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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported): October 20, 2010
THE INTERGROUP CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-10324 13-3293645
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10940 Wilshire Blvd., Suite 2150, Los Angeles, California 90024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 889-2500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 Entry into a Material Definitive Agreement
On October 20, 2010, The InterGroup Corporation and its consolidated
subsidiaries, Santa Fe Financial Corporation and Portsmouth Square Inc. (the
"Company") exchanged approximately $13,231,000 in notes, convertible notes and
debt instruments that it held in Comstock Mining, Inc. ("Comstock" - OTCBB:
LODE)) for 13,231 shares of newly created 7 1/2% Series A-1 Convertible
Preferred Stock (the "A-1 Preferred") of Comstock. As of June 30, 2010, those
notes and convertible debt instruments had a carrying value of $1,875,000 (net
of impairment adjustments) on the Company's consolidated balance sheet. As part
of that transaction, The Company's Chairman and President also exchanged
approximately $7,681,000 in notes, convertible notes and debt instruments held
personally by him for 7,681 shares of A-1 Preferred. Together, the Company and
Mr. Winfield constitute all of the holders of the A-1 Preferred.
Each share of A-1 Preferred has a stated value of $1,000 per share and a
liquidation and change of control preference equal to the stated value plus
accrued and unpaid dividends. Commencing January 1, 2011, the holders are
entitled to semi-annual dividends at a rate of 7.5% per annum, payable in cash,
common stock preferred stock or any combination of the foregoing, at the
election of Comstock. At the holder's election, each share of A-1 Preferred is
convertible at a fixed conversion rate (subject to anti dilution) into 1,536
shares of common stock of Comstock, therefore converting into common stock at a
conversion price of $0.6510. Each share of A-1 Preferred will entitle the
holder to vote with the holders of common stock as a single class on all
matters submitted to the vote of the common stock (on an as converted basis)
and, for purposes of voting only, each share of A-1 Preferred shall be entitled
to five times the number of votes per common share to which it would otherwise
be entitled. Each share of A-1 Preferred shall entitle its holder to one (1)
vote in any matter submitted to vote of holders of Preferred Stock, voting as a
separate class. The A-1 Preferred, in conjunction with the other series of
newly created Preferred Stock of Comstock discussed below, also has certain
rights requiring consent of the Preferred Stock holders for Comstock to take
certain corporate and business actions. The holders will have registration
rights with respect to the shares of common stock underlying the A-1 Preferred
and also preemptive rights, In addition, so long as the holders of the A-1
Preferred hold 25% or more of the total Preferred Stock of Comstock, (i) Mr.
Winfield will be a member of Comstock's board of directors and (ii) the A-1
Preferred holders will have the right, upon written request to Comstock, to
nominate a member of Comstock's board of directors who meet the definition of
an "independent" director" and other requirements. The foregoing description of
the A-1 Preferred and the specific terms of the A-1 Preferred is qualified in
its entirety by reference to the provisions of the Series A Securities Purchase
Agreement, the Certificate of Designation of Preferences and Rights and
Limitations of 7 1/2% Series A-1 Convertible Preferred Stock and the
Registration Rights Agreement for the Series A Preferred Stock, attached to
this report as Exhibits 10.1 10.2 and 10.3, respectively.
Concurrent with the exchange of the convertible debt held by the Company and
Mr. Winfield for A-1 Preferred, Comstock also exchanged approximately
$8,483,000 of other senior indebtedness for 8,483 shares of newly created
7 1/2% Series A-2 Convertible Preferred Stock (the A-2 Preferred") and issued
35,750 shares of 7 1/2% Series B Convertible Preferred Shares (the "B
Preferred") as part of a new equity raise of $35.75 million in gross proceeds
($32 million, net of commissions and transaction related expenses). Each share
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of A-2 Preferred is convertible into 1,536 shares of common stock and each
share of B Preferred is convertible into 606 shares of common stock, both at a
fixed conversion rate (subject to anti dilution adjustments). Each share of A-2
Preferred and B Preferred will entitle the holder to vote with the holders of
common stock as a single class on all matters submitted to the vote of the
common stock on an as converted basis. Each share of A-2 Preferred and B
Preferred shall also entitle its holder to one (1) vote in any matter submitted
to vote of holders of Preferred Stock, voting as a separate class. Following
these transactions, the A-1 Preferred will constitute approximately 32.1% of
the total Preferred Stock of Comstock.
As long as 25% or more of the Preferred Stock issued on or prior to October 20,
2010 is outstanding, Comstock will not be permitted (subject to limited
exceptions) without the consent of the Preferred Stock, to incur indebtedness,
grant liens, repurchase more than 5% of the common stock outstanding, enter
into any transaction with an affiliate of Comstock which is not on an arm's
length basis, enter into transactions with affiliates of officers or directors
that provide for the payment of services in securities of Comstock, amend its
certificate of incorporation, by-laws, or a certificate of designations of the
Preferred Stock in a manner that adversely affects the interests of the
Preferred Stock, issue new series of preferred stock, pay dividends on equity
junior to the Preferred Stock, adopt an executive equity incentive plan which
provides for the issuance of not greater than 6.0% of the fully diluted equity
of the Company, enter into any transaction for the sale or pledge of a material
asset of Comstock, approve or consent to the initiation of a bankruptcy
proceeding or issue any securities of the Comstock in exchange for services to
a consultant. A majority of the Preferred Stock is generally required to
provide consent; provided, that the holders of the A-1 Preferred must be part
of that majority so long as they hold 25% or more of the Preferred Stock.
In addition, as long as at least 25% of the Preferred Stock issued on or prior
to October 20, 2010, is still outstanding, and as long as the holders of the A-
1 Preferred still hold at least 25% of the Preferred Stock, Comstock shall not,
without the affirmative vote of the holders of the A-1 Preferred, enter into
any transaction for the acquisition of any business, property or asset pursuant
to which Comstock will incur indebtedness to finance such acquisition in
principal amount in excess of $500,000, pay any dividends to holders of
Preferred Stock in cash in an amount to exceed $500,000, engage in a private
placement or public offering of any common stock or common stock equivalents of
the Comstock, enter into a Change of Control Transaction (as defined in each
certificate of designation) or enter into any transaction that would constitute
a Fundamental Transaction (as defined in each certificate of designation).
Following the transactions discussed herein, the Company will have an economic
ownership (on a converted basis) of approximately 24.5% in Comstock and have
the right to vote approximately 47.6% of the common stock pursuant to the
voting rights it was granted pursuant to the A-1 Preferred.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Securities Purchase Agreement dated as of August 31, 2010
(Series A Preferred).
10.2 Certificate of Designation of Preferences and rights and
Limitations of 7 1/2% Series A-1 Convertible Preferred Stock,
dated October 20, 2010.
10.3 Registration Rights Agreement for the Series A Preferred Stock
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE INTERGROUP CORPORATION
Dated: October 26, 2010 By /s/ Michael G. Zybala
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Michael G. Zybala
Asst. Secretary and Counsel
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EXHIBIT INDEX
Exhibit
Number Description
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10.1 Securities Purchase Agreement dated as of August 31, 2010
(Series A Preferred).
10.2 Certificate of Designation of Preferences and rights and
Limitations of 7 1/2% Series A-1 Convertible Preferred Stock,
dated October 20, 2010.
10.3 Registration Rights Agreement for the Series A Preferred
Stock
