LOANS/GOTHWAR
0839/39038-028  NYLIB2/549878 v4                     09/22/98  09:02 AM  (10559)



     WARRANT  AGREEMENT  dated as of  September  15, 1998  between  Insignia/ESG
Holdings, Inc., a Delaware corporation (the "Corporation"), and Gotham Partners,
L.P., a Delaware limited partnership ("Gotham").

                              Preliminary Statement


     This  Warrant  Agreement  sets forth the terms and  conditions  of Warrants
transferred  to Gotham in  connection  with the exchange of the warrants held by
Gotham to purchase shares of Class A Common Stock,  par value $.01 per share, of
Insignia  Financial  Group,  Inc. ("IFG") under the Amended and Restated Warrant
Agreement  dated as of November 7, 1995  between IFG and Gotham,  such  exchange
resulting from the  distribution  by IFG to its  stockholders of all of the then
outstanding shares of Common Stock of the Corporation in a transaction intending
to qualify as a tax-free  distribution and reorganization under Sections 355 and
368 of the Internal Revenue Code.

     Accordingly, the parties hereto agree as follows.


1.   Definitions.  As used in this Warrant Agreement,  the following terms shall
     have the following meanings, unless the context otherwise requires.

     a.   "Aggregate Consideration  Receivable" by the Corporation in connection
          with the  issuance  of any  shares  of Common  Stock  (or any  rights,
          warrants,  options or convertible or exercisable  securities entitling
          the holders  thereof to subscribe for or purchase any shares of Common
          Stock or any stock  appreciation  rights entitling the holders thereof
          to any interest in an increase in value,  however measured,  of shares
          of Common Stock) shall mean the sum of:

          i.   the  aggregate  consideration  paid to the  Corporation  for such
               shares, rights,  warrants,  options or convertible or exercisable
               securities, and

          ii.  the aggregate  consideration  or premiums  stated in such rights,
               warrants,  options or convertible or exercisable securities to be
               payable for the shares of Common Stock covered thereby.

          In case all or any portion of the  consideration to be received by the
          Corporation  may be paid in a form other than cash,  the value of such
          consideration  shall  be  determined  in good  faith  by the  Board of
          Directors or a duly authorized committee thereof  (irrespective of the
          accounting  treatment  thereof),  and described in a resolution of the
          Board of Directors or such committee.


                                           
     b.   "Board  of  Directors"  shall  mean  the  board  of  directors  of the
          Corporation.

     c.   "Business Day" shall mean a day other than a Saturday, Sunday or other
          day on which  commercial  banks in New York,  New York are required by
          law to close.

     d.   "Capital  Stock"  shall mean any and all shares,  rights to  purchase,
          warrants, options, convertible securities,  participations in or other
          equivalents  of  or  interests  (other  than  security  interests)  in
          (however designated and whether voting or nonvoting) corporate stock.

     e.   "Change in Control"  shall mean the occurrence of any of the following
          events:

          i.   Andrew  Farkas  has ceased to serve on a  full-time  basis as the
               Chief Executive Officer of the Corporation for any reason;

          ii.  Andrew Farkas has ceased to own beneficially  (within the meaning
               of rule  13d-3  promulgated  under  the  Exchange  Act) at  least
               700,000  shares of Common  Stock (as  adjusted  to reflect  stock
               dividends or  distributions,  subdivisions or  reclassifications,
               splits and combinations);

          iii. any Person or group  (within the  meaning of section  13(d)(3) or
               14(d)(2) of the Exchange  Act) other than a group  controlled  by
               Andrew  Farkas or by Gotham or any  affiliate of Andrew Farkas or
               Gotham acquires beneficial  ownership (within the meaning of Rule
               13d-3  promulgated  under the Exchange Act) of 45% or more of the
               number of shares of Common Stock or the combined  voting power of
               Voting Stock of the Corporation  outstanding immediately prior to
               such acquisition;

          iv.  individuals  who, as of the  Distribution  Date,  constitute  the
               Board of Directors and individuals  nominated or elected to serve
               on the  Board  of  Directors  by  individuals  described  in this
               section  2(f)(iv)  cease for any reason to  constitute at least a
               majority of the Board of Directors; and

          v.   the Corporation  consummates any merger or  consolidation  (other
               than a Permitted Merger or Consolidation) of the Corporation with
               or into any other entity, the sale of all or substantially all of
               the assets of the Corporation, the reorganization, liquidation or
               dissolution  of the  Corporation,  or any similar  transaction or
               event.



     f.   "Common Stock" shall mean the Common Stock,  par value $.01 per share,
          of  the   Corporation   and,  in  the  case  of  a   reclassification,
          recapitalization  or other  similar  change in such Common Stock or in
          the case of a consolidation  or merger of the Corporation with or into
          another  Person,  such  consideration  to which a holder of a share of
          Common  Stock would have been  entitled  upon the  occurrence  of such
          event.

     g.   "Common Stock Equivalents" shall mean, without double counting:

          i.   shares of Common  Stock,  where one share of Common  Stock  shall
               constitute one Common Stock Equivalent;

          ii.  shares of Capital Stock convertible into Common Stock,  where any
               one share of Capital  Stock shall  constitute  a number of Common
               Stock  Equivalents  equal to the number of shares of Common Stock
               issuable in respect of such share of Capital Stock;

          iii. any rights,  warrants,  options and  convertible  or  exercisable
               securities  entitling  the  holder  thereof to  subscribe  for or
               purchase  any  shares of  Common  Stock,  where any such  rights,
               warrants, options and convertible or exercisable securities shall
               constitute  a number of  Common  Stock  Equivalents  equal to the
               number of shares of Common  Stock  issuable  in  respect  of such
               rights,   warrants,   options  or   convertible   or  exercisable
               securities; and

          iv.  any stock  appreciation  rights  entitling the holders thereof to
               any interest in an increase in value, however measured, of shares
               of Common Stock, where any such stock  appreciation  rights shall
               constitute  a number of  Common  Stock  Equivalents  equal to the
               Common Stock  equivalent,  as nearly as it may be calculated,  of
               such stock appreciation rights.

     h.   "Corporation"  shall mean  Insignia  /ESG  Holdings,  Inc., a Delaware
          corporation.

     i.   "Distribution"  shall  mean the  distribution  by  Insignia  Financial
          Group, Inc. to its stockholders of all of the then outstanding  shares
          of Common Stock of the Corporation.

     j.   "Distribution Date" shall mean the record date for the Distribution.

     k.   "Effective  Purchase Price per Share" at which the Corporation  issues
          any  shares  of Common  Stock (or any  rights,  warrants,  options  or
          convertible or exercisable securities entitling the holders thereof to
          subscribe  for or  purchase  any  shares of Common  Stock or any stock
          appreciation  rights  entitling the holders thereof to any interest in
          an increase in value,  however  measured,  of shares of Common  Stock)
          shall mean an amount equal to the ratio of:


          i.   the  Aggregate  Consideration  Receivable by the  Corporation  in
               connection  with the  issuance of such shares of Common Stock (or
               any such rights,  warrants,  options,  convertible or exercisable
               securities or stock appreciation rights) to

          ii.  the number of shares of Common Stock so issued (or issuable  upon
               the exercise or conversion of such rights,  warrants,  options or
               convertible  or  exercisable   securities  or  the  Common  Stock
               Equivalents,  as nearly as it may be  calculated,  of such  stock
               appreciation rights).

     l.   "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
          amended, or any successor federal statute.

     m.   "Excluded Transaction" shall mean any of the following transactions:

          i.   the issuance of any shares of Capital Stock of the Corporation to
               employees  or  directors  of the  Corporation  under an  employee
               benefit plan or arrangement  adopted by the Corporation,  whether
               or not referred to or described in the Form 10;

          ii.  the  issuance  of Common  Stock  Equivalents  in an amount not to
               exceed 200,000 (as adjusted, as appropriate, to reflect any stock
               dividends,  distributions,  subdivisions,   reclassifications  or
               combinations  of the  Common  Stock),  provided  that,  within 10
               Business  Days  following  such  issuance,  the  Corporation  has
               furnished to each Warrant  Holder written notice of the fact that
               the  Corporation  intends to treat such  issuance  as an Excluded
               Transaction within the meaning of this clause (ii); and

          iii. any issuance of  securities  referred to or described in the Form
               10.

     n.   "Exercise Price per Share" of any Warrant shall mean:

          i.   until  adjusted in accordance  with section 12 hereof,  an amount
               equal to $8.25 per share, and

          ii.  thereafter,  such  other  amount  as may  from  time  to  time be
               determined  in  accordance  with the  provisions  of  section  12
               hereof.

     o.   "Expiration Date" shall mean January 1, 1999.

     p.   "Fair  Market  Value" of a share of Common  Stock as of any date shall
          mean,  as of any date,  the  average of the  closing  prices of Common
          Stock for the 20 consecutive Trading Days next preceding the date five
          days prior to the date in  question.  The  closing  price for each day
          shall be:


          i.   the  average of the  closing  sale price or, in the  absence of a
               closing  sale price,  the highest bid and lowest  asked prices of
               one share of Common Stock quoted in the NYSE  Composite  Tape or,
               if not then listed on the NYSE, the NASDAQ National Market System
               or any similar system of automated dissemination of quotations of
               securities prices then in common use, if so quoted; or

          ii.  if not quoted as  described  in clause  (i),  the  average of the
               highest bid and lowest  offered  quotations  for Common  Stock as
               reported by the  National  Quotation  Bureau  Incorporated  if at
               least two  securities  dealers have inserted both bid and offered
               quotations   for  Common  Stock  on  at  least  five  of  the  20
               consecutive  Trading Days next preceding the date five days prior
               to the date in question; or

          iii0 if the  Common  Stock is listed or  admitted  for  trading on any
               national securities exchange, the last sale price, or the closing
               bid price if no sale  occurred,  of Common Stock on the principal
               securities  exchange  on which  the  Common  Stock is  listed  or
               admitted for trading.

          If none of the conditions set forth above is met, the closing price of
          Common Stock on any day or the average of such closing  prices for any
          period  shall be the Fair Market Value of Common Stock for such day or
          period as  determined  by a member  firm of the NYSE  selected  by the
          Corporation  and  approved  by  the  Holders  of  a  majority  of  the
          outstanding  Warrants.  If the Corporation and such Holders are unable
          to  agree  on the  selection  of a  member  firm,  then  the  issue of
          selection  of a  member  firm  shall  be  submitted  to  the  American
          Arbitration Association.

     q    "Form  10" shall  mean the  Registration  Statement  on Form 10 of the
          Corporation  with  respect to the Common Stock in the form in which it
          is declared effective by the Securities and Exchange Commission.

     r    "GAAP" shall mean those generally accepted  accounting  principles and
          practices  which are  recognized as such by the American  Institute of
          Certified Public Accountants acting through its Accounting  Principles
          Board or by the Financial  Accounting Standards Board or through other
          appropriate  boards or committees  thereof and which are  consistently
          applied  for all  periods  after  the date  hereof  so as to  properly
          reflect the financial condition,  results of operations and changes in
          financial position of any Person, except that any accounting principle
          or practice required to be changed by such Accounting Principles Board
          or Financial Accounting Standards Board (or other appropriate board or
          committee of such Boards) in order to continue as a generally accepted
          accounting principle or practice may be so changed.

     s    "Gotham"  shall  mean  Gotham  Partners,   L.P.,  a  Delaware  limited
          partnership.


     t    "Merger Transaction" shall mean any business  combination  transaction
          or series of  transactions  involving the  Corporation,  regardless of
          whether such transactions take the form of a merger, purchase and sale
          of  securities,  purchase or sale of assets or otherwise,  immediately
          prior to which,  following  which or in connection with which a Change
          in Control occurs.

     u    "NASDAQ"  shall mean the National  Association  of Securities  Dealers
          Automated Quotation System.

     v    "NYSE" shall mean the New York Stock Exchange.

     w    "Permitted  Merger  or   Consolidation"   shall  mean  any  merger  or
          consolidation of the Corporation:

          i0   with or into any wholly owned Subsidiary; or

          ii0  immediately  after  which  Persons who were  stockholders  of the
               Corporation  prior to such merger or consolidation  hold at least
               80% of the outstanding shares of Capital Stock of the Corporation
               measured by voting power.

     x    "Person" shall mean an individual, corporation, joint venture, general
          or limited partnership,  trust, unincorporated  organization,  limited
          liability company,  limited liability  partnership,  government or any
          agency   or   political   subdivision   thereof,   association,   sole
          proprietorship  or any other  form of entity not  specifically  listed
          herein.

     y    "Qualifying Transaction" shall mean:

          i0   any  acquisition  by the  Corporation of stock or other assets of
               any kind in  exchange,  in whole or in part,  for  shares  of any
               class of Capital Stock of the Corporation; and

          ii0  any   transaction  in  which  shares  of  Capital  Stock  of  the
               Corporation are issued for cash proceeds;

          provided,  however,  that the term "Qualifying  Transaction" shall not
          include a Merger Transaction.

     z    "Securities Act" shall mean the Securities Act of 1933, as amended, or
          any successor federal statute.

          aa   "Subsidiary" shall mean:

               i0   any  corporation 50% or more of the Voting Stock of which is
                    owned, directly or indirectly, by the Corporation; or


               ii0  any other Person whose  accounts are required  under GAAP to
                    be  included  in the  Corporation's  consolidated  financial
                    statements,

          but shall exclude limited partnerships.

          bb   "Trading Day" shall mean,  with respect to the Common Stock:  (i)
               if the Common  Stock is quoted on the NYSE,  the NASDAQ  National
               Market System,  any similar system of automated  dissemination of
               quotations of securities prices, or the National Quotation Bureau
               Incorporated,  each day on which  quotations  may be made on such
               system;  or (ii) if the Common  Stock is listed or  admitted  for
               trading on any national securities  exchange,  days on which such
               national  securities  exchange is open for business;  or (iii)~if
               shares of the  Corporation's  Common  Stock are not quoted on any
               system  or listed  or  admitted  for  trading  on any  securities
               exchange, a Business Day.

          cc   "Voting  Stock"  shall  mean,  with  respect to any  Person,  all
               classes of Capital  Stock of such  Person  then  outstanding  and
               normally  entitled to vote for the  election of directors of such
               Person. Any reference to a percentage of Voting Stock shall refer
               to the  percentage of votes  eligible to be cast for the election
               of directors which are  attributable to the applicable  shares of
               Voting Stock.

          dd   "Warrant Agreement" shall mean this warrant agreement.

          ee   "Warrant Certificate" shall mean a certificate  evidencing one or
               more Warrants, substantially in the form of Exhibit~A hereto.

          ff   "Warrant  Holder" shall mean Gotham,  as the original  registered
               holder  of the  Warrants,  and  any  registered  transferee  of a
               Warrant Holder.

          gg   "Warrant   Office"  shall  mean  the  office  or  agency  of  the
               Corporation at which the Warrant Register shall be maintained and
               where the  Warrants  may be  presented  for  exercise,  exchange,
               substitution  and  transfer,  which  office or agency will be the
               office of the Corporation at 200 Park Avenue,  New York, New York
               10166,  which office or agency may be changed by the  Corporation
               pursuant to notice in writing to the Persons named in the Warrant
               Register as the holders of the Warrants.

          hh   "Warrant   Register"  shall  mean  the  register,   substantially
               maintained by the Corporation at the Warrant Office.

          ii   "Warrant  Shares" shall mean the shares of Common Stock issued or
               issuable  upon  exercise  of the  Warrants,  as the  same  may be
               adjusted from time to time pursuant to section 12 hereof, and any
               other  shares  of  Capital  Stock  issued  or  issuable  upon the
               exercise of the Warrants pursuant to section 12 hereof.


          jj   "Warrants"  shall mean the  warrants  to  purchase  Common  Stock
               issued by the  Corporation  pursuant to this  Warrant  Agreement;
               individually, a "Warrant."

2    Representations  and  Warranties.  The  Corporation  hereby  represents and
     warrants as follows:

     a    The Corporation is a corporation duly  incorporated,  validly existing
          and in good standing under the laws of the State of Delaware,  has the
          corporate  power and  authority  to conduct its  business as presently
          conducted,  has the  corporate  power and  authority  to  execute  and
          deliver this Warrant Agreement and the Warrant Certificates,  to issue
          the  Warrants  and to  perform  its  obligations  under  this  Warrant
          Agreement and the Warrant Certificates.

     b    The execution,  delivery and  performance  by the  Corporation of this
          Warrant  Agreement and the Warrant  Certificates,  the issuance of the
          Warrants,  and the issuance of the Warrant Shares upon exercise of the
          Warrants have been duly authorized by all necessary corporate action.

     c    This Warrant  Agreement  has been duly  executed and  delivered by the
          Corporation  and constitutes a legal,  valid,  binding and enforceable
          obligation  of  the   Corporation.   When  the  Warrants  and  Warrant
          Certificates have been issued as contemplated  hereby the Warrants and
          the Warrant  Certificates  will constitute legal,  valid,  binding and
          enforceable  obligations of the Corporation.  The Warrant Shares, when
          issued upon  exercise of the  Warrants  in  accordance  with the terms
          hereof,  will be duly  authorized,  validly  issued,  fully  paid  and
          nonassessable  shares  of the  Common  Stock  or,  in the  event of an
          adjustment  pursuant to section  12,  other  shares of Capital  Stock.
          Statements  in this section 2(c) as to  validity,  binding  effect and
          enforceability  are subject to (i)  limitations  as to  enforceability
          imposed by  bankruptcy,  reorganization,  moratorium,  insolvency  and
          other  laws  of  general  application  relating  to or  affecting  the
          enforceability of creditors' rights,  including,  without  limitation,
          limitations as to enforceability that may be imposed under Section 548
          of the  United  States  Bankruptcy  Code,  Article  10 of the New York
          Debtor Creditor Law or other  provisions of law relating to fraudulent
          transfers and obligations and (ii) equitable  principles  limiting the
          availability of equitable remedies.

3    Number of Warrants.  The Corporation  hereby agrees to issue and deliver to
     Gotham on the  Distribution  Date Warrant  Certificates  evidencing  42,500
     Warrants.

4    Registration, Transfer and Exchange of Certificates.

     a    The  Corporation  shall  maintain  at the  Warrant  Office the Warrant
          Register for registration of the Warrants and Warrant Certificates and
          transfers  thereof.  On the  Distribution  Date the Corporation  shall
          register the Warrants and Warrant Certificates in the Warrant Register
          in the name of the Warrant Holder.  The Corporation may deem and treat
          the  registered  holders of the Warrant  Certificates  as the absolute
          owners thereof and the Warrants  represented thereby  (notwithstanding
          any notation of ownership or other writing on the Warrant Certificates
          made by any  person) for the  purpose of any  exercise  thereof or any
          distribution  to the  Warrant  Holders  thereof,  and  for  all  other
          purposes,  and the Corporation  shall not be affected by any notice to
          the contrary.

     b    Subject to  section 14 hereof,  the  Corporation  shall  register  the
          transfer of any  outstanding  Warrants in the  Warrant  Register  upon
          surrender of the Warrant Certificates  evidencing such Warrants to the
          Corporation at the Warrant Office,  accompanied (if so required by it)
          by  a  written   instrument  or   instruments   of  transfer  in  form
          satisfactory to it, duly executed by the registered  holder or holders
          thereof or by the duly appointed legal  representative  thereof.  Upon
          any such registration of transfer, new Warrant Certificates evidencing
          such  transferred  Warrants  shall be issued to the transferee and the
          surrendered Warrant Certificates shall be cancelled.  If less than all
          the  Warrants  evidenced  by  Warrant  Certificates   surrendered  for
          transfer  are to be  transferred,  new Warrant  Certificates  shall be
          issued to the holder surrendering such Warrant Certificates evidencing
          such remaining number of Warrants.

     c    Warrant  Certificates  may be  exchanged  at the option of the holders
          thereof when surrendered to the Corporation at the Warrant Office, for
          another  Warrant  Certificate  or other Warrant  Certificates  of like
          tenor and  representing  in the  aggregate a like number of  Warrants.
          Warrant Certificates surrendered for exchange shall be cancelled.

     d    No charge shall be made for any such  transfer or exchange  except for
          any tax or other governmental charge imposed in connection  therewith.
          Except as provided in section 14(b) hereof,  each Warrant  Certificate
          issued upon  transfer  or exchange  shall bear the legend set forth in
          section 14(b) hereof if the Warrant Certificate presented for transfer
          or exchange bore such legend.


5    Mutilated or Missing Warrant Certificates. If any Warrant Certificate shall
     be mutilated,  lost,  stolen or destroyed,  the Corporation shall issue, in
     exchange  and  substitution  for and  upon  cancellation  of the  mutilated
     Warrant  Certificate,  or in  lieu  of and  substitution  for  the  Warrant
     Certificate  lost, stolen or destroyed,  a new Warrant  Certificate of like
     tenor and  representing  an  equivalent  number of Warrants,  but only upon
     receipt of evidence  satisfactory to the Corporation of such loss, theft or
     destruction  of such  Warrant  Certificate  and,  if  requested,  indemnity
     satisfactory to it. The Corporation  acknowledges  that a written indemnity
     by the Warrant Holder shall be  satisfactory  to the  Corporation  for such
     purpose. No service charge shall be made for any such substitution, but all
     expenses and reasonable  charges  associated  with procuring such indemnity
     and all stamp,  tax and other  governmental  duties  that may be imposed in
     relation thereto shall be borne by the holder of such Warrant  Certificate.
     Each Warrant  Certificate  issued in any such  substitution  shall bear the
     legend set forth in section  14(b)  hereof if the Warrant  Certificate  for
     which such substitution was made bore such legend.

6    Duration and Exercise of Warrants.

     a    The Warrants  evidenced by a Warrant  Certificate shall be exercisable
          in whole or in part by the  registered  holder thereof on any Business
          Day after the  Distribution  Date and on or before  5:00 PM,  New York
          City time, on the Expiration Date.

     b    Upon  presentation  to the  Corporation  at the Warrant  Office of the
          Warrant Certificate evidencing the Warrants to be exercised,  with the
          form of election to purchase  attached thereto duly completed,  signed
          by the  Warrant  Holder,  and upon  payment of an amount  equal to the
          product of:

          i0   the Exercise Price per Share; and

          ii0  the number of Warrant Shares being purchased,

          in lawful money of the United States of America, the Corporation shall
          issue and cause to be  delivered  to or upon the written  order of the
          registered  holders of such Warrants and in such name or names as such
          registered  holder may designate,  a certificate for the Warrant Share
          or Warrant  Shares  issued upon such  exercise of the  Warrants  being
          exercised.  Any Persons so  designated  to be named  therein  shall be
          deemed to have become Warrant  Holders of record of such Warrant Share
          or Warrant Shares as of the date of exercise of such Warrants.

          Any Persons so  designated to be named therein shall be deemed to have
          become holders of record of such Warrant Share or Warrant Shares as of
          the date of exercise of such Warrants.

     c    If less than all of the Warrants  evidenced  by a Warrant  Certificate
          are exercised at any time, a new Warrant  Certificate or  Certificates
          shall be issued for the remaining number of Warrants evidenced by such
          Warrant Certificate. Each new Warrant Certificate so issued shall bear
          the  legend  set  forth  in  section   14(b)  hereof  if  the  Warrant
          Certificate presented in connection with partial exercise thereof bore
          such legend.  All Warrant  Certificates  surrendered  upon exercise of
          Warrants shall be cancelled.

7    No  Fractional  Shares.  The  Corporation  shall not be  required  to issue
     fractional  Warrant  Shares upon exercise of the Warrants but shall pay for
     any such  fraction  of a share an amount in cash equal to such  fraction of
     the Fair Market Value of a share of Common Stock.


8    Payment of Taxes.  The Corporation  will pay all taxes  attributable to the
     initial issuance of Warrant Shares to a Warrant Holder upon the exercise of
     his Warrants,  provided that the  Corporation  shall not be required to pay
     any income tax incurred by the Warrant  Holder or the holder of the Warrant
     Shares upon exercise of the Warrants or issuance of the Warrant Shares.

9    Stockholder Rights.

     a    Nothing  contained in this Warrant  Agreement or in any of the Warrant
          Certificates shall be construed as conferring upon the holders thereof
          the right to vote or to consent or to receive  notice as a stockholder
          in  respect  of  the  meetings  of  stockholders  or the  election  of
          directors  of the  Corporation  or any  other  matter,  or any  rights
          whatsoever as a stockholder of the Corporation.

     b    Nothing  contained in this Warrant  Agreement or in any of the Warrant
          Certificates  shall be  construed as imposing  any  obligation  on the
          registered  holders  thereof to purchase any securities or as imposing
          any  liabilities  on  such  Warrant  Holders  as  stockholders  of the
          Corporation,  whether such  obligation or liabilities  are asserted by
          the Corporation or by creditors of the Corporation.

10   Reservation and Issuance of Warrant Shares.

     a    The  Corporation  will at all times have  authorized,  and reserve and
          keep  available,  for  the  purpose  of  enabling  it to  satisfy  any
          obligation to issue Warrant  Shares upon the exercise of the Warrants,
          the number of shares of Common Stock  deliverable upon exercise of all
          outstanding Warrants.

     b    The Corporation  will take any corporate action which may be necessary
          in order that the Corporation may validly and legally issue fully paid
          and nonassessable Warrant Shares at the Exercise Price per Share.

     c    The Corporation  covenants that all Warrant Shares will, upon issuance
          to the Warrant  Holder in  accordance  with the terms of this  Warrant
          Agreement and the Corporation's certificate of incorporation, be fully
          paid and  nonassessable  and free from all taxes  with  respect to the
          issuance  thereof and from all liens,  charges and security  interests
          (other than any created by or on behalf of any Warrant Holder).


11   Obtaining  of  Governmental  Approvals  and Stock  Exchange  Listings.  The
     Corporation  will,  at its own  expense,  from time to time take all action
     which may be  necessary to obtain and keep  effective  any and all permits,
     consents,  orders and approvals of  governmental  agencies and  authorities
     which  are or become  requisite  in  connection  with the  issuance,  sale,
     transfer and delivery of the Warrant  Certificates  and the exercise of the
     Warrants  and the  issuance,  sale,  transfer  and  delivery of the Warrant
     Shares,  and all action which may be  necessary  so that any Common  Stock,
     immediately upon its issuance upon the exercise of Warrants, will be listed
     on each  securities  exchange or listing or quotation  service,  if any, on
     which the Common Stock is then listed.

12   Adjustment  of  Exercise  Price  per Share and  number  of  Warrant  Shares
     issuable on exercise of Warrants.

     a    Prior to the Expiration  Date,  the Exercise  Price per Share,  and in
          some cases the number of Warrant Shares issuable upon exercise of each
          Warrant,  are  subject to  adjustment  from time to time in the manner
          provided in this section 12 upon the  occurrence  of any of the events
          enumerated in this section~12.

     b    In the  event  that  the  Corporation  shall  at any  time  after  the
          Distribution Date:

          i0   declare a dividend  or make a  distribution  on any series of its
               Common Stock in shares of any series of its Common Stock;

          ii0  subdivide or reclassify  shares of any series of its  outstanding
               Common Stock into a greater number of shares;

          iii0 combine shares of any series of its outstanding Common Stock into
               a smaller number of shares;

          iv0  pay a dividend or make a distribution on any series of its Common
               Stock in shares of any  series of its  Capital  Stock  other than
               Common Stock; or

          v0   issue by  reclassification  of any  series  of its  Common  Stock
               shares of any series of its Capital Stock;

          then each Warrant  outstanding on the record date for such dividend or
          distribution   or  on  the   effective   date  of  such   subdivision,
          reclassification  or combination  shall thereafter  entitle the holder
          thereof  to receive  the  aggregate  number and kind of shares,  other
          securities  and property  which,  if such  Warrant had been  exercised
          immediately  prior to such time,  such holder would have owned or have
          become  entitled to receive by virtue of such dividend,  distribution,
          subdivision,  reclassification  or  combination  and,  if  after  such
          dividend, distribution,  subdivision,  reclassification or combination
          the Warrants  continue to represent  the right to purchase only shares
          of Common Stock (and not other  securities or property),  the Exercise
          Price per Share shall be adjusted to be an amount equal to the product
          of:

          (x)  the Exercise Price per Share in effect  immediately prior to such
               dividend,   distribution,   subdivision,    reclassification   or
               combination and

          (y)  the ratio of:

               (1)  the number of shares of Common Stock issuable on exercise of
                    a single  Warrant  immediately  before  giving effect to the
                    dividend,  distribution,  subdivision,  reclassification  or
                    combination and

               (2)  the number of shares of Common Stock issuable on exercise of
                    a single  Warrant  immediately  after giving  effect to such
                    dividend,  distribution,  subdivision,  reclassification  or
                    combination.


          If after such dividend, distribution, subdivision, reclassification or
          combination  the Warrants  represent the right to purchase  securities
          other than  shares of Common  Stock or other  property,  the  Exercise
          Price  per Share  shall be  adjusted  equitably.  An  adjustment  made
          pursuant to this  section  12(b) shall  become  effective  immediately
          after the record  date in the case of a dividend or  distribution  and
          shall become  effective  immediately  after the effective  date in the
          case of subdivision, combination or reclassification.  Such adjustment
          shall be made  successively  whenever  any event  listed  above  shall
          occur.

     c    

          i0   "Full-ratchet"  Anti-dilution  Adjustment.  In the event that the
               Corporation  shall at any time after the Distribution  Date issue
               any shares of Common Stock (or any rights,  warrants,  options or
               convertible  or  exercisable  securities  entitling  the  holders
               thereof to subscribe  for or purchase any shares of Common Stock,
               or any stock appreciation rights entitling the holders thereof to
               any interest in an increase in value, however measured, of shares
               of Common Stock) other than in a Qualifying Transaction and other
               than in an Excluded  Transaction,  at an Effective Purchase Price
               per  Share  less  than the  Exercise  Price  per  Share in effect
               immediately prior to such issuance, then:

               (1)  the  Exercise  Price per Share  shall be  adjusted  to be an
                    amount equal to such Effective Price per Share and

               (2)  no adjustment  shall be made as a result of such issuance in
                    the number of Warrant  Shares  issuable  on  exercise of the
                    Warrants.


               For example,  if on any given date the Corporation  issues (other
               than in a  Qualifying  Transaction  and other than in an Excluded
               Transaction)  warrants exercisable at $3.00 per share to purchase
               shares of Common Stock for a purchase  price of $5.00 per warrant
               and the Exercise Price per Share in effect  immediately  prior to
               such  issuance is $8.25 per share,  then the  Exercise  Price per
               Share will be adjusted to $8.00 per share and no adjustment  will
               be made in the number of Warrant Shares issuable upon exercise of
               a Warrant.

               ii0  "Proportional"  Anti-dilution  Adjustment. In the event that
                    the  Corporation  shall at any time  after the  Distribution
                    Date  issue  any  shares of  Common  Stock  (or any  rights,
                    warrants,  options or convertible or exercisable  securities
                    entitling  the holders  thereof to subscribe for or purchase
                    any shares of Common Stock, or any stock appreciation rights
                    entitling the holders thereof to any interest in an increase
                    in value, however measured,  of shares of Common Stock) in a
                    Qualifying   Transaction  or  in  an  Excluded   Transaction
                    described  in clause (i) or (ii) of the  definition  of that
                    term, at an Effective Purchase Price per Share less than the
                    Exercise Price per Share in effect immediately prior to such
                    issuance, then:

                    (1)  the Exercise Price per Share shall be adjusted to be an
                         amount equal to the ratio of:

                    (a)  the sum of:

                         (i)  the product of:

                              1    the  number  of  shares  of  Common  Stock 
                                   outstanding immediately prior to such
                                   issuance and

                              2    the  Exercise  Price per  Share in  effect  
                                   immediately prior to such issuance and

                         (ii) the   Aggregate   Consideration   Receivable  
                              by   the Corporation in connection with such 
                              issuance, to

                    (b)  the sum of:

                         (i)  the  number  of  shares  of  Common  Stock 
                              outstanding immediately prior to such issuance and

                         (ii) the number of  additional  shares of Common Stock
                              to be so issued  (including  the number of shares
                              underlying such  rights,  warrants,   options  or
                              convertible  or exercisable securities); and

               (2)  no adjustment  shall be made as a result of such issuance in
                    the number of Warrant  Shares  issuable  on  exercise of the
                    Warrants.


               For example,  if on any given date the Corporation has 10,000,000
               shares of Common Stock outstanding,  the Corporation issues (in a
               Qualifying Transaction or in an Excluded Transaction described in
               clause  (i) or (ii) of the  definition  of  that  term)  warrants
               exercisable   at  $3.00  per  share  to  purchase  an  additional
               1,000,000  shares of Common  Stock for a purchase  price of $5.00
               per  warrant  and  the   Exercise   Price  per  Share  in  effect
               immediately  prior to such issuance is $8.25 per share,  then the
               Exercise  Price per Share  shall be  adjusted to $8.227 per share
               (calculated as follows:  $8.227 per share = [(10,000,000 shares x
               $8.25 per share) + $8,000,000]  / (10,000,000  shares + 1,000,000
               shares),  and no adjustment will be made in the number of Warrant
               Shares issuable upon exercise of a Warrant.

     d    No change  in either  the  Exercise  Price per Share or the  number of
          Warrant  Shares  issuable  upon  exercise of the Warrants  shall occur
          solely as the result of the  issuance by the  Corporation  at any time
          after the  Distribution  Date of any  shares  of Common  Stock (or any
          rights,  warrants,  options or convertible  or exercisable  securities
          entitling the holders  thereof to subscribe for or purchase any shares
          of Common Stock or any stock appreciation rights entitling the holders
          thereof to any interest in an increase in value, however measured,  of
          shares of Common Stock) in an Excluded Transaction described in clause
          (iii) of the definition of that term.

     e    In case all or any portion of the  consideration to be received by the
          Corporation  may be paid in a form other than cash,  the value of such
          consideration  shall  be  determined  in good  faith  by the  Board of
          Directors or a duly authorized committee thereof  (irrespective of the
          accounting  treatment  thereof),  and described in a resolution of the
          Board of Directors or such  committee.  An adjustment made pursuant to
          section  12(c)  hereof  shall become  effective  immediately  upon the
          effective  date of the  issuance  resulting in such  adjustment.  Such
          adjustment  shall be made  successively  whenever any shares,  rights,
          warrants,  options or  convertible  or  exercisable  securities are so
          issued at an Effective  Purchase Price per Share that is less than the
          Exercise  Price per Share in effect on the date of such  issuance.  To
          the extent that any such rights,  warrants,  options or convertible or
          exercisable  securities or stock  appreciation  rights expire  without
          having been converted or exercised, each Warrant outstanding shall, as
          of the date of such expiration, have the same Exercise Price per Share
          as  would  have  been the case  had  such  expired  rights,  warrants,
          options,  convertible or exercisable  securities or stock appreciation
          rights not been  issued,  but such  readjustment  shall not affect the
          Exercise  Price per Share paid for any shares of Common Stock or other
          shares of Capital Stock  delivered upon any exercise prior to the date
          such readjustment is made.


     f    In the event that the Corporation  shall  distribute to all holders of
          its  Common  Stock any of its  assets or debt  securities,  or rights,
          options,  warrants or  convertible  or  exercisable  securities of the
          Corporation (including securities for cash, but excluding:

          i0   distributions  of Capital  Stock  referred  to in  section  12(b)
               hereof,

          ii0  distributions  of  rights,  warrants,  options,   convertible  or
               exercisable  securities or stock appreciation  rights referred to
               in section  12(c) hereof,  if the decrease in the Exercise  Price
               per Share under  section  12(c)  hereof would be greater than the
               decrease in the Exercise Price per Share under this section 12(f)
               (with section 12(c) applying rather than this section 12(f)), and

          iii0 cash dividends or other cash  distributions  that are paid out of
               Consolidated Net Income for any dividend  period,  earned surplus
               or retained earnings,

          then in each such case:

               (1)  the  Exercise  Price per Share  shall be  adjusted  to be an
                    amount equal to the difference between:

                    (a)  the  Exercise  Price per  Share in  effect  immediately
                         prior to such issuance and

                    (b)  an  amount  equal to the then  fair  market  value  (as
                         reasonably  determined  by the Board of  Directors,  in
                         good  faith and as  described  in a  resolution  of the
                         Board of  Directors)  of the  portion  of the assets or
                         debt securities of the Corporation so distributed or of
                         such  rights,  options,   warrants  or  convertible  or
                         exercisable  securities  applicable  to  one  share  of
                         Common Stock, and

               (2)  no  adjustment  shall be made in any such case in the number
                    of Warrant Shares issuable on exercise of the Warrants.

               Such  adjustment  shall become  effective  immediately  after the
               record date for the  determination  of shares entitled to receive
               such  distribution.   Notwithstanding  the  foregoing,   no  such
               adjustment  shall be made upon any such  distribution if the plan
               or arrangement under which such distribution is made provides for
               a distribution  to holders of Warrant Shares in the same pro rata
               amounts upon exercise of the Warrants.  Such adjustment  shall be
               made successively whenever any event listed above shall occur.


     g    If at any time,  as a result of an  adjustment  made  pursuant to this
          section  12,  the holder of any  Warrant  thereafter  exercised  shall
          become  entitled to receive any shares of the  Corporation  other than
          shares of Common Stock,  thereafter the number of such other shares so
          receivable upon exercise of any Warrant shall be subject to adjustment
          from  time to time in a manner  and on terms as nearly  equivalent  as
          practicable  to the  provisions  with  respect to the  Warrant  Shares
          contained  in this  section  12, and the  provisions  of this  Warrant
          Agreement with respect to the Warrant Shares shall apply on like terms
          to such other shares.

     h    If any of the following events occur, namely:

          i0   any  reclassification  or change of Warrant  Shares (other than a
               change in par value,  or from par value to no par value,  or from
               no par  value to par  value,  or as a result  of  subdivision  or
               combination);

          ii0  any  consolidation  or merger  of the  Corporation  with  another
               Person shall be effected as a result of which  holders of Warrant
               Shares shall be entitled to receive  stock,  securities  or other
               property  or  assets  (including  cash)  with  respect  to  or in
               exchange for Warrant Shares; or

          iii0 any  sale or  conveyance  of the  properties  and  assets  of the
               Corporation  as, or  substantially  as, an  entirety to any other
               Person;

          then the  Corporation or such successor or purchasing  Person,  as the
          case may be, shall make provisions to establish that each Warrant then
          outstanding  shall be exercisable for the kind and amount of shares of
          stock and other  securities  or  property or assets  (including  cash)
          receivable  upon the  occurrence  of such event by a holder of Warrant
          Shares  immediately  prior to such event.  The  Corporation  shall not
          consummate any such event unless, prior to or simultaneously with such
          consummation,  the  successor  Person (if other than the  Corporation)
          resulting from such  consolidation or merger or the Person  purchasing
          such  properties  and assets shall assume by written  instrument,  the
          obligation  to  deliver  to each  Warrant  Holder the shares of stock,
          securities  or assets  to  which,  in  accordance  with the  foregoing
          provisions,  such holder may be entitled and all other  obligations of
          the Corporation under this Warrant  Agreement.  The provisions of this
          section 12(h) shall similarly  apply to successive  reclassifications,
          consolidations, mergers, sales and conveyances.

     i    Irrespective  of any  adjustments  in the  number  or kind  of  shares
          purchasable  upon the  exercise of the Warrant,  Warrant  Certificates
          theretofore  or  thereafter  issued may  continue  to express the same
          number  and kind of shares as are stated on the  Warrant  Certificates
          initially issuable pursuant to this Warrant Agreement.


     j    Anything  in this  section  12 to the  contrary  notwithstanding,  the
          Corporation  shall be entitled to make such  decreases in the Exercise
          Price per Share and such  increases  in the number of  Warrant  Shares
          issuable  upon the  exercise  of each  Warrant,  in  addition to those
          adjustments  required by this section 12, as it in its sole discretion
          shall   determine  to  be  advisable  in  order  that  any  dividends,
          distributions or, issuances of securities,  rights, options,  warrants
          or convertible or  exchangeable  securities made by the Corporation to
          its stockholders shall not be taxable to them.

13   Notices to Holders.

     a    Upon any  adjustment  pursuant  to section  12 hereof in the  Exercise
          Price  per Share or in the  number of  Warrant  Shares  issuable  upon
          exercise of a Warrant, the Corporation shall promptly but in any event
          within 30 days  thereafter,  cause to be given to each of the  Warrant
          Holders,   at  its  address  appearing  on  the  Warrant  Register  by
          registered  mail,  postage  prepaid,   return  receipt  requested,   a
          certificate  signed  by its  chairman,  president  or chief  financial
          officer  setting forth the Exercise  Price per Share and the number of
          Warrant Shares  purchasable  upon exercise of a Warrant as so adjusted
          and  describing in  reasonable  detail the facts  accounting  for such
          adjustment and the method of calculation used. When appropriate,  such
          certificate  may be given in  advance  and  included  as a part of the
          notice  required  to be  mailed  under the  other  provisions  of this
          section 13.

     b    In the event:

          i0   that the Corporation  shall authorize the issuance to all holders
               of  Common  Stock of  rights  or  warrants  to  subscribe  for or
               purchase  Capital  Stock  of  the  Corporation  or of  any  other
               subscription rights or warrants;

          ii0  that the  Corporation  shall  authorize the  distribution  to all
               holders  of Common  Stock of  evidences  of its  indebtedness  or
               assets  (including,  without  limitation,  cash dividends or cash
               distributions  payable  out of  consolidated  earnings  or earned
               surplus or dividends payable in Common Stock);

          iii0 of any  consolidation  or merger to which  the  Corporation  is a
               party  and  for  which  approval  of  any   stockholders  of  the
               Corporation is required,  or of the conveyance or transfer of the
               properties  and  assets of the  Corporation  substantially  as an
               entirety, or of any capital reorganization or reclassification or
               change of the Common Stock (other than a change in par value,  or
               from  par  value  to no par  value,  or from no par  value to par
               value, or as a result of a subdivision or combination);

          iv0  of the  voluntary  or  involuntary  dissolution,  liquidation  or
               winding up of the Corporation; or


          v0   that the  Corporation  proposes  to take any other  action  which
               would require an adjustment in the Exercise Price per Share or in
               the number of  Warrant  Shares or other  securities  or assets to
               which each holder is entitled pursuant to section 12 hereof;

               then  the  Corporation  shall  cause  to be  given to each of the
               Warrant Holders at its address appearing on the Warrant Register,
               at least 30 calendar days prior to the applicable record date, if
               any,  hereinafter  specified,  or,  if no  such  record  date  is
               specified,  30  calendar  days  prior to the taking of any action
               referred to in clauses (i) through (v) above (except that, if the
               action  taken by the  Corporation  is an  issuance  described  in
               section 12(c)(i) or (ii) hereof, then as promptly as possible but
               in no event  later  than the date that the  Corporation  provides
               public  notice of such  issuance),  by registered  mail,  postage
               prepaid,  return receipt requested,  a written notice stating (i)
               the date as of which the holders of record of Common  Stock to be
               entitled to receive any such rights, warrants or distribution are
               to  be   determined,   or  (ii)  the  date  on  which   any  such
               consolidation,   merger,   conveyance,   transfer,   dissolution,
               liquidation  or winding up is  expected to become  effective,  or
               (iii)  the  date as of  which  any  such  other  action  is to be
               effected,  and, if applicable and known to the  Corporation,  the
               date as of which it is expected  that holders of record of Common
               Stock shall be entitled to exchange  their shares for  securities
               or   other   property,    if   any,    deliverable    upon   such
               reclassification,  consolidation,  merger, conveyance,  transfer,
               dissolution,  liquidation or winding up; provided,  however, that
               in the event that the Corporation  provides public notice of such
               proposed  action or event  specifying the  information  set forth
               above at  least 10 days  prior  to the  proposed  record  date or
               effective  date,  then the  Corporation  shall be  deemed to have
               satisfied  its  obligation  to provide  notice  pursuant  to this
               section  13(b).  The failure to give the notice  required by this
               section 13 or any defect therein shall not affect the legality or
               validity  of any  distribution,  right,  warrant,  consolidation,
               merger, conveyance, transfer, dissolution, liquidation or winding
               up or other action  referred to above,  or the vote upon any such
               action.

     c    The Corporation shall promptly,  but in any event no less than 30 days
          prior to the  effective  date of any  Change in  Control,  cause to be
          given  to each  of the  registered  holders  of the  Warrants,  at its
          address appearing on the Warrant Register by registered mail,  postage
          prepaid,  return receipt requested,  written notice of the pendency of
          such Change in Control.

14   Restrictions   on   Transfer;   Subsequent   Transferees   as  Third  Party
     Beneficiaries.


     a    The Warrant  Holder  (i)~represents  that it is acquiring the Warrants
          for  its  own  account  for  investment  and  not  with a view  to any
          distribution  or public  offering within the meaning of the Securities
          Act,  (ii)~acknowledges  that  the  Warrants  and the  Warrant  Shares
          issuable  upon  exercise  thereof have not been  registered  under the
          Securities Act or any state securities laws and  (iii)~agrees  that it
          will not sell or  otherwise  transfer  any of its  Warrants or Warrant
          Shares except upon the terms and conditions specified herein, provided
          that the Warrant  Holders may sell the Warrants or the Warrant  Shares
          purchased  upon  exercise  of the  Warrants  in one  or  more  private
          transactions not requiring registration under the Securities Act.

     b    Except as otherwise  provided in  section~14(d)  hereof,  each Warrant
          Certificate  and each  certificate  for the Warrant Shares issued to a
          Warrant Holder shall include a legend in  substantially  the following
          form  (with such  changes  therein  as may be  appropriate  to reflect
          whether such legend  refers to Warrants or Warrant  Shares),  provided
          that such legend shall not be required if such  transfer is being made
          in connection with a sale which is exempt from  registration  pursuant
          to  Rule~144  under the  Securities  Act or if the  opinion of counsel
          referred  to in  section~14(c)  hereof is to the  further  effect that
          neither  such  legend  nor  the   restrictions  on  transfer  in  this
          section~14  are  required  in  order  to  ensure  compliance  with the
          Securities Act:

     THE  [WARRANTS,  AND THE SHARES  ISSUABLE  ON  EXERCISE  OF THE  WARRANTS,]
     [SHARES] REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933 OR ANY APPLICABLE  STATE SECURITIES LAWS AND MAY NOT
     BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH  REGISTRATION OR AN EXEMPTION
     THEREFROM UNDER SUCH ACT OR LAWS.

     c    Each Warrant  Holder  wishing to effect such a transfer of any Warrant
          or Warrant Shares shall furnish to the Corporation an agreement by the
          transferee  thereof  that it is taking and holding the same subject to
          the terms and  conditions  specified  herein and a written  opinion of
          such Warrant Holder's counsel, in form reasonably  satisfactory to the
          Corporation,  to the effect that the proposed transfer may be effected
          without registration under the Securities Act and any applicable state
          securities laws.

     d    The  restrictions  set forth in this  section~14  shall  terminate and
          cease to be effective  with respect to any Warrants or Warrant  Shares
          registered  under the Securities Act or receipt by the  Corporation of
          an  opinion  of  counsel,  in  form  reasonably  satisfactory  to  the
          Corporation,  to the effect that compliance with such  restrictions is
          not  necessary  in order to  comply  with the  Securities  Act and any
          applicable  state  securities laws with respect to the transfer of the
          Warrants and/or the Warrant Shares.  Whenever such restrictions  shall
          so terminate the holder of such Warrants  and/or  Warrant Shares shall
          be entitled to receive from the  Corporation,  without  expense (other
          than transfer taxes, if any), Warrant Certificates or certificates for
          such Warrant Shares not bearing the legend set forth in  section~14(b)
          hereof and the  Corporation  will  rescind any  transfer  restrictions
          relating thereto.

     e    It is the intention of the parties hereto that each Warrant Holder who
          acquires  Warrants by transfer  be a third party  beneficiary,  to the
          extent of Warrants  acquired and held by such Warrant  Holder,  of the
          provisions  of this Warrant  Agreement  that bestow  rights on Warrant
          Holders.


15   Covenants.  Holdings  covenants  to  include in any  filings  made with any
     taxing  authority the issuance of these  warrants as being  pursuant to the
     plan of reorganization (with respect to the distribution of the Corporation
     by IFG).

16   Amendments  and Waivers.  Any  provision of this Warrant  Agreement  may be
     amended,  supplemented,  waived,  discharged  or  terminated  by a  written
     instrument  signed by the  Corporation  and the  holders of not less than a
     majority of the outstanding Warrants,  provided that the Exercise Price per
     Share may not be  increased  by  amendment,  the number of  Warrant  Shares
     issuable  upon exercise of the Warrants may not be reduced by amendment and
     this  section~15 may not be changed by amendment  except with the unanimous
     consent of the holders of outstanding Warrants.

17   Specific  Performance.  The holders of the Warrants shall have the right to
     specific  performance by the  Corporation of the provisions of this Warrant
     Agreement. The Corporation hereby irrevocably waives, to the extent that it
     may do so under  applicable  law,  any defense  based on the  adequacy of a
     remedy at law  which may be  asserted  as a bar to the  remedy of  specific
     performance  in any action  brought  against the  Corporation  for specific
     performance of this Warrant Agreement by the holders of the Warrants.

18   Notices.

     a    Any notice or demand to be given or made by the Warrant Holders or the
          holders of Warrant  Shares to or on the  Corporation  pursuant to this
          Warrant  Agreement  shall  be  sufficiently  given  or made if sent by
          registered mail, return receipt requested,  postage prepaid, addressed
          to the Corporation at the Warrant Office.

     b    Any notice to be given by the  Corporation  to the Warrant  Holders or
          the holders of Warrant Shares shall be  sufficiently  given or made if
          sent by registered mail,  return receipt  requested,  postage prepaid,
          addressed  to such  holder as such  holder's  name and  address  shall
          appear on the  Warrant  Register or the Common  Stock  registry of the
          Corporation, as the case may be.

19   Binding Effect.  This Warrant  Agreement shall be binding upon and inure to
     the sole and exclusive  benefit of the  Corporation and the Warrant Holder,
     and their respective successors and assigns.

20   Continued  Validity.  A holder  of  Warrant  Shares  shall  continue  to be
     entitled  with respect to such Warrant  Shares to all rights and subject to
     all obligations to which it would have been entitled or subject as a holder
     under sections~14 through 22 hereof.


21   Counterparts.  This  Warrant  Agreement  may be  executed  in  one or  more
     separate  counterparts and all of said counterparts taken together shall be
     deemed to constitute one and the same instrument.

22   New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT  CERTIFICATE SHALL BE
     GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
     YORK.

23   Benefits of This  Agreement.  Nothing in this  Warrant  Agreement  shall be
     construed  to give any Person  other than the  Corporation  and the Warrant
     Holder any legal or  equitable  right,  remedy or claim under this  Warrant
     Agreement.

IN WITNESS  WHEREOF the parties hereto have caused this Warrant  Agreement to be
duly executed and delivered by their proper and duly authorized officers,  as of
the date and year first above written.



                  INSIGNIA/ESG HOLDINGS, INC.


                  By:/s/ Andrew L. Farkas
                  -----------------------
                     Name: Andrew L. Farkas
                     Title:   Chairman and Chief Executive Officer



                  GOTHAM PARTNERS, L.P.


                  By:  Section H. Partners, L.P.,
                           its general partner

                  By:  DPB Corp., a general partner


                  By:/s/David P. Berkowitz
                  ------------------------
                     Name: David P. Berkowitz
                     Title:         President



                                                   
                                    EXHIBIT A

                           FORM OF WARRANT CERTIFICATE

THE WARRANTS,  AND THE SHARES ISSUABLE ON EXERCISE OF THE WARRANTS,  REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE  STATE  SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.

                          EXERCISABLE ONLY ON OR BEFORE
                                 JANUARY 1, 1999

[Date]                        Warrant Certificate             Warrant No. [   ]

     This Warrant Certificate is one of the Warrant Certificates  referred to in
the Warrant  Agreement dated as of September 15, 1998 (the "Warrant  Agreement")
between  the  Corporation  and  Gotham   Partners,   L.P.,  a  Delaware  limited
partnership.  The Warrant  Agreement is hereby  incorporated by reference in and
made a part of this  instrument  and is hereby  referred to for a description of
the rights,  limitations,  obligations,  duties and immunities thereunder of the
Corporation and the holders of Warrants.  Terms defined in the Warrant Agreement
and used herein have the same meanings herein as therein.

     This Warrant  Certificate  certifies that , or registered  assigns,  is the
registered  holder of _____  Warrants  to  purchase  shares  of Common  Stock of
INSIGNIA/ESG  HOLDINGS,  INC., a Delaware corporation (the "Corporation").  Each
Warrant entitles the holder, but only subject to the conditions set forth herein
and in the Warrant  Agreement,  to purchase from the Corporation before 5:00~PM,
New York City time, on the  Expiration  Date,  one fully paid and  nonassessable
share of Common Stock  (subject to  adjustment  as  described  below) at a price
equal to the Exercise Price per Share.

     The Exercise Price per Share shall be payable in lawful money of the United
States of America. The Warrants represented by this certificate may be exercised
by  surrender of this Warrant  Certificate,  along with an executed  copy of the
annexed  Form of  Election to Purchase  and payment of the  applicable  Exercise
Price at the office of the  Corporation  at 200 Park Avenue,  New York, New York
10166,  or such other address as the  Corporation  may specify in writing to the
registered holder of the Warrants evidenced hereby. The Exercise Price per Share
and the  number of  shares of Common  Stock  purchasable  upon  exercise  of the
Warrants is subject to adjustment  prior to the Expiration  Date as set forth in
the Warrant Agreement.

     No Warrant  may be  exercised  after  5:00~PM,  New York City time,  on the
Expiration Date and (except as otherwise  provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00~PM,  New
York City time, on the Expiration Date.


                                                       
     The Corporation  may deem and treat the registered  holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership  or other  writing  hereon  made by  anyone)  for the  purpose  of any
exercise hereof and of any  distribution to the holders hereof and for all other
purposes,  and the  Corporation  shall  not be  affected  by any  notice  to the
contrary.

     This Warrant  Certificate,  when  surrendered  at the Warrant Office by the
registered holder hereof in person or by a legal  representative duly authorized
in  writing,  may be  exchanged,  in the manner and  subject to the  limitations
provided in the Warrant  Agreement,  but without  payment of any service charge,
for another Warrant Certificate or Warrant Certificates of like tenor registered
in the name of the holder and  representing  in the  aggregate  a like number of
Warrants.

     Upon  due  presentment  for   registration  of  transfer  of  this  Warrant
Certificate  at  the  Warrant  Office,  a new  Warrant  Certificate  or  Warrant
Certificates  of like tenor and  evidencing  in the  aggregate  a like number of
Warrants  shall be  issued  in  exchange  for this  Warrant  Certificate  to the
transferee(s)  and,  if less than all the  Warrants  evidenced  hereby are to be
transferred,  to the  registered  holder  hereof,  subject  to  the  limitations
provided in the Warrant  Agreement,  without  charge except for any tax or other
governmental charge imposed in connection therewith.

     IN WITNESS WHEREOF the  Corporation has caused this Warrant  Certificate to
be signed by its duly  authorized  officers and has caused its corporate seal to
be affixed hereunto.

                                            INSIGNIA/ ESG HOLDINGS, INC.

                                            By:__________________________
                                               Name:
                                               Title:
(CORPORATE SEAL)
ATTEST

____________________________
Secretary

                      ANNEX TO FORM OF WARRANT CERTIFICATE


                          FORM OF ELECTION TO PURCHASE

                    (To be executed upon exercise of Warrant)

     The undersigned hereby  irrevocably elects to exercise,  in accordance with
section  6(b) of the  Warrant  Agreement,  Warrants,  representing  the right to
purchase shares of Common Stock, and herewith tenders payment for such shares of
Common  Stock to the order of the  Corporation  in the amount of $ as payment of
the exercise price in accordance with the terms hereof.

     The undersigned requests that a certificate for such shares of Common Stock
be  registered  in the name of whose  address  is and that such  certificate  be
delivered to whose address is . If said number of shares of Common Stock is less
than all of the shares of Common Stock  purchasable  hereunder,  the undersigned
hereby  requests  that a new  Warrant  Certificate  representing  the  remaining
balance of the Warrants be  registered  in the name of whose address is and that
such Warrant Certificate be delivered to whose address is .

Signature:



                                         
     (Signature  must  conform in all respects to name of holder as specified on
the face of the Warrant Certificate.)

Date: