(PAGE)    AGREEMENT TO RETIRE PARTNERSHIP INTEREST OF 
              INTERSTATE GENERAL COMPANY, L.P. IN 
                   EQUUS GAMING COMPANY, L.P.

          This AGREEMENT TO RETIRE PARTNERSHIP INTEREST OF
INTERSTATE GENERAL COMPANY, L.P. IN EQUUS GAMING COMPANY, L.P. (the
"Agreement") is entered into and shall be effective as of December
30, 1997 by and among Equus Gaming Company, L.P., a Virginia
limited partnership (the "Partnership"), Interstate General
Company, L.P., a Delaware limited partnership and general partner
of the Partnership (the "Retiring Partner"), Equus Management
Company, a Delaware Corporation and managing general partner of the
Partnership ("EMC"), Equus Management Title Company, a Delaware
Corporation and limited partner of the Partnership ("EMTC" and
together with EMC, the "Continuing Partners"), and Housing
Development Associates S.E., a Puerto Rico Partnership ("HDA")
(HDA, the Retiring Partner, the Continuing Partners, and the
Partnership are sometimes referred to individually as a "Party" and
collectively as the "Parties"), based on the following facts:

     A. The Retiring Partner and the Continuing Partners formed the
Partnership pursuant to that certain agreement dated February 6,
1995, which agreement has been amended from time to time (as
amended, the "Partnership Agreement").

     B. The Parties have agreed that the Retiring Partner's entire
right, title, and interest in the Partnership (the "Redemption
Interest") shall be retired and redeemed by the Partnership and the
Retiring Partner shall withdraw from the  Partnership, all as set
forth herein.

     Based on the foregoing, and in consideration of the mutual
agreements, covenants, and conditions contained herein, and for
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties hereby agree as follows:

          1.  Retirement, Redemption, and Withdrawal.  The
Redemption Interest shall be retired and redeemed by the
Partnership effective as of 9:00 a.m. Eastern Time on December 31,
1997, (the "Effective Date"), all in accordance with the provisions
set forth in this Agreement. The Retiring Partner shall sell,
assign, and transfer the entire Redemption Interest to the
Partnership and withdraw from the Partnership as of the close of
business on the Effective Date.


(PAGE)    2.  Consideration for Redemption Interest;
Indemnification Provisions.  In consideration for the retirement
and redemption of the Redemption Interest, the Partnership agrees
to distribute to the Retiring Partner consideration (the 
"Redemption Consideration") composed of the following:

               (a)  On the Effective Date, the Partnership shall
distribute to the Retiring Partner a portion of its partnership
interest in HDA, such portion being equal to the product of (a) the
Partnership's interest in HDA immediately prior to the Effective
Date and (b) the Retiring Partner's Partnership interest in the
Partnership immediately prior to the Effective Date.

               (b)  As among the Parties and subject to the
Guaranty Agreement (of even date herewith by and between Retiring
Partner and EMC (the "Guaranty Agreement")) and Section 7.7 of the
Partnership Agreement, the Retiring Partner shall be relieved of
all responsibility for liabilities of the Partnership whether known
or unknown the Partnership and EMC shall indemnify, defend,
protect, and hold harmless the Retiring Partner from such
liabilities, subject to the Guaranty Agreement and Section 7.7 of
the Partnership Agreement.  Liabilities to which the Retiring
Partner remains subject pursuant to Section 7.7 of the Partnership
Agreement are referred to herein as "Contingent Liabilities".  

               (c)  The Redemption Consideration provided for in
this Section 2 is the total consideration payable by the
Partnership to the Retiring Partner for the Redemption Interest,
and the Retiring Partner shall not retain an interest in, or be 
entitled to receive distributions of, any other Partnership assets.


          3.  Continuation of Partnership; Adjustment of EMC
Percentage Interest.  The Parties hereby agree that the Partnership
shall continue and shall not be dissolved because of the retirement
and redemption of the Redemption Interest or the withdrawal of the
Retiring Partner.  Pursuant to Section 7.3 of the Partnership
Agreement, the partnership interest of EMC shall be increased from
 .99% to 1%.
     
          4.  Tax Matters.  The Parties agree that:

               (a)  To the extent possible, the tax and other
attributes that the Retiring Partner held indirectly in HDA through
its interest in the Partnership (including its share of Section
704(c) property under Treas. Reg. Sec. 1.704-3 and its share of HDA's
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nonrecourse liabilities under Section 752 of the Internal Revenue
Code of 1986 (the "Code")) immediately before the Effective Date
shall continue to be held by the Retiring Partner through its
direct interest in HDA on and after the Effective Date.

               (b)  The Parties shall each file all required
Federal, state, and local income tax returns and related returns
and reports in a manner consistent with the provisions of this
Section 4.


     5.  Representations, Warranties, and Covenants.  

          (a)  Of Each Party.  The Partnership, the Retiring
Partner, and the Continuing Partners each hereby represents and
warrants to and covenants to each other Party that:

                    (i)  Neither the execution nor the delivery of
this Agreement, the incurrence of the obligations herein set forth,
the consummation of the transactions herein contemplated, nor the
compliance with the terms of this Agreement will conflict  with, or
result in a breach of, any of the terms, conditions, or provisions
of, or constitute a default under, any bond, note, or other
evidence or indebtedness or any contract, indenture, mortgage, deed
of trust, loan agreement, lease, or other  agreement or instrument
to which such Party is a party or by which such Party may be bound.

                    (ii)  Such Party has the right, power, legal
capacity, and authority to execute and enter into this Agreement
and to execute all other documents and perform all other acts as
may be necessary in connection with the performance of this 
Agreement.

                    (iii)  No approval or consent not heretofore
obtained by any person or entity is necessary in connection with
the execution of this Agreement by such Party or the performance of
such Party's obligations under this Agreement.

                    (iv)  Such Party has received independent tax
and legal advice from attorneys of his choice with respect to the
advisability of executing this Agreement.

                    (v)  Such Party has made such investigation of
the facts pertaining to this Agreement, and all of the matters
pertaining thereto, as he deems necessary.
(PAGE)              (vi)  Except as expressly provided herein, no
person has made any statement or representation to such Party
regarding any fact relied upon by such Party in entering into this
Agreement and each Party specifically does not rely upon any 
statement, representation, or promise of any other person in
executing this Agreement.

                    (vii)  Such Party relies on the finality of
this Agreement as a material factor inducing his execution of this
Agreement, and the obligations under this Agreement.

                    (viii)  Such Party will not take any action
which would interfere with the performance of this Agreement by any
other Party or which would adversely affect any of the rights
provided for herein.


          (b)  Additional Representation, Warranty, and Covenant of
the Retiring Partner.  The Retiring Partner hereby represents and
warrants to and covenants to each other Party that the Retiring
Partner owns the Redemption Interest free and clear of any and all
liens, claims, encumbrances, and adverse equities.
     6.  Releases and Indemnification.  

          (a)  By Each Party.  For value received, each Party for
himself and for each and all of his past, present, and future
predecessors, successors, assigns, affiliates, licensees,
transferees, principals, servants, agents, partners,  associates,
officers, directors, employees, representatives, shareholders,
attorneys, insurers, legal representatives, descendants,
dependents, heirs, executors, administrators, and all other persons
(collectively, the "Successors in  Interest") hereby and forever
releases and discharges and agrees to indemnify and hold harmless
each other Party and each and all of each other Party's Successors
in Interest, from any and all claims, demands, liens, causes of
action, suits,  obligations, controversies, debts, costs, expenses,
damages, judgments, and orders of whatever kind or nature, in law,
equity, or otherwise, whether known or unknown, suspected or
unsuspected, and whether or not concealed or hidden, which have 
existed, do presently exist, or may exist, relating to the
Partnership or its activities, assets, liabilities, or partners,
other than the obligations to the Retiring Partner set forth in
this Agreement.



(PAGE)
          (b)  After-Discovered Facts.  It is understood by each
Party that there is a risk that subsequent to the execution of this
Agreement, a Party may discover facts different from or in addition
to the facts which he now knows or believes to  be true with
respect to the subject matter of this Agreement, or that certain
debts, claims, expenses, or liabilities presently known may be or
become greater than a Party now expects or anticipates. Each Party
intends this Agreement to apply to all unknown or unanticipated
results, as well as those known and anticipated, and it is the
intention of each Party to hereby fully, finally, absolutely, and
forever resolve any and all claims and disputes which have existed,
do exist, or may exist  relating to the Partnership or its
activities, assets, liabilities, or partners, other than the
obligations to the Retiring Partner set forth in this Agreement.

          7.  Miscellaneous.  

          (a)  Statement of Partnership; Other Filings.  The
Partnership may prepare and file fictitious business name
statements and such other statements or documents as the Continuing
Partners deem appropriate to reflect the withdrawal of the Retiring
Partner from the Partnership and the continuation of the
Partnership.

          (b)  Name of Partnership.  The Partnership may, in the
sole discretion of the Continuing Partners, continue to use Equus
Gaming Company, L.P. as the name of the Partnership after the
Effective Date.

          (c)  Attorneys' Fees to Enforce This Agreement or in
Subsequent Litigation.  In the event any Party shall maintain or
commence any action, proceeding, or motion against any other Party
to enforce this Agreement or any provision thereof,  the prevailing
Party therein shall be entitled to recover his actual attorneys'
fees and costs therein incurred. Each Party agrees that if such
Party hereafter commences, joins in, or in any manner asserts
against any other Party any of the claims  released hereunder, then
it will pay to the other Party, in addition to any other damages
caused to the other Party thereby, all actual attorneys' fees and
costs incurred in defending or otherwise responding to such suit or
claim.

          (d)  Severability.  Each provision of this Agreement is
intended to be severable. If any term or provision hereof is
illegal or invalid for any reason whatsoever, such illegality or
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invalidity shall not affect the legality or validity of  the
remainder of the Agreement.

          (e)  Survival.  All of the terms, representations,
warranties, and other provisions of this Agreement shall survive
and remain in effect after the Effective Date.

          (f)  Costs.  Each Party shall pay its own legal fees and
expenses incidental to the execution of this Agreement and the
consummation of the transactions contemplated hereby.

          (g)  Execution of Documents.  Each Party agrees to
execute all documents necessary to carry out the purpose of this
Agreement and to cooperate with each other for the expeditious
filing of any and all documents and the fulfillment of the  terms
of this Agreement.

          (h)  Successors and Assigns.  This Agreement shall inure
to the benefit of the transferees, successors, assigns, heirs,
beneficiaries, executors, administrators, partners, agents,
employees, and representatives of each Party.

          (i)  Controlling Law.  This Agreement has been entered
into in the Commonwealth of Virginia and the Agreement, including
any rights, remedies, or obligations provided for thereunder, shall
be construed and enforced in accordance with the laws of the  State
of Delaware.

          (j)  Counterpart Execution.  This Agreement may be
executed in multiple counterparts each of which may be deemed an
original and shall become effective when the separate counterparts
have been exchanged among the Parties.

          (k)  Construction.  Every covenant, term, and provision
of this Agreement shall be construed simply according to its fair
meaning and not strictly for or against any Party.

          (l)  Headings.  Section and other headings contained in
this Agreement are for reference purposes only and are not intended
to describe, interpret, define, or limit the scope, extent, or
intent of this Agreement or any provision hereof.
          (m)  Incorporation by Reference.  Every exhibit,
schedule, and other appendix attached to this Agreement and
referred to herein is hereby incorporated in this Agreement by
reference.
(PAGE)    (n)  Variation of Provisions.  All pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine, or neuter, singular or plural, as the identity of the
person or persons may require.

          (o)  Notices.  Any notice, payment, demand, or
communication required or permitted to be given by any provision of
this Agreement shall be in writing and shall be delivered
personally to the Party or to an officer of the Party to whom the 
same is directed, or sent by regular, registered, or certified
mail, addressed to the person to whom directed at the following
address, or to such other address as such Party may from time to
time specify by notice to the Parties:

                    (i)  If to the Partnership or the Continuing
Partners:
                         Equus Gaming Co., L.P.
                         222 Smallwood Village Center
                         St. Charles, MD 20602

                    (ii)  If to the Retiring Partner:
                         
                         Interstate General Company              
                         222 Smallwood Village Center
                         St. Charles, MD 20602

Any such notice shall be deemed to be delivered, given, and
received for all purposes as of the date so delivered, if delivered
personally or if sent by regular mail, or as of the date on which
the same was deposited in a regularly maintained  receptacle for
the deposit of United States mail, if sent by registered or
certified mail, postage and charges prepaid. Any Party may from
time to time specify a different address by choice to the other
Parties.


          (p)  Amendments.  Any amendment to this Agreement shall
be in writing and executed by each Party hereto.

          (q)  Entire Agreement.  This Agreement contains the
entire understanding among the Parties and supersedes any prior
written or oral agreements between them respecting the subject
matter of this Agreement. There are no representations, 
agreements, arrangements, or understandings, oral or written,
between the Parties relating to the subject matter of this
Agreement that are not fully set forth herein. This Agreement
(PAGE)
amends and restates the Partnership Agreement with respect to the 
subject matter of this Agreement. This Agreement shall be
considered part of the Partnership Agreement for all purposes under
the Code.

     IN WITNESS WHEREOF, the Parties hereto have approved and
executed this Agreement as of the date first set forth above.

                              PARTNERSHIP
 
                              EQUUS GAMING COMPANY, L.P.
                              a Virginia partnership
                              By: EQUUS MANAGEMENT COMPANY
                                   its Managing General Partner
                              By:  /s/ Gretchen Gronau
                                   ------------------------------

                              CONTINUING PARTNERS:

                              EQUUS MANAGEMENT COMPANY, a
                              Delaware corporation
                              By:  /s/ Gretchen Gronau
                                   ------------------------------
                              Its: Vice President
                                   ------------------------------

                              EQUUS MANAGEMENT TITLE COMPANY, a
                              Delaware corporation.  
                              By:  /s/ Gretchen Gronau
                                   ------------------------------
                              Its: Vice President
                                   ------------------------------
                                   
                              RETIRING PARTNER:
     
                              INTERSTATE GENERAL COMPANY, L.P.
                              By:  Interstate General Management
                                   Company, its managing general
                                   partner
                              By:  /s/ Francisco Arrivi
                                   ------------------------------
                         
                              HOUSING DEVELOPMENT ASSOCIATES S.E.
                              By: EQUUS GAMING COMPANY, L.P.
                                   a Virginia partnership
                              By: EQUUS MANAGEMENT COMPANY
                                   its Managing General Partner
                              By:  /s/ Gretchen Gronau
                                   ------------------------------