EMPLOYMENT AGREEMENT

This  EMPLOYMENT  AGREEMENT  ("Agreement")  is made as of the 24 day of  October
2000, by and between HARBOURTON FINANCIAL  CORPORATION,  a Delaware corporation,
having its  principal  place of business at 8180  Greensboro  Drive,  Suite 525,
McLean, Virginia 22102 (the "Company"), and James M.Cluett, an individual having
a residence at 1121 S. Military Trail #312,  Deerfield Beach,  Fla. 33442,  (the
"Employee").  The  Company  and the  Employee  in  consideration  of the  mutual
premises contained herein, mutually agree as follows:

1. Employment. The Company employs the Employee and the Employee agrees to serve
the Company as President of the Company.  It is intended that the Employee shall
serve as a member of the board of directors of the Company  (the  "Board").  The
Employee  shall devote the  Employee's  full  business  time and best efforts to
Company  business.  Employee  shall  perform such duties  commensurate  with the
Employee's position as may be specified from time to time by the Chairman of the
Board or the Board.

2. Term. The initial term of this Agreement shall commence on the date set forth
above,  and  shall end at the close of  business  on  December  31,  2002,  (the
"Term").  Notwithstanding the foregoing, commencing on January 1, 2002, the Term
shall  extend  one day at the end of every day during  its  length,  and the new
closing date of the term shall be that additional day, unless either party shall
notify the other of its  intention  to stop such  extensions,  in which case the
closing date of the Term shall be one year from the date of such notice.

3. Salary.  During the Term,  the Company  shall pay to the Employee a base
salary at a rate of One Hundred  Twenty Eight  Thousand  dollars  ($128,000) per
annum,  which amount may be increased from time to time at the discretion of the
Board.

4. Benefits and Other Compensation.  The Company shall provide the Employee
with the following additional compensation during the Term:

(a)               Subject  to  meeting  eligibility  provisions,   any  and  all
                  existing and future general Employee benefit plans,  including
                  without  limitation,  medical,  health,  life  and  disability
                  insurance,  stock option and pension  plans,  now or hereafter
                  provided by the Company to the  employees  of the Company as a
                  group, or to the executive officers of the Company as a group,
                  shall be provided to the Employee.

(b)               An  annual  profit  sharing/incentive  bonus  to  be  paid  to
                  Employee,   predicated  on  achieving   mutually  agreed  upon
                  earnings targets for the Company (the "Bonus Plan"). The bonus
                  for any  calendar  year  shall be deemed  fully  accrued as of
                  December 31 of the applicable  year and shall be paid no later
                  than March 31 of the following year.

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


5.Reimbursement.  Bona fide business expenses incurred by the Employee in
connection  with the  performance  of the Employee's  duties  hereunder
shall be  reimbursed by the Company.  Such  allowances  shall,  without
limitation,  include expenses such as travel, meals, hotels, telephone,
automobile,  telegraph, postage and other normal and customary business
expenses.

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6. Vacation.  During the term, Employee shall be entitled to four (4) weeks
paid vacation per year.  The dates of any vacation  periods shall be arranged in
order that such vacation days shall not materially hinder the normal functioning
of the Company's business activities.

7. Trade Secrets; Non-Competition:

(a)  In the course of the Employee's  employment,  the Employee will have access
     to confidential  records,  data, pricing information,  lists of clients and
     prospective clients,  lists of vendors,  books and promotional  literature,
     leases and agreements, policies and similar material and information of the
     Company or used in the  course of its  business  (hereinafter  collectively
     referred  to  as  "Confidential   Information").   All  such   Confidential
     Information  which the  Employee  shall use or come into contact with shall
     remain the sole property of the Company. The Employee will not, directly or
     indirectly,  disclose or use any such Confidential  Information,  except as
     required in the course of such  employment.  The  Employee  shall not for a
     period of one (1) year  following  the end of the Term,  disclose or use in
     any  fashion  any  Confidential  Information  of the  Company or any of its
     subsidiaries or affiliates, whether such Confidential Information is in the
     Employee's memory or embodied in writing or other physical form,  provided,
     that the foregoing requirements shall not apply  to any  information (i)
     that (prior to disclosure by the Employee) has been
     disclosed by the Company or any third party or (ii) that Employee discloses
     (A) to any branch, agency or regulatory authority of any federal,  state or
     local  government to comply with any statute,  regulation,  rule,  order or
     ordinance  or (B) to any federal,  state or local court,  tribunal or other
     adjudicatory  body in connection with any suit,  claim or question  arising
     before such court, tribunal or other adjudicatory body or otherwise.

In the event of a breach or a  threatened  breach  by the  Employee  of the
provisions  of this  subparagraph  (a),  the  Company  shall be  entitled  to an
injunction  restraining the Employee from  disclosing any of the  aforementioned
Confidential  Information.  Nothing  contained  herein  shall  be  construed  as
prohibiting  the Company  from  pursuing  any other  remedies  available  to the
Company for such breach or threatened breach,  including the recovery of damages
from the Employee.  Subject to  subparagraph  (c) below,  this  provision  shall
survive the termination of this Agreement.

(b)  The Employee  further agrees that,  during the Term, the Employee will not,
     except with the prior  written  consent of the Board of  Directors,  (i) be
     employed as an employee, consultant, officer or director, by any other real
     estate finance company, (ii) solicit any business from or have any business
     dealings with,  either directly or indirectly or through corporate or other
     entities or  associates,  any client of the Company,  or (iii) initiate any
     action,  either  directly  or  indirectly  or  through  corporate  or other
     entities or associates,  that would  reasonably be expected to encourage or
     to induce any employee of the Company or of any  subsidiary or affiliate of
     the Company to leave the employ of the Company or of any such subsidiary or
     affiliate.  The Employee  specifically  acknowledges the necessity for this
     subparagraph (b), given the nature of the Company's business.  The Employee
     agrees that the Company shall be entitled to injunctive relief in the event
     of a breach of the provisions of this  subparagraph (b), the legal remedies
     being  inadequate to fully protect the Company.  Nothing  contained  herein
     shall be  construed  as  prohibiting  the Company  from  pursuing any other
     remedies  available to the Company for such breach,  including the recovery
     of damages  from the  Employee.  Subject to  subparagraph  (c) below,  this


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     provision shall survive the termination of this Agreement.

(c)  In the event of a Business  Combination  or Change of Control  (as  defined
     below)  involving  the  Company  (whether  or not the  Company's  Board  of
     Directors  recommends  such Business  Combination  or Change of Control for
     approval by the Company's shareholders),  subparagraphs (a) and (b) of this
     paragraph  7 shall,  at the time  such  Business  Combination  or Change of
     Control is  consummated,  but only in the event  Employee's  employment  is
     terminated or the employee's Salary, Benefits and Other Compensation and/or
     duties and  responsibilities  are  substantially  reduced and/or changed in
     connection  therewith under the terms of  subparagraph  8(c) below, be null
     and void and of no further force or effect. For purposes of this Agreement,
     "Business  Combination"  shall mean (i) a merger,  a  consolidation  or any
     other business  combination of the Company with any  non-affiliated  party,
     (ii)  the  disposition  of all  or  substantially  all  of the  securities,
     business or assets of the Company or (iii) a joint venture,  reorganization
     or other  transaction (or series of  transactions) as a result of which all
     or  substantially  all  of the  business  or  assets  of  the  Company  are
     transferred,  with or  without a Change of  Control,  or any other  similar
     corporate  combination or transaction (or series of related  transactions).
     For  purposes  of this  Agreement,  a  "Change  of  Control"  shall  mean a
     transaction  (or  series of  transactions)  or other  event  (or  series of
     events) that results in the  acquisition  of a Controlling  Interest in the
     Company by a person or entity (or group of persons  and/or  entities)  that
     did  not  have  a  Controlling  Interest  in  the  Company  prior  to  such
     transaction (or series of transactions) or event (or series of events).  As
     used in the  preceding  sentence,  the term  "Controlling  Interest"  means
     possession,  directly  or  indirectly,  of power  to  direct  or cause  the
     direction of management or policies  (whether  through  ownership of voting
     securities,  by contract or otherwise);  provided  that, in any event,  any
     person or entity (or group of persons and/or  entities) which  beneficially
     acquires,  directly or indirectly,  25% or more (in number of votes) of the
     securities  having  ordinary  voting power for the election of directors of
     the Company shall be conclusively  presumed to have a Controlling  Interest
     in the  Company.  This  provision  shall be construed so that if a Business
     Combination  or Change of Control (as defined  herein)  occurs on more than
     one occasion, the terms and provisions of this Agreement shall apply to the
     most recent Business Combination or Change of Control.

(d)  In the event the  Employee is  terminated  for a reason  other
     than cause,  Subparagraphs (a) and (b) of this paragraph shall
     become null and void.

     8. Payments Upon  Termination.  The Company and the Employee shall have the
right to terminate  the  Employee's  employment  hereunder  for any reason.  The
Company shall pay to the Employee  upon  termination  of  employment  during the
Term, as follows:

(a)  If the  Employee's  employment is  terminated  by death,  the Company shall
     continue  to pay and  provide  to the estate of the  Employee  for a period
     equal to three months,  Employee's  then applicable base salary pursuant to
     the provisions of paragraph 3 for such period, in monthly installments.  In
     addition, the Company, as soon as reasonably possible, but not past the end
     of the  fiscal  year of the death of the  Employee,  shall  also pay to the
     estate  of  the  Employee  (on a pro  rata  basis  up to  the  date  of the
     Employee's  death) the Benefits and Other  Compensation  otherwise  due and
     unpaid  to the  Employee  as of the date of,  or in  connection  with,  the
     Employee's  death,  pursuant and subject to the provisions of subparagraphs


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

(b)  In the event the Employee's  employment is terminated  because of permanent
     disability (as defined below),  then following such termination the Company
     shall continue to pay and provide to the Employee for a period equal to six
     months,  the Employee's then  applicable  salary for such period in monthly
     installments,  pursuant to the  provisions  of paragraph 3 herein,  and the
     Benefits and Other  Compensation  for such period as if the  Employee  were
     still  employed to be paid not later than the last day of such period under
     subparagraphs  4(a),  4(b) and 4(c)  herein.  In  addition,  the Board will
     consider in good faith the payment of an  incentive  bonus for the calendar
     year in which the  termination  occurs,  taking into account the portion of
     the year completed prior to such termination, the Company's performance for
     the year, and the Employee's contributions to that performance.

As used herein, the Employee shall be deemed to be permanently disabled in the
event  that the  Employee  has not been able  (due to  mental  or  physical
illness or incapacity) to render services  required by this Agreement for a
period of ninety (90)  consecutive  days. Any salary payments to be made by
the Company under the provisions of this  subparagraph (b) are to be offset
by payments,  if any, made to the Employee under any  disability  insurance
plan maintained by the Company.

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

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

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

(3)                        any declared but unpaid bonus paid pursuant to
                           subparagraph  4(b) above for any prior calendar year,
                           and

(4)                        a bonus,  for the year in which such  termination
                           occurs,  in an amount no less than the bonus declared
                           or paid pursuant to  subparagraph  4(b) above,as the
                           case may be, for the prior  year (but not less than
                           an amount  equal to one year's  salary),  pro-rated
                           to reflect the number of weeks in which the Employee
                           was employed in the calendar year of  termination,


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                           such bonus to be paid within thirty (30) days
                           following such termination,  provided,however,  that
                           if termination  occurs prior to December 31, 2002,
                           Employee will receive  a bonus payment or payments
                           equal to the bonus Employee would otherwise  have
                           earned for fiscal year 2001 (if not previously  paid)
                           and 2002 paid in accordance with and
                           pursuant to the terms of the Bonus Plan.

         (d)      For this purpose Good Reason shall mean:

(i)                        any material  breach of this Agreement by the Company
                           at any  time,  including  (A) loss of the  Employee's
                           position as an executive officer of the Company,  (B)
                           failure  to elect,  or  re-elect  the  Employee  as a
                           member of the Board or (C)  reduction  in  Employee's
                           Salary, Benefits and Other Compensation.

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

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

(e)  Notwithstanding  anything  else  contained in  subparagraph  (c) above,  no
     compensation   shall  be  payable  under  subparagraph  (c)  above  if  the
     Employee's employment was or is terminated for Cause (as defined below). As
     used herein,  the term "Cause" shall mean (i) the Employee's  conviction of
     (or entry of a plea of nolo  contendere  with respect to) a felony or other
     crime  involving  moral  turpitude  or  (ii)  a  willful,  substantial  and
     continual  failure by the  Employee in breach of this  Agreement to perform
     the lawful duties, responsibilities or obligations assigned to the Employee
     pursuant to the terms  hereof and the  failure to cure such  breach  within
     fifteen  (15) days  following  written  notice from the Company  containing
     specific  findings by the Board of Directors of the Company  detailing such
     failures.

9. Validity.  In the event that any provision or portion of this Agreement shall
be  determined  to be invalid or  unenforceable  for any reason,  the  remaining
provisions and portions of this Agreement shall be unaffected  thereby and shall
remain in full force and effect to the fullest extent permitted by law.

10.  Amendment  and Waiver.  This  Agreement  constitutes  the entire  agreement
between the parties as to  employment by the Company of the Employee and may not
be changed  orally but only by a written  document  signed by both  parties.  No
waiver  by either  party  hereto  at any time of any  breach by the other  party
hereto of any  condition or provision of this  Agreement to be performed by such
other party  shall be deemed a waiver of any other  breach by such party at that
time or any other time.  No agreements  or  representations,  oral or otherwise,
express or implied,  with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.

11.  Arbitration.   Any  dispute  whatsoever  relating  to  the  interpretation,


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validity,  or performance of this Agreement and any other dispute arising out of
this Agreement  which cannot be resolved by the parties to such a dispute shall,
upon  thirty  (30)  days  written  notice  by  either  party,  be  settled  upon
application  of any such party by arbitration in Fairfax  County,  Virginia,  in
accordance  with  the  rules  then   prevailing  of  the  American   Arbitration
Association,  and judgment  upon the award  rendered by the  arbitrators  may be
entered  in any court of  competent  jurisdiction.  The cost of any  arbitration
proceedings  under this paragraph shall be shared equally by the parties to such
a dispute.  Nothing contained in this paragraph shall limit the Company's rights
to obtain  injunctive  relief to enforce the  provisions of paragraphs  7(a) and
8(b) above.

12.  Applicable  Law. This Agreement  shall be governed by and construed in
accordance  with the laws of the  Commonwealth  of Virginia  (without  regard to
conflicts of law principles).

13. Binding  Effect.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns and shall become effective upon execution by the Company.

14. Notice. All notices and other communications made pursuant to this Agreement
shall be made in  writing  and shall be deemed to have been  given if  delivered
personally or mailed,  postage  prepaid,  to the applicable  party hereto at the
applicable address first above written, or in either case, to such other address
as the Company or Employee  shall have  specified by written notice to the other
party.

IN WITNESS WHEREOF, the parties have executed this agreement, the Company acting
herein by its duly authorized officer, the day and year first above written.

                                    HARBOURTON FINANCIAL CORPORATION

                                    By:/S/ J. Kenneth McLendon
                                       -----------------------
                                       J. Kenneth McLendon
                                    Its:President

                                    EMPLOYEE


                                            By:/S/ James M. Cluett
                                               -------------------
                                              James M. Cluett

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