EXHIBIT 10.1
March 11, 2004
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.)
c/o Arlington Hospitality, Inc.
(f/k/a Amerihost Properties, Inc.)
2355 South Arlington Heights Road
Suite 400
Arlington Heights, Illinois 60005
Attention: Jerry H. Herman, President
Gentleman:
Reference is made to (i) those certain Lease Agreements listed in
Schedule 1 attached hereto (the "PROPERTY LEASES") between Arlington Inns, Inc.
(f/k/a Amerihost Inns, Inc.) ("TENANT") and the landlords described therein
(collectively, the "LANDLORD"), (ii) that certain Amended and Restated Master
Agreement dated as of January 24, 2001, which agreement was amended by the
parties thereto pursuant to that certain First Amendment to Amended and Restated
Master Agreement dated as of May 25, 2001 and that certain Second Amendment to
Amended and Restated Master Agreement dated as of June 4, 2003 (the Amended and
Restated Master Agreement as so amended herein called the "MASTER AGREEMENT")
and (iii) that certain Guaranty Agreement dated June 30, 1998 (the "GUARANTY"),
executed by Arlington Hospitality, Inc. (f/k/a Amerihost Properties, Inc.)
("GUARANTOR"). Capitalized terms used but not otherwise defined herein shall
have the meaning set forth in the Master Agreement.
Pursuant to the various letters each dated March 2, 2004, Landlord
provided notice to Tenant of certain defaults under the Property Leases and
Master Agreement. Notwithstanding the continued existence of such defaults,
Landlord hereby waives such defaults and agrees to refrain from exercising its
remedies under the Property Leases and Master Agreement, subject to the
following terms and conditions:
1. Although Base Rent will continue to accrue at the rate set forth
in the Master Agreement and the separate Property Leases, the Base
Rent payments required to be paid on March 1, 2004 and April 1,
2004 hereunder shall be reduced to an amount equal to an
annualized rate of 8 1/2% of the stated value of the leased
properties (the "REDUCED PAYMENT"). The Base Rent due, less the
Reduced Payment, is herein called the "ACCRUED BASE RENT."
2. The Reduced Payment amount for March 1, 2004 is $385,319.00, which
amount includes the late fee due on the March 1 Base Rent payment
and past due Base Rent due to CPI increases as provided in the
Property Leases. Tenant shall pay to Landlord, by wire transfer of
good funds, on or before March 12, 2004, the March 1, 2004 Reduced
Payment, less the sum of $108,897.00 (which amount shall be funded
by Landlord from the Escrow Funds held under the Master
Agreement),
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.)
c/o Arlington Hospitality, Inc.
(f/k/a Amerihost Properties, Inc.)
March 11, 2004
Page 2
for a net payment of $276,422.00. The Reduced Payment amount for
April 1, 2004 is $359,833.00. Tenant shall pay to Landlord, by
wire transfer of good funds, on or before April 1, 2004, the April
1, 2004 Reduced Payment, less the sum of $100,000 (which amount
shall be funded by Landlord from the Escrow Funds held under the
Master Agreement), for a net payment of $259,833.00.
3. Concerning capital expenditures reimbursement requests previously
made by Tenant to Landlord with respect to the calendar year 2003,
Landlord agrees to reimburse Tenant the total of $62,499.29 by
wire transfer of good funds on or before March 12, 2004, which
amount is net of the amount of $89,161.78, which is the estimated
reserve payments to the Capital Expenditure Reserve Account due
under the Property Leases and Master Agreement by Tenant for the
months of January, 2004 (which payment was due on February 15,
2004) and February, 2004 (which payment is due on March 15, 2004
(the "Outstanding Reserve Payments"). The credit against the
amount to be paid by Landlord in accordance with the prior
sentence shall satisfy Tenant's obligation to fund the OUTSTANDING
RESERVE PAYMENTS and to the extent Tenant is entitled to any
further reimbursement for any additional capital expenditures for
the calendar year 2003 under the terms of the Property Leases,
such reimbursement shall not exceed $20,000.00 in any event. The
provisions of this Section 3 do not apply to the payment of
capital expenditures for the four hotels with securitized
financing.
4. On or before the earlier of (a) April 30, 2004 or (b) the date of
any failure by Tenant to comply with the terms hereof (the
"TERMINATION DATE"), Tenant shall (a) pay all Accrued Base Rent,
and (b) restore the $208,897.00 of the Escrow Funds used by
Landlord to fund a portion of the Reduced Payment as provided in
Paragraph 2 above.
5. Subject to the terms of that certain Confidentiality Agreement
between Tenant and Landlord and dated February 19, 2004 and the
advice of its auditors and legal counsel, Tenant will use good
faith efforts to promptly provide to Landlord all financial
information regarding Tenant, Guarantor and the operation of the
leased properties requested by Landlord in order for Landlord to
evaluate the financial position of Arlington, the properties and
the Guarantor.
6. Concerning the sale of the hotels subject to the Property Leases,
Tenant shall prepare on a good faith basis and present to Landlord
a plan for pricing, listing and selling such hotels, the terms of
which may be incorporated into any modification of the Property
Leases and Master Agreement entered into between the parties
during the term of this Letter Agreement. Pending the finalization
of any such plan, Tenant will present to Landlord all offers
received on said hotels, if
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.)
c/o Arlington Hospitality, Inc.
(f/k/a Amerihost Properties, Inc.)
March 11, 2004
Page 3
any, which are received directly from any prospective purchaser or
through any broker inquiries, whether or not listed with such
broker, together with Tenant's written recommendation on the
action to be taken in connection with such offer.
7. Landlord, Tenant and Guarantor will comply with all other
provisions of and obligations under the Master Agreement, the
Property Leases, and any other agreements between Tenant,
Guarantor and Landlord, including, without limitation, keeping all
other payments required under such documents current.
Nothing herein shall be deemed to preclude Landlord from exercising any
of its rights and remedies under the Property Leases and/or the Master Agreement
upon the expiration of this Letter Agreement.
Please indicate your acceptance of the terms hereof by signing a copy
of this letter in the space provided below and returning one executed
counterpart to Jan F. Salit of PMC Commercial Trust.
Very truly yours,
PMC COMMERCIAL TRUST
By: /s/ LANCE B. ROSEMORE
------------------------------
Name: Lance B. Rosemore
Title: President
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.)
c/o Arlington Hospitality, Inc.
(f/k/a Amerihost Properties, Inc.)
March 11, 2004
Page 4
ACCEPTED AND AGREED THIS 17th DAY OF MARCH, 2004:
ARLINGTON INNS, INC.
(f/k/a Amerihost Inns, Inc.)
By: /s/ JERRY H. HERMAN
----------------------------------
Name: Jerry H. Herman
-----------------------------
Title: President
----------------------------
By: /s/ JAMES B. Dale
----------------------------------
Name: James B. Dale
-----------------------------
Title: Secretary
----------------------------
ARLINGTON HOSPITALITY, INC.
(f/k/a Amerihost Properties, Inc.)
By: /s/ JERRY H. HERMAN
----------------------------------
Name: Jerry H. Herman
-----------------------------
Title: President
----------------------------
By: /s/ JAMES B. Dale
----------------------------------
Name: James B. Dale
-----------------------------
Title: Secretary
----------------------------
SCHEDULE 1
1. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1611 Range Road, Port
Huron, Michigan 48074
2. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 400 Orbiting Drive,
Mosinee, Wisconsin 54455
3. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1726 Lake Avenue, Storm
Lake, Iowa 50588
4. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 625 Spicer Drive,
Tupelo, Mississippi 38801
5. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 2055 E. Lincolnway,
Wooster, Ohio 44691
6. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 789 East Milltown Road,
Wooster, Ohio 44691
7. Lease Agreement dated March 23, 1999 between PMCT Sycamore, L.P. and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1475 South Peace Road,
Sycamore, Illinois 60178
8. Lease Agreement dated March 23, 1999 between PMCT Macomb, L.P. and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1646 N. Lafayette
Expressway, Macomb, Illinois 61455
9. Lease Agreement dated March 5, 1999 between PMCT Plainfield, L.P. and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 6105 Cambridge Way,
Plainfield, Indiana 46168
10. Lease Agreement dated March 5, 1999 between PMCT Marysville, L.P.) and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 16520 Allenby Drive,
Marysville, Ohio 43040
11. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 567 East Highway 38,
Rochelle, Illinois 61068
12. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1100 North Grand Avenue,
Mt. Pleasant, Iowa 52641
13. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 14774 Laplaisance Road,
Monroe, Michigan 48161
14. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 951 South Central
Expressway, McKinney, Texas 75070
15. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 465 Vann Drive, Jackson,
Tennessee 38305
16. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 2171 Holton Court,
Walker, Michigan 49544
17. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 7625 Caterpillar Court,
Grand Rapids, Michigan 49548
18. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 100 North Park Court,
Stockbridge, Georgia 30281
19. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 1040 O'Malley Drive,
Coopersville, Michigan 49404
20. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 741 US 250 East,
Ashland, Ohio 44805
21. Lease Agreement dated June 30, 1998 between PMC Commercial Trust and
Arlington Inns, Inc. (f/k/a Amerihost Inns, Inc.) with respect to the
property known as the AmeriHost Inn and located at 5130 S. Cobb Drive,
Smyrna, Georgia 30082