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Employment Agreement - National Association of Securities Dealers Inc. and Alfred R. Berkeley III

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                          1735 K STREET, NORTHWEST
     PRESIDENT                 (202) 728-8100


                                                         May 31, 1996

Mr. Alfred R. Berkeley, III
301 Northfield Place
Baltimore, MD  21210

Dear Al:

         At a special meeting on May 9, 1996, the Board of Directors of The
Nasdaq Stock Market, Inc. (Nasdaq) authorized me to extend to you an offer
to become the President of Nasdaq. The responsibilities of the President
are set forth in the enclosed Position Description (Enclosure 1). In this
position, you will report directly to the Nasdaq Board, of which you will
be a voting member, and to me as the Chief Executive Officer of the parent,
NASD, Inc. Your election to this position must be ratified by the NASD
Board which I expect to formally take place on June 27, 1996. You can only
be removed from this position by action of the Nasdaq or NASD Boards, the
latter only in exceptional circumstances.

         Your compensation and benefits will be as set forth on the
enclosed schedule entitled "Alfred R. Berkeley Compensation and Benefit
Package" (Enclosure 2). You will be eligible for participation in our
Incentive Compensation Plan on the date you are formally employed and you
are guaranteed payment of the target incentive levels of 50% of your salary
for the first two calendar years of employment. Your salary will be
reviewed at the beginning of each calendar year by the Management
Compensation Committee of the NASD Board along with the salaries of the
other executives of the NASD, NASDR and Nasdaq. The annual review may or
may not result in a salary adjustment.

         Your employment will begin on May 31, 1996. If your employment is
terminated by the Nasdaq or the NASD Boards without cause, the NASD will
take the necessary action to require payment by Nasdaq to you of your
salary then in effect for a period of 24 months following the date of
termination. The term "cause" shall mean your conviction of a felony or
your willful commission of acts of dishonesty, fraud or deceit in
connection with your position.

         You shall be entitled to four weeks of annual vacation and in all
other respects you shall be subject to our normal employee vacation and
sick leave policy. Obviously, we will reimburse you for reasonable expenses
incurred in furtherance of the business of Nasdaq or the NASD when
appropriately documented just as we do for other executives. In addition,
Nasdaq will reimburse you for fees and dues necessary to maintain any
licenses or privileges held by you or any memberships in professional
associations such as bar associations. We will also reimburse you for your
initiation fee and annual dues in a lunch or dinner club of your choice
that may be necessary or useful in the performance of your responsibilities
as President of Nasdaq.

         Lastly, you will find attached as Enclosure 3 a copy of an NASD
Board Resolution, adopted on March 18, 1983 and still in effect, setting
forth the indemnification policy for the NASD and its subsidiaries. We also
include in the Nasdaq Certificate of Incorporation language permitting the
broadest possible indemnification under Delaware law. For your information,
we have in effect a Directors and Officers liability policy in the amount
of $10 million, with deductibles (all of which are covered under our

         For purposes of this letter agreement, the enclosures are
incorporated by reference.

         We are truly excited about your joining our senior management team
as we prepare to lead The Nasdaq Stock Market and the NASD Regulation onto
a new plateau that will serve as the springboard for success of the
enterprise into the next decade.


                                             /s/ Joseph R. Hardiman

                                              ALFRED R. BERKELEY, III
                                         COMPENSATION AND BENEFIT PACKAGE

Compensation                                        Target                  Maximum

Base Salary                                     $   500,000               $  500,000

Incentive Compensation
o    Corporate (50%)1
         Paid Currently                             200,000    (40%)          300,000    (60%)
         Deferred for 2 yrs.2                        50,000    (10%)           75,000    (15%)
o    Deferred Match3

                                                -----------               -----------
Total Compensation                              $   750,000               $   875,000
                                                ===========               ===========

Incentive Compensation as % of Base                     50%                     75.0%
                                                    =======                    ======

o  Qualified Retirement Plan (defined benefit - employer paid) - Exhibit A
o  Supplemental Executive Retirement Plan (defined benefit - employer paid) -
   Exhibit B
o  401(k) Savings Plan - 50% company match up to first 6% contributed by
   employee (discretionary additional match of 50% upon Board approval) -
   Exhibit C
o  Health and Medical Plans
o  Flexible Spending Account

     1   Earned if annual corporate goals are met or exceeded.

     2   20% of earned incentive compensation in deferred for two
         (2) years -- ultimate payout is conditioned on continued
         service, except in the event of death, disability,
         retirement or termination without cause.

     3   A match, up to 50% of the deferred amount, may be awarded depending
         on the attainment of 3-year Corporate Strategic Plan objectives.

                                                                EXHIBIT A



         The NASD retirement plan is designed to provide retirement income
based on the average base salary for the highest five consecutive years of
employment (final average salary) and years of service. All contributions
to the Plan, which include funding for administration expenses, are paid by
the Association.

         These are some important features of the Plan:

         o  accrued benefits vest, that is, are non-forfeitable after five
            years of service;

         o  early retirement can be elected as early as age 55 with a reduced
            retirement income;

         o  non-contributory defined benefit plan.

                              BENEFIT FORMULA

         Normal retirement at age 65 with benefit computed as follows:

             1.25% per year of service (maximum 30 years) times final
             average salary, plus .6267% per year times final average
             salary exceeding social security covered compensation.

             Election options - Joint and Survivor annuity or Lump Sum
             benefit, certain, or certain and life.

         Deferred retirement - Employment with the NASD past the Normal
         Retirement Age of 65 will delay benefits until actual retirement.
         Benefits are determined as of the actual retirement date.

         Early retirement - After age 55 and ten or more years of service
         the accrued benefit would be reduced 3% per year up to age 61 and
         is unreduced for ages 62 through 64.

         Disability retirement - Employees who are totally and permanently
         disabled before the Normal Retirement Age of 65, regardless of the
         length of service, will receive a monthly retirement benefit at
         age 65 that is based on the assumption that employment continued
         from the beginning of the disability until age 65 at the salary
         rate in effect at the beginning of the disability.

                                                                   EXHIBIT B


Comp Base                           Base salary + 1/3 of incentive compensation

Final Average Comp (FAC)            Highest 60 consecutive months immediately
                                    preceding retirement

Normal Retirement Calculation
-        Maximum                    60% of FAC
-        Offset                     Qualified plan benefit

Early Retirement Calculation        After age 55 and vested
-        Reductions                 No reduction after age 62.  3% per year
                                    between 55 and 62

Vesting                             Age 55 plus 10 years

Death Benefit                       Death benefit
                                    in lieu of above
                                    benefits equal to 3
                                    times base pay payable
                                    in 120 monthly

Funding                            Paid from general assets of Nasdaq

                                                                   Exhibit C

                            SAVINGS PLAN (401-K)


o    Offered to employees as a means of accumulating savings for
     retirement, reducing federal income taxes, and deferring taxes on
     investment earnings.


o    Employees are eligible to contribute to the plan, through payroll
     deductions, immediately upon employment. However, matching employer
     contributions are not made until 12 consecutive months of employment,
     with at least 1,000 hours of service during that time.

                         CONTRIBUTIONS AND MATCHING

o    NASD contributes $.50 for every dollar saved up to 6 percent of the
     employee's salary.

o    NASD may, at its discretion, contribute up to an additional $.50 for
     every dollar saved up to 6 percent of the employee's salary at the end
     of the year based on the performance of the organization as determined
     by management and approved by the Management Compensation/Development

o    Two types of employee contributions to the plan:

     -   Regular - can be pre-tax, after-tax or both. Contributions can
         range from 1 to 6 percent of base salary. These contributions are
         matched by the NASD at 50%, with up to an additional 50%
         discretionary match.
     -   Voluntary - pre-tax or after-tax or both.  Contributions above 6
         percent are not matched by the NASD.

o    The plan limits contributions (regular and voluntary combined) to 17
     percent of base salary. Highly compensated participants as defined by
     the IRS are further limited by anti-discrimination tasks which
     currently allow a maximum of 9%.


o Employee contributions vest immediately. Employer contributions are
vested after three years of service.

                             INVESTMENT OPTIONS

o    Investments are managed by the Vanguard Group of Investment Companies.
     Employees may select from 12 investment options to allocate their
     monies (6 equity, 3 fixed income, 2 balanced, 1 money market):

     -   Money Market Reserves - Federal Portfolio
     -   Investment Contract Trust
     -   Bond Index Fund
     -   Index Trust - 500 Portfolio
     -   Windsor II
     -   Trustees' Equity Fund - International Portfolio
     -   Morgan Growth Fund
     -   Explorer Fund
     -   Short Term Corporate Portfolio
     -   STAR Fund
     -   Wellington Fund
     -   U.S. Growth Portfolio

o    Market value of assets at December 31, 1994 - $51,974,000


o    In-service withdrawals of employee after-tax contributions are
     permitted for any reason, with certain restrictions, and withdrawals
     of pre-tax contributions are permitted in the case of hardship.

o    The Plan contains a loan feature which allows employees to borrow a
     portion of their pre-tax balances.

o    Plan benefits are paid to employees at retirement or termination of NASD