10000005117

DEWEY & LEBOEUF LLP
1301 Avenue of the Americas

New York, New York 10019
Telephone: (212) 259.8000
Facsimile: (212) 259.6333
Martin J. Bienenstock, Esq.
Timothy Q. Karcher, Esq.

Attorneys for Ad Hoc Committee of Preferred Shareholders

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
INNKEEPERS USA TRUST, et al.,
Debtors.
LEHMAN ALI INC.
MIDLAND LOAN SERVICES
ONE EAST CAPITAL ADVISORS L.P.
Objectants,
-against-
AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS

Respondents.

Chapter 11 Case No.

Case No. 10 13800
(SCC)
(Jointly Administered)

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MEMORANDUM OF LAW OF AD HOC
COMMITTEE OF PREFERRED SHAREHOLDERS IN
SUPPORT OF REMAINING DEBTORS PLANS AND
AD HOC COMMITTEE AGREEMENT CONTAINED THEREIN

TO THE HONORABLE SHELLEY C. CHAPMAN
UNITED STATES BANKRUPTCY JUDGE:

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The Ad Hoc Committee of Preferred Shareholders (the Ad Hoc Committee)
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in
the above-captioned chapter 11 cases of Innkeepers USA Trust (Innkeepers or the
Company), its parent corporation Grand Prix Holdings, LLC (Grand Prix) and their direct
and indirect title 11 debtor subsidiaries (collectively with Innkeepers and Grand Prix, the
Debtors),
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hereby files its memorandum of law in support of the Remaining Debtors Plans

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The following holders which collectively hold approximately 20.7% of Innkeepers 8.0% Series C Cumulative
Preferred Shares comprise the Ad Hoc Committee: Brencourt Advisors, LLC; Esopus Creek Advisors, LLC;
Plainfield Special Situations Master Fund II Limited; Morgens, Waterfall, Vintiadis & Co., Inc.; and P.
Schoenfeld Asset Management LP, for and on behalf of certain funds and entities for which it serves as the
Investment Advisor.
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The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtors federal tax identification
number, are: GP AC Sublessee LLC (5992); Grand Prix Addison (RI) LLC (3740); Grand Prix Addison (SS)
LLC (3656); Grand Prix Albany LLC (3654); Grand Prix Altamonte LLC (3653); Grand Prix Anaheim Orange
Lessee LLC (5925); Grand Prix Arlington LLC (3651); Grand Prix Atlanta (Peachtree Corners) LLC (3650);
Grand Prix Atlanta LLC (3649); Grand Prix Atlantic City LLC (3648); Grand Prix Bellevue LLC (3645); Grand
Prix Belmont LLC (3643); Grand Prix Binghamton LLC (3642); Grand Prix Bothell LLC (3641); Grand Prix
Bulfinch LLC (3639); Grand Prix Campbell / San Jose LLC (3638); Grand Prix Cherry Hill LLC (3634); Grand
Prix Chicago LLC (3633); Grand Prix Columbia LLC (3631); Grand Prix Denver LLC (3630); Grand Prix East
Lansing LLC (3741); Grand Prix El Segundo LLC (3707); Grand Prix Englewood / Denver South LLC (3701);
Grand Prix Fixed Lessee LLC (9979); Grand Prix Floating Lessee LLC (4290); Grand Prix Fremont LLC
(3703); Grand Prix Ft. Lauderdale LLC (3705); Grand Prix Ft. Wayne LLC (3704); Grand Prix Gaithersburg
LLC (3709); Grand Prix General Lessee LLC (9182); Grand Prix Germantown LLC (3711); Grand Prix Grand
Rapids LLC (3713); Grand Prix Harrisburg LLC (3716); Grand Prix Holdings LLC (9317); Grand Prix
Horsham LLC (3728); Grand Prix IHM, Inc. (7254); Grand Prix Indianapolis LLC (3719); Grand Prix Islandia
LLC (3720); Grand Prix Las Colinas LLC (3722); Grand Prix Lexington LLC (3725); Grand Prix Livonia LLC
(3730); Grand Prix Lombard LLC (3696); Grand Prix Louisville (RI) LLC (3700); Grand Prix Lynnwood LLC
(3702); Grand Prix Mezz Borrower Fixed, LLC (0252); Grand Prix Mezz Borrower Floating, LLC (5924);
Grand Prix Mezz Borrower Floating 2, LLC (9972); Grand Prix Mezz Borrower Term LLC (4285); Grand Prix
Montvale LLC (3706); Grand Prix Morristown LLC (3738); Grand Prix Mountain View LLC (3737); Grand
Prix Mt. Laurel LLC (3735); Grand Prix Naples LLC (3734); Grand Prix Ontario Lessee LLC (9976); Grand
Prix Ontario LLC (3733); Grand Prix Portland LLC (3732); Grand Prix Richmond (Northwest) LLC (3731);
Grand Prix Richmond LLC (3729); Grand Prix RIGG Lessee LLC (4960); Grand Prix RIMV Lessee LLC
(4287); Grand Prix Rockville LLC (2496); Grand Prix Saddle River LLC (3726); Grand Prix San Jose LLC
(3724); Grand Prix San Mateo LLC (3723); Grand Prix Schaumburg LLC (3721); Grand Prix Shelton LLC
(3718); Grand Prix Sili I LLC (3714); Grand Prix Sili II LLC (3712); Grand Prix Term Lessee LLC (9180);
Grand Prix Troy (Central) LLC (9061); Grand Prix Troy (SE) LLC (9062); Grand Prix Tukwila LLC (9063);
Grand Prix West Palm Beach LLC (9065); Grand Prix Westchester LLC (3694); Grand Prix Willow Grove
LLC (3697); Grand Prix Windsor LLC (3698); Grand Prix Woburn LLC (3699); Innkeepers Financial
Corporation (0715); Innkeepers USA Limited Partnership (3956); Innkeepers USA Trust (3554); KPA HI
Ontario LLC (6939); KPA HS Anaheim, LLC (0302); KPA Leaseco Holding Inc. (2887); KPA Leaseco, Inc.
(7426); KPA RIGG, LLC (6706); KPA RIMV, LLC (6804); KPA San Antonio, LLC (1251); KPA Tysons
Corner RI, LLC (1327); KPA Washington DC, LLC (1164); KPA/GP Ft. Walton LLC (3743); KPA/GP
Louisville (HI) LLC (3744); KPA/GP Valencia LLC (9816). The location of the Debtors corporate
headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite
306, Palm Beach, Florida 33480.
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(the Plan) and the agreement among the Debtors and the Ad Hoc Committee (the Ad Hoc
Committee Agreement) contained therein and attached hereto as Exhibit A. In support of the
Plan and the Ad Hoc Committee Agreement, the Ad Hoc Committee respectfully avers:
SUMMARY OF ARGUMENT
1. Three objections
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have been lodged to the Ad Hoc Committee Agreement.
A fourth was filed and withdrawn. In the main, none of them objects to the reasonable attorneys
fees and other out of pocket expenses for experts and the like incurred by the members of the Ad
Hoc Committee. Those fees approximate $2.2 million, and remain subject to increase through
the effective date and until distributions have been made. Accordingly, the objections are aimed
at the remaining $1.3 million. The United States Trustee has not filed any objection whatsoever
to the Ad Hoc Committee Agreement to pay the Ad Hoc Committee $3.5 million.
2. Each of the objections shares the same fatal defect, namely, its premise
that the $1.3 million is being paid to the Ad Hoc Committee members on account of their
preferred shares, thereby providing them better treatment than other preferred shareholders in
violation of Bankruptcy Code section 1123(a)(4). If the objectors premise were correct, their
conclusion would be correct. But, the premise is completely wrong.
3. The $1.3 million is being paid for (a) value the Ad Hoc Committee
members, and no one else, provided all the Remaining Debtors (debtors not subject to other
chapter 11 plans), and (b) settlement of claims raised by the Ad Hoc Committee members and no

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Lehman ALI Inc. and SASCO 2008-C2, LLCS (I) Limited Objection to Confirmation of the Remaining Debtors
Plan and (II) Reservation of Rights, dated June 17, 2011 [Docket No. 1737] (the Lehman Objection);
Objection of Midland Loan Services to Confirmation of the Fixed/Floating and Remaining Debtor Plans of
Reorganization, dated June 17, 2011 [Docket No. 1738] (the Midland Objection); and Objection by One
East Capital Advisors L.P. to Confirmation of The Remaining Debtors Plan Of Reorganization, dated June 17,
2011 [Docket No. 1735] (the One East Objection) (collectively, the Objectants).
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one else. Specifically, the Ad Hoc Committee members uniquely provided the following values
and settled the following claims:
(i) Three Stalking Horse Offers that Provided Competition for Chatham: The
Ad Hoc Committee members made three offers for five of the seven
sisters, complete with commitments to backstop a rights offering to raise
sufficient working capital to own and operate the five properties. This
alone is worth more than the $1.3 million because the Ad Hoc Committee
members can be granted a breakup fee and expense reimbursement of
more than $1.3 million for such offers. No one else made such offers.
Moreover, just as the Court, by order dated May 11, 2011, granted
Chatham Lodging Trust (Chatham) a break-up fee after the auction
occurred, it can grant the Ad Hoc Committee a break-up fee now. That is
already the law of the case. Similarly, Cerberus is granted a break-up fee
under the very same plans Objectants support. See Order Approving (A)
Adequacy of the Disclosure Statement; (B) Certain Dates Related to
Confirmation of the Plan; (C) Certain Voting Procedures and the Form of
Certain Documents to be Distributed in Connection with Solicitation of
the Plan; and (D) Proposed Voting and General Tabulation Procedures,
dated May 19, 2011 [Docket No. 1441] at 33 ([T]he Fixed/Floating
Plan Sponsors shall be entitled to (a) payment of a $12 million cash
termination fee . . . and (b) reimbursement of up to $3 million on account
of reasonable and documented expenses incurred by the Fixed Floating
Plan Sponsors. . . .).

(ii) Saved the Remaining Debtors between $5 million and $10 million of
Default Interest and Settled its Ability to Prevent Simultaneous Auction of
the Seven Sisters and the 65 Properties. Although the Debtors procured
a court order scheduling the sale of the 65 properties subject to the two
blanket mortgages, there was no auction scheduled for the seven sisters.
As the auction date approached for the 65 properties, each of the Debtors
and LNR determined for different reasons they wanted to auction the
seven sisters simultaneously with the 65 properties. LNR determined it
wanted five of the seven sisters sold because it was afraid it might lose
Chatham as the most likely buyer and Chatham was going to assume the
LNR mortgage debt. The Debtors determined they wanted to auction five
of the seven sisters because (i) it was possible a buyer would only buy
the 65 properties if it could also purchase five of the seven sisters (as one
prominent entity proposed in a stalking horse offer), and (ii) the Debtors
wanted to end the process. The Ad Hoc Committee advised the Debtors
and LNR that it would object to an auction of the seven sisters without a
court order providing a schedule, bidding procedures, and marketing.
Pursuant to (a) the stipulation dated May 3, 2011 the Ad Hoc Committee
entered into with LNR and the Debtors, and (b) the Ad Hoc Committee
Agreement, the Ad Hoc Committee settled its objections to the auction of
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five of the seven sisters and settled its substantial contribution claims in
exchange for (i) LNRs agreement to waive over $5 million to $10 million
of default interest and to limit its reimbursement claim, and (ii) the
Debtors agreements (y) to provide the preferred shareholders reporting
and other protections and (z) to pay the Ad Hoc Committee members $3.5
million. See Stipulation By and Between the Debtors, LNR Partners LLC,
as Special Servicer for the Trusts, and the Ad Hoc Committee of Preferred
Shareholders Regarding the Sale of Trust Properties, dated May 3, 2011
(hereinafter, the Stipulation), attached hereto as Exhibit B.

(iii) Saved the Estates from Indemnity Claims ahead of Preferred Shares.
Article X of the Grand Prix Acquisition Trust ByLaws provides Grand
Prix trustees and officers indemnity, inclusive of reimbursement of
defense costs, for virtually all claims except for meritorious claims for
deliberate dishonesty, personal gain, and the like. See Grand Prix
Acquisition Trust ByLaws, attached hereto as Exhibit C, at Article X. The
Ad Hoc Committee agreed to be a Releasing Party, thereby eliminating its
claims which would have generated indemnity expenses that the trustees
and management would argue come before the preferred shares.

(iv) Obtained $7.4 million Cash for Remaining Debtors. The Debtors advised
the Ad Hoc Committee that the Ad Hoc Committees analysis that no liens
encumbered the $7.4 million cash held in a Bank of America account at
Innkeepers USA LP turned out correct, even though the Debtors originally
thought the opposite. This benefitted the Remaining Debtors by $7.4
million, with resulting benefits to all preferred shareholders, none of
whom would benefit from these funds if the Ad Hoc Committee had not
shown how they were unencumbered.

(v) Successfully Opposed Plans Paying Preferred Shares Nothing. From the
beginning of the case through March 10, 2011, the Debtors were
proposing plans providing preferred shareholders zero for the seven
sisters and taking away their $7.4 million unless they supported getting
nothing for the seven sisters. See Debtors Motion for Entry of an Order
(I) Authorizing the Debtors to Enter Into the Commitment Letter With Five
Mile Capital II Pooling REIT LLC, Lehman ALI Inc., and Midland Loan
Services, (II) Approving the New Party/Midland Commitment Between the
Debtors and Midland Loan Services, (III) Approving Bidding Procedures,
(IV) Approving Bid Protections, (V) Authorizing an Expense
Reimbursement to Bidder D, and (VI) Modifying Cash Collateral Order
to Increase Expense Reserve, dated January 14, 2011 [Docket No. 820]
(hereinafter, the Five Mile/Lehman Stalking Horse Motion). The only
advocate against that treatment was the Ad Hoc Committee. Moreover,
absent the Ad Hoc Committees opposition, there was absolutely no force
in these cases that would have motivated any party to stop the transfer of
the seven sisters to Midland and Lehman for no consideration. Indeed,
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the Debtors trustees unanimously approved such transfer for no
consideration.

4. As set forth more fully below, the foregoing facts justify the $3.5 million
payment on multiple legal grounds:
(i) Settlement. As a matter of law, the Ad Hoc Committee is entitled to the
$3.5 million simply for settling its objection to the auction of five of the
seven sisters. At the time the deal was made, there was more than $1
billion at stake between the 65 properties and the seven sisters. By any
yardstick, the payment by the Remaining Debtors of $3.5 million to settle
all the Ad Hoc Committees claims, including substantial contribution
claims, and to eliminate a defense and cloud over the auction where a
buyer for the 65 properties may require the other seven properties, is a
settlement above the lowest level of the zone of reasonableness in
accordance with Bankruptcy Rule 9019.

(ii) Bankruptcy Code section 503(b)(3-4). The fees and expenses of Dewey &
LeBoeuf LLP (approximately $2.1 million), Portfolio Hotels & Resorts
LLC (hotel experts) (approximately $100,000), and expenses of Ad Hoc
Committee members are all reimbursable.

(iii) Bankruptcy Code section 1129(a). As Bankruptcy Judge Gerber opined in
In re Adelphia Communications Corp., 441 B.R. 6, 13 (Bankr. S.D.N.Y.
2010), section 1129(a)(4) approves payments beyond substantial
contribution claims as long as the payments are reasonable pursuant to
section 1123(b)(3)(A) of the Bankruptcy Code.

(iv) Bankruptcy Code section 1123(b)(6). Because the settlement with the Ad
Hoc Committee enabled the Debtors to move forward with confirmation
through a resolution of the Ad Hoc Committees claims and causes of
action not inconsistent with other provisions of the Bankruptcy Code, the
Ad Hoc Committee Agreement satisfies section 1123(b)(6) of the
Bankruptcy Code. In addition, given that the Debtors proposed the
settlement to achieve global peace in accordance with permissible plan
provisions under section 1123(b)(6), the Ad Hoc Committee Agreement
satisfies the good faith requirement of section 1129(a)(3).

(v) Bankruptcy Code section 1123(a)(4). As stated above, the Ad Hoc
Committee Agreement between the Debtors and the members of the Ad
Hoc Committee does not violate section 1123(a)(4) because the members
of the Ad Hoc Committee are receiving the $1.3 million payment not on
account of their interests as holders of preferred shares, but rather as
bidders and parties in interest who provided value to and settled claims
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against the Remaining Debtors that no other preferred shareholder in these
cases provided or timely raised.

5. The Objectants Make Several Arguments Erroneous on their Facts and
Law. Both Midland and Lehman incorrectly assert that the $3.5 million payment should not be
funded by any other entity other than Innkeepers USA Trust, the entity that issued the preferred
shares owned by the members of the Ad Hoc Committee. See Midland Objection at p. 21-22;
Lehman Objection at p. 5. That is just plain wrong. The Ad Hoc Committee can receive
payment from each entity that obtained value from the Ad Hoc Committee members by any
means. The Ad Hoc Committee benefitted all the Remaining Debtors by, among other things: (i)
making a stalking horse offer to purchase five properties and to backstop the raising of working
capital, which offer showed all bidders the properties did not need to go to auction, (ii)
convincing the Debtors to carve out five of the seven sisters for a sale that ultimately resulted
in proceeds substantially above the mortgage debt on such hotels, and (iii) negotiating with the
special servicer of the mortgage debt encumbering five of the seven sisters to eliminate over
$10 million of default interest claims and to limit other secured charges and fees potentially
encumbering the properties (including the bank account at Innkeepers USA LP holding the $7.4
million cash).
6. Conversely, neither Midland nor Lehman has any claims at Innkeepers
USA LP, the entity that will fund the $3.5 million. Midland and Lehman must live and die with
the contractual rights that they bargained for: a guaranty by Grand Prix (which sits behind
Innkeepers USA LP) and nothing more. Indeed, Midland and Lehman seem to ignore altogether
that the Ad Hoc Committee agreed to waive its right to equitably subordinate Grand Prixs
recovery on account of its Innkeepers USA Trust Preferred A Shares (the Series A Shares).
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Equitable subordination of the Series A shares would eliminate any ability for Midland and
Lehman to obtain distributions from Grand Prix because Grand Prix would have no assets.
7. As the holding company in control of all the Debtors, Grand Prix has
ultimate responsibility for causing the Debtors, repeatedly, to attempt to transfer the seven
sisters for nothing and to deprive the preferred shareholders of $7.4 million cash unless they
supported transferring the seven sisters for nothing. This Court repudiated Grand Prixs first
attempt in a written decision finding breaches of fiduciary duty. See In re Innkeepers USA Trust,
No. 10-13800, 2010 WL 5300870, at *3 (Bankr. S.D.N.Y. Dec. 20, 2010) (holding that the Court
could not conclude that the debtors exercised due care in electing to move forward with the
current plan term sheet and the proposed valuation implied therein).
8. If the Ad Hoc Committee presses its equitable subordination claims
against Grand Prix and is successful, there will be nothing in Grand Prix to satisfy Midland and
Lehmans guaranty claims against Grand Prix if they have allowable claims in the first place,
especially after Lehman did not even file a proof of claim. Accordingly, even Midland and
Lehman benefit from the settlement in the Ad Hoc Committee Agreement.
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PERTINENT FACTS
9. From the inception of and throughout these chapter 11 cases, the members
of the Ad Hoc Committee have continuously made contributions and taken actions unmatched by
any other preferred shareholder:
they personally incurred over approximately $2 million of fees and
expenses to vindicate their rights;
they spent thousands of hours actively participating in telephonic
conferences and in-person meetings as the Ad Hoc Committees financial
advisor;
they vigorously opposed a plan support agreement that provided preferred
shareholders with zero consideration, the denial of which ultimately led
the Debtors to pursue a competitive marketing process of the Debtors
assets that resulted in a substantially higher enterprise value for the
Debtors estates;
they executed confidentiality agreements that restricted the ability of
members of the Ad Hoc Committee to trade securities in order to conduct
due diligence of financial and operating data assembled in an electronic
data room for the purposes of maximizing the return to preferred
shareholders;
they analyzed entitlements to a bank account containing $7.4 million cash
and demonstrated the cash was not encumbered by any secured claims and
was therefore available for the preferred shares after satisfaction of certain
senior claims;
they advised the Official Committee of Unsecured Creditors of potential
perfection issues and fraudulent conveyance actions;
they engaged Portfolio Hotels & Resorts, LLC (Portfolio) to conduct
site visits of all 72 of the Innkeepers hotel properties;
they assisted with the solicitation of third party bids among interested
buyers identified by the Ad Hoc Committee, including two ultimate
stalking horse bidders;
they submitted three stalking horse offers which caused the members of
the Ad Hoc Committee to incur joint and several liability by agreeing to
backstop a preferred shareholders rights offering equal to $15 million,
which resulted in an auction price of approximately $25 million above the
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outstanding unpaid principal and accrued interest on the mortgage debt
encumbering such properties;
they convinced Innkeepers to withdraw its effort to sell the five properties
as part of a proposed sale of sixty-five (65) other properties encumbered
by two blanket mortgages, which proposed sale was yielding preferred
shareholders no consideration for the five properties not encumbered by
blanket mortgages; and
they negotiated with the special servicer for the mortgage debt against the
five properties to limit over $10 million of default interest claims to zero
and to limit other secured charges and fees potentially encumbering the
properties (including the bank account holding the $7.4 million cash),
thereby allowing the special servicer to provide financing to the stalking
horse for the five properties not encumbered by blanket mortgages.
10. While notable for the Ad Hoc Committees affirmative efforts, the
aforementioned activities do not show the value of the claims and causes of action the Ad Hoc
Committee settled with the Debtors pursuant to the Ad Hoc Committee Agreement. Specifically,
the Ad Hoc Committee:
settled the right to challenge the legality of the auction of the five
properties not encumbered by the blanket mortgages absent a court order
and without notice to the marketplace and further marketing;
agreed to be a Releasing Party, thereby eliminating its claims which would
have generated indemnity expenses that the trustees and management
would argue come before the preferred shares;
settled their right to challenge the allowability and priority of the Series A
Shares, including any right to object to or seek to subordinate the holder of
such shares; and
settled any right in, and any claim against or interest in, the recovery
distributable to holders of Series A Shares.
11. The Ad Hoc Committee settled additional issues as part of its Stipulation
with the Debtors and LNR. See Stipulation, supra 3(ii). Those settlements included:
fixing the level of bid protections sought by Chatham;
the allowance of some of LNRs claims, including legal and financial
advisory fees and expenses, incentive and transaction fees of LNRs
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financial advisor, a servicing fee, an assumption fee, a liquidating fee, and
the disallowance of others (default interest, interest on interest, etc.);
procuring reporting requirements by the Debtors for the benefit of the
preferred shareholders;
releases of LNR and all of its affiliates for any claims; and
procuring the right for preferred shareholders to enforce any remedy for
breach of the Debtors affirmative covenants that does not impair or
diminish the rights and benefits of LNR in the stipulation or under the
plan.
12. In recognition of the Ad Hoc Committees substantial contributions, and
as settlement of the claims belonging to the Ad Hoc Committee members, the Debtors exercised
their business judgment to negotiate a resolution that allowed these chapter 11 cases to proceed
to confirmation with the Ad Hoc Committees imprimatur.
13. As described more fully in the Ad Hoc Committee Agreement, the Plan
provides the Ad Hoc Committee and its advisors with a $3.5 million administrative claim. The
Ad Hoc Committees professional fees and expenses equal roughly $2.2 million currently, and
will continue to increase through the effective date and until the Debtors have made distributions
to the holders of the Innkeepers USA Trust Series C Shares (the Series C Shares).
14. By any yardstick, the Plan and the Ad Hoc Committee Agreement comply
with the applicable provisions of the Bankruptcy Code.
15. First, the Ad Hoc Committee Agreement presents an appropriate
reimbursement of the Ad Hoc Committees professional fees and expenses under section
503(b)(3)(D) of the Bankruptcy Code. The Ad Hoc Committees activities undeniably conferred
a direct, significant and demonstrably positive benefit on the Debtors estates. The efforts of the
members of the Ad Hoc Committee brought about a more favorable plan that increased
recoveries for all of the Debtors constituents, and their role as bidder and their settlements
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collectively warrant the pro rata distribution of the amount in excess of professional fees up to
$3.5 million.
16. Second, the entire $3.5 million payment satisfies the requirement of
reasonableness under section 1129(a)(4) of the Bankruptcy Code.
17. Third, any amounts over and above what the Ad Hoc Committee receives
for fees and expenses also constitute a reasonable settlement of the Ad Hoc Committees claims
pursuant to section 1123(b)(3)(A) of the Bankruptcy Code. The settlement of the Ad Hoc
Committees claims and causes of action clearly meet the standards for approval of a settlement
under Bankruptcy Rule 9019 because the $1.3 million fee does not fall below the lowest zone of
reasonableness. In addition, given that the settlement of the Ad Hoc Committees claims and
causes of action achieves global peace and promotes the rehabilitative objectives of the
Bankruptcy Code, the Ad Hoc Committee also complies with the good faith requirement of
Bankruptcy Code section 1129(a)(3).
18. Fourth, the Ad Hoc Committee Agreement is authorized by section
1123(b)(6) of the Bankruptcy Code because the settlement with the Ad Hoc Committee enabled
the Debtors to move forward with simultaneous auctions and a consensual reorganization.
19. Finally, the Ad Hoc Committee Agreement between the Debtors and the
members of the Ad Hoc Committee does not violate section 1123(a)(4) of the Bankruptcy Code.
Section 1123(a)(4) is inapplicable because the members of the Ad Hoc Committee are receiving
the $1.3 million fee not on account of their interests as holders of Series C Shares, but rather as
providers of values and settlements that no other preferred shareholder in these cases has
provided.
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PROCEDURAL HISTORY
Innkeepers I: The Ad Hoc Committees Vigorous Opposition to the Plan Support
Agreement Leads to Value
20. The Debtors commenced these cases with a proposed plan support
agreement (the Plan Support Agreement) and chapter 11 plan term sheet extinguishing all
preferred shares in exchange for zero consideration, while the common shareholder, Apollo
Investment Corporation (Apollo) obtained the exclusive right to purchase half the reorganized
debtors from the Debtors hand-picked-purchaser, Lehman ALI, Inc. (Lehman). See Plan
Support Agreement, dated June 19, 2010, attached as Exhibit B to Debtors Motion for an Order
(A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Related
Relief [Docket No. 15] (Paragraph 8(e) provides: (e) holders of interests in the Debtors,
including common and preferred stock, receiving no distributions on account of such interests,
with such interests being cancelled.).
21. The Plan Support Agreement sought to lock the Debtors into a deal
whereby the Debtors could not consider any alternate transaction unless it provided Lehman with
a higher and better recovery than that provided under the Debtors plan term sheet, even though
Lehman was already obtaining more than it could obtain if it enforced all its rights. Lehman was
obtaining its own collateral, Midlands collateral, and the seven sisters, for no consideration to
the owners of the seven sisters. Evidence adduced at the September 1, 2010 hearing on the
Plan Support Agreement (the PSA Hearing) would later show the Debtors made no effort to
allow competing offers, market test their assets, perform a valuation, or identify an alternative
plan sponsor. See id.; see generally Transcript of September 1, 2010 Proceedings.
22. The Ad Hoc Committees active participation in these cases began in
earnest around late July 2010, when the Ad Hoc Committee went out-of-pocket to retain Dewey
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& LeBoeuf LLP (DL) to vindicate its rights as preferred shareholders. See Notice of
Appearance and Request for Service of Papers, dated August 11, 2010 [Docket No. 176]. The
Ad Hoc Committee engaged DL with the acknowledgment that the Court might ultimately
confirm a chapter 11 plan that gave preferred shareholders no recovery in these cases, let alone
any reimbursement for expenses and fees.
23. Indeed, after this Court denied the Ad Hoc Committees request to appoint
a statutory preferred shareholders committee, the members of the Ad Hoc Committee continued
to attempt to vindicate their rights. See Order Denying Motion of Ad Hoc Committee of
Preferred Shareholders for Order Directing Appointment of Statutory Committee of Preferred
Shareholders Pursuant to Bankruptcy Code Section 1102(a)(2), dated October 19, 2010 [Docket
No. 582].
24. In the weeks preceding the PSA Hearing, the Ad Hoc Committee filed an
objection to the Plan Support Agreement, and participated in expedited discovery. See Objection
of Ad Hoc Committee of Preferred Shareholders to (I) Debtors Motion for Order Authorizing
Debtors to Assume Plan Support Agreement and (II) Debtors Motion for Entry of Order
Authorizing Debtors to Obtain Postpetition Financing from Five Mile Capital Partners on a
Priming Basis, dated August 23, 2010 [Docket No. 269]. Through its counsel, the Ad Hoc
Committee vigorously argued against the Plan Support Agreement at the PSA Hearing, and
cross-examined the Debtors Chief Restructuring Officer.
25. At the conclusion of the PSA Hearing, this Court could not conclude that
the debtors exercised due care in electing to move forward with the current plan term sheet and
the proposed valuation implied therein. See In re Innkeepers USA Trust, at *3, supra 7.
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Innkeepers II: The Ad Hoc Committee As Financial Advisor and Bidder
26. Following this Courts denial of the Plan Support Agreement, the Debtors
embarked upon an enterprise-level marketing process for the sale of their hotels. From the
early days of the Debtors marketing process, the Debtors favored an enterprise-level sale
process, rather than bids for logical clusters of hotels and individual hotels.
27. The Ad Hoc Committee quickly worked with LNR and Miller Buckfire to
design a sale protocol that would allow the Debtors enough flexibility to market their assets on
both an enterprise-level and property-by-property basis. On November 10, 2010, the Court held
a chambers conference relating to the Debtors motion to extend its exclusive period to file a
chapter 11 plan. The Ad Hoc Committee and LNR voiced their concerns that the Debtors were
not soliciting bids for individual hotels, separate hotel groups, and logical clusters. Responding
to these criticisms, the Court admonished the Debtors to consider all bids.
28. As the Ad Hoc Committees own financial advisor, the members of the Ad
Hoc Committee spent thousands of hours reviewing data, conducting site visits, participating in
numerous telephone conferences with DL and prospective investors, and attending countless in-
person meetings with Moelis and the Debtors.
29. The members of the Ad Hoc Committee executed confidentiality
agreements that imposed onerous restrictions on their ability to trade securities so they could
analyze financial and operating data for the purposes of maximizing the return to preferred
shareholders.
30. The Ad Hoc Committee soon learned that the Debtors subsequently
discovered $7.4 million in a Bank of America account at Innkeepers USA Limited Partnership.
Through its attorneys, the Ad Hoc Committee demonstrated to the Debtors that, pursuant to UCC
9-332(a), the cash was not encumbered by any secured claims and was therefore available for
16
the preferred shares after satisfaction of certain senior claims because a transferee of money
takes the money free of a security interest unless the transferee acts in collusion with the debtor
in violating the rights of the secured party. See Reply of Ad Hoc Committee of Preferred
Shareholders to Objections to Motion for Order Directing Appointment of Statutory Committee
of Preferred Shareholders Pursuant to Bankruptcy Code Section 1102(a)(2), dated September
28, 2010 [Docket No. 513]. This $7.4 million cash would ultimately emerge as a provenance of
additional value for the Remaining Debtors.
31. The Ad Hoc Committee would later come out-of-pocket again to engage a
hotel valuation expert, Portfolio, to conduct site visits of all 72 of the Debtors hotels.
The Ad Hoc Committee Puts its Money Where its Mouth Is
32. Unsatisfied with the Debtors commitment to an enterprise-level
restructuring that provided preferred shareholders with no recovery, and recognizing the Courts
admonishments that the Debtors consider non-enterprise-level bids, on December 20, 2010, the
Ad Hoc Committee sent the Debtors an offer of its own for five of the hotels not subject to the
blanket mortgages (the Five Independent Hotels) and non-debtor KPA Raleigh, LLCs 49%
ownership interest in non-debtor Genwood Raleigh LLC (the First Ad Hoc Committee Offer),
attached hereto as Exhibit D. The First Ad Hoc Committee Offer contemplated a transaction that
would allow the members of the Ad Hoc Committee to backstop a rights offering of up to $15
million of new capital to fund the recapitalization of the Five Independent Hotels, and reinstate
the debt at such hotels. The Debtors had advised the Ad Hoc Committee that $15 million would
be the required working capital.
33. On January 12, 2010, the Ad Hoc Committee reiterated the First Ad Hoc
Committee Offer (the Second Ad Hoc Committee Offer), attached hereto as Exhibit E. The
Second Ad Hoc Committee Offer remained virtually identical to the First Ad Hoc Committee
17
Offer with the exception that LNR, as the special servicer on the mortgage debt encumbering the
Five Independent Hotels, had agreed to the full reinstatement of the outstanding mortgage debt
on those hotels.
34. Significantly, both the First Ad Hoc Committee Offer and the Second Ad
Hoc Committee Offer rendered the members of the Ad Hoc Committee jointly and severally
liable for the $15 million capital commitment.
35. Despite the fact that the Second Ad Hoc Committee Offer was superior in
every respect to the Five Mile/Lehmans stalking horse offer for the Five Independent Hotels and
provided better treatment to the preferred shareholders and to the secured debt at the Five
Independent Hotels, the Debtors adopted the stalking horse bid submitted by Five Mile Capital II
Pooling REIT LLC (Five Mile) and Lehman (together with Five Mile, Five Mile/Lehman
and their bid, the Five Mile/Lehman Bid) for all 72 of the Debtors hotels. See Five
Mile/Lehman Stalking Horse Motion, supra 3(v).
The Ad Hoc Committee Challenges The Five Mile/Lehman Bid
36. Just as the Plan Support Agreement extinguished preferred shares for zero
consideration to enable an insider transaction between Apollo and Lehman, the Five
Mile/Lehman Bid gave preferred shareholders zero consideration for the Five Independent
Hotels, only $1.5 million cash of the $7.4 million of unencumbered cash at Innkeepers USA LP,
and conditioned any recovery on the preferred shareholders acceptance and support of a yet to
be filed plan.
37. After the Ad Hoc Committee filed its objection to the Five Mile/Lehman
Bid, the Debtors revised the Five Mile/Lehman Bid to provide for the exclusion of the seven
hotels not subject to the two blanket mortgage claims (the Seven Independent Hotels) from any
auction of the other sixty-five (the Fixed/Floating Hotels). See Order (I) Authorizing the
18
Debtors to Enter Into the Amended Commitment Letter with Five Mile Capital II Pooling REIT
LLC, Lehman ALI Inc., and Midland Loan Services, (II) Approving the Amended New
Party/Midland Commitment Between the Debtors and Midland Loan Services, (III) Approving
Fixed/Floating Bidding Procedures, (IV) Approving Bid Protections, (V) Authorizing an Expense
Reimbursement to Bidder D, and (VI) Modifying Cash Collateral Order to Increase Expense
Reserve, dated March 11, 2011 [Docket No. 1009] (hereinafter, the Fixed/Floating Debtors Sale
Order). The Ad Hoc Committee withdrew its objections to the Debtors stalking horse motion
as part of a settlement in which the order granting that motion would provide, among other
things, that preferred shareholders would not be required to grant releases to any nondebtors in
connection with the Fixed/Floating Hotels.
38. Notably, the Fixed/Floating Debtors Sale Order made conspicuous that the
relief granted thereby pertained only to the Fixed/Floating Hotels and not the Seven Independent
Hotels: [n]othing in the Amended Commitment Letter shall affect the rights, claims and
interests of [the Seven Independent Hotels] and their respective creditors. See Fixed/Floating
Debtors Sale Order, dated March 11, 2011 [Docket No. 1009] at 20.
The Ad Hoc Committees Claims
39. Nevertheless, despite the fact that the Debtors never asked this Court to
approve bidding procedures for an auction of the Seven Independent Hotels, and in light of the
fact that the Fixed/Floating Debtors Sale Order expressly provided that it was not setting any
procedures for an auction of the Seven Independent Hotels, the Debtors decided to attempt to
proceed anyway with an auction of the Seven Independent Hotels concurrently with the court-
approved auction of the Fixed/Floating Hotels on May 2-3, 2011.
40. Significantly, the Debtors (i) never advised the Ad Hoc Committee that
they had made a decision with respect to the Seven Independent Hotels prior to May 2, (ii) never
19
requested an order setting the auction of the Seven Independent Hotels for May 2-3 and setting
rules of bidding and marketing, (iii) never filed a subsequent pleading advising the marketplace
that the auction of the Seven Independent Hotels would indeed occur on May 2-3, and (iv) never
completed any stalking horse contract for any of the Seven Independent Hotels until at or after
the auction commenced for those properties on May 3, 2011.
41. By letter dated April 25, 2011 (the Final Ad Hoc Committee Offer),
attached hereto as Exhibit F, the Ad Hoc Committee submitted a new offer to purchase five of
the seven sisters and to backstop a rights offering to raise $15 million of working capital.
42. In the end, after settlements among the Debtors, LNR, and the Ad Hoc
Committee, a stalking horse contract was signed in the moments before or after the auction of the
Five Independent Hotels commenced with the blessing of the Ad Hoc Committee. Pursuant to
the Stipulation among the Debtors, LNR, and the Ad Hoc Committee, the auction could proceed
without objection, based on all the tradeoffs listed above in the Summary of Argument and
Pertinent Facts.
43. No party bid on the Five Independent Hotels other than the stalking horse.
One entity bid on two hotels, but the bid was not a qualifying bid. Nevertheless, the Final Ad
Hoc Committee Offer showed the market place that the Debtors did not need to auction the
seven sisters because the preferred shareholders were prepared to take them and operate them.
This led to the final stalking horse auction price of approximately $25 million above the
outstanding unpaid principal and accrued interest encumbering such properties.
44. The Debtors and the Ad Hoc Committee entered into the Ad Hoc
Committee Agreement set forth in Article IV. AA. of the Plan at p. 54.
20
ARGUMENT
A. The Ad Hoc Committee Agreement Satisfies Section 503(b)(3)(D) of the
Bankruptcy Code
45. Bankruptcy Code section 503(b)(3)(D) provides for the allowance as an
administrative expense of the actual, necessary expenses . . . incurred by . . . an equity security
holder, or a committee representing . . . equity security holders . . . 11 U.S.C. 503(b)(3)(D);
see also 11 U.S.C. 503(b)(4) (allowance of administrative expense claims for reasonable
compensation for professional services rendered by an attorney or an accountant of an entity
entitled to claims under 11 U.S.C. 503(b)(3)(D)).
46. While the Bankruptcy Code does not define substantial contribution,
courts in the Southern District of New York typically award a movant substantial contribution if
its actions have led to an actual and demonstrable benefit to the debtors estate, the creditors,
and to the extent relevant, the stockholders. See In re Granite Partners, L.P., 213 B.R. 440, 445
(Bankr. S.D.N.Y. 1997).
47. Significantly, the majority of cases allowing substantial contribution
claims under section 503(b)(3)(D) of the Bankruptcy Code have found that the movant played a
leadership role that normally would be expected of an estate-compensated professional but was
not so performed . . . [and] involved a [movant] who actively facilitated the negotiation and
successful confirmation of the chapter 11 plan or, in opposing a plan, brought about the
confirmation of a more favorable plan.
4

4
See In re Bayou Group, LLC, 431 B.R. 549, 562 (Bankr. S.D.N.Y. 2010); see also In re Granite Partners, L.P.,
213 B.R. 440, 446-447 (Bankr. S.D.N.Y. 1997); In re McLean Indus., Inc., 88 B.R. 36, 39 (Bankr. S.D.N.Y.
1988) (objection to a proposed sale of estate property led to other objections and an increased bid of $1.5
million); In re Baldwin-United Corp., 79 B.R. 321, 344 (Bankr. S.D. Ohio 1987) (plan to purchase debtors
assets attracted competing bid $5 million higher); In re DP Partners Ltd. Pship, 106 F.3d. 667, 673-4 (5th

Cir.
1997) (creditors participation in confirmation caused debtor to change plan and resulted in $3 million benefit to
continued on the following page
21
48. Here, it appears the reimbursement of professional fees is not challenged.
To the extent some Objectants request that the Ad Hoc Committee spend more money by
channeling their reimbursement request through the fee application process, they ignore an
important consideration. See Lehman Objection at 5. Specifically, professional fees of debtors
and statutory committees are subject to the standard application process because it is not clear
that the debtors or committee have the same incentives as private clients to minimize fees. In
contrast, the Ad Hoc Committee members were paying these fees out of their pockets since last
July and served as the most rigorous check and balance on the accrued fees.
49. Indeed, the Ad Hoc Committees substantial contributions satisfy the
requirements of section 503(b)(3)(D) in multiple ways.
The Ad Hoc Committees Actions Conferred Actual and Demonstrable Benefit to the
Debtors Estate By Bringing About a More Favorable Plan

50. When the Ad Hoc Committee commenced its participation in these
chapter 11 cases, the Debtors had proposed a Plan Support Agreement that extinguished
preferred shares for zero consideration. The Ad Hoc Committees vigorous opposition to the
Plan Support Agreement set the stage for a competitive auction process of the Debtors assets.
The Ad Hoc Committees analysis of the $7.4 million cash also identified an additional source of
value for the Remaining Debtors.
51. By convincing the Debtors to exclude the Seven Independent Hotels from
the auction of the other 65 hotels, the Ad Hoc Committee also provided a mechanism for other

continued from the preceding page
all creditors); and In re AM Intl, Inc., 203 B.R. 898, 904-05 (D.Del. 1996) (ad hoc equity committee
successfully opposed pre-packaged plan that wiped out equity, and negotiated a new plan that added value to
the estate and benefited all constituents).
22
bidders, like Chatham, to submit bids on those properties not subject to the blanket mortgages.
Absent the Ad Hoc Committees insistence that the Debtors market the properties individually,
the Debtors may have very well proceeded with the original Five Mile/Lehman Bid, and
preferred shareholders would have been left with a substantially lower recovery.
52. The First, Second, and Final Ad Hoc Committee Offers also set a floor on
the amounts that bidders like Chatham could bid for the Five Independent Hotels, thereby
resulting in an auction price equal to $25 million above the mortgage debt at those properties. Of
course, Chatham may very well have never made its final bid without the LNR financing, which
the Ad Hoc Committee secured when it negotiated with LNR to limit default interest and other
claims.
The Ad Hoc Committee Played a Leadership Role Normally Expected of an Estate-
Compensated Professional
53. The members of the Ad Hoc Committee were not only holders of the
Series C Shares; they actively participated in these chapter 11 cases as financial advisor and
bidder. After this Court denied the Ad Hoc Committees motion for a statutory preferred
shareholders committee, the members of the Ad Hoc Committee acted as their own financial
advisor. This meant that the members of the Ad Hoc Committee had to execute confidentiality
agreements to enable the due diligence of financial and operating data (thereby restricting
themselves from trading certain securities), and attend numerous telephonic and in-person
meetings with Moelis, the Debtors, and interested buyers. Indeed, no other preferred
shareholders in these chapter 11 cases performed such an active role.
The Ad Hoc Committees Fees in Excess of its Professional Fees are Reasonable Based on
Multiple Metrics

23
54. The fees in excess of professional fees, approximately $1.3 million, are
legally sustainable and allowable on numerous bases, including section 503(b).
55. By submitting three offers that committed the members of the Ad Hoc
Committee to jointly and severally backstop a rights offering equal to $15 million, the Ad Hoc
Committee incurred the opportunity cost of setting that money aside. The evidence will show
the cost to the Ad Hoc Committee far exceeds $1.3 million. Separately, a $1.3 million fee to
compensate the members of the Ad Hoc Committee for their considerable time and costs as
financial advisor to the Ad Hoc Committee appears more than reasonable, particularly given that
(i) the members of the Ad Hoc Committee will share the $1.3 million pro rata and (ii) the $1.3
million remains subject to decline based upon additional fees and expenses incurred after
confirmation, through the effective date, and until the time of distributions to the holders of
Series C Shares.
B. The Ad Hoc Committee Agreement Constitutes a Reasonable Settlement of
the Ad Hoc Committees Claims under section 1123(b)(3)(A) of the
Bankruptcy Code
56. Section 1123(b)(3)(A) of the Bankruptcy Code states that a plan may
provide for the settlement or adjustment of any claim or interest belonging to the debtor or the
estate. 11 U.S.C. 1123(b)(3)(A). Any amounts over and above what the Ad Hoc Committee
receives for fees and expenses constitute a reasonable settlement of the Ad Hoc Committees
claims pursuant to section 1123(b)(3)(A) of the Bankruptcy Code. See Adelphia, 441 B.R. at 14
(finding that the payment of fees as part of a settlement in a plan was authorized under the
settlement authority granted by section 1123(b)(3)); see also In re WorldCom, Inc., 347 B.R.
123, 137 (Bankr. S.D.N.Y. 2006) (In considering whether to approve a settlement, a bankruptcy
court is required to review the reasonableness of the proposed settlement.).
24
57. The settlement of the Ad Hoc Committees claims and causes of action
clearly meets the standards for approval of a settlement under Bankruptcy Rule 9019 because the
$1.3 million fee does not fall below the lowest zone of reasonableness. See Protective Comm.
For Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 441 (1968)
([A] bankruptcy court is not to approve or confirm a plan of reorganization unless it is found to
be fair and equitable.); see also Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d
Cir. 1983) (holding that the Court may approve a settlement so long as it does not fall[] below
the lowest point in the range of reasonableness[.]); In re Drexel Burnham Lambert Group, Inc.,
138 B.R. 723, 758 (Bankr. S.D.N.Y. 1992) (The inquiry under the Bankruptcy Code . . . need
only determine whether the settlement falls below the lowest point of reasonableness.).
58. In exchange for the $3.5 million administrative claim, the Ad Hoc
Committee Agreement requires the members of the Ad Hoc Committee to (i) waive the right to
challenge the legality of the auction of the Five Independent Hotels because it was without a
court order and without sufficient advertisement and notice to the marketplace; (ii) waive any
right to challenge the allowability of the Series A Shares, including any right to object to or seek
to subordinate the holder of such shares, which preserves for Lehman and Midland recoveries on
their allowable guaranty claims, if any; (iii) waive any right in, and any claim against or interest
in, the recovery distributable to holders of Series A Shares; and (iv) grant releases of Innkeepers
board of trustees and management, which spares all the Remaining Debtors the cost of honoring
the trustees' indemnity claims under their bylaws.
59. Given that the Ad Hoc Committees fees and expenses currently total
approximately $2.2. million, the $1.3 million fee constitutes a settlement that does not fall below
25
the lowest zone of reasonableness, particularly in light of the value of the claims that the Ad Hoc
Committee Agreement requires the members of the Ad Hoc Agreement to waive.
60. Finally, given that the settlement of the Ad Hoc Committees claims and
causes of action achieves global peace and promotes the rehabilitative objectives of the
Bankruptcy Code, the Ad Hoc Committee Agreement also complies with the good faith
requirement of Bankruptcy Code section 1129(a)(3). See 11 U.S.C. 1129(a)(3) (a plan of
reorganization must be proposed in good faith and not by any means forbidden by law); see
also In re Leslie Fay Cos., 207 B.R. 764, 781 (Bankr. S.D.N.Y. 1997) (quoting In re Texaco Inc.,
84 B.R. 893, 907).
C. The Ad Hoc Committee Agreement Satisfies the Requirements of Section
1123(b)(6) of the Bankruptcy Code
61. Section 1123(b)(6) provides that a plan may include any other
appropriate provision not inconsistent with the applicable provisions of this title. See 11 U.S.C.
1123(b)(6); see also Adelphia, 441 B.R. at 14-17 (asserting that a Court may approve a
settlement payment as part of a plan under section 1123(b)(6)); United States v. Energy
Resources Co., 495 U.S. 545, 549 110 S. Ct. 2139, 109 L. Ed. 2d 580 (1990); see also 11 U.S.C.
105(a) (The court may issue any order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title.).
62. The Court can and should exercise its statutory power to approve the Ad
Hoc Committee Agreement because the settlement with the Ad Hoc Committee provided the
Debtors estates far more value than its costs. In fact, as per the terms of the Plan (see Article
IV. AA. at p. 54), the alternative to the Ad Hoc Committee Agreement is litigation over the
Remaining Debtors Plan at least 30 days after this confirmation hearing and discovery. It is
26
beyond dispute that the administrative claims attendant to such litigation exceed the amounts at
issue here, a point seemingly lost on Objectants.
63. Several Objectants argue that approval of the Ad Hoc Committee
Agreement will lead to horrible imaginings and fallout in other cases. See, e.g., Midland
Objection at 46. This argument is based solely on Objectants erroneous premise that the Ad
Hoc Committee members are not receiving the $1.3 million for value and settlements they
uniquely provided. Once the facts are set forth, the instant matter creates no novel precedent,
leading to no horrible imaginings.
64. Even if this Court determines that it must not evaluate the Ad Hoc
Committee Agreement under section 1123(b)(3) of the Bankruptcy Code or Rule 9019, Adelphia
rules that bankruptcy courts have broad latitude to authorize a settlement in a plan:
Obviously, settlements by their nature, are factually unique, with a broad array of
potential terms. Settlements are not evaluated under a business judgment test;
they must be in the best interests of the estate. Whether the payment of such fees
is in the best interests of the estate, or if the settlement as a whole is in the best
interests of the estate notwithstanding a payment of fees provision, would at least
seemingly turn on the particular facts as to the settlement, the underlying
controversy, and the umbrella bankruptcy case.
See Adelphia, B.R. 441 at 14, n. 23. Given that every alternative to the Ad Hoc Committee
Agreement is worse for the estate simply because, among other things, the cost of litigating
confirmation after 30 days of discovery as provided for in the Plan will consume more than the
agreement costs, we submit there is no logical reason not to approve the agreement.
D. The Ad Hoc Committee Agreement Proposes a Payment that Satisfies the
Reasonableness Requirement of Section 1129(a)(4) of the Bankruptcy Code
65. The Ad Hoc Committee Agreement also warrants approval because the
payment contained therein satisfies the requirement of reasonableness under section 1129(a)(4)
of the Bankruptcy Code.
27
66. Section 1129(a)(4) requires that a plan must provide that [a]ny payment
made or to be made by the proponent [or] by the debtor . . . for services or for costs and expenses
in or in connections with the case, or in connection with the plan and incident to the case, has
been approved by, or is subject to the approval of, the court as reasonable. 11 U.S.C.
1129(a)(4).
67. As Judge Gerber emphasized in Adelphia, the language of section
1129(a)(4) at least permits the possibility that section 503(b) isnt the only source for authority
to pay legal fees under a plan. See Adelphia, 441 B.R. at 13. Judge Gerber continued:
[Section 1129(a)(4)] expressly contemplates that payments may be made
in connection with a reorganization planpresumably, consensuallyby
a debtor, plan proponent, issuer of securities, or acquiror of property.
Section 1129(a)(4) then requires that any such payments must be approved
by the court as reasonable, or that they be subject to such a review. To be
sure, the needs and concerns to be addressed by a court when reviewing
payments by parties as diverse as those named in 1129(a)(4) are likely to
vary materially from case to case. But payments by the debtor, for costs
and expenses in or in connection with the plan and incident to the case,
are within that list. Thus the Code plainly contemplates that debtors will
be making payments of that character for something.
Id. In this case, that something represents the costs and expenses that the members of the Ad
Hoc Committee incurred in their role as financial advisor and bidder, as well as the value that
the members of the Ad Hoc Committee relinquished by settling their claims and causes of
actions. Just as the provision for fees in the Adelphia plan was an element of a chapter 11 plan
negotiated in the context of a global settlement, the Debtors and the Ad Hoc Committee brokered
the Ad Hoc Committee Agreement to set the stage for a consensual confirmation hearing
between the Debtors, LNR, and the Ad Hoc Committee.
68. Adelphia ruled that there might be other payments by the debtor, for
costs and expenses in or in connection with the case, beyond those expressly permitted by
section 503(b). See Adelphia, 441 B.R. at 14. Indeed, the payment to the Ad Hoc Committee
28
falls within that description, and is subject to approval pursuant to the reasonableness
requirement of section 1129(a)(4). When examined within the standard enunciated by section
1129(a)(4), the Ad Hoc Committee Agreement clearly presents a payment that is reasonable in
light of the Ad Hoc Committees multiple contributions of value in different forms throughout
these cases.
E. The Ad Hoc Committee Agreement Does Not Violate Section 1123(a)(4) of
the Bankruptcy Code
69. As explained above, section 1123(a)(4) of the Bankruptcy Code is not
applicable because the members of the Ad Hoc Committee are receiving the $1.3 million fee not
on account of their interests as holders of Series C Shares, but rather as bidders, settlers of
claims, and financial advisors. No other preferred shareholder in these cases has provided such
value or settled such claims.
70. One East Capital Advisors L.P. (One East), allegedly a holder of Series
C Shares, argues that all holders of Preferred C Interests should share in any portion of the Ad
Hoc Committee Administrative Claim that exceeds what otherwise is properly payable to the Ad
Hoc Committee for professional fees. See One East Objection, at p. 6.
71. One East further contends that the additional amount over and above what
the Ad Hoc Committee would receive for fees and expenses would allow the members of the Ad
Hoc Committee to get an impermissible distribution in excess of what the other holders of
Preferred C Interests (including One East) are to receive under the Remaining Debtor Plan. See
One East Objection, at p. 19.
72. Tellingly, One East did not seem to have a problem with this additional
amount when one of its partners, Sina Toussi, contacted Andrew Sole, a member of the Ad Hoc
Committee, on May 17, 2011. The email, in pertinent part, provided that [a]lthough [One East]
29
will pay for [its] own counsel at King & Spaulding (who has been speaking with Marty
[Bienenstock] and has provided legal suggestions to him in support of the preferreds cause)
5

[One East] want[s] to make sure that [it] [is] eligible for any distributions made to the ad
hoc group for contributions to the case.) (emphasis supplied).
73. The problem One East had, however, is that the Ad Hoc Committee had
already made its Final Ad Hoc Committee Offer, settled claims, and reached the instant Plan.
One East had done none of that, partially because it had not restricted its ability to trade, as had
the Ad Hoc Committee members. In short, One East wanted compensation for what the Ad Hoc
Committee members had done, without having done it.
74. Where was One East when the Ad Hoc Committee went out-of-pocket to
retain DL in July 2010? Did One East support the Ad Hoc Committees request for a statutory
preferred shareholders committee? How many in-person meetings with hotel managers,
property valuation experts, and potential third party investors did Mr. Toussi conduct in
connection with these cases? Did One East have to set aside $15 million of capital to satisfy the
joint and several liability of the two offers for the Five Independent Hotels? Did One East object
to the simultaneous auction of the seven sisters with the 65 properties and settle its objection?
Without any question, the universal answer is no.
75. Additionally, One East has not (a) objected to allowance of Grand Prix
Series A preferred shares, (b) requested equitable subordination of Grand Prix Series A Shares,
and (c) requested leave to bring such an equitable subordination action to the extent required by

5
For the record, counsel to One East first contacted Mr. Bienenstock via email on March 11, 2011 (nearly ten
months after the Ad Hoc Committee commenced its participation in these chapter 11 cases), and would
periodically (no more than 4 or 5 times since March 11, 2011) reach out to Mr. Bienenstock for a telephonic
update on the latest developments in the case.
30
Official Committee of Unsecured Creditors v. Halifax Fund, L.P. (In re Applied Theory Corp.),
493 F.3d 82 (2d Cir. 2007). In short, One East is lateabout six months late.
CONCLUSION
WHEREFORE the Ad Hoc Committee requests the Court to (i) confirm the Plan,
(ii) approve the Ad Hoc Committee Agreement, and (iii) grant the Ad Hoc Committee such other
and further relief as is just.
Dated: New York, NY DEWEY & LEBOEUF LLP
June 21, 2011

/s/ Martin J. Bienenstock
Telephone: 212.259.8000
Facsimile: 212.259.6333

Attorneys for Ad Hoc Committee of Preferred
Shareholders

EXHIBIT A

54
K&E 18934861.44
AA. Ad Hoc Committee Agreement
The following is an integrated agreement among the Debtors and the Ad Hoc Committee (the Ad Hoc
Committee Agreement) under which, upon its approval in its entirety, the Ad Hoc Committee, among other
things, waives any right to challenge the allowability of the Innkeepers USA Trust Preferred A Interests (held by one
of the Debtors or otherwise), including any right to object to or seek to subordinate the Innkeepers USA Trust
Preferred A Interests, in exchange for the consideration being provided to the Ad Hoc Committee herein.

The distribution provisions under the Remaining Debtor Plan under which, after payment of certain
allowed claims, the Innkeepers USA Trust Preferred C Interests share in the $7.4 million of cash, the proceeds of the
Chatham Hotel Sale Transaction, and other available assets, shall not be changed adversely to the Innkeepers USA
Trust Preferred C Interests absent the consent of the Ad Hoc Committee.

The Ad Hoc Committee will support the Plan and all its provisions and waive all objections to the Plan,
provided that the Ad Hoc Committee Agreement is approved in its entirety. Upon any denial of the whole or any
part of the Ad Hoc Committee Agreement (the Denial Date), the Debtors shall withdraw their request for
Confirmation of the Remaining Debtor Plan (the Initial Confirmation Hearing) and shall not request
Confirmation of the Remaining Debtor Plan again for 30 days (the Subsequent Confirmation Hearing);
provided, the parties will be required to serve any discovery requests within 10 days after the Denial Date, the
parties will work in good faith to respond promptly to document requests and deposition notices, and the Court will
schedule the Subsequent Confirmation Hearing, without requiring resolicitation of the non-materially modified
Remaining Debtor Plan, as close as practicable to (but no earlier than) 31 days after the Denial Date; provided,
further, the Debtors shall request approval of the Chatham Hotel Sale Transaction immediately following the Denial
Date (in accordance with the terms and conditions set forth in the Chatham APA (as defined herein)), without regard
to the scheduling of the Subsequent Confirmation Hearing, and the Ad Hoc Committee will support approval of the
Chatham Hotel Sale Transaction.

The Remaining Debtor Plan (and only the Remaining Debtor Plan) shall provide that, upon approval of the
Ad Hoc Committee Agreement: (i) Holders of Innkeepers USA Trust Preferred C Interests and the Ad Hoc
Committee shall be deemed to be Fixed/Floating Releasing Parties, Anaheim Hotel Releasing Parties, and Ontario
Hotel Releasing Parties; and (ii) the Ad Hoc Committee shall be a Remaining Debtor Releasing Party.
The Ad Hoc Committee will draft a letter in support of the Plan that will be distributed with the Disclosure
Statement and other solicitation materials.

Without limiting the scope of the release, exculpation, and injunction provisions of the Plan, the Ad Hoc
Committee waives any right in, and will not assert a claim against or interest in, the recovery distributable to
Holders of Innkeepers USA Trust Preferred A Interests or any party in interest asserting rights with respect to such
recovery, provided that the Ad Hoc Committee Agreement is approved in its entirety. The Innkeepers USA Trust
Preferred A Interests shall be treated as pari passu with the Innkeepers USA Trust Preferred C Interests.

The Ad Hoc Committee and its advisors will receive the Ad Hoc Committee Administrative Claim to be
paid in the amount of $3.5 million by a Remaining Debtor (other than Grand Prix Holdings, Innkeepers USA Trust,
and Innkeepers Financial Corporation) for its role in the Chapter 11 Cases. The amount will be paid on the Effective
Date of the Remaining Debtor Plan. The claim for payment shall be deemed an Allowed administrative priority
Claim.

The Debtors will support approval of the Ad Hoc Committee Agreement in its entirety.

The Debtors shall enter into exclusive discussions for 30 days with the Ad Hoc Committee regarding the
Ad Hoc Committee becoming a stalking horse bidder for the Raleigh JV interest, subject to Bankruptcy Court
approval.

To the extent there are any inconsistencies between the terms of the Ad Hoc Committee Agreement as set
forth in this Article IV.AA and elsewhere, the terms of the Ad Hoc Committee Agreement as set forth in this Article
IV.AA shall govern.
.
EXHIBIT B
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
INNKEEPERS USA TRUST, eta!./
Debtors.
)
) Chapter 11
)
Execution Copy
) Case No. 10-13800 (SCC)
)
) Jointly Administered
________________ )
STIPULATION BY AND BETWEEN THE DEBTORS, LNR PARTNERS LLC, AS
SPECIAL SERVICER FOR THE TRUSTS, AND THE AD HOC COMMITTEE OF
PREFERRED SHAREHOLDERS REGARDING THE SALE OF TRUST PROPERTIES
Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession
(collectively, the "Debtors"), LNR Partners LLC ("LNR"), as special servicer for the Trusts
(defined below), and the ad hoc committee of 8% Series C Cumulative Preferred Shares (the "Ad
Hoc Committee" and together with the Debtors, LNR, and the Ad Hoc Committee, the
"Parties") hereby enter into this stipulation (this "Stipulation") regarding the sale of certain of
the Debtors' properties. The Parties hereby make the following statements and agreements:'
A. WHEREAS, on July 19, 2010 (the "Petition Date"), the Debtors commenced
these voluntary cases under chapter 11 of the Bankruptcy Code and are authorized to continue to
operate their business and manage their properties as a debtors-in-possession pursuant to sections
11 07 and 11 08 of the Bankruptcy Code.
B. WHEREAS, Wells Fargo Bank, N.A., is the trustee for the registered holders of
Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through
Certificates, Series 2007 -C 1, and U.S. Bank National Association is the successor to LaSalle
Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of
1
The Ad Hoc Committee has personal knowledge of, and only joins in, Recitals A, C, E, and F.
K&E 18920457.5
ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates,
Series 2006-4 Gointly the "Trusts"). The Trusts hold mortgage loans (the "Trust Secured
Loans") against certain of the Debtors that are secured by all or substantially all of the Trust
Properties (defined below). The Trusts also have unsecured claims against Grand Prix Holdings,
LLC pursuant to certain guaranty and indemnity obligations.
C. WHEREAS, the Ad Hoc Committee is comprised of: Brencourt Advisors, LLC;
Esopus Creek Advisors, LLC; Plainfield Special Situations Master Fund II Limited; Morgens,
Waterfall, Vintiadis & Co., Inc.; and P. Schoenfeld Asset Management LP, for and on behalf of
certain funds and entities for which it serves as the Investment Advisor.
D. WHEREAS, beginning in September 201 0, the Debtors implemented a process to
market all of their assets, including the Trust Properties (defined below), on both an enterprise
level and on an individual property basis, to achieve the most value-maximizing outcome for
stakeholders.
E. WHEREAS, on November 5, 2010, LNR filed the following proofs of claim in
these chapter 11 cases on behalf of the Trusts, as applicable?
1. Claim No. 1632 against Grand Prix Holdings LLC in the amount of
$24,501,947.20, plus unliquidated and contingent amounts, on account of the Trust
Secured Loan secured by a first priority security interest in the San Antonio, TX property.
2
Pursuant to the terms of the Order Establishing Deadlines and Procedures for Filing Proofs of
Claim and Approving the Form and Manner ofNotice Thereof, dated September 16,2010
[Docket No. 440], the Trusts are not required to file proofs of claim against the Five Independent
Hotel Debtors (defined below).
2
Secured Loan secured by a first priority security interest in the San Diego, CA Mission
Valley property.
Secured Loan secured by a first priority security interest in the Garden Grove, CA
property.
Secured Loan secured by a first priority security interest in the Washington DC property.
Secured Loan secured by a first priority security interest in the Tysons Comer, VA
property.
F. WHEREAS, on April 8, 2011, the Debtors filed the Debtors' Plans of
Reorganization Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 1094] (the "Plan").
The Plan includes four separate joint plans of reorganization that together provide for the
resolution of all claims against and interests in each of the 92 Debtors in these chapter 11 cases.
The Reorganizing Debtors Plan (as defined in the Plan) provides for the resolution of all claims
against and interests in the Debtors (the "Five Independent Hotel Debtors") who own and
operate the properties that serve as collateral for the Trust Secured Loans (the "Trust
Properties").
3
G. WHEREAS, the Debtors scheduled an auction (the "Auction") for certain of the
Debtors' assets, including the Trust Properties, for 10:00 a.m. on May 2, 2011 at the offices of
the Debtors' counsel, Kirkland & Ellis LLP.
H. WHEREAS, the Parties agree that the availability ofthe Trust Financing (defined
below) to the Stalking Horse and competing bidders enables the Debtors to maximize the value
to all of the stakeholders of the estates of the Reorganizing Debtors.
I. WHEREAS, the Parties acknowledge that the transactions contemplated in the
Trust Financing, the Auction, and the Plan support commitment set forth in this Stipulation
provide substantial value to the Debtors' estates, whether or not such Trust Financing is
ultimately utilized by the successful bidder, and put the Debtors on the path towards a consensual
emergence from Chapter 11 pursuant to confirmed Chapter 11 plan(s).
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and
between the Parties, as follows:
1. In exchange for the consideration set forth herein and in the Letter of even date
regarding the Trust Financing, including the term sheet attached thereto, (collectively, the "Term
Sheet") and incorporated herein, the Trusts agree to provide financing (the "Trust Financing")
to Chatham Lodging LP (the "Stalking Horse") for a restructuring of the debt and equity of the
Five Independent Hotel Debtors on the terms, conditions and limitations set forth in the Term
Sheet. Except to the extent set forth in the Term Sheet, the Trusts have no obligation to provide
financing (a) to any bidder other than the Stalking Horse bidder and those bidders identified in
the Term Sheet (collectively, the "Qualified Borrowers"), (b) with respect to any bid for less
than all of the Trust Properties, or (c) on any other terms.
4
2. Auction: The Auction shall commence on May 3, 2011 at the law offices of
Kirkland & Ellis LLP. The opening bid at the Auction shall be $195 million as set forth in that
certain asset purchase agreement by and between the Debtors and the Stalking Horse (the
"Stalking Horse AP A"). With respect to any overbids at the Auction, the increased value
reflected in any overbid shall be paid solely in cash and allocated among the estates of the Five
Independent Hotel Debtors in accordance with the allocation of value set forth in the bid
submitted by the Stalking Horse.
3. Bid Protections: The Debtors shall file, and LNR, on behalf of the Trusts, and the
Ad Hoc Committee shall support, a motion seeking approval of the bid protections set forth in
section 9.4 of the Stalking Horse APA, which shall be reasonably acceptable to LNR and
include, but not be limited to, a requirement that qualified bids be only for all of the Trust
Properties, regardless of whether the Trust Financing is utilized.
4. Allowance of the Trust Claims: The Trusts' claims against the Debtors shall be
allowed as follows (collectively, the "Allowed Trust Claims"):
(a) Claim No. 1632 shall be deemed an allowed secured claim against KPA
San Antonio, LLC in the amount of $24,062,695.40, plus interest at the non-default rate through
the date the Plan is effective, plus fees and expenses, including legal and financial advisor fees
and expenses (including incentive and transaction fees of the Trusts' financial advisor), servicing
fees, an assumption fee in an amount equal to 1% of the outstanding principal balance of the
Trust Secured Loan after the paydowns and a liquidation fee in a amount equal to 1% of the
pay downs.
(b) Claim No. 1634 shall be deemed an allowed secured claim against KPA
RIMY, LLC and Grand Prix RIMY Lessee LLC in the amount of$47,168,769.26, plus interest at
5
the non-default rate through the date the Plan is effective, plus fees and expenses, including legal
and financial advisor fees and expenses (including incentive and transaction fees of the Trusts'
financial advisor), servicing fees, an assumption fee in a amount equal to 1% of the outstanding
principal balance of the Trust Secured Loan after the paydowns and a liquidation fee in a amount
equal to 1% of the paydowns.
(c) Claim No. 1635 shall be deemed an allowed secured claim against KPA
RIGG, LLC and Grand Prix RIGG Lessee LLC in the amount of$37,416,576.45, plus interest at
the non-default rate through the date the Plan is effective, plus fees and expenses, including legal
and financial advisor fees and expenses (including incentive and transaction fees of the Trusts'
financial advisor), servicing fees, an assumption fee in a amount equal to 1% of the outstanding
principal balance of the Trust Secured Loan after the paydowns and a liquidation fee in a amount
equal to 1% of the paydowns.
(d) Claim No. 1636 shall be deemed an allowed secured claim against KPA
Washington DC, LLC in the amount of $25,454,752.20, plus interest at the non-default rate
through the date the Plan is effective, plus fees and expenses, including legal and financial
advisor fees and expenses (including incentive and transaction fees of the Trusts' financial
advisor), servicing fees, an assumption fee in a amount equal to 1% of the outstanding principal
balance of the Trust Secured Loan after the pay downs and a liquidation fee in a amount equal to
I% of the paydowns.
(e) Claim No. 1637 shall be deemed an allowed secured claim against KPA
Tysons Comer RI, LLC in the amount of $25,057,021.67, plus interest at the non-default rate
through the date the Plan is effective, plus fees and expenses, including legal and financial
advisor fees and expenses (including incentive and transaction fees of the Trusts' financial
6
advisor), servicing fees, an assumption fee in a amount equal to 1% of the outstanding principal
balance of the Trust Secured Loan after the pay downs and a liquidation fee in a amount equal to
1% of the paydowns.
(f) Without limiting the generality of the foregoing, the Trusts shall not be
subject to any avoidance actions under chapter 5 of the Bankruptcy Code or claim objection
under section 502( d) of the Bankruptcy Code.
(g) All payments received by the Trusts (the "Cash Collateral Payments")
pursuant to the Final Order Authorizing the Debtors to (i) Use The Adequate Protection Parties'
Cash Collateral and (ii) Provide Adequate Protection to The Adequate Protection Parties
Pursuant To 11 U.S.C. 361, 362, And 363 [Docket No. 402] (the "Cash Collateral Order")
shall be credited, to the extent actually made by the Debtors, to the legal fees and disbursements
of the Trusts' counsel and the monthly fees and disbursements of the Trusts' financial advisors
and the Allowed Trusts Claim for interest at non-default rate. In no event shall any payment be
applied to or recharacterized to reduce the principal balance or the Allowed Trust Claims. The
Cash Collateral Payments shall not be subject to objection, avoidance, recovery, disgorgement,
or turnover.
5. Structuring Fee: In exchange for the Trusts' agreement to provide the Trust
Financing, the Debtors shall pay to the Trusts the amount of $2.5 million, plus an amount equal
to 25.0% of the excess of the purchase price over $200 million, up to a maximum of $700,000
(the "Structuring Fee"). The Structuring Fee shall be fully earned and non-refundable on the
date of execution of this Stipulation, subject only to Bankruptcy Court approval. The Structuring
Fee shall be paid by the Five Independent Hotel Debtors on the earlier to occur of (i) the
effective date of the Plan or (ii) a Termination Event (as defined in the Term Sheet). The
7
Structuring Fee shall constitute, in accordance with Section 364(c)(l) of the Bankruptcy Code,
an allowed super-priority administrative claim having priority over any or all administrative
expenses of the kind specified in, among other sections, sections 105, 326, 330, 331, 503(b),
506(c), 507(a) and (b) and 726 of the Bankruptcy Code; provided however that, to the extent
allowed by the Final Order Authorizing The Debtors To Obtain Postpetition Senior Secured
Super-Priority Debtor-In-Possession Financing From Five Mile Capital II Pooling International
LLC Pursuant To 11 U.S.C. 105, 361, 362, 364(C), 364(D) and 364(E) [Docket No. 400] (the
"DIP Order"), such super-priority administrative claims against KPA RIMV, LLC and KPA
Tysons Comer RI, LLC shall be pari passu with the super-priority administrative claims granted
to Mile Capital II Pooling International LLC (the "DIP Claims") pursuant to the DIP Order, but
if it is determined by an order of the Bankruptcy Court that the granting of such claims would
result in an Event of Default under the DIP Order then the super-priority administrative claims
with respect to KP A RIMV, LLC and KP A Tysons Comer RI, LLC shall be subordinate to the
DIP Claims.
6. Treatment of Allowed Trust Claims Under the Plan: The Allowed Trust Claims
shall be treated under the Plan as follows:
(a) The assumption of the Allowed Trust Claims and the principal payments
in cash by the Stalking Horse Bidder or another Qualified Borrower whose bid is selected as the
highest or otherwise best bid at Auction, in the following respective amounts:
1. Tysons Comer
a. Assumed loan amount: $23,057,021.67
b. Cash principal paydown: $2,000,000.00
u. Garden Grove
iii. Mission Valley
8
IV. San Antonio
v. Washington, D.C.
Notwithstanding the foregoing, the Trusts may accept a different combination or a different
allocation of the purchase price in their sole discretion.
(b) Except as provided in (c) below, the remainder of the Allowed Trust
Claims (including, but not limited to, the Structuring Fee, the assumption fee, the liquidation fee,
the servicing fee, and the fees and expenses of the Trusts' legal and financial advisors) shall be
paid in full in cash (net of any credits with respect to interest at the non-default rate and the fees
expenses of the Trusts' legal and financial advisors as provided for in paragraph 4(f) above);
(c) The portion of the Allowed Trust Claim for interest at the non-default rate
with respect to the Garden Grove Allowed Trust Claim shall be satisfied by the retention of the
amounts, if any, paid with respect to interest at the non-default rate on such claim under the Cash
Collateral Order, plus the amount of the cash purchase price allocated to the Garden Grove
property in the event of an overbid pursuant to paragraph 2; and
(d) The Allowed Trust Claims shall not receive a distribution in respect of any
claim for default interest, any deficiency claim, yield maintenance premiums, or similar
defeasance payments.
7. Trust Claim Waivers: The Trusts hereby waive under the Plan:
(a) any and all right to a distribution on account of the Allowed Trust Claims
other than as provided herein; and
9
(b) any right the Trusts may have in the approximately $7.4 million of cash
currently existing in a segregated bank account held in the name of Innkeepers USA Limited
Partnership.
8. Plan Modifications: The Debtors shall amend the Reorganizing Debtors Plan as
follows:
(a) The Reorganizing Debtors Plan will be modified in accordance with this
Stipulation and to implement the transactions contemplated in the AP A.
(b) The definition of "Reorganizing Releasing Parties" will be expanded to
include (i) the successful bidder, and (ii) LNR, the Trusts, and the master servicer for each of the
Trust Secured Loans, and (iii) each of the foregoing entities' respective predecessors, successors
and assigns, shareholders, affiliates, subsidiaries, principals, employees, agents, officers,
directors, trustees, members, master services, special servicers, trusts and trustees, and
professionals, including legal and financial advisors
(c) The Ad Hoc Committee shall release LNR, the Trusts and the master
servicer for each of the Trust Secured Loans, and each of the foregoing entities' respective
predecessors, successors and assigns, shareholders, affiliates, subsidiaries, principals, employees,
agents, officers, directors, trustees, members, master services, special servicers, trusts and
trustees, and professionals, including legal and financial advisors from all claims related to the
Trust Secured Loans and the Debtors, whether arising before or after the commencement of their
chapter 11 cases.
9. Auction: The Auction will commence on May 3, 2011 and shall remain open
until the Debtors (in consultation with LNR, and the Ad Hoc Committee) select the highest or
otherwise best bid as the winning bid.
10
10. Plan Support Provisions: Subject to the Debtors' modification of the
Reorganizing Debtors' Plan and the disclosure statement to incorporate the transactions
contemplated in this Stipulation and the Term Sheet, and satisfaction of all of the conditions and
obligations set forth therein, and the successful bid, LNR, on behalf of the Trusts, will support
the Debtors' Motion for Entry of an Order Approving (A) Adequacy of the Disclosure Statement;
(B) Certain Dates Related to Confirmation of the Plan; (C) Certain Voting Procedures and the
Form of Certain Documents to be Distributed in Connection with Solicitation of the Plan; and
(D) Proposed Voting and General Tabulation Procedures, dated April 8, 2011 [Docket No.
1 095] with respect to the disclosure statement for the Reorganizing Debtors Plan.
11. Each of the Parties expressly acknowledges that the purpose of this Stipulation is
to provide a general framework for the allocation of value among holders of claims against and
interests in the Reorganizing Debtors. The ultimate recovery under the Plan for each of the
constituents of the Ad Hoc Committee is contingent upon the administrative costs of these
chapter 11 cases and the outcome of the Debtors' claims reconciliation process, as well as the
timing of the effective date of the Plan. Nothing in this Stipulation or in the negotiations
regarding this Stipulation or the Auction shall be interpreted to guaranty a minimum recovery to
these parties.
12. No Party shall file an objection, adversary proceeding, or other proceeding
challenging the amount of the Allowed Trust Claims and/or the secured status of such claims, or
take any action inconsistent with the treatment of the Allowed Trust Claims as set forth herein or
any other provision of this Stipulation.
13. Debtors' Affirmative Covenants to Ad Hoc Committee.
11
(a) The Debtors agree (i) to file objections to all disputed claims on or before
June 15; (ii) to file a motion to estimate any unliquidated claims on or before the Effective Date;
(iii) that counsel to the Debtors will participate in a telephonic conference with counsel to the Ad
Hoc Committee every other week regarding the outstanding claims; and (iv) that counsel to. the
Debtors will consult with the Ad Hoc Committee prior to settling any claim in excess of
$250,000.
(b) On or before the fifteenth day of each month following the Plan's effective
date, the Debtors shall provide the Ad Hoc Committee with (i) a statement of uses of all proceeds
of the Trust Properties and all other assets of the Debtors' estates not subject to blanket
mortgages, and (ii) an estimate of the ultimate aggregate distributions to Series C preferred
shareholders.
14. The Ad Hoc Committee's remedies for breach of any of the affirmative covenants
in the preceding paragraph shall not include any remedy that impairs or diminishes the rights and
benefits of the Trusts and LNR hereunder or under the Plan.
15. Except as expressly provided herein, no Party releases any claim or right.
16. This is the entire agreement among the Parties in respect of its subject matter and
all oral statements and understandings are merged herein.
1 7. Each of the Parties represents and warrants it is duly authorized to enter into and
be bound by this Stipulation.
18. This Stipulation may be executed in multiple counterparts, any of which may be
transmitted by facsimile or electronic mail, and each of which shall be deemed an original, but
all of which together shall constitute one instrument.
12
19. This Stipulation shall not be modified, altered, amended, or vacated without
written consent of all Parties hereto. Any such modification, alteration, amendment or vacation,
in whole or in part, shall be subject to the approval of the Bankruptcy Court.
20. The Bankruptcy Court shall retain jurisdiction to hear any disputes relating to or
arising from this Stipulation.
13
Dated: May 3, 2011
New York, New York
James H.M. Sprayregen, P.C.
Paul M. Basta
Stephen E. Hessler
Brian S. Lennon
KIRKLAND & ELLIS LLP
601 Lexington A venue
Execution Copy
New York, New York 10022-4611
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
and
KIRKLAND & ELLIS LLP
Anup Sathy, P.C.
Todd M. Schwartz
300 North LaSalle Street
Chicago, Illinois 60654-3406
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Counsel to the Debtors and Debtors in
Possession
Is/
BRYAN CAVE LLP
Lawrence P. Gottesman
Michelle McMahon
BRYAN CAVE LLP
1290 A venue of the Americas
Telephone: (212) 541-2000
Facsimile: (212) 541-4630
Counsel for the Trusts
Is/
DEWEY & LEBOEUF LLP
Irena M. Goldstein, Esq.
DEWEY & LEBOEUF LLP
1301 Avenue ofthe Americas
Telephone: (212) 259-8000
Facsimile: (212) 259-6333
Counsel for the Ad Hoc Committee of
Preferred Shareholders
2
/s/
BRYAN CAVE LLP
Lawrence P. Gottesman
Michelle McMahon
BRYAN CAVE LLP
1290 A venue of the Americas
Telephone: (212) 541-2000
Facsimile: (212) 541-4630
Mart" J. Bienenstock, Esq.
Irenfi M. Goldstein, Esq.
DEWEY & LEBOEUF LLP
1301 Avenue ofthe Americas
Telephone: (212) 259-8000
Facsimile: (212) 259-6333
Counsel for the Ad Hoc Committee of
Preferred Shareholders
2
EXHIBIT C
1229525.03-New York Server 7A - MSW
GRAND PRIX ACQUISITION TRUST
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of Grand Prix Acquisition Trust,
a Maryland real estate investment trust (the "Trust") shall be located at such place or places as
the trustees (the "Trustees") on the board of trustees of the Trust (the "Board of Trustees") may
designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at such
places as the Trustees may from time to time determine or the business of the Trust may require.
Section 3. FISCAL AND TAXABLE YEARS. The fiscal and taxable years of the Trust
shall begin on January 1 and end on December 31.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the principal office of
the Trust or at such other place within the United States as shall be stated in the notice of the
meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for the election
of Trustees and the transaction of any business within the powers of the Trust shall be held on the
date and at the time fixed, from time to time, by the Board of Trustees. Failure to hold an annual
meeting does not invalidate the Trusts existence or affect any otherwise valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the Board of Trustees, if there be
one, or the president or one-third of the Trustees may call special meetings of the shareholders.
Such request shall state the purpose of such meeting and the matters proposed to be acted on at
such meeting. A special meeting need not be called to consider any matter which is substantially
the same as a matter voted on at any meeting of the shareholders held during the preceding
twelve months.
Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of
shareholders, the secretary shall give to each shareholder entitled to vote at such meeting and to
each shareholder not entitled to vote who is entitled to notice of the meeting written or printed
notice stating the time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, the purpose for which the meeting is called, either by
mail or by presenting it to such shareholder personally or by leaving it at his residence or usual
2
place of business. If mailed, such notice shall be deemed to be given when deposited in the
United States mail addressed to the shareholder at his post office address as it appears on the
records of the Trust, with postage thereon prepaid. Meetings may be held without notice if all
shareholders entitled to vote are present, or if notice is waived by those not present in accordance
with Article XI.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted at an
annual meeting of shareholders without being specifically designated in the notice, except such
business as is required by any statute to be stated in such notice. No business shall be transacted
at a special meeting of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the chairman of the
Board of Trustees, if there be one, shall conduct the meeting or, in the case of vacancy in office
or absence of the chairman of the Board of Trustees, one of the following officers present shall
conduct the meeting in the order stated: the vice chairman of the Board of Trustees, if there be
one, the president, the vice presidents in their order of rank and seniority, or a chairman chosen
by the shareholders entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast, shall act as chairman, and the secretary, or, in his absence,
an assistant secretary, or in the absence of both the secretary and assistant secretaries, a person
appointed by the chairman shall act as secretary.
Section 7. QUORUM. At any meeting of shareholders, the presence in person or by
proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at such
meeting shall constitute a quorum; but this Section 7 shall not affect any requirement under any
statute or the Declaration of Trust of the Trust (as may be amended from time to time, the
"Declaration of Trust") for the vote necessary for the adoption of any measure. If, however, such
quorum shall not be present at any meeting of the shareholders, the shareholders entitled to vote
at such meeting, present in person or by proxy, shall have the power to adjourn the meeting from
time to time to a date not more than 120 days after the original record date without notice other
than announcement at the meeting. At such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the meeting as
originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of shareholders duly
called and at which a quorum is present shall be sufficient to elect a Trustee. Each share may be
voted for as many individuals as there are Trustees to be elected and for whose election the share
is entitled to be voted. A majority of the votes cast at a meeting of shareholders duly called and
at which a quorum is present shall be sufficient to approve any other matter which may properly
come before the meeting, unless more than a majority of the votes cast is required herein or by
statute or by the Declaration of Trust. Unless otherwise provided in the Declaration of Trust,
each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted
to a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may vote the shares owned of record by him, either
in person or by proxy executed in writing by the shareholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the secretary of the Trust before or at the time of the
3
meeting. No proxy shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust
registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted,
may be voted by the president or a vice president, a general partner or trustee thereof, as the case
may be, or a proxy appointed by any of the foregoing individuals, unless some other person who
has been appointed to vote such shares pursuant to a bylaw or a resolution of the governing
board or similar governing body of such corporation or other entity or agreement of the partners
of the partnership presents a certified copy of such bylaw, resolution or agreement, in which case
such person may vote such shares. Any trustee or other fiduciary may vote shares registered in
his name as such fiduciary, either in person or by proxy.
Shares of the Trust directly or indirectly owned by it shall not be voted at any meeting
and shall not be counted in determining the total number of outstanding shares entitled to be
voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may
be voted and shall be counted in determining the total number of outstanding shares at any given
time.
The Trustees may adopt by resolution a procedure by which a shareholder may certify in
writing to the Trust that any shares registered in the name of the shareholder are held for the
account of a specified person other than the shareholder. The resolution shall set forth the class
of shareholders who may make the certification, the purpose for which the certification may be
made, the form of certification and the information to be contained in it; if the certification is
with respect to a record date or closing of the share transfer books, the time after the record date
or closing of the share transfer books within which the certification must be received by the
Trust; and any other provisions with respect to the procedure which the Trustees consider
necessary or desirable. On receipt of such certification, the person specified in the certification
shall be regarded as, for the purposes set forth in the certification, the shareholder of record of
the specified shares in place of the shareholder who makes the certification.
Notwithstanding any other provision contained herein or in the Declaration of Trust or
these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated
Code of Maryland (or any successor statute) shall not apply to any acquisition by any person of
shares of beneficial interest of the Trust. This Section 10 may be repealed, in whole or in part, at
any time, whether before or after an acquisition of control shares and, upon such repeal, may, to
the extent provided by any successor bylaw, apply to any prior or subsequent control share
acquisition.
Section 11. INSPECTORS. At any meeting of shareholders, the chairman of the
meeting may, or upon the written request of the holders of shares entitled to cast not less than
50% of all the votes entitled to be cast at such meeting shall, appoint one or more persons as
inspectors for such meeting. Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity and effect of proxies,
count all votes, report the results and perform such other acts as are proper to conduct the
election and voting with impartiality and fairness to all the shareholders.
4
Each report of an inspector shall be in writing and signed by him or by a majority of them
if there is more than one inspector acting at such meeting. If there is more than one inspector,
the report of a majority shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 12. NOMINATIONS AND SHAREHOLDER BUSINESS.
(a) Annual Meetings of Shareholders. (1) Nominations of persons for election to the
Board of Trustees and the proposal of business to be considered by the shareholders may be
made at an annual meeting of shareholders (i) pursuant to the Trust's notice of meeting or (ii) by
or at the direction of the Trustees.
(b) Special Meetings of Shareholders. Only such business shall be conducted at a special
meeting of shareholders as shall have been brought before the meeting pursuant to the Trust's
notice of meeting. Nominations of persons for election to the Board of Trustees may be made at
a special meeting of shareholders at which Trustees are to be elected (i) pursuant to the Trust's
notice of meeting or (ii) by or at the direction of the Board of Trustees.
(c) General. Only such persons who are nominated in accordance with the procedures
set forth in this Section 12 shall be eligible to serve as Trustees and only such business shall be
conducted at a meeting of shareholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 12.
Section 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of shareholders may be taken without a meeting if a consent in
writing, setting forth such action, is signed by each shareholder entitled to vote on the matter and
any other shareholder entitled to notice of a meeting of shareholders (but not to vote thereat) has
waived in writing any right to dissent from such action, and such consent and waiver are filed
with the minutes of proceedings of the shareholders.
Section 14. VOTING BY BALLOT. Voting on any question or in any election may be
viva voce unless the presiding officer shall order or any shareholder shall demand that voting be
by ballot.
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER.
The business and affairs of the Trust shall be managed under the direction of its Board of
Trustees which may exercise all such powers of the Trust and do all such lawful acts and things
as are not by statute or by the Declaration of Trust or by these Bylaws required to be exercised or
done by shareholders. A Trustee shall be an individual at least 21 years of age who is not under
legal disability. Unless otherwise agreed between the Trust and the Trustee, each individual
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Trustee, may engage in other business activities of the type conducted by the Trust and is not
required to present to the Trust any investment opportunities presented to them even though the
investment opportunities may be within the scope of the Trust's investment policies. In case of
failure to elect Trustees at an annual meeting of the shareholders, the Trustees holding over shall
continue to direct the management of the business and affairs of the Trust until their successors
are elected and qualify.
Section 2. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Trustees
shall be held immediately after and at the same place as the annual meeting of shareholders, no
notice other than this Bylaw being necessary. The Trustees may provide, by resolution, the time
and place, either within or without the State of Maryland, for the holding of regular meetings of
the Trustees without other notice than such resolution.
Section 3. SPECIAL MEETINGS. Special meetings of the Trustees may be called by or
at the request of the chairman of the Board of Trustees, if there be one, or the president or by a
majority of the Trustees then in office. The person or persons authorized to call special meetings
of the Trustees may fix any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Trustees called by them.
Section 4. NOTICE. Notice of any special meeting shall be given by written notice
delivered personally, telegraphed or mailed to each Trustee at his business or residence address.
Personally delivered or telegraphed notices shall be given at least two days prior to the meeting.
Notice by mail shall be given at least five days prior to the meeting. Telephone notice shall be
given at least 24 hours prior to the meeting. If mailed, such notice shall be deemed to be given
when deposited in the United States mail properly addressed, with postage thereon prepaid. If
given by telegram, such notice shall be deemed to be given when the telegram is delivered to the
telegraph company. Telephone notice shall be deemed given when the Trustee is personally
given such notice in a telephone call to which he is a party. Neither the business to be transacted
at, nor the purpose of, any annual, regular or special meeting of the Trustees need be stated in the
notice, unless specifically required by statute or these Bylaws.
Section 5. QUORUM. A majority of the entire Board of Trustees shall constitute a
quorum for transaction of business at any meeting of the Trustees, provided that, if less than a
majority of such Trustees are present at said meeting, a majority of the Trustees present may
adjourn the meeting from time to time without further notice, and provided further that if,
pursuant to the Declaration of Trust or these Bylaws, the vote of a majority of a particular group
of Trustees is required for action, a quorum must also include a majority of such group.
The Trustees present at a meeting which has been duly called and convened may continue
to transact business until adjournment, notwithstanding the withdrawal of enough Trustees to
leave less than a quorum.
Section 6. VOTING. The action of the majority of the Trustees present at a meeting at
which a quorum is present shall be the action of the Trustees, unless the concurrence of a greater
proportion is required for such action by applicable statute.
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Section 7. TELEPHONE MEETINGS. Trustees may participate in a meeting by means
of a conference telephone or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 8. INFORMAL ACTION BY TRUSTEES. Any action required or permitted to
be taken at any meeting of the Trustees may be taken without a meeting, if a consent in writing
to such action is signed by each Trustee and such written consent is filed with the minutes of
proceedings of the Trustees.
Section 9. VACANCIES. If for any reason any or all the Trustees cease to be Trustees,
such event shall not terminate the Trust or affect these Bylaws or the powers of the remaining
Trustees hereunder (even if fewer than two Trustees remain). Any vacancy (including a vacancy
created by an increase in the number of Trustees) shall be filled, at any regular meeting or at any
special meeting called for that purpose, by a majority of the Trustees then in office, though less
than a quorum, or by a sole remaining Trustee. Any individual so elected as Trustee shall hold
office for the unexpired term of the Trustee he is replacing and until his successor is duly elected
and qualified, or until his earlier death, resignation or removal.
Section 10. COMPENSATION. Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, fixed sums per year or per meeting.
Expenses of attendance, if any, may be allowed to Trustees for attendance at each annual, regular or
special meeting of the Trustees or of any committee thereof; but nothing herein contained shall be
construed to preclude any Trustees from serving the Trust in any other capacity and receiving
compensation therefor.
Section 11. REMOVAL OF TRUSTEES. The shareholders may, at any time, remove
any Trustee in the manner provided in the Declaration of Trust.
Section 12. RESIGNATION OF TRUSTEES. Any Trustee of the Trust may resign from
the Board of Trustees or any committee thereof at any time, by giving notice in writing to the
chairman of the Board of Trustees, if there be one, the president or the secretary and, in the case
of a committee, to the chairman of such committee. Such resignation shall take effect at the time
therein specified or, if no time is specified, immediately; and unless otherwise specified in such
notice, the acceptance of such resignation shall not be necessary to make it effective.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for any loss which may
occur by reason of the failure of the bank, trust company, savings and loan association, or other
institution with whom moneys or shares have been deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee shall be obligated to
give any bond or surety or other security for the performance of any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and agent of the Trust shall, in
the performance of his duties with respect to the Trust, be fully justified and protected with
regard to any act or failure to act in reliance in good faith upon the books of account or other
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records of the Trust, upon an opinion of counselor upon reports made to the Trust by any of its
officers or employees or by the adviser, accountants, appraisers or other experts or consultants
selected by the Trustees or officers of the Trust, regardless of whether such counselor expert may
also be a Trustee.
Section 16. NUMBER AND QUALIFICATIONS. The number of Trustees of the Trust
shall not be less than one (1) nor more than nine (9), the exact number of which shall be fixed by
the Board of Trustees, provided that the number thereof shall never be less than required by
Maryland law and further provided that the tenure of office of a Trustee shall not be affected by
any decrease in the number of Trustees. Trustees need not be shareholders of the Trust.
Section 17. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419 of the
Maryland General Corporation Law (the "MGCL") shall be available for and apply to any
contract or other transaction between the Trust and any of its Trustees or between the Trust and
any other trust, corporation, firm or other entity in which any of its Trustees is a trustee or
director or has a material financial interest.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Trustees may
appoint from among its members such committees as the Trustees consider appropriate, composed
of one or more Trustees, to serve at the pleasure of the Board of Trustees.
Section 2. POWERS. The Trustees may delegate to committees appointed under Section
1 of this Article any of the powers of the Trustees, except as prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such committee, the
members thereof present at any meeting, whether or not they constitute a quorum, may appoint
another Trustee to act in the place of such absent member.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Trustees may
participate in a meeting by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each member of the committee and
such written consent is filed with the minutes of proceedings of such committee.
ARTICLE V
OFFICERS
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Section 1. GENERAL PROVISIONS. The officers of the Trust may consist of a
chairman of the Board of Trustees, a vice chairman of the Board of Trustees, a chief executive
officer, a president, one or more vice presidents, a treasurer, one or more assistant treasurers, a
secretary, and one or more assistant secretaries. In addition, the Trustees may from time to time
appoint such other officers with such powers and duties as they shall deem necessary or
desirable. The officers of the Trust shall be elected annually by the Trustees at the first meeting
of the Trustees held after each annual meeting of shareholders. If the election of officers shall
not be held at such meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall hold office until his successor is elected and qualifies or until his death,
resignation or removal in the manner hereinafter provided. Any two or more offices may be held
by the same person. In their discretion, the Trustees may leave unfilled any office except that of
president and secretary. Election of an officer or agent shall not of itself create contract rights
between the Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Trust may be
removed by the Trustees if in their judgment the best interests of the Trust would be served
thereby, but such removal shall be without prejudice to the contract rights, if any, of the person
so removed. Any officer of the Trust may resign at any time by giving written notice of his
resignation to the Trustees, the chairman of the Board of Trustees, if there be one, the president or
the secretary. Any resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein, immediately upon
its receipt. The acceptance of a resignation shall not be necessary to make it effective unless
otherwise stated in the resignation. Such resignation shall be without prejudice to the contract
rights, if any, of the Trust.
Section 3. VACANCIES. A vacancy in any office may be filled by the Trustees for the
balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a chief
executive officer from among the elected officers. The chief executive officer shall have
responsibility for implementation of the policies of the Trust, as determined by the Trustees, and
for the administration of the business affairs of the Trust. In the absence of both the chairman
and vice chairman of the Board of Trustees, the chief executive officer shall preside over the
meetings of the Trustees and of the shareholders at which he shall be present.
Section 5. CHIEF OPERATING OFFICER. The Trustees may designate a chief
operating officer from among the elected officers. Said officer will have the responsibilities and
duties as set forth by the Trustees or the chief executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Trustees may designate a chief
financial officer from among the elected officers. Said officer will have the responsibilities and
duties as set forth by the Trustees or the chief executive officer.
Section 7. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD OF TRUSTEES.
The chairman of the Board of Trustees, if there be one, shall preside over the meetings of the
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Trustees and of the shareholders at which he shall be present and shall in general oversee all of
the business and affairs of the Trust. In the absence of the chairman of the Board of Trustees, the
vice chairman of the Board of Trustees shall preside at such meetings at which he shall be
present. The chairman and the vice chairman of the Board of Trustees may execute any deed,
mortgage, bond, contract or other instrument, except in cases where the execution thereof shall
be expressly delegated by the Trustees or by these Bylaws to some other officer or agent of the
Trust or shall be required by law to be otherwise executed. The chairman of the Board of
Trustees and the vice chairman of the Board of Trustees shall perform such other duties as may be
assigned to him or them by the Trustees.
Section 8. PRESIDENT. In the absence of the chairman, the vice chairman of the Board
of Trustees and the chief executive officer, the president shall preside over the meetings of the
Trustees and of the shareholders at which he shall be present. In the absence of a designation of
a chief executive officer by the Trustees, the president shall be the chief executive officer. The
president may execute any deed, mortgage, bond, contract or other instrument, except in cases
where the execution thereof shall be expressly delegated by the Trustees or by these Bylaws to
some other officer or agent of the Trust or shall be required by law to be otherwise executed; and
in general shall perform all duties incident to the office of president and such other duties as may
be prescribed by the Trustees from time to time.
Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a
vacancy in such office, the vice president (or in the event there be more than one vice president,
the vice presidents in the order designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of the president and when
so acting shall have all the powers of and be subject to all the restrictions upon the president; and
shall perform such other duties as from time to time may be assigned to him by the president or
by the Trustees. The Trustees may designate one or more vice presidents as executive vice
president or as vice president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings
of the shareholders, the Trustees and committees of the Trustees in one or more books provided
for that purpose; (b) see that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be custodian of the Trust records and of the seal of the Trust;
(d) keep a register of the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) have general charge of the share transfer books of the Trust;
and (f) in general perform such other duties as from time to time may be assigned to him by the
chief executive officer, the president or by the Trustees.
Section 11. TREASURER. The treasurer shall have the custody of the funds and
securities of the Trust and shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Trust and shall deposit all moneys and other valuable effects in the name
and to the credit of the Trust in such depositories as may be designated by the Trustees.
The treasurer shall disburse the funds of the Trust as may be ordered by the Trustees,
taking proper vouchers for such disbursements, and shall render to the president and Trustees, at
10
the regular meetings of the Trustees or whenever they may require it, an account of all his
transactions as treasurer and of the financial condition of the Trust.
If required by the Trustees, the treasurer shall give the Trust a bond in such sum and with
such surety or sureties as shall be satisfactory to the Trustees for the faithful performance of the
duties of his office and for the restoration to the Trust, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, moneys and other property of
whatever kind in his possession or under his control belonging to the Trust.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be
assigned to them by the secretary or treasurer, respectively, or by the president or the Trustees.
The assistant treasurers shall, if required by the Trustees, give bonds for the faithful performance
of their duties in such sums and with such surety or sureties as shall be satisfactory to the
Trustees.
Section 13. SALARIES. The salaries of the officers shall be fixed from time to time by
the Trustees and no officer shall be prevented from receiving such salary by reason of the fact
that he is also a Trustee.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or agent to enter into
any contract or to execute and deliver any instrument in the name of and on behalf of the Trust
and such authority may be general or confined to specific instances. Any agreement, deed,
mortgage, lease or other document executed by one or more of the Trustees or by an authorized
person shall be valid and binding upon the Trustees and upon the Trust when authorized or
ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the Trust shall be
signed by such officer or officers, agent or agents of the Trust in such manner as shall from time
to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed shall be deposited
from time to time to the credit of the Trust in such banks, trust companies or other depositories
as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled to a certificate or
certificates which shall represent and certify the number of shares of each class of beneficial
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interests held by him in the Trust. Each certificate shall be signed by the chief executive officer,
the president or a vice president and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Trust. The
signatures may be either manual or facsimile. Certificates shall be consecutively numbered; and
if the Trust shall, from time to time, issue several classes of shares, each class may have its own
number series. A certificate is valid and may be issued whether or not an officer who signed it is
still an officer when it is issued. Each certificate representing shares which are restricted as to
their transferability or voting powers, which are preferred or limited as to their dividends or as to
their allocable portion of the assets upon liquidation or which are redeemable at the option of the
Trust, shall have a statement of such restriction, limitation, preference or redemption provision,
or a summary thereof, plainly stated on the certificate. In lieu of such statement or summary, the
Trust may set forth upon the face or back of the certificate a statement that the Trust will furnish
to any shareholder, upon request and without charge, a full statement of such information.
Section 2. TRANSFERS. Certificates shall be treated as negotiable, and title thereto and
to the shares they represent shall be transferred by delivery thereof to the same extent as those of
a Maryland stock corporation. No transfers of shares of the Trust shall be made if (i) void ab
initio pursuant to any provision of the Declaration of Trust or (ii) the Board of Trustees, pursuant
to any provision of the Declaration of Trust, shall have refused to permit the transfer of such
shares. Permitted transfers of shares of the Trust shall be made on the share records of the Trust
only upon the instruction of the registered holder thereof, or by his attorney thereunto authorized
by power of attorney duly executed and filed with the secretary or with a transfer agent or
transfer clerk, and upon surrender of the certificate or certificates, if issued, for such shares
properly endorsed or accompanied by a duly executed share transfer power and the payment of
all taxes thereon. Upon surrender to the Trust or the transfer agent of the Trust of a certificate
for shares duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfers not prohibited by any provision of the Declaration of
Trust or by action of the Board of Trustees thereunder, it shall be the duty of the Trust to issue a
new certificate to the person entitled thereto, cancel the old certificate and record the transaction
upon its books.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Trustees
may direct a new certificate to be issued in place of any certificate previously issued by the Trust
alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a
new certificate, the officer designated by the Trustees may, in his discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or
the owner's legal representative to advertise the same in such manner as he shall require and/or to
give bond, with sufficient surety, to the Trust to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Trustees may set, in advance, a record date for the purpose of determining shareholders entitled
to notice of or to vote at any meeting of shareholders or determining shareholders entitled to
receive payment of any dividend or the allotment of any other rights, or in order to make a
determination of shareholders for any other purpose. Such date, in any case, shall not be prior to
12
the close of business on the day the record date is fixed and shall be not more than 90 days and,
in the case of a meeting of shareholders not less than ten days, before the date on which the
meeting or particular action requiring such determination of shareholders of record is to be held
or taken.
In lieu of fixing a record date, the Trustees may provide that the share transfer books
shall be closed for a stated period but not longer than 20 days. If the share transfer books are
closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the share transfer books are not closed for the determination
of shareholders, (a) the record date for the determination of shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the day on which the
notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to
the meeting; and (b) the record date for the determination of shareholders entitled to receive
payment of a dividend or an allotment of any other rights shall be the close of business on the
day on which the resolution of the Trustees, declaring the dividend or allotment of rights, is
adopted.
When a determination of shareholders entitled to vote at any meeting of shareholders has
been made as provided in this Section 4, such determination shall apply to any adjournment
thereof, except when (i) the determination has been made through the closing of the transfer
books and the stated period of closing has expired or (ii) the meeting is adjourned to a date more
than 120 days after the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Trust shall maintain at its principal office or at the
office of its counsel, accountants or transfer agent, an original or duplicate share ledger
containing the name and address of each shareholder and the number of shares of each class held
by such shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees may issue
fractional shares or provide for the issuance of scrip, all on such terms and under such conditions
as they may determine. Notwithstanding any other provision of the Declaration of Trust or these
Bylaws, the Trustees may issue units consisting of different securities of the Trust. Any security
issued in a unit shall have the same characteristics as any identical securities issued by the Trust,
except that the Trustees may provide that for a specified period securities of the Trust issued in
such unit may be transferred on the books of the Trust only in such unit.
ARTICLE VIII
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the shares of the
Trust may be authorized and declared by the Trustees, subject to the provisions of law and the
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Declaration of Trust. Dividends may be paid in cash, property or shares of the Trust, subject to
the provisions of law and the Declaration of Trust.
Section 2. CONTINGENCIES. Before payment of any dividends, there may be set aside
out of any funds of the Trust available for dividends such sum or sums as the Trustees may from
time to time, in their absolute discretion, think proper as a reserve fund for contingencies, for
equalizing dividends, for repairing or maintaining any property of the Trust or for such other
purpose as the Trustees shall determine to be in the best interest of the Trust, and the Trustees
may modify or abolish any such reserve in the manner in which it was created.
ARTICLE IX
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal by the Trust. The
seal shall have inscribed thereon the name of the Trust and the year of its formation. The
Trustees may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is required to place its seal to a
document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to
a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute
the document on behalf of the Trust.
ARTICLE X
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to time, the Trust,
without requiring a preliminary determination of the ultimate entitlement to indemnification,
shall indemnify (a) any Trustee, officer or shareholder or any former Trustee, officer or
shareholder (including among the foregoing, for all purposes of this Article X and without
limitation, any individual who, while a Trustee, officer or shareholder and at the express request
of the Trust, serves or has served another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise as a director, officer, shareholder, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) who has
been successful, on the merits or otherwise, in the defense of a proceeding to which he was made
a party by reason of service in such capacity, against reasonable expenses incurred by him in
connection with the proceeding, (b) any Trustee or officer or any former Trustee or officer
against any claim or liability to which he may become subject by reason of such status unless it
is established that (i) his act or omission was material to the matter giving rise to the proceeding
and was committed in bad faith or was the result of active and deliberate dishonesty, (ii) he
actually received an improper personal benefit in money, property or services or (iii) in the case
of a criminal proceeding, he had reasonable cause to believe that his act or omission was
unlawful and (c) each shareholder or former shareholder against any claim or liability to which
he may become subject by reason of such status. In addition, the Trust shall pay or reimburse, in
advance of final disposition of a proceeding, reasonable expenses incurred by a Trustee, officer
14
or shareholder or former Trustee, officer or shareholder made a party to a proceeding by reason
such status, provided that, in the case of a Trustee or officer, the Trust shall have received (i) a
written affirmation by the Trustee or officer of his good faith belief that he has met the
applicable standard of conduct necessary for indemnification by the Trust as authorized by these
Bylaws and (ii) a written undertaking by or on its behalf to repay the amount paid or reimbursed
by the Trust if it shall ultimately be determined that the applicable standard of conduct was not
met. The Trust may, with the approval of its Trustees, provide such indemnification or payment
or reimbursement of expenses to any Trustee, officer or shareholder or any former Trustee,
officer or shareholder who served a predecessor of the Trust and to any employee or agent of the
Trust or a predecessor of the Trust. Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Declaration of Trust or these Bylaws
inconsistent with this Article, shall apply to or affect in any respect the applicability of this
Article with respect to any act or failure to act which occurred prior to such amendment, repeal
or adoption.
Any indemnification or payment or reimbursement of the expenses permitted by these
Bylaws shall be furnished in accordance with the procedures provided for indemnification or
payment or reimbursement of expenses, as the case may be, under Section 2-418 of the MGCL
for directors of Maryland corporations. The Trust may provide to Trustees, officers and
shareholders such other and further indemnification or payment or reimbursement of expenses,
as the case may be, to the fullest extent permitted by the MGCL, as in effect from time to time,
for directors of Maryland corporations.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration of Trust or
Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically required by statute.
The attendance of any person at any meeting shall constitute a waiver of notice of such meeting,
except where such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE XII
AMENDMENT OF BYLAWS
The Trustees shall have the exclusive power to adopt, alter or repeal any provision of
these Bylaws and to make new Bylaws.
ARTICLE XIII
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MISCELLANEOUS
All references to the Declaration of Trust shall include any amendments thereto and any
Articles Supplementary pertaining thereto.
EXHIBIT D
DEWEY & LEBOEUF
By Email
brad.scheler@friedfrank.com
Brad E. Scheler, Esq.
December 20, 2010
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10004
Dewey & LeBoeuf LLP
New York, NY 10019-6092
tel +1 212 259 8530
fax +1 212 259 6333
mbienenstock@dl.com
Re: In re Innkeepers USA Trust, eta/. -- Ad Hoc Preferred Shareholders'
Committee (the "Preferred Shareholders' Committee")-Chapter 11
Plan Offer Benefitting Preferred Shareholders ("Offer")
Dear Brad:
As attorneys for the Preferred Shareholders' Committee
1
in the above-referenced
chapter 11 cases of Innkeepers USA Trust, et al. (collectively, the "Debtors"), we submit
this Offer.
As you know, the Debtors own seventy-two (72) hotels, each of which is owned
by an individual debtor entity. Of those seventy-two (72) hotels, forty-five (45) are
subject to a blanket lien currently controlled by Midland Loan Services, Inc., and twenty
(20) are subject to a blanket lien held by Lehman All, Inc. The remaining seven (7)
hotels (the "Independent Hotels") are not subject to blanket liens, but are, rather, subject
only to individual mortgages on the hotels. The Preferred Shareholders' Committee
believes that no fewer than five (5) of the Independent Hotels (the "Five Independent
Hotels"), as well as non-debtor KPA Raleigh, LLC's 49% ownership interest in non-
debtor Genwood Raleigh LLC (the "Joint Venture Interest"), provide value for the
1
The members of the Preferred Shareholders' Committee are: Brencourt Advisors, LLC; Esopus Creek
Advisors, LLC; Plainfield Special Situations Master Fund II Limited; Morgens, Waterfall, Vintiadis & Co.,
Inc.; P. Schoenfeld Asset Management LP; and York Capital Management.
NEWYORKILONDONMULTINATIONALPARTNERSHIPIWASHINGTON,DC
ALBANYIALMATYIAUSTINIBEIJINGIBOSTONIBRUSSELSICHARLOTIEICHICAGOIDUBAI
FRANKFURTIHARTFORDIHoNGKONGIHousroNIJACKSONVILLEIJOHANNESBURG (PTY)LTD. 1 LosANGELES MILAN 1 Moscow 1
PARISMULTINATIONALPARTNERSHIP I RIYADHAFFILIATEDOFFICE I ROME I SAN FRANCISCO I SILICON VALLEY I WARSAW
December 20, 2010
Page 2 of 6
preferred shareholders. Significantly, neither of the blanket lienholders has any claims
whatsoever against the entities directly or indirectly owning the Five Independent Hotels
and the Joint Venture Interest (together, the "Independent Entities").
Pursuant to the annexed term sheet (the "Term Sheet"), the Preferred
Shareholders' Committee, or their designee to be created for the purpose of this
transaction (the "Preferred Acquisition REIT" or "PAR"), will provide equity capital for the
restructuring of the Independent Entities, resulting in the PAR owning 100% of such
entities (the "PAR Transaction").
The Term Sheet provides the terms of the PAR Transaction. In summary, (a) the
PAR will have the option to reinstate the existing mortgage debt or to impose a new
mortgage in the outstanding principal amount at a longer term and the lowest interest
rate the court approves on the Independent Entities, (b) preferred shareholders will
have the right to participate in a rights offering for $15 million that will be backstopped
by the members of the Preferred Shareholders' Committee (the "Preferred
Shareholders' Rights Offering") and whose proceeds will be applied as set forth herein,
(c) the unsecured claim holders at each of the Independent Entities, for each claim at
PAR's option, will have their claim reinstated or be paid their allowed claims in full in
cash from either (i) the proceeds of the Preferred Shareholders' Rights Offering, or (ii)
other cash held by Innkeepers USA LP, which cash will also provide funds to satisfy any
claims for property improvement work ("PIP") on the Five Independent Hotels, and (d)
equity interests in the PAR will be distributed 40% to holders of preferred shares not
equitably subordinated on a pro rata basis, 40% purchased pro rata in the Preferred
Shareholders' Rights Offering raising $15 million, and 20% to the preferred
shareholders backstopping the Preferred Shareholders' Rights Offering.
By definition, this proposal provides the preferred shareholders with the full value
they are entitled to from the hotels not subject to any blanket mortgage claims. The
independent trustees are trustees of Innkeepers USA Trust, which is the entity that
issued the preferred shares at issue. This Offer enables those directors to carry out
December 20, 2010
Page 3 of6
their fiduciary duties to the preferred shareholders. Finally, nothing contained in this
Offer shall prejudice in any manner the rights of the members of the Preferred
Shareholders' Committee, nor shall be deemed to constitute a waiver or release of any
claims whatsoever.
Many thanks for your prompt consideration of our proposal. We look forward to
hearing from you.
MJB/ds
CC by email:
Paul Basta, Esq. paul.basta@kirkland.com

S
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1ncere y,

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Bienenstock
December 20, 2010
Page 4 of 6
Innkeepers USA Trust, eta/.
Term Sheet for Preferred Shareholders' Committee Acquisition
Independent
Entities
PAR
Sources of Cash
KPA RIMV, LLC,
KPA RIGG, LLC,
KPA Tysons Corner Rl, LLC,
KPA Washington DC, LLC,
KPA San Antonio, LLC,
KPA Raleigh, LLC,
Innkeepers USA Trust,
Innkeepers Financial Corporation, and
Innkeepers USA LP.
The Preferred Acquisition REIT: A Real Estate Investment
Trust created for the purpose of effectuating this
transaction.
Cash proceeds from the Preferred Shareholders' Rights
Offering will supply up to $15 million and use that and
other cash belonging to Innkeepers USA Trust and its
other subsidiaries not subject to the blanket mortgage
claims to satisfy (i) unsecured claims and (ii) outstanding
PIP obligations of the Independent Entities, and to provide
working capital for the reorganized entities. The
reorganized entities will have cash equal to:
$15 million from the Preferred Shareholders' Rights
Offering; plus
All available cash the Independent Entities have
and are entitled to be paid (including, but not limited
to, their share, as determined by the court, of the
$7.4 million cash account held by Innkeepers USA
LP).
December 20, 2010
Page 5 of6
Treatment of
Claims
All Secured
Claims
All Unsecured
Claims
KPA RIMV. LLC : Capmark Mission Valley CMBS
Mortgage Loan- Either reinstate pursuant to 11 U.S.C.
1124, or pursuant to 11 U.S.C. 1129(b) impose a new
mortgage in the then current principal amount outstanding
for a term of 10 years at the lowest interest rate the court
will approve.
KPA RIGG. LLC : Capmark Garden Grove CMBS
Mortgage Loan- Either reinstate pursuant to 11 U.S.C.
will approve.
KPA Tysons Corner Rl. LLC: Merrill Lynch Tysons Corner
CMBS Mortgage Loan - Either reinstate pursuant to 11
U.S. C. 1124, or pursuant to 11 U.S.C. 1129(b) impose
a new mortgage in the then current principal amount
outstanding for a term of 10 years at the lowest interest
rate the court will approve.
KPA Washington DC. LLC: Merrill Lynch Washington D.C.
CMBS Mortgage Loan - Either reinstate pursuant to 11
U.S.C. 1124, or pursuant to 11 U.S.C. 1129(b) impose
a new mortgage in the then current principal amount
outstanding for a term of 10 years at the lowest interest
rate the court will approve.
KPA San Antonio. LLC : Merrill Lynch San Antonio CMBS
Mortgage Loan- Either reinstate pursuant to 11 U.S. C.
will approve.
KPA Raleigh. LLC: TBD
Fixed, liquidated allowed claims paid in full in cash from
December 20, 2010
Page 6 of6
Interests in
Innkeepers USA
Trust
Preferred
Shareholders'
Rights Offering
Plan
Documentation
proceeds of the Preferred Shareholders' Rights Offering
and cash of debtors' estates.
Contingent allowed claims reinstated pursuant to 11
U.S.C. 1124, or estimated for distribution purposes
pursuant to 11 U.S.C. 502(c) and paid in full in cash.
(Unimpaired- not entitled to vote)
Each preferred shareholder with an interest in Innkeepers
USA Trust will receive its pro rata distribution of 40% of
the equity of PAR, along with the right to participate on a
pro rata basis in the Preferred Shareholders' Rights
Offering whose participants will share 40% of such equity.
20% of the remaining equity shall go to the preferred
shareholders backstopping the Preferred Shareholders'
Rights Offering.
Apollo Investment Corporation's preferred shares will be
(a) extinguished based on benefits it receives from not
having to satisfy its guaranty of improvements and/or (b)
equitably subordinated.
Common shares will be cancelled.
(Impaired- entitled to vote)
$15 million rights offering (subject to adjustment to reflect
cash on hand) to be offered to preferred shareholders who
are accredited investors. The Preferred Shareholders'
Rights Offering will be used to consummate the chapter 11
plans and provide capital for the reorganized debtors.
The Preferred Shareholders' Rights Offering will be
backstopped by the members of the Preferred
Shareholders' Committee.
Will memorialize the foregoing economic terms and be
satisfactory to the Preferred Shareholders' Committee.
EXHIBIT E
NEWYORK|LONDONMULTINATIONALPARTNERSHIP|WASHINGTON,DC
ALBANY|ALMATY|AUSTIN|BEIJING|BOSTON|BRUSSELS|CHARLOTTE|CHICAGO|DUBAI
FRANKFURT|HARTFORD|HONGKONG|HOUSTON|JACKSONVILLE|JOHANNESBURG (PTY)LTD. | LOSANGELES MILAN | MOSCOW |
PARISMULTINATIONALPARTNERSHIP | RIYADHAFFILIATEDOFFICE | ROME | SANFRANCISCO | SILICON VALLEY | WARSAW

Dewey & LeBoeuf LLP
New York, NY 10019-6092

tel +1 212 259 8530
fax +1 212 259 6333
mbienenstock@dl.com

January 12, 2011

By Email
brad.scheler@friedfrank.com

Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10004

Re: In re Innkeepers USA Trust, et al. -- Ad Hoc Preferred Shareholders'
Committee (the "Preferred Shareholders' Committee")Revised
Chapter 11 Plan Offer Benefitting Preferred Shareholders (the
Revised Offer)
Dear Brad:
1
chapter 11 cases of Innkeepers USA Trust, et al. (collectively, the Debtors), we submit
this Revised Offer to reflect recent negotiations between the Preferred Shareholders
Committee and LNR Partners, LLC (LNR), as special servicer on those certain
mortgage loans collateralized by the Five Independent Hotels (as defined below). The
Revised Offer is subject to all customary terms and conditions and shall not be deemed
to be a solicitation of acceptances of a plan.
The Revised Offer is the offer submitted to the Debtors on December 20, 2010
except that the mortgage debt on all five properties is being reinstated, as opposed to

1
The members of the Preferred Shareholders Committee are: Brencourt Advisors, LLC; Esopus Creek
Inc.; P. Schoenfeld Asset Management LP; and York Capital Management.
January 12, 2011
Page 2 of 7

being restructured with new maturity dates and interest rates, as described more fully in
the annexed revised term sheet (the Revised Term Sheet).
Accordingly: (i) pursuant to 11 U.S.C. 1124, the Preferred Acquisition REIT or
PAR (as defined in the Revised Term Sheet) will reinstate the existing mortgage debt at
KPA RIMV, LLC, KPA Tysons Corner RI, LLC, KPA Washington DC, LLC, and KPA
San Antonio, LLC and KPA RIGG, LLC (reinstatement of KPA RIGG being subject to
further due diligence) (together, the Five Independent Hotels); and (ii) the Preferred
Shareholders Committee will appoint an operator acceptable to LNR and the Preferred
Shareholders Committee to manage the Independent Entities (as defined in the
Revised Term Sheet).
This proposal provides the preferred shareholders with the full value they are
entitled to from the entities not subject to any blanket mortgage claims, and enables the
independent trustees of Innkeepers USA Trust to carry out their fiduciary duties. The
Preferred Shareholders Committee reiterates that nothing contained in this Revised
Offer shall prejudice in any manner the rights of the members of the Preferred
Shareholders Committee or LNR, nor shall be deemed to constitute a waiver or release
of any claims whatsoever.
We understand that the Debtors are finalizing bid procedures and a motion
seeking approval of such procedures. The Five Mile/Lehman stalking horse bid and the
proposed bid procedures would be inconsistent both with the Revised Offer and with the
maximization of values for all stakeholder constituencies. Accordingly, the Preferred
Shareholders Committee also believes that it is critical that the Debtors conduct a
comprehensive sales and marketing process for all of their hotels, both on a pool by
pool basis and as a whole, and not agree to a stalking horse bid or bid procedures that
will operate as an impediment to any potential competing bids.
2
Inasmuch as this
stalking horse bid and procedures are for a proposed plan, it is also appropriate that the
Debtors contemporaneously seek approval of a proposed disclosure statement setting
forth, among other things, the Debtors analyses of valuation and value allocation
issues, rather than seeking approval of such bid procedures and stalking horse in
isolation.
This Revised Offer maximizes the value of the estates of all of the Debtors,
including Innkeepers USA Trust, which issued the preferred shares. Additionally, the
Revised Offer does not interfere with any of the blanket mortgage pools but would serve
to maximize the recoveries on such claims. Conversely, the blanket mortgagees have

2
From speaking with LNRs advisors, we are informed that TriMont Real Estate Advisors, Inc., as special
servicer for the benefit of SASCO 2008-C2, LLC the 100% participant and owner of all economic and
beneficial interests in certain mezzanine loans, would also be supportive of such a process.
January 12, 2011
Page 3 of 7

no claims whatsoever against the properties underlying the Revised Offer. Accordingly,
we see no reason why the Debtors will not move forward with our proposal and
acceptable bid procedures promptly. We look forward to hearing from you.

Sincerely,

/s/

Martin J. Bienenstock
MJB/ds
CC by email:
Paul Basta, Esq. paul.basta@kirkland.com
Lawrence Gottesman, Esq. lawrence.gottesman@bryancave.com

January 12, 2011
Page 4 of 7

Innkeepers USA Trust, et al.
Revised Term Sheet for Preferred Shareholders Committee Acquisition

Independent
Entities
KPA RIGG, LLC (subject to further due diligence),
KPA RIMV, LLC,
KPA Tysons Corner RI, LLC,
KPA Raleigh, LLC,
Innkeepers USA LP.

PAR
transaction.

Sources of Cash
Combined cash proceeds from the Preferred
Shareholders Rights Offering and cash on hand at
Innkeepers USA Trust (and its other subsidiaries not
subject to the blanket mortgage claims) will supply $15
million to (i) satisfy unsecured claims of the Independent
Entities, (ii) fund outstanding PIP obligations of each of the
Five Independent Hotels,
3
(iii) fund reserves and escrows
for the Five Independent Hotels as reasonably determined
by LNR and the Preferred Shareholders Committee, and
(iv) provide working capital for the Five Independent
Hotels. The Five Independent Hotels will have cash equal
to $15 million from:

the Preferred Shareholders Rights Offering;
LP).

3
Upon the closing of the Preferred Shareholders Rights Offering, PAR will make a direct payment to KPA
RIMV, LLC and KPA Tysons Corner RI, LLC in satisfaction of any PIP obligations then outstanding.
January 12, 2011
Page 5 of 7

Treatment of
Allowed Claims

All Secured
Claims

KPA RIMV, LLC: Capmark Mission Valley CMBS
Mortgage Loan Reinstate pursuant to 11 U.S.C. 1124
at outstanding principal amount of $47.4 million, original
interest rate of 5.98%, and original maturity of November
11, 2016.
KPA Tysons Corner RI, LLC: Merrill Lynch Tysons Corner
CMBS Mortgage Loan Reinstate pursuant to 11 U.S.C.
1124 at outstanding principal amount of $25.2 million,
original interest rate of 6.03%, and original maturity of
October 1, 2016.
KPA Washington DC, LLC: Merrill Lynch Washington D.C.
CMBS Mortgage Loan Reinstate pursuant to 11 U.S.C.
1124 at outstanding principal amount of $25.6 million,
original interest rate of 6.03%, and original maturity of
October 1, 2016.
KPA San Antonio, LLC: Merrill Lynch San Antonio CMBS
Mortgage Loan Reinstate pursuant to 11 U.S.C. 1124
at outstanding principal amount of $24.2 million, original
interest rate of 6.03%, and original maturity of October 1,
2016.
KPA RIGG, LLC: Capmark Anaheim CMBS Mortgage
Loan Reinstate pursuant to 11 U.S.C. 1124 at
outstanding principal amount of $37.6 million, original
interest rate of 5.98%, and original maturity of November
11, 2016, subject to further due diligence.
4

KPA Raleigh, LLC: TBD.

All Unsecured
Claims
proceeds of the Preferred Shareholders Rights Offering

4
In the event that this loan is not reinstated LNR will take back the collateral securing this loan pursuant
to 11 U.S.C. 1129(b)(2)(A)(iii).
January 12, 2011
Page 6 of 7

and cash of debtors estates.
pursuant to 11 U.S.C. 502(c) and paid in full in cash.
New non-recourse carveout guarantees and
environmental indemnities acceptable to LNR and the
Preferred Shareholders Committee.
(Unimpaired not entitled to vote)

Interests in
Innkeepers USA
Trust
USA Trust will receive its pro rata distribution of 40% of
pro rata basis in the Preferred Shareholders Rights
Offering whose participants will share 40% of such equity.
20% of the remaining equity shall go to the preferred
shareholders backstopping the Preferred Shareholders
Rights Offering.
Apollo Investment Corporations preferred shares will be
equitably subordinated. Apollo Investment Corporations
guarantee will not be released or discharged.
(Impaired entitled to vote)

Preferred
Shareholders
Rights Offering
Up to $15 million rights offering (subject to adjustment to
reflect cash on hand) to be offered to preferred
shareholders who are accredited investors. The Preferred
Shareholders Rights Offering will be used to consummate
the chapter 11 plans and provide capital for the
reorganized debtors.
The Preferred Shareholders Rights Offering will be
backstopped by the members of the Preferred
Shareholders Committee.

January 12, 2011
Page 7 of 7

Management
Team
As designated by Preferred Shareholders Committee.

Plan
Documentation
Will memorialize the foregoing and other essential
economic and other terms and be satisfactory to the
Preferred Shareholders Committee and LNR.

EXHIBIT F
DEWEY & LEBOEUF
By Email
mbeilinson@beilinsonpartners.com
Marc A. Beilinson, Esq.
Innkeepers USA Trust
340 Royal Poinciana Way, Suite 306
Palm Beach, FL 33480
April 25, 2011
Dewey & LeBoeuf LLP
New York, NY 10019-6092
tel +1 212 259 8530
fax +1 212 259 6333
mbienenstock@dl.com
Re: In re Innkeepers USA Trust, eta/. -- Ad Hoc Preferred Shareholders'
Committee (the "Preferred Shareholders' Committee")-Renewed
and Modified Chapter 11 Plan Offer Benefitting Preferred
Shareholders (the "Renewed and Modified Offer")
Dear Marc:
1
chapter 11 cases of Innkeepers USA Trust, et al. (collectively, the "Debtors"), we submit
this Renewed and Modified Offer to reflect our discussions with the Debtors in recent
days concerning potential restructuring alternatives for the Five Independent Hotels (as
defined below). The Renewed and Modified Offer is subject to all customary terms and
conditions and shall not be deemed to be a solicitation of acceptances of a plan.
The Renewed and Modified Offer largely remains consistent with the revised
offer submitted to the Debtors on January 12, 2011 except that the Renewed and
Modified Offer now incorporates the illustrative transaction proposed by the Debtors in
the Moelis & Company presentation at our meeting with you on April 19, 2011: namely,
1
The members of the Preferred Shareholders' Committee are: Brencourt Advisors, LLC; Esopus Creek
Inc.; and P. Schoenfeld Asset Management LP.
N EWYORKILONDONMUL TINA TIONALPARTNERSHIPIWASHINGTON, DC
ALBANYIALMATYIAUSTINIBEIJINGIBOSTONIBRUSSELSICHARLOTTEICHICAGOIDUBAI
FRANKFURTIHARTFORDIHONGKONGIHousroNIJACKSONVILLEjJOHANNESBURG (PTY)LTD. 1 LosANGELES MILAN 1 Moscow 1
PARISMULTINATIONALPARTNERSHIP I RIYADHAFFILIATEDOFFICE I ROME I SAN FRANCISCO I SiLICON VALLEY I WARSAW
April 25, 2011
Page 2 of 7
it imposes a new blanket mortgage in the then current principal and accrued, unpaid
interest amounts on all Five Independent Hotels pursuant to the issuance of a Tranche
A and Tranche B Note with a cash interest rate of 6.0% and a maturity date of 2017, as
described more fully in the annexed term sheet (the "Term Sheet"). Accrued, unpaid
interest shall be computed at the non-default interest rates unless the Court orders
otherwise.
Significantly, the Renewed and Modified Offer contemplates that the Preferred
Shareholders' Committee or its designee to be created for the purpose of this
transaction (the "Preferred Acquisition REIT" or "PAR") will provide up to $15 million of
equity capital for the restructuring of the Independent Entities (as defined in the Term
Sheet) through a rights offering (the "Preferred Shareholders' Rights Offering")
backstopped by members of the Preferred Shareholders' Committee (the "Backstop
Parties"), resulting in the PAR owning 100% of such entities (the "PAR Transaction"). In
addition to providing for the payment of closing costs and the balance of any debtor-in-
possession financing remaining on the Five Independent Hotels, the Preferred
Shareholders' Rights Offering removes the need to burden the reorganized Debtors with
the additional leverage that would otherwise be imposed by the issuance of a Tranche
C Note, as originally set forth in the materials that the Debtors distributed at the April 19,
2011 meeting.
The Term Sheet more fully describes the terms of the PAR Transaction. In
summary, (a) the PAR will issue a Tranche A and Tranche B Note in the then current
principal and accrued interest amounts on all Five Independent Hotels and whose
proceeds will be applied herein, (b) holders of Innkeepers USA Trust Series C Preferred
Shares (the "Series C Preferred Shares") will have the right to participate in the
Preferred Shareholders' Rights Offering and whose proceeds will be applied as set forth
herein, (c) the unsecured claimholders at each of the Independent Entities (as defined
in the Term Sheet), for each claim at PAR's option, will have their claim reinstated or be
paid their allowed claims in full in cash from either (i) the proceeds of the Preferred
Shareholders' Rights Offering, or (ii) other cash held by Innkeepers USA LP, which cash
will also provide funds to satisfy any claims for property improvement work ("PIP") on
the Five Independent Hotels, and (d) equity interests in the PAR will be distributed
50.0% to holders of preferred shares not equitably subordinated on a pro rata basis,
42.3% purchased pro rata in the Preferred Shareholders' Rights Offering raising $15
million, and 7.6% to the Backstop Parties.
This Renewed and Modified Offer provides the preferred shareholders with the
full value they are entitled to from the entities not subject to any blanket mortgage
claims, and enables the independent trustees of Innkeepers USA Trust to carry out their
fiduciary duties. The Preferred Shareholders' Committee reiterates that nothing
contained in this Renewed and Modified Offer shall prejudice in any manner the rights
April 25, 2011
Page 3 of 7
of the members of the Preferred Shareholders' Committee, nor be deemed to waive or
release any claims whatsoever.
This Renewed and Modified Offer maximizes the value of the estates of all the
Debtors not subject to blanket mortgage claims, including Innkeepers USA Trust, which
issued the preferred shares. Additionally, the Renewed and Modified Offer does not
interfere with any of the blanket mortgage pools. Conversely, the blanket mortgagees
have no claims whatsoever against the properties underlying the Renewed and
Modified Offer. Accordingly, we see no reason why the Debtors will not move forward
with our proposal promptly. We look forward to hearing from you.
MJB/ds
CC by email:
Anup Sathy, Esq. anup.sathy@kirkland.com
Brad Scheler, Esq. brad.scheler@friedfrank.com
Lawrence Gottesman, Esq. lawrence.gottesman@bryancave.com
April 25, 2011
Page 4 of 7
Innkeepers USA Trust, eta/.
Term Sheet for Preferred Shareholders' Committee Acquisition
Independent
Entities
PAR
Sources of Cash
KPA RIMV, LLC,
KPA Tysons Corner Rl, LLC,
KPA Raleigh, LLC,
Innkeepers USA LP.
transaction.
Combined cash proceeds from the Preferred
Shareholders' Rights Offering and cash on hand at
Innkeepers USA Trust (and its other subsidiaries not
subject to the blanket mortgage claims) will supply $15
million to (i) satisfy unsecured claims of the Independent
Entities, (ii) fund outstanding PIP obligations of each of the
Five Independent Hotels,
2
(iii) fund reserves and escrows
for the Five Independent Hotels as reasonably determined
by the Preferred Shareholders' Committee, and (iv)
provide working capital for the Five Independent Hotels.
The Five Independent Hotels will have cash equal to $15
million from:
the Preferred Shareholders' Rights Offering;
LP).
2
Upon the closing of the Preferred Shareholders' Rights Offering, PAR will make a direct payment to KPA
RIMV, LLC and KPA Tysons Corner Rl, LLC in satisfaction of any PIP obligations then outstanding.
April 25, 2011
Page 5 of 7
Treatment of
Allowed Claims
All Secured
Claims
All Unsecured
Claims
KPA RIMV, LLC: Capmark Mission Valley CMBS
Mortgage Loan- Pursuant to 11 U.S.C. 1129(b) impose
a new blanket mortgage in the then current principal and
accrued interest amount in the form of a Tranche A and
Tranche B Note.
3
KPA Tysons Corner Rl, LLC: Merrill Lynch Tysons Corner
CMBS Mortgage Loan- Pursuant to 11 U.S.C. 1129(b)
impose a new blanket mortgage in the then current
principal and accrued interest amount in the form of a
Tranche A and Tranche B Note.
KPA Washington DC, LLC: Merrill Lynch Washington D.C.
CMBS Mortgage Loan- Pursuant to 11 U.S.C. 1129(b)
impose a new blanket mortgage in the then current
principal and accrued interest amount in the form of a
Tranche A and Tranche B Note.
KPA San Antonio, LLC: Merrill Lynch San Antonio CMBS
Mortgage Loan- Pursuant to 11 U.S.C. 1129(b) impose
a new blanket mortgage in the then current principal and
accrued interest amount in the form of a Tranche A and
Tranche B Note.
KPA Raleigh, LLC: TBD.
proceeds of the Preferred Shareholders' Rights Offering
and cash of debtors' estates, seventy percent on earlier of
effective date or final allowance and thirty percent 90 days
after effective date.
3
The Tranche A and Tranche B Note assume a cash interest rate of 6.0% and a maturity date of 2017.
April 25, 2011
Page 6 of 7
Interests in
Innkeepers USA
Trust
Management
Equity Incentive
Plan
Preferred
Shareholders'
Rights Offering
pursuant to 11 U.S.C. 502(c) and paid in full in cash in
two installments as above.
USA Trust will receive its pro rata distribution of 50.0% of
pro rata basis in the Preferred Shareholders' Rights
Offering whose participants will share 42.3% of such
equity. The Backstop Parties shall receive 7.6% of the
remaining equity.
Apollo Investment Corporation's preferred shares will be
equitably subordinated.
The equity of PAR will remain subject to dilution up to
5.0% as a result of the implementation of a Management
Equity Incentive Plan with terms satisfactory to the
Preferred Shareholders' Committee.
Up to $15 million rights offering (subject to adjustment to
reflect cash on hand) to be offered to preferred
shareholders who are accredited investors. The Preferred
Shareholders' Rights Offering will be used to consummate
the chapter 11 plans and provide capital for the
reorganized debtors.
The Preferred Shareholders' Rights Offering will be
backstopped by The Backstop Parties.
Holders of Innkeepers USA Trust Series C Preferred
April 25, 2011
Page 7 of 7
Management
Team
Plan
Documentation
Reservation of
Rights
Governance
Plan
Documentation
Shares will have the right to purchase 4,400,000 common
shares in PAR pro rata at $3.40 per share.
The Backstop Parties will receive 800,000 common shares
in PAR at $3.40 per share.
The Preferred Shareholders' Committee will designate
management, subject to the right of Marc A. Beilinson to
serve as Chief Executive Officer on mutually agreeable
terms.
The Preferred Shareholders' Committee reserves all rights
to sell the Independent Entities in the event that the
Debtors elect to solicit higher and better offers for such
entities through an auction (the "Auction") pursuant to
section 363 of the Bankruptcy Code.
Under the Auction, the Debtors' Chief Restructuring
Officer will receive a special exit bonus equal to 15.0% of
any recovery the Auction yields to holders of the Series C
Preferred Shares in excess of $3.40 per share.
PAR will report quarterly and annual financial information
in accordance with United States Over-the-Counter listing
requirements.
The board of directors will initially consist of up to five
directors to be nominated at the discretion of the Preferred
Shareholders Committee.

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