Document:

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                                                                   Exhibit 10.18

                                         June 22, 2000

Soros Private Equity Partners LLC
888 Seventh Avenue
New York, New York  10106
Attn:  Neal Moszkowski

Gentlemen:

     As we have discussed, Bluefly, Inc. (the "Company") recently revised its
financial statements for quarter ended September 30, 1999 and the year ended
December 31, 1999 to reflect the presentation of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), as redeemable preferred stock. This letter sets forth our mutual
agreement to negotiate in good faith an amendment of the rights of the Series A
Preferred Stock such that the Series A Preferred Stock is not treated as
"redeemable preferred stock" within the meaning of U.S. Securities and Exchange
Commission Accounting Series Release No. 268 within forty-five (45) days of the
date of this letter. Please indicate by your signature below that this letter
accurately sets forth our understanding.

                                         Bluefly, Inc.

                                         By: /s/ E. Kenneth Seiff
                                            ----------------------------------
                                         Name: E. Kenneth Seiff
                                         Title: Chairman of the Board, Chief
                                                Executive Officer and President

Agreed to and accepted as of this 23
day of June, 2000.

Soros Private Equity Partners LLC

By: /s/ Neal Moszkowski
   ----------------------------------
Name: Neal Moszkowski
Title: Partner<PAGE>

                                  EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of August
1, 2000, by and between Insignia Financial Group, Inc ("IFG"), a Delaware
corporation with an office at 200 Park Avenue, New York, New York, 10166 (the
"Company"), and Frank M. Garrison, an individual with an office at 102 Woodmont
Boulevard, Suite 400, Nashville TN, 37205 (the "Executive").

                                   BACKGROUND

         The Company, formerly known as Insignia/ESG Holdings, Inc, previously
entered into an Employment Agreement with Executive dated as of August 3, 1998
and desires to amend and restate such agreement. The Company desires to assure
itself of the services of the Executive for the period provided in this
Agreement, and the Executive is willing to serve in the employ of the Company
for such period upon the terms and conditions provided in this Agreement.

                             STATEMENT OF AGREEMENT

         In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

         SECTION 1. EMPLOYMENT. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, in each case upon
the terms and conditions set forth herein, for a period commencing on the
effective date hereof (the "Commencement Date") and ending on December 31,2002
or on such earlier or later date as provided herein (the "Expiration Date")
(such period, as it may be so terminated, being referred to herein as the
"Employment Period"). In the event that the Company has not provided Executive
notice of its intention not to extend or renew the terms of this agreement at
least 6 months prior to December 31, 2002, the term hereof shall be deemed
automatically extended so that the Expiration Date is always not less than six
(6) months from the date that the Company provides written notice to Executive
of it's intention not to renew or extend the terms hereof.

         SECTION 2. DUTIES AND SERVICES.

         (a) DUTIES. Subject to Section 2(d), during the Employment Period the
Executive shall serve as Office of the Chairman and Executive Managing Director
of the Company and President and Chief Executive Officer of Insignia Financial
Services, Inc and, at the Company's request, as an officer or director of one or
more of its subsidiaries. In the performance of his duties hereunder, the
Executive shall report to and shall be responsible only to the Chief Executive
Officer and the Board of Directors of the Company. The Executive agrees to his
employment as described in this Section 2. The

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parties hereto understand and agree that the Executive has substantial business
interests outside of the scope of this Agreement, including, without limitation,
under an employment or consulting agreement with Apartment Investment and
Management Company ("AIMCO"), and both parties hereby consent to such
arrangements. The Executive shall be available to travel as the needs of the
business of the Company reasonably require.

         (b) OFFICE. During the Employment Period, the Company shall provide the
Executive with an office located in Nashville, TN and at 200 Park Avenue, New
York, NY or at such other location(s) as the Company and the Executive shall
mutually agree. The Company will provide the Executive with an office and
executive secretary reasonably acceptable to him, and other reasonable support
appropriate to his duties hereunder.

         (c) PRIMARY RESPONSIBILITIES. Subject to Section 2(a) and 2(d), during
the Employment Period, the Executive shall have such responsibilities as are
assigned to him by the Chief Executive Officer and the Board of Directors of the
Company. The Executive shall comply with all written policies and procedures of
the Company.

         (d) CONSULTING. If (i) without the prior written consent of the
Executive the Executive's title, powers or duties within the Company have been
substantially diminished, other than as a result of a Termination For Cause (as
defined in Section 7(a)(iv)), (ii) a Extraordinary Transaction (as defined in
Section 4(c)) or a Material Asset Disposition (as defined in Section 4(d)) has
taken place, or (iii) Andrew L. Farkas has or had the right to convert that
certain Employment Agreement, dated May 18, 2000 by and between the Company and
Mr. Farkas, or any subsequent agreement entered into during the term hereof,
whether by amendment, restatement or otherwise, which contains substantially
similar terms, (the "Farkas Employment Agreement") into a consulting agreement,
then the Executive may elect in writing to convert this Agreement into a
consulting agreement. Under the terms of the consulting agreement, the Executive
shall consult with respect to the assets and liabilities of the Company as they
existed immediately before the conversion. Such consultation shall be at the
reasonable times convenient to the Executive on no less than five business days'
notice, the parties recognizing that the Executive during the consulting period
likely will have substantial other business interests, including under an
employment or consulting agreement with AIMCO. The terms and conditions of this
Agreement (including all rights hereunder of the Executive as to compensation,
bonus, payments and benefits) shall continue unabridged during the period of
consulting. The other provisions of this Agreement also shall remain in effect
except that (i) Section 2(a) shall be deleted and the remainder of Section 2
shall be modified by this Section 2(d), (ii) Section 7(a)(iv)(B) and Section
7(a)(iv)(C) shall be deleted, and (iii) references to salary (and Base Salary)
in Section 4(a) and elsewhere in this Agreement shall be deemed to refer to a
consulting fee (and Base Consulting Fee), and such Base Consulting Fee shall be
paid to the executive in twelve monthly installments, payable on the first day
of each calendar month. The "Employment Period" shall be deemed to include the
period during which the Executive is obligated to provide consulting services
hereunder and therefore, to the extent

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permitted by law, the conversion shall not be deemed a termination or
resignation for any purpose and, if the law requires that the conversion be
treated as a termination, then the Company must provide the Executive with
benefits equivalent to those he would have received had there been no
termination. The Executive shall not be obligated to consult for more than five
days or portions of a day in any calendar month.

         SECTION 3. KEY MAN LIFE INSURANCE. The Company shall have the right to
place a "key man" life insurance policy, providing a death benefit of up to
$15,000,000 upon the life of the Executive, for which the Company is the
beneficiary. In connection therewith, the Executive hereby authorizes the
Company, at its sole cost and expense, to purchase and maintain upon the life of
the Executive such insurance policy, and agrees to submit to such reasonable
medical examinations, and to provide and/or consent to the release of such
medical information, as may be necessary or desirable in order to secure the
issuance thereof. Except as may be required in order to obtain insurance
coverage as described in this Section 3, any and all information about
Executive's health or medical records shall be kept confidential by the Company
and shall not be disclosed by the Company to any party without the Executive's
prior written consent.

         SECTION 4. COMPENSATION. As full compensation for his services
hereunder, the Company shall pay, grant, issue or give, as the case may be, to
the Executive the compensation and benefits specified below:

         (a) BASE SALARY. Subject to the provisions of Section 7, a base salary
at the rate of $ $500,000 per annum ("Base Salary"), which Base Salary shall be
paid to the Executive in accordance with the customary executive payroll policy
of the Company as in effect from time to time; provided, however, that the Base
Salary, as in effect at any time and from time to time, may be further increased
by action of the Board of Directors; and further provided, however, that in no
event shall the Base Salary be decreased at any time or from time to time
without the prior consent of the Executive, which consent may be granted or
withheld in the Executive's sole discretion.

         (b) ANNUAL BONUS. An annual bonus ("the Bonus"), the amount of which,
if any, shall be determined by the Board of Directors of the Company in its sole
and absolute discretion or as may be established pursuant to formula or
otherwise by the Board of Directors of the Company or the Compensation Committee
thereof, which shall be paid to the Executive, with respect to any fiscal year
of the Company, before the expiration of 74 days after the end of such fiscal
year. In making bonus determinations, the Company shall evaluate the Executive's
performance in accordance with the standard bonus guidelines used by the Company
for executives of the Company in the same or a similar position as the
Executive.

         (c) EXTRAORDINARY TRANSACTION.

         An "Extraordinary Transaction" as used herein means the occurrence of
any one or more of the following:

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                  (i) the Company ceases to be required to file reports under
Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor to that Section;

                  (ii) a majority of the members of the Board of Directors of
the Company are not persons who (a) had been directors of the Company for at
least the preceding 12 consecutive months or (b) when they initially were
elected to the Board (x) were nominated (if they were elected by the
stockholders) or elected (if they were elected by the directors) with the
affirmative vote of two-thirds of the directors who were Continuing Directors at
the time of the nomination or election by the Board and (y) were not elected as
a result of an actual or threatened solicitation of proxies or consents by a
person other than the Board of Directors of the Company or an agreement intended
to avoid or settle such a proxy solicitation (the directors described in clauses
(a) and (b) being "Continuing Directors");

                  (iii) any "person," including a "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company,
any of its present affiliates (as such term is defined in Rule 405 promulgated
under the Securities Act of 1933, as amended) ("Affiliates"), or any employee
benefit plan of the Company or any of its present Affiliates) is or becomes the
"beneficial owner" (as defined in Rule 13(d) (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;

                  (iv) the purchase of Common Stock of the Company ("Common
Stock") pursuant to any tender or exchange offer or otherwise made by any
"person," including a "group" (as such terms are used in Sections 13 (d) and 14
(d) of the Exchange Act), other than the Company, any of its present Affiliates,
or any employee benefit plan of the Company or any of its present Affiliates,
which results in "beneficial ownership" (as so defined) of 30% or more of the
outstanding Common Stock;

                  (v) the execution and delivery of a definitive agreement by
the Company that provides for a merger or consolidation, or a transaction having
a similar effect (unless such merger, consolidation or similar action is with a
subsidiary of the Company or with another company, a majority of whose
outstanding capital stock is owned by the same persons or entities who own a
majority of the Company's outstanding Common Stock at such time), where (A) the
majority of the Common Stock of the Company is no longer held by the persons who
were the stockholders of the Company immediately prior to the transaction, (B)
the sale, lease, exchange or other disposition of all or substantially all of
the assets of the Company but excluding the trading of marketable securities
held as portfolio securities or (C) the Company's Common Stock is converted into
cash, securities or other property (other than the common stock of a company
into which the Company is merged), provided, however, that, in the event that
the contemplated merger, consolidation or similar transaction is not
consummated, then any rights that may arise under this paragraph (v) by virtue
of such Change of Control shall not apply; and

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                  (vi) upon the consummation of any transaction requiring
stockholder approval for the acquisition of the Company by an entity other than
the Company or a subsidiary through purchase of assets, or by merger, or
otherwise.

         (d) MATERIAL ASSET DISPOSITION BONUS. In the event of a Material Asset
Disposition, as defined below, in consideration of the services performed by the
Executive and consistent with the prior terms of the Executive's employment, the
Company (or, in the case of clause (iii) below, the spin-off entity or, in
default thereof, the Company) shall pay to the Executive immediately before the
consummation of such Material Asset Disposition, a cash bonus equal to the Bonus
Percentage of the consideration (valued as set forth below) received by the
Company or its shareholders as a result of such Material Asset Disposition. The
Bonus Percentage shall be .25% if the Executive is a consultant to the Company,
or makes himself reasonably available to consult for the Company at the time the
definitive agreement regarding such Material Asset Disposition is executed. The
Bonus Percentage shall be .5% if the Executive is an employee of the Company
(for this purpose only, the word "employee" not including a consultant under
this Agreement), whether under this Agreement or otherwise, at the time the
definitive agreement regarding such Material Asset Disposition is executed. If
the Executive has been Terminated For Cause, or is otherwise not employed by the
Company and not available to consult for the Company, at the time the definitive
agreement regarding such Material Asset Disposition is executed, then the Bonus
Percentage shall be 0%.

         A "Material Asset Disposition" as used herein means, without
duplication for the same matter: (i) a transaction which results in a majority
of the equity interest in the Company being beneficially owned by any "person"
or "persons," including any "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act), other than any of the Company's present Affiliates;
(ii) a sale or series of sales by the Company of subsidiaries, divisions, or
assets (other than marketable securities), or operating businesses regardless of
size; (iii) any spin off, regardless of size) which is followed by a subsequent
Extraordinary Transaction (as defined above, but with reference to the spun off
entity rather than the Company) of the subsidiary, division or business spun off
within five years following such spin off; or (iv) any transaction, regardless
of size, which results in any one or more of the Company's divisions,
subsidiaries, or operating businesses being owned by a third party. In the event
a Material Asset Disposition is consummated in one or more steps, including,
without limitation, by way of second-step merger, any additional consideration
paid or to be paid in any subsequent step in the Material Asset Disposition in
respect of (x) subsidiaries, divisions, assets (other than marketable
securities), or operating businesses of the Company and (y) capital stock of the
Company (and any securities convertible into, or options, warrants or other
rights to acquire, such capital stock) shall be included for purposes of
calculating the bonus payable pursuant to this Section 4(d). "Consideration"
shall not include the assumption, directly or indirectly, or repayment of
indebtedness or other liabilities of the Company but shall include the
assumption, directly or indirectly, or repayment of securities similar to the
IFG Trust Convertible Preferred Securities previously outstanding. If all or a

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portion of the consideration paid in the Material Asset Disposition is other
than cash or securities, then the value of such non-cash consideration shall be
the fair market value thereof on the date the Material Asset Disposition is
consummated as mutually agreed upon in good faith by the Company's Board of
Directors and the Executive. If the Board of Directors and the Executive are
unable to come to agreement on the fair market value of such non-cash
consideration following the provisions of this Section 4(d), then, at the
request of either, an independent valuation expert agreeable to both shall be
appointed to determine the fair market value of such non-cash consideration, and
the determination of such independent expert shall be binding on both the
Executive and the Company. If such non-cash consideration consists of common
stock, options, warrants or rights for which a public trading market existed
prior to the consummation of the Material Asset Disposition, then the value of
such securities shall be determined by the closing or last sales price thereof
on the date of the consummation of the Material Asset Disposition; provided,
however, that if such non-cash consideration consists of newly-issued,
publicly-traded common stock, options, warrants or rights for which no public
trading market existed prior to the consummation of the Material Asset
Disposition, then the value thereof shall be the average of the closing prices
for the 20 trading days subsequent to the fifth trading day after the
consummation of the Material Asset Disposition. In such event, the portion of
the bonus payable to the Executive pursuant to this Section 4(d) attributable to
such securities shall be paid on the 30th trading day subsequent to consummation
of the Material Asset Disposition. If no public market exists for the common
stock, options, warrants or other rights issued in the Material Asset
Disposition, then the value of thereof shall be as mutually agreed upon in good
faith by the Company's Board of Directors and the Executive. If the non-cash
consideration paid in the Material Asset Disposition consists of preferred stock
or debt securities (regardless of whether a public trading market existed for
such preferred stock or debt securities prior to consummation of the Material
Asset Disposition or exists thereafter), the value hereof shall be the face or
principal amount, as the case may be. Any amounts payable by a purchaser to the
Company, any shareholder of the Company or any Affiliate of either the Company
or any shareholder of the Company in connection with a non-competition,
employment, consulting, licensing, supply or other agreement shall be deemed to
be part of the consideration paid in the Material Asset Disposition. If all or a
portion of the consideration payable in connection with the Material Asset
Disposition includes contingent future payments, then the Company shall pay to
the Executive, upon consummation of such Material Asset Disposition, an
additional cash fee, determined in accordance with this Section 4(d) as, when
and if such contingency payments are received. However, in the event of an
installment purchase at a fixed price and a fixed time schedule, the Company
agrees to pay the Executive, upon consummation of the Material Asset
Disposition, a cash fee determined in accordance with this Section 4(d) based on
the present value of such installment payments using a discount rate of 6.5%.
For purposes of this Section 4(d), in no case shall the "consideration" received
by the Company be greater than the total market capitalization of the Company at
the time of the Material Asset Disposition.

         (e) FRINGE BENEFIT PROGRAMS. In addition to the other benefits provided
to the Executive hereunder and to the extent he satisfies the eligibility
requirements thereof

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and to the extent permitted by law, participation in fringe benefit programs
made available generally to employees or independent contractors of the Company,
including, without limitation, pension, profit sharing, stock purchase, savings,
bonus, disability, life insurance, health insurance, hospitalization, dental,
deferred compensation and other plans and policies authorized on the date hereof
or in the future.

         (f) EXPENSE REIMBURSEMENT. Reimbursement of the Executive for all
out-of-pocket expenses incurred by him in connection with the performance of his
duties hereunder, including professional activities and membership fees and dues
relating to professional organizations of which the Executive currently is a
member or is directed in writing to be a member by the Chief Executive Officer
of the Company and including, without limitation, expenses required for
professional licensing of the Executive, and business related cell phone expense
in accordance with the Company's written policies and procedures, all upon the
presentation of appropriate documentation therefore in accordance with the then
regular procedures of the Company.

         (g) PERQUISITES. In addition to the other benefits provided to the
Executive hereunder, and at the sole cost and expense of the Company, except as
otherwise provided herein:

                  (i) the Executive shall be entitled to reasonable business
usage of aircraft owned or leased by the Company as determined by the Chief
Executive Officer of the Company. With prior consent from the Chief Executive
Officer of the Company, the Executive may utilize such aircraft for personal use
and in such event the cost of such use shall be added to and included in the
Executive's compensation for federal, state and local income tax purposes;

                  (ii) subject to the provisions of Section 7 hereof, the
Company will provide to the Executive disability insurance coverage identical to
the disability insurance coverage provided to senior executives of the Company
from time to time; and

                  (iii) the Executive shall be fully reimbursed for expenses
incurred in respect of professional continuing education.

                  (iv) the Company shall provide Executive with a car allowance
of not less than $1,500 per month through December 31, 2002 or such later date
if the Expiration Date under this Agreement has been extended. At the expiration
of any automobile lease, Executive shall have the right to acquire such
automobile upon such terms and conditions available to the Company at such time
and the Company shall assign such rights to Executive upon request.

                  (v) the Company shall provide up to ten thousand ($10,000)
dollars in annual reimbursement for expenses incurred by Executive in connection
with tax advice and planning (including estate planning), the preparation of tax
returns and assistance in audits of tax returns.

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         (h) VACATIONS, ETC. Leaves-of-absence in accordance with the then
regular procedures of the Company governing senior executives, and four weeks of
paid vacation per year on a non-cumulative basis.

         (i) PARACHUTE LIMIT. Notwithstanding anything else herein, to the
extent the Executive would be subject to the excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), on such amounts or
benefits received from the Company required to be included in the calculation of
parachute payments for purposes of Sections 280G and 4999 of the Code (the
"Parachute Payments"), the amounts of any Parachute Payments shall be
automatically reduced as described herein to an amount one dollar less than an
amount that would subject the Executive to the excise tax under Section 4999 of
the Code (the "Parachute Limit"); provided, however, that this Section 4(i)
shall apply only if the reduced Parachute Payments received by the Executive
(after taking into account further reductions for applicable federal, state and
local income, social security and other taxes) would be greater than the
unreduced Parachute Payments to be received by the Executive minus (i) the
excise tax payable under Section 4999 of the Code with respect to such Parachute
Payments and (ii) all applicable federal, state and local income, social
security and other taxes on such Parachute Payments. The foregoing reduction
shall be applied to the Parachute Payments as follows: (i) first by reducing the
amounts payable under Section 4(c) (if such amounts are included in such
computation) until such amounts have been exhausted up to the Parachute Limit,
(ii) then by reducing any such other amounts and benefits (other than awards
described in (iii) below) as determined by the Company, and (iii)
notwithstanding anything contained herein or in an option, warrant or restricted
stock agreement, award or plan relating to the Executive then, on a pro-rata
basis up to the Parachute Limit, by failing to accelerate the vesting (without
affecting the right to vest) upon a change in ownership or effective control or
change in ownership of a substantial portion of assets (as described in Code
Section 280G(b)(2)(A)(i)) of any unvested awards of shares of restricted stock
of the Company previously granted to Executive and options or warrants to
purchase shares of the Company previously granted to Executive. Notwithstanding
the foregoing, the Company shall treat any of the amounts described in (i)
through (iii) above as a Parachute Payment solely to the extent required under
applicable law.

         (j) PURCHASE OF INSURANCE. Following the Executive's cessation of
employment with the Company for any reason, (i) the Executive shall have the
right to continue, at the Executive's sole cost, any or all life insurance
policies on the life of the Executive maintained by the Company during the
Employment Period and to designate the beneficiaries and owners thereof, and
(ii) the Executive and his dependents shall have the right to purchase from or
through the Company or its successor, at the Executive's or his dependents' sole
cost, individual and dependent care health insurance coverage and the Company
shall take such steps as may be necessary to effect the same. Notwithstanding
anything in this Agreement to the contrary, the provisions of this Section 4(j)
shall continue regardless of the cessation of the Executive's employment by the
Company. In the case of the death of the Executive, whether during or after the
Employment Period, the rights under Section 4(j)(ii) of the persons who were the

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Executive's dependents at the time of his death shall continue in full force and
effect for the duration of each of their lives.

         (k) VESTING. In the event of (a) a termination of Executive's
employment for any reason other than a Termination for Cause or voluntary
termination by the Executive, including, but not limited to a Death Termination
Event, Disability Termination Event, Termination Without Cause or in the event
of (b) the occurrence of an Extraordinary Transaction, an Influence Change Event
(as such term is defined in the Farkas Employment Agreement), or an
Extraordinary Stock Event (as such term is defined in the Farkas Employment
Agreement) (whether or not resulting in a termination of Executive's
employment), all options, warrants and restricted stock and interests in or
rights of any kind with respect to the Company's principal co-investment and
development activities including, but not limited to, grants and rights with
respect to Insignia Opportunity Trust and Insignia Opportunity Partners and West
Village Associates, to which the Executive may be entitled the Executive will
immediately vest and be no longer subject to forfeiture for any reason
(irrespective of any terms to the contrary contained in any document, agreement
or grant letter relating to any such grant or right) and, in the case of options
and warrants or other instrument with an exercise component or provision be
exercisable by the Executive. Notwithstanding the foregoing, in the event of a
Death Termination Event or Disability Termination Event, Executive shall become
vested on fifty percent (50%) of any remaining unvested amounts with respect to
grants and rights with respect to the Company's co-investment and development
activities and Insignia Opportunity Trust and Insignia Opportunity Partners and
West Village Associates (but shall remain vested on any previously vested
amounts).

         SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EXECUTIVE.
The Executive represents and warrants to the Company as follows:

         (a) He is under no contractual or other restriction or obligation which
is inconsistent with the execution of this Agreement, the performance of his
duties hereunder, or the other rights of the Company hereunder; and

         (b) He is able to perform the essential functions of his duties
hereunder with or without reasonable accommodations.

         SECTION 6. NON-SOLICITATION; CONFIDENTIALITY.

                  (a) NON-SOLICITATION.

                           (1) In recognition of the close personal contact the
Executive has or will have with the Company's and its affiliates' trade secrets,
confidential information, records and business relationships, and the position
of trust in which the Company holds the Executive, the Executive further
covenants and agrees that while the Executive is employed by the Company and for
a period lasting for one (1) year following the cessation of the Executive's
employment with the Company, the Executive will not, if such action would have a
material adverse effect on the Company, in direct

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competition with the Company (where competition is measured as of the date the
Executive ceases to be employed by the Company), either for himself or as an
officer, director, employee, agent, representative, independent contractor or in
any relationship to any person, partnership, corporation, or other entity
(except the Company or its Affiliates or subsidiaries), solicit, directly or by
assisting others, business from any of the Company's customers or clients who
were customers or clients of the Company as of the date of the cessation of the
Executive's employment and with whom the Executive has had material contact (as
defined below) during the twelve (12) month period preceding the date of
cessation of the Executive's employment with the Company in the event of a
cessation of employment with the Company or, absent such cessation, during the
twelve (12) months preceding the solicitation, for the purpose of providing
goods or services to said customers and clients. For purposes of this Agreement,
"material contact" exists between the Executive and any of the Company's
customers or clients (i) with whom the Executive actually dealt; or (ii) whose
dealings with the Company were handled, coordinated or supervised by the
Executive; or (iii) about whom the Executive obtained confidential information
in the ordinary course of business through the Executive's association with the
Company.

                           (2) The Executive covenants and agrees that, for a
period ending on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not solicit any employee,
broker or sales person of the Company, or any of its respective subsidiaries or
affiliates to leave their employ for the employ of a person or entity which
directly competes with the Company, or any of its respective subsidiaries or
affiliates.

                           (3) The Executive covenants and agrees that, for a
period ending on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not purchase for his own
account any limited partnership units of partnerships that, on the date of
purchase, are controlled directly or indirectly by the Company, except that the
provisions of this sentence shall not be deemed breached merely because the
Executive owns, immediately after a purchase, not more than one percent of the
outstanding units. Should the Executive breach the foregoing sentence, all his
options issued by the Company or any of its subsidiaries shall be canceled and
all of his restricted stock issued by the Company or any of its subsidiaries
(whether or not then vested) which he then owns shall be forfeited. For purposes
of this Section 6(a)(3), "purchase" shall mean the payment of cash only for such
limited partnership units and shall not include payment of cash for interests in
an entity whose assets consist in whole or in part of such limited partnership
units.

                           (4) The Executives covenants and agrees that he will
not, either for himself or as an officer, director, employee, agent,
representative, or independent contractor of any person, partnership,
corporation, or other entity (except the Company or its Affiliates or
subsidiaries), interfere with any contract that exists between the Company and
any customers or clients of the Company as of the effective date of this
Agreement.

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         The Executive acknowledges that the foregoing provisions are intended
to protect the Company's and its subsidiaries' and Affiliates' business and
customer contacts, not to prevent the Executive from pursuing a livelihood in
the general area of his previous training, and they should be interpreted
accordingly.

         (b) CONFIDENTIALITY. All confidential information which the Executive
may now possess, may obtain during or after his employment with Company, or may
create prior to the end of his employment with the Company or otherwise relating
to the business of the Company or any of its subsidiaries or affiliates or of
any customer or supplier of any of them shall not be published, disclosed, or
made accessible by him to any other person, either during or after the cessation
of his employment, or used by him except during his employment with the Company
in the business and for the benefit of the Company and its subsidiaries and
Affiliates. In addition, the Executive agrees not to disclose, publish or make
accessible to any other person, from and after the date of this Agreement,
during the Employment Period or at any time thereafter, any of the terms or
provisions of this Agreement, except the Executive's accountants who need such
information to advise him, prepare his tax returns, make required filings and
the like; provided, however, that the Executive will be responsible for causing
any such accountants to be aware of and to abide by the obligations contained in
this Section 6(b) and will be responsible for any breach of such obligations by
any of them. In the event that the Executive becomes legally compelled to
disclose any of the confidential information, the Executive will provide the
Company with prompt written notice so that the Company may seek a protective
order or other appropriate remedy and/or waive in writing compliance with the
provisions of this Section 6(b) and in the event that such protective order or
other remedy is not obtained, or should the Company waive in writing compliance
with the provisions of this Section 6(b), the Executive will furnish only that
portion of the confidential information which is so legally required. The
Executive shall return all tangible evidence of such confidential information to
the General Counsel of the Company prior to or at the cessation of his
employment.

         (c) INTERPRETATION. Since a breach of the provisions of this Section 6
could not adequately be compensated by money damages, the Company shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach and the Company shall not be required to post
a bond in any proceeding brought for such purpose. The Executive agrees that the
provisions of this Section 6 are necessary and reasonable to protect the Company
in the conduct of its businesses. If any restriction contained in this Section 6
shall be deemed to be invalid, illegal, or unenforceable by reason of the
extent, duration, or geographical scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies, at law or in equity, for such breach or threatened breach.

                                       11
<PAGE>

         (d) INVESTORS. Notwithstanding anything herein to the contrary, nothing
in this Agreement shall restrict the right of the Executive to solicit or
receive, on his own behalf or on behalf of others, any investment or any funds
in any form from any person, regardless of whether such person is an investor in
the Company or in any current or former affiliate of the Company.

         SECTION 7. TERMINATION.

         (a) DEFINITIONS.

                   (i) Death Termination Event. As used herein, "Death
Termination Event" shall mean the death of the Executive.

                  (ii) Disability Termination Event. As used herein, "Disability
Termination Event" shall mean a circumstance where the Executive is physically
or mentally incapacitated or disabled or otherwise unable to fully discharge his
duties hereunder for a period of 185 consecutive days.

                  (iii) Estate. As used herein, "Estate" shall mean (A) in the
event that the last will and testament of the Executive has not been probated at
the time of determination, the estate of the Executive and (B) in the event that
the last will and testament of the Executive has been probated at the time of
determination, the legatees of the Executive who are entitled under such will to
the assets or payments at issue.

                  (iv) Termination For Cause. As used herein, the term
"Termination For Cause" shall mean the termination by the Company of the
Executive's employment hereunder upon a good faith determination by a majority
vote of the members of the Board of Directors of the Company that termination of
this Agreement is necessary by reason of (A) the Executive shall be convicted of
a felony, (B) the Executive shall commit any act or omit to take any action in
bad faith and to the material detriment of the Company and Executive shall not
have cured the same within 30 days after the Company sends written notice
thereof, or (C) Executive shall breach in a material way any material term of
this Agreement and fail to correct such breach within 30 days after the Company
sends written notice thereof.

                  (v) Termination Without Cause. As used herein, "Termination
Without Cause" shall mean any termination of the Executive's employment by the
Company hereunder that is not a Termination For Cause, a Death Termination
Event, or a Disability Termination Event but shall not include a conversion of
this Agreement to a consulting agreement.

         (b) DEATH TERMINATION EVENT. Upon the occurrence of a Death Termination
Event, this Agreement will terminate automatically upon the date that such Death
Termination Event occurred (subject to the last sentence of this Section 7 and
to the last two sentences of Section 4(j)), whereupon the Executive's Estate
shall receive

                                       12
<PAGE>

the consideration set forth in Sections 4(a) through (d) through December 31,
2002, or such later date if the Expiration Date of this Agreement has been
extended, as well as the benefits of the provisions of sections 4(j) and 4(k)
according to their terms. In addition, the Executive's Estate shall be entitled
to receive the payments contemplated by Section 4(c) and Section 4(d) if the
event giving rise to such payment occurs, or a definitive agreement regarding
such event is executed, before or within 180 days after the Death Termination
Event.

         (c) DISABILITY TERMINATION EVENT. Upon the occurrence of a Disability
Termination Event, this Agreement shall terminate automatically upon the date
that such Disability Termination Event occurred (subject to the last sentence of
this Section 7 and to the last two sentences of Section 4(j)), whereupon the
Executive shall continue to receive the consideration set forth in Sections 4(a)
through (d) and Section 4(g)(iii), (iv) and (v) through December 31, 2002, or
such later date if the Expiration Date of this Agreement has been extended, as
well as the benefits of the provisions of sections 4(j) and 4(k) according to
their terms. In addition, the Executive shall be entitled to receive the
payments contemplated by Section 4(c) and Section 4(d) if the event giving rise
to such payment occurs, or a definitive agreement regarding such event is
executed, before or within 180 days after the Disability Termination Event.

         (d) TERMINATION FOR CAUSE. The Executive and the Company agree that the
Company shall have the right to effectuate a Termination For Cause in accordance
with the terms of this Agreement at any time. Upon the occurrence of a
Termination For Cause, this Agreement will terminate upon the date that such
Termination For Cause occurs (subject to the provisions of Section 9), whereupon
(i) the Executive shall not be entitled to receive any additional payments
hereunder other than the Base Salary, as then in effect, to and including the
date that such Termination For Cause occurs and (ii) the Company shall be
entitled to any and all remedies and damages available to it.

         (e) TERMINATION WITHOUT CAUSE. Upon the occurrence of a Termination
Without Cause, this Agreement shall terminate upon the date that such
Termination Without Cause occurs (subject to the provisions of Section 9 and to
the last two sentences of Section 4(j)), whereupon the Executive shall continue
to receive the consideration set forth in Sections 4(a) through (d) and Section
4(g)(iii), (iv) and (v) through the December 31, 2002, or such later date if the
Expiration Date under this Agreement has been extended as well as the benefits
of the provisions of sections 4(j) and 4(k) according to their terms. In
addition, the Executive shall be entitled to receive the payments contemplated
by Section 4(c) and Section 4(d) if the event giving rise to such payment
occurs, or a definitive agreement regarding such event is executed, on or before
December 31, 2002 or such later date if the Expiration Date under this Agreement
has been extended.

         In the event of a termination of Executive's employment for any reason
other than a Termination for Cause or voluntary termination by the Executive,
including, but not limited to a Death Termination Event, Disability Termination
Event, or Termination Without Cause, all options, warrants and restricted stock
and interests in or rights of any

                                       13
<PAGE>

kind with respect to the Company's principal co-investment and development
activities including, but not limited to, grants and rights with respect to
Insignia Opportunity Trust and Insignia Opportunity Partners and West Village
Associates, to which the Executive may be entitled will immediately vest and be
no longer subject to forfeiture for any reason (irrespective of any terms to the
contrary contained in any document, agreement or grant letter relating to any
such grant or right) and, in the case of options and warrants or other
instrument with an exercise component or provision be exercisable by the
Executive but in the event of the occurrence of an Extraordinary Transaction, no
options, warrants or restricted stock then held by and/or granted to the
Executive will immediately vest as a result thereof. Notwithstanding the
foregoing, in the event of a Death Termination Event or Disability Termination
Event, Executive shall become vested on fifty percent (50%) of any remaining
unvested amounts with respect to grants and rights with respect to the Company's
co-investment and development activities and Insignia Opportunity Trust and
Insignia Opportunity Partners and West Village Associates (but shall remain
vested on any previously vested amounts).

         SECTION 8. WITHHOLDING. The Company shall be entitled to withhold from
amounts payable to the Executive hereunder such amounts as may be required by
applicable law to be so withheld.

         SECTION 9. SURVIVAL. Notwithstanding anything in this Agreement to the
contrary, Section 6 of this Agreement shall survive any termination of this
Agreement or cessation of the Executive's employment hereunder for the periods
stated therein.

         SECTION 10. MODIFICATION. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.

         SECTION 11. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given, at the address of such party set forth in the
preamble to this Agreement (or to such other address as such party shall have
furnished in writing in accordance with the provisions of this Section 11).
Notice to the Estate shall be sufficient if addressed to the Executive as
provided in this Section 11. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof.

         SECTION 12. WAIVER. Any waiver by either party of a breach of any
provision of Agreement shall not operate as a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict

                                       14
<PAGE>

adherence to that term or any other term of this Agreement. Any waiver must be
in writing.

         SECTION 13. BINDING EFFECT. The Executive's rights and obligations
under this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to commutation, encumbrance or the claims of the
Executive's creditors, and any attempt to do any of the foregoing shall be void.
The provisions of this Agreement shall be binding upon and inure to the benefit
of the Executive and his heirs and personal representatives, and shall be
binding upon and inure to the benefit of the Company and its successors.

         SECTION 14. HEADINGS. The headings in this Agreement are solely for
convenience of reference, and shall be given no effect in the construction or
interpretation of this Agreement.

         SECTION 15. ENFORCEMENT. Should the Executive sue to enforce any of his
rights under this Agreement and should the Executive prevail on any issue in
such suit, then the Company shall pay all the Executive's costs of such suit
(including attorneys fees and disbursements). If any taxes are imposed on such
payment, the Company shall make such additional payments to the Executive as may
be necessary, so that after deducting the taxes imposed on all payments made to
the Executive pursuant to this paragraph, the Executive is left on an after tax
basis with an amount equal to his claim for indemnification prior to the
payments described in this sentence.

         SECTION 16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         SECTION 17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to the conflict of law provisions thereof.

         SECTION 18. CONSTRUCTION AND INTERPRETATION. Should any provision of
this Agreement require judicial interpretation, the parties hereto agree that
the court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against one party by reason of
the rule of construction that a document is to be more strictly construed
against the party that itself, or through its agent, prepared the same, and it
is expressly agreed and acknowledged that the Executive, the Company and their
respective attorneys and representatives have participated in the preparation
hereof.

SECTION 19. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALING BETWEEN OR AMONG THEM RELATING TO

                                       15
<PAGE>

THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIPS BEING ESTABLISHED.
THE SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO THE TRIAL BY THE COURT.

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

                                            INSIGNIA FINANCIAL GROUP, INC.

                                            By: /s/ Adam B. Gilbert
                                               ---------------------------
                                            Name: Adam B. Gilbert
                                            Its:  Executive Vice President

                                            EXECUTIVE
                                            /s/ Frank M. Garrison
                                            ------------------------------
                                            Name: Frank M. Garrison

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