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                                                                   EXHIBIT 10.42

                              EMPLOYMENT AGREEMENT

This employment agreement (this "AGREEMENT") dated as of February 14, 2003, is
entered into by and between MOTORCAR PARTS & ACCESSORIES, INC., a New York
corporation currently having an address at 2929 California Street, Torrance,
California 90503 (together with its subsidiaries and affiliates, the "COMPANY"),
and Selwyn Joffe, an individual residing at 2687 Cordelia Road, Los Angeles,
California 90049 (the "EXECUTIVE").

                                   WITNESSETH:

WHEREAS, the COMPANY desires to employ EXECUTIVE as its Chairman of the Board,
President and Chief Executive Officer and EXECUTIVE desires to be so employed by
the COMPANY, all upon the terms and subject to the conditions contained herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.       EMPLOYMENT; PRIOR AGREEMENTS. Subject to and upon the terms and
         conditions contained in this AGREEMENT, the COMPANY hereby agrees to
         employ EXECUTIVE and EXECUTIVE agrees to be employed by the COMPANY,
         for the period set forth in Paragraph 2 hereof, to render the services
         to the COMPANY, its affiliates and/or subsidiaries as described in
         Paragraph 3 hereof. Each of the Consulting Agreement dated as of
         December 1, 1999 and the Agreement for Consulting Services dated as of
         May 9, 2002, both between the COMPANY and the EXECUTIVE (the "PRIOR
         AGREEMENTS") shall terminate as of the date hereof (the "COMMENCEMENT
         DATE"); provided, however, that any payments due and payable to the
         EXECUTIVE under the PRIOR AGREEMENTS as of the COMMENCEMENT DATE shall
         be paid as provided therein.

2.       TERM. EXECUTIVE'S term of employment under this AGREEMENT shall
         commence on the COMMENCEMENT DATE and shall continue for a period
         through and including March 31, 2006 (the "EMPLOYMENT TERM"), unless
         extended in writing by both parties or earlier terminated pursuant to
         the terms and conditions set forth herein.

3.       DUTIES.

         (a)      EXECUTIVE shall be employed as the COMPANY'S Chairman of the
                  Board, President and Chief Executive Officer and shall report
                  to the COMPANY'S Board of Directors. It is agreed that
                  EXECUTIVE shall perform his service in the COMPANY'S Torrance,
                  California, facilities, or any other facilities mutually
                  agreeable to the parties.

         (b)      EXECUTIVE agrees to abide by all By-Laws and applicable
                  policies of the Company promulgated from time to time by the
                  Board of Directors of the COMPANY and its constituent
                  committees (together with its appropriate committees, the
                  "BOARD OF DIRECTORS").

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4.       EXCLUSIVE SERVICES AND BEST EFFORTS. EXECUTIVE shall devote all of his
         working time, attention, best efforts and ability to the service of the
         COMPANY, its affiliates and subsidiaries during the term of this
         AGREEMENT.

5.       COMPENSATION. As compensation for his services and covenants hereunder,
         the COMPANY shall pay EXECUTIVE the following:

         (a)      Base Salary; Benefits. The COMPANY shall pay EXECUTIVE a base
                  salary ("SALARY") of Five Hundred Thousand Dollars ($500,000)
                  per year. The EXECUTIVE shall receive such additional benefits
                  as are usually provided from time-to-time to senior executives
                  of the COMPANY.

         (b)      Bonus. EXECUTIVE shall participate in the COMPANY'S Executive
                  Bonus Program as adopted and amended from time to time by the
                  COMPANY'S Board of Directors. The COMPANY'S Executive Bonus
                  Program shall be adopted and effective no later than with
                  respect to fiscal periods beginning April 1, 2003.

         (c)      Stock Option. As additional consideration for the services to
                  be performed by EXECUTIVE, the COMPANY granted EXECUTIVE, on
                  March 3, 2003, an option to purchase 100,000 shares of the
                  COMPANY'S common stock, pursuant to the COMPANY'S 1994 Stock
                  Option Plan, at an exercise price of $2.16 per share. Such
                  option shall be immediately exercisable with respect to
                  one-half of such shares and on the first anniversary thereof
                  with respect to the remaining such shares. Upon the
                  termination of this AGREEMENT for any reason, or the
                  expiration of the options for any reason, EXECUTIVE shall
                  have, for a period of 90 days from such termination or
                  expiration, the option, but not the obligation, to sell for
                  cash all or any part of the option, and all or any of the
                  underlying shares if any or all of the options have been
                  exercised, to the COMPANY for (i) with respect to each share
                  remaining subject to the option, the closing price of the
                  COMPANY'S common stock on the trading day immediately
                  preceding termination or expiration (or, if the COMPANY'S
                  stock is not then publicly traded, the fair market value
                  thereof as determined by negotiation between the COMPANY and
                  the EXECUTIVE) minus the exercise price and (ii) with respect
                  to each share purchased pursuant to the option and held by the
                  EXECUTIVE, the closing price of the COMPANY'S common stock on
                  the trading day immediately preceding termination or
                  expiration(or, if the COMPANY'S stock is not then publicly
                  traded, the fair market value thereof as determined by
                  negotiation between the COMPANY and the EXECUTIVE).

         (d)      Certain Transaction Fees. In the event of one or more
                  "PROPOSED TRANSACTIONS" (as defined in Exhibit A hereto)
                  occurring during the term of this AGREEMENT, EXECUTIVE shall
                  receive, as additional compensation with respect to each
                  PROPOSED TRANSACTION, a fee as set forth in Exhibit A hereto
                  (the "TRANSACTION FEES").

6.       BUSINESS EXPENSES. EXECUTIVE shall be reimbursed for, and entitled to
         advances (subject to repayment to the COMPANY if not actually incurred
         by EXECUTIVE) with respect to, only those business expenses incurred by
         him which are reasonable and necessary

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         for EXECUTIVE to perform his duties under this AGREEMENT in accordance
         with policies established from time to time by the COMPANY.

7.       EXECUTIVE BENEFITS.

         (a)      EXECUTIVE shall be entitled to four (4) weeks paid vacation
                  each year during the EMPLOYMENT TERM.

         (b)      The COMPANY may withhold from any benefits payable to
                  EXECUTIVE all federal, state, local and other taxes and
                  amounts as shall be required pursuant to law, rule or
                  regulation. All of the benefits to which EXECUTIVE may be
                  entitled which are not specifically described herein may be
                  changed from time to time or withdrawn at any time in the sole
                  discretion of the COMPANY, so long as any such change or
                  withdrawal are applicable to all of the relevant COMPANY
                  executives and to the relevant executives of any company which
                  may control the COMPANY.

         (c)      During the EMPLOYMENT TERM the COMPANY shall provide to
                  executive an automobile allowance in the amount of Fifteen
                  Hundred Dollars ($1500.00) per month, payable monthly. In lieu
                  of such allowance, the Company may, at its option, elect to
                  provide EXECUTIVE an automobile of a make, model and year
                  mutually agreeable to the COMPANY and EXECUTIVE, all costs of
                  which, including fuel, oil, insurance, repairs, maintenance
                  and other expenses, shall be the responsibility of the
                  COMPANY.

         (d)      During the EMPLOYMENT TERM, if EXECUTIVE does not elect
                  medical insurance coverage for himself and his eligible family
                  through the COMPANY, he shall receive as an allowance for such
                  medical insurance an amount equal to the then cost which would
                  be incurred by the COMPANY in supplying such coverage for
                  EXECUTIVE and his eligible family.

8.       DEATH AND DISABILITY.

         (a)      The EMPLOYMENT TERM shall terminate on the date of EXECUTIVE'S
                  death, in which event EXECUTIVE'S accrued SALARY, BONUS and
                  TRANSACTION FEES, if any, reimbursable expenses and benefits,
                  including accrued but unused vacation time, owing to EXECUTIVE
                  through the date of EXECUTIVE'S death, shall be paid to the
                  EXECUTIVE'S estate, and EXECUTIVE'S estate shall assume
                  EXECUTIVE'S rights under the 1994 Stock Option Plan and the
                  related rights under this AGREEMENT. EXECUTIVE'S estate will
                  not be entitled to any other compensation upon termination of
                  this AGREEMENT pursuant to this Paragraph 8 (a)

         (b)      If, during the EMPLOYMENT TERM, in the opinion of a duly
                  licensed physician selected by COMPANY and reasonably
                  acceptable to the EXECUTIVE, EXECUTIVE, because of physical or
                  mental illness or incapacity, shall become substantially
                  unable to perform the duties and services required of him
                  under this AGREEMENT for a period of 180 ) consecutive days ,
                  the COMPANY may, upon at least ten (10) days' prior written
                  notice given at any time after the expiration of

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                  such 180 ) day period to EXECUTIVE of its intention to do so,
                  terminate this AGREEMENT as of such date as may be set forth
                  in the notice. In case of such termination, EXECUTIVE shall be
                  entitled to receive his accrued SALARY, BONUS and TRANSACTION
                  FEES, if any, reimbursable expenses and benefits owing to
                  EXECUTIVE through the date of termination. In addition,
                  EXECUTIVE shall be entitled to receive the benefits payable
                  pursuant to the POLICY described in Paragraph 8(c) below.
                  EXECUTIVE will not be entitled to any other compensation upon
                  termination of this AGREEMENT pursuant to this Paragraph 8
                  (b).

         (c)      During the period ending no later than June 30, 2003, the
                  COMPANY and the EXECUTIVE agree to negotiate in good faith to
                  provide EXECUTIVE, at the COMPANY'S expense, with the benefit
                  of an appropriate amount and term and terms of disability
                  insurance. The EXECUTIVE understands and agrees that this
                  Section 8(c) shall not require the COMPANY to agree to any
                  particular disability terms or policy, but to, in the
                  COMPANY'S judgment, negotiate with EXECUTIVE with respect to
                  disability insurance. Any agreement reached by the parties
                  with respect to providing such insurance to EXECUTIVE shall be
                  evidenced by a written amendment to this AGREEMENT signed by
                  the COMPANY and the EXECUTIVE.

9.       TERMINATION.

         (a)      The COMPANY may terminate the employment of EXECUTIVE for
                  Cause (as hereinafter defined); provided, however, that such
                  termination shall only become effective if the COMPANY (acting
                  upon duly adopted resolutions of the Board) shall first give
                  EXECUTIVE written notice of the material breach or default,
                  which notice shall (i) identify in reasonable detail the
                  manner in which the COMPANY believes that EXECUTIVE has
                  breached or defaulted under this AGREEMENT or in the
                  performance of his duties and (ii) indicate the steps required
                  to cure such breach or default, and EXECUTIVE shall fail
                  within 20 business days after receipt of such notice to
                  substantially remedy or correct the same. Upon any such
                  termination, the COMPANY shall be released from any and all
                  further obligations under this AGREEMENT, except that the
                  COMPANY shall be obligated to pay EXECUTIVE his accrued
                  SALARY, BONUS and TRANSACTION FEES, if any, reimbursable
                  expenses and benefits owing to EXECUTIVE through the day on
                  which EXECUTIVE is terminated. EXECUTIVE will not be entitled
                  to any other compensation upon termination of this AGREEMENT
                  pursuant to this Paragraph 9 (a).

         (b)      As used in this AGREEMENT, the term "Cause" shall mean: (i)
                  the willful failure of EXECUTIVE to perform his duties
                  pursuant to Paragraph 3 hereof, which failure is not cured by
                  EXECUTIVE as described in subparagraph (a) above, or (ii) the
                  commission by EXECUTIVE of an act involving moral turpitude,
                  dishonesty, theft or fraudulent business conduct.

         (c)      EXECUTIVE may voluntarily terminate this AGREEMENT for Good
                  Reason. For purposes of this AGREEMENT, "Good Reason" shall
                  mean the occurrence of a Change in Control, as defined below,
                  of the COMPANY. In the event of a

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                  Change in Control, EXECUTIVE may voluntarily terminate this
                  AGREEMENT for Good Reason within 90 days of such event by
                  giving written notice thereof to COMPANY.

         (d)      For purposes of this AGREEMENT, a "Change in Control" shall
                  have occurred if:

                  (i)      any "person", as such term is used in Sections 13(d)
                  and 14(d) of the Securities Exchange Act of 1934, as amended
                  (the "Exchange Act") (other than the COMPANY, any trustee or
                  other fiduciary holding securities under an employee benefit
                  plan of the COMPANY, any corporation owned, directly or
                  indirectly, by the stockholders of the COMPANY in
                  substantially the same proportions as their ownership of stock
                  of the COMPANY, Mel Marks, Richard Marks or any affiliate or
                  family relative of either of them, or any trust for the
                  benefit thereof), individually or as a group, is or becomes
                  the "beneficial owner" (as defined in Rule 13d-3 under the
                  Exchange Act), directly or indirectly, of securities of the
                  COMPANY representing 30% or more of the combined voting power
                  of the COMPANY'S then outstanding securities;

                  (ii)     the shareholders of the COMPANY approve a merger or
                  consolidation of the COMPANY with any other corporation, other
                  than (A) a merger or a consolidation which would result in the
                  voting securities of the COMPANY outstanding immediately prior
                  thereto continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity) more than 80% of the combined voting
                  power of the voting securities of the COMPANY or such
                  surviving entity outstanding immediately after such merger or
                  consolidation or (B) a merger or consolidation effected to
                  implement a recapitalization of the COMPANY (or similar
                  transaction) in which no "person" (as hereinabove defined)
                  acquires more than 30% of the combined voting power of the
                  COMPANY's then outstanding securities; or

                  (iii)    the shareholders of the COMPANY approve an agreement
                  for the sale or disposition by the COMPANY of all or
                  substantially all of the COMPANY'S assets.

         (e)      If EXECUTIVE shall voluntarily terminate this AGREEMENT
         pursuant to the provisions of Subparagraph 9(c), then the COMPANY shall
         pay EXECUTIVE'S Salary and benefits through March 31, 2006 at the
         annual rate in effect immediately prior to the Termination Date. For
         the purposes of the foregoing payments, the foregoing annual SALARY
         rate shall be the rate paid to EXECUTIVE without regard to any
         purported reduction or attempted reduction of such rate by the COMPANY.
         EXECUTIVE shall not be required to mitigate the amount of any payment
         provided for in this Paragraph 9 by seeking employment or otherwise,
         nor shall the amount of any payment or benefit provided for in this
         Paragraph 9 be reduced by any compensation earned by EXECUTIVE as the
         result of consultancy with or employment by another entity, by
         retirement benefits, by offset against any amount claimed to be owed by
         EXECUTIVE to the COMPANY, or otherwise.

10.      DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT. EXECUTIVE
         acknowledges that, by his employment, he has been and will be in a
         confidential relationship with the COMPANY and will have access to
         confidential information and trade secrets of the

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         COMPANY, its subsidiaries and affiliates. Confidential information and
         trade secrets include, but are not limited to, customer, supplier, and
         client lists, marketing, distribution and sales strategies and
         procedures, operational and equipment techniques, business plans and
         system, quality control procedures and systems, special projects and
         technological research, including projects, research and reports for
         any entity or client or any project, research, report or the like
         concerning sales or manufacturing or new technology, EXECUTIVE
         compensation plans and any other information relating thereto, and any
         other records, files, drawings, inventions, discoveries, applications,
         processes, data, and information concerning the business of the COMPANY
         which are not in the public domain. EXECUTIVE agrees that in
         consideration of the execution of this AGREEMENT by the COMPANY:

         (a)      EXECUTIVE will not, during the term of this AGREEMENT or at
                  any time thereafter, use, or disclose to any third party,
                  trade secrets or confidential information of the COMPANY,
                  including but not limited to, confidential information or
                  trade secrets belonging or relating to the COMPANY, its
                  subsidiaries, affiliates, customers and clients or proprietary
                  processes or procedures of the COMPANY, its subsidiaries,
                  affiliates, customers and clients. Proprietary processes and
                  procedures shall include, but shall not be limited to, all
                  information which is known or intended to be known only to
                  executives of the COMPANY or others in a confidential
                  relationship with the COMPANY or its respective subsidiaries
                  and affiliates which relates to business matters.

         (b)      EXECUTIVE will not, during the term of this AGREEMENT,
                  directly or indirectly, under any circumstance other than at
                  the direction and for the benefit of the COMPANY, engage in or
                  participate in any business activity, including, but not limit
                  to, acting as a director, franchiser or franchisee,
                  proprietor, syndicate member, shareholder or creditor or with
                  a person having any other relationship with any other
                  business, company, firm occupation or business activity, in
                  any geographic area within the United States that is, directly
                  or indirectly, competitive with any business completed by the
                  COMPANY or any of its subsidiaries or affiliates during the
                  term of this AGREEMENT or thereafter. Should EXECUTIVE own 5%
                  or less of the issued and outstanding shares of a class of
                  securities of a corporation the securities of which are traded
                  on a national securities exchange or in the over-the-counter
                  market, such ownership shall not cause EXECUTIVE to be deemed
                  a shareholder under this Paragraph 10 (b).

         (c)      EXECUTIVE will not, during the term of this AGREEMENT, on his
                  behalf or on behalf of any other business enterprise, directly
                  or indirectly, under any circumstance other than at the
                  direction and for the benefit of the COMPANY, solicit or
                  induce any creditor, customer, supplier, officer, EXECUTIVE or
                  agent of the COMPANY or any of its subsidiaries or affiliates
                  to sever its relationship with or leave the employ of any such
                  entities.

         (d)      This Paragraph 10 and Paragraphs 11, 12 and 13 hereof shall
                  survive the expiration or termination of this AGREEMENT for
                  any reason.

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         (e)      It is expressly agreed by EXECUTIVE that the nature and scope
                  of each of the provisions set forth above in this Paragraph 10
                  are reasonable and necessary. If, for any reason, any aspect
                  of the above provisions as it applies to EXECUTIVE is
                  determined by a court of competent jurisdiction to be
                  unreasonable, or unenforceable, the provision shall only be
                  modified to the minimum extent required to make the provisions
                  reasonable and/or enforceable, as the case may be. EXECUTIVE
                  acknowledges and agrees that his services are of a unique
                  character and expressly grants to the COMPANY or any
                  subsidiary, successor or assignee of the COMPANY, the right to
                  enforce the provisions above through the use of all remedies
                  available at law or in equity, including, but not limited to,
                  injunctive relief.

11.      COMPANY PROPERTY.

         (a)      Any patents, inventions, discoveries, applications or process,
                  designs, devised, planned, applied, created, discovered or
                  invented by EXECUTIVE in the course of EXECUTIVE'S employment
                  under this AGREEMENT and which pertain to any aspect of the
                  COMPANY'S or its respective subsidiaries' or affiliates'
                  business shall be the sole and absolute property of the
                  COMPANY, and EXECUTIVE shall make prompt report thereof to the
                  COMPANY and promptly execute any and all documents reasonably
                  requested to assure the COMPANY the full and complete
                  ownership thereof.

         (b)      All records, files, lists, including computer generated lists,
                  drawings, documents, equipment and similar items relating to
                  the COMPANY'S business which EXECUTIVE shall prepare or
                  receive from the COMPANY shall remain the COMPANY'S sole and
                  exclusive property. Upon termination of this AGREEMENT,
                  EXECUTIVE shall promptly return to the COMPANY all property of
                  the COMPANY in his possession. EXECUTIVE further represents
                  that he will not copy or cause to be copied, print out or
                  cause to be printed out any software, documents or other
                  materials originating with or belonging to the COMPANY.
                  EXECUTIVE additionally represents that, upon termination of
                  his employment with the COMPANY, he will not retain in his
                  possession any such software, documents or other materials.

12.      REMEDY. It is mutually understood and agreed that EXECUTIVE'S services
         are special, unique, unusual, extraordinary and of an intellectual
         character giving them a peculiar value, the loss of which cannot be
         reasonably or adequately compensated in damages in an action at law.
         Accordingly, in the event of any breach of this AGREEMENT by EXECUTIVE,
         including but not limited to, the breach of the non-disclosure,
         non-solicitation and non-compete clauses of Paragraph 10 hereof, the
         COMPANY shall be entitled to equitable relief by way of injunction or
         otherwise in addition to damages the COMPANY may be entitled to
         recover.

13.      REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In order to induce the
         COMPANY to enter into this AGREEMENT, EXECUTIVE hereby represents and
         warrants to the COMPANY as follows: (i) EXECUTIVE hereby has the legal
         capacity and unrestricted right to execute and deliver this AGREEMENT
         and to perform all of his obligations hereunder; (ii) the execution and
         delivery of this AGREEMENT by EXECUTIVE and the

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         performance of his obligations hereunder will not will not violate or
         be in conflict with any fiduciary or other duty, instrument, agreement,
         document, ,arrangement or other understanding to which EXECUTIVE is a
         party or by which he is or may be bound or subject; and (iii) EXECUTIVE
         is not a party to any instrument, agreement, document, arrangement or
         other understanding with any person (other than the COMPANY) requiring
         or restricting the use or disclosure of any confidential information or
         the provision of any employment, consulting or other services, except
         any confidentiality agreements unrelated to the COMPANY'S industry and
         having no relationship or impact of any kind whatsoever with respect to
         this AGREEMENT and the transactions contemplated hereby.

14.      NOTICES. All notices given hereunder shall be in writing and shall be
         deemed effectively given when hand-delivered or mailed, if sent by
         registered or certified mail, return receipt requested, addressed to
         EXECUTIVE at his address set forth on the first page of this AGREEMENT
         or to the COMPANY at its address set forth on the first page of this
         AGREEMENT or to such changed address as may be properly noticed
         hereunder.

15.      ENTIRE AGREEMENT. This AGREEMENT constitutes the entire understanding
         of the parties with respect to its subject matter and no change,
         alteration or modification hereof may be made except in writing signed
         by the parties hereto. Any prior or other agreements, promises,
         negotiations or representations not expressly set forth in this
         AGREEMENT are of no force or effect.

16.      SEVERABILITY. If any provision of the Agreement shall be unenforceable
         under any applicable law, then notwithstanding such unenforceability,
         the remainder of this AGREEMENT shall continue in full force and
         effect.

17.      WAIVERS, MODIFICATIONS. No amendment, modification or waiver of any
         provision of this AGREEMENT shall be effective unless the same shall be
         in writing and signed by each of the parties hereto, and then such
         waiver or consent shall be effective only in the specific instance and
         for the specific purpose for which given.

18.      INDEMNIFICATION. COMPANY shall indemnify EXECUTIVE against any and all
         claims of third parties arising out of his earlier services to the
         COMPANY and out of the performance of his duties pursuant to this
         AGREEMENT to the fullest extent permitted by law.

19.      ASSIGNMENT. Neither this AGREEMENT, nor any of EXECUTIVE'S rights,
         powers, duties or obligation hereunder, may be assigned by EXECUTIVE.
         This AGREEMENT shall be binding upon and inure to the benefit of
         EXECUTIVE and his heirs and legal representatives and the COMPANY and
         its successors and assigns.

20.      APPLICABLE LAW. This AGREEMENT shall be deemed to have been made,
         drafted, negotiated and the transactions contemplated hereby
         consummated and fully performed in the State of California, without
         regard to the conflicts of law rules thereof. Nothing contained in this
         AGREEMENT shall be construed so as to require the commission of any act
         contrary to law, and whenever there is any conflict between any
         provision of this AGREEMENT and any statue, law, ordinance, order or
         regulation, contrary to which the parties hereto have no legal right to
         contract, the latter shall prevail, but in such event any

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         provision of this AGREEMENT so affected shall be curtailed and limited
         only to the extent necessary to bring it within applicable legal
         requirements.

21.      ARBITRATION; JURISDICTION AND VENUE; PREVAILING PARTY. All disputes or
         controversies between COMPANY and EXECUTIVE arising out of, in
         connection with or relating to this AGREEMENT shall be exclusively
         heard, settled and determined by arbitration before a retired Federal
         or California judge to be held in the City of Los Angeles, County of
         Los Angeles. The arbitration shall be administered by JAMS pursuant to
         its Comprehensive Arbitration Rules and Procedures. The parties also
         agree that judgment may be entered on the arbitrator's award by any
         court having jurisdiction thereof and the parties consent to the
         jurisdiction of any court located in the City of Los Angeles, County of
         Los Angeles, for this purpose. The arbitrator shall allocate all of the
         costs of the arbitration, including the fees of the arbitrator and the
         reasonable attorneys' fees and expenses of the prevailing party,
         against the party who did not prevail.

22.      FULL UNDERSTANDING. EXECUTIVE represents and agrees that he fully
         understands his rights to discuss all aspects of this AGREEMENT with
         his private attorney, that to the extent, if any, that he desires, he
         availed himself of this right, that he has carefully read and fully
         understands all of the provisions of this AGREEMENT, that he is
         competent to execute this AGREEMENT, that his agreement to execute the
         Agreement has not been obtained by any duress and that he freely and
         voluntarily enters into it, and that he has read this document in its
         entirety and fully understands the meaning, intent and consequences of
         this document.

23.      COUNTERPARTS. This AGREEMENT may be executed in any number of
         counterparts, each of which shall be deemed an original and all of
         which taken together shall constitute one and the same agreement.

24.      LEGAL REPRESENTATION. The parties hereto acknowledge that each has been
         represented by independent counsel of such party's own choice
         throughout all of the negotiations which preceded the execution of this
         Employment Agreement and in connection with the preparation and
         execution of this Employment Agreement or has had the opportunity to do
         so and has not availed himself of it.

                            [SIGNATURE PAGE FOLLOWS]

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

                              MOTORCAR PARTS & ACCESSORIES, INC.

                              By:       _____________________________

                              Name:     _____________________________

                              Title:    _____________________________

                              ______________________________
                              SELWYN JOFFE

                              ACKNOWLEDGED BY THE BOARD OF DIRECTORS
                              OF MOTORCAR PARTS & ACCESSORIES, INC.:

                              ______________________________
                              Douglas Horn

                              ______________________________
                              Mel Marks

                              ______________________________
                              Murray Rosenzweig

                              ______________________________
                              Irving Siegel

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                                    EXHIBIT A

As part of EXECUTIVE'S obligations to the COMPANY, EXECUTIVE will identify
prospective buyers and sellers who may be interested in acquiring or selling
businesses or lines of businesses upon terms and conditions and in a form
satisfactory to COMPANY (including any transaction resulting in a change of
control, and without regard to form, sometimes described herein as a "PROPOSED
TRANSACTION").

In the event of a closing of any PROPOSED TRANSACTION(s) at any time during the
term of this AGREEMENT, EXECUTIVE shall be entitled to a fee as provided in this
Paragraph. In any such event, the COMPANY shall pay EXECUTIVE a transaction fee
upon the closing of a PROPOSED TRANSACTION in an amount (the "TRANSACTION FEE")
equal to 1% of the "total consideration." The "total consideration" shall equal
(a) the sum of all cash consideration paid by the acquirer plus all Non-Cash
Consideration (as defined below) received as consideration for the transaction,
including any contingent payments of cash or securities and the aggregate amount
of any dividends (other than normal quarterly or annual cash dividends) or other
distributions declared by the acquired entity in connection with a PROPOSED
TRANSACTION, reduced by (b) any cash payments or any Non-Cash Consideration
subsequently returned to the acquirer pursuant to the agreement (the "Purchase
Agreement") out of an escrow account, through an offset against an earn-out
amount or through another holdback arrangement, regardless of the reason for
such return. "Non-Cash Consideration" shall have the following meaning: (i)
publicly traded securities shall be valued at the average of their closing
prices (as reported in The Wall Street Journal), for the five trading days
immediately prior to closing of the transaction between COMPANY and the other
party and (ii) any other non-cash consideration shall be valued at the fair
market value thereof as determined in good faith by the Board of Directors of
COMPANY. Debt assumed by the acquirer shall not constitute consideration or
Non-Cash Consideration for purposes of calculating the TRANSACTION FEE.

Subject to the terms and conditions of this paragraph, the TRANSACTION FEE shall
be deemed earned and payable upon receipt of the total consideration at the
closing with respect to a PROPOSED TRANSACTION and, with respect to contingent
or deferred payments, whether pursuant to promissory notes or other securities,
if any, from time to time, only upon the receipt thereof by the seller or holder
of its equity interests. If for any reason whatsoever, including, without
limitation, the act, omission, negligence or willful default of any party,
including the COMPANY, a PROPOSED TRANSACTION is not consummated, then EXECUTIVE
shall not be entitled to any TRANSACTION FEE. The TRANSACTION FEE shall, at
COMPANY'S sole option, be payable in kind, depending upon the form of
consideration paid by the acquirer, in the same proportions of cash and
securities as paid by the acquirer. In the event that the Purchase Agreement
provides that all or any part of the total consideration paid shall be deposited
into an escrow account at closing (the "ESCROWED PORTION"), then the amount of
the TRANSACTION FEE proportional to the ESCROWED PORTION shall not be payable
until the ESCROWED PORTION is released. If the ESCROWED PORTION is released in
installments, then a portion of EXECUTIVE'S TRANSACTION FEE will be payable in
proportion to each installment released and EXECUTIVE shall not be entitled to
receive any amount with respect to any ESCROWED PORTION which is returned to the
acquirer. However, in any instance where any cash or securities which have
previously been distributed to the seller or holder of its equity interests are
required to be returned to the acquirer for any reason, EXECUTIVE shall not be
required to return any portion of the TRANSACTION FEE. EXECUTIVE hereby agrees
that any

                                       11

<PAGE>

securities received by him as part of the TRANSACTION FEE hereunder shall be
acquired and held subject to the same restrictions, if any, applicable to the
securities issued by the acquirer or any affiliate thereof and that securities
delivered to EXECUTIVE may bear an appropriate legend with respect to any such
restrictions.

                                       12<PAGE>
                                                                   EXHIBIT 10.43
July 17, 2002

Personal and Confidential

Mr. Selwyn Joffe
and
Mr. Anthony Souza
Motorcar Parts & Accessories, Inc.
2929 California Street
Torrance, CA 90503

Dear Messrs. Joffe and Souza:

         This letter confirms the understanding and agreement (the "Agreement")
between Motorcar Parts & Accessories, Inc. (together with its subsidiaries and
affiliates, the "Company") and Houlihan Lokey Howard & Zukin Capital ("Houlihan
Lokey"). Houlihan Lokey's engagement as described herein will include providing
certain consulting services to Company with respect to its business, which may
'include consultation in connection with any potential Transactions. For
purposes of this Agreement, the term "Transaction" shall include any of the
following: (i) the obtaining of financing for the Company or any of its
subsidiaries, whether in the form of subordinated or senior debt, equity or
equity equivalents, and whether or not such financing is arranged on a public or
private basis (a "Financing Transaction"); (ii) a licensing, joint venture or
other partnership transaction which provides the Company the night to receive
other strategic consideration including but not limited to consideration
received from long term exclusive and non exclusive licensing relationships with
third parties (a "Strategic Transaction"); (iii) the purchase by the Company of
all or substantially all of the stock or assets of another business for cash or
other valuable consideration (an "Acquisition Transaction"); or (iv) any merger,
consolidation, tender or exchange offer, leveraged buyout, leveraged
recapitalization, or sale of assets or equity interests, or similar transaction
involving all or a substantial part of the business, assets or equity interests
of the Company and/or its subsidiaries and affiliates in one or more
transactions (each, a "Sale Transaction")

         1 . Engagement; Services; Term. The Company hereby retains Houlihan
Lokey as its exclusive financial advisor to provide consulting and advisory
services, including the following:

         (a) Business Consultation: Houlihan Lokey will review the financial
condition and future prospects of the Company, conduct such investigations of
the Company's business and prospects as the parties reasonably determine are
necessary or appropriate, conduct such interviews with the Company's management
and directors as the parties reasonably determine are necessary or appropriate,
review any other matters which the parties deem relevant to assist and advise
the Company in its business and, in addition, provide advisory services in
conjunction with the Company's efforts in acquiring financing in the approximate
amount of $29,000,000 to "take out" the Company's cur rent credit facility with
Wells Fargo Bank.

         (b) Financial Advisory Services: Houlihan Lokey will provide financial
advisory services, including consultation in connection with one or more of any
Strategic Transaction,

                                       1
<PAGE>

Financing Transaction, Sale Transaction or Acquisition Transaction. Such
financial advisory services will include: (i) preparing a memorandum, a
management presentation and other documents and presentations as required; (ii)
soliciting, coordinating and evaluating indications of interest and proposals
regarding one or more of any Strategic Transaction, Financing Transaction, Sale
Transaction or Acquisition Transaction; (iii) advising and assisting the Company
in deciding whether to proceed with one or more of any Strategic Transaction,
Financing Transaction (which advice and assistance is substantial, e.g., the
placement of such financing), Sale Transaction or Acquisition Transaction; (iv)
negotiating the financial aspects, and facilitating the consummation, of one or
more of any Strategic Transaction, Financing Transaction, Sale Transaction or
Acquisition Transaction; and (v) providing such other financial advisory and
investment banking services reasonably necessary to accomplish the foregoing,
including the rendering of a fairness opinion if requested.

         The Company agrees that neither it nor its management, directors and
executive officers will engage in any discussions regarding a Transaction during
the term of this Agreement, except in cooperation with Houlihan Lokey. In the
event the Company or its management, directors or executive officers receives
any material inquiry regarding a Transaction, Houlihan Lokey will be promptly
informed of such inquiry so that it can evaluate such party and its interest in
a Transaction, and assist the Company in any resulting negotiations.

         This Agreement shall have an initial term of twelve (12) months, and
thereafter shall be automatically extended on a month to month basis unless
either party provides thirty days prior written notice of termination to the
other party; provided, however ' that no expiration or termination of this
Agreement shall affect (a) the Company's indemnification, reimbursement,
contribution and other obligations as set forth on Schedule A attached hereto,
(b) the confidentiality provisions set forth herein and Sections 69 hereof, and
(c) Houlihan Lokey's night to receive, and the Company's obligation to pay, any
and all fees and expenses due, and whether or not any Transaction shall be
consummated prior to or subsequent to the effective date of termination, all as
more fully set forth in this Agreement.

         2.       Fees and Expenses.

         (a) In exchange for Houlihan Lokey's consulting services pursuant to
Subsection (a) to Paragraph 1 above, the Company shall pay Houlihan Lokey a non
refundable consulting fee of $ 100,000 ("Consulting Fee") upon the mutual
execution of this Agreement.

         (b) In the event of any Financing Transaction, Acquisition Transaction
or Strategic Transaction, then the Company and Houlihan Lokey shall mutually
agree upon the appropriate market fee in exchange for its services in connection
therewith. The parties acknowledge that it is not contemplated that Houlihan
Lokey will receive any fee in connection with Houlihan Lokey's advisory services
under Section 1(a) above in connection with the Company's efforts in acquiring
financing in the approximate amount of $29,000,000 to "take out" the Company's
current credit facility with Wells Fargo Bank; provided, however, that if
Houlihan Lokey is called upon by the Company to provide a substantial portion of
the Financial Advisory Services as described 'in Section 1(b) above in
connection with the Company's efforts and such "take out" financing occurs
within the applicable time period provided by this Agreement, then the

                                       2
<PAGE>

Company and Houlihan Lokey shall negotiate in good faith on an appropriate
market fee in exchange for such Financial Advisory Services.

         (c) In the event Houlihan Lokey provides its financial advisory
services and investment banking services in connection with any Sale
Transaction, Houlihan Lokey shall be entitled to the following consideration:

                  (i) Upon the signing of a definitive purchase agreement or
similar document in connection with such Sale Transaction the Company shall pay
Houlihan Lokey a fee of $150,000 ("Progress Fee").

                  (ii) In addition to the foregoing Consulting Fee and Progress
Fee, upon the consummation of a Sale Transaction, the Company shall pay Houlihan
Lokey a cash fee ("Transaction Fee"), against which the Consulting Fee and
Progress Fee actually received by Houlihan Lokey will be credited, equal to:

<TABLE>
<S>                                                                    <C>
- For a Transaction Value up to $80 million:                           1.25%, plus
- For a Transaction Value from $80 to $100 million:                    3.0% of such incremental value, plus
- For a Transaction Value in excess of $100 million:                   5.5% of such incremental value.
</TABLE>

         For the purpose of calculating the Transaction Fee, the Transaction
Value shall be the total proceeds and other consideration paid or received, or
to be paid or received, in connection with a Transaction (which consideration
shall be deemed to include amounts in escrow), including, without limitation,
cash, notes, securities, and other property; payments made in installments;
amounts payable under any above market and out of the ordinary course consulting
agreements, employment contracts, non compete agreements or similar
extraordinary arrangements; and Contingent Payments (as defined below). If 50%
or more but less than all of the Company's equity interests are sold, the
Transaction Value shall be calculated as if 100% of the ownership of the equity
interests of the Company had been sold by dividing (i) the total consideration,
whether in cash, securities, notes or other forms of consideration, received or
receivable by the Company and/or its creditors and equity holders by (ii) the
percentage of ownership which is sold. In addition, if any of the Company's
interest bearing liabilities are assumed, decreased or paid off 'in conjunction
with a Transaction, or any of the Company's assets are retained, sold or
otherwise transferred to another party prior to the consummation of a
Transaction, the Transaction Value will be increased to reflect the fair market
value of any such assets or interest bearing liabilities. Contingent Payments
shall be defined as the fair market value of consideration received or
receivable by the Company, its employees and/or former or current equity holders
in the form of deferred performance based payments, "earn outs", or other
contingent payments based upon the future performance of the Company or any of
its businesses or assets.

In the case that less than 50% of the ownership of the equity interests of the
Company are sold in any Sale Transaction, then the Company and Houlihan Lokey
shall mutually agree upon the appropriate market Transaction Fee.

                                       3
<PAGE>

         For the purpose of calculating the consideration received in a
Transaction, any securities (other than a promissory note) will be valued at the
time of the closing of a Transaction (without regard to any restrictions on
transferability) as follows: (i) if such securities are traded on a stock
exchange, the securities will be valued at the average last sale or closing
price for the ten trading days immediately prior to the closing of a
Transaction; (ii) if such securities are traded primarily in over the counter
transactions, the securities will be valued at the mean of the closing bid and
asked quotations similarly averaged over a ten trading day period immediately
prior to the closing of a Transaction; and (iii) if such securities have not
been traded prior to the closing of a Transaction, Houlihan Lokey will prepare a
valuation of the securities, and Houlihan Lokey and the Company will negotiate
in good faith to agree on a fair valuation thereof for the purposes of
calculating the Transaction Fee. The value of any purchase money or other
promissory notes shall be deemed to be the face amount thereof. Notwithstanding
anything to the contrary contained herein, in the event the Transaction Value
includes any deferred payment, including, but not limited to, promissory note or
Contingent Payment, the Company and Houlihan Lokey will negotiate in good faith
in an attempt to agree on that portion, if any, of the Transaction Fee to be
paid to Houlihan Lokey as of the closing of the Transaction in consideration
thereof (it is acknowledged that the failure to so agree shall not constitute
the lack of good faith in negotiation). If the parties do not reach such an
agreement, then the pro rata portion of any Transaction Fee which is derived
from any deferred payment, including, but not limited to, promissory note or
Contingent Payment, shall be due and payable to Houlihan Lokey upon the time of
Company's receipt of such deferred amounts.

         If this Agreement is terminated by the Company for any reason other
than the material breach of Houlihan Lokey, and the Company consummates, or
enters into an agreement in principle to engage in (and which subsequently
closes), a Transaction within twelve (12) months after such termination date
with any party which Houlihan Lokey identified, contacted or with whom Houlihan
Lokey or the Company had discussions regarding a potential Transaction during
the term of this Agreement and which party is identified on a list of "Contacted
Parties" which Houlihan will prepare and deliver to Company within seven days
following the termination of the Agreement, Houlihan Lokey shall be entitled to
receive its Transaction Fee upon the consummation of such Transaction as if no
such termination had occurred.

         Additionally, and regardless of whether any Transaction is consummated,
Houlihan Lokey shall be entitled to reimbursement of their reasonable out of
pocket expenses incurred from time to time during the term hereof in connection
with the services to be provided under this Agreement, promptly after invoicing
the Company therefor but in no event greater than $50,000; provided, however,
upon the reimbursable expenses hereunder reaching $25,000, all subsequent such
expenses in excess of $2,500 shall require the Company's prior written approval.

         3. Information. The Company will furnish Houlihan Lokey with such
information regarding the business and financial condition of the Company as is
reasonably requested, all of which will be, to the Company's best knowledge,
accurate and complete in all material respects at the time furnished. The
Company further represents and warrants that any projections have been prepared
in good faith based upon assumptions which, in light of the circumstances under
which they are made, are reasonable. The Company will promptly notify Houlihan
Lokey if it

                                       4
<PAGE>

learns of any material misstatement in, or material omission from,
any information previously delivered to Houlihan Lokey. Houlihan Lokey may rely,
without independent verification, on the accuracy and completeness of all
information furnished by the Company or any other potential party to any
Transaction. The Company understands that Houlihan Lokey will not be responsible
for independently verifying the accuracy of such information, and shall not be
liable for any inaccuracies therein. Except as may be required by law or court
process, any opinions or advice (whether written or oral) rendered by Houlihan
Lokey pursuant to this Agreement are intended solely for the benefit and use of
the Company, and may not be publicly disclosed in any manner or made available
to third parties (other than the Company's management, directors, advisors,
accountants and attorneys) without the prior written consent of Houlihan Lokey,
which consent shall not be unreasonably withheld.

         Houlihan Lokey does not assume responsibility for the accuracy and
completeness of the Information, including, but not limited to, any disclosure
materials related to a Transaction, and Houlihan Lokey shall not be obligated to
conduct any independent study or investigation as to the accuracy or
completeness of the Information. The Company represents that the disclosure
materials will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not false or misleading. In addition,
the Company represents and warrants that the Information will be true, complete
and correct in all material respects. The foregoing shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
Houlihan Lokey or any Indemnified Person (as defined elsewhere in this
agreement) or any person controlling any of them.

         The Company will furnish to Houlihan Lokey complete copies of all
relevant documents with respect to a Transaction filed with or submitted to any
regulatory agency prior to the consummation of a Transaction, and all such other
data, material and other information as Houlihan Lokey may reasonably request.
The Company will furnish to Houlihan Lokey, concurrently with their submission
to others, all material drafts of and a copy of the final disclosure materials
and financing and other documents related to a Transaction, and will keep
Houlihan Lokey apprised of changes in the terms of a Transaction on a timely
basis as they are decided upon.

         Houlihan Lokey acknowledges that, in connection with the services to be
provided pursuant to this Agreement, certain confidential, non public and/or
proprietary information concerning the Company ("Confidential Information") has
been or may be disclosed to Houlihan Lokey or its employees, attorneys and
advisors (collectively, "Representatives"). Houlihan Lokey agrees that no
Confidential Information will be disclosed, in whole or in part, to any other
person (other than to any potential party to a Transaction under appropriate
assurances of confidentiality contained in an executed customary nondisclosure
agreement, to those Representatives who need access to any Confidential
Information for purposes of performing the services to be provided hereunder
which Representatives shall be bound by equivalent non disclosure covenants, or
as may be required by legal process), without the Company's prior consent. The
term "Confidential Information" does not include any information: (a) that was
already in Houlihan Lokey's possession, or that was available to Houlihan Lokey
on a non confidential basis, prior to the time of disclosure by the Company to
Houlihan Lokey; (b)

                                       5
<PAGE>

obtained by Houlihan Lokey from a third person which, insofar as is known to
Houlihan Lokey, is not subject to any prohibition against disclosure; or (c)
which is or becomes generally available to the public through no fault of
Houlihan Lokey or any of its Representatives. Houlihan Lokey shall be liable to
the Company if any of its Representatives disclose any Confidential Information
'in breach of the foregoing provisions. Upon request, Houlihan Lokey agrees to
return to the Company any Confidential Information, except for Confidential
Information (i) incorporated into analyses, studies or other documents prepared
by Houlihan Lokey or its Representatives, which Confidential Information shall
continue to be held subject to the terms hereof, and (ii) which Houlihan Lokey
is required to retain under any records retention policy or any law, regulation
or securities exchange rule. If Houlihan Lokey becomes legally required to
disclose any Confidential Information, prompt notice thereof shall be given to
the Company, and Houlihan Lokey agrees to permit Company the opportunity to
obtain an appropriate protective order preventing such disclosure; provided,
however, that if any such disclosure is required notwithstanding the Company's
efforts, Houlihan Lokey will provide only such information as is specifically
requested and legally required. Without prejudice to any other rights or
remedies the Company may have, Houlihan Lokey acknowledges and agrees that money
damages would not be an adequate remedy for any breach of these provisions, and
that the Company shall be entitled to an injunction, specific performance and
other equitable relief for any threatened or actual breach hereof. Houlihan
Lokey's obligations under this Section 3 shall remain in effect for a period of
two (2) years following the termination of this Agreement.

         4. The Opinion. If requested, Houlihan Lokey shall render an opinion as
to the fairness (the "Opinion'), from a financial point of view, to the public
stockholders of the Company and/or to the Company of the consideration to be
received in connection with a Transaction. The Opinion shall not address the
Company's underlying business decision to effect any Transaction. It is
contemplated that the Opinion will include, in addition to any other matters
that Houlihan Lokey in its sole discretion deems appropriate, a description of
the principal materials that Houlihan Lokey has reviewed and upon which Houlihan
Lokey is relying, and the principal assumptions and qualifications upon which
Houlihan Lokey has relied. The Opinion will be signed and delivered as
contemplated below. Houlihan Lokey shall be responsible only for conclusions or
opinions set forth in its written Opinion, subject to the limitations set forth
herein.

         Houlihan Lokey consents to a description of and the inclusion of the
text of its written Opinion in any filing required to be made by the Company
with the Securities and Exchange Commission in connection with a Transaction and
in materials delivered to the Company's stockholders that are a part of such
filings, provided that any such description or 'inclusion shall be subject to
Houlihan Lokey's prior review and approval, which approval shall not be
unreasonably withheld. Any summary of, or reference to, the Opinion, any verbal
presentation with respect thereto, or other references to Houlihan Lokey 'in
connection with a Transaction, will in each instance be subject to Houlihan
Lokey's prior review and written approval (which shall not be unreasonably
withheld). Other than as set forth above, the Opinion will not be *included in,
summarized or referred to in any manner *in any materials distributed to the
public or the securityholders of the Company, or filed with or submitted to any
governmental agency, without Houlihan Lokey's express, prior written consent
(which shall not be unreasonably

                                       6
<PAGE>

withheld). Neither Houlihan Lokey's verbal conclusions nor the Opinion will be
used for any purpose other than in connection with a Transaction.

         In connection with the Opinion, Houlihan Lokey shall, subject to the
limitations expressed herein or in the Opinion, make such reviews, analyses and
inquiries as we deem necessary and appropriate under the circumstances. Among
other things, Houlihan Lokey will meet with certain senior management of the
Company, visit certain facilities and business offices of the Company, review
certain of the Company's historical financial statements, review certain other
documents pertaining to a Transaction, review forecasts and projections prepared
by Company management and/or the Company's advisors, and review publicly
available data about certain companies it deems comparable to the Company and
certain transactions it deems relevant.

         Each signatory hereto and each recipient of the Opinion acknowledges
that Houlihan Lokey may be requested to render certain future services to other
participants in a Transaction and that services rendered in the past or to be
rendered by Houlihan Lokey hereunder do not represent any actual or potential
conflict of interest on the part of Houlihan Lokey with respect to any such
future services.

         5. Indemnification; Standard of Care. The Company agrees to provide
indemnification, contribution and reimbursement to Houlihan Lokey and certain
other parties in accordance with, and farther agrees to be bound by the other
provisions set forth in, Schedule A attached hereto.

         6. Other Services. To the extent Houlihan Lokey is requested by the
Company to perform any financial advisory or investment banking services which
are not within the scope of this assignment, such fees shall be mutually agreed
upon by Houlihan Lokey and the Company in writing, in advance, depending on the
level and type of services required, and shall be in addition to the fees and
expenses described hereinabove. In the event that Houlihan Lokey is called upon
to render services, other than any services expressly provided for elsewhere *in
this Agreement, in connection with any lawsuit or legal action (including, but
not limited to, producing documents, answering interrogatories, giving
depositions, giving expert or other testimony, and whether by subpoena, court
process or order, or otherwise), then the Company shall pay Houlihan Lokey's
then current base hourly rates for the persons involved by the time expended in
rendering such services, including, but not limited to, time for meetings,
conferences, preparation and travel, and all related reasonable out of pocket
costs and expenses, and the reasonable legal fees and expenses of Houlihan
Lokey's legal counsel incurred in connection therewith; provided, however, that
the foregoing provision shall not apply in connection with either (i) any
lawsuit or other legal action initiated by either party against the other, or
(ii) any lawsuit or other legal action initiated by any third party against
Houlihan Lokey for which Houlihan Lokey is not entitled to Indemnification under
Schedule A, or (iii) any claim for indemnity by Houlihan Lokey under Schedule A.

         7. Attorneys' Fees. If any party to this Agreement brings an action
directly or indirectly based upon this Agreement or the matters contemplated
hereby against another party, the prevailing party shall be entitled to recover,
in addition to any other appropriate amounts, its

                                       7
<PAGE>

reasonable costs and expenses in connection with such proceeding, including, but
not limited to, reasonable attorneys' fees and court costs.

        8. Credit. Upon consummation of any Transaction, Houlihan Lokey may, a
its own expense, place announcements in financial and other newspapers and
periodicals (such as a customary "tombstone" advertisement) describing its
services in connection therewith.

         9. Miscellaneous. This Agreement shall be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, however, is intended to confer or does confer on
any person or entity, other than the parties hereto and their respective
successors and permitted assigns and, to the extent expressly set forth in
Schedule A attached hereto, and the other Indemnified Parties, any rights or
remedies under or by reason of this Agreement or as a result of the services to
be rendered by Houlihan Lokey hereunder.

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain *in full force and effect pursuant to the terms
hereof

         The Company agrees that it will be solely responsible for ensuring that
any Transaction complies with applicable law.

         This Agreement incorporates the entire understanding of the parties
regarding the subject matter hereof, and supersedes all previous agreements or
understandings regarding the same, whether written or oral.

         This Agreement may not be amended, and no portion hereof may be waived,
except in a writing duly executed by the parties.

         THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO SUCH STATE'S RULES CONCERNING CONFLICTS OF LAWS.
EACH OF HOULIHAN LOKEY AND THE COMPANY (ON ITS OWN BEHALF AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS EQUITY HOLDERS) WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THE ENGAGEMENT OF
HOULIHAN LOKEY PURSUANT TO, OR THE PERFORMANCE BY HOULIHAN LOKEY OF THE SERVICES
CONTEMPLATED BY, THIS AGREEMENT.

         We look forward to working with you on this assignment. Please confirm
that the foregoing terms are in accordance with your understanding by signing
and returning the enclosed copy of this Agreement, together with payment in the
amount of $100,000.

Very truly yours,

Houlihan Lokey Howard & Zukin Capital

                                       8
<PAGE>

By /S/ SCOTT J. ADELSON
   ---------------------
Scott J. Adelson
Senior Managing Director

Accepted and agreed to as of July 17, 2002:

Motorcar Parts & Accessories, Inc.

By:  /S/ SELWYN JOFFE
    ----------------------
Selwyn Joffe
Chairman

By:  /S/ ANTHONY SOUZA
   -----------------------
Anthony Souza
President and Chief Executive Officer

                                       9
<PAGE>

                                   SCHEDULE A

         This Schedule is attached to, and constitutes a material part of, that
certain agreement dated July 17, 2002, addressed to Motorcar Parts &
Accessories, Inc. by Houlihan Lokey (the "Agreement"). Unless otherwise noted,
all capitalized terms used herein shall have the meaning set forth in the
Agreement.

         As a material part of the consideration for the agreement of Houlihan
Lokey to furnish its services under the Agreement, the Company agrees to
indemnify and hold harmless Houlihan Lokey and its affiliates, and their
respective past, present and future directors, officers, shareholders,
employees, agents and controlling persons within the meaning of either Section
15 of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended (collectively, the "Indemnified Parties"), to
the fullest extent lawful, from and against any and all losses, claims, damages
or liabilities (or actions in respect thereof), joint or several, arising out of
or related to the Agreement, any actions taken or omitted to be taken by an
Indemnified Party (including acts or omissions constituting ordinary negligence)
in connection with the Agreement, or any Transaction or proposed Transaction
contemplated thereby. In addition, the Company agrees to reimburse the
Indemnified Parties for any legal or other expenses reasonably incurred by them
in respect thereof at the time such expenses are incurred; provided, however the
Company shall not be liable under the foregoing indemnity and reimbursement
agreement for any loss, claim, damage or liability which is finally judicially
determined to have resulted primarily from the willful misconduct, bad faith or
gross negligence of any Indemnified Party.

         If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold it harmless, the Company shall
contribute to the amount paid or payable by the Indemnified Party as a result of
such losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by the Company, on the one hand, and Houlihan Lokey, on the other
hand, in connection with the actual or potential Transaction and the services
rendered by Houlihan Lokey. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or otherwise,
then the Company shall contribute to such amount paid or payable by any
Indemnified Party in such proportion as is appropriate to reflect not only such
relative benefits, but also the relative fault of the Company, on the one hand,
and Houlihan Lokey, on the other hand, in connection therewith, as well as any
other relevant equitable considerations. Notwithstanding the foregoing, the
aggregate contribution of all Indemnified Parties to any such losses, claims,
damages, liabilities and expenses shall not exceed the amount of fees actually
received by Houlihan Lokey pursuant to the Agreement.

         The Company shall not effect any settlement or release from liability
*in connection with any matter for which an Indemnified Party would be entitled
to indemnification from the Company, unless such settlement or release contains
a release of the Indemnified Parties reasonably satisfactory in form and
substance to Houlihan Lokey. The Company shall not be required to indemnify any
Indemnified Party for any amount paid or payable by such party in the settlement
or compromise of any claim or action without the Company's prior written
consent.

                                       10
<PAGE>

         The Company farther agrees that neither Houlihan Lokey nor any other
Indemnified Party shall have any liability, regardless of the legal theory
advanced, to the Company or any other person or entity (including the Company's
equity holders and creditors) related to or arising out of Houlihan Lokey's
engagement, except for any liability for losses, claims, damages, liabilities or
expenses incurred by the Company which are finally judicially determined to have
resulted primarily from the willful misconduct, bad faith, or gross negligence
of any Indemnified Party. The indemnity, reimbursement, contribution and other
obligations and agreements of the Company set forth herein shall apply to any
modifications of the Agreement, shall be in addition to any liability which the
Company may otherwise have, and shall be binding upon and inure to the benefit
of any successors, assigns, heirs and personal representatives of the Company
and each Indemnified Party. The foregoing provisions shall survive the
consummation of any Transaction and any termination of the relationship
established by the Agreement.

                                       11

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