1
Exhibit 10(hhhhh)
CONTROL TRANSFER AGREEMENT
This Control Transfer Agreement (this "Agreement"), dated as of
December 31, 1996, is entered into by and among Interstate Business
Corporation, a Delaware corporation ("IBC"), Interstate General Company
L.P., a Delaware limited partnership ("IGC"), Interstate General Properties
Limited Partnership S.E., a Maryland limited partnership ("IGP"), Housing
Development Associates S.E., a Puerto Rico partnership ("HDA"), Equus
Management Company, a Delaware corporation ("EMC"), and Equus Gaming
Company L.P., a Virginia limited partnership ("Equus").
W I T N E S S E T H:
WHEREAS, EMC, Equus and HDA are all commonly controlled, directly or
indirectly by IGC;
WHEREAS, IGC wishes to divest itself of control of EMC, Equus and HDA
by transferring such control to IBC;
WHEREAS, in anticipation of the control transfer to be effected by
this Agreement, in April 1996 IGP transferred to EMC certain employees that
perform consulting services for El Comandante Operating Company, Inc.
("ECOC") and IGP assigned to EMC its rights under that certain Consulting
Agreement dated as of December 15, 1993 by and between IGP and ECOC, and in
August 1996 IGP transferred certain employees that perform services for
Equus and HDA to the payroll of EMC and IGP assigned to EMC that certain
Amended and Restated Management Agreement dated as of December 15, 1993 by
and between IGP and HDA (all such employees are referred to herein as the
"Transferred Employees");
WHEREAS, in transferring control, IGC, Equus and EMC wish to preserve
the employee benefits presently enjoyed by EMC employees and wish to
provide for continued funding of certain EMC and Equus expenses;
WHEREAS, the Board of Directors of each of IBC, EMC and the managing
general partner of IGC has determined that the transaction contemplated by
this agreement are fair to each of IBC, IGC and Equus and are at least as
favorable to each such company as would be available for substantially
comparable transactions between unrelated parties;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Transfer of Stock. For and in consideration of the undertaking
set forth in Section 3 hereof, IGC hereby sells, assigns, transfers and
conveys to IBC, and IBC hereby purchases, acquires and accepts from IGC,
all of IGC's right, title and interest in and to 100 shares of the Common
Stock of EMC (the "EMC Stock"). IGC and EMC represent and warrant to IBC
that the EMC Stock constitutes all of the issued and outstanding shares of
capital stock of EMC. IBC hereby acknowledges receipt of certificate No.
____ representing the EMC Stock, duly endorsed by IGC. IBC shall surrender
2
such stock certificate to EMC and EMC shall issue to IBC a stock
certificate evidencing IBC's ownership of the EMC Stock and bearing the
following legend:
Certain dividend and transfer rights with respect to the shares
represented by this certificate have been irrevocably assigned to
Interstate General Company L.P., or its successors or assigns, in
accordance with that certain Control Transfer Agreement dated as
of December 31, 1996. The Shares represented by this certificate
have not been registered under the Securities Act of 1933. Such
Shares have been acquired for investment and may not be pledged,
offered, sold or transferred except in compliance with the
registration requirements of the Securities Act of 1933 or an
exemption therefrom, or upon delivery to Equus Management Company
("EMC"), if requested, of an opinion of counsel, in form and
substance reasonably satisfactory to EMC, that registration under
such Act is not required.
2. Transfer of IGC GP Interest. For and in consideration of the
undertakings set forth in Section 3 hereof, IGC shall, if and when it
receives Nasdaq Approval (as hereinafter defined), sell, assign, transfer
and convey to IBC, and IBC shall purchase, acquire and accept from IGC, all
of IGC's right, title and interest in and to IGC's general partnership
interest (the "IGC GP Interest"). Upon the transfer to IBC of the IGC GP
Interest, IGC shall withdraw as a general partner of Equus.
3. IBC Undertakings. For and in full consideration of the transfer
of the EMC Stock and the IGC GP interest to IBC by IGC, IBC hereby agrees
to:
(a) forever indemnify and hold harmless IGC, and its successors
and assigns from and against any and all liability and expense (including,
without limitation, any liability for debts or obligations incurred by
Equus) which IGC may incur as a result of its serving as a general partner
of Equus;
(b) use its best efforts to obtain the approval of Nasdaq Stock
Market to the continued listing of Equus' Class A Limited Partnership Units
("Equus Units") on the Nasdaq Stock Market in the event of and following
the withdrawal of IGC as a general partner of Equus ("Nasdaq Approval");
(c) irrevocably assign to IGC all rights to any distributions
received by EMC from Equus in respect of its .99% general partnership
interest in Equus to the extent that such distributions exceed the expenses
and liabilities of EMC incurred in the ordinary course of business in its
capacity as managing general partner of Equus; and
(d) not transfer or otherwise dispose of any EMC stock other
than (i) to an affiliate or IBC who agrees to remain bound by the terms of
this Agreement, or (ii) to any party in an arm's length transaction for
fair value which such value is hereby irrevocably assigned to IGC.
4. Assignment of Master Support Agreement. IGC, hereby assigns to
IBC all rights and IBC hereby assumes all obligations under that certain
Master Services and Support Agreement between IGC and Equus dated as of
December 9, 1994 (the "Support Agreement"). Equus hereby consents to such
assignment.
3
5. Unit Transfers to Fund Employee Benefits. IGC, Equus and EMC
hereby amend that certain Distribution Agreement dated as of August, 1994
to reduce by 50,000 the number of Equus Units that Equus is obligated to
deliver to IGC from time to time to fund employee benefit obligations of
IGC (the "Relinquished Units"). IGC hereby transfers and conveys to Equus
75,000 Class A Limited Partnership Units of IGC (the "Reserved IGC Units").
Equus shall offer the Transferred Employees unit incentive awards
("Replacement Awards") that will provide benefits substantially equivalent
to incentive compensation awards issued to such Transferred Employees by
IGC and until Equus' obligations with such Replacement Awards have been
satisfied, Equus shall use the Relinquished Units and the Reserved IGC
Units solely to satisfy obligations under such Replace Awards. IGC is
issuing the Reserved Units to Equus without registration under the
Securities Act of 1933. The Unit certificates evidencing the Reserved
Units shall bear the following legend:
Transfer of the Units represented by this certificate are subject
to certain restrictions in accordance with that certain Control
Transfer Agreement dated as of December 31, 1996. The Units
represented by this certificate have not been registered under
the Securities Act of 1933. Such Units have been acquired for
investment and may not be pledged, offered, sold or transferred
except in compliance with the registration requirements of the
Securities Act of 1933 or an exemption therefrom, or upon
delivery to Interstate General Company L.P. ("IGC"), if
requested, of an opinion of counsel, in form and substance
reasonably satisfactory to IGC, that registration under such Act
is not required.
6. Assignment of HDA Management Agreement. IGP hereby assigns to
EMC all rights, and EMC hereby assumes from IGP all obligations under that
certain Amended and Restated Management Agreement dated December 15, 1993
by and between IGP and HDA (the "HDA Management Agreement"). IGP shall
provide EMC office space and office equipment and supplies (including
telecommunications equipment and services) suitable to permit EMC to
perform the obligations assumed under the HDA Management Agreement. EMC
shall reimburse IGP for its direct costs incurred in providing such
administrative support.
7. Further Actions. The parties hereto shall promptly execute and
deliver all such documents, instruments and agreements and take such other
actions as may be necessary or desirable to carry into effect the
transactions contemplated hereby.
8. Amendments; Waivers. Any provisions of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing
and is signed by all of the parties hereto. No failure or delay by any
party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
9. Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and
effect, and the application of such invalid or unenforceable provision to
persons or circumstances other than those as to which it is held invalid or
4
unenforceable shall be valid and be enforced to the fullest extent
permitted by law.
10. Headings. The descriptive headings of the several Sections of
this Agreement are inserted for convenience only, do no constitute a part
of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
11. Applicable Law. The validity and interpretation of this
Agreement and the performance by the parties of their respective
obligations hereunder shall be governed by the laws of the State of
Delaware without regard to its choice of law provisions.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for
more than one counterpart signed by the party to be charged thereby.
13. Entire Agreement. This Agreement contains the entire agreement
of the parties hereto with respect to the subject matters hereof, and
supersedes all previous agreements and understandings among the parties
with respect to such matters.
14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and transferees.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
INTERSTATE GENERAL PROPERTIES INTERSTATE BUSINESS CORPORATION
LIMITED PARTNERSHIP S.E.
By: Interstate General Company L.P. By: /s/ J. Michael Wilson
its General Partner --------------------------
Name: J. Michael Wilson
Title: President
By: Interstate General Management
Corporation, its Managing INTERSTATE GENERAL COMPANY L.P.
General Partner
By: Interstate General Management
By: /s/ J. Michael Wilson Corporation, its Managing
------------------------------ General Partner
Name: J. Michael Wilson
Title: Vice Chairman By: /s/ J. Michael Wilson
---------------------------
Name: J. Michael Wilson
Title: Vice Chairman
EQUUS GAMING COMPANY L.P.
By: Equus Management Company, its EQUUS MANAGEMENT COMPANY
Managing General Partner
By: /s/ Donald G. Blakeman By: /s/ Donald G. Blakeman
------------------------------- ----------------------------
Name: Donald G. Blakeman Name: Donald G. Blakeman
Title: President Title: President
5
HOUSING DEVELOPMENT
ASSOCIATES, S.E.
By: Equus Gaming Company L.P., its
Managing General Partner
By: Equus Management Company, its
Managing General Partner
By: /s/ Donald G. Blakeman
-------------------------------
Name: Donald G. Blakeman
Title: President
6
AMENDMENT TO CONTROL TRANSFER AGREEMENT
This Amendment to Control Transfer Agreement (this "Amendment"), dated
as of March 25, 1997, is entered into by and among Interstate Business
Corporation, a Delaware corporation ("IBC"), Interstate General Company
L.P., a Delaware limited partnership ("IGC"), Interstate General Properties
Limited Partnership S.E., a Maryland limited partnership ("IGP"), Housing
Development Associates S.E., a Puerto Rico partnership ("HDA"), Equus
Management Company, a Delaware corporation ("EMC"), and Equus Gaming
Company L.P., A Virginia limited partnership ("Equus").
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain Control
Transfer Agreement dated as of December 31, 1996 (the "Agreement"); and
WHEREAS, the parties hereto now wish to amend Sections 4, 5 and 6 of
the Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Amendments. Sections 4, 5 and 6 of the Agreement are hereby
amended and restated in their entirety as follows:
4. Assignment of Master Support Agreement. Effective as of
October 1, 1996, IBC assumed certain obligations of IGC under that certain
Master Services and Support Agreement between IGC and Equus dated as of
December 9, 1994 (the "Support Agreement") with respect to the provision of
accounting services to Equus. Equus hereby consents to such assumption and
confirms payment to IBC of $5,000 for such services provided during the
third quarter of 1996 and $1,000 per month thereafter. IBC shall continue
to provide such accounting services for the remaining term of the Support
Agreement.
5. Unit Transfers to Fund Employee Benefits. IGC, Equus and
EMC hereby amend that certain Distribution Agreement dated as of August
1994 to reduce by 50,000 the number of Equus Units that Equus is obligated
to deliver to IGC from time to time to fund employee benefit obligations of
IGC (the "Relinquished Units"). IGC hereby transfers and conveys to Equus
75,000 Class A Limited Partnership Units of IGC (the "Reserved Awards")
that will provide benefits substantially equivalent to incentive
compensation awards issued to such Transferred Employees by IGC and until
Equus' obligations with such Replacement Awards have been satisfied, Equus
shall use the Relinquished Units and the Reserved Units solely to satisfy
obligations under such Replacement Awards. IGC is issuing the Reserved
Units to Equus without registration under the Securities Act of 1933. The
Unit certificate evidencing the Reserved Units shall bear the following
legend:
Transfer of the Units represented by this certificate are subject
to certain restrictions in accordance with that certain Control
Transfer Agreement dated as of December 31, 1996 as it may be
amended from time to time. The Units represented by this
certificate have not been registered under the Securities Act of
1933. Such Units have been acquired for investment and may not
7
be pledged, offered, sold or transferred except in compliance
with the registration requirements of the Securities Act of 1933
or an exemption therefrom, or upon delivery to Interstate General
Company L.P. ("IGC"), if requested, of an opinion of counsel, in
form and substance reasonably satisfactory to IGC, that
registration under such Act is not required.
The Replacement Awards will include an option granted to Donald Drew to
purchase up to 20,000 Reserved Units for an exercise price of $4.00 per
Unit (the "Drew Option"). In the event that the Drew Option, or any
portion thereof, is exercised, Equus shall deliver the option price
received by Equus to IGC within five (5) business days of its receipt
thereof. In the event that the Drew Option lapses without being fully
exercised, Equus shall return to IGC within (5) business days of such lapse
the number of Units for which the Drew Option remained exercisable upon the
date of its lapse. Equus shall not reduce the exercise price of the Drew
Option without the written consent of IGC.
6. Assignment of HDA Management Agreement. IGP hereby assigns to
EMC all rights, and EMC hereby assumes from IGP all obligations under that
certain Amended and Restated Management Agreement dated December 15, 1993
by and between IGP and HDA (the "HDA Management Agreement"). IGP shall
provide EMC office space and office equipment and supplies (including
telecommunications equipment and services) suitable to permit EMC to
perform the obligations assumed under the HDA Management Agreement. EMC
shall reimburse IGP for its direct costs incurred in providing such
administrative support. The terms of this Section shall be effective
retroactively to August 16, 1996.
2. Effectiveness of Amendment. This Amendment shall be effective as
of the date hereof. Except as expressly amended hereby, all other
provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
INTERSTATE GENERAL COMPANY L.P.
By: Interstate General Management
Corporation, its managing
general partner
By: /s/ Edwin L. Kelly
--------------------------------
Name: Edwin L. Kelly
Title: President
EQUUS GAMING COMPANY L.P.
By: Equus Management Company,
its managing general partner
By: /s/ Donald G. Blakeman
-------------------------------
Name: Donald G. Blakeman
Title: President
8
INTERSTATE BUSINESS CORPORATION
By: /s/ J. Michael Wilson
-------------------------------
Name: J. Michael Wilson
Title: President
EQUUS MANAGEMENT COMPANY
By: /s/ Donald G. Blakeman
-------------------------------
Name: Donald G. Blakeman
Title: President
HOUSING DEVELOPMENT ASSOCIATES S.E.
By: Equus Gaming Company, L.P.
its managing general partner
By: Equus Management Company,
its managing general partner
By: /s/ Donald G. Blakeman
------------------------------
Name: Donald G. Blakeman
Title: President
INTERSTATE GENERAL PROPERTIES LIMITED
PARTNERSHIP S.E.
By: Interstate General Company L.P.
its managing general partner
By: Interstate General Management
Corporation, its managing
general partner
By: /s/ Edwin L. Kelly
-----------------------------
Name: Edwin L.Kelly
Title: President