Document:

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                                                                   EXHIBIT 10.19

                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of July 25, 2000, by and among AMERICAN NATIONAL FINANCIAL, INC., a
California corporation ("Buyer") and CHICAGO TITLE INSURANCE COMPANY, a Missouri
corporation ("Seller").

                                    RECITALS

         WHEREAS, out of its office located in Tucson, Arizona (the "Office"),
Seller is engaged in the business of providing title insurance within the area
of Pima County, Arizona (the "Business"); and

         WHEREAS, Seller desires to sell and transfer to Buyer and Buyer desires
to purchase from Seller, substantially all of the assets of the Business, upon
the terms and subject to the conditions set forth in this Agreement.

         NOW, THEREFORE, in consideration of the premises, mutual covenants,
agreements, representations and warranties contained in this Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller, intending to be legally bound, hereby
agree as follows:

                                   ARTICLE 1

                                PURCHASE AND SALE

         1.01 PURCHASE AND SALE OF ASSETS. At the Closing (as hereinafter
defined), and subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell, transfer, convey, assign and deliver to Buyer, and Buyer
agrees to purchase and acquire from Seller, the following assets of Seller
(collectively, the "Purchased Assets"):

                  (a) Escrow Inventory/Assigned Contracts. All of Seller's
         right, title and interest in and to Seller's contracts, agreements,
         commitments and understandings to perform escrow services for escrows
         which have not yet closed as of the Closing Date and which have
         originated in the Office (the "Assigned Contracts");

                  (b) Fixed Assets. All of Seller's right, title and interest to
         the supplies, computers, printers, equipment, furniture, fixtures
         specifically listed on Schedule 1.01(b) hereto (collectively, the
         "Fixed Assets"); and

                  (c) Client Files. All of Seller's right, title and interest to
         customer information assembled and compiled in the course of the
         operation of the Business,

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         specifically, and to the extent available, financial and account
         servicing files on all the customers of Seller related to the Business
         (the "Client Files").

         1.02 EXCLUDED ASSETS. The Purchased Assets shall include only the
assets expressly listed in Section 1.01 and shall not include any other assets
of Seller of any kind.

         1.03 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume,
discharge and become liable only for (i) those executory obligations arising
after the Closing Date under the Purchased Assets and (ii) those obligations set
forth on Schedule 1.03 (collectively, the "Assumed Liabilities"). The Assumed
Liabilities shall not include any obligations or liabilities arising out of any
act or omission or default of Seller under any Assigned Contract regardless of
when such obligation is asserted. Except as set forth herein, Buyer shall not
assume, or in any way be responsible for any obligations of Seller.

         1.04 RETAINED LIABILITIES. Except for the Assumed Liabilities, Seller
agrees that Buyer shall not be obligated to assume or perform and is not
assuming or performing, and Seller shall remain responsible for, any liabilities
or obligations of Seller, whether known or unknown, fixed or contingent, certain
or uncertain, and regardless of when such liabilities or obligations may arise
or may have arisen or when they are or were asserted (the "Retained
Liabilities").

         1.05 SUBLEASES. At the Closing, Seller and Buyer shall enter into
subleases (the "Subleases") for the properties set forth on Schedule 1.05, with
the primary terms for each Sublease set forth on Schedule 1.05.

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                                   ARTICLE 2

                            CASH AND FIDUCIARY ASSETS

         2.01 CASH AND OTHER FIDUCIARY ASSETS. At Closing, Seller will assign to
Buyer all of its right, title and interest in bank accounts and other accounts
(the "Fiduciary Accounts") in which any funds, property, investments, documents
or other property are being held by Seller in a fiduciary capacity for the
benefit of any person (the "Fiduciary Assets") relating to the Assigned
Contracts. The Fiduciary Assets and Fiduciary Accounts are described in Schedule
2.01 to this Agreement, and include, without limitation, all fiduciary funds and
fiduciary property connected to the Business. Seller shall execute any document
reasonably requested by Buyer to evidence the assignment made in this Article.
At Closing, Seller shall deliver to Buyer in immediately available funds the
amount shown as "Escrow Ledger Balance" on Schedule 2.01, and any other
documents necessary to transfer to Buyer the Fiduciary Assets and the Fiduciary
Accounts, and Buyer will have sole control over the Fiduciary Accounts and
Fiduciary Assets from and after the Closing Date.

                                   ARTICLE 3

                                 PURCHASE PRICE

         3.01 PURCHASE PRICE. The purchase price (the "Purchase Price") to be
paid by Buyer to Seller for the Purchased Assets shall be One Hundred Thousand
Dollars ($100,000), which shall be paid at Closing to Seller in cash or via wire
transfer in immediately available funds.

                                   ARTICLE 4

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer as follows:

         4.01 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted or proposed
to be conducted.

         4.02 CORPORATE AUTHORITY. Seller has the corporate power and authority
to enter into and perform this Agreement and to consummate the transactions
contemplated by this Agreement in accordance with the terms of this Agreement.

         4.03 CORPORATE AUTHORIZATION. Seller has taken all necessary corporate
actions to authorize and approve the execution, delivery and performance of this
Agreement and the transactions contemplated by this Agreement. This Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.

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         4.04 REQUIRED CONSENTS. Except as set forth on Schedule 4.04, no
consents or approvals of any governmental body or authority and no consents or
waivers from any other parties to leases, licenses, franchises, permits,
indentures, agreements or other instruments are required for the lawful
consummation by Seller of the transactions contemplated by this Agreement.

         4.05 TITLE. Seller has good and marketable title to the Fixed Assets,
free and clear of all mortgages, liens, security interests and similar
encumbrances.

                                   ARTICLE 5

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller as follows:

         5.01 ORGANIZATION AND STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted or proposed
to be conducted.

         5.02 CORPORATE AUTHORITY. Buyer has the corporate power and authority
to enter into and perform this Agreement and to consummate the transactions
contemplated by this Agreement in accordance with the terms of this Agreement.

         5.03 CORPORATE AUTHORIZATION. Buyer has taken all necessary corporate
actions to authorize and approve the execution, delivery and performance of this
Agreement and the transactions contemplated by this Agreement. This Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.

         5.04 REQUIRED CONSENTS. No consents or approvals of any governmental
body or authority and no consents or waivers from any other parties to leases,
licenses, franchises, permits, indentures, agreements or other instruments are
required for the lawful consummation by Seller of the transactions contemplated
by this Agreement.

                                   ARTICLE 6

                          COVENANTS OF SELLER AND BUYER

         Seller and Buyer each covenant with the other as follows:

         6.01 THE CLOSING. The closing of the sale and purchase of the Purchased
Assets (the "Closing") will take place at the corporate offices of Seller,
located at 4050 Calle Real, Santa Barbara, California 93110, at 10:00 a.m. local
time on September 1, 2000 (the "Closing Date") or such other time and place as
Seller and Buyer may agree.

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         6.02 SUBLEASES. Buyer and Seller shall negotiate and execute the
Subleases, which shall include the terms set forth on Schedule 1.05, as well as
other customary and usual terms and conditions for commercial subleases. Buyer
and Seller shall also cooperate to obtain all required consents necessary for
the Subleases.

         6.03 TITLE PLANT LEASE AGREEMENT/RIGHT OF FIRST REFUSAL. Buyer and
Seller shall negotiate and execute a Lease Agreement pursuant to which Seller
shall lease Buyer all of Seller's right, title and interest in and to Seller's
title plant and/or title plant interest, including all records, files, data and
related assets (collectively, the "Title Plant") (the "Lease Agreement"). Among
other things, the Lease Agreement shall provide:

                  (a) for a term of ten (10) years;

                  (b) for total payments of Five Hundred Thousand Dollars
         ($500,000);

                  (c) for the initial payment of Four Thousand One Hundred Sixty
         Six Dollars and 67/100 ($4,166.67) to be due at Closing;

                  (d) for a One Dollar ($1.00) option to purchase the Title
         Plant at any time during the term of the Lease Agreement, provided all
         other payments due under the Lease Agreement and the Access Agreement
         (as defined below) have been paid;

                  (e) that if Buyer does purchase the Title Plant from Seller,
         Buyer shall grant Seller a right of first refusal to purchase the Title
         Plant back from Buyer at a purchase price equal to or greater to any
         offer Buyer received (excluding any offers by any affiliate of Buyer;
         and

                  (f) that at such time as all monies due Seller under the Lease
         Agreement are paid by Buyer, the Access Agreement shall be terminated.

         6.04 ACCESS AGREEMENT. Buyer and Seller shall negotiate and execute an
Access Agreement, pursuant to which Seller shall grant Buyer access to the Title
Plant for a monthly access fee (for access to the Title Plant) of One Thousand
Dollars ($1,000) per month for a period of ten (10) years (the "Access
Agreement").

         6.05 ISSUING AGENCY CONTRACT. Buyer and Seller shall negotiate and
execute an Issuing Agency Contract whereby Buyer shall issue the title
assurances of Seller, or its title underwriting affiliates, and no other title
insurance company or underwriter (the "Agency Agreement"). Among other things,
the Agency Agreement shall provide that:

                  (a) for a term concurrent with the Issuing Agency Agreement
         between Buyer and Fidelity National Financial, Inc. ("FNF"), which
         expires July 1, 2007;

                  (b) Buyer shall be liable for the first Five Thousand Dollars
         ($5,000) of any loss sustained or incurred by Seller as a result of the
         issuances of any title assurance by Buyer pursuant to the Agency
         Agreement;

                  (c) the division of premium shall be eighty-eight percent
         (88%) to Buyer and

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         twelve percent (12%) to Seller, subject to the following: one percent
         (1%) of the gross title insurance premium, from Seller's share thereof,
         shall be paid to Fidelity National Title Insurance Company ("Fidelity")
         for back office support and/or work services performed. Example: for
         each transaction, Buyer shall retain eighty-eight percent (88%) of the
         gross title insurance premium; CTI shall receive eleven percent of the
         gross title insurance premium after one percent (1%) is paid to
         Fidelity; and

                  (d) during the term of the Agency Agreement, all national
         referral business generated by Seller for Pima County, Arizona will be
         non-exclusive to Buyer.

         6.06 LICENSE AGREEMENT. Buyer and Seller shall negotiate and execute a
software license agreement (the "License Agreement") pursuant to which Seller
shall provide to Buyer: (i) the TEAM Software System ("TEAM") and/or (ii) the
Sierra Office Software ("Sierra"). The Sierra and TEAM licenses, and initial
training for the use of the related software, shall be provided at no expense to
Buyer. However, Buyer shall bear the expense for the annual maintenance fee and
for training support beyond the initial training for the all licensed software.

         6.07 CONFIDENTIALITY. All information concerning the terms of this
Agreement shall be kept confidential by each party, its attorneys, accountants
and representatives. All information furnished by one party to the other in
connection with this Agreement or the transactions contemplated by this
Agreement shall be kept confidential by such other party (and shall be used by
it and its officers, attorneys, accountants and representatives only in
connection with this Agreement and the transactions contemplated by this
Agreement) except to the extent that such information (i) already is known to
such other party when received, (ii) thereafter becomes lawfully obtainable from
other sources, (iii) is required to be disclosed in any document filed by Seller
or its affiliate with the Securities and Exchange Commission or any other agency
of any government, (iv) is otherwise required to be disclosed pursuant to any
federal or state law, rule or regulation or by any applicable judgment, order or
decree of any court or by any governmental body or agency having jurisdiction
after such other party has given reasonable prior written notice to the other
parties to this Agreement of the pending disclosure of any such information, or
(v) is required to be disclosed to a parties investors or sources of financing
who agree to hold such information in confidence. In the event that the
transactions contemplated by this Agreement shall fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to another party to be returned to such other
party.

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         6.08 SELLER'S PHONE NUMBER. If reasonably possible, after the Closing,
Buyer shall be permitted to use the existing phone number(s) of the Office.
Seller shall use its best efforts to help facilitate the use of the existing
phone number(s) by, and for the benefit of, Seller.

         6.09 DOCUMENT RETENTION. After Closing Buyer shall maintain and store
the following documents for that period of time necessary to ensure compliance
by Seller and/or Buyer with federal and/or state law, including, but not limited
to, requirements promulgated by the Arizona Department of Insurance, the Arizona
Banking Department or any other applicable administrative authority: escrow and
title files; account servicing files and any personnel or other administrative
files.

         6.10 STARTER EXCHANGE PROGRAM. After Closing, Buyer shall support and
participate in the Starter Exchange Program (the "Program") upon such terms to
be mutually agreed upon. For purposes of this Agreement, the Program shall mean
cooperation in the current method of exchange of starters among Chicago Title,
American Title, Fidelity National Title, Ticor Title and Security Union Title
and cooperation in future updates and improvements in the Program.

                                   ARTICLE 7

                         CONDITIONS PRECEDENT TO CLOSING

         7.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The obligations
of Buyer to effect the purchase of the Purchased Assets from the Seller shall be
subject to fulfillment or waiver at or prior to the Closing Date of the
following conditions:

                  (a) Representations and Warranties. The representations and
         warranties of Seller set forth in Article 4 of this Agreement shall be
         true and correct in all material respects as of the date of this
         Agreement and as of the Closing Date (as though made on and as of the
         Closing Date) except (i) to the extent such representations and
         warranties are by their expressed provisions made as of a specified
         date and (ii) for the effect of transactions contemplated by this
         Agreement.

                  (b) Performance of Obligations. Seller shall have performed in
         all material respects all obligations required to be performed by it
         under this Agreement on or prior to the Closing Date.

                  (c) Closing Deliveries. Buyer shall have received the
         following deliveries from Seller:

                           (i) Subleases. The Subleases, duly executed by
                  Seller.

                           (ii) The Lease Agreement. The Lease Agreement, duly
                  executed by Seller.

                           (iii) The Access Agreement. The Access Agreement
                  duly, executed by Seller.

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                           (iv) The Agency Agreement. The Agency Agreement duly,
                  executed by Seller.

                           (v) The License Agreement. The License Agreement
                  duly, executed by Seller.

                           (vi) Bill of Sale. A bill of sale, assignment and
                  assumption agreement conveying ownership of the Purchased
                  Assets in the form attached hereto as Exhibit A (the "Bill of
                  Sale"), duly executed by Seller.

                           (vii) Other Documents. Such other documents as shall
                  be reasonably requested by Buyer and its counsel or required
                  to be delivered pursuant to this Agreement.

         7.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The obligations
of Seller to effect the sale of the Purchased Assets to the Buyer at the Closing
shall be subject to the fulfillment or waiver at or prior to the Closing Date of
the following conditions:

                  (a) Litigation. Neither Seller nor Buyer shall be subject to
         any order, decree or injunction of a court or agency of competent
         jurisdiction that enjoins or prohibits the consummation of the
         transactions contemplated by this Agreement.

                  (b) Representations and Warranties. The representations and
         warranties of Buyer set forth in Article 5 of this Agreement shall be
         true and correct in all material respects as of the date of this
         Agreement and as of the Closing Date (as though made on and as of the
         Closing Date) except (i) to the extent such representations and
         warranties are by their expressed provisions made as of a specified
         date and (ii) for the effect of transactions contemplated by this
         Agreement.

                  (c) Performance of Obligations. Buyer shall have performed in
         all material respects all obligations required to be performed by it
         under this Agreement on or prior to the Closing Date.

                  (d) Closing Deliveries. Buyer shall have received the
         following from Seller or such other party(ies):

                           (i) Subleases and related consents. The Subleases,
                  duly executed by Buyer, as well as all related and necessary
                  consents for the Subleases.

                           (ii) The Lease Agreement. The Lease Agreement, duly
                  executed by Buyer.

                           (iii) The Access Agreement. The Access Agreement,
                  duly executed by Buyer.

                           (iv) The Agency Agreement. The Agency Agreement, duly
                  executed by Buyer.

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                           (v) The License Agreement. The License Agreement,
                  duly executed by Buyer.

                           (vi) The Bill of Sale. The Bill of Sale, duly
                  executed by Buyer.

                           (vii) Other Documents. Such other documents as shall
                  be reasonably requested by Buyer and its counsel or required
                  to be delivered pursuant to this Agreement.

                           (viii) The Purchase Price. The Purchase Price in cash
                  or wire transfer in immediately available funds.

                                   ARTICLE 8

                                  TERMINATION

         8.01 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time prior to the
Closing:

                  (a) By the Buyer, up until 5:00 p.m. on July 28, 2000, for any
         reason resulting from its business, legal and accounting due diligence
         with respect to the Business and the Purchased Assets.

                  (b) By mutual written consent of Buyer and Seller;

                  (c) By the Buyer, if there has been a material breach by
         Seller of any of its respective material representations, warranties,
         agreements or covenants set forth herein, or a failure of any condition
         to which the obligations of the Buyer are subject; or

                  (d) By Seller, if there has been a material breach by the
         Buyer of any of its representations, warranties, agreements or
         covenants set forth herein, or a failure of any condition to which the
         obligations of Seller are subject.

         8.02 PROCEDURE UPON TERMINATION. In the event of termination of this
Agreement by Buyer or Seller or by both Buyer and Seller pursuant to Section
8.01 hereof, written notice thereof shall forthwith be given to the other party
hereto and the transactions contemplated herein shall be abandoned without
further action by Buyer or Seller. In addition, if this Agreement is terminated
as provided herein:

                  (a) Each party will redeliver all documents, workpapers and
         other material of any other party relating to the transactions
         contemplated hereby, whether so obtained before or after the execution
         hereof, to the party furnishing the same.

                  (b) All information of a confidential nature received by any
         party hereto with

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         respect to the business of any other party (other than information
         which is a matter of public knowledge or which has heretofore been or
         is hereafter published in any publication for public distribution or
         filed as public information with any governmental authority) shall
         continue to be subject to the provisions of the Confidentiality
         Agreement.

                  (c) Upon any termination of this Agreement pursuant to this
         Article 8, the respective obligations of the parties hereto under this
         Agreement shall terminate and no party shall have any liability
         whatsoever to any other party hereto by reason of such termination,
         irrespective of the cause of such termination, except as set forth in
         this Article 8.

                                   ARTICLE 9

                                 MISCELLANEOUS

         9.01 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns.

         9.02 COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.

         9.03 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of California without regard to any applicable
conflicts of law.

         9.04 EXPENSES. Except as otherwise herein provided, each of the parties
shall pay its respective costs and expenses incurred or to be incurred by it in
connection with the negotiations respecting this Agreement and the transactions
contemplated by this Agreement, including preparation of documents, obtaining
any necessary approvals and the consummation of the other transactions
contemplated by this Agreement.

         9.05 ASSIGNMENT. This Agreement shall only be assignable with the
written consent of the other party.

         9.06 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto, contains the entire agreement among the parties with respect
to the transactions contemplated by this Agreement and supersedes all other
prior agreements, understandings and letters related to this Agreement.

         9.07 NOTICES. Any notice or other communications required or permitted
by this Agreement shall be in writing and shall be deemed to have been duly
given on the date mailed if mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

                  (a) if to Seller, to:

                      Chicago Title Insurance Corporation
                      4650 Calle Real
                      Santa Barbara, California 93110
                      Attention:  Tom Evans, Jr.

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                  (b) if to Buyer, to:

                      American National Financial, Inc.
                      1111 E. Katella Avenue, Suite 220
                      Orange, California 92867
                      Attention:  Dennis Duffy

         9.08 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.

         9.09 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement, whether in whole or in part, shall not in any way affect the
validity and/or enforceability of any other provision of this Agreement. Any
invalid or unenforceable provisions shall be deemed severable to the extent of
any such invalidity or unenforceability.

         9.10 CONSENT TO EXCLUSIVE JURISDICTION AND VENUE. The parties hereto
each hereby consents to personal jurisdiction and venue in the Superior Court of
the State of California for Orange County, California for any action brought by
any party arising out of the breach or threatened breach of this Agreement. The
parties each agree that any action arising out of or related to this covenant
shall be brought only and exclusively in the Superior Court of the State of
California for Orange County, California.

         9.11 COSTS OF ENFORCEMENT. In the event any arbitration or litigation
is brought to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover its reasonable costs and expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings).

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<PAGE>   12

         IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their respective duly authorized representatives as of the day and
year first above written.

                                        "SELLER"

                                        CHICAGO TITLE INSURANCE CORPORATION

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        "BUYER"

                                        AMERICAN NATIONAL FINANCIAL, INC.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

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<PAGE>   13

                                SCHEDULE 1.01(b)

                                  FIXED ASSETS

                                   [TO FOLLOW]

<PAGE>   14

                                  SCHEDULE 1.03

                               ASSUMED LIABILITIES

1.       The Assumed Liabilities shall include all equipment leases associated
         with the Purchased Assets.

                                [MORE TO FOLLOW]

<PAGE>   15

                                  SCHEDULE 1.05

                                    SUBLEASES

1.       Buyer and Seller shall enter into a sublease relating to Seller's real
         property lease for the premises described as _________________ (the
         "Main Office Sublease"). The Main Office Sublease shall provide for
         terms and conditions identical to those set forth in the existing
         lease.

2.       Buyer and Seller shall enter into a sublease relating to Seller's real
         property lease for the premises described as _________________ (the
         "______ Sublease"). The ______Sublease shall provide for terms and
         conditions identical to those set forth in the existing lease.

3.       Buyer and Seller shall enter into a sublease relating to Seller's real
         property lease for the premises described as _________________ (the
         "______ Sublease"). The ______Sublease shall provide for terms and
         conditions identical to those set forth in the existing lease.

4.       Buyer and Seller shall enter into a sublease relating to Seller's real
         property lease for the premises described as _________________ (the
         "______ Sublease"). The ______Sublease shall provide for terms and
         conditions identical to those set forth in the existing lease.

5.       Buyer and Seller shall enter into a sublease relating to Seller's real
         property lease for the premises described as _________________ (the
         "______ Sublease"). The ______Sublease shall provide for terms and
         conditions identical to those set forth in the existing lease.

<PAGE>   16

                                  SCHEDULE 2.01

                     FIDUCIARY ASSETS AND FIDUCIARY ACCOUNTS

                                   [TO FOLLOW]

<PAGE>   17

                                  SCHEDULE 4.04

                                REQUIRED CONSENTS

1.       Consents for the Subleases by the landlords of the related properties.

<PAGE>   18

                                    EXHIBIT A

                                  BILL OF SALE

                                   [TO FOLLOW]<PAGE>   1
                                                                    EXHIBIT 10.1

                               PHARMACYCLICS, INC.
                             995 East Arques Avenue
                            Sunnyvale, CA 94086-4593

                                  July 10, 2000

Dear Jon:

          On behalf of the Company's Board of Directors, I am pleased to make
you an offer to join the Company as its Vice President, Quality. The purpose of
this letter is to set forth the terms of your proposed employment with the
Company, including your compensation level and benefit entitlements.

          1.   EMPLOYMENT AND DUTIES.

               A.   The Company will employ you as Vice President Quality,
commencing not later than August 31, 2000, and you will accordingly make
yourself available on a full-time basis to assume that position on or before
that date. In that position, you will report directly to the Vice President,
Chemical Operations.

               B.   You will perform the duties inherent in your position in
good faith and to the best of your ability and will render all services which
may be reasonably required of you in such position. While you are employed with
the company, you will devote your full time and effort to the business and
affairs of the Company. Your principal place of operations will be at the
Company's corporate offices, which are presently located in Sunnyvale,
California.

          2.   COMPENSATION.

               A.   Your initial base salary will be at the rate of $192,000 per
year. Your base salary will be subject to adjustment by the Company's Board of
Directors for each calendar year of service following the 2000 calendar year.

               B.   Your base salary will be paid at periodic intervals in
accordance with the Company's payroll practices for salaried employees.

               C.   The Company will deduct and withhold from the base salary
and bonuses payable to you hereunder any and all applicable Federal, state and
local income and employment withholding taxes and any other amounts required to
be deducted or withheld by the Company under applicable statute or regulation.

<PAGE>   2
                                                                               2

               D.   Subject to approval of the Board of Directors, Pharmacyclics
will provide you with a $150,000 loan for the purpose of purchasing of a home in
the San Francisco Bay Area. The terms of this loan will be follows:

          $100,000 will be forgivable and the remaining $50,000 will become
          repayable, both on the 4th anniversary of your employment. This loan
          will be provided to you as an interest free loan during the course of
          your employment. Since Pharmacyclics will be providing this loan to
          you interest free, the Internal Revenue Service requires that
          Pharmacyclics treat the imputed interest portion of this loan as
          income to you. In order to meet this requirement, your year end W-2
          income will reflect the applicable federal tax rate as mandated by the
          Internal Revenue Service as income to you. You should consult your tax
          advisor regarding the deductibility of this interest income on your
          tax return. This loan will be secured by a second deed of trust on
          your principal residence. This loan is subject to your providing
          Pharmacyclics with documentation that the total amount of loans
          secured by your principal residence, including the loan that may be
          provided by Pharmacyclics, does not exceed 80% of the market value of
          the property at the inception of the loan. If your employment with
          Pharmacyclics terminates for any reason prior to your 4th anniversary,
          the full amount of the loan will be repayable 90 days after your
          termination date.

          3.   EMPLOYEE STOCK OPTIONS. As soon as possible after you join the
Company as Vice President, Quality, and subject to the approval of the Board of
Directors, you will be granted a stock option to purchase 40,000 shares of
Pharmacyclics Common Stock. The option will have an exercise price equal to 100%
of the fair market value of the Pharmacyclics Common Stock on the grant date and
will have a maximum term of 10 years, subject to earlier termination upon your
cessation of employment with the Company. The option will become exercisable as
follows: the option will become exercisable for 8,000 shares upon completion of
one year of service after your date of hire, the option will become exercisable
for the remaining 32,000 shares in a series of 48 equal successive monthly
installments upon completion of each month of service thereafter. All vesting
under your option will cease upon your termination of employment. The remaining
terms and conditions of your option will be in accordance with the standard
provisions utilized for stock option grants under the Company's 1995 Stock
Option Plan.

          4.   RELOCATION COSTS. You will be entitled to reimbursement from the
Company for reasonable costs involved in moving your household to the San
Francisco Bay Area. These costs will be reimbursed on an expense report against
documented receipts. The following costs are included:

          Cost of packing and moving household goods, including up to two
          personal automobiles. The Company will not reimburse you for the cost

<PAGE>   3
                                                                               3

          of moving items requiring special handling, such as camping trailers,
          boats and livestock (except household pets). You must obtain
          competitive quotations from two moving companies and select the
          company submitting the lower quotation.

          Travel expenses for you and your immediate family, including economy
          class airfare and ground transportation to/from the airports

In addition, the Company will provide you with a $75,000 allowance to cover all
other moving costs including but not limited to, house-hunting trips, closing
costs to purchase a new residence in the San Francisco Bay Area, temporary
housing and living expenses, and closing costs on the sale of your current
residence. $25,000 of this will be payable to you in three equal monthly
installments commencing upon your start date. The remaining $50,000 will be
payable upon receipt of documented evidence of the sale of your current home in
Philadelphia. All applicable taxes will be withheld from these reimbursements to
the extent required by law.

In the event that you voluntarily resign from the Company or are terminated for
cause, as defined in Section 10 (D), within one year of your start date all of
the above relocation costs will become refundable to the Company.

          5.   EXPENSE REIMBURSEMENT. You will be entitled to reimbursement from
the Company for all customary, ordinary and necessary business expenses incurred
by you in the performance of your duties hereunder, provided you furnish the
Company with vouchers, receipts and other details of such expenses within thirty
(30) days after they are incurred.

          6.   FRINGE BENEFITS. You will be eligible to participate in any group
life insurance plan, group medical and/or dental insurance plan, accidental
death and dismemberment plan, short-term disability program and other employee
benefit plans, including the Section 401(k) plan and the Employee Stock Purchase
Plan, which are made available to executive officers of the Company and for
which you otherwise qualify.

          7.   VACATION. You will accrue paid vacation benefits in accordance
with the Company policy in effect for executive officers.

          8.   RESTRICTIVE COVENANTS. During the period of service as Vice
President Quality:

               (i)  you will devote your full working time and effort to the
                    performance of your duties as Vice President Quality; and

               (ii) except as approved by the President & CEO you will not
                    directly or indirectly, whether for your own account or as
                    an employee,

<PAGE>   4
                                                                               4

                    consultant or advisor, provide services to any business
                    enterprise other than the Company.

                    However, you will have the right to perform such incidental
                    services as are necessary in connection with (a) your
                    private passive investments, (b) your charitable or
                    community activities, and (c) your participation in trade or
                    professional organizations, but only to the extent such
                    incidental services do not interfere with the performance of
                    your services as Vice President Quality.

          9.   PROPRIETARY INFORMATION. Upon the commencement of your services
as Vice President Quality, you will sign and deliver to the Company the
standard-form Proprietary Information and Inventions Agreement required of all
key employees of the Company.

          10.  TERMINATION OF EMPLOYMENT: SALARY CONTINUATION.

               A.   Your employment as Vice President Quality pursuant to this
agreement will be entirely at will.

               B.   The Company may terminate your employment under this
agreement at any time for any reason, with or without cause (as defined below),
by providing you with at least thirty (30) days prior written notice. However,
such notice requirement will not apply to the termination of your employment for
cause pursuant to subparagraph D below.

               C.   You may terminate your employment under this agreement at
any time for any reason upon thirty (30) days prior written notice to the
Company.

               D.   The Company may at any time, upon written notice, terminate
your employment hereunder for cause. Such termination will be effective
immediately upon such notice.

          For purposes of this agreement, your employment with the Company will
be deemed to have been involuntarily terminated for cause if your services are
terminated by the Company for one or more of the following reasons:

               (i)  acts of fraud or embezzlement or other intentional
                    misconduct which adversely affects the Company's business,
                    or

               (ii) failure to correct any material deficiency in the
                    performance of your services as Vice President Quality
                    within thirty (30) after written notification of such
                    deficiency from the Board, or

               (iii) misappropriation or unauthorized disclosure or use of the
                     Company's proprietary information.

<PAGE>   5
                                                                               5

Please indicate your acceptance of the foregoing provisions of this employment
agreement by signing the enclosed copy of this agreement and returning it to the
Company by July 17, 2000.

                                       Very truly yours,

                                       PHARMACYCLICS, INC.

                                       By: /s/ Richard M. Miller
                                           ---------------------
                                       Title: President and Chief Executive
                                              Officer

ACCEPTED BY AND AGREED TO

Signature:  /s/ Jon R. Wallace
            ------------------

Dated:  July 12, 2000

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