Document:

<PAGE>

                                    TERM NOTE
                                    ---------

$4,000,000                                                           May 5, 2000

         FOR VALUE RECEIVED, STRATEGIC DIAGNOSTICS INC., a Delaware corporation
(the "Borrower"), with an address at 111 Pencader Drive, Newark, Delaware 19702,
promises to pay to the order of PNC BANK, DELAWARE (the "Bank"), in lawful money
of the United States of America in immediately available funds at its offices
located at 222 Delaware Avenue, Wilmington, Delaware 19801, or at such other
location as the Bank may designate from time to time, the principal sum of FOUR
MILLION and 00/100 DOLLARS ($4,000,000), together with interest accruing on the
outstanding principal balance from the date hereof, all as provided below:

         1. Rate of Interest. Amounts outstanding under this Note will bear
interest at a rate per annum equal to the sum of (A) the Euro-Rate plus (B) the
Applicable Margin for the Term Loan (as defined in the Loan Agreement (defined
below)), for the applicable Euro-Rate Interest Period.

For purposes hereof, the following terms shall have the following meanings:

         "Business Day" shall mean any day other than a Saturday or Sunday or a
         legal holiday on which commercial banks are authorized or required to
         be closed for business in Wilmington, Delaware.

         "Euro-Rate" shall mean, with respect to any amounts to which the
         Euro-Rate applies for the applicable Euro-Rate Interest Period, the
         interest rate per annum determined by the Bank by dividing (the
         resulting quotient rounded upwards, if necessary, to the nearest
         1/100th of 1%) (i) the rate of interest determined by the Bank in
         accordance with its usual procedures (which determination shall be
         conclusive absent manifest error) to be the eurodollar rate two (2)
         Business Days prior to the first day of such Euro-Rate Interest Period
         for such amounts and having a borrowing date and a maturity comparable
         to such Euro-Rate Interest Period by (ii) a number equal to 1.00 minus
         the Euro-Rate Reserve Percentage.

         "Euro-Rate Interest Period" shall mean the period of one (1) month
         commencing on the date of disbursement of an advance (or the date of
         conversion of an advance to the Euro-Rate, as the case may be) and
         each successive period selected by the Borrower thereafter; provided,
         that if a Euro-Rate Interest Period would end on a day which is not a
         Business Day, it shall end on the next succeeding Business Day, unless
         such day falls in the succeeding calendar month in which case the
         Euro-Rate Interest Period shall end on the next preceding Business Day.
         In no event shall any Euro-Rate Interest Period end on a day after the
         Expiration Date.

         "Euro-Rate Reserve Percentage" shall mean the maximum effective
         percentage in effect on such day as prescribed by the Board of
         Governors of the Federal Reserve System (or any successor) for
         determining the reserve requirements (including, without limitation,
         supplemental, marginal and emergency reserve requirements) with respect
         to eurocurrency funding (currently referred to as "Eurocurrency
         liabilities").

                                       -1-

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         The Euro-Rate shall be adjusted with respect to any amounts to which
the Euro-Rate applies on and as of the effective date of any change in the
Euro-Rate Reserve Percentage. The Bank shall give prompt notice to the Borrower
of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.

         If the Bank determines (which determination shall be final and
conclusive) that, by reason of circumstances affecting the eurodollar market
generally, deposits in dollars (in the applicable amounts) are not being offered
to banks in the eurodollar market for the selected term, or adequate means do
not exist for ascertaining the Euro-Rate, then the Bank shall give notice
thereof to the Borrower. Thereafter, until the Bank notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (a) the
availability of the Euro-Rate shall be suspended, and (b) the interest rate for
all amounts then bearing interest under the Euro-Rate shall be converted at the
expiration of the then current Euro-Rate Interest Period(s) to the Base Rate (as
defined below).

          "Base Rate" means a rate of interest per annum which is at all times
         equal to the sum of (A) the Prime Rate plus (B) the otherwise
         Applicable Margin less (C) an amount equal to the Prime Rate minus the
         Euro-Rate on the last day of its availability. For purposes hereof, the
         term "Prime Rate" shall mean the rate publicly announced by the Bank
         from time to time as its prime rate. The Prime Rate is determined from
         time to time by the Bank as a means of pricing some loans to its
         borrowers. The Prime Rate is not tied to any external rate of interest
         or index, and does not necessarily reflect the lowest rate of interest
         actually charged by the Bank to any particular class or category of
         customers. If and when the Prime Rate changes, the rate of interest
         with respect to any amounts to which the Base Rate applies will change
         automatically without notice to the Borrower, effective on the date of
         any such change. There are no required minimum interest periods for
         amounts bearing interest under the Base Rate.

         In addition, if, after the date of this Note, the Bank shall determine
(which determination shall be final and conclusive) that any enactment,
promulgation or adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by a
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
guideline, request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank to make or maintain or fund loans under the Euro-Rate,
the Bank shall notify the Borrower. Upon receipt of such notice, until the Bank
notifies the Borrower that the circumstances giving rise to such determination
no longer apply, (a) the availability of the Euro-Rate shall be suspended, and
(b) the interest rate on all amounts then bearing interest under the Euro-Rate
shall be converted to the Base Rate either (i) on the last day of the then
current Euro-Rate Interest Period(s) if the Bank may lawfully continue to
maintain any indebtedness under the Euro-Rate to such day, or (ii) immediately
if the Bank may not lawfully continue to maintain any indebtedness under the
Euro-Rate.

Interest hereunder will be calculated on the basis of a year of 360 days for the
actual number of days elapsed. In no event will the rate of interest hereunder
exceed the maximum rate allowed by law.

         2. Payment of Interest. The Borrower shall pay accrued interest on the
unpaid principal balance of this Note in arrears: (a) for the portions hereunder
bearing interest under the Base Rate, on the first day of each month during the

                                       -2-

<PAGE>

term hereof, (b) for the portions hereunder bearing interest under the
Euro-Rate, on the last day of the respective Euro-Rate Interest Period for such
portion, and (c) for all outstanding amounts, at maturity, whether by
acceleration of this Note or otherwise, and after maturity, on demand until paid
in full.

         3. Payment of Principal. Principal shall be due and payable in
thirty-six (36) equal consecutive monthly installments in the amount of
$111,111.11 each, commencing on June 5, 2000 and continuing on the fifth day of
each month thereafter to and including May 5, 2003. Any outstanding principal
and accrued interest shall be due and payable in full on May 5, 2003.

         If any payment under this Note shall become due on a Saturday, Sunday
or public holiday under the laws of the State where the Bank's office indicated
above is located, such payment shall be made on the next succeeding business day
and such extension of time shall be included in computing interest in connection
with such payment. The Borrower hereby authorizes the Bank to charge the
Borrower's deposit account at the Bank for any payment when due hereunder.
Payments received will be applied to reasonable charges, fees and expenses
(including reasonable attorneys' fees), accrued interest and principal in any
order the Bank may choose, in its sole discretion.

         4. Late Payments; Default Rate. If the Borrower fails to make any
payment of principal, interest or other amount coming due pursuant to the
provisions of this Note within fifteen (15) calendar days of the date due and
payable, the Borrower also shall pay to the Bank a late charge equal to the
lesser of five percent (5.00%) of the amount of such payment or $100.00 (the
"Late Charge"). Such 15-day period shall not be construed in any way to extend
the due date of any such payment. Upon maturity, whether by acceleration, demand
or otherwise, and at the Bank's option upon the occurrence of any Event of
Default (as hereinafter defined) and during the continuance thereof, this Note
shall bear interest at a rate per annum (based on a year of 360 days and actual
days elapsed) which shall be two percentage points (2.00%) in excess of the
interest rate in effect from time to time under this Note but not more than the
maximum rate allowed by law (the "Default Rate"). The Default Rate shall
continue to apply whether or not judgment shall be entered on this Note. Both
the Late Charge and the Default Rate are imposed as liquidated damages for the
purpose of defraying the Bank's expenses incident to the handling of delinquent
payments, but are in addition to, and not in lieu of, the Bank's exercise of any
rights and remedies hereunder, under the other Loan Documents (as defined below)
or under applicable law, and any fees and expenses of any agents or attorneys
which the Bank may employ. In addition, the Default Rate reflects the increased
credit risk to the Bank of carrying a loan that is in default. The Borrower
agrees that the Late Charge and Default Rate are reasonable forecasts of just
compensation for anticipated and actual harm incurred by the Bank, and that the
actual harm incurred by the Bank cannot be estimated with certainty and without
difficulty.

         5. Prepayment. The Borrower shall have the right to prepay at any time
and from time to time, in whole or in part, without penalty, any amount
hereunder which is accruing interest under the Base Rate. If the Borrower
prepays (whether voluntary, on default or otherwise) all or any part of any
amount which is accruing interest under the Euro-Rate on any day other than the
last day of the applicable Euro-Rate Interest Period, the Borrower shall pay to
the Bank, on demand therefor, all amounts due pursuant to paragraph 6 below.

                                       -3-

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         6. Yield Protection. The Borrower shall pay to the Bank, promptly after
demand therefor, together with the written evidence of the justification
therefor, all direct costs incurred, losses suffered or payments made by Bank by
reason of any change in law or regulation or its interpretation imposing any
reserve, deposit, allocation of capital, or similar requirement (including
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) on the Bank, its holding company or any of their respective
assets. In addition, the Borrower agrees to indemnify the Bank against any
liabilities, losses or expenses (including loss of margin, any loss or expense
sustained or incurred in liquidating or employing deposits from third parties,
and any loss or expense incurred in connection with funds acquired to effect,
fund or maintain any of the Borrower's indebtedness (or any part thereof)
bearing interest under the Euro-Rate which the Bank sustains or incurs as a
consequence of either (i) the Borrower's failure to make a payment on the due
date thereof, (ii) the Borrower's revocation (expressly, by later inconsistent
notices or otherwise) in whole or in part of any notice given to Bank to
request, convert, renew or prepay any advance, or (iii) the Borrower's payment,
prepayment or conversion of any advance bearing interest under the Euro-Rate on
a day other than the last day of the applicable Euro-Rate Interest Period. The
Bank's determination of an amount payable under this paragraph shall, in the
absence of manifest error, be conclusive and shall be payable promptly after
demand.

         7. Other Loan Documents. This Note is issued in connection with a loan
agreement between the Borrower and the Bank dated as of the date hereof (as
amended, modified or renewed from time to time, the "Loan Agreement"), and the
other agreements and documents executed in connection therewith or referred to
therein, the terms of which are incorporated herein by reference (as amended,
modified or renewed from time to time, collectively with the Loan Agreement, the
"Loan Documents"), and is secured by the property described in the Loan
Documents and by such other collateral as previously may have been or may in the
future be granted to the Bank to secure this Note.

         8. Events of Default. The occurrence of any of the following events
will be deemed to be an "Event of Default" under this Note: (i) the nonpayment
of any principal, interest or other indebtedness under this Note when due; (ii)
the occurrence of any event of default or default and the lapse of any notice or
cure period under any Loan Document or any other debt, liability or obligation
to the Bank of any Obligor; (iii) the filing by or against any Obligor of any
proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against any Obligor, such proceeding is not dismissed or stayed
within 90 days of the commencement thereof, provided that the Bank shall not be
obligated to advance additional funds during such period); (iv) any assignment
by any Obligor for the benefit of creditors, or any levy, garnishment,
attachment or similar proceeding is instituted against any property of any
Obligor held by or deposited with the Bank; (v) a default with respect to any
other indebtedness of any Obligor for borrowed money, if the effect of such
default is to cause or permit the acceleration of such debt and such
acceleration would have a material adverse effect upon Borrower's business,
operations, property (including, the Collateral) or prospects; (vi) the
commencement of any foreclosure or forfeiture proceeding, execution or
attachment against any collateral securing the obligations of any Obligor to the
Bank; (vii) the entry of a final judgment against any Obligor and the failure of
such Obligor to discharge or bond the judgment within thirty (30) days of the
entry thereof; (viii) any material adverse change in any Obligor's business,
assets, operations, financial condition or results of operations; (ix) any
Obligor ceases doing business as a going concern; (x) the revocation or
attempted revocation, in whole or in part, of any guarantee by any Guarantor;
(xi) the death or legal incompetency of any individual Obligor or, if any

                                       -4-

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Obligor is a partnership, the death or legal incompetency of any individual
general partner; or (xii) any representation or warranty made by any Obligor to
the Bank in any Loan Document, or any other documents now or in the future
evidencing or securing the obligations of any Obligor to the Bank, is false,
erroneous or misleading in any material respect; or (xiii) any Obligor's failure
to observe or perform any covenant or other agreement with the Bank contained in
any Loan Document or any other documents now or in the future evidencing or
securing the obligations of any Obligor to the Bank. As used herein, the term
"Obligor" means any Borrower and any Guarantor, and the term "Guarantor" means
any guarantor of the Borrower's obligations to the Bank existing on the date of
this Note or arising in the future.

         Upon the occurrence and during the continuance of an Event of Default:
(a) the Bank shall be under no further obligation to make advances hereunder;
(b) if an Event of Default specified in clause (iii) or (iv) above shall occur,
the outstanding principal balance and accrued interest hereunder together with
any additional amounts payable hereunder shall be immediately due and payable
without demand or notice of any kind; (c) if any other Event of Default shall
occur, the outstanding principal balance and accrued interest hereunder together
with any additional amounts payable hereunder, at the Bank's option and without
demand or notice of any kind, may be accelerated and become immediately due and
payable; (d) at the Bank's option, this Note will bear interest at the Default
Rate from the date of the occurrence of the Event of Default; and (e) the Bank
may exercise from time to time any of the rights and remedies available under
the Loan Documents or under applicable law.

         9. Power to Confess Judgment. The Borrower hereby empowers any attorney
of any court of record, during the existence of any Event of Default hereunder,
to appear for the Borrower and, with or without complaint filed, confess
judgment, or a series of judgments, against the Borrower in favor of the Bank or
any holder hereof for the entire principal balance of this Note, all accrued
interest and all other amounts due hereunder, together with costs of suit and an
attorney's commission of the greater of 10% of such principal and interest or
$1,000 added as a reasonable attorney's fee, and for doing so, this Note or a
copy verified by affidavit shall be a sufficient warrant. The Borrower hereby
forever waives and releases all errors in said proceedings and all rights of
appeal and all relief from any and all appraisement, stay or exemption laws of
any state now in force or hereafter enacted. Interest on any such judgment shall
accrue at the Default Rate.

         No single exercise of the foregoing power to confess judgment, or a
series of judgments, shall be deemed to exhaust the power, whether or not any
such exercise shall be held by any court to be invalid, voidable, or void, but
the power shall continue undiminished and it may be exercised from time to time
as often as the Bank shall elect until such time as the Bank shall have received
payment in full of the debt, interest and costs. Notwithstanding the attorney's
commission provided for in the preceding paragraph (which is included in the
warrant for purposes of establishing a sum certain), the amount of attorneys'
fees that the Bank may recover from the Borrower shall not exceed the actual
attorneys' fees incurred by the Bank.

         10. Right of Setoff. In addition to all liens upon and rights of setoff
against the Borrower's money, securities or other property given to the Bank by
law, the Bank shall have, with respect to the Borrower's obligations to the Bank
under this Note and to the extent permitted by law, a contractual possessory
security interest in and a contractual right of setoff against, and the Borrower

                                       -5-

<PAGE>

hereby assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all of the Borrower's deposits,
moneys, securities and other property now or hereafter in the possession of or
on deposit with, or in transit to, the Bank or any other direct or indirect
subsidiary of PNC Bank Corp., whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for safekeeping
or otherwise, excluding, however, all IRA, Keogh, and trust accounts. Every such
security interest and right of setoff may be exercised without demand upon or
notice to the Borrower. Every such right of setoff shall be deemed to have been
exercised immediately upon the occurrence of an Event of Default hereunder
without any action of the Bank, although the Bank may enter such setoff on its
books and records at a later time.

         11. Miscellaneous. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder must be in writing
(except as may be agreed otherwise above with respect to borrowing requests) and
will be effective upon receipt. Such notices and other communications may be
hand-delivered, sent by facsimile transmission with confirmation of delivery and
a copy sent by first-class mail, or sent by nationally recognized overnight
courier service, to the addresses for the Bank and the Borrower set forth above
or to such other address as either may give to the other in writing for such
purpose. No delay or omission on the Bank's part to exercise any right or power
arising hereunder will impair any such right or power or be considered a waiver
of any such right or power, nor will the Bank's action or inaction impair any
such right or power. No modification, amendment or waiver of any provision of
this Note nor consent to any departure by the Borrower therefrom will be
effective unless made in a writing signed by the Bank. The Borrower agrees to
pay promptly after demand, to the extent permitted by law, all costs and
expenses incurred by the Bank in the enforcement of its rights in this Note and
in any security therefor, including without limitation reasonable fees and
expenses of the Bank's counsel. If any provision of this Note is found to be
invalid by a court, all the other provisions of this Note will remain in full
force and effect. The Borrower and all other makers and indorsers of this Note
hereby forever waive presentment, protest, notice of dishonor and notice of
non-payment. The Borrower also waives all defenses based on suretyship or
impairment of collateral. If this Note is executed by more than one Borrower,
the obligations of such persons or entities hereunder will be joint and several.
This Note shall bind the Borrower and its successors and assigns, and the
benefits hereof shall inure to the benefit of the Bank and its successors and
assigns; provided, however, that the Borrower may not assign this Note in whole
or in part without the Bank's written consent and the Bank at any time may
assign this Note in whole or in part.

         This Note has been delivered to and accepted by the Bank and will be
deemed to be made in the State where the Bank's office indicated above is
located. This Note will be interpreted and THE RIGHTS AND LIABILITIES OF THE
BANK AND THE BORROWER DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE
THE BANK's office indicated above is LOCATED, EXCLUDING ITS CONFLICT OF LAWS
RULES. The Borrower hereby irrevocably consents to the exclusive jurisdiction of
any state or federal court in the county or judicial district where the Bank's
office indicated above is located; provided that nothing contained in this Note
will prevent the Bank from bringing any action, enforcing any award or judgment
or exercising any rights against the Borrower individually, against any security
or against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.

                                       -6-

<PAGE>

         12. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL
RIGHTS THE BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION
WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

         The Borrower acknowledges that it has read and understood all the
provisions of this Note, including the confession of judgment and the waiver of
jury trial, and has been advised by counsel as necessary or appropriate.

         WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.

ATTEST:                                  STRATEGIC DIAGNOSTICS INC.

By: /s/ Martha C. Ryder                  By: /s/ Arthur Koch              (SEAL)
    -------------------------                ----------------------------
Print Name: Martha C. Ryder              Print Name: Arthur Koch
Title:_____________________________      Title: COO

                                      - 7 -<PAGE>

                              NEWTEK CAPITAL, INC.

                          -----------------------------

                            Employment Agreement with
                                  Jeffrey Rubin

                          -----------------------------

         PREAMBLE. This Agreement entered into this ____ day of __________ 1999,
by and between Newtek Capital, Inc. (the "Company") and Jeffrey Rubin (the
"Executive"), effective immediately.

         WHEREAS, the Executive is to be employed by the Company as an executive
officer; and

         WHEREAS, the parties desire by this writing to set forth the employment
relationship of the Company and the Executive.

         NOW, THEREFORE, it is AGREED as follows:

         1.  Defined Terms

             When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.

             (a) "Board" shall mean the Board of Directors of the Company.

             (b) "Change in Control" shall mean any one of the following events:
(i) the acquisition of ownership, holding or power to vote more than 25% of the
Company's voting stock, (ii) the acquisition of the ability to control the
election of a majority of the Company's directors, (iii) the acquisition of a
controlling influence over the management or policies of the Company by any
person or by persons acting as a "group" (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the beginning
of such period constitute the Board of Directors of the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds thereof, provided
that any individual whose election or nomination for election as a member of the
Existing Board was approved by a vote of at least two-thirds of the Continuing
Directors then in office shall be considered a Continuing Director. For purposes
of this paragraph only, the term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

             (c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.

             (d) "Code ss.280G Maximum" shall mean the product of 2.99 and the
Executive's "base amount" as defined in Code ss.280G(b)(3).

<PAGE>

             (e) "Company" shall mean Newtek Capital, Inc., and any successor to
its interest.

             (f) "Common Stock" shall mean common stock of the Company.

             (g) "Effective Date" shall mean the date of execution referenced in
the Preamble of this Agreement.

             (h) "Executive" shall mean Jeffrey Rubin.

             (i) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Executive in writing: (i) the
requirement that the Executive move his personal residence, or perform his
principal executive functions, more than fifty (50) miles from his primary
office as of the Effective Date; (ii) a material reduction in the Executive's
base compensation as the same may be increased from time to time; (iii) the
failure by the Company to continue to provide the Executive with compensation
and benefits provided for on the Effective Date, as the same may be increased
from time to time, or with benefits substantially similar to those provided to
him under any of the Executive benefit plans in which the Executive now or
hereafter becomes a participant, or the taking of any action by the Company
which would directly or indirectly reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by him; (iv) the assignment to
the Executive of duties and responsibilities materially different from those
associated with his position on the Effective Date; (v) a failure to elect or
reelect the Executive to the Board of Directors of the Company; (vi) a material
diminution or reduction in the Executive's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Company.

             (j) "Just Cause" shall mean the Executive's willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction for a felony, or material breach of any
provision of this Agreement. No act, or failure to act, on the Executive's part
shall be considered "willful" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interests of the Company.

             (k) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the second
annual anniversary of the Change in Control or the expiration date of this
Agreement.

             (l) "Trigger Event" shall mean (i) the Executive's voluntary
termination of employment either for any reason within the 30-day period
beginning on the date of a Change in Control, or within 90 days of an event that
both occurs during the Protected Period and constitutes Good Reason, or (ii) the
termination by the Company or its successor(s) in interest, of the Executive's
employment for any reason other than Just Cause during the Protected Period.

         2. Employment. The Executive is employed as President and Chief
Operating Officer of the Company. The Executive shall render such administrative
and management services for the Company and its subsidiaries at the request of
the Board as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity and consistent with the duties of the
President and Chief Operating Officer as set forth in the

                                       2

<PAGE>

bylaws of the Company. The Executive shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Company
and its subsidiaries. The Executive's other duties shall be such as the
Company's Chief Executive Officer may from time to time reasonably direct,
including normal duties as an officer of the Company.

         3. Base Compensation. The Company agrees to pay the Executive during
the term of this Agreement a salary at the rate of $300,000 per annum, payable
in cash not less frequently than monthly. On each annual anniversary date of the
Effective Date, the Executive's annual salary shall automatically be increased
10 percent. Additionally, the Board shall review, not less often than annually,
the rate of the Executive's salary and may decide to further increase his
salary.

         4. Annual Cash Bonuses. The Board shall determine the Executive's right
to receive incentive compensation in the form of cash bonuses and other awards.
No other compensation provided for in this Agreement shall be deemed a
substitute for such incentive compensation. Cash bonuses shall be awarded
pursuant to the terms of the Company's Annual Cash Bonus Plan.

         5. Other Benefits.

             (a) Participation in Retirement, Medical and Other Plans. The
Executive shall participate in any plan that the Company maintains for the
benefit of its employees if the plan relates to (i) pension, profit-sharing, or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits, including
disability and life insurance plans.

             (b) Executive Benefits; Expenses. The Executive shall participate
in any fringe benefits which are or may become available to the Company's senior
management Executives, including for example incentive compensation plans, club
memberships, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Executive under this
Agreement. The Executive shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Company.

             (c) Split-Dollar Life Insurance. The Company shall provide the
Executive with split-dollar life insurance coverage. The coverage shall be
provided under a separate Split-Dollar Life Insurance Agreement (the
"Split-Dollar Agreement") entered into between the Executive and the Company,
the terms of which shall include the following:

                 (i) Amount of Insurance. The Company shall obtain an insurance
policy (the "Policy") in the face amount of $2 million on the life of the
Executive.

                 (ii) Ownership. The Company shall be the sole owner of the
Policy.

                 (iii) Payment of Premiums. The Company shall pay all premiums
for each Policy year.

                                       3

<PAGE>

                 (iv) Death Benefits. Upon the death of the Executive, the death
benefit payable under the Policy shall be paid to the Company in an amount equal
to the lesser of (i) the aggregate premiums paid by the Company and (ii) the
cash surrender value of the Policy. The balance shall be paid to the Executive's
designated beneficiary or, if none is validly designated, his estate.

                 (v) Dividends. All dividends on the Policy shall be used to
purchase additions to insurance issued by the insurer.

                 (vi) Termination of Employment. If the Company terminates the
Executive's employment for Just Cause pursuant to Section 11(a) hereof, the
Split-Dollar Agreement shall automatically be cancelled, and the Executive may
elect, by written notice to the Company within 30 days of such termination, to
purchase the Policy from the Company by paying the lesser of (i) the total
premiums paid by the Company and (ii) the cash surrender value of the Policy. If
the Executive's employment terminates for any other reason, the Company's
obligation to pay premiums for the Policy shall continue for the life of the
Executive.

         6. Term. The Company hereby employs the Executive, and the Executive
hereby accepts such employment under this Agreement, for the period commencing
on the Effective Date and ending 24 months thereafter or such earlier date as is
determined in accordance with Section 11 (the "Term"). Additionally, on each
annual anniversary date of the Effective Date, the Executive's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, unless either party to this Agreement notifies the
other party in writing no later than 90 days before such expiration date that
this Agreement shall not be extended.

         If the Executive is an employee of the Company on the expiration date
of the Term (as amended hereunder) of this Agreement, the Executive shall be
paid an amount equal to 299% times the highest W-2 income that the Company
reported to him for a calendar year that ended before said expiration date. Said
sum shall be paid in one lump sum within ten (10) days of said expiration date,
unless more than 30 days beforehand the Executive files an election to collect
said sum over a period of up to five years, in which case interest shall accrue
on unpaid amounts at a rate determined pursuant to Section 1274(d) of the Code.

         7. Loyalty; Noncompetition.

             (a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Executive shall devote substantially all his full business time, attention,
skill, and efforts to the faithful performance of his duties hereunder;
provided, however, from time to time, Executive may serve on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, at the request of the Company or which will not present, in the
opinion of the Board, any conflict of interest with the Company or any of its
subsidiaries or affiliates, nor unfavorably affect the performance of
Executive's duties pursuant to this Agreement, nor violate any applicable
statute or regulation. "Full business time" is hereby defined as that amount of
time usually devoted to like companies by similarly situated executive officers.
During the term of his employment

                                       4

<PAGE>

under this Agreement, the Executive shall not engage in any business or activity
contrary to the business affairs or interests of the Company.

             (b) Nothing contained in this Paragraph 7 shall be deemed to
prevent or limit the Executive's right

                 (i) to invest in the capital stock or other securities of any
business dissimilar from that of the Company or, solely as a passive or minority
investor, in any business, or

                 (ii) to own and perform reasonable management duties for J R
Group, LLC (:JR") on behalf of the Company pursuant to a management services
agreement between JR and the Company which provides, among other things, for the
payment to the Company of all revenues of JR in excess of $70,000 per year based
upon its annual federal income tax returns.

         8. Standards. The Executive shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide Executive with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.

         9. Vacation and Sick Leave. At such reasonable times as the Board shall
in its discretion permit, the Executive shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided that:

             (a) The Executive shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management Executives of the Company.

             (b) The Executive shall not receive any additional compensation
from the Company on account of his failure to take a vacation, and the Executive
shall not accumulate unused vacation from one fiscal year to the next, except in
either case to the extent authorized by the Board.

             (c) In addition to the aforesaid paid vacations, the Executive
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Executive a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.

             (d) In addition, the Executive shall be entitled to an annual sick
leave benefit as established by the Board.

         10. Indemnification. The Company shall indemnify and hold harmless
Executive from any and all loss, expense, or liability that he may incur due to
his services for the Company as an officer and or director (including any
liability he may ever incur under Code ss. 4999, or a

                                       5

<PAGE>

successor, as the result of severance benefits he collects pursuant to Sections
11 or 13) during the full Term of this Agreement and shall at all times maintain
adequate insurance for such purposes.

         11. Termination and Termination Pay. Subject to Section 13 hereof, the
Executive's employment hereunder may be terminated under the following
circumstances:

             (a) Just Cause. The Board may, based on a good faith determination
and only after giving the Executive written notice and a reasonable opportunity
to cure, immediately terminate the Executive's employment at any time, for Just
Cause. The Executive shall have no right to receive compensation or other
benefits for any period after termination for Just Cause.

             (b) Without Just Cause. The Board may, by written notice to the
Executive, immediately terminate his employment for a reason other than Just
Cause, in which case the Executive shall be paid an amount equal to the Code
280G Maximum. Said sum shall be paid in one lump sum within ten (10) days of
such termination, unless more than 30 days beforehand the Executive shall have
filed an election to collect said sum over a period of up to five years, in
which case interest shall accrue on unpaid amounts at a rate determined pursuant
to Section 1274(d) of the Code.

             (c) Resignation by Executive with Good Reason. The Executive may at
any time immediately terminate employment for Good Reason, in which case the
Executive shall be entitled to receive the following compensation and benefits:
(i) the salary and cash bonus provided pursuant to Sections 3 and 4 hereof, up
to the expiration date (the "Expiration Date") of the Term, including any
renewal term, of this Agreement, and (ii) the cost to the Executive of obtaining
all health, life, disability and other benefits which the Executive would have
been eligible to participate in through the Expiration Date based upon the
benefit levels substantially equal to those that the Company provided for the
Executive at the date of termination of employment. Said payment shall be made
in a lump sum payment within 10 days after his termination of employment, unless
more than 30 days beforehand the Executive shall have filed an election to
receive such benefits over a period of up to five years, in which case interest
shall accrue on unpaid amounts at a rate determined pursuant to Section 1274(d)
of the Code.

             (d) Resignation by Executive without Good Reason. The Executive may
voluntarily terminate employment with the Company during the Term of this
Agreement, upon at least 60 days' prior written notice to the Board of
Directors, in which case the Executive shall receive only his compensation,
vested rights, and Executive benefits up to the date of his termination of
employment.

             (e) Retirement, Death, or Disability. If the Executive's employment
terminates during the Term of this Agreement due to his death, a disability that
results in his collection of any long-term disability benefits, or retirement at
or after age 62, the Executive (or the beneficiaries of his estate) shall be
entitled to receive the compensation and benefits that the Executive would
otherwise have become entitled to receive pursuant to subsection (d) hereof upon
a resignation without Good Reason.

         12. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, and no such

                                       6

<PAGE>

payment shall be offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment.

         13. Change in Control.

             (a) Notwithstanding any provision herein to the contrary, if a
Trigger Event occurs during the Protected Period, the Executive shall be paid an
amount equal to the Code ss. 280G Maximum. Said sum shall be paid in one lump
sum within ten (10) days of such termination, unless more than 90 days before
the Change in Control the Executive shall have filed an election to collect
benefits over a period of up to five years, in which event interest shall accrue
on unpaid amounts at a rate determined pursuant to Section 1274(d) of the Code.

             (b) Not later than three business days after a Change in Control,
the Company shall (a) deposit in a grantor trust (the "Trust"), having terms
consistent with Revenue Procedure 92-64, an amount that the Company reasonably
projects to be sufficient to fund the payment of all benefits that are or may
become payable, pursuant to this Agreement, and (b) provide the trustee of the
Trust with a written direction both to hold said amount and any investment
return thereon in a segregated account for the benefit of Executive, and to
follow the procedures set forth in the next paragraph as to the payment of such
amounts from the Trust. The provisions of this Section shall be null and void
only if the Executive provides a written release of all claims under this
Agreement.

         During the 27-consecutive month period after a Change in Control, the
Executive may provide the trustee of the Trust with a written notice directing
the trustee to pay to Executive an amount designated in the notice as being
payable pursuant to this Agreement. Within three business days after receiving
said notice, the trustee of the Trust shall pay such amount to the Executive,
and coincidentally shall provide the Company or its successor with notice of
such payment. Upon the earlier of the Trust's final payment of all amounts due
under the preceding paragraph or the date 27 months after the Change in Control,
the trustee of the Trust shall pay to the Company the entire balance remaining
in the segregated account maintained for the benefit of the Executive. The
Executive shall thereafter have no further interest in the Trust.

         14. Reimbursement for Litigation Expenses.

         In the event that any dispute arises between the Executive and the
Company as to the terms or interpretation of this Agreement, whether instituted
by formal legal proceedings or otherwise, including any action that the
Executive takes to enforce the terms of this Agreement or to defend against any
action taken by the Company, the Executive shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Executive shall obtain a final
judgement by a court of competent jurisdiction in favor of the Executive. Such
reimbursement shall be paid within ten (10) days of Executive's furnishing to
the Company written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Executive.

                                       7

<PAGE>

        15. Successors and Assigns.

             (a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Company which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.

             (b) Since the Company is contracting for the unique and personal
skills of the Executive, the Executive shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.

         16. Corporate Authority. Company represents and warrants that the
execution and delivery of this Agreement by it has been duly and properly
authorized by the Executive's Board of Directors and that when so executed and
delivered this Agreement shall constitute the lawful and binding obligation of
the Company.

         17. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

         18. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of New York shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

         19. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         20. Entire Agreement. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.

Witnessed by:                           NEWTEK CAPITAL, INC.

                                        By
------------------------                   -------------------------------
Secretary                                  Its
                                              ----------------------------

Witnessed by:

-------------------------                   ------------------------------
                                            Jeffrey Rubin

                                       8

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