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                           CERTIFICATE OF DESIGNATION

                                       OF
                         INSIGNIA FINANCIAL GROUP, INC.

                  UNDER SECTION 151 OF THE DELAWARE GENERAL CORPORATION LAW,
INSIGNIA FINANCIAL GROUP, INC., a Delaware corporation (the "Corporation"),
certifies as follows:

     FIRST: Under the authority contained in Article FOURTH of the Certificate
of Incorporation of the Corporation, as amended, the Board of Directors of the
Corporation has classified 250,000 of the authorized but unissued shares of
Preferred Stock of the Corporation, par value $.01 per share, as shares of
"Convertible Preferred Stock".

     SECOND: The following resolution was duly adopted by the Board of
Directors on February 3, 2000 and such resolution has not been modified and is
in full force and effect on the date hereof:

     RESOLVED, that the Board of Directors hereby creates, from the authorized
but unissued shares of Preferred Stock of the Corporation, par value $.01 per
share (hereinafter the "Preferred Stock"), a series of Preferred Stock to
consist of 250,000 shares, and hereby fixes the voting powers, designation,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:

     (a) Designation. The designation of the series of Preferred Stock created
by this resolution shall be "Convertible Preferred Stock" (hereinafter the
"Convertible Preferred Stock") and the number of shares constituting the
Convertible Preferred Stock shall be 250,000 shares. Shares of the Convertible
Preferred Stock shall have a stated value of $100.00 per share. The number of
authorized shares of the Convertible Preferred Stock may be reduced by further
resolution duly adopted by the Board of Directors and by the filing of a
certificate pursuant to the provisions of the General Corporation Law of the
State of Delaware stating that such reduction has been so authorized, but the
number of authorized shares of the Convertible Preferred Stock shall not be
increased.


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     (b) Dividends.

     (1) The Corporation shall pay on February 1, May 1, August 1 and November
1 (each of such dates being a "Dividend Payment Date" and each of such
quarterly periods being a "Dividend Payment Period") of each twelve-month
period following the date of the initial issuance of the Convertible Preferred
Stock (the "Initial Issuance Date"), a dividend per share of Convertible
Preferred Stock outstanding on such Dividend Payment Date, at a rate per annum
of 4%, payable, at the option of the Corporation, (i) in cash equal to 4% of
the stated value divided by 4, (ii) in shares of Common Stock (with any
fractional shares being rounded up or down to the nearest whole share) equal to
4% of the stated value divided by 4, and further divided by the Market Price
per Common Share on such Dividend Payment Date or (iii) a combination thereof;
provided, however, that the cash or the number of shares of Common Stock
payable as a dividend for the initial Dividend Payment Period, or any other
period shorter or longer than a full Dividend Payment Period, on the
Convertible Preferred Stock shall be computed by multiplying the result of the
previous calculation by a fraction the numerator of which shall be the number
of days in such Dividend Payment Period and the denominator of which shall be
90. If dividends are not paid in cash, out of funds then legally available
therefor, the Board of Directors of the Corporation shall declare and pay the
dividends in shares of Common Stock.

     Accrued dividends, whether or not declared, not paid on the Dividend
Payment Date therefor shall compound quarterly, at a rate per annum equal to 4%
per annum until the date of payment of such dividend. Each such dividend shall
be paid to the holders of record of shares of the Convertible Preferred Stock
as they appear on the stock books of the Corporation on such record date, not
more than 60 nor less than 10 days preceding the payment date thereof, as shall
be fixed by the Board of Directors or a duly authorized committee thereof.
Accumulated but unpaid dividends for any past quarterly dividend periods may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, not more than 60 nor less than
10 days preceding the payment date thereof, as may be fixed by the Board of
Directors or a duly authorized committee thereof. Dividends shall be paid in
cash or Common Stock as provided above.

     (2) So long as any shares of Convertible Preferred Stock are outstanding,
no dividends shall, for any period, be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Convertible Preferred Stock, and no such Preferred
Stock of any such series shall be redeemed, purchased or otherwise acquired by
the Corporation or any Subsidiary (as hereinafter defined) for any
consideration (except by conversion into or exchange for capital stock of the
Corporation ranking junior to the Convertible Preferred Stock as to dividends
and liquidation rights) unless full cumulative compound dividends have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment) on the Convertible Preferred
Stock for all Dividend Payment Periods terminating on or prior to the date of
payment of such dividends; provided, however, that the foregoing restriction on
redemption, purchase or acquisition of Preferred Stock shall be inapplicable to
the conversion of the Convertible Preferred Stock into Common Stock of the
Corporation (hereinafter the "Common Stock") pursuant to the terms hereof. When
dividends are not paid in full upon the shares of the


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Convertible Preferred Stock and such other Preferred Stock ranking on a parity
as to dividends with the Convertible Preferred Stock, all compound dividends
declared upon shares of the Convertible Preferred Stock and such other
Preferred Stock shall be declared pro rata so that the amount of compound
dividends declared per share on the Convertible Preferred Stock and such other
Preferred Stock shall in all cases bear to each other the same ratio that
dividends per share on the shares of the Convertible Preferred Stock and such
other Preferred Stock bear to each other. Holders of shares of the Convertible
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or securities, in excess of full cumulative compound dividends, as
herein provided, on the Convertible Preferred Stock. Other than as provided in
Paragraph (b)(1) above, no interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on the Convertible
Preferred Stock, whether or not accumulated and unpaid. "Subsidiary" means any
corporation or other entity of which the Corporation shall at the time own
directly or indirectly through one or more Subsidiaries at least a majority of
the outstanding capital stock (or other equity interest) entitled to vote
generally for the election of directors.

     (3) So long as any shares of the Convertible Preferred Stock are
outstanding, unless all payments for the redemption or retirement pursuant to
Paragraph (c) below have been made or set aside for payment and full cumulative
compound dividends on the Convertible Preferred Stock have been paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment), no dividends (other than a dividend in the form of shares of Common
Stock or of shares of any other capital stock of the Corporation ranking junior
to the Convertible Preferred Stock as to dividends and liquidation rights) or
distribution shall be declared or paid or set apart for payment or other
distribution declared or made upon the Common Stock or upon any other capital
stock of the Corporation ranking junior to or on a parity with the Convertible
Preferred Stock as to dividends or liquidation rights, and no Common Stock or
any other stock of the Corporation ranking junior to or on a parity with the
Convertible Preferred Stock as to dividends or liquidation rights shall be
redeemed, purchased or otherwise acquired for any consideration by the
Corporation or any Subsidiary (except by conversion into or exchange for
capital stock of the Corporation ranking junior to the Convertible Preferred
Stock as to dividends and liquidation rights). The foregoing restriction on
redemption, purchase or acquisition of Common Stock or any other capital stock
of the Corporation ranking junior to or on a parity with the Convertible
Preferred Stock shall be inapplicable to (a) any payments in lieu of issuance
of fractional shares thereof whether upon any merger, conversion, stock
dividend or otherwise; (b) the acquisition of any shares of Common Stock or
other capital stock of the Corporation in connection with the settlement of
disputes arising out of acquisitions by the Corporation pursuant to which such
stock was issued; (c) the rescission of any acquisition or disposition by the
Corporation pursuant to which such stock was issued; (d) the purchase or
redemption of any warrants to purchase capital stock of the Corporation; or (e)
the conversion of shares of Convertible Preferred Stock into Common Stock.

     (4) Notwithstanding the foregoing provisions of this paragraph (b),
dividends on the Convertible Preferred Stock may not be paid if (i) the
Corporation is insolvent or would be rendered insolvent thereby or (ii) such
payment would impair the Corporation's capital.


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(c) Redemption.

     (1) Optional Redemption. The shares of the Convertible Preferred Stock
will be redeemable at any time on or after February 15, 2004 at the option of
the Corporation (hereinafter an "Optional Redemption Date"), either in whole at
any time, or in part from time to time, at the stated value thereof, together
with accrued and unpaid compound dividends on the shares of Convertible
Preferred Stock redeemed.

     (2) Notice of any redemption of shares of the Convertible Preferred Stock,
specifying the time and place of redemption and the date and time at which the
shares shall cease to be convertible, shall be mailed to each holder of record
of the shares to be redeemed, at his address of record, not more than 60 days
nor less than 30 days prior to the Optional Redemption Date; if less than all
the shares owned by such stockholder are then to be redeemed, the notice shall
also specify the number of shares thereof which are to be redeemed and the
numbers of the certificates representing such shares.

     (3) Unless default be made in the payment in full of the redemption price
and any accrued and unpaid compound dividends, (a) the shares of Convertible
Preferred Stock will cease to be convertible into shares of Common Stock at the
close of business on the Optional Redemption Date (unless such day is not a
Business Day, in which event the shares of Convertible Preferred Stock shall
cease to be convertible on the next succeeding business day); (b) dividends on
the shares called for redemption shall cease to accrue on the Optional
Redemption Date; (c) all rights of the holders of such shares as stockholders
of the Corporation by reason of the ownership of such shares shall cease on the
Optional Redemption Date, except the right to receive the amount payable upon
redemption of such shares, on presentation and surrender of the respective
certificates representing such shares; and (d) such shares shall not after the
Optional Redemption Date be deemed to be outstanding. In case less than all the
shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the holder
thereof.

     (4) Any shares of the Convertible Preferred Stock which shall at any time
have been redeemed shall, after such redemption, have the status of authorized
but unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of Directors.

     (5) If less than all of the outstanding shares of the Convertible
Preferred Stock are to be redeemed, the Corporation shall select the shares to
be redeemed, if the shares of the Convertible Preferred Stock are listed on a
national securities exchange, in accordance with the rules of such exchange,
or, if the shares of Convertible Preferred Stock are not so listed, as nearly
pro rata as practicable or by lot, at the discretion of the Board of Directors.
The Corporation shall make the selection from the shares outstanding, not
previously called for redemption.

     (6) Notwithstanding the foregoing provisions of this Paragraph (c), the
shares of the Convertible Preferred Stock may not be redeemed in whole or in
part if (i) the


                                       4
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Corporation is insolvent or would be rendered insolvent thereby or (ii) such
redemption would impair the Corporation's capital.

     (d) Voting.

     (1) Unless the vote of the holders of a greater number of shares shall
then be required by law, (i) the approval of holders of at least two-thirds of
the votes entitled to be cast by the holders of all of the outstanding shares
of the Convertible Preferred Stock at the time outstanding, voting as a single
class (and in such instances each share of Convertible Preferred Stock shall be
entitled to one vote per share), given in person or by proxy, by vote at a
meeting called for that purpose, shall be necessary for authorizing, effecting
or validating any amendment, alteration or repeal of any of the provisions of
the Certificate of Incorporation or By-laws of the Corporation which would
materially adversely affect the preferences, rights or powers of the
Convertible Preferred Stock; provided, however, that any amendment of the
provisions of the Certificate of Incorporation which would authorize or create
or increase the authorized amount of any capital stock ranking senior to, on a
parity with or junior to the Convertible Preferred Stock as to dividends and
liquidation rights shall not be deemed to adversely affect the preferences,
rights or powers of the Convertible Preferred Stock.

     (2) If the equivalent of four quarterly dividends payable on the
Convertible Preferred Stock are in arrears (whether or not consecutive)
(hereinafter a "Default"), the holders of all outstanding shares of Convertible
Preferred Stock voting together with the holders of all other series of the
Preferred Stock then having a similar special voting right because of the
existence of a similar condition with respect thereto (the Convertible
Preferred Stock and all such other series are hereinafter referred to as the
"Defaulted Series") will be entitled, as a single class, to elect to the Board
of Directors two directors, and in such instances will be entitled to one vote
per share. Such voting rights shall remain vested until such time as all
dividends in arrears shall have been paid in full (or declared and a sum
sufficient for the payment thereof set aside for payment). Each director
elected by the holders of the Defaulted Series (hereinafter a "Preferred
Director") shall serve, in accordance with the By-laws of the Corporation, as
such a director until the payment in full of the dividend arrearage. Any
Preferred Director may be removed by, and shall not be removed except by, the
vote of the holders of record of a majority of the shares of the Defaulted
Series, voting as a single class at a meeting of the stockholders, or of the
holders of the Defaulted Series, called for the purpose. So long as all
dividends on the Defaulted Series in arrears have not been paid or declared and
set apart for payment, (a) any vacancy in the office of a Preferred Director
may be filled (except as provided in the following clause (b)) by an instrument
in writing signed by a majority of the remaining Preferred Directors and filed
with the Corporation, and (b) in the case of the removal of any Preferred
Director, the vacancy may be filled by the majority vote of the holders of the
Defaulted Series, voting as a separate class. Each director elected as
aforesaid by a majority of the remaining Preferred Directors shall be deemed,
for all purposes hereof, to be a Preferred Director.

     Such special voting rights may be initially exercised either at a special
meeting of holders of the Defaulted Series or at any annual stockholders'
meeting. A special meeting for the exercise of such rights shall be called by
the Secretary of the Corporation as promptly as

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possible, and in any event within 10 days after receipt of a written request
signed by the holders of record of at least 10% of the outstanding shares of
the Defaulted Series addressed to him at the principal office of the
Corporation, in each case by sending written notice of such meeting to each
Defaulted Series stockholder at his registered address. Such notice shall state
the purpose of the meeting and the place and time for the meeting.

     A meeting for the removal of a director elected by the holders of the
Defaulted Series and the filling of the vacancy created thereby shall be called
by the Secretary of the Corporation within 10 days after receipt of a written
request signed by the holders of record of at least 10% of the outstanding
shares of the Defaulted Series by sending, in each case, written notice of such
meeting to each holder of the Defaulted Series at his registered address. Such
meeting shall be held at the earliest practicable date thereafter. Such notice
shall state the purpose of the meeting and the place and time for the meeting.

     If any meeting of holders of the Defaulted Series required to be called
shall not have been called within 10 days after personal service of a written
request therefor upon the Secretary of the Corporation, or within 15 days after
mailing the same within the United States of America by registered mail
addressed to the Secretary of the Corporation at its principal office, then the
holders of record of at least 10% of the outstanding shares of the Defaulted
Series may designate in writing one of their number to give notice of such
meeting at the expense of the Corporation and such meeting may be called by
such person so designated upon the notice required for annual meetings of
stockholders. Any holder of the Defaulted Series so designated shall have
access to the stock books of the Corporation relating to the Defaulted Series
for the purpose of causing meetings of holders of the Defaulted Series to be
called pursuant to these provisions.

     At any meeting of the holders of the Defaulted Series to vote as a class
for the election or removal of directors, the presence in person or by proxy of
the holders of one-fifth of the outstanding shares of the Defaulted Series
shall be required to constitute a quorum; in the absence of a quorum, a
majority of the holders present in person or by proxy shall have the power to
adjourn the meeting from time to time without notice, other than announcement
at the meeting, until the quorum shall be present.

     (e) Liquidation Rights.

     (1) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of shares of the Convertible Preferred Stock shall be entitled to
receive and to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall be
made on the Common Stock or any other class of capital stock ranking junior to
the Convertible Preferred Stock upon liquidation, the amount of $100.00 per
share, plus a sum equal to all compound dividends (whether or not declared) on
such shares accrued and unpaid thereon to the date of final distribution.

     (2) None of the sale of all or substantially all the property or business
of the Corporation, the merger or consolidation of the Corporation into or with
any other Corporation or the merger or consolidation of any other Corporation
into or with the Corporation

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or any dissolution, liquidation, winding up or reorganization of the Corporation
immediately followed, in each case, by reincorporation of another corporation
succeeding to the business and obligations of the Corporation, shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, for
the purposes of this Paragraph (e).

     (3) After the payment to the holders of shares of the Convertible
Preferred Stock of the full preferential amounts provided for in this Paragraph
(e), the holders of the Convertible Preferred Stock as such shall have no right
or claim to any of the remaining assets of the Corporation.

     (4) In the event the assets of the Corporation available for distribution
to the holders of shares of the Convertible Preferred Stock upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Paragraph (e)(1) above, no such distribution
shall be made on account of any shares of any other class or series of capital
stock of the Corporation ranking on a parity with the shares of the Convertible
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
the Convertible Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.

     (f) Ranking.

     For purposes of this resolution, any capital stock of any class or series
of the Corporation shall be deemed to rank:

     (1) prior to shares of the Convertible Preferred Stock, either as to
dividends or upon liquidation, if the holders of such stock shall be entitled
to the receipt of dividends, or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in preference
or priority to the holders of shares of the Convertible Preferred Stock;

     (2) on a parity with shares of the Convertible Preferred Stock, either as
to dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share, be different from
those of the Convertible Preferred Stock, if the holders of such capital stock
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such
capital stock and the holders of shares of the Convertible Preferred Stock; and


     (3) junior to shares of the Convertible Preferred Stock, either as to
dividends or upon liquidation, if such capital stock shall be Common Stock or
if the holders of shares of the Convertible Preferred Stock shall be entitled
to receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in preference
or priority to the holders of shares of such class or series.

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     (g) Conversion

     (1) Each share of the Convertible Preferred Stock shall be convertible at
any time at the option of the holder thereof into fully paid and non-assessable
shares of Common Stock at the conversion price, determined as hereinafter
provided, in effect at the time of conversion. The price at which shares of the
Common Stock shall be delivered upon conversion of shares of the Convertible
Preferred Stock (hereinafter the "Conversion Price") shall be initially $14.00
per share. The number of shares of Common Stock issuable upon conversion of
shares of the Convertible Preferred Stock is determined by dividing the stated
value of a share of Convertible Preferred Stock plus accrued and unpaid
compound dividends by the Conversion Price in effect on the conversion date and
rounding the result to the nearest 1/100th of a share. The conversion price
shall be subject to adjustment as provided below. If a holder converts more
than one share at the same time, the number of shares issuable upon the
conversion shall be based upon the total number of shares converted.

     (2) In order to convert shares of the Convertible Preferred Stock into
shares of Common Stock, the holder thereof shall surrender at the office of the
Corporation or, if appointed by the Corporation, any transfer agent for the
Convertible Preferred Stock the certificate or certificates therefor, duly
endorsed to the Corporation or in blank, and give written notice to the
Corporation at said office that he or she elects to convert such shares. Shares
of the Convertible Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the date of surrender of such
shares for conversion in accordance with the foregoing provisions (hereinafter
the "Conversion Date"), the person or persons entitled to receive shares of the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of the Common Stock at such time
and the shares of Convertible Preferred Stock so converted shall not be deemed
to be retired, but shall be held as treasury shares. As promptly as practicable
after the Conversion Date, the Corporation shall issue and deliver at said
office the certificate or certificates for the number of shares (including
fractional shares) of the Common Stock issuable upon such conversion, as
hereinafter provided, to the person or persons entitled to receive the same or
to the nominee or nominees of such person or persons.

     (3) In order to prevent dilution of the rights hereunder, the Conversion
Price will be subject to adjustment from time to time as provided in this
Paragraph (g)(3):

     (A) Dividends and Distributions. If the Corporation shall declare or pay
to the holders of the Common Stock a dividend or other distribution payable in
shares of Common Stock or any other security convertible into or exchangeable
for shares of Common Stock, the holder of any Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock or other securities convertible into or exchangeable
for shares of Common Stock, as applicable, which such holder would have owned
or been entitled to receive after the declaration and payment of such dividend
or other distribution as if the Convertible Preferred Stock had been converted
immediately prior to the record date for the determination of stockholders
entitled to receive such dividend or other distribution. The adjustment
described in this Paragraph (g)(3)(A) shall become effective immediately after
such record date.

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     (B) Stock Splits and Combinations. If the Corporation shall subdivide (by
means of any stock split, stock dividend, recapitalization or otherwise) the
outstanding shares of Common Stock into a greater number of shares of Common
Stock, or combine (by means of any combination, reverse stock split or
otherwise) the outstanding shares of Common Stock into a lesser number of
shares, or issue by reclassification of shares of Common Stock any shares of
the Corporation, the Conversion Price shall be adjusted so that the holder
shall receive the number of shares of Common Stock which the holder would have
owned or been entitled to receive after the happening of any and each of the
events described above if the Convertible Preferred Stock had been converted
immediately prior to the happening of each such event on the day upon which
such subdivision or combination, as the case may be, becomes effective. The
adjustment described in this Paragraph (g)(3)(B) shall become effective
immediately after the effective date of such subdivision, combination or
reclassification.

     (C) Reclassifications, Consolidations, Mergers, Sales, Etc. If any of the
following shall occur, namely: (i) any reorganization, reclassification or
change of Common Stock issuable upon conversion of any Convertible Preferred
Stock; (ii) any consolidation or merger to which the Corporation is a party
other than a merger in which the Corporation is the surviving entity and which
does not result in any reclassification of, or change (other than a change in
name or as a result of a subdivision or combination) in, Common Stock; or (iii)
any sale or conveyance of all or substantially all of the assets of the
Corporation as an entirety, then the Corporation, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reorganization, reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver to the holders an undertaking providing that
the holders shall have the right, immediately following such reorganization,
reclassification, change, consolidation, merger, sale or conveyance, to convert
the Convertible Preferred Stocks into the kind and amount of securities and
property (including cash) receivable upon such reorganization,
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of the
Convertible Preferred Stocks immediately prior to such reorganization,
reclassification, change, consolidation, merger, sale or conveyance. If, in the
case of any such consolidation, merger, sale or conveyance, of the securities
and property (including cash) receivable thereupon by a security holder include
securities and property of a corporation other than the successor or purchasing
entity, as the case may be, in such consolidation, merger, sale or conveyance,
then such agreement shall also be executed by such other entity and shall
contain such additional provisions to protect the conversion rights of the
holders. The provisions of this Paragraph (g)(3) shall similarly apply to
successive consolidations, mergers, sales or conveyances.

     (D) Extraordinary Dividends and Distributions. If the Corporation at any
time or from time to time after the date hereof shall declare, order, pay or
make a distribution (including, without limitation, any distribution of other
or additional stock or other securities or property or options by way of
dividend or spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than (i) a distribution payable in
Additional Shares of Common Stock, (ii) a regularly scheduled cash
distribution, or (iii) for which an adjustment is made pursuant to Paragraph
(g)(3)(A), (B) or (C) above, the Conversion Price in effect immediately prior
to the close of business on the record date fixed for the determination of
holders of any class of securities entitled to receive such distribution shall
be

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reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Conversion Price by a fraction

     (i) the numerator of which shall be the Market Price in effect on such
record date or, if the Common Stock trades on an ex-distribution basis, on the
date prior to the commencement of ex-distribution trading, less the Fair Value
of such distribution applicable to one share of Common Stock, and

     (ii) the denominator of which shall be such Market Price.

     (E) Adjustment upon Issuance of Options and Convertible Securities. If the
Corporation in any manner issues, grants, sells or assumes any rights or
options to subscribe for or to purchase one or more classes of its Common Stock
(other than pursuant to an Approved Stock Plan or upon conversion of any
Convertible Preferred Stock) or any stock or other securities convertible into
or exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") and the price per share for which Common Stock
is issuable upon the exercise of such Options (together with the amount
received by the Company for such Options on a per share basis) or upon
conversion or exchange of such Convertible Securities (together with any
additional amount to be received by the Company upon such conversion or
exchange on a per share basis) (the "New Option Issuance Price") is less than
the Conversion Price which would have been in effect immediately prior to such
issuance, grant, sale or assumption, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard to
any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued, upon the expiration or termination of any
unexercised Option, the Conversion Price shall not be readjusted, but the
Additional Shares of Common Stock deemed issued as the result of the original
issue of such Option shall not be deemed issued for the purposes of any
subsequent adjustment of the Conversion Price. No further adjustment of the
Conversion Price shall be made upon the actual issuance of such Common Stock or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of such
Convertible Securities.

     (F) Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable for any
class of Common Stock change at any time, the Conversion Price at the time of
such change shall be readjusted, effective on and after the date of such
change, to the Conversion Price which would have been in effect on the date of
such change had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that no adjustment shall be made if such adjustment would result
in an increase of the Conversion Price then in effect.

                                      10
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     (G) Issuance of Additional Shares of Common Stock. In case the Corporation
at any time or from time to time after the date hereof shall issue or sell
Additional Shares of Common Stock, including Additional Shares of Common Stock
deemed to be issued without consideration or for a consideration per share less
than the Conversion Price which would have been in effect immediately prior to
such issuance or sale, then, and in each such case, the Conversion Price shall
be reduced, to a price determined by multiplying such Conversion Price by a
fraction

               (i) the numerator of which shall be the sum of (x) the number of
          shares of Common Stock outstanding immediately prior to such issuance
          or sale and (y) the number of shares of Common Stock which the
          aggregate consideration received by the Corporation for the total
          number of such Additional Shares of Common Stock so issued or sold
          would purchase at the Conversion Price which would have been in
          effect immediately prior to such issuance or sale, and

               (ii) the denominator of which shall be the number of shares of
          Common Stock outstanding immediately after such issuance or sale,
          provided that, for the purposes of this Paragraph (g)(3)(G), (x)
          immediately after any Additional Shares of Common Stock are deemed to
          have been issued pursuant to Paragraph (g)(3), such Additional Shares
          of Common Stock shall be deemed to be outstanding, and (y) treasury
          shares of Common Stock shall not be deemed to be outstanding.

     (H) Abandoned Dividend or Distribution. If the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution (which results in an adjustment to the Conversion Price
under the terms of this Agreement) and shall, thereafter, and before such
distribution is paid or delivered to members entitled thereto, legally abandon
its plan to pay or deliver such dividend or distribution, then any adjustment
made to the Conversion Price and number of shares of Common Stock into which
any Convertible Preferred Stock is convertible by reason of the taking of such
record shall be reversed, and any subsequent adjustments, based thereon, shall
be recomputed.

     (I) Other Dilutive Events. In case any event shall occur as to which the
provisions of this Paragraph (g)(3) are not strictly applicable or if strictly
applicable would not fairly protect the conversion rights of the holders in
accordance with the essential intent and principles of this Paragraph (g)(3),
then, in each such case, the Board of Directors of the Corporation shall make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to preserve, without dilution, the
conversion rights represented herein.

     (J) Computation of Consideration. For the purposes of this Paragraph
(g)(3),

               (i) the consideration for the issue or sale of any Additional
          Shares of Common Stock shall, irrespective of the accounting
          treatment of such consideration,


                                      11
<PAGE>

                    (x) insofar as it consists of cash, be computed at the net
               amount of cash received by the Corporation, without deducting
               any expenses paid or incurred by the Corporation or any
               commissions or compensations paid or concessions or discounts
               allowed to underwriters, dealers or others performing similar
               services in connection with such issuance or sale,

                    (y) insofar as it consists of property (including
               securities) other than cash, be computed at the Fair Value
               thereof at the time of such issuance or sale, and

                    (z) in case Additional Shares of Common Stock are issued or
               sold together with other stock or securities or other assets of
               the Corporation for a consideration which covers both, be the
               portion of such consideration so received, computed as provided
               in clauses (x) and (y) above, allocable to such Additional
               Shares of Common Stock, such allocation to be determined in the
               same manner that the Fair Value of property not consisting of
               cash or securities is to be determined as provided in the
               definition of "Fair Value" herein; and

                           (ii) Additional Shares of Common Stock deemed to
         have been issued pursuant to this Paragraph (g)(3), relating to stock
         dividends, stock splits, etc. or to employee benefit plans, employee
         compensation or incentives of the Corporation or any Affiliate thereof
         or otherwise to employees of the Corporation or any Affiliate thereof
         (except in a public offering open to the public generally on the same
         terms as such employees) shall be deemed to have been issued for no
         consideration, except to the extent the Corporation receives cash or
         property therefor.

     (K) No Dilution or Impairment. The Corporation shall not, by amendment of
its Certificate of Incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Paragraph (g), but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holders against dilution or other impairment. Without limiting
the generality of the foregoing, the Corporation (i) shall take all such action
as may be necessary or appropriate in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Common Stock, free
from all taxes, liens, security interests, encumbrances, preemptive rights and
charges on the conversion of the Convertible Preferred Stock from time to time
outstanding, (ii) shall not take any action which results in any adjustment of
the Conversion Price if the total number of shares of Common Stock issuable
after the action upon the conversion of the Convertible Preferred Stock would
exceed the total number of shares of Common Stock then authorized by the
Corporation's Certificate of Incorporation and available for the purpose of
issue upon such exercise, (iii) shall not permit the par value of any shares of
stock receivable upon the conversion of the Convertible Preferred Stock to
exceed the amount payable therefor upon such exercise, and (iv) shall not issue
any capital stock of any class which, as to the holders, is preferred as to
dividends or as to the distribution of assets upon voluntary or involuntary
dissolution, liquidation or winding-up, unless the rights of the holders
thereof shall be limited to a fixed sum or percentage of par value or a

                                      12

<PAGE>

sum determined by reference to a formula based on a published index of interest
rates, an interest rate publicly announced by a financial institution or a
similar indicator of interest rates in respect of participation in dividends
and to a fixed sum or percentage of par value in any such distribution of
assets.

     (L) Notice of Corporate Action.

     (a) Immediately upon any adjustment pursuant to Paragraph (g)(3) of the
Conversion Price, the Corporation will give written notice thereof to the
holders, setting forth in reasonable detail and certifying the calculation of
such adjustment.

     (b) The Corporation will give written notice to the holders at least
twenty (20) days prior to the date on which the Corporation closes its books or
takes a record (i) with respect to any dividend or distribution upon the Common
Stock, or (ii) for determining rights to vote with respect to any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation or any consolidation or merger involving
the Corporation and any other Person or any transfer of all or substantially
all of the assets of the Corporation to any other Person.

     (c) The Corporation will also give written notice to the holders at least
twenty (20) days prior to the date on which any voluntary or involuntary
dissolution, liquidation or winding-up will take place.

     (M) Further Adjustments. Successive adjustments in the Conversion Price
shall be made whenever any event specified in Paragraph (g)(3) shall occur. All
calculations under Paragraph (g)(3) shall be made to the nearest cent. No
adjustment in the Conversion Price shall be made if the amount of such
adjustment would be less than $0.01, but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such amount and
any other amount or amounts so carried forward, shall aggregate $0.01 or more.

     "Additional Shares of Common Stock" means all shares (including treasury
shares) of Common Stock issued (or, pursuant hereto, deemed to be issued) or
sold by the Corporation after the date hereof, whether or not subsequently
reacquired or retired by the Corporation other than (a) shares of Common Stock
issued pursuant to Approved Stock Plans and (b) shares issued upon exercise of
options and warrants outstanding as of the Sale Closing.

     "Approved Stock Plan" means (i) any contract, plan, arrangement or
agreement which has been or shall be approved by the Board of Directors and
stockholders of the Corporation, pursuant to which the Corporation's securities
may be issued to any employee, officer, director, consultant or other service
provider of the Corporation or any of its Subsidiaries, and (ii) any such
contract, plan, arrangement, or agreement existing as of the Sale Closing and
any such contract, plan, arrangement or agreement assumed by the Corporation
after the Sale Closing pursuant to an acquisition or business combination, in
either case whether or not approved by stockholders of the Corporation.

                                      13
<PAGE>


     "Business Day" means any day, other a Saturday, Sunday or legal holiday,
on which banks in Greenville, South Carolina, Charlotte, North Carolina and New
York, New York are open for the conduct of their domestic or international
commercial banking business.

     "Fair Value" means, on any date (a) in the case of cash, the dollar amount
thereof, (b) in the case of a security, the Market Price on such date, and (c)
in all other cases, the fair value thereof (as of a date not more than 20 days
prior to the date as of which the determination is to be made) determined in
good faith by the Board of Directors of the Corporation.

     "Market Price" means, on any date specified herein, the amount per share
of the Common Stock equal to (a) the last reported sale price of such Common
Stock, regular way, on such date or, in case no such sale takes place on such
date, the average of the closing bid and asked prices thereof, regular way, on
such date, in either case as officially reported on the principal national
securities exchange on which such Common Stock is then listed or admitted for
trading, (b) if such Common Stock is not then listed or admitted for trading on
any national securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common Stock on
such date, or in case no such sale takes place on such date, or if the Common
Stock is not so designated, the average of the closing bid and asked prices of
the Common Stock on such date as shown by the NASD automated quotations system,
or (c) if such Common Stock is not then listed or admitted for trading on any
national exchange or quoted in the over-the-counter market, the fair value
thereof (as of a date which is within 20 days of the date as of which the
determination is to be made) determined in good faith by the Board of Directors
of the Corporation.

     (h) No Other Rights.

     The shares of the Convertible Preferred Stock shall not have any relative,
participating, optional or other special rights and powers other than as set
forth above in this Certificate of Designation and in the Certificate of
Incorporation.

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<PAGE>


     IN WITNESS WHEREOF, INSIGNIA FINANCIAL GROUP, INC. has caused its corporate
seal to be hereunto affixed and this Certificate of Designation to be signed by
its Executive Vice President, and attested by its Assistant Secretary, this 9th
day of February 2000.

                              INSIGNIA FINANCIAL GROUP, INC.

                              By: /s/ Adam B. Gilbert
                                 ------------------------------------
                                      Adam B. Gilbert
                                      Executive Vice President
[Corporate Seal]

ATTEST:

/s/ Kathleen Gallagher
-----------------------------
    Kathleen Gallagher
    Assistant Secretary