-----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, NTnza31o5XFbyNSCQkgxzoR1G8EIR3kxhT9XVf1paqbaa/Jkjq4RGn/anbT3I/x4 AcSiImHF/HIQLrnV/0hObw== 0000950136-98-001416.txt : 19980813 0000950136-98-001416.hdr.sgml : 19980813 ACCESSION NUMBER: 0000950136-98-001416 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19980812 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: ANGELES INCOME PROPERTIES LTD IV CENTRAL INDEX KEY: 0000763049 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953974194 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-51129 FILM NUMBER: 98684293 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES INCOME PROPERTIES LTD IV CENTRAL INDEX KEY: 0000763049 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953974194 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-51129 FILM NUMBER: 98684294 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. 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 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 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 1 SCHEDULE 14D-1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1) ------------------------------------ ANGELES INCOME PROPERTIES, LTD. IV (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 ------------------------------------ CALCULATION OF FILING FEE - ------------------------------------------------------------------------------- Transaction Valuation*: $3,750,000 Amount of Filing Fee: $750 - ------------------------------------------------------------------------------- o For purposes of calculating the fee only. This amount assumes the purchase of 50,000 units of limited partnership interest ("Units") of the subject partnership for $75 per Unit. The amount of the filing fee, calculated in accordance with Section 14(g)(3) and Rule 0-11(d) under the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate of the cash offered by the bidders. o Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: Not Applicable Filing Party: Not Applicable Form or Registration No.: Not Applicable Date Filed: Not Applicable - -------------------------------------------------------------------------------
- -------------------------------- ----------------------------------- CUSIP No. NONE 14D-1 AND 13D/A Page 2 - -------------------------------- ----------------------------------- ======================================================================================================================== 1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons COOPER RIVER PROPERTIES, L.L.C. - ------------------------------------------------------------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - ------------------------------------------------------------------------------------------------------------------------ 3. SEC Use Only - ------------------------------------------------------------------------------------------------------------------------ 4. Sources of Funds AF - ------------------------------------------------------------------------------------------------------------------------ 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) [ ] - ------------------------------------------------------------------------------------------------------------------------ 6. Citizenship or Place of Organization DELAWARE - ------------------------------------------------------------------------------------------------------------------------ 7. Aggregate Amount Beneficially Owned by Each Reporting Person 8,014 - ------------------------------------------------------------------------------------------------------------------------ 8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ] - ------------------------------------------------------------------------------------------------------------------------ 9. Percent of Class Represented by Amount in Row 7 6.1% - ------------------------------------------------------------------------------------------------------------------------ 10. Type of Reporting Person OO ======================================================================================================================== - -------------------------------- ----------------------------------- CUSIP No. NONE 14D-1 AND 13D/A Page 3 - -------------------------------- ----------------------------------- ======================================================================================================================== 1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons INSIGNIA PROPERTIES, L.P. - ------------------------------------------------------------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - ------------------------------------------------------------------------------------------------------------------------ 3. SEC Use Only - ------------------------------------------------------------------------------------------------------------------------ 4. Sources of Funds WC - ------------------------------------------------------------------------------------------------------------------------ 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) [ ] - ------------------------------------------------------------------------------------------------------------------------ 6. Citizenship or Place of Organization DELAWARE - ------------------------------------------------------------------------------------------------------------------------ 7. Aggregate Amount Beneficially Owned by Each Reporting Person 8,014 - ------------------------------------------------------------------------------------------------------------------------ 8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ] - ------------------------------------------------------------------------------------------------------------------------ 9. Percent of Class Represented by Amount in Row 7 6.1% - ------------------------------------------------------------------------------------------------------------------------ 10. Type of Reporting Person PN ======================================================================================================================== - -------------------------------- ----------------------------------- CUSIP No. NONE 14D-1 AND 13D/A Page 4 - -------------------------------- ----------------------------------- ======================================================================================================================== 1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons INSIGNIA PROPERTIES TRUST - ------------------------------------------------------------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - ------------------------------------------------------------------------------------------------------------------------ 3. SEC Use Only - ------------------------------------------------------------------------------------------------------------------------ 4. Sources of Funds NOT APPLICABLE - ------------------------------------------------------------------------------------------------------------------------ 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) [ ] - ------------------------------------------------------------------------------------------------------------------------ 6. Citizenship or Place of Organization MARYLAND - ------------------------------------------------------------------------------------------------------------------------ 7. Aggregate Amount Beneficially Owned by Each Reporting Person 8,014 - ------------------------------------------------------------------------------------------------------------------------ 8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ] - ------------------------------------------------------------------------------------------------------------------------ 9. Percent of Class Represented by Amount in Row 7 6.1% - ------------------------------------------------------------------------------------------------------------------------ 10. Type of Reporting Person OO ======================================================================================================================== - -------------------------------- ----------------------------------- CUSIP No. NONE 14D-1 AND 13D/A Page 5 - -------------------------------- ----------------------------------- ======================================================================================================================== 1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons INSIGNIA FINANCIAL GROUP, INC. - ------------------------------------------------------------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - ------------------------------------------------------------------------------------------------------------------------ 3. SEC Use Only - ------------------------------------------------------------------------------------------------------------------------ 4. Sources of Funds NOT APPLICABLE - ------------------------------------------------------------------------------------------------------------------------ 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) [ ] - ------------------------------------------------------------------------------------------------------------------------ 6. Citizenship or Place of Organization DELAWARE - ------------------------------------------------------------------------------------------------------------------------ 7. Aggregate Amount Beneficially Owned by Each Reporting Person 8,014 - ------------------------------------------------------------------------------------------------------------------------ 8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ] - ------------------------------------------------------------------------------------------------------------------------ 9. Percent of Class Represented by Amount in Row 7 6.1% - ------------------------------------------------------------------------------------------------------------------------ 10. Type of Reporting Person CO ======================================================================================================================== - -------------------------------- ----------------------------------- CUSIP No. NONE 14D-1 AND 13D/A Page 6 - -------------------------------- ----------------------------------- ======================================================================================================================== 1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons ANDREW L. FARKAS - ------------------------------------------------------------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - ------------------------------------------------------------------------------------------------------------------------ 3. SEC Use Only - ------------------------------------------------------------------------------------------------------------------------ 4. Sources of Funds NOT APPLICABLE - ------------------------------------------------------------------------------------------------------------------------ 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) [ ] - ------------------------------------------------------------------------------------------------------------------------ 6. Citizenship or Place of Organization UNITED STATES - ------------------------------------------------------------------------------------------------------------------------ 7. Aggregate Amount Beneficially Owned by Each Reporting Person 8,014 - ------------------------------------------------------------------------------------------------------------------------ 8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares [ ] - ------------------------------------------------------------------------------------------------------------------------ 9. Percent of Class Represented by Amount in Row 7 6.1% - ------------------------------------------------------------------------------------------------------------------------ 10. Type of Reporting Person IN ========================================================================================================================
SCHEDULE 14D-1/AMENDMENT NO. 1 TO SCHEDULE 13D This Tender Offer Statement on Schedule 14D-1 (the "Statement") also constitutes Amendment No. 1 to the Statement on Schedule 13D previously filed by Market Ventures, L.L.C., Liquidity Assistance, L.L.C., Insignia Financial Group, Inc., a Delaware corporation ("Insignia"), and Andrew L. Farkas in connection with their beneficial ownership of Units (as defined below). The item numbers and responses thereto set forth below are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Angeles Income Properties, Ltd. IV, a California limited partnership (the "Partnership"). The address of the Partnership's principal executive offices is One Insignia Financial Plaza, Greenville, South Carolina 29602. (b) This Statement relates to an offer by Cooper River Properties, L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up to 50,000 of the outstanding units of limited partnership interest ("Units") of the Partnership at a purchase price of $75 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 12, 1998 (the "Offer to Purchase") and the related Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively. The information set forth in the Offer to Purchase under "Introduction" is incorporated herein by reference. (c) The information set forth in the Offer to Purchase in Section 13 ("Background of the Offer") is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d), (g) This Statement is being filed by the Purchaser, Insignia Properties, L.P., a Delaware limited partnership, ("IPLP"), Insignia Properties Trust, a Maryland real estate investment trust ("IPT"), and Insignia (collectively, the "Bidders"), and solely, insofar as the filing also constitutes Amendment No. 1 to the Schedule 13D, by Mr. Farkas. The information set forth in the Offer to Purchase under "Introduction," in Section 11 ("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") and in Schedules II, III and IV to the Offer to Purchase is incorporated herein by reference. (e)-(f) During the last five years, none of the Bidders nor, to the best of their knowledge, any of the persons listed in Schedules II, III and IV to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of or prohibiting activities subject to federal or state securities laws or finding any violation with respect to such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Offer to Purchase under "Introduction," in Section 10 ("Conflicts of Interest and Transactions with Affiliates") and in Section 13 ("Background of the Offer") is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in the Offer to Purchase in Section 10 ("Conflicts of Interest and Transactions with Affiliates") and in Section 12 ("Source of Funds") is incorporated herein by reference. (b)-(c) Not applicable. 7 ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(b), (e) The information set forth in the Offer to Purchase under "Introduction" and in Section 8 ("Future Plans of Insignia, IPT and the Purchaser") is incorporated herein by reference. (c) The information set forth in the Offer to Purchase in Section 8 ("Future Plans of Insignia, IPT and the Purchaser"), in Section 10 ("Conflicts of Interest and Transactions with Affiliates") and in Section 13 ("Background of the Offer") is incorporated herein by reference. (d) Not applicable. (f)-(g) The information set forth in the Offer to Purchase in Section 7 ("Effects of the Offer") is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in the Offer to Purchase under "Introduction," in Section 11 ("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") and in Schedule I to the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Offer to Purchase under "Introduction," in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts of Interest and Transactions with Affiliates"), Section 11 ("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") and Section 13 ("Background of the Offer") is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Offer to Purchase under "Introduction" and in Section 16 ("Fees and Expenses") is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in the Offer to Purchase in Section 11 ("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") is incorporated herein by reference. In addition, the following are expressly incorporated in this Statement by reference: (i) the audited financial statements of Insignia set forth at Part I-Item 8 of Insignia's Annual Report on Form 10-K for the year ended December 31, 1997, which is on file with the Commission; and (ii) the unaudited financial statements of Insignia set forth at Part I-Item 1 of Insignia's Quarterly Report on Form 10-Q/A for the period ended March 31, 1998, which is on file with the Commission. ITEM 10. ADDITIONAL INFORMATION. (a) Not applicable. (b)-(d) The information set forth in the Offer to Purchase in Section 15 ("Certain Legal Matters") is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the related Assignment of Partnership Interest, copies of which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively, is incorporated herein by reference in its entirety. 8 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated August 12, 1998. (a)(2) Assignment of Partnership Interest and Related Instructions. (a)(3) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(4) Cover Letter, dated August 12, 1998, from the Purchaser to the Limited Partners of the Partnership. (b)(1) Credit Agreement, dated December 30, 1997. (c) Not applicable. (d) Not applicable. (e) Not applicable. (f) Not applicable. (z)(1) Summaries of appraisals referred to in the Offer to Purchase in Section 13 ("Background of the Offer"). (z)(2) Agreement of Joint Filing, dated August 12, 1998, among the Purchaser, IPLP, IPT, Insignia and Andrew L. Farkas. 9 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 12, 1998 COOPER RIVER PROPERTIES, L.L.C. INSIGNIA FINANCIAL GROUP, INC. By: /s/ JEFFREY P. COHEN By: /s/ FRANK M. GARRISON -------------------------- ------------------------------- Jeffrey P. Cohen Frank M. Garrison Manager Executive Managing Director INSIGNIA PROPERTIES, L.P. SOLELY FOR PURPOSES OF, AND INSOFAR AS THIS FILING CONSTITUTES, AMENDMENT By: Insignia Properties Trust, NO. 1 TO THE STATEMENT ON SCHEDULE its General Partner 13D By: /s/ JEFFREY P. COHEN /s/ ANDREW L. FARKAS -------------------------- ---------------------------- Jeffrey P. Cohen ANDREW L. FARKAS Senior Vice President INSIGNIA PROPERTIES TRUST By: /s/ JEFFREY P. COHEN --------------------------- Jeffrey P. Cohen Senior Vice President KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints Jeffrey P. Cohen his true and lawful attorney-in-fact and agent to sign in any and all capacities this Amendment No. 1 and all further amendments to the Statement on Schedule 13D and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting to such attorney-in-fact and agent full power and authority to do all such other acts and execute all such other documents as he may deem necessary or desirable in connection with the foregoing, as fully as the undersigned might or could do in person, hereby ratifying and confirming that such attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. /s/ ANDREW L. FARKAS - --------------------------- Andrew L. Farkas Dated: August 12, 1998 10 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION (a)(1) Offer to Purchase, dated August 12, 1998. (a)(2) Assignment of Partnership Interest and Related Instructions. (a)(3) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(4) Cover Letter, dated August 12, 1998, from the Purchaser to the Limited Partners of the Partnership. (b)(1) Credit Agreement, dated December 30, 1997. (z)(1) Summaries of appraisals referred to in the Offer to Purchase in Section 13 ("Background of the Offer"). (z)(2) Agreement of Joint Filing, dated August 12, 1998, among the Purchaser, IPLP, IPT, Insignia and Andrew L. Farkas. 11 EX-99.(A)(1) 2 OFFER TO PURCHASE Offer to Purchase for Cash Up to 50,000 Units of Limited Partnership Interest in ANGELES INCOME PROPERTIES, LTD. IV, a California limited partnership for $75 Net Per Unit by COOPER RIVER PROPERTIES, L.L.C. - ------------------------------------------------------------------------------- THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON SEPTEMBER 9, 1998, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------- IMPORTANT Cooper River Properties, L.L.C., a Delaware limited liability company (the "Purchaser"), is offering to purchase up to 50,000 of the outstanding units of limited partnership interest ("Units") in Angeles Income Properties, Ltd. IV, a California limited partnership (the "Partnership"), at a purchase price of $75 per Unit (the "Purchase Price"), net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"). The Purchase Price is subject to adjustment under certain circumstances, as described herein. Holders of Units (each, a "Limited Partner") who tender their Units in response to the Offer will not be obligated to pay any commissions or partnership transfer fees. The Purchaser is an affiliate of Angeles Realty Corporation II, which is the general partner of the Partnership (the "General Partner"). Limited Partners are urged to consider the following factors: o The Purchaser and the General Partner are both affiliates of and controlled by Insignia Properties Trust ("IPT"), which is controlled by Insignia Financial Group, Inc. ("Insignia"). IPT, through its operating partnership Insignia Properties, L.P. ("IPLP"), currently owns 8,014 Units. o The net asset value per Unit most recently estimated by an affiliate of the General Partner was $131 as of June 30, 1998, and the net liquidation value per Unit (the "Estimated Liquidation Value") estimated by the Purchaser (which is an affiliate of the General Partner) in connection with the Offer is $128.52. The Purchaser does not believe, however, that either the net asset value estimate by the General Partner's affiliate or the Estimated Liquidation Value represents a fair estimate of the market value of a Unit, primarily due to the fact that such estimates do not take into account timing considerations, market uncertainties and legal and other expenses that would be incurred in connection with a liquidation of the Partnership. See Section 13. Accordingly, if the Purchaser does not believe that such estimates should be viewed as representative of the amount a Limited Partner can realistically expect to obtain on a sale of a Unit in the near term. o The Purchaser will have the right to vote all Units acquired pursuant to the Offer. Accordingly, if the Purchaser (which is an affiliate of the General Partner) is successful in acquiring a significant number of Units, it will be able to significantly influence the outcome of all voting decisions with respect to the Partnership, including decisions regarding liquidation, amendments to the Limited Partnership Agreement, removal and replacement of the General Partner and mergers, consolidations and other extraordinary transactions. o The Purchaser (which is an affiliate of the General Partner) is making the Offer with a view to making a profit. Accordingly, there is a conflict between the desire of the Purchaser (which is an affiliate of the General Partner) to purchase Units at a low price and the desire of the Limited Partners to sell their Units at a high price. THE OFFER IS NOT CONDITIONED ON FINANCING OR UPON ANY MINIMUM AGGREGATE NUMBER OF UNITS BEING TENDERED. ---------------------------------------- Any Limited Partner desiring to tender Units should complete and sign the Assignment of Partnership Interest in accordance with the Instructions to the Assignment of Partnership Interest and mail or deliver the signed Assignment of Partnership Interest to the Depositary. A Limited Partner may tender any or all of the Units owned by that Limited Partner; provided, however, that because of restrictions in the Partnership's Limited Partnership Agreement, in order for a partial tender to be valid, after a sale of Units pursuant to the Offer, the tendering Limited Partner must continue to hold a minimum of ten Units (or, in the case of Limited Partners who hold Units in an Individual Retirement Account or Keogh Plan, at least four Units (except Limited Partners who reside in New Mexico, who must continue to hold at least five Units)). Tenders of fractional Units will not be permitted, except by a Limited Partner who is tendering all of the Units owned by that Limited Partner. Questions and requests for assistance or for additional copies of this Offer to Purchase and the Assignment of Partnership Interest may be directed to the Information Agent at the address and telephone numbers set forth below and on the back cover of this Offer to Purchase. No soliciting dealer fees or other payments to brokers for tenders are being paid by the Purchaser (which is an affiliate of the General Partner). ---------------------------------------- For More Information or for Further Assistance Please Call: Beacon Hill Partners, Inc. at (800) 854-9486 August 12, 1998 TABLE OF CONTENTS
PAGE INTRODUCTION.................................................................................................... 1 The Purchaser; Affiliation with the General Partner......................................................... 1 Some Factors to Be Considered by Limited Partners........................................................... 1 Reasons for and Effects of the Offer........................................................................ 3 Certain Tax Considerations.................................................................................. 3 Originally Anticipated Term of the Partnership; General Policy Regarding Sales and Refinancings of Partnership Properties; Alternatives........................................... 4 Conditions.................................................................................................. 4 Distributions............................................................................................... 4 Outstanding Units........................................................................................... 4 THE OFFER....................................................................................................... 5 Section 1. Terms of the Offer; Expiration Date; Proration.................................................. 5 Section 2. Acceptance for Payment and Payment for Units.................................................... 6 Section 3. Procedure for Tendering Units................................................................... 6 Valid Tender............................................................................................ 6 Signature Requirements.................................................................................. 7 Delivery of Assignment of Partnership Interest.......................................................... 7 Appointment as Proxy; Power of Attorney................................................................. 7 Assignment of Interest in Future Distributions.......................................................... 8 Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects.......................................................................... 8 Backup Federal Income Tax Withholding................................................................... 8 FIRPTA Withholding...................................................................................... 8 Binding Obligation...................................................................................... 8 Section 4. Withdrawal Rights............................................................................... 8 Section 5. Extension of Tender Period; Termination; Amendment.............................................. 9 Section 6. Certain Federal Income Tax Matters.............................................................. 9 General................................................................................................. 9 Gain or Loss Generally.................................................................................. 10 Unrealized Receivables and Certain Inventory............................................................ 10 Passive Activity Loss Limitation........................................................................ 11 Partnership Termination................................................................................. 11 Backup Withholding and FIRPTA Withholding............................................................... 11 Section 7. Effects of the Offer............................................................................ 12 Limitations on Resales.................................................................................. 12 Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.......................... 12 Control of Limited Partner Voting Decisions by Purchaser; Effect of Relationship with General Partner............................................................................... 12 Section 8. Future Plans of Insignia, IPT and the Purchaser................................................. 13 Section 9. Certain Information Concerning the Partnership.................................................. 13 General................................................................................................. 14 Originally Anticipated Term of Partnership; Alternatives................................................ 14 General Policy Regarding Sales and Refinancings of Partnership Properties............................... 14 Selected Financial and Property-Related Data............................................................ 14 Cash Distributions History.............................................................................. 16 Operating Budgets of the Partnership.................................................................... 17 Section 10. Conflicts of Interest and Transactions with Affiliates......................................... 17 Conflicts of Interest with Respect to the Offer......................................................... 17 i Voting by the Purchaser................................................................................. 17 Financing Arrangements.................................................................................. 18 Transactions with Affiliates............................................................................ 18 Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia........................... 18 The Purchaser........................................................................................... 18 IPT and IPLP............................................................................................ 19 Insignia................................................................................................ 20 Section 12. Source of Funds................................................................................ 22 Section 13. Background of the Offer........................................................................ 23 Affiliation with the General Partner.................................................................... 23 Determination of Purchase Price......................................................................... 24 Litigation.............................................................................................. 28 Section 14. Conditions of the Offer........................................................................ 29 Section 15. Certain Legal Matters.......................................................................... 30 General................................................................................................. 30 Antitrust............................................................................................... 30 Margin Requirements..................................................................................... 30 Section 16. Fees and Expenses.............................................................................. 30 Section 17. Miscellaneous.................................................................................. 30 SCHEDULE I - Transactions in the Units Effected by IPLP in the Past 60 Days...........................S-1 SCHEDULE II - Information Regarding the Managers of the Purchaser......................................S-2 SCHEDULE III - Information Regarding the Trustees and Executive Officers of IPT.........................S-3 SCHEDULE IV - Information Regarding the Directors and Executive Officers of Insignia...................S-5 SCHEDULE V - IPT Partnerships.........................................................................S-8
ii TO THE LIMITED PARTNERS OF ANGELES INCOME PROPERTIES, LTD. IV INTRODUCTION Cooper River Properties, L.L.C. (the "Purchaser"), which is a Delaware limited liability company and an affiliate of the General Partner (as defined below), hereby offers to purchase up to 50,000 Units, representing approximately 38% of the Units outstanding, in Angeles Income Properties, Ltd. IV, a California limited partnership (the "Partnership"), at a purchase price of $75 per Unit (the "Purchase Price"), net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"). The Offer is not conditioned on any aggregate minimum number of Units being tendered. A Limited Partner may tender any or all of the Units owned by that Limited Partner; provided, however, that because of restrictions in the Partnership's Limited Partnership Agreement (the "Limited Partnership Agreement"), in order for a partial tender to be valid, after a sale of Units pursuant to the Offer, the tendering Limited Partner must continue to hold a minimum of ten Units (or, in the case of Limited Partners who hold Units in an Individual Retirement Account ("IRA") or Keogh Plan, at least four Units (except Limited Partners who reside in New Mexico, who must continue to hold at least five Units)). Accordingly, any Limited Partner that owns ten or fewer Units (or, in the case of Limited Partners who hold Units in an IRA or Keogh Plan, four Units, or five Units in New Mexico) must tender all or none of its Units. Tenders of fractional Units will not be permitted, except by a Limited Partner who is tendering all of the Units owned by that Limited Partner. The Purchaser (which is an affiliate of the General Partner) will pay all charges and expenses of Beacon Hill Partners, Inc., who will serve as the Purchaser's information agent for the Offer (the "Information Agent"), and Harris Trust Company of New York, who will act as depositary for the Offer (the "Depositary"). The Purchaser; Affiliation with the General Partner. Angeles Realty Corporation II, which is the general partner of the Partnership (the "General Partner"), is a direct, wholly-owned subsidiary of Angeles Securitization Corporation ("ASC"), and IAP GP Corporation ("IAP") owns all of the equity interests in ASC. IAP in turn is a direct, wholly-owned subsidiary of Insignia Properties Trust, a Maryland real estate investment trust ("IPT"). The Purchaser is a recently formed, wholly-owned subsidiary of Insignia Properties, L.P., a Delaware limited partnership ("IPLP"), which is the operating partnership of IPT. IPT is the sole general partner of IPLP (owning approximately 66% of the total equity interests in IPLP), and Insignia Financial Group Inc., a Delaware corporation ("Insignia"), is the sole limited partner of IPLP (owning approximately 34% of the total equity interests in IPLP). Insignia and its affiliates also own approximately 68% of the outstanding common shares of IPT. For more than the past three years, Insignia/ESG, Inc., formerly known as Insignia Commercial Group, Inc. ("IESG"), which is an affiliate of Insignia and the Purchaser, has provided property management services to the Partnership, and Insignia (directly or through affiliates) has performed asset management, partnership administration and investor relations services for the Partnership. By reason of these relationships, the General Partner has conflicts of interest in considering the Offer. The General Partner has indicated in a Statement on Schedule 14D-9 (the "Schedule 14D- 9") filed with the Securities and Exchange Commission (the "Commission") that it is remaining neutral and making no recommendation as to whether Limited Partners should tender their Units in response to the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS AND THE SCHEDULE 14D-9 CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS. See Sections 10 and 13. Some Factors to Be Considered by Limited Partners. In considering the Offer, Limited Partners may wish to consider the following factors: Potential Adverse Aspects of the Offer for Limited Partners o The Purchaser and the General Partner are both affiliates of and controlled by IPT, which is controlled by Insignia. See Sections 11 and 13. The General Partner has conflicts of interest in considering the Offer, including (i) as a result of the fact that a sale or liquidation of the Partnership's assets would result in a decrease or elimination of the fees paid to the General Partner and/or its affiliates and (ii) the fact that as a consequence of the Purchaser's ownership of Units, the Purchaser (which is an affiliate of the General Partner) may have incentives to seek to maximize the value of its ownership of Units, which in turn may result in a conflict for the General Partner in attempting to reconcile the interests of the Purchaser (which is an affiliate of the General Partner) with the interests of the other Limited Partners. See Section 10. o The net asset value per Unit most recently estimated by an affiliate of the General Partner was $131 as of June 30, 1998, and the net liquidation value per Unit (the "Estimated Liquidation Value") estimated by the Purchaser (which is an affiliate of the General Partner) in connection with the Offer is $128.52. See Section 13 for a discussion of why the Purchaser (which is an affiliate of the General Partner) believes that such estimates are not necessarily indicative of the fair market value of a Unit. THE PURCHASER (WHICH IS AN AFFILIATE OF THE GENERAL PARTNER) MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS TO THE FAIRNESS OR ADEQUACY OF THE PURCHASE PRICE. o As with any rational investment decision, the Purchaser (which is an affiliate of the General Partner) is making the Offer with a view to making a profit. Accordingly, there is a conflict between the desire of the Purchaser (which is an affiliate of the General Partner) to purchase Units at a low price and the desire of the Limited Partners to sell their Units at a high price. o If the Purchaser is successful in acquiring a significant number of Units pursuant to the Offer, the Purchaser (which is an affiliate of the General Partner) will have the right to vote those Units and thereby significantly influence all voting decisions with respect to the Partnership, including decisions concerning liquidation, amendments to the Limited Partnership Agreement, removal and replacement of the General Partner and mergers, consolidations and other extraordinary transactions. This means that (i) non-tendering Limited Partners could be prevented from taking action they desire but that IPT (which is an affiliate of the General Partner) opposes and (ii) IPT (which is an affiliate of the General Partner) may be able to take action desired by IPT but opposed by the non-tendering Limited Partners. Potentially Beneficial Aspects of the Offer for Limited Partners o Although there are some limited resale mechanisms available to Limited Partners wishing to sell their Units, there is no formal trading market for Units. At present, Limited Partners may seek to negotiate private sales or sales through a trading system such as the American Partnership Board, which publishes sell offers by Limited Partners in respect of Units. Accordingly, THE OFFER AFFORDS LIMITED PARTNERS AN OPPORTUNITY TO DISPOSE OF THEIR UNITS FOR CASH WHICH OTHERWISE MIGHT NOT BE AVAILABLE TO THEM. o THE OFFER MAY BE ATTRACTIVE TO LIMITED PARTNERS WHO HAVE AN IMMEDIATE NEED FOR CASH. The Purchase Price is approximately 4% less than the highest reported sales price of any Unit (excluding Units transferred by Insignia to IPLP) during the past six months (based on published information and information provided by the General Partner). However, reported secondary market sales prices do not take into account commissions and transfer fees typically payable by a Limited Partner in connection with a secondary market sale. Therefore, the actual proceeds received by a Limited Partner who sells Units in the secondary market are typically significantly less than the reported sales prices. o LIMITED PARTNERS WHO SELL UNITS PURSUANT TO THE OFFER WILL NOT BE CHARGED ANY SALES COMMISSIONS (WHICH GENERALLY RANGE FROM 3% TO 10% OF THE SALES PRICE) OR PARTNERSHIP TRANSFER FEES (WHICH ARE TYPICALLY $150 PER TRANSFER). The Purchaser will pay all transfer fees imposed by the Partnership in connection with sales of Units pursuant to the Offer. 2 o Real estate markets in the United States generally have recovered and experienced an upward trend since the end of the last recession. That recovery and upward trend might continue. On the other hand, real estate markets also may be adversely affected by a variety of factors, including possible fluctuations in interest rates, economic slowdowns and overbuilding. Accordingly, ownership of Units continues to be a speculative investment. THE OFFER MAY PROVIDE LIMITED PARTNERS WITH THE OPPORTUNITY TO LIQUIDATE THEIR INTERESTS IN THE PARTNERSHIP AND REPLACE THEM WITH INVESTMENTS THAT ARE LESS SPECULATIVE. o The Offer may be attractive to Limited Partners who wish to avoid in the future the expenses, delays and complications in filing personal income tax returns which may be caused by ownership of Units. In addition, A LIMITED PARTNER WHO SELLS 100% OF ITS UNITS PURSUANT TO THE OFFER WILL NO LONGER BE SUBJECT TO THE PASSIVE ACTIVITY LOSS LIMITATION WITH RESPECT TO "SUSPENDED" LOSSES ATTRIBUTABLE TO THOSE UNITS AND, THEREFORE, WILL BE ABLE TO UTILIZE FULLY ANY SUCH LOSSES. o The Offer may be attractive to those Limited Partners who have become disenchanted with real estate investments generally, and in particular with the perceived illiquidity of investments made through limited partnerships, because it may afford an immediate opportunity for those Limited Partners to liquidate their investments in the Partnership. On the other hand, Limited Partners who tender their Units will be giving up the opportunity to participate in any potential future benefits represented by the ownership of those Units, including, for example, the right to participate in any future distributions of cash or property, whether from operations, the proceeds of a sale or refinancing of one or more of the Partnership's properties or in connection with any future liquidation of the Partnership. Instead, any such distributions of cash or property with respect to Units tendered in the Offer and purchased by the Purchaser will be paid to the Purchaser. The Purchaser (which is an affiliate of the General Partner) makes no recommendation to any Limited Partner as to whether to tender or refrain from tendering Units and has been advised by the General Partner that the General Partner also expects to make no recommendation. Each Limited Partner must make its own decision, based on the Limited Partner's particular circumstances, as to whether to tender Units and, if so, how many Units to tender. Limited Partners should consult with their respective advisors regarding the financial, tax, legal and other implications of accepting the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS. Reasons for and Effects of the Offer. The Purchaser's purpose in making the Offer is to increase IPT's equity interest in the Partnership, primarily for investment purposes and with a view to making a profit. Although the number of Units sought in the Offer will not give the Purchaser (which is an affiliate of the General Partner) absolute control over the Partnership, if the Purchaser is successful in acquiring all or a substantial portion of the Units it is tendering for, it will be in a position to exercise significant influence over the outcome of any vote by Limited Partners. See Sections 8, 10 and 13. Certain Tax Considerations. A sale by a Limited Partner pursuant to the Offer will result in taxable gain (or loss) equal to the excess (deficit) of the amount realized by the Limited Partner for the Units sold over (under) such Limited Partner's adjusted tax basis in those Units, which may be taxable as ordinary income or loss, capital gain or loss or gain from real estate depreciation recapture. If a Limited Partner has suspended "passive losses" from the Partnership or other passive activity investments, such Limited Partner generally may deduct these losses up to the amount of any gain from the sale. A sale pursuant to the Offer of all of a Limited Partner's Units will terminate his or her investment in the Partnership and, commencing with the year following the year of sale, the Limited Partner will no longer receive Partnership tax information or have to report the complicated tax information currently required of Limited Partners. See Section 6. 3 Originally Anticipated Term of the Partnership; General Policy Regarding Sales and Refinancings of Partnership Properties; Alternatives. According to the Partnership's Prospectus dated April 25, 1985, the General Partner (which at the time was not affiliated with Insignia or IPT) indicated that prior partnerships sponsored by affiliates of the General Partner had, on average, begun selling their properties during the fifth or sixth years after the investments were made and had sold all of their properties after eight years of ownership. The Prospectus further stated, however, that the General Partner was unable to predict how long the Partnership would remain invested in the properties, and that the Partnership acquired such properties for investment rather than resale. In any event, according to the Prospectus, the General Partner anticipated that a disposition of the properties would depend on, among other things, the current real estate and money markets, economic climate and income tax consequences to the Limited Partners. In general, the General Partner regularly evaluates the Partnership's properties by considering various factors, such as the Partnership's financial position and real estate and capital markets conditions. The General Partner monitors each property's specific locale and sub-market conditions evaluating current trends, competition, new construction and economic changes. The General Partner oversees each asset's operating performance and continuously evaluates the physical improvement requirements. In addition, the financing structure for each property, tax implications and the investment climate are all considered. Any of these factors, and possibly others, could potentially contribute to any decision by the General Partner to sell, refinance, obtain financing on, upgrade with capital improvements or hold either of the Partnership's properties. Based on the foregoing considerations, the General Partner has determined that it is not in the best interest of Limited Partners to sell, refinance or obtain financing on either of the Partnership's properties at the present time. Under the Limited Partnership Agreement the term of the Partnership will continue until December 31, 2035, unless sooner terminated as provided in the Limited Partnership Agreement or by law. Limited Partners could, as an alternative to tendering their Units, take a variety of possible actions, including voting to liquidate the Partnership or amending the Limited Partnership Agreement to authorize Limited Partners to cause the Partnership to merge with another entity or engage in a "roll-up" or similar transaction. Conditions. The Offer is not conditioned on any aggregate minimum number of Units being tendered. Certain other conditions do apply, however. See Section 14. Distributions. The last distribution made by the Partnership was in 1991 ($55.00 per Unit). In total, original investors in the Partnership have received distributions of only $202.21 in respect of their original $500 investment made in 1985. See Section 9. The Partnership is currently generating positive cash flow from operations, and the Purchaser (which is an affiliate of the General Partner) believes that the Partnership will continue to generate positive cash flow from operations. The potential for future distributions was considered by the Purchaser (which is an affiliate of the General Partner) when establishing the Purchase Price. Limited Partners who tender their Units in response to the Offer will retain any distributions made through August 12, 1998, and will be entitled to receive and retain any subsequent distributions made by the Partnership prior to the date on which the Purchaser pays for tendered Units pursuant to the Offer, although any such subsequent distribution will result in a reduction of the Purchase Price. See Section 1. However, tendering Limited Partners will not be entitled to receive or retain any distributions in respect of tendered Units which are made on or after the date on which the Purchaser pays for such Units pursuant to the Offer, regardless of the fact that the record date (as opposed to the payment date) for any such distribution may be a date prior to the date of purchase. See Section 3. Outstanding Units. According to information supplied by the Partnership, as of August 1, 1998 there were 131,585 Units issued and outstanding, which were held of record by 5,386 Limited Partners. IPLP currently owns 8,014 (representing approximately 6.1%) of the outstanding Units. See Schedule I to this Offer to Purchase for a list of transactions in the Units effected by IPLP within the past 60 days. 4 THE OFFER SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms and subject to the conditions of the Offer, the Purchaser (which is an affiliate of the General Partner) will accept for payment (and thereby purchase) up to 50,000 Units that are validly tendered on or prior to the Expiration Date and not withdrawn in accordance with the procedures set forth in Section 4. For purposes of the Offer, the term "Expiration Date" shall mean 12:00 midnight, New York City time, on September 9, 1998, unless the Purchaser (which is an affiliate of the General Partner) in its sole discretion shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as extended by the Purchaser, shall expire. See Section 5 for a description of the Purchaser's right to extend the period of time during which the Offer is open and to amend or terminate the Offer. THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE AMOUNT OF DISTRIBUTIONS PER UNIT, IF ANY, MADE BY THE PARTNERSHIP TO LIMITED PARTNERS ON OR AFTER AUGUST 12, 1998, AND PRIOR TO THE DATE ON WHICH THE PURCHASER PAYS FOR UNITS PURCHASED PURSUANT TO THE OFFER. If, prior to the Expiration Date, the Purchaser (which is an affiliate of the General Partner) increases the consideration offered to Limited Partners pursuant to the Offer, the increased consideration will be paid for all Units accepted for payment pursuant to the Offer, regardless of whether the Units were tendered prior to the increase in the consideration offered. If more than 50,000 Units are validly tendered prior to the Expiration Date and not properly withdrawn prior to the Expiration Date in accordance with the procedures specified in Section 4, the Purchaser (which is an affiliate of the General Partner) will, upon the terms and subject to the conditions of the Offer, accept for payment and pay for an aggregate of 30,000 of the Units so tendered, pro rata according to the number of Units validly tendered by each Limited Partner and not properly withdrawn on or prior to the Expiration Date, with appropriate adjustments to avoid (i) purchases of fractional Units and (ii) purchases that would violate Section 9.1 of the Limited Partnership Agreement (which generally requires that, in order for a partial tender to be valid, a Limited Partner continues to hold a minimum of ten Units (or, in the case of Limited Partners who hold Units in an IRA or Keogh Plan, four Units, other than Limited Partners who reside in New Mexico, who must continue to hold five Units)). If the number of Units validly tendered and not properly withdrawn on or prior to the Expiration Date is less than or equal to 50,000 Units, the Purchaser (which is an affiliate of the General Partner) will purchase all Units so tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. If proration of tendered Units is required, then, subject to the Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act of 1934 (the "Exchange Act") to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after the termination or withdrawal of the Offer, the Purchaser (which is an affiliate of the General Partner) does not intend to pay for any Units accepted for payment pursuant to the Offer until the final proration results are known. NOTWITHSTANDING ANY SUCH DELAY IN PAYMENT, NO INTEREST WILL BE PAID ON THE PURCHASE PRICE. The Offer is conditioned on satisfaction of certain conditions. See Section 14, which sets forth in full the conditions of the Offer. The Purchaser (which is an affiliate of the General Partner) reserves the right (but in no event shall be obligated), in its sole discretion, to waive any or all of those conditions. If, on or prior to the Expiration Date, any or all of the conditions have not been satisfied or waived, the Purchaser reserves the right to (i) decline to purchase any of the Units tendered and terminate the Offer, (ii) waive all of the unsatisfied conditions and, subject to complying with applicable rules and regulations of the Commission, purchase all Units validly tendered, (iii) extend the Offer and, subject to the right of Limited Partners to withdraw Units until the Expiration Date, retain the Units that have been tendered during the period or periods for which the Offer is extended, and/or (iv) amend the Offer. This Offer to Purchase and the related Assignment of Partnership Interest are being mailed by the Purchaser (which is an affiliate of the General Partner) to the persons shown by the Partnership's records to have been Limited 5 Partners or (in the case of Units owned of record by IRAs and qualified plans) beneficial owners of Units as of August 1, 1998. SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the terms and subject to the conditions of the Offer, the Purchaser (which is an affiliate of the General Partner) will accept for payment (and thereby purchase) and will pay for all Units validly tendered and not withdrawn in accordance with the procedures specified in Section 4, as promptly as practicable following the Expiration Date. A tendering beneficial owner of Units whose Units are held of record in an IRA or other qualified plan will not receive direct payment of the Purchase Price; rather, payment will be made to the custodian of such account or plan. In all cases, payment for Units purchased pursuant to the Offer will be made only after timely receipt by the Depositary of a properly completed and duly executed Assignment of Partnership Interest and any other documents required by the Assignment of Partnership Interest. See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT. For purposes of the Offer, the Purchaser (which is an affiliate of the General Partner) will be deemed to have accepted for payment pursuant to the Offer, and thereby purchased, validly tendered Units if, as and when the Purchaser (which is an affiliate of the General Partner) gives verbal or written notice to the Depositary of the Purchaser's acceptance of those Units for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Units accepted for payment pursuant to the Offer will be made by deposit of the Purchase Price with the Depositary, which will act as agent for tendering Limited Partners for the purpose of receiving payments from the Purchaser and transmitting those payments to Limited Partners whose Units have been accepted for payment. If any tendered Units are not purchased for any reason, the Assignment of Partnership Interest with respect to such Units will be destroyed by the Purchaser (which is an affiliate of the General Partner). If for any reason acceptance for payment of, or payment for, any Units tendered pursuant to the Offer is delayed or the Purchaser is unable to accept for payment, purchase or pay for Units tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights under Section 14, the Depositary may, nevertheless, on behalf of the Purchaser (which is an affiliate of the General Partner) retain tendered Units, and those Units may not be withdrawn except to the extent that the tendering Limited Partners are entitled to withdrawal rights as described in Section 4; subject, however, to the Purchaser's obligation under Rule 14e-1(c) under the Exchange Act to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after termination or withdrawal of the Offer. The Purchaser (which is an affiliate of the General Partner) reserves the right to transfer or assign, in whole or from time to time in part, to one or more of the Purchaser's affiliates, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering Limited Partners to receive payment for Units validly tendered and accepted for payment pursuant to the Offer. SECTION 3. PROCEDURE FOR TENDERING UNITS. Valid Tender. In order for a tendering Limited Partner to participate in the Offer, its Units must be validly tendered and not withdrawn on or prior to the Expiration Date. To validly tender Units, a properly completed and duly executed Assignment of Partnership Interest and any other documents required by the Assignment of Partnership Interest must be received by the Depositary, at its address set forth on the back cover of this Offer to Purchase, on or prior to the Expiration Date. A Limited Partner may tender any or all of the Units owned by that Limited Partner; provided, however, that because of restrictions in the Limited Partnership Agreement, in order for a partial tender to be valid, after a sale of Units pursuant to the Offer, the tendering Limited Partner must continue to hold a minimum of ten Units (or, in the case of Limited Partners who hold Units in an IRA or Keogh Plan, at least four Units (except Limited Partners who reside in New Mexico, who must continue to hold at least five Units). Accordingly, any Limited Partner that owns ten or fewer Units (or, in the case of Limited Partners who hold Units in an IRA or Keogh Plan, four Units, or five Units in New Mexico) must tender all or none of its Units. Tenders of fractional Units will not be permitted, except by a Limited Partner who is tendering all of the Units owned by that Limited Partner. No alternative, conditional or contingent tenders will be accepted. 6 Signature Requirements. If the Assignment of Partnership Interest is signed by the registered holder of the Units and payment is to be made directly to that holder, then no signature guarantee is required on the Assignment of Partnership Interest. Similarly, if the Units are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no signature guarantee is required on the Assignment of Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. Please contact the Information Agent for assistance in obtaining a signature guarantee. Delivery of Assignment of Partnership Interest. The method of delivery of the Assignment of Partnership Interest and all other required documents is at the option and risk of the tendering Limited Partner, and delivery will be deemed made only when actually received by the Depositary. In all cases, sufficient time should be allowed to assure timely delivery. Appointment as Proxy; Power of Attorney. By executing an Assignment of Partnership Interest, a tendering Limited Partner irrevocably appoints the Purchaser (which is an affiliate of the General Partner), and its managers and designees as the Limited Partner's proxies, in the manner set forth in the Assignment of Partnership Interest, each with full power of substitution, to the full extent of the Limited Partner's rights with respect to the Units tendered by the Limited Partner and accepted for payment by the Purchaser (which is an affiliate of the General Partner). Each such proxy shall be considered coupled with an interest in the tendered Units. Such appointment will be effective when, and only to the extent that, the Purchaser (which is an affiliate of the General Partner) accepts the tendered Units for payment. Upon such acceptance for payment, all prior proxies given by the Limited Partner with respect to the Units will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective). The Purchaser (which is an affiliate of the General Partner) and its managers and designees will, as to those Units, be empowered to exercise all voting and other rights of the Limited Partner as they in their sole discretion may deem proper at any meeting of Limited Partners, by written consent or otherwise. The Purchaser (which is an affiliate of the General Partner) reserves the right to require that, in order for Units to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of the Units, the Purchaser must be able to exercise full voting rights with respect to the Units, including voting at any meeting of Limited Partners then scheduled or acting by written consent without a meeting. By executing an Assignment of Partnership Interest, a tendering Limited Partner also irrevocably constitutes and appoints the Purchaser and its managers and designees as the Limited Partner's attorneys-in-fact, each with full power of substitution, to the full extent of the Limited Partner's rights with respect to the Units tendered by the Limited Partner and accepted for payment by the Purchaser. Such appointment will be effective when, and only to the extent that, the Purchaser accepts the tendered Units for payment. The tendering Limited Partner agrees not to exercise any rights pertaining to the tendered Units without the prior consent of the Purchaser. Upon such acceptance for payment, all prior powers of attorney granted by the Limited Partner with respect to such Units will, without further action, be revoked, and no subsequent powers of attorney may be granted (and if granted will not be effective). Pursuant to such appointment as attorneys-in-fact, the Purchaser and its managers and designees each will have the power, among other things, (i) to transfer ownership of such Units on the Partnership books maintained by the General Partner (and execute and deliver any accompanying evidences of transfer and authenticity any of them may deem necessary or appropriate in connection therewith), (ii) upon receipt by the Depositary (as the tendering Limited Partner's agent) of the Purchase Price, to become a substituted Limited Partner, to receive any and all distributions made by the Partnership on or after the date on which the Purchaser purchases such Units, and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units in accordance with the terms of the Offer, (iii) to execute and deliver to the General Partner a change of address form instructing the General Partner to send any and all future distributions to which the Purchaser is entitled pursuant to the terms of the Offer in respect of tendered Units to the address specified in such form, and (iv) to endorse any check payable to or upon the order of such Limited Partner representing a distribution to which the Purchaser is entitled pursuant to the terms of the Offer, in each case in the name and on behalf of the tendering Limited Partner. 7 Assignment of Interest in Future Distributions. By executing an Assignment of Partnership Interest, a tendering Limited Partner irrevocably assigns to the Purchaser (which is an affiliate of the General Partner) and its assigns all of the right, title and interest of the Limited Partner in and to any and all distributions made by the Partnership on or after the date on which the Purchaser purchases such Units, in respect of the Units tendered by such Limited Partner and accepted for payment by the Purchaser, regardless of the fact that the record date for any such distribution may be a date prior to the date of such purchase. The Purchaser will seek to be admitted to the Partnership as a substituted Limited Partner upon consummation of the Offer. Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Units pursuant to the Offer will be determined by the Purchaser (which is an affiliate of the General Partner), in its sole discretion, which determination shall be final and binding. The Purchaser (which is an affiliate of the General Partner) reserves the absolute right to reject any or all tenders of any particular Units determined by it not to be in proper form or if the acceptance of or payment for those Units may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser (which is an affiliate of the General Partner) also reserves the absolute right to waive or amend any of the conditions of the Offer that it is legally permitted to waive as to the tender of any particular Units and to waive any defect or irregularity in any tender with respect to any particular Units of any particular Limited Partner. The Purchaser's interpretation of the terms and conditions of the Offer (including the Assignment of Partnership Interest and the Instructions thereto) will be final and binding. No tender of Units will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser (which is an affiliate of the General Partner), the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in the tender of any Units or will incur any liability for failure to give any such notification. Backup Federal Income Tax Withholding. To prevent the possible application of backup federal income tax withholding of 31% with respect to payment of the Purchase Price, each tendering Limited Partner must provide the Purchaser (which is an affiliate of the General Partner) with the Limited Partner's correct taxpayer identification number by completing the Substitute Form W-9 included in the Assignment of Partnership Interest. See the Instructions to the Assignment of Partnership Interest and Section 6. FIRPTA Withholding. To prevent the withholding of federal income tax in an amount equal to 10% of the amount of the Purchase Price plus Partnership liabilities allocable to each Unit purchased, each tendering Limited Partner must complete the FIRPTA Affidavit included in the Assignment of Partnership Interest certifying the Limited Partner's taxpayer identification number and address and that such Limited Partner is not a foreign person. See the Instructions to the Assignment of Partnership Interest and Section 6. Binding Obligation. A tender of Units pursuant to and in accordance with the procedures described in this Section 3 and the acceptance for payment of such Units will constitute a binding agreement between the tendering Limited Partner and the Purchaser (which is an affiliate of the General Partner) on the terms set forth in this Offer to Purchase and in the Assignment of Partnership Interest. SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer are irrevocable, except that Units tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless already accepted for payment as provided in this Offer to Purchase, may also be withdrawn at any time after October 12, 1998. For withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Units to be withdrawn and must be signed by the person(s) who signed the Assignment of Partnership Interest in the same manner as the Assignment of Partnership Interest was signed (including signature guarantees by an Eligible Institution). Units properly withdrawn will be deemed not to be validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered, however, by following the procedures described in Section 3 at any time prior to the Expiration Date. If payment for Units is delayed for any reason or if the Purchaser (which is an affiliate of the General Partner) is unable to pay for Units for any reason, then, without prejudice to the Purchaser's rights under the Offer, 8 tendered Units may be retained by the Depositary and may not be withdrawn except to the extent that tendering Limited Partners are entitled to withdrawal rights as set forth in this Section 4; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after termination or withdrawal of the Offer. All questions as to the validity and form (including time of receipt) of notices of withdrawal will be determined by the Purchaser (which is an affiliate of the General Partner), in its sole discretion, which determination shall be final and binding. None of the Purchaser, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The Purchaser (which is an affiliate of the General Partner) expressly reserves the right, in its sole discretion, at any time and from time to time, (i) to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, validly tendered Units, (ii) to terminate the Offer if any condition referred to in Section 14 has not been satisfied or upon the occurrence of any event specified in Section 14, (iii) to amend the Offer in any respect (including, without limitation, by increasing the consideration offered, increasing or decreasing the number of Units being sought, or both). Notice of any such extension, termination or amendment will be disseminated promptly to Limited Partners in a manner reasonably designed to inform Limited Partners of such change in compliance with Rule 14d-4(c) under the Exchange Act. In the case of an extension of the Offer, the extension will be followed by a press release or public announcement which will be issued no later than 9:00 a.m., New York City time, on the next business day after the then scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. If the Purchaser (which is an affiliate of the General Partner) extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Units) is delayed in its payment for Units or is unable to pay for Units pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered Units and those Units may not be withdrawn except to the extent tendering Limited Partners are entitled to withdrawal rights as described in Section 4; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after termination or withdrawal of the Offer. If the Purchaser (which is an affiliate of the General Partner) makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Purchaser will extend the Offer and disseminate additional tender offer materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an offer must remain open following a material change in the terms of the offer or information concerning the offer will depend upon the facts and circumstances, including the relative materiality of the change in the terms or information. In the Commission's view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to securityholders, and if material changes are made with respect to information that approaches the significance of price or the percentage of securities sought, a minimum of ten business days may be required to allow for adequate dissemination to securityholders and investor response. As used in this Offer to Purchase, "business day" means any day other than a Saturday, Sunday or a federal holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS. General. The following summary is a general discussion of certain of the federal income tax consequences of a sale of Units pursuant to the Offer. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations thereunder, administrative rulings, practice and procedures and judicial authority, all as of the date of the Offer. All of the foregoing are subject to change, and any such change could affect the continuing accuracy of this summary. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular Limited Partner in light of such Limited Partner's specific circumstances or to certain types of Limited Partners subject to special treatment under the federal income tax laws (for example, 9 foreign persons, dealers in securities, banks, insurance companies and tax-exempt organizations), nor (except as otherwise expressly indicated) does it describe any aspect of state, local, foreign or other tax laws. Sales of Units pursuant to the Offer will be taxable transactions for federal income tax purposes, and also may be taxable transactions under applicable state, local, foreign and other tax laws. EACH LIMITED PARTNER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER. Gain or Loss Generally. In general, a Limited Partner will recognize gain or loss on a sale of Units pursuant to the Offer equal to the difference between (i) the Limited Partner's "amount realized" on the sale and (ii) the Limited Partner's adjusted tax basis in the Units sold. Generally, a Limited Partner's adjusted tax basis with respect to a Unit equals its cost, increased by the amount of income and the amount of Partnership liabilities (as determined under Code Section 752) allocated to the Unit, and decreased by (i) any distributions made with respect to such Unit, (ii) the amount of deductions or losses allocated to the Unit and (iii) any decrease in the amount of Partnership liabilities (as determined under Code Section 752) allocated to the Unit. Thus, the amount of a Limited Partner's adjusted tax basis in tendered Units will vary depending upon the Limited Partner's particular circumstances. The "amount realized" with respect to a Unit will be a sum equal to the amount of cash received by the Limited Partner for the Unit pursuant to the Offer, plus the amount of the Partnership's liabilities allocable to the Unit (as determined under Code Section 752). A portion of the gain or loss recognized by a Limited Partner on a sale of a Unit pursuant to the Offer generally will be treated as a capital gain or loss, if (as is generally expected to be the case) the Unit was held by the Limited Partner as a capital asset. Under the IRS Restructuring and Reform Act of 1998, the capital gains rate for individuals and other non-corporate taxpayers is 20% for sales of capital assets held for more than one year. However, any gain from the sale of such assets attributable to the recapture of depreciation with respect to real property (other than certain depreciation recapture taxable as ordinary income) is taxed at a maximum rate of 25%. Corporate taxpayers are taxed at a maximum marginal rate of 35% for both capital gains and ordinary income. The maximum marginal federal income tax rate for ordinary income of individuals and other noncorporate taxpayers is 39.6%. Capital losses are deductible only to the extent of capital gains, except that, subject to the passive activity loss limitations discussed below, non-corporate taxpayers may deduct up to $3,000 of capital losses in excess of the amount of their capital gains against ordinary income. Excess capital losses generally can be carried forward to succeeding years (a corporation's carryforward period is five years and a non-corporate taxpayer can carry forward such losses indefinitely); and a corporation is permitted to carry back excess capital losses to the three preceding taxable years, provided the carryback does not increase or produce a net operating loss for any of those years. A tendering Limited Partner will be allocated a pro rata share of the Partnership's taxable income or loss for the year of sale with respect to the Units sold in accordance with the provisions of the Limited Partnership Agreement concerning transfers of Units. Such allocation and any cash distributed by the Partnership to the Limited Partner for that year will affect the Limited Partner's adjusted tax basis in Units and, therefore, the amount of such Limited Partner's taxable gain or loss upon a sale of Units pursuant to the Offer. Unrealized Receivables and Certain Inventory. A portion of the gain or loss upon the sale of Units may be attributable to unrealized receivables. If any portion of the amount of gain or loss realized by a Limited Partner is attributable to "unrealized receivables" (which includes certain depreciation recapture) or "substantially appreciated inventory" as defined in Code Section 751, then a portion of the Limited Partner's gain or loss may be ordinary rather than capital. In addition, a portion of such gain may be taxed at the 25% rate discussed above. A Limited Partner who tenders Units which are purchased pursuant to the Offer must file an information statement with such Limited Partner's federal income tax return for the year of the sale which provides the information specified in Treasury Regulation ss. 1.751-1(a)(3). A selling Limited Partner also must notify the Partnership of the date of the transfer and the names, addresses and tax identification numbers of the transferor(s) and transferee within 30 days of the date of the transfer (or, if earlier, by January 15 of the following calendar year). 10 Passive Activity Loss Limitation. Under Code Section 469, a non-corporate taxpayer or personal service corporation generally can deduct "passive losses" in any year only to the extent of the person's passive income for that year. Closely held corporations (other than personal service corporations) may offset such losses against active income as well as passive activity income for that year. A portion of any post-1986 losses of Limited Partners from the Partnership may have been passive losses. Thus, Limited Partners may have "suspended" passive losses from the Partnership (i.e., post-1986 net taxable losses in excess of statutorily permitted "phase-in" amounts which have not been used to offset income from other passive activities or from the Partnership). Substantially all gain or loss from a sale of Units pursuant to the Offer will be passive income or loss. If a Limited Partner sells less than all of its Units pursuant to the Offer, suspended passive losses, if any (including a portion of any loss recognized on the sale of Units), can be currently deducted (subject to other applicable limitations) to the extent of the Limited Partner's passive income from the Partnership for that year (including any gain recognized on the sale of Units) plus any other passive income for that year. If, on the other hand, a Limited Partner sells 100% of its Units pursuant to the Offer, any "suspended" losses and any losses recognized upon the sale of the Units will be offset first against any other net passive gain to the Limited Partner from the sale of the Units and any other net passive activity income from other passive activity investments, and the balance of any "suspended" net losses from the Units will no longer be subject to the passive activity loss limitation and, therefore, will be deductible by such Limited Partner from its other income (subject to any other applicable limitations), including ordinary income. If a tendering Limited Partner has suspended passive losses from the Partnership, such Limited Partner must sell all of its Units to receive these tax benefits. If more than 50,000 of the outstanding Units are tendered, some tendering Limited Partners may not be able to sell 100% of their Units pursuant to the Offer because of proration of the number of Units to be purchased by the Purchaser. See Section 1. Partnership Termination. Section 708(b) of the Code provides that a partnership terminates for income tax purposes if there is a sale or exchange of 50% or more of the total interest in partnership capital and profits within a twelve-month period (although successive transfers of the same interest within a twelve-month period will be treated as a single transfer for this purpose). In the event of a termination, the Partnership's tax year would close and the Partnership would be treated for income tax purposes as if it had contributed all of its assets and liabilities to a "new" partnership in exchange for an interest in the "new" partnership. The Partnership would then be treated as making a distribution of the interests in the "new" partnership to the new partners and the remaining partners, followed by the liquidation of the Partnership. Because the "new" partnership would be treated as having acquired its assets on the date of the deemed contribution, a new depreciation recovery period would begin on such date, the Partnership's annual depreciation deductions over the next few years would be substantially reduced, and the Partnership would have greater taxable income (or less tax loss) than if no tax termination occurred. In addition, depreciation may be required to be allocated to those Limited Partners that have a higher tax basis. A tax termination of the Partnership would also terminate any partnership in which the Partnership holds a majority interest (50% or more). The Limited Partnership Agreement prohibits transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for tax purposes. The Purchaser believes that even if the maximum number of Units is purchased pursuant to the Offer, those transfers will not cause a tax termination of the Partnership. Backup Withholding and FIRPTA Withholding. Limited Partners (other than tax-exempt persons, corporations and certain foreign persons) who tender Units may be subject to 31% backup withholding unless those Limited Partners provide a taxpayer identification number ("TIN") and certify that the TIN is correct or properly certify that they are awaiting a TIN. A Limited Partner may avoid backup withholding by properly completing and signing the Substitute Form W-9 included as part of the Assignment of Partnership Interest. If a Limited Partner who is subject to backup withholding does not properly complete and sign the Substitute Form W-9, the Purchaser will withhold 31% from payments to such Limited Partner. Gain realized by a foreign Limited Partner on the sale of a Unit pursuant to the Offer will be subject to federal income tax. Under Code Section 1445, the transferee of an interest held by a foreign person in a partnership which owns United States real property generally is required to deduct and withhold a tax equal to 10% of the 11 amount realized on the disposition. In order to comply with this requirement, the Purchaser will withhold 10% of the amount realized by a tendering Limited Partner unless the Limited Partner properly completes and signs the FIRPTA Affidavit included as part of the Assignment of Partnership Interest certifying the Limited Partner's TIN and address, and that such Limited Partner is not a foreign person. Amounts withheld would be creditable against a foreign Limited Partner's federal income tax liability and, if in excess thereof, a refund could be obtained from the Internal Revenue Service by filing a U.S. income tax return. SECTION 7. EFFECTS OF THE OFFER. Limitations on Resales. The Limited Partnership Agreement prohibits transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for federal income tax purposes. This provision may limit sales of Units in the secondary market and in private transactions for the twelve-month period following completion of the Offer. The General Partner has advised the Purchaser that the Partnership will not process any requests for recognition of substitution of Limited Partners upon a transfer of Units during such twelve-month period which the General Partner believes may cause a tax termination in contravention of the Limited Partnership Agreement. In determining the number of Units for which the Offer is made (representing approximately 38% of the outstanding Units), the Purchaser (which is an affiliate of the General Partner) took this restriction into account so as to permit normal historical levels of transfers to occur following the transfers of Units pursuant to the Offer without violating this restriction. Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act. If a substantial number of Units are purchased pursuant to the Offer, the result will be a reduction in the number of Limited Partners. In the case of certain kinds of equity securities, a reduction in the number of security-holders might be expected to result in a reduction in the liquidity and volume of activity in the trading market for the security. In this case, however, there is no established public trading market for the Units and, therefore, the Purchaser (which is an affiliate of the General Partner) does not believe a reduction in the number of Limited Partners will materially further restrict the Limited Partners' ability to find purchasers for their Units through secondary market transactions. See Section 13 for certain limited information regarding recent secondary market sales of the Units. The Units are registered under Section 12(g) of the Exchange Act, which means, among other things, that the Partnership is required to file periodic reports with the Commission and to comply with the Commission's proxy rules. The Purchaser (which is an affiliate of the General Partner) does not expect or intend that consummation of the Offer will cause the Units to cease to be registered under Section 12(g) of the Exchange Act. If the Units were to be held by fewer than 300 persons, the Partnership could apply to de-register the Units under the Exchange Act. Because the Units are widely held, however, the Purchaser (which is an affiliate of the General Partner) believes that, even if it purchases the maximum number of Units in the Offer, after that purchase the Units will be held of record by more than 300 persons. Control of Limited Partner Voting Decisions by Purchaser; Effect of Relationship with General Partner. The Limited Partnership Agreement provides that the General Partner has absolute discretion as to whether to admit an assignee of Units to the Partnership as a substituted Limited Partner. The Purchaser (which is an affiliate of the General Partner) will seek to be admitted to the Partnership as a substituted Limited Partner upon consummation of the Offer and, if admitted, will have the right to vote each Unit purchased pursuant to the Offer. Even if the Purchaser (which is an affiliate of the General Partner) is not admitted to the Partnership as a substituted Limited Partner, however, the Purchaser nonetheless will have the right to vote each Unit purchased in the Offer pursuant to the irrevocable appointment by tendering Limited Partners of the Purchaser and its managers and designees as proxies with respect to the Units tendered by such Limited Partners and accepted for payment by the Purchaser. See Section 3. As a result, the Purchaser (which is an affiliate of the General Partner) could be in a position to significantly influence all voting decisions with respect to the Partnership. In general, IPLP and the Purchaser (which are affiliates of the General Partner) will vote the Units owned by them in whatever manner they deem to be in the best interests of IPT, which, because of their relationship with the General Partner, also may be in the best interest of the General Partner, but may not be in the best interest of other Limited Partners. This could (i) prevent non-tendering Limited Partners from taking action they desire but that IPT opposes and (ii) enable IPT to take action desired by IPT but opposed by non-tendering Limited Partners. Under the Limited Partnership 12 Agreement, Limited Partners holding a majority of the Units are entitled to take action with respect to a variety of matters including: removal of the General Partner and in certain circumstances election of a new or successor general partner; dissolution of the Partnership; and most types of amendments to the Limited Partnership Agreement. The Offer will not result in any change in the compensation payable to the General Partner or its affiliates. However, as a result of the Offer, the Purchaser (which is an affiliate of the General Partner) will participate, in its capacity as a Limited Partner, in any subsequent distributions to Limited Partners to the extent of the Units purchased pursuant to the Offer. SECTION 8. FUTURE PLANS OF INSIGNIA, IPT AND THE PURCHASER. IPT, through the Purchaser (which is an affiliate of the General Partner), is seeking to acquire Units pursuant to the Offer in order to increase its equity interest in the Partnership, primarily for investment purposes and with a view to making a profit. Following the completion of the Offer, IPT and/or persons related to or affiliated with it may acquire additional Units. Any such acquisition may be made through private purchases, through one or more future tender or exchange offers or by any other means deemed advisable. Any such acquisition may be at a price higher or lower than the price to be paid for the Units purchased pursuant to the Offer, and may be for cash or other consideration. Insignia and IPT (which are affiliates of the General Partner) also may consider disposing of some or all of the Units the Purchaser acquires pursuant to the Offer, either directly or by a sale or other disposition of one or more interests in IPT or IPLP, depending among other things on the requirements from time to time of Insignia, IPT and their affiliates in light of liquidity, strategic, tax and other considerations. Neither IPT nor the Purchaser (which are affiliates of the General Partner) has any present plans or intentions with respect to an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Partnership or a sale or refinancing of, or obtaining financing on, either of the Partnership's properties. However, IPT and the Purchaser expect that consistent with the General Partner's fiduciary obligations, the General Partner will seek and review opportunities (including opportunities identified by IPT and the Purchaser) to engage in transactions which could benefit the Partnership, such as sales or refinancings of assets or a combination of the Partnership with one or more other entities, with the objective of seeking to maximize returns to Limited Partners. IPT and the Purchaser (which are affiliates of the General Partner) have been advised that the possible future transactions the General Partner expects to consider on behalf of the Partnership include (i) payment of extraordinary distributions; (ii) refinancing, reducing or increasing existing indebtedness of the Partnership; (iii) sales of assets, individually or as part of a complete liquidation; and (iv) mergers or other consolidation transactions involving the Partnership. Any such merger or consolidation transaction could involve other limited partnerships in which the General Partner or its affiliates serve as general partners, or a combination of the Partnership with one or more existing, publicly traded entities (including, possibly, affiliates of IPT (which is an affiliate of the General Partner) or IPT itself), in any of which Limited Partners might receive cash, common stock or other securities or consideration. There is no assurance, however, as to when or whether any of the transactions referred to above might occur. If any such transaction is effected by the Partnership and financial benefits accrue to the Limited Partners of the Partnership, the Purchaser (and thus IPT) will participate in those benefits to the extent of its ownership of Units. The Limited Partnership Agreement prohibits Limited Partners from voting on actions taken by the Partnership, unless otherwise specifically permitted therein. Limited Partners may vote on a liquidation, and if the Purchaser is successful in acquiring a significant number of Units pursuant to the Offer (or otherwise), IPT will be able to significantly influence the outcome of any such vote. IPT's primary objective in seeking to acquire the Units through the Purchaser pursuant to the Offer is not, however, to influence the vote on any particular transaction, but rather to generate a profit on the investment represented by those Units. SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as otherwise indicated, information contained in this Section 9 is based upon documents and reports publicly filed by the Partnership with the Commission. 13 General. The Partnership was organized on June 29, 1984 under the laws of the State of California. Its principal executive offices are located at One Insignia Financial Plaza, Greenville, South Carolina 29602, and its telephone number at that address is (864) 239-2747. The Partnership was formed for the primary purpose of acquiring fee, long-term leasehold, equity or other interests, including debt interests, in residential, commercial and industrial real properties either directly or indirectly through partnerships or joint ventures with others. The Partnership's investment portfolio currently consists of two shopping centers: a 147,000 square foot retail complex in Walla Walla, Washington, and a 200,000 square foot retail complex in Pigeon Forge, Tennessee. Originally Anticipated Term of Partnership; Alternatives. According to the Partnership's Prospectus dated April 25, 1985, the General Partner (which at the time was not affiliated with Insignia or IPT) indicated that prior partnerships sponsored by affiliates of the General Partner had, on average, begun selling their properties during the fifth or sixth years after the investments were made and had sold all of their properties after eight years of ownership. The Prospectus further stated, however, that the General Partner was unable to predict how long the Partnership would remain invested in the properties, and that the Partnership acquired such properties for investment rather than resale. In any event, according to the Prospectus, the General Partner anticipated that a disposition of the properties would depend on, among other things, the current real estate and money markets, economic climate and income tax consequences to the Limited Partners. Under the Limited Partnership Agreement, the term of the Partnership will continue until December 31, 2035, unless sooner terminated as provided in the Limited Partnership Agreement or by law. Limited Partners could, as an alternative to tendering their Units, take a variety of possible actions including voting to liquidate the Partnership or amending the Limited Partnership Agreement to authorize Limited Partners to cause the Partnership to merge with another entity or engage in a "roll-up" or similar transaction. General Policy Regarding Sales and Refinancings of Partnership Properties. In general, the General Partner regularly evaluates the Partnership's properties by considering various factors, such as the Partnership's financial position and real estate and capital markets conditions. The General Partner monitors each property's specific locale and sub-market conditions evaluating current trends, competition, new construction and economic changes. The General Partner oversees each asset's operating performance and continuously evaluates the physical improvement requirements. In addition, the financing structure for each property, tax implications and the investment climate are all considered. Any of these factors, and possibly others, could potentially contribute to any decision by the General Partner to sell, refinance, obtain financing on, upgrade with capital improvements or hold either of the Partnership's properties. Based on the foregoing considerations, there are no plans to sell, refinance or obtain financing on either of the Partnership's properties at the present time. Selected Financial and Property-Related Data. Set forth below is a summary of certain financial and statistical information with respect to the Partnership and its properties, all of which has been excerpted or derived from the Partnership's Annual Reports on Form 10-KSB for the years ended December 31, 1997, 1996, 1995, 1994 and 1993 and the Partnership's Quarterly Reports on Form 10-QSB for the periods ended June 30, 1998 and 1997. More comprehensive financial and other information is included in such reports and other documents filed by the Partnership with the Commission, and the following summary is qualified in its entirety by reference to such reports and other documents and all the financial information and related notes contained therein. 14 ANGELES INCOME PROPERTIES, LTD. IV SELECTED FINANCIAL DATA (in thousands, except Unit data)
SIX MONTHS ENDED FISCAL YEAR ENDED JUNE 30, DECEMBER 31, ----------------------- ------------------------------------------------------------ 1998 1997 1997 1996 1995 1994 1993 ----------- ---------- ----------- ----------- ----------- ---------- ---------- (UNAUDITED) Statements of Operations Data: Rental Income................. $ 2,062 $ 2,045 $ 4,253 $ 4,196 $ 3,512 $ 3,090 $ 3,233 Other Income.................. $ 163 $ 110 $ 304 $ 153 $ 191 $ 33 $ 865 Total Revenues............. $ 2,225 $ 2,155 $ 4,557 $ 4,349 $ 3,703 $ 3,124 $ 4,098 Income (Loss) from Operations (before extraordinary item) $ (196) $ 13,881 $ 8,857 $ (2,001) $ 1,447 $ (3,273) $ (7,992) Net Income (Loss)............. $ (196) $ 13,881 $ 13,782 $ (2,285) $ 1,447 $ (3,273) $ (7,992) Net Income (Loss) per Unit.... $ (1.46) $ 103.38 $ 102.64 $ (16.99) $ 10.98 $ (24.35) $ (59.43)
AS OF AS OF JUNE 30, DECEMBER 31, ----------------------- ------------------------------------------------------------ 1998 1997 1997 1996 1995 1994 1993 ----------- ---------- ----------- ----------- ----------- ---------- ---------- (UNAUDITED) Balance Sheets Data: Total Assets.................. $ 15,705 $ 16,156 $ 16,168 $ 16,128 $ 16,623 $ 16,312 $ 17,432 Total Liabilities............. $ 15,414 $ 15,570 $ 15,681 $ 29,423 $ 27,633 $ 31,254 $ 29,101 Limited Partners' Equity (Defici$) 1,424 $ 1,713 $ 1,616 $(11,890) $ (9,651) $(13,504) $(10,296) Units Outstanding............. 131,585 131,585 131,585 131,585 131,760 131,760 131,800 Book Value per Unit........... $ 10.82 $ 13.02 $ 12.28 $ (90.36) $ (73.25) $(102.49) $ (78.12)
Description of Properties. Set forth below is a table showing the location, the date of purchase, the nature of the Partnership's ownership interest in and the use of each of the Partnership's properties.
DATE OF PROPERTY PURCHASE TYPE OF OWNERSHIP USE - -------------------------- -------- --------------------------- ---------------- Eastgate Marketplace 08/29/86 Fee ownership Retail Center Shopping Center (147,000 sq.ft.) Walla Walla, Washington Factory Merchants Mall 05/22/86 Fee ownership Retail Center Pigeon Forge, Tennessee (subject to first mortgage) (200,000 sq.ft.)
Accumulated Depreciation Schedule. Set forth below is a table showing the gross carrying value, accumulated depreciation and federal tax basis of each of the Partnership's properties as of December 31, 1997 ($ amounts in thousands).
GROSS CARRYING ACCUMULATED FEDERAL PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS - ---------------------- --------- ------------ ---- ------ --------- Eastgate Marketplace Shopping Center $ 2,999 $ 2,071 5-20 yrs (1) $ 3,664 Factory Merchants Mall 20,369 10,498 5-20 yrs (1) 10,851 -------- -------- -------- $ 23,368 $ 12,569 $ 14,515 ======== ========== ==========
(1) Straight line method used. 15 Schedule of Mortgages. Set forth below is a table showing certain information regarding the outstanding mortgages encumbering the Partnership's properties as of December 31, 1997 ($ amounts in thousands).
PRINCIPAL PRINCIPAL BALANCE AT STATED BALANCE DECEMBER 31, INTEREST PERIOD MATURITY DUE AT PROPERTY 1997 RATE AMORTIZED DATE MATURITY - ---------------------------------- --------------- ----------- ------------ ------------- ----------- Factory Merchants Mall 1st mortgage $ 15,221 9.75% 25 yrs. 10/2006 $ 12,955
Average Annual Rental Rate and Occupancy. Set forth below is a table showing the average annual rental rates and occupancy percentages for each of the Partnership's properties during the past two years.
PROPERTY AVERAGE ANNUAL RENTAL RATE AVERAGE ANNUAL OCCUPANCY - -------------------------- ------------------------------ ------------------------ 1997 1996 1997 1996 ------ -------- ---- ---- Eastgate Marketplace Shopping Center(1) 3.03/sq.ft. $ 2.95/sq.ft. 83% 92% Factory Merchants Mall(2) $14.15/sq.ft. $13.28/sq.ft. 96% 91%
(1) A lease was signed with a major tenant for the majority of the remaining space available. During November 1997, the tenant took possession of this space, and Eastgate Marketplace was 96% occupied at December 31, 1997. (2) The increase in occupancy results from existing tenants leasing additional space on a short-term basis for special promotional sales. Due to the competition in the area, the General Partner is currently considering a redevelopment of this mall in order to enhance its competitive position. Schedule of Real Estate Taxes and Rates. Set forth below is a table showing the real estate taxes and rates for 1997 for each of the Partnership's properties.
1997 1997 PROPERTY BILLING RATE - ------------------------- ------------ ------- Eastgate Marketplace Shopping Center $ 52,000 1.45% Factory Merchants Mall $ 138,000 1.37%
Other Information. The Partnership is subject to the information reporting requirements of the Exchange Act and accordingly is required to file reports and other information with the Commission relating to its business, financial results and other matters. Such reports and other documents may be inspected at the Commission's Public Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, where copies may be obtained at prescribed rates, and at the regional offices of the Commission located in the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies should be available by mail upon payment of the Commission's customary charges by writing to the Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site that contains reports, proxy and other information filed electronically with the Commission, the address of which is http://www.sec.gov. Cash Distributions History. The last distribution made by the Partnership was in 1991 ($55.00 per Unit). In total, original investors in the Partnership have received distributions of only $202.21 in respect of their original $500 investment made in 1985. 16 Operating Budgets of the Partnership. A summary of the fiscal 1997 and 1998 operating budgets and the audited results of operations for fiscal 1997 of the Partnership are set forth in the table below. The budgeted amounts provided below are figures that were not computed in accordance with generally accepted accounting principles ("GAAP"). Historically, budgeted operating results of operations for a particular fiscal year have differed significantly in certain respects from the audited operating results for that year. In particular, items that are categorized as capital expenditures for purposes of preparing the operating budgets are often re-categorized as expenses when the financial statements are audited and presented in accordance with GAAP. Therefore, the summary operating budget presented for fiscal 1998 should not necessarily be considered as indicative of what the audited operating results for fiscal 1998 will be. Furthermore, any estimate of the future performance of a business, such as the Partnership's business, is forward-looking and based on numerous assumptions, some of which inevitably will prove to be incorrect. For this reason, it is probable that the Partnership's future operating results will differ from those projected in the operating budget, and those differences may be material. Therefore, such information should not be relied on by Limited Partners.
FISCAL 1997 FISCAL 1997 FISCAL 1998 BUDGETED AUDITED BUDGETED ------------ ------------ ------------ Total Revenues from Property Operations...................... $ 4,289,000 $ 4,557,000 $ 4,554,000 Total Operating Expenses .................................... $ 1,546,000 $ 2,287,000 $ 1,583,000 Net Operating Income......................................... $ 2,743,000 $ 2,270,000 $ 2,971,000 Capital Expenditures......................................... $ 1,068,000 $ 402,000 $ 804,000
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES. The General Partner and its affiliates have conflicts of interest with respect to the Offer as set forth below. Conflicts of Interest with Respect to the Offer. The General Partner has conflicts of interest with respect to the Offer, including conflicts resulting from its affiliation with IPT and the Purchaser. The General Partner also would have a conflict of interest (i) as a result of the fact that a sale or liquidation of the Partnership's assets would result in a decrease or elimination of the fees paid to the General Partner and/or its affiliates and (ii) as a consequence of the Purchaser's ownership of Units, because the Purchaser (which is an affiliate of the General Partner) may have incentives to seek to maximize the value of its ownership of Units, which in turn may result in a conflict for the General Partner in attempting to reconcile the interests of the Purchaser (which is an affiliate of the General Partner) with the interests of the other Limited Partners. In addition, the Purchaser (which is an affiliate of the General Partner) is making the Offer with a view to making a profit. Accordingly, there is a conflict between the desire of the Purchaser (which is an affiliate of the General Partner) to purchase Units at a low price and the desire of the Limited Partners to sell their Units at a high price. The General Partner has indicated in the Schedule 14D-9 that it is remaining neutral and making no recommendation as to whether Limited Partners should tender their Units pursuant to the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS. Voting by the Purchaser. The Limited Partnership Agreement provides that the General Partner has absolute discretion as to whether to admit an assignee of Units to the Partnership as a substituted Limited Partner. The Purchaser (which is an affiliate of the General Partner) will seek to be admitted to the Partnership as a substituted Limited Partner upon consummation of the Offer and, when admitted, will have the right to vote each Unit purchased pursuant to the Offer. Even if the Purchaser (which is an affiliate of the General Partner) is not admitted to the Partnership as a substituted Limited Partner, however, the Purchaser nonetheless will have the right to vote each Unit purchased in the Offer pursuant to the irrevocable appointment by tendering Limited Partners of the Purchaser (which is an affiliate of the General Partner) and its managers and designees as proxies with respect to the Units tendered by such Limited Partners and accepted for payment by the Purchaser. See Section 3. As a result, if the Purchaser (which is an affiliate of the General Partner) is successful in acquiring a significant number of Units pursuant to the Offer, the Purchaser will have the right to vote those Units and thereby significantly influence all voting decisions with respect to the Partnership. In general, IPLP and the Purchaser (which are affiliates of the General Partner) will vote the Units owned by them in whatever manner they deem to be in IPT's best interests, which, because of their relationship with the General Partner, also may be in the best interest of the General Partner, but may not be in the best interest of other Limited Partners. This could (i) prevent non-tendering 17 Limited Partners from taking action they desire but that IPT opposes and (ii) enable IPT to take action desired by IPT but opposed by non-tendering Limited Partners. Under the Limited Partnership Agreement, Limited Partners holding a majority of the Units are entitled to take action with respect to a variety of matters including: removal of the General Partner and in certain circumstances election of a new or successor general partner; dissolution of the Partnership; and most types of amendments to the Limited Partnership Agreement. See Section 7. Financing Arrangements. The Purchaser (which is an affiliate of the General Partner) expects to pay for the Units it purchases pursuant to the Offer with funds provided by IPLP as capital contributions. IPLP in turn intends to use its cash on hand and, if necessary, funds available to it under its credit facility (as described in Section 12) to make such contributions. See Section 12. It is possible, however, that in connection with its future financing activities, IPT or IPLP may cause or request the Purchaser (which is an affiliate of the General Partner) to pledge the Units as collateral for loans, or otherwise agree to terms which provide IPT, IPLP and the Purchaser with incentives to generate substantial near-term cash flow from the Purchaser's investment in the Units. This could be the case, for example, if a loan has a "balloon" maturity after a relatively short time or bears a high or increasing interest rate. In such a situation, the General Partner may experience a conflict of interest in seeking to reconcile the best interests of the Partnership with the need of its affiliates for cash flow from the Partnership's activities. Transactions with Affiliates. The Partnership paid IESG property management fees for property management services in the amounts of approximately $131,000, $129,000 and $171,000 for the years ended December 31, 1997, 1996 and 1995, respectively, and has paid IESG property management fees equal to $68,000 during the first six months of 1998. The Partnership reimbursed the General Partner and its affiliates (including Insignia) for expenses incurred in connection with asset management and partnership administration services performed by them for the Partnership for the years ended December 31, 1997, 1996 and 1995 in the amounts of $197,000, $242,000 and $334,000, respectively, and has reimbursed them for such services in the amount of $88,000 through June 30, 1998. The reimbursement amounts for the year ended December 31, 1997 and the six months ended June 30, 1998 include $1,000 and $1,000, respectively, which amounts were paid to an affiliate of the General Partner for costs incurred in connection with construction oversight services. The Partnership paid $175,000 and $21,000 for the year ended December 31, 1997 and the six months ended June 30, 1998, respectively, to an affiliate of the General Partner for commercial lease commissions. The reimbursement amount for the six months ended June 30, 1998 includes $27,500 which was paid to an affiliate of the General Partner for consulting services. For the period January 1, 1996 through August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner, but with an insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. That agent assumed the financial obligations to the affiliate of the General Partner who received payments on these obligations from the agent. Insignia and the General Partner believe that the aggregate financial benefit derived by Insignia and its affiliates from such arrangement was immaterial. SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER, IPLP, IPT AND INSIGNIA. The Purchaser. The Purchaser (which is an affiliate of the General Partner) is a recently formed entity controlled by IPT and organized for the purpose of making the Offer. The Purchaser is a wholly-owned subsidiary of IPLP. The Purchaser (which is an affiliate of the General Partner) has not engaged in any business activity other than in connection with the Offer and certain other tender offers for units of limited partnership interests in other IPT Partnerships (as defined below) being made contemporaneously with and during the 30 days preceding the Offer, and has no significant assets or liabilities at the present time other than the units of limited partnership interest acquired in such other offers. Upon consummation of the Offer and such other offers, the Purchaser's only significant assets will be the Units it acquires pursuant to the Offer and the limited partnership units it acquires pursuant to such other offers. The principal executive offices of the Purchaser (which is an affiliate of the General Partner) are located at One Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602, and its telephone number is (864) 239-1300. For certain information concerning the managers of the Purchaser (which is an affiliate of the General Partner), see Schedule II to this Offer to Purchase. 18 IPT and IPLP. IPT was formed by Insignia in May 1996, for the purpose of acquiring and owning interests in multi-family residential properties, principally through ownership of limited and general partner interests in real estate limited partnerships (including the Partnership). IPT has been organized and operates in a manner that will qualify it to be taxed as a real estate investment trust ("REIT") under the Code. Substantially all of IPT's investments are held through IPLP, which is the operating partnership of IPT. IPT is presently the sole general partner and Insignia is presently the sole limited partner of IPLP. IPT has engaged Insignia to provide certain investment banking and related services to IPT and IPLP, including in connection with the Offer. Substantially all of IPT's assets consist of (i) interests in entities which comprise or control the managing general partners of real estate limited partnerships, including the Partnership (the "IPT Partnerships"), which interests are held by IPT directly, and (ii) limited partner interests in the IPT Partnerships, which interests are held through IPLP. The IPT Partnerships own, in the aggregate, 349 properties containing approximately 73,000 residential apartment units and approximately 5.8 million square feet of commercial space. See Schedule V for a list of the IPT Partnerships in which IPT has a material investment. On July 18, 1997, IPT, Insignia, MAE GP Corporation (which at the time was an affiliate of IPT but has subsequently been merged into IPT, see Section 13) ("MAE GP"), and Angeles Mortgage Investment Trust, an unincorporated California business trust ("AMIT"), entered into a definitive merger agreement (the "AMIT Merger Agreement"), pursuant to which AMIT is to be merged with and into IPT, with IPT being the surviving entity, in a stock for stock transaction (the "AMIT Merger"). AMIT is a public company whose Class A shares trade on the American Stock Exchange under the symbol ANM. Insignia and its affiliates currently own 96,800 (or approximately 3.7%) of the 2,617,000 outstanding AMIT Class A shares and all of the 1,675,113 outstanding AMIT Class B shares. If the AMIT Merger is consummated, IPT will become a publicly traded company (IPT's common shares have been approved for listing on the American Stock Exchange under the symbol "FFO" subject to consummation of the AMIT Merger), and it is anticipated that Insignia and its affiliates will own approximately 57% of post-merger IPT, the former AMIT shareholders (other than Insignia and its affiliates) will own approximately 16% of post-merger IPT, and the current unaffiliated shareholders of IPT will own the remaining 27% of post-merger IPT (see, however, the discussion of the merger of Insignia and AIMCO in the following subsection of this Section 9 captioned "Insignia"). The AMIT Merger is expected to be completed in early September 1998. However, consummation of the AMIT Merger is subject to several conditions, including approval of the AMIT Merger Agreement and the AMIT Merger by the shareholders of AMIT. Accordingly, there can be no assurance as to when the AMIT Merger will occur, or that it will occur at all. The principal executive offices of IPT and IPLP are located at One Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602, and the telephone number of each is (864) 239-1300. For certain information concerning the trustees and executive officers of IPT, see Schedule III to this Offer to Purchase. IPLP does not have any officers or employees. Set forth below is certain consolidated financial information with respect to IPT and IPLP. 19 INSIGNIA PROPERTIES TRUST SELECTED CONSOLIDATED FINANCIAL INFORMATION (in thousands, except share and unit data)
SIX MONTHS ENDED YEAR ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 ------------------ ------------------- ------------------- (unaudited) (audited) (audited) Statements of Operations Data: Revenues.......................................... $ 12,977 $ 16,826 $ 9,705 Income Before Extraordinary Item.................. $ 9,164 $ 6,074 $ 3,557 Net Income........................................ $ 8,907 $ 6,004 $ 2,425 Supplemental Data: Funds From Operations(1).......................... $ 16,825 $ 20,939 $ 12,563 IPT Common Shares Outstanding..................... $ 19,427,760 $ 18,573,151 $ 11,168,036 IPLP Units Outstanding............................ $ 9,934,476 $ 9,415,947 $ 8,399,499 ----------- ---------- ---------- IPT Common Shares and IPLP Units Outstanding(2)... $ 29,362,236 $ 27,989,098 $ 19,567,535 ========== ========== ========== Balance Sheets Data: Cash.............................................. $ 14,639 $ 37,432 $ 4,928 Investments in IPT Partnerships(3)................ $ 192,832 $ 159,469 $ 118,741 Long-Term Debt.................................... $ 21,951 $ 19,300 $ 19,730 Shareholders' Equity(4)........................... $ 212,697 $ 200,659 $ 121,068
(1) Funds from Operations represent income or loss from real estate operations, which is net income or loss in accordance with GAAP, excluding gains or losses from debt restructuring or sales of property, plus depreciation and provision for impairment. (2) Assumes all outstanding IPLP units are exchanged for IPT Common Shares. (3) As of June 30, 1998, represented IPT's investment in 41 of the 124 IPT Partnerships which IPT accounts for using the equity method. Of the remaining 83 IPT Partnerships, IPT accounts for 81 using the cost method and two using the consolidation method. (4) Includes Insignia's minority interest in IPLP. Insignia. Insignia is a fully integrated real estate services organization. Insignia is the largest manager of multi-family residential properties in the United States and is among the largest managers of commercial properties. Insignia's real estate services include property management, providing all of the day-to-day services necessary to operate a property, whether residential or commercial; asset management, including long-term financial planning, monitoring and implementing capital improvement plans, and development and execution of refinancings and dispositions; real estate leasing and brokerage; maintenance and construction services; marketing and advertising; investor reporting and accounting; and investment banking, including assistance in workouts and restructurings, mergers and acquisitions, and debt and equity securitizations. Insignia provides property and/or asset management services for approximately 3,800 properties, which include approximately 272,000 residential units (including cooperative and condominium units), and in excess of 208 million square feet of retail, commercial and industrial space, located in over 500 cities in 48 states, Italy, the United Kingdom and Germany. Insignia currently provides partnership administration services to approximately 900 limited partnerships having approximately 350,000 limited partners. Insignia is a public company whose stock is traded on the New York Stock Exchange under the symbol IFS. On March 17, 1998, Insignia and Apartment Investment and Management Company, a Maryland corporation ("AIMCO"), entered into a definitive merger agreement (as amended and restated, the "AIMCO Merger Agreement"), pursuant to which substantially all of Insignia's residential real estate operations and ownership interests, including its interests in IPT and IPLP, are to be merged with and into AIMCO, with AIMCO as the surviving corporation (the "AIMCO Merger"). AIMCO is a public REIT whose Class A shares trade on the New York Stock Exchange under the symbol AIV. The AIMCO Merger is expected to be completed early in the fourth quarter of 1998. However, consummation of the AIMCO Merger is subject to certain conditions, including the approval of the shareholders of Insignia. Accordingly, there can be no assurance as to when the AIMCO Merger will occur, or that it will occur at all. 20 Assuming the AIMCO Merger is consummated, AIMCO will succeed to Insignia's ownership of IPT and IPLP, and thus IPT (and the Partnership) will thereafter be controlled by AIMCO. In addition, AIMCO is required pursuant to the AIMCO Merger Agreement to acquire all of the outstanding shares of IPT not owned by Insignia by causing IPT to merge with and into AIMCO (or a subsidiary of AIMCO) as soon as practicable after the consummation of the AIMCO Merger, in which event IPT would cease to exist as a separate entity and AIMCO would effectively own all of the Units acquired by the Purchaser pursuant to the Offer. Insignia is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Certain information, as of particular dates, concerning Insignia's business, principal properties, capital structure, material pending legal proceedings, operating results, financial condition, directors and officers (including their remuneration and stock options granted to them), the principal holders of Insignia's securities, any material interests of such persons in transactions with Insignia and certain other matters is required to be disclosed in proxy statements and annual reports distributed to Insignia's shareholders and filed with the Commission. Such reports, proxy statements and other information may be inspected and copied at the Commission's public reference facilities and should also be available for inspection in the same manner as set forth with respect to the Partnership in Section 9. Insignia's principal executive offices are located at One Insignia Financial Plaza, Greenville, South Carolina 29602, and its telephone number is (864) 239-1000. For certain information concerning the directors and executive officers of Insignia, see Schedule IV to this Offer to Purchase. Set forth below is certain consolidated financial information with respect to Insignia and its consolidated subsidiaries for its fiscal years ended December 31, 1997, 1996 and 1995 and the three-month periods ended March 31, 1998 and 1997. More comprehensive financial and other information is included in Insignia's Annual Report on Form 10-K for the year ended December 31, 1997 (including management's discussion and analysis of financial condition and results of operations) and in other reports and documents filed by Insignia with the Commission. The financial information set forth below is qualified in its entirety by reference to such reports and documents filed with the Commission and the financial statements and related notes contained therein. These reports and other documents may be examined and copies thereof may be obtained in the manner set forth above. 21 INSIGNIA FINANCIAL GROUP, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (in thousands, except per share data)
THREE MONTHS ENDED YEAR ENDED MARCH 31, DECEMBER 31, ------------------------- ------------------------------------- 1998 1997 1997 1996 1995 ----------- ------------ ------------ ------------ ---------- (unaudited) Statements of Operations Data: Total Revenues.................................. $ 130,458 $ 67,912 $ 400,843 $ 227,074 $ 123,032 Income Before Taxes and Extraordinary Item...... $ 3,486 $ 3,340 $ 17,055 $ 14,946 $ 10,093 Net Income...................................... $ 1,917 $ 2,004 $ 10,233 $ 8,564 $ 5,806 Earnings Per Share.............................. $ 0.06 $ 0.06 $ 0.32 $ 0.26 $ 0.20
AS OF AS OF MARCH 31, DECEMBER 31, ------------------------- ------------------------------------- 1998 1997 1997 1996 1995 ----------- ------------ ------------ ------------ ---------- (unaudited) Balance Sheets Data: Cash and Cash Equivalents....................... $ 73,143 $ 69,821 $ 88,847 $ 54,614 $ 49,846 Receivables..................................... $ 151,919 $ 52,455 $ 122,180 $ 46,040 $ 26,445 Total Assets................................ $ 922,810 $ 486,809 $ 800,223 $ 492,402 $ 245,409 Accounts Payable................................ $ 17,347 $ 2,417 $ 13,705 $ 1,711 $ 1,497 Commissions Payable............................. $ 56,404 $ 18,264 $ 51,285 $ 18,736 $ 602 Accrued and Sundry Liabilities.................. $ 114,524 $ 32,186 $ 102,009 $ 40,741 $ 25,619 Long-Term Debt.................................. $ 258,422 $ 68,905 $ 189,704 $ 69,140 $ 42,996 Total Liabilities........................... $ 446,697 $ 121,772 $ 356,703 $ 130,328 $ 70,714 Redeemable Convertible Preferred Stock.......... -- -- -- -- $ 15,000 Redeemable Convertible Preferred Securities of Subsidiary Trust........................... $ 144,137 $143,943 $ 144,065 $ 144,169 -- Minority Interest in Consolidated Subsidiaries.. $ 65,082 -- $ 61,546 -- $ 2,682 Shareholders' Equity........................ $ 266,894 $ 221,094 $ 237,909 $ 217,905 $ 157,013
Except as otherwise set forth herein and in Schedule I, none of the Purchaser (which is an affiliate of the General Partner), IPLP, IPT, Insignia or, to the best of the Purchaser's knowledge, any of the persons listed on Schedules II, III or IV hereto, or any affiliate of the foregoing, (i) beneficially owns or has a right to acquire any Units, (ii) has effected any transaction in the Units in the last 60 days, or (iii) has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Partnership, including, but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting thereof, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Andrew L. Farkas, who is the Chairman of the Board, Chief Executive Officer and President of Insignia and a trustee of IPT, beneficially owns approximately 28% of Insignia's outstanding common stock and, as a result, may be deemed to beneficially own the Units owned by IPLP. SECTION 12. SOURCE OF FUNDS. The Purchaser (which is an affiliate of the General Partner) expects that approximately $4,000,000 will be required to purchase 50,000 Units, if tendered, and to pay related fees and expenses. The Purchaser (which is an affiliate of the General Partner) expects to obtain all of those funds from IPLP, which in turn intends to use its cash on hand and borrowings from its credit facility with a commercial bank and financial institution. The Purchaser has not conditioned the Offer on obtaining financing. The following is a summary description of the existing credit facility (the "Facility") provided for the benefit of IPLP pursuant to the Credit Agreement, dated as of December 30, 1997 (the "Credit Agreement"), among IPLP, as borrower, Lehman Commercial Paper, Inc., as syndication agent, First Union National Bank, as administrative agent and the lenders from time to time parties thereto (the "Lenders"). This summary description does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, a copy of which has been filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission. 22 Pursuant to the Credit Agreement, the Lenders have made available to IPLP a revolving credit facility of up to $50 million at any one time outstanding. Loans under the Facility (the "Loans") may be utilized to finance certain permitted investments and refinance certain investments made prior to the date of the Credit Agreement. The Facility matures in a single installment on December 30, 2000. Loans bear interest, at IPLP's election, (i) at a rate equal to the higher of (a) the rate announced from time to time by First Union National Bank as its base lending rate or (b) the daily effective federal funds rate as quoted by First Union National Bank; or (ii) at rates based on the London interbank offered rate, as adjusted for certain reserve and other requirements applicable to lenders, for one-, two-, three- or six-month periods plus an interest margin of 2.50%. As of the date hereof, IPT has no outstanding indebtedness under the Facility. IPT is obligated to pay a commitment fee at a rate of 0.25% per annum on the undrawn portion of the Facility. Such commitment fee is payable quarterly in arrears and calculated based on the actual number of days elapsed over a 365-day year. The Loans are subject to mandatory prepayment only to the extent that the aggregate outstanding principal amount of the Loans on any day exceeds the amount of the Facility then in effect. Voluntary prepayments of the Loans and voluntary reductions of the Facility are permitted, in whole or in part, at the option of IPLP in minimum principal amounts, without premium or penalty, subject to reimbursement of certain of the Lenders' costs under certain conditions. IPLP's obligations under the Facility have been guaranteed by IPT and such guaranty is secured by a first priority pledge of and security interest in the capital stock or other equity interests held by IPT in each of the subsidiaries of IPT which directly or indirectly owns or controls the general partner interest (including an interest in the General Partner) in any Real Estate Entity (as defined below) in which IPLP directly or indirectly owns a limited partner interest (including the Partnership). In addition, the Facility is secured by a first priority pledge of and security interest in all limited partnership interests from time to time owned by IPLP and the equity interests from time to time held by IPLP in any subsidiary of IPLP which itself owns limited partnership interests. The Credit Agreement defines a "Real Estate Entity" as any limited partnership, limited liability company, corporation or other entity which has as its principal business the ownership of real property or debt secured by real property. Thus, the IPT Partnerships (including the Partnership) constitute Real Estate Entities for purposes of the Credit Agreement. The Facility contains representations and warranties, conditions precedent, covenants, events of default and other provisions customarily found in similar transactions. SECTION 13. BACKGROUND OF THE OFFER. Affiliation with the General Partner. The General Partner (which also serves as the general partner of ten other affiliated public real estate limited partnerships) is a direct, wholly-owned subsidiary of Angeles Securitization Corporation ("ASC"), which in turn is a direct, wholly-owned subsidiary of IAP GP Corporation ("IAP"), which in turn is a direct, wholly-owned subsidiary of IPT. ASC acquired all of the outstanding stock of the General Partner in November 1992 from Angeles Real Estate Corporation, which in turn was a wholly-owned subsidiary of Angeles Corporation. At the time of such acquisition, IAP and ASC were (and thus the General Partner became) wholly-owned subsidiaries of MAE GP. Effective March 7, 1998, MAE GP was merged with and into IPT, with IPT being the surviving entity (the "MAE GP Merger"). As a result of the MAE GP Merger, IAP, ASC and the General Partner are now wholly-owned subsidiaries of IPT and the Partnership is controlled by IPT. In connection with the MAE GP Merger, effective February 17, 1998, Insignia contributed 7,775 Units owned by it and its subsidiaries (representing all Units then owned by such entities) to IPLP in exchange for additional units of partnership interest in IPLP. 23 Determination of Purchase Price. In establishing the Purchase Price, the Purchaser (which is an affiliate of the General Partner) reviewed certain publicly available information and certain information made available to it by the General Partner and its other affiliates, including among other things: (i) the Limited Partnership Agreement, as amended to date; (ii) the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1997 and the Partnership's Quarterly Report on Form 10-QSB for the period ended June 30, 1998; (iii) unaudited results of operations of the Partnership's properties for the period since the beginning of the Partnership's current fiscal year; (iv) the operating budgets prepared by IESG with respect to the Partnership's properties for the year ending December 31, 1998; (v) independent appraisals of the Partnership's properties; and (vi) other information obtained by IESG, Insignia and other affiliates in their capacities as providers of property management, asset management and partnership administration services to the Partnership. The Purchaser's determination of the Purchase Price was based on its review and analysis of the foregoing information, the other financial information and analyses concerning the Partnership summarized below. In determining the Purchase Price, the Purchaser did not rely upon any material, non-public information concerning the Partnership not summarized below or elsewhere in this Offer to Purchase. Trading History of Units. Secondary market sales activity for the Units, including privately negotiated sales, has been limited and sporadic. According to information obtained from the General Partner, from July 1, 1996 to June 30, 1998 an aggregate of 15,285 Units (representing less than 11.7% of the total outstanding Units) was transferred (excluding the Units transferred by Insignia to IPLP in February 1998) in sale transactions. Set forth in the table below are the high and low sales prices of Units for the quarterly periods from July 1, 1996 to June 30, 1998, as reported by the General Partner and by The Partnership Spectrum, which is an independent, third-party source. The gross sales prices reported by The Partnership Spectrum do not necessarily reflect the net sales proceeds received by sellers of Units, which typically are reduced by commissions and other secondary market transaction costs to amounts less than the reported prices; thus the Purchaser does not know whether the information compiled by The Partnership Spectrum is accurate or complete. The transfer paperwork submitted to the General Partner often does not include the requested price information or contains conflicting information as to the actual sales price; accordingly, Limited Partners should not rely upon this information as being completely accurate. 24 ANGELES INCOME PROPERTIES, LTD. IV REPORTED SALES PRICES OF PARTNERSHIP UNITS
AS REPORTED BY AS REPORTED BY THE GENERAL PARTNER(A) THE PARTNERSHIP SPECTRUM(B) -------------------------- --------------------------- LOW SALES HIGH SALES LOW SALES HIGH SALES PRICE PRICE PRICE PRICE PER UNIT PER UNIT PER UNIT PER UNIT ---------- ---------- ------------ ------------ Fiscal Year Ended December 31, 1998: Second Quarter.................................... $30 $ 70 $55 $67 First Quarter..................................... 30 78 63 72 Fiscal Year Ended December 31, 1997: Fourth Quarter.................................... 25 90 50 64 Third Quarter ................................... 25 89 57 75 Second Quarter.................................... 21 112 63 92 First Quarter .................................... 25 90 65 91 Fiscal Year Ended December 31, 1996: Fourth Quarter ................................... 25 90 75 90 Third Quarter..................................... 18 89 43 79
(a) Although the General Partner requests and records information on the prices at which Units are sold, it does not regularly receive or maintain information regarding the bid or asked quotations of secondary market makers, if any. The General Partner processes transfers of Units 12 times per year - on the first day of each month. The prices in the table are based solely on information provided to the General Partner by sellers and buyers of Units transferred in sale transactions (i.e., excluding transactions believed to result from the death of a Limited Partner, rollover to an IRA account, establishment of a trust, trustee to trustee transfers, termination of a benefit plan, distributions from a qualified or non-qualified plan, uniform gifts, abandonment of Units or similar non-sale transactions). (b) The gross sales prices reported by The Partnership Spectrum do not necessarily reflect the net sales proceeds received by sellers of Units, which typically are reduced by commissions and other secondary market transaction costs to amounts less than the reported prices. The Purchaser (which is an affiliate of the General Partner) does not know whether the information compiled by The Partnership Spectrum is accurate or complete. The Purchaser (which is an affiliate of the General Partner) believes that, although secondary market sales information probably is not a reliable measure of value because of the limited and inefficient nature of the market for Units, this information may be relevant to a Limited Partner's decision as to whether to tender its Units pursuant to the Offer. At present, privately negotiated sales and sales through intermediaries (e.g., through the trading system operated by American Partnership Board, Inc., which publishes sell offers by holders of Units) are the only means available to a Limited Partner to liquidate an investment in Units (other than the Offer) because the Units are not listed or traded on any exchange or quoted on NASDAQ. Estimate of Net Asset Value in Connection with the MAE GP Merger. In connection with the MAE GP Merger (as described in Section 11), IPT estimated the net asset value of a Unit to be $93. This net asset value estimate was based on a hypothetical sale of all of the Partnership's properties and the distribution to the Limited Partners and the General Partner of the gross proceeds of such sales, net of related indebtedness, together with the Partnership's cash, proceeds from temporary investments, and all other assets that are believed to have liquidation value, after provision in full for all of the Partnership's other known liabilities. This net asset value estimate did not take into account (i) timing considerations or (ii) costs associated with winding up the Partnership. Therefore, the Purchaser believes that IPT's estimate of the net asset value of a Unit prepared in connection with the MAE GP Merger does not necessarily represent either the fair market value of a Unit or the amount a Limited Partner reasonably could expect to receive if the Partnership's properties were sold and the Partnership was liquidated. For this reason, the Purchaser considered such net asset value estimate to be less meaningful in determining the Purchase Price than the pro forma liquidation analysis described below. 25 General Partner's Estimates of Net Asset Value. An affiliate of the General Partner prepared an estimate of the Partnership's net asset value per Unit in connection with an offer to purchase up to 4.9% of the outstanding Units commenced by a party unaffiliated with the Purchaser, IPLP, IPT or Insignia in August 1998. That estimate of the Partnership's net asset value per Unit as of June 30, 1998 was $131 per Unit. The General Partner also prepares annual estimates of the Partnership's net asset value per Unit. The General Partner's three most recent estimates of the Partnership's net asset value per Unit were $111, $106 and $149 as of December 31, 1997, 1996 and 1995, respectively. The General Partner estimates net asset value based on a hypothetical sale of all of the Partnership's properties and the distribution to the Limited Partners and the General Partner of the gross proceeds of such sales, net of related indebtedness, together with the Partnership's cash, proceeds from temporary investments, and all other assets that are believed to have liquidation value, after provision in full for all of the Partnership's other known liabilities. The net asset value estimates prepared by the General Partner do not take into account (i) timing considerations or (ii) costs associated with winding up the Partnership. Therefore, the Purchaser believes that the General Partner's estimates of net asset value per Unit do not necessarily represent either the fair market value of a Unit or the amount a Limited Partner reasonably could expect to receive if the Partnership's properties were sold and the Partnership was liquidated. For this reason, the Purchaser considered the General Partner's net asset value estimates to be less meaningful in determining the Purchase Price than the pro forma liquidation analysis described below. Appraisals. Both of the Partnership's properties were appraised during the first quarter of 1998 by an independent, third party appraiser (Koeppel Tener Real Estate Services, Inc. ("KTR")) in connection with the General Partner's net asset value estimate as of December 31, 1997. In addition, Eastgate Marketplace Shopping Center was appraised in each of the two prior years, as listed below. According to the appraisal reports, the scope of the appraisals included an inspection of each property and an analysis of the respective surrounding markets. For each property, KTR relied principally on the discounted cash flow approach to valuation and secondarily on the sales comparison approach, and represented that its report was prepared in accordance with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice, and in compliance with the Appraisal Standards set forth in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (known as "FIRREA"). The estimated market values of the fee simple estate of each of the properties specified in the appraisal reports for 1996, 1997 and 1998 for the Partnership's properties are set forth in the table below, and copies of the summaries of the 1998 appraisals have been filed as exhibits to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission.
PROPERTY NAME 1998 1997 1996 - ------------------------------------------ ------------------- -------------------- ------------ Eastgate Marketplace Shopping Center $ 4,800,000 $ 4,100,000 $ 3,000,000 Factory Merchants Mall $ 24,500,000 n/a n/a ------------- AGGREGATE APPRAISED VALUE $ 29,300,000 n/a n/a =============
Purchaser's Estimate of Gross Real Estate Value. In estimating the gross real estate value of the Partnership's properties, the Purchaser (which is an affiliate of the General Partner) relied on the appraised values described above in determining the estimated values of the Partnership's properties. The Purchaser (which is an affiliate of the General Partner) reviewed the discounted cash flow analysis utilized by KTR in preparing its estimates of the values of the Partnership's properties, and based on that review, the Purchaser determined that the discount rates used by KTR were within a range of reasonableness. Working backwards from the appraised value of each property, the Purchaser (which is an affiliate of the General Partner) calculated the implied gross rent multiplier for each of the Partnership's properties, and determined that the multiplier for each property was within a range of reasonableness. The Purchaser (which is an affiliate of the General Partner) also calculated, based on the appraised value of each of the Partnership's properties, the implied cost per square foot, and determined that those costs were within a range of reasonableness. Based on the estimates of the appraised values of the Partnership's properties described above, the Purchaser estimated that the current aggregate gross real estate value of the Partnership's properties is $29,300,000 (the "Gross Real Estate Value Estimate"). In relying upon the appraised values of the Partnership's properties, the Purchaser considered the factors described above as well as other unquantifiable factors such as the Purchaser's 26 knowledge of expenses relating to operating properties in the relative markets in which the Partnership's properties are located and its experience in the real estate markets in general. The Purchaser concluded that the appraised values of the Partnership's properties are reasonable estimates of the gross fair values of the Partnership's properties. Although there are several other methods of estimating the value of real estate of this type, the Purchaser believes that the approach used by the appraiser represents a reasonable method of estimating the aggregate gross real estate value of the Partnership's properties (without taking into account the costs of disposing of the properties), subject to the substantial uncertainties inherent in any estimate of value. An appraisal is an estimate or opinion of value and cannot be relied upon as a precise measure of value or worth. All of the assumptions and limiting conditions as well as the analysis and methodology included in the appraisal report are an integral part of the value conclusion. The amount which could be realized on a sale of any of the Partnership's properties may be substantially more or less than its appraised value. The Purchaser did not solicit any offers or inquiries from prospective buyers of the Partnership's properties. Purchaser's Pro Forma Estimate of Net Liquidation Value per Unit. The Purchaser is offering to purchase Units, which are a relatively illiquid investment, and is not offering to purchase the Partnership's underlying assets or assume any of its liabilities. Consequently, the Purchaser does not believe that the per-Unit amount which might be distributed to Limited Partners following a future sale of all the Partnership's properties necessarily reflects the present fair value of a Unit. Conversely, the realizable value of the Partnership's assets clearly is a relevant factor in determining the price a prudent purchaser would offer for Units. In considering this factor, the Purchaser made a pro forma calculation of the amount each Limited Partner might receive in a theoretical orderly liquidation of the Partnership (which may not be realistically possible, particularly in the near term, due to real estate market conditions, the general difficulty of disposing of real estate in a short period of time, and other general economic factors), based on the Gross Real Estate Value Estimate as described above and the other considerations described below. The Purchaser based its pro forma liquidation analysis on the Gross Real Estate Value Estimate (and thus in large part on the appraised values of the Partnership's properties described above (which values also were used by the General Partner in calculating its net asset value estimates as of June 30, 1998 and December 31, 1997)) as opposed to the values estimated by IPT in connection with the MAE GP Merger (as described above), because the Purchaser believes that the Gross Real Estate Value Estimate represents the best estimate, based on currently available information, of the values of the Partnership's properties. In estimating the pro forma net liquidation value per Unit, the Purchaser adjusted its Gross Real Estate Value Estimate of $29,300,000 to reflect the Partnership's other assets and liabilities (excluding prepaid and deferred expenses and security deposits). Specifically, the Purchaser added the amounts of cash, accounts receivable and escrow deposits shown on the Partnership's unaudited balance sheet at June 30, 1998 ($4,543,000), and subtracted the mortgage debt encumbering the Partnership's properties ($15,138,000) and all other liabilities shown on that balance sheet ($276,000). The Purchaser then deducted $1,172,000, representing a reserve equal to 4% of the Gross Real Estate Value Estimate (which represents the Purchaser's estimate of the probable costs of brokerage commissions, real estate transfer taxes and other disposition expenses). The result, $17,257,000, represents the Purchaser's pro forma estimate of the aggregate net liquidation proceeds (before provision for the costs described in the following sentence) which could be realized on an orderly liquidation of the Partnership, based on the assumptions implicit in the calculations described above. The Purchaser did not, however, deduct any amounts in respect of the legal and other costs which the Purchaser expects would be incurred in a liquidation, including costs of negotiating purchase and sale contracts, possibly conducting a consent solicitation in order to obtain the Limited Partners' approvals for the sales as may be required by the Limited Partnership Agreement, and winding up the Partnership, because of the difficulty of estimating those amounts. To complete its pro forma estimate of the amount of the theoretical liquidation proceeds that would be distributable per Unit, the Purchaser then deducted 2%, which would be the percentage allocable to the General Partner in respect of its non-subordinated interest in the Partnership, and the remaining $16,911,860 was then divided by the 131,585 Units reported as outstanding by the General Partner as of August 1, 1998. The resulting estimated pro forma liquidation value was $128.52 per Unit (the "Estimated Liquidation Value"), before provision for the legal and other costs of liquidating the Partnership described in the last sentence of the preceding paragraph. 27 The Purchaser's pro forma liquidation analysis described above is merely theoretical and does not itself reflect the value of the Units because (i) there is no assurance that any such liquidation in fact will occur in the foreseeable future and (ii) any liquidation in which the estimated fair market values described above might be realized would take an extended period of time (at least a year, and quite possibly significantly longer), during which time the Partnership and its partners would continue to be exposed to the risk of fluctuations in asset values because of changing market conditions and other factors. For any property sales in which the Partnership is required to indemnify the buyer for matters arising after the closing, a portion of the sales proceeds could be held by the Partnership until all possible claims are satisfied, further extending the delay in the receipt by the Limited Partners of liquidation proceeds. In light of these factors, the Purchaser (which is an affiliate of the General Partner) believes the actual current value of the Units is substantially less than its estimate of the Estimated Liquidation Value. Conversely, there is a substantial possibility that the per-Unit value realized in an orderly liquidation could be greater than the Estimated Liquidation Value. A reduction in either operating expenses or capital expenditures from the levels reflected in the property operating statements for the six months ended June 30, 1998 would result in a higher liquidation value under the method described above. Similarly, a higher liquidation value would result if a buyer applied lower discount rates (reflecting a willingness to accept a lower rate of return on its investment) to the applicable net operating income generated by the Partnership's properties than the discount rates applied by the appraiser. For example, a 5% increase or decrease in the value of the Partnership's properties would produce a corresponding increase or decrease in the Estimated Liquidation Value of approximately $10 per Unit. Furthermore, the analysis described above is based on a series of assumptions, some of which may not be correct. Accordingly, this analysis should be viewed merely as indicative of the Purchaser's approach to valuing Units and not as predictive of the likely result of any future transactions. Litigation. On March 24, 1998, certain persons claiming to own limited partner interests in certain limited partnerships (including the Partnership) whose general partners (the "General Partners") are affiliates of Insignia (the "Partnerships") filed a purported class and derivative action in California Superior Court in the County of San Mateo (the "San Mateo Complaint") against Insignia, the General Partners (including the Managing General Partner), certain persons and entities who purportedly formerly controlled the General Partners, and additional entities affiliated with and individuals who are officers, directors and/or principals of several of the defendants. The San Mateo Complaint contains allegations that, among other things, (i) the defendants breached their fiduciary duties to the plaintiffs by selling or agreeing to sell their "fiduciary positions" as stockholders, officers and directors of the General Partners for a profit and retaining said profit rather than distributing it to the plaintiffs; (ii) the defendants breached their fiduciary duties by mismanaging the Partnerships and misappropriating the assets of the Partnerships by (a) manipulating the operations of the Partnerships to depress the trading price of limited partnership units (the "Units") of the Partnerships; (b) coercing and fraudulently inducing unitholders to sell Units to certain of the defendants at depressed prices; and (c) using the voting control obtained by purchasing Units at depressed prices to entrench certain of the defendants' positions of control over the Partnerships; and (iii) the defendants breached their fiduciary duties to the plaintiffs by (a) selling assets of the Partnerships such as mailing lists of unitholders; and (b) causing the General Partners to enter into exclusive arrangements with their affiliates to sell goods and services to the General Partners, the unitholders and tenants of Partnership properties. The San Mateo Complaint also alleges that the foregoing allegations constitute violations of various California securities, corporate and partnership statutes, as well as conversion and common law fraud. The San Mateo Complaint seeks unspecified compensatory and punitive damages, an injunction blocking the sale of control of the General Partners to AIMCO and a court order directing the defendants to discharge their fiduciary duties to the plaintiffs. As of the date of this Offer to Purchase, defendants have not served or filed a reply to the San Mateo Complaint. IPT and Insignia believe that the allegations contained in the San Mateo Complaint are without merit and intend to vigorously contest the plaintiffs' action. On July 30, 1998, certain entities claiming to own limited partnership interests in certain limited partnerships (including the Partnership) whose general partners are affiliates of Insignia, IPT and the Purchaser (the "Affiliated General Partners") filed a complaint in the Superior Court of the State of California, County of Los Angeles (the "Los Angeles Complaint") against Insignia, the Subject Partnerships (defined below), the Affiliated General Partners (including the General Partner) and additional entities affiliated with several of the defendants. The action involves 44 real estate limited partnerships (each named as a defendant) in which the plaintiffs allegedly own interests and which Insignia affiliates allegedly manage or control (the "Subject Partnerships"). Plaintiffs allege 28 that they have requested from, but have been denied by each of the Subject Partnerships, lists of their respective limited partners for the purpose of making tender offers to purchase up to 4.9% of the units of limited partnership interest in each of the Subject Partnerships. The Los Angeles Complaint also alleges that certain of the defendants made tender offers to purchase units of limited partnership interest in many of the Subject Partnerships, with the alleged result that plaintiffs have been deprived of the benefits they would have realized from ownership of the additional units. The plaintiffs assert eleven causes of action, including breach of contract, unfair business practices, and violations of the partnership statutes of the states in which the Subject Partnerships are organized. Plaintiffs seek compensatory, punitive and treble damages. Insignia was only recently served with the Los Angeles Complaint and has not yet responded to it. Insignia believes the claims to be without merit and intends to defend the action vigorously. SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of the Offer, the Purchaser (which is an affiliate of the General Partner) will not be required to accept for payment or to pay for any Units tendered if all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, necessary for the consummation of the transactions contemplated by the Offer shall not have been filed, occurred or been obtained prior to the Expiration Date. Furthermore, notwithstanding any other term of the Offer and in addition to the Purchaser's right to withdraw the Offer at any time before the Expiration Date, the Purchaser (which is an affiliate of the General Partner) will not be required to accept for payment or pay for any Units not theretofore accepted for payment or paid for and may terminate or amend the Offer as to such Units if, at any time on or after the date of the Offer and before the Expiration Date, any of the following conditions exists: (a) a preliminary or permanent injunction or other order of any federal or state court, government or governmental authority or agency shall have been issued and shall remain in effect which (i) makes illegal, delays or otherwise directly or indirectly restrains or prohibits the making of the Offer or the acceptance for payment, purchase of or payment for any Units by the Purchaser (which is an affiliate of the General Partner), (ii) imposes or confirms limitations on the ability of the Purchaser effectively to exercise full rights of ownership of any Units, including without limitation the right to vote any Units acquired by the Purchaser pursuant to the Offer or otherwise on all matters properly presented to the Partnership's Limited Partners, (iii) requires divestiture by the Purchaser of any Units, (iv) causes any material diminution of the benefits to be derived by the Purchaser as a result of the transactions contemplated by the Offer, or (v) might materially adversely affect the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Purchaser or the Partnership; (b) there shall be any action taken, or any statute, rule, regulation or order proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer by any federal or state court, government or governmental authority or agency, which might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) any change or development shall have occurred or been threatened since the date of the Offer to Purchase, in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Partnership, which is or may be materially adverse to the Partnership, or the Purchaser (which is an affiliate of the General Partner) shall have become aware of any fact that does or may have a material adverse effect on the value of the Units; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any limitation by any governmental authority on, or other event which might affect, the extension of credit by lending institutions or result in any imposition of currency controls in the United States, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States, (v) a material change in United States or other currency exchange rates or a suspension of, or imposition of a limitation on, the markets thereof, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; or 29 (e) it shall have been publicly disclosed or the Purchaser (which is an affiliate of the General Partner) shall have otherwise learned that (i) more than ten percent of the outstanding Units have been or are proposed to be acquired by another person (including a "group" within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person or group that prior to such date had filed a Statement with the Commission pursuant to Section 13(d) or (g) of the Exchange Act has increased or proposes to increase the number of Units beneficially owned by such person or group as disclosed in such Statement by two percent or more of the outstanding Units. The foregoing conditions are for the sole benefit of the Purchaser (which is an affiliate of the General Partner) and may be asserted by the Purchaser regardless of the circumstances giving rise to such conditions or may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. Any determination by the Purchaser (which is an affiliate of the General Partner) concerning the events described above will be final and binding upon all parties. SECTION 15. CERTAIN LEGAL MATTERS. General. The Purchaser (which is an affiliate of the General Partner) is not aware of any filings, approvals or other actions by any domestic or foreign governmental or administrative agency that would be required prior to the acquisition of Units by the Purchaser (which is an affiliate of the General Partner) pursuant to the Offer, other than the filing of a Tender Offer Statement on Schedule 14D-1 with the Commission (which has already been filed) and any required amendments thereto. Should any such approval or other action be required, it is the Purchaser's present intention that such additional approval or action would be sought. Although there is no present intent to delay the purchase of Units tendered pursuant to the Offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Partnership's business, or that certain parts of the Partnership's business might not have to be disposed of or other substantial conditions complied with in order to obtain such approval or action, any of which could cause the Purchaser (which is an affiliate of the General Partner) to elect to terminate the Offer without purchasing Units thereunder. Antitrust. The Purchaser (which is an affiliate of the General Partner) does not believe that the Hart-ScottRodino Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition of Units contemplated by the Offer. Margin Requirements. The Units are not "margin securities" under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, those regulations generally are not applicable to the Offer. SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16, the Purchaser (which is an affiliate of the General Partner) will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Units pursuant to the Offer. The Purchaser (which is an affiliate of the General Partner) has retained Beacon Hill Partners, Inc. to act as Information Agent and Harris Trust Company of New York to act as Depositary in connection with the Offer. The Purchaser (which is an affiliate of the General Partner) will pay the Information Agent and the Depositary reasonable and customary compensation for their respective services in connection with the Offer, plus reimbursement for out-of-pocket expenses, and has agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws. The Purchaser (which is an affiliate of the General Partner) will also pay all costs and expenses of printing and mailing the Offer and its legal fees and expenses. SECTION 17. MISCELLANEOUS. The Purchaser (which is an affiliate of the General Partner) is not aware of any jurisdiction in which the making of the Offer is not in compliance with applicable law. If the Purchaser (which is an affiliate of the General Partner) becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, the Purchaser will make a good faith effort to comply with any such law. If, after such good faith effort, the Purchaser (which is an affiliate of the General Partner) cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) Limited Partners residing in such jurisdiction. In those jurisdictions whose securities or blue sky laws require the Offer to be made 30 by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser (which is an affiliate of the General Partner) by one or more registered brokers or dealers licensed under the laws of that jurisdiction. No person has been authorized to give any information or to make any representation on behalf of the Purchaser (which is an affiliate of the General Partner) not contained in this Offer to Purchase or in the Assignment of Partnership Interest and, if given or made, such information or representation must not be relied upon as having been authorized. The Purchaser (which is an affiliate of the General Partner), IPLP, IPT and Insignia have filed with the Commission a Tender Offer Statement on Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected and copies may be obtained at the same places and in the same manner as set forth in Section 9 (except that they will not be available at the regional offices of the Commission). COOPER RIVER PROPERTIES, L.L.C. AUGUST 12, 1998 31 SCHEDULE I TRANSACTIONS IN THE UNITS EFFECTED BY IPLP IN THE PAST 60 DAYS Number of Price DATE Units Purchased Per Unit 6/17/98 14.00 $63.60 6/22/98 60.00 60.00 S-1 SCHEDULE II INFORMATION REGARDING THE MANAGERS OF THE PURCHASER Set forth in the table below are the name and the present principal occupations or employment and the name, principal business and address of any corporation or other organization in which such occupation or employment is conducted, and the five-year employment history of each of the managers of the Purchaser. Each person identified below is employed by Insignia and is a United States citizen. The principal business address of the Purchaser and, unless otherwise indicated, the business address of each person identified below, is One Insignia Financial Plaza, Greenville, South Carolina 29602.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Jeffrey P. Cohen Jeffrey P. Cohen has been a Manager of the Purchaser since its inception in 375 Park Avenue July 1998. For additional information regarding Mr. Cohen, see Schedule III. Suite 3401 New York, NY 10152 Adam B. Gilbert Adam B. Gilbert has been a Manager of the Purchaser since July 1998. For 200 Park Avenue additional information regarding Mr. Gilbert, see Schedule IV. New York, NY 10166 Ronald Uretta Ronald Uretta has been a Manager of the Purchaser since its inception in July 1998. For additional information regarding Mr. Uretta, see Schedules III and IV.
S-2 SCHEDULE III INFORMATION REGARDING THE TRUSTEES AND EXECUTIVE OFFICERS OF IPT Set forth in the table below are the name and the present principal occupations or employment and the name, principal business and address of any corporation or other organization in which such occupation or employment is conducted, and the five-year employment history of each of the trustees and executive officers of IPT. Each person identified below is employed by Insignia and is a United States citizen. The principal business address of IPT and, unless otherwise indicated, the business address of each person identified below, is One Insignia Financial Plaza, Greenville, South Carolina 29602. Trustees are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Andrew L. Farkas* Andrew L. Farkas has served as a Trustee of IPT and as Chairman 375 Park Avenue of the Board of Trustees and Chief Executive Officer of IPT since Suite 3401 December 1996. For additional information regarding Mr. Farkas, New York, NY 10152 see Schedule IV. James A. Aston* James A. Aston has served as a Trustee of IPT since its inception in May 1996, and has served as President and Director of IPT since December 1996. For additional information regarding Mr. Aston, see Schedule IV. Frank M. Garrison* Frank M. Garrison has served as a Trustee of IPT since December 102 Woodmont Boulevard 1996. Mr. Garrison has also served as an Executive Managing Suite 400 Director of IPT since December 1996. For additional information Nashville, TN 37205 regarding Mr. Garrison, see Schedule IV. Jeffrey P. Cohen Jeffrey P. Cohen has served as a Senior Vice President of IPT 375 Park Avenue since August 1997, and has served as Secretary of IPT since Suite 3401 January 1998. From June until August 1997, Mr. Cohen served as New York, NY 10152 a Vice President of IPT. Since April 1997, Mr. Cohen's principal occupation has been to serve as a Senior Vice President -Investment Banking of Insignia. Prior to April 1997, Mr. Cohen's principal occupation was as an attorney with the law firm of Rogers & Wells, New York, New York. William D. Falls William D. Falls has served as the Controller of IPT since August 1997. Since April 1995, Mr. Falls' principal occupation has been to serve as an accountant with Insignia. Prior to April 1995, Mr. Falls' principal occupation was as a senior auditor with the accounting firm of Ernst & Young LLP. William H. Jarrard, Jr. William H. Jarrard, Jr. has served as a Senior Vice President of IPT since August 1997, and served as Vice President and Director of Operations of IPT from December 1996 until August 1997. Mr. Jarrard's principal employment has been with Insignia for more than the past five years. From January 1994 to September 1997, Mr. Jarrard served as Managing Director-- Partnership Administration of Insignia. S-3 PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Ronald Uretta Ronald Uretta has served as Vice President and Treasurer of IPT since December 1996. Mr. Uretta served as a Vice President of IPT from December 1996 until August 1997 and as Chief Financial Officer of IPT from May 1996 until December 1996. For additional information regarding Mr. Uretta, see Schedule IV. Carroll D. Vinson Carroll D. Vinson has served as Chief Operating Officer of IPT since May 1997. Since August 1994, Mr. Vinson's principal occupation has been to serve as President of the various corporate general partners of partnerships controlled by Metropolitan Asset Enhancement, L.P., which is an affiliate of Insignia.
S-4 SCHEDULE IV INFORMATION REGARDING THE DIRECTORS AND EXECUTIVE OFFICERS OF INSIGNIA Set forth in the table below are the name and the present principal occupations or employment and the name, principal business and address of any corporation or other organization in which such occupation or employment is conducted, and the five-year employment history of each of the directors and executive officers of Insignia. Unless otherwise indicated, each person identified below is employed by Insignia and is a United States citizen. The principal business address of Insignia and, unless otherwise indicated, the business address of each person identified below, is One Insignia Financial Plaza, Greenville, South Carolina 29602. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Andrew L. Farkas* Andrew L. Farkas has been a Director of Insignia since its 375 Park Avenue inception in July 1990. Mr. Farkas has been Chairman and Chief Suite 3401 Executive Officer of Insignia since January 1991 and President New York, NY 10152 since May 1995. Mr. Farkas has also been President of Metropolitan Asset Group, Ltd. ("MAG"), a real estate investment banking firm, since 1983. Robert J. Denison* Robert J. Denison has been a Director of Insignia since May 1996. For 1212 North Summit Drive more than the past five years, Mr. Denison's principal occupation has Santa Fe, NM 87501 been as a General Partner of First Security Company II, L.P., an investment advisory firm. Robin L. Farkas* Robin L. Farkas has been a Director of Insignia since August 1993. Mr. 730 Park Avenue Farkas is the retired Chairman of the Board and Chief Executive New York, NY 10021 Officer of Alexander's Inc., a real estate company. He also serves as a director of Refac Technology Development Corporation, Noodle Kiddoodle, and Containerways International Ltd. Robert G. Koen* Robert G. Koen has been a Director of Insignia since August 1993. 125 West 55th Street Since February 1996, Mr. Koen has been a partner in the law firm of New York, NY 10019 Akin, Gump, Strauss, Hauer & Feld, which represents Insignia and certain of its affiliates from time to time. From January 1991 to February 1996, Mr. Koen was a partner in the law firm LeBoeuf, Lamb, Greene & MacRae. Michael I. Lipstein* Michael I. Lipstein has been a Director of Insignia since August 1993. 110 East 59th Street For more than the past five years, Mr. Lipstein's principal occupation New York, NY 10022 has been as a self-employed consultant in the real estate business, including ownership, management and lending. James A. Aston James A. Aston's principal employment has been with Insignia for more than the past five years. Mr. Aston currently serves as Chief Financial Officer of Insignia (since August 1996), with the Office of the Chairman (since July 1994) and Executive Managing Director of Investment Banking of Insignia (since January 1991). Joseph T. Aveni Joseph T. Aveni's principal employment has been with Realty One, Inc., 6000 Rockside Woods Blvd. a wholly-owned subsidiary of Insignia ("Realty One"), for more Cleveland, OH 44131 than the past five years. Mr. Aveni currently serves as Chairman and Chief Executive Officer of Realty One (since October 1997). S-5 PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Anthony M. Ciepiel Mr. Ciepiel currently serves as a Director and Chief Operating Officer of 6000 Rockside Woods Blvd. Realty One (since October 1997). From 1994 to 1997, Mr. Ciepiel Cleveland, OH 44131 was the President of Realty One. Prior to 1994, Mr. Ciepiel was the Chief Financial Officer and Executive Vice President of Griswold, Inc., a full service advertising agency. Hugh V.A. Ellingham Hugh V.A. Ellingham's principal employment has been with Richard Berkeley Square House Ellis for more than the past five years. Mr. Ellingham currently London W1X 6AN serves as a Managing Director of Insignia for Richard Ellis England (since Insignia's acquisition of Richard Ellis in 1998) and has been a director of Richard Ellis since its inception in 1997. Mr. Ellingham is a citizen of the United Kingdom. Albert J. Frazia Albert Frazia has been a Senior Vice President -- Human Resources of Insignia since August 1997. Prior to August 1997, Mr. Frazia's principal employment for more than the prior five years was as Director -- Human Resources of E&Y Kenneth Leventhal Real Estate Group, New York, New York. Alan C. Froggatt Alan C. Froggatt's principal employment has been with Richard Ellis for Berkeley Square House more than the past five years. Mr. Froggatt currently serves as London W1X 6AN Chief Executive Officer of Richard Ellis (since Insignia's England acquisition of Richard Ellis in 1998). Mr. Froggatt is a citizen of the United Kingdom. Frank M. Garrison Frank M. Garrison's principal employment has been with Insignia for 102 Woodmont Boulevard more than the past five years. Mr. Garrison currently serves as Suite 400 an Executive Managing Director of Insignia (since July 1994) and Nashville, TN 37205 as President of Insignia Financial Services, a division of Insignia (since July 1994). Adam B. Gilbert Adam B. Gilbert has been General Counsel and Secretary of Insignia 200 Park Avenue since March 1998. Prior to that time, Mr. Gilbert's principal New York, NY 10166 occupation was as a partner with the law firm of Nixon, Hargrave, Devans & Doyle, LLP, New York, New York. Jeffrey L. Goldberg Jeffrey L. Goldberg's principal employment has been with Insignia for 200 Park Avenue more than the past five years. Mr. Goldberg currently serves as New York, NY 10166 a Managing Director -- Investment Banking of Insignia (since July 1994). Edward S. Gordon Edward S. Gordon has been with the Office of the Chairman of Insignia 200 Park Avenue and has been Chairman of Insignia/ESG, Inc. since July 1996. New York, NY 10166 Prior to July 1996, Mr. Gordon's principal employment for more than the prior five years was as a founder and Chairman of Edward S. Gordon Company, Incorporated ("ESG"), a commercial property management and brokerage firm located in New York, New York that was acquired by Insignia in June 1996. Albert H. Gossett Albert H. Gossett's principal employment has been with Insignia for more than the past five years. Mr. Gossett currently serves as a Senior Vice President of Insignia (since July 1994) and as Chief Information Officer of Insignia (since January 1991). S-6 PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------- Andrew J.M. Huntley Andrew Huntley's principal employment has been with Richard Ellis Berkeley Square House Group Limited, a wholly-owned U.K. subsidiary of Insignia ("Richard London W1X 6AN Ellis"), for more than the past five years. Mr. Huntley currently serves England as Chairman of Richard Ellis (since Insignia's acquisition of Richard Ellis in 1998). Mr. Huntley is a citizen of the United Kingdom. Neil Kreisel Neil Kreisel has been an Executive Managing Director of Insignia since 909 Third Avenue September 1995 and President of Insignia Residential Group since New York, NY 10022 September 1997. Mr. Kreisel has also served as President of Insignia Management Services -- New York, Inc., a subsidiary of Insignia, since September 1995. Prior to September 1995, Mr. Kreisel's principal occupation was to serve as President and Chief Executive Officer of Kreisel Company, Inc., a residential property management firm located in New York, New York which Insignia acquired in September 1995. Martha Long Martha Long has been a Senior Vice President -- Finance of Insignia since January 1997 and Controller of Insignia since June 1994. Prior to June 1994, Ms. Long was Senior Vice President and Controller of The First Savings Bank, FSB located in Greenville, South Carolina. Thomas R. Shuler Thomas R. Shuler's principal employment has been with Insignia for more than the past five years. Mr. Shuler currently serves as Chief Operating Officer of Insignia Residential Group (since January 1997). Stephen B. Siegel Stephen B. Siegel has been a Managing Director of Insignia since 200 Park Avenue June 1996, President of Insignia Commercial Group since January New York, NY 10166 1997 and President of Insignia/ESG, Inc. since June 1996. From February 1992 until July 1996, Mr. Siegel's principal employment was as President of ESG. Mr. Siegel currently serves as a Director of Liberty Property Trust and Tower Realty, Inc. Ronald Uretta Ronald Uretta's principal employment has been with Insignia for more than the past five years. Mr. Uretta currently serves as Chief Operating Officer (since August 1996) and Treasurer (since January 1992) of Insignia. Mr. Uretta has also served as the Chief Financial Officer and Controller of MAG since September 1990.
S-7 SCHEDULE V IPT PARTNERSHIPS Consolidated Capital Growth Fund Consolidated Capital Institutional Properties Consolidated Capital Institutional Properties/2 Consolidated Capital Institutional Properties/3 Consolidated Capital Properties III Consolidated Capital Properties IV Consolidated Capital Properties V Consolidated Capital Properties VI Johnstown/Consolidated Income Partners Multi-Benefit Realty Fund 87-1 Shelter Properties I Limited Partnership Shelter Properties II Limited Partnership Shelter Properties III Limited Partnership Shelter Properties IV Limited Partnership Shelter Properties V Limited Partnership Shelter Properties VI Limited Partnership Shelter Properties VII Limited Partnership National Property Investors III National Property Investors 4 National Property Investors 5 National Property Investors 6 National Property Investors 7 National Property Investors 8 Century Properties Fund XIV Century Properties Fund XV Century Properties Fund XVI Century Properties Fund XVII Century Properties Fund XVIII Century Properties Fund XIX Century Properties Growth Fund XXII Fox Strategic Housing Income Partners Davidson Growth Plus, L.P. Davidson Diversified Real Estate II, L.P. Davidson Income Real Estate, L.P. HCW Pension Real Estate Fund Angeles Income Properties, Ltd. II Angeles Income Properties, Ltd. IV Angeles Income Properties, Ltd. 6 Angeles Opportunity Properties, Ltd. Angeles Partners IX Angeles Partners XII S-8 Manually signed facsimile copies of the Assignment of Partnership Interest will be accepted. The Assignment of Partnership Interest and any other required documents should be sent or delivered by each Limited Partner or such Limited Partner's broker, dealer, bank, trust company or other nominee to the Depositary as set forth below. The Depositary for the Offer is: HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery: Wall Street Station (212) 701-7636 (212) 701-7624 Wall Street Plaza P.O. Box 1023 88 Pine Street, 19th Floor New York, New York 10268-1023 New York, New York 10005
Questions and requests for assistance or for additional copies of this Offer to Purchase and the Assignment of Partnership Interest may be directed to the Information Agent at its telephone number and address listed below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: BEACON HILL PARTNERS, INC. 90 Broad Street 20th Floor New York, New York 10004 (800) 854-9486 (Toll Free) (212) 843-8500 (Call Collect) EX-99.(A)(2) 3 ASSIGNMENT OF PARTNERSHIP INTEREST ASSIGNMENT OF PARTNERSHIP INTEREST FOR THE TENDER OF UNITS OF LIMITED PARTNERSHIP INTEREST IN ANGELES INCOME PROPERTIES, LTD. IV PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 12, 1998 - ------------------------------------------------------------------------------- THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON SEPTEMBER 9, 1998 UNLESS THE OFFER IS EXTENDED - ------------------------------------------------------------------------------- The Depositary for the Offer is: HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery: Wall Street Station (212) 701-7636 (212) 701-7624 Receive Window P.O. Box 1023 Wall Street Plaza New York, New York 10268-1023 88 Pine Street, 19th Floor New York, New York 10005
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THIS ASSIGNMENT OF PARTNERSHIP INTEREST, PLEASE CALL OUR INFORMATION AGENT, BEACON HILL PARTNERS, TOLL FREE AT (800) 854-9486. DELIVERY OF THIS ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE COPY) OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY. PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS Ladies and Gentlemen: The undersigned hereby tenders to Cooper River Properties, L.L.C., a Delaware limited liability company (the "Purchaser"), the number of the undersigned's units of limited partnership interest ("Units") in Angeles Income Properties, Ltd. IV, a California limited partnership (the "Partnership"), specified below, at a price of $75 per Unit (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in the offer to purchase dated August 12, 1998 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"). The undersigned understands and agrees that the Purchase Price will automatically be reduced by the aggregate amount of distributions per Unit, if any, made by the Partnership on or after August 12, 1998 and prior to the date on which the Purchaser pays for the Units purchased pursuant to the Offer. Holders of Units ("Limited Partners") who tender their Units will not be obligated to pay any commissions or Partnership transfer fees, which commissions and Partnership transfer fees, if any, will be borne by the Purchaser. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase Units tendered pursuant to the Offer. Subject to and effective upon acceptance for payment of and payment for the Units tendered hereby, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to all of the Units tendered hereby. The undersigned understands that upon acceptance for payment of and payment for the tendered Units, the Purchaser will be entitled to seek admission to the Partnership as a substituted Limited Partner in substitution for the undersigned as to all the tendered Units. The undersigned irrevocably appoints the Purchaser and its managers and designees as the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights with respect to the Units tendered by the undersigned and purchased by the Purchaser. Such power of attorney and proxy shall be considered coupled with an interest in the tendered Units and is irrevocable. When the Units tendered hereby are accepted for payment pursuant to the Offer, all prior proxies and powers given by the undersigned with respect to the Units will, without further action, be revoked, and no subsequent proxies or powers may be given (and if given will not be effective). The Purchaser and its managers and designees will, with respect to the Units, be empowered to exercise all voting and other rights of the undersigned as they in their sole discretion may deem proper, whether at any meeting of the Partnership's Limited Partners, by written consent or otherwise, subject to the restrictions in the Limited Partnership Agreement of the Partnership. The foregoing proxy and power may be exercised by the Purchaser or any of the other persons referred to above acting alone. In addition to and without limiting the generality of the foregoing, the undersigned hereby irrevocably (a) appoints the Purchaser and its managers and designees (each an "Agent") as the undersigned's attorneys-in-fact, each with full power of substitution, with an irrevocable instruction to each Agent to execute all or any instrument of transfer and/or other documents in the Agent's discretion in relation to the Units tendered hereby and accepted for payment by the Purchaser, and to do all such other acts and things as may in the opinion of the Agent be necessary or expedient for the purpose of, or in connection with, the undersigned's acceptance of the Offer and to vest in the Purchaser, or as it may direct, those Units, effective when, and only to the extent that, the Purchaser accepts the tendered Units for payment; (b) authorizes and requests the Partnership and general partner (the "General Partner") to take any and all acts as may be required to effect the transfer of the undersigned's Units to the Purchaser (or its designee) and admit the Purchaser (or its designee) as a substituted Limited Partner in the Partnership; (c) assigns to the Purchaser and its assigns all of the right, title and interest of the undersigned in and to any and all distributions made by the Partnership from and after the expiration of the Offer in respect of the Units tendered by the undersigned; (d) grants to the Purchaser and its assigns the right to receive any and all distributions made by the Partnership on or after the date on which the Purchaser pays for the Units tendered by the undersigned (regardless of the record date for any such distribution), and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units; (e) empowers the Purchaser and the Agent to execute and deliver to the General Partner a change of address form instructing the General Partner to send any and all future distributions to the address specified in the form, and to endorse any check payable to or upon the order of such Limited Partner representing a distribution to which the Purchaser is entitled pursuant to the terms of the Offer, in each case in the name and on behalf of the tendering Limited Partner; and (f) agrees not to exercise any rights pertaining to the Units without the prior consent of the Purchaser. The undersigned hereby represents and warrants that the undersigned owns the Units tendered hereby and has full power and authority to validly tender, sell, assign and transfer the Units tendered hereby and that when the same are purchased by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and such Units will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Units tendered hereby. The undersigned understands that a tender of Units pursuant to the procedures described in the Offer to Purchase and in the Instructions to this Assignment of Partnership Interest will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. THIS TENDER IS IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AS DESCRIBED IN SECTION 4 OF THE OFFER TO PURCHASE. PLEASE COMPLETE ALL SHADED AREAS SIGN HERE TO TENDER YOUR UNITS BOX A - -------------------------------------------------------------------------------- The undersigned hereby tenders the number of Units in Angeles Income Properties, Ltd. IV specified below pursuant to the terms of the Offer. The undersigned hereby certifies, under penalties of perjury, that the information and representations provided in Boxes A, B and C of this Assignment of Partnership Interest, which have been duly completed by the undersigned, are true and correct as of the date hereof. X ------------------------------------------------ X ------------------------------------------------ SIGNATURE(S) OF LIMITED PARTNER DATE (B): ---------------------------------------- (MUST BE SIGNED BY REGISTERED LIMITED PARTNER EXACTLY AS NAME(S) APPEAR(S) IN THE PARTNERSHIP'S RECORDS. IF SIGNATURE IS BY AN OFFICER OF A CORPORATION, ATTORNEY-IN-FACT, AGENT, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN OR OTHER PERSON(S) ACTING IN FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE COMPLETE THE LINE CAPTIONED "CAPACITY (FULL TITLE)" AND SEE INSTRUCTION 5.) PRINT NAME(S): ------------------------------- CAPACITY (FULL TITLE): ----------------------- ADDRESS : ------------------------------------- - ------------------------------------------------- (INCLUDE ZIP CODE) (THE ADDRESS PROVIDED ABOVE MUST BE THE REGISTERED ADDRESS OF THE LIMITED PARTNER) - ------------------------------- ----------------------------------------- AREA CODE AND SOCIAL SECURITY NUMBER TELEPHONE NUMBER OR TAXPAYER IDENTIFICATION NUMBER OF NUMBER OF UNITS TENDERED : UNITS OWNED : ------------ ------------ (If no indication is given, all Units owned of record by the Limited Partner will be deemed tendered.) - ------------------------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS - SECTION 1) AUTHORIZED SIGNATURE: NAME OF FIRM: --------------------- ---------------------- NAME: ADDRESS: ------------------------------------- --------------------------- DATE: AREA CODE AND TEL. NO.: ------------------------------------- ------------ - ------------------------------------------------------------------------------- IMPORTANT! LIMITED PARTNERS MUST ALSO COMPLETE BOTH BOX B AND BOX C BELOW. BOX B - ------------------------------------------------------------------------------- SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND Form W-9 CERTIFY BY SIGNING AND DATING BELOW Department of the Treasury Internal Revenue Service --------------------------------------- Social Security Number(s) or Employer Identification Number ------------------------------------------------------------ PAYER'S PART 2-- Certification-- Under penalties of perjury, I REQUEST FOR certify that: (1) The number shown on this form is my TAXPAYER correct Taxpayer a Identification Number (or I am waiting IDENTIFICATION for a number to be issued to me) and (2) I am not subject NUMBER (TIN) to back-up withholding either because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to back-up withholding as result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to back-up withholding ------------------------------------------------------------ PART 3 AWAITING TIN [ ] Certification Instructions -- You must cross out item (2) above if you have been notified by the IRS that you -- are subject to back-up withholding because of underreporting interest or dividends on your tax return However, if after being notified by the IRS that you were subject to back-up withholding you received another notification from the IRS that you are no longer subject to back-up withholding, do not cross out item (2). SIGNATURE : DATE : ------------------------------- ---------------------- - ------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER *(TO BE COMPLETED ONLY IF THE BOX IN PART 3 ABOVE IS CHECKED) I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty days, 31 percent of all reportable payments made to me thereafter will be withheld until I provide a number. - ------------------------------------ ------------------------------------ SIGNATURE SIGNATURE - ------------------------------------------------------------------------------- BOX C - ------------------------------------------------------------------------------- FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Purchaser that withholding of tax is not required upon this disposition of a U.S. real property interest, the undersigned hereby certifies the following on behalf of the tendering Limited Partner named above: 1. The Limited Partner, if an individual, is not a nonresident alien for purposes of U.S. income taxation, and if not an individual, is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); 2. The Limited Partner's Social Security Number (for individuals) or Employer Identification Number (for non-individuals) is: ; and 3. The Limited Partner's address is: -------------------------------- I understand that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement I have made here could be punished by fine, imprisonment, or both. Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete. - ------------------------------------ ------------------------------------ Signature Signature Title: Title: ------------------------------ ------------------------------ - ------------------------------------------------------------------------------- INSTRUCTIONS TO ASSIGNMENT OF PARTNERSHIP INTEREST FOR ANGELES INCOME PROPERTIES, LTD. IV FORMING PART OF TERMS AND CONDITIONS OF THE OFFER - ------------------------------------------------------------------------------- IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE COMPLETING THE ASSIGNMENT OF PARTNERSHIP INTEREST, PLEASE CALL BEACON HILL PARTNERS TOLL FREE AT (800) 854-9486 OR COLLECT AT (212) 843-8500 - ------------------------------------------------------------------------------- 1. GUARANTEE OF SIGNATURES. If the Assignment of Partnership Interest is signed by the registered holder of the Units and payment is to be made directly to that holder, then no signature guarantee is required on the Assignment of Partnership Interest. Similarly, if the Units are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no signature guarantee is required on the Assignment of Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. A notarization is not the same thing as a signature guarantee, and a notarization of the Assignment of Partnership Interest will not be sufficient. IN THE MAJORITY OF CASES, THE LOCAL BANK AT WHICH YOU DO YOUR DAY TO DAY BANKING IS AN ELIGIBLE INSTITUTION AND WILL BE ABLE TO PROVIDE YOU WITH THE REQUIRED MEDALLION GUARANTEE. 2. DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The Assignment of Partnership Interest is to be completed by all Limited Partners who wish to tender Units in response to the Offer. For a Limited Partner validly to tender Units, a properly completed and duly executed Assignment of Partnership Interest (or a facsimile copy), along with the required signature guarantees by an Eligible Institution and any other required documents, must be received by the Depositary at one of its addresses set forth on the Assignment of Partnership Interest on or prior to the Expiration Date (as defined in the Offer to Purchase). THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted, and no fractional Units will be purchased (except from a Limited Partner who is tendering all of the Units owned by that Limited Partner). All tendering Limited Partners, by execution of the Assignment of Partnership Interest, waive any right to receive any notice of the acceptance of their Units for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, additional information may be provided on a separate signed schedule attached hereto. 4. MINIMUM TENDERS. A Limited Partner may tender any or all of his or her Units; provided, however, that because of restrictions in the Partnership's Limited Partnership Agreement, in for a partial tender to be valid, after a sale of Units pursuant to the Offer, the tendering Limited Partner must continue to hold a minimum of ten Units (or, in the case of Limited Partners who hold Units in an Individual Retirement Account or Keogh Plan, at least four Units (except Limited Partners who reside in New Mexico, who must continue to hold at least five Units)). Tenders of fractional Units will be permitted only by a Limited Partner who is tendering all Units owned by that Limited Partner. 5. SIGNATURES ON ASSIGNMENT OF PARTNERSHIP INTEREST. If the Assignment of Partnership Interest is signed by the registered Limited Partner(s), the signature(s) must correspond exactly with the name(s) as shown on the records of the Partnership, without alteration, enlargement or any change whatsoever. If any of the Units tendered hereby are held of record by two or more joint Limited Partners, each such Limited Partner must sign the Assignment of Partnership Interest. If the Assignment of Partnership Interest is signed by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Depositary of their authority to so act must be submitted. 6. WAIVER OF CONDITIONS. The Purchaser expressly reserves the absolute right, in its sole discretion, to waive any of the specified conditions of the Offer, in whole or in part, in the case of any Units tendered. 7. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions or requests for assistance may be directed to Beacon Hill Partners, the Information Agent, at its address and telephone number set forth on the back cover of the Offer to Purchase. Copies of the Offer to Purchase and the Assignment of Partnership Interest may be obtained from the Information Agent. (Continued on Reverse Side) 8. SUBSTITUTE FORM W-9. Each tendering Limited Partner is required to provide the Depositary with a correct taxpayer identification number ("TIN"), generally the Limited Partner's social security or federal employer's identification number, on Substitute Form W-9, which is provided under "Important Tax Information" below. You must cross out item (2) in the Certification box on Substitute Form W-9 if you are subject to back-up withholding. Failure to provide the information on the form may subject the tendering Limited Partner to 31% federal income tax withholding on the payments made to the Limited Partner with respect to Units purchased pursuant to the Offer. The box in Part 3 of the form may be checked if the tendering Limited Partner has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN within sixty (60) days, thereafter the Depositary will withhold 31% on all such payments of the Purchase Price until a TIN is provided to the Depositary. 9. FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant to Section 1445 of the Internal Revenue Code in an amount equal to 10% of the purchase price for Units purchased pursuant to the Offer, plus the amount of any liabilities of the Partnership allocable to such Units, each Limited Partner who or which is a United States person must complete the FIRPTA Affidavit contained in the Assignment of Partnership Interest stating, under penalties of perjury, such Limited Partner's TIN and address, and that such Limited Partner is not a foreign person. Tax withheld under Section 1445 of the Internal Revenue Code is not an additional tax. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. IMPORTANT: THE ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE COPY) (TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. ---------------- IMPORTANT TAX INFORMATION To prevent backup withholding on payments made to a Limited Partner or other payee with respect to Units purchased pursuant to the Offer, the Limited Partner is required to notify the Depositary of the Units of the Limited Partner's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Limited Partner is awaiting a TIN) and that (1) the Limited Partner has not been notified by the Internal Revenue Service that the Limited Partner is subject to backup withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified the Limited Partner that the Limited Partner is no longer subject to backup withholding. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Limited Partner. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The Limited Partner is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Units. If the Units are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. Certain Limited Partners (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that Limited Partner must submit to the Depositary a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that Limited Partner's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional institutions. ---------------- INDIVIDUAL RETIREMENT ACCOUNT (IRAS) PLEASE NOTE THAT A TENDERING BENEFICIAL OWNER OF UNITS WHOSE UNITS ARE OWNED OF RECORD BY AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR OTHER QUALIFIED PLAN WILL NOT RECEIVE DIRECT PAYMENT OF THE PURCHASE PRICE, RATHER, PAYMENT WILL BE MADE TO THE CUSTODIAN OF SUCH ACCOUNT OR PLAN. IF THE UNITS ARE HELD IN AN IRA ACCOUNT, THE CUSTODIAN OF THE ACCOUNT MUST SIGN THE ASSIGNMENT OF PARTNERSHIP INTEREST. EX-99.(A)(3) 4 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. - --------------------------------------------------------------------------- GIVE THE TAXPAYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - --------------------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of (joint account) the account or, if combined funds, the first individual on the account 3. Husband and wife The actual owner of (joint account) the account or, if joint funds, either person1 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if the account) minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee for a incompetent(3) designated ward, minor, or incompetent person(3) 7. a. The usual revocable The grantor-trustee(1) savings trust account (grantor is also trustee) b. So-called trust account that The actual owner(1) is not a legal or valid trust under State law 8. Sole proprietorship account The owner(4) - --------------------------------------------------------------------------- GIVE THE TAXPAYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - --------------------------------------------------------------------------- 9. A valid trust, estate or The legal entity (Do not pension trust furnish the identifyin number of the personal representative or truste unless the legal entity itself is not designated in th account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in The partnership the name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nomine 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments - ------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number or employer identification number. (4) Show your individual name. You may also enter your business name. You may use your social security number or employer identification number. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a) of the Code. - - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. - - A futures commission merchant registered with the Commodity Futures Trading Commission. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441 of the Code. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to an appropriate nominee. - - Section 404(k) payments made by an ESOP. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852 of the Code). - - Payments described in section 6049(b)(5) of the Code to nonresident aliens. - - Payments on tax-free covenant bonds under section 1451 of the Code. - - Payments made by certain foreign organizations. - - Payments of mortgage interest to you. - - Payments made to an appropriate nominee. Exempt payees described above should file substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS). Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest, or other payments to give correct taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a correct taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 20% on any portion of an underpayment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a false statement with no reasonable basis that results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.(A)(4) 5 COVER LETTER FROM THE PURCHASER Exhibit (a)(4) COOPER RIVER PROPERTIES, L.L.C. One Insignia Financial Plaza Greenville, South Carolina 29602 August 12, 1998 To: The Limited Partners of Angeles Income Properties, Ltd. IV Enclosed for your review and consideration are documents relating to an offer by Cooper River Properties, L.L.C. ("Cooper River") to purchase your units of limited partnership interest in Angeles Income Properties, Ltd. IV for $75 in cash per unit. This offer will expire midnight, New York City time on September 9, 1998 (unless extended by Cooper River). Cooper River is an affiliate of the General Partner of the Partnership. THE ENCLOSED DOCUMENTS CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE YOU DECIDE WHETHER TO SELL YOUR UNITS TO COOPER RIVER PURSUANT TO THIS OFFER. If you have any questions concerning the terms of the offer, or need assistance in completing the forms necessary to tender your units, please contact our Information Agent, Beacon Hill Partners, at (800) 854-9486. Thank you. Sincerely, Cooper River Properties, L.L.C. EX-99.(B)(1) 6 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 ----------------------------- EX-99.(Z)(1) 7 SUMMARIES OF APPRAISALS [KTR LOGO] KOEPPEL TENER REAL ESTATE SERVICES, INC. Valuation Division PIGEON FORGE FACTORY OUTLET SHOPPING CENTER RESTRICTED APPRAISAL REPORT LIMITED APPRAISAL Located at 2850 North Parkway, City of Pigeon Forge, Sevier County, Tennessee Submitted to: Mr. Nick Husak Insignia Financial Group One Insignia Financial Plaza Greenville, SC 29602 Effective Date of Appraisal: December 31, 1997 Date of Report: March 17, 1998 Prepared By: KOEPPEL TENER REAL ESTATE SERVICES, INC. 5477 Glen Lakes Drive, Suite 202 Dallas, Texas 75231 [KOEPPEL TENER REAL ESTATE SERVICES, INC. LETTERHEAD] Mr. Nick Husak March 17, 1998 Insignia Financial Group One Insignia Financial Plaza Greenville, SC 29602 Reference: Pigeon Forge Factory Outlet Shopping Center 2850 North Parkway Pigeon Forge, Sevier County, Tennessee Dear Sir: In accordance with our engagement letter dated February 16, 1998, we have appraised the above captioned property as of December 31, 1997. This appraisal and final estimate of value has been based upon a careful and personal inspection of the property and upon research into various factors that influence value. The purpose of this report is to estimate the market value of the interests appraised in subject property as of the date of value. The function of this appraisal is to update a prior appraisal prepared on the subject property by KTR. The date of the prior appraisal is September 19, 1995. The results of our appraisal are presented in the attached Restricted Appraisal Report. Briefly described, the subject property consists of a factory outlet shopping center containing 200,166 square feet. Included in the net rentable area are three buildings that have built upon 3.34 acres of land under a long-term leases, which have remaining lease terms of longer than 20 years. The structures were reportedly built in 1977. The primary tenants include, Gold Toe, Banner House, Van Heusen, Corning/Revere, Phaltgraffe Factory Outlet, Mikasa, Fieldcrest Cannon, Banister Shoe Outlet, Bass Factory Outlet, Oneida Factory Store, Black & Decker, and Carters Childrenswear, which occupy approximately 87,051 square feet. As of the date of inspection the property was approximately 94% leased. It should be noted that a portion of the subject improvements have been built upon leased land, which is reflected in the ground lease payments in the Income Capitalization Approach and is given consideration in the Sales Comparison Approach. [KTR LOGO] KOEPPEL TENER REAL ESTATE SERVICES, INC. Valuation Division March 17, 1998 Mr. Nick Husak Page 2 In view of the pertinent facts mentioned herein and based upon the analysis of data which has been considered in connection with this report, it is our opinion that the market value of the interests appraised in the subject property; leasehold interest in the main site; and subleased fee in the three pad sites, as of December 31, 1997 is: TWENTY-FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($24,500,000) It has been a pleasure to be of service to you. Please feel free to contact the undersigned with any questions you may have regarding our conclusion. Respectfully submitted, KOEPPEL TENER REAL ESTATE SERVICES, INC. By /s/ Steven J. Goldberg By /s/ Jerry L. Fulwiler ---------------------------- --------------------------- Steven J. Goldberg, MAl Jerry L. Fulwiler Senior Vice President Senior Appraiser [The appraisal relating to Eastgate Marketplace Shopping Center will be filed at a later date] EX-99.(Z)(2) 8 AGREEMENT OF JOINT FILING Exhibit (z)(2) AGREEMENT OF JOINT FILING Cooper River Properties, L.L.C., Insignia Properties, L.P., Insignia Properties Trust, Insignia Financial Group, Inc. and Andrew L. Farkas hereby agree that the Amendment No. 1 to Statement on Schedule 13D to which this agreement is attached as an exhibit, and all further amendments thereto, shall be filed on behalf of each of them. This agreement is intended to satisfy the requirements of Rule 13d- 1(f)(1)(iii) under the Securities Exchange Act of 1934, as amended. Dated: August 12, 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 /s/ ANDREW L. FARKAS -------------------------------- ANDREW L. FARKAS -----END PRIVACY-ENHANCED MESSAGE-----