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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. Irena M. Goldstein, 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. INNKEEPERS USA TRUST, et al., Movants, -againstAD HOC COMMITTEE OF PREFERRED SHAREHOLDERS, Respondents.

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Chapter 11 Case No. Case No. 10 13800 (SCC) (Jointly Administered)

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OBJECTION OF AD HOC COMMITTEE OF PREFERRED SHAREHOLDERS TO DEBTORS MOTION FOR ENTRY OF 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 TO THE HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE:

The Ad Hoc Committee of Preferred Shareholders (the Ad Hoc Committee)1 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),2 objects (the Objection) to the Debtors motion, dated April 8, 2011 [Docket No.

The following holders which collectively hold approximately 20.7% of Innkeepers 8.0% Series C Cumulative Preferred Shares Shares (the Series C 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. 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.

1095], for entry of an order approving (a) the adequacy of the Disclosure Statement for the Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code filed on April 8, 2011 [Docket No. 1093] (the Disclosure Statement); (b) certain dates related to confirmation of the Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code filed on April 8, 2011 [Docket No. 1094] (the Plan); (c) certain voting procedures and the form of certain documents to be distributed in connection with the solicitation of the Plan; and (d) proposed voting and general tabulation procedures (the Motion). In support of its Objection, the Ad Hoc Committee respectfully avers: BACKGROUND 1. Almost two months ago, after the Ad Hoc Committee filed its objection to

the stalking horse bid submitted by Five Mile Capital II Pooling REIT LLC (Five Mile) and Lehman ALI Inc. (Lehman and, together with Five Mile, Five Mile/Lehman and their bid, the Five Mile/Lehman Bid) for all seventy-two of the Debtors hotels, 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 sixtyfive (the Fixed/Floating Hotels). 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. 2. As they represented to this Court at the hearing on March 11, 2011, the

Debtors reiterated to the Ad Hoc Committee privately in the days following the hearing that the Seven Independent Hotels would remain in abeyance until the Debtors (purportedly after

consultation with the Ad Hoc Committee) identified a consensual path of reorganization going forward. 3. Consistent with the Ad Hoc Committees understanding, the revised

bidding procedures approved by this Court on March 11, 2011 emphasized that such procedures do not govern or establish any auction for [the Seven Independent Hotels]. See Revised Bidding Procedures, attached to Order Authorizing Debtors Stalking Horse Motion and Bidding Procedures (the Fixed/Floating Debtors Sale Order), dated March 11, 2011 [Docket No. 1009] at 5. 4. Significantly, 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. 5. 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 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. 6. The Ad Hoc Committee did not know about the Debtors intentions.3 The

Debtors then claimed that failure to sell the Seven Independent Hotels on May 2-3, 2011 would

That said, as the Debtors true intentions continued to surface on the evening of May 2, 2011, one member of the Ad Hoc Committee, in his capacity as a holder of the Series C Preferred Shares, informed counsel to the

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sour the market on those hotels because the Debtors had represented the Seven Independent Hotels might be sold on those dates. As admitted by the Debtors own letter in which they advised parties they might decide to auction the Seven Independent Hotels on May 2, 2011, the Debtors purported to keep their options open.4 7. Significantly, the Debtors (i) never advised the Ad Hoc Committee that it

had made a decision with respect to the Seven Independent Hotels prior to May 2, (ii) never requested an order setting the auction of the Seven Independent Hotels for May 2-3 and setting rules of bidding, (iii) never provided the Ad Hoc Committee an opportunity to object, (iv) never filed a subsequent pleading advising the marketplace that the auction of the Seven Independent Hotels would indeed occur on May 2-3, and (v) 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.

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Independent Committee of the Board of Trustees of Innkeepers USA Trust (the Independent Committee), the entity that issued the Series C Preferred Shares, of his desire to express his concerns about the Debtors behavior in a face-to-face meeting with Lawrence J. Ruisi, the Chairman of the Independent Committee. Although Mr. Ruisi attended the auction on both May 2 and 3, he refused to meet or speak with any member of the Ad Hoc Committee.
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On April 13, 2011, more than one month after this Court entered the Fixed/Floating Debtors Sale Order authorizing the May 2, 2011 auction of the Fixed/Floating Hotels, the Debtors filed a copy of a letter sent by Moelis & Company LLC (Moelis) on April 12, 2011 to potential investors to provide an update regarding the marketing process of the Fixed/Floating Hotels. See Notice of Filing of Process Update Letter, dated April 13, 2011 [Docket No. 1102] (To the extent we believe that proceeding with an auction including . . . bids [on the Seven Independent Hotels] will be value-maximizing, we may hold a concurrent auction for those bids on May 2, 2011.) (emphasis supplied). The Debtors apparently believe that allowing their financial advisor to bury one sentence in a five-page process letter merely three weeks before the May 2, 2011 auction satisfies their fiduciary duty to adequately market test the Seven Independent Hotels. Tellingly, this window dressing treatment of the Seven Independent Hotels stands in stark contrast to the not one, but two (and including the April 12 letter, three) process letters that Moelis felt compelled to send to potential investors to maintain market interest in the Fixed/Floating Hotels. See Notice of Filing of Process Letter, filed on January 25, 2011 [Docket No. 856]; Notice of Filing of Process Update Letter, filed on March 17, 2011 [Docket No. 1027].

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LNR Partners, LLC, the special servicer on the outstanding mortgage debt

encumbering five of the Seven Independent Hotels (the Five Independent Hotels), was concerned the Debtors might be correct that the market would be soured, and induced the Ad Hoc Committee to go along with the effort to hold the sale, by offering to compromise default interest claims, and without releasing the Debtors and their trustees and management from any liability for what they had done. Indeed, the Debtors signed the stipulation under which they agreed the Ad Hoc Committee was not releasing any claims other than those expressly set forth, and it is indisputable that claims against shareholders, trustees, and management were not set forth. 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, at 15 (. . . [the Ad Hoc Committee] releases [no] claim or right [against any person or entity].), attached hereto as Exhibit A. 9. No stalking horse contract had been agreed on. The only party interested

in the Five Independent Hotels having equity value was the party that approached the Ad Hoc Committee in March 2011 because of its inability to engage the Debtors in constructive negotiations. In the end, a stalking horse contract was signed in the moments before or after the auction of the Five Independent Hotels commenced, with the Ad Hoc Committee and the market never having seen it. 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. The Debtors now want preferred shareholders to vote on its proposed Plan with no disclosure of the foregoing facts. 10. On April 8, 2011, the Debtors filed the proposed Plan and Disclosure

Statement. See Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, dated April 8, 2011 [Docket No. 1094]; Disclosure Statement for Debtors Plans of

Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, dated April 8, 2011 [Docket No. 1093]. 11. Among other infirmities, the proposed Plan and Disclosure Statement take

value from preferred shareholders by improperly providing they release third party nondebtors, including directors and officers, of any and all claims, interests, obligations, debts, rights, suits, damages, remedies, causes of action, liabilities . . . whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, contingent or non-contingent . . . See Plan, Article VIII. H., at p. 69. This makes the Plan unconfirmable on its face. The Plan incorporates a sale to third parties and its success is in no way conditioned on or beholden to the Debtors shareholders, trustees, or management being released by preferred shareholders from prepetition or postpetition actions. 12. The releases and exculpations on their faces violate the Second Circuits

limitations on releases obtainable from nondebtors. See Johns-Manville Corp. v. Chubb Indem. Ins. Co. (In re Johns-Manville Corp.), 517 F.3d 52 (2d cir. 2008), revd on other grounds, 129 S. Ct. 2195 (2009); Deutsche Bank AG v. Metromedia Fiber Network, Inc. (In re Metromedia Fiber Network, Inc.) (hereafter, Metromedia), 416. F.3d 136, 143 (2d Cir. 2005) (emphasizing that a non-debtor release in a plan of reorganization should not be approved absent the finding that truly unusual circumstances render the release terms important to success of the plan . . .). Moreover, claims cannot be taken from preferred shareholders without compensation therefor. 13. The definition of Reorganizing Releasing Parties in the Plan illegally

encompasses all Holders of Claims against or Interests in [Innkeepers USA Trust]. See Plan, Article I. A. 200. at p. 17. Notably, the holders of the Series C Preferred Shares issued by Innkeepers USA Trust have not consented to give the Debtors or any of their directors or officers

any release whatsoever. See Fixed/Floating Debtors Sale Order at 17 (The transaction contemplated by the Amended Commitment Letter shall not be conditioned on any holder of Innkeepers USA Trust 8.0% Series C Cumulative Preferred Shares, in such capacity, releasing claims or interests against any person or entity.); see also 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, at 15, supra 8. 14. In addition to explicit releases of the Debtors directors and officers, the

Plan contemplates indirect releases by way of exculpation and injunctive relief. See Plan, Article VIII. H., at p. 70 and Article VIII. H. at p. 71. Just as the Plan and Disclosure Statement provide for the inappropriate releaseexplicit or otherwiseof third party nondebtors, the Plan and Disclosure Statement also contemplate an incentive package of up to $2 million for the Debtors Chief Restructuring Officer that the Debtors evidently proposed in consultation with consultants they retained absent Court approval, and without compliance with sections 363 and 503 of the Bankruptcy Code.5 See Plan at p. 53; see Disclosure Statement at p. 34. Notably, in connection with the foregoing stipulation, the Debtors refused to make the bonus severable from confirmation of their Plan. Given the limited resources of the estate which the Court has invoked several times to support denying motions for appointment of a preferred shareholders committee

On April 15, 2011, Midland Loan Services, Inc. (Midland) filed a Motion To Require Debtors To Comply With Sections 363 And 503 Of The Bankrupcty Code [Docket No. 1110] (the Midland Motion). The Ad Hoc Committee filed its own joinder to the Midland Motion on April 25, 2011. See Joinder of Ad Hoc Committee of Preferred Shareholders to Motion of Midland Loan Services to Require Debtors to Comply with Sections 363 and 503 of the Bankruptcy Code and Request for Ancillary Relief [Docket No. 1147]. A hearing before this Court on the Midland Motion was scheduled and noticed for April 28, 2011 at 10:00am EST. Counsel for the Ad Hoc Committee learned on April 27, 2011 from counsel for Midland that Midland agreed to the Debtors request to adjourn the hearing to a future date. Suffice it to say, the Debtors never bothered to seek the Ad Hoc Committees approval of the adjournment.

and an examiner, it is especially critical that the Court deny approval of the Disclosure Statement so that a process is not unleashed with its large expenditures that cannot result in a confirmable plan. Put simply, the Plan should be fixed now. 15. Finally, just as the Debtors fail to explain the justification for the non-

consensual third party releases, the information set forth in the proposed Disclosure Statement does not meet the adequate information standard under section 1125 of the Bankruptcy Code because the proposed Disclosure Statement does not contain a waterfall for the holders of Series C Preferred Shares outlining the anticipated likely range of distributions under the proposed Plan. OBJECTION A. The Proposed Disclosure Statement Cannot be Approved Because the Plan is Unconfirmable on its Face 16. Although the issue of whether a proposed plan of reorganization meets the

requirements of confirmation is typically decided at the confirmation hearing, it is well-settled that a court should not approve a proposed disclosure statement when it describes a plan of reorganization that is patently unconfirmable. See In re Quigley Co., 377 B.R. 110, 115-16 (Bankr. S.D.N.Y. 2007) (If the plan is patently unconfirmable on its face, the application to approve the disclosure statement must be denied, as solicitation of the vote would be futile.); In re Phoenix Petroleum Co., 278 B.R. 385, 394 (Bankr. E.D.Pa. 1996) (If the disclosure statement describes a plan that is so fatally flawed that confirmation is impossible, the court should exercise its discretion to refuse to consider the adequacy of disclosures.); In re 266 Washington Assocs., 141 B.R. 275, 288 (Bankr. E.D.N.Y. 1992) (A disclosure statement will not be approved where . . . it describes a plan which is fatally flawed and thus incapable of confirmation.); In re Filex Inc., 116 B.R. 37, 41 (Bankr. S.D.N.Y. 1990) (Court approval of a

disclosure statement for a plan which will not, nor can not, be confirmed by the Bankruptcy Court is a misleading and artificial charade which should not bear the imprimatur of the court.). 17. The aforementioned release, exculpation, and injunction provisions render

the proposed Plan patently unconfirmable on its face, and as such, the Debtors estates should not be burdened with the unnecessary expense and efforts related to a futile exercise of solicitation and the Ad Hoc Committee should not be put to the expense of objecting. B. The Proposed Disclosure Statement Lacks Adequate Information 18. For the reasons outlined above, the information provided in the proposed

Disclosure Statement fails to satisfy the adequate information standard under section 1125 of the Bankruptcy Code. See 11 U.S.C. 1125 (defining adequate information as that of detail sufficient to enable a hypothetical investor to make an informed judgment about the plan); see also In re BSL Operating Corp., 57 B.R. 945, 950 (Bankr. S.D.N.Y. 1986) (A disclosure statement . . . is evaluated . . . in terms of whether it provides sufficient information to permit enlightened voting by holders of claims or interest.). In its determination of whether to approve a proposed disclosure statement, a court must examine each particular plan on a case-by-case basis. See In re Worldcom, Inc., 2003 WL 21498904, *10 (S.D.N.Y. June 30, 2003) (the approval of a disclosure statement . . . involves a fact specific inquiry into the particular plan to determine whether it possesses adequate information under 1125) (quoting In re Ionosphere Clubs, 179 B.R. 24, 29 (S.D.N.Y. 1995)). 19. To enable preferred shareholders to make an informed judgment about the

proposed Plan, the Debtors must also revise the proposed Disclosure Statement to include a waterfall for the holders of the Series C Preferred Shares illustrating the anticipated likely range of distributions that such holders will receive under the proposed Plan.

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RESERVATION OF RIGHTS 20. The Ad Hoc Committee reserves the right to amend and supplement this

Objection as necessary and to object to the Plan on any and all appropriate grounds whether listed above or not.

[Remainder of Page Left Intentionally Blank]

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CONCLUSION WHEREFORE the Ad Hoc Committee requests the Court to deny the Motion and to grant the Ad Hoc Committee such other and further relief as is just. Dated: New York, NY May 6, 2011 DEWEY & LEBOEUF LLP

/s/ Martin J. Bienenstock Martin J. Bienenstock, Esq. Irena M. Goldstein, Esq. Timothy Q. Karcher, Esq. 1301 Avenue of the Americas New York, New York 10019 Telephone: 212.259.8000 Facsimile: 212.259.6333 Attorneys for Ad Hoc Committee of Preferred Shareholders

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Exhibit A (May 3, 2011 Stipulation)

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Execution Copy UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
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In re: INNKEEPERS USA TRUST, eta!./ Debtors.

Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

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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

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. Claim No. 1634 against Grand Prix Holdings LLC in the amount of

$47,787,117.82, plus unliquidated and contingent amounts, on account of the Trust

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).

Secured Loan secured by a first priority security interest in the San Diego, CA Mission Valley property. 3. Claim No. 1635 against Grand Prix Holdings LLC in the amount of

$37,907,080.79, plus unliquidated and contingent amounts, on account of the Trust Secured Loan secured by a first priority security interest in the Garden Grove, CA property. 4. Claim No. 1636 against Grand Prix Holdings LLC in the amount of

$25,919,415.27, plus unliquidated and contingent amounts, on account of the Trust Secured Loan secured by a first priority security interest in the Washington DC property. 5. Claim No. 1637 against Grand Prix Holdings LLC in the amount of

$25,514,424.38, plus unliquidated and contingent amounts, on account of the Trust 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").

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.

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 paydowns.

(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
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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

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

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 a. Assumed loan amount: $32,416,576.45 b. Cash principal paydown: $5,000,000.00 iii. Mission Valley a. Assumed loan amount: $40,168,769.26
8

b. Cash principal paydown: $7,000,000.00 IV. San Antonio a. Assumed loan amount: $18,462,695.40 b. Cash principal paydown: $5,600,000.00 v. Washington, D.C. a. Assumed loan amount: $20,054,752.20 b. Cash principal paydown: $5,400,000.00 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. follows: (a) The Reorganizing Debtors Plan will be modified in accordance with this Plan Modifications: The Debtors shall amend the Reorganizing Debtors Plan as

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.

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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.
1095] 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.

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(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. 16. Except as expressly provided herein, no Party releases any claim or right. This is the entire agreement among the Parties in respect of its subject matter and

all oral statements and understandings are merged herein. 17. 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.

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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.

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Execution Copy 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 Avenue 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 New York, New York 10104 Telephone: (212) 541-2000 Facsimile: (212) 541-4630 Counsel for the Trusts

Is/
DEWEY & LEBOEUF LLP Martin J. Bienenstock, Esq. Irena M. Goldstein, Esq. Timothy Q. Karcher, Esq. DEWEY & LEBOEUF LLP 1301 Avenue ofthe Americas New York, New York 10019 Telephone: (212) 259-8000 Facsimile: (212) 259-6333 Counsel for the Ad Hoc Committee of Preferred Shareholders

/s/ BRYAN CAVE LLP Lawrence P. Gottesman Michelle McMahon BRYAN CAVE LLP 1290 A venue of the Americas New York, New York 10104 Telephone: (212) 541-2000 Facsimile: (212) 541-4630

Mart" J. Bienenstock, Esq. Irenfi M. Goldstein, Esq. Timothy Q. Karcher, Esq. DEWEY & LEBOEUF LLP 1301 Avenue ofthe Americas New York, New York 10019 Telephone: (212) 259-8000 Facsimile: (212) 259-6333 Counsel for the Ad Hoc Committee of Preferred Shareholders