Exhibit 10(b)
MEMORANDUM OF AGREEMENT
The Xxxxxx Family Limited Partnership (WFLP) is a Delaware
limited partnership, all the partnership interest of which are owned
directly or indirectly by Xxxxx X. Xxxxxx, his wife Xxxxxxx and their six
children (Xxxxxx Family).
Interstate Business Corporation (IBC) is a Delaware corporation.
A majority of the stock of IBC is owned directly or indirectly by the
Xxxxxx Family.
Interstate General Company L.P. (IGC) is a Delaware limited
partnership, the units of which are publicly traded on the American Stock
Exchange and on the Pacific Stock Exchange. IBC is a general partner of
IGC.
WFLP is currently indebted to IBC under a note in the original
principal amount of $1,895,482 due February 25, 2000 (WFLP Indebtedness).
IBC is currently indebted to WFLP under notes totaling $3,112,217
due on various maturity dates, and IBC is currently indebted to Xxxxx X.
Xxxxxx in the amount of $2,116,877 under a note due October 31, 1999
(collectively, the IBC Indebtedness).
IBC is a general partner of IGC and is secondarily liable as a
matter of law for the obligations of IGC.
In October 1995, IGC, its affiliate, St. Xxxxxxx Associates L.P.
(SCA) and Xxxxx X. Xxxxxx were indicted by a federal grand jury for alleged
violations of the Clean Water Act ("Act") with respect to four parcels of
land in St. Xxxxxxx, Maryland. In February 1996, the three defendants were
found guilty of four felony violations of the Act. In June 1996 the court
sentenced Xx. Xxxxxx to imprisonment, imposed fines on all three defendants
and ordered IGC and SCA to implement a restoration and mitigation plan. On
appeal to the United States Court of Appeals for the Fourth Circuit, the
convictions of the defendants were reversed and the case remanded for
retrial to the U.S. District Court for the District of Maryland where the
matter is now pending (Wetlands Litigation).
On March 11, 1998, IGC and three of its affiliates entered into
an employment agreement with Xxxx Xxxxxxxxxx under which Xx. Xxxxxxxxxx is
employed by IGC and its stated affiliates for a term of four years
(Augenblick Agreement). The obligations of IGC and its stated affiliates
under the Augenblick Agreement are guaranteed by IBC.
IBC has agreed to lend to IGC such amounts as may be necessary to
meet IGC's Wetlands Litigation expenses and to meet the obligations of IGC
and its stated affiliates under the Augenblick Agreement in the event that
IGC itself is unable to pay these expenses currently.
In furtherance of the foregoing undertaking by IGC, WFLP and
Xxxxx X. Xxxxxx have agreed, until the Wetlands Litigation is concluded and
the obligations of IGC and its stated affiliates under the Augenblick
Agreement are current, to defer collections on the IBC Indebtedness and to
accelerate payments ont he WFLP Indebtedness as may be required to meet
such obligations.
NOW, THEREFORE, in consideration of the foregoing, the
undertakings of the parties as set forth in this Memorandum of Agreement
and for other good and valuable consideration, the receipt of which each of
the parties acknowledges it has received, IGC, IBC, Xxxxx X. Xxxxxx and
WFLP agree as follows:
1. IBC agrees to lend to IGC on commercially reasonable terms
such amount(s) as may be necessary to enable IGC to pay IGC's Wetlands
Litigation expenses in the event that IGC itself is unable to pay those
expenses currently.
2. WFLP and Xxxxx X. Xxxxxx agree that until the Wetlands
Litigation is concluded and IGC's expenses related thereto are paid and the
obligations of IGC and its stated affiliates under the Augenblick Agreement
are current, it shall defer collection on the IBC Indebtedness as may be
needed to enable IBC to meet its obligations as a general partner of IGC
and as a guarantor under the Augenblick Agreement.
3. WFLP agrees to accelerate payments on the WFLP Indebtedness
as may be needed to enable IBC to meet its obligations under Paragraph 1 of
this Memorandum of Agreement and as guarantor under the Augenblick
Agreement.
4. This Memorandum of Agreement shall be construed under the
laws of the State of Delaware.
5. This Memorandum of Agreement is solely for the benefit of
the parties hereto, and no persons not a signatory to this Memorandum of
Agreement shall be considered a beneficiary hereof or have any rights of
enforcement hereunder.
6. The parties hereto waive trial by jury in any proceeding,
legal or otherwise, under this Memorandum of Agreement.
7. This Memorandum of Agreement shall be valid and legally
enforceable when signed on behalf of each of the parties hereto. Each of
the persons signing this Memorandum of Agreement represents and warrants
that he is fully authorized to sign this Memorandum of Agreement on behalf
of the respective parties hereto.
IN WITNESS WHEREOF, the parties hereto have signed this
Memorandum of Agreement as of this 16th day of July, 1998.
INTERSTATE GENERAL COMPANY L.P.
By: INTERSTATE GENERAL MANAGEMENT
CORPORATION, its managing general
partner
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
CEO
INTERSTATE BUSINESS CORPORATION
By: /s/ J. Xxxxxxx Xxxxxx
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J. Xxxxxxx Xxxxxx
President
XXXXXX FAMILY LIMITED PARTNERSHIP
By: /s/ J. Xxxxxxx Xxxxxx
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J. Xxxxxxx Xxxxxx
General Partner
