FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

         This Amendment is made as of July 1, 1999, by and among Olympic Cascade
Financial  Corporation,   a  Delaware  corporation  (the  "Company"),   National
Securities  Corporation,  a Washington corporation and a wholly-owned subsidiary
of  the  Company   ("National")   and  Steven  A.   Rothstein,   an   individual
("Executive").

         A. The Company,  National and  Executive  are parties to an  Employment
Agreement dated as of April 1, 1998 (the "Agreement"), pursuant to which each of
the Company and National  employ  Executive as its Chairman and Chief  Executive
Officer, based in the Company's executive offices in Chicago, Illinois; and

         B.  The  Company,  National  and  Executive  desire  to  amend  certain
provisions of the Agreement, as set forth in this Amendment.

         NOW,  THEREFORE,  in consideration  of the mutual terms,  covenants and
conditions set forth below, the parties agree as follows:

1.       TERM OF AGREEMENT.  Section 2 of the Agreement is hereby deleted in its
 entirety and replaced with the following:

         "The  term of this  Agreement  shall be for a period of three (3) years
         commencing  on July 1, 1999,  unless  terminated  earlier  pursuant  to
         Section 7 below."

2. CONFLICTING ACTIVITIES. Section 4.3 of the Agreement is hereby deleted in its
entirety and replaced with the following:

         "4.3  CONFLICTING  ACTIVITIES.  For the term of this Agreement or until
         Executive's  employment hereunder  terminates,  whichever occurs first,
         Executive   hereby   agrees  to  promote  and   develop  all   business
         opportunities  that  come  to his  attention  relating  to  current  or
         anticipated  future  business of the Company and National,  in a manner
         consistent  with the best interest of the Company and National and with
         his duties  under  this  Agreement.  If  Executive  becomes  aware of a
         business  opportunity  during the performance of his duties  hereunder,
         through  the use of the  property  or  information  of the  Company  or
         National,  or under  circumstances that would reasonably lead Executive
         to believe that the business opportunity was intended by the offeror to
         be  offered to the  Company  or  National,  he shall  first  offer such
         opportunity to the Company or National,  as the case may be. Should the
         Board of Directors of the Company or National,  as the case may be, not
         exercise  its  right  to  pursue  this  business  opportunity  within a
         reasonable  period of time,  not to exceed thirty (30) days,  Executive
         may develop the business  opportunity for himself;  provided,  however,
         that such  development  may in no way  conflict or  interfere  with the
         duties  owed by  Executive  to the  Company  and  National  under  this
         Agreement.  Further,  Executive may develop such business opportunities
         only  on his  own  time,  and  may  not  use  any  service,  personnel,
         equipment,  supplies,  facility,  or trade  secrets  of the  Company or
         National  in their  development.  As used  herein,  the term  "business
         opportunity"  shall  not  include  business   opportunities   involving
         investment in publicly  traded stocks,  bonds or other  securities,  or
         other investments of a personal nature.

3.       SEVERANCE.  Section 5 of the Agreement is hereby deleted in its
entirety and replaced with the following:


         "So  long as this  Agreement  is in  effect,  and  except  as  would be
         inconsistent   with  Section  7,  upon   termination   of   Executive's
         employment,  Executive  or  Executive's  designees  or  heirs  shall be
         entitled to a lump sum payment  equal to one year of  Executive's  Base
         Salary as then in effect (the "Severance Payment"). Notwithstanding any
         other provision of this Agreement to the contrary, for purposes of this
         Section  5, all  compensation  payable  pursuant  to  Section 3 of this
         Agreement shall be accrued to the date of termination of employment."

4. CHANGE OF CONTROL.  Section 7.1 of the Agreement shall be amended by adding a
new  subsection  (e) and a new  subsection  (f)  immediately  following  Section
7.1(d), as follows:

         "(e) Executive's  employment hereunder may be terminated by the Company
         or by  Executive  at  any  time  within  ninety  (90)  days  after  the
         occurrence  of a Change  in  Control  (as  defined  below).  Upon  such
         termination:

(i)      the Company shall pay to Executive as a lump-sum payment an amount
         equal to two (2) years' Base Salary in effect at the time of
         termination;

(ii)     the Company  shall  provide  Executive  with a  continuation  of health
         insurance coverage,  existing office space and existing secretarial and
         telephone  services,  in each case for a period of eighteen (18) months
         after the date of termination; and

(iii)    all stock options issued by the Company and National to Executive shall
         immediately  vest and become  exercisable  for a period of at least two
         (2) years after the date of termination,  notwithstanding any provision
         to the  contrary  in the  Company's  stock  option plan or in any stock
         option agreement between the Company and/or National and Executive.

         For purposes of this  Agreement,  a "Change in Control"  shall mean the
         occurrence of any of the following events:

                           (x) the  acquisition  by any  individual,  entity  or
                  group  (within the meaning of Section  13(d)(3) or 14(d)(2) of
                  the Securities Exchange Act of 1934, as amended (the "Exchange
                  Act")  (collectively,  a "person") of Beneficial ownership (as
                  such  term is  defined  in Rule  13d-3  promulgated  under the
                  Exchange Act), directly or indirectly,  of twenty-five percent
                  (25%) or more of the then  outstanding  shares of common stock
                  of the Company or  National  (collectively,  the  "Outstanding
                  Common Stock");  provided,  however,  that the following shall
                  not constitute a Change of Control:  (i) any acquisition by an
                  Underwriter  (as such term is defined in Section  2(11) of the
                  Securities  Act of 1933, as amended) for the purpose of making
                  a public  offering;  or (ii) any  acquisition  by any employee
                  benefit plan (or related trust) sponsored or maintained by the
                  Company  or  National  or any  corporation  controlled  by the
                  Company or National;

                    (y)  the sale or liquidation of all or substantially  all of
                         the assets of the

                  Company or National; or

                           (z) any transaction or series of  transactions  which
                  result in Steven A.  Rothstein  directly or indirectly  owning
                  less than ten percent (10%) of the  Outstanding  Common Stock,
                  other  than  as  a  result  of  a  transaction  or  series  of
                  transactions  involving the direct or indirect voluntary sale,
                  transfer or other  disposition  of common stock of the Company
                  by Steven A. Rothstein.

         (f)  Notwithstanding   anything  contained  herein,  or  in  any  other
         agreement  between the Company,  National and Executive,  or benefit or
         compensation  plan  under  which  the  Executive  participates,  to the
         contrary,  in the event  that any  amounts  due  Executive  under  this
         Section  7.1,  or under any other  plan or  program  of the  Company or
         National  or  other  agreement   between  the  Company,   National  and
         Executive,  constitute  "parachute  payments,"  within  the  meaning of
         section  280G of the  Internal  Revenue  Code of 1986,  as amended (the
         "Code"), and the amount of such parachute payments, when reduced by the
         federal excise taxes due and owing on such parachute payments,  if any,
         is less than the amount  Executive  would  receive if he were paid only
         three (3) times his "base  amount,"  as that term is defined in section
         280G of the Code,  then,  in lieu of all payments  hereunder  which are
         parachute  payments,  Executive shall be paid, in cash, an amount equal
         to three  (3)  times  his base  amount  less one  dollar  ($1.00).  The
         determinations  to be made with respect to this Section 7.1(f) shall be
         made by an independent auditor jointly selected by the parties."

5. GOVERNING LAW. Section 9.3 of the Agreement is hereby deleted in its entirety
and replaced with the following:

         "This Agreement is made under and shall be construed in accordance with
         the laws of the State of Illinois,  without  regard to conflict of laws
         principles.  The Company,  National and  Executive  hereby  consent and
         agree to be subject to the jurisdiction of the federal and state courts
         of the State of  Illinois  sitting in Chicago,  Illinois,  in any suit,
         action or proceeding  arising out of this Agreement or the transactions
         contemplated hereby."

6. AFFECT ON AGREEMENT. Except as set forth in this Amendment, the Agreement and
each of the  parties'  respective  obligations  thereunder  shall remain in full
force and effect,  and shall not be waived,  modified,  superseded  or otherwise
affected by this Amendment.  This Amendment is not to be construed as a release,
waiver or modification  of any of the terms,  conditions,  covenants,  rights or
remedies set forth in the Agreement, except as specifically set forth herein.

7.  COUNTERPARTS.  This  Amendment may be executed in two or more  counterparts,
each of which  shall be  deemed  an  original  and all of which  together  shall
constitute one and the same instrument.

8.  GOVERNING  LAW.  This  Amendment  is made  under and shall be  construed  in
accordance with the laws of the State of Illinois, without regard to conflict of
laws principles.

IN WITNESS  WHEREOF,  the parties have  executed  this  Amendment as of the date
first above written.

OLYMPIC CASCADE FINANCIAL CORPORATION          NATIONAL SECURITIES CORPORATION

By:________________________________       By:________________________________
Its:________________________________      Its:_________________________________

EXECUTIVE

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Steven A. Rothstein