CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RELATIVE
                       OPTIONAL OR OTHER SPECIAL RIGHTS OF
                       PREFERRED STOCK AND QUALIFICATIONS,
                      LIMITATIONS AND RESTRICTIONS THEREOF

                                       OF

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       OF

                      OLYMPIC CASCADE FINANCIAL CORPORATION

                                 Pursuant to the
                General Corporation Law of the State of Delaware

      Olympic Cascade Financial Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in Article A
of its Certificate of Incorporation, its Board of Directors ("Board") adopted
the following resolution creating a series of its Preferred Stock, par value
$0.01 per share, designated as Series A Convertible Preferred Stock:

      WHEREAS, the Certificate of Incorporation of the Corporation authorizes a
class of shares known as Preferred Stock, par value $0.01 per share, to be
issuable from time to time in one or more series;

      RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation, the Board hereby creates a series of the class of
authorized Preferred Stock of the Corporation, and hereby fixes the designation
and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof as follows:

      (A) Designation of Series. The Corporation shall have a series of
Preferred Stock designated as "Series A Preferred Stock " (the "Series A
Preferred Stock").

      (B) Designation of Number of Shares in Series. The number of shares
constituting the Series A Preferred Stock shall be 50,000.

      (C) Fixing the Rights, Preferences, Privileges and Restrictions. The
following rights, preferences, privileges and restrictions are hereby granted to
and imposed upon the Series A Preferred Stock:

1.    RANK.

      The Series A Preferred Stock shall rank (i) prior to the Corporation's
common stock, par value $.02 per share (the "Common Stock"); (ii) prior to any
class or series of capital stock of the Corporation hereafter created
(collectively, with the Common Stock, "Junior Securities"); (iii) pari passu
with any class or series of capital stock of the Corporation hereafter created
specifically ranking, by its terms, on parity with the Series A Preferred Stock
("Pari Passu Securities"); and (iv) junior to any class or series of capital
stock of the Corporation hereafter created specifically ranking, by its terms,
senior to the Series A Preferred Stock ("Senior Securities"), in each case as to
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.

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2.    DIVIDENDS.

            (a) The holders of the Series A Preferred Stock shall be entitled to
receive dividends on a quarterly basis at a rate of 9% per annum per share (the
"Premium Amount"), payable out of any assets or funds legally available
therefor. Such dividends shall be cumulative and shall accrue, whether or not
declared by the Board of Directors, but shall be payable only when, as and if
declared by the Board of Directors. Accrued but unpaid dividends will be paid
upon conversion of the Series A Preferred Stock.

            (b) In no event, so long as any Series A Preferred Stock shall
remain outstanding, shall any dividend whatsoever be declared or paid upon, nor
shall any distribution be made upon, any Junior Securities, nor shall any shares
of Junior Securities be purchased or redeemed by the Corporation nor shall any
moneys be paid to or made available for a sinking fund for the purchase or
redemption of any Junior Securities (other than a distribution of Junior
Securities), without, in each such case, the written consent of the holders of a
majority of the outstanding shares of Series A Preferred Stock, voting together
as a class.

3.    LIQUIDATION PREFERENCE.

      In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, distributions to the stockholders
of the Corporation shall be made in the following manner:

            (a) The holders of the Series A Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock by reason of
their ownership of such stock, an amount equal to $100 (the "Initial Series A
Preferred Stock Price") for each share of Series A Preferred Stock then held by
them and, in addition, an amount equal to all cumulated and unpaid dividends on
the Series A Preferred Stock. If upon the occurrence of a liquidation,
dissolution or winding up of the Corporation the assets and funds thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.

            (b) After setting apart or paying in full the preferential amounts
due pursuant to Section 2(a) above, the remaining assets of the Corporation
available for distribution to stockholders, if any, shall be distributed to the
holders of the Series A Preferred Stock and Common Stock on a pro rata basis,
based on the number of shares of Common Stock then held by each holder on an
as-converted basis.

            (c) A consolidation or merger of this Corporation with or into any
other corporation or corporations, or a sale, conveyance or disposition of all
or substantially all of the assets of this Corporation, the effectuation by the
Corporation of a transaction or series of related transactions in which more
than 50% of the voting power of the Corporation is disposed of; or an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, of shares of Common Stock of this
Corporation (each, a "Liquidity Event"), shall be deemed to be a liquidation,
dissolution or winding up within the meaning of this Section 2.


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<PAGE>

            (d) Notwithstanding any other provision of this Section 2, the
Corporation may at any time, out of funds legally available therefor, repurchase
shares of Common Stock of the Corporation issued to or held by employees,
officers or consultants of the Corporation or its subsidiaries upon termination
of their employment or services, pursuant to any agreement providing for such
right of repurchase, whether or not dividends on the Series A Preferred Stock
shall have been declared and funds set aside therefor and such repurchases shall
not be subject to the liquidation preferences of the Series A Preferred Stock.

            (e) In the event the Corporation proposes to distribute assets other
than cash in connection with any liquidation, dissolution or winding up of the
Corporation, the value of the assets to be distributed to the holder of shares
of Series A Preferred Stock and Common Stock shall be determined in good faith
by the Board. Any securities not subject to investment letter or similar
restrictions on free marketability shall be valued as follows:

                  (i) If traded on a securities exchange, the value shall be
deemed to be the average

                  of the security's closing prices on such exchange over the
thirty (30) day period ending one (1) day prior to the distribution;

                  (ii) If actively traded over-the-counter, the value shall be
deemed to be the average

                  of the closing bid prices over the thirty (30) day period
ending three (3) days prior to the distribution; and

                  (iii) If there is no active public market, the value shall be
the fair market value thereof as determined in good faith by the Board.

                  The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i),
(ii) or (iii) to reflect the fair market value thereof as determined in good
faith by the Board. The holders of at least a majority of the outstanding Series
A Preferred Stock shall have the right to challenge any determination by the
Board of fair market value pursuant to this Section 2(e), in which case the
determination of fair market value shall be made by an independent appraiser
selected jointly by the Board and the challenging parties, the cost of such
appraisal to be borne equally by the Corporation and the challenging parties.

4.    VOTING RIGHTS.

      Except as otherwise required by law or as set forth herein, the holder of
each share of Series A Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such share of A
Preferred could be converted at the record date for determination on of the
stockholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not counted
separately as a class. Holders of Series A Preferred Stock shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of the
Corporation.


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<PAGE>

5.    CONVERSION.

      The holders of the Series A Preferred Stock have conversion rights as
follows (the "Conversion Rights"):

            (a) Right to Convert Series A Preferred Stock. Each share of Series
A Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series A Preferred Stock, into such
number of fully paid and nonassessable shares of Common Stock as is determined
in the case of the Series A Preferred Stock by dividing Initial Series A
Preferred Stock Price by the Series A Conversion Price, determined as
hereinafter provided, in effect at the time of the conversion. The price at
which shares of Common Stock shall be deliverable upon conversion of the Series
A Preferred Stock (the "Series A Conversion Price") shall initially be $1.50 per
share of Common Stock. Such Initial Conversion Price shall be subject to
adjustment as hereinafter provided.

            (b) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective respective Conversion Price. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into full shares of Common Stock and
to receive certificates therefor, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock and shall give written notice to
the Corporation at such office that he elects to convert the same. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series A Preferred Stock a certificate or certificates
for the number of shares of Common Stock to which he shall be entitled as
aforesaid and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of Common Stock.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on such date.

            (c) Reservation of Stock Issuable Upon Conversion. This Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of the Series A Preferred Stock such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such Series A Preferred Stock, this Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.


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<PAGE>

6.    TRADING MARKET LIMITATION.

      Unless the Corporation either (i) is permitted by the applicable rules and
regulations of the principal securities market on which the Common Stock is
listed or traded or (ii) has obtained approval of the issuance of the Common
Stock upon conversion of or otherwise pursuant to the Series A Preferred Stock
in accordance with applicable law and the rules and regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization
with jurisdiction over the Corporation or any of its securities (the
"Stockholder Approval"), in no event shall the total number of shares of Common
Stock issued upon conversion of or otherwise pursuant to the Series A Preferred
Stock (including any shares of capital stock or rights to acquire shares of
capital stock issued by the Corporation which are aggregated or integrated with
the Common Stock issued or issuable upon conversion of or otherwise pursuant to
the Series A Preferred Stock for purposes of any such rule or regulation) exceed
the maximum number of shares of Common Stock that the Corporation can so issue
pursuant to any rule of the principal United States securities market on which
the Common Stock trades (including Rules 711 and 713 of the American Stock
Exchange or any successor rule)(the "Maximum Share Amount"). With respect to
each holder of Series A Preferred Stock, the Maximum Share Amount shall refer to
such holder's pro rata share thereof. In the event that the sum of (x) the
aggregate number of shares of Common Stock actually issued upon conversion of or
otherwise pursuant to the outstanding Series A Preferred Stock plus (y) the
aggregate number of shares of Common Stock that remain issuable upon conversion
of or otherwise pursuant to the Series A Preferred Stock at the then effective
Conversion Price, represents at least one hundred percent (100%) of the Maximum
Share Amount (the "Triggering Event"), the Corporation will use its best efforts
to seek and obtain Stockholder Approval (or obtain such other relief as will
allow conversions hereunder in excess of the Maximum Share Amount) as soon as
practicable following the Triggering Event.

7.    REDEMPTION OR CONVERSION AT MATURITY.

            (a) So long as all of the shares of Common Stock issuable upon
conversion of all outstanding shares of Series A Preferred Stock are then
authorized and reserved for issuance, each share of Series A Preferred Stock
issued and outstanding on December __, 2011 (the "Maturity Date"), shall be
either (i) redeemed in cash by the Corporation for the Liquidation Preference
(the "Redemption Price") or (ii) at the option of the Corporation, automatically
converted into shares of Common Stock on such date at a conversion price equal
to the Series A Conversion Price then in effect one business day prior to the
Maturity Date, in accordance with, and subject to, the provisions of Section 7
hereof (the "Automatic Conversion").

            (b) From and after the Maturity Date, unless there shall have been a
default in the payment of the Redemption Price or the Automatic Conversion, all
rights of the holders of shares of Series A Preferred Stock (except the right to
receive the Redemption Price or shares of Common Stock pursuant to the Automatic
Conversion) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.


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<PAGE>

8.    ADJUSTMENTS TO CONVERSION PRICE.

            (a) Adjustments for Stock Dividends, Subdivisions, Combinations or
Consolidations of Common Stock. In the event the outstanding shares of Common
Stock shall be subdivided (by stock dividend, stock split, or otherwise), into a
greater number of shares of Common Stock, the Series A Conversion Price then in
effect shall, concurrently with the effectiveness of such subdivision, be
proportionately decreased. In the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Series A Conversion Prices then in
effect shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.

            (b) Adjustments for Other Distributions. In the event the
Corporation at any time or from time to time makes, or files a record date for
the determination of holders of Common Stock entitled to receive any
distribution payable in securities or assets of the Corporation other than
shares of Common Stock then and in each such event provision shall be made so
that the holders of Series A Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities or assets of the Corporation which they
would have received had their Series A Preferred Stock been converted into
Common Stock on the date of such event and had they thereafter, during the
period from the date of such event to and including the date of conversion,
retained such securities or assets receivable by them as aforesaid during such
period, subject to all other adjustment called for during such period under this
Section 8 with respect to the rights of the holders of the Series A Preferred
Stock.

            (c) Adjustments for Reclassification, Exchange and Substitution. If
the Common Stock issuable upon conversion of the Series A Preferred Stock shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for
above), then and in each such event the holder of each share of Series A
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization or reclassification or other change by holders of the
number of shares of Common Stock that would have been subject to receipt by the
holders upon conversion of the Series A Preferred Stock immediately before that
change, all subject to further adjustment as provided herein.

            (d) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the provisions of
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.


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<PAGE>

            (e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to Section 8, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series A Preferred Stock.

                  9. PROTECTIVE PROVISIONS.

      So long as any shares of Series A Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval of the holders of at
least a majority of the then-outstanding shares of Series A Preferred Stock,
take any action that:

            (a) alters the rights, preferences or privileges of the Series A
Preferred Stock;

            (b) creates any new class or series of shares that has a preference
over or is on a parity with the Series A Preferred Stock with respect to voting
rights, dividends or liquidation preferences; or

            (c) reclassifies stock into shares having a preference over or on a
parity with the Series A Preferred Stock with respect to voting, dividends or
liquidation preferences.

Composite as amended through March 16, 2004.


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