National Securities Corporation
August 23, 2001




                               CLEARING AGREEMENT


     THIS  CLEARING  AGREEMENT,  dated as of this 23rd day of August  2001 (this
"Agreement") between FIRST CLEARING CORPORATION  (hereinafter referred to as the
"Clearing Firm") and NATIONAL SECURITIES  CORPORATION,  a Washington corporation
(hereinafter referred to as the "Introducing Firm"),

                                WITNESSETH THAT:

     WHEREAS, the Introducing Firm is desirous of availing itself of
clearing, execution and other services related to the securities business as
more fully set forth herein; and

     WHEREAS,  the  Clearing  Firm  desires  to extend  the  foregoing  types of
services to the Introducing Firm.

NOW THEREFORE,  in consideration  of the mutual covenants  hereinafter set forth
and  other  good and  valuable  consideration  the  receipt  of which is  hereby
acknowledged, the parties hereto hereby covenant and agree as follows:

I.       Services

         A.       Services to be Performed by the Clearing Firm
                  ---------------------------------------------

                (i)  The Clearing Firm shall execute orders for the  Introducing
                     Firm's  customers  whose cash or margin  accounts have been
                     accepted by Clearing Firm ("Introduced Accounts"), but only
                     insofar as such orders are  transmitted by the  Introducing
                     Firm to the Clearing  Firm.  For purposes of the Securities
                     Investor  Protection  Act of  1970,  as  amended,  and  the
                     broker-dealer financial responsibility rules promulgated by
                     the  Securities and Exchange  Commission  (the "SEC") under
                     the  Securities  Exchange  Act of  1934,  as  amended  (the
                     "SEA"),   the   Introducing   Firm's   customers  who  have
                     Introduced  Accounts  shall be  customers  of the  Clearing
                     Firm, and not of the Introducing Firm.

                (ii) The  Clearing  Firm shall  generate,  prepare  and,  to the
                     extent  mutually  agreed upon by the parties  hereto,  mail
                     confirmations  respecting each of the Introduced  Accounts.
                     Upon mutual  agreement of the parties hereto,  the Clearing
                     Firm  may  transmit  the  necessary   information  via  the
                     available  communication  facilities in order to effect the
                     printing   of   confirmations   at  the   location  of  the
                     Introducing Firm.

                (iii)The  Clearing  Firm  shall  prepare  and mail  the  summary
                     monthly statements (or quarterly  statements if no activity
                     in any Introduced Account occurs during any quarter covered
                     by such statement) to every Introduced Account.

                (iv) The Clearing Firm shall settle  contracts and  transactions
                     in securities (including options to buy or sell securities)
                     (i)  between  the  Introducing  Firm and other  brokers and

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                     dealers,   (ii)  between  the  Introducing   Firm  and  the
                     Introduced Accounts, and (iii) between the Introducing Firm
                     and  persons  other than the  Introduced  Accounts or other
                     brokers and dealers.

                (v)  The Clearing Firm shall engage in all cashiering  functions
                     for  the  Introduced   Accounts,   including  the  receipt,
                     delivery  and  transfer  of  securities  purchased,   sold,
                     borrowed and loaned,  receiving  and  distributing  payment
                     therefor, holding in custody and safekeeping all securities
                     and payments so received,  the handling of margin accounts,
                     the  receipt  and   distribution  of  dividends  and  other
                     distributions,  and  the  processing  of  exchange  offers,
                     rights offerings,  warrants,  tender offers and redemptions
                     only to the extent the Clearing Firm is timely  notified of
                     such  transactions  by the appropriate  third parties.  The
                     Clearing Firm shall not be responsible for errors caused by
                     such third parties with respect to such transactions.  Upon
                     mutual  agreement  of the parties  hereto,  the  cashiering
                     functions with respect to the receipt of securities and the
                     making and receiving  payment therefore may be relinquished
                     to  the  Introducing  Firm.  All  deposits  for  Introduced
                     Accounts,  which constitute  Individual  Retirement Account
                     contributions,  must be physically received by the Clearing
                     Firm (or  deposited  into the local  bank  deposit  account
                     established on behalf of the Introducing  Firm's  customers
                     pursuant  to this  Agreement)  on the date they are due, or
                     they  may be  rejected  by the  Clearing  Firm in its  sole
                     discretion).

                (vi) The Clearing Firm shall  construct  and maintain  books and
                     records of all transactions  executed or cleared through it
                     and  not  specifically  charged  to  the  Introducing  Firm
                     pursuant to the terms of this Agreement,  including a daily
                     record of required margin and other information required by
                     Rule 432(a) of the rules of the Board of  Governors  of the
                     New York Stock  Exchange,  Inc.  (the  "Rules"),  or by the
                     constitution,   articles  of  incorporation,   by-laws  (or
                     comparable  instruments)  or  rules,  regulations  or other
                     instruments  corresponding to the foregoing, and the stated
                     policies or practices of any other securities exchange (the
                     "Standards"),  including but not  otherwise  limited to any
                     national  securities  exchange  registered  under  the  SEA
                     ("National Securities Exchange") or the by-laws or rules of
                     the  National  Association  of  Securities  Dealers,   Inc.
                     ("NASD").

               (vii) The Clearing Firm shall report all transactions cleared and
                     settled  for  Introducing  Firm in Nasdaq NMS and Small Cap
                     securities,  and convertible bonds on behalf of Introducing
                     Firm in accordance with NASD rules governing the NASD Order
                     Audit Trail System  ("OATS").  The Clearing Firm represents
                     that it (a) is  familiar  with  OATS  rules  and  the  OATS
                     Reporting Technical Specifications;  (b) completed testing,
                     as  described  in the OATS  Technical  Specifications;  (c)
                     agrees  to make  reports  to OATS in  compliance  with OATS
                     rules  and  Technical  Specifications,  and any  subsequent
                     modifications  thereto; (d) agrees that the records of OATS

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                     data prepared on behalf of Introducing  Firm and maintained
                     by the Clearing  Firm is property of the  Introducing  Firm
                     and  shall  be  surrendered  upon  the  Introducing  Firm's
                     request; (e) agrees to permit examination of any records of
                     OATS  data  prepared  on  behalf  of  Introducing  Firm and
                     maintained by the Clearing Firm at any time or from time to
                     time during normal  business  hours by  representatives  of
                     NASD Regulation and to promptly  furnish to NASD Regulation
                     or its designee true, correct,  complete,  and current hard
                     copy  of  any of  these  records;  (f)  has  processes  and
                     procedures  reasonably  designed to ensure  compliance with
                     OATS  requirements;  and (g) agrees to promptly  notify the
                     Introducing   Firm  upon  the   occurrence  of  any  event,
                     including physical damage to the Clearing Firm's facilities
                     or legal proceedings involving the Clearing Firm that would
                     materially  affect the Clearing Firm's ability to make OATS
                     reports on behalf of Introducing  Firm. The Clearing Firm's
                     agreement  to  undertake   OATS   reporting  on  behalf  of
                     Introducing  Firm does not relieve  Introducing Firm of its
                     responsibilities  under OATS rules or Rules 17a-3 and 17a-4
                     under  the  SEA.  The  Clearing  Firm  may in its  sole and
                     absolute discretion,  upon ninety (90) days written notice,
                     stop performing OATS reporting on behalf of the Introducing
                     Firm, and this Agreement shall be deemed to have terminated
                     under  Section  K(iv) of Article XVII of this  Agreement if
                     and  when  the  Clearing  Firm  so  stops  performing  OATS
                     reporting.

             (viii)  Introducing  Firm  authorizes and directs the Clearing Firm
                     to  forward  promptly  any  written   customer   complaints
                     received by the Clearing  Firm  regarding  the  Introducing
                     Firm or any of its  associated  persons  relating to any of
                     the  functions  and   responsibilities   allocated  to  the
                     Introducing  Firm under  this  Agreement  directly  to: (a)
                     Introducing  Firm and (b) the Introducing  Firm's examining
                     authority  designated  under Section 17 of the SEA ("DEA").
                     In addition,  Introducing Firm acknowledges and understands
                     that the  Clearing  Firm is  required  to  notify  any such
                     customers in writing  that the  Clearing  Firm has received
                     the  written  complaint  and  that the  complaint  has been
                     forwarded  to the  Introducing  Firm  and  the  Introducing
                     Firm's DEA.

         B.       Services which shall not be Performed by the Clearing Firm
                  ----------------------------------------------------------

                  Unless otherwise agreed to in a writing executed by the
                  parties hereto, the Clearing Firm shall not engage in any of
                  the following services, nor be responsible for the same, on
                  behalf of the Introducing Firm:

                  (a)       Accounting,     bookkeeping    or     recordkeeping,
                            cashiering,  or any other  services  with respect to
                            any transaction other than securities transactions.

                  (b)       Preparation  of  the   Introducing   Firm's  payroll
                            records,  financial  statements  or any  analysis or
                            review  thereof  or  any   recommendation   relating
                            thereto.

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                  (c)       Preparation  or issuance of checks in payment of the
                            Introducing  Firm's  expenses,  other than  expenses
                            (incurred  by the  Clearing  Firm on  behalf  of the
                            Introducing Firm) pursuant to this Agreement.

                  (d)       Payment   of   commissions,    salaries   or   other
                            remuneration to the  Introducing  Firm's salesmen or
                            any other employees of the Introducing Firm.

                  (e)       Preparation  and filing of reports  (the  "Reports")
                            with the SEC, any state securities  commission,  any
                            National  Securities  Exchange,  or other securities
                            exchange  or  securities  association  or any  other
                            regulatory  or  self-regulatory  body or agency with
                            which the Introducing  Firm is associated  and/or by
                            which   it   is   regulated.   Notwithstanding   the
                            foregoing,  the Clearing Firm shall,  at the request
                            of the  Introducing  Firm,  furnish the  Introducing
                            Firm  with  any  necessary   information   and  data
                            contained  in books and records kept by the Clearing
                            Firm and not otherwise  reasonably  available to the
                            Introducing  Firm if such information is required in
                            connection   with  the  preparation  and  filing  of
                            Reports by the Introducing Firm.

                  (f)       Making and maintaining  reports and records required
                            to be kept by the  Introducing  Firm by the Currency
                            and Foreign  Transactions  Reporting Act of 1970 and
                            the regulations promulgated pursuant thereto, or any
                            similar  law  or  regulations   enacted  or  adopted
                            hereafter.

                  (g)       Obtaining and verifying new account information, and
                            insuring   that   such    information    meets   the
                            requirements  of Rule  405(1)  of the  Rules and any
                            other Laws,  Regulations or applicable  Standards as
                            defined herein.

                  (h)       Maintaining  a record of all personal and  financial
                            information  concerning any  Introduced  Account and
                            all  orders  received  therefrom,   and  maintaining
                            documents and  agreements  executed by an Introduced
                            Account.

                  (i)       Accepting  deposits from the Introducing Firm in the
                            form of coin or currency of the United States or any
                            other country.

II.      Clearing Charges

         A.   Incorporation  of  Appendix.  See  Appendix I attached  hereto and
              incorporated herein by reference.


         B.   No Contravention  of Laws and  Regulations.  In no event shall the
              fees  charged  in this  Article  II for the above  services  be in
              contravention of the Securities Act of 1933, as amended,  the SEA,
              the Investment Advisers Act of 1940, as amended,  and the Employee
              Retirement  Income Security Act of 1974, as amended,  or any rules
              or regulations  thereunder,  or any other law, rule or regulation,
              federal,  state  or  local,  or any  constitution,  by-law,  rule,
              regulation or instrument corresponding to the foregoing, or stated
              policy,  rule or practice of any National  Securities  Exchange or

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<PAGE>

              other  securities  exchange or association or other  regulatory or
              self-regulatory  body or agency ("Laws and  Regulations").  In the
              event  that such fees are  deemed  by the  Clearing  Firm to be in
              contravention of the Laws and Regulations,  they shall be replaced
              with  fees  mutually  agreed  upon by the  Clearing  Firm  and the
              Introducing Firm.

III.     Interest

         Interest income earned through charges on debit balances in any
         Introduced Account shall be proprietary to and fully retained by the
         Clearing Firm. No interest shall be paid or credit given for any credit
         balances which from time to time may be left on deposit with the
         Clearing Firm, unless otherwise mutually agreed upon by the Clearing
         Firm and the Introducing Firm as noted in Appendix I.

IV.      Notations on Statements and Confirmations

         The Clearing Firm shall carry all Introduced Accounts in the name of
         the Introducing Firm's customer, with a notation on its books and
         records and on all monthly or quarterly statements, and confirmation
         that such Introduced Accounts were introduced by the Introducing Firm.
         The role of the Clearing Firm is to perform only the clearing functions
         and related services expressly set forth herein, and the Introducing
         Firm shall continue as broker for the Introduced Accounts. Inadvertent
         omission of such notations shall not be deemed to constitute a breach
         of this Agreement. Copies of the forms covering all of the foregoing
         shall be furnished by the Clearing Firm to the Introducing Firm.

V.       Opening of Accounts

         A.   At the  time  of the  opening  of  each  Introduced  Account,  the
              Introducing   Firm  shall  furnish  the  Clearing  Firm  with  all
              financial  and personal  information  concerning  such  Introduced
              Accounts as the Clearing Firm may reasonably require including but
              not limited to the tax  identification  number for each Introduced
              Account.  At the time of the opening of  Introduced  Accounts that
              are  margin  accounts,  the  Introducing  Firm shall  furnish  the
              Clearing Firm with executed customers'  agreements,  hypothecation
              agreements and consents to loans of securities (collectively,  the
              "margin agreement"). With respect to Introduced Accounts which are
              Individual  Retirement Accounts for which the Clearing Firm serves
              as   custodian,   the   Introducing   Firm  shall   furnish   such
              documentation  and  information as may be required by the Clearing
              Firm.  The Clearing  Firm shall supply the  Introducing  Firm with
              "new account" and margin agreement forms regarding margin accounts
              in sufficient quantities.  If any Introduced Account may have been
              opened  without the Clearing Firm having  previously  received the
              foregoing information or, in the case of a margin account, without
              the Clearing Firm having  previously  received  properly  executed
              margin  agreements,  failure of the Clearing  Firm to receive such
              information  or  margin  agreements  shall  not be  deemed to be a
              waiver  of the  information  requirements  set forth  herein.  The
              Introducing  Firm shall make and maintain copies of all agreements
              executed by or related to Introduced  Accounts,  including but not
              limited to tax identification number and appropriate certification

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<PAGE>

              thereof.  Upon the  written  and/or oral  request of the  Clearing
              Firm,  the  Introducing  Firm shall furnish the Clearing Firm with
              any other  documents  and  agreements  executed by the  Introduced
              Account on forms which shall be supplied by the  Clearing  Firm in
              sufficient  quantities and which may reasonably be required by the
              Clearing  Firm  in  connection  with  the  opening,  operating  or
              maintaining of Introduced Accounts.  The Clearing Firm may, at its
              option,  mail margin agreements and/or option agreements  directly
              to the Introduced  Accounts upon  notification  to the Introducing
              Firm and/or require  completion of its own margin agreement or new
              account form and, if required,  option  account  agreement  for an
              Introduced  Account.  The Introducing  Firm shall promptly provide
              the Clearing Firm with basic data and copies of documents relating
              to each of the Introduced Accounts,  including,  but not otherwise
              limited to,  copies of records of any  receipts of the  Introduced
              Accounts'  funds  and/or  securities   received  directly  by  the
              Introducing  Firm,  as shall be necessary for the Clearing Firm to
              discharge its service obligations under this Agreement.

         B.   All  transactions  in any Introduced  Account are to be considered
              cash  transactions  until  such  time  as the  Clearing  Firm  has
              received margin  agreements,  duly and validly executed in respect
              of such Introduced Account.  Nevertheless, it is intended that the
              Introducing  Firm shall obtain executed margin  agreements  within
              fifteen (15) days after the opening of  Introduced  Accounts  that
              are margin  accounts.  In the event that the Clearing Firm has not
              received an executed margin  agreement within fifteen (15) days of
              opening,  the Clearing Firm has the right to place  limitations on
              the  trading  of the  account,  including,  but  not  limited  to,
              restricting  the account to a cash basis.  In the event  credit is
              inadvertently  extended with respect to such Introduced  Accounts,
              the  Introducing  Firm shall  indemnify and hold the Clearing Firm
              harmless from and against all loss,  liability,  damage,  cost and
              expense (including, but not otherwise limited to fees and expenses
              of legal counsel arising therefrom);  provided,  however,  that if
              the Clearing Firm is the cause of such an inadvertent extension of
              credit,  the Clearing Firm shall share with the Introducing  Firm,
              on a  reasonable  basis,  the  costs  and  expenses  for which the
              Introducing  Firm is required by this  sentence to  indemnify  and
              hold harmless the Clearing Firm.

         C.   At the  time of the  opening  of any  agency  Introduced  Account,
              including  any  account for which the  Introducing  Firm is acting
              pursuant to  discretionary  authority or a power of attorney,  the
              Introducing Firm shall obtain  appropriate  written authority from
              the Introduced Account and upon request shall furnish the Clearing
              Firm with the name of any principal for whom the Introducing  Firm
              is acting as agent, and written  evidence of such authority.  With
              respect to Delivery vs. Payment Accounts, it is the responsibility
              of the  Introducing  Firm to obtain a written  assurance  from the
              client that all trades shall be settled  pursuant to Section 64 of
              the NASD  Uniform  Practices  Code and Section 387 of the New York
              Stock Exchange ("NYSE").

         D.   The   Introducing   Firm  shall   have  the  sole  and   exclusive
              responsibility  for  compliance  with Rule 405(3) of the Rules and
              shall  specifically  approve the opening of any new account before
              forwarding  such  account  to the  Clearing  Firm  as a  potential
              Introduced Account.  The Clearing Firm, in its reasonable business

                                      -6-
<PAGE>

              judgment,  reserves  the right to  reject  any  account  which the
              Introducing  Firm may tender to the  Clearing  Firm as a potential
              Introduced  Account  within five (5) business days of such tender.
              The Clearing Firm also reserves the right to terminate any account
              previously  accepted  by it  as an  Introduced  Account  five  (5)
              business days after giving written notice to the Introducing  Firm
              of the  Clearing  Firm's  intention to  terminate  the  Introduced
              Account.

         E.   Pursuant to written notification  received by the Introducing Firm
              and forwarded to the Clearing Firm, any account of the Introducing
              Firm may  choose to reject the  services  to be  performed  by the
              Clearing Firm pursuant to this Agreement and thus choose not to be
              serviced as an Introduced  Account  pursuant  hereto.  Upon notice
              from  another  member  organization  that  an  Introduced  Account
              intends to transfer his account  thereto,  the Clearing Firm shall
              expedite  such  transfer  and  shall  have the sole and  exclusive
              responsibility for compliance with Rule 412 of the Rules.

         F.   It  shall  be  the  sole  and  exclusive   responsibility  of  the
              Introducing Firm to make every reasonable  effort to ascertain the
              essential  facts relative to any Introduced  Account and any order
              therefor,  in compliance with Rule 405(1) of the Rules,  including
              but not  otherwise  limited to  ascertaining  the authority of all
              orders  for  Introduced  Accounts,  and  the  genuineness  of  all
              certificates,  papers and signatures  provided by each  Introduced
              Account.  Any investment advice furnished to an Introduced Account
              shall be the sole and exclusive  responsibility of the Introducing
              Firm.

         G.   The Introducing  Firm shall be solely and exclusively  responsible
              for the handling and supervisory review of any Introduced Accounts
              over which the Introducing Firm's partners,  officers or employees
              have discretionary authority, as required by Rule 408 of the Rules
              and any other  applicable  Laws and  Regulations.  The Introducing
              Firm shall furnish the Clearing Firm with such  documentation with
              respect  thereto as may be  requested by the  Clearing  Firm.  The
              Introducing  Firm hereby agrees to indemnify and hold the Clearing
              Firm  harmless  against  any loss,  liability  (including  but not
              otherwise limited to liability as to controlling persons and other
              liability  pursuant  to  Section 20 of the SEA),  damage,  cost or
              expense  (including but not otherwise limited to fees and expenses
              of legal  counsel)  suffered  or  incurred  by the  Clearing  Firm
              directly or  indirectly as a result of any  liabilities  or claims
              arising from the exercise by the  Introducing  Firm, its partners,
              officers or employees of  discretionary  authority over Introduced
              Accounts. The Introducing Firm hereby warrants that with regard to
              any  order or  instructions  given by the  Introducing  Firm  with
              respect to such discretionary accounts, its partners,  officers or
              employees shall have been fully and properly  authorized  relative
              thereto  and that the  execution  of such  orders  shall not be in
              violation   of  the  Laws  and   Regulations.   Furthermore,   the
              Introducing  Firm hereby agrees to indemnify and hold the Clearing
              Firm  harmless  against  any loss,  liability  (including  but not
              otherwise limited to liability as to controlling persons and other
              liability  pursuant  to  Section 20 of the SEA),  damage,  cost or
              expense  (including but not otherwise limited to fees and expenses
              of legal  counsel)  suffered  or  incurred  by the  Clearing  Firm

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<PAGE>

              directly  or   indirectly  as  a  result  of  any  breach  of  the
              Introducing  Firm's said  warranty.  The  Introducing  Firm hereby
              agrees and warrants  that it shall  maintain  appropriate  blanket
              brokers bond insurance  policies  covering any and all acts of its
              employees,  agents and partners,  each of which  policies shall by
              rider name the Clearing Firm as a loss payee  thereunder and shall
              be  adequate to fully  protect and  indemnify  the  Clearing  Firm
              against any loss,  liability  (including but not otherwise limited
              to  liability  as  to  controlling  persons  and  other  liability
              pursuant  to  Section  20 of the  SEA),  damage,  cost or  expense
              (including but not otherwise limited to fees and expenses of legal
              counsel) which the Clearing Firm may suffer or incur,  directly or
              indirectly,  as a result of any act or omission of the Introducing
              Firm's  employees,  agents or  partners.  Each such  policy  shall
              further  include  a rider  that it may be  cancelled,  and  that a
              material provision thereof may be modified,  only upon thirty (30)
              days' prior written notice to the Clearing Firm.

         H.   The   Introducing   Firm  shall   have  the  sole  and   exclusive
              responsibility  for the  handling  and  supervisory  review of any
              Introduced  Account  for an  employee  or  officer  of any  member
              organization,  self-regulatory organization,  bank, trust company,
              insurance company or other organization  engaged in the securities
              business,  and for compliance  with Rule 407 of the Rules relating
              thereto. The Introducing Firm shall furnish the Clearing Firm with
              such documentation with respect thereto as may be requested by the
              Clearing Firm.

         I.   The   Introducing   Firm  shall   have  the  sole  and   exclusive
              responsibility  to insure that those of its  customers  who become
              Introduced  Accounts under this  Agreement  shall not be minors or
              subject  to  those  prohibitions   existing  under  the  Laws  and
              Regulations generally relating to the incapacity of any Introduced
              Account or any  conflict of interest  relating to such  Introduced
              Account.

         J.   The Introducing  Firm shall be solely and exclusively  responsible
              for the loss,  liability,  damage,  cost or expense (including but
              not  otherwise  limited  to fees and  expense  of  legal  counsel)
              sustained  or  incurred  by  either  the  Introducing  Firm or the
              Clearing  Firm,  arising out of or  resulting  from any orders the
              Introducing  Firm has taken from Introduced  Accounts  residing or
              being domiciled in  jurisdictions in which the Introducing Firm or
              its  representatives  have not been or are no longer authorized or
              registered to do business.

         K.   It  shall  be  the  sole  and  exclusive   responsibility  of  the
              Introducing  Firm to comply with any and all  prospectus  delivery
              requirements  in connection  with  Introduced  Accounts  which are
              option accounts.

         L.   In addition to the previous requirements for opening accounts, the
              following  conditions  govern  the  conversion  of the  Introduced
              Accounts of Introducing  Firm, and all positions in such accounts,
              from the clearing firm which had previously  cleared such accounts
              for  Introducing  Firm  to the  Clearing  Firm  pursuant  to  this
              Agreement  ("Conversion").  The  date as of  which  Conversion  is
              completed shall  hereinafter be called the "Conversion  Date." The
              Introducing Firm shall obtain from such customers  executed copies
              of the  Clearing  Firm's  Margin  and  Automatic  Cash  Investment
              Agreements  (and such other  agreements  which the  Clearing  Firm

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<PAGE>

              shall reasonably require in connection with Conversion).  Further,
              the  Introducing  Firm certifies and warrants with respect to such
              converted Introduced Accounts that it has obtained with respect to
              each Introduced Account the correct taxpayer identification number
              for the Introduced  Account to the extent required by Section 3406
              of the  Internal  Revenue  Code  of  1986,  as  amended,  and  the
              regulations  thereunder together with the certifications  required
              by such Section 3406 and the regulations thereunder.  The Clearing
              Firm  agrees  to work  diligently  and in good  faith to  complete
              Conversion  within  ninety (90) days after August 23, 2001,  which
              shall be the  effective  date of this  Agreement  (the  "Effective
              Date"). The Introducing Firm agrees to cooperate diligently and in
              good faith with the  Clearing  Firm to  complete  Conversion.  The
              Introducing  Firm shall  indemnify the Clearing Firm for any loss,
              liability,  damage,  cost or expense (including but not limited to
              fees and  expenses of legal  counsel)  sustained  or incurred as a
              result  of  the   Introducing   Firm's   failure  to  fulfill  its
              obligations  under this Section L. The Clearing Firm shall provide
              the  Introducing  Firm sufficient  quantities of such  Agreements.
              Unless  specifically  requested to the contrary by Clearing  Firm,
              Introducing  Firm shall  provide  Clearing Firm with copies of all
              Introduced Accounts' taxpayer identification number certifications
              immediately upon Conversion.

         M.   Clearing Firm Acting as Executing Broker

              If the Clearing  Firm agrees in its sole  discretion  to act as an
              "Executing  Broker"  as such term is  understood  in that  certain
              letter  dated  January  25,  1994  from  the  Division  of  Market
              Regulation  of the SEC,  as the same may be  amended,  modified or
              supplemented from time to time (the "No-Action Letter"),  then all
              terms  herein  shall  have the same  meaning as  ascribed  thereto
              either in this  Agreement or in the No-Action  Letter as the sense
              thereof shall require.

              The Clearing Firm may, from time to time, execute trades for Prime
              Brokerage  Accounts in  compliance  with the  requirements  of the
              No-Action Letter. The No-Action Letter requires,  inter alia, that
              a contract be executed  between the Executing Broker and the Prime
              Broker and the Prime Broker and Prime Brokerage  Customer prior to
              the transaction of any business under this Agreement.  Introducing
              Broker agrees to arrange for  execution by the Prime  Broker,  and
              the Prime  Brokerage  Customer,  of any contracts  prepared by and
              provided by the Clearing Broker.

              Introducing  Broker shall promptly  notify  Clearing Broker of any
              trades to be cleared under this Agreement,  and such  notification
              shall be given not later than 5:00 p.m.  Eastern  standard time on
              the day when the trade was executed on an exchange or other market
              (the  "Trade  Date").  Notification  shall be given in a  mutually
              acceptable fashion, in sufficient detail for Clearing Broker to be
              able to report and  transfer  any trade  executed  by  Introducing
              Broker on behalf of a Prime  Brokerage  Account to the appropriate
              Prime Broker.

              Introducing  Broker  understands  and agrees that if Prime  Broker
              shall  disaffirm or "DK" any trade executed by Introducing  Broker
              on behalf of a Prime Brokerage  Account,  Introducing Broker shall
              open an account for such Prime  Brokerage  Account in its range of

                                      -9-
<PAGE>

              accounts  and shall  transfer or deliver the trade to such account
              at the risk and expense of  Introducing  Broker to the same extent
              as for any account  introduced by Introducing  Broker  pursuant to
              this Agreement.

              Introducing Broker understands and agrees that all Prime Brokerage
              Accounts shall be conducted in accordance with the requirements of
              the   No-Action   Letter  and  any  relevant   agreement   between
              Introducing  Broker  and a Prime  Brokerage  Customer,  or between
              Clearing Broker and the relevant Prime Broker.  Introducing Broker
              further agrees to supply  Clearing  Broker with such documents and
              information  which, from time to time, may be required by Clearing
              Broker to carry out the intention of this Section M.

              Introducing  Broker  agrees  that it  "shall  know its  customer,"
              obtain  appropriate  documentation,  including new account  forms,
              conduct its own credit check with  respect to the Prime  Brokerage
              Customer,  and determine the  availability of shares for any short
              sales.  Introducing  Broker  shall make  arrangements,  by written
              contract, for the clearance of any disaffirmed trades.

         N.   Clearing Firm Acting as Prime Broker

              If, in its sole discretion,  the Clearing Broker agrees to act, in
              accordance  with the  requirements of the No-Action  Letter,  as a
              Prime Broker on behalf of the Introducing Broker or on behalf of a
              customer of the Introducing  Broker (the "Prime Broker Customer"),
              the Prime  Broker  Customer  agrees to execute  and comply  with a
              separate Customer Prime Broker Agreement provided for execution by
              the Clearing Broker, which is incorporated by reference herein. In
              addition,  the Introducing Broker shall execute,  or shall arrange
              for its Prime Broker  Customer,  to execute,  any other  documents
              required by the Clearing Broker,  or by the No-Action  Letter,  in
              order to carry out the  intention of this Article or shall provide
              any information which may be required in that connection either by
              the Clearing Broker or by the No-Action Letter.

VI.      Financial Responsibility

         A.   Hypothecation of Customer Securities

              Clearing Firm shall maintain possession and control of Introducing
              Firm's  customer  funds  and  securities  in  accordance  with the
              broker-dealer financial responsibility rules promulgated under the
              SEA and  other  applicable  laws,  rules  or  regulations.  Within
              limitations  imposed by applicable  laws,  rules and  regulations,
              securities and other property in Introducing  Firm's  customer and
              proprietary  accounts may be pledged and  hypothecated by Clearing
              Firm  from  time to time,  without  notice  to  Introducing  Firm.
              Clearing  Firm may do so without  retaining in its  possession  or
              under its control for delivery a like amount of similar securities
              or other property.

                                      -10-
<PAGE>

         B.       PAIB Reserve Computation

          (i)        The  Clearing  Firm  agrees to  perform a  computation  for
                     Proprietary  Accounts of  Introducing  Firm  assets  ("PAIB
                     reserve  computation")  in  accordance  with  the  customer
                     reserve  computation  set forth in Rule  15c3-3  ("customer
                     reserve formula") modified as follows:

                     (a)    Any credit  (including a credit  applied to reduce a
                            debit)  that is  included  in the  customer  reserve
                            formula  cannot be  included as a credit in the PAIB
                            reserve computation;

                     (b)    Note  E(3)  to  Rule  15c3-3a  which  reduces  debit
                            balances   by  1%  under   the  basic   method   and
                            subparagraph  (a)(1)(ii)(A) of Rule 15c3-1 under the
                            SEA which  reduces  debit  balances  by 3% under the
                            alternative method shall not apply; and

                     (c)    Neither   Note  E  (1)  to  Rule  15c3-3a  nor  NYSE
                            Interpretation  /04  to  Item  10  of  Rule  15c3-3a
                            regarding   securities   concentration   charges  is
                            applicable to the PAIB reserve computation.

          (ii)       Clearing  Firm agrees  that all PAIB  assets  shall be kept
                     separate  and  distinct  from  customer  assets  under  the
                     customer reserve formula in Rule 15c3-3;

          (iii)      Clearing  Firm  agrees  that the PAIB  reserve  computation
                     shall be  prepared  within  the same  time  frames as those
                     prescribed by Rule 15c3-3 for the customer reserve formula;

          (iv)       Clearing  Firm agrees to establish  and maintain a separate
                     "Special  Reserve  Account  for the  Exclusive  Benefit  of
                     Customers"  with a bank in conformity with paragraph (f) of
                     Rule 15c3-3 ("PAIB Reserve Account"). Cash and/or qualified
                     securities as defined in the customer  reserve formula must
                     be maintained in the PAIB reserve requirement;

          (v)        Clearing Firm and  Introducing  Firm agree that if the PAIB
                     reserve computation results in a deposit  requirement,  the
                     requirement  can be  satisfied  to the extent of any excess
                     debit in the customer reserve formula on the same date;

          (vi)       Introducing  Firm agrees that  commissions  receivable  and
                     other  receivables of Introducing Firm (excluding  clearing
                     deposits)  that are otherwise  allowable  assets under Rule
                     15c3-1   shall  not  be  included   in  the  PAIB   reserve
                     computation,  and to identify  them as  receivables  on the
                     books and  records of  Introducing  Firm and as payables on
                     the books of Clearing Firm;

          (vii)      Clearing   Firm  and   Introducing   Firm  agree  that  the
                     proprietary   account  of   Introducing   Firm  that  is  a
                     guaranteed  subsidiary of a clearing firm or who guarantees
                     a clearing  firm is to be  excluded  from the PAIB  reserve
                     computation; and


                                      -11-
<PAGE>

          (viii)     Introducing Firm understands and agrees that upon discovery
                     that any deposit made to the PAIB  Reserve  Account did not
                     satisfy its deposit requirement, the Clearing Firm shall by
                     facsimile  or telegram  immediately  notify its  designated
                     examining  authority,  the SEC and  the  Introducing  Firm.
                     Unless a corrective plan is found acceptable by the SEC and
                     the  designated  examining  authority,  Clearing Firm shall
                     provide written  notification within five (5) business days
                     of the date of  discovery  to  Introducing  Firm  that PAIB
                     assets held by Clearing Firm shall not be deemed  allowable
                     assets for net capital purposes.  These assets shall become
                     non-allowable  on the  last  day of  the  subsequent  month
                     unless the deposit requirement with respect to those assets
                     is satisfied.

     VII.     Concentration of Positions

              Introducing  Firm shall ensure that its net aggregate  proprietary
              and customer positions for any particular security (and/or options
              or  warrants  thereon)  ("net  aggregate  position  of  Introduced
              Accounts") carried by the Clearing Firm for Introducing Firm shall
              not  exceed  such   limits  as  may  be  set  by   Clearing   Firm
              ("concentration limits") in a schedule of concentration limits, as
              amended by  Clearing  Firm from time to time and  communicated  in
              writing to the Introducing Firm. The Clearing Firm may at any time
              refuse to execute,  clear and/or  settle  transactions  that would
              otherwise  increase the Introducing  Firm's net aggregate position
              of Introduced  Accounts in excess of the applicable  concentration
              limit.  The  Clearing  Firm  also  may at  any  time  require  the
              Introducing  Firm to promptly take steps to reduce the Introducing
              Firm's net  aggregate  position of Introduced  Accounts  below the
              applicable concentration limit. If such position is not so reduced
              by the  Introducing  Firm in a timely  manner as determined by the
              Clearing Firm and promptly  communicated to the Introducing  Firm,
              the Clearing Firm in its sole and absolute  discretion and without
              further notice,  is authorized to sell or otherwise dispose of (in
              the  case  of a net  aggregate  long  position),  or  purchase  or
              otherwise  acquire (in the case of a net aggregate short position)
              such securities  (and/or options or warrants thereon) in an amount
              and manner  sufficient  to reduce the net  aggregate  position  of
              Introduced  Accounts  below the  applicable  concentration  limit.
              Introducing  Firm agrees to indemnify  and hold the Clearing  Firm
              harmless  from and against any loss,  liability,  damage,  cost or
              expense,  penalties or taxes, (including but not otherwise limited
              to fees and expenses of legal counsel) arising out of or resulting
              from  Introducing  Firm's failure to comply with the terms of this
              Article VII.

VIII.    Transactions and Margin

         A.          It is understood  that with respect to Introduced  Accounts
                     which are margin  accounts the Clearing Firm is responsible
                     for compliance with  Regulation T, 12 C.F.R.  Part 220, the
                     federal  margin  regulation  promulgated  by the  Board  of
                     Governors of the Federal Reserve System (the "Board"),  and
                     any  interpretive  ruling  issued by the Board,  and letter
                     rulings of the Federal Reserve Bank of New York,  Rules and
                     Interpretations of the NYSE and any other applicable margin
                     and  margin  maintenance   requirements  of  the  Laws  and
                     Regulations.  The  Introducing  Firm is  responsible to the
                     Clearing Firm for the collection of the margin  required to
                     support each  transaction  for, and to maintain  margin in,
                     each  Introduced  Account,  in  conformity  with the  above
                     margin  and  margin  maintenance  requirements.  After such

                                      -12-
<PAGE>

                     initial  margin  on each  transaction  has  been  received,
                     maintenance margin calls shall be generated by the Clearing
                     Firm and made by the Clearing Firm. The Clearing Firm shall
                     have the  right to  modify,  in its  sole  discretion,  any
                     margin  requirements of any Introduced Account from time to
                     time so that the  Clearing  Firm  may  call for  additional
                     margin.  Therefore,  the  Clearing  Firm  shall be the sole
                     judge as to the  amount  of margin  to be  required  of and
                     maintained by Introduced Accounts,  which may be imposed by
                     security or specific Introduced Accounts and need not be of
                     general application. The Clearing Firm shall impose no fees
                     on the  Introducing  Firm,  other  than any fees or charges
                     imposed directly by a regulatory body with regard to margin
                     extensions granted by the Clearing Firm pursuant to written
                     requests from a principal of the Introducing Firm.

         B.          Subject to Article XIII of this Agreement,  the Introducing
                     Firm shall be solely  and  exclusively  responsible  to the
                     Clearing Firm on all transactions for any loss,  liability,
                     damage,  cost  or  expense  (including  but  not  otherwise
                     limited to fees and expenses of legal counsel)  incurred or
                     sustained by the Introducing Firm or the Clearing Firm as a
                     result of the  failure  of any  Introduced  Account to make
                     timely payment for the securities purchased by it or timely
                     and good  delivery  of  securities  sold for it,  or timely
                     compliance  by it with margin or margin  maintenance  calls
                     (provided  that the Clearing  Firm has timely  issued under
                     its  then  current  policies  such  call and  given  notice
                     thereof to the Introducing Firm), whether or not any margin
                     extensions  have been granted by the Clearing Firm pursuant
                     to the  request of the  Introducing  Firm,  except  that no
                     interest  shall be  charged by the  Clearing  Firm for cash
                     shorts in Introduced Accounts.  The Introducing Firm agrees
                     to be solely and  exclusively  responsible  to the Clearing
                     Firm for any loss or liability  whatsoever should any check
                     or  draft  given  to  the  Clearing  Firm  by  any  of  the
                     Introduced  Accounts  be  returned  to  the  Clearing  Firm
                     unpaid.  The  Introducing  Firm  furthermore  agrees  to be
                     solely and  exclusively  responsible  for the  payment  and
                     delivery  of  all  "when  issued"  or  "when   distributed"
                     transactions which the Clearing Firm may accept, forward or
                     execute for Introduced Accounts.

         C.          On  all   over-the-counter   transactions   for  Introduced
                     Accounts,  the Introducing  Firm shall furnish the Clearing
                     Firm  with  the  names  of the  respective  purchasing  and
                     selling  broker/dealers  (except as  otherwise  provided in
                     Section D of this Article VIII,  as set forth  below),  the
                     names of the  purchasing  and  selling  customers,  and the
                     wholesale and retail purchase and sale prices and any other
                     information required by the Clearing Firm.

         D.          Should   the   Introducing   Firm   give  an  order  in  an
                     over-the-counter  security  to the  Clearing  Firm  and the
                     counter  party is left to the Clearing  Firm's  discretion,
                     the Clearing Firm shall assume the responsibility of paying
                     the  Introducing  Firm  that  which the  counter  party has
                     failed to pay pursuant to the over-the-counter  transaction
                     ("del credere risk"). In case the Introducing Firm executes
                     its own  over-the-counter  order or designates  the counter
                     party,  it  shall  be  understood  that  in the  event  the
                     over-the-counter  dealer  with  whom the  Introducing  Firm
                     dealt or whom it designated fails to live up to its part of

                                      -13-
<PAGE>

                     the transaction,  the Introducing Firm shall assume the del
                     credere risk and  reimburse  the Clearing Firm for any loss
                     sustained thereby.

         E.          The  Introducing  Firm  shall  be  solely  and  exclusively
                     responsible  for  approving  all orders for the  Introduced
                     Accounts  and for  establishing  procedures  to insure that
                     such  approved  orders  are  transmitted  properly  to  the
                     Clearing  Firm for  execution.  The Clearing  Firm,  in its
                     reasonable business judgement, reserves the right to reject
                     any order which the  Introducing  Firm may  transmit to the
                     Clearing Firm for execution.

         F.          The  Introducing  Firm  shall  be  solely  and  exclusively
                     responsible  for the  supervisory  review of all orders for
                     the  Introduced  Accounts  and shall insure that any orders
                     and instructions given by it or any of its employees to the
                     Clearing Firm pursuant to the terms of this Agreement shall
                     have been properly authorized in advance.

         G.          The  Introducing  Firm  shall  be  solely  and  exclusively
                     responsible  for sales  and  purchases  for the  Introduced
                     Accounts that may create or result in a violation of any of
                     the Laws and Regulations, Rules or Standards.

         H.          All  transactions  pursuant to the Terms of this  Agreement
                     shall  be  subject  to the  constitution,  rules,  by-laws,
                     regulations,  stated policies,  practices,  and customs and
                     any  modifications   thereof  of  any  National  Securities
                     Exchange  or other  securities  exchange  or market and its
                     clearing house,  if any, where  executed,  and the Laws and
                     Regulations.  It is understood  that the  Introducing  Firm
                     assumes sole and exclusive  responsibility  for  compliance
                     with the Laws and Regulations in the same manner and to the
                     same degree as if the Introducing  Firm were performing the
                     services  for  the  Introduced   Accounts  that  have  been
                     performed by the Clearing Firm pursuant to this  Agreement,
                     except  insofar  as the  Clearing  Firm  may,  pursuant  to
                     Section D of this Article VIII, as set forth above,  select
                     the counter party to a particular transaction.

         I.          All  Transactions  hereto between the Introducing  Firm and
                     the  Clearing  Firm with  respect to orders given by or for
                     the  Introduced  Accounts and cleared  through the Clearing
                     Firm shall be subject to the provisions of this Agreement.

IX.      Supervisory Responsibility

         A.          The  Introducing  Firm  shall  have the sole and  exclusive
                     responsibility  for the review of all Introduced  Accounts,
                     including an introduced  IRA account for which the Clearing
                     Firm  serves  as  custodian,  and for  compliance  with any
                     supervisory  responsibility under Rule 405(2) of the Rules,
                     including  but not otherwise  limited to matters  involving
                     the  investments  made  by  the  Introduced  Accounts,  the
                     reasonable  basis for  recommendations  made to  Introduced
                     Accounts,  and the frequency of trading in the Introductory
                     Accounts,  whether or not such  transactions are instituted
                     by the  Introducing  Firm,  its partners,  employees or any
                     registered investment advisor.


                                      -14-
<PAGE>

         B.         The  Introducing  Firm and the Clearing  Firm shall each be
                     responsible for compliance with any supervisory  procedures
                     under  Rules 342 and 351 of the Rules  and,  to the  extent
                     applicable,   any   other   provisions   of  the  Laws  and
                     Regulations,   including  but  not  otherwise   limited  to
                     supervising the activities and training of their respective
                     registered  representatives,  as well as all of their other
                     respective   employees  in  the  performance  of  functions
                     specifically  allocated  to them  pursuant  to the terms of
                     this Agreement.

         C.          Introducing Firm shall maintain  compliance and supervisory
                     procedures  which are  adequate to assure  compliance  with
                     restricted/control stock requirements.


X.       Information to be Provided by the Introducing Firm

         A.          The  Introducing  Firm shall provide the Clearing Firm with
                     copies of all  financial  information  and reports filed by
                     the Introducing Firm with the NYSE (if a member), the NASD,
                     the SEC, and any other National  Securities Exchange (where
                     a member)  (including but not otherwise  limited to monthly
                     and quarterly  Financial and Operational  Combined  Uniform
                     Single Reports,  i.e.,  "FOCUS" Reports)  simultaneous with
                     the filing therewith.

         B.          The Introducing Firm shall submit to the Clearing Firm on a
                     monthly basis or, if so requested by the Clearing  Firm, at
                     more frequent  intervals,  information and reports relating
                     to the Introducing  Firm's financial  integrity,  including
                     but not  otherwise  limited to  information  regarding  the
                     Introducing  Firm's  aggregate  indebtedness  ratio and net
                     capital.

         C.          The  Introducing  Firm shall provide the Clearing Firm with
                     all  appropriate  data in its  possession  pertinent to the
                     proper  performance  and  supervision  of any  function  or
                     responsibility  specifically allocated to the Clearing Firm
                     pursuant to the terms of this Agreement.

         D.          The  Introducing  Firm shall provide the Clearing Firm with
                     any   amendment  or  supplement  to  the  Form  BD  of  the
                     Introducing Firm.

XI.      Information to be Provided by the Clearing Firm

         A.          The Clearing Firm shall provide the  Introducing  Firm with
                     all  appropriate  data in its  possession  pertinent to the
                     proper   performance   and   supervision  of  any  function
                     specifically  allocated to the Introducing Firm pursuant to
                     the terms of this Agreement.

         B.          No later than December 31, 2001, and thereafter  within ten
                     (10) business days prior to each  anniversary of such date,
                     Clearing Firm shall provide Introducing Firm with a list or
                     description  of all reports  (exception  and other types of
                     reports) which Clearing Firm offers to Introducing  Firm to
                     assist  Introducing Firm in supervising  Introducing Firm's
                     activities, monitoring Introducing Firm's customer accounts
                     and carrying out its functions and  responsibilities  under
                     the Clearing Agreement.  After receipt of this information,
                     Introducing Firm agrees to promptly notify Clearing Firm in
                     writing of the specific  reports  offered by Clearing  Firm

                                      -15-
<PAGE>

                     that Introducing Firm requires to supervise and monitor its
                     customer accounts.

         C.

                     As part of its  books  and  records,  Clearing  Firm  shall
                     retain  copies of the reports  requested  by or provided to
                     Introducing  Firm  by  Clearing  Firm  (or   alternatively,
                     Clearing  Firm may retain the data from which such original
                     report  was  produced  and at the  request  of  Introducing
                     Firm's DEA, Clearing Firm can either recreate the report or
                     provide the data and the data  formatting  that was used by
                     Clearing Firm to prepare the report).

         D.

                     Each  year,  no later  than July 31,  Clearing  Firm  shall
                     provide written notification to the chief executive officer
                     and chief  compliance  officer of Introducing  Firm (with a
                     copy of such notification to the Introducing Firm's DEA) of
                     the  reports  offered  by  Clearing  Firm  and the  reports
                     requested by or supplied to Introducing Firm as of the date
                     of such notification.

XII.     Customer Notification and Correspondence

         A.

                     The  Introducing  Firm  shall  be  solely  and  exclusively
                     responsible  for  informing  its  customers  in  a  written
                     correspondence,  the form and  substance  of which shall be
                     mutually agreed upon,  prior to the Conversion  Date, as to
                     the  general  nature of the  services to be provided by the
                     Clearing Firm  pursuant to this  Agreement and the right of
                     such customers to reject the services provided herein.  Any
                     new customers of the Introducing  Firm shall be so informed
                     on or  about  the date  such  customers  become  Introduced
                     Accounts by the Clearing Firm.

         B.

                     The Introducing Firm shall inform its customers pursuant to
                     such  written   correspondence   that  all   inquiries  and
                     correspondence  should be directed to the Introducing Firm.
                     All customer correspondence shall be reviewed and responded
                     to by the party  responsible for the specific area to which
                     the inquiry or complaint  relates  pursuant to the terms of
                     this  Agreement.  In the event such  correspondence  is not
                     directed to such party originally,  the Introducing Firm or
                     Clearing    Firm   shall    expeditiously    forward   such
                     correspondence to the appropriate party.

XIII.    Errors, Controversies and Indemnities

         A.          Errors,  misunderstandings  or controversies,  except those
                     specifically  otherwise covered in this Agreement,  between
                     the Introduced  Accounts and the Introducing Firm or any of
                     its  employees,  which shall arise out of acts or omissions
                     of the Introducing Firm or any of its employees (including,
                     without   limiting  the  foregoing,   the  failure  of  the
                     Introducing  Firm to deliver  promptly to the Clearing Firm
                     any  instructions  received by the Introducing Firm from an
                     Introduced  Account with  respect to the voting,  tender or
                     exchange of shares held in such Introduced Account),  shall
                     be the sole and exclusive  responsibility  and liability of
                     the Introducing Firm. In the event, however, that by reason
                     of  such  error,   misunderstanding  or  controversy,   the
                     Introducing  Firm in its  discretion  deems it advisable to
                     commence  an action or  proceeding  against  an  Introduced
                     Account,  the Introducing Firm shall indemnify and hold the
                     Clearing Firm harmless  from any loss,  liability,  damage,

                                      -16-
<PAGE>

                     cost or  expense,  penalties  or taxes  (including  but not
                     otherwise  limited to fees and  expenses of legal  counsel)
                     which the Clearing  Firm may incur or sustain in connection
                     therewith or under any settlement  thereof.  If such error,
                     misunderstanding   or  controversy   shall  result  in  the
                     bringing of an action or  proceeding  against the  Clearing
                     Firm,  the  Introducing  Firm shall  indemnify and hold the
                     Clearing Firm harmless  from any loss,  liability,  damage,
                     cost or expense,  penalties  or taxes,  (including  but not
                     otherwise  limited to fees and  expenses of legal  counsel)
                     which the Clearing  Firm may incur or sustain in connection
                     therewith or under any settlement thereof.

         B.          Errors,  misunderstandings  or controversies,  except those
                     specifically  otherwise covered in this Agreement,  between
                     the Introduced  Accounts and the Introducing Firm or any of
                     its  employees,  which shall arise out of acts or omissions
                     of the Clearing Firm or any of its employees,  shall be the
                     sole and  exclusive  responsibility  and  liability  of the
                     Clearing  Firm.  In the event,  however,  that by reason of
                     such error,  misunderstanding or controversy,  the Clearing
                     Firm in its  discretion  deems it  advisable to commence an
                     action or  proceeding  against an Introduced  Account,  the
                     Clearing Firm shall indemnify and hold the Introducing Firm
                     harmless from any loss, liability, damage, cost or expense,
                     penalties or taxes, (including but not otherwise limited to
                     fees and expenses of legal counsel)  which the  Introducing
                     Firm may incur or sustain in connection  therewith or under
                     any settlement thereof. If such error,  misunderstanding or
                     controversy  shall  result in the  bringing of an action or
                     proceeding  against the Introducing Firm, the Clearing Firm
                     shall indemnify and hold the Introducing Firm harmless from
                     any loss, liability,  damage, cost or expense, penalties or
                     taxes,  (including  but not  otherwise  limited to fees and
                     expenses of legal counsel) which the  Introducing  Firm may
                     incur or  sustain  in  connection  therewith  or under  any
                     settlement thereof.

         C.          The Clearing  Firm and the  Introducing  Firm both agree to
                     indemnify  the other and hold the other  harmless  from and
                     against  any  loss,  liability,  damage,  cost or  expense,
                     penalties or taxes, (including but not otherwise limited to
                     fees and  expenses  of  legal  counsel)  arising  out of or
                     resulting from any failure by the indemnifying party or any
                     of  its  employees  to  carry  out  fully  the  duties  and
                     responsibilities  placed  upon  the  indemnifying  party by
                     state or federal law, rule or regulation,  or the rules and
                     regulations  of any  stock  exchange  or  other  applicable
                     self-regulatory    organization,   or   assigned   to   the
                     indemnifying party herein (including,  without  limitation,
                     the   indemnification   obligations   contained   in   this
                     Agreement) or any breach of any  representation or warranty
                     herein by the indemnifying party under this Agreement.  The
                     Introducing  Firm hereby  agrees to indemnify  and hold the
                     Clearing   Firm   harmless   from  and  against  any  loss,
                     liability,  damage,  cost or expense,  penalties  or taxes,
                     (including  but not otherwise  limited to fees and expenses
                     of legal  counsel)  sustained  or  incurred  in  connection
                     herewith in the event any Introduced  Account fails to meet
                     any initial margin call or maintenance  call, in conformity
                     with Article VIII hereof.

                                      -17-
<PAGE>

         D.          The  indemnification  provisions  in this  Agreement  shall
                     remain  operative and in full force and effect,  regardless
                     of the termination of this Agreement, and shall survive any
                     such termination.

         E.          Introducing  Firm  agrees  to  maintain,  and to  provide a
                     certificate  of  insurance  thereof to the  Clearing  Firm,
                     brokers indemnity bond insurance  providing coverage for an
                     Introducing  Firm that acts in the capacity of market maker
                     equal to the greater of (a)  $1,000,000  or (b) the minimum
                     coverage as required  under the rules of  whichever or both
                     of NASD or NYSE are applicable to it ("Applicable  Rules"),
                     and for all other  Introducing  Firms, the minimum coverage
                     as required under Applicable Rules and other applicable law
                     (or  other  such   reasonable   indemnity   bond  insurance
                     requirements  as  communicated  in writing upon thirty (30)
                     days notice to Introducing  Firm) covering any and all acts
                     of its employees, agents and partners, listing the Clearing
                     Firm as an  additional  insured  party and  permitting  the
                     Clearing  Firm to  assume  the  policy  in the event of the
                     Introducing  Firm ceasing  operations.  Such indemnity bond
                     insurance  shall  contain a rider or provision  whereby the
                     insurance  company  shall notify the Clearing  Firm,  as an
                     insured party, of any  modification to or claims under such
                     policy by the Introducing Firm.

XIV.     Representations, Warranties and Covenants

         A.       The  Introducing  Firm  represents,  warrants and covenants as
                  follows:

                  (i)       The Introducing  Firm will (a) maintain at all times
                            a net  capital  computed  in  accordance  with  Rule
                            15c3-1 of at least the  amount set forth in the next
                            sentence  of  this  paragraph  (i) of  Section  A in
                            excess of the minimum  net capital  required by such
                            rule and (b)  immediately  notify the Clearing  Firm
                            when (i) its net capital is less than the applicable
                            amount  set forth in (a) above,  (ii) its  Aggregate
                            Indebtedness  Ratio  reaches  or  exceeds 10 to 1 or
                            (iii) if the Introducing Firm has elected to operate
                            under paragraph (f) of Rule 15c3-1 of the Securities
                            Exchange  Act of  1934,  as  amended,  when  its net
                            capital  is less than 5% of  aggregate  debit  items
                            computed in accordance with Rule 15c3-3.  The amount
                            required by clause (a) of the immediately  preceding
                            sentence shall be One Million  Dollars  ($1,000,000)
                            until the Third Advance as defined in the Promissory
                            Note  shall  have  been  made,  at which  time  such
                            required  amount  shall be One Million  Five Hundred
                            Thousand Dollars  ($1,500,000);  provided,  however,
                            that when, and only so long as, the principal amount
                            outstanding on the  Promissory  Note after the Third
                            Advance shall have been made shall have been reduced
                            to not more than Two Million  Dollars  ($2,000,000),
                            such  required  amount shall be One Million  Dollars
                            ($1,000,000), otherwise it shall be One Million Five
                            Hundred   Thousand   Dollars    ($1,500,000).    The
                            applicable  amount  identified  in  the  immediately
                            preceding  sentence  in excess of such  minimum  net
                            capital shall be the "Clearing  Agreement Excess Net
                            Capital"  which  is  described  and  defined  in the
                            hereinafter defined "Promissory Note."

                                      -18-
<PAGE>

                  (ii)

                            The Introducing Firm is a member in good standing of
                            the NASD or other self-regulatory organization.  The
                            Introducing  Firm shall promptly notify the Clearing
                            Firm  of  any  additional  exchange  memberships  or
                            affiliations. The Introducing Firm shall also comply
                            with  whatever  non-member  access  rules  have been
                            promulgated by any National  Securities  Exchange or
                            any other  securities  exchange of which it is not a
                            member.

                  (iii)

                            The Introducing Firm and its representatives are and
                            during the term of this Agreement  shall remain duly
                            registered  or  licensed  and in good  standing as a
                            broker/dealer and registered  representatives  under
                            all applicable Laws and  Regulations  and, except as
                            relief may be granted  by the SEC  pursuant  to Rule
                            19h-1  of  the  SEA,  shall  not  be  subject  to  a
                            "statutory disqualification" as such term is defined
                            in Section 3(a)(39) of the SEA.

                  (iv)

                            The Introducing Firm has all the requisite authority
                            in   conformity   with  all   applicable   Laws  and
                            Regulations  to enter  into  this  Agreement  and to
                            retain  the  services  of  the   Clearing   Firm  in
                            accordance with the terms hereof.

                  (v)

                            The  Introducing  Firm is in compliance,  and during
                            the  term  of  this   Agreement   shall   remain  in
                            compliance   with  (i)  the  capital  and  financial
                            reporting  requirements of every National Securities
                            Exchange  or  other   securities   exchange   and/or
                            securities association of which the Introducing Firm
                            is a member, (ii) the capital  requirements of every
                            state in which the Introducing Firm is licensed as a
                            broker/dealer.  In the  event  that the  Introducing
                            Firm  is  notified  at  anytime  by  any  regulatory
                            authority  of a net  capital  deficiency  or similar
                            notice, a copy shall be provided  immediately to the
                            Clearing  Firm. The  Introducing  Firm, in addition,
                            shall provide to the Clearing Firm copies of any and
                            all net capital  deficiency  notices or reports that
                            the  Introducing  Firm  files  with such  regulatory
                            authorities  including,  but not limited to, notices
                            and reports made pursuant to section  17a(11) of the
                            SEA.

                  (vi)

                            The  Introducing  Firm  shall  not  generate  and/or
                            prepare any  statements,  billings or  confirmations
                            respecting any Introduced  Account unless  expressly
                            so instructed in writing by the Clearing Firm.

                  (vii)

                            The  Introducing  Firm shall keep  confidential  any
                            information  it may  acquire  as a  result  of  this
                            Agreement  regarding the business and affairs of the
                            Clearing Firm, which  requirement  shall survive the
                            life of this Agreement.

                  (viii)    The  Introducing  Firm  agrees that it shall not use
                            the name of or make any representations on behalf of
                            the Clearing Firm or any of its  affiliates  without
                            the express written consent of the Clearing Firm.

                  (ix)      The Introducing  Firm shall at all times comply with
                            the annual and periodic  reporting  requirements  of
                            Rule  17a-5  of the  SEA  and,  in  addition,  shall

                                      -19-
<PAGE>

                            provide  the  Clearing  Firm  copies  of any and all
                            reports  filed  pursuant  to such Rule 17a-5  within
                            twenty  four  (24)  hours of the date on which  such
                            reports are filed with the SEC.


                  (x)       The Introducing  Firm shall at no time be subject to
                            an order of the SEC pursuant to Section  15(b)(4) of
                            the SEA.

                  (xi)      The Introducing  Firm shall keep  confidential,  and
                            not share with anyone other than the  Clearing  Firm
                            and others  entitled  thereby by applicable law, any
                            and  all  proprietary  information  relating  to the
                            Introducing  Firm,  including but not limited to all
                            or any portion of the names,  addresses and taxpayer
                            identification  numbers of any one or more or all of
                            (a) the brokers,  dealers and investment advisers of
                            the  Introducing  Firm (whether they be  independent
                            contractors or employees),  and (b) the customers of
                            the Introducing Firm.

                  (xii)     The  Introducing  Firm shall not obtain  services of
                            the type being  provided by the Clearing  Firm under
                            this   Agreement  from  any  party  other  than  the
                            Clearing  Firm;  provided that (i) the Clearing Firm
                            acknowledges that the Introducing Firm obtains as of
                            the date of this  Agreement  clearing  services from
                            other clearing firms previously disclosed in writing
                            to the  Clearing  Firm and shall use its  reasonable
                            efforts to convert at least ninety  percent (90%) of
                            its  cleared  trades  to  the  Clearing  Firm  in  a
                            commercially  reasonable  manner in a period  not to
                            exceed  twelve  (12)  months  from  the date of this
                            Agreement, and (ii) the Introducing Firm shall, from
                            time to time,  acquire the  securities  or assets of
                            other  firms which  obtain  clearing  services  from
                            entities  other  than  the  Clearing  Firm  and  the
                            Introducing Firm shall use its reasonable efforts to
                            convert  each  such firm to the  Clearing  Firm in a
                            commercially  reasonable  manner in a period  not to
                            exceed   twelve   (12)   months  from  the  date  of
                            acquisition  of the  securities  or  assets  of that
                            firm.

                 (xiii)     The Introducing  Firm is organized under the laws of
                            the  State of  Washington  and has not  changed  the
                            jurisdiction of its organization within the five (5)
                            years preceding the date hereof except as previously
                            reported  in  writing  to  the  Clearing  Firm.  The
                            principal place of business of the Introducing  Firm
                            is at  1001  Fourth  Avenue,  Suite  2200,  Seattle,
                            Washington    98154.    The    Introducing    Firm's
                            organizational identification number assigned by the
                            jurisdiction of its organization is 178077585.

         B.       The  Clearing  Firm  represents,  warrants  and  covenants  as
                  follows:

                  (i)       The  Clearing  Firm is a member in good  standing of
                            the NASD and the NYSE

                  (ii)      The  Clearing  Firm is and  during  the term of this
                            Agreement  shall  remain duly  licensed  and in good
                            standing  as a  broker/dealer  under all  applicable
                            Laws and Regulations.

                                      -20-
<PAGE>

                  (iii)     The Clearing Firm has all the  requisite  authority,
                            in   conformity   with  all   applicable   Laws  and
                            Regulations,   to  enter  into  and   perform   this
                            Agreement.

                  (iv)      The Clearing Firm is in  compliance,  and during the
                            term of this  Agreement  shall remain in  compliance
                            with  (i)  the  capital  and   financial  and  other
                            reporting  requirements of every National Securities
                            Exchange   and/or  other   securities   exchange  or
                            association  of  which  it  is a  member,  (ii)  the
                            capital  requirements  of the  SEC,  and  (iii)  the
                            capital  requirements  of every state in which it is
                            licensed as a broker/dealer.

                  (v)       The Clearing Firm  represents  and warrants that the
                            names  and  addresses  of  the  Introducing   Firm's
                            customers  which  have  or  which  may  come  to its
                            attention  in  connection   with  the  clearing  and
                            related   functions   it  has  assumed   under  this
                            Agreement are confidential and shall not be utilized
                            by the Clearing Firm except in  connection  with the
                            functions performed by the Clearing Firm pursuant to
                            this  Agreement.  The  Clearing  Firm  shall send no
                            written  information  to such  customers  other than
                            statements,  bills or  notices  of  transactions  in
                            connection with its role as the Clearing Firm.

                            Notwithstanding  the foregoing,  should a client who
                            has an Introduced Account request, on an unsolicited
                            basis,  that the  Clearing  Firm or an  organization
                            affiliated with the Clearing Firm become its broker,
                            acceptance  of such client by the  Clearing  Firm or
                            such affiliated organization shall in no way violate
                            this  representation  and warranty,  nor result in a
                            breach of this Agreement.

                  (vi)      The  Clearing  Firm  shall  keep   confidential  any
                            information  it may  acquire  as a  result  of  this
                            Agreement  regarding the business and affairs of the
                            Introducing  Firm, which  requirement  shall survive
                            the life of this Agreement.

XV.    Termination - Events of Default

       Notwithstanding any provision in this Agreement,  the following events or
       occurrences  shall  constitute an Event of Default  under this  Agreement
       (each, an "Event of Default"):

       (1)    the Introducing  Firm shall fail to maintain net capital set forth
              in Section A(i)(a) of Article XIV; or

       (2)    either the  Clearing  Firm or the  Introducing  Firm shall fail to
              perform or observe any term, covenant or condition to be performed
              or  observed by it under this  Agreement  and such  failure  shall
              continue  to be  unremedied  for a period of thirty (30) days (ten
              (10)   business   days  in  the  case  of  a   violation   or  any
              representation,  warranty or covenant  set forth above in Sections
              A(viii),  A(ix) and A(x) of Article XIV) after written notice from
              the  non-defaulting  party to the defaulting  party specifying the
              failure and demanding that the same be remedied; or

                                      -21-
<PAGE>

       (3)    any representation or warranty made by either the Clearing Firm or
              the  Introducing  Firm herein  shall prove to be  incorrect at any
              time in any material respect; or

       (4)    a receiver,  liquidator  or trustee of either the Clearing Firm or
              the Introducing Firm, or of its property,  held by either party is
              appointed by court order and such order remains in effect for more
              than  thirty  (30)  days;  or  either  the  Clearing  Firm  or the
              Introducing Firm is adjudicated  bankrupt or insolvent;  or any of
              its property is  sequestered by court order and such order remains
              in effect for more than thirty  (30) days;  or a petition is filed
              against either the Clearing Firm or the Introducing Firm under any
              bankruptcy, reorganization,  arrangement, insolvency, readjustment
              of  debt,  dissolution  or  liquidation  law of any  jurisdiction,
              whether now or hereafter in effect,  and is not  dismissed  within
              thirty (30) days after such filing; or

       (5)    either the Clearing Firm or the Introducing  Firm files a petition
              in voluntary  bankruptcy or seeking  relief under any provision of
              any   bankruptcy,    reorganization,    arrangement,   insolvency,
              readjustment  of  debt,  dissolution  or  liquidation  law  of any
              jurisdiction,  whether now or hereafter in effect,  or consents to
              the filing of any petition against it under any such law; or

       (6)    either  the  Clearing  Firm  or  the  Introducing  Firm  makes  an
              assignment for the benefit of its creditors,  or admits in writing
              its  inability  to pay its debts  generally as they become due, or
              consents to the  appointment of a receiver,  trustee or liquidator
              of either the Clearing  Firm or the  Introducing  Firm,  or of any
              property held by either party; or

       (7)    any Event of Default occurs under the Promissory Note of even date
              herewith  made by Olympic  Cascade  Financial  Corporation  in the
              amount of Six Million Dollars ($6,000,000) payable to the order of
              the Clearing Firm (the "Promissory Note"); or

       (8)    any change in the  financial  condition  of the  Introducing  Firm
              occurs  which  the  Clearing  Firm  reasonably  determines  to  be
              material  and  adverse  in that it  causes  the  Clearing  Firm to
              question, in the reasonable exercise of its judgment,  whether the
              Introducing  Firm will be able to meet its obligations  under this
              Agreement.

XVI. Additional Provisions as to Remedies

       A.     Upon  the   occurrence   of  any  such  Event  of   Default,   the
              non-defaulting  party  shall  have the right,  exercisable  at its
              option by notice to the  defaulting  party,  to declare  that this
              Agreement shall be thereby  terminated and such termination  shall
              be  effective  as of  the  date  such  notice  has  been  sent  or
              communicated  to  the  defaulting   party.   Notwithstanding   the
              foregoing, if a notice of termination is given upon the occurrence
              of any such Event of Default with respect to the Introducing Firm,
              the Clearing Firm shall remain  entitled to exercise any or all of
              the rights and remedies  provided it by this Agreement  (including
              but not limited to those with respect to indemnities) with respect
              to acts,  inactions  and  omissions  in the  period  prior to such

                                      -2-
<PAGE>

              termination,  the Introducing Firm and the Clearing Firm expressly
              agreeing  that all such  rights,  remedies and  indemnities  shall
              survive the termination of this Agreement and remain in full force
              and effect.

       B.     Without  limitation upon the foregoing,  upon the occurrence of an
              Event  of  Default  with  respect  to the  Introducing  Firm,  the
              Clearing Firm shall have the right,  exercisable at its option, to
              offset any and all liabilities, costs and expenses due it from the
              Introducing  Firm which remain unpaid as of the date of such Event
              of Default against the amount in the Deposit Account  (hereinafter
              defined in Section A of Article XVIII) and the commission  revenue
              and  proprietary  account  balances then in the  possession of the
              Clearing Firm.

       C.     Without  limitation  upon any of the Clearing  Firm's other rights
              and remedies  under this  Agreement  (including but not limited to
              rights to be indemnified by the Introducing  Firm), if at any time
              and from time to time (1) the  Clearing  Firm has a claim  against
              the  Introducing  Firm  which  arises  in any  manner  under  this
              Agreement,  (2) an Introduced Account has made a claim against the
              Clearing  Firm which arises as a  consequence  of the  Introducing
              Firm's actions,  inactions or omissions  under this Agreement,  or
              (3) the Introducing  Firm is otherwise  obligated to indemnify the
              Clearing Firm under this Agreement, and the Introducing Firm fails
              or refuses to satisfy its obligation  under any one or more or all
              of  clause  (1),  (2) or (3) of  this  Section  C (the  obligation
              arising  with  respect  to each  such  failure  or  refusal  being
              hereinafter  called an "Outstanding  Obligation")  within five (5)
              business  days after  receipt of notice from the Clearing  Firm of
              that  Outstanding  Obligation,  the  Clearing  Firm shall have the
              right,  without notice or demand, to (i) deduct the amount of that
              Outstanding  Obligation from  commissions  owed to the Introducing
              Firm at that time or thereafter  and pay the amount so deducted to
              satisfy  that  Outstanding  Obligation,  and (ii) if the amount of
              such  commissions  are not at any one time  sufficient  to satisfy
              that Outstanding Obligation,  withdraw such amount from any one or
              more of the Deposit Account and the Introducing Firm's proprietary
              accounts   and  pay  the  amount  so  withdrawn  to  satisfy  that
              Outstanding Obligation. After the satisfaction of that Outstanding
              Obligation, the Introducing Firm shall promptly deposit additional
              cash  into  the  Deposit  Account  so that the  principal  balance
              thereof  equals the amount  hereinafter  required  by Section A of
              Article XVIII.

       D.     The  enumeration in this Agreement of specific  remedies shall not
              be  exclusive of any other  remedies.  Any delay or failure by any
              party to this  Agreement to exercise any right,  power,  remedy or
              privilege herein contained, or now or hereafter existing under any
              applicable  statute or law,  shall not be construed to be a waiver
              of such right, power, remedy or privilege or to limit the exercise
              of such right, power, remedy or privilege.  No single,  partial or
              other exercise of any such right, power, remedy or privilege shall
              preclude the further exercise thereof or the exercise of any other
              right, power, remedy or privilege.

XVII.  Miscellaneous

                                      -23-
<PAGE>

       A.     As of the Conversion  Date, the Clearing Firm shall not convert to
              its  records  as  Introduced  Accounts  customer  accounts  of the
              Introducing   Firm  that  are  partially  or  totally   unsecured,
              securities in the name of the  Introducing  Firm's  customers,  or
              legal  transfer  securities  (securities  in the name of  estates,
              trust, joint ownership and such).

       B.     The  Clearing  Firm shall  have the power to place open  orders as
              instructed by the Introducing  Firm as of the Conversion Date, and
              appropriate  adjustments  shall  be made by the  Clearing  Firm to
              reflect  that the  Clearing  Firm has  acted as broker on the open
              orders with  specialists  on any National  Securities  Exchange or
              other securities exchange.

       C.     The  Clearing  Firm  shall  have the power to  effect  appropriate
              adjustments   with   respect  to  pending   dividends   and  other
              distributions  from the  Conversion  Date through the last payable
              date of such pending dividends.

       D.     The  Introducing  Firm shall be responsible  for providing  annual
              dividend  and  distribution  information  as contained in IRS Form
              1087 and any other information required to be reported by federal,
              state, or local tax laws,  rules or regulations,  to its customers
              until the  Conversion  Date,  whereupon  the  Clearing  Firm shall
              assume this function as to Introduced Accounts.

       E.     The  Clearing  Firm  shall  have the  power to  allocate  and make
              appropriate adjustments for fails,  reorganization accounts, other
              work in process  accounts,  and coverages  relating to accounts of
              the customers of the Introducing Firm that have become  Introduced
              Accounts pursuant to the terms of this Agreement.

       F.     The  Introducing  Firm shall assume all  liabilities in connection
              with uncompared  principal trades. The Introducing Firm shall also
              assume all  liabilities  in  connection  with the bad debts of all
              Introduced  Accounts.  Unsecured debits in the Introduced Accounts
              shall be paid within  fifteen (15) days of their origin date,  and
              it shall be the  responsibility of the Introducing Firm to collect
              such payments from its customers and transmit them to the Clearing
              Firm within such  fifteen (15) day period.  If any debit  balances
              remain  outstanding  for a period of more than  fifteen  (15) days
              after their origin date,  the Clearing Firm is authorized to apply
              as  payment  of such debit  balances  commission  fees owed to the
              Introducing Firm in connection with transactions  pursuant to this
              Agreement.

       G.     Transfers of securities  relating to Introduced  Accounts shall be
              frozen ten (10) business days prior to the Conversion Date.

       H.     The Clearing  Firm shall limit its services  pursuant to the terms
              of this  Agreement to that of clearing  functions  and the related
              services expressly set forth herein and the Introducing Firm shall
              not hold itself out as an agent of the Clearing Firm or any of the
              subsidiaries or companies  controlled directly or indirectly by or
              affiliated with the Clearing Firm.  Should the Introducing Firm in
              any way  attempt to hold  itself out as,  advertise  or in any way
              represent  that it is the agent of the Clearing Firm, the Clearing
              Firm  shall have the  power,  at its  option,  to  terminate  this

                                      -24-
<PAGE>

              Agreement and the  Introducing  Firm shall be liable for any loss,
              liability,  damage,  cost or expense  (including but not otherwise
              limited  to fees and  expenses  of  legal  counsel)  sustained  or
              incurred by the Clearing Firm as a result of such a representation
              of agency or apparent authority to act as an agent of the Clearing
              Firm or agency by estoppel.

       I.     This  Agreement  supersedes  any  previous  agreement  and  may be
              modified  only  by a  writing  signed  by  both  parties  to  this
              Agreement. Such modification shall not be deemed as a cancellation
              of this Agreement.

       J.     This  Agreement  shall be  submitted  to  and/or  approved  by any
              National   Securities   Exchange,    or   other   regulatory   and
              self-regulatory  bodies vested with the authority to review and/or
              approve this Agreement or any amendment or  modifications  hereto.
              The parties  hereto agree to work  diligently and in good faith to
              have this Agreement be reviewed and approved expeditiously. In the
              event of any such disapproval, the parties hereto agree to bargain
              in good faith to achieve the  requisite  approval.  The date as of
              which all applicable  regulatory  authorities  shall have approved
              the Clearing  Agreement shall  hereinafter be called the "Clearing
              Agreement Approval Date."

       K.

              (i) The  first  period  of the  arrangement  contemplated  by this
              Agreement (the "First Term Year") shall commence on the date first
              written  above  and  shall  end on  the  last  day of the  twelfth
              consecutive  calendar  month which  follows the first (1st) day of
              the  first  (1st)  calendar  month  after the  Clearing  Agreement
              Approval Date.  The term of this  Agreement  shall commence on the
              date first above written and shall end of the tenth anniversary of
              the end of the First  Term Year  (the  "Term").  Each of the First
              Term  Year  and  each  succeeding  period  of  twelve  consecutive
              calendar  months shall  hereinafter be called a "Term Year." After
              the  expiration  of the  Term,  either  party may  terminate  this
              Agreement by giving  ninety (90) days' advance  written  notice to
              the other party.

              (ii)  In the  event  that  (a) the  Introducing  Firm  desires  to
              terminate this Agreement and cancel the relationship  contemplated
              hereby prior to the  expiration  of the Term,  or (b) the Clearing
              Firm elects to terminate  this  Agreement  during the Term upon an
              Event  of  Default  with  respect  to the  Introducing  Firm,  the
              Introducing Firm shall, upon such termination, pay to the Clearing
              Firm the following early termination fees:

              ---------------------------------- -------------------------------
              Termination in Term Year             Early Termination Fee
              ---------------------------------- -------------------------------
                           1                              $2,000,000
              ---------------------------------- -------------------------------
                           2                              $1,600,000
              ---------------------------------- -------------------------------
                           3                              $1,200,000
              ---------------------------------- -------------------------------
                           4                               $800,000
              ---------------------------------- -------------------------------
                           5                               $400,000
              ---------------------------------- -------------------------------

              Notwithstanding  the  foregoing,  if  the  loan  evidenced  by the
              Promissory  Note is paid in full in accordance  with its terms and
              there  is then no Event  of  Default  under  this  Agreement,  the
              Clearing   Firm  shall  waive  its  right  to  receive  any  early

                                      -25-
<PAGE>

              termination  fees under this Agreement which are payable after the
              date such loan is so paid.

              (iii) In the event of a change in the  "control"  of the  Clearing
              Firm which (a) occurs prior to the  expiration of the second (2nd)
              Term Year and (b)  necessitates  the  conversion of the Introduced
              Accounts of Introducing  Firm, and all positions in such accounts,
              from the  Clearing  Firm to  another  clearing  firm (a "Change in
              Control  Conversion"),  then Introducing Firm shall have the right
              to elect either to (1) continue this  Agreement as if no change in
              control  had  occurred or (2)  terminate  this  Agreement.  If the
              Introducing  Firm elects to terminate this  Agreement  pursuant to
              this paragraph (iii) of Section K, the Introducing Firm shall have
              no  obligation  to pay  any  early  termination  fees  under  this
              Agreement  which are  payable  after the date it  terminates  this
              Agreement  and the Clearing  Firm shall pay the  Introducing  Firm
              whichever of the following fees is then applicable (the "Change in
              Control Fee") as compensation  for subjecting the Introducing Firm
              to a Change in Control Conversion:

              ------------------------------------ -----------------------------
              Change in Control in Term Year            Change in Control Fee
              ------------------------------------ -----------------------------
                        1                                    $2,000,000
              ------------------------------------ -----------------------------
                        2                                    $1,600,000
              ------------------------------------ -----------------------------

              For purposes of this paragraph  (iii) of Section K, the occurrence
              of any one or more of the  following  without  the  prior  written
              consent of the Introducing  Firm shall be deemed to be a change in
              the  "control"  of the  Clearing  Firm:  (a)  the  sale  of all or
              substantially  all of the business or assets of the Clearing  Firm
              at any time  during  the Term,  (b) the  acquisition  of more than
              fifty  percent (50%) of the  outstanding  stock or voting power of
              the  Clearing  Firm by any  other  entity;  or (c) the  merger  or
              consolidation of the Clearing Firm into another entity.

       (iv)   Notwithstanding  any other provision of this Agreement and without
              limitation upon the rights and obligations  under  paragraphs (ii)
              and (iii) of this Section K, this  Agreement may be terminated and
              the  relationship  contemplated  hereby  cancelled by the Clearing
              Firm at any time for any reason,  and without liability  therefor,
              upon  ninety  (90) days prior  written  notice to the  Introducing
              Firm.

       L.

              ANY DISPUTE OR CONTROVERSY  BETWEEN THE  INTRODUCING  FIRM AND THE
              CLEARING FIRM RELATING TO OR ARISING OUT OF THIS  AGREEMENT  SHALL
              BE SETTLED BY ARBITRATION  BEFORE AND UNDER THE ARBITRATION  RULES
              OF THE NYSE.

       M      The  Clearing  Firm  shall not be bound to make any  investigation
              into the facts  surrounding any transaction  that it may have with
              the  Introducing  Firm on a principal  or agency basis or that the
              Introducing Firm may have with its customers or other persons, nor
              shall the Clearing Firm be under any responsibility for compliance
              by the Introducing Firm with any Laws or Regulations  which may be
              applicable to the Introducing Firm.


                                      -26-
<PAGE>

       N.     To  facilitate  the keeping of records by the Clearing  Firm,  the
              Introducing Firm shall turn over promptly to the Clearing Firm any
              and  all  payments  and  securities  which  the  Introducing  Firm
              receives  from its  customers.  Concurrently  with the delivery of
              such  payments or  securities  to the  Introducing  Firm, it shall
              furnish the Clearing Firm with such information as may be relevant
              or necessary to enable the  Clearing  Firm to record  promptly and
              properly such payments and securities in the respective Introduced
              Account.

       O.     This Agreement  shall be binding upon all  successors,  assigns or
              transfers of both parties hereto,  irrespective of any change with
              regard to the name of or the personnel of the Introducing  Firm or
              the Clearing  Firm.  Any  assignment  of this  Agreement  shall be
              subject to the requisite  review and/or approval of any regulatory
              or  self-regulatory  agency or body whose review  and/or  approval
              must be obtained prior to the  effectiveness  and validity of such
              assignment.  No  assignment of this  Agreement by the  Introducing
              Firm shall be valid unless the Clearing  Firm  consents to such an
              assignment in writing.  Any assignment by the Clearing Firm to any
              subsidiary  that it may create or to a company  affiliated with or
              controlled  directly or indirectly by it shall be deemed valid and
              enforceable  in the  absence of any consent  from the  Introducing
              Firm.   Neither  this  Agreement  nor  any  operation  under  this
              Agreement  is intended to be, shall not be deemed to be, and shall
              not be treated as a general or limited partnership, association or
              joint venture or agency relationship  between the Introducing Firm
              and the Clearing Firm.

       P.     Notwithstanding  the  provisions of Section L of Article XVII that
              any dispute or  controversy  between  the  parties  relating to or
              arising out of this Agreement  shall be referred to and settled by
              arbitration, in connection with any breach by the Introducing Firm
              of Section H of Article XVII or by the Clearing firm of the second
              sentence of Section B(v) of Article XIV, the Clearing  Firm or the
              Introducing  Firm,  as  applicable,  may, at any time prior to the
              initial   arbitration   hearing  pertaining  to  such  dispute  or
              controversy,  by application  to the United States  District Court
              for the Eastern  District of Virginia or the Circuit  Court of the
              Commonwealth  of Virginia  or the City of  Richmond  seek any such
              temporary or provisional relief or remedy  ("provisional  remedy")
              provided  by the  laws of the  United  States  or the  laws of the
              Commonwealth  of Virginia  would be  available  in an action based
              upon such dispute or controversy in the absence of an agreement to
              arbitrate.  The  parties  acknowledge  and agree  that it is their
              intention to have any such  application  for a provisional  remedy
              decided by the court to which it is made and that such application
              shall  not be  referred  to or  settled  by  arbitration.  No such
              application to either said court for a provisional remedy, nor any
              act or conduct by either party in  furtherance of or in opposition
              to such  application,  shall constitute a relinquishment or waiver
              of any right to have the underlying  dispute or  controversy  with
              respect to which such  application  is made settled by arbitration
              in accordance with Section L above.

       Q.     Neither the Introducing Firm nor the Clearing Firm shall,  without
              having  obtained  the prior  written  approval  of the other firm,
              agree  to  place  or place  any  advertisement  in any  newspaper,
              publication, periodical or any other media or communicate with any
              customer  or  the  public  in  any  manner   whatsoever   if  such

                                      -27-
<PAGE>

              advertisement  or  communication  in any manner makes reference to
              the  other  firm,  to any  person  or  entity  that  directly,  or
              indirectly  through  one or more  intermediaries,  controls  or is
              controlled by, or is under common control, with the other firm and
              to the clearing  arrangements  and/or any of the services embodied
              in this Agreement.

       R.     The Laws and Regulations  require that the Clearing Firm must have
              proper  documentation  to support any account opened on its books,
              including  Introduced  Accounts.   If,  after  reasonable  request
              therefor,  the  necessary  documents  so as to enable the Clearing
              Firm to comply with such account documentation requirements of the
              Laws and Regulations  have not been received by the Clearing Firm,
              the Introducing  Firm shall receive  notification  that no further
              orders shall be accepted  for the  Introduced  Accounts  involved.
              Should it happen  that  inadvertent  orders  are  placed  for such
              account after this notice is received,  no commission credit shall
              be  granted  from  such  orders.   On  receipt  of  the  necessary
              documents, this restriction shall be lifted on future commissions,
              but any  commissions  withheld shall not be credited or paid. This
              Agreement is not in any way  intended to limit the  responsibility
              of the Clearing Firm under the Laws and  Regulations  with respect
              to Introduced Accounts.

       S.     The  construction and effect of every provision of this Agreement,
              the rights of the parties  under this  Agreement and any questions
              arising  out of the  Agreement,  shall be governed  by,  construed
              under  and  subject  to  the  statutory  and  common  law  of  the
              Commonwealth of Virginia.

       T.     The headings preceding the text, articles and sections hereof have
              been inserted for  convenience and reference only and shall not be
              construed  to affect the meaning,  construction  or effect of this
              Agreement.

       U.     This  Agreement  shall cover only the types of services  set forth
              herein  and is in no way  intended  nor shall it be  construed  to
              bestow upon the Introducing Firm any special  treatment  regarding
              any  other   arrangements,   agreements  or  understanding   which
              presently exist between the Introducing Firm and the Clearing Firm
              or which may hereafter  exist. The Introducing Firm shall be under
              no obligation  whatsoever to deal with the Clearing Firm or any of
              its   subsidiaries  or  any  companies   controlled   directly  or
              indirectly  by or  affiliated  with  the  Clearing  Firm,  in  any
              capacity other than as set forth in this Agreement.  Likewise, the
              Clearing Firm shall be under no obligation whatsoever to deal with
              the  Introducing  Firm or any of its  affiliates  in any  capacity
              other than as set forth in this Agreement.

       V.     If any provision or condition of this  Agreement  shall be held to
              be  invalid  or  unenforceable  by any  court,  or  regulatory  or
              self-regulatory    agency   or   body,    such    invalidity    or
              unenforceability shall attach only to such provision or condition.
              The validity of the remaining  provisions and conditions shall not
              be affected  thereby and this Agreement shall be carried out as if
              any such invalid or unenforceable  provision or condition were not
              contained herein.

                                      -28-
<PAGE>

       W.     Unless  otherwise  expressly  provided  in  this  Agreement,   all
              notices, consents, directions, approvals,  restrictions,  requests
              and other  communications  required or  permitted  to be delivered
              under this Agreement  shall be in writing and shall be deemed duly
              given if delivered personally or by express delivery service (such
              as UPS Next Day Air), or if sent by registered or certified United
              States  mail,  return  receipt  requested,  first  class,  postage
              prepaid, to the following addresses (or to such other address of a
              party which that party elects to designate in writing to all other
              addressees  listed  below).  The date such notice is deemed  given
              shall be the date it is  received,  if it is  delivered  in person
              (including  by express  delivery  service),  or two days after its
              postmark date, if it is sent by registered or certified mail.

                If to the Clearing Firm:  First Clearing Corporation,
                                          901 E. Byrd Street
                                          P.O. Box 1357, Richmond, VA 23211-1357
                                          Attn: President

                If to the Introducing Firm: National Securities Corporation
                                            1001 Fourth Avenue, Suite 2200
                                            Seattle, WA 98154
                                            Attn: President

       X.     The  Clearing  Firm  shall  not be  liable  for any  loss  caused,
              directly or indirectly,  by government  restrictions,  exchange or
              market  ruling,  suspension  of  trading,  war,  strikes  or other
              conditions  beyond the control of the Clearing  Firm. In the event
              that any  communications  network or  computer  system used by the
              Clearing  Firm,  whether  or not owned by the  Clearing  Firm,  is
              rendered inoperable,  the Clearing Firm shall not be liable to the
              Introducing Firm for any loss, liability, claim, damage or expense
              resulting, either directly or indirectly, therefrom.

       Y.     The Clearing Firm shall have the right to investigate,  or arrange
              for an appropriate  party to investigate,  the Introducing  Firm's
              credit;  provided,  however,  that the Introducing Firm may make a
              written request for disclosure of the nature of such investigation
              within a  reasonable  time.  Nothing  in this  Section  Z shall be
              construed to relieve the  Introducing  Firm of its  obligation  to
              over see its financial integrity.

       Z.     During the Term of this  Agreement  (including  any  extensions or
              renewals  thereof),  neither the Introducing Firm nor the Clearing
              Firm or any of its affiliates  shall hire or suffer the employment
              of a  registered  representative  ("Representative")  of the other
              without the prior express written  approval of a senior  executive
              officer  of the party  (the  "Losing  Firm")  which is losing  the
              Representative.

              1.     In the event that a party (the "Hiring  Firm") hereto hires
                     or suffers the employment of a Representative of the Losing
                     Firm without having  obtained the prior written  permission
                     required  above pursuant to this Section Z, the Hiring Firm
                     shall  pay to the  Losing  Firm an  amount  equal  to fifty

                                      -29-
                     percent (50%) of the trailing twelve (12) month  production
                     of each  Representative so hired.  Payment shall be made by
                     the Hiring Firm to the Losing Firm within  thirty (30) days
                     of the making of a written  demand by the Losing  Firm.  In
                     the event  that  payment  is not made when due,  the Losing
                     Firm may offset  such  unpaid  amount(s)  against  any sums
                     which may be due by it to the Hiring Firm.

              2.     Notwithstanding   anything   contained  in  this  Agreement
                     (including without limitation,  this Article XVIII, Section
                     Z), in addition to the right to receive fifty percent (50%)
                     of the  trailing  twelve  (12)  month  production  of  each
                     Representative so hired without its permission,  the Losing
                     Firm  shall  be  entitled  to  exercise  any and all  other
                     remedies or claims it may have under contract,  law, equity
                     or  arbitration,  cumulatively,  against either or both the
                     Representative and/or the Hiring Firm.

              3.     For   the   purposes   of  this   Section   Z,   the   term
                     "Representative" shall have the same meaning given to it in
                     Part III of Schedule C of the By-Laws of the NASD, PROVIDED
                     HOWEVER,   that   for   purposes   of   this   Section   Z,
                     "Representative"  shall also  include  individuals  who are
                     registered  with,  or  licensed  by  any  other  securities
                     self-regulatory organization,  national securities exchange
                     or state securities administrator.

       AA.    Payment of commissions due the  Introducing  Firm shall be made by
              the  Clearing  Firm to the  Introducing  Firm twice each  calendar
              month  subject to and after the  deduction of the  following  from
              such commissions:

              1.     All clearing and other charges,  costs and expenses due and
                     payable to the Clearing Firm under this Agreement.

              2.     All  amounts due and payable  under this  Agreement  by the
                     Introducing Firm to the Clearing Firm on account of losses,
                     liabilities,  damages and any rights the Clearing  Firm may
                     have against the Introducing Firm under this Agreement.

       BB.    To facilitate execution, this Agreement may be executed in as many
              counterparts  as may be required.  It shall not be necessary  that
              the  signature  of,  or on  behalf  of,  each  party,  or that the
              signatures  of all persons  required to bind any party,  appear on
              each counterpart. It shall be sufficient that the signature of, or
              on behalf of, each party,  or that the  signatures  of the persons
              required   to  bind  any  party,   appear  on  one  or  more  such
              counterparts.  All counterparts shall together constitute a single
              agreement.

XVIII.   Introducing Firm Deposit Account

       A.     In order to further assure  compliance  with its  representations,
              agreements  and  indemnifications  herein,  the  Introducing  Firm
              agrees to establish an  Introducing  Firm  Deposit  Account  ("the
              Deposit  Account")  in the name of the  Introducing  Firm with the
              Clearing Firm.

                                      -30-
<PAGE>

              The  Introducing  Firm  shall  deposit  good and free funds in the
              amount  of One  Million  Dollars  ($1,000,000)  into  the  Deposit
              Account  on the day that the  First  Advance  (as  defined  in the
              Promissory  Note) is made under the Promissory  Note.  Thereafter,
              the Introducing Firm shall at all times maintain on deposit in the
              Deposit Account not less than One Million Dollars  ($1,000,000) in
              good and free funds.  The Clearing Firm shall pay interest on cash
              deposited  in the  Deposit  Account  in  accordance  with its then
              accepted Free Credit Balance Interest Rates.

       B.     The  establishment  of the  Deposit  Account  and deposit of funds
              therein  shall be for the  purposes  described in this section and
              shall not constitute an ownership interest in the Clearing Firm by
              the Introducing Firm.

       C.     Return of Required  Clearing  Deposit.  Upon  termination  of this
              Agreement in accordance with the provisions hereof, and subject to
              (a) the Clearing  Firm's receipt of payment in full of any and all
              amounts   owing  to  the  Clearing   Firm  under  this   Agreement
              (collectively,  the  "Clearing  Agreement  Amounts")  and  (b) the
              Introducing   Firm's   satisfaction  of  each  and  every  of  the
              Introducing  Firm's  outstanding  obligations to the Clearing Firm
              under this Agreement,  including  without  limitation  obligations
              arising under  indemnities in this Agreement and the obligation to
              pay the Clearing  Agreement Amounts  (collectively,  the "Clearing
              Agreement  Obligations"),  the  Clearing  Firm  shall  return  the
              required  clearing  deposit to the Introducing  Firm within thirty
              (30)  calendar days of the date on which all of said payments have
              been received, and obligations  satisfied.  The Clearing Agreement
              Obligations  include,  but  are  not  limited  to,  any  open  and
              unsettled  litigation matters between the Clearing Firm and either
              the Introducing  Firm or its customer,  any unresolved,  unsecured
              Introduced  Account debit balances,  any open fails as a result of
              trades executed on behalf of Introduced Accounts, and any failures
              to transfer to another broker any Introduced  Accounts  introduced
              by the Introducing  Firm. The Clearing  Agreement  Amounts and the
              Clearing  Agreement  Obligations shall collectively be referred to
              as the "Clearing Agreement Liabilities."

XIX.     Liens and Security Interests

The Introducing  Firm hereby grants to the Clearing Firm a security  interest in
and lien on all of the Introducing Firm's right, title and interest, whether now
existing or hereafter arising, in, to and under (i) all commission,  proprietary
and other accounts of the  Introducing  Firm  maintained with the Clearing Firm,
including without limitation the Deposit Account, (ii) all securities, financial
assets,  contracts,  commercial paper, monies,  general intangibles,  investment
property (as each such term is defined in the Uniform  Commercial  Code as shall
be in effect in the  Commonwealth  of Virginia  on July 1, 2001),  and all other
similar  property of every nature,  type or description  held in any commission,
proprietary  or  other  account  of the  Introducing  Firm  maintained  with the
Clearing Firm,  including without limitation the Deposit Account,  and (iii) all
proceeds  thereof.  The  foregoing  security  interest and lien shall secure the
payment and performance of all of the Introducing Firm's debts,  liabilities and
obligations to the Clearing Firm under this  Agreement,  whether now existing or
hereafter  arising and howsoever  incurred,  including  without  limitation  the
Clearing  Agreement  Liabilities.  Without  limiting any of the Clearing  Firm's
other rights and remedies  under this  Agreement,  the  Introducing  Firm hereby

                                      -31-
<PAGE>

agrees that the Clearing Firm may,  without demand or notice of any kind,  debit
any cash  balance in any account of the  Introducing  Firm  maintained  with the
Clearing Firm and/or liquidate any securities or other property of any type held
in any account of the  Introducing  Firm  maintained  with the Clearing Firm and
credit  the  proceeds  to the  obligations  secured  hereby  in  such  order  of
application as the Clearing Firm elects in its sole discretion.  The Introducing
Firm shall, from time to time, at its sole expense,  promptly execute,  deliver,
file and/or record (as appropriate) all such instruments and documents, and take
all such further  action as the Clearing  Firm may deem  necessary or prudent in
order to perfect,  continue and protect the security interests and liens granted
hereunder or to enable the Clearing  Firm to exercise and enforce its rights and
remedies  with respect to any of the  property in which the Clearing  Firm has a
security  interest or lien.  The  Introducing  Firm and the Clearing Firm hereby
expressly  agree that any and all  property  contained  in any of the  foregoing
accounts  is to be  treated  as a  "financial  asset" as that term is defined in
Title 8A of the  Uniform  Commercial  Code as  adopted  in the  Commonwealth  of
Virginia on the date hereof.


                          [SIGNATURES ON THE NEXT PAGE]



                                      -32-
<PAGE>



Made and executed at Richmond, Virginia on the date first hereinabove set forth.

                                         NATIONAL SECURITIES CORPORATIOIN



                                         By:
                                            ------------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                               ---------------------------------



                                         FIRST CLEARING CORPORATION



                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                              ----------------------------------







                                      -33-