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EXHIBIT 99.(a)
LOAN COMMITMENT LETTER FROM U.S. BANK
AND RATE LOCK AGREEMENT
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[LETTERHEAD OF U.S. BANK]
November 18, 1998
Xx. Xxxxxx Xxxxxxxx
Peninsula Motel Associates
0000 Xxxxxxxx Xx., XX
Xxxxxxxx, Xxxxxxxxxx 00000
Dear Xxxxx:
U.S. Bank is pleased to offer Xxxxxxxx Family, LLC, (successor to Peninsula
Motel Associates and related entities) the following commitment. This is a firm
commitment and, as such, this will facilitate quickly moving towards a closing.
BORROWER: Xxxxxxxx Family, LLC, A Washington Liability
Company
GUARANTOR: Xxxxxx Xxxxxxxx & Xxxxxxxx Xxxxxxxx (husband and
wife) (Limited to $25,000,000), Peninsula
Development Services and any management or
subsidiary companies, jointly and severally.
PURPOSE: Loan to consolidate ownership of Super 8 Motels
currently held in various partnerships, buy out
underlying leases, pay transaction costs and
refinance existing debt.
AMOUNT: 1) Maximum of 75% of appraised value of Super 8
Motel properties securing the loan (estimated
$66,500,000 credit facility) consisting of the
following:
a) $59,276,920 term loan ($30,000,000 to be
participated at closing) secured by 23 Super 8
properties.
b) Term loan for $2,500,000 secured by 1st D/T on
lacey Super 8
c) Term loan for $1,575,000 secured by 1st D/T on
Bremerton Super 8
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d) Term loan for $1,980,000 secured 1st D/T on
Yakima Super 8
e) Term loan for $1,168,080 secured by Peninsula
Office
2) $2,000,000 line of credit for future buy out
opportunities. (Existing unsecured lines total
$1,800,000 and will be replaced by the $2,000,000
line of credit)
INTEREST RATE: 1) Fixed Treasury plus 3.00%, minimum 7.5% rate
2) Prime Rate plus .25%.
FEES: 1) Bank fee of 1.0%.
2) 1/4% annually
Administrative Agent Fee of $10,000 annually for
first five (5) years.
PREPAYMENT PREMIUM: Yield maintenance agreement on fixed rate option.
None on floating option.
COMMITMENT DEADLINE: Acceptance required by November 20, 1998
AMORTIZATION/REPAYMENT: 1) a) Monthly principal and interest payments per
the following schedule:
YEAR ANNUAL PAYMENTS MONTHLY PAYMENTS
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1-5 $5,760,000 $480,000
6-7 $6,600,000 $525,000
b) Monthly principal and interest payments of about
$20,000.00 (20 year amortization).
c) Monthly principal and interest payments of about
$13,000.00 (20 year amortization).
d) Monthly principal and interest of about $16,000
(20 year amortization).
e) Monthly principal and interest payments of about
$9,500.00 (20 year amortization).
TERM: 1) a) Seven (7) maturity term, 20 year
amortization,
b-e) Five (5) year maturity with a 20 year
amortization.
2) One year with interest payable monthly.
COLLATERAL: 1) A First Deed of Trust on fee simple interest in
Super 8 Motel properties sufficient to generate a
value of real
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estate with a maximum loan to Bank accepted and
reviewed MAI appraisals of 75% on all notes and a
first security priority security interest in all
accounts, equipment, fixtures, improvements,
assignment of franchise rights and other personal
property associated with or relating to such Super
8 motel properties.
2) Unsecured, 30 day out of debt requirement.
CONDITIONS PRECEDENT: - ALTA Lender's Extended Coverage Title policy
insuring first lien position and adequate
property and casualty insurance on all
properties offered as collateral.
- Formal credit approval by Bank.
- Satisfactory review and approval by Bank of each
property's compliance with the Americans with
Disabilities Act.
- Execution and delivery of credit and security
documentation satisfactory to Bank.
- Acceptable financial statements and other
financial information from borrower and
guarantors.
- Review and acceptance of borrowing entity
documentation.
- No material adverse change in condition or
prospects of borrower or any guarantor.
- Satisfactory opinion of counsel for xxxxxxxx and
guarantors.
- Environmental questionnaire and Level 1
environmental audit to be completed and reviewed
and accepted by Bank.
- FIRREA complaint MAI Appraisal with an
acceptable Bank review to be completed on all
properties offered as collateral.
- Commitments from loan participants for
$30,000,000 to be received prior to funding.
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COVENANTS: The usual and including but not limited to:
- Reporting requirements to include annual audited
statement within 120 days of the fiscal
year-end, monthly occupancy and ADR statistics
on all properties and other such information as
may reasonably be requested by the Bank. Also,
financial statements on the guarantors to be
provided annually.
- No sale of assets, merger, consolidation, change
of control, additional liens on properties or
future indebtedness secured by the real estate
collateral without the Bank's prior written
approval.
- The ratio of cash flow, (EBITDA less renovation
reserve of 5% of net revenues) to current
portion of long term debt plus interest expense
will not fall below 1.20 to 1.
- Renovation Reserve of 5% to be funded and
deposited with Bank on a monthly basis.
MISCELLANEOUS: - Xxxxxxxx Family, LLC agrees to pay all legal
fees, appraisal fees and costs incurred in the
preparation of the documentation. A deposit of
$100,000 will be required upon acceptance of
this commitment. This deposit is earned upon the
signing of this commitment. This will also be
applied towards the overall fee collected at
closing.
- Washington law to apply.
- Ability to subdivide land on which SeaTac and
Xxxxx Super 8 motels, and Peninsula Office Park
are located, based on Bank acceptable MAI
appraised value.
- Provisions for deed releases of individual
properties providing LT is equal to or less than
75% (based on current appraisals acceptable to
Bank),. The remaining debt coverage ratio is 1.4
or greater on the remaining assets and no
existing default.
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
Xxxxx, please sign acknowledging your acceptance and enclose the deposit.
Thanks.
Sincerely, Commitment Acceptance:
____________________________________
Xxxxxx X. Xxxxxxxxxx Xxxxxx Xxxxxxxx, Manager
Vice President Xxxxxxxx Family, LLC
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[LETTER OF THE PENINSULA GROUP]
December 2, 1998
Xx. Xxxxxx Xxxxxxxxxx
Xx. Vice President
US Bank
Seattle, WA VIA Fax: 000-000-0000
Dear Xxxxxx:
This letter will serve to notify you of our decision to do a forward rate lock
on the loans committed to our entitles as follows:
For the single large loan, please lock Six Million, seven hundred eighty-seven
thousand, five hundred dollars ($6,787,500) at today's rate of 5 year T-bills
plus 3%, but not less than 7.5%. Therefore the rate is 7.5% P/A.
The lock should be for a period of 4 months from today.
We have elected to finance the lock by adding 1 basis point (.01) per month for
the four month period. This arrangement will create a 7.55% annual rate on that
part of the 7 year loan on which we have placed the lock ($57,152,000) and a
7.54% annual rate on that part of the 5 year loan on which we have placed the
lock ($6,787,000).
It is understood that the remainder of the funds which will total not more than
75% of the appraised value of the properties being offered as security will be
taken either at a rate we may subsequently lock, or at the appropriate T-bill
rate plus 3 points.
This letter only serves to notify you of the lock and is in addition to the lock
commitment letter being completed by you and our counsel Xxxxx Xxxxxx.
Sincerely,
Xxxxxx X. Xxxxxxxx
President & CEO
cc: Xxxxx Xxxxxx
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[LETTER OF US BANK]
December 2, 1998
Xx. Xxxxxx Xxxxxxxx
Xxxxxxxx Family, LLC
0000 Xxxxxxxx Xx. XX
Xxxxxxxx, Xxxxxxxxxx 00000
Dear Xxxxx:
U.S. Bank is pleased to offer Xxxxxxxx Family, LLC (successor to Pensinsula
Motel Associates and related entities) the following commitment to fix the rate
for the commitment letter dated 11/18/98.
BORROWER: Xxxxxxxx Family, LLC, A Washington Limited
Liability Company
TERM LOAN AMOUNTS: 1) $59,276,920 secured by 1st D/T on 23 Super 8
properties
2) $2,500,000 secured by 1st D/T on Lacey Super 8
3) $1,575,000 secured by 1st D/T on Bremerton Super
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4) $1,980,000 secured by 1st D/T on Yakima Super 8
5) $1,168,080 secured by Peninsula Office
INTEREST RATE: Fixed Treasury plus 3.00%, minimum 7.5% rate.
Current rate is 7.51% for 1) and 7.50% for 2-5).
FORWARD RATE LOCK: Costs of locking in current rates are 1bp or .01%
per month added to the loan rates above.
or a "Hedging Fee" (cash up front) of:
1) $33,000.00 per month ($132,000.00 for four
months).
2-5) $2,550.00 per month ($7,650.00) for four
months)
The Borrower may elect to set a fixed rate of
interest for the term loans. The Borrower may elect
to do so by agreeing with the Bank to a fee, to be
paid upon the setting of the rate, established by
the Bank (the "Hedging Fee"). As an example, the
Hedging Fee for fixing the rate at 7.51% for 1) and
7.50% for 2), had the Hedging Fee been paid on
December 2, 1998 would have been $132,000 for
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1) and $7,650 for 2) for the amount and
amortization indicated above. This is used as an
example, and amortization indicated above. This is
used as an example, and rates and applicable fees
may change due to market conditions.
PREPAYMENT PREMIUM: If the borrower elects to set a fixed rate in this
manner, and then fails for any reason not to borrow
the term loans, whether voluntarily, or
involuntarily, or cannot comply with conditions
precedent, the following shall apply: (i) no amount
of the hedging fee shall be returned (and such fee
shall be retained by the Bank), and (ii) the
Borrower shall be required to pay to the Bank an
additional amount calculated by the Bank (see
attached) as its loss or damages resulting from the
Banks' reservation of funds, or hedging
arrangements entered into by the Bank, for the Bank
to have been able to make the term loans at the
fixed rate. The Bank may calculate such amount as
if the Bank had entered into hedging arrangements
for the amount of the tenor of the term loans,
whether or not the Bank hedged such loans on an
individual basis (or merely hedged its entire fixed
rate portfolio).
Yield maintenance agreement per example attached.
This is in effect if either a prepayment occurs,
less than the full amount of the loan is funded or
terms of the deal change materially.
AMORTIZATION/REPAYMENT: 1) Appropriate monthly principal and interest
payments per the following:
YEAR ANNUAL PAYMENTS MONTHLY PAYMENTS
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1-5 $5,760,000 $480,000
6-7 $6,600,000 $525,000
2) Monthly principal and interest payments of
$20,000
3) Monthly principal and interest payments of
$13,000
4) Monthly principal and interest of $16,000
5) Monthly principal and interest payments of
$9,500.
TERM: 1) Seven (7) maturity term, 20 year amortization,
2-5) Five (5) year maturity with a 20 year
amortization.
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
Xxxxx, please sign the appropriate acceptance and enclose the lock fee if
applicable. Thanks.
Sincerely, Loan Rate Increase Acceptance: Lock In Fee Acceptance:
Xxxxxx X. Xxxxxxxxxx Xxxxxx Xxxxxxxx, Manager Xxxxxx Xxxxxxxx, Manager
Vice President Xxxxxxxx Family, LLC Xxxxxxxx Family, LLC
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