Document:

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                                                                    Exhibit 10.1

                           WESTBROOK CORPORATE CENTER
                              WESTCHESTER, ILLINOIS

                             OFFICE LEASE AGREEMENT

                                     BETWEEN

   IL-WESTBROOK CORPORATE CENTER, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY
                                  ("LANDLORD")

                                       AND

             INSURANCE AUTO AUCTIONS, INC., AN ILLINOIS CORPORATION
                                   ("TENANT")

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                             OFFICE LEASE AGREEMENT

      THIS OFFICE LEASE AGREEMENT (the "LEASE") is made and entered into as of
April 13, 2004, by and between IL-WESTBROOK CORPORATE CENTER, L.L.C., A DELAWARE
LIMITED LIABILITY COMPANY ("LANDLORD") and INSURANCE AUTO AUCTIONS, INC., AN
ILLINOIS CORPORATION ("TENANT").

      The following exhibits and attachments are incorporated into and made a
part of the Lease: EXHIBIT A (Outline and Location of Premises), EXHIBIT B
(Intentionally Omitted), EXHIBIT C (Work Letter), EXHIBIT D (Commencement
Letter), EXHIBIT E (Building Rules and Regulations), EXHIBIT F (Additional
Provisions), EXHIBIT G (Letter of Credit Form), EXHIBIT H (Offering Space),
EXHIBIT I (Janitorial Cleaning Specifications), EXHIBIT J (Base Building
Condition), EXHIBIT K (SNDA Agreement) and EXHIBIT L (Location of Certain
Parking Spaces).

1. BASIC LEASE INFORMATION.

      1.01. "BUILDING" shall mean the 5 office buildings located at Westbrook
Corporate Center, Westchester, Illinois, and commonly known as One Westbrook
Corporate Center, Two Westbrook Corporate Center, Three Westbrook Corporate
Center, Four Westbrook Corporate Center and Five Westbrook Corporate Center;
and, at Landlord's option, shall include any other building constructed on the
vacant land owned by Landlord adjacent to the existing office buildings in the
Property (as hereinafter defined). "Rentable Square Footage of the Building" is
deemed to be 1,101,920 square feet (such number of 1,101,920 being the standard
number generally used for leasing space in the Building currently and in the
past several years and not a number unique to this deal); provided, however,
that in the event Landlord constructs another office building on the land which
is part of the Property or elects to operate the individual office buildings
comprising the Building as separate entities, the Rentable Square Footage of the
Building shall be appropriately adjusted by Landlord.

      1.02. "PREMISES" shall mean the area shown on EXHIBIT A to this Lease. The
Premises is located on the FOURTH AND FIFTH FLOORS OF TWO WESTBROOK CORPORATE
CENTER and known as SUITES 400 AND 500. If the Premises include one or more
floors in their entirety, all corridors and restroom facilities located on such
full floor(s) shall be considered part of the Premises. The "RENTABLE SQUARE
FOOTAGE OF THE PREMISES" is deemed to be 37,522 SQUARE FEET. Landlord and Tenant
stipulate and agree that the Rentable Square Footage of the Building and the
Rentable Square Footage of the Premises are correct.

      1.03. "BASE RENT":

<TABLE>
<CAPTION>
                                          ANNUAL RATE                MONTHLY
  PERIOD OR MONTHS OF TERM              PER SQUARE FOOT             BASE RENT
  ------------------------              ---------------             ---------
<S>                                     <C>                        <C>
COMMENCEMENT DATE-08/31/2006                $10.37                 $32,425.26
    09/01/2006-08/31/2007                   $21.50                 $67,226.92
    09/01/2007-08/31/2008                   $22.25                 $69,572.04
    09/01/2008-08/31/2009                   $23.00                 $71,917.17
    09/01/2009-08/31/2010                   $24.50                 $76,607.42
    09/01/2010-08/31/2011                   $25.25                 $78,952.54
    09/01/2011-08/31/2012                   $26.00                 $81,297.67
    09/01/2012-08/31/2013                   $26.75                 $83,642.79
    09/01/2013-08/31/2014                   $27.50                 $85,987.92
    09/01/2014-08/31/2015                   $28.25                 $88,333.04
    09/01/2015-08/31/2016                   $29.00                 $90,678.17
</TABLE>

      1.04. "TENANT'S PRO RATA SHARE": 3.4051%.

      1.05. INTENTIONALLY OMITTED.

      1.06. "TERM": A period of ONE HUNDRED FORTY FOUR (144) MONTHS and zero (0)
days. Subject to Section 3, the Term shall commence on SEPTEMBER 1, 2004 (the
"COMMENCEMENT DATE") and, unless terminated early in accordance with this Lease,
end on AUGUST 31, 2016 (the "TERMINATION DATE").

      1.07. ALLOWANCE(S): A TENANT IMPROVEMENT ALLOWANCE OF $1,876,100.00 as
more fully set forth on Exhibit C to this Lease.

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      1.08. "SECURITY DEPOSIT": $129,763.58, as more fully described (including
provisions relating to the use of a LETTER OF CREDIT) in Section 6.

      1.09. "GUARANTOR(S)": None.

      1.10. "BROKER(S)": Equis Corporation.

      1.11. "PERMITTED USE": General office use.

1.12. "Notice Address(es)":

Landlord:                                     Tenant:

IL-WESTBROOK CORPORATE CENTER, L.L.C.,        INSURANCE AUTO AUCTIONS, INC., an
a Delaware limited liability company          Illinois corporation
c/o Equity Office                             Two Westbrook Corporate Center
8600 W. Bryn Mawr Avenue, Suite 400N          Suite 500
Chicago, Illinois 60631                       Westchester, Illinois 60154
Attention: Building Manager                   ATTN: Michael J. Madden

      Notwithstanding the Tenant notice address set forth above, prior to
September 1, 2004, Tenant's notice address shall be Insurance Auto Auction,
Inc., 850 East Algonquin Road, Suite 100, Schaumburg, IL, 60173, Attn: Michael
J. Madden.

      A copy of any notices to Landlord shall be sent to Equity Office, Two
North Riverside Plaza, Suite 2100, Chicago IL, 60606, Attn: Central Regional
Counsel.

      A copy of any notices to Tenant shall be sent to Cohon, Raizes & Regal,
208 South LaSalle Street, Suite 1860, Chicago, IL, 60604, Attn: Bruce J.
Waldman, Esq.

      1.13. "BUSINESS DAY(S)" are Monday through Friday of each week, exclusive
of New Year's Day, Presidents Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day ("HOLIDAYS"). Landlord may designate in
writing additional Holidays that are commonly recognized by other office
buildings in the area where the Building is located. "Building Service Hours"
are 8:00 A.M. to 6:00 P.M. on Business Days and 8:00 A.M. to 1:00 P.M. on
Saturdays.

      1.14. "LANDLORD WORK" means the work, if any, that Landlord is obligated
to perform in the Premises pursuant to a separate agreement (the "WORK LETTER"),
if any, attached to this Lease as EXHIBIT C.

      1.15. "PROPERTY" means the Building and the parcel(s) of land on which it
is located and, at Landlord's discretion, the parking facilities and other
improvements, if any, serving the Building and the parcel(s) of land on which
they are located, however no such exercise of Landlord's discretion shall
adversely affect Tenant's parking rights contained in this Lease including, but
not limited to, the provisions set forth in Exhibit F of this Lease.

2. LEASE GRANT.

      The Premises are hereby leased to Tenant from Landlord, together with the
right to use any portions of the Property that are designated by Landlord for
the common use of tenants and others (the "COMMON AREAS").

3. ADJUSTMENT OF COMMENCEMENT DATE; POSSESSION.

      3.01. Intentionally Omitted.

      3.02. Landlord shall, upon full execution of this Lease by both Landlord
and Tenant, tender possession of the Premises to Tenant, broom-clean and free of
all tenancies and other occupancies, for the purpose of performing improvements.
Subject to Landlord's obligation to perform Landlord Work, the Premises are
accepted by Tenant in "as is" condition and configuration without any
representations or warranties by Landlord, except as may be expressly set forth
elsewhere in this Lease. By taking possession of the Premises, Tenant agrees
that the Premises are in good order and satisfactory condition. If Tenant takes
possession of the Premises for the purpose of conducting its business (over and
above initial startup/testing/skeleton-crew activities) before the Commencement
Date, such possession shall

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be subject to the terms and conditions of this Lease and Tenant shall pay Rent
(defined in Section 4.01) to Landlord for each day of possession before the
Commencement Date. However, except for the cost of services requested by Tenant
(e.g. after hours HVAC), Tenant shall not be required to pay Rent for any days
of possession before the Commencement Date during which Tenant, with the
approval of Landlord, is in possession of the Premises for the sole purpose of
performing improvements or installing furniture, equipment or other personal
property. (Tenant shall be entitled to the reasonable use of freight elevator
service during the pre-Commencement Date construction period at no charge to
Tenant, subject to normal rules and regulations including those regarding
scheduling and availability.)

4. RENT.

      4.01. Tenant shall pay Landlord, without any setoff or deduction, unless
expressly set forth in this Lease, all Base Rent and Additional Rent due for the
Term (collectively referred to as "RENT"). "ADDITIONAL RENT" means all sums
(exclusive of Base Rent) that Tenant is required to pay Landlord under this
Lease. Base Rent and recurring monthly charges of Additional Rent shall be due
and payable in advance on the first day of each calendar month without notice or
demand, provided that the installment of Base Rent for the first full calendar
month of the Term shall be payable upon the execution of this Lease by Tenant.
All other items of Rent shall be due and payable by Tenant on or before 30 days
after billing by Landlord. Rent shall be made payable to the entity, and sent to
the address, Landlord designates in writing and shall be made by good and
sufficient check or wire transfer or by other means acceptable to Landlord. If
Tenant fails to pay any item or installment of Rent when due, Tenant shall pay
Landlord an administration fee equal to the lesser of 5% of the past due Rent or
$500.00, provided that Tenant shall be entitled to a grace period of 5 Business
Days for the first 3 late payments of Rent in a given calendar year. In
addition, past due Rent shall accrue interest at 11% per annum. Landlord's
acceptance of less than the correct amount of Rent shall be considered a payment
on account of the earliest Rent due. Rent for any partial month during the Term
shall be prorated. No endorsement or statement on a check or letter accompanying
payment shall be considered an accord and satisfaction. Tenant's covenant to pay
Rent is independent of every other covenant in this Lease.

      4.02. Intentionally Omitted.

5. COMPLIANCE WITH LAWS; USE.

      The Premises shall be used for the Permitted Use and for no other use
whatsoever. Tenant shall comply with all statutes, codes, ordinances, orders,
rules and regulations of any municipal or governmental entity whether in effect
now or later, including the Americans with Disabilities Act ("LAW(S)"),
regarding the operation of Tenant's business and the use, condition,
configuration and occupancy of the Premises. Landlord shall be responsible for
the cost of correcting any violations of Title III of the Americans with
Disabilities Act ("ADA") with respect to the Common Areas of the Building,
including the existing rest rooms serving the Premises. Notwithstanding the
foregoing, Landlord shall have the right to contest any alleged violation of the
ADA or other Laws in good faith, including, without limitation, the right to
apply for and obtain a waiver or deferment of compliance, the right to assert
any and all defenses allowed by Law and the right to appeal any decisions,
judgments or rulings to the fullest extent permitted by Law. Landlord and Tenant
further agree that the provisions of Article 13 (Indemnity) shall be applicable
to such contest by Landlord. Landlord, after the exhaustion of any and all
rights to appeal or contest, will make all repairs, additions, alterations or
improvements necessary to comply with the terms of any final order or judgment
consistent with the ADA provisions set forth above or required of Landlord
pursuant to Laws other than the ADA.

      Subject to all applicable Laws, as well as Landlord's Rules and
Regulations, Tenant shall be allowed to use the connecting stairway between the
fourth and fifth floors on a pass-card basis.

      In addition, Tenant shall, at its sole cost and expense, promptly comply
with any Laws that relate to the "Base Building" (defined below), but only to
the extent such obligations are triggered by Tenant's use of the Premises, other
than for general office use, or Alterations or improvements in the Premises
performed or requested by Tenant. "BASE BUILDING" shall include the structural
portions of the Building, the public restrooms and the Building mechanical,
electrical and plumbing systems and equipment located in the internal core of
the Building on the floor or floors on which the Premises are located. Tenant
shall promptly provide Landlord with copies of any notices it receives regarding
an alleged violation of Law. Tenant shall comply with the rules and regulations
of the Building attached as EXHIBIT E and such other reasonable rules and
regulations adopted by Landlord from time to time, including rules and

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regulations for the performance of Alterations (defined in Section 9). The rules
and regulations shall be generally applicable, and generally applied in the same
manner, to all tenants of the Building.

6. SECURITY DEPOSIT.

      The Security Deposit shall be delivered to Landlord upon the execution of
this Lease by Tenant and held by Landlord without liability for interest (unless
required by Law) as security for the performance of Tenant's obligations. The
Security Deposit is not an advance payment of Rent or a measure of damages.
Landlord may use all or a portion of the Security Deposit to satisfy past due
Rent or to cure any Default (defined in Section 18) by Tenant. If Landlord uses
any portion of the Security Deposit, Tenant shall, within 5 Business Days after
demand, restore the Security Deposit to its original amount. Landlord shall
return any unapplied portion of the Security Deposit to Tenant within 45 days
after the later to occur of: (a) determination of the final Rent due from
Tenant; or (b) the later to occur of the Termination Date or the date Tenant
surrenders the Premises to Landlord in compliance with Section 25. Landlord may
assign the Security Deposit to a successor or transferee and, following the
assignment, Landlord shall have no further liability for the return of the
Security Deposit. Landlord shall not be required to keep the Security Deposit
separate from its other accounts.

      At Tenant's option, all or part of the Security Deposit may be in the form
of an irrevocable letter of credit (the "LETTER OF CREDIT"), which Letter of
Credit shall: (a) be in the amount of $129,763.58; (b) be issued on the form
attached hereto as EXHIBIT G; (c) name Landlord as its beneficiary; and (d) be
drawn on an FDIC insured financial institution satisfactory to the Landlord. The
Letter of Credit (and any renewals or replacements thereof) shall be for a term
of not less than 1 year. Tenant agrees that it shall from time to time, as
necessary, whether as a result of a draw on the Letter of Credit by Landlord
pursuant to the terms hereof or as a result of the expiration of the Letter of
Credit then in effect, renew or replace the original and any subsequent Letter
of Credit so that a Letter of Credit, in the amount required hereunder, is in
effect until a date which is at least 60 days after the Termination Date of the
Lease. If Tenant fails to furnish such renewal or replacement at least 60 days
prior to the stated expiration date of the Letter of Credit then held by
Landlord, Landlord may draw upon such Letter of Credit and hold the proceeds
thereof (and such proceeds need not be segregated) as a Security Deposit
pursuant to the terms of this Section 6. Any renewal or replacement of the
original or any subsequent Letter of Credit shall meet the requirements for the
original Letter of Credit as set forth above, except that such replacement or
renewal shall be issued by a national bank satisfactory to Landlord at the time
of the issuance thereof.

      If Landlord draws on the Letter of Credit as permitted in this Lease,
then, upon demand of Landlord, Tenant shall restore the amount available under
the Letter of Credit to its original amount by providing Landlord with an
amendment to the Letter of Credit evidencing that the amount available under the
Letter of Credit has been restored to its original amount. In the alternative,
Tenant may provide Landlord with cash, to be held by Landlord in accordance with
this Section, equal to the restoration amount required under the Letter of
Credit.

7. BUILDING SERVICES.

      7.01. Landlord shall furnish Tenant with the following services: (a) hot
and cold water for use in the Base Building lavatories and cold water for use in
the kitchen and break room in the Premises; (b) customary heat and air
conditioning in season during Building Service Hours (`customary' shall be
deemed to mean reasonably consistent with specifications provided from time to
time by other comparable buildings in the East-West Corridor submarket). Tenant
shall have the right to receive HVAC service during hours other than Building
Service Hours by paying Landlord's then standard charge for additional HVAC
service and providing such prior notice as is reasonably specified by Landlord
(As of the date hereof, Landlord's charges for after hours heating and air
conditioning service is $32.00 per hour per wing, subject to change from time to
time.); (c) standard janitorial service on Business Days in accordance with the
cleaning specifications attached hereto as Exhibit I, or such other reasonably
comparable specifications designated by Landlord from time to time.; (d)
Elevator service; (e) Electricity in accordance with the terms and conditions in
Section 7.02; (f) Access to the Building for Tenant and its employees 24 hours
per day/7 days per week, subject to the terms of this Lease and such security or
monitoring systems as Landlord may reasonably impose, including, without
limitation, sign-in procedures and/or presentation of identification cards; and
(g) such other services as Landlord reasonably determines are necessary or
appropriate for the Property.

      7.02. Electricity used by Tenant in the Premises shall be paid for by
Tenant by separate charge (separately metered) billed by the applicable utility
company and payable directly by Tenant. Without the consent of Landlord,
Tenant's use of electrical service shall not

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exceed, either in voltage, rated capacity, use beyond Building Service Hours or
overall load, that which Landlord reasonably deems to be standard for the
Building, which is currently six watts per useable square foot of the Premises.

      7.03. Landlord's failure to furnish, or any interruption, diminishment or
termination of services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or alterations, utility
interruptions or the occurrence of an event of Force Majeure (defined in Section
26.03) (collectively a "SERVICE FAILURE") shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an abatement
of Rent, nor relieve Tenant from the obligation to fulfill any covenant or
agreement. However, if the Premises, or a material portion of the Premises, are
made untenantable for a period in excess of 1 Business Day as a result of a
Service Failure that is reasonably within the control of Landlord to correct and
is not caused by the negligence or willful misconduct of Landlord, then Tenant,
as its sole remedy, shall be entitled to receive an abatement of Rent payable
hereunder during the period beginning on the date of the Service Failure and
ending on the day the service has been restored. If the entire Premises have not
been rendered untenantable by the Service Failure, the amount of abatement shall
be equitably prorated.

8. LEASEHOLD IMPROVEMENTS.

      All improvements in and to the Premises, including any Alterations
(collectively, "LEASEHOLD IMPROVEMENTS") shall remain upon the Premises at the
end of the Term without compensation to Tenant. Landlord, however, by written
notice to Tenant at least 30 days prior to the Termination Date, may require
Tenant, at its expense, to remove (a) any Cable (defined in Section 9.01)
installed by or for the benefit of Tenant, and (b) any Landlord Work or
Alterations that, in Landlord's reasonable judgment, are of a nature that would
require removal and repair costs that are materially in excess of the removal
and repair costs associated with standard office improvements (collectively
referred to as "REQUIRED REMOVABLES"). Required Removables shall include,
without limitation, internal stairways, raised floors, personal baths and
showers, vaults, rolling file systems and structural alterations and
modifications. However, it is agreed that Required Removables shall not include
any usual office improvements such as gypsum board, partitions, ceiling grids
and tiles, fluorescent lighting panels, Building standard doors and non-glued
down carpeting. The designated Required Removables shall be removed by Tenant
before the Termination Date. Tenant shall repair damage caused by the
installation or removal of Required Removables. If Tenant fails to perform its
obligations in a timely manner, Landlord may perform such work at Tenant's
expense. As part of the Landlord approval process for a proposed Alteration
(including the "Initial Alterations" referred to in Exhibit C of this Lease),
Landlord shall advise Tenant in writing as to which portions of the Alteration
are Required Removables.

9. REPAIRS AND ALTERATIONS.

      9.01. Tenant shall periodically inspect the Premises to identify any
conditions that are dangerous or in need of maintenance or repair. Tenant shall
promptly provide Landlord with notice of any such conditions. Tenant shall, at
its sole cost and expense, perform all maintenance and repairs to the Premises
that are not Landlord's express responsibility under this Lease, and keep the
Premises in good condition and repair, reasonable wear and tear excepted.
Tenant's repair and maintenance obligations include, without limitation, repairs
to: (a) floor covering; (b) interior partitions; (c) doors; (d) the interior
side of demising walls; (e) electronic, phone and data cabling and related
equipment that is installed by or for the exclusive benefit of Tenant
(collectively, "CABLE"); (f) supplemental air conditioning units, kitchens,
including hot water heaters, plumbing, and similar facilities exclusively
serving Tenant; and (g) Alterations. To the extent Landlord is not reimbursed by
insurance proceeds, Tenant shall reimburse Landlord for the cost of repairing
damage to the Building caused by the acts of Tenant, Tenant Related Parties and
their respective contractors and vendors. If Tenant fails to make any repairs to
the Premises for more than 15 days after notice from Landlord (although notice
shall not be required in an emergency), Landlord may make the repairs, and
Tenant shall pay the reasonable cost of the repairs, together with an
administrative charge in an amount equal to 10% of the cost of the repairs.
Notwithstanding the foregoing, if the repair to be performed by Tenant cannot
reasonably be completed within 15 days after Landlord's notice to Tenant,
Landlord shall not exercise its right to make such repair on Tenant's behalf so
long as Tenant commences such repair within 10 days after notice from Landlord
and is diligently pursuing the same to completion.

      9.02. Landlord shall keep and maintain in good repair and working order
and perform maintenance upon the: (a) structural elements of the Building; (b)
mechanical (including HVAC), electrical, plumbing and fire/life safety systems
serving the Building in general; (c) Common

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Areas; (d) roof of the Building; (e) exterior windows of the Building; and (f)
elevators serving the Building. Landlord shall promptly make repairs for which
Landlord is responsible.

      9.03. Tenant shall not make alterations, repairs, additions or
improvements or install any Cable (collectively referred to as "ALTERATIONS")
without first obtaining the written consent of Landlord in each instance, which
consent shall not be unreasonably withheld, conditioned or delayed. However,
Landlord's consent shall not be required for any Alteration that costs less than
$25,000.00 and satisfies all of the following criteria (a "COSMETIC
ALTERATION"): (a) is of a cosmetic nature such as painting, wallpapering,
hanging pictures and installing carpeting; (b) is not visible from the exterior
of the Premises or Building; (c) will not affect the Base Building; and (d) does
not require work to be performed inside the walls or above the ceiling of the
Premises. Cosmetic Alterations shall be subject to all the other provisions of
this Section 9.03. Prior to starting work, Tenant shall furnish Landlord with
plans and specifications; names of contractors reasonably acceptable to Landlord
(provided that Landlord may designate specific contractors with respect to Base
Building, however Tenant intends to competitively bid contracts to the extent
that contractors are acceptable to Landlord); required permits and approvals;
evidence of contractor's and subcontractor's insurance in amounts reasonably
required by Landlord and naming Landlord as an additional insured; and any
security for performance in amounts reasonably required by Landlord. Changes to
the plans and specifications must also be submitted to Landlord for its
approval, which shall not be unreasonably withheld, conditioned or delayed.
Alterations shall be constructed in a good and workmanlike manner using
materials of a quality reasonably approved by Landlord. Tenant shall reimburse
Landlord for any sums paid by Landlord for third party examination of Tenant's
plans for non-Cosmetic Alterations. In addition, Tenant shall pay Landlord a fee
for Landlord's oversight and coordination of any non-Cosmetic Alterations equal
to 5% of the cost of the Alterations. Notwithstanding the provisions of the
prior sentence, with respect to the Initial Alterations, in lieu of such 5% fee,
Tenant shall reimburse Landlord for its actual, out-of-pocket costs to third
parties incurred in connection with Landlord's review, oversight and
coordination of the Initial Improvements up to a maximum amount of Ten Thousand
Dollars ($10,000). Upon completion, Tenant shall furnish "as-built" plans for
non-Cosmetic Alterations, completion affidavits and full and final waivers of
lien. Landlord's approval of an Alteration shall not be deemed a representation
by Landlord that the Alteration complies with Law.

10. ENTRY BY LANDLORD.

      Landlord may enter the Premises to inspect, show (although showings to
prospective tenants shall only be during the last 18 months of the Lease Term)
or clean the Premises or to perform or facilitate the performance of repairs,
alterations or additions to the Premises or any portion of the Building. Except
in emergencies or to provide Building services, Landlord shall provide Tenant
with reasonable prior verbal notice of entry and shall use reasonable efforts to
minimize any interference with Tenant's use of the Premises. If reasonably
necessary, Landlord may temporarily close all or a portion of the Premises to
perform repairs, alterations and additions. However, except in emergencies,
Landlord will not close the Premises if the work can reasonably be completed on
weekends and after Building Service Hours. Entry by Landlord shall not
constitute a constructive eviction or entitle Tenant to an abatement or
reduction of Rent. Notwithstanding the foregoing, except in emergency situations
as determined by Landlord, Landlord shall exercise reasonable efforts not to
unreasonably interfere with the conduct of the business of Tenant in the
Premises. However, the foregoing shall not require Landlord to perform work
after Business Service Hours unless Tenant agrees to reimburse Landlord for the
extra cost incurred in connection with such work which exceeds the cost for such
work which would have been incurred had it been performed during Business
Service Hours.

11. ASSIGNMENT AND SUBLETTING.

      11.01. Except in connection with a Permitted Transfer (defined in Section
11.04), Tenant shall not assign, sublease, transfer or encumber any interest in
this Lease or allow any third party to use any portion of the Premises
(collectively or individually, a "TRANSFER") without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed if Landlord does not exercise its recapture rights under Section 11.02.
If the entity which controls the voting shares/rights of Tenant changes at any
time, such change of ownership or control shall constitute a Transfer unless
Tenant is an entity whose outstanding stock is listed on a recognized securities
exchange or if at least 80% of its voting stock is owned by another entity, the
voting stock of which is so listed. Any attempted Transfer in violation of this
Section is voidable by Landlord. In no event shall any Transfer, including a
Permitted Transfer, release or relieve Tenant from any obligation under this
Lease.

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      11.02. Tenant shall provide Landlord with financial statements for the
proposed transferee, a fully executed copy of the proposed assignment, sublease
or other Transfer documentation and such other information as Landlord may
reasonably request. Within 15 Business Days after receipt of the required
information and documentation, Landlord shall either: (a) consent to the
Transfer by execution of a consent agreement in a form reasonably designated by
Landlord; (b) reasonably refuse to consent to the Transfer in writing (setting
forth the basis for such refusal); or (c) in the event of an assignment of this
Lease or subletting of more than 50% of the Rentable Area of the Premises for
more than 90% of the remaining Term (excluding unexercised options), recapture
the portion of the Premises that Tenant is proposing to Transfer. If Landlord
exercises its right to recapture, this Lease shall automatically be amended (or
terminated if the entire Premises is being assigned or sublet) to delete the
applicable portion of the Premises effective on the proposed effective date of
the Transfer. Tenant shall pay Landlord a review fee of $1,500.00 for Landlord's
review of any requested Transfer, except that there shall be no review fee 1) in
the case of a Permitted Transfer, or 2) in the case of an exercise of Landlord's
recapture rights contained herein.

      11.03. Tenant shall pay Landlord 50% of all rent and other consideration
which Tenant receives as a result of a Transfer that is in excess of the Rent
payable to Landlord for the portion of the Premises and Term covered by the
Transfer. Tenant shall pay Landlord for Landlord's share of the excess within 30
days after Tenant's receipt of the excess. Tenant may deduct from the excess, on
a straight-line basis, all reasonable and customary expenses directly incurred
by Tenant attributable to the Transfer, including brokerage fees, legal fees and
construction costs. If Tenant is in Default, Landlord may require that all
sublease payments be made directly to Landlord, in which case Tenant shall
receive a credit against Rent in the amount of Tenant's share of payments
received by Landlord.

      11.04. Tenant may assign this Lease to a successor to Tenant by purchase,
merger, consolidation or reorganization (an "OWNERSHIP CHANGE") or assign this
Lease or sublet all or a portion of the Premises to an Affiliate without the
consent of Landlord, provided that all of the following conditions are satisfied
(a "PERMITTED TRANSFER"): (a) Tenant is not in Default; (b) in the event of an
Ownership Change, Tenant's successor shall own substantially all of the assets
of Tenant and have a net worth which is at least equal to Tenant's net worth as
of the day prior to the proposed Ownership Change; (c) the Permitted Use does
not allow the Premises to be used for retail purposes; and (d) Tenant shall give
Landlord written notice at least 15 Business Days after the effective date of
the Permitted Transfer. Tenant's notice to Landlord shall include information
and documentation evidencing the Permitted Transfer and showing that each of the
above conditions has been satisfied. If requested by Landlord, Tenant's
successor shall sign a commercially reasonable form of assumption agreement.
"AFFILIATE" shall mean an entity controlled by, controlling or under common
control with Tenant.

12. LIENS.

      Tenant shall not permit mechanics' or other liens to be placed upon the
Property, Premises or Tenant's leasehold interest in connection with any work or
service done or purportedly done by or for the benefit of Tenant or its
transferees. Tenant shall give Landlord notice at least 15 days prior to the
commencement of any work in the Premises to afford Landlord the opportunity,
where applicable, to post and record notices of non-responsibility. Tenant,
within 30 days of notice from Landlord, shall fully discharge any lien by
settlement, by bonding or by insuring over the lien in the manner prescribed by
the applicable lien Law. In the event that Tenant provides the necessary bonding
or insurance over a claim in favor of Landlord, Tenant may contest the matter
with the claimant at Tenant's sole expense. If Tenant fails to do so, Landlord
may bond, insure over or otherwise discharge the lien. Tenant shall reimburse
Landlord for any reasonable amount paid by Landlord, including, without
limitation, reasonable attorneys' fees.

13. INDEMNITY AND WAIVER OF CLAIMS.

      Subject to the provisions of Article 15 of this Lease, Tenant hereby
waives all claims against and releases Landlord and its trustees, members,
principals, beneficiaries, partners, officers, directors, employees, Mortgagees
(defined in Section 23) and agents (the "LANDLORD RELATED PARTIES") from all
claims for any injury to or death of persons, damage to property or business
loss in any manner related to (a) Force Majeure, (b) acts of third parties, (c)
the bursting or leaking of any tank, water closet, drain or other pipe, (d) the
inadequacy or failure of any security services, personnel or equipment, or (e)
any matter not within the reasonable control of Landlord.

      Except to the extent caused by the negligence or willful misconduct of
Landlord or any Landlord Related Parties, Tenant shall indemnify, defend and
hold Landlord and Landlord

                                       7
<PAGE>

Related Parties harmless against and from all liabilities, obligations, damages,
penalties, claims, actions, costs, charges and expenses, including, without
limitation, reasonable attorneys' fees and other professional fees (if and to
the extent permitted by Law) (collectively referred to as "LOSSES"), which may
be imposed upon, incurred by or asserted against Landlord or any of the Landlord
Related Parties by any third party and arising out of or in connection with any
damage or injury occurring in the Premises or any acts or omissions (including
violations of Law) of Tenant, the Tenant Related Parties or any of Tenant's
transferees, contractors or licensees.

      Except to the extent caused by the negligence or willful misconduct of
Tenant or any Tenant Related Parties, Landlord shall indemnify, defend and hold
Tenant, its affiliated companies and their trustees, members, shareholders,
principals, beneficiaries, partners, officers, directors, employees and agents
("TENANT RELATED PARTIES") harmless against and from all Losses which may be
imposed upon, incurred by or asserted against Tenant or any of the Tenant
Related Parties by any third party and arising out of or in connection with the
acts or omissions (including violations of Law) of Landlord or the Landlord
Related Parties.

      Notwithstanding the foregoing, except as provided in Article 15 to the
contrary, Tenant shall not be required to waive any claims against Landlord
(other than for loss or damage to Tenant's business) where such loss or damage
is due to the negligence or willful misconduct of Landlord or any Landlord
Related Parties. Nothing herein shall be construed as to diminish the repair and
maintenance obligations of Landlord contained elsewhere in this Lease.

14. INSURANCE.

      Tenant shall maintain the following insurance ("TENANT'S INSURANCE"): (a)
Commercial General Liability Insurance applicable to the Premises and its
appurtenances providing, on an occurrence basis, a minimum combined single limit
of $2,000,000.00; (b) Property/Business Interruption Insurance written on an All
Risk or Special Perils form, with coverage for broad form water damage including
earthquake sprinkler leakage, at replacement cost value and with a replacement
cost endorsement covering all of Tenant's business and trade fixtures,
equipment, movable partitions, furniture, merchandise and other personal
property within the Premises ("TENANT'S PROPERTY") ; (c) Workers' Compensation
Insurance in amounts required by Law; and (d) Employers Liability Coverage of at
least $1,000,000.00 per occurrence. Any company writing Tenant's Insurance shall
have an A.M. Best rating of not less than A-VIII. All Commercial General
Liability Insurance policies shall name as additional insureds Landlord (or its
successors and assignees), the managing agent for the Building (or any
successor), EOP Operating Limited Partnership, Equity Office Properties Trust
and their respective members, principals, beneficiaries, partners, officers,
directors, employees, and agents, and other designees of Landlord and its
successors as the interest of such designees shall appear. All policies of
Tenant's Insurance shall contain endorsements that the insurer(s) shall give
Landlord and its designees at least 30 days' advance written notice of any
cancellation, termination, material change or lapse of insurance. Tenant shall
provide Landlord with a certificate of insurance evidencing Tenant's Insurance
prior to the earlier to occur of the Commencement Date or the date Tenant is
provided with possession of the Premises, and thereafter as necessary to assure
that Landlord always has current certificates evidencing Tenant's Insurance.

      Landlord shall maintain the following insurance ("Landlord's Insurance"):
(1) Commercial General Liability insurance applicable to the Property, Building,
Premises and Common Areas providing, on an occurrence basis, a minimum combined
single limit of at least $2,000,000.00; (2) All Risk Property Insurance on the
Building (including the Premises, Initial Improvements and Leasehold
Improvements, except for Tenant's Property) at replacement cost value; (3)
Worker's Compensation insurance as required by the state in which the Building
is located and in amounts as may be required by applicable statute; and (4)
Employers Liability Coverage of at least $1,000,000.00 per occurrence.

15. SUBROGATION.

      Landlord and Tenant hereby waive and shall cause their respective
insurance carriers to waive any and all rights of recovery, claims, actions or
causes of action against the other for any loss or damage with respect to
Tenant's Property, Leasehold Improvements, the Building, the Premises, or any
contents thereof, including rights, claims, actions and causes of action based
on negligence, which loss or damage is (or would have been, had the insurance
required by this Lease been carried) covered by insurance.

                                       8
<PAGE>

16. CASUALTY DAMAGE.

      16.01. If all or any portion of the Premises becomes untenantable by fire
or other casualty to the Premises (collectively a "CASUALTY"), Landlord, with
reasonable promptness, shall cause a general contractor selected by Landlord to
provide Landlord and Tenant with a written estimate of the amount of time
required using standard working methods to Substantially Complete the repair and
restoration of the Premises (including the Initial Alterations to the extent
paid for initially by Landlord) and any Common Areas necessary to provide access
to the Premises ("COMPLETION ESTIMATE"). If the Completion Estimate indicates
that the Premises or any Common Areas necessary to provide access to the
Premises cannot be made tenantable within 180 days from the date the repair is
started, then either party shall have the right to terminate this Lease upon
written notice to the other within 10 days after receipt of the Completion
Estimate. Tenant, however, shall not have the right to terminate this Lease if
the Casualty was caused by the negligence or intentional misconduct of Tenant or
any Tenant Related Parties. In addition, Landlord, by notice to Tenant within 90
days after the date of the Casualty, shall have the right to terminate this
Lease if: (1) the Premises have been materially damaged and there is less than 2
years of the Term remaining on the date of the Casualty; (2) any Mortgagee
requires that the insurance proceeds be applied to the payment of the mortgage
debt; or (3) a material uninsured loss to the Building occurs.

      In addition to Landlord's right to terminate as provided herein, Tenant
shall have the right to terminate this Lease if: (a) a substantial portion of
the Premises has been damaged by fire or other casualty and such damage cannot
reasonably be repaired within 60 days after receipt of the Completion Estimate;
(b) there is less than 2 years of the Term remaining on the date of such
casualty; (c) the casualty was not caused by the negligence or willful
misconduct of Tenant or its agents, employees or contractors; and (d) Tenant
provides Landlord with written notice of its intent to terminate within 30 days
after the date of the fire or other casualty.

      16.02. If this Lease is not terminated, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, restore the Premises and Common
Areas. Such restoration shall be to substantially the same condition that
existed prior to the Casualty, except that Landlord shall not be required to
rebuild Leasehold Improvements in excess of the Initial Alterations which were
paid for by Landlord pursuant to the Allowance set forth in Exhibit C, and
except for modifications required by Law or any other modifications to the
Common Areas deemed desirable by Landlord. Upon notice from Landlord, Tenant
shall assign to Landlord (or to any party designated by Landlord) all property
insurance proceeds payable to Tenant, if any, under Tenant's Insurance with
respect to any Leasehold Improvements performed by or for the benefit of Tenant;
provided if the estimated cost to repair such Leasehold Improvements exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, the excess cost of such repairs shall be paid by Tenant to Landlord
prior to Landlord's commencement of repairs. Within 30 days of demand, Tenant
shall also pay Landlord for any additional excess costs that are determined
during the performance of the repairs. Landlord shall not be liable for any
inconvenience to Tenant, or injury to Tenant's business resulting in any way
from the Casualty or the repair thereof. Provided that Tenant is not in Default,
during any period of time that all or a material portion of the Premises is
rendered untenantable as a result of a Casualty, the Rent shall abate for the
portion of the Premises that is untenantable and not used by Tenant for the
operation of Tenant's business.

17. CONDEMNATION.

      Either party may terminate this Lease if any material part of the Premises
is taken or condemned for any public or quasi-public use under Law, by eminent
domain or private purchase in lieu thereof (a "TAKING"). Landlord shall also
have the right to terminate this Lease if there is a Taking of any portion of
the Building or Property which would have a material adverse effect on
Landlord's ability to profitably operate the remainder of the Building. The
terminating party shall provide written notice of termination to the other party
within 45 days after it first receives notice of the Taking. The termination
shall be effective on the date the physical taking occurs. If this Lease is not
terminated, Base Rent and Tenant's Pro Rata Share shall be appropriately
adjusted to account for any reduction in the square footage of the Building or
Premises. All compensation awarded for a Taking shall be the property of
Landlord. The right to receive compensation or proceeds are expressly waived by
Tenant, however, Tenant may file a separate claim for damages and losses
suffered by Tenant with respect to Tenant's Property and Tenant's reasonable
relocation expenses, provided the filing of the claim does not diminish the
amount of Landlord's award. If only a part of the Premises is subject to a
Taking and this Lease is not terminated, Landlord, at Landlord's cost and with
reasonable diligence, will restore the remaining portion of the Premises as
nearly as practicable to the condition immediately prior to the Taking.

                                       9
<PAGE>

18. EVENTS OF DEFAULT.

      Each of the following occurrences shall be a "DEFAULT": (a) Tenant's
failure to pay any portion of Rent when due, if the failure continues for 5
Business Days after written notice to Tenant ("MONETARY DEFAULT"); (b) Tenant's
failure (other than a Monetary Default) to comply with any term, provision,
condition or covenant of this Lease, if the failure is not cured within 20 days
after written notice to Tenant provided, however, if Tenant's failure to comply
cannot reasonably be cured within 20 days, Tenant shall be allowed additional
time (not to exceed 120 days) as is reasonably necessary to cure the failure so
long as Tenant begins the cure within 20 days and diligently pursues the cure to
completion; (c) Tenant or any Guarantor becomes insolvent, makes a transfer in
fraud of creditors, makes an assignment for the benefit of creditors, admits in
writing its inability to pay its debts when due or forfeits or loses its right
to conduct business; (d) the leasehold estate is taken by process or operation
of Law; (e) intentionally omitted; or (f) Tenant is in default beyond any notice
and cure period under any other lease or agreement with Landlord at the Building
or Property. In addition, if Landlord provides Tenant with notice of Tenant's
failure to comply with the same particular non-Monetary term, provision or
covenant of the Lease on 3 occasions during any calendar year, Tenant's
subsequent violation of such non-Monetary term, provision or covenant shall, at
Landlord's option, be an incurable event of default by Tenant. All notices sent
under this Section shall be in satisfaction of, and not in addition to, notice
required by Law.

19. REMEDIES.

      19.01. Upon Default, Landlord shall have the right to pursue any one or
more of the following remedies:

            (a)   Terminate this Lease, in which case Tenant shall immediately
surrender the Premises to Landlord. If Tenant fails to surrender the Premises,
Landlord, in compliance with Law, may enter upon and take possession of the
Premises and remove Tenant, Tenant's Property and any party occupying the
Premises. Tenant shall pay Landlord, on demand, all past due Rent and other
losses and damages Landlord suffers as a result of Tenant's Default, including,
without limitation, all Costs of Reletting (defined below) and any deficiency
that may arise from reletting or the failure to relet the Premises. "COSTS OF
RELETTING" shall include all reasonable costs and expenses incurred by Landlord
in reletting or attempting to relet the Premises, including, without limitation,
legal fees, brokerage commissions, the cost of alterations and the value of
other concessions or allowances granted to a new tenant. Landlord agrees to use
reasonable efforts to mitigate damages, provided that those efforts shall not
require Landlord to relet the Premises in preference to any other space in the
Building or to relet the Premises to any party that Landlord could reasonably
reject as a transferee pursuant to Article 11. Notwithstanding the above, if
Landlord relets the Premises for a term (the "Relet Term") that extends past the
Termination Date of this Lease (without consideration of any earlier termination
pursuant to this Article 19), the Costs of Reletting which may be included in
Landlord's damages under this Lease shall be limited to a prorated portion of
the Costs of Reletting, based on the percentage that the length of the Term
remaining on the date Landlord terminates this Lease or Tenant's right to
possession bears to the length of the Relet Term. For example, if there are 2
years left on the Term at the time that Landlord terminates possession and,
prior to the expiration of the 2 year period, Landlord enters into a lease with
a Relet Term of 10 years with a new tenant, then only 20% of the Costs of
Reletting shall be included when determining Landlord's damages.

            (b)   Terminate Tenant's right to possession of the Premises and, in
compliance with Law, remove Tenant, Tenant's Property and any parties occupying
the Premises. Landlord may (but shall not be obligated to) relet all or any part
of the Premises, without notice to Tenant, for such period of time and on such
terms and conditions (which may include concessions, free rent and work
allowances) as Landlord in its absolute discretion shall determine. Landlord may
collect and receive all rents and other income from the reletting. Tenant shall
pay Landlord on demand all past due Rent, all Costs of Reletting and any
deficiency arising from the reletting or failure to relet the Premises. The
re-entry or taking of possession of the Premises shall not be construed as an
election by Landlord to terminate this Lease. Landlord agrees to use reasonable
efforts to mitigate damages, provided that those efforts shall not require
Landlord to relet the Premises in preference to any other space in the Building
or to relet the Premises to any party that Landlord could reasonably reject as a
transferee pursuant to Article 11.

      19.02. In lieu of calculating damages under Section 19.01, Landlord may
elect to receive as damages the sum of (a) all Rent accrued through the date of
termination of this Lease or Tenant's right to possession, and (b) an amount
equal to the total Rent that Tenant would have been required to pay for the
remainder of the Term discounted to present value, minus the then present fair
rental value of the Premises for the remainder of the Term, similarly
discounted, after deducting all anticipated Costs of Reletting. If Tenant is in
Default of any of its

                                       10
<PAGE>

non-monetary obligations under the Lease, Landlord shall have the right to
perform such obligations. Tenant shall reimburse Landlord for the cost of such
performance upon demand together with an administrative charge equal to 10% of
the cost of the work performed by Landlord. The repossession or re-entering of
all or any part of the Premises shall not relieve Tenant of its liabilities and
obligations under this Lease. No right or remedy of Landlord shall be exclusive
of any other right or remedy. Each right and remedy shall be cumulative and in
addition to any other right and remedy now or subsequently available to Landlord
at Law or in equity.

20. LIMITATION OF LIABILITY.

      NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE
LESSER OF (A) THE INTEREST OF LANDLORD IN THE PROPERTY, OR (B) THE EQUITY
INTEREST LANDLORD WOULD HAVE IN THE PROPERTY IF THE PROPERTY WERE ENCUMBERED BY
THIRD PARTY DEBT IN AN AMOUNT EQUAL TO 70% OF THE VALUE OF THE PROPERTY. TENANT
SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY
JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER
LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY
JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED
PARTY BE LIABLE TO TENANT FOR ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR
ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S)
WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN SECTION 23 BELOW),
NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. SUCH CURE PERIOD FOR
LANDLORD SHALL BE AT LEAST 60 DAYS AFTER WRITTEN NOTICE OF DEFAULT FROM TENANT
TO LANDLORD (OR, IF THE DEFAULT CANNOT REASONABLY BE CURED WITHIN SAID 60 DAY
PERIOD, SUCH LONGER PERIOD OF TIME AS IS REASONABLY NECESSARY TO CURE SUCH
DEFAULT, PROVIDED LANDLORD COMMENCES THE CURE WITHIN SUCH 60 DAY PERIOD AND
DILIGENTLY PURSUES SAME), AND, FOR ANY MORTGAGEE, SUCH CURE PERIOD SHALL BE AT
LEAST 60 DAYS AFTER THE LATER OF (i) WRITTEN NOTICE OF DEFAULT FROM TENANT TO
SUCH MORTGAGEE, OR (ii) EXPIRATION OF THE CURE PERIOD AVAILABLE TO LANDLORD AS
PROVIDED ABOVE (OR, IF THE DEFAULT CANNOT REASONABLY BE CURED WITHIN SAID 60 DAY
PERIOD, SUCH LONGER PERIOD OF TIME AS IS REASONABLY NECESSARY TO CURE SUCH
DEFAULT, PROVIDED MORTGAGEE COMMENCES THE CURE WITHIN SUCH 60 DAY PERIOD AND
DILIGENTLY PURSUES SAME). NOTWITHSTANDING THE FOREGOING, IF TENANT AND ANY SUCH
MORTGAGEE HAVE AGREED TO A LONGER PERIOD OF TIME IN ANY SEPARATE AGREEMENT BY
AND BETWEEN SUCH PARTIES, THE TERMS OF SUCH SEPARATE AGREEMENT SHALL CONTROL AS
BETWEEN TENANT AND SUCH MORTGAGEE.

      FOR PURPOSES HEREOF, "INTEREST OF LANDLORD IN THE PROPERTY" SHALL INCLUDE
RENTS DUE FROM TENANTS, INSURANCE PROCEEDS, AND PROCEEDS FROM CONDEMNATION OR
EMINENT DOMAIN PROCEEDINGS (PRIOR TO THE DISTRIBUTION OF SAME TO ANY PARTNER OR
SHAREHOLDER OF LANDLORD OR ANY OTHER THIRD PARTY).

21. INTENTIONALLY OMITTED.

22. HOLDING OVER.

      If Tenant fails to surrender all or any part of the Premises at the
termination of this Lease, occupancy of the Premises after termination shall be
that of a tenancy at sufferance. Tenant's occupancy shall be subject to all the
terms and provisions of this Lease, and Tenant shall pay an amount (on a per
month basis without reduction for partial months during the holdover) equal to
the sum of 150% of the Base Rent and 100% of the Additional Rent due for the
period immediately preceding the holdover. No holdover by Tenant or payment by
Tenant after the termination of this Lease shall be construed to extend the Term
or prevent Landlord from immediate recovery of possession of the Premises by
summary proceedings or otherwise. If Landlord is unable to deliver possession of
the Premises to a new tenant or to perform improvements for a new tenant as a
result of Tenant's holdover and Tenant fails to vacate the Premises within 90
days after notice from Landlord, Tenant shall be liable for all damages that
Landlord suffers from the holdover.

                                       11
<PAGE>

23. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.

      Tenant accepts this Lease subject and subordinate to any mortgage(s),
deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising
upon the Premises, the Building or the Property, and to renewals, modifications,
refinancings and extensions thereof (collectively referred to as a "MORTGAGE").
The party having the benefit of a Mortgage shall be referred to as a
"MORTGAGEE". This clause shall be self-operative, but upon request from a
Mortgagee, Tenant shall execute a commercially reasonable subordination
agreement in favor of the Mortgagee. As an alternative, a Mortgagee shall have
the right at any time to subordinate its Mortgage to this Lease. Upon request,
Tenant, without charge, shall attorn to any successor to Landlord's interest in
this Lease. Landlord and Tenant shall each, within 10 Business Days after
receipt of a written request from the other, execute and deliver a commercially
reasonable estoppel certificate to those parties as are reasonably requested by
the other (including a Mortgagee or prospective purchaser). Without limitation,
such estoppel certificate may include a certification as to the status of this
Lease, the existence of any defaults and the amount of Rent that is due and
payable.

      Notwithstanding the foregoing, Landlord shall obtain a non-disturbance,
subordination and attornment agreement from Landlord's then current Mortgagee on
such Mortgagee's then current standard form of agreement. Landlord shall be
responsible for any fee or review costs charged by the Mortgagee. Tenant will
execute the Mortgagee's form of non-disturbance, subordination and attornment
agreement and return the same to Landlord for execution by the Mortgagee.
Mortgagee's current form (except that Paragraph 8 has been added at the request
of Tenant) is set forth on EXHIBIT K to this Lease.

24. NOTICE.

      All demands, approvals, consents or notices pursuant to this Lease
(collectively referred to as a "NOTICE") shall be in writing and delivered by
hand or sent by registered or certified mail with return receipt requested or
sent by overnight or same day courier service at the party's respective Notice
Address(es) set forth in Section 1. Each notice shall be deemed to have been
received on the earlier to occur of actual delivery or the date on which
delivery is refused, or, if Tenant has vacated the Premises or any other Notice
Address of Tenant without providing a new Notice Address, 3 days after notice is
deposited in the U.S. mail or with a courier service in the manner described
above. Either party may, at any time, change its Notice Address (other than to a
post office box address) by giving the other party written notice of the new
address.

25. SURRENDER OF PREMISES.

      At the termination of this Lease or Tenant's right of possession, Tenant
shall remove Tenant's Property from the Premises, and quit and surrender the
Premises to Landlord, broom clean, and in good order, condition and repair,
ordinary wear and tear and damage which Landlord is obligated to repair
hereunder excepted. If Tenant fails to remove any of Tenant's Property within 5
Business Days after termination of this Lease or Tenant's right to possession,
Landlord, at Tenant's sole cost and expense, shall be entitled (but not
obligated) to remove and store Tenant's Property. Landlord shall not be
responsible for the value, preservation or safekeeping of Tenant's Property.
Tenant shall pay Landlord, upon demand, the expenses and storage charges
incurred. If Tenant fails to remove Tenant's Property from the Premises or
storage, within 30 days after notice, Landlord may deem all or any part of
Tenant's Property to be abandoned and title to Tenant's Property shall vest in
Landlord.

26. MISCELLANEOUS.

      26.01. This Lease shall be interpreted and enforced in accordance with the
Laws of the state or commonwealth in which the Building is located and Landlord
and Tenant hereby irrevocably consent to the jurisdiction and proper venue of
such state or commonwealth. If any term or provision of this Lease shall to any
extent be void or unenforceable, the remainder of this Lease shall not be
affected. Tenant represents and warrants to Landlord that each individual
executing this Lease on behalf of Tenant is authorized to do so on behalf of
Tenant and that Tenant is not, and the entities or individuals constituting
Tenant or which may own or control Tenant or which may be owned or controlled by
Tenant are not, among the individuals or entities identified on any list
compiled pursuant to Executive Order 13224 for the purpose of identifying
suspected terrorists.

      26.02. If either party institutes a suit against the other for violation
of or to enforce any covenant, term or condition of this Lease, the prevailing
party shall be entitled to all of its costs and expenses, including, without
limitation, reasonable attorneys' fees. Landlord and Tenant hereby waive any
right to trial by jury in any proceeding based upon a breach of this Lease.

                                       12
<PAGE>

Either party's failure to declare a default immediately upon its occurrence, or
delay in taking action for a default, shall not constitute a waiver of the
default, nor shall it constitute an estoppel.

      26.03. Whenever a period of time is prescribed for the taking of an action
by Landlord or Tenant (other than the payment of the Security Deposit or Rent),
the period of time for the performance of such action shall be extended by the
number of days that the performance is actually delayed due to strikes, acts of
God, shortages of labor or materials, war, terrorist acts, civil disturbances
and other causes beyond the reasonable control of the performing party ("FORCE
MAJEURE").

      26.04. Landlord shall have the right to transfer and assign, in whole or
in part, all of its rights and obligations under this Lease and in the Building
and Property. Upon transfer Landlord shall be released from any further
obligations hereunder and Tenant agrees to look solely to the successor in
interest of Landlord for the performance of such obligations, provided that, any
successor pursuant to a voluntary, third party transfer (but not as part of an
involuntary transfer resulting from a foreclosure or deed in lieu thereof) shall
have assumed Landlord's obligations under this Lease, and further provided that
Landlord and its successors, as the case may be, shall remain liable after their
respective periods of ownership with respect to any sums due in connection with
a breach or default by such party that arose during such period of ownership by
such party.

      26.05. Landlord has delivered a copy of this Lease to Tenant for Tenant's
review only and the delivery of it does not constitute an offer to Tenant or an
option. Tenant represents that it has dealt directly with and only with the
Broker as a broker in connection with this Lease. Tenant shall indemnify and
hold Landlord and the Landlord Related Parties harmless from all claims of any
other brokers claiming to have represented Tenant in connection with this Lease.
Landlord shall indemnify and hold Tenant and the Tenant Related Parties harmless
from all claims of any brokers claiming to have represented Landlord in
connection with this Lease.

      26.06. Time is of the essence with respect to Tenant's exercise of any
expansion, renewal or extension rights granted to Tenant. The expiration of the
Term, whether by lapse of time, termination or otherwise, shall not relieve
either party of any obligations which accrued prior to or which may continue to
accrue after the expiration or termination of this Lease.

      26.07. Tenant may peacefully have, hold and enjoy the Premises, subject to
the terms of this Lease, provided Tenant pays the Rent and fully performs all of
its covenants and agreements. This covenant shall be binding upon Landlord and
its successors only during its or their respective periods of ownership of the
Building.

      26.08. This Lease does not grant any rights to light or air over or about
the Building. Landlord excepts and reserves exclusively to itself any and all
rights not specifically granted to Tenant under this Lease. This Lease
constitutes the entire agreement between the parties and supersedes all prior
agreements and understandings related to the Premises, including all lease
proposals, letters of intent and other documents. Neither party is relying upon
any warranty, statement or representation not contained in this Lease. This
Lease may be modified only by a written agreement signed by an authorized
representative of Landlord and Tenant.

                                       13
<PAGE>

      Landlord and Tenant have executed this Lease as of the day and year first
above written.

WITNESS/ATTEST:                           LANDLORD:

                                          IL-WESTBROOK CORPORATE CENTER, L.L.C.,
                                          A DELAWARE LIMITED LIABILITY COMPANY

                                          By: Equity Office Management, L.L.C.,
                                              a Delaware limited liability
                                              company, its non-member manager

                                              By:    /s/ Donald E. Huffner
                                                     ---------------------------
/s/ Jeanne Krejci                             Name:  Donald E. Huffner
---------------------------------
Name (print): J. Krejci                       Title: Sr. Vice President

---------------------------------
Name (print):
             --------------------

WITNESS/ATTEST:                           TENANT:

                                          INSURANCE AUTO AUCTIONS, INC., AN
                                          ILLINOIS CORPORATION

/s/ Linda Jurczyk                         By:    /s/ Scott P. Pettit
---------------------------------
Name (print): Linda Jurczyk               Name:  Scott P. Pettit

/s/ Katerina Dotzeva                      Title: SVP & CFO
---------------------------------
Name (print): Katerina Dotzeva            95-3790111
                                          --------------------------------------
                                          TENANT'S TAX ID NUMBER (SSN OR FEIN)

                                       14<PAGE>
                                                                   Exhibit 10.42

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of January 1,
2004 (the "Effective Date"), by and between Technical Olympic USA, Inc., a
Delaware corporation (the "Company") and Harry Engelstein, an individual (the
"Executive").

                                   BACKGROUND

         TOUSA Homes, Inc., a Florida corporation f/k/a Engle Homes, Inc.
("TOUSA Homes"), is a wholly-owned subsidiary of the Company. TOUSA Homes and
the Executive were parties to an employment agreement that expired as of
December 31, 2003. The Company and the Executive now desire to enter into this
Agreement setting forth the terms and conditions of the continued employment
relationship between the Executive and the Company.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements set forth below, and intending to be legally bound hereby, it is
hereby agreed as follows:

1.       DEFINITIONS. For the purposes of this Agreement, capitalized terms
shall have the meanings defined herein or on Exhibit A attached hereto unless
the context otherwise requires.

2.       EMPLOYMENT TERM, DUTIES.

         2.1 EMPLOYMENT TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, upon the terms and
conditions set forth herein for an initial period to begin on the Effective Date
and to end on December 31, 2004, unless terminated earlier in accordance with
the provisions of Section 4 (the "Employment Period"); provided, however, that
the Employment Period shall automatically be extended for additional one (1)
year periods at the end of each then-current Employment Period, unless either
the Company or the Executive delivers written notice to the other of the
non-extension of the Employment Period at least three (3) months prior to the
end of the then-current Employment Period.

         2.2 DUTIES.

                  (a) The Executive will serve as Executive Vice President of
TOUSA Homes. In this capacity, Executive will act as president of the South
Florida Division of TOUSA Homes, will assume certain executive and corporate
management responsibilities for the Company, and will have such other duties and
responsibilities as are reasonably consistent with such position or as may be
assigned or delegated to the Executive from time to time by the Board of
Directors, the Chief Executive Officer of the Company, or a senior executive of
the Company identified by the Chief Executive Officer to the Executive. The
Executive will devote his full business time, attention, skill, and energy
exclusively to the business of the Company, will use his best efforts to promote
the success of the Company's business and will cooperate fully with the senior
management of the Company and the Board of Directors in the advancement of the
best interests of the Company.

                  (b) Notwithstanding the provisions of Section 2.2(a) hereof,
the Executive may engage in the following activities during the Employment
Period: (i) serve on such corporate, civic, religious, educational and/or
charitable boards or committees that have been disclosed to, and approved by,
the Board of Directors in writing; (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions without receiving any
compensation other than reimbursement of expenses,

                                       1
<PAGE>

nominal stipends or similar forms of compensation; and (iii) manage his personal
investments, provided that such investments do not conflict with the Executive's
duties and responsibilities under this Agreement. If the Executive is appointed
or elected an officer or director of the Company or any Affiliate, the Executive
will fulfill his duties as such officer or director without additional
compensation; provided that such appointment may not be made without the
Executive's prior consent. Upon termination of this Agreement for any reason,
the Executive hereby automatically resigns as of such date as an officer and
director of the Company and each Affiliate of which he is an officer or
director, if any.

         2.3 LOCATION. The Executive's primary place of employment hereunder
shall be at the TOUSA Homes office located in Boca Raton, Florida; provided,
however, that the Executive shall travel as reasonably necessary to perform his
obligations and duties to the Company.

3.       COMPENSATION AND BENEFITS. The compensation and benefits payable and
provided to the Executive under this Agreement shall constitute the full
consideration to be paid to the Executive for all services to be rendered by the
Executive to the Company and its Affiliates in all capacities.

         3.1 BASE SALARY. Commencing on the Effective Date, the Executive will
be paid an annual salary of Four Hundred and Forty Five Thousand Dollars
($445,000) (the "Base Salary"), which will be payable in equal periodic
installments according to the Company's customary payroll practices. In the
event the Employment Period is extended in accordance with Section 2.1 of this
Agreement, the parties will agree to any adjustments to the Base Salary.

         3.2 BENEFITS. The Executive (and the Executive's spouse and dependents,
where applicable) shall be permitted to participate in such 401(k) plan (or
similar qualified plan) and any welfare benefit plan, program or fringe benefit
made available to, and on the terms at least as favorable to, other similarly
situated employees of the Company or its Affiliates, that may be in effect from
time to time, subject to the Executive (and the Executive's spouse and
dependents, where applicable) meeting the eligibility requirements under the
terms of each of those plans (collectively, the "Benefits"). Nothing herein
shall prevent the Company from modifying or terminating any employee benefit
plan in the Company's sole discretion, so long as such modification or
termination equally affects all of the Company's similarly situated employees.

         3.3 ANNUAL BONUS. So long as the Executive has been employed by the
Company throughout the Employment Period, the Executive shall be eligible to
receive a cash bonus ("Bonus") substantially equivalent to the opportunity set
forth in Exhibit B attached hereto, as the same may be amended from time to time
by the parties.

         3.4 STOCK OPTION PLAN PARTICIPATION. The Company may adopt a policy for
the granting of stock options to certain officers and senior managers of the
Company. In the event that such a policy is adopted, contingent upon specific
approval of the Compensation and Benefits Committee and the Board of Directors,
the Executive may be granted stock options on terms and conditions appropriate
to his position and consistent with other similarly situated employees.

         3.5 BUSINESS EXPENSES. In accordance with the rules and policies that
the Company may establish from time to time for its executives, the Company
shall reimburse the Executive for business expenses reasonably incurred by him
in the performance of his duties hereunder. Requests for reimbursement must be
accompanied by appropriate documentation.

         3.6 VACATION. The Executive shall be entitled to four (4) weeks
vacation per calendar year (prorated for less than a full year). Unused vacation
time not to exceed an aggregate of two (2) weeks for

                                       2
<PAGE>

all prior years may be accumulated or carried over from year to year.
Notwithstanding, the Executive shall not be entitled to any compensation for
unused vacation time except as provided in Section 4.

         3.7 CAR ALLOWANCE. During the Employment Period, the Executive shall be
provided an automobile for his use and the Company shall pay the costs relating
to the maintenance and operation of such automobile in accordance with the
Company's customary practices and policies. Such automobile shall be suitable
for Executive's use and its quality and standard shall not be less than his
existing automobile.

         3.8 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistants, as
provided at any time with respect to other similarly situated employees of the
Company and its Affiliates and/or as reasonably necessary to perform the
Executive's duties and obligations as set forth herein.

4.       TERMINATION.

         4.1 DEATH; DISABILITY. This Agreement will terminate automatically upon
the death or Disability of the Executive.

         4.2 TERMINATION NOTICE. Any termination of the Executive's employment
other than a termination pursuant to Section 4.1 hereof shall be by written
notice to the other party, indicating the specific termination provision in this
Agreement relied upon, if any, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for the termination of the
Executive's employment under the provision so indicated. The date of the
Executive's termination of employment shall be specified in such notice;
provided, however, that such date may not be earlier than any applicable cure
periods as set forth herein. If a termination is being effected by the
Executive, such date shall not be less than three (3) months from the date the
written notice is given to the Company (the "Required Notice"). Failure to
provide the Required Notice shall be deemed a breach of this Agreement by the
Executive for which the Executive will be liable to the Company as provided
herein and for any damages caused by such breach.

         4.3 TERMINATION PAY. Upon termination of the Executive's employment,
the Company will be obligated to pay or provide the Executive or the Executive's
estate, as the case may be, only such compensation and Benefits as are provided
in this Section 4.3 and, if applicable, in Section 5.3 hereof.

                  (a) TERMINATION BY THE COMPANY FOR CAUSE; RESIGNATION OF THE
EXECUTIVE WITHOUT GOOD REASON OR REQUIRED Notice. If (i) the Company terminates
the Executive's employment for Cause; (ii) the Executive terminates his
employment for any reason other than Good Reason; or (iii) the Executive
terminates his employment for any reason without the Required Notice, the
Executive shall be entitled to receive the Accrued Obligations from the Company,
payable via wire transfer to an account designated by the Executive within
thirty (30) Business Days after the date of termination. Except as specifically
provided herein, the Executive shall not be entitled to any other payments or
Benefits pursuant to this Agreement.

                  (b) TERMINATION DUE TO DISABILITY. If the Executive's
employment is terminated due to Disability, the Executive shall be entitled to
receive from the Company the sum of the following, payable via wire transfer to
an account designated by the Executive's legal representative within thirty (30)
Business Days after the date of termination: (i) the Accrued Obligations and
(ii) the Pro-Rata Bonus.

                                       3
<PAGE>

                  (c) TERMINATION UPON DEATH. If this Agreement is terminated
because of the Executive's death, the Executive's estate shall be entitled to
receive from the Company the sum of the following, payable via wire transfer to
an account designated by the Executive's legal representative within thirty (30)
Business Days after the date of termination: (i) the Accrued Obligations and
(ii) the Pro-Rata Bonus.

                  (d) TERMINATION BY THE EXECUTIVE DUE TO GOOD REASON OR BY THE
COMPANY WITHOUT CAUSE. If the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason, the Executive shall
be entitled to receive from the Company the following, payable via wire transfer
to an account designated by the Executive within thirty (30) Business Days after
the date of termination: (i) the Termination Payment and (ii) if the Executive
timely elects continuation coverage under the Company's group health plan, an
amount equal to the monthly premium charge for such coverage, for the lesser of
the then remaining term of the Employment Period or the period of such continued
health coverage, at the active employee premium rate for similar coverage.

         4.4 RELEASE AND WAIVER. Notwithstanding anything in Section 4.3 to the
contrary, the Executive shall not be entitled to any payment or Benefit pursuant
to Section 4.3, except for Accrued Obligations as required by law, unless the
Executive has delivered to the Company an executed form of general release, in a
form reasonably acceptable to the Company, that releases the Company and its
Affiliates, and all their respective officers, directors, employees and agents
from any and all claims of any kind that the Executive may have arising out of
the Executive's employment with the Company or the termination of such
employment, but excluding any claims arising under this Agreement, and such
release has become irrevocable.

         4.5 NO MITIGATION; NO OFFSET. In the event of any termination of the
Executive's employment under this Agreement, the Executive shall be under no
obligation to seek other employment, and there shall be no offset against
amounts due under this Agreement on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. The Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company or any Affiliate may have against the Executive or others.

         4.6 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

                  (a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4.6) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest or penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 4.6(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

                                       4
<PAGE>

                  (b) Subject to the provisions of Section 4.6(c) hereof, all
determinations required to be made under this Section 4.6, including whether and
when a Gross-Up payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's independent certified accountant or such other certified public
accounting firm as may be designated by the Company (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) Business Days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is required by
the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section
4.6, shall be paid by the Company to the Executive within five (5) Business Days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4.6(c) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.

                  (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten (10) Business Days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:

                           (i) give the Company any information reasonably
requested by the Company relating to such claim;

                           (ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;

                           (iii) cooperate with the Company in good faith in
order effectively to contest such claim; and

                           (iv) permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions of
this Section 4.6(c), the Company shall control all proceedings taken in
connection with such contest and at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and

                                       5
<PAGE>

sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such payment to the Executive, the Company
shall advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statue of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

                  (d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 4.6(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company complying with the requirements of Section 4.6(c)
hereof) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 4.6(c) hereof, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

5.       NON-COMPETITION AND NON-INTERFERENCE.

         5.1 ACKNOWLEDGEMENTS. The Executive acknowledges that (a) the services
to be performed by him under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character and (b) the provisions of this Section
5 are reasonable and necessary to protect the Confidential Information, goodwill
and other business interests of the Company.

         5.2 COVENANTS OF THE EXECUTIVE. The Executive covenants that he will
not, directly or indirectly:

                  (a) during the Non-Compete Period, without the express prior
written consent of the Board of Directors, as owner, officer, director,
employee, stockholder, principal, consultant, agent, lender, guarantor,
cosigner, investor or trustee of any corporation, partnership, proprietorship,
joint venture, association or any other entity of any nature, engage, directly
or indirectly, in the Business in (i) in any county in any state, or any county
contiguous with a county, in which the Company or any of its Affiliates is
conducting Business activities or has conducted Business activities in the prior
twelve (12) months, and (ii) any county in which the Company of any of its
Affiliates is conducting other business; provided, however, that the Executive
may purchase or otherwise acquire for passive investment up to three percent
(3%) of any class of securities of any such enterprise under Section 12(g) of
the Securities Exchange Act of 1934;

                  (b) whether for the Executive's own account or for the account
of any other person at any time during his employment with the Company or its
Affiliates (except for the account of the Company and its Affiliates) and the
Non-Compete Period, solicit Business of the same or similar type being carried
on by the Company or its Affiliates, whether or not the Executive had personal
contact with such person or entity during the Executive's employment with the
Company;

                                       6
<PAGE>

                  (c) whether for the Executive's own account or the account of
any other person and at any time during his employment with the Company or its
Affiliates and the Non-Compete Period, (i) solicit, employ, or otherwise engage
as an employee, independent contractor or otherwise, any person who is an
employee of the Company or an Affiliate, or in any manner induce, or attempt to
induce, any employee of the Company or its Affiliates to terminate his or her
employment with the Company or its Affiliate; or (ii) interfere with the
Company's or its Affiliate's relationship with any person or entity that, at any
time during the Employment Period, was an employee, contractor, supplier or
customer of the Company or its Affiliate; or

                  (d) at any time after the termination of his employment,
disparage the Company or its Affiliates or any shareholders, directors,
officers, employees, or agents of the Company or any of its Affiliates, so long
as the Company does not disparage the Executive;

provided, however, that notwithstanding the foregoing, paragraphs (a) and (b) of
this Section 5.2 shall not apply if the Executive's employment is terminated
pursuant to Section 4.3(d) hereof. If any covenant in this Section 5.2 is held
to be unreasonable, arbitrary or against public policy, such covenant will be
considered to be divisible with respect to scope, time and geographic area, and
such lesser scope, time or geographic area, or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary and not
against public policy, will be effective, binding and enforceable against the
Executive. The Executive hereby agrees that this covenant is a material and
substantial part of this Agreement and that: (i) the geographic limitations are
reasonable; (ii) the term of the covenant is reasonable; and (iii) the covenant
is not made for the purpose of limiting competition per se and is reasonably
related to a protectable business interest of the Company. The period of time
applicable to any covenant in this Section 5.2 will be extended by the duration
of any violation by the Executive of such covenant.

         5.3 COVENANTS OF THE COMPANY. The Company covenants and agrees that,
during the Non-Compete Period, the following provisions shall apply:

                  (a) if the Executive's employment is terminated due to the
death or Disability of the Executive, for Cause by the Company or by the
Executive without having provided the Required Notice, no additional
compensation shall be payable or Benefits provided to the Executive during the
Non-Compete Period except as specifically provided for in Section 4.3 hereof.

                  (b) In addition to the compensation payable or Benefits to be
provided to the Executive as provided in Section 4.3 hereof, if the Executive's
employment is terminated for any reason other than as set forth in Section
5.3(a) hereof, the Company shall continue to (i) pay to the Executive during the
Non-Compete Period the Base Salary as provided herein as if the Executive
remained employed by the Company during the Non-Compete Period and (ii) provide
all the Benefits to the Executive (and the Executive's spouse and dependents, as
applicable) that the Company would have provided pursuant to this Agreement, as
if the Executive remained employed by the Company during the Non-Compete Period,
unless the Company is prohibited from providing any such Benefits pursuant to
applicable law.

                  (c) Notwithstanding the foregoing provisions of this Section
5.3, the Company may pay to the Executive the cash equivalent of any Benefit
that the Company is otherwise obligated to provide the Executive in lieu of
providing such Benefit.

                  (d) Notwithstanding the foregoing provisions of this Section
5.3, the Company shall have the right, at any time, to release the Executive
from the covenants contained in this Section 5, at which time the Executive's
right to receive and the Company's obligation to make any payments under

                                       7
<PAGE>

this Section 5.3 shall terminate upon the payments by the Company to the
Executive of all amounts due under this Section 5.3 up to and including the date
of such release.

6.       NON-DISCLOSURE COVENANT

         6.1 ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive acknowledges that
(a) during the Employment Period the Executive will be afforded access to
Confidential Information; (b) public disclosure of such Confidential Information
could have an adverse effect on the Company and its business; and (c) the
provisions of this Section 6 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information.

         6.2 COVENANTS OF THE EXECUTIVE. The Executive covenants as follows:

                  (a) CONFIDENTIALITY. During and after his employment with the
Company and its Affiliates, the Executive will hold in confidence the
Confidential Information and will not disclose such Confidential Information to
any person other than in connection with the performance of his duties and
obligations hereunder, except with the specific prior written consent of the
Board of Directors or the Chief Executive Officer; provided, however, that the
parties agree that this Agreement does not prohibit the disclosure of
Confidential Information where applicable law requires, including, but not
limited to, in response to subpoenas and/or orders of a governmental agency or
court of competent jurisdiction. In the event that the Company is requested or
becomes legally compelled under the terms of a subpoena or order issued by a
court of competent jurisdiction or by a governmental body to make a disclosure
of Confidential Information, the Executive agrees that he will (i) immediately
provide the Company with written notice of the existence, terms and
circumstances, surrounding such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy, (ii) cooperate with
the Company in its efforts to decline, resist or narrow such requests, and (iii)
if disclosure of such Confidential Information is required in the opinion of
counsel, exercise reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such disclosed
information.

                  (b) TRADE SECRETS. Any and all trade secrets of the Company
will be entitled to all the protections and benefits under the federal and state
trade secret and intellectual property laws and any other applicable law. If any
information that the Company deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this Agreement,
such information will, nevertheless, be considered Confidential Information for
the purposes of this Agreement, so long as it otherwise meets the definition of
Confidential Information. The Executive hereby waives any requirement that the
Company submit proof of the economic value of any trade secret or post a bond or
other security.

                  (c) REMOVAL. The Executive will not remove from the Company's
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except otherwise
specifically authorized by the Company) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in a
disk or in any other form belonging to the Company or used in the Company's
business (collectively, the "Proprietary Items"). All of the Proprietary Items,
whether or not developed by the Executive, are the exclusive property of the
Company. Upon termination of his employment, or upon the request of the Company
during the Employment Period, the Executive will return to the Company all of
the Proprietary Items and Confidential Information in the Executive's possession
or subject to the Executive's control, and the Executive shall not retain any
copies, abstracts, sketches, or other physical embodiments in electronic form or
otherwise, of any such Proprietary Items or Confidential Information.

                                       8
<PAGE>

                  (d) DEVELOPMENT OF INTELLECTUAL PROPERTY. Any and all
writings, inventions, improvements, processes, procedures and/or techniques
which the Executive (i) made, conceived, discovered or developed, either solely
or jointly with any other person or persons, at any time when the Executive was
an employee of the Company whether pursuant to this Agreement or otherwise,
whether or not during working hours and whether or not at the request or upon
the suggestion of the Company, which relate to or were useful in connection with
any business now or hereafter carried on or contemplated by the Company,
including developments or expansions of its fields of operations, or (ii) may
make, conceive, discover or develop, either solely or jointly with any other
person or persons, at any time when the Executive is an employee of the Company,
whether or not during working hours and whether or not at the request or upon
the suggestion of the Company, which relate to or are useful in connection with
any business now or hereafter carried on or contemplated by the Company,
including developments or expansions of its present fields of operations, shall
be the sole and exclusive property of the Company. The Executive shall make full
disclosure to the Company of all such writings, inventions, improvements,
processes, procedures and techniques, and shall do everything necessary or
desirable to vest the absolute title thereto in the Company. The Executive shall
write and prepare all specifications and procedures regarding such inventions,
improvements, processes, procedures and techniques and otherwise aid and assist
the Company so that the Company can prepare and present applications for
copyright or patent therefor and can secure such copyright or patent wherever
possible, as well as reissues, renewals, and extensions thereof, and can obtain
the record title to such copyright or patents so that the Company shall be the
sole and absolute owner thereof in all countries in which it may desire to have
copyright or patent protection. The Executive shall not be entitled to any
additional or special compensation or reimbursement regarding any and all such
writings, inventions, improvements, processes, procedures and techniques.

7.       GENERAL PROVISIONS OF SECTIONS 5 AND 6.

         7.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. The Executive acknowledges
that the injury that would be suffered by the Company as a result of a breach of
the provisions of Sections 5 and 6 of this Agreement would be irreplaceable and
that an award of monetary damages to the Company for such a breach may be an
inadequate remedy. Consequently, the Company will have the right, in addition to
any other rights it may have, to obtain a temporary restraining order and/or
injunctive relief to restrain any breach or threatened breach or otherwise to
specifically enforce any provision of this Agreement. The Executive waives any
requirement that the Company secure or post any bond in conjunction with any
such remedies. The Executive further agrees to and hereby does submit to in
personam jurisdiction before each and every court for that purpose. Without
limiting the Company's rights under this Section 7 or any other remedies
available to the Company, if the Executive breaches any other provisions of
Sections 5 and 6 and such breach is proven in a court of competent jurisdiction,
the Company will have the right to cease making any payments or providing
Benefits otherwise due to the Executive under this Agreement.

         7.2 COVENANTS OF SECTIONS 5 AND 6 ARE ESSENTIAL AND INDEPENDENT
COVENANTS. The covenants of the Executive in Sections 5 and 6 hereof are
essential elements of this Agreement, and without the Executive's agreement to
comply with such covenants, the Company would not have entered into this
Agreement or continued the employment of the Executive. The Company and the
Executive have independently consulted their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by the
Company. In addition, the Executive's covenants in Sections 5 and 6 are
independent covenants and the existence of any claim by the Executive against
the Company under this Agreement or otherwise will not excuse the Executive's
breach of any covenant in Sections 5 or 6. Notwithstanding anything in the
Agreement to the contrary, (i) the covenants and agreements of the Executive in
Sections

                                       9
<PAGE>

5 and 6 shall survive the termination of the Agreement, except as provided
below, and (ii) the covenants and agreements in Section 5.2(a) shall be
effective as of the Effective Date.

8.       GENERAL PROVISIONS.

         8.1 INDEMNIFICATION. The Company shall indemnify and hold harmless the
Executive to the fullest extent permitted by applicable law against all costs
(including reasonable attorneys' fees and costs), judgments, penalties, fines,
amounts paid in settlements, interest and all other liabilities incurred or paid
by the Executive in connection or in any way associated with the investigation,
defense, prosecution, settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including actions pursuant to the Sarbanes-Oxley Act of 2002, and
to which the Executive was or is a party or is threatened to be made a party by
reason of the fact that the Executive is or was an officer, employee or agent of
the Company, or any of its subsidiaries or Affiliates, including any property
owner or condominium association that the Executive has been asked to serve on
by the Company, or by reason of anything done or not done by the Executive in
any such capacity or capacities, provided that the Executive acted in good
faith, and in a manner the Executive reasonably believed to be in or not opposed
to the best interests on the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company also shall pay any and all expenses (including reasonable attorney's
fees) incurred by the Executive as a result of the Executive being called as a
witness in connection with any matter involving the Company and/or any of its
officers or directors. Nothing herein shall limit or reduce any rights of
indemnification to which the Executive might be entitled under the
organizational documents of the Company or as allowed by applicable law.

         8.2 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power or privilege under this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right for the party giving such notice
or demand or take further action without notice or demand as provided in this
Agreement.

8.3      SUCCESSORS.

                  (a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement "Company" shall mean the Company as
hereinbefore defined and any successor to its

                                       10
<PAGE>

business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

         8.4 NOTICES. All notices, consents, waivers and other communication
required under this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by facsimile (with written confirmation of receipt), provided that a
copy is mailed by certified mail, return receipt requested, the same day or the
next Business Day, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service, in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):

         If to the Company:

         Technical Olympic USA, Inc.
         4000 Hollywood Blvd., Suite 500-N
         Hollywood, FL  33021
         Attn:  Antonio B. Mon, CEO
         Facsimile No.:  (954) 364-4020
         With a copy to Patricia Petersen, General Counsel, at the same address.

         If to the Executive:

         Harry Engelstein
         16211 Bristol Pointe Drive
         Delray Beach, FL  33446

         8.5 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof, and
expressly terminates, rescinds, replaces and supersedes all prior and
contemporaneous agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof, including, without
limitation, the Prior Agreement.

         8.6 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT WILL BE
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS IN BROWARD COUNTY, FLORIDA, FOR THE PURPOSES OF
ANY PROCEEDINGS ARISING OUT OF THIS AGREEMENT.

         8.7 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court or competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect, unless the absence of such
invalid or unenforceable provision materially alters the rights or obligations
of either party hereto. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable, unless the absence of such invalid or
unenforceable portion of such provision materially alters the rights or
obligations of either party hereto.

         8.8 TAX WITHHOLDING AND REPORTING. The Company shall withhold from all
payments hereunder all applicable taxes that it is required to withhold with
respect to payments and Benefits provided under this Agreement and shall report
all such payments and withholdings to the appropriate taxing authorities as
required by applicable law.

                                       11
<PAGE>

         8.9 AMENDMENTS AND WAIVERS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and a member of the Board of
Directors authorized by the Board of Directors to execute the same. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
in compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.

         8.10 SURVIVAL. The provisions of Sections 4, 5, 6, 7, and 8 shall
survive the termination of this Agreement.

         8.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by original or facsimile signatures, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Effective Date.

TECHNICAL OLYMPIC USA, INC.

By: /s/ Antonio B. Mon                 /s/ Harry Engelstein
    -----------------------------      -----------------------------------------
Name:  Antonio B. Mon                  Harry Engelstein
Title: Chief Executive Officer

                                       12
<PAGE>

                                    EXHIBIT A

                                   DEFINITIONS

"ACCRUED OBLIGATIONS" means, at the relevant date, the sum of the following: (i)
the Executive's earned or accrued, but unpaid, Base Salary through the date of
termination of the Executive's employment as provided herein; (ii) any Bonus
earned or accrued and vested, but unpaid (together with accrued interest or
earnings credited thereon); (iii) the economic value of any of the Executive's
accrued, but unused, vacation time; and (iv) any unreimbursed business expenses
incurred by the Executive.

"AFFILIATE" means a person or entity who or which, (i) with respect to an
entity, directly or indirectly through one or more intermediaries, controlled,
is controlled by or is under common control with, such entity; or (ii) with
respect to the Executive, is a parent, spouse or issue of the Executive,
including persons in an adopted or step relationship.

"BOARD OF DIRECTORS" means the board of directors of the Company.

"BUSINESS" means the business of developing land for, and the design and
construction of, and the promotion, marketing and sale of, single-family
residences, townhouses, and condominiums.

"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or bank holiday
recognized in Hollywood, Florida.

"CAUSE" means:

         (a) an act of fraud, misappropriation or personal dishonesty taken by
the Executive and intended to result in the substantial personal enrichment of
the Executive at the expense of the Company or an Affiliate, including, but not
limited to, the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the Company;

         (b) the material violation by the Executive of a material obligation of
the Executive under this Agreement, including but not limited to, the willful
and continued failure of the Executive to perform substantially the Executive's
duties with the Company or one of its Affiliates (other than such failure
resulting from incapacity due to physical or mental illness) which violation or
failure is not remedied within ten (10) Business Days (or such additional
reasonable period of time if additional time is necessary to remedy) after
receipt of written notice or demand for substantial performance or corrective
action is delivered to the Executive by the Board of Directors or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board of Directors or the Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties or violated an
obligation under this Agreement;

         (c) the conviction, or plea of nolo contendere, of the Executive for
any felony or any misdemeanor involving moral turpitude; or

         (d) a material violation of any express direction of the Board of
Directors or the Chief Executive Officer of the Company or a material violation
of any rule, regulation, policy or plan established by the Board of Directors
from time to time regarding the conduct of the Company's employees and/or its
business, which violation is not remedied within ten (10) Business Days (or such
additional reasonable period of time if additional time is necessary to remedy)
after receipt of written notice from the Company of such failure.

                                       13
<PAGE>

"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time.

"CONFIDENTIAL INFORMATION" means any and all intellectual property of the
Company (or any of its Affiliates), including but not limited to:

         (a) trade secrets concerning the business and affairs of the Company
(or any of its Affiliates), product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research development,
current and planned manufacturing or distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including object
code and source code), computer software and database technologies, systems,
structures, and architectures (and related formulae, compositions, processes,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information, however
documented, that is a trade secret under federal, state or other applicable law;
and

         (b) information concerning the business and affairs of the Company (or
any of its Affiliates) (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented; and notes,
analysis, compilations, studies, summaries, and other material prepared by or
for the Company (or any of its Affiliates) containing or based, in whole or in
part, on any information included in the foregoing.

Notwithstanding the foregoing, Confidential Information shall not include
information otherwise lawfully known generally by or readily accessible to the
trade or general public other than by the improper disclosure by the Executive.

"DISABILITY" means, for all purposes of this Agreement, the inability of the
Executive, due to the injury, illness, disease, or bodily or mental infirmity,
to engage in the performance of substantially all of the usual duties of
employment with the Company as contemplated by Section 2.2 herein, such
Disability to be determined by the Board of Directors of the Company upon
receipt and in reliance on competent medical advice from one (1) or more
individuals, selected by the Board, who are qualified to give such professional
medical advice. The Executive must submit to a reasonable number of examinations
by the medical doctor making the determination of Disability, and the Executive
hereby authorizes the disclosure and release to the Company of such
determination and all supporting medical records. If the Executive is not
legally competent, the Executive's legal guardian or duly authorized
attorney-in-fact will act in the Executive's stead for the purposes of
submitting the Executive to the examinations, and providing the authorization of
disclosure required hereunder.

It is expressly understood that the Disability of the Executive for a period of
one hundred twenty (120) calendar days or less in the aggregate during any
period of twelve (12) consecutive months, in the absence of any reasonable
expectation that his Disability will exist for more than such a period of time,
shall not constitute a failure by him to perform his duties hereunder and shall
not be deemed a breach or default and the Executive shall receive full
compensation for any such period of Disability or for any other temporary
illness or incapacity during the term of this Agreement.

"EMPLOYMENT PERIOD" means the term of the Executive's employment under this
Agreement.

"FISCAL YEAR" means the fiscal year of Company on the Effective Date or as it
may change from time to time.

                                       14
<PAGE>

"GOOD REASON" means:

         (a) that without the Executive's prior written consent and in the
absence of Cause, one or more of the following events occur:

                  (i) any materially adverse change in the Executive's
authority, duties or responsibilities as set forth in Section 2 or any
assignment to the Executive of duties and responsibilities materially and
substantially inconsistent with those normally associated with such position;

                  (ii) the Company requiring the Executive to be primarily based
at any office more than fifty (50) miles outside the Boca Raton, Florida
metropolitan area, excluding travel reasonably required in the performance of
the Executive's responsibilities and excluding the fulfillment of
responsibilities at the Company's corporate headquarters located in Hollywood,
Florida;

                  (iii) any failure by the Company to comply with and satisfy
Section 8.3(c) of this Agreement; or

                  (iv) the material violation by the Company of a material
obligation of the Company under this Agreement, which violation or failure is
not remedied within ten (10) Business Days (or such additional reasonable period
of time if additional time is necessary to remedy) after receipt of written
notice or demand for substantial performance or corrective action is delivered
to the Company and the Chief Executive Officer of the Company by the Executive
which specifically identifies the manner in which Executive believes that the
Company has not substantially performed the Company's duties or violated an
obligation under this Agreement; and

         (b) within sixty (60) Business Days learning of the occurrence of any
such event, and in the absence of any circumstances that constitutes Cause, the
Executive terminates employment with the Company by written notice to the Chief
Executive Officer of the Company; provided, however, that the events set forth
in subparagraphs (a)(I, II OR III) shall not constitute Good Reason for purposes
of this Agreement unless, within twenty (20) Business Days of Executive's
learning of such event, the Executive gives written notice of the event to the
Company and the Company fails to remedy such event within thirty (30) Business
Days (or such additional reasonable period of time if additional time is
necessary to remedy) of receipt of such notice.

"INDEX" shall mean the Consumer price Index for the Austin, Texas area published
by the United States government or, if publication of the Index is discontinued,
any comparable statistics on the cost of living for the Austin, Texas area as
computed and published by an agency of the United States government or by any
regularly published national financial periodical that does compute and publish
such statistics.

"NON-COMPETE PERIOD" means the period beginning on the Effective Date and ending
on the first anniversary of the Executive's termination of employment with the
Company.

"PRO RATA BONUS" shall mean a pro rata Bonus for the year in which the
Executive's employment terminates based on the performance of the Company for
the year during which such termination occurs.

"TERMINATION PAYMENT" shall mean a lump sum payment in cash equal to the sum of
the following: (A) an amount equal to the aggregate Base Salary (as it may be
increased from time to time pursuant to this Agreement) that would have been
payable to the Executive if his employment had continued for the then remaining
term of the Employment Period, (B) the Pro Rata Bonus, (C) an amount equal to
the aggregate Bonus that would have been payable to the Executive if his
employment had continued for the then remaining term of the Employment Period
(other than the year in which the Executive's employment

                                       15
<PAGE>

terminates), calculated by multiplying the highest Bonus paid to the Executive
in the prior three (3) fiscal years by the number of years remaining in the
Employment Period, (D) the Accrued Obligations, and (E) the fair market value of
any Benefits and perquisites (other than health benefits, if paid to the
Executive pursuant to subparagraph (ii) of Section 4.3(d) of this Agreement to
be provided to the Executive for the then remaining term of the Employment
Period.

                                       16
<PAGE>

                                    EXHIBIT B

                                   BONUS PLAN

In accordance with Article 3.3 of the Agreement, the Executive shall be eligible
to receive an annual cash bonus calculated in accordance with this Exhibit B.

The bonus to be paid to Executive shall be based upon a combination of Regional
Results and Consolidated Results. Consolidated results shall represent 30% of
bonus and regional results (earnings of the Engle operations in South Florida)
shall represent 70% of bonus.

2004 ANNUAL BONUS

For 2004, the total bonus to Executive shall be not less than Nine Hundred and
Sixty Nine Thousand and Sixty Four Dollars ($969,064).

CONSOLIDATED RESULTS (30% OF TOTAL):

Bonus based upon consolidated results shall be calculated on a return on equity
basis, where "return" is after tax earnings of TOUSA and consolidated entities,
adding back corporate bonuses, net, and unusual charges, and "equity" is the
average of the quarterly ending equity balance beginning with the prior year's
ending equity. Executive's bonus payment shall be earned by incremental ROE, as
follows:

ROE                                 % of Bonus Earned
---                                 -----------------
0 to 6 %                   =                 0
>6 % to 9 %                =                1/3
>9 % to 12 %               =                1/3
> 12 %                     =                1/3

REGIONAL RESULTS (70% OF TOTAL):

Bonus based upon regional results shall be calculated as 1.3% of regional
earnings.

PAYMENT OF BONUS

The annual bonus shall be payable in quarterly installments, payable within 15
days following final calculation of the bonus, which shall occur upon the
financial closing of each fiscal quarter. All bonus payments shall be subject to
income and payroll taxes in accordance with applicable requirements and shall be
paid in accordance with company payroll policies.

                                       17

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