NY3 3061726.

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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.
AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS,
Movant,
-against-
INNKEEPERS USA TRUST, et al.,

Respondent.

Chapter 11 Case No.

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


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MOTION OF AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS FOR ORDER DIRECTING APPOINTMENT OF
EXAMINER PURSUANT TO SECTION 1104(c)(1)-(2) OF THE BANKRUPTCY CODE

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



NY3 3061726.1

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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 a number of
their direct and indirect subsidiaries (collectively with Innkeepers and Grand Prix, the
Debtors),
2
hereby moves for entry of an order, attached hereto as Exhibit A, directing the

1
The following holders of approximately 24.0% of Innkeepers 8% Series C Cumulative Preferred Shares
comprise the Ad Hoc Committee: Brencourt Advisors, LLC; Esopus Creek Advisors, LLC; and Plainfield
Special Situations Master Fund II Limited.
2
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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appointment of an examiner pursuant to section 1104(c)(1) and (2) of title 11 of the United States
Code (the Bankruptcy Code), and respectfully represents as follows:
PRELIMINARY STATEMENT
1. Prior to filing for bankruptcy, the Debtors and their ultimate common
equity owner, Apollo Investment Corp. (Apollo) engineered a transaction that would allow
Apollo and a single chosen creditor, Lehman ALI, Inc. (Lehman), to retain or obtain equity
interests in the Debtors while wrongfully and needlessly extinguishing preferred shareholders.
While Innkeepers put this case on a fast track as soon as it filed its petition on July 19, 2010,
pleadings filed in the Lehman Brothers bankruptcy show Lehman retained Lazard Freres & Co.
LLC as of May 15, 2010 to advise on the restructuring of Innkeepers. See Motion of Lehman
Brothers Holdings Inc. and Lehman Commercial Paper Inc. for Authorization to Guarantee
Payment of the Fees and Related Charges of Lazard Freres & Co. LLC, as Investment Banker to
Lehman ALI, Inc., Incurred in Connection with the Innkeepers Restructuring, In re Lehman
Brothers Holdings Inc., et. al., Case No. 08-13555-JMP (Bankr. S.D.N.Y. July 27, 2010)
[Docket No.10466].
2. Nowhere in the Debtors first-day pleadings or any other pleadings, do the
Debtors disclose and explain that the holders of preferred shares in Innkeepers own equity
interests of value because subsidiaries of Innkeepers own individual properties in which there is
likely equity value and Innkeepers is not liable for any of the subsidiaries debts.
3. Nowhere in the Debtors first day pleadings or any other pleadings do the
Debtors disclose they are attempting to borrow money to satisfy obligations to improve certain
Debtors properties, by saddling other Debtors properties with liens securing the new money
while Apollo is separately liable for the improvements pursuant to a written guaranty.


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4. In this regard, rather than propose a plan which respects the corporate
structure of the Debtors, in which equity in separately capitalized subsidiaries is held by the debt-
free issuer of the preferred stock, Apollo and Lehman are seeking to force an effective
substantive consolidation which imposes a haircut on other creditors, extinguishes the preferred
shares and leaves Apollo and Lehman in control of the entire enterprise. Innkeepers and Apollo
ignore that this practice has been illegal for 65 years since the United States Supreme Court ruled
that preferred shareholders cannot take something for themselves in this case (a) the exclusive
right to repurchase Innkeepers and (b) the right to encumber valuable properties otherwise
available to preferred shareholders to secure financing for improvements on other properties that
Apollo was independently liable to improve while other preferred shareholders do not obtain
the same right. Young v. Higbee Company, 324 U.S. 204 (1945).
5. As set forth in the Plan Support Agreement and its accompanying term
sheet attached thereto (the Plan Term Sheet), dated July 17, 2010 [Docket No. 15], the
Debtors plan provides that Lehman will receive 100% of the equity of the reorganized
Innkeepers in satisfaction of Lehmans secured claim. This is the case even though Innkeepers
subsidiaries (to name a few) KPA RIMV, LLC, KPA RIGG, LLC, KPA HI Ontario, LLC, KPA
Washington DC, LLC, KPA Tysons Corner RI, LLC and KPA San Antonio, LLC each of
which is separately capitalized with long-term financing at favorable interest rates are owned
by (debt-free) Innkeepers, and the Debtors make no showing that Lehman has a claim against,
much less a security interest in the assets or equity of any of these entities.
3
Currently, 100% of
the common stock of Innkeepers is held by Grand Prix, and 100% of the membership interests in
Grand Prix are held by Apollo. As a condition to certain of Lehmans obligations under the Plan

3
Indeed, the prepetition organizational structure filed with the Debtors first-day pleadings demonstrates that if
even one of the individual hotel properties described above or non-debtor KPA Raleigh JV has equity value, the
equity flows to preferred shareholders at the holding company.


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Support Agreement, Lehman must have executed a definitive agreement to liquidate at least 50%
of the ownership interest in the reorganized Innkeepers it receives under the Plan within 45 days
after the Petition Date. What is not set forth in the Plan Term Sheet, and what no one other than
Apollo, the Debtors, and Lehman may have known had it not been disclosed first by Midland
Loan Services, Inc. (Midland), a secured claimholder of the Debtors, is that Lehman has
already agreed to sell the 50% interest in the reorganized Innkeepers to Apollo. Through this
prearranged scheme, Apollo regains a 50% equity interest in the Company, while the preferred
shares in the Debtors are wiped out and unsecured claimholders are left with unsatisfied claims.
4

6. Had the Debtors chosen not to ignore the Supreme Court, the Debtors,
pursuant to Bank of America National Trust & Savings Assn v.203 North LaSalle Street
Partnership, 526 U.S. 434 (1999), would have had to allow for market testing of the value of the
equity in each of the Debtors subsidiaries before handing the equity to Lehman, subject to
Lehmans agreement to sell half to Apollo, which could only engineer that deal using its position
as a controlling shareholder of Innkeepers. Instead, the Debtors tried to circumvent applicable
law and propose a plan that benefits only Apollo and Lehman to the detriment of the Debtors
other creditors and wipes out preferred shareholders other than Apollo.
7. This alone demonstrates the tricks and shenanigans that Innkeepers and
Apollo have engaged in to extinguish other parties in interest. An examiner must uncover all the
tricks and causes of action created by these breaches of fiduciary duties. It is abundantly clear
that Apollo is out for itself and is determined to extinguish all other shareholders of the Debtors.
Apollo did not even consult with the Ad Hoc Committees preferred shareholders. It simply
plotted to extinguish them. Based upon the limited facts available at this time as more fully set

4
Notably, Apollo and Lehman have a longstanding business relationship. Indeed, it was Lehman which acted as
the financial advisor and prepared a fairness opinion with respect to the 2007 Apollo acquisition of Innkeepers.
See Innkeepers USA Trust Schedule 14A, filed on April 16, 2007, at 29.


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forth below, the Ad Hoc Committee also believes there is in excess of $5 million of fixed,
liquidated unsecured debts warranting the appointment of an examiner under section 1104(c)(2).
Because Apollo and its captive, Innkeepers, created self-made emergencies causing these cases
to proceed on a fast track, time is of the essence.
JURISDICTION AND VENUE
8. This Court has subject matter jurisdiction over this Motion pursuant to 28
U.S.C. 1334. Venue is proper pursuant to 28 U.S.C. 1408 and 1409.
BACKGROUND
9. On the Petition Date, each of the Debtors filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the
Southern District of New York (the Bankruptcy Court). The Debtors chapter 11 cases are
jointly administered under the above-captioned number, but not substantively consolidated. No
trustee or examiner has been appointed in the Debtors chapter 11 cases.
10. According to the Amended Declaration of Dennis Craven, Chief Financial
Office of Innkeepers, In Support of First-Day Pleadings [Docket No. 2] (the First-Day
Declaration), some of the Debtors have approximately $1.29 billion in debt, approximately
$250 million of which is comprised of a floating rate senior mortgage loan and $118 million of
which is comprised of a junior mezzanine loan both owed to Lehman.
5
The First Day
Declaration fails to make clear that Innkeepers, the holding company whose preferred shares are
outstanding, is not liable on such debt (or any other debt for that matter) and owns the equity in
several other subsidiaries which have no obligation to Lehman. The Lehman loans are

5
Reference is made to the Amended First Day Declaration because the prior First Day Declaration omitted any
disclosure about the agreement between Lehman and Apollo with respect to Apollos buying back Lehmans
stock. The Amended Declaration was filed by the Debtors only after Midland exposed the existence of the
Apollo transaction to regain control of the Company.


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collateralized by properties owned by 20 of the Debtors. The remaining debt is comprised of
fixed-rate mortgage loans
6
collateralized by 45 of the Debtors and seven mortgage loans each
secured by an individual property (the Seven Individual Property Mortgages). First-Day
Declaration 6, 8. A total of 79 of the 92 Debtors are parties to the various agreements
documenting the loans. See Schedules 1-9 attached to this Courts Interim Order (A)
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, and (B) Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001(b), dated
July 19, 2010 [Docket No. 13].
11. Prior to the commencement of the chapter 11 cases, the Debtors engaged
in extensive negotiations with certain of their key constituents [Apollo and Lehman] regarding
the parameters of a comprehensive restructuring. First-Day Declaration at 9. As a result of
these negotiations, the Debtors and Lehman have entered into a Plan Support Agreement that
incorporates the terms of a prearranged restructuring. In sum, the plan provides that Lehman
will temporarily receive 100% of the equity in the reorganized Innkeepers, the other secured
lenders will receive new secured notes under the prepetition credit facilities, and the unsecured
creditors will receive a cash allocation, with shareholders other than Apollo receiving no
distributions on account of their equity interests, which shall be extinguished. See Id. at 12.
12. In short, Lehman will receive 100% of the ownership interest in the 92
reorganized Debtors even though its debt is secured by hotels belonging to only 20 of the
Debtors, and Lehman is not secured by six of the Seven Individual Property Mortgages.
7
This

6
The fixed rate mortgage loans were originated by Lehman, and later sold, assigned and transferred into the
collateralized mortgage backed securities (CMBS) market.
7
One of the seven individual hotel properties in Anaheim, California is encumbered by a $21.3 million junior
mezzanine loan held by Lehman. See First-Day Declaration at 30.


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results in a de facto substantive consolidation of the Debtors estates to the prejudice of all other
parties other than Apollo. Thereafter, Apollo, but not the preferred shareholders, will acquire
half the ownership interest from Lehman once the reorganization is complete. While the holders
of the Seven Individual Property Mortgages will receive replacement liens, there is evidence that
at least five hotels owned by Innkeepers are solvent. These five hotels owned by Innkeepers
(Homewood Suites San Antonio, Residence Inn Tysons Corner, Doubletree Guest Suites,
Washington DC, Residence Inn San Diego and the Residence Inn Garden Grove) are each
separately capitalized with debt at (low) fixed interest rates and maturities in 2016 (none of
which was by provided by Lehman). Notably, publicly available financial data on Bloomberg
shows that five of the seven entities obligated on the Seven Individual Property Mortgages have,
during the last several months, generated cash flow in excess of their interest expenses.
8
Even if
current levels of net operating income fall short of interest and principal, a rational investor
might elect to put in additional equity to preserve the option provided by the long duration and
favorable rate of the financing. Yet the equity value of these properties is being extinguished for
the benefit of Lehman and Apollo.
13. Perhaps even more troubling, despite the overwhelming quantitative
evidence showing the solvency of these five hotels,
9
all five hotels stopped paying their interest
on the CMBS loans several months ago. The Ad Hoc Committee believes that an examination
will reveal that these hotels were forced to cease making interest payments on their CMBS loans
precisely to make them delinquent so as to enable the Company to transfer the loans to a special

8
The Debt Service Coverage Ratios (DSCRs) for five of the individual loans exceed a rating of 1 for most
periods. Financial analysts will typically interpret any rating above 1 as undisputed evidence of solvency.
9
In addition to an analysis of DSCRs, the Ad Hoc Committee also believes that a valuation of the net operating
income (NOI) and capitalization rate (cap rate) of the five hotels yields at least $27mm of value that flows to the
preferred shareholders.


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servicer. This falsely creates the impression that there is no equity value for preferred
shareholders.
14. Tellingly, no reference was made to the restructuring arrangement
between Lehman and Apollo in the Debtors original filings. Instead, Midland, which had
learned of the arrangement between Lehman and Apollo from the Debtors chief restructuring
officer, advised the Court and parties in interest of the arrangement in its objection to the
Debtors cash collateral motion. See Id. at 8, Midland Loan Services, Inc.s, Special Servicer
For The Fixed Rate Trustee, Objection To (1) The Motion (A) Authorizing The Debtors To (i)
Use The Adequate Protection Parties Cash Collateral And (ii) Providing Adequate Protection
Pursuant To 11 U.S.C. Sections 361, 362, And 363 And (B) Scheduling A Final Hearing
Pursuant To Bankruptcy Rule 4001(b) And (2) Motion For Entry Of An Order Authorizing The
Continued Use Of (I) Existing Cash Management System, As Modified Herein, (II) Existing Bank
Accounts, (III) Existing Business Forms, And (IV) Certain Existing Investment Guidelines
[Docket No. 36] (Midland Objection) at 8.
15. Only after the Midland Objection was filed did the Debtors scamper to file
an amended first-day declaration, tongue in cheek, providing that: [i]t is Debtors
understanding that, subject to certain terms and conditions, [Apollo] may become the purchaser
[of a portion of Lehmans distributions of equity in the reorganized Innkeepers]. First-Day
Declaration at 13. This alone raises red flags. Indeed, the publicly filed motion, dated July 27,
2010, of Lehman Commercial Paper Inc. (filed in the Lehman Brothers cases for authority to
have a non-debtor Lehman affiliate enter into a plan support agreement with Innkeepers and a
term sheet with Apollo), includes a copy of Apollos term sheet (the Apollo-Lehman Term
Sheet), dated July 19, 2010, for Apollos acquisition of half of Innkeepers from Lehman for


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$107.5 million. See Motion of Lehman Commercial Paper Inc. for Authority to Consent to
Lehman ALI Inc.s Entry into a Plan Support Agreement in Connection with the Innkeepers
Restructuring, In re Lehman Brothers Holdings Inc., et. al., Case No. 08-13555-JMP (Bankr.
S.D.N.Y. July 27, 2010) [Docket No.10465]. The Apollo-Lehman Term Sheet is attached hereto
as Exhibit B for this Courts convenience.
10

16. As stated above, along with the Debtors failure to disclose, Apollo is
causing its captive, Innkeepers, to file a proposed plan without the requirement of an auction or
termination of the Debtors exclusive periods, which plan favors Apollo. While the Debtors are
technically proposing the plan, in actuality, without any termination of exclusivity, it is really
Apollo that is proposing the plan that only benefits Apollo.
17. Moreover, Apollo is obtaining additional benefits from the proposed
restructuring by using the Debtors debtor-in-possession (DIP) financing to fulfill obligations
Apollo guaranteed. Specifically, the Debtors and Apollo are required to complete certain
property improvement programs (PIPs) under a Franchise Agreements entered into with
Marriott International Inc. (Marriott) for 44 of the Debtors 72 hotels. The Debtors are
currently seeking to fund these PIPs using DIP financing. See Debtors Motion for the Entry of
an Order Authorizing the Debtors to Obtain Postpetition Financing from an Affiliate of Lehman
ALI Inc. on a Priming Basis, dated July 19, 2010, at 3 [Docket No. 23].
18. Notably, the Debtors Five Mile DIP Facility attempts to pledge hotel
properties yielding equity to preferred shareholders (namely, the Residence Inn San Diego and
the Residence Inn Tysons Corner) to support borrowings to improve hotels for which Apollo is
personally responsible and is being sued by Midland to enforce. Apollo, which separately

10
It cannot go without notice, that Apollo did not allow Innkeepers to commence this chapter 11 case until the day
it procured for itself a term sheet with Lehman entitling Apollo to repurchase half of Innkeepers. That term
sheet is dated July 19, 2010, the same as the commencement date of these cases.


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guaranteed the obligations to perform the PIPs and repay the debt of Grand Prix Belmont LLC
(and other Grand Prix entities owned by Apollo), is thus seeking to discharge its obligations to
fund improvements on a majority of Innkeepers hotels using DIP financing. The capital
improvement guaranty agreement attached as an exhibit to the complaint dated May 21, 2010 of
Midland, as special servicer, against Apollo Investment Corp., shows in section 1.10 that
Apollos claims for subrogation, reimbursement, and/or indemnification are all waived until
payment in full of the debt to Apollos entities. See Required Capital Improvements Guaranty at
1.10.
11
Because Apollo initially failed to disclose its scheme to regain 50% of the Company as
part of the restructuring, the integrity of the bankruptcy process has been damaged. Moreover,
while Apollo and a select few key constituents will greatly benefit by the Debtors planned short
stay in this Court, other creditors and equity holders will lose all their rights without any of the
safeguards required by Courts and the Bankruptcy Code.
19. Apollos efforts to disenfranchise and extinguish preferred shareholders
stands in contrast to the pertinent pages of Apollos Form 10K filed on May 26, 2010, attached
hereto as Exhibit C. They provide that Apollos preferred equity interests in Grand Prix had a
value of $5,268,000 as of March 31, 2010. See Apollo Investment Corp Form 10-K For The
Fiscal Year Ended March 31, 2010 at 55-56. This value set forth in the May 26, 2010 filing
clearly took into consideration the fact that Innkeepers and its affiliates would restructure
because: (a) in January 2010, Innkeepers released a statement, that it was renegotiating its
nonrecourse debt on a limited number of hotels and discontinued debt service on its Hilton
hotel in Ontario Calif [Innkeepers USA Trust Provides Business Update, dated January 21,
2010, attached hereto as Exhibit D]; (b) in March 2010, Wachovia Bank, N.A, the master

11
Significantly, had Apollo used estate property to finance the improvements prepetition, the transaction would
have been a voidable preference recoverable from Apollo if any of the debtors assumed liability for the
improvements.


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servicer of one of the Debtors mortgage loan pools, informed the Debtors that a triggering
event under the June 29, 2007 Cash Management Agreement had occurred [First-Day
Declaration at 49]; and (c) Moelis has been working with the Debtors as a restructuring advisor
since March 24, 2010 [First-Day Declaration at 60]. Presumably this valuation exercise (a
fertile area of inquiry for an examiner) took into account the likely improving operating
performance of the Debtors hotels. Indeed, operating metrics (occupancy, average daily rate,
RevPar) throughout the mid-price hotel industry have continued to improve since March 31.
12

20. In addition, there is strong evidence suggesting that certain of the Debtors
and non-debtor affiliates have equity value, or put another way, the Debtors estimates regarding
value are suspect. For example, non-debtor KPA Raleigh JV, shown on the corporate
organization chart on page 16 of the First-Day Declaration as an affiliate of Apollo, holds a 49%
interest in the joint venture Genwood Raleigh Lessee LLC (Genwood). In April 2008,
Genwood filed a real estate property tax appeal with the County of Wake, State of North
Carolina in which it stated that it thought that the fair market value of its property was $16
million. See Board of Equalization and Review Notice of Appeal, attached hereto as Exhibit F.
In November 2009, Genwood refinanced the property with a $32 million loan, twice the amount
the Genwood believed the property to be worth less than two years earlier in a significantly
stronger market. See Real Property Transaction Record attached hereto as Exhibit G.
Presumably, the lender in this transaction believed the property was worth well in excess of the
$32 million loan, based on appraisals and other customary underwriting procedures and it is
likely that the value of the property has only been enhanced by the rally in the financial markets
since November 2009. Such documentation would be fertile ground for an examination.

12
See e.g., InterContinental Hotels Says Room Rates Are Rising reported in the Wall Street Journal, August 11,
2010, annexed hereto as Exhibit E.


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21. Given that there is likely equity value in certain of the Debtors and non-
debtors, the Debtors/Apollos proposed treatment of intercompany claims is particularly
egregious. According to the Plan Term Sheet, Intercompany claims shall not be entitled to
receive any distribution under the Plan on account of such claims and shall be deemed to have
voted against the Plan. Such claims will be reinstated, extinguished or cancelled as appropriate
in the judgment of Lehman and the Company to effectuate the Transaction contemplated by the
Plan. Plan Term Sheet at 3. In other words, any value from such claims may be reinstated after
the discharge of the preferred shares.
22. Moreover, the proposed plan conspicuously attributes no value whatsoever
to the estate for claims against third parties: The Plan shall include a full discharge and release
of liability by the Company, other than a release of the obligations set forth herein, in favor of (a)
the Company and each of its subsidiaries, (b) Lehman, and (c) each of their respective principals,
employees, affiliates, subsidiaries, members, shareholders, agents, officers, directors, and
professionals from: (i) any and all claims and causes of action arising prior to the Effective Date
and (ii) any and all claims arising from the actions taken or not taken in good faith in connection
with the [restructuring]. Plan Term Sheet at 12-13. Significantly, the exclusion of the Debtors
causes of action from any plan valuation severely impacts the value of the preferred shares.
23. An examiner should be appointed to investigate the issues listed in
paragraph 33 below, including (a) the restructuring and whether Apollo and Innkeepers officers
and directors carried out their fiduciary duties to preferred shareholders, (b) what steps Apollo
caused Innkeepers to take to advantage Apollo at the expense of other creditors and preferred
shareholders of Innkeepers, (c) whether and how Apollo and Innkeepers created self-imposed
emergencies by causing properties not encumbered by Lehmans mortgage to default


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unnecessarily, and (d) how value can be maximized for preferred shareholders and unsecured
claimholders.
RELIEF REQUESTED
24. This district has always adhered to the belief that bankruptcy must not
only be fair, but must appear fair. In re Bidermann Industries U.S.A., Inc., 203 B.R. 547 (Bankr.
S.D.N.Y. 1997). Under any respectable metric, the Debtors cases do not appear fair. Instead, it
appears the Debtors have engineered a bankruptcy to allow Apollo to retain an equity interest in
the reorganized Debtors without complying with basic bankruptcy tenets. Creditors and equity
security holders are entitled to understand how and why we are here why their claims and
interests are to be discharged while the Debtors, controlled by Apollo, use their exclusive right to
file a plan to benefit seemingly only Apollo, and potentially Lehman; and to do so on a short
timetable designed to prevent other parties in interest from finding the facts before it is too late.
25. The standards for appointment of an examiner are set forth in section
1104(c) of the Bankruptcy Code, which provides:
If the court does not order the appointment of a trustee under this
section, then at any time before the confirmation of a plan, on
request of a party in interest or the United States trustee, and after
notice and a hearing, the court shall order the appointment of an
examiner to conduct such an investigation of the debtor as is
appropriate, including an investigation of any allegations of fraud,
dishonesty, incompetence, misconduct, mismanagement, or
irregularity in the management of the affairs of the debtor of or by
current or former management of the debtor, if

(1) such appointment is in the interests of creditors, any equity
security holders, and other interests of the estate; or

(2) the debtors fixed, liquidated, unsecured debts, other than
debts for goods, services, or taxes, or owing to an insider,
exceed $5,000,000.

11 U.S.C. 1104(c).


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26. The Ad Hoc Committee undisputably consists of parties in interest
pursuant to the Bankruptcy Code, which defines party in interest as the debtor, the trustee, a
creditors committee, an equity security holders committee, a creditor, an equity security holder,
or any indentured trustee. 11 U.S.C. 1109(b).
27. Pursuant to section 1104(c)(1) of the Bankruptcy Code, the Court must
appoint an examiner in these cases. The appointment of an examiner clearly falls within the
interests of the equity security holders and creditors of these Debtors. An examiner will bring
sunlight and transparency to these cases, which is much needed given the lack of transparency of
Apollos role. Indeed, this is not a case in which the debtor-in-possessions management and
directors will carry out their fiduciary duties to preferred and common shareholders. To the
contrary, Innkeepers management and directors are affirmatively boasting in their pleadings that
they are attempting to extinguish preferred shareholders while preferring the interests of Apollo.
See Debtors Motion for an Order (A) Authorizing The Debtors to Assume The Plan Support
Agreement Motion, dated June 19, 2010 [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.). Moreover, Apollo nowhere
discloses that the debtor-in-possession financing the Debtors are requesting is to be used in part
to make improvements in hotels that Apollo had guaranteed to make and Midland, as special
servicer, is suing Apollo to enforce. See Midland Objection at 9.
28. The need for an examiner is clearly heightened in these cases, particularly
in light of the Debtors attempt to give away the entire estate to Lehman subject to Apollos
private deal to buy it back, while extinguishing unsecured claims and preferred shareholders in
the process.


NY3 3061726.1

16
29. The appointment of an examiner will also ensure preferred shareholders
the most basic protections. Notably, after Innkeepers missed six (6) preferred dividend
payments, the preferred shareholders were entitled to designate two directors. Given what we
know today about the deal cut between Apollo and Lehman, an independent director appointed
by the preferred equityholders would never have allowed the secret Apollo transaction.
Compounding the injury, Apollo delisted and deregistered Innkeepers, thereby depriving the
preferred shareholders of the legislative safeguards afforded by Sarbanes-Oxley.
30. Tellingly, none of the Debtors initial first day declaration, motion for
authority to obtain debtor-in-possession financing, or motion for an order approving the plan
support agreement divulge Apollos objective in these chapter 11 cases to provide Lehman, as
lender, full ownership of the reorganized debtor subject to Apollos acquisition of half of it. See
Midland Objection at 15 [Docket No.36] (Under the PSA, Lehman has agreed to support a
plan in which Apollo, as Midland has been advised by the Debtors chief restructuring officer,
will receive 50% of the reorganized Debtors equity in what amounts to a new value plan with
every other creditor taking a massive haircut.). The Debtors attempt to do so with the intended
consequence of sacrificing value otherwise allocable to preferred and common shareholders.
The appointment of an examiner will unearth the facts, no doubt far beyond the facts we have
been able to assemble in a brief period.
31. Given the small amount of trade debt and the Debtors assertion that there
is no value for shareholders, it is reasonable to assume that the Debtors calculations show
purported deficiency claims in excess of $5 million (there are 92 Debtors after all) for purposes
of Bankruptcy Code section 1104(c)(2).
13
Indeed, where the circumstances set forth in section

13
The Debtors cannot have it both ways. They cannot argue that the estates are insolvent but all of the
outstanding loans are fully secured.


NY3 3061726.1

17
1104(c)(2) are present, the plain language of the statute requires the appointment of an examiner.
See In re Revco D.S., Inc., 898 F.2d 498, 500-01 (6
th
Cir. 1990); In re Loral Space & Comm.,
Ltd., No. 04 Civ. 8645RPP, 2004 WL 2979785, at *5 (S.D.N.Y. Dec. 23, 2004); In re UAL
Corp., 307 B.R. 80, 86 (Bankr. N.D. Ill. 2004); In re The Bible Speaks, 74 B.R. 511, 514 (Bankr.
D. Mass. 1987).
32. Moreover, the legislative history of section 1104(c)(2) of the Bankruptcy
Code strongly favors the appointment of an examiner in these cases because Congress intended
third party intervention to be provided upon request in large cases involving public companies.
Put differently, Congress intended that in larger reorganization cases, third party intervention
should be provided upon request where a party is uncomfortable with the representation provided
by the debtor and the committees, as part of the congressional goal to validate the reorganization
process. See Barry L. Zaretsky, Chapter 11 Issues: Trustees and Examiners in Chapter 11, 44
S.C. L. Rev. 907, 940 (Summer 1993). Mandatory appointment of an examiner is thus wholly
consistent with Congresss intent in drafting section 1104(c)(2) of the Bankruptcy Code. Here,
the facts and circumstances mandate the appointment of an examiner to validate the
reorganization process.
33. The Ad Hoc Committee requests the appointment of an examiner to
conduct an investigation of the Debtors, Apollo, and their respective directors and senior
officers, in respect of, among other things, the following issues:
Prepetition acts and omissions from and after July 1, 2009 in respect of the
Debtors officers and directors, and the officers and directors of the Debtors
other direct and indirect subsidiaries impacting their respective fiduciary duties of
care, loyalty, and good faith to preferred shareholders;
Postpetition acts and omissions from and after July 19, 2010 in respect of
Innkeepers officers and directors, and the officers and directors of Innkeepers


NY3 3061726.1

18
other direct and indirect subsidiaries impacting their respective fiduciary duties of
care, loyalty, and good faith to preferred shareholders;
Whether Apollo caused the Company to take any steps to advantage Apollo at the
expense of other creditors and preferred shareholders;
The communications and negotiations that led to the Debtors proposed Plan
Support Agreement;
Whether and how the Company and Apollo created self-imposed emergencies by
causing properties not encumbered by Lehmans mortgage to default
unnecessarily;
The purpose and necessity of debtor-in-possession financing on all the hotels,
especially the DIP collateralized by the equity of the Residence Inn San Diego
and the Residence Inn Tysons;
Exploration of the Companys franchising relationship with Marriott, and whether
the Company entered into franchise agreements with Marriott merely to fulfill a
guarantee by Apollo;
Whether Apollos 2007 purchase of the Company constitutes a fraudulent
conveyance;
The nature and extent of the relationships between Lehman and Apollo;
How value can be maximized for preferred shareholders and unsecured
claimholders;
Valuation of Debtors, including, but not limited to, the March 31, 2010 valuation
referenced in Apollos Form 10K filed on May 26, 2010, and any valuation of the
Debtors that Lehman may have performed in connection with its own chapter 11
cases.
[Remainder of Page Intentionally Left Blank]


NY3 3061726.1

19
CONCLUSION
WHEREFORE the Ad Hoc Committee requests the Court issue an order,
substantially in the form attached hereto, appointing an examiner pursuant to section 1104(c) of
the Bankruptcy Code and granting the Ad Hoc Committee of Preferred Shareholders such other
and further relief as is just.
Dated: New York, NY DEWEY & LEBOEUF LLP
August 11, 2010

/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


NY3 3061726.1

20
EXHIBIT A
(Proposed Order)



UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
INNKEEPERS USA TRUST, et al.,
Debtors.
AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS,
Movant,
-against-
INNKEEPERS USA TRUST, et al.,

Respondent.

Chapter 11 Case No.

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


x
)
)
)
)
)
)
X
)
)
)
)
)
)
)
)
)
)
)
x



ORDER GRANTING MOTION OF AD HOC
COMMITTEE OF PREFERRED SHAREHOLDERS FOR
ORDER DIRECTING THE APPOINTMENT OF EXAMINER
PURSUANT TO SECTION 1104(C)(1)-(2) OF THE BANKRUPTCY CODE

Upon consideration of the motion dated August 11, 2010 (the Motion) of the
Ad Hoc Committee of Preferred Shareholders (the Ad Hoc Committee) for the
appointment of an examiner pursuant to section 1104(c)(1)-(2) of title 11 of the United
States Bankruptcy Code (the Bankruptcy Code); and this Court having jurisdiction to
consider and determine the Motion and all relief requested therein; and due and sufficient
notice of the Motion having been given under the circumstances; and this Court having
convened a hearing at which all interested parties had an opportunity to appear and be


heard; and after considering all responses to the Motion, after due deliberation and
sufficient cause appearing therefor; it is:
1. Ordered that the Motion is granted, and the United States Trustee is
directed to appoint an examiner on or before ___________, 2010; and it is further
2. Ordered that the examiner shall investigate:
Prepetition acts and omissions from and after July 1, 2009 in respect of the
Debtors officers and directors, and the officers and directors of the
Debtors other direct and indirect subsidiaries impacting their respective
fiduciary duties of care, loyalty, and good faith to preferred shareholders;
Postpetition acts and omissions from and after July 19, 2010 in respect of
Innkeepers officers and directors, and the officers and directors of
Innkeepers other direct and indirect subsidiaries impacting their
respective fiduciary duties of care, loyalty, and good faith to preferred
shareholders;
Whether Apollo caused the Company to take any steps to advantage
Apollo at the expense of other creditors and preferred shareholders;
The communications and negotiations that led to the Debtors proposed
Plan Support Agreement;
Whether and how the Company and Apollo created self-imposed
emergencies by causing properties not encumbered by Lehmans mortgage
to default unnecessarily;
The purpose and necessity of debtor-in-possession (DIP) financing on
all the hotels, especially the DIP collateralized on the equity of the
Residence Inn San Diego and the Residence Inn Tysons;
Exploration of the Companys franchising relationship with Marriott, and
whether the Company entered into franchise agreements with Marriott
merely to fulfill a guarantee by Apollo;
Whether Apollos 2007 purchase of the Company constitutes a fraudulent
conveyance;
The nature and extent of the relationships between Lehman and Apollo;
How value can be maximized for preferred shareholders and unsecured
claimholders;


Valuation of Debtors, including, but not limited to, the March 31, 2010
valuation referenced in Apollos Form 10K filed on May 26, 2010, and
any valuation of the Debtors that Lehman may have performed in
connection with its own chapter 11 cases; and it is further
3. Ordered that any and all statutory committees appointed shall provide the
examiner with access to all materials they receive in response to discovery in these cases,
and the committee(s) and the examiner shall use best efforts to cooperate without slowing
down each others investigations and the carrying out of their respective duties; and it is
further
4. Ordered that if the Debtors assert the attorney-client privilege or work
product doctrine to block any discovery by the examiner, after notice and hearing this
Court may direct the Debtors to waive the privilege or the work product doctrine if it
appears a chapter 11 trustee would be entitled to the same discovery or would have no
compelling reason to assert the attorney-client privilege or work product doctrine; and it
is further
5. Ordered that the Debtors and all of the Debtors affiliates, subsidiaries,
and other companies under their control are directed to fully cooperate with the examiner
in connection with the performance of the examiners duties. The Debtors shall provide
to the examiner all documents and information that the examiner deems relevant to
discharge the examiners duties under this Order; and it is further
6. Ordered that, until the examiner has filed the reports required by this
Order and section 1106(b) of the Bankruptcy Code, neither the examiner nor the
examiners representatives or agents shall make any public disclosures concerning the
performance of the examiners duties, except in hearing before the Court; provided,
however, that (a) the examiner may provide to the Securities and Exchange Commission,


the United States Department of Justice, the Internal Revenue Service, the United States
Attorney for the Southern District of New York, and other governmental agencies any
information requested by them; and (b) this paragraph shall not prevent the examiner
from communicating with the Debtors and any committee to further the cooperation
provided for herein; and it is further
7. Ordered that, with respect to issues identified in paragraph 2 above, the
examiner shall prepare and file an interim or final report within __ days after the date of
the examiners appointment unless this time is extended for good cause shown, by order
of this Court; and it is further
8. Ordered that any examiner may retain counsel and other professionals if
he or she determines that such retention is necessary to discharge his or her duties, with
such retention being subject to the approval of this Court under standards equivalent to
those set forth in section 327(e) of the Bankruptcy Code; and it is further
9. Ordered that the examiner and any professionals retained by the examiner
pursuant to any order of this Court shall be compensated from the Debtors estates
pursuant to further orders of this Court; and it is further
10. Ordered that the examiner shall be a party in interest under section
1109(b) of the Bankruptcy Code with respect to matters that are within the scope of the
duties delineated in this Order or as such duties may hereafter be modified by this Court,
and shall be entitled to appear at hearings and be heard with respect to matters that are
within the examiners duties; and it is further


11. Ordered that nothing in this Order shall impede the right of the United
States Trustee or of any other party in interest to request any other lawful relief, including
but not limited to the expansion of the scope of the examiners investigation.

______________________________________
New York, NY
August __, 2010 THE HONORABLE SHELLEY C. CHAPMAN
UNITED STATES BANKRUPTCY JUDGE



NY3 3061726.1

21
EXHIBIT B
(Apollo-Lehman Term Sheet)
Confidential

TERM SHEET
(Lehman/AIC)
July 19, 2010
This term sheet (Term Sheet) is proffered in the nature of a settlement proposal in furtherance
of settlement discussions, and is intended to be entitled to the protection of Rule 408 for the
Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or
disclosure of confidential information and information exchanged in the context of settlement
discussions, and shall not be treated as an admission regarding the truth, accuracy or
completeness of any fact or the applicability or strength of any legal theory.
THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO
ANY SECURITIES OF INNKEEPERS USA TRUST OR A SOLICITATION OF
ACCEPTANCES OF A CHAPTER 11 PLAN. ANY SUCH OFFER OR SOLICITATION
SHALL COMPLY WITH ALL APPLICABLE SECURITIES LAWS, IF ANY, AND/OR
PROVISIONS OF THE BANKRUPTCY CODE.
Seller: Lehman ALI Inc. (Lehman).
Acquirer: Apollo Investment Corporation (AIC).
AIC may not assign any or all of its rights or delegate any or all
of its obligations under this Term Sheet without the express
written consent of Lehman (which consent may be withheld in
Lehmans sole discretion).
Description of Transaction: Following the confirmation by the Bankruptcy Court for the
Southern District of New York (the Bankruptcy Court) of the
prearranged plan (the Plan) of reorganization of Innkeepers
USA Trust (Innkeepers or the Company) as described in
the term sheet, dated as of July 17, 2010, by and between
Lehman and the Company, and attached hereto as Annex A
(the Lehman-Innkeepers Term Sheet) and prior to the
effective date of the Plan (the Effective Date), Lehman and
AIC will enter into an agreement (the Stock Purchase
Agreement) whereby Lehman will agree to sell to AIC and
AIC will agree to purchase from Lehman the right to receive
50% of the equity in the Company, subject to dilution as set
forth in the Lehman-Innkeepers Term Sheet, that Lehman
receives in connection with consummation of the Plan (such
50%, the Transferred Equity) in exchange for cash in an
amount equal to $107.5 million (the Sale Proceeds) payable
upon the closing of the transactions contemplated by the Stock
Purchase Agreement. In the event the transfer tax exception
under 1146(a) of the Bankruptcy Code is determined by the
Bankruptcy Court to be inapplicable, AIC and Lehman will
15816974. 6
cooperate to structure the sale of the Transferred Equity in a
manner that will not incur transfer taxes; provided, however,
that in the event such taxes are incurred as a result of the sale,
AIC shall be responsible for payment of such taxes in addition
to the Sale Proceeds.
Distribution of Innkeepers
Equity:
After giving effect to the sale of Transferred Equity described
above, the equity in the reorganized Company (the New
Equity) will be held as follows:
50% by Lehman; and

50% by AIC;

Subject to pro rata dilution of 3%, which shall
be available for distribution to the Companys
management under the Plan pursuant to a
Management Equity Incentive Program on the
terms provided in the Lehman-Innkeepers Term
Sheet.
Conditions to Execution of
Stock Purchase Agreement:
The execution of the Stock Purchase Agreement and the
consummation of a transaction on the terms described herein
will be subject to the satisfaction or waiver by Lehman or AIC,
as applicable, (in each case in such partys sole discretion) of
the following conditions:
approval of the Bankruptcy Court of a plan
support agreement executed by Lehman and the
Company as contemplated by the Lehman-
Innkeepers Term Sheet;

receipt by AIC and Lehman of all necessary
final internal approvals to consummate the
transaction (which may be withheld (for any
reason or no reason) in their sole discretion) by
September 2, 2010, including, without
limitation, final approval by AICs Investment
Committee and final approval of the UCC and
the United States Bankruptcy Court
administering the Chapter 11 case of LBHI by
such date; and

the negotiation, execution and delivery of
definitive documents reflecting the terms set
forth in this Term Sheet and containing other
terms and conditions mutually acceptable to
2

AIC and Lehman, including, but not limited to,
terms customary for transactions of this type.

Conditions to Closing: The consummation of a transaction on the terms described
herein will be subject to the satisfaction or waiver by Lehman
or AIC, as applicable, (in each case in such partys sole
discretion) of customary closing conditions including, without
limitation, the following:
the consummation of the proposed restructuring
transaction between Lehman and Innkeepers on
the terms and as contemplated by the Lehman-
Innkeepers Term Sheet;

the reorganized Company will have the pro
forma capitalization structure contemplated by
the Lehman-Innkeepers Term Sheet; and

completion of third party and regulatory notices
and receipt of all necessary and material
consents and waivers.

So long as the Letter Agreement has not been terminated,
during the pendency of Innkeepers chapter 11 cases, Lehman
shall not object, directly or indirectly, to (a) Innkeepers
performance of the primary obligations underlying the
Required Capital Improvements Guaranty, dated as of June 29,
2007 (the Guaranty) so long as such obligations are
exclusively limited to the non-immediate property
improvement plan (PIP) obligations in the properties which
constitute the Fixed Rate Collateral (as such term is defined in
the Lehman-Innkeepers Term Sheet) (the Fixed Rate Pool)
and such obligations are paid solely with funds available under
the Fixed Rate DIP Facility (as such term is defined in the
Lehman-Innkeepers Term Sheet) or cash collateral generated
from the Fixed Rate Pool, and (b) the settlement or termination
of the Guaranty so long as such settlement or termination
occurs at least 45 days after the date Innkeepers commences its
chapter 11 cases (the Petition Date).

So long as the Letter Agreement has not been terminated and
AIC is at least a 25% owner of reorganized Innkeepers, subject
to dilution as provided in the Lehman-Innkeepers Term Sheet,
Lehman and AIC shall authorize reorganized Innkeepers to
agree that any (a) non-immediate PIP obligations in the Fixed
Rate Pool described in Schedule XI to the related loan
agreement that were not satisfied before or during the chapter
3

11 cases and (b) discretionary capital expenditures as set forth
in Annex B attached hereto will be funded from the proceeds of
the Exit Funding (as such term is defined in the Lehman-
Innkeepers Term Sheet) or excess cash flow after payment of
all property level expenses, FF&E reserves, debt obligations,
corporate G&A, and working capital holdbacks as reasonably
determined by reorganized Innkeepers.

Termination Events: Upon the occurrence of any of the following events (each, a
Termination Event), the Letter Agreement, dated as of July
17, 2010, by and between Lehman and AIC (the Letter
Agreement) and any Stock Purchase Agreement shall be
terminable by either Lehman or AIC, and shall terminate upon
five (5) business days written notice of such Termination
Event by the terminating party to the other party:

upon the occurrence of any Termination Event
described in the Lehman-Innkeepers Term
Sheet;

upon the waiver, modification or amendment of
any material term, condition or provision of the
Lehman-Innkeepers Term Sheet, or the
definitive documents (including the Plan)
implementing the same, in a manner not
acceptable to Lehman or AIC;

any material extension of the period of time to
achieve the Plan Milestones set forth in the
Lehman-Innkeepers Terms Sheet;

if AIC seeks but does not obtain the approval of
its Investment Committee within 45 days after
the Petition Date;

if Lehman seeks but does not obtain the
approval of the UCC or the United States
Bankruptcy Court administering the Chapter 11
case of LBHI within 45 days after the Petition
Date; or

upon the occurrence of any event that would
make the fulfillment of any conditions set forth
under Conditions to Closing or Conditions to
Execution of the Stock Purchase Agreement of
this Term Sheet impossible by April 15, 2011.
4

5


Notwithstanding the foregoing, the Letter Agreement and any
Stock Purchase Agreement shall be terminable by either
Lehman or AIC (for any reason or no reason in such partys
sole discretion) at any time prior to September 2, 2010.
Governance: The board of directors of the Company will initially consist of
7 members: 2 members nominated by Lehman, 2 members
nominated by AIC and 3 members to be mutually agreed.

A super-majority vote of 66 2/3% will be required for material
transactions, including, among others, a merger or
consolidation, equity issuances, debt issuances in excess of $10
million in the aggregate, sale or disposal of a property and such
other events as determined by Lehman, AIC and the Company.

Lehman and AIC shall agree on a future date by which the
Company shall engage an investment banker to market and sell
the Company; provided, that such date shall not be later than
three years after the Effective Date unless otherwise agreed by
Lehman and AIC.
Other usual and customary terms, subject to mutual agreement
between Lehman and AIC.
Shareholders Agreement: The Plan shall provide that, on the Effective Date, Lehman,
AIC and all other holders of New Equity to be issued pursuant
to the Plan shall enter into a shareholders agreement that
provides, among other things, for restrictions on the transfer of
the New Equity and customary protections, including, but not
limited to, tag-along/drag-along rights, all on terms to be
mutually agreed between Lehman and AIC.
REIT Status: Lehman and AIC shall, prior to the Effective Date, determine
whether to maintain Innkeepers status as a real estate
investment trust.
Property Manager: Prior to the Effective Date, Lehman and AIC shall designate a
manager for the Companys properties.
Professional Fees: The Company shall reimburse AIC for fees and expenses of
one counsel; provided that the transactions contemplated by the
Stock Purchase Agreement are consummated.
Governing Law: This Term Sheet and all agreements entered into pursuant
thereto shall be governed by New York law with jurisdiction in
the courts in New York.

US_ACTIVE:\43446016\20\58399.0008
Annex A

(Proposed Order)


NY3 3061726.1

22
EXHIBIT C
(Pertinent Pages of Apollo 10K)
APOLLO INVESTMENT CORP (AINV)
10K
FORM 10K FOR THE FISCAL YEAR ENDED MARCH 31, 2010
Filed on 05/26/2010 Period: 03/31/2010
File Number 81400646
LIVEDGAR

Information Provided by Global Securities Information, Inc.

800.669.1154
www.gsionline.com
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2010
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 81400646
APOLLO INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 522439556
(State of Incorporation) (I.R.S. Employer Identification Number)
9 West 57th Street
New York, N.Y. 10019
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (212) 5153450
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, par value
$0.001 per share
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a wellknown seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation ST during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation SK is not contained herein, and will not be contained, to the
best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or any amendment to
this Form 10K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b2 of the Exchange Act.
Large accelerated filer Accelerated filer Nonaccelerated filer Smaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Act) Yes No
The aggregate market value of common stock held by nonaffiliates of the Registrant on September 30, 2009 based on the closing price on that date of
$9.55 on the NASDAQ Global Select Market was approximately $1.6 billion. For the purposes of calculating this amount only, all directors and executive
officers of the Registrant have been treated as affiliates. There were 193,844,627 shares of the Registrants common stock outstanding as of May 26, 2010.
Portions of the registrants Proxy Statement for its 2010 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the fiscal year
covered by this Annual Report on Form 10K are incorporated by reference into Part III of this Form 10K.
Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (continued)
March 31, 2010
(in thousands, except shares)
INVESTMENTS IN CONTROLLED PORTFOLIO
COMPANIES 5.2%(9) Industry Shares Cost
Fair
Value(1)
Preferred Equity 0.3%
Grand Prix Holdings, LLC Series A, 12.00% (Innkeepers USA) *** Hotels, Motels, Inns &
Gaming 2,989,431 $ 101,346 $ 5,268
EQUITY
Common Equity/Interests 4.9%
AIC Credit Opportunity Fund LLC (10) Asset Management $ 70,041 $ 73,514
Generation Brands Holdings, Inc. (Quality Home Brands) Consumer Products 750 230
Generation Brands Holdings, Inc. Series H (Quality Home Brands) Consumer Products 7,500 2,297 2,297
Generation Brands Holdings, Inc. Series 2L (Quality Home Brands) Consumer Products 36,700 11,242 11,242
Grand Prix Holdings, LLC
(Innkeepers USA) **
Hotels, Motels, Inns &
Gaming 17,335,834 172,664
Total Common Equity/Interests $ 256,244 $ 87,283
TOTAL EQUITY $ 256,244 $ 87,283
Total Investments in Controlled Portfolio Companies $ 357,590 $ 92,551
Total Investments 161.0%(11) $3,242,605 $ 2,853,580
Par
Amount*
CASH EQUIVALENTS 25.3%
U.S. Treasury Bill, 0.13%, 7/1/10 Government $ 450,000 $ 449,852 $ 449,828
Total Investments and Cash Equivalents 186.3% $3,692,457 $ 3,303,408
Liabilities in Excess of Other Assets (86.3%) (1,530,602)
Net Assets 100.0% $ 1,772,806
See notes to financial statements.
54
Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS (continued)
March 31, 2010
(in thousands)
(1)
Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2).
(2) Includes floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the LIBOR (London Interbank Offered Rate), EURIBOR (Euro
Interbank Offered Rate), GBP LIBOR (London Interbank Offered Rate for British Pounds), or the prime rate. At March 31, 2010, the range of interest rates on floating rate bank
debt was 4.59% to 10.50%.
(3) Position is held across five US Dollardenominated tranches with varying yields.
(4) Position is held across three Eurodenominated tranches with varying yields.
(5) Denominated in Euro ().
(6) The Company is the sole Limited Partner in GS Prysmian CoInvest L.P.
(7) Denominated in Canadian dollars.
(8) Denotes investments in which we are an Affiliated Person, as defined in the 1940 Act, due to owning, controlling, or holding the power to vote, 5% or more of the outstanding
voting securities of the investment. Transactions during the fiscal year ended March 31, 2010 in these Affiliated investments are as follows:
Name of Issuer
Fair Value at
March 31, 2009
Gross
Additions
Gross
Reductions
Interest/Dividend
Income
Fair Value at
March 31, 2010
Gray Wireline Service, Inc. 1
st
Out $ $ 1,000 $ $ 5 $ 1,000
Gray Wireline Service, Inc. 2
nd
Out 77,554 633 59,251
DSI Renal, Inc., 17.00% 9,860 364 10,057
CDSI I Holding Company, Inc. Common Equity 9,300 10,206
Gray Energy Services, LLC Class H Common Equity 3,590
CDSI I Holding Company, Inc. Series A Warrant 773 854
CDSI I Holding Company, Inc. Series B Warrant 645 693
CDSI I Holding Company, Inc. Contingent Payment Agreement 1,003 1,075
Gray Holdco, Inc. Warrant
$ 3,590 $ 100,135 $ $ 1,002 $ 83,136
(9) Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially
owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the fiscal year ended
March 31, 2010 in these Controlled investments are as follows:
Name of Issuer
Fair Value at
March 31, 2009
Gross
Additions
Gross
Reductions
Interest/Dividend
Income
Fair Value at March 31,
2010
Grand Prix Holdings, LLC Series A Preferred $ 76,557 $ 11,272 $ $ 9,351 $ 5,268
AIC Credit Opportunity Fund LLC Common Equity
(10) 57,294 11,854 21,190 11,309 73,514
Generation Brands Holdings, Inc. Common Equity 230
Generation Brands Holdings, Inc. Series H Common
Equity 2,297 2,297
Generation Brands Holdings, Inc. Series 2L
Common Equity 11,242 11,242
Grand Prix Holdings, LLC Common Equity 7,570
$ 141,421 $ 36,665 $ 21,190 $ 20,660 $ 92,551
See notes to financial statements.
55


NY3 3061726.1

23
EXHIBIT D
(Innkeepers January 21, 2010 Press Release)

For Immediate Release
Contact: Dennis Craven, CFO
Innkeepers USA Trust
Telephone: (561) 227-1302



Innkeepers USA Trust Provides Business Update

PALM BEACH, Fla., January 21, 2010 Innkeepers USA Trust (OTC: INKPP) today
announced that in its continuing effort to enhance profitability, it is renegotiating its nonrecourse
debt on a limited number of hotels.
In this regard, the company discontinued debt service on its Hilton hotel in Ontario, Calif.
and is in the process of seeking loan amendments that would share the hotels cash flow and
adjust the hotels loan-to-value ratio. During this process, the company expects it will stipulate
to the appointment of a receiver for the Ontario Hilton. In the event the parties do not agree on
the terms of any amendments, the company may transfer ownership of the hotel to the lender in
satisfaction of its obligation to the lender.
Innkeepers USA Trust is a real-estate investment trust (REIT) and a leading owner of
upscale and extended-stay hotel properties throughout the United States. The company currently
owns interests in 73 hotels with approximately 10,000 rooms in 19 states and the District of
Columbia.
- 30 -

.



NY3 3061726.1

24
EXHIBIT E
(Wall Street Journal Article)
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Wolting for Godoc Apple'& Foil E.,.nt Is O.fin ltely Happening ...
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- See e sample reprint In PDF format.
4
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THE WALL STREET JOURNAL.
Will."""
EARNINGS I AUG ST 1. 2010
InterContinental Hotels Says Room Rates Are Rising
ly MICHAEL CAROLAN
..ONDON-lnterContinental Hotels Group PLC said room rates, which fell during the recession, have started to rise in most markets as the return of
msiness travelers boosts its revenue and profit.
!'he world's largest hotel operator by number of rooms said revenue per available room, or revpar-a key indusby measure-rose 7.496 in the second
JUarter, compared with a 0.296 rise in the first quarter. By July, revpar was up 8.196. A 196 increase in revpar improves full-year operating profit by $13
nillion.
nterContinental, often called IHG, franchises or owns more than 4,000 hotels globally under the brands Holiday Inn, Holiday Inn Express, Crowne
'laza and others. It also operates 168 luxury hotels under the InterContinental Hotels and Resorts brand, seven of which it actually owns.
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The new lnterConbnental Hotel located at 44th Street
and Eighth Avenue In New York City
IHG's results followed similarly upbeat second-quarter reports from other major hotel operators,
which also signaled a return of corporate travel and conference. Starwood Hotels & Resorts Worldwide
Inc. posted a 1396 increase in second-quarter revpar from a year ago and outlined a 2010 forecast for a
revpar gain of 796 to 996. Marriott International Inc. posted a 9.996 rise in revpar and a 1.696 rise in
nightly rates.
"Business and leisure stays at our hotels are trending up," Marriott Chairman and Chief Executive
Officer Bill Marriott said.
IHG said the improving revenue was driven by higher occupancy levels. While room rates still were
lower in the second quarter than a year ago, the company said rates are stabilizing and beginning to
rise is many markets.
Overall, IHG reported operating income of $136 million in the second quarter ended June 30, up 2796
from the same period a year ago. Earnings per share was 30 cents from a loss of 20 cents per share a
year ago. Revenue in the latest quarter rose 9.396, to $410 million.
Despite the positive news, shares of IHG dropped 4.196, to 1,078 pence ($17.15), in London after a
profit warning from tour operator TU I Travel PLC sent shares across the sector lower. Still, IHG shares
have doubled since March oflast year.
A recovery in business travel is critical for hotels because business travelers tend to pay higher rates
han leisure travelers. In addition, corporate meetings and conferences are a more stable and lucrative flow of business for hotels than tourism traffic.
'Last year was an awful year for corporate travel," said John Arabia, an analyst with Green Street Advisors Inc. 'What we're seeing now is more
:orporations getting back on the road. As a result of that, hotels are increasing their number of room nights from high-paying corporate travel. Some
1otels in some markets are able to pull back on some of the discounts they had been offering."
IHG has 197,431 rooms waiting to be built or converted into one of its brands. This is less than the May
>ipeline of 200,895 rooms, suggesting the company is struggling to increase its estate. Rather than owning all of its hotels directly, IHG operates a
'ranchise model in partnership with hotel owners and must rely on developers finding financing for new hotel construction.
Email Newsletters and Alerts
1 of2
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WSJ com L.1w P.1ue PXt ". ( u1" I LextsNexts Tnt.1l Ltttgator Hl'>toncdl Quotes Lex1sNexts' LegJI News llliHtHHJ
' . L ['I
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Room for Recovery
InterContinental Hotels'
quarterly revenue per available
room. chango from previous year
1.0"<
5
0
-5
-10
- 15
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2008 '09 I 1o
Richard Solomons, IHG's chief financial officer, said developers still were finding it tough to secure financing
for new hotels in the U.S. and Europe. He added that 30,000 rooms will be removed from IHG's system in the
second half of the year, following 10,000 removals in the first six months. These are mainly Holiday Inns that
are leaving the brand rather than investing in refurbishing.
The company started a relaunch of its Holiday Inn brand two years ago and is set to complete it at the end of
this year. Mr. Solomons said the relaunched hotels were performing at the top end of his expectations.
Write to Michael Carolan at michael.carolan@dowjones.com
2009 Dow Jones & Inc. All Rlgllta RBIIIMIC!
This copy Ia for your peraonal, non-commercial use only, OlatrlbuUon and use ollhll material are govemee! by our Subaalber Agreement anc1 by
copyr1ghl Jaw. For non-peraolllf use or to order mUIIple coplea, please contact Dow Jonea Reprint& at1-8Q0.843-0008 or visit
www.djreprlnta.com
2 of2


NY3 3061726.1

25
EXHIBIT F
(Board of Equalization and Review Notice of Appeal)
BOE Appeal Application
BOE Appeal Application(12-00.1)
COUNTY OF WAKE
STATE OF NORTH CAROLINA
BOARD OF EQUALIZATION AND REVIEW
NOTICE OF APPEAL
Page 1 of 1
03/28/2008
ACCOUNT 0000001233 TYPE REB DESCRIPTION RADISSON HOTEL PROP (428-30 FA YETTEV ST)
YEAR 2008 OWNERSHIP GENWOOD RALEIGH LLC
THOMSON TAX AND ACCOUNTING
ATTN BARBARA ROLLINS
PO BOX56607
Return by
APRIL 11.2008
Wake County Revenue Department
to: 300 S. Salisbury Street- Lower Level
P.O. Box 2331
ATLANTA GA 30343
ASSESSED VALUE
LAND
BUILDING
TOTAL
Reason For Appeal:
4twl
Raleigh, NC 27602
PREVIOUS - 2007
1,393,900
14,027,871
15,421,771
CURRENT - 2008
1,393,900
21,499,572
22,893,472
In your opinion, what is the fair market value of this property? /&.
1
Ot9cJ, {.)t.JV
(Please attach any documentation in support of this value and return with t-hi-.s-a_p.!..pe-a"i
Date property was purchased: Purchase Price:
------------
Cost of improvements added to property since purchase:
Has an independent appraisal been made on this property? Yes ( ) No ( )
Appraisal Date:
(Please provide copy of appraisal)
_____________ Appraised Value:
Appellant Contact Information (please print)
Name:
WiD Brown
Daytime Phone: __ 4_041 ____ 94_2_-_6_3_8_0 ____ _

Relationship/affiliation with owner/property:
(If other than owner)
RepreseRtative
I CERTIFY THAT THE ABOVE STATEMENTS ARE TRUE AND CORRECT
Appellant's Signature


NY3 3061726.1

26
EXHIBIT G
(Real Property Transaction Record)


APN: 1703.42-67-8106000 Page 1
2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
REAL PROPERTY TRANSACTION RECORD

Filings Collected Through:07-26-2010
County Last Updated:08-04-2010
Frequency of Update:WEEKLY
Current Date:08/07/2010
Source: REGISTER OF
DEEDS
, WAKE, NORTH CAROLINA

OWNER INFORMATION

Owner(s):GENWOOD RALEIGH LLC
Ownership Rights:COMPANY / CORPORATION
Corporate Owner:CORPORATE OWNER
Absentee Owner:SITUS FROM SALE (ABSENTEE)
Property Address:421 S SALISBURY ST
RALEIGH NC 27601-1730
Mailing Address:801 BRICKELL AVE
MIAMI FL 33131-2951

PROPERTY INFORMATION

County:WAKE
Assessor's Parcel Number:1703.42-67-8106000
Property Type:HOTEL, MOTEL
Land Use:MOTEL
Building Square Feet:249480

TRANSACTION INFORMATION

Transaction Date:11/13/2009
Deed Type:MULTI COUNTY/STATE - OPEN END MORTGAGE
Document Type:MORTGAGE MODIFICATION AGREEMNT
Type of Transaction:REFINANCE
Mortgage Amount:$32,025,986.00
Mortgage Type:CONVENTIONAL
Mortgage Term:2 YEARS
Mortgage Deed Type:MORTGAGE MODIFICATION AGREEMNT
Mortgage Date:11/13/2009
Mortgage Due Date:11/13/2012
Lender Name: CSE MTG LLC
Lender Address:4445 WILLARD AVE #12TH CHEVY CHASE, MD
20815-3690
Recording Date:03/18/2010
Recording Book/Page:BOOK 13881, PAGE 284
APN: 1703.42-67-8106000 Page 2
2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Refinance Loan:LOAN TO VALUE IS MORE THAN 50%
TAX ASSESSOR RECORD is available for this property. The record contains information from
the office of the local real property tax assessor office. In addition to identifying
the current owner, the record may include tax assessment information, the legal de-
scription, and property characteristics. Additional charges may apply.

TRANSACTION HISTORY REPORT is available for this property. The report contains details
about all available transactions associated with this property. The report may include
information about sales, ownership transfers, refinances, construction loans, 2nd
mortgages, or equity loans based on recorded deeds. Additional charges may apply.

Call Westlaw CourtExpress at 1-877-DOC-RETR (1-877-362-7387)
to order copies of documents related to this or other matters.
Additional charges apply.

END OF DOCUMENT