the  Employee's  then current  base salary  otherwise
                           payable  through the later of the end of the Term, or
                           one year;

(2)                        continuation of the benefits  described in Paragraphs
                           4(a)  and  4(c)  above  for  a  period  of  one  year
                           following termination of employment (provided that if
                           the   Company   cannot    continue   the   Employee's
                           participation  under the terms of any applicable plan
                           it shall pay the employee an amount equal to the cost
                           the Company  would have  incurred in  providing  such
                           participation);

(3)               any declared but unpaid bonus for any prior calendar year, and

(4)                        bonus, for the year in which such termination occurs,
                           in an amount no less than the bonus declared or paid,
                           as the case may be, for the prior year,  pro-rated to
                           reflect the number of weeks in which the Employee was
                           employed in the calendar  year of  termination,  such
                           bonus to be paid within  thirty  (30) days  following
                           such termination.

(d) For this purpose Good Reason shall mean:


(i)                        any material  breach of this Agreement by the Company
                           at any  time,  including  (A) loss of the  Employee's
                           position as President  and Chief  Executive  Officer,
                           (B) failure to elect,  or re-elect  the Employee as a
                           member of the Board,  (C) breach of the provisions of
                           Paragraph 6, or (D) attempted reduction in Employee's
                           Salary, Benefits and Other Compensation.


(ii)                       failure of the Company to obtain the agreement of any
                           successor to perform this agreement at least ten (10)
                           days  prior to a  Business  Combination  or Change in
                           Control  in  which  the  Company   will  not  be  the
                           surviving entity; or

(iii)                      following  a  Business   Combination   or  Change  in
                           control,   assignment  of  duties  inconsistent  with
                           Employee's  position or any  reduction in  Employee's
                           authority or direct support.

                         (e)   Notwithstanding   anything   else   contained  in
                    subparagraph  (c) above,  no  compensation  shall be payable
                    under  subparagraph  (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.

10. 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.

11.  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.

12.  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  8(a) and
8(b) above.

13.  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).

14.  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.



<PAGE>


15. 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.

16.  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.

17.  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.

18. 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: /s/ David W. Campbell
                             ---------------------
                             David W. Campbell, Chairman of the Board

                             /s/ Charles G. Johnson
                             ----------------------
                   EMPLOYEE:     Charles G. Johnson