Document:

<PAGE>

         AMENDMENT No. 2, dated as of August 30, 1999, to WARRANT AGREEMENT
dated as of September 15, 1998, as previously amended by Amendment No. 1 dated
as of December 18, 1998 (the "Original Agreement"), between Insignia Financial
Group, Inc., a Delaware corporation formerly known as Insignia/ESG Holdings,
Inc. (the "Corporation"), and APTS V, L.L.C., a Delaware limited liability
company ("APTS"), providing for the issuance of warrants to purchase 51,944
shares of common stock, par value $.01 per share, of the Corporation.

         WHEREAS, the Corporation and APTS desire to extend the Expiration Date
(as defined in the Original Agreement) of the Warrants provided for in the
Original Agreement;

         NOW, THEREFORE, the parties hereto agree as follows:

         1. Terms used herein shall have the meanings set forth in the Original
Agreement, unless otherwise defined herein.

         2. The Expiration Date of the Warrants is hereby extended from
September 1, 1999 to September 15, 1999.

         3. Except as set forth in this Amendment No. 2, the Original Agreement
is hereby ratified and conformed in all respects.

         4. Any Warrant Certificate evidencing Warrants need not be amended to
reflect the change in Expiration Date provided for herein in order to give full
effect to such change.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to the Original 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 FINANCIAL GROUP, INC.

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

                                 APTS V, L.L.C.
                                 By: APTS Partners, L.P., the managing member
                                 By: APTS GP Partner, L.P., its general partner
                                 By: APTS Acquisition Corporation, its general
                                       partner

                                 By: /s/ John R. S. Jacobsson
                                     -------------------------------------------
                                     Name:  John R. S. Jacobsson
                                     Title: Vice President<PAGE>

         AMENDMENT No. 3, dated as of September 15, 1999, to WARRANT AGREEMENT
dated as of September 15, 1998, as previously amended by Amendment No. 1 dated
as of December 18, 1998 and Amendment No. 2 dated as of August 30, 1999 (as
amended, the "Original Agreement") between Insignia Financial Group, Inc., a
Delaware corporation formerly known as Insignia/ESG Holdings, Inc. (the
"Corporation"), and APTS V, L.L.C., a Delaware limited liability company
("APTS"), providing for the issuance of warrants to purchase 51,944 shares of
common stock, par value $.01 per share, of the Corporation.

         WHEREAS, pursuant to that certain letter agreement dated the date
hereof, the Corporation and APTS desire to extend the Expiration Date (as
defined in the Original Agreement) of the Warrants provided for in the Original
Agreement;

         NOW, THEREFORE, the parties hereto agree as follows:

         1. Terms used herein shall have the meanings set forth in the Original
Agreement, unless otherwise defined herein.

         2. The Expiration Date of the Warrants is hereby extended from
September 15, 1999 to August 1, 2000.

         3. Except as set forth in this Amendment No. 3, the Original Agreement
is hereby ratified and confirmed in all respects.

         4. Any Warrant Certificate evidencing Warrants need not be amended to
reflect the change in Expiration Date provided for herein in order to give full
effect to such change.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
to the Original Agreement to be duly executed and delivered by their proper and
duly authorized officers, as of the date and year first above written.

                                 INSIGNIA FINANCIAL GROUP, INC.

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

                                 APTS V, L.L.C.
                                 By: APTS Partners, L.P., the managing member
                                 By: APTS GP Partners, L.P., its general partner
                                 By: APTS Acquisition Corporation, its general
                                       partner

                                 By: /s/ John R. S. Jacobsson
                                     -------------------------------------------
                                     Name:  John R. S. Jacobsson
                                     Title: Vice President<PAGE>

                          STOCK SUBSCRIPTION AGREEMENT

                                      AMONG

                         INSIGNIA FINANCIAL GROUP, INC.

                                       and

                           THE PURCHASERS NAMED HEREIN

                          Dated as of February 9, 2000

<PAGE>

<TABLE>
<CAPTION>
                                Table of Contents
<S>       <C>                                                                                       <C>
                                                                                                      Page
                                                                                                      ----
ARTICLE I   DEFINITIONS.................................................................................1
   1.1.    Definitions..................................................................................1
   1.2.    Terms Generally..............................................................................7

ARTICLE II PURCHASE, SALE AND EXCHANGE OF SHARES........................................................7
   2.1.    Agreement to Purchase and Sell...............................................................7
   2.2.    Sale Closing.................................................................................7

ARTICLE III   REPRESENTATION AND WARRANTIES OF THE COMPANY..............................................8
   3.1.    Organization; Power; Qualification...........................................................8
   3.2.    Capitalization...............................................................................8
   3.3.    Subsidiaries.................................................................................9
   3.4.    Authorization................................................................................9
   3.5.    No Violation; Consents.......................................................................9
   3.6.    Compliance with Law; Governmental Approvals.................................................10
   3.7.    Litigation..................................................................................10
   3.8.    SEC Documents, Financial Statements.........................................................11
   3.9.    Debt and Contingent Obligations.............................................................12
   3.10.   Tax Returns and Payments....................................................................12
   3.11.   ERISA.......................................................................................12
   3.12.   Absence of Defaults.........................................................................13
   3.13.   Environmental Matters.......................................................................13
   3.14.   Material Contracts..........................................................................15
   3.15.   Titles to Properties........................................................................15
   3.16.   Insurance...................................................................................15
   3.17.   Employee Relations..........................................................................15
   3.18.   Material Disclosure.........................................................................15
   3.19.   No Broker...................................................................................16
   3.20.   Intellectual Property Matters...............................................................16
   3.21.   Minute Books................................................................................16
   3.22.   Liens.......................................................................................16
   3.23.   Government Regulation.......................................................................16
   3.24.   Financial Statements........................................................................16

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...........................................17
   4.1.   Organization; Authorization..................................................................17
   4.2.   No Violation; Consents.......................................................................17
   4.3.   Funds........................................................................................18
   4.4.   Status.......................................................................................18
   4.5.   Investment Representation....................................................................18
   4.6.   No Broker....................................................................................18
   4.7.   Litigation...................................................................................18

                                                    i
<PAGE>

ARTICLE V   COVENANTS OF THE COMPANY...................................................................19
   5.1.    Securities Compliance.......................................................................19

ARTICLE VI   ADDITIONAL AGREEMENTS OF THE PARTIES......................................................19
   6.1.    Restrictive Legend..........................................................................19

ARTICLE VII   CONDITIONS TO THE SALE CLOSING...........................................................20
   7.1.    Conditions to Obligations of the Purchasers.................................................20
   7.2.    Conditions to Obligations of the Company....................................................22

ARTICLE VIII   MISCELLANEOUS...........................................................................22
   8.1.    Survival of Representations, Warranties and Agreements......................................22
   8.2.    Notices.....................................................................................23
   8.3.    Complete Agreement..........................................................................23
   8.4.    Binding Notice of Agreement; No Third Party Beneficiary.....................................23
   8.5.    Modifications, Amendments and Waivers.......................................................24
   8.6.    Counterparts................................................................................24
   8.7.    Expenses....................................................................................24
   8.8.    Indemnification.............................................................................24
   8.9.    Nominee; Benefits...........................................................................26
   8.10.   Governing Law...............................................................................26
   8.11.   Headings....................................................................................26
   8.12.   Severability................................................................................26
   8.13.   Assignment..................................................................................26

EXHIBITS
--------
Exhibit A         Form of Certificate of Designation
Exhibit B         Form of Registration Rights Agreement
Exhibit C         Form of Opinion of Proskauer Rose LLP

SCHEDULES
---------
Schedule 2.2(b)   Wire Transfer Instructions
Schedule 3.1      Company and Subsidiaries
Schedule 3.2      Capitalization
Schedule 3.7      Litigation
Schedule 3.9      Debt and Contingent Obligations
Schedule 3.11     Employee Benefit Plans
Schedule 3.14     Material Contracts
</TABLE>

                                             ii
<PAGE>

                          STOCK SUBSCRIPTION AGREEMENT

     STOCK SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of February 9,
2000, by and among Insignia Financial Group, a Delaware corporation (the
"Company"), and the Purchasers specified on the signature pages to this
Agreement (the "Purchasers").

     WHEREAS, the Company desires to issue and sell 250,000 shares of Preferred
Stock (for an aggregate purchase price of $25,000,000); and

     WHEREAS, the Purchasers desire to subscribe for and purchase the securities
described above upon the terms and subject to the conditions specified herein
(the "Sale Transaction").

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:

     "Actual Knowledge" means information actually known to Andrew L. Farkas,
Chairman of the Board and Chief Executive Officer; James A. Aston, Chief
Financial Officer; Ronald Uretta, Chief Operating Officer and Treasurer; Adam B.
Gilbert, General Counsel and Secretary; or Stephen Siegel, President, or any
other individual hereafter holding the office of the Company currently held by
such individuals, in each case at the date of determination.

     "Affiliate" means, with respect to any Person, any other Person (other than
a Subsidiary of such first Person) which directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such first Person or any of its Subsidiaries.

     "Applicable Law" means in respect of any Person all provisions of
constitutions, statutes, laws, rules, treaties, regulations and orders of all
Governmental Authorities and all orders and decrees of all courts and
arbitrators applicable to such Person.

     "Blue Sky Laws" means the state securities and takeover laws.

     "Capital Lease" means, with respect to the Company and its Subsidiaries,
any lease of any property that is, in accordance with GAAP, classified and
accounted for as a capital lease on a Consolidated balance sheet of the Company
and its Subsidiaries.

<PAGE>

     "Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock or any and all
equivalent ownership interests in a Person (other than a corporation).

     "Certificate of Designation" means the Certificate of Designation of
Convertible Preferred Stock, attached hereto as Exhibit A, filed with the
Secretary of State of the State of Delaware on February 9, 2000.

     "Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.

     "Common Stock" means the common stock, par value $.01 per share, of the
Company.

     "Consolidated" means, when used with reference to financial statements or
financial statement items of the Company and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.

     "Contingent Obligation" means, with respect to any Person, without
duplication, any obligation, contingent or otherwise, of such Person pursuant to
which such Person has directly or indirectly guaranteed any Debt or other
material asserted payment obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect, contingent
or otherwise, of such first Person (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation (whether
arising by agreement to keep well, to purchase assets, goods, securities or
services or to take-or-pay) or (b) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term Contingent Obligation shall not include (i)
endorsements for collection or deposit in the ordinary course of business and
(ii) earn-out obligations (which are included in Debt).

     "Debt" means, with respect to the Company and its Subsidiaries at any date
and without duplication, the sum of the following calculated in accordance with
GAAP: (a) all Debt for Money Borrowed, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade payables
arising in the ordinary course of business not more than ninety (90) days past
due, (c) all Debt of any Person secured by a Lien on any asset of the Company
and its Restricted Subsidiaries, (d) all Contingent Obligations of any such
Person with respect to Debt, (e) the Company's reasonable estimate of the
aggregate liability of the Company and its Restricted Subsidiaries with respect
to all earn-out obligations and (f) all net obligations incurred by any such
Person pursuant to Hedging Agreements.

     "Debt for Money Borrowed" means, with respect to the Company and its
Restricted Subsidiaries at any date and without duplication, the sum of the
following calculated in accordance with GAAP: (a) all liabilities, obligations
and indebtedness for borrowed money, including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar instruments of any
Person, (b) all obligations of any Person as lessee under Capital Leases, (c)
all

                                  2
<PAGE>

Contingent Obligations of any such Person with respect to Debt for Money
Borrowed, and (d) all obligations, contingent or otherwise, of any such Person
relative to the face amount of letters of credit, whether or not drawn, and
banker's acceptances issued for the account of any such Person.

     "Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of the Company or
any ERISA Affiliate or (b) has at any time within the preceding six years been
maintained for the employees of the Company or any current or former ERISA
Affiliate.

     "Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. ss. 331 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300, et seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. ss. 651 et seq.), analogous state statutes, and the rules and
regulations promulgated under the foregoing as such statutes are amended or
modified from time to time.

     "ERISA" means the Employee Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended or modified from time to time.

     "ERISA Affiliate" means any Person which is a Restricted Subsidiary and
which, together with the Company, is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA. For purposes of the definition of "Termination Event," and the definition
of "Multiemployer Plan", however, the meaning of "ERISA Affiliate" shall be
determined by disregarding the phrase "which is a Restricted Subsidiary and" in
the immediately preceding sentence.

     "Financial Statements" means (a) the Consolidated balance sheet of the
Borrower and its Subsidiaries as at September 30, 1999 and the related
Consolidated statements of operations, stockholders' equity and cash flows for
the fiscal quarter ended on such date and for the period commencing at the end
of the previous Fiscal Year and ending with the end of such fiscal quarter and
(b) the Consolidated balance sheet of the Borrower and its Subsidiaries as at
December 31, 1998 and the related Consolidated statements of operations,
stockholders' equity and cash flows of the Borrower and its Subsidiaries for the
Fiscal Year ended on such date.

     "GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants or the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Company and its Subsidiaries

                                       3
<PAGE>

throughout the period indicated and consistent with the prior financial
practice of the Company, provided, however, that any accounting principle or
practice required to be changed by the American Institute of Certified Public
Accounts or the Financial Accounting Standards Board (or other appropriate board
or committee of either) in order to continue as a generally accepted accounting
principle or practice may be so changed.

     "Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

     "Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

     "Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law, (d) the discharge or emission or release of which
requires a permit or license under any Environmental Law or other Governmental
Approval, (e) which are deemed by a court of law or a Governmental Authority to
constitute a nuisance or a trespass or pose a health or safety hazard to persons
or neighboring properties, (f) which are materials consisting of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.

     "Hedging Agreement" means any agreement with respect to an interest rate
swap, collar, cap or floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Company under the Senior Credit
Agreement, and any confirming letter executed pursuant to such hedging
agreement, all as amended or modified.

     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.

     "Material Adverse Effect" means, with respect to the Company and its
Restricted Subsidiaries, a material adverse effect on the properties, business,
operations or condition (financial or otherwise) of such Persons on a
Consolidated basis taken as a whole or the ability of any such Person to perform
the payment or other material obligations under the Transaction

                                       4
<PAGE>

Documents to which it is a party or which would materially impair the
validity or enforceability of any of the Transaction Documents against any
Person party thereto, other than the Purchasers or their Affiliates.

     "Material Contract" means (a) any contract or other agreement, written or
oral, of the Company or any of its Restricted Subsidiaries involving monetary
liability of any such Person in an amount in excess of $1,000,000 per annum, or
(b) any other contract or agreement, written or oral, of the Company or any of
its Restricted Subsidiaries the failure to comply with which could reasonably be
expected to have a Material Adverse Effect.

     "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is making, or is
accruing an obligation to make, contributions within the preceding six years.

     "PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.

     "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Company or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the employees of the Company or any of their current ERISA Affiliates.

     "Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.

     "Preferred Stock" means the Convertible Preferred Stock of the Company, par
value $.01 per share, having a liquidation preference of $100.00 per share and
such other rights and preferences as are set forth in the Certificate of
Designation.

     "Purchase Price" has the meaning set forth in Section 2.1 hereof.

     "Registration Rights Agreement" means the Registration Rights Agreements to
be entered into on the date hereof between the Company and the Purchasers,
substantially in the form attached hereto as Exhibit B.

     "Registration Statement" means any registration statement of the Company
covering any shares of Common Stock to be registered pursuant to the terms of
the Registration Rights Agreement.

     "Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.

     "Sale Closing" has the meaning set forth in Section 2.2 hereof.

                                       5
<PAGE>

     "Sale Transaction" shall have the meaning set forth in the recitals hereto.

     "SEC" means the United States Securities and Exchange Commission.

     "SEC Documents" shall have the meaning set forth in Section 3.8 hereof.

     "Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.

     "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.

     "Senior Credit Agreement" means the Credit Agreement, dated as of October
22, 1998, as amended March 19, 1999 and July 21, 1999, by and among the
Borrower, the lenders party thereto and First Union National Bank, as
administrative agent, and Lehman Commercial Paper, Inc., as syndication agent,
and any and all agreements refinancing or refunding the Obligations (as defined
therein) and all amendments, renewals, extensions and modifications thereto,
including increases in amount.

     "Subsidiary" means, as to any Person, any corporation, partnership or other
entity of which more than fifty percent (50%) of the outstanding capital stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity is at the time, directly or indirectly, owned by such Person
(irrespective of whether, at such time, capital stock or other ownership
interest of any other class or classes shall have or might have voting power by
reason of the happening of any contingency). Unless otherwise qualified,
references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the
Company.

     "Termination Event" means: (a) a "Reportable Event" described in Section
4043 of ERISA for which notice has not been waived which results in a Material
Adverse Effect, or (b) the withdrawal of the Company or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA which results in a Material Adverse
Effect, or (c) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, any Pension Plan by the PBGC which results in a
Material Adverse Effect, or (d) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, or (e) the imposition
of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA which
results in a Material Adverse Effect, or (f) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA which results in a Material Adverse Effect, or
(g) any event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA which results in a
Material Adverse Effect.

     "Transaction Documents" means, collectively, this Agreement, the
Certificate of Designation and the Registration Rights Agreement, and each other
document and agreement

                                       6
<PAGE>

executed and delivered by the Company, its Subsidiaries or their counsel in
connection with this Agreement or otherwise referred to herein or contemplated
hereby.

     "Unrestricted Subsidiary" means any Subsidiary of the Company and of any
other Subsidiary whose Debt and Contingent Obligations are non-recourse to the
Company and its other Restricted Subsidiaries and which has been designated, in
writing, by the Company as such (without such designation having been rescinded
by the Company). As of the Sale Closing, the Unrestricted Subsidiaries are those
set forth as such on Schedule 3.1.

     1.2. Terms Generally. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

                                   ARTICLE II
                      PURCHASE, SALE AND EXCHANGE OF SHARES

     2.1. Agreement to Purchase and Sell. Upon the terms and subject to the
conditions hereinafter set forth, the Purchasers hereby, severally but not
jointly, subscribe for and agree to purchase from the Company, in the amount for
each Purchaser set forth below such Purchaser's name on the signature pages
hereto, and the Company agrees to issue and sell to the Purchasers in such
amounts, on the date hereof, an aggregate of 250,000 shares of Preferred Stock
(the "Preferred Stock") for an aggregate cash price (the "Purchase Price") equal
to $25,000,000.

     2.2. Sale Closing. (a) The closing of the purchase and sale of the
Preferred Stock pursuant to Section 2.1 hereof (the "Sale Closing") shall take
place at the time of the execution of this Agreement. The Sale Closing shall be
held at the offices of Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New
York, or at such other place as the parties hereto shall mutually agree.

                                       7
<PAGE>

     (b) At the Sale Closing, (i) the Company shall deliver to each Purchaser,
against payment of the Purchase Price therefor, one or more certificates for the
shares of Preferred Stock being purchased by such Purchaser, in definitive form
and registered in the name of such Purchaser or its nominee, which name shall be
designated in writing at least two (2) business days prior to the Sale Closing,
representing the Preferred Stock being purchased by it, (ii) the Purchasers
shall deliver to the Company against delivery of the certificate or certificates
representing the Preferred Stock, by wire transfer to the account set forth on
Schedule 2.2(b), the Purchase Price payable in immediately available funds, and
(iii) each party to this Agreement shall deliver to the other such other
documents, instruments and writings as may be required to be delivered in
accordance with this Agreement or as may be reasonably requested by such other
party.

                                   ARTICLE III

                  REPRESENTATION AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Purchasers as follows:

     3.1. Organization; Power; Qualification. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization, except
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect. The jurisdictions in which the Company and its
Subsidiaries are organized are described on Schedule 3.1.

     3.2. Capitalization. (a) Part I of Schedule 3.2 sets forth the number and
par value of the shares of Capital Stock that the Company as of the date hereof
is authorized to issue, has issued, has outstanding and has reserved for
issuance upon conversion of or as dividends on the Preferred Stock. All the
outstanding Common Stock as of the date hereof is fully paid and nonassessable.
All the outstanding Common Stock has been issued in full compliance with
applicable law. 1,502,600 shares of the Common Stock are held in the Company's
treasury. The Common Stock is not entitled to cumulative voting rights,
preemptive rights and antidilution rights, except as otherwise provided in this
Agreement. The Common Stock has the preferences, voting powers, qualifications,
and special or relative rights or privileges set forth in the Company's
Certificate of Incorporation. Except as provided in Part II of Schedule 3.2, the
Company has outstanding no option, warrant or other commitment to issue or to
acquire any shares of its Capital Stock, or any securities or obligations
convertible into or exchangeable for its Capital Stock, except as set forth in
the Certificate of Designation, nor, has it given any Person any right to
acquire from the Company or sell to the Company any shares of its Capital Stock.
Except as set forth on Schedule 3.2 and in the Registration Rights Agreement,
the Company has no obligation to register any of its presently outstanding
securities or any of its securities which may thereafter be issued under the
Securities Act.

                                       8
<PAGE>

     (b) Upon delivery of the certificate(s) representing the Preferred Stock,
and payment of the Purchase Price therefor, pursuant to the Sale Transaction in
accordance with the terms of this Agreement, the Company will transfer to the
Purchasers good and valid title to the Preferred Stock, which Preferred Stock
shall be (i) validly issued, fully paid and non-assessable, (ii) free from all
preemptive rights and taxes, liens and charges with respect to the issue thereof
and (iii) entitled to the rights and preferences set forth in the Certificate of
Designation. A sufficient number of shares of Common Stock necessary to provide
for the conversion of the Preferred Stock has been duly authorized and reserved
for issuance upon conversion of or as dividends on the Preferred Stock. Upon
conversion in accordance with the Certificate of Designation, such Common Stock
will be validly issued, fully paid and nonassessable and free from all
preemptive rights and taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded to a holder of
Common Stock.

     3.3. Subsidiaries. Each Subsidiary as of the Sale Closing is listed on
Schedule 3.1. All outstanding shares or other equity interests in such
Subsidiaries have been duly authorized and validly issued and, with respect to
capital stock, are fully paid and nonassessable.

     3.4. Authorization. The Company has full corporate power and authority to
execute and deliver this Agreement and the Registration Rights Agreement, to
execute and file the Certificate of Designation and to consummate the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof and to issue the Preferred Stock and the Common Stock issuable upon
conversion of or as dividends on the Preferred Stock in accordance with the
terms of the Certificate of Designation. The execution and delivery of this
Agreement and the Registration Rights Agreement, the execution and filing of the
Certificate of Designation and the issuance of the Preferred Stock and of the
Common Stock issuable upon conversion of or as dividends on the Preferred Stock
have been duly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to approve and
authorize the execution and delivery of this Agreement and the Registration
Rights Agreement, the execution and filing of the Certificate of Designation,
the issuance of the Preferred Stock and the Common Stock issuable upon
conversion of or as dividends on the Preferred Stock and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof. This Agreement and the Registration Rights Agreement have been duly
executed and delivered by the Company, the Certificate of Designation has been
duly executed and filed in accordance with the Delaware General Corporation Law
and, when issued in accordance with the terms hereof, the Preferred Stock will
be duly issued, and each of this Agreement, the Registration Rights Agreement
and the Certificate of Designation constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except to the extent limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity.

     3.5. No Violation; Consents. (a) Assuming the making or receipt of all
filings, notices, registrations, consents, approvals, permits and authorizations
described in the following paragraph and that the Purchasers' representations in
Article IV are true and correct, the execution and delivery of this Agreement
and the Registration Rights Agreement, the execution and filing of the
Certificate of Designation by the Company, the issuance of the Preferred Stock

                                       9
<PAGE>

and the Common Stock issuable upon conversion of or as dividends on the
Preferred Stock by the Company, the consummation of the transactions
contemplated hereby, by the Registration Rights Agreement or by the Certificate
of Designation, the compliance by the Company with any of the provisions hereof
or of the Registration Rights Agreement or the Certificate of Designation will
not (i) conflict with, violate or result in any breach of the Certificate of
Incorporation, by-laws or other charter documents of the Company, (ii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default or give rise to any right of termination, cancellation
or acceleration under, or result in the creation of any Lien on or against any
of the properties of the Company pursuant to any of the terms or conditions of
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which the Company is a party or by which any of them or any of
their properties or assets may be bound, or (iii) violate any statute, law,
rule, regulation, writ, injunction, judgment, order or decree of any
Governmental Authority, binding on the Company or any of their properties or
assets, excluding from the foregoing clauses (i) and (ii) conflicts, violations,
breaches, defaults, rights of termination, cancellation or acceleration, and
liens which, individually or in the aggregate, would not have a Material Adverse
Effect, would not prevent or materially delay consummation of the transactions
contemplated hereby and would not affect the validity of the issuance of the
Preferred Stock or of the Common Stock issuable upon conversion of or as
dividends on the Preferred Stock.

     (b) Except for (i) the filing of the Certificate of Designation in
accordance with the Delaware General Corporation Law, (ii) applicable
requirements, if any, under Blue Sky Laws, (iii) the filing of a Registration
Statement as set forth in the Registration Rights Agreement, and (iv) the
listing on the New York Stock Exchange of the Common Stock issuable upon
conversion of and as dividends on the Preferred Stock, no filing, consent,
approval, permit, authorization, notice, registration or other action of or with
any Governmental Authority, is required to be made or obtained by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and the Registration Rights Agreement
by the Company, the issuance of the Preferred Stock and the Common Stock
issuable upon conversion of or as dividends on the Preferred Stock by the
Company or the consummation by the Company of the transactions contemplated
hereby and thereby.

     3.6. Compliance with Law; Governmental Approvals. Each of the Company and
its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of its knowledge, threatened attack by direct or
collateral proceedings, except for such Governmental Approvals the absence of
which could not reasonably be expected to have a Material Adverse Effect and
(ii) is in compliance with each Governmental Approval applicable to it and in
compliance with all other Applicable Laws relating to it or any of its
respective properties, except in each case where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.

     3.7. Litigation. Except for matters existing as of the Sale Closing and set
forth either in the public filings of the Company with the Securities and
Exchange Commission made prior to the Sale Closing or on Schedule 3.7, there are
no actions, suits or proceedings pending nor, to the knowledge of the Company,
threatened against or in any other way relating adversely

                                       10
<PAGE>

to or affecting the Company or any Subsidiary thereof or any of their
respective properties in any court or before any arbitrator of any kind or
before or by any Governmental Authority which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect or that seek to
have, or are reasonably likely to have the effect of making illegal, materially
delaying or otherwise directly or indirectly prohibiting or materially
restraining or making materially more costly the Sale Transaction.

     3.8. SEC Documents, Financial Statements. (i) The Common Stock is
registered pursuant to Section 12(b) of the Securities Exchange Act and the
Company has filed all reports, schedules, forms, statements and other documents,
together with all exhibits, financial statements and schedules thereto required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act, including material filed pursuant to Section 13(a) or
15(d), (all of the foregoing, whether heretofore or hereafter filed with the
SEC, and the Registration Statement, when declared effective, being hereinafter
referred to as the "SEC Documents"). The Company has not provided to the
Purchasers any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and as of their respective dates,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of the date of delivery by the Purchasers of
the prospectus contained in the Registration Statement in connection with sales
of Common Stock by the Purchasers, such prospectus will comply in all material
respects with the requirements of the Securities Act and the rules and
regulations of the SEC promulgated thereunder, and other federal, state and
local laws, rules and regulations applicable to such prospectus. The financial
statements of the Company included (or incorporated by reference) in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).

     (ii) During the three years preceding the date hereof, the SEC has not
issued an order preventing or suspending the use of any prospectus relating to
the offering of any shares of Common Stock or instituted proceedings for that
purpose.

     3.9. Debt and Contingent Obligations. Schedule 3.9 is a complete and
correct listing of all Debt and Contingent Obligations of the Company and its
Subsidiaries as of the Sale

                                       11
<PAGE>

Closing in excess of $1,000,000. The Company and its Subsidiaries have
performed and are in material compliance with all of the terms of such Debt and
Contingent Obligations and all instruments and agreements relating thereto.

     3.10. Tax Returns and Payments. Each of the Company and its Subsidiaries
has duly filed or caused to be filed all material federal, state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all material federal, state, local and
other taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets which are due and payable (other than
taxes, assessments and governmental charges or levies which are being challenged
in good faith by the Company and are adequately reserved for in accordance with
GAAP). No Governmental Authority has asserted any Lien or other material claim
against the Company or any Subsidiary with respect to unpaid taxes which could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state, local and other taxes for all fiscal years and portions thereof
since the organization of the Company and its Subsidiaries are in the judgment
of the Company adequate, and the Company does not anticipate any additional
taxes or assessments for any of such years, the result of which could reasonably
be expected to have a Material Adverse Effect.

     3.11. ERISA.

    (i)   Neither the Company nor any ERISA Affiliate maintains or contributes
          to, or has any obligation under, any Employee Benefit Plans other than
          those identified on Schedule 3.11;

    (ii)  the Company and each ERISA Affiliate is in material compliance with
          all applicable provisions of ERISA and the regulations and published
          interpretations thereunder with respect to all Employee Benefit Plans
          except for any required amendments for which the remedial amendment
          period as defined in Section 401(b) of the Code has not yet expired.
          No material liability has been incurred by the Company or any ERISA
          Affiliate which remains unsatisfied for any taxes or penalties with
          respect to any Employee Benefit Plan or any Multiemployer Plan;

    (iii) No Pension Plan of the Company has been terminated, and to the
          knowledge of the Company no Pension Plan of any ERISA Affiliate has
          been terminated, nor has any accumulated funding deficiency (as
          defined in Section 412 of the Code) been incurred (without regard to
          any waiver granted under Section 412 of the Code), nor has any funding
          waiver from the Internal Revenue Service been received or requested
          with respect to any Pension Plan, nor has the Company or any ERISA
          Affiliate failed to make any contributions or to pay any amounts due
          and owing as required by Section 412 of the Code, Section 302 of ERISA
          or the terms of any Pension Plan prior to the due dates of such
          contributions under

                                       12
<PAGE>

          Section 412 of the Code or Section 302 of ERISA, nor has there been
          any event requiring any disclosure under Section 4041(c)(3)(C) or
          4063(a) of ERISA with respect to any Pension Plan, in each case
          which could reasonably be expected to result in a Material
          Adverse Effect;

    (iv)  Neither the Company nor any ERISA Affiliate has: (A) engaged in a
          nonexempt prohibited transaction described in Section 406 of the ERISA
          or Section 4975 of the Code, (B) incurred any liability to the PBGC
          which remains outstanding other than the payment of premiums and there
          are no premium payments which are due and unpaid, (C) failed to make a
          required contribution or payment to a Multiemployer Plan, or (D)
          failed to make a required installment or other required payment under
          Section 412 of the Code;

    (v)   No Termination Event has occurred or, to the knowledge of the Company,
          is reasonably expected to occur; and

    (vi)  No proceeding, claim, lawsuit and/or investigation (other than routine
          claims for benefits in the ordinary course) is existing or, to the
          best knowledge of the Company after due inquiry, threatened concerning
          or involving any (A) employee welfare benefit plan (as defined in
          Section 3(1) of ERISA) currently maintained or contributed to by the
          Company or any ERISA Affiliate or (B) Pension Plan.

     3.12. Absence of Defaults. No event has occurred or is continuing which
constitutes, or which with the passage of time or giving of notice or both would
constitute, a default or event of default by the Company or any Subsidiary
thereof under any Material Contract or judgment, decree or order to which the
Company or its Subsidiaries is a party or by which the Company or its
Subsidiaries or any of their respective properties may be bound, which could
reasonably be expected to have a Material Adverse Effect or which would require
the Company or any of its Subsidiaries to make any payment thereunder in excess
of $1,000,000 prior to the scheduled maturity date therefor.

     3.13. Environmental Matters.

    (i)   To the Company's Actual Knowledge, the properties owned or managed by
          the Company and its Subsidiaries do not contain, and to their Actual
          Knowledge have not previously contained, any Hazardous Materials in
          amounts or concentrations which (A) constitute or constituted a
          violation of, or (B) could give rise to liability under, applicable
          Environmental Laws, in each case which could reasonably be expected to
          have a Material Adverse Effect;

                                       13
<PAGE>

    (ii)  To the Company's Actual Knowledge, such properties and all operations
          of the Company and its Subsidiaries are conducted in compliance in all
          respects, and have been in compliance in all respects, with all
          applicable Environmental Laws the violation of which could reasonably
          be expected to have a Material Adverse Effect, and the Company and its
          Subsidiaries have not caused contamination at, under or about such
          properties or such operations which could reasonably be expected to
          have a Material Adverse Effect;

    (iii) Neither the Company nor any Subsidiary (a) has received any notice of
          violation, alleged violation, non-compliance, liability or potential
          liability regarding environmental matters or compliance with
          Environmental Laws with regard to any of their properties or their
          operations, or (b) have Actual Knowledge that any such notice will be
          received or is being overtly threatened, in each case which could
          reasonably be expected to have a Material Adverse Effect;

    (iv)  To the Company's Actual Knowledge, the Company and its Subsidiaries
          have not caused Hazardous Materials to be transported or disposed of
          from the properties of the Company and its Subsidiaries in violation
          of, or in a manner or to a location which gives rise to liability
          under, Environmental Laws, which violation or liability could
          reasonably be expected to have a Material Adverse Effect, nor to the
          Company's Actual Knowledge have the Company and its Subsidiaries
          caused any Hazardous Materials to be generated, treated, stored or
          disposed of at, on or under any of such properties in violation of, or
          in a manner that could give rise to liability under, any applicable
          Environmental Laws which could reasonably be expected to have a
          Material Adverse Effect;

    (v)   No judicial proceedings or governmental or administrative action is
          pending, or, to the Actual Knowledge of the Company, overtly
          threatened, under any Environmental Law to which the Company or any
          Subsidiary is or will be named as a party with respect to such
          properties or operations of the Company and its Subsidiaries conducted
          thereon, nor are there any consent decrees or other decrees, consent
          orders, administrative orders or other orders, or other administrative
          or judicial requirements outstanding under any Environmental Law with
          respect to such properties or such operations which in each case could
          reasonably be expected to have a Material Adverse Effect; and

                                       14
<PAGE>

    (vi)  To its Actual Knowledge, neither the Company nor its Subsidiaries have
          caused any release, or to the Company's Actual Knowledge, the threat
          of release, of Hazardous Materials at or from such properties, in
          violation of or in amounts or in a manner that gives rise to liability
          under Environmental Laws, in each case which could reasonably be
          expected to have a Material Adverse Effect.

     3.14. Material Contracts. Schedule 3.14 sets forth a complete and accurate
list of all Material Contracts of the Company and its Subsidiaries in effect as
of the Sale Closing; other than as set forth in Schedule 3.14, each such
Material Contract is, and after giving effect to the consummation of the
transactions contemplated by the Transaction Documents will be, in full force
and effect on the Sale Closing in accordance with the terms thereof. The Company
and its Subsidiaries have delivered to the Purchasers a true and complete copy
of each Material Contract required to be listed on Schedule 3.14 or any other
Schedule hereto.

     3.15. Titles to Properties. Each of the Company and its Subsidiaries has
such title to the real property owned by it as is necessary or desirable to the
conduct of its business and valid and legal title to all of its personal
property and assets, including, but not limited to, those reflected on the
September 30, 1999 balance sheets of the Company and its Subsidiaries referred
to in the Financial Statements, except those which have been disposed of by the
Company or its Subsidiaries subsequent to such date which dispositions have been
in the ordinary course of business or as otherwise expressly permitted
hereunder.

     3.16. Insurance. All current primary, excess and umbrella policies of
insurance owned or held by or on behalf of or providing insurance coverage to
the Company or any of its Subsidiaries are in full force and effect. With
respect to all such insurance policies providing insurance coverage to the
Company or any of its Subsidiaries, no premiums are in arrears, no notice or
cancellation or termination has been received with respect to any such policy,
other than notices of cancellation or termination routinely sent at the end of a
policy term. The Company believes that the insurance coverage of the Company and
its Subsidiaries is consistent with the coverage generally maintained by
corporations of similar size and engaged in similar lines of business.

     3.17. Employee Relations. Each of the Company and its Subsidiaries has an
adequate work force in place and is not, as of the Sale Closing, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees. The Company knows of no pending or threatened
strikes, work stoppage or similar collective labor actions involving its
employees or those of its Subsidiaries, which could reasonably be expected to
have a Material Adverse Effect.

     3.18. Material Disclosure. To the best knowledge of the Company, there is
no fact, transaction or development which the Company has not disclosed to the
Purchasers in writing (including pursuant to the SEC Documents filed prior to
the date hereof) which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

                                       15
<PAGE>

     3.19. No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Company in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, or similar fee or other
commission in connection therewith based on any contract or other agreement with
the Company or any action taken by the Company.

     3.20. Intellectual Property Matters. Each of the Company and its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, service marks, service mark rights,
trade names, trade name rights and rights with respect to the foregoing which
are required to conduct its business, except where the failure to so own or
possess such rights could not reasonably be expected to have a Material Adverse
Effect. No event has occurred which permits, or after notice or lapse of time or
both would permit, the revocation or termination of any such rights, and, to the
best of its knowledge, neither the Company nor any Subsidiary thereof is liable
to any Person for infringement under Applicable Law with respect to any such
rights as a result of its business operations, the result of which could
reasonably be expected to have a Material Adverse Effect.

     3.21. Minute Books. The minute books of the Company contain a complete
summary of all meetings of directors and stockholders since the time of
incorporation and reflect accurately in all material respects all transactions
referred to in such minutes.

     3.22. Liens. None of the properties and assets of the Company or any
Subsidiary is subject to any Lien, except Liens permitted pursuant to Section
10.3 of the Senior Credit Agreement.

     3.23. Government Regulation. Neither the Company nor any Subsidiary thereof
is an "investment company" or a company "controlled" by an "investment company"
(as each such term is defined or used in the Investment Company Act of 1940, as
amended).

     3.24. Financial Statements.

          (i) The Financial Statements, copies of which have been furnished to
     the Purchasers, are complete and correct and fairly present the financial
     condition of the Company and its Subsidiaries as of the respective dates
     thereof and the results of operations of the Company and its Subsidiaries
     for the fiscal periods covered thereby, in each case in accordance with
     GAAP, subject in the case of unaudited statements to normal year-end
     adjustments. As of December 31, 1998, the Company and its Subsidiaries had
     no Debt, obligation or other unusual forward or long-term commitment which
     was not fairly reflected on the December 31, 1998 balance sheets of the
     Company and its Subsidiaries referred to in the Financial Statements or in
     the notes thereto.

          (ii) Since September 30, 1999, there has been (A) no material adverse
     change in the business, operations, prospects or condition (financial or
     otherwise) of the Company and its Subsidiaries taken as a whole, and (B) no
     event has occurred or condition arisen that could be reasonably expected to
     have a Material Adverse Effect.

                                       16
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                                OF THE PURCHASERS

     Each Purchaser hereby, severally but not jointly, represents and warrants,
on behalf of itself and each Person for whom it is a nominee, to the Company as
follows:

     4.1. Organization; Authorization. Such Purchaser is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has full power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to purchase the Preferred Stock and to consummate
the transactions contemplated hereby and thereby in accordance with the terms
hereof and thereof. The execution and delivery of this Agreement and the
Registration Rights Agreement, the purchase by such Purchaser of the Preferred
Stock and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by such Purchaser, and no other proceedings on the
part of such Purchaser are necessary to approve and authorize the execution and
delivery of this Agreement and the Registration Rights Agreement, the purchase
by such Purchaser of the Preferred Stock and the consummation of the
transactions by such Purchaser contemplated hereby and thereby in accordance
with the terms hereof and thereof. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by such Purchaser and constitute
valid and binding agreements of such Purchaser, enforceable against such
Purchaser in accordance with their terms, except to the extent limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity.

     4.2. No Violation; Consents. (a) Assuming the making or receipt of all
filings, notices, registrations, consents, approvals, permits and authorizations
described in the following paragraph, neither the execution and delivery by such
Purchaser of this Agreement and the Registration Rights Agreement, nor the
purchase by such Purchaser of the Preferred Stock nor the consummation by such
Purchaser of the transactions contemplated hereby or thereby will (i) conflict
with, violate or result in a breach of the governing documents of such
Purchaser, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination, cancellation or acceleration under, or result in the creation of
any Lien on or against any of the properties of such Purchaser pursuant to, any
of the terms or conditions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which such Purchaser is a party
or by which it or any of its properties or assets may be bound, or (iii) violate
any statute, law, rule, regulation, writ, injunction, judgment, order or decree
of any Governmental Authority, binding on such Purchaser or any of its
properties or assets, excluding from the foregoing clause (ii) violations,
breaches and defaults that individually or in the aggregate, would not prevent
or materially delay consummation of or justify recission of the transactions
contemplated hereby.

     (b) Except for the filing of a Registration Statement for the resale of the
Common Stock contemplated by the Registration Rights Agreement, no filing,
consent, approval, permit, authorization, notice, registration or other action
of or with any Governmental Authority

                                       17
<PAGE>

is required to be made or obtained by or with respect to such Purchaser in
connection with the execution and delivery of this Agreement and the
Registration Rights Agreement, the purchase of the Preferred Stock or the
consummation by such Purchaser of the transactions contemplated hereby and
thereby.

     4.3. Funds. Such Purchaser has the funds necessary to consummate the
purchase of the Preferred Stock to be purchased by it hereunder.

     4.4. Status. Such Purchaser has sufficient knowledge and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of an investment in the Preferred Stock, and is capable of bearing the
economic risks of such investment, including a complete loss of such investment.

     4.5. Investment Representation. Each Person for whom the Purchaser is a
nominee is a "qualified institutional buyer," as such term is defined in Rule
144A promulgated under the Securities Act. Such Purchaser is purchasing the
Preferred Stock for its own account. Such Purchaser has no present intention to
sell any Preferred Stock or the Common Stock received upon conversion of or as
dividends on the Preferred Stock in accordance with the terms of the Certificate
of Designation, and such Purchaser has no present arrangement (whether or not
legally binding) at any time to sell Preferred Stock or such Common Stock to or
through any Person or entity; provided, however, that by making the
representations herein, no Purchaser agrees to hold the Preferred Stock or the
Common Stock received upon conversion of or as dividends on the Preferred Stock
in accordance with the terms of the Certificate of Designation for any minimum
or other specific term and each Purchaser reserves the right to dispose of all
Preferred Stock or Common Stock at any time in accordance with federal and state
securities laws applicable to any such disposition. Such Purchaser acknowledges
that each certificate representing the Preferred Stock shall contain a legend
relating to restrictions on resale arising under the Securities Act and Blue Sky
Laws as provided in Section 6.1 hereof until such time as such shares are
registered under the Securities Act or, in the opinion of counsel reasonably
satisfactory to the Company, such legend may be removed.

     4.6. No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Purchasers in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, or similar fee or other
commission in connection therewith based on any contract or other agreement with
the Purchasers or any action taken by the Purchasers.

     4.7 Litigation. There are no actions, suits or proceedings pending nor, to
the knowledge of such Purchaser, threatened against or in any other way relating
adversely to or affecting such Purchaser that seek to have, or are reasonably
likely to have the effect of making illegal, materially delaying or otherwise
directly or indirectly prohibiting or materially restraining or making
materially more costly the Sale Transaction.

                                       18
<PAGE>

                                    ARTICLE V

                            COVENANTS OF THE COMPANY

     5.1. Securities Compliance.

     (a) The Company shall take all necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation for the legal and
valid issuance of the Preferred Stock to the Purchasers.

     (b) The Company will cause the Common Stock to continue to be registered
under Section 12(b) of the Securities Exchange Act (or successor provision of
such act or successor act), will comply in all respects with its reporting and
filing obligations pursuant to the Securities Exchange Act, and will not take
any action to terminate or suspend its reporting and filing obligations under
the Securities Exchange Act. The Company will take all action necessary to
continue the listing or trading of the Common Stock (including, upon issuance,
all of the Common Stock issued upon conversion of or as dividends on the
Preferred Stock) on the NYSE or on the NASDAQ National Market System; and will
comply in all material respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NYSE or the NASDAQ National Market
System.

                                   ARTICLE VI

                      ADDITIONAL AGREEMENTS OF THE PARTIES

     6.1. Restrictive Legend. Each certificate representing the Preferred Stock
shall contain a legend relating to restrictions on resale arising under the
Securities Act and Blue Sky Laws substantially in the following form:

           THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
           REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
           STATE SECURITIES OR "BLUE SKY" LAWS AND MAY NOT BE TRANSFERRED
           OR OTHERWISE DISPOSED OF UNLESS SUCH SECURITIES HAVE BEEN
           REGISTERED UNDER THAT ACT OR THE COMPANY SHALL HAVE RECEIVED
           AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
           THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                                       19
<PAGE>

                                 ARTICLE VII

                         CONDITIONS TO THE SALE CLOSING

     7.1. Conditions to Obligations of the Purchasers. The obligation of the
Purchasers to purchase the Preferred Stock hereunder pursuant to the Sale
Transaction is subject to the satisfaction or waiver at, or prior to, the Sale
Closing of the following conditions:

     (a) Representations and Warranties; Agreements and Covenants. (i) The
representations and warranties of the Company contained in this Agreement and in
any certificate or agreement of the Company delivered pursuant hereto shall be
true and correct in all material respects, and if qualified by materiality,
shall be true and correct, as of the date hereof, (ii) the Company shall have
performed or complied with in all material respects all agreements and covenants
contained in this Agreement and in any certificate or agreement of the Company
delivered pursuant hereto to be performed or complied with by the Company at or
before the Sale Closing, and (iii) the Purchasers shall have received a
certificate of the Company, signed by the President or a Vice President thereof,
on behalf of the Company, as to the fulfillment of the conditions set forth in
the foregoing clauses (i) and (ii).

     (b) Principal Market. Trading in the Common Stock shall not have been
suspended by the SEC or the NYSE, (except for any suspension of trading of
limited duration agreed to between the Company and the NYSE, solely to permit
dissemination of material information regarding the Company), and trading in
securities generally as reported by NYSE shall not have been suspended or
limited or minimum prices shall not have been established on securities whose
trades are reported by the NYSE.

     (c) Litigation. There shall have been no order or preliminary or permanent
injunction entered in any action or proceeding before any Governmental
Authority, nor other action taken by any Governmental Authority, nor any
statute, rule, regulation, legislation, interpretation, judgment or order
enacted, entered, enforced, promulgated, amended, issued or deemed applicable to
the Purchasers, the Company or any of its Subsidiaries, by any Governmental
Authority that shall have remained in effect and that in the good faith judgment
of a majority of the Purchasers shall have had, or threaten to have or would be
reasonably likely to have the effect of (i) making illegal, materially delaying
or otherwise directly or indirectly prohibiting or materially restraining or
making materially more costly the Sale Transaction, (ii) prohibiting or
materially limiting the ownership or operation by the Company or any of its
Subsidiaries of all or any material portion of its respective businesses or
assets, or compelling the Company or any of its Subsidiaries to dispose of or
hold separate all or any material portion of its respective businesses or
assets, (iii) imposing or confirming material limitations on the ability of the
Purchasers to effectively exercise full rights of ownership of the Preferred
Stock to be acquired pursuant to this Agreement, including, without limitation,
the right to vote any Common Stock subsequently acquired upon conversion of or
as dividends on the Preferred Stock on all matters properly presented to
stockholders; (iv) requiring divestiture by the Purchasers of any of the
Preferred Stock; or (v) causing a Material Adverse Effect.

                                       20
<PAGE>

     (d) No Action or Proceeding. No action, suit, claim or proceeding by or
before any Governmental Authority shall have been commenced and be pending that
seeks to have, or is reasonably likely to have, any of the effects described in
clauses (i) through (v) of Section 7.1(c) above.

     (e) Bankruptcy; Insolvency; etc. The Company or any of its Subsidiaries
shall not be the subject of a case under the Bankruptcy Code, and no proceeding
shall have been instituted (and not dismissed) or consented to by or against the
Company or any of its Subsidiaries seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief or composition of its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for any of the Company or of its
Subsidiaries or any substantial part of any of their property and neither the
Company nor any of its Subsidiaries shall have taken any corporate action to
authorize any such proceeding.

     (f) Material Adverse Change. No change, condition or event shall have
occurred that has had, or would be reasonably likely to have, a Material Adverse
Effect.

     (g) Opinion of Counsel, etc. The Purchasers shall have received a written
opinion in form and substance (including qualifications) satisfactory to the
Purchasers, dated the date hereof, from Proskauer Rose LLP, substantially in the
form of Exhibit C hereto, and such other certificates, opinions of other
counsel, and documents, as the Purchasers or their counsel shall reasonably
require.

     (h) Registration Rights Agreement. The Registration Rights Agreement shall
have been duly executed and delivered by the Company and the other parties
thereto, if any, other than the Purchasers.

     7.2. Conditions to Obligations of the Company. The obligation of the
Company to issue and sell the Preferred Stock hereunder pursuant to the Sale
Transaction is subject to the satisfaction or waiver at, or prior to, the Sale
Closing of the following conditions:

     (a) Representations and Warranties, Agreements And Covenants. (i) The
representations and warranties of the Purchasers contained in this Agreement and
in any certificate or agreement of the Purchasers delivered pursuant hereto
shall be true and correct in all material respects as of the date hereof and
(ii) the Purchasers shall have performed or complied with in all material
respects all agreements and covenants contained in this Agreement and in any
certificate or agreement of the Purchasers delivered pursuant hereto to be
performed or complied with by the Purchasers, at or before the Sale Closing, and
(iii) the Company shall have received a certificate of each Purchaser, signed by
an officer thereof, on behalf of such Purchaser, as to the fulfillment of the
conditions set forth in the foregoing clauses (i) and (ii).

     (b) Litigation. There shall have been no order or preliminary or permanent
injunction entered in any action or proceeding before any Governmental
Authority, nor other action taken by any Governmental Authority nor any statute,
rule, regulation, legislation,

                                       21
<PAGE>

interpretation, judgment or order enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to the Company or any of its Subsidiaries
by any Governmental Authority that shall have remained in effect and that shall
have had the effect of making illegal, materially delaying or otherwise directly
or indirectly prohibiting or materially restraining or making materially more
costly the Sale Transaction.

     (c) No Action or Proceeding. No action, suit, claim or proceeding by or
before any Governmental Authority shall have been commenced and be pending that
seeks to have, or is reasonably likely to have the effect of making illegal,
materially delaying or otherwise directly or indirectly prohibiting or
materially restraining or making materially more costly the Sale Transaction.

     (d) Registration Rights Agreement. The Registration Rights Agreement shall
have been duly executed and delivered by each Purchaser.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     8.1. Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution of this Agreement until the date that the
Purchasers have sold or otherwise disposed of all shares of Preferred Stock and
Common Stock issuable on conversion of the Preferred Stock.

     8.2. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with the
provisions of this Section:

     (i)      If to the Company, to:

              Insignia Financial Group, Inc.
              200 Park Avenue
              New York, NY  10166
              Attn: Adam B. Gilbert, Esq.
              Telecopy:  212-984-6644
              Telephone:  212-984-6649

                                       22
<PAGE>

              With a copy to:

              Proskauer Rose LLP
              1585 Broadway
              New York, New York  10036
              Attn: Arnold S. Jacobs, Esq.
              Telecopy:  212-969-2900
              Telephone:  212-969-3000

     (ii) If to the Purchasers, to the addresses specified on the signature
          pages hereto.

              With a copy to:

              Schulte Roth & Zabel LLP
              900 Third Avenue
              New York, NY  10022
              Attn:  Stuart D. Freedman, Esq.
              Telecopy: 212-593-5955
              Telephone: 212-756-2000

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; on the next business day, if timely delivered to a
courier guaranteeing overnight delivery; and five days after being deposited in
the mail, if sent first class or certified mail, return receipt requested,
postage prepaid.

     8.3. Complete Agreement. This Agreement, the Registration Rights Agreement
and the Certificate of Designation contain the entire understanding of the
parties with respect to the transactions contemplated hereby and supersede all
prior agreements, arrangements or understandings with respect thereto. There are
no restrictions, agreements, promises, representations, warranties, covenants or
undertakings by or on behalf of any party hereto with respect to the
transactions contemplated hereby or thereby, other than those expressly set
forth herein or therein.

     8.4. Binding Notice of Agreement; No Third Party Beneficiary. This
Agreement shall be binding upon and inure to the benefits of the parties hereto,
their successors and permitted assigns. Nothing herein express or implied is
intended to or shall be construed to confer upon or give to any Person,
corporation, group or other entity (of any nature) other than the parties
hereto, their successors or permitted assigns any rights or remedies under or by
reason of this Agreement.

     8.5. Modifications, Amendments and Waivers. Any term or provision of this
Agreement may be waived by the party which is entitled to the benefits thereof.
No waiver shall be deemed to have been made by any party hereto of any of its
rights hereunder or any provision or term hereof unless the same shall be in
writing and is signed on its behalf by its authorized

                                       23
<PAGE>

officer or representative. Any such waiver or extension shall constitute a
waiver or extension only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or any other time. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have in law or
equity. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracies in or breach of any representation,
warranty, covenant or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence or other state of fact
upon which any claim of any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement as to which there is no inaccuracy or breach. The
representations and warranties of the Company contained in this Agreement shall
not be affected or deemed waived by reason of any investigation made by or on
behalf of the Purchasers or its representatives or by reason of the fact that
the Purchasers or such representatives knew or should have known that any such
representation or warranty is or might be inaccurate.

     8.6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.

     8.7. Expenses. The fees and expenses of counsel for the Purchasers, not to
exceed $50,000, shall be paid by the Company. The foregoing payment shall be in
addition to, and not in lieu of, the fees and expenses payable by the Company to
the holders of Preferred Stock pursuant to the terms of the Registration Rights
Agreement.

     8.8. Indemnification..(a) The Company agrees to indemnify and hold harmless
each Purchaser, its directors and officers and each Person, if any, who controls
each Purchaser within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act from and against any and all losses,
claims, suits, damages, causes of action, liabilities, costs and expenses
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) to which
such Purchaser or other Person may become subject to under the Securities Act or
under the Securities Exchange Act or otherwise, arising from or relating to the
Company's breach of any representation, warranty, covenant or agreement
contained in this Agreement.

     (b) Each Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors and officers and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act, from and against any and all
losses, claims, suits, damages, causes of action, liabilities, costs and
expenses (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or claim)
to which the Company or such Person may become subject to under the Securities
Act or under the Securities Exchange Act or otherwise, arising from or relating
to the Purchasers' breach of any representation, warranty, covenant or agreement
contained in this Agreement.

                                       24
<PAGE>

     (c) In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to paragraph (a) or (b) of this Section 8.8, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of other counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them;
provided, however, that it is understood that the indemnifying party shall not,
in respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for each indemnified party, its directors, officers and all Persons, if
any, who control each indemnified party within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm, such firm shall be designated in writing by a majority
of all the indemnified parties. All such fees and expenses shall be reimbursed
as they are incurred; provided, however, that if it is subsequently determined
that such indemnified party was not entitled to such indemnification, then the
indemnified party shall promptly reimburse the indemnifying party for all such
fees and expenses previously paid by the indemnifying party. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by this
paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.

     (d) The indemnity provisions contained in this Section 8.8 shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Purchasers, their
officers or directors or any Person controlling the Purchasers; or the Company,
its officer or directors or any Person controlling the Company and (iii)
acceptance of any payment for any of the Preferred Stock.

                                       25
<PAGE>

     8.9. Nominee; Benefits. All references to Purchasers in this Agreement
shall include the Person or Persons for whom the Purchasers are a nominee, and
the benefits of and rights and obligations under the Agreement shall accrue to
such Person or Persons which have a beneficial interest in the Preferred Stock
being acquired hereunder and for whom the Purchasers are a nominee. The
Purchaser makes the representations in Article IV for all such Persons for whom
the Purchaser is a nominee.

     8.10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to applicable
principles of conflicts of law thereof.

     8.11. Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

     8.12. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement, except to the extent that such prohibition or invalidity
would constitute a material change in the terms of this Agreement taken as a
whole.

     8.13. Assignment. The Purchasers may assign their rights hereunder to any
of their Affiliates, provided that such assignment shall not release the
Purchasers from their obligations hereunder.

                                       26
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Stock Subscription
Agreement to be executed as of the day and year first above written.

                                    COMPANY:

                                    INSIGNIA FINANCIAL GROUP, INC.

                                    By: /s/ Adam B. Gilbert
                                       --------------------------------
                                       Name:  Adam B. Gilbert
                                       Title: EVP

                                       27

<PAGE>

                          STOCK SUBSCRIPTION AGREEMENT

PURCHASERS:

MADELEINE L.L.C.

By: /s/ Ronald J. Kravit
   --------------------------
     Name:  Ronald J. Kravit
     Title: Managing Director

Address for notices:

450 Park Avenue
New York, NY  10022
Attn: Ronald J. Kravit
Telecopy:  212-891-2104
Telephone: 212-891-2100

Subscription Amount:  $25,000,000.00

                                       28

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