-----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, Sd3Iq5En4rhQaffXaRkAQ2MhrWDt+rZHqnboc3M7/H4UZeud9XEz5rKcgbDXdi4k 4dRiQMt8y2meBBDoNqkQIA== 0000914760-99-000096.txt : 19990504 0000914760-99-000096.hdr.sgml : 19990504 ACCESSION NUMBER: 0000914760-99-000096 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19990503 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERIHOST PROPERTIES INC CENTRAL INDEX KEY: 0000778423 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363312434 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: SEC FILE NUMBER: 005-42259 FILM NUMBER: 99608388 BUSINESS ADDRESS: STREET 1: 2400 E DEVON AVE STE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 BUSINESS PHONE: 7082984500 MAIL ADDRESS: STREET 1: 2400 E DEVON AVE STREET 2: SUITE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 FORMER COMPANY: FORMER CONFORMED NAME: AMERICA POP INC DATE OF NAME CHANGE: 19871111 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMERIHOST PROPERTIES INC CENTRAL INDEX KEY: 0000778423 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363312434 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: 2400 E DEVON AVE STE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 BUSINESS PHONE: 7082984500 MAIL ADDRESS: STREET 1: 2400 E DEVON AVE STREET 2: SUITE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 FORMER COMPANY: FORMER CONFORMED NAME: AMERICA POP INC DATE OF NAME CHANGE: 19871111 SC 13E4 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- SCHEDULE 13E-4 ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934) ----------------------------------- AMERIHOST PROPERTIES, INC. (Name of Issuer) AMERIHOST PROPERTIES, INC. (Name of Person(s) Filing Statement) Common Stock, $.005 par value 03070-D-209 (Title of Class of Securities) (CUSIP Number of Class of Securities) Michael P. Holtz Chief Executive Officer Amerihost Properties, Inc. 2400 East Devon Ave., Suite 280 Des Plaines, Illinois 60018 847-298-4500 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) Copy to: Helen R. Friedli, P.C. McDermott, Will & Emery 227 West Monroe Street Chicago, Illinois 60606 312-984-7563 May 3, 1999 (Date Tender Offer First Published, Sent or Given to Security Holders) ----------------------------------- Calculation of Filing Fee - --------------------------------- --------------------------------------------- Transaction Value Amount of filing fee - --------------------------------- --------------------------------------------- $4,000,000 $800.00 - --------------------------------- --------------------------------------------- * Calculated solely for purposes of determining the filing fee, based upon the purchase of 1,000,000 shares at the maximum tender offer price per share of $4.00. [ ] 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: N/A Filing Party: N/A Form or Registration No.: N/A Date Filed: N/A ================================================================================ This Issuer Tender Offer Statement on Schedule 13E-4 (the "Statement") relates to the tender offer by Amerihost Properties, Inc., a Delaware corporation (the "Company"), to purchase up to 1,000,000 shares of its common stock, $.005 par value per share (the "Shares") at prices, net to the seller in cash, not greater than $4.00 nor less than $3.375 per Share, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 3, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which are herein collectively referred to as the "Offer"). Copies of such documents are filed as Exhibits (a)(1) and (a)(2), respectively, to this Statement. ITEM 1. SECURITY AND ISSUER. (a) The name of the issuer is Amerihost Properties, Inc., a Delaware corporation. The address of its principal executive offices is 2400 East Devon Ave., Suite 280 Des Plaines, Illinois 60018 (b) The information set forth in "Introduction," "Section 1. Number of Shares; Proration" and "Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" in the Offer to Purchase is incorporated herein by reference. The Offer is being made to all holders of Shares, including officers, directors and affiliates of the Company, The Company has been advised that, other than Mr. Bernardo, a director of the Company who intends to tender up to 20,000 Shares, none of its directors or executive officers intends to tender any Shares pursuant to the Offer. Any Shares tendered by Mr. Bernardo may be purchased by the Company in accordance with the terms of the Offer in the same manner as Shares tendered by any other stockholder of the Company. (c) The information set forth in "Introduction" and "Section 7. Price Range of Shares; Dividends" in the Offer to Purchase is incorporated herein by reference. (d) This Statement is being filed by the Issuer. ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in "Section 10. Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER (a)-(j) The information set forth in "Introduction," "Section 8. Background and Purpose of the Offer; Certain Effects of the Offer," "Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares," "Section 10. Source and Amount of Funds" and "Section 12. Effects of the Offer on the Market for Shares; Registration Under the Exchange Act" in the Offer to Purchase is incorporated herein by reference. ITEM 4. INTEREST IN SECURITIES OF THE ISSUER. The information set forth in "Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" in the Offer to Purchase is incorporated herein by reference. ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES. The information set forth in "Introduction," "Section 8. Background and Purpose of the Offer; Certain Effects of the Offer" and "Section 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" in the Offer to Purchase is incorporated herein by reference. ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in "Introduction" and "Section 16. Fees and Expenses" in the Offer to Purchase is incorporated herein by reference. ITEM 7. FINANCIAL INFORMATION. (a)-(b) The information set forth in "Section 11. Certain Information About the Company" in the Offer to Purchase is incorporated herein by reference. The financial statements filed as a part of the Company's Annual Report on Form 10-K for the year ended December 31, 1998, filed as exhibit (g)(i) hereto, are incorporated herein by reference. ITEM 8. ADDITIONAL INFORMATION. (a) Not applicable. (b) The information set forth in "Section 13. Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase is incorporated herein by reference. (c) The information set forth in "Section 12. Effects of the Offer on the Market for Shares; Registration Under the Exchange Act" in the Offer to Purchase is incorporated herein by reference. (d) Not applicable. (e) The information set forth in the Offer to Purchase and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. ITEM DESCRIPTION (a)(1) Form of Offer to Purchase dated May 3, 1999. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Form of Letter to Stockholders dated May 3, 1999 from the Chief Executive Officer of the Company. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Press Release issued by the Company dated May 3, 1999. (b)(1) Revolving Acquisition and Development Line of Credit Note, dated October 15, 1998, from the Company to Bridgeview Bank and Trust (b)(2) General Business Security Agreement, dated October 15, 1998, between the Company and Bridgeview Bank and Trust (c) Not applicable (d) Not applicable (e) Not applicable (f) Not applicable (g)(1) Financial statements filed as a part of the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (incorporated herein by reference to such Form 10-K). 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. AMERIHOST PROPERTIES, INC. By: /s/ Michael P. Holtz ---------------------------------- Michael P. Holtz, Chief Executive Officer Dated: May 3, 1999 EX-99.(A)(1) 2 [AMERIHOST LOGO] OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK AT A PURCHASE PRICE NOT GREATER THAN $4.00 NOR LESS THAN $3.375 PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999, UNLESS THE OFFER IS EXTENDED. Amerihost Properties, Inc., a Delaware corporation (the "Company"), invites its stockholders to tender shares of its common stock, $.005 par value per share (the "Shares") to the Company at prices not greater than $4.00 nor less than $3.375 per Share in cash, specified by tendering stockholders, upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share price (not greater than $4.00 nor less than $3.375 per Share), net to the seller in cash (the "Purchase Price"), that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the lowest Purchase Price that will allow it to buy 1,000,000 Shares validly tendered and not withdrawn pursuant to the Offer (or such lesser number of Shares as are validly tendered at prices not greater than $4.00 nor less than $3.375 per Share). The Company will pay the Purchase Price for all Shares validly tendered at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer, including the proration terms hereof. The Company reserves the right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant to the Offer. Shares tendered at prices in excess of the Purchase Price and Shares not purchased because of proration will be returned. The Offer is not conditioned on any minimum number of shares being tendered. The Offer is, however, subject to certain other conditions. See Section 6. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MAKING OF THE OFFER. HOWEVER, STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT, OTHER THAN MR. BERNARDO, A DIRECTOR OF THE COMPANY WHO MAY TENDER UP TO 20,000 SHARES, NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. ANY SHARES TENDERED BY MR. BERNARDO MAY BE PURCHASED BY THE COMPANY IN ACCORDANCE WITH THE TERMS OF THE OFFER IN THE SAME MANNER AS SHARES TENDERED BY ANY OTHER STOCKHOLDER OF THE COMPANY. The date of this Offer to Purchase is May 3, 1999. IMPORTANT Any stockholders desiring to tender all or any portion of their Shares should either: (i) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, mail or deliver it with any required signature guarantee, or transmit an Agent's Message (as defined in Section 3) in connection with a book-entry transfer, in each case with any other required documents to Harris Trust and Savings Bank (the "Depositary"), and either mail or deliver the stock certificates for such Shares to the Depositary (with all such other documents) or follow the procedure for book-entry delivery set forth in Section 3, or (ii) request a broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact that broker, dealer, commercial bank, trust company or other nominee if such stockholder desires to tender such Shares. Stockholders who desire to tender Shares and whose certificates for such Shares are not immediately available or who cannot comply with the procedure for book-entry transfer on a timely basis or whose other required documentation cannot be delivered to the Depositary, in any case, by the expiration of the Offer should tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. TO EFFECT A VALID TENDER OF THEIR SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES. Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Company at its address and telephone number set forth on the back cover of this Offer to Purchase. THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION, IF GIVEN OR MADE, AS HAVING BEEN AUTHORIZED BY THE COMPANY. Table of Contents SECTION PAGE Summary................................................................. 1 Introduction............................................................ 2 The Offer............................................................... 3 1. Number of Shares; Proration........................................ 3 2. Tenders by Owners of Fewer Than 100 Shares......................... 4 3. Procedure for Tendering Shares..................................... 5 4. Withdrawal Rights.................................................. 9 5. Purchase of Shares and Payment of Purchase Price................... 9 6. Certain Conditions of the Offer.................................... 10 7. Price Range of Shares; Dividends................................... 12 8. Background and Purpose of the Offer; Certain Effects of the Offer.................................. .................... 12 9. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares ............................ 14 10. Source and Amount of Funds......................................... 15 11. Certain Information About the Company.............................. 15 12. Effects of the Offer on the Market for Shares; Registration Under the Exchange Act................. ........................... 18 13. Certain Legal Matters; Regulatory Approvals........................ 18 14. Certain U.S. Federal Income Tax Consequences....................... 19 15. Extension of the Offer; Termination; Amendments.................... 22 16. Fees and Expenses.................................................. 22 17. Miscellaneous...................................................... 23 Schedule I -- Certain Transactions Involving Shares..................... 24 SUMMARY This general summary is provided for the convenience of the Company's stockholders and is qualified in its entirety by reference to the full text and more specific details of this Offer to Purchase. Number of Shares to be Purchased...... 1,000,000 Shares (or such lesser number of Shares as are validly tendered). Purchase Price........................ The Company will determine a single per Share net cash price, not greater than $4.00 nor less than $3.375 per Share, that it will pay for Shares validly tendered. All Shares acquired in the Offer will be acquired at the Purchase Price even if tendered below the Purchase Price. Each stockholder desiring to tender Shares must (i) specify in the Letter of Transmittal the minimum price (not greater than $4.00 nor less than $3.375 per Share) at which such stockholder is willing to have Shares purchased by the Company or (ii) elect to have such stockholder's Shares purchased at a price determined by the Dutch Auction tender process, which could result in such Shares being purchased at the minimum price of $3.375 per Share. How to Tender Shares.................. See Section 3. Call the Company or consult your broker for assistance. Brokerage Commissions................. None. Stock Transfer Tax.................... None, if payment is made to the registered holder. See Section 5. Expiration and Proration Dates........ Wednesday, June 2, 1999, at 5:00 p.m., New York City Time, unless extended by the Company. Payment Date.......................... As soon as practicable after the Expiration Date. Position of the Company and its Directors .......................... Neither the Company nor its Board of Directors makes any recommendation to any stockholder as to whether to tender or refrain from tendering Shares. Withdrawal Rights..................... Tendered Shares may be withdrawn at any time until 5:00 p.m., New York City Time, on Wednesday, June 2, 1999, unless the Offer is extended by the Company and, unless previously purchased, after 12:00 Midnight, New York City Time, on Tuesday, June 29, 1999. See Section 4. Odd Lots.............................. There will be no proration of Shares tendered by any stockholder owning beneficially fewer than 100 Shares in the aggregate as of April 15, 1999, and continuing to beneficially own fewer than 100 Shares on the Expiration Date, and who tenders all such Shares at or below the Purchase Price prior to the Expiration Date and who checks the "Odd Lots" box in the Letter of Transmittal. Further Developments Regarding the Offer .......................... Call the Company or consult your broker. INTRODUCTION Amerihost Properties, Inc., a Delaware corporation (the "Company"), invites its stockholders to tender shares of its common stock, $.005 par value per share (the "Shares") to the Company at prices not greater than $4.00 nor less than $3.375 per Share in cash, specified by tendering stockholders, upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share price (not greater than $4.00 nor less than $3.375 per Share), net to the seller in cash (the "Purchase Price"), that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the lowest Purchase Price that will allow it to buy 1,000,000 Shares validly tendered and not withdrawn pursuant to the Offer (or such lesser number of Shares as are validly tendered at prices not greater than $4.00 nor less than $3.375 per Share). The Company will pay the Purchase Price for all Shares validly tendered prior to the Expiration Date (as defined in Section 1) at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer including the proration terms described below. The Company reserves the right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant to the Offer. The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions. See Section 6. If, before the Expiration Date, more than 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase) are validly tendered at or below the Purchase Price and not withdrawn, the Company will, upon the terms and subject to the conditions of the Offer, purchase Shares first from all Odd Lot Owners (as defined in Section 2) who validly tender all their Shares at or below the Purchase Price and then on a pro rata basis from all other stockholders who validly tender Shares at prices at or below the Purchase Price (and do not withdraw them prior to the Expiration Date). The Company will return at its own expense all Shares not purchased pursuant to the Offer, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration. The Purchase Price will be paid net to the tendering stockholder in cash for all Shares purchased. Tendering stockholders will not be obligated to pay brokerage commissions, solicitation fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer taxes on the Company's purchase of Shares pursuant to the Offer. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY (AS DEFINED BELOW) THE SUBSTITUTE FORM W-9 THAT IS INCLUDED AS PART OF THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. See Section 3. In addition, the Company will pay all fees and expenses of Harris Trust and Savings Bank (the "Depositary") in connection with the Offer. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MAKING OF THE OFFER. HOWEVER, STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT, OTHER THAN MR. BERNARDO, A DIRECTOR OF THE COMPANY WHO MAY TENDER UP TO 20,000 SHARES, NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. ANY SHARES TENDERED BY MR. BERNARDO MAY BE PURCHASED BY THE COMPANY IN ACCORDANCE WITH THE TERMS OF THE OFFER IN THE SAME MANNER AS SHARES TENDERED BY ANY OTHER STOCKHOLDER OF THE COMPANY. As of the close of business on April 27, 1999, there were 6,043,132 Shares outstanding and 2,031,033 Shares issuable upon exercise of outstanding stock options under the Company's Stock Option Plan, warrants or other convertible securities issued by the Company. The 1,000,000 Shares that the Company is offering to purchase represent approximately 16.6% of the outstanding Shares (approximately 12.4% assuming the exercise of all outstanding options, warrants and other convertible securities). The funds necessary to consummate the Offer will be provided through borrowings under the Company's Line-of-Credit (as defined in Section 10) or cash held by the Company. The Shares are listed on the Nasdaq National Market ("Nasdaq") under the symbol "HOST." On April 27, 1999 the closing per Share sales price as reported by Nasdaq was $3.375. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. THE OFFER 1. NUMBER OF SHARES; PRORATION. Upon the terms and subject to the conditions of the Offer, the Company will accept for payment (and thereby purchase) 1,000,000 Shares or such lesser number of Shares as are validly tendered before the Expiration Date (and not withdrawn in accordance with Section 4) at a net cash price (determined in the manner set forth below) not greater than $4.00 nor less than $3.375 per Share. The term "Expiration Date" means 5:00 p.m., New York City Time, on Wednesday, June 2, 1999, unless and until the Company in its sole discretion shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall refer to the latest time and date at which the Offer, as so extended by the Company, shall expire. See Section 15 for a description of the Company's right to extend the time during which the Offer is open and to delay, terminate or amend the Offer. Subject to Section 2, if the Offer is oversubscribed, Shares tendered at or below the Purchase Price before the Expiration Date will be eligible for proration. The proration period also expires on the Expiration Date. The Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share Purchase Price that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the lowest Purchase Price that will allow it to buy 1,000,000 Shares validly tendered and not withdrawn pursuant to the Offer (or such lesser number as are validly tendered at prices not greater than $4.00 nor less than $3.375 per Share). The Company reserves the right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant to the Offer, but does not currently plan to do so. The Offer is not conditioned on any minimum number of Shares being tendered. In accordance with applicable regulations of the Securities and Exchange Commission (the "Commission"), the Company may purchase pursuant to the Offer an additional amount of Shares not to exceed 2% of the outstanding Shares without amending or extending the Offer. If (i) the Company increases or decreases the price to be paid for Shares, increases the number of Shares being sought and such increase in the number of Shares being sought exceeds 2% of the outstanding Shares, or decreases the number of Shares being sought and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date notice of such increase or decrease is first published, sent or given in the manner specified in Section 15, the Offer will be extended until the expiration of such period of ten business days. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York City Time. The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions. See Section 6. In accordance with Instruction 5 of the Letter of Transmittal, each stockholder desiring to tender Shares must (i) specify the price (not greater than $4.00 nor less than $3.375 per Share) at which such stockholder is willing to have the Company purchase Shares or (ii) elect to have such stockholder's Shares purchased at a price determined by the Dutch Auction tender process, which could result in such Shares being purchased at the minimum price of $3.375 per Share. As promptly as practicable following the Expiration Date, the Company will, in its sole discretion, determine the Purchase Price (not greater than $4.00 nor less than $3.375 per Share) that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will pay the Purchase Price for all Shares validly tendered prior to the Expiration Date at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer. All Shares not purchased pursuant to the Offer, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration, will be returned to the tendering stockholders at the Company's expense as promptly as practicable following the Expiration Date. If the number of Shares validly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date is less than or equal to 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company will, upon the terms and subject to the conditions of the Offer, purchase at the Purchase Price all Shares so tendered. PRIORITY. Upon the terms and subject to the conditions of the Offer, in the event that prior to the Expiration Date more than 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer) are validly tendered at or below the Purchase Price and not withdrawn, the Company will purchase such validly tendered Shares in the following order of priority: (i) all Shares validly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date by any Odd Lot Owner (as defined in Section 2) who: (a) tenders all Shares beneficially owned by such Odd Lot Owner at or below the Purchase Price (partial tenders will not qualify for this preference); and (b) completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and (ii) after purchase of all of the foregoing Shares, all other Shares validly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date, on a pro rata basis. PRORATION. In the event that proration of tendered Shares is required, the Company will determine the final proration factor as promptly as practicable after the Expiration Date. Proration for each stockholder tendering Shares (other than Odd Lot Owners) shall be based on the ratio of the number of Shares tendered by such stockholder at or below the Purchase Price to the total number of Shares tendered by all stockholders (other than Odd Lot Owners) at or below the Purchase Price. This ratio will be applied to stockholders tendering Shares (other than Odd Lot Owners) to determine the number of Shares that will be purchased from each such stockholder pursuant to the Offer. Although the Company does not expect to be able to announce the final results of such proration until approximately seven business days after the Expiration Date, it will announce preliminary results of proration by press release as promptly as practicable after the Expiration Date. Stockholders can obtain such preliminary information from the Depositary and may be able to obtain such information from their brokers. As described in Section 14, the number of Shares that the Company will purchase from a stockholder may affect the United States federal income tax consequences to the stockholder of such purchase and therefore may be relevant to a stockholder's decision whether to tender Shares. The Letter of Transmittal affords each tendering stockholder the opportunity to designate the order of priority in which Shares tendered are to be purchased in the event of proration. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares as of April 15, 1999 and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES. The Company, upon the terms and subject to the conditions of the Offer, will accept for purchase, without proration, all Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by or on behalf of stockholders who beneficially owned as of the close of business on April 15, 1999, and continue to beneficially own as of the Expiration Date, an aggregate of fewer than 100 Shares ("Odd Lot Owners"). See Section 1. To avoid proration, however, an Odd Lot Owner must validly tender at or below the Purchase Price all such Shares that such Odd Lot Owner beneficially owns. This preference is not available to partial tenders or to owners of 100 or more Shares in the aggregate, even if such owners have separate stock certificates for fewer than 100 such Shares. Any Odd Lot Owner wishing to tender all Shares beneficially owned by such stockholder pursuant to this Offer must complete the box captioned "Odd Lots" in the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery, and must properly indicate in the section entitled "Price (In Dollars) Per Share At Which Shares Are Being Tendered" in the Letter of Transmittal the price at which such Shares are being tendered, or may elect to have all of such Shares purchased at the Purchase Price determined by the Dutch Auction tender process. See Section 3. Stockholders owning an aggregate of less than 100 Shares whose Shares are purchased pursuant to the Offer will avoid both the payment of brokerage commissions and any applicable odd lot discounts payable on a sale of their Shares in transactions on the Nasdaq. As of April 15, 1999, there were approximately 1,380 holders of record of Shares. Approximately 51.2% of these holders of record held individually fewer than 100 Shares and held in the aggregate 28,883 Shares. Because of the large number of Shares held in the names of brokers and nominees, the Company is unable to estimate the number of beneficial owners of fewer than 100 Shares or the aggregate number of Shares they own. The Company also reserves the right, but will not be obligated, to purchase all Shares duly tendered by any stockholder who tendered any Shares beneficially owned at or below the Purchase Price and who, as a result of proration, would then beneficially own an aggregate of fewer than 100 Shares. If the Company exercises this right, it will increase the number of Shares that it is offering to purchase in the Offer by the number of Shares purchased through the exercise of such right. 3. PROCEDURE FOR TENDERING SHARES. PROPER TENDER OF SHARES. For Shares to be validly tendered pursuant to the Offer: (i) the certificates for such Shares (or confirmation of receipt of such Shares pursuant to the procedures for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, in each case together with any other documents required by the Letter of Transmittal, must be received prior to 5:00 p.m., New York City Time, on the Expiration Date by the Depositary at its address set forth on the back cover of this Offer to Purchase; or (ii) the tendering stockholder must comply with the guaranteed delivery procedure set forth below. AS SPECIFIED IN INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, EACH STOCKHOLDER DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST EITHER (A) CHECK THE BOX IN THE SECTION OF THE LETTER OF TRANSMITTAL CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION" OR (B) CHECK ONE OF THE BOXES IN THE SECTION OF THE LETTER OF TRANSMITTAL CAPTIONED "SHARES TENDERED AT A PRICE DETERMINED BY STOCKHOLDER." A STOCKHOLDER WHO WISHES TO MAXIMIZE THE CHANCE THAT SUCH STOCKHOLDER'S SHARES WILL BE PURCHASED AT THE RELEVANT PURCHASE PRICE SHOULD CHECK THE BOX ON THE LETTER OF TRANSMITTAL MARKED "SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION." NOTE THAT THIS ELECTION COULD RESULT IN SUCH STOCKHOLDER'S SHARES BEING PURCHASED AT THE MINIMUM PRICE OF $3.375 PER SHARE. A STOCKHOLDER WHO WISHES TO INDICATE A SPECIFIC PRICE (IN MULTIPLES OF $.125) AT WHICH SUCH STOCKHOLDER'S SHARES ARE BEING TENDERED MUST CHECK A BOX UNDER THE SECTION CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER" OF THE LETTER OF TRANSMITTAL IN THE TABLE LABELED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED." A STOCKHOLDER WHO WISHES TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE SEPARATE LETTERS OF TRANSMITTAL FOR EACH PRICE AT WHICH SUCH SHARES ARE BEING TENDERED. THE SAME SHARES CANNOT BE TENDERED AT MORE THAN ONE PRICE. A TENDER OF SHARES WILL BE PROPER IF, AND ONLY IF, ON THE LETTER OF TRANSMITTAL EITHER THE BOX IN THE SECTION CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION" OR ONE OF THE BOXES IN THE SECTION CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER" IS CHECKED. Odd Lot Owners who tender all Shares must complete the section entitled "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery, in order to qualify for the preferential treatment available to Odd Lot Owners as set forth in Section 2. SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is required on the Letter of Transmittal if (i) the Letter of Transmittal is signed by the registered holder of the Shares (which term, for purposes of this Section, includes any participant in The Depository Trust Company (the "Book-Entry Transfer Facility") whose name appears on a security position listing as the holder of the Shares) tendered therewith and payment and delivery are to be made directly to such registered holder, or (ii) Shares are tendered for the account of a firm or other entity that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchange Medallion Program (an "Eligible Institution"). In this regard see Section 5 for information with respect to applicable stock transfer taxes. In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a certificate representing Shares is registered in the name of a person other then the signer of a Letter of Transmittal, or if payment is to be made, or Shares not purchased or tendered are to be returned, to a person other than the registered holder, the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature on the certificate or stock power guaranteed by an Eligible Institution. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility as described below), and a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), or an Agent's Message in connection with a book-entry transfer, together with any other documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of the Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. Even though delivery of Shares may be effected through book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), with any required signature guarantees, or an Agent's Message, in each case together with any other required documents must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedure set forth below must be followed. The confirmation of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Company may enforce such agreement against the participant. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share certificates cannot be delivered to the Depositary prior to the Expiration Date (or the procedures for book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary before the Expiration Date, such Shares may nevertheless be tendered provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) the Depositary receives (by hand, mail, overnight courier, telegram or facsimile transmission), on or prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form the Company has provided with this Offer to Purchase (indicating the price at which the Shares are being tendered), including (where required) a signature guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery; and (iii) the certificates for all tendered Shares in proper form for transfer (or confirmation of book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any required signature guarantees (or, in the case of book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal, are received by the Depositary no later than 5:00 p.m., New York City Time, on the third Nasdaq trading day after the date the Depositary receives such Notice of Guaranteed Delivery. RETURN OF UNPURCHASED SHARES. If any tendered Shares are not purchased, or if less than all Shares evidenced by a stockholder's certificates are tendered, certificates for unpurchased Shares will be returned as promptly as practicable after the expiration or termination of the Offer or, in the case of Shares tendered by book-entry transfer at the Book-Entry Transfer Facility, such Shares will be credited to the appropriate account maintained by the tendering stockholder at the Book-Entry Transfer Facility, in each case without expense to such stockholder. BACKUP FEDERAL INCOME TAX WITHHOLDING. Under the United States federal income tax backup withholding rules, unless an exemption applies under the applicable law and regulations, 31% of the gross proceeds payable to a stockholder or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury, unless the stockholder or other payee provides such person's taxpayer identification number (employer identification number or social security number) to the Depositary and certifies under penalties of perjury that such number is correct. Therefore, each tendering stockholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such stockholder otherwise establishes to the satisfaction of the Depositary that the stockholder is not subject to backup withholding. Certain stockholders (including, among others, all corporations and certain foreign stockholders (in addition to foreign corporations)) are not subject to these backup withholding and reporting requirements. In order for a foreign stockholder to qualify as an exempt recipient, that stockholder must submit an IRS Form W-8 or a Substitute Form W-9, signed under penalties of perjury, attesting to that stockholder's exempt status. Such statements can be obtained from the Depositary. See Instructions 10 and 11 of the Letter of Transmittal. Backup withholding is not an additional tax; any amounts so withheld may be credited against the U.S. federal income tax liability of the beneficial holder subject to the withholding. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL. For a discussion of certain United States federal income tax consequences to tendering stockholders, see Section 14. WITHHOLDING FOR FOREIGN STOCKHOLDERS. Even if a foreign stockholder has provided the required certification to avoid backup withholding, the Depositary will withhold United States federal income taxes equal to 30% of the gross payments payable to a foreign stockholder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the United States. For this purpose, a foreign stockholder is any stockholder that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership, or other entity created or organized in or under the laws of the United States, any State or any political subdivision thereof, (iii) an estate the income of which is subject to United States federal income taxation regardless of the source of such income, or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a foreign stockholder must deliver to the Depositary before the payment a properly completed and executed IRS Form 1001. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a foreign stockholder must deliver to the Depositary a properly completed and executed IRS Form 4224. The Depositary will determine a stockholder's status as a foreign stockholder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate that such reliance is not warranted. A foreign stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such stockholder meets the "complete redemption," "substantially disproportionate" or "not essentially equivalent to a dividend" test described in Section 14 or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. FOREIGN STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING, INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE REFUND PROCEDURE. See Instructions 13 and 14 of the Letter of Transmittal. TENDERING STOCKHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S ACCEPTANCE CONSTITUTES AN AGREEMENT. It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person acting alone or in concert with others, directly or indirectly, to tender Shares for such person's own account unless at the time of tender and at the Expiration Date such person has a "net long position" equal to or greater than the amount tendered in the Shares and will deliver or cause to be delivered (i) such Shares for the purpose of tender to the Company within the period specified in the Offer, or (ii) other securities immediately convertible into, exercisable for or exchangeable into Shares ("Equivalent Securities") and, upon the acceptance of such tender, will acquire such Shares by conversion, exchange or exercise of such Equivalent Securities to the extent required by the terms of the Offer and will deliver or cause to be delivered such Shares so acquired for the purpose of tender to the Company within the period specified in the Offer. Rule 14e-4 also provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. A tender of Shares made pursuant to any method of delivery set forth herein will constitute the tendering stockholder's representation and warranty to the Company that (i) such stockholder has a "net long position" in Shares or Equivalent Securities being tendered within the meaning of Rule 14e-4, and (ii) such tender of Shares complies with Rule 14e-4. The Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Company upon the terms and subject to the conditions of the Offer. DETERMINATIONS OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares to be accepted, the price to be paid therefor and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company, in its sole discretion, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders it determines not to be in proper form or the acceptance of or payment for which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Shares or by any particular stockholder. No tender of Shares will be deemed to be properly made until all defects or irregularities have been cured or waived. Neither the Company nor the Depositary, or any other person, is or will be obligated to give notice of any defects or irregularities in tenders, and none of them will incur any liability for failure to give any such notice. CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS DELIVERED TO THE COMPANY MAY NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE MAY BE DEEMED TO BE NOT VALIDLY TENDERED. 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4, tenders of Shares pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time before the Expiration Date and, unless accepted for payment by the Company as provided in this Offer to Purchase, may also be withdrawn after 12:00 Midnight, New York City Time, on Tuesday, June 29, 1999. For a withdrawal to be effective, the Depositary must receive (at its address set forth on the back cover of this Offer to Purchase) a notice of withdrawal in written, telegraphic or facsimile transmission form on a timely basis. Such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares tendered, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If the certificates have been delivered or otherwise identified to the Depositary, then, prior to the release of such certificates, the tendering stockholder must also submit the serial numbers shown on the particular certificates evidencing the Shares and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution). If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3, the notice of withdrawal must specify the name and the number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the procedures of such facility. All questions as to the form and validity, including time of receipt, of notices of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding on all parties. Neither the Company nor the Depositary, or any other person, is or will be obligated to give any notice of any defects or irregularities in any notice of withdrawal, and none of them will incur any liability for failure to give any such notice. Withdrawals may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered before the Expiration Date by again following any of the procedures described in Section 3. If the Company extends the Offer, is delayed in its purchase of Shares or is unable to purchase Shares pursuant to the Offer for any reason, then, without prejudice to the Company's rights under the Offer, the Depositary may, subject to applicable law, retain on behalf of the Company all tendered Shares, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in this Section 4. 5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE. The Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share Purchase Price that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders, and will accept for payment and pay for (and thereby purchase) Shares validly tendered at or below the Purchase Price and not withdrawn as soon as practicable after the Expiration Date. For purposes of the Offer, the Company will be deemed to have accepted for payment (and therefore purchased), subject to proration, Shares that are validly tendered at or below the Purchase Price and not withdrawn when, as and if it gives oral or written notice to the Depositary of its acceptance of such Shares for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, the Company will purchase and pay a single per Share Purchase Price for all of the Shares accepted for payment pursuant to the Offer as soon as practicable after the Expiration Date. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made promptly (subject to possible delay in the event of proration) but only after timely receipt by the Depositary of certificates for Shares (or of a timely Book-Entry Confirmation of such Shares into the Depositary's account at the Book-Entry Transfer Facility), and a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), or, in the case of a book-entry transfer, an Agent's Message, in each case together with any other required documents. Payment for Shares purchased pursuant to the Offer will be made by depositing the aggregate Purchase Price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Company and transmitting payment to the tendering stockholders. In the event of proration, the Company will determine the proration factor and pay for those tendered Shares accepted for payment as soon as practicable after the Expiration Date. However, the Company does not expect to be able to announce the final results of any such proration until approximately seven business days after the Expiration Date. Under no circumstances will the Company pay interest on the Purchase Price including, without limitation, by reason of any delay in making payment. Certificates for all Shares not purchased, including all Shares tendered at prices greater than the Purchase Price and Shares not purchased due to proration, will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to the account maintained with the Book-Entry Transfer Facility by the participant who so delivered such Shares) as promptly as practicable following the Expiration Date or termination of the Offer, without expense to the tendering stockholder. In addition, if certain events occur, the Company may not be obligated to purchase Shares pursuant to the Offer. See Section 6. The Company will pay all stock transfer taxes, if any, payable on the transfer to it of Shares purchased pursuant to the Offer; provided, however, that if payment of the Purchase Price is to be made to, or (in the circumstances permitted by the Offer) if unpurchased Shares are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or such other person), payable on account of the transfer to such person will be deducted from the Purchase Price unless evidence satisfactory to the Company of the payment of such taxes or exemption therefrom is submitted. See Instruction 7 of the Letter of Transmittal. Any tendering stockholder or other payee who fails to complete fully, sign and return to the Depositary the Substitute Form W-9 included as part of the Letter of Transmittal may be subject to required backup U.S. federal income tax withholding of 31% of the gross proceeds paid to such stockholder or other payee pursuant to the Offer. See Section 3. Also see Section 3 regarding U.S. federal income tax consequences for foreign stockholders. 6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Company shall not be required to accept for payment, purchase or pay for any Shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f) promulgated under the Exchange Act, if at any time on or after May 3, 1999 and prior to the time of payment for any such Shares (whether any Shares have theretofore been accepted for payment, purchased or paid for pursuant to the Offer) any of the following events shall have occurred (or shall have been determined by the Company to have occurred) that, in the Company's judgment in any such case and regardless of the circumstances giving rise thereto (including any action or omission to act by the Company), makes it inadvisable to proceed with the Offer or with such acceptance for payment or payment: (a) there shall have been threatened, instituted or be pending before any court, agency, authority or other tribunal any action, suit or proceeding by any government or governmental, regulatory or administrative agency or authority or by any other person, domestic, foreign or supranational, or any judgment, order or injunction entered, enforced or deemed applicable by any such court, authority, agency or tribunal, which (i) challenges or seeks to make illegal, or to delay or otherwise directly or indirectly to restrain, prohibit or otherwise affect the making of the Offer, the acquisition of Shares pursuant to the Offer or is otherwise related in any manner to, or otherwise affects, the Offer or (ii) could, in the sole judgment of the Company, materially affect the business, condition (financial or otherwise), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company and its subsidiaries, taken as a whole, or materially impair the Offer's contemplated benefits to the Company; or (b) there shall have been any action threatened or taken, or any approval withheld, or any statute, rule or regulation invoked, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company or any of its subsidiaries, by any government or governmental, regulatory or administrative authority or agency or tribunal, domestic, foreign or supranational, which, in the sole judgment of the Company, would or might directly or indirectly result in any of the consequences referred to in clause (i) or (ii) of paragraph (a) above; or (c) there shall have occurred (i) the declaration of any banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory); (ii) any general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market; (iii) the commencement of a war, armed hostilities or any other national or international crisis directly or indirectly involving the United States; (iv) any limitation (whether or not mandatory) by any governmental, regulatory or administrative agency or authority on, or any event which, in the sole judgment of the Company, might materially affect, the extension of credit by banks or other lending institutions in the United States; (v) any significant decrease in the market price of the Shares or in the market prices of equity securities generally in the United States or any change in the general political, market, economic or financial conditions in the United States or abroad that could have, in the sole judgment of the Company, a material adverse effect on the business, condition (financial or otherwise), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or on the trading in the Shares or on the proposed financing of the Offer; (vi) in the case of any of the foregoing existing at the time of the announcement of the Offer, a material acceleration or worsening thereof; or (vii) any decline in either the Dow Jones Industrial Average or the S&P 500 Composite Index by an amount in excess of 10% measured from the close of business on April 30, 1999; or (d) any change shall occur or be threatened in the business, condition (financial or otherwise), income, operations or prospects of the Company and its subsidiaries, taken as a whole, which in the sole judgment of the Company is or may be material to the Company and its subsidiaries taken as a whole; or (e) a tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger or acquisition proposal for the Company, shall have been proposed, announced or made by another person or shall have been publicly disclosed, or the Company shall have learned that (i) any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) has acquired or proposes to acquire beneficial ownership of more than 5% of the outstanding Shares whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than as disclosed in a Schedule 13D or 13G on file with the Commission on April 30, 1999) or (ii) any such person or group that on or prior to April 30, 1999 had filed such a Schedule with the Commission thereafter shall have acquired or shall propose to acquire whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise, beneficial ownership of additional Shares representing 2% or more of the outstanding Shares; or (f) any person or group shall have filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire the Company or any of its Shares. The foregoing conditions are for the Company's sole benefit and may be asserted by the Company regardless of the circumstances giving rise to any such condition (including any action or inaction by the Company) or may be waived by the Company in whole or in part. The Company's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. In certain circumstances, if the Company waives any of the foregoing conditions, it may be required to extend the Expiration Date of the Offer. Any determination by the Company concerning the events described above and any related judgment or decision by the Company regarding the inadvisability of proceeding with the purchase of or payment for any Shares tendered will be final and binding on all parties. 7. PRICE RANGE OF SHARES; DIVIDENDS. The Company's Common Stock is traded on the Nasdaq National Market under the symbol "HOST." As of April 15, 1999, there were approximately 1,380 holders of record of the Company's Common Stock. The following table shows the range of reported high and low closing prices per share. High($) Low($) ------- ------ FISCAL 1997 First quarter 7.63 5.31 Second quarter 7.88 6.06 Third quarter 7.13 6.19 Fourth quarter 6.88 5.13 FISCAL 1998 First quarter 5.81 3.94 Second quarter 5.38 4.38 Third quarter 4.63 3.09 Fourth quarter 4.50 2.56 FISCAL 1999 First quarter 3.81 3.00 Second quarter (through April 27, 1999) 3.47 3.00 The Company has not declared or paid any cash dividends on its Common Stock. The Company currently intends to retain any earnings for use in its business and therefore does not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be made by the Board of Directors in light of the Company's earnings, financial position, capital requirements and such other factors as the Board of Directors deems relevant. In addition, pursuant to the terms of the Company's 7% Subordinated Notes (the "7% Notes"), no dividends may be paid on any capital stock of the Company until the 7% Notes have been paid in full. 8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER. The discussion in the Introduction, this Section 8, and elsewhere in this Offer to Purchase contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. When used in this Offer to Purchase, the words "anticipate," "believe," "plans," "estimate," "intend," "has or may consider" and "expect" and similar expressions are intended to identify such forward-looking statements. Such factors include, but are not limited to, the availability of sufficient capital to finance the Company's business plan on terms satisfactory to the Company; competitive factors, such as the introduction of new hotels or renovation of existing hotels in the same markets; changes in travel patterns which could affect demand for the Company's hotels; changes in development and operating costs, including labor, construction, land, equipment, and capital costs; general business and economic conditions; and other risk factors described from time to time in the Company's reports filed with the Commission. Some or all of the factors are beyond the Company's control. There can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievement expressed or implied by such forward-looking statements. The Company undertakes no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The Offer provides stockholders who are considering a sale of all or a portion of their Shares with the opportunity to determine the price or prices (not greater than $4.00 nor less than $3.375 per share) at which they are willing to sell their Shares and, subject to the terms and conditions of the Offer, to sell those Shares for cash without the usual transaction costs associated with market sales. The Offer also allows stockholders to sell a portion of their Shares while retaining a continuing equity interest in the Company. In addition, the Offer may give stockholders the opportunity to sell Shares at prices greater than market prices prevailing immediately prior to announcement of the Offer. The Offer would allow Odd Lot Holders whose Shares are purchased pursuant to the Offer to avoid both the payment of brokerage commissions and any applicable odd lot discounts payable on sales of odd lots on the Nasdaq. Stockholders who decide not to accept the Offer will realize a proportionate increase in their relative equity interest in the Company and thus in the Company's future earnings and assets, subject to the Company's right to issue additional Shares and other equity securities in the future. To the extent the purchase of Shares in the Offer results in a reduction of the number of stockholders, the costs of the Company for services to stockholders may be reduced. The Company's Board of Directors believes that the Company's financial condition and outlook and current market conditions, including recent trading prices of the Shares, make this an attractive time to repurchase a portion of the outstanding Shares. The Company's Board of Directors believes that the Offer constitutes a prudent use of the Company's financial resources, given the Company's business profile, assets and prospects. The amounts required to fund the Offer and pay related expenses will be provided by the Company's Line-of-Credit described in Section 10. As of April 27, 1999, the Company had available for borrowing approximately $6.7 million under its Line-of-Credit. The Company believes that its Line-of-Credit, along with cash generated from operations, will be sufficient to finance the Offer and the Company's working capital needs and capital expenditures. Accordingly, the Offer is consistent with the Company's goal of increasing stockholder value. The Company believes that, upon the completion of the Offer, the Shares will continue to be quoted on the Nasdaq National Market. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MAKING OF THE OFFER. HOWEVER, STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. Shares that the Company acquires pursuant to the Offer will be cancelled and returned to the status of authorized but unissued stock and will be available for the Company to issue without further stockholder action (except as required by applicable law or the rules of Nasdaq or any other securities exchange on which the Shares are listed) for purposes including, without limitation, the acquisition of other businesses, the raising of additional capital for use in the Company's business and the satisfaction of obligations under existing or future employee benefit or compensation programs or stock plan or compensation programs for directors. The Company has no current plans for issuance of the Shares repurchased pursuant to the Offer. The Company has from time to time and will continue to explore strategic arrangements, transactions and opportunities consistent with the Company's goal of increasing stockholder value. Such strategic transactions could include acquisitions, joint ventures or corporate restructurings. The Company does not currently have any plans to enter into any strategic transactions. The Company's decision to enter into any strategic transaction in the future will depend upon a number of factors, including, without limitation, the Company's business and financial position, its corporate strategies, general economic and market conditions, and the market value of its businesses and the Shares. In the event that the Company enters into a strategic transaction in the future and such transaction increases the market value of the Shares, however, the stockholders who tender their Shares in this Offer will not realize any of the potential value of such transaction. The Company may in the future purchase additional Shares on the open market, in private transactions, through tender offers or otherwise. Any additional purchase may be on the same terms or on terms which are more or less favorable to stockholders than the terms of the Offer. However, under the Exchange Act rules, the Company and its affiliates are prohibited from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the Expiration Date. Any possible future purchases by the Company will depend on many factors, including the results of the Offer, the market price of the Shares, the Company's business and financial position and general economic and market conditions. As described in the Company's proxy statement for its annual meeting to be held May 27, 1999, a copy of which has been mailed to the Company's stockholders together with this Offer to Purchase, the Company's Board of Directors has nominated a slate of five directors to be elected to its Board of Directors, a reduction in the size from the current seven-member Board of Directors. One of the nominees is not currently a member of the Company's Board of Directors. Except as disclosed in this Offer to Purchase, the Company currently has no plans or proposals that relate to or would result in (a) the acquisition by any person of additional securities of the Company or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any or all of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company; (e) any change in the present management of the Company; (f) any other material change in the Company's corporate structure or business; (g) any change in the Company's Certificate of Incorporation or Bylaws or any actions which may impede the acquisition of control of the Company by any person; (h) a class of equity security of the Company being delisted from a national securities exchange; (i) a class of equity security of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) the suspension of the Company's obligation to file reports pursuant to Section 15(d) of the Exchange Act. 9. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES. As of April 27, 1999, there were 6,043,132 Shares outstanding and 2,031,033 Shares issuable upon the exercise of all outstanding options, warrants or other convertible securities issued by the Company. As of April 27, 1999, the Company's current directors and executive officers as a group (9 persons) beneficially owned 2,235,667 Shares (including 1,193,884 Shares issuable upon the exercise of options, warrants or other convertible securities issued by the Company which are exercisable within 60 days of such date), which constituted approximately 30.9% of the outstanding Shares (including Shares issuable if options, warrants and other convertible securities issued by the Company held by the Company's directors and executive officers exercisable within 60 days of such date were exercised) at such time. If the Company purchases 1,000,000 Shares pursuant to the Offer (approximately 16.6% of the outstanding Shares as of April 27, 1999) and no director or executive officer, other than Mr. Bernardo, a director of the Company who may tender up to 20,000 Shares, tenders Shares pursuant to the Offer (as is intended by the directors and executive officers), then after the purchase of Shares pursuant to the Offer, the Company's directors and executive officers as a group would beneficially own approximately 35.5% of the outstanding Shares (including Shares issuable if options, warrants and other convertible securities issued by the Company held by the Company's directors and executive officers exercisable within 60 days of such date were exercised). Based on the Company's records and information provided to the Company by its directors, executive officers, associates and subsidiaries, other than as set forth on Schedule I attached hereto (which describes acquisitions of Shares made by the Company and Dr. Dayan, a director of the Company), neither the Company nor any of its associates or subsidiaries or persons controlling the Company nor, to the best of the Company's knowledge, any of the directors or executive officers of the Company, nor any associate or subsidiary of such directors or executive officers, has effected any transactions in the Shares during the 40 business days prior to the date hereof. Except as set forth in this Offer to Purchase, neither the Company or any person controlling the Company nor, to the Company's knowledge, any of its directors or executive officers, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to any securities of the Company (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations). 10. SOURCE AND AMOUNT OF FUNDS. Assuming that the Company purchases 1,000,000 Shares pursuant to the Offer at the maximum specified purchase price of $4.00 per Share, the Company expects the maximum aggregate cost, including all fees and expenses applicable to the Offer, to be approximately $4,050,000. The Company anticipates that the funds necessary to pay such amounts will be provided through borrowings under its operating line-of-credit with Bridgeview Bank and Trust (the "Line-of-Credit") or from cash held by the Company. The Line-of-Credit (i) has a limit of $7.0 million (ii) is collateralized by a security interest in certain of the Company's assets, including its interest in various joint ventures; (iii) bears interest at an annual rate equal to the lending bank's base rate plus 1/2% (with a minimum interest rate of 7.5%); and (iv) matures October 15, 1999. At April 27, 1999, the Company had approximately $300,000 outstanding under its Line-of-Credit. A copy of the Line-of-Credit has been filed with the Commission as an exhibit to the Company's Schedule 13E-4 which was filed in connection with this Offer. The Company expects to repay indebtedness incurred under the Line-of-Credit as a result of the Offer through cash flow from operations and/or future borrowings. 11. CERTAIN INFORMATION ABOUT THE COMPANY. The Company is engaged in the development and construction of AmeriHost Inn(R) hotels, its proprietary hotel brand, and the ownership, operation and management of both AmeriHost Inn(R) hotels and other hotels. The AmeriHost Inn(R) brand was created by the Company to provide for the consistent, cost-effective development and operation of mid-price hotels in various markets. All AmeriHost Inn(R) hotels are designed and developed using the Company's 60 to 120 room, interior corridor and indoor pool prototype design and are located in tertiary and secondary markets. As of December 31, 1998, the Company owned, operated or managed 91 hotels located in 18 states. Of these hotels, 75 hotels are operated or managed under the Company's proprietary brand, the AmeriHost Inn(R). Of the 91 hotels, the Company owns a 100% or majority ownership interest in 69 hotels and a minority equity interest, ranging from 10% to 50%, in 16 hotels. Of the 85 hotels in which the Company has an ownership interest, 72 are AmeriHost Inn(R) hotels and 13 are other brands, which in most cases were acquired, renovated and repositioned in their respective marketplaces between 1987 and 1993. The majority of the other brand hotels are franchised through Days Inn, Hampton Inn, Holiday Inn and Ramada Inn. The Company also managed six hotels at December 31, 1998 for unaffiliated third parties whereby the Company has no ownership interest. Three of the six managed hotels operate as AmeriHost Inn(R) hotels. As of December 31, 1998, an additional six AmeriHost Inn(R) hotels were under construction. The Company has 100% ownership in five of these hotels, and a minority ownership interest in one. The principal executive office of the Company is located at 2400 East Devon Avenue, Suite 280, Des Plaines, Illinois 60018. SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION HISTORICAL FINANCIAL INFORMATION. The following summary historical consolidated financial information of the Company and its subsidiaries (other than the ratios of earnings to fixed charges) as of and for fiscal years 1997 and 1998 has been derived from, and should be read in conjunction with, and is qualified in its entirety by reference to, the audited consolidated financial statements of the Company as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 which is incorporated herein by reference. Copies of such Annual Report may be inspected or obtained from the Commission in the manner specified in "-- Additional Information" below. The following summary unaudited pro forma consolidated financial information for the year ended December 31, 1998 gives effect to the purchase of the Shares pursuant to the Offer, based on certain assumptions described in the Notes to the Summary Historical and Unaudited Pro Forma Consolidated Financial Information, as if the purchase had occurred on January 1, 1998 (with respect to the statement of operations data and other data) and on December 31, 1998 (with respect to the balance sheet data). The summary unaudited pro forma consolidated financial information should be read in conjunction with the summary historical consolidated financial information and does not purport to be indicative of results that would actually have been obtained, or results that may be obtained in the future, or the financial condition that would have resulted had the purchase of the Shares pursuant to the Offer been completed at the dates indicated. Fiscal Year Ended December 31, --------------------------------------------------------- Actual Unaudited Pro Forma(1) ------ ---------------------- Assumed $3.375 Assumed Purchase Price $4.00 Purchase Price 1997 1998 1998 1998 ---- ---- ---- ---- (in thousands, except per share data) STATEMENT OF OPERATIONS DATA: Revenue $ 62,666 $ 68,618 $ 68,618 $ 68,618 Operating costs and expenses 52,285 54,286 54,286 54,286 Depreciation and amortization expense 4,532 5,487 5,487 5,487 Leasehold rents - hotels 1,729 4,192 4,192 4,192 Corporate general and administrative 2,140 1,569 1,569 1,569 Operating income (loss) 1,980 3,084 3,084 3,084 Interest expense, net 3,299 5,592 5,875 5,926 Loss, before extraordinary item and cumulative effect of change in accounting principle(2) $ (966) $ (1,167) $ (1,337) $ (1,368) ========= ========= ========= ========= Net loss $ (966) $ (2,796) $ (2,966) $ (2,996) ========= ========= ========= ========= Loss per share, before extraordinary item and cumulative effect of change in accounting principle(2) Basic $ (0.15) $ (0.19) $ (0.26) $ (0.26) ========= ========= ========= ========= Diluted $ (0.19) $ (0.20) $ (0.27) $ (0.28) ========= ========= ========= ========= Earnings (loss) per share: Basic $ (0.15) $ (0.45) $ (0.57) $ (0.58) ========= ========= ========= ========= Diluted $ (0.19) $ (0.45) $ (0.57) $ (0.58) ========= ========= ========= ========= Weighted average shares outstanding: Basic 6,283 6,180 5,180 5,180 ========= ========= ========= ========= Diluted 6,659 6,513 5,513 5,513 ========= ========= ========= ========= Ratio of earnings to fixed charges (3) 0.59 0.66 0.63 0.63 Fiscal Year Ended December 31, --------------------------------------------------------- Actual Unaudited Pro Forma(1) ------ ---------------------- Assumed $3.375 Assumed Purchase Price $4.00 Purchase Price 1997 1998 1998 1998 ---- ---- ---- ---- (in thousands, except per share data) BALANCE SHEET DATA: Total assets $ 92,668 $ 115,281 $ 115,394 $ 115,415 Line-of-Credit 1,290 1,961 5,386 6,011 Long-term debt, including current portion 60,235 71,841 71,841 71,841 Working capital (2,208) (6,924) (10,518) (11,174) Stockholders' equity 21,593 18,316 14,721 14,066 Book value per share (4) 3.48 3.01 2.89 2.76 OTHER DATA: EBITDA (5) $ 6,023 $ 12,790 $ 12,790 $ 12,790 Cash provided by operating activities 1,858 5,408 5,239 5,208 Cash provided by (used in) investing activities (28,463) 15,555 15,555 15,555 Cash (used in) provided by financing activities 25,926 (18,819) (18,819) (18,819) _____________________ Notes to Summary Historical and Unaudited Pro Forma Consolidated Financial Information (1) The unaudited pro forma consolidated financial information assumes a total of 1,000,000 shares of common stock are purchased at $3.375 per share and $4.00 per share with the total purchase price amounts of $3,425,000 and $4,050,000 (both amounts inclusive of expenses of the Offer) being initially financed with borrowings under the Company's Line-of-Credit. The assumed interest rate used in the unaudited pro forma consolidated financial information was 8.25%. Expenses directly related to the Offer were assumed to be $50,000 and were charged against additional paid-in capital. The unaudited pro forma consolidated financial information gives effect to the tax expense or benefit of all applicable adjustments, as described above, at an incremental rate of 40%. (2) The Company recorded an extraordinary item of $333,000 in 1998, net of income taxes, relating to the early extinguishment of mortgage debt on hotels sold in connection with a sale/leaseback transaction. The Company recorded a cumulative effect of a change in accounting principle of $1,296,000 in 1998, net of income taxes, relating to the adoption of Statement of Position No. 98-5, "Reporting on the Costs of Start-up Activities." (3) For purposes of the ratio of earnings to fixed charges computation, earnings are defined as income before income taxes, extraordinary items, the cumulative effect of a change in accounting principle, minority interests and operations of consolidated subsidiaries and partnerships, equity and net income and losses of affiliates, and fixed charges, less capitalized interest. Fixed charges include interest expensed and capitalized. The amount by which earnings were insufficient to cover fixed charges was $1,908,000 and $2,151,000 for the fiscal years ended December 31, 1997 and 1998 on an actual basis, respectively and $2,434,000 and $2,485,000 for the fiscal year ended December 31, 1998 on a pro forma basis, assuming a $3.375 purchase price and a $4.00 purchase price, respectively. (4) Book value per share is calculated as total stockholders' equity divided by the number of Shares outstanding at the end of the period. (5) EBITDA is not defined by generally accepted accounting principles ("GAAP"), however the Company believes it provides relevant information about its operations and is necessary for an understanding of the Company's operations, given its significant investment in real estate. EBITDA should not be considered as an alternative to operating income (as determined in accordance with GAAP) as an indicator of the Company's operating performance or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. EBITDA is defined as net income, adjusted to eliminate the impact of (i) interest expense; (ii) interest and other income; (iii) leasehold rents for hotels, which the Company considers to be financing costs similar to interest; (iv) income tax expense (benefit); (v) depreciation and amortization; and (vi) gains or losses from property transactions. EBITDA for 1997, when calculated to exclude non-recurring charges for costs associated with contractual terminations and costs incurred in connection with a potential merger or acquisition which was not consummated, would have been approximately $7.9 million.
ADDITIONAL INFORMATION. The Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; at its regional offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material may also be obtained by mail, upon payment of the Commission's customary charges, from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web site on the World Wide Web at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission (which the Company does). Reports, proxy statements and other information concerning the Company also can be inspected at the offices of the Nasdaq National Market, 1735 K Street N.W., Washington, D.C. 20006-1500, on which the Shares are listed. 12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT. The Company's purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and is likely to reduce the number of stockholders. Nonetheless, the Company believes that there will still be a sufficient number of Shares outstanding and publicly traded following the Offer to ensure a continued trading market in the Shares. Based on the published guidelines of the Nasdaq, the Company does not believe that its purchase of Shares pursuant to the Offer will cause its remaining Shares to be delisted from Nasdaq. The Shares are registered under the Exchange Act, which requires, among other things, that the Company furnish certain information to its stockholders and to the Commission and comply with the Commission's proxy rules in connection with meetings of the Company's stockholders. The Company believes that its purchase of Shares pursuant to the Offer will not result in the Shares becoming eligible for deregistration under the Exchange Act. The Shares are currently "margin securities" under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. The Company believes that, following the purchase of Shares pursuant to the Offer, the Shares will continue to be "margin securities" for purposes of the Federal Reserve Board's margin regulations. 13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. The Company is not aware of any license or regulatory permit material to its business that might be adversely affected by its acquisition of Shares as contemplated in the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the Company's acquisition or ownership of Shares as contemplated by the Offer. Should any such approval or other action be required, the Company currently contemplates that it would seek such approval or other action. The Company cannot predict whether it may determine that it is required to delay the acceptance for payment of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Company's business. The Company's obligations under the Offer to accept for payment and pay for Shares are subject to certain conditions. See Section 6. 14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general summary of the material U.S. federal income tax consequences of the exchange of Shares for cash pursuant to the Offer. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, Treasury Regulations thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all the tax consequences that may be relevant to a particular stockholder in light of the stockholder's particular circumstances and it is not intended to be applicable in all respects to all categories of stockholders, some of whom--such as insurance companies, tax-exempt persons, financial institutions, regulated investment companies, dealers in securities or currencies, persons that hold Shares as a position in a "straddle" or as part of a "hedge," "conversion transaction" or other integrated investment, persons who received Shares as compensation or persons whose functional currency is other than United States dollars--may be subject to different rules not discussed below. In addition, this summary does not address any state, local or foreign tax considerations that may be relevant to a stockholder's decision to tender Shares pursuant to the Offer. This summary discusses only Shares held as capital assets within the meaning of Section 1221 of the Code. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL CONSEQUENCES OF PARTICIPATING IN THE OFFER, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER JURISDICTION. DIVIDEND V. SALE TREATMENT. If an exchange of Shares for cash pursuant to the Offer is treated as a sale because a stockholder meets any of the tests discussed below, the stockholder will recognize gain or loss on the exchange in an amount equal to the difference between the amount of cash received by the stockholder and such stockholder's tax basis in the Shares exchanged. Such gain or loss will be a capital gain or loss and will be long-term capital gain or loss if the Shares were held more than one year. Calculation of gain or loss must be made separately for each block of Shares owned by a stockholder. Under the tax laws, a stockholder may be able to designate which blocks and the order of such blocks of Shares to be tendered pursuant to the Offer. If a stockholder's exchange of Shares for cash pursuant to the Offer satisfies none of the tests discussed below, the receipt of cash by the stockholder will be treated as a distribution from the Company and will be taxed to the stockholder as ordinary dividend income provided the Company has sufficient current and accumulated earnings and profits. If the exchange is treated as a dividend, the tax basis of a stockholder's Shares which are exchanged for cash pursuant to the Offer is added to the tax basis of the remaining Shares of common stock of the Company which the stockholder actually or constructively owns and cannot be used to offset such stockholder's dividend income from the transaction. SALE TREATMENT FOR THE PURCHASE OF SHARES FOR CASH PURSUANT TO THE OFFER. An exchange of Shares for cash will be treated as a sale of Shares by the exchanging stockholder provided that at least one of the following tests is met: (i) as a result of the exchange the stockholder's equity interest in the Company is completely terminated (a "complete termination"); (ii) the receipt of cash in exchange for the stockholder's Shares is "not essentially equivalent to a dividend"; or (iii) as a result of the exchange there is a "substantially disproportionate" reduction in the stockholder's equity interest in the Company. In applying the foregoing tests, the constructive ownership rules of Section 318 of the Code apply. Thus a stockholder generally takes into account Shares actually owned by the stockholder as well as Shares actually (and in some cases constructively) owned by others, but which the stockholder is treated as owning by reason of the application of the constructive ownership rules. Pursuant to the constructive ownership rules, a stockholder will be considered to own those Shares owned, directly or indirectly, by certain members of the stockholder's family and certain related entities (such as corporations, partnerships, trusts and estates) in which the stockholder has an interest, as well as Shares which the stockholder has an option to purchase. Under certain circumstances, however, a stockholder may avoid the constructive ownership of Shares owned by family members solely for the purpose of determining whether the "complete termination" of interest test referred to above has been satisfied if (i) the stockholder does not actually own any Shares after the purchase by the Company, and (ii) in accordance with Section 302(c)(2) of the Code, the stockholder files an effective waiver with the Internal Revenue Service ("IRS"). If a stockholder desires to file such a waiver, the stockholder should consult his or her own tax advisor. Complete Termination. A sale of shares pursuant to the Offer will be deemed to result in a "complete termination" of the stockholder's interest in the Company if, immediately after the sale, either: (i) the stockholder owns, actually and constructively, no Shares of the Company's common stock; or (ii) the stockholder actually owns no Shares of the Company's common stock and constructively owns only Shares of the Company's common stock as to which the stockholder is eligible to waive, and does effectively waive, such constructive ownership under the procedures described in Section 302(c)(2) of the Code, as discussed above. Not Essentially Equivalent to a Dividend. Even if a stockholder's receipt of cash in exchange for Shares pursuant to the Offer fails to meet the "complete termination" test, the stockholder may nevertheless meet the "not essentially equivalent to a dividend" test. Whether a stockholder meets this test will depend on his or her facts and circumstances. In any case, in order to satisfy this test, the stockholder's sale of Shares pursuant to the Offer must result in a "meaningful reduction" in his or her interest in the Company taking into account the constructive ownership rules of Section 318 of the Code referred to above. The IRS has held in a public ruling that, under the particular facts of that ruling, a 3.3% reduction in the percentage stock ownership of a stockholder constituted a "meaningful reduction" when the stockholder owned .0001118% of the publicly-held corporation's stock before a redemption, owned .0001081% of the corporation's stock after the redemption, and did not exercise any control over corporate affairs. In that ruling, the IRS applied the meaningful reduction standard to three important rights attributable to stock ownership: (1) the right to vote and thereby exercise control; (2) the right to participate in current earnings and accumulated surplus; and (3) the right to share in net assets on liquidation. In measuring the change, if any, in a stockholder's proportionate interest in the Company, the meaningful reduction test is applied by taking into account all Shares that the Company purchases pursuant to the Offer, including Shares purchased from other stockholders. If, taking into account the constructive ownership rules of Section 318 of the Code referred to above, a stockholder owns Shares that constitute only a minimal interest in the Company and does not exercise any control over the affairs of the Company, any reduction in the stockholder's percentage interest in all of the three rights described in the preceding sentence should be a "meaningful reduction." Such selling stockholder would, under these circumstances, be entitled to treat his or her sale of Shares to the Company pursuant to the Offer as a "sale or exchange" for U.S. federal income tax purposes. Substantially Disproportionate. Under Section 302(b)(2) of the Code, a sale of Shares pursuant to the Offer, in general, will be "substantially disproportionate" as to a stockholder if immediately after the sale: (a) The ratio of the outstanding voting stock of the Company that the stockholder then actually and constructively owns (treating as not outstanding all voting stock purchased by the Company pursuant to the Offer) is less than 80% of the ratio of the outstanding voting stock of the Company that the stockholder actually and constructively owned immediately before the sale of Shares (treating as outstanding all voting stock purchased by the Company pursuant to the Offer); and (b) the ratio of the fair market value of the outstanding common stock that the stockholder then actually and constructively owns (treating as not outstanding all common stock purchased by the Company pursuant to the Offer) is less than 80% of the ratio of the fair market value of the outstanding common stock that the stockholder actually and constructively owned immediately before the sale of Shares (treating as outstanding all common stock purchased by the Company pursuant to the Offer). CORPORATE DIVIDENDS-RECEIVED DEDUCTION. In the case of a corporate stockholder, if the cash paid is treated as a dividend, such dividend income may be eligible for the 70% dividends-received deduction. The dividends-received deduction is subject to certain limitations, and may not be available if the corporate stockholder does not satisfy certain holding period requirements set forth in Section 246 of the Code or if the Shares are treated as "debt financed portfolio stock" within the meaning of Section 246A(c) of the Code. Additionally, if a dividends-received deduction is available, the dividend may be treated as an "extraordinary dividend" under Section 1059(a) of the Code, in which case a corporate stockholder's adjusted tax basis in the Shares retained by such stockholder would be reduced, but not below zero, by the amount of the nontaxed portion of such dividend. Any amount of the nontaxed portion of the dividend in excess of the corporate stockholder's adjusted tax basis generally will be taxable. Corporate stockholders are urged to consult their own tax advisors as to the effect of Section 1059 of the Code on the adjusted tax basis of their Shares. OVER-SUBSCRIPTION OF THE OFFER. The Company cannot predict whether or the extent to which the Offer will be oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to the Offer will cause the Company to accept fewer Shares than are tendered. Consequently, the Company can give no assurance that a sufficient number of any stockholder's Shares will be purchased pursuant to the Offer to ensure that such purchase will be treated as a sale or exchange, rather than as a dividend, for federal income tax purposes pursuant to the rules discussed above. CONSEQUENCES TO STOCKHOLDERS WHO DO NOT TENDER PURSUANT TO THE OFFER. Stockholders who do not accept the Company's Offer to tender their Shares will not incur any tax liability as a result of the consummation of the Offer. BACKUP FEDERAL INCOME TAX WITHHOLDING. Payments in connection with the Offer may be subject to "backup withholding" at a 31% rate. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's social security number or other taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails to properly report to the IRS interest or dividends or (d) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's current number and that such stockholder is not subject to backup withholding. To prevent backup withholding each stockholder should complete the substitute IRS Form W-9 included in the Letter of Transmittal. Certain persons generally are exempt from backup withholding, including corporations, financial institutions and certain non-U.S. stockholders. In order to qualify for an exemption from backup withholding, a non-U.S. stockholder must submit a properly executed IRS Form W-8 to the Depositary. WITHHOLDING FOR NON-U.S. STOCKHOLDERS. Although a non-U.S. stockholder may be exempt from U.S. federal backup withholding, certain payments to the non-U.S. stockholders are subject to U.S. withholding tax at a rate of 30%. The Depositary will withhold the 30% tax from gross payments made to non-U.S. stockholders pursuant to the Offer unless the Depositary determines that a non-U.S. stockholder is either exempt from the withholding or entitled to a reduced withholding rate under an income tax treaty. For purposes of this discussion, a "non-U.S. stockholder" means a stockholder who is not (a) a citizen or resident of the United States, (b) a corporation, partnership or other entity created or organized under the laws of the United States or of any State or political subdivision of the foregoing, (c) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (d) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. trustees have the authority to control all substantial decisions of the trust. A non-U.S. stockholder will not be subject to the withholding tax if the payment from the Company is effectively connected with the conduct of a trade or business in the United States by such non-U.S. stockholder (and, if certain tax treaties apply, is attributable to a United States permanent establishment maintained by such non-U.S. stockholder) and the non-U.S. stockholder has furnished the Depositary with a properly executed IRS Form 4224 prior to the time of payment. A non-U.S. stockholder who is eligible for a reduced rate of withholding pursuant to a U.S. income tax treaty must certify such to the Depositary by providing to the Depositary a properly executed IRS Form 1001 prior to the time payment is made. A non-U.S. stockholder may be eligible to obtain from the IRS a refund of tax withheld if such non-U.S. stockholder is able to establish that no tax (or a reduced amount of tax) is due. THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF EXCHANGING SHARES FOR CASH PURSUANT TO THE OFFER IN LIGHT OF HIS OR HER OWN PARTICULAR CIRCUMSTANCES. 15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS. The Company expressly reserves the right, in its sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 6 shall have occurred or shall be deemed by the Company to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Shares by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. The Company also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for Shares, upon the occurrence of any of the conditions specified in Section 6 hereof by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement thereof. Additionally, in certain circumstances, if the Company waives any of the conditions of the Offer set forth in Section 6, it may be required to extend the Expiration Date of the Offer. The Company's reservation of the right to delay payment for Shares that it has accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that the Company must pay the consideration offered or return the Shares tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, the Company further reserves the right, in its sole discretion, and regardless of whether any of the events set forth in Section 6 shall have occurred or shall be deemed by the Company to have occurred, to amend the Offer in any respect (including, without limitation, by decreasing or increasing the consideration offered in the Offer to holders of Shares or by decreasing or increasing the number of Shares being sought in the Offer). Amendments to the Offer may be made at any time and from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., New York City Time, on the next business day after the last previously scheduled or announced Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to stockholders in a manner reasonably designed to inform stockholders of such change. Without limiting the manner in which the Company may choose to make any public announcement, except as provided by applicable law (including Rule 13e-4(e)(2) promulgated under the Exchange Act), the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If the Company makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act, which require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or a change in percentage of securities sought) will depend upon the facts and circumstances, including the relative materiality of such terms or information. If (i) the Company increases or decreases the price to be paid for Shares, increases the number of Shares being sought and such increase in the number of Shares being sought exceeds 2% of the outstanding Shares, or decreases the number of Shares being sought, and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date notice of such increase or decrease is first published, sent or given, the Offer will be extended until the expiration of such period of ten business days. 16. FEES AND EXPENSES. The Company has retained Harris Trust and Savings Bank as Depositary in connection with the Offer. The Depositary will receive reasonable and customary compensation for its services. The Company will also reimburse the Depositary for out-of-pocket expenses, including reasonable attorneys' fees, and has agreed to indemnify the Depositary against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. The Company may contact stockholders by mail, telephone, telex, telegraph and personal interviews, and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners. The Depositary has not been retained to make solicitations or recommendations in connection with the Offer. The Company will not pay fees or commissions to any broker, dealer, commercial bank, trust company or other person for soliciting any Shares pursuant to the Offer. The Company will, however, on request, reimburse such persons for customary handling and mailing expenses incurred in forwarding materials in respect of the Offer to the beneficial owners for which they act as nominees. No such broker, dealer, commercial bank or trust company has been authorized to act as the Company's agent for purposes of the Offer. The Company will pay (or cause to be paid) any stock transfer taxes on its purchase of Shares, except as otherwise provided in Instruction 7 of the Letter of Transmittal. 17. MISCELLANEOUS. The Company is not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If the Company becomes aware of any jurisdiction where the making of the Offer is not in compliance with any valid applicable law, the Company will make a good faith effort to comply with such law. If, after such good faith effort, the Company cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. In any jurisdiction the securities or blue sky laws of which require the Offer to be made by a licensed broker or dealer, the Offer is being made on the Company's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") which contains additional information with respect to the Offer. The Schedule 13E-4, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, at the same places and in the same manner as is set forth in Section 11 with respect to information concerning the Company. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. AMERIHOST PROPERTIES, INC. May 3, 1999 Schedule I Certain Transactions Involving Shares Based on the Company's records and information provided to the Company by its directors, executive officers, associates and subsidiaries, other than as set forth below, neither the Company nor any of its associates or subsidiaries or persons controlling the Company nor, to the best of the Company's knowledge, any of the directors or executive officers of the Company, nor any associates or subsidiaries of such directors or executive officers, has effected any transactions in the Shares during the 40 business days prior to the date hereof. o Company purchases:
Date of Purchase Shares Purchased Price per Share Nature of Transaction ---------------- ---------------- --------------- --------------------- March 10, 1999 1,000 $3.125 Open market transaction March 12, 1999 1,000 3.3125 Open market transaction March 15, 1999 1,600 3.25 Open market transaction March 16, 1999 1,600 3.1875 Open market transaction March 30, 1999 1,500 3.3125 Open market transaction April 1, 1999 1,500 3.21875 Open market transaction April 1, 1999 18,518 2.75 Private transaction April 14, 1999 1,600 3.25 Open market transaction April 16, 1999 1,600 3.625 Open market transaction April 19, 1999 1,600 3.3475 Open market transaction April 21, 1999 1,600 3.4375 Open market transaction April 22, 1999 1,600 3.4375 Open market transaction
o On April 1, 1999, Salomon Dayan, a director of the Company, acquired an aggregate of 12,000 Shares in the open market. Dr. Dayan paid a purchase price of $2.875 per share for 2,000 of such Shares and $3.1875 for the remaining 10,000 such Shares. Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for the Shares and any other required documents should be sent or delivered by each stockholder or such stockholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary at its address set forth below: The Depositary for the Offer is: HARRIS TRUST AND SAVINGS BANK: By Hand or Overnight Delivery: By Facsimile Transmission (Eligible Institution Only): (212) 701-7636 Harris Trust and Savings Bank c/o Harris Trust Company Confirm Receipt of Facsimile by of New York Telephone: Wall Street Plaza (212) 701-7624 88 Pine Street, 19th Floor New York, New York 10005 For Information Call: (800) 245-7630 By Registered or Certified Mail: Harris Trust and Savings Bank c/o Harris Trust Company of New York P.O. Box 1010 Wall Street Station New York, New York 10268-1010 Any questions or requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Company, at the telephone number and address below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. Amerihost Properties, Inc. 2400 East Devon Avenue, Suite 280 Des Plaines, Illinois 60018 (847) 298-4500 Please Direct Inquiries To: Michael P. Holtz James B. Dale Craig S. Arnson EX-99.(A)(2) 3 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF AMERIHOST PROPERTIES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 3, 1999 THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999 UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: HARRIS TRUST AND SAVINGS BANK: By Hand or Overnight Delivery: By Facsimile Transmission (Eligible Institution Only): (212) 701-7636 Harris Trust and Savings Bank c/o Harris Trust Company Confirm Receipt of Facsimile by of New York Telephone: Wall Street Plaza (212) 701-7624 88 Pine Street, 19th Floor For Information Call: New York, New York 10005 (800) 245-7630 By Registered or Certified Mail: Harris Trust and Savings Bank c/o Harris Trust Company of New York P.O. Box 1010 Wall Street Station New York, New York 10268-1010 DELIVERY OF THIS INSTRUMENT AND ALL OTHER DOCUMENTS TO ANY ADDRESS OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY. THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed only if (a) certificates for Shares (as defined below) are being forwarded herewith or (b) a tender of Shares is being made concurrently by book-entry transfer to the account maintained by Harris Trust and Savings Bank (the "Depositary") at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to Section 3 of the Offer to Purchase. Stockholders who cannot deliver the certificates for their Shares to the Depositary prior to the Expiration Date (as defined in the Offer to Purchase) or who cannot complete the procedure for book-entry transfer on a timely basis or who cannot deliver a Letter of Transmittal and all other required documents to the Depositary prior to the Expiration Date (as defined below) must, in each case, tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase (as defined below). See Instruction 2. Stockholders who cannot deliver their Share certificates and any other required documents to the Depositary by the Expiration Date (as defined in the Offer to Purchase) must tender their Shares using the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. - -------------------------------------------------------------------------------- NAME(S) AND ADDRESSES OF REGISTERED HOLDER(S) (Please fill in, if blank, exactly as name(s) appear(s) on Share certificate(s)) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED (See Instructions 3 and 4) - -------------------------------------------------------------------------------- SHARES TENDERED (ATTACHED ADDITIONAL SIGNED LIST IF NECESSARY) - -------------------------------------------------------------------------------- SHARE CERTIFICATE TOTAL NUMBER OF SHARES NUMBER NUMBER(S)* REPRESENTED BY CERTIFICATE(S)* OF SHARES TENDERED** - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - --------------------- -------------------------------- ------------------------- - ------------------------------------------------------ ------------------------- Total Shares Tendered..................... - -------------------------------------------------------------------------------- |_| Indicate in this box the order (by certificate number) in which Shares are to be purchased in event of proration. (Attach additional list if necessary.)*** See Instruction 9. Shares: 1st: _______2nd: ________3rd: _________4th: ________5th: ________ - -------------------------------------------------------------------------------- * DOES NOT need to be completed if Shares are tendered by book-entry transfer. ** If you desire to tender less than all Shares evidenced by any certificates listed above, please indicate in this column the number of Shares you wish to tender. Otherwise, all Shares evidenced by such certificates will be deemed to have been tendered. See Instruction 4. *** If you do not designate an order, in the event less than all Shares tendered are purchased due to proration, Shares will be selected for purchase by the Depositary. See Instruction 9. - -------------------------------------------------------------------------------- |_| CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED. NUMBER OF SHARES REPRESENTED BY LOST OR DESTROYED CERTIFICATES: ___________. TO PROPERLY TENDER SUCH SHARES IN THIS OFFER, YOU MUST RECEIVE A REPLACEMENT CERTIFICATE FOR SUCH SHARES AND DELIVER THAT CERTIFICATE TO THE DEPOSITARY. TO RECEIVE A REPLACEMENT CERTIFICATE, CALL THE COMPANY'S TRANSFER AGENT, AFFILIATED STOCK TRANSFER COMPANY, AT 516-759-6009. THIS BOX IS FOR USE BY ELIGIBLE INSTITUTIONS ONLY: - -------------------------------------------------------------------------------- |_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _______________________________________ DTC Account Number: ___________________________________________________ Transaction Code Number: ______________________________________________ |_| CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): _______________________________________ Date of Execution of Notice of Guaranteed Delivery: ___________________ Name of Institution that Guaranteed Delivery: _________________________ DTC Account Number: ______________________________ Transaction Code Number: _________________________ - -------------------------------------------------------------------------------- NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY To Harris Trust And Savings Bank: The undersigned hereby tenders to Amerihost Properties, Inc., a Delaware corporation (the "Company"), the above described shares of the Company's common stock, $.005 par value per share (the "Shares"), represented by the above described certificates for Shares at a price per Share indicated in this Letter of Transmittal, net to the seller in cash, upon the terms and subject to the conditions set forth in the Company's Offer to Purchase, dated May 3, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Subject to and effective upon acceptance for payment of the Shares tendered hereby in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to all the Shares that are being tendered hereby and orders the registration of all such Shares if tendered by book-entry transfer and hereby irrevocably constitutes and appoints the Depositary as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Depositary also acts as the agent of the Company) with respect to such Shares with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to: (i) deliver certificate(s) for such Shares or transfer ownership of such Shares on the account books maintained by the Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to, or upon the order of, the Company upon receipt by the Depositary, as the undersigned's agent, of the aggregate Purchase Price (as defined below) with respect to such Shares; (ii) present certificates for such Shares for cancellation and transfer on the Company's books; and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, subject to the next paragraph, all in accordance with the terms of the Offer. The undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and further represents and warrants to the Company that: (a) the undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer, including the undersigned's representation and warranty that: (i) the undersigned has a "net long position" in Shares or equivalent securities at least equal to the Shares tendered within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and (ii) such tender of Shares complies with Rule 14e-4 under the 1934 Act; (b) when and to the extent the Company accepts such Shares for purchase, the Company will acquire good, marketable and unencumbered title to them, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents the Depositary or the Company deems necessary or desirable to complete the assignment, transfer and purchase of the Shares tendered hereby; (d) the undersigned has read and agrees to all of the terms of the Offer; and (e) the Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the undersigned and the Company upon terms and subject to the conditions of the Offer. All authorities conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy, and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The name(s) and address(es) of the registered holder(s) should be printed above, if they are not already printed above, exactly as they appear on the certificates representing Shares tendered hereby. The certificate numbers, the number of Shares represented by such certificates and the number of Shares that the undersigned wishes to tender, should be set forth in the appropriate boxes above. Any order (by certificate number) in which the tendered Shares must be purchased should also be indicated above. The price at which Shares are being tendered should be indicated in the boxes below. The undersigned understands that the Company will, upon the terms and subject to the conditions of the Offer, determine a single per Share price for the Shares, such price to be not greater than $4.00 nor less than $3.375 per share, net to the seller in cash, without interest thereon (the "Purchase Price"), that it will pay for Shares properly tendered and not withdrawn prior to the Expiration Date pursuant to the Offer, taking into account the number of Shares so tendered and the prices (in multiples of $.125) specified by tendering stockholders. The undersigned understands that the Company will select the lowest Purchase Price for the Shares that will allow it to buy 1,000,000 Shares, or such lesser number of Shares as are properly tendered, at prices not greater than $4.00 nor less than $3.375 per Share, pursuant to the Offer. The undersigned understands that (i) all Shares properly tendered at prices at or below the Purchase Price and not properly withdrawn prior to the Expiration Date will be purchased at such Purchase Price, net to the Seller in cash, upon the terms and subject to the conditions of the Offer, including its proration provisions, and (ii) the Company will return all other Shares not purchased pursuant to the Offer, including Shares tendered at prices greater than the applicable Purchase Price and Shares not purchased because of proration. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, the Company may terminate or amend the Offer or may postpone the acceptance for payment of, or the payment for, Shares tendered or may accept for payment less than all of the Shares tendered hereby. In any such event, the undersigned understands that certificate(s) for any Shares delivered herewith but not tendered or not purchased will be returned to the undersigned at the address indicated above, unless otherwise indicated under the "Special Payment Instructions" or "Special Delivery Instructions" boxes below. The undersigned recognizes that the Company has no obligation, pursuant to the Special Payment Instructions, to transfer any certificate for Shares from the name of its registered holder, or to order the registration or transfer of Shares tendered by book-entry transfer, if the Company purchases none of the Shares represented by such certificate or tendered by such book-entry transfer. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the Purchase Price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the Purchase Price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the Purchase Price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail such check and/or any certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder(s) thereof if the Company does not accept for payment any of the Shares so tendered. IMPORTANT: STOCKHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR SHARES TENDERED. PRICE SELECTION FOR SHARES - -------------------------------------------------------------------------------- PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED (SEE INSTRUCTION 5) ================================================================================ CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES (STOCKHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED.) ================================================================================ SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION: |_| The undersigned wants to maximize the chance of having Amerihost Properties, Inc. purchase all Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this box instead of one of the prices below, the undersigned hereby tenders Shares and is willing to accept the Purchase Price resulting from the Dutch Auction tender process. This action will result in receiving a price per Share as low as $3.375 or as high as $4.00. OR SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER: By checking ONE of the boxes below instead of the box above, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. A STOCKHOLDER WHO DESIRES TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED. THE SAME SHARES CANNOT BE TENDERED AT MORE THAN ONE PRICE. PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED: |_| $3.375 |_| $3.75 |_| $3.50 |_| $3.875 |_| $3.625 |_| $4.00 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ODD LOTS (SEE INSTRUCTION 8) To be completed ONLY if the Shares are being tendered by or on behalf of a person owning beneficially an aggregate of less than 100 Shares. The undersigned either (check one box): |_| is the beneficial owner of an aggregate of less than 100 Shares, all which Shares are being tendered; or |_| is a broker, dealer, commercial bank, trust company, or other nominee that (i) is tendering for the beneficial owner(s) thereof, Shares with respect to which it is the record holder, and (ii) believes, based upon representations made to it by such beneficial owner(s), that each such person is the beneficial owner of an aggregate of less than 100 Shares and is tendering all of such Shares. NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. - -------------------------------------------------------------------------------- - --------------------------------------------------------- ------------------------------------------------------- SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6, 7 AND 10) (SEE INSTRUCTIONS 1, 4, 6, 7 AND 10) To be completed ONLY if certificates To be completed ONLY if certificates for Shares not tendered or not purchased for Shares not tendered or not purchased and/or any check for the aggregate Purchase and/or any check for the Purchase Price of Price of Shares purchased are to be issued in Shares purchased, issued in the name of the the name of and sent to someone other than undersigned, are to be mailed to someone the undersigned. other than the undersigned or to the undersigned at an address other than that shown above. Issue: Mail: |_| Check to: |_| Certificates to: |_| Check to: |_| Certificates to: Name(s):__________________________________________ (Please Print) Name(s):_______________________________________________ (Please Print) Address:__________________________________________ __________________________________________________ Address:_______________________________________________ __________________________________________________ _______________________________________________________ (Include Zip Code) _______________________________________________________ (Include Zip Code) _______________________________________________________ (Taxpayer Identification or Social Security Number) - --------------------------------------------------------- -------------------------------------------------------
- -------------------------------------------------------------------------------- PLEASE SIGN HERE (TO BE COMPLETED BY ALL STOCKHOLDERS) (PLEASE ALSO COMPLETE AND RETURN THE ENCLOSED SUBSTITUTE FORM W-9) (Must be signed by the registered holder(s) exactly as name(s) appear(s) on certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 6.) > _______________________________________________________________________ < > _______________________________________________________________________ < SIGNATURES OF OWNER(S) Dated: _______________, 1999 Name(s): _____________________________________________________________________ (Please Print) Capacity (Full Title): _______________________________________________________ Address: _____________________________________________________________________ (Include Zip Code) Area Code and Telephone No.: _________________________________________________ Taxpayer Identification or Social Security No.: ______________________________ (See substitute Form W-9) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 6) Name of Firm: ________________________________________________________________ Authorized Signature: ________________________________________________________ Name: ________________________________________________________________________ (Please Print) Title: _______________________________________________________________________ Address: _____________________________________________________________________ (Include Zip Code) Area Code and Telephone Number: ______________________________________________ Dated: ___________________, 1999 - -------------------------------------------------------------------------------- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including commercial banks, savings and loan associations, and brokerage houses) that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Agreement") (an "Eligible Institution") unless: (i) this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) exactly as the name of the registered holder appears on the certificate tendered with this Letter of Transmittal and payment and delivery are to be made directly to such owner, unless such holder(s) has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" included herein; or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instructions 6 and 10. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be used only if certificates for Shares are delivered with it to the Depositary (or such certificates will be delivered pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary) or if a tender for Shares is being made concurrently pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. The Depositary must receive (a) a properly completed and duly executed Letter of Transmittal or a facsimile thereof in accordance with the instructions of the Letter of Transmittal, including any required signature guarantees, certificates, and any other documents required by the Letter of Transmittal, on or prior to the Expiration Date at one of its addresses set forth on the back cover of the Offer to Purchase, (b) such Shares delivered pursuant to the procedures for book-entry transfer described in Section 3 of the Offer to Purchase (and a confirmation of such delivery is received by the Depositary, including an Agent's Message, if the tendering stockholder has not delivered a Letter of Transmittal) or (c) such Shares validly tendered through the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP"), prior to the Expiration Date. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by the Depositary and forming a part of the Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase), which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Company may enforce such agreement against the participant. If certificates are to be forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Participants in the Book-Entry Transfer Facility may tender their Shares in accordance with ATOP, to the extent it is available to such participants for the Shares they wish to tender. A stockholder tendering through ATOP must expressly acknowledge that the stockholder has reviewed and agreed to be bound by the Letter of Transmittal and that the Letter of Transmittal may be enforced against such stockholder. Stockholders whose certificates are not immediately available or who cannot deliver certificates for their Shares and all other required documents to the Depositary before the Expiration Date, or whose Shares cannot be delivered on a timely basis pursuant to the procedures for book-entry transfer, must, in any case, tender their Shares by or through any Eligible Institution by properly completing and duly executing and delivering a Notice of Guaranteed Delivery (or facsimile of it) and by otherwise complying with the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Company (with any required signature guarantees) must be received by the Depositary prior to the Expiration Date, and (c) certificates for all physically delivered Shares in proper form for transfer by delivery, or in the case of Shares by confirmation of a book-entry transfer, into Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, in each case together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees (or, in the case of book-entry transfer an Agent's Message or, in the case of a tender through ATOP, the specified acknowledgment), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three NASDAQ trading days after receipt by the Depositary of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a signature guarantee by an Eligible Institution in the form set forth in such Notice. For Shares to be tendered validly pursuant to the guaranteed delivery procedure, the Depositary must receive the Notice of Guaranteed Delivery on or before the Expiration Date. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY. The Company will not accept any alternative, conditional or contingent tenders, nor will it purchase any fractional Shares, except as expressly provided in the Offer to Purchase. All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile of it), waive any right to receive any notice of the acceptance of their tender. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 3. INADEQUATE SPACE. If the space provided in the boxes captioned "Description of Shares Tendered" is inadequate, then the certificate numbers and/or the number of Shares should be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to stockholders who tender by book-entry transfer.) If less than all of the Shares evidenced by any certificate are to be tendered, fill in the number of Shares that are to be tendered in the column entitled "Number of Shares Tendered," in the box captioned "Description of Shares Tendered." In such case, if any tendered Shares are purchased, a new certificate for the remainder of the Shares (including any Shares not purchased) evidenced by the old certificate(s) will be issued and sent to the registered holder(s), unless otherwise specified in either the "Special Payment Instructions" or "Special Delivery Instructions" box on this Letter of Transmittal, as soon as practicable after the Expiration Date. Unless otherwise indicated, all Shares represented by the certificates(s) listed and delivered to the Depositary will be deemed to have been tendered. 5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be properly tendered, the stockholder MUST check either the box under "Shares Tendered at Price Determined by Dutch Auction" or one of the boxes under "Shares Tendered at Price Determined by Stockholder," indicating the price per Share at which he or she is tendering Shares all under "Price (In Dollars) Per Share at Which Shares Are Being Tendered" on this Letter of Transmittal (the "Price Selection"). TO PROPERLY TENDER SHARES, A STOCKHOLDER MUST COMPLETE THE PRICE SELECTION. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THEN THERE IS NO PROPER TENDER OF SHARES. A STOCKHOLDER WISHING TO TENDER PORTIONS OF HIS OR HER SHARE HOLDINGS AT DIFFERENT PRICES MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL (AND, IF APPLICABLE, A SEPARATE NOTICE OF GUARANTEED DELIVERY) FOR EACH PRICE AT WHICH HE OR SHE WISHES TO TENDER EACH SUCH PORTION OF HIS OR HER SHARES. THE SAME SHARES CANNOT BE TENDERED (UNLESS PREVIOUSLY PROPERLY WITHDRAWN AS PROVIDED IN SECTION 4 OF THE OFFER TO PURCHASE) AT MORE THAN ONE PRICE. 6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. (a) If this Letter if Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without any change whatsoever. (b) If any tendered Shares are registered in the names of two or more joint holders, each such holder must sign this Letter of Transmittal. (c) If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles of it) as there are different registrations of certificates. (d) When this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsement(s) of certificate(s) representing such Shares or separate stock power(s) are required unless payment is to the made or the certificate(s) for the Shares not tendered or not purchased are to be issued to a person other than the registered holder(s). If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, or if payment is to be made or certificate(s) not tendered or not purchased are to be issued to a person other than the registered holder(s), the certificate(s) must be endorsed or accompanied by appropriate stock power(s), in either case signed exactly as the name(s) of the registered holder(s) appears on the certificate(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. See Instruction 1. (e) If this Letter of Transmittal or any certificate(s) or stock powers(s) are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Company of their authority to so act. 7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock transfer tax stamps or funds to cover such stamps need accompany this Letter of Transmittal. The Company will pay or cause to be paid any stock transfer taxes payable on the transfer to it of Shares purchased pursuant to the Offer. If, however: (a) payment of the aggregate Purchase Price for Shares tendered hereby and accepted for purchase is to be made to any person other than the registered holder(s); (b) certificates not tendered or not accepted for purchase are to be registered in the name(s) of any person(s) other than the registered holder(s); or (c) tendered certificates are registered in the name(s) of any person(s) other than the person(s) signing this Letter of Transmittal; then the Depositary will deduct from such aggregate Purchase Price the amount of any stock transfer taxes (whether imposed on the registered holder, such other person or otherwise) payable on account of the transfer to such person, unless satisfactory evidence of the payment of such taxes or any exemption from them is submitted. See Section 5 of the Offer to Purchase. 8. ODD LOTS. As described in Section 2 of the Offer to Purchase, if the Company is to purchase less than all Shares tendered before the Expiration Date and not properly withdrawn, then the Shares purchased first will consist of all Shares tendered by any stockholders who owns of record or own beneficially an aggregate of less than 100 Shares, and who tenders all of his or her Shares at or below the Purchase Price (an "Odd Lot Holder"). This preference will not be available unless the box captioned "Odd Lots" is completed. 9. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of the Offer to Purchase stockholders may designate the order in which their Shares are to be purchased in the event of proration. The order of purchase may have an effect on the Federal income tax treatment of the Purchase Price for the Shares purchased. If you do not designate an order, in the event that less than all Shares tendered are purchased due to proration, Shares will be selected for purchase by the Depositary. See Sections 1, 3 and 14 of the Offer to Purchase. 10. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Purchase Price of any Shares tendered hereby is to be issued in the name of, and/or any certificates not tendered or not accepted for purchase are to be returned to, a person other than the signer of the Letter of Transmittal or if such certificates and/or checks are to be mailed to someone other than the person signing the Letter of Transmittal or to the signer at a different address, the boxes captioned "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed as applicable and signatures must be guaranteed as described in Instruction 1. Stockholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such stockholder at the Book-Entry Transfer Facility. 11. IRREGULARITIES. All questions as to the number of Shares to be accepted, the price to be paid therefor and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company in its sole discretion, which determinations shall be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders of Shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Shares, and the Company's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. Neither the Company nor the Depositary, or any other person, is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice. 12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and requests for assistance may be directed to, or additional copies of the Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal may be obtained from, the Company at its address and telephone number set forth at the end of this Letter of Transmittal or from your broker, dealer, commercial bank or trust company. 13. FORM W-9 AND FORM W-8. Under the federal income tax backup withholding rules, unless an exemption applies under the applicable law and regulations, 31% of the gross proceeds payable to a stockholder or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury, unless the stockholder or other payee provides his or her taxpayer identification number (employer identification number or social security number) to the Depositary and certifies that such number is correct. Therefore, each tendering stockholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such stockholder otherwise establishes to the satisfaction of the Depositary that it is not subject to backup withholding. Certain stockholders (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 individual must submit an IRS Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. 14. WITHHOLDING ON FOREIGN STOCKHOLDERS. Even if a foreign stockholder has provided the required certification to avoid backup withholding, the Depositary will withhold federal income taxes equal to 30% of the gross payments payable to a foreign stockholder or his agent unless the Depositary determines that an exemption from or a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business in the United States. For this purpose, a foreign stockholder is a stockholder that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States, any State or any political subdivision thereof or (iii) any estate the income of which is subject to United States federal income taxation regardless of the source of such income, or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a foreign stockholder must deliver to the Depositary a properly completed Form 1001. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the United States, a foreign stockholder must deliver to the Depositary a properly completed Form 4224. The Depositary will determine a stockholder's status as a foreign stockholder and eligibility for a reduced rate of, or an exemption from, withholding by reference to outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., Form 1001 or Form 4224) unless facts and circumstances indicate that such reliance is not warranted. A foreign stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such stockholder meets the "complete redemption," "substantially disproportionate" or "not essentially equivalent to a dividend" test described in Section 14 of the Offer to Purchase or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or treaty-reduced rate of withholding. Foreign stockholders are urged to consult their tax advisors regarding the application of federal income tax withholding, including eligibility for a withholding tax reduction or exemption and refund procedures. 15. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Shares has been lost or destroyed, the stockholder should promptly notify the Depositary of the number of Shares represented by the certificate so lost or destroyed. To properly tender such Shares in this Offer, you must receive a replacement certificate for such Shares and deliver that certificate to the Depositary. To receive a replacement certificate, call the Company's transfer agent, Affiliated Stock Transfer Company, at 516-759-6009. This Letter of Transmittal and related documents cannot be processed until the transfer agent's procedures for replacing lost or destroyed certificates have been followed. Please allow at least ten to fourteen business days to complete such procedures. - ---------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK - ---------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1- Taxpayer Identification Number--for all FORM W-9 accounts, enter taxpayer identification number in TIN:____________________ the box at right and certify by signing and dating Social Security Number below. or Employer Department of the Treasury, Identification Number Internal Revenue Service (If awaiting TIN, write "Applied For") Note: If the account is in more than one name, see the chart in the enclosed Guidelines to determine which number to give the payer. --------------------------------------------------------------------------------------- PART 2--For payees exempt from backup withholding, please write PAYER'S REQUEST FOR TAXPAYER "EXEMPT" here (see the enclosed Guidelines): IDENTIFICATION NUMBER ("TIN") - ---------------------------------------------------------------------------------------------------------------------- PART 3--Certification--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct TIN (or I am waiting for a TIN to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. (Also see instructions in the enclosed Guidelines.) - ---------------------------------------------------------------------------------------------------------------------- SIGNATURE: _____________________________________________ DATE: _____________________________________ - ----------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE WAITING (OR SOON WILL APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER 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 by the time of payment, 31% of all reportable payments made to me will be withheld; but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days. _____________________________________ _______________________________ Signature Date Name: _________________________________________________________________________ (Please Print) Address: ______________________________________________________________________ (Include Zip Code) - -------------------------------------------------------------------------------- EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEES) OF SHARES OF COMMON STOCK OF AMERIHOST PROPERTIES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 3, 1999 This form or a facsimile hereof must be used to accept the Offer (as defined below) if: (a) certificates for shares of Common Stock, $.005 par value per share (the "Shares") of Amerihost Properties, Inc. (the "Company") are not immediately available, if the procedure for book-entry transfer cannot be completed on a timely basis; or (b) the procedure for book-entry transfer (set forth in Section 3 of the Company's Offer to Purchase dated May 3, 1999 (the "Offer to Purchase")) cannot be completed on a timely basis; or (c) the Letter of Transmittal (or a facsimile thereof) and all other required documents cannot be delivered to the Depositary prior to the Expiration Date. This form, properly completed and duly executed, may be delivered by hand, mail or facsimile transmission to the Depositary. See Section 3 of the Offer to Purchase. The Depositary of the Offer is: HARRIS TRUST AND SAVINGS BANK By Registered or Certified Mail: By Facsimile Transmission: (212) 701-7636 or (212) 701-7637 Harris Trust and Savings Bank c/o Harris Trust Company of New York Confirm Receipt of Facsimile by Telephone: P.O. Box 1010 (212) 701-7624 Wall Street Station New York, New York 10268-1010 For Information Call: (800) 245-7630 By Hand or Overnight Delivery: Harris Trust and Savings Bank c/o Harris Trust Company of New York Wall Street Plaza 88 Pine Street, 19th Floor New York, New York 10005 ----------------------- DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Amerihost Properties, Inc., a Delaware corporation, at the price per share indicated in this Notice of Guaranteed Delivery, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which together constitute the "Offer"), receipt of both of which is hereby acknowledged, the number of Shares set forth herein pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. - -------------------------------------------------------------------------------- ODD LOTS To be completed ONLY if the Shares are being tendered by or on behalf of a person owning beneficially or of record an aggregate of less than 100 Shares. The undersigned either (check one box): |_| is the beneficial owner of an aggregate of less than 100 Shares, all of which Shares are being tendered; or |_| is a broker, dealer, commercial bank, trust company, or other nominee that (a) is tendering for the beneficial owner(s) thereof, Shares with respect to which it is the record holder, and (b) believes, based upon representations made to it by such beneficial owner(s), that each such person is the beneficial owner of an aggregate of less than 100 Shares and is tendering all of such Shares of that class (or classes). - -------------------------------------------------------------------------------- IMPORTANT: STOCKHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR SHARES TENDERED. PRICE SELECTION FOR SHARES - -------------------------------------------------------------------------------- PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED (SEE INSTRUCTION 5 OF LETTER OF TRANSMITTAL) ================================================================================ CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES. (STOCKHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL AND/OR NOTICE OF GUARANTEED DELIVERY FOR EACH PRICE AT WHICH SHARES ARE TENDERED.) ================================================================================ SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION: |_| The undersigned wants to maximize the chance of having Amerihost Properties, Inc. purchase all Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this box instead of one of the prices below, the undersigned hereby tenders Shares and is willing to accept the Purchase Price resulting from the Dutch Auction tender process. This action will result in receiving a price per Share as low as $3.375 or as high as $4.00. OR SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER: By checking ONE of the boxes below instead of the box above, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. A STOCKHOLDER WHO DESIRES TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL AND/OR NOTICE OF GUARANTEED DELIVERY FOR EACH PRICE AT WHICH SHARES ARE TENDERED. THE SAME SHARES CANNOT BE TENDERED AT MORE THAN ONE PRICE. PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED: |_| $3.375 |_| $3.75 |_| $3.50 |_| $3.875 |_| $3.625 |_| $4.00 - -------------------------------------------------------------------------------- (Please type or print) Certificate Nos. (if available): ____________________________________________ ____________________________________________ Name(s) ____________________________________________ Address(es) ____________________________________________ ____________________________________________ Area Code(s) and Telephone Number(s) SIGN HERE ____________________________________________ Signature(s) ____________________________________________ Dated: If Shares will be tendered by book-entry transfer, fill in the applicable account number, below: The Depository Trust Company DTC Account Number:__________________________ Transaction Code Number:_____________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or a financial institution that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Institution"), hereby guarantees (i) that the above-named person(s) has a net long position in the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, (ii) that such tender of Shares complies with Rule 14e-4, and (iii) the delivery to the Depositary, at one of its addresses set forth above, of certificate(s) for the Shares tendered hereby, in proper form for transfer, or a confirmation of the book-entry transfer of the Shares tendered hereby into the Depositary's account at The Depository Trust Company, in each case together with a properly completed and duly executed Letter(s) of Transmittal (or a facsimile(s) thereof), with any required signature guarantee(s), or an Agent's Message (as defined in the Offer to Purchase) or through ATOP (as defined in the Offer to Purchase), and any other required documents, all within three Nasdaq National Market trading days after the date of receipt by the Depositary. THE ELIGIBLE INSTITUTION THAT COMPLETES THIS FORM MUST COMMUNICATE THE GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION. Authorized Signature:__________________________________________________ Name:__________________________________________________________________ (Please Print) Title:_________________________________________________________________ Name of Firm:__________________________________________________________ Address:_______________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ (Including Zip Code) Area Code and Telephone Number:________________________________________ Date:____________________________________________________________, 1999 NOTE: DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 Amerihost Properties, Inc. 2400 East Devon Avenue Suite 280 Des Plaines, Illinois 60018 AMERIHOST PROPERTIES, INC. OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK AT A PURCHASE PRICE NOT GREATER THAN $4.00 NOR LESS THAN $3.375 PER SHARE - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: Amerihost Properties, Inc., a Delaware corporation (the "Company"), has made an offer to purchase for cash 1,000,000 shares of its common stock, par value $.005 per share (the "Shares"), or such lesser number of shares as are properly tendered, at a price per Share not greater than $4.00 nor less than $3.375 per share in cash, as specified by its stockholders tendering their Shares, upon the terms and subject to the conditions set forth in its Offer to Purchase, dated May 3, 1999, and in the related Letter of Transmittal (which together constitute the "Offer"). The Company will determine a single per share price for the Shares, not greater than $4.00 nor less than $3.375 per share, net to the seller in cash (each a "Purchase Price"), that it will pay for the Shares properly tendered pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the lowest Purchase Price for Shares that will allow it to buy 1,000,000 Shares, or such lesser number as are properly tendered. All Shares properly tendered at prices at or below the Purchase Price and not withdrawn will be purchased at such Purchase Price, upon the terms and subject to the conditions of the Offer, including the proration provisions. Shares tendered at prices greater than the applicable Purchase Price and Shares not purchased because of proration will be returned. The Company reserves the right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant to the Offer. See the Offer to Purchase. If, prior to the Expiration Date (as defined in the Offer to Purchase), more than 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase) are properly tendered and not withdrawn, the Company will, with respect to the Shares, upon the terms and subject to the conditions of the Offer, accept Shares for purchase (i) first from Odd Lot Holders (as defined in the Offer to Purchase) of Shares who properly tender all Shares beneficially owned by such Odd Lot Holders at or below the Purchase Price, (ii) second, after purchase of all of the foregoing Shares, all other Shares validly tendered at prices at or below the Purchase Price and not withdrawn prior to the Expiration Date, on a pro-rata basis. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6 OF THE OFFER TO PURCHASE. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase, dated May 3, 1999; 2. Letter to Clients which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 3. Letter, dated May 3, 1999, from Michael P. Holtz, Chief Executive Officer of the Company, to stockholders of the Company; 4. Letter of Transmittal for your use and for the information of your clients (together with accompanying Form W-9); and 5. Notice of Guaranteed Delivery to be used to accept the Offer if the Share certificates and all other required documents cannot be delivered to the Depositary by the Expiration Date or if the procedure for book-entry transfer cannot be completed on a timely basis. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999, UNLESS THE OFFER IS EXTENDED. No fees or commissions will be payable to brokers, dealers or any person for soliciting tenders of Shares pursuant to the Offer other than fees paid to the Depositary as described in the Offer to Purchase. The Company will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to the beneficial owners of Shares held by you as a nominee or in a fiduciary capacity. The Company will pay or cause to be paid any stock transfer taxes applicable to its purchase of Shares, except as otherwise provided in Instruction 6 of the Letter of Transmittal. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal and any other required documents should be sent to the Depositary with either certificate(s) representing the tendered Shares or confirmation of their book-entry transfer, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. As described in Section 3 of the Offer to Purchase, tenders may be made without the concurrent deposit of stock certificates or concurrent compliance with the procedure for book-entry transfer if such tenders are made by or through a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a member in good standing of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. Certificates for Shares so tendered (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the "Book-Entry Transfer Facility" described in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal, must be received by the Depositary within three (3) Nasdaq trading days after timely receipt by the Depositary of a properly completed and duly executed Notice of Guaranteed Delivery. Any inquiries you may have with respect to the Offer should be addressed to the Company at its address and telephone number set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Company at the same address and telephone number. Very truly yours, Amerihost Properties, Inc. Enclosures NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 AMERIHOST PROPERTIES, INC. OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF ITS COMMON STOCK AT A PURCHASE PRICE NOT GREATER THAN $4.00 NOR LESS THAN $3.375 PER SHARE - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated May 3, 1999, and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer") in connection with the Offer by Amerihost Properties, Inc., a Delaware corporation (the "Company"), to purchase 1,000,000 shares of its common stock, par value $.005 per share ("Shares"), or such lesser number of Shares as are properly tendered, at a price per Share not greater than $4.00 nor less than $3.375 per share, net to the Seller in cash without interest thereon, specified by tendering stockholders, upon the terms and subject to the conditions set forth in the Offer. Also enclosed herewith is certain other material related to the Offer, including a letter to stockholders from Michael P. Holtz, the Chief Executive Officer of the Company. The Company will determine a single per share price for the Shares, not greater than $4.00 nor less than $3.375 per share, net to the seller in cash (each a "Purchase Price"), that it will pay for the Shares properly tendered pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the lowest Purchase Price for Shares that will allow it to buy 1,000,000 Shares, or such lesser number as are properly tendered. All Shares properly tendered at prices at or below the Purchase Price and not withdrawn will be purchased at such Purchase Price, upon the terms and subject to the conditions of the Offer, including the proration provisions. Shares tendered at prices greater than the applicable Purchase Price and Shares not purchased because of proration will be returned. The Company reserves the right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant to the Offer. See the Offer to Purchase. If, prior to the Expiration Date (as defined in the Offer to Purchase), more than 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase) are properly tendered and not withdrawn, the Company will, with respect to the Shares, upon the terms and subject to the conditions of the Offer, accept Shares for purchase (i) first from Odd Lot Holders (as defined in the Offer to Purchase) of Shares who properly tender all applicable Shares beneficially owned by such Odd Lot Holder at or below the Purchase Price, (ii) second, after purchase of all of the foregoing Shares, all Shares validly tendered at prices at or below the Purchase Price and not withdrawn prior to the Expiration Date, on a pro-rata basis. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6 OF THE OFFER TO PURCHASE. WE ARE THE OWNER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE THE ONLY ONES WHO CAN TENDER SUCH SHARES, AND THEN ONLY PURSUANT TO YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT. Please instruct us as to whether you wish us to tender any or all of the Shares we hold for your account on the terms and subject to the conditions of the Offer to Purchase and the Letter of Transmittal. We call your attention to the following: 1. You may tender Shares at prices not greater than $4.00 nor less than $3.375 per share, or the price determined by the "Dutch Auction" tender process, as indicated in the attached Instruction Form, net to you in cash. You should mark the box entitled "Shares Tendered at Price Determined by Dutch Auction" if you are willing to accept the Purchase Price resulting from the Dutch Auction tender process for the Shares. This could result in your receiving a minimum price of $3.375 per share. 2. The Offer is for 1,000,000 Shares, constituting approximately 16.6% of the Shares outstanding as of April 27, 1999. Although the Company has no present intention of doing so, the Company reserves the right, in its sole discretion but subject to certain applicable legal requirements, to purchase more than the 1,000,000 Shares pursuant to the Offer. The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions set forth in Section 6 of the Offer to Purchase. 3. The Offer, proration period and withdrawal rights will expire at 5:00 p.m., New York City Time, on Wednesday, June 2, 1999, unless the Company extends the Offer. Your instructions to us should be forwarded to us in ample time to permit us to submit a tender on your behalf. 4. As described in the Offer to Purchase, if more than 1,000,000 Shares have been validly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date, as defined in Section 1 of the Offer to Purchase, the Company will purchase Shares in the following order of priority: (i) all Shares validly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date by any stockholder who owns beneficially an aggregate of less than 100 Shares and who validly tenders all of such Shares (partial tenders will not qualify for this preference) and completes the box captioned "Odd Lots" in the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery; and (ii) after purchase of all of the foregoing Shares, all Shares validly tendered at prices at or below the Purchase Price and not withdrawn prior to the Expiration Date, on a pro rata basis as described in Section 1 of the Offer to Purchase. 5. You may designate the order in which your Shares shall be purchased in the event of proration. 6. The Offer is not conditioned upon any minimum number of Shares being tendered. 7. Tendering stockholders will not be obligated to pay brokerage fees or commissions to the Depositary or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. A tendering stockholder who holds securities with such stockholder's broker may be required by such broker to pay a service charge or other fee. 8. If you beneficially hold an aggregate of less than 100 Shares and you instruct us to tender on your behalf all such Shares at or below the Purchase Price before the Expiration Date (as defined in the Offer to Purchase) and check the box captioned "Odd Lots" in the attached Instruction Form, the Company, upon the terms and subject to the conditions of the Offer, will accept all such Shares for purchase before proration, if any, of the purchase of other Shares properly tendered at or below the Purchase Price. 9. If you wish to tender portions of your Shares at different prices, you must complete a separate Instruction Form for each price at which you wish to tender each such portion of your Shares. We must submit a separate Letter of Transmittal on your behalf for each price you will accept. 10. The Company believes that the Shares will continue to be listed on the Nasdaq National Market. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the attached Instruction Form. An envelope to return your Instruction Form to us is enclosed. If you authorize us to tender your Shares, we will tender all such Shares unless you specify otherwise on the attached Instruction Form. YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 2, 1999, UNLESS THE COMPANY EXTENDS THE OFFER. The Offer is being made to all holders of Shares. The Company is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to a valid state statute. If the Company becomes aware of any valid state statute prohibiting the making of the Offer, the Company will make a good faith effort to comply with such statute. If, after such good faith effort, the Company cannot comply with such statute, the Offer will not be made to, nor will tenders be accepted from or on behalf of, holders of Shares in such state. In those jurisdictions whose securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by one or more registered brokers or dealers licensed under the laws of such jurisdiction. INSTRUCTION FORM INSTRUCTIONS FOR TENDER OF SHARES OF AMERIHOST PROPERTIES, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated May 3, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer") in connection with the offer by Amerihost Properties, Inc., a Delaware corporation (the "Company"), to purchase up to 1,000,000 shares of its common stock, par value $.005 per share (the "Shares"), or such lesser number of Shares as are properly tendered, at a price per Share not greater than $4.00 nor less than $3.375 per share, net to the seller in cash, without interest thereon, as specified by stockholders tendering their Shares, upon the terms and subject to the conditions of the Offer. This will instruct you to tender to the Company, on (our) (my) behalf, the number of Shares indicated below (or if no number is indicated below, all Shares) which are beneficially owned by (us)(me) and registered in your name, upon terms and subject to the conditions of the Offer. - -------------------------------------------------------------------------------- NUMBER OF SHARES TO BE TENDERED:______________________ SHARES* - -------------------------------------------------------------------------------- *Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. - -------------------------------------------------------------------------------- ODD LOTS (SEE INSTRUCTION 2 OF THE LETTER OF TRANSMITTAL) To be completed ONLY if the Shares are being tendered by or on behalf of a person owning beneficially an aggregate of less than 100 Shares. The undersigned either (check one box): |_| is the beneficial owner of an aggregate of less than 100 Shares all which Shares are being tendered; or |_| is a broker, dealer, commercial bank, trust company, or other nominee that (a) is tendering for the beneficial owner(s) thereof, Shares with respect to which it is the record holder, and (b) believes, based upon representations made to it by such beneficial owner(s), that each such person is the beneficial owner of an aggregate of less than 100 Shares and is tendering all of such Shares. NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. - -------------------------------------------------------------------------------- INSTRUCTION FORM INSTRUCTIONS FOR TENDER OF SHARES OF AMERIHOST PROPERTIES, INC. Please tender to Amerihost Properties, Inc. (the "Company"), on (our) (my) behalf, the number of Shares indicated below, which are beneficially owned by (us) (me) and registered in your name, upon the terms and subject to the conditions contained in the Offer to Purchase of the Company dated May 3, 1999, and the related Letter of Transmittal, the receipt of both of which is acknowledged. NUMBER OF SHARES TO BE TENDERED PURSUANT TO THIS INSTRUCTION FORM: SHARES:______________________________ IMPORTANT: STOCKHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR SHARES TENDERED. PRICE SELECTION FOR SHARES - -------------------------------------------------------------------------------- PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED (SEE INSTRUCTION 5) - -------------------------------------------------------------------------------- CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES (STOCKHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED.) - -------------------------------------------------------------------------------- SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION: |_| The undersigned wants to maximize the chance of having Amerihost Properties, Inc. purchase all Shares the undersigned is tendering (subject to the possibility of proration). Accordingly, by checking this box instead of one of the prices below, the undersigned hereby tenders Shares and is willing to accept the Purchase Price resulting from the Dutch Auction tender process. This action will result in receiving a price per Share as low as $3.375 or as high as $4.00. OR SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER: By checking ONE of the boxes below instead of the box above, the undersigned hereby tenders Shares at the price checked. This action could result in none of the Shares being purchased if the Purchase Price for the Shares is less than the price checked. A STOCKHOLDER WHO DESIRES TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED. THE SAME SHARES CANNOT BE TENDERED AT MORE THAN ONE PRICE. PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED: |_| $3.375 |_| $3.75 |_| $3.50 |_| $3.875 |_| $3.625 |_| $4.00 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- |_| Indicate in this box the order (by certificate number) in which Shares are to be purchased in event of proration. (Attach additional list if necessary.)* See Instruction 9 to the Letter of Transmittal. Shares: 1st: _______2nd: ________3rd:_________ 4th:________ 5th: ________ * If you do not designate an order, in the event less than all Shares tendered are purchased due to proration, Shares will be selected for purchase by the Depositary. See Instruction 9 to the Letter of Transmittal. - -------------------------------------------------------------------------------- THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OF THEIR SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY AND AT WHICH PRICE OR PRICES THE SHARES SHOULD BE TENDERED. Signature(s)_________________________ Address:______________________________ _____________________________________ ______________________________________ Name(s):_____________________________ (Including Zip Code) (Please Print) Area Code and Telephone No.___________ _____________________________________ Date:___________________________, 1999 (Taxpayer Identification or Social Security Number) EX-99.(A(6) 7 May 3, 1999 Dear Stockholder: Amerihost Properties, Inc. (the "Company") is offering (the "Offer") to purchase up to 1,000,000 shares of its common stock, or approximately 16.6% of the currently outstanding common stock, at a price not greater than $4.00 nor less than $3.375 per share. The Company is conducting this Offer through a procedure commonly referred to as a "Dutch Auction." This procedure allows you to select the price within the specified price range at which you are willing to sell all or a portion of your shares to the Company. Alternatively, this procedure allows you to tender all or a portion of your shares to the Company at a price determined by the "Dutch Auction" process. Based upon the number of shares tendered and the prices specified by the tendering stockholders, the Company will determine the single per share price within the $3.375 to $4.00 range that will allow it to buy 1,000,000 shares (or such lesser number of shares that are properly tendered). All of the shares that are properly tendered at prices at or below that purchase price (and are not withdrawn) will - subject to possible proration and provisions relating to the tender of "odd lots" and certain conditions - be purchased for cash at that purchase price, net to the selling stockholder. All other shares that are tendered and not purchased will be returned to the stockholder. If you do not wish to participate in this Offer, you do not need to take any action. This Offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender your shares, instructions are provided in the enclosed materials. I encourage you to read these materials carefully before making any decision with respect to this Offer. Neither the Company nor its Board of Directors makes any recommendation to any stockholder whether or not to tender any or all shares. Each stockholder must make the decision whether to tender shares and, if so, how many shares and at what price. Neither I nor any other director or executive officer intends to tender shares pursuant to the Offer, other than one director who may tender up to 20,000 shares. Please note that this offer is scheduled to expire at 5:00 p.m., New York City Time, on Wednesday, June 2, 1999, unless extended by the Company. Questions regarding this offer should be directed to James B. Dale, Chief Financial Officer, Craig S. Arnson, In-house legal counsel, or myself at (847) 298-4500. Sincerely, Michael P. Holtz President & Chief Executive Officer EX-99.(A)(7) 8 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. - -------------------------------------------------------------------------------- For this type of Account: Give the SOCIAL SECURITY NUMBER OF-- - -------------------------------------------------------------------------------- 1. Individual The individual 2. Two or more individuals (joint account) The account owner of the account or, if combined funds, the first individual on the account(1) 3. Custodian account of a minor (Uniform Gift to The minor(2) Minors Act) 4a. The usual revocable savings trust account The grantor-trustee(1) (grantor is also trustee) b. So-called trust account that is not a legal or The actual owner(1) valid trust under State Law 5. Sole proprietorship The owner(3) 6. Sole proprietorship The owner(3) 7. A valid trust, estate, or pension trust The legal entity(4) 8. Corporate The corporation 9. Association, club, religious, charitable, The organization educational, or other tax-exempt organization 10. Partnership The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of The public entity Agriculture in the The public entity 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. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or your employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) 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 Note: You may be subject to backup withholding if this interest is If you do not have a taxpayer $600 or more and is paid in the identification number or you do not course of the payer's trade or know your number, obtain Form SS-5, business and you have not Application for a Social Security provided your correct taxpayer Number Card, or Form SS-4, identification number to the Application for Employer payer. Identification Number, at the local / / Payments of tax-exempt interest office of the Social Security (including exempt-interest Administration or the Internal dividends under section 852). Revenue Service and apply for a / / Payments described in section number. 6049(b)(5) to nonresident aliens. / / Payments on tax-free covenant bonds PAYEES EXEMPT FROM BACKUP WITHHOLDING under section 1451. / / Payments made by certain foreign Payees specifically exempted from organizations. backup withholding include the / / Mortgage interest paid to you. following: Exempt payees described above should / / An organization exempt from file Form W-9 to avoid possible tax under section 501(a) of erroneous backup withholding. FILE THIS the Internal Revenue Code of FORM WITH THE PAYER, FURNISH YOUR 1986, as amended (the "Code"), TAXPAYER IDENTIFICATION NUMBER, WRITE an individual retirement "EXEMPT" IN PART II OF THE FORM, SIGN account or a custodial account AND DATE THE FORM, AND RETURN IT TO THE under section 403(b)(7), if PAYER. the account satisfies the requirements of section Certain payments other than 401(f)(2). interest, dividends, and patronage / / The United States or any dividends, that are not subject to agency or instrumentality information reporting are also not thereof. subject to backup withholding. / / A state, the District of Columbia, a possession of the PRIVACY ACT NOTICE.--Section 6109 of the United States, or any Code requires most recipients of political subdivision or dividend, interest, or other payments to instrumentality thereof. give taxpayer identification numbers to / / A foreign government or any payers who must report the payments to political subdivision, agency IRS. IRS uses the numbers for or instrumentality thereof. identification purposes and to help / / An international organization verify the accuracy of your tax return. or any agency or The IRS may also provide this instrumentality thereof. information to the Department of Justice for civil and criminal litigation and to Other payees that may be exempt cities, states, and the District of from backup withholding include: Columbia to carry out their tax laws. You must provide your taxpayer / / A corporation. identification number whether or not you / / A financial institution. are required to file tax returns. Payers / / A dealer in securities or must generally withhold 31% of taxable commodities registered in the interest, dividend, and certain other U.S., the District of Columbia payments to a payee who does not furnish or a possession of the U.S. a taxpayer identification number to a / / A futures commission merchant payer. Certain penalties may also apply. registered with the Commodity Futures Trading Commission. PENALTIES / / A real estate investment trust. PENALTY FOR FAILURE TO FURNISH TAXPAYER / / A common trust fund operated IDENTIFICATION NUMBER.--If you fail to by a bank under section furnish your taxpayer identification 584(a). number to a payer, you are subject to a / / An entity registered at all penalty of $50 for each such failure times during the tax year unless your failure is due to reasonable under the Investment Company cause and not to willful neglect. Act of 1940. / / A foreign central bank of CIVIL PENALTY FOR FALSE INFORMATION WITH issue. RESPECT TO WITHHOLDING.--If you make a / / A middleman known in the false statement with no reasonable basis investment community as a which results in no imposition of backup nominee or who is listed in withholding, you are subject to a the most recent publication of penalty of $500. the American Society of Corporate Secretaries, Inc. CRIMINAL PENALTY FOR FALSIFYING Nominee List. INFORMATION.--Willfully falsifying / / A trust exempt from tax under certifications or affirmations may section 664 as described in subject you to criminal penalties section 4947. including fines and/or imprisonment. Payments of dividends and patronage FOR ADDITIONAL INFORMATION CONTACT YOUR dividends not generally subject to TAX CONSULTANT OR THE INTERNAL REVENUE backup withholding include the SERVICE. following: / / Payments to nonresident aliens subject to withholding under section 1441. / / Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident alien partner. / / Payments of patronage dividends where the amount received is not paid in money. / / Payments made by certain foreign organizations. / / 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. EX-99.(A)(8) 9 CONTACT: PAUL J. ARNDT FOR IMMEDIATE RELEASE DIRECTOR OF FINANCIAL RELATIONS (847) 298-4501 X 306 PARNDT@AMERIHOSTINN.COM AMERIHOST PROPERTIES, INC. ANNOUNCES "DUTCH AUCTION" SELF TENDER OFFER FOR SHARES OF ITS COMMON STOCK DES PLAINES, ILLINOIS, MAY 3, 1999 - Amerihost Properties, Inc. (Nasdaq/NM: HOST) today announced that it will commence a Dutch Auction self tender offer to purchase for cash up to 1,000,000 shares of its common stock, which represents approximately 16.6% of its currently outstanding common stock, subject to the terms and conditions set forth in the Offer to Purchase of the Company dated May 3, 1999, and the related Letter of Transmittal. The tender offer commenced on Monday, May 3, 1999, and will expire, unless extended by the Company, at 5:00 p.m. New York City Time, on Wednesday, June 2, 1999. The terms of the tender offer, which are described more fully in the Offer to Purchase and the Letter of Transmittal pursuant to which the tender offer is made, include a purchase price for each tendered share of not more than $4.00 per share, nor less than $3.375 per share net to the seller in cash, without interest thereon. In a Dutch Auction, the Company sets a price range, and the stockholders have an opportunity to specify prices within that range at which they are willing to sell shares. After the expiration of the tender offer period, the Company will determine a single per share price to be paid for each share purchased, taking into consideration the number of shares tendered and the prices specified by tendering stockholders. If more than 1,000,000 shares of common stock are properly tendered pursuant to the Offer to Purchase and Letter of Transmittal, the Company will accept shares on a pro rata basis. Odd lots tendered will not be subject to proration. The Company reserves the right to purchase more than 1,000,000 shares of common stock pursuant to the tender offer. The tender offer is not conditioned on any minimum number of shares being tendered. Neither the Company nor its Board of Directors makes any recommendation to any stockholder as to whether to tender or refrain from tendering shares. Each stockholder must make the decision whether to tender shares and, if so, how many shares and at what price or prices shares should be tendered. The Company has been advised that none of its directors or executive officers intend to tender any shares pursuant to the Offer, other than one director who may tender up to 20,000 shares. On April 30, 1999, the last trading day prior to the announcement of the Offer, the price per share for the last trade for the common stock on Nasdaq National Market was $3.438. The Offer to Purchase, Letter of Transmittal and related documents are being mailed to the Company's stockholders of record and will also be made available for distribution to beneficial owners of common stock. Stockholders may obtain further information by calling the Company directly and asking for James B. Dale, Chief Financial Officer, Craig S. Arnson, in-house legal counsel, or Michael P. Holtz, President and Chief Executive Officer. - -------------------------------------------------------------------------------- This press release is for information purposes only and is not intended to serve as a solicitation to buy securities. Any solicitation to buy securities is made only pursuant to the Offer to Purchase and the Letter of Transmittal. EX-99.(B)(1) 10 REVOLVING ACQUISITION AND DEVELOPMENT LINE OF CREDIT NOTE --------------------------------------------------------- $7,000,000.00 Bridgeview, Illinois As of October 15, 1998 Maturity Date: October 15, 1999 GENERAL TERMS - ------------- This Revolving Line of Credit Note ("Note") is a variable rate, revolving credit line which is secured by (1) a written General Business Security Agreement ("Security Agreement") of even date herewith, and (2) such other collateral which may be reasonably requested from time to time by the hereinafter defined Lender including, but not limited to, title insured, first priority mortgage liens ("Mortgages") on the real estate and the improvements existing or to be constructed thereon acquired or developed utilizing the proceeds of this Note. Loans will be made from time to time as requested of the hereinafter defined Lender and subject to the terms hereof and the terms and conditions of the written commitment letter dated September 24, 1998 ("Commitment Letter") issued by Lender and accepted by the undersigned, (the "Borrower" or the "undersigned") on October 6, 1998. The terms and conditions of the Commitment Letter are incorporated herein and made a part hereof. The aforesaid Mortgages if any, and the aforesaid Security Agreement will be referred to collectively herein as the "Security Instruments." Notwithstanding, anything else contained herein Lender may refuse to advance any such future loans when it reasonably deems itself insecure by so advancing or in the event the undersigned are in default under the terms and provisions of this Note or the Security Instruments after the expiration of all notice and grace periods therein provided, if applicable. 1. THE BORROWER'S PROMISE TO PAY For value received, the Borrower hereby promises, to pay all loans now or hereafter made under this Note, which loans shall not exceed the aggregate principal amount of Seven Million Thousand and No/100 Dollars ($7,000,000.00) (the "principal") plus interest to the order of Bridgeview Bank and Trust (the "Lender"). The Borrower understands that the Lender may negotiate, assign or otherwise transfer this Note. The Lender or anyone who takes this Note by negotiation, assignment or other transfer and who its entitled to receive payments under this Note is called the "Note Holder." 2. INTEREST Interest will be charged on that part of the principal that has not been paid. Interest will be charged beginning on the date of this Note and continuing until the full amount of the principal has been paid. Beginning on the date of this Note, the Borrower agrees to pay interest on the unpaid principal balances from time to time outstanding between the date of this Note and October 15, 1999 (the "Maturity Date") at the per annum. interest rate equal to the sum of: (i) the base rate of interest which shall be defined as the floating daily variable rate of interest determined and announced by the Lender from time to time as its base lending rate (without reference to the prime or base rate of any other financial institution) which rate may not necessarily be the lowest rate of interest charged by the Lender to any at its customers (the "Base Rate"), plus (ii) one-half percent (0.5%) per annum. Interest after maturity, by acceleration or otherwise, shall be at three and one-half percent (3.5%) per annum above the Base Rate. After the date of this Note, the Loan Interest Rate shall be adjusted in accordance with the aforesaid on each date on which there is a change in the Base Rate. 3. PAYMENTS Unless otherwise paid sooner, beginning on November 15, 1998, and continuing on the 15th day of each and every month thereafter until the earlier of September 15, 1999, the Borrower will make monthly payments of interest accrued through the date of payment. On October 15, 1999, Borrower shall make a final balloon payment of all principal, interest and other charges then due and owing on this Note. All payments on account of the indebtedness evidenced by this Note shall first be applied to charges due under the Note, then to interest and the remainder to principal. The Borrower will make its payments at the offices of Bridgeview Bank and Trust, 7940 South Harlem Avenue, Bridgeview, Illinois 60455 at a different place if requested by the Note Holder. Acceptance by Note Holder of any payment in an amount less than the amount then due on this Note shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and will continue to be a default. At any time thereafter and until the entire amount then due on the Note has been paid, Lender shall be entitled to exercise all rights conferred upon it in this Note or any Security Instruments upon the occurrence of a default as defined thereunder after the expiration at all notice and grace periods therein provided, if applicable. 4. THE BORROWER'S RIGHT TO PREPAY Provided that any payments required under this Note are current and not then in default under the terms of this Note or the Security Instruments, the Borrower has the right to make payments of the principal at any time before they are due. A payment of the principal only is known as a "prepayment." When the Borrower makes a prepayment, the Borrower will inform the Note Holder in writing that they are doing so. The Borrower may make a full prepayment or a partial prepayment without paying any penalty. The Note Holder will use all of the Borrower's prepayment to reduce the amount of the principal that the Borrower owes under this Note. If the Borrower makes a partial prepayment, there will be no delays in the due dates of their payments due hereunder unless the Note Holder agrees in writing to those delays. 5. LOAN CHARGES If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the interest or other loan charges collected or to be collected in connection with this loan exceed the permitted limits, then: (i) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (ii) any sums already collected from the Borrower that exceeded permitted limits will be refunded to the Borrower. The Note Holder may choose to make this refund by reducing the principal the Borrower owes under this Note or by making a direct payment to the Borrower. It a refund reduces the principal, the reduction will be treated as a partial prepayment. 6. PURPOSE OF LOAN The Borrower hereby represents and warrants that the Borrower will use the proceeds of the loan evidenced by this Note solely for proper business purposes (as referred to in 815 ILCS 205/4) and consistently with all applicable laws and statutes. Borrower further agrees that this Note shall be governed by and construed under the laws of the State of Illinois. 7. THE BORROWER'S FAILURE TO PAY AS REQUIRED (A) LATE CHARGE FOR OVERDUE PAYMENTS AND DEFAULT If the Note Holder has not received the full amount of any of the Borrower's regular installment payments within ten (10) calendar days after the date it is due, the Borrower will pay a late charge to the Note Holder. The amount of the late charge will be the greater of five percent (5.0%) of the Borrower's overdue payment of interest and/or principal then due or Two Hundred Fifty and No/100 Dollars ($250.00). This Note will be in default if (i) the Note Holder has not received the full amount of any of the Borrower's payments and the full amount of any late charges due thereon within fifteen (15) calendar days after the date the payment is due; (ii) the Borrower fails to perform, keep or observe any term or condition of this Note or of any agreement, instrument or document securing this Note and such failure shall continue for a period of thirty (30) days after written notice thereof from Note Holder to Borrower thereof; provided, however, that, in the event such default is not susceptible of cure within said initial thirty (30) day period, Borrower shall have such longer period of time as is necessary in the reasonable determination of the Note Holder to effectuate such cure (not to exceed one hundred eighty (180) days), so long as Borrower shall commence such cure within said initial thirty (30) day period and thereafter diligently and continually pursue the same; (iii) there is a default remaining uncured after the expiration of any applicable cure period under the Security instruments or any other agreement, instrument or document delivered by the Borrower to the Note Holder or under any agreement, instrument or document which creates a lien, encumbrance, charge or claim against the real estate which is the subject matter of the Mortgage; (iv) the Collateral (as such term is defined below) or any assets of the Borrower are attached, seized, levied upon or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same shall not have been released or discharged within sixty (60) days thereafter; (v) the Borrower's net worth as determined as of December 31, 1998 shall fall below $19,000,000.00 or the debt to worth ratio at any time during the term of this Note shall go above 3.75 to 1; (vi) a petition under any section or chapter of the Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by or against the Borrower and the same shall not have been released or discharged within sixty (60) days thereafter; (vii) the Borrower makes an assignment for the benefit of creditors; or (viii) any case or proceeding is filed by or against the Borrower for dissolution or liquidation and the same shall not have been released or discharged within sixty (60) days thereafter; (ix) Borrower dissolves or a conservator is appointed for all or any portion of its assets or of the Collateral. (B) PAYMENT OF NOTE HOLDER'S COSTS AND EXPENSES The Borrower shall pay all of the costs and expenses incurred by the Note Holder in enforcing this Note to the extent not prohibited by applicable law. Such expenses include, without limitation, reasonable attorneys' fees. 8. NOTE SECURED/ACCELERATION The Borrower's obligations under this Note, including without limitation, the full payment of this Note, are secured by the aforesaid Security Agreement. At the election of Note Holder and without notice, the principal, interest and any other charges or amounts due hereunder remaining unpaid hereon shall become at once due and payable (a) in case of default remaining uncured after the expiration of any applicable cure period hereunder or (b) in case of the sale, transfer, conveyance, assignment, mortgage, pledge, encumbrance or vesting of title of or to the real, estate, or any portion thereof, or upon the transfer of the security interests, or any portion thereof, to any party other than the owner thereof as of the date of this Note or any other entity owned or controlled by Borrower or one of its wholly-owned subsidiaries; or (c) in the event the outstanding amount due under this Note exceeds the limits permitted under paragraph 11 hereof and which event has not been addressed to the reasonable satisfaction of Lender. The terms and provisions of the aforesaid Security Agreement and Mortgages are incorporated herein by reference. In addition, the Borrower's obligations under this Note are secured by (i) all of the now existing or owned and hereafter arising or acquired monies, reserves, deposits, deposit accounts and interest or dividends thereon, securities, cash, cash equivalents and other property of the Borrower, now or at any time or times hereafter in the possession or under the control of the Lender or its bailee for any purpose; (ii) all such additional collateral as the Lender may reasonably request from time to time including, without limitation, title insured, first priority mortgage liens on the real estate and improvements existing or to be constructed thereon related to the projects; and (iii) all substitutions, renewals, improvements, replacements, products and proceeds of any of the foregoing the rights with respect to all of which may be exercised by Lender upon the terms and conditions therefor as set forth in the immediately preceding paragraph. All of the security described in this Section 8 is referred to as the "Collateral." 9. WAIVERS All parties hereto severally waive presentment for payment, notice of dishonor, protest and notice of protest. The Borrower hereby waives, to the fullest extent allowed by applicable law, any right to jury trial with respect to any action to enforce the provisions of this Note or any instrument securing this Note. 10. NOTICES Unless applicable law requires a different method of giving notice, any notice that must be given to the Borrower under this Note will be given by delivering it or by mailing it by first class mail addressed to the Borrower at 2400 East Devon Avenue, Suite 280, Des Plaines, Illinois 60018, or at a different address if the Borrower gives the Note Holder notice of their different address. Any notice that must be given to the Note Holder under this Note will be given by mailing it by first class mail to the Note Holder at the address stated above or at a different address if the Note Holder gives the Borrower notice of its different address. 11. LIMITATIONS ON LINE OF CREDIT LOAN ADVANCES Borrower expressly acknowledges and agrees that the proceeds hereof are to be utilized by Borrower to fund the acquisition and development of various hotel and motel projects ("projects") throughout the United States, In that regard, Borrower further acknowledges and agrees that the aggregate amount of advances outstanding at any time during the term of this Note shall be limited to the sum of the following: (i) seventy five percent (75%) of the value of Borrower's Eligible Accounts as that term is defined in the aforesaid General Business Security Agreement; (ii) seventy five percent (75%) of the value of the equity of Borrower as determined by Lender in furniture and fixtures owned by the Borrower; (iii) seventy five percent (75%) of the value of the equity of Borrower as determined by Lender of any project constructed or under construction utilizing the proceeds of this Note; and (iv) seventy five percent (75%) of the value as determined by the Lender of the equity of Borrower in any partnerships, limited liability companies or joint ventures in which Borrower has any interest. Borrower further agrees that not less than once a year during the term hereof and as first measured from the date hereof, the outstanding balance due hereunder of funds advanced for such purpose in connection with each project shall be completely paid and reduced to zero and shall be so maintained for a least thirty (30) consecutive days before any additional advances are permitted hereunder for that project. [SIGNATURE PAGE FOLLOWS] BORROWER: AMERIHOST PROPERTIES, INC., a Delaware Corporation By:_________________________________ MICHAEL P. HOLTZ President Name:_______________________________ Title:______________________________ EX-99.(B)(2) 11 GENERAL BUSINESS SECURITY AGREEMENT ----------------------------------- The undersigned, AMERIHOST PROPERTIES, INC., a Delaware corporation, 2400 East Devon Avenue, Suite 280, Des Plaines, Illinois 60018 (the "Borrower"), for value received, hereby conveys and grants to BRIDGEVIEW BANK AND TRUST, having offices located at 7940 South Harlem Avenue, Bridgeview, Illinois 60455 (hereinafter called the "Lender"), a security interest in the following personal property and all proceeds thereof and all accessories, parts and equipment now or hereafter affixed thereto or used in connection therewith (hereinafter collectively called the "Collateral") : SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF. The aforesaid security interest is given to secure the payment of the principal, interest and all obligations of the Borrower evidenced by a Revolving Acquisition and Development Line of Credit Note in the original principal amount of Seven Million and No/100 Dollars ($7,000,000.00) dated as of October 15, 1998 executed by the Borrower and payable to the order of the Lender and any extensions, renewals or modifications thereof, (hereinafter called the "Note"). The Note and all other obligations evidenced thereby are herein collectively called the "Indebtedness". 1. The Borrower hereby warrants and agrees that: (a) For the purpose of this Agreement the term "Account Debtor" shall be defined as any person or entity obligated to the Borrower on or under any Eligible Account as that term is defined hereunder. (b) For the purpose of this Agreement and the Notes the term "Eligible Account" shall mean an Account arising in the ordinary course of the business of the Borrower which meets and maintains each of the following requirements: 1. if it arises from the sale or lease of goods, such goods have been shipped or delivered to the Account Debtor under such Account; if it arises from services rendered, such services have been performed; 2. it is a valid, legally enforceable obligation of the Account Debtor thereunder, and is not subject to any offset, counterclaim or other defense on the part of such Account Debtor or to any claim on the part of such Account Debtor denying liability thereunder in whole or in part; 3. it is not subject to any lien or security interest whatsoever other than the security interest hereunder; 4. it is evidenced by an invoice, dated not later than the date of shipment or performance, rendered to such Account Debtor or some other evidence of billing acceptable to Lender and is not evidenced by any instrument or chattel paper; 5. it is not owing by any Account Debtor whose obligations the Lender, acting in its sole and reasonable discretion, shall have notified the Borrower are not deemed to constitute Eligible Accounts; and 6. it is not past due more than ninety (90) days, nor is it unacceptable to the Lender for any reason which Lender may reasonably hereafter adopt without notice. 2. The Borrower further hereby warrants and agrees that the Borrower: (a) will, upon request of the Lender, execute such financing statements and other documents (and pay the cost of filing or recording the same in all public offices deemed necessary by the Lender) and do such other acts and things, all as the Lender may from time to time request to establish and maintain a valid perfected security interest in the Collateral (free of all other liens and claims whatsoever) to secure the payment of the Indebtedness. To the extent permitted by applicable law, the Borrower hereby grants Lender authority on its behalf as attorney-in-fact to execute, file or record any document necessary to perfect the Lender's security interest in the Collateral. (b) will keep, at the address designated above for its records, all records concerning the Collateral, including computer records and related software, which records will be of such character as will enable the Lender or its designees to determine at any time the status of the Collateral. (c) will furnish the Lender such information concerning Borrower, the Collateral, any Account Debtor of the Borrower, Eligible Accounts, as the Lender may from time to time reasonably request. (d) will permit the Lender and its designees from time to time during Borrower's regular business hours, to inspect, audit and make copies of and extracts from all records and other papers in the possession of the Borrower pertaining to the Collateral and any Account Debtor, and will upon reasonable request of the Lender, deliver to the Lender copies of all such records and papers. (e) will, upon request of the Lender, stamp on the records of the Borrower concerning the Collateral, a notation, in form satisfactory to the Lender, of the security interest of Lender hereunder. (f) will immediately deliver to the Lender, appropriately endorsed to the order of the Lender, any note, trade acceptance, chattel paper or other instrument or writing for the payment of money which shall be received by Borrower and which may at any time evidence any obligation to Borrower for payment for Collateral sold or leased or services rendered outside the ordinary course of Borrower's business or upon the occurrence of a Default. (g) hereby authorizes Lender as the Borrower's attorney-in-fact to endorse, in the name of the Borrower, any check or other item, howsoever received by Lender and whether received before or after any default, representing any payment on or other proceeds of any of the Collateral sold or leased outside of the ordinary course of Borrower's business or upon the occurrence of a Default. (h) without the prior written consent of the Lender will not sell or assign any collateral outside of the ordinary course of Borrower's business or create or permit to exist any lien or security interest in any collateral to or in favor of, anyone other than the Lender. (i) will, to the extent that a security interest is granted hereunder in Inventory as that term is defined under the applicable provisions of the Uniform Commercial Code, maintain insurance on such Inventory with a company satisfactory to Lender against such risks and in such amounts as the Lender may require, such insurance to be payable to the Borrower and Lender as their interests appear. Lender may act as the Borrower's attorney-in-fact in obtaining, adjusting, settling and canceling such insurance and endorsing any drafts in the event that a Default shall have occurred and continues beyond the expiration of any applicable cure period. If the Borrower fails to provide insurance as above required, Lender, may, at its option, purchase the same and the cost thereof (with interest thereon at the highest rate borne by the Indebtedness) shall be added to the Indebtedness secured hereby. (j) will reimburse the Lender for all expenses, including reasonable attorney's fees and legal expenses, incurred by the Lender in seeking to collect or enforce any rights in, under or to the Collateral and, in case of a Default, incurred by the Lender in seeking to collect each Notes and all other Indebtedness and to enforce its rights hereunder. (k) will not permit the Indebtedness to Lender to exceed the limits therefore from time to time established by Lender, either as to actual amount or as to the percentage amount of acceptable Collateral as approved by Lender. In the event that said percentage requirements shall be exceeded, Borrower shall promptly reduce the Indebtedness by an amount sufficient to satisfy Lender's requirement or, at Lender's sole and exclusive option grant Lender a security interest in such additional collateral as Lender may require. (l) shall materially comply with all applicable federal, state and local laws, ordinances, rules and regulations, including, but not limited to, the rules and regulations of the Federal Communications Commission and any and all environmental laws, ordinances, rules and regulations and shall keep the Collateral free and clear of any liens imposed pursuant to such laws, ordinances, rules and regulations contest the same while at all times preserving the value of the Collateral. (m) shall materially comply with all applicable federal, state and local laws, ordinances, rules and regulations concerning minimum wages, overtime laws, and payment of withholding taxes, and deliver to Lender such reports and information in form satisfactory to Lender as Lender reasonably may request from time to time to establish compliance with such laws. (n) will execute within seven (7) days of being presented therewith any documents or instruments, including without limitation, any subordination agreement which Lender in its sole and exclusive discretion deems necessary to protect and maintain its interests arising in connection with this transaction. 3. Until such time as the Lender shall notify the Borrower of the revocation of such authority, upon the occurrence of a Default, the Borrower: (a) will, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any Collateral, including the taking of such action with respect to such collection as the Lender may reasonably request or, in the absence of such request, as the Borrower may deem advisable; (b) may grant, in the ordinary course of the business of the Borrower, to any Account Debtor, any rebate, refund or adjustment to which such Account Debtor may be lawfully entitled, and may accept, in connection therewith, the return of Collateral, the sale or lease of which shall have given rise to the obligation of the Account Debtor; (c) will, prior to the time of any deposit or delivery, keep segregated any such checks, drafts, cash, chattel paper or other remittances from any of the Borrower's funds or property and will hold such checks, drafts, cash, chattel paper or other remittances in trust for the benefit of the Lender until delivery thereof, or deposit in the Collateral Account (as hereinafter defined), if any; and (d) if requested by the Lender, note the security interest of the Lender on all records relative to the Collateral, including, without limitation, any invoice which evidences an Eligible Account. 4. If the Lender requests, after the occurrence of a Default, the Borrower: (a) will, upon receipt of all checks, drafts, cash and other remittances in payment of Inventory sold or in payment of accounts receivable of the Borrower, deposit same in a special collateral account ("Collateral Account") maintained with the Lender. Such proceeds shall be deposited in the form received except for the endorsement of the Borrower where required, which endorsement the Lender is authorized to make on the Borrower's behalf and shall be held by the Lender as security for all Indebtedness of the Borrower in favor of the Lender. Lender will, at least once each week, unless otherwise agreed to in writing by the Borrower and the Lender, apply all or any portion of the funds on deposit in the Collateral Account, against the principal or any other indebtedness, or both, of the Borrower in favor of the Lender, the order of application to be the discretion of the Lender. Any portion of the funds on deposit in the Collateral Account and not applied as provided herein may, in the discretion of the Lender, be turned over to the Borrower; (b) will deliver to the Lender, all chattel paper which constitutes proceeds from the sale of Collateral subject to delivery of the proceeds resulting from the sale of such chattel paper which shall be deposited in the Collateral Account unless such sale occurs outside the ordinary course of Borrower's business, in which event no such Default shall have had to occurred. 5. The Lender, however, in the event of default by Borrower under any instrument evidencing the Indebtedness after the expiration of all notice and grace periods therein provided, if applicable, may, notify all Account Debtors to make payment directly to Lender of any amounts due or to become due and enforce the collection of any Account by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. 6. If and to the extent that a perfected security interest hereunder in any Collateral shall cease to be perfected for any reason whatsoever (including, without limitation, release of all or any balance in the Collateral Account or use or disposition by Borrower of any proceeds of Collateral), then such Collateral (referred to in this paragraph as "released Collateral") shall be deemed thereby released from the security interest hereunder in exchange, as of the time of such release, for any other Collateral of equivalent value in which a perfected security interest hereunder is being obtained contemporaneously or has been most recently obtained, but only to the extent such other Collateral does not represent either: (a) Collateral in exchange for which any previously released Collateral shall have been deemed released, or (b) Collateral of equivalent value to any loan (otherwise than by renewal or extension) from the Lender to Borrower in which Collateral, a perfected security interest hereunder shall have been obtained contemporaneously with or most recently prior to such loan. 7. The Borrower will monthly and at such additional times as the Lender may reasonably request, deliver to the Lender an ageing report identifying each Account (listing the name and address of each Account Debtor) subject to the security interest hereunder. The Borrower will also, from time to time, deliver to the Lender such additional ageing reports and such certificates and reports respecting all or any of the Collateral at the time subject to the security interest hereunder, listing the items or amounts received by Borrower in full or partial payment of any of the Collateral, and any goods (the sale or lease of which by the Borrower shall have given rise to any of the Collateral) possession of which has been obtained by Borrower, all to such extent as the Lender reasonably may request. Any such schedule, certificate or report shall be executed by a duly authorized officer of the Borrower and shall be in such form and detail as the Lender reasonably may specify. Any such schedule identifying any Account subject to the security interest hereunder shall be accompanied (if the Lender so requests) by a true and correct copy of the invoice evidencing such Account and by evidence of shipment or performance. 8. Borrower covenants and agrees to furnish to the Bank (i) within thirty (30) days after the end of each fiscal quarter, commencing with the first fiscal quarter, a quarterly operating statement relating to the operations of Borrower; (ii) within ninety (90) days after the end of each fiscal year commencing with the current fiscal year, an annual operating statement containing statements of income and expenses relating to the Borrower, including without limitation those financial statements of Borrower setting forth in each case, in comparative form, the figures for the previous fiscal year, all in form and detail satisfactory to the Bank; (iii) within ten (10) business days of the date of their filing any state or federal income tax return filed by or on behalf of Borrower; and (iv) within ten (10) business days of their filing copies of any documents or statements required to be filed with the Securities and Exchange Commission including, without limitation, any 10Q or 10K forms relating to the Borrower. 9. The occurrence of any of the following events shall constitute a Default (as such term is used herein): (i) the Bank has not received the full amount of any of the Borrower's regular installment payments and the full amount of any late charges due thereon within fifteen (15) calendar days after the date the regular installment payment is due; (ii) the Borrower fails to perform, keep or observe any term or condition of this Security Agreement or of any agreement, instrument or document securing the performance of Borrower's obligations under the Note and, such default remains uncured at the expiration of any applicable cure period; (iii) the Borrower fails to execute within seven (7) business days after presentation of any documents which Lender, in its sole and exclusive discretion, deems necessary to evidence, preserve and protect its interests, including without limitation, any documents, instruments or agreements deemed necessary by Lender to evidence Lender's security interest in any FCC License issued to Borrower or any proceeds thereof. 10. Whenever a Default shall be existing, the Notes and all other Indebtedness may (notwithstanding any provisions thereof), at the option of the Lender, and without demand or notice of any kind, be declared, and thereupon immediately shall become, due and payable, and the Lender may exercise from time to time any rights and remedies available to it under applicable law. The Borrower agrees, in case of Default, to assemble, at its expense, all the Collateral at a convenient place acceptable to the Lender and to pay all costs of the Lender of collection of the Notes and all other Indebtedness, and enforcement of Lender's rights hereunder, including reasonable attorneys fees and legal expenses, and expenses of any repairs to any realty or other property to which any of the Collateral may be affixed or be a part. 11. If any notification of intended disposition of any of the Collateral is required by law, such notification, if mailed, shall be deemed reasonably and properly given if mailed at least fourteen (14) days before such disposition, postage prepaid, addressed to the Borrower either at the address shown below, or at any other address of the Borrower appearing on the records of the Lender. Any proceeds of any disposition of any of the Collateral may be applied by the Lender to the payment of expenses in connection with the Collateral, including reasonable attorneys' fees and legal expenses, and any balance of such proceeds may be applied by the Lender toward the payment of such of the Indebtedness, and in such order of application, as the Lender may from time to time elect. 12. No delay an the part of the Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. If more than one party shall execute this Agreement, the term "Borrower" shall mean all parties signing this Agreement and each of them and all such parties shall be jointly BORROWER: AMERIHOST PROPERTIES, INC., a Delaware Corporation By:_________________________________ MICHAEL P. HOLTZ President Name:_______________________________ Title:______________________________ -----END PRIVACY-ENHANCED MESSAGE-----