-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FKvuZ30SqoNKgfVKMdGbUQcHQ0IICdOUxLmu4gjfbzETKEKS2cY55LjxbijgW+X1 33kCoJhkIYYwShWgt9atfQ== 0000950136-98-001513.txt : 19980819 0000950136-98-001513.hdr.sgml : 19980819 ACCESSION NUMBER: 0000950136-98-001513 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980818 SROS: NONE GROUP MEMBERS: COOPER RIVER PROPERTIES LLC GROUP MEMBERS: COOPER RIVER PROPERTIES, L.L.C. GROUP MEMBERS: INSIGNIA FINANCIAL GROUP, INC. GROUP MEMBERS: INSIGNIA PROPERTIES TRUST GROUP MEMBERS: INSIGNIA PROPERTIES, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES III CENTRAL INDEX KEY: 0000317331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942653686 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-50851 FILM NUMBER: 98693649 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391591 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES III CENTRAL INDEX KEY: 0000317331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942653686 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-50851 FILM NUMBER: 98693650 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391591 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COOPER RIVER PROPERTIES LLC CENTRAL INDEX KEY: 0001066016 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: ONE INSIGNIA PLAZA STREET 2: P O BOX 19059 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 2128788022 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 19059 CITY: GREENVILLE STATE: SC ZIP: 29602 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COOPER RIVER PROPERTIES LLC CENTRAL INDEX KEY: 0001066016 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: ONE INSIGNIA PLAZA STREET 2: P O BOX 19059 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 2128788022 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 19059 CITY: GREENVILLE STATE: SC ZIP: 29602 SC 14D1/A 1 SCHEDULE 14D-1/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ SCHEDULE 14D-1/A TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1) AND SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 4) ------------------------------------ CONSOLIDATED CAPITAL PROPERTIES III (Name of Subject Company) COOPER RIVER PROPERTIES, L.L.C. INSIGNIA PROPERTIES, L.P. INSIGNIA PROPERTIES TRUST INSIGNIA FINANCIAL GROUP, INC. (Bidders) UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class of Securities) NONE (Cusip Number of Class of Securities) ------------------------------------ JEFFREY P. COHEN SENIOR VICE PRESIDENT INSIGNIA FINANCIAL GROUP, INC. 375 PARK AVENUE, SUITE 3401 NEW YORK, NEW YORK 10152 (212) 750-6070 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) COPY TO: JOHN A. HEALY, ESQ. ROGERS & WELLS LLP 200 PARK AVENUE NEW YORK, NEW YORK 10166 (212) 878-8000 ------------------------------------ AMENDMENT NO. 1 TO SCHEDULE 14D-1/AMENDMENT NO. 4 TO SCHEDULE 13D This Amendment No. 1, which amends and supplements the Tender Offer Statement on Schedule 14D-1 originally filed with the Commission on July 30, 1998, (the "Schedule 14D-1") by Cooper River Properties, L.L.C. (the "Purchaser"), Insignia Properties, L.P. ("IPLP"), Insignia Properties Trust ("IPT") and Insignia Financial Group, Inc. ("Insignia"), also constitutes Amendment No. 4 to the Statement on Schedule 13D of the Purchaser, IPLP, IPT, Insignia and Andrew L. Farkas, originally filed with the Commission on December 20, 1994, as amended by Amendment No. 1 filed with the Commission on April 25, 1997, Amendment No. 2 filed with the Commission on July 8, 1997 and Amendment No. 3 filed with the Commission on July 30, 1998 (and together with the Schedule 14D-1, the "Schedules"). The Schedules relate to the tender offer of the Purchaser to purchase up to 75,000 of the outstanding units of limited partnership interest ("Units") of Consolidated Capital Properties III, at a purchase price of $60 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 30, 1998 (the "Offer to Purchase") and the related Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Schedule 14D-1 and the Offer to Purchase. This amendment hereby supplements the Schedule 14D-1 to include as Exhibit (b)(1) the credit agreement referred to in Section 12 of the Offer to Purchase. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (b)(1) Credit Agreement, dated December 30, 1977. 2 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: August 18, 1998 COOPER RIVER PROPERTIES, L.L.C. By: /s/ JEFFREY P. COHEN ------------------------------------------- Jeffrey P. Cohen Manager INSIGNIA PROPERTIES, L.P. By: Insignia Properties Trust, its General Partner By: /s/ JEFFREY P. COHEN ------------------------------------------- Jeffrey P. Cohen Senior Vice President INSIGNIA PROPERTIES TRUST By: /s/ JEFFREY P. COHEN ------------------------------------------- Jeffrey P. Cohen Senior Vice President INSIGNIA FINANCIAL GROUP, INC. By: /s/ FRANK M. GARRISON ------------------------------------------- Frank M. Garrison Executive Managing Director SOLELY FOR PURPOSES OF, AND INSOFAR AS THIS FILING CONSTITUTES, AMENDMENT NO. 4 TO THE STATEMENT ON SCHEDULE 13D /s/ ANDREW L. FARKAS ------------------------------------------- By: Jeffrey P. Cohen, Attorney-in-Fact 3 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- (b)(1) Credit Agreement, dated December 30, 1997. 4 EX-99.(B)(1) 2 CREDIT AGREEMENT ================================================================================ CREDIT AGREEMENT dated as of December 30, 1997 by and among INSIGNIA PROPERTIES, L.P., as Borrower, the Lenders referred to herein, FIRST UNION NATIONAL BANK, as Administrative Agent and LEHMAN COMMERCIAL PAPER INC., as Syndication Agent ================================================================================
TABLE OF CONTENTS ARTICLE I - DEFINITIONS.........................................................................................1 SECTION 1.1 Definitions....................................................................................1 SECTION 1.2 General.......................................................................................12 SECTION 1.3 Other Definitions and Provisions..............................................................12 ARTICLE II - CREDIT FACILITY...................................................................................12 SECTION 2.1 Commitment....................................................................................12 SECTION 2.2 Procedure for Advances of Loans...............................................................13 SECTION 2.3 Repayment of Loans............................................................................13 SECTION 2.4 Revolving Credit Notes........................................................................14 SECTION 2.5 Increase/Reduction of the Aggregate Commitment................................................14 SECTION 2.6 Termination of Credit Facility................................................................15 SECTION 2.7 Use of Proceeds...............................................................................15 ARTICLE III - GENERAL LOAN PROVISIONS..........................................................................15 SECTION 3.1 Interest......................................................................................15 SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans......................................17 SECTION 3.3 Fees..........................................................................................17 SECTION 3.4 Manner of Payment.............................................................................17 SECTION 3.5 Crediting of Payments and Proceeds............................................................18 SECTION 3.6 Adjustments...................................................................................18 SECTION 3.7 Nature of Obligations of Lenders Regarding Loans; Assumption by the Administrative Agent..........................................................................18 SECTION 3.8 Changed Circumstances.........................................................................19 SECTION 3.9 Reimbursement.................................................................................22 SECTION 3.10 Capital Requirements..........................................................................22 SECTION 3.11 Taxes.........................................................................................22 SECTION 3.12 Claims for Increased Costs and Taxes..........................................................24 ARTICLE IV - CLOSING; CONDITIONS OF CLOSING AND BORROWING......................................................25 SECTION 4.1 Closing........................................................................................25 SECTION 4.2 Conditions to Closing and Initial Loan.........................................................25 SECTION 4.3 Conditions to All Loans........................................................................27 SECTION 4.4 Delivery of Certificates by Administrative Agent...............................................28 ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE BORROWER.....................................................28 SECTION 5.1 Representations and Warranties.................................................................28 SECTION 5.2 Survival of Representations and Warranties, Etc................................................33 ARTICLE VI - FINANCIAL INFORMATION AND NOTICES.................................................................34 SECTION 6.1 Financial Statements and Information...........................................................34 SECTION 6.2 Officer's Compliance Certificate...............................................................35 SECTION 6.3 Accountants' Certificate.......................................................................35 SECTION 6.4 Other Reports..................................................................................35 SECTION 6.5 Notice of Litigation and Other Matters.........................................................35 ARTICLE VII - AFFIRMATIVE COVENANTS............................................................................36 SECTION 7.1 Preservation of Existence and Related Matters..................................................36 SECTION 7.2 Maintenance of Property........................................................................36 SECTION 7.3 Insurance......................................................................................36 SECTION 7.4 Accounting Methods and Financial Records.......................................................36 SECTION 7.5 Payment and Performance of Obligations.........................................................36 SECTION 7.6 Compliance With Laws and Approvals.............................................................37 SECTION 7.7 Environmental Laws.............................................................................37 SECTION 7.8 Compliance with ERISA..........................................................................37 SECTION 7.9 Compliance With Agreements.....................................................................37 SECTION 7.10 Visits and Inspections37 SECTION 7.11 Pledge of Partner Interests38 SECTION 7.12 Further Assurances38 SECTION 7.13 Application of Non-Operational Distributions38 SECTION 7.14 Year 2000 Compatibility38 ARTICLE VIII - FINANCIAL COVENANTS.............................................................................38 SECTION 8.1 Maximum Leverage................................................................................39 SECTION 8.2 Interest and Dividend Coverage..................................................................39 SECTION 8.3 Interest Coverage Ratio.........................................................................39 ARTICLE IX - NEGATIVE COVENANTS..........................................................................39 SECTION 9.1 Limitations on Debt.......................................................................39 SECTION 9.2 Limitations on Contingent Obligations.....................................................40 SECTION 9.3 Negative Pledge; Limitation on Lien.......................................................40 SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions..............................40 SECTION 9.5 Limitations on Mergers and Liquidation....................................................42 SECTION 9.6 Limitations on Sale of Assets.............................................................42 SECTION 9.7 Limitations on Distributions..............................................................42 SECTION 9.8 Transactions with Affiliates..............................................................43 SECTION 9.9 Certain Accounting Changes................................................................43 SECTION 9.10 Lines of Business.........................................................................43 SECTION 9.11 Restrictive Agreements....................................................................43 ARTICLE X - DEFAULT AND REMEDIES.........................................................................43 SECTION 10.1 Events of Default.........................................................................43 SECTION 10.2 Remedies..................................................................................45 SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc...........................................46 ARTICLE XI - THE AGENTS..................................................................................46 SECTION 11.1 Appointment and Authorization.............................................................46 SECTION 11.2 Delegation of Duties......................................................................46 SECTION 11.3 Exculpatory Provisions....................................................................46 SECTION 11.4 Reliance by the Agents....................................................................47 SECTION 11.5 Notice of Default.........................................................................47 SECTION 11.6 Non-Reliance on the Agents and Other Lenders..............................................47 SECTION 11.7 Indemnification...........................................................................48 SECTION 11.8 Agent in Its Individual Capacity..........................................................48 SECTION 11.9 Resignation of the Agent; Successor Agent.................................................48 ARTICLE XII - MISCELLANEOUS..............................................................................49 SECTION 12.1 Notices...................................................................................49 SECTION 12.2 Expenses; Indemnity.......................................................................51 SECTION 12.3 Governing Law.............................................................................52 SECTION 12.4 Consent to Jurisdiction...................................................................52 SECTION 12.5 Waiver of Jury Trial......................................................................52 SECTION 12.6 Reversal of Payments......................................................................52 SECTION 12.7 Accounting Matters........................................................................53 SECTION 12.8 Successors and Assigns; Participations....................................................53 SECTION 12.9 Amendments, Waivers and Consents..........................................................56 SECTION 12.10 Performance of Duties.....................................................................56 SECTION 12.11 No Fiduciary Relationship.................................................................56 SECTION 12.12 All Powers Coupled with Interest..........................................................56 SECTION 12.13 Survival of Indemnities...................................................................57 SECTION 12.14 Titles and Captions.......................................................................57 SECTION 12.15 Severability of Provisions................................................................57 SECTION 12.16 Counterparts..............................................................................57 SECTION 12.17 Term of Agreement.........................................................................57 SECTION 12.18 Independent Effect of Covenants...........................................................57
Exhibits and Schedules ---------------------- EXHIBITS -------- Exhibit A - Form of Revolving Credit Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Notice of Conversion/Continuation Exhibit D - Form of Officer's Compliance Certificate Exhibit E - Form of Assignment and Acceptance Exhibit F - Form of Guaranty Agreement Exhibit G - Form of IPLP Pledge Agreement Exhibit H - Form of IPT Pledge Agreement Exhibit I - Form of Notice of Account Designation SCHEDULES --------- Schedule 1 - Lenders and Commitments Schedule 5.1(h) - Employee Benefit Plans Schedule 5.1(q) - Debt and Contingent Obligations Schedule 5.1(r) - Litigation Schedule 9.4 - Existing Loans, Advances and Investments Schedule 9.8 - Transactions with Affiliates CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of the 30th day of December, 1997, by and among INSIGNIA PROPERTIES, L.P., a Delaware limited partnership, the Lenders who are or may become a party to this Agreement (the "Lenders"), FIRST UNION NATIONAL BANK, as Administrative Agent for the Lenders, and LEHMAN COMMERCIAL PAPER INC., as Syndication Agent. STATEMENT OF PURPOSE The Borrower has requested and the Lenders have agreed to extend a credit facility to the Borrower on the terms and conditions in this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1. Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below: "Actual Knowledge" means information actually known to Andrew L. Farkas, James A. Aston, Ronald Uretta, John K. Lines, Thomas R. Shuler, Carroll Vinson, William Jarrard or Frank Garrison, or any other individual hereafter holding the office of the Borrower currently held by such individuals, in each case at the date of determination. "Adjusted DCFO" means, as of any date of determination, an amount equal to the aggregate of the Borrower's Pro Rata Portion of the DCFO of each Real Estate Entity in which the Borrower owns an equity interest after giving effect to any acquisition by the Borrower of an equity interest in such Real Estate Entity during the quarterly period ending on the determination date, plus all fee and other income received by the Borrower during such quarterly period (excluding extraordinary items) less all fees and expenses paid by the Borrower or IPT during such period not reimbursed. "Adjusted Portfolio Equity" means, as of any date of determination and with respect to each Real Estate Entity, an amount equal to the Pro Rata Portion of the EFV of the real property owned by each Real Estate Entity whose Leverage is less than sixty percent (60%) less an amount equal to the Pro Rata Portion of the Debt of such Real Estate Entity. "Administrative Agent" means First Union in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 11.9. "Administrative Agent's Office" means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 12.1. "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. "Agents" means the collective reference to the Administrative Agent and the Syndication Agent; "Agent" means either of such Persons. "Aggregate Commitment" means the aggregate amount of the Lenders' Commitments hereunder, as such amount may be increased or reduced at any time or from time to time pursuant to Section 2.5. On the Closing Date, the Aggregate Commitment shall be Fifty Million Dollars ($50,000,000). "Agreement" means this Credit Agreement, as amended, modified, restated or supplemented from time to time. "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. "Applicable Margin" means as to the LIBOR Rate, 2.50% per annum. "Assignment and Acceptance" shall have the meaning assigned thereto in Section 12.8. "Base Rate" means, at any time, the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1/2 of 1%, as applicable; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate, as applicable. "Base Rate Loan" means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 3.1(a). "Borrower" means IPLP in its capacity as borrower hereunder. "Business Day" means (a) for all purposes other than as set forth in clause (b) below, any day, other than a Saturday, Sunday or legal holiday, on which banks in Greenville, South Carolina, Charlotte, North Carolina and New York, New York are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Expenditures" means, with respect to any Person for any period, the aggregate cost of all assets acquired by such Person during such period which should, in accordance with GAAP, be classified as capital assets on the balance sheet of such Person. 2 "Capital Lease" means, with respect to the Borrower 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 Borrower and its Subsidiaries. "Closing Date" means December 30, 1997. "Code" means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended or supplemented from time to time. "Commitment" means, as to any Lender, the obligation of such Lender to make Loans to the Borrower hereunder in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 1, as the same may be reduced or modified at any time or from time to time pursuant to Sections 2.5, 2.6 and 12.8. "Commitment Percentage" means, as to any Lender at any time prior to the Termination Date, the ratio (expressed as a percentage) of (a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment of all of the Lenders, and on and after the Termination Date, the ratio of (c) the amount of the Loans of such Lender to (d) the aggregate amount of all Loans then outstanding. "Contingent Obligation" means, with respect to the Borrower, without duplication, any obligation, contingent or otherwise, of the Borrower pursuant to which the Borrower has directly or indirectly guaranteed any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of the Borrower (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) for purposes of determining compliance by IPT and the Borrower with Section 9.2, the obligations set forth on Schedule 5.1(q) . "Credit Facility" means the revolving credit facility established pursuant to Article II. "DCFO" means, as to any period of time, the aggregate NOI for such period of each Real Estate Entity in which the Borrower owns an equity interest less with respect to each Real Estate Entity for such period the sum of the following: (i) Cash Interest Expense, plus (ii) All principal payments (other than in connection with refinancings) on the Debt of such Real Estate Entity, plus (iii) An amount equal to the greater of (x) the capital expenditures (exclusive of capital expenditures to restore newly-acquired properties to their original condition in accordance with a budget provided to the Agents within ninety (90) days after the acquisition) less funded capital expenditures or (y) an amount equal to $500 for each 3 apartment unit and $.20 per square foot for each commercial property owned by such Real Estate Entity. "Debt" means, with respect to any Person at any date and without duplication, the sum of the following calculated in accordance with GAAP: (a) all Debt for Money Borrowed, (b) all obligations to pay the deferred purchase price of property or services of the Borrower, except trade payables arising in the ordinary course of business not more than ninety (90) days past due, (c) all Debt of any other Person secured by a Lien on any asset of such Person, (d) all Contingent Obligations of the Borrower and (e) all net obligations incurred by the Borrower pursuant to Hedging Agreements; provided that the obligations of the Borrower to pay the purchase price in connection with investments and acquisitions permitted hereunder shall not be included in Debt. "Debt for Money Borrowed" means, with respect to any Person at any date and without duplication, the sum of the following calculated in accordance with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of the Borrower, (b) all obligations of such Person as lessee under Capital Leases, and (c) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person. "Default" means any of the events specified in Section 10.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default. "Dollars" or "$" means, unless otherwise qualified, dollars in lawful currency of the United States. "EFV" means the estimated fair value of the real property owned by any Real Estate Entity as determined by the Borrower based on assumptions consistent with those set forth in the December 31, 1996 valuation schedules provided to the Agents and reasonably acceptable to the Agents. "Eligible Assignee" means, with respect to any assignment of the rights, interest and obligations of a Lender hereunder, a Person that is at the time of such assignment (a) a commercial bank organized under, or which has a branch or agency licensed under, the laws of the United States or any state thereof, having combined capital and surplus in excess of $500,000,000, (b) a finance company, insurance company or other financial institution which in the ordinary course of business extends credit of the type extended hereunder and that has total assets in excess of $500,000,000, (c) already a Lender hereunder (whether as an original party to this Agreement or as the assignee of another Lender), (d) the successor (whether by transfer of assets, merger or otherwise) to all or substantially all of the commercial lending business of the assigning Lender, (e) any Affiliate of the assigning Lender that is not a competitor of the Borrower and is engaged in the business of making commercial loans in the ordinary course of its business, or (f) any other Person that has been approved in writing as an Eligible Assignee by the Agents and the Borrower, which approval by Borrower shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, if a Lender proposes to assign its right, interest and obligations hereunder to a Person that is at the time of such assignment either (i) a competitor of the Borrower, or (ii) an Affiliate of a competitor of the Borrower or a Person who is not engaged in the business of making 4 commercial loans in the ordinary course of its business, then it shall be within the Borrower's sole discretion whether such Person is an Eligible Assignee. "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 Borrower or any ERISA Affiliate or (b) has at any time within the preceding six years been maintained for the employees of the Borrower 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, together with the Borrower, 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. "Event of Default" means any of the events specified in Section 10.1, provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. "FDIC" means the Federal Deposit Insurance Corporation, or any successor thereto. "Federal Funds Rate" means, the rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then "Federal Funds Rate" shall mean the average of the quotations for the day for such transactions received by the Administrative Agent from three brokers of national standing. Rates for weekends or holidays shall be the same as the rate for the most immediate preceding Business Day. "First Union" means First Union National Bank, a national banking association, and its successors. 5 "Fiscal Quarter" means any quarter of any Fiscal Year. "Fiscal Year" means any fiscal year of the Borrower ending on December 31. "Funded Capital Expenditures" means, with respect to any Person for any period, all Capital Expenditures during such period for which funds have been set aside or reserved and which will not be paid from operating revenues of such Person. "Funded Debt" means all of the Borrower's Debt for Borrowed Money (other than Subordinated Debt). "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 Borrower and its Subsidiaries throughout the period indicated and consistent with the prior financial practice of the Borrower, provided, however, that any accounting principle or practice required to be changed by such 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 principal or practice may be so changed. "General Partner" means IPT in its capacity as general partner of the Borrower. "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, 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. "Guaranty Agreement" means the reference to the Guaranty Agreement of even date executed by IPT in favor of the Administrative Agent for the ratable benefit of the Agents and the Lenders substantially in the form of Exhibit F, as such agreement may be amended or supplemented. "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, 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. 6 "Hedging Agreement" means any agreement with respect to an interest rate swap, collar, cap, 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 Borrower under this Agreement, and any confirming letter executed pursuant to such hedging agreement, all as amended or modified. "Insignia" means Insignia Financial Group, Inc., a Delaware corporation. "Interest Expense" means, with respect to the Borrower for any period, the gross cash interest expense (including but without limitation interest expense attributable to Capital Leases but excluding interest expense with respect to Subordinated Debt) of the Borrower, all determined for such period in accordance with GAAP. "Interest Period" shall have the meaning assigned thereto in Section 3.1(b). "IPLP" means Insignia Properties, L.P., a Delaware limited partnership. "IPLP Pledge Agreement" means the Pledge Agreement of even date executed by IPLP in favor of the Administrative Agent for the ratable benefit of the Agents and the Lenders substantially in the form of Exhibit G, as such Pledge Agreement may be amended or supplemented, with the consent of the Lenders. "IPT" means Insignia Properties Trust, a Maryland real estate investment trust. "IPT Advisory Agreement" means the Second Amended and Restated Advisory Agreement dated August 1, 1997 among the Borrower, IPT and Insignia. "IPT Pledge Agreement" means the Pledge Agreement of even date executed by IPT in favor of the Administrative Agent for the ratable benefit of the Agents and the Lenders substantially in the form of Exhibit H, as such Pledge Agreement may be amended or supplemented, with the consent of the Lenders. "Lehman" means Lehman Commercial Paper Inc., a Delaware corporation, and its successors. "Lender" means each Person executing this Agreement as a Lender set forth on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 12.8. "Lending Office" means, with respect to any Lender, the office of such Lender maintaining such Lender's Commitment Percentage of the Loans. "Leverage" means, with respect to any Real Estate Entity, an amount determined by dividing the Debt of such Real Estate Entity by the EFV of the real property owned by such Real Estate Entity. 7 "LIBOR" means the rate for deposits in Dollars for a period equal to the Interest Period selected which appears on the Telerate Page 3750 at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of the applicable Interest Period. If, for any reason, such rate is not available, then "LIBOR" shall mean the rate per annum at which, as determined by First Union in its reasonable judgment, Dollars are being offered to leading banks at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected and in an amount approximately equal to the applicable Loan. "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula: LIBOR Rate = LIBOR ----------------------------- 1.00-LIBOR Reserve Percentage "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 3.1(a). "LIBOR Reserve Percentage" means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) in respect of Eurocurrency Liabilities as defined in Regulation D of the Board of Governors of the Federal Reserve System. "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. "Loan" means any revolving credit loan made to the Borrower pursuant to Section 2.1, and all such Loans collectively as the context requires. "Loan Documents" means, collectively, this Agreement, the Revolving Credit Notes, the Security Documents, and each other document, instrument and agreement executed and delivered by the Borrower, its Subsidiaries or their counsel in connection with this Agreement or otherwise referred to herein or contemplated hereby, all as may be amended or supplemented from time to time. "Material Adverse Effect" means, with respect to IPT or the Borrower, a material adverse effect on the properties, business, operations or condition (financial or otherwise) of IPT or the Borrower or the ability of IPT or the Borrower to perform the payment or other material obligations under the Loan Documents to which it is a party or which would materially impair the enforceability of any of the Loan Documents against any Person party thereto, other than the Agents or any of the Lenders or their Affiliates. 8 "Material Contract" means (a) any contract or other agreement, written or oral, of the Borrower involving monetary liability of or to the Borrower in an amount in excess of $1,000,000 per annum, or (b) any other contract or agreement, written or oral, of the Borrower the failure to comply with which could reasonably be expected to have a Material Adverse Effect. "Maturity Date" shall have the meaning given thereto in Section 2.6. "Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its successors; provided that, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then "Moody's" shall mean any other nationally recognized securities rating agency reasonably acceptable to the Borrower which is designated by the Required Lenders by notice to Administrative Agent and the Borrower. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, contributions within the preceding six years. "Net Operating Income" means, with respect to the Borrower for any period, the net operating income (or loss) of the Borrower for such period determined in accordance with GAAP. "NOI" means for any period: (a) With respect to any Real Estate Entity in which the Borrower owned a limited partner or other equity interest prior to the first day of the quarter ending on the date of such determination, the Net Operating Income of such Real Estate Entity for the period of four fiscal quarters ending on the date of determination; (b) With respect to any Real Estate Entity in which the Borrower did not own a limited partner or other equity interest on the first day of the quarter ending on the date of determination (a "New Real Estate Entity") and for which audited financial statements for the most recently-completed fiscal year of such New Real Estate Entity are available, the Net Operating Income of such New Real Estate Entity for the period of four fiscal quarters ending on the date of determination; and (c) With respect to any New Real Estate Entity for which audited financial statements are not available, 75% of the pro forma Net Operating Income of the New Real Estate Entity for the period of four consecutive fiscal quarters commencing on the date of determination. "Notice of Borrowing" shall have the meaning assigned thereto in Section 2.2(a). "Notice of Conversion/Continuation" shall have the meaning assigned thereto in Section 3.2. "Obligations" means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) all payment and other obligations owing by the Borrower to any Lender, an 9 Affiliate of any Lender, or any Agent under any Hedging Agreement and (c) all other fees and commissions (including attorney's fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Borrower to any Lender or Agent, of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note, and whether or not for the payment of money under or in respect of this Agreement, any Revolving Credit Note or any of the other Loan Documents. "Other Taxes" shall have the meaning assigned thereto in Section 3.11(b). "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 Borrower or any ERISA Affiliates or (b) has at any time within the preceding six years been maintained for the employees of the Borrower or any of their current or former 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. "Pledge Agreements" means the collective reference to the IPLP Pledge Agreement and the IPT Pledge Agreement. "Prime Rate" means, at any time, the rate of interest per annum publicly announced from time to time by First Union as its prime rate then in effect. The parties hereto acknowledge that the rate announced publicly by First Union as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. "Pro Rata Portion" means, with respect to any Real Estate Entity, the ratio (expressed as a percentage) of (a) the equity interest owned by the Borrower in such Real Estate Entity to (b) the total equity in such Real Estate Entity. "Real Estate Entity" means any limited partnership, limited liability company, corporation or other Person which has as its principal business the ownership of real property or debt secured by real property. "Register" shall have the meaning assigned thereto in Section 12.8(d). "Required Lenders" means, at any date, any combination of holders of greater than fifty percent of the aggregate unpaid principal amount of the Revolving Credit Notes, or if no amounts are outstanding under the Revolving Credit Notes, any combination of Lenders whose Commitment Percentages aggregate greater than fifty percent. 10 "Revolving Credit Notes" means the separate Revolving Credit Notes made by the Borrower payable to the order of each Lender, substantially in the form of Exhibit A hereto, evidencing the Credit Facility, and any amendments and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part; "Note" means any of such Revolving Credit Notes. "S&P" means Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies, a New York corporation, and its successors; provided that, if such division shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then "S&P" shall mean any other nationally recognized securities rating agency reasonably acceptable to the Borrower which is designated by the Required Lenders by notice to Administrative Agent and the Borrower. "Security Documents" means the collective reference to the Guaranty Agreement and the Pledge Agreements and each other agreement or writing pursuant to which the Borrower or the Guarantor pledges or grants a security interest in any property or assets securing the Obligations or any such Person guaranties the payment and/or performance of the Obligations. "Solvent" means, as to the Borrower on a particular date, that the Borrower (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its debts as they mature and (b) is not "Insolvent" as defined under the United States Bankruptcy Code or any applicable State insolvency law. "Subordinated Debt" means the collective reference to all Debt of the Borrower which (a) has a scheduled maturity date more than one year after the Maturity Date hereunder, (b) is not subject to any scheduled amortization or mandatory redemption feature of any kind, and (c) is subordinated with respect to payment, remedies and covenants to the Obligations and (with respect to Debt which is incurred by the Borrower after the date hereof) otherwise subordinated thereto to the reasonable satisfaction of the Agents and Required Lenders. "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). "Syndication Agent" means Lehman in its capacity as Syndication Agent. "Taxes" shall have the meaning assigned thereto in Section 3.11(a). "Termination Date" means the date on which the Credit Facility terminates pursuant to Section 2.6. "Termination Event" means: (a) a "Reportable Event" described in Section 4043 of ERISA for which notice has not been waived, or (b) the withdrawal of the Borrower 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, or (c) the institution of proceedings to terminate, or the 11 appointment of a trustee with respect to, any Pension Plan by the PBGC, 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, 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. "United States" means the United States of America. SECTION 1.2 General. Unless otherwise specified, a reference in this Agreement to a particular section, subsection, Schedule or Exhibit is a reference to that section, subsection, Schedule or Exhibit of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Any reference herein to "Charlotte time" shall refer to the applicable time of day in Charlotte, North Carolina. SECTION 1.3 Other Definitions and Provisions. (a) Use of Capitalized Terms. Unless otherwise defined therein, all capitalized terms defined in this Agreement shall have the defined meanings when used in this Agreement, the Revolving Credit Notes and the other Loan Documents or any certificate, report or other document made or delivered pursuant to this Agreement. (b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. ARTICLE CREDIT FACILITY SECTION.2.1 Commitment. Subject to the terms and conditions of this Agreement, each Lender severally irrevocably commits to make Loans to the Borrower from time to time from the Closing Date through the Termination Date as requested by the Borrower in accordance with the terms of Section 2.2; provided, that (a) the aggregate principal amount of all outstanding Loans (after giving effect to any amount requested and funded and the use of the proceeds thereof) shall not exceed the Aggregate Commitment and (b) the principal amount of outstanding Loans from any Lender to the Borrower shall not at any time exceed such Lender's Commitment. Each Loan by a Lender shall be in a principal amount equal to such Lender's Commitment Percentage of the aggregate principal amount of Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow Loans hereunder until the Termination Date. 12 SECTION 2.2 Procedure for Advances of Loans. (a) Requests for Borrowing. The Borrower shall give the Administrative Agent irrevocable prior written notice substantially in the form attached hereto as Exhibit B (a "Notice of Borrowing") not later than 12:00 noon (Charlotte time) (i) at least one Business Day before each Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such borrowing, which shall be with respect to Base Rate Loans in an aggregate principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof and with respect to LIBOR Rate Loans in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof, (C) whether the Loans are to be LIBOR Rate Loans or Base Rate Loans or a combination thereof and, if a combination thereof, the amount allocable to each and (D) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto. Notices received after 12:00 noon (Charlotte time) shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify and furnish each Lender with a copy of each Notice of Borrowing. (b) Disbursement of Loans. Not later than 1:00 p.m. (Charlotte time) on the proposed borrowing date, each Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Lender's Commitment Percentage of the Loans to be made on such borrowing date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 2.2 in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrower maintained with the Administrative Agent as identified in the most recent Notice of Account Designation substantially in the form of Exhibit I hereto (a "Notice of Account Designation") delivered by the Borrower to the Administrative Agent or as may be otherwise agreed upon by the Borrower and the Administrative Agent from time to time. Subject to Section 3.7 hereof, the Administrative Agent shall not be obligated to disburse the amounts to be funded by a Lender pursuant to this Section 2.2 to the extent that such Lender has not made such amounts available to the Administrative Agent. SECTION 2.3 Repayment of Loans. (a) Repayment on Termination Date. The Borrower shall repay the outstanding principal amount of all Loans in full, together with all accrued but unpaid interest thereon, on the Termination Date. (b) Mandatory Repayment of Excess Loans. If at any time the outstanding principal amount of all Loans exceeds the Aggregate Commitment, the Borrower shall repay within ten (10) Business Days after notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, the Loans in an amount equal to such excess. Each such repayment shall be accompanied by accrued interest on the amount repaid and any amount required to be paid pursuant to Section 3.9 hereof. 13 (c) Optional Repayments. The Borrower may at any time and from time to time repay the Loans, in whole or in part without premium (but subject to Section 3.9), upon irrevocable prior notice to the Administrative Agent not later than 12:00 noon (Charlotte time) (i) at least three (3) Business Days with respect to LIBOR Rate Loans and (ii) at least one (1) Business Day with respect to Base Rate Loans specifying the date and amount of repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans, or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial repayments shall be in an aggregate amount of $2,500,000 or a whole multiple of $500,000 in excess thereof with respect to Base Rate Loans and $5,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans. SECTION 2.4 Revolving Credit Notes. Each Lender's Loans and the obligation of the Borrower to repay such Loans shall be evidenced by a Revolving Credit Note executed by the Borrower payable to the order of such Lender representing the Borrower's obligation to pay such Lender's Commitment or, if less, the aggregate unpaid principal amount of all Loans made and to be made by such Lender to the Borrower hereunder, plus interest and all other fees, charges and other amounts due thereon. Each Revolving Credit Note shall be dated the Closing Date and shall bear interest on the unpaid principal amount thereof at the applicable interest rate per annum specified in Section 3.1. SECTION 2.5 Increase/Reduction of the Aggregate Commitment. (a) The Borrower shall have the option, which may be exercised upon at least three (3) Business Days prior written notice to the Administrative Agent not later than one hundred eighty (180) days after the Closing Date, to increase the Aggregate Commitment from Fifty Million Dollars ($50,000,000) to Seventy Million Dollars ($70,000,000), subject to the satisfaction of each of the following conditions: (i) The merger of IPT and Angeles Mortgage Investment (the "IPT/Angeles Merger") shall have been consummated; (ii) No Default or Event of Default shall have occurred and be continuing; and (iii) The Borrower shall have paid to First Union and Lehman the fees and amounts set forth or referenced in Section 3.3(b) of this Agreement. (b) The Borrower shall have the right at any time and from time to time, upon at least three (3) Business Days prior written notice to the Administrative Agent, to permanently reduce, in whole at any time or in part from time to time, without premium, the Aggregate Commitment in an aggregate principal amount not less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof. (c) Each permanent reduction permitted pursuant to this Section 2.5 shall be accompanied by a payment of principal sufficient to reduce the aggregate outstanding Loans of the Lenders to an amount not in excess of the Aggregate Commitment as so reduced and by 14 payment of accrued interest on the amount of such repaid principal. Any reduction of the Aggregate Commitment to zero shall be accompanied by payment of all outstanding Obligations and, if such reduction is permanent, termination of the Commitments and Credit Facility. Any repayment of a LIBOR Rate Loan resulting from the reduction of the Aggregate Commitment shall, if such repayment occurs on a day which is not the last day of the then current Interest Period applicable thereto, be subject to the provisions of Section 3.9 hereof. SECTION 2.6 Termination of Credit Facility. The Credit Facility shall terminate on the earliest of (a) the third anniversary of the Closing Date (the "Maturity Date"), (b) the date of termination by the Borrower pursuant to Section 2.5(a) and (c) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 10.2(a). SECTION 2.7 Use of Proceeds. The Borrower shall use the proceeds of the Loans to make investments permitted by and subject to the limitations of Section 9.4(c). The proceeds of the Loans may also be used to reimburse the Borrower for amounts previously expended by the Borrower to fund such acquisitions subject to compliance by the Borrower with Section 9.4(c). ARTICLE GENERAL LOAN PROVISIONS SECTION 3.1 Interest. (a) Interest Rate Options. Subject to the provisions of this Section 3.1, at the election of the Borrower, the aggregate principal balance of the Revolving Credit Notes or any portion thereof shall bear interest at the Base Rate or the LIBOR Rate plus the Applicable Margin. The Borrower shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given pursuant to Section 2.2 or at the time a Notice of Conversion/Continuation is given pursuant to Section 3.2. Each Loan or portion thereof bearing interest based on the Base Rate shall be a "Base Rate Loan" and each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a "LIBOR Rate Loan". Any Loan or any portion thereof as to which the Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (b) Interest Periods. In connection with each LIBOR Rate Loan, the Borrower, by giving notice at the times described in Section 3.1(a), shall elect an interest period (each, an "Interest Period") to be applicable to such Loan, which Interest Period shall be a period of one (1), two (2), three (3) or six (6) months with respect to each LIBOR Rate Loan; provided that: (i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan or and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the next preceding Interest Period expires; 15 (ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (iv) no Interest Period shall be permitted to extend beyond the Termination Date; and (v) there shall be no more than five (5) Interest Periods outstanding at any time. (c) Default Rate. Upon the occurrence and during the continuance of an Event of Default, (i) all outstanding LIBOR Rate Loans shall upon the request of the Required Lenders bear interest at a rate per annum two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans, and (ii) all outstanding Base Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans. To the maximum extent permitted by applicable law, interest shall continue to accrue on the Revolving Credit Notes after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign. (d) Interest Payment and Computation. Interest on each Base Rate Loan shall be payable in arrears on the last Business Day of each fiscal quarter and interest on each LIBOR Rate Loan shall be payable on the last day of each Interest Period applicable thereto, provided that, in the case of an Interest Period in excess of three (3) months, accrued interest shall also be paid on the day which is three (3) months after the commencement of such Interest Period. All interest rates, fees and commissions provided hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed. (e) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder or under any of the Revolving Credit Notes and charged or collected pursuant to the terms of this Agreement or pursuant to any of the Revolving Credit Notes exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent's option promptly refund to the Borrower any interest received by Lenders in excess of the maximum lawful rate or shall apply such excess to the principal balance of the Obligations. It is the intent hereof that the Borrower not pay or contract to pay, and that neither the 16 Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law. SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans. Provided that no Default (other than a Default arising from any of the events specified in Section 10.1(e), (f) and (n) hereof) or Event of Default has occurred and is then continuing, the Borrower shall have the option to (a) convert at any time all or any portion of its outstanding Base Rate Loans in a principal amount equal to $5,000,000 or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans or (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $2,500,000 or a whole multiple of $500,000 in excess thereof into Base Rate Loans or (c) upon the expiration of any Interest Period, continue the relevant LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrower desires to convert or continue Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in substantially the form attached as Exhibit C (a "Notice of Conversion/ Continuation") not later than 12:00 noon (Charlotte time) three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation. SECTION 3.3 Fees. (a) Commitment Fee. The Borrower shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable commitment fee (the "Commitment Fee") of 0.25% per annum for so long as Loans under Section 2.1 are limited to an aggregate amount of $50,000,000 and 0.375% per annum for each day, if any, after the Borrower elects to increase the Aggregate Commitment to Seventy Millions Dollars ($70,000,000) in accordance with Section 2.5(a). The Commitment Fee due to each Lender shall commence to accrue on the date hereof and shall cease to accrue on the earlier of (i) the termination of the Commitment of such Lender and (ii) the Termination Date. The Commitment Fee shall be payable in arrears (i) on the last Business Day of each fiscal quarter during the term of this Agreement with the first payment due on March 31, 1998, and (ii) on the Termination Date. Such Commitment Fee shall be promptly distributed by the Administrative Agent to the Lenders pro rata in accordance with the Lenders' respective Commitment Percentages. (b) Other Fees. The Borrower agrees to pay to First Union and Lehman, for their respective accounts, the fees set forth in the separate fee letter agreement executed by the Borrower in favor of such Persons dated October 24, 1997, as amended by letter agreement of even date. SECTION 3.4 Manner of Payment. Except as otherwise provided herein, each payment (including repayments described in Article II) by the Borrower on account of the principal of or interest on the Loans or of any fee, commission or other amounts payable to the 17 Lenders under this Agreement or any Revolving Credit Note shall be made not later than 1:00 p.m. (Charlotte time) on the date specified for payment under this Agreement to the Administrative Agent for the account of the Lenders pro rata in accordance with their respective Commitment Percentages at the Administrative Agent's Office, in Dollars, in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on such date for the purposes of Section 10.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall credit each Lender's account with its pro rata share of such payment in accordance with such Lender's Commitment Percentage and shall wire advice of the amount of such credit to each Lender. Subject to Section 3.1(b)(ii), if any payment under this Agreement or any Revolving Credit Note shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. SECTION 3.5 Crediting of Payments and Proceeds. In the event that the Borrower shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 10.2, all payments received by the Lenders upon the Revolving Credit Notes and the other Obligations and all net proceeds from the enforcement of the Obligations shall be applied first to all expenses then due and payable by the Borrower hereunder, then to all indemnity obligations then due and payable by the Borrower hereunder, then to all Administrative Agent's fees then due and payable, then to all commitment and other fees and commissions then due and payable, then to accrued and unpaid interest on the Revolving Credit Notes and then to the principal amount of the Revolving Credit Notes, in that order. SECTION 3.6 Adjustments. If any Lender (a "Benefitted Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or if any Lender shall at any time receive any collateral in respect to its Loans (whether voluntarily or involuntarily, by set-off or otherwise) in a greater proportion than any such payment to and collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such Benefitted Lender shall purchase for cash from the other Lenders such portion of each such other Lender's Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender's Loans may exercise all rights of payment with respect to such portion as fully as if such Lender were the direct holder of such portion. SECTION 3.7 Nature of Obligations of Lenders Regarding Loans; Assumption by the Administrative Agent. The obligations of the Lenders under this Agreement to make the Loans are several and are not joint or joint and several. Unless the Administrative Agent shall 18 have received notice from a Lender prior to a proposed borrowing date that such Lender will not make available to the Administrative Agent such Lender's ratable portion of the amount to be borrowed on such date (which notice shall not release such Lender of its obligations hereunder), the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the proposed borrowing date in accordance with Section 2.2(b) and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If such amount is made available to the Administrative Agent on a date after such borrowing date, such Lender shall pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the amount of such Lender's Commitment Percentage of such borrowing, times (b) the average Federal Funds Rate during such period as determined by the Administrative Agent, times (c) a fraction the numerator of which is the number of days that elapse from and including such borrowing date to the date on which such Lender's Commitment Percentage of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent with respect to any amounts owing under this Section 3.7 shall be conclusive, absent manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three (3) Business Days of such borrowing date, the Administrative Agent shall be entitled to recover such amount made available by the Administrative Agent with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to make its Commitment Percentage of any Loan available shall not relieve it or any other Lender of its obligation hereunder to make its Commitment Percentage of such Loan available on such borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Commitment Percentage of such Loan available on the borrowing date. In the event that, at any time when the Borrower is not in Default and has otherwise satisfied each of the conditions in Section 4.3 hereof, a Lender for any reason fails or refuses to fund its portion of a borrowing and such failure shall continue for a period in excess of thirty (30) days, then, until such time as such Lender has funded its portion of such borrowing (which late funding shall not absolve such Lender from any liability it may have to the Borrower), or all other Lenders have received payment in full from the Borrower (whether by repayment or prepayment) or otherwise of an amount equal to the principal and interest due in respect of such borrowing, such non-funding Lender shall not have the right (A) to vote regarding any issue on which voting is required or advisable under this Agreement or any other Loan Document, and such Lender's Commitment Percentage of the Loans shall not be counted as outstanding for purposes of determining "Required Lenders" hereunder, and (B) to receive payments of principal, interest or fees from the Borrower, the Administrative Agent or the other Lenders in respect of its Commitment Percentage of the Loans. SECTION 3.8 Changed Circumstances. (a) Circumstances Affecting LIBOR Rate Availability. If with respect to any Interest Period the Administrative Agent or any Lender (after consultation with the Administrative Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars, in the applicable amounts are not being quoted via Telerate Page 3750 or offered to the Administrative Agent or such Lender for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrower. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, the 19 obligation of any affected Lender to make or continue its portion of such LIBOR Rate Loans shall be suspended. Upon receipt of such notice, notwithstanding anything contained herein, the then outstanding principal amount of such Lender's Commitment Percentage of each affected LIBOR Rate Loan, together with accrued interest thereon, shall automatically be converted to a Base Rate Loan on either (a) the last day of the then current Interest Period applicable to such affected LIBOR Rate Loan if such Lender may lawfully continue to maintain and fund its portion of such LIBOR Rate Loan to such date or (b) immediately if such Lender may not lawfully continue to fund and maintain its portion of such affected LIBOR Rate Loan to such day. (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Authority, central bank or comparable agency, shall make it unlawful for any Lender (or its Lending Office) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders. Before giving any notice to the Administrative Agent pursuant to this Section 3.8, such Lender shall designate a different lending office if such designation will avoid the need for giving such notice and will not, in the reasonable judgment of such Lender, be otherwise materially disadvantageous to such Lender. Upon receipt of such notice, notwithstanding anything contained herein, the then outstanding principal amount of such Lender's Commitment Percentage of each affected LIBOR Rate Loan, together with accrued interest thereon, shall automatically be converted to a Base Rate Loan on either (a) the last day of the then current Interest Period applicable to such affected LIBOR Rate Loan if such Lender may lawfully continue to maintain and fund its portion of such LIBOR Rate Loan to such date or (b) immediately if such Lender may not lawfully continue to fund and maintain its portion of such affected LIBOR Rate Loan to such day. (c) Increased Costs. If, after the date hereof, the introduction of, or any change in, any Applicable Law, or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Lending Office) with any request or directive (whether or not having the force of law) of such Authority, central bank or comparable agency: (i) shall subject any Lender (or its Lending Office) to any tax, duty or other charge with respect to any Revolving Credit Note or shall change the basis of taxation of payments to any Lender (or its Lending Office) of the principal of or interest on any Revolving Credit Note or any other amounts due under this Agreement in respect thereof (except taxes contemplated by Section 3.11 and for changes in the rate of tax on the overall net income of such Lender or its Lending Office imposed by the jurisdiction in which such Lender is organized or is or should be qualified to do business or such Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve 20 System), special deposit, insurance or capital or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender (or its Lending Office) or shall impose on any Lender (or its Lending Office) or the foreign exchange and interbank markets any other condition affecting its obligation to make its Commitment Percentage of such LIBOR Rate Loans or its Commitment Percentage of existing LIBOR Rate Loans; and the result of any of the foregoing is to increase the costs to such Lender of maintaining any LIBOR Rate Loan or to reduce the yield or amount of any sum received or receivable by such Lender under this Agreement or under the Revolving Credit Notes in respect of a LIBOR Rate Loan, then, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or Lenders for such increased cost or reduction. Each Lender will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section 3.8(c) and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender made in good faith, be otherwise disadvantageous to such Lender. Any Lender claiming compensation under this Section 3.8(c) shall notify the Borrower of any event occurring after the Closing Date entitling such Lender to such compensation as promptly as practicable; provided that if such Lender fails to give such notice within forty-five (45) days after its obtains actual knowledge of such an event, such Lender shall, with respect to such compensation in respect of any costs resulting from such event, only be entitled to payment under this Section 3.8(c) for costs incurred from and after the date forty-five (45) days prior to the date that such Lender does give such notice. Any Lender claiming compensation under this Section 3.8(c) shall provide the Borrower with a written certificate setting forth the additional amount or amounts to be paid to it hereunder and calculations therefor in reasonable detail. Such certificate shall be presumptively correct absent manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. If any Lender demands compensation under this Section 3.8(c), the Borrower may at any time, upon at least five (5) Business Days' prior notice to such Lender, prepay in full such Lender's Commitment Percentage of the then outstanding LIBOR Rate Loans, together with accrued interest thereon to the date of prepayment, along with any reimbursement required under Section 3.9 hereof. Concurrently with prepaying such Commitment Percentage of LIBOR Rate Loans the Borrower may borrow a Base Rate Loan, or a LIBOR Rate Loan not so affected, from such Lender, and such Lender shall, if so requested, make such Advance in an amount such that the outstanding principal amount of the affected Revolving Credit Note or Revolving Credit Notes held by such Lender shall equal the outstanding principal amount of such Revolving Credit Note or Revolving Credit Notes immediately prior to such prepayment. (d) Effect on Other Advances. If notice has been given pursuant to Section 3.8(a), (b) or (c) suspending the obligation of any Lender to make its Commitment Percentage of any type of LIBOR Rate Loan, or requiring such Lender's Commitment Percentage of LIBOR Rate Loans to be repaid or prepaid, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such repayment no longer apply (which notice such Lender shall 21 give promptly), all advances which would otherwise be made by such Lender as its Commitment Percentage of LIBOR Rate Loans shall, unless otherwise notified by the Borrower, be made instead as Base Rate Loans. SECTION 3.9 Reimbursement. Whenever any Lender shall sustain or incur any losses, other than lost profits, or out-of-pocket expenses (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow on a date specified therefor in a Notice of Borrowing or Notice of Continuation/Conversion or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor, the Borrower agrees to pay to such Lender, promptly following such Lender's demand, an amount sufficient to compensate such Lender for all such losses and out-of-pocket expenses. Such Lender's good faith determination of the amount of such losses or out-of-pocket expenses, as set forth in writing and accompanied by calculations in reasonable detail demonstrating the basis for its demand, shall be presumptively correct absent manifest error. The obligations of the Borrower contained in this Section 3.9 shall survive for a period of one year following the payment in full of the Revolving Credit Notes and the termination of the Commitments. SECTION 3.10 Capital Requirements. If either (a) the introduction of, or any change in, or in the interpretation of, any Applicable Law after the date hereof or (b) compliance with any guideline or request made after the date hereof by any central bank or comparable agency or other Governmental Authority (whether or not having the force of law), has or would have the effect of reducing the rate of return on the capital of, or has affected or would affect the amount of capital required to be maintained by, any Lender or any corporation controlling such Lender as a consequence of, or with reference to the Commitments and other commitments of this type, below the rate which the Lender or such other corporation could have achieved but for such introduction, change or compliance, then within five (5) Business Days after written demand by any such Lender, the Borrower shall pay to such Lender from time to time as specified by such Lender additional amounts sufficient to compensate such Lender or other corporation for such reduction. Any Lender claiming compensation under this Section 3.10 shall notify the Borrower of any event occurring after the date of this Agreement entitling such Lender to such compensation as promptly as practicable, but in any event within forty-five (45) days, after such Lender obtains actual knowledge thereof; provided that if such Lender fails to give such notice within forty-five (45) days after it obtains actual knowledge of such an event, such Lender shall, with respect to such compensation in respect of any costs resulting from such event, only be entitled to payment under this Section 3.10 for costs incurred from and after the date forty-five (45) days prior to the date that such Lender does give such notice. A certificate of such Lender setting forth the amount to be paid to such Lender by the Borrower as a result of any event referred to in this paragraph and supporting calculations in reasonable detail shall be presumptively correct absent manifest error. SECTION 3.11 Taxes. (a) Payments Free and Clear. Any and all payments by the Borrower hereunder or under the Revolving Credit Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholding, and all liabilities with respect thereto excluding, (i) in the case of each Lender and the Administrative 22 Agent, income and franchise taxes imposed by the jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof and (ii) in the case of each Lender, income and franchise taxes imposed by the jurisdiction of such Lender's Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Revolving Credit Note to any Lender or the Administrative Agent, (A) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.11) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the amount such party would have received had no such deductions been made, (B) the Borrower shall make such deductions, (C) the Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with Applicable Law, and (D) the Borrower shall deliver to the Administrative Agent evidence of such payment to the relevant taxing authority or other authority in the manner provided in Section 3.11(d). (b) Stamp and Other Taxes. In addition, the Borrower shall pay any present or future stamp, registration, recordation or documentary taxes or any other similar fees or charges or excise or property taxes, levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Loans, the other Loan Documents, or the perfection of any rights or security interest in respect thereto (hereinafter referred to as "Other Taxes"). The Borrower shall not be liable for the payment of Other Taxes which are payable solely by reason of the assignment by any Lender of its interests, rights and obligations under this Agreement. (c) Indemnity. The Borrower shall indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.11) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within thirty (30) days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Evidence of Payment. Within thirty (30) days after the date of any payment of Taxes or Other Taxes, the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 12.1, the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment satisfactory to the Administrative Agent. (e) Delivery of Tax Forms. Each Lender organized under the laws of a jurisdiction other than the United States or any state thereof shall deliver to the Borrower, with a copy to the Administrative Agent, on the Closing Date or concurrently with the delivery of the relevant Assignment and Acceptance, as applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms 1001, as applicable (or successor forms) properly completed and certifying in each case that such Lender is entitled to a complete exemption from withholding or deduction for or on account of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8 23 or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding taxes. Each such Lender further agrees to deliver to the Borrower, with a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower, certifying in the case of a Form 1001 or 4224 that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes (unless in any such case an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders such forms inapplicable or the exemption to which such forms relate unavailable and such Lender notifies the Borrower and the Administrative Agent that it is not entitled to receive payments without deduction or withholding of United States federal income taxes) and, in the case of a Form W-8 or W-9, establishing an exemption from United States backup withholding tax. The Borrower shall not be required to gross-up pursuant to this Section 3.11 or otherwise for any deductions on account of withholding taxes from amounts owing to a Lender who has not complied with this clause (e). (f) Survival. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 3.11 shall survive the payment in full of the Revolving Credit Notes and the termination of the Commitments. SECTION 3.12 Claims for Increased Costs and Taxes. In the event that any Lender shall decline to make LIBOR Rate Loans pursuant to Section 3.8(a) or (b) hereof or shall have notified the Borrower that it is entitled to claim compensation pursuant to Section 3.8(c), 3.10 or 3.11 hereof or is unable to complete the form required or is subject to withholding as provided in Section 3.11 hereof (each such lender being an "Affected Lender"), the Borrower at its own cost and expense may designate a replacement bank (a "Replacement Lender") to assume the Commitment and the obligations of any such Affected Lender hereunder, and to purchase the outstanding Revolving Credit Note of such Affected Lender and such Affected Lender's rights hereunder and with respect thereto, without recourse upon, or warranty by, or expense to, such Affected Lender, for a purchase price equal to (unless such Lender agrees to a lesser amount) the outstanding principal amount of the Loans of such Affected Lender plus all interest accrued and unpaid thereon and all other amounts owing to such Affected Lender hereunder, including without limitation, any amount which would be payable to such Affected Lender pursuant to Section 3.8(c), and upon such assumption and purchase by the Replacement Lender, such Replacement Lender shall be deemed to be a "Lender" for purposes of this Agreement and such Affected Lender shall cease to be a "Lender" for purposes of this Agreement and shall no longer have any obligations or rights hereunder (other than any obligations or rights which according to this Agreement shall survive the termination of the Commitment). In the event any Lender receives a refund or credit with respect to withholding taxes paid by the Borrower, such Lender shall promptly repay such amounts to the Borrower. 24 ARTICLE CLOSING; CONDITIONS OF CLOSING AND BORROWING SECTION 4.1 Closing. The closing shall take place at the offices of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on December 30, 1997, or on such other place or date as the parties hereto shall mutually agree. SECTION 4.2 Conditions to Closing and Initial Loan. The obligation of the Lenders to close this Agreement and to make the initial Loan are subject to the satisfaction of each of the following conditions: (a) Executed Loan Documents. This Agreement, the Revolving Credit Notes, the Guaranty Agreement and the Pledge Agreements shall each have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default shall exist hereunder. (b) Closing Certificates; etc. (i) Certificate of IPT. The Administrative Agent shall have received a certificate from the chief executive officer or president of the General Partner, in form and substance reasonably satisfactory to the Administrative Agent, to the effect that all representations and warranties of the Borrower contained in this Agreement and the other Loan Documents are in all material respects true, correct and complete to the best knowledge of such Person; that to the best knowledge of such Person, the Borrower is not in violation of any of the covenants contained in this Agreement and the other Loan Documents; that, after giving effect to the transactions contemplated by this Agreement to occur on the Closing Date, no Default or Event of Default has occurred and is continuing; and that to the best knowledge of such Person, the Borrower has satisfied each of the closing conditions. (ii) Certificate of Secretary of the General Partner. The Administrative Agent shall have received a certificate of the secretary or assistant secretary of the General Partner certifying on behalf of the Borrower that attached thereto is a true and complete copy of the certificate of limited partnership of the Borrower and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of formation; that attached thereto is a true and complete copy of the partnership agreement of the Borrower as in effect on the date of such certification; that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors or other governing body of IPT in its capacity as general partner of the Borrower authorizing the execution, delivery and performance of the Loan Documents to which the Borrower is a party; and as to the incumbency and genuineness of the signature of each officer of the General Partner executing Loan Documents to which the Borrower is a party. (iii) Certificates of Good Standing. The Administrative Agent shall have received long-form certificates as of a recent date of the good standing of the 25 Borrower and IPT under the laws of its jurisdiction of formation and, where available, a certificate of the relevant taxing authorities of such jurisdictions certifying that such Person has filed required tax returns and owes no delinquent taxes. (iv) Opinions of Counsel. The Administrative Agent shall have received a favorable opinion of Simpson Thacher & Bartlett, special counsel to the Borrower and IPT, John K. Lines, Secretary of IPT, and Douglas G. Brown, Esq., special counsel to the Borrower and IPT with respect to certain matters of South Carolina law, addressed to the Agents and Lenders with respect to such Persons, the Loan Documents, the security interests created thereunder and such other matters as the Lenders shall reasonably request. (The opinion of Simpson Thacher & Bartlett shall be in form and substance customary for transactions of this type.) (v) Insurance. Certificates or other evidence reasonably satisfactory to the Agents that the insurance coverage required by this Agreement and the other Loan Documents is in full force and effect, and true, correct and complete copies of the policies of such insurance, if requested by the Administrative Agent. (vi) Tax Forms. Unless the Borrower otherwise consents, the Administrative Agent shall have received copies of the United States Internal Revenue Service forms required by Section 3.11 hereof. (c) No Default. No Default or Event of Default shall have occurred and be continuing. (d) Financial Matters. (i) Financial Statements. The Agents shall have received the most recent audited consolidated financial statements of IPT and its Subsidiaries and unaudited consolidated financial statements for the Borrower and its Subsidiaries. The Agents shall have also received a certificate of the president or treasurer of the General Partner in the form of Exhibit D. (ii) Financial Condition Certificate. The Borrower shall have delivered to the Administrative Agent a certificate, in form and substance reasonably satisfactory to the Agents, and certified as accurate by the chief executive officer or president of the General Partner on behalf of the Borrower, that (A) the Borrower is Solvent, (B) the Borrower's material payables are current and not past due and (C) the financial data and models previously delivered to the Agents represent the good faith opinion (based upon the assumptions set forth therein) of the Borrower as to the results contained therein. (iii) Payment at Closing; Fee Letter. The Borrower shall have paid to First Union, Lehman and the Lenders the fees set forth or referenced in Section 3.3 of this Agreement and (to the extent submitted for payment a reasonable time prior to the Closing Date) any accrued and unpaid fees or commissions then due hereunder (including, without limitation, reasonable legal fees and expenses), and 26 (to the extent submitted for payment a reasonable time prior to the Closing Date) to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents. The Agents shall have received a duly authorized and executed copy of the fee letter agreement referred to in Section 3.3(b). (e) Miscellaneous. (i) Notice of Borrowing. The Administrative Agent shall have received the Notice of Borrowing. (ii) Proceedings and Documents. All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be in form and substance reasonably satisfactory to the Agents and Lenders. The Agents and Lenders shall have received copies of all other instruments and other evidence as such Persons may reasonably request, in form and substance reasonably satisfactory thereto with respect to the transactions contemplated by this Agreement. (iii) Due Diligence and Other Documents. The Borrower shall have delivered to the Agents such other documents and certificates as the Agents may reasonably request sufficiently prior to the Closing Date to permit the delivery thereof, all certified by a secretary or assistant secretary of the General Partner on behalf of the Borrower as a true and correct copy thereof. (iv) Perfection. The Borrower shall have executed and delivered to the Administrative Agent such instruments and documents (including, without limitation, UCC Financing Statements, stock certificates and stock powers, notices to general partners, etc.) as the Administrative Agent may reasonably deem necessary to perfect the Liens purported to be granted under the Security Documents. (v) IPT Advisory Agreement. The Borrower shall have delivered to the Agents a fully executed counterpart of the IPT Advisory Agreement, which shall be in full force and effect. (vi) Letter Agreement. The Agent shall have received a fully-executed counterpart of the letter agreement of even date with this Agreement between Insignia Commercial Group, Inc., Insignia Residential Group, Inc. and the Administrative Agent confirming the right to terminate Management Agreements, without penalty, upon the occurrence of a Default or an Event of Default under this Agreement. SECTION 4.3 Conditions to All Loans. The obligation of the Lenders to make any Loan is subject to the satisfaction of the following conditions precedent on the relevant borrowing date: 27 (a) Continuation of Representations and Warranties. The representations and warranties contained in Article V shall be true and correct in all material respects on and as of such borrowing with the same effect as if made on and as of such date. (b) No Existing Default. No Default or Event of Default shall have occurred and be continuing hereunder on the borrowing date with respect to such Loan or after giving effect to the Loans to be made on such date. (c) Notice of Borrowing. The Administrative Agent shall have received the Notice of Borrowing. SECTION 4.4 Delivery of Certificates by Administrative Agent. The Administrative Agent shall furnish each Lender with a copy of each certificate delivered to the Administrative Agent pursuant to Section 4.2(b) and (d) and Section 4.3(c) hereof. ------------------------------ ARTICLE REPRESENTATIONS AND WARRANTIES OF THE BORROWER SECTION 5. Representations and Warranties. To induce the Agents and Lenders to enter into this Agreement and the Lenders to make Loans hereunder, the Borrower hereby represents and warrants to the Agents and Lenders that: (a) Organization; Power; Qualification. The Borrower is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware, 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, the failure in which to so qualify or be authorized could reasonably be expected to have a Material Adverse Effect. (b) Authorization of Agreement, Loan Documents and Borrowing. The Borrower has the right, power and authority and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents to which the Borrower is a party have been duly executed and delivered by the duly authorized officers of the General Partner on behalf of the Borrower, and each such document constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies, and public policy. (c) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by the Borrower of the Loan Documents to 28 which it is a party, in accordance with their respective terms, the borrowings hereunder and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or violate any Applicable Law relating to the Borrower, (ii) conflict with, result in a breach of or constitute a default under the Partnership Agreement of the Borrower or any material indenture, agreement or other instrument to which the Borrower is a party or by which any of its properties may be bound or any Governmental Approval relating to the Borrower, or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower other than Liens arising under the Loan Documents or permitted by Section 9.3. (d) Compliance with Law; Governmental Approvals. The Borrower (i) has all material 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 knowledge of the Borrower, overtly threatened attack by direct or collateral proceeding, and (ii) is in compliance in all material respects with each Governmental Approval applicable to it and in compliance in all material respects with all other Applicable Laws relating to it or any of its respective properties, except to the extent that the failure to have any such approval or to so be in compliance would not reasonably be expected to have a Material Adverse Effect. (e) Tax Returns and Payments. The Borrower has duly filed or caused to be filed, or has received an extension for, 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 federal, state, local and other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are then due and payable. No Governmental Authority has asserted any material Lien or other claim against the Borrower with respect to unpaid taxes which has not been discharged or resolved. The charges, accruals and reserves on the books of the Borrower in respect of federal, state, local and other taxes for all Fiscal Years and portions thereof since the organization of the Borrower are in the judgment of the Borrower adequate, and the Borrower does not have any knowledge of additional taxes or assessments for any of such years. (f) Intellectual Property Matters. The Borrower owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are required to conduct its business. 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) the Borrower is not liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations, to the extent that such revocation, infringement or liability would reasonably be expected to have a Material Adverse Effect. (g) Environmental Matters. (i) To the Borrower's Actual Knowledge, the properties owned by the Borrower do not contain, and to its Actual Knowledge have not previously 29 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 upon the Borrower; (ii) To the Borrower's Actual Knowledge, such properties and all operations of the Borrower 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 upon the Borrower, and the Borrower has not caused contamination at, under or about such properties or such operations which could reasonably be expected to have a Material Adverse Effect upon the continued operation of such properties and which could reasonably be expected to have a Material Adverse Effect upon the Borrower; (iii) The Borrower (a) has not 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 its properties or its operations, nor (b) has 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 upon the Borrower; (iv) To the Borrower's Actual Knowledge, the Borrower has not caused Hazardous Materials to be transported or disposed of from the properties of the Borrower 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 upon the Borrower, nor to the Borrower's Actual Knowledge has the Borrower 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 upon the Borrower; (v) No judicial proceedings or governmental or administrative action is pending, or, to the Actual Knowledge of the Borrower, overtly threatened, under any Environmental Law to which the Borrower is or will be named as a party with respect to such properties or operations of the Borrower 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 upon the Borrower; and (vi) To its Actual Knowledge, the Borrower has not caused any release, or to the Borrower'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 upon the Borrower. 30 (h) ERISA. (i) Neither the Borrower nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 5.1(h); (ii) The Borrower 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. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code. No liability has been incurred by the Borrower 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 Borrower has been terminated, and to the knowledge of the Borrower 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 Borrower 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 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; (iv) Neither the Borrower 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 Borrower, 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 Borrower after due inquiry, threatened concerning or involving any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA) 31 currently maintained or contributed to by the Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan. (i) Margin Stock. The Borrower is not engaged principally in or has as one of its activities the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used in Regulations G and U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation G, T, U or X of such Board of Governors or without executing and delivering to the Administrative Agent a properly completed Federal Reserve Form U-1. (j) Government Regulation. The Borrower is not 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) and neither the Borrower nor any Material Subsidiary thereof is, or after giving effect to any Loan will be, subject to regulation under the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as amended, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby. (k) Certain Contracts and Properties. Each Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. The Borrower has delivered to eac Agent a true and complete copy of each Material Contract with respect to which a copy has been requested by such Agent. (l) Financial Statements. The balance sheet of IPT as of September 30, 1997 and the related statements of income and retained earnings and cash flows for the fiscal period then ended, copies of which have been furnished to the Agents and each Lender, fairly present the financial condition of IPT as at such dates, and the results of the operations and changes of financial position for the periods then ended (subject to year-end audit adjustments). All such financial statements have been prepared in accordance with GAAP (other than the absence of footnotes). The Borrower has no material Debt, obligation or other unusual forward or long-term commitment which is not fairly reflected in the foregoing financial statements or in the notes to IPT's financial statements of December 31, 1996. (m) No Material Adverse Change. Since September 30, 1997, there has been no material adverse change in the business, operations, or condition (financial or otherwise) of the Borrower and no event has occurred or condition arisen that could reasonably be expected to have Material Adverse Effect. (n) Solvency. As of the Closing Date and after giving effect to each Loan made hereunder, the Borrower will be Solvent. (o) Titles to Properties. The Borrower has such title to the real property owned by it as is necessary to the conduct of its business and valid and legal title to all of its material personal property and assets, including, but not limited to, those reflected on the 32 balance sheets of the Borrower delivered pursuant to Section 5.1(l), except those which have been disposed of by the Borrower subsequent to such date, which dispositions have been in the ordinary course of business or as otherwise of a type permitted hereunder. (p) Liens. None of the material properties and assets of the Borrower is subject to any Lien, except Liens permitted pursuant to Section 9.3. (q) Debt and Contingent Obligations. Schedule 5.1(q) is a complete and correct listing of all Debt and Contingent Obligations of the Borrower as of the date hereof. The Borrower has performed and is in compliance with all of the terms of such Debt and Contingent Obligations and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with notice or lapse of time or both would constitute such a default or event of default on the part of the Borrower exists with respect to any such Debt or Contingent Obligation. (r) Litigation. Except as set forth on Schedule 5.1(r), there are no actions, suits or proceedings pending nor, to the Actual Knowledge of the Borrower, overtly threatened against or in any other way directly relating to or directly affecting the Borrower or any of its properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that would reasonably be expected to have a Material Adverse Effect. (s) Absence of Defaults. No event has occurred or is continuing which constitutes a Default or an Event of Default, or 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 Borrower under any Material Contract or judgment, decree or order to which the Borrower is a party or by which the Borrower or any of its properties may be bound or (to the extent the making of such payment is prohibited hereunder) which would require the Borrower to make any payment thereunder prior to the scheduled maturity date therefor. SECTION 5.2 Survival of Representations and Warranties, Etc. All representations and warranties set forth in this Article V and all representations and warranties contained in any certificate delivered pursuant to the terms hereof, or any of the Loan Documents (including but not limited to any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made, and shall be true and correct in all material respects, at and as of the Closing Date and the date of each Loan hereunder, shall survive the Closing Date and the date of each Loan hereunder, shall not be waived by the execution and delivery of this Agreement, (except to the extent that such Lender has actual knowledge to the contrary) any investigation made by or on behalf of the Lenders or any borrowing hereunder. 33 ARTICLE VI FINANCIAL INFORMATION AND NOTICES Until all the Obligations have been finally and indefeasibly paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 12.9 hereof, the Borrower will furnish or cause to be furnished to the Administrative Agent and each Lender at its address set forth in Schedule 1, or such other office as may be designated by the Agent or the applicable Lender from time to time: SECTION 6.1 Financial Statements and Information. (a) Quarterly Financial Statements. As soon as practicable and in any event within forty-five (45) days after the end of each fiscal quarter (other than the last fiscal quarter of each Fiscal Year), an unaudited consolidated balance sheet of IPT and its Subsidiaries and an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such fiscal quarter and unaudited statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, all in reasonable detail setting forth in comparative form the corresponding figures for the preceding Fiscal Year and prepared in accordance with GAAP, and certified by the president or principal accounting officer of IPT to present fairly in all material respects the financial condition of IPT and Subsidiaries and of the Borrower and its Subsidiaries as of their respective dates and the results of operations of IPT and Subsidiaries and of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year end adjustments and the absence of footnotes. (b) Annual Financial Statements. As soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year, an audited consolidated balance sheet of IPT and its Subsidiaries and an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Year and audited consolidated statements of income, retained earnings and cash flows for the Fiscal Year then ended (unaudited as to the Borrower and its Subsidiaries), including the notes thereto, all in reasonable detail and prepared in accordance with GAAP and setting forth in comparative form the corresponding figures for the preceding Fiscal Year and accompanied by a report thereon prepared by Ernst & Young, or other independent certified public accounting firm reasonably acceptable to the Agents, that is not qualified with respect to scope limitations imposed by IPT or its Subsidiaries or with respect to accounting principles followed by IPT and its Subsidiaries or not in accordance with GAAP. (c) Annual Budget. As soon as practicable and in any event not later than March 30 of each Fiscal Year, a budget of the Borrower and its Subsidiaries for such Fiscal Year, such plan to be prepared in a form and on a basis similar to the plan(s) previously furnished to the Lenders and to include, on a quarterly basis, the following: a quarterly operating and capital budget, an income statement, statement of cash flows and balance sheet, accompanied by a certificate from the chief financial officer of the Borrower, on behalf of the Borrower, to the effect that, to the best of such officer's knowledge, such information is a good faith estimate of the financial condition and operations of the Borrower and its Subsidiaries for such period. 34 SECTION 6.2 Officer's Compliance Certificate. At each time financial statements are delivered pursuant to Sections 6.1(a) or (b) and at such other times as an Agent shall reasonably request or the Borrower shall elect, a certificate on behalf of the Borrower of the president or the treasurer of the General Partner in the form of Exhibit D. SECTION 6.3 Accountants' Certificate. At each time financial statements are delivered pursuant to Section 6.1(b), a certificate of the independent public accountants certifying such financial statements addressed to the Administrative Agent for the benefit of the Agents and Lenders: (a) stating that in making the examination necessary for the certification of such financial statements, they obtained no knowledge of any Default or Event of Default or, if such is not the case, specifying such Default or Event of Default and its nature and period of existence; and (b) including the calculations prepared by such accountants required to establish whether or not the Borrower is in compliance with the financial covenants set forth in Article VIII hereof as at the end of each respective period. SECTION 6.4 Other Reports. Such other information regarding the operations, business affairs and financial condition of the Borrower as any Agent or Lender (acting through the Administrative Agent) may reasonably request. SECTION 6.5 Notice of Litigation and Other Matters. Prompt (but in no event later than ten (10) Business Days after an executive officer of the General Partner obtains Actual Knowledge thereof) written notice of: (a) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving the Borrower or any of its properties, assets or businesses which would reasonably be expected to have Material Adverse Effect; (b) any labor controversy that has resulted in, or threatens to result in, a strike or other work action against the Borrower which in any such case would reasonably be expected to have a Material Adverse Effect; (c) (i) any Default or Event of Default or (ii) any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which the Borrower is a party or by which the Borrower or any of its properties may be bound; (d) (i) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by the Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining 35 knowledge or reason to know that the Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and (e) any event which would reasonably be expected to have a Material Adverse Effect. ARTICLE AFFIRMATIVE COVENANTS Until all of the Obligations have been finally paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 12.9, each of IPT and the Borrower will: SECTION 7.1 Preservation of Existence and Related Matters. Except as permitted by Section 9.5, preserve and maintain its separate existence as a real estate investment trust and partnership, as applicable, and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified and authorized to do business in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect. SECTION 7.2 Maintenance of Property. Protect and preserve all of its properties useful in and material to its business, including copyrights, patents, trade names and trademarks; and from time to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted at all times. SECTION 7.3 Insurance. Maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as are customarily maintained by similar businesses and as may be required by Applicable Law; deliver to any Agent upon its request (which request shall not be made by the Agents, in the aggregate, more than once per Fiscal Year) a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. SECTION 7.4 Accounting Methods and Financial Records. Maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its properties. SECTION 7.5 Payment and Performance of Obligations. Pay and perform all material Obligations under this Agreement and the other Loan Documents, and pay or perform (a) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (b) all other indebtedness, obligations and liabilities in accordance with customary trade practices; except to the extent that IPT or the Borrower is contesting any item 36 described in clauses (a) or (b) of this Section 7.5 in good faith and is maintaining adequate reserves with respect thereto in accordance with GAAP. SECTION 7.6 Compliance With Laws and Approvals. Subject to Section 7.7, observe and remain in compliance with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business and where the failure to comply or maintain could reasonably be expected to have a Material Adverse Effect. SECTION 7.7 Environmental Laws. (a) Use reasonable commercial efforts to comply with all applicable Environmental Laws and use reasonable commercial efforts to obtain, comply with and maintain any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, in each case where the failure to so obtain or comply with which could reasonably be expected to have a Material Adverse Effect upon IPT or the Borrower, and (b) defend, indemnify and hold harmless the Agents and Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements authorized by IPT or the Borrower, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of IPT or the Borrower, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the negligence or misconduct of the party seeking indemnification therefor. SECTION 7.8 Compliance with ERISA. In addition to and without limiting the generality of Section 7.6, (a) materially comply with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (b) not take any action or fail to take action the result of which could be a material liability to the PBGC (other than for the payment of premiums) or to a Multiemployer Plan, (c) not participate in any prohibited transaction that could result in any material civil penalty under ERISA or tax under the Code, (d) operate each Employee Benefit Plan in such a manner that will not incur any material tax liability under Section 4980B of the Code or any material liability to any qualified beneficiary as defined in Section 4980B of the Code and (e) furnish to any Agent upon its request such additional information about any Employee Benefit Plan as may be reasonably requested by such Agent. SECTION 7.9 Compliance With Agreements. Comply in all material respects with each material term, condition and provision of all Material Contracts, except to the extent that IPT or the Borrower is contesting any provision or Material Contract in good faith through applicable proceedings and is maintaining adequate reserves in accordance with GAAP. SECTION 7.10 Visits and Inspections. Permit representatives of any Agent or Lender (acting through an Agent), from time to time, upon reasonable notice and during normal business hours, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files; and discuss with its principal officers, and (during such time as a Default or an 37 Event of Default is continuing) its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. SECTION 7.11 Pledge of Partner Interests. Pledge to the Administrative Agent for the benefit of the Agents and Lenders, pursuant to the terms of the IPLP Pledge Agreement substantially in the form of Exhibit G hereto, as collateral for the Obligations, a first priority security interest in all limited partner interest now or hereafter owned by the Borrower and in the equity interest of any Subsidiary of the Borrower which now or hereafter owns any limited partner interest. IPT shall pledge to the Administrative Agent for the benefit of the Agents and Lenders, pursuant to the terms of the IPT Pledge Agreement, as collateral for the performance of the obligations of IPT under the Guaranty Agreement, a first priority security interest in the stock or other equity interest of IPT in each Subsidiary which now or hereafter owns, directly or indirectly, the general partner interest in any Real Estate Entity in which the Borrower owns, directly or indirectly, a limited partnership interest. SECTION 7.12 Further Assurances. Make, execute and deliver all such additional and further acts, things, deeds and instruments as either Agent may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Agents and Lenders their respective rights under this Agreement, the Revolving Credit Notes and the other Loan Documents. SECTION 7.13 Application of Non-Operational Distributions. Apply all distributions received by the Borrower from any Real Estate Entity resulting from the sale or the refinancing of properties owned by such Real Estate Entity ("Non-Operational Distributions") to the payment of all Loans then outstanding; provided that if no Default or Event of Default shall have occurred and be continuing, the Non-Operational Distributions may be used by the Borrower to purchase additional limited partner or other equity interests in Real Estate Entities, subject to the limitations of Section 9.4(c)(ii) or distributed to the limited partners of the Borrower, provided that immediately after giving effect to any such distribution, (i) the Interest Coverage Ratio is greater than 7.00 to 1.00, (ii) the Borrower is compliance on a pro forma basis with all other financial covenants contained in this Agreement and (iii) no Default or Event of Default exists or would result from such distribution. SECTION 7. 14 Year 2000 Compatibility. Take all action necessary to assure that from and after January 1, 2000 the computer-based systems of IPT and the Borrower are able to operate and effectively process data that includes dates on and after January 1, 2000. At the request of the Agents, IPT and the Borrower shall provide to the Agents assurance acceptable to the Agents of the timely year 2000 compatibility of IPT and the Borrower. ARTICLE FINANCIAL COVENANTS Until all of the Obligations have been finally paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 12.9 hereof, the Borrower will not: 38 SECTION 8.1 Maximum Leverage. Permit, as of any fiscal quarter end, the ratio of (a) Adjusted Portfolio Equity as of such fiscal quarter end to (b) Funded Debt as of such fiscal quarter end, to be less than 5.00 to 1.00. SECTION 8.2 Interest and Dividend Coverage. Permit, as of any fiscal quarter end, the ratio of (a) Adjusted DCFO for the four (4) preceding fiscal quarters ending on such date to (b) the sum of (i) Interest Expense of the Borrower for such period (including interest expense on Subordinated Debt) plus (ii) an amount equal to the dividends paid which would be payable by IPT during such period on a fully-diluted basis, to be less than 1.10 to 1.0 . SECTION 8.3 Interest Coverage Ratio. Permit, as of any fiscal quarter end, the ratio of (a) Adjusted DCFO for the four (4) preceding fiscal quarters ending on such fiscal quarter end to (b) Interest Expense of the Borrower for such period, to be less than 6.0 to 1.0. ARTICLE NEGATIVE COVENANTS Until all of the Obligations have been finally paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 12.9 hereof, IPT and the Borrower will not: SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer to exist any Debt except: (a) the Obligations; (b) Debt incurred in connection with a Hedging Agreement entered into in the ordinary course of business for protective and not speculative purposes; (c) Subordinated Debt to Insignia not to exceed $100,000,000 at any one time outstanding; (d) existing Debt set forth on Schedule 5.1(q) and the renewal and refinancing (but not the increase) thereof; (e) Debt consisting of Contingent Obligations permitted by Section 9.2; (f) Debt incurred by a Special Purpose Subsidiary to the extent permitted under Section 9.4(e); (g) Debt incurred for all or a portion of the deferred purchase price of property to the extent IPT or the Borrower, as applicable, would have been permitted under this Agreement to purchase such property for cash; and 39 (h) other Debt of the Borrower not to exceed an aggregate of $5,000,000 at any time outstanding. SECTION 9.2 Limitations on Contingent Obligations. Create, incur, assume or suffer to exist any Contingent Obligations except: (a) Contingent Obligations in favor of the Administrative Agent for the benefit of the Agents and the Lenders; (b) Contingent Obligations of IPT on account of Debt of the Borrower, to the extent such Debt is permitted by Section 9.1; and (c) other Contingent Obligations not to exceed $5,000,000 at any one time outstanding. SECTION 9.3 NEGATIVE PLEDGE; LIMITATION ON LIENS. CREATE, INCUR, ASSUME OR SUFFER TO EXIST, ANY LIEN ON OR WITH RESPECT TO ANY OF ITS ASSETS OR PROPERTIES, REAL OR PERSONAL, WHETHER NOW OWNED OR HEREAFTER ACQUIRED, EXCEPT: (a) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) not yet due or as to which the period of grace, if any, related thereto has not expired or which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (b) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, (i) which are not overdue for a period of more than thirty (30) days or (ii) which are being contested in good faith and by appropriate proceedings; (c) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers' compensation, unemployment insurance or similar legislation or obligations under customer service contracts; (d) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, detract from the value of such property or impair the use thereof in the ordinary conduct of business; and (e) Liens of the Administrative Agent for the benefit of the Agents and the Lenders. SECTION 9.4 Limitations on Loans, Advances, Investments and Acquisitions. Purchase, own, invest in or otherwise acquire, directly or indirectly, any capital stock, interests in any partnership or joint venture, evidence of Debt or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest 40 whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person, or enter into, directly or indirectly, any commitment in respect of the foregoing except: (a) investments existing on the Closing Date and the other existing loans, advances and investments described on Schedule 9.4; (b) investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within 120 days from the date of acquisition thereof, (ii) marketable direct obligations issued by any State of the United States or any political subdivision of any such State or any public instrumentality thereof maturing within 120 days from the date of acquisition thereof and, at the time of acquisition, having the highest or second highest rating obtainable from S&P or Moody's; (iii) commercial paper maturing within 120 days from the date of the acquisition thereof, and, at the time of acquisition, having a rating of A-1 or higher by S&P or P-1 or higher by Moody's, (iv) certificates of deposit maturing no more than 120 days from the date of creation thereof issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $500,000,000 and having a rating of A or better by a nationally recognized rating agency; (v) time deposits maturing no more than 30 days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts not exceeding the maximum amounts of insurance thereunder; (vi) eligible bankers' acceptances, repurchase agreements and tax-exempt municipal bonds having a maturity of less than one year and in each case having a rating, or being the full recourse obligation of a Person whose senior debt rating has a rating, of A or higher by S&P or Moody's; or (vii) any money market fund organized under the laws of the United States or any State thereof; (c) investments in Real Estate Entities in which the general partner or other managing interest is held by a Person in which IPT or a wholly-owned Subsidiary of IPT owns the controlling interest; provided (i) an aggregate of up to $5,000,000 may be invested in Real Estate Entities in which the general partner interest or other managing interest is not held by a Person in which IPT or a wholly-owned Subsidiary of IPT owns the controlling interest; (ii) not more than 50% of the aggregate cost of all limited partner or other equity interests purchased by the Borrower subsequent to June 30, 1997 may be funded from the proceeds of any Loan; and (iii) the Borrower shall have invested at least $50,000,000 of its own funds in such limited partner or other equity interests at all times that any Loan is outstanding; (d) investments in the form of the acquisition of general partner or other managing interests in Real Estate Entities; (e) investment of up to $10,000,000 in the aggregate in one or more new Subsidiaries (each, a "Special-Purpose Subsidiary") to acquire interests in real estate and in Real Estate Entities, and such Special-Purpose Subsidiaries shall be permitted to incur Debt of up to an aggregate of $40,000,000 at any time outstanding, the payment of 41 which may be secured by a security interest in the limited partner or other equity interests owned by the relevant Special-Purpose Subsidiary, provided: (i) Recourse for payment of such Debt shall be limited to the Special-Purpose Subsidiary and its assets and all limited partner or other equity interests pledged by the Special-Purpose Subsidiary as collateral for such Debt, and neither the Borrower, IPT nor any other Subsidiary of IPT or the Borrower shall be liable for the payment of such Debt, contingently or otherwise; (ii) The equity of each Special-Purpose Subsidiary shall be pledged as collateral for the Obligations; and (f) investments by IPT in Subsidiaries and Affiliates which hold the general partner interest in Real Estate Entities. SECTION 9.5 Limitations on Mergers and Liquidation. Merge, consolidate or enter into any similar combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), except: (a) The merger of Angeles Mortgage Investment Trust into IPT; (b) Any Subsidiary may merge into the Person such Subsidiary was formed to acquire in connection with an acquisition permitted by Section 9.4(c); and (c) Any Person may merge with IPT or the Borrower, provided such Person is engaged in a similar or complementary line of business to that of IPT or the Borrower, no Event of Default shall result from such merger and IPT or the Borrower shall be the surviving Person. SECTION 9.6 Limitations on Sale of Assets . Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, any capital stock or other ownership interest in any Subsidiary or Affiliate or the sale of any receivables and leasehold interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired, except: (a) The sale of obsolete assets no longer used or usable in the business of IPT or any of its Subsidiaries, including the Borrower; (b) The sale of interests in Real Estate Entities; (c) Inter-company sales; and (d) The sale of assets, other than as otherwise permitted hereunder, not to exceed an aggregate of $10,000,000 in any Fiscal Year. SECTION 9.7 Limitations on Distributions. Purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its capital stock or other ownership interests, or make any distribution of cash, property or assets among the holders of its shares or of its 42 partnership interests or other ownership interests, during such time as any Default or Event of Default has occurred and is continuing or would result therefrom, or make any change in its capital structure or amend any organizational document which change or amendment could reasonably be expected to have a Material Adverse Effect. SECTION 9.8 Transactions with Affiliates. Except as set forth on Schedule 9.8 and as otherwise expressly permitted hereunder, directly or indirectly: (a) make any loan or advance to, or purchase or assume any note or other obligation to or from, any of its partners or officers, directors or shareholders of any partner or any other Affiliates, or to or from any member of the immediate family of any officer, director or shareholder of any partner or other Affiliates, or subcontract any operations to any of its Affiliates, or (b) enter into, or be a party to, any transaction with any of its Affiliates, in both cases except upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not its Affiliate. SECTION 9.9 Certain Accounting Changes. Change its Fiscal Year end, or make any change in its accounting treatment and reporting practices except as permitted by GAAP. SECTION 9.10 Lines of Business. Change the lines of business in which it currently is engaged and those reasonably related thereto or change, directly or indirectly, or substantially alter its method of doing business in a manner which would have a Material Adverse Effect. SECTION 9.11 Restrictive Agreements. Incur any Debt which (a) contains any negative pledge on assets or any other covenants more restrictive (taken as a whole) than the provisions of Articles VII, VIII and IX hereof, or (b) restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties, other than (in any such case) the assets or properties securing such Debt. ARTICLE DEFAULT AND REMEDIES SECTION 10.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority or otherwise: (a) Default in Payment of Principal of Loans. The Borrower shall default in any payment of principal of any Loan or Revolving Credit Note when and as due (whether at maturity, by reason of acceleration or otherwise). (b) Other Payment Default. The Borrower shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan or Revolving Credit Note or the payment of any other Obligation and such payment shall not have been made within five (5) Business Days thereafter. 43 (c) Misrepresentation. Any representation or warranty made or deemed to be made by the Borrower or any of its Subsidiaries under this Agreement, any Loan Document or any amendment hereto or thereto, shall at any time prove to have been incorrect in any material respect when made or deemed made. (d) Default in Performance of Certain Covenants. The Borrower shall default in the performance or observance of any covenant or agreement contained in Articles VIII or IX of this Agreement. (e) Default in Performance of Other Covenants and Conditions. The Borrower or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for otherwise in this Section 10.1) or any other Loan Document and such default shall continue for a period of thirty (30) days after written notice thereof has been given to the Borrower by the Administrative Agent. (f) Hedging Agreement. Any termination payment shall be due by the Borrower under any Hedging Agreement and such amount is not paid within ten (10) Business Days of the due date thereof. (g) Other Cross-Defaults. The Borrower shall default in the payment when due, or in the performance or observance, of any material obligation or condition of any Material Contract involving monetary liability in an amount in excess of $5,000,000 unless, but only as long as, the existence of any such default is being contested by the Borrower or such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect thereof have been established on the books of the Borrower or such Subsidiary to the extent required by GAAP. (h) Voluntary Bankruptcy Proceeding. The Borrower thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing. (i) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against the Borrower thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for the Borrower or any Material Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall 44 continue undismissed or unstayed for a period of ninety (90) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered. (j) Failure of Agreements. Any material provision of this Agreement or of any other Loan Document shall for any reason cease to be valid and binding on the Borrower or the Borrower shall so state in writing, or this Agreement or any Security Document shall for any reason cease to create a valid and perfected first priority Lien on, or security interest in, any material portion of the collateral purported to be covered thereby, in each case other than in accordance with the express terms hereof or thereof and except where due solely to the failure to file, on a timely basis, appropriate financing or continuation statements under the Uniform Commercial Code. (k) Termination Event. The occurrence of any of the following events: (i) the Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the Code, the Borrower or any ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated funding deficiency in excess of $250,000 occurs or exists, whether or not waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) the Borrower or any ERISA Affiliate as employers under one or more Multiemployer Plan makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $5,000,000. (l) Judgment. A judgment or order for the payment of money not covered by insurance which causes the aggregate amount of such undischarged, unstayed and not removed judgments to exceed $3,000,000 in any Fiscal Year shall be entered against the Borrower by any court and such judgment or order shall continue undischarged, unstayed or not removed to bond for a period of thirty (30) days. SECTION 10.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower: (a) Acceleration; Termination of Facilities. Declare the principal of and interest on the Loans, the Revolving Credit Notes at the time outstanding, and all other amounts owed to the Lenders and Agents under this Agreement or any of the other Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrower to request borrowings thereunder; provided, that upon the occurrence of an Event of Default specified in Section 10.1(h) or (i), the Credit Facility shall be automatically terminated and all Obligations shall automatically become due and payable. 45 (b) Rights of Collection. Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Borrower's Obligations. SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies of the Agents and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Agents and Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the Loan Documents or that may now or hereafter exist in law or in equity or by suit or otherwise. No delay or failure to take action on the part of any Agent or Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Agents and Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. ARTICLE THE AGENTS SECTION 11.1 Appointment and Authorization. Each of the Lenders hereby irrevocably designates and appoints First Union as Administrative Agent of such Lender and Lehman as Syndication Agent of such Lender under this Agreement and the other Loan Documents and each such Lender irrevocably authorizes First Union as Administrative Agent for such Lender and Lehman as Syndication Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or such other Loan Documents, no Agent shall have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Loan Documents or otherwise exist against any Agent. SECTION 11.2 Delegation of Duties. Each Agent may execute any of its respective duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by such Agent with reasonable care. SECTION 11.3 Exculpatory Provisions. Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the other Loan Documents (except for actions occasioned by its or such Person's 46 own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer of the General Partner contained in this Agreement or the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or the other Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents or for any failure of the Borrower to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower. SECTION 11.4 Reliance by the Agents. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by such Agent. Each Agent may deem and treat the payee of any Revolving Credit Note as the owner thereof for all purposes unless such Revolving Credit Note shall have been transferred in accordance with Section 12.8 hereof. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement and the other Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders (or, when expressly required hereby or by the relevant other Loan Document, all the Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except for its own gross negligence or willful misconduct. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Revolving Credit Notes in accordance with a request of the Required Lenders (or, when expressly required hereby, all the Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Revolving Credit Notes. SECTION 11.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless it has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that an Agent receives such a notice, it shall promptly give notice thereof to the other Agent and Lenders. Each Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. SECTION 11.6 Non-Reliance on the Agents and Other Lenders. Each Lender expressly acknowledges that neither any Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact, subsidiaries or affiliates has made any representations or warranties to it and that no act by any Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by such Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance 47 upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Loans and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by an Agent hereunder or by the other Loan Documents, such Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower which may come into the possession of such Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates. SECTION 11.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such and (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to the respective amounts of their Commitment Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Revolving Credit Notes) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of this Agreement or the other Loan Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct. The agreements in this Section 11.7 shall survive the payment of the Revolving Credit Notes and all other amounts payable hereunder and the termination of this Agreement. SECTION 11.8 Agent in Its Individual Capacity. Each Agent and its respective subsidiaries and affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though it were not an Agent hereunder. With respect to any Loans made or renewed by it and any Revolving Credit Note issued to it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. SECTION 11.9 Resignation of the Agent; Successor Agent. Subject (in the case of the Administrative Agent) to the appointment and acceptance of a successor as provided below, the Administrative Agent or the Syndication Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders with, as long as no Event of Default has occurred and is continuing, the consent of the Borrower, which consent shall not be unreasonably withheld, shall have the right to appoint a successor Administrative Agent, which successor shall have minimum capital and surplus of at least $1,000,000,000. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall 48 have accepted such appointment within thirty (30) days after the Administrative Agent's giving of notice of resignation, then the Administrative Agent may, on behalf of the Lenders and with, as long as no Event of Default has occurred and is continuing, the consent of the Borrower (not to be unreasonably withheld), appoint a successor Administrative Agent, which successor shall be any Lender or a commercial bank organized under the laws of the United States or any political subdivision thereof which has minimum capital and surplus of at least $1,000,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 11.9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. In the event of the resignation of the Syndication Agent, the Administrative Agent immediately shall assume the obligations of the Syndication Agent hereunder. ARTICLE MISCELLANEOUS SECTION 12.1 Notices. (a) Method of Communication. Except as otherwise provided in this Agreement, all notices and communications hereunder shall be in writing, or by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand delivery or sent via telecopy, recognized overnight courier service or certified mail, return receipt requested, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand or sent by telecopy, (ii) on the next Business Day if sent by recognized overnight courier service and (iii) on the third Business Day following the date sent by certified mail, return receipt requested. (b) Addresses for Notices. Notices to any party shall be sent to it at the following addresses, or any other address as to which all the other parties are notified in writing. If to the Borrower: Insignia Properties, L.P. One Insignia Financial Plaza P.O. Box 1089 Greenville, South Carolina 29602 Attention: James A. Aston Telecopy Number: (864) 239-1699 With a copy to: John K. Lines, Esq. General Counsel Insignia Financial Group, Inc. One Insignia Financial Plaza P. O. Box 1089 Greenville, South Carolina 29602 49 With a copy (in the case of extraordinary notices only) to (which shall not constitute notice hereunder): Simpson Thacher & Bartlett 425 Lexington Avenue - 19th Floor New York, New York 10017-3954 Attention: Charles H. F. Garner Telecopy Number: (212) 455-2502 If to First Union as First Union National Bank Administrative Agent One Insignia Financial Plaza P.O. Box 1329 Greenville, South Carolina 29602 Attention: Portfolio Management and Relationship Manager Telecopy Number: (864) 255-8357 With a copy to: First Union National Bank One First Union Center 301 S. College Street, TW-10 Charlotte, North Carolina 28288-0608 Attention: Syndication Agency Services Telecopy Number: (704) 383-0288 With a copy to (which shall not constitute notice hereunder): Kennedy Covington Lobdell & Hickman, L.L.P. Suite 4200 100 North Tryon Street Charlotte, North Carolina 28202-4006 Attention: J. Donnell Lassiter, Esquire Telecopy Number: (704) 331-7598 If to the Syndication Agent: Lehman Commercial Paper Inc. Three World Financial Center 10th Floor New York, New York 10285 Attention: Michelle Swanson Telecopy Number: (212) 528-0819 50 If to any Lender: To its Address set forth on Schedule 1 (c) Administrative Agent's Office. The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrower and Lenders, as the Administrative Agent's Office referred to herein, to which payments due are to be made and at which Loans will be disbursed. SECTION 12.2 Expenses; Indemnity. The Borrower will (a) pay all reasonable out-of-pocket expenses of the Agents in connection with: (i) the preparation, execution and delivery of this Agreement and each other Loan Document, whenever the same shall be executed and delivered, including without limitation all reasonable out-of-pocket syndication and due diligence expenses and reasonable fees and disbursements of a single counsel for the Agents (with the right of such counsel to engage such special or local counsel as the Agents reasonably deem necessary), (ii) the preparation, execution and delivery of any waiver, amendment or consent by the Agents or the Lenders relating to this Agreement or any other Loan Document, including without limitation reasonable fees and disbursements of a single counsel for the Agents and (iii) the administration and enforcement of any rights and remedies of the Agents and Lenders under the Credit Facility, and (b) defend, indemnify and hold harmless the Agents and Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors (collectively, the "indemnitees"), from and against any losses, penalties, fines, liabilities, settlements, damages, costs and expenses, suffered by any such indemnitee in connection with any claim, investigation, litigation or other proceeding (whether or not any Agent or Lender is a party thereto) and the prosecution and defense thereof, arising out of the Agreement, any other Loan Document or the Loans, including without limitation reasonable attorney's and consultant's fees, except to the extent that any of the foregoing result from the gross negligence or willful misconduct of the party seeking indemnification therefor or the breach by the Agents or the Lenders of this Agreement. If any claim, demand, action or cause of action is asserted against any indemnitee, such indemnitee shall promptly notify the Borrower, but the failure to so promptly notify the Borrower shall not affect the Borrower's obligations under this Section 12.2 unless such failure materially prejudices the Borrower's right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. If requested by the Borrower in writing, and so long as no Default or Event of Default shall have occurred and be continuing, such indemnitee shall in good faith contest the validity, applicability and amount of such claim, demand, action or cause of action and shall permit the Borrower to participate in such contest. Any indemnitee that proposes to settle or compromise any claim or proceeding for which the Borrower may be liable for payment of indemnity hereunder shall give the Borrower written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain the Borrower's concurrence thereto. The Agents are authorized at the Borrower's cost and expense to employ one counsel in enforcing the rights of the Agents and Lenders hereunder and in defending against any claim, demand, action or cause of action covered by this Section 12.2. In addition, each indemnitee shall have the right to employ its own separate counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnitee unless the employment of such counsel shall have been authorized in writing by the Borrower in connection with the defense of such action, in which case such fees and expenses shall be paid by the Borrower. If an indemnitee shall have reasonably concluded (based upon the 51 written advice of counsel to the Administrative Agent) that the representation by one counsel of the Agents and Lenders creates a conflict of interest for such counsel, the reasonable fees and expenses of such additional counsel as are necessary to resolve that conflict chosen by such indemnitee and reasonably satisfactory to the Borrower (provided that the Borrower's approval of such counsel shall not be unreasonably delayed or withheld) shall be borne by the Borrower. Any obligation or liability of the Borrower to any indemnitee under this Section 12.2 shall survive the expiration or termination of this Agreement and the repayment of the Obligations. SECTION 12.3 GOVERNING LAW. THIS AGREEMENT, THE REVOLVING CREDIT NOTES AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF SOUTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF. SECTION 12.4 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN GREENVILLE COUNTY, SOUTH CAROLINA, IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTES AND THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY ANY AGENT OR LENDER IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OTHERWISE IN THE MANNER SPECIFIED IN SECTION 12.1. NOTHING IN THIS SECTION 12.4 SHALL AFFECT THE RIGHT OF ANY AGENT OR LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR AFFECT THE RIGHT OF ANY AGENT OR LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS. SECTION 12.5 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH AGENT AND LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. SECTION 12.6 Reversal of Payments. To the extent the Borrower makes a payment or payments to any Agent for the ratable benefit of the Lenders or any Agent receives any payment or proceeds of the collateral which payments or proceeds or any part thereof are 52 subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by such Agent. SECTION 12.7 Accounting Matters. All financial and accounting calculations, measurements and computations made for any purpose relating to this Agreement, including, without limitation, all computations utilized by the Borrower or any Subsidiary thereof to determine compliance with any covenant contained herein, shall, except as otherwise expressly contemplated hereby or unless there is an express written direction by the Agents to the contrary agreed to by the Borrower, be performed in accordance with GAAP. In the event of changes in GAAP in accordance with the definition thereof, the Borrower and the Lenders will thereafter negotiate in good faith to revise, by amendment of this Agreement, any covenants of this Agreement affected thereby in order to make such covenants consistent with GAAP then in effect. All projections and estimates of financial results shall be made in good faith and based on reasonable assumptions. SECTION 12.8 Successors and Assigns; Participations. (a) Benefit of Agreement. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Agents and Lenders, all permitted future holders of the Revolving Credit Notes, and their respective successors and assigns, except that the Borrower shall not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Assignment by Lenders. Each Lender may, with the consent of the Agents, which consent shall not be unreasonably withheld or delayed, and, as long as no Event of Default has occurred and is continuing, the consent of the Borrower, which consent of the Borrower shall not be unreasonably withheld or delayed, assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including, without limitation, all or a portion of the Loans at the time owing to it and the Revolving Credit Notes held by it); provided that: (i) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Lender's rights and obligations under this Agreement; (ii) if less than all of the assigning Lender's Commitment is to be assigned, the Commitment so assigned shall not be less than $5,000,000 and the assigning Lender shall retain a Commitment of at least $5,000,000; (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance in the form of Exhibit E (an "Assignment and Acceptance"), together with any Revolving Credit Note or Revolving Credit Notes subject to such assignment; (iv) such assignment shall not, without the consent of the Borrower, require the Borrower to file a registration statement with the Securities and Exchange Commission or 53 apply to or qualify the Loans or the Revolving Credit Notes under the blue sky laws of any state; and (v) the assigning Lender shall pay to the Administrative Agent an assignment fee of $3,000 upon the execution by such Lender of the Assignment and Acceptance; provided that no such fee shall be payable upon any assignment by a Lender to an Affiliate thereof or upon any assignment requested by the Borrower pursuant to the terms of Sections 2.8 or 3.12. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall, unless the Administrative Agent otherwise agrees, be at least five (5) Business Days after the execution thereof, (A) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereby and (B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement. (c) Rights and Duties Upon Assignment. By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as set forth in such Assignment and Acceptance. (d) Register. The Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders and the amount of the Loans with respect to each Lender from time to time (the "Register"). The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Issuance of New Revolving Credit Notes. Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Eligible Assignee together with any Revolving Credit Note or Revolving Credit Notes subject to such assignment and the written consent to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is substantially in the form of Exhibit E: (i) accept such Assignment and Acceptance; (ii) record the information contained therein in the Register; (iii) give prompt notice thereof to the Lenders and the Borrower; and (iv) promptly deliver a copy of such Assignment and Acceptance to the Borrower. Within five (5) Business Days after receipt of notice, the Borrower shall execute and deliver to the Administrative Agent, in exchange for the surrendered Revolving Credit Note or Revolving Credit Notes, a new Revolving Credit Note or Revolving Credit Notes to the order of such Eligible 54 Assignee in amounts equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and a new Revolving Credit Note or Revolving Credit Notes to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Revolving Credit Note or Revolving Credit Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Revolving Credit Note or Revolving Credit Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Revolving Credit Notes delivered to the assigning Lender. Each surrendered Revolving Credit Note or Revolving Credit Notes shall be canceled and returned to the Borrower. (f) Participations. Each Lender may sell participations to one or more banks or other financial institutions which are not competitors of the Borrower in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans and the Revolving Credit Notes held by it); provided that: (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment) shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iii) such Lender shall remain the holder of the Revolving Credit Notes held by it for all purposes of this Agreement; (iv) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement; (v) such Lender shall not permit such participant the right to approve any waivers, amendments or other modifications to this Agreement or any other Loan Document other than (to the extent that such Lender would have an approval right with respect thereto) waivers, amendments or modifications which would reduce the principal of or the interest rate on any Loan or extend the term or increase the amount of the Commitment, reduce the amount of any fees to which such participant is entitled, extend any scheduled payment date for principal of any Loan; and (vi) any such disposition shall not, without the consent of the Borrower, require the Borrower to file a registration statement with the Securities and Exchange Commission to apply to qualify the Loans or the Revolving Credit Notes under the blue sky law of any state. (g) Disclosure of Information; Confidentiality. The Agents and each Lender agree to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure to (i) legal counsel, accountants, and other professional advisors, on a need-to-know basis, (ii) regulatory officials, (iii) as required by law or legal process (including by subpoena) or in connection with any legal proceeding, and (iv) another financial institution in connection with a disposition or proposed disposition of any of its interests hereunder or under any Loan Document, upon execution by such institution of an agreement to 55 keep such information confidential to the extent described in this Section 12.8(g). The Agents and Lenders agree that the breach of this Section 12.8(g), including the disclosure of any confidential information received from the Borrower pursuant to this Agreement, shall constitute a material breach of this Agreement. Notwithstanding (ii) and (iii) above, in the event that any such Person is requested pursuant to, or required by, Applicable Law or Governmental Authority to disclose any such information, such Person will provide the Borrower with prompt notice of such request or requirement, unless prohibited by law or regulation, in order to enable the Borrower to seek an appropriate protective order or other remedy, or to consult with such Person with respect to the Borrower's taking steps to resist or narrow the scope of such request or legal process. If, in such event, the Borrower has not provided such Person with a protective order or other remedy in sufficient time, with such Person acting in good faith and otherwise in its sole discretion, for such Person to avoid unlawful nondisclosure of such information, such Person may disclose such information pursuant to such Applicable Law or Governmental Authority, as the case may be, without any recourse or remedy against such Person by the Borrower or any Affiliate of the Borrower, which the Borrower hereby expressly waives. (h) Certain Pledges or Assignments. Nothing herein shall prohibit any Lender from pledging or assigning any Revolving Credit Note to any Federal Reserve Bank in accordance with Applicable Law. SECTION 12.9 Amendments, Waivers and Consents. Except as set forth below, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrower; provided, that no amendment, waiver or consent shall (a) except as specifically set forth in Section 2.8, increase the amount or extend the time of the obligation of the Lenders to make Loans (including without limitation pursuant to Section 2.6), (b) extend the originally scheduled time or times of payment of the principal of any Loan or the time or times of payment of interest on any Loan, (c) reduce the rate of interest or fees payable on any Loan, (d) permit any subordination of the principal or interest on any Loan, (e) release any collateral or Security Document (other than as specifically permitted in this Agreement) or (f) amend the provisions of this Section 12.9 or the definition of Required Lenders, without the prior written consent of each Lender directly affected thereby. In addition, no amendment, waiver or consent to the provisions of Article XI shall be made without the written consent of the Agents. SECTION 12.10 Performance of Duties. The Borrower's obligations under this Agreement and each of the Loan Documents shall be performed by the Borrower at its sole cost and expense. SECTION 12.11 No Fiduciary Relationship. Notwithstanding any provision to the contrary elsewhere in this Agreement or the other Loan Documents, neither the Agent nor any Lender shall have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with the Borrower or any of its Subsidiaries, any Guarantor or any Pledgor. 56 SECTION 12.12 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to the Lenders, the Agents and any Persons designated by any Agent or Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied or the Credit Facility has not been terminated. SECTION 12.13 Survival of Indemnities. Notwithstanding any termination of this Agreement, the indemnities to which the Agents and the Lenders are entitled under the provisions of this Article XII and any other provision of this Agreement and the Loan Documents shall continue in full force and effect and shall protect the Agents and Lenders against events arising after such termination as well as before. SECTION 12.14 Titles and Captions. Titles and captions of Articles, Sections and subsections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. SECTION 12.15 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 12.16 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. SECTION 12.17 Term of Agreement. This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations shall have been paid and satisfied in full. No termination of this Agreement shall affect the rights and obligations of th parties hereto arising prior to such termination. SECTION 12.18 Independent Effect of Covenants. The Borrower expressly acknowledges and agrees that each covenant contained in Articles VII, VIII or IX hereof shall be given independent effect. Accordingly, the Borrower shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles VII, VIII or IX if, before or after giving effect to such transaction or act, the Borrower shall or would be in breach of any other covenant contained in Articles VII, VIII or IX. 57 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers, all as of the day and year first written above. INSIGNIA PROPERTIES, L.P. By Its General Partner Insignia Properties Trust By: /s/ C D Vinson ---------------------------------------- Name: C D VINSON ---------------------------------- Title: C O O ---------------------------------- BORROWER INSIGNIA PROPERTIES TRUST By: /s/ C D Vinson ---------------------------------------- Name: C D VINSON Title: C O O GUARANTOR FIRST UNION NATIONAL BANK, As Administrative Agent and Lender By: /s/ Charles P. Cecil ----------------------------------- Name: Charles P. Cecil Title: SVP LEHMAN COMMERCIAL PAPER INC., as Syndication Agent and Lender By: /s/ Dennis J. Dee ------------------------------------ Name: DENNIS J. DEE Title: ASSISTANT SECRETARY EXHIBIT A TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 REVOLVING CREDIT NOTE --------------------- EXHIBIT B TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 NOTICE OF BORROWING ------------------- EXHIBIT C TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 NOTICE OF CONVERSION/CONTINUATION --------------------------------- EXHIBIT D TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 OFFICER'S COMPLIANCE CERTIFICATE -------------------------------- EXHIBIT E TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 ASSIGNMENT AND ACCEPTANCE ------------------------- EXHIBIT F TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 GUARANTY AGREEMENT ------------------ EXHIBIT G TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 IPLP PLEDGE AGREEMENT --------------------- EXHIBIT H TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 IPT PLEDGE AGREEMENT -------------------- EXHIBIT I TO CREDIT AGREEMENT BY AND AMONG INSIGNIA PROPERTIES, L.P., FIRST UNION NATIONAL BANK, AS ADMINISTRATIVE AGENT FOR THE LENDERS AND LEHMAN COMMERCIAL PAPER INC. DATED DECEMBER 30, 1997 NOTICE OF ACCOUNT DESIGNATION ----------------------------- -----END PRIVACY-ENHANCED MESSAGE-----