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

Anup Sathy, P.C.
KIRKLAND & ELLIS LLP
300 North LaSalle
Chicago, Illinois 60654-3406
Telephone: (312) 862-2000
Facsimile: (312) 862-2200

Counsel to the Debtors and Debtors in Possession
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
)
In re: ) Chapter 11
)
INNKEEPERS USA TRUST, et al.,
1
) Case No. 10-13800 (SCC)
)
Debtors. ) Jointly Administered
)
DEBTORS OBJECTION TO CLAIM NUMBER 711 FILED BY CSE MORTGAGE LLC
AGAINST INNKEEPERS USA LIMITED PARTNERSHIP AND MOTION TO
ESTIMATE THE VALUE OF CLAIM FOR DISTRIBUTION PURPOSES

1
The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax
identification number can be found by visiting the Debtors restructuring website at
www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o
Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. 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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2

Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession
(collectively, the Debtors), object (this Objection)
2
to the proof of claim [Claim No. 711]
filed by CSE Mortgage LLC (the Guaranty Claim) against Innkeepers USA Limited
Partnership (Innkeepers), and seek entry of an order disallowing and expunging the Guaranty
Claim in its entirety. Alternatively, the Debtors request entry of an order estimating the value of
the Guaranty Claim at zero dollars for distribution purposes pursuant to sections 502(b) and
502(c) of title 11 of the United States Code (the Bankruptcy Code) and Rule 3007 of the
Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules). In further support of this
Objection, the Debtors respectfully state as follows:
Jurisdiction
1. The Bankruptcy Court has jurisdiction over this matter pursuant to 28 U.S.C.
157 and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2).
2. Venue is proper in this Bankruptcy Court pursuant to 28 U.S.C. 1408
and 1409.
3. The bases for the relief requested herein are sections 105(a), 502(b), and 502(c) of
the Bankruptcy Code and Bankruptcy Rule 3007.
Relief Requested
4. By this Objection, the Debtors respectfully request that the Bankruptcy Court
enter an order disallowing and expunging the Guaranty Claim in its entirety. Alternatively, the
Debtors respectfully request that the Court estimate the value of the Guaranty Claim at zero
dollars for distribution purposes so that the Debtors may expedite distributions pursuant to the

2
All capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Debtors
Plans of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code [Docket No. 1799] (as
modified, the Plan).
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3

Remaining Debtor Plan, including to Holders of the publicly-held Innkeepers USA Trust
Preferred C Interests.
Background
5. On July 19, 2010 (the Petition Date), each of the Debtors filed a petition with
the Bankruptcy Court under chapter 11 of the Bankruptcy Code (collectively, the Chapter 11
Cases). The Chapter 11 Cases have been consolidated for procedural purposes only and are
being jointly administered pursuant to Bankruptcy Rule 1015(b). The Debtors are operating their
business and managing their properties as debtors in possession pursuant to sections 1107(a) and
1108 of the Bankruptcy Code. No request for the appointment of a trustee has been made in the
Chapter 11 Cases. On July 28, 2010, the United States Trustee for the Southern District of New
York appointed an official committee of unsecured creditors (the Creditors Committee).
6. On September 16, 2010, the Bankruptcy Court entered an order establishing
certain dates and deadlines for filing proofs of claim in the Chapter 11 Cases [Docket No. 440]
(the Bar Date Order). Specifically, the Bankruptcy Court established, among other things,
October 29, 2010 (the Bar Date), as the deadline to file proof of claim for all persons and
entities holding or wishing to assert a claim (as defined in section 101(5) of the Bankruptcy
Code) against any of the Debtors that arose prior to the Petition Date.
7. On October 19, 2010, CSE filed a proof of claim [Claim No. 711] in an
unliquidated amount against Innkeepers on account of the Nonrecourse Guaranty Agreement (as
defined herein).
8. On June 29, 2011, the Bankruptcy Court entered the Findings of Fact,
Conclusions of Law, and Order Confirming Debtors Plans of Reorganization Pursuant to
Chapter 11 of the Bankruptcy Code [Docket No. 1804] (the Confirmation Order). On
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4

October 21, 2011, the Court entered the Order (I) Authorizing Fixed/Floating Debtors to Enter
Into Second Amended Commitment Letter, (II) Approving (A) Modifications to Fixed/Floating
Plan and Confirmation Order and (B) Amended New HoldCo/Midland Commitment, (III)
Authorizing Fixed/Floating Debtors to Settle Adversary Proceeding Upon Consummation of
Modified Fixed/Floating Plan [Docket No. 2181] approving certain modifications to the Plan
and the Confirmation Order. The Plan is comprised of four separate joint plans: the Remaining
Debtor Plan, the Fixed/Floating Plan, the Anaheim Plan and the Ontario Plan. Holders of
allowed claims against Innkeepers will receive distributions pursuant to the Remaining Debtor
Plan.
Raleigh Joint Venture Mortgage Loan and Guaranty Agreement
9. Innkeepers, through its non-Debtor direct subsidiary KPA Raleigh, LLC (KPA
Raleigh), owns a 49% ownership interest in Genwood Raleigh LLC (the Raleigh JV
Borrower), the fee owner of the Sheraton hotel in Raleigh, North Carolina (the Raleigh
Sheraton). The remainder of the ownership interests in the Raleigh JV Borrower are held
directly or indirectly by a third partyGenwood Owner LLC (the Raleigh JV Partner),
whose largest indirect owner, to the best of the Debtors knowledge, is Karim Alibhai.
3
In
addition, Innkeepers, through its non-Debtor indirect subsidiary KPA Raleigh Leaseco, LLC
(KPA Raleigh Leaseco), owns a 49% ownership interest in Genwood Raleigh Lessee, LLC
(the Raleigh JV Operating Lessee), the entity that is party to an operating lease with the
Raleigh JV Borrower and a franchise agreement with The Sheraton, LLC for the Raleigh
Sheraton. The remainder of the ownership interests in KPA Raleigh Leaseco are held directly or

3
A chart summarizing the Debtors understanding of the ownership structure of the Raleigh JV Partner is
attached hereto as Exhibit B.
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5

indirectly by the Raleigh JV Partner. For the avoidance of doubt, KPA Raleigh, the Raleigh JV
Borrower, the Raleigh JV Partner, KPA Raleigh Leaseco, and the Raleigh JV Operating Lessee
are not debtors in these Chapter 11 Cases.
10. The Raleigh JV Borrower, the Raleigh JV Operating Lessee, and CSE are parties
to that certain Loan Agreement, dated as of November 13, 2006 (as amended, the Raleigh Loan
Agreement). Pursuant to the Raleigh Loan Agreement, CSE provided a non-recourse mortgage
loan to the Raleigh JV Borrower in the original principal amount of up to $33.45 million, which
amount is collateralized by the Raleigh Sheraton. The Raleigh JV Borrower is current with
respect to the monthly debt service payments required under the Raleigh Loan Agreement.
11. Innkeepers, Karim Alibhai, and CSE are parties to that certain Nonrecourse
Carveout Guaranty Agreement, dated as of November 13, 2006 (the Nonrecourse Guaranty
Agreement).
4
Pursuant to the Nonrecourse Guaranty Agreement, Innkeepers and Karim
Alibhai agreed to have joint and several liability for the payment of and performance when
due, whether at stated maturity or by acceleration or otherwise, of the indebtedness and other
obligations of [the Raleigh JV Borrower] to [CSE] evidenced by the [Raleigh JV Loan
Agreement] and any other amounts that may become owing by [the Raleigh JV Borrower] under
the Mortgage or any other Loan Document upon the occurrence of one or more of the events
identified in Article 2.1(b) of the Loan Agreement.
12. CSE alleges in the Guaranty Claim that one of the events identified in Article 2 of
the Nonrecourse Guaranty Agreement has occurred, specifically that a guarantor (Innkeepers)
under the Nonrecourse Guaranty Agreement has filed a voluntary petition under the Bankruptcy
Code. As a result, CSE asserts that it has an unliquidated claim against Innkeepers for any and

4
A copy of the Nonrecourse Guaranty Agreement is attached hereto as Exhibit C.
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6

all obligations, fees, and other liabilities owed by [Innkeepers] to CSE in accordance with the
terms of the [Nonrecourse Guaranty Agreement], including any attorneys fees, collection costs,
and post-petition interest payable to CSE in accordance with the [Nonrecourse Guaranty
Agreement] and applicable law.
Argument
A. The Only Potential Provision That Could Have Triggered Innkeepers Liability
Under the Nonrecourse Guaranty Agreement is Unenforceable.
13. CSE alleges that Innkeepers liability under the Nonrecourse Guaranty Agreement
has been triggered due to the filing of a voluntary bankruptcy petition by Innkeepers on July 19,
2010. CSE does not specifically allege that any of the other potential triggering events specified
in Section 2.1(b) of the Nonrecourse Guaranty Agreement have occurred. For a number of
independent reasons, however, Section 2.1(b)(ii), the provision regarding a bankruptcy filing by
a guarantor, is unenforceable against Innkeepers. Therefore, Innkeepers liability under Section
2.1(b) of the Nonrecourse Guaranty Agreement has not been triggered and CSE is not entitled to
a claim against Innkeepers pursuant to the terms of the Nonrecourse Guaranty Agreement
14. First, Section 2(b)(ii) of the Nonrecourse Guaranty Agreement essentially
provides that damages upwards of millions of dollars will be owing to CSE merely as a result of
Innkeepers filing its chapter 11 casea decision that was consistent with Innkeepers fiduciary
duties and in the best interest of its stakeholders. Under the laws of the state of Marylandthe
governing law under the Nonrecourse Guaranty Agreementthe provision is an unenforceable
penalty. Under Maryland law, a damages provision in a contract will not be enforced if the
amount contemplated is grossly excessive and out of all proportion to the damages that might
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7

reasonably have been expected to result from such breach of the contract.
5
Given (a) the
minimal disruption, if any, to the business of the Raleigh JV Borrower related to the chapter 11
filing of Innkeepers, (b) the fact that the Raleigh JV Borrower is current on its obligations under
the Raleigh Loan Agreement, and (c) the existence of another guarantor that has not filed for
bankruptcy (Karim Alibhai), imposing significant liabilities on Innkeepers solely because of
Innkeepers filing for bankruptcy grossly would exceed the damages that CSE might reasonably
expect to result from the bankruptcy filing of Innkeepers. In fact, with more than 14 months
having passed since the Petition Date, it is safe to say that CSE has suffered no damage as a
result of Innkeepers filing. Accordingly, to burden Innkeepers with a significant liability solely
because it exercised its rights under the Bankruptcy Code is inappropriate.
15. Further, disallowing the Guaranty Claim would be consistent with the New York
Supreme Courts recent decision in ING Real Estate Finance (USA) LLC v. Park Avenue Hotel
Acquisition LLC, No. 601860/09, 2010 N.Y. Slip Op. 50276U, at *6 (N.Y. Sup. Ct. Feb. 24,
2010) where the Court held that a guaranty-triggering provision was unenforceable because it
[was] not a reasonable measure of any probable loss suffered.
6
As discussed below, the Raleigh
JV Borrower continues to perform under the Raleigh Loan Agreement and there exists one other

5
Barrie School v. Patch, 933 A.2d 382, 38889, 401 Md. 497, 50809 (2007) (quoting Balto. Bridge Co.v.
United Rys. & Electric Co.,125 Md. 208, 21415 (1915)).
6
The Debtors note that the standard for determining whether a provision is an unenforceability penalty under
New York Law (applied in Park Avenue) is substantially similar to the standard under Maryland law, which is
applicable here. Compare Truck Rent-A-Center, Inc. v Puritan Farms 2nd, Inc., 41 NY2d 420, 425 (1977)
(applying New York law and stating A contractual provision fixing damages in the event of breach will be
sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual
loss is incapable or difficult of precise estimation. If, however, the amount fixed is plainly or grossly
disproportionate to the probable loss, the provision calls for a penalty and will not be enforced.) (emphasis
added) with Barrie School, 933 A.2d 382, 38889, 401 Md. 497, 50809 (2007) (a damages provision in a
contract will not be enforced if the amount contemplated is grossly excessive and out of all proportion to the
damages that might reasonably have been expected to result from such breach of the contract.) (quoting Balto.
Bridge Co.v. United Rys. & Electric Co.,125 Md. 208, 21415 (1915)) (emphasis added).
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8

guarantor against whom CSE may assert any claims in the event that the Raleigh JV Borrower
fails to satisfy the entirety of its obligations under the Raleigh Loan Agreement. Accordingly,
granting CSE a claim against Innkeepers, given CSEs lack of demonstrable harm, would not be
a reasonable measure of any probable loss suffered by CSE and any liability-triggering provision
should be held unenforceable.
16. Second, the Nonrecourse Guaranty Agreements imposition of such a harsh
financial disincentive for filing for bankruptcy should render the provision triggering Innkeepers
liability void on policy grounds.
7
A primary purpose of the Bankruptcy Code is to allow
troubled companies to preserve assets for the benefit of creditors and obtain a fresh start. Parties
should not be allowed to compromise the benefits of bankruptcy protection through contractual
provisions that will result in the creation of claims merely by the filing of a bankruptcy petition.
17. Indeed, in drafting the Bankruptcy Code, Congress took care to ensure that
contractual counterparties would not have the unilateral right to torpedo a debtors ability to
restructure itself by imposing harsh penalties on the debtor upon its filing of a bankruptcy
petition. Specifically, section 365(e)(1) provides: Notwithstanding a provision in an executory
contract or unexpired lease, or in applicable law, an executory contract or unexpired lease of the
debtor may not be terminated or modified, and any right or obligation under such contract or
lease may not be terminated or modified, at any time after commencement of the case solely
because of a provision in such contract or lease that is conditioned on -- (A) the insolvency or

7
See e.g., In re U.S. Lines, Inc., 103 B.R. 427, 431 n.1 (S.D.N.Y. Bankr. 1989) (the fiduciary duty of the debtor-
in-possession ... cannot be contracted away); In re Madison, 184 B.R. 686, 690 (E.D. Pa. Bankr. 1995) (an
agreement not to file [for] bankruptcy is unenforceable because it violates public policy); see also Denberg v.
Parker Chapin Flattau & Klimpl, 82 N.Y.2d 375, 379-381 (1993) (financial disincentives against competition
in law firm partnership agreement were unenforceable); 17A C.J.S. Contracts 205 (2009) (Contracts, the
object or tendency of which is to constitute a ... breach of duty on the part of one who stands in a fiduciary or
confidential relation, are illegal and void.).
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9

financial condition of the debtor at any time before the closing of the case; (B) the
commencement of a case under this title; or (C) the appointment of or taking possession by a
trustee in a case under this title or a custodian before such commencement. In short, the
purpose of section 365(e)(1) is to protect the debtor from the enforcement of unfavorable
insolvency-triggered clauses in executory contracts.
8

18. In addition to the rehabilitative purpose behind this Code section, courts also
reason that ipso facto clauses should be held invalid because they work a forfeiture or
punishment for filing bankruptcy.
9
Indeed, it is now axiomatic that ipso facto clauses are
unenforceable in bankruptcy.
10
Here, the only provision that arguably gives rise to a contingent
claim of CSE is a provision triggered only by the event of Innkeepers bankruptcy filing, which
provision should not be enforced for the foregoing reasons.
19. The Debtors are aware of the recent decisions of Bank of Am. v. Lightstone
Holdings LLC, Case No. 601853/09 (N.Y. Sup. Ct. July 14, 2011), UBS Commercial Mortgage
Trust 2007-FL1 v. Garrison Special Opportunities Fund L.P., Case No. 654212/10 (MLS) (N.Y.
Sup. Ct. March 9, 2011), and 111 Debt Acquisition LLC v Six Ventures, Ltd., 2009 WL 414181
(S.D. Ohio Feb. 18, 2009)and the published decisions of First Nationwide Bank v.
BrookhavenRealty Assocs., 637 N.Y.S.2d 418 (1996) and FDIC v. Prince George Corp., 58 F.3d
1041 (4th Cir. 1995)where courts enforced guaranty obligations of non-debtors that were
triggered by the bankruptcy filing of a property-owning borrower under the loan documents.

8
In re S. Pac. Funding Corp., 268 F.3d 712, 715 (9th Cir. 2001).
9
In re Chedick, 1996 WL 762329, *3 (Bankr. D. Colo. 1996).
10
In re Lehman Bros. Holdings Inc., 452 B.R. 31, 39 (Bankr. S.D.N.Y. 2011) (concluding that certain provisions
in a swap agreement may constitute ipso facto clauses because they eliminate the right of a debtor to receive a
payment due to commencement of a bankruptcy case).
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10

These cases are distinguishable with respect to the Debtors unenforceability arguments on the
grounds that the guarantors in those cases were non-debtors, unlike in the matter at hand where it
was the guarantor (Innkeepers) that sought bankruptcy protection. Unlike here, in those cases it
was the property-owner that was placed in bankruptcy, directly impacting the lenders rights to
receive regular payments and exercise remedies against the collateral under the applicable loan
documents. These decisions do not establish a precedent for imposing liability on a debtor
merely as a result of such debtor determining it was in the best interests of its stakeholders to file
for bankruptcy. Moreover, the Brookhaven and Prince George cases did not even implicate the
policy principles of the Bankruptcy Code because the bankruptcy proceedings that allegedly
triggered the guaranties had been terminated by the time the litigation over the enforceability of
the guaranty had commenced.
B. Even If Innkeepers Liability Under the Nonrecourse Guaranty Agreement Were
Triggered, the Appropriate Amount of the Guaranty Claim is Zero Dollars.
20. Section 502(c) of the Bankruptcy Code empowers the Court to estimate claims
and moreover, requires such estimation where the fixing or liquidation of such claim would
unduly delay the administration of the case.
11
Courts historically have estimated claims for
both allowance and other purposes, including establishing reserves for voting, feasibility or
distribution purposes.
12
The Court has immense flexibility in estimating claims. As this Court
has recognized, estimation provides a means for a bankruptcy court to achieve reorganization,
and/or distribution on claims, without awaiting the results of legal proceedings that could take a

11
11 U.S.C. 502(c).
12
See, e.g., In re Lomas Fin. Corp., 172 B.R. 3, 4 (S.D.N.Y. 1994) (noting that court had estimated certain claims
for purposes of setting reserve and cap on recovery of such claims); In re Adelphia Commcns Corp., 368 B.R.
140, 277-78 (Bankr. S.D.N.Y. 2007) (estimating creditors claim for future expenses for purposes of
establishing reserve); In re Thomson McKinnon Sec., Inc., 143 B.R. 612, 619 (Bankr. S.D.N.Y. 1992) (The
estimation process is an expedient method for setting the amount of a claim that may receive a distributive share
from the estate.).
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11

very long time to determine.
13
Further, when estimating claims, bankruptcy courts may use
whatever method is best suited to the contingencies of the case, so long as the procedure is
consistent with the fundamental policy of Chapter 11 that a reorganization must be accomplished
quickly and efficiently.
14

21. While the Debtors dispute the existence of an enforceable triggering event of the
type specified in Section 2.1(b) of the Nonrecourse Guaranty Agreement, even if the Bankruptcy
Court were to determine that Innkeepers liability were triggered, the Raleigh JV Borrowers
performance under the Raleigh Loan Agreement and other relevant facts justify the Bankruptcy
Courts valuation of the Guaranty Claim at zero dollars for distribution purposes. As one of the
most significant contingent claims remaining against the Debtors, it is critical that the Remaining
Debtors resolve their liability under the Guaranty Claim before the Remaining Debtors begin
making distributions pursuant to the Remaining Debtor Plan.
22. First, under the terms of the Nonrecourse Guaranty Agreement, Innkeepers only
becomes liable for the payment of and performance of the obligations under the Raleigh Loan
Agreement when such payment or performance is due.
15
The Raleigh JV Borrower is current
with respect to the monthly debt service payments required under the Raleigh Loan Agreement.
And the performance of the Raleigh Sheraton is improving, especially in comparison to the
period before the Petition Date. For example, total room revenue in September 2011 was
approximately $841,000 compared to approximately $760,000 in September 2010 (and

13
Adelphia Commcns, 368 B.R. at 278.
14
Id. (internal endnotes and quotations omitted).
15
See Raleigh Loan Agreement 2.1(b) (Guarantor shall have unlimited liability for the payment of and
performance when due, whether at stated maturity or by acceleration or otherwise, of the indebtedness and
other obligations of Borrower to Lender evidenced by the Loan Agreementif any of the following shall
occur) (emphasis added).
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12

approximately $290,000 higher in September 2011 than in June 2010, the last full month before
the Petition Date). Other performance metrics show similar improvements. Revenue per
available room in the first nine months of 2011 was up approximately 14.9% compared to the
first nine months of 2010. Importantly, CSE has failed to allege any facts to suggest that the
Raleigh JV Borrower will be unable to satisfy all of its obligations under the Raleigh Loan
Agreement when they become due. Accordingly, the Bankruptcy Court may appropriately
estimate that Innkeepers will not have any liability under the Nonrecourse Guaranty Agreement
and expunge the Guaranty Claim in its entirety, which will permit the Debtors to make
distributions pursuant to the Remaining Debtor Plan, including to Holders of Innkeepers USA
Trust Preferred C Interests.
23. Second, the event allegedly giving rise to Innkeepers obligations under the
Nonrecourse Guaranty Agreement caused no harm to CSE. Innkeepers bankruptcy filing has in
no way prevented the Raleigh JV Borrower from continuing to make its monthly debt service
payments required under the Raleigh Loan Agreement since the Petition Date. CSE essentially
is seeking the best of both worlds with respect to the amount it is owed under the Raleigh Loan
Agreement as it continues to accept monthly debt service payments from the Raleigh JV
Borrower while seeking payment on the Guaranty Claim in Innkeepers bankruptcy case.
Further, the value of the Raleigh Sheraton has not been diminished by Innkeepers bankruptcy
filing. In fact, since Innkeepers filed for bankruptcy, given general performance and valuation
trends in the hospitality industry, it is reasonable to infer that the value of CSEs collateral under
the Raleigh Loan Agreement has increased, perhaps by a substantial amount. Further, upon the
Effective Date of the Remaining Debtor Plan (expected to occur on the date hereof), Innkeepers
no longer will be in bankruptcyproviding a de facto cure of any alleged default or trigger
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13

under the Nonrecourse Guaranty Agreement. As a result, CSE finds itself in the same position
today as it was before the Petition Date and the Court should value the Guaranty Claim at zero
dollars.
24. Third, in addition to Innkeepers, Karim Alibhai is obligated under the
Nonrecourse Guaranty Agreement. Even in the scenario where circumstances result in the
Raleigh JV Borrower being unable to satisfy its obligations under the Raleigh Loan Agreement
when they become due, CSE will be able to pursue a recovery from Karim Alibhai. Upon
information and belief, the Debtors believe that Karim Alibhai has sufficient funds to make CSE
whole in the unlikely scenario where the Raleigh JV Borrower fails to pay the entirety of its
obligations under the Raleigh Loan Agreement when they become due. The existence of this
alternate source of recovery makes it even more remote that the Raleigh JV Borrowers
obligations under the Raleigh Loan Agreement will go unsatisfied and Innkeepers will be
required to make any payment to CSE under the Nonrecourse Guaranty Agreement. For this
reason, the Court should value the Guaranty Claim at zero dollars for distribution purposes under
the Remaining Debtor Plan.
Motion Practice
25. This Objection includes citations to the applicable rules and statutory authorities
upon which the relief requested herein is predicated and a discussion of their application to this
Objection. Accordingly, the Debtors submit that this Objection satisfies Rule 9013-1(a) of the
Local Rules of Bankruptcy Procedure for the Southern District of New York.
Notice
26. The Debtors have provided notice of this Objection consistent with the
Confirmation Order [Docket No. 1804], which is available at www.omnimgt.com/innkeepers,
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14

the website maintained by Omni Management Group, LLC, the Debtors notice and claims
agent. The Debtors respectfully submit that no further notice is necessary.

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15


WHEREFORE, for the reasons stated in the Objection, the Debtors respectfully
request that the Bankruptcy Court grant the relief requested in the Objection and such other relief
as the Bankruptcy Court deems just and proper.
New York, New York /s/ Brian S. Lennon
Dated: October 27, 2011 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

Anup Sathy, P.C.
KIRKLAND & ELLIS LLP
300 North LaSalle
Chicago, Illinois 60654-3406
Telephone: (312) 862-2000
Facsimile: (312) 862-2200

Counsel to the Debtors and
Debtors in Possession

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EXHIBIT A
Proposed Order

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
)
In re: ) Chapter 11
)
INNKEEPERS USA TRUST, et al.,
1
) Case No. 10-13800 (SCC)
)
Debtors. ) Jointly Administered
)
ORDER GRANTING DEBTORS OBJECTION TO THE ALLEGED GUARANTY
CLAIM OF CSE MORTGAGE LLC AGAINST INNKEEPERS USA LIMITED
PARTNERSHIP AND MOTION TO ESTIMATE THE VALUE OF THE ALLEGED
GUARANTY CLAIM AT ZERO DOLLARS FOR DISTRIBUTION PURPOSES
1

Upon the Debtors Objection to the Alleged Guaranty Claim of CSE Mortgage LLC
Against Innkeepers USA Limited Partnership and Motion to Estimate the Value of the Alleged
Guaranty Claim at Zero Dollars for Distribution Purposes (the Objection)
2
filed by
Innkeepers USA Trust and certain of it affiliates, as debtors and debtors in possession
(collectively, the Debtors), requesting entry of an order disallowing and expunging the
Guaranty Claim in its entirety or, in the alternative, estimating its value at zero dollars for
distribution purposes; all as more fully described in the Objection; it appearing that the relief
requested is in the best interests of the Debtors estates, their creditors, and other parties in
interest; the Court having jurisdiction to consider the Objection and the relief requested therein
pursuant to 28 U.S.C. 157 and 1334; consideration of the Objection and the relief requested

1
The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax
identification number can be found by visiting the Debtors restructuring website at
www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o
Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. 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.
2
All capitalized terms used by otherwise not defined herein shall have the meanings set forth in the Objection.
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2

therein being a core proceeding pursuant to 28 U.S.C. 157(b); venue being proper before this
court pursuant to 28 U.S.C. 1408 and 1409; notice of the Objection having been adequate and
appropriate under the circumstances; and after due deliberation and sufficient cause appearing
therefor, it is HEREBY ORDERED THAT:
1. The Objection is granted to the extent set forth herein.
2. [The Guaranty Claim is hereby disallowed and expunged in its entirety.]
[The value of the Guaranty Claim is hereby estimated at zero dollars for distribution
purposes.]
3. Omni Management Group, LLC, the Debtors notice and claims agent, is hereby
authorized to update the Claim register to reflect the relief granted in this Order.
4. The terms and conditions of this Order shall be immediately effective and
enforceable upon its entry.
5. All time periods set forth in this Order shall be calculated in accordance with
Bankruptcy Rule 9006(a).
6. The Debtors are authorized to take all actions necessary to effectuate the relief
granted pursuant to this Order in accordance with the Objection.
7. This Court retains jurisdiction with respect to all matters arising from or related to
the implementation of this Order.
New York, New York
Dated: ___________, 2011

United States Bankruptcy Judge

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EXHIBIT B
Organizational Chart
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Bahadur Alibhai Ukani 25%
Amir Alibhai Ukani 25%
Haider Alibhai Ukani 25%
Akber Alibhai Ukani 25%
20%
Bahadur Alibhai Ukani 24.975%
Amir Alibhai Ukani 24.975%
Haider Alibhai Ukani 24.975%
Akber Alibhai Ukani 24.975%
Karim Alibhai 50%
Karim Alibhai Family Trust 30%
Marim Trust 10%
Gencom Execs LLC 10%
KA Genwood Manager LLC
Westchase Operating Company, LLC
DVI Gen, LLC Westchase Family L.P.
David Buddenger 25%
Charles Dzaz 25%
Pete Walz 25%
Carlos Rodrigues 25%
Genwood Owner LLC
20%
60%
0.1%
99.9%
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EXHIBIT C
Nonrecourse Guaranty Agreement
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NONRECOURSE CARVEOUT GUARANTY AGREEMENT
(Sheraton Hotel Raleigh, Raleigh, North Carolina)
THIS NONRECOURSE CARVEOUT GUARANTY AGREEMENT (this "Guaranty")
is executed as of November 13, 2006, by KARIM ALIBHAI and INNKEEPERS USA
LIMITED PARTNERSHIP, a Virginia limited partnership (collectively, the "Guarantor"), for
the benefit of CSE MORTGAGE LLC, a Delaware limited liability company, its successors
and/or assigns ("Lender"), with reference to the following facts:
A. Lender has agreed to lend up to Thirty-Three Million Four Hundred Fifty
Thousand and No/100 Dollars ($33,450,000.00) (the "Loan") to GENWOOD RALEIGH LLC,
a Delaware limited liability company, and GENWOOD RALEIGH LESSEE LLC, a Delaware
limited liability company (collectively, jointly, severally, and jointly and severally, the
"Borrower").
B. The Loan is made pursuant to the terms of that certain Loan Agreement (as
amended, supplemented or otherwise modified from time to time, the "Loan Agreement") dated
as of even date herewith between Borrower and Lender. The Loan is secured by, among other
instruments, that certain Future Advance Fee and Leasehold Deed ofTrust, Security Agreement,
Assignment of Rents and Leases and Fixture Filing (as amended, supplemented or otherwise
modified from time to time, the "Mortgage'') executed by Borrower, dated as of even date
herewith and affecting that certain real property situated in the City of Raleigh, Wake County,
North Carolina, and more particularly described in the Mortgage (the "Property"). The Loan
Agreement, any Note, the Mortgage and all documents and instruments executed by Borrower,
Guarantor or any other guarantor in connection with the Loan are herein collectively referred to
as "Loan Documents."
C. As a condition to the making of the Loan, Lender has required that Guarantor
guarantee the respective obligations of Borrower in accordance with the terms of this Guaranty.
NOW, THEREFORE, in consideration of Lender's agreement to make the Loan and as
an inducement to Lender to do so, Guarantor covenants and agrees with Lender, for the benefit
of Lender as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
1.1. Each Guarantor makes the following representations and warranties which
shall be continuing representations and warranties until this Guaranty expires in accordance with
the provisions contained herein:
(a) Guarantv Authorized and Binding. There are no conditions
precedent to the effectiveness of this Guaranty and this Guaranty has been duly authorized,
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executed and delivered and constitutes a valid and legally binding obligation of Guarantor
enforceable in accordance with its terms, regardless of whether Lender obtains other collateral or
any guaranties from others or takes any other action contemplated by Guarantor.
(b) No Conflict. To the best of Guarantor's knowledge, the execution
and delivery of this Guaranty are not, and the performance of this Guaranty will not be, in
contravention of, or in conflict with, any law, rule, regulation or other legal requirement or any
agreement, indenture or undertaking to which Guarantor is a party or by which Guarantor or any
of Guarantor's assets is or may be bound or affected and do not, and will not cause any security
interest, lien or other encumbrance to be created or imposed upon any such assets.
(c) Litigation. There is no litigation or other proceeding pending or,
to Guarantor's actual knowledge, threatened against, or affecting, Guarantor or Guarantor's
properties which, if determined adversely to Guarantor, would have a materially adverse effect
on the financial condition, assets, businesses or operations of Guarantor or which prevents or
interferes with or adversely affects Guarantor's entering into this Guaranty or the validity of this
Guaranty or the carrying out of the terms hereof, and Guarantor is not in default with respect to
any order, writ, injunction, decree or demand of any court or other governmental or regulatory
authority.
(d) Financial Condition. To the best of Guarantor's knowledge,
Guarantor's financial statements, which have heretofore been submitted in writing by Guarantor
to Lender in connection herewith, are true and correct and fairly present the financial condition
of Guarantor for the period covered thereby .. Since the date of said financial statements, there
has been no materially adverse change in Guarantor's financial condition. Guarantor has no
actual knowledge of any liabilities, contingent or otherwise, as of the date of said financial
statements which are not reflected in said financial statements; other than in the ordinary course
of Guarantor's business, Guarantor has not entered into any commitments or contracts which are
not reflected in such financial statements or which may have a materially adverse effect upon his
financial condition, operations or business as now conducted; and Guarantor has not (since the
date of such statements) sold, leased, assigned, encumbered, hypothecated, transferred or
otherwise disposed of and will not, without the prior written consent of Lender, sell, lease,
assign, encumber, hypothecate, transfer or otherwise dispose of, all or substantially all of
Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantor's
business.
(e) Solvencv. The execution and delivery of this Guaranty will not
(i) render Guarantor insolvent under generally accepted accounting principles nor render it
Insolvent (as defined below), (ii) leave Guarantor with remaining assets which constitute
unreasonably small capital given the nature of Guarantor's business, or (iii) result in the
incurrence of "Debts" (as defined below) beyond Guarantor's ability to pay them when and as
they mature. Guarantor is not insolvent under generally accepted accounting principles nor
Insolvent, regardless of the effect of this Guaranty on his financial condition. For the purposes
of this Section, "Insolvent" means that the present fair salable value of assets is less than the
amount that will be required to pay the probable liability on existing Debts as they become
absolute and matured. For the purposes of this Section, "Debts" includes any legal liability for
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indebtedness, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent.
(f) Financial or Other Benefit or Advantage. Guarantor hereby
acknowledges and warrants that (i) Guarantor has derived or expects to derive a financial or
other benefit or advantage from the Loan and from each and every renewal, extension, release of
collateral or other relinquishment of legal rights made or granted or to be made or granted by
Lender to Borrower in connection with the Loan, and (ii) Lender would not make the Loan but
for this Guaranty.
(g) Information. Guarantor has established adequate means of
obtaining from sources other than Lender, on a continuing basis, financial and other information
pertaining to Borrower's financial condition, the Property, and Borrower's activities relating
thereto and the status of Borrower's performance of their respective obligations imposed by the
Loan Documents, and Guarantor agrees to keep adequately informed from such means of any
facts, events or circumstances which might in any way affect Guarantor's risks hereunder and
Lender has made no representation to Guarantor as to any such matters.
(h) No Material Adverse Effect. Guarantor represents and warrants
that it is not a party to any agreement or instrument subject to any court order, injunction, permit,
or restriction which might materially and adversely affect the Property or the business,
operations, condition (financial or otherwise) of Guarantor; and Guarantor is not in violation of
any agreement which violation would have a material adverse effect on the Property or
Guarantor's business, properties or assets, operations, or condition, financial or otherwise.
ARTICLE II
AGREEMENTS
2.1 Guarantv.
(a) Each Guarantor hereby irrevocably and unconditionally guarantees
to Lender and its successors and assigns, on a joint and several basis, punctual payment of any
actual loss, damage, cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in connection with any
of the following (the "Indemnity Obligations"):
( i) Borrower's commission of a criminal act (except as set
forth in Section 2.1(b)(vii) below);
(ii) the removal or disposal of any of the Personal Property by
Borrower (as defined in the Mortgage) in violation of the tenus of any of the Loan
Documents unless replaced by personal property of reasonably equivalent value or unless
such Personal Property is obsolete and replacement is not appropriate in the ordinary
course of business;
(iii) application or appropnatwn in a manner not permitted
under the Loan Documents of any revenue derived from the Property, including but not
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limited to sales proceeds, rents, security deposits, earnest money or other sales deposits,
insurance proceeds, condemnation awards, or the proceeds of the Loan, by Borrower, any
Member, Manager, any Guarantor or any other Affiliate of the Borrower (except as set
fm1h in Section 2.1 (b )(vii) below);
(iv) a material misrepresentation made by Borrower, any
Member, Manager, any Guarantor or any other Affiliate of the Borrower in or in
connection with the Loan Documents or the Loan (except as set forth in Section
2.l(b)(vii) below);
(v) Borrower's collection of rents more than one month in
advance (except in connection with advance hotel reservations) or entering into or
modifying written leases, or receipt of monies by Borrower, any Member, Manager, any
Guarantor or any other Affiliate of the Borrower in connection with the modification of
any written leases, in violation of the Loan Agreement or any of the other Loan
Documents;
(vi) Borrower's failure to apply proceeds of rents or any other
payments in respect of the leases and other income of the Property or any other collateral
to the costs of maintenance and operation of the Property and to the payment of taxes,
lien claims, insurance premiums, debt service and other amounts due under the Loan
Documents or failure to deliver to Lender rents or security deposits upon request after the
occurrence of an Event of Default;
(vii) Borrower's failure to maintain insurance as required by the
Loan Agreement or to pay any taxes or assessments affecting the Property (except to the
extent Lender fails to pay any taxes or insurance premiums due from the escrow
maintained pursuant to Section 2.4 of the Loan Agreement); or
(viii) any intentional damage, destruction or waste to the
Property caused by the acts or omissions of Borrower, any Member, Manager, any
Guarantor or their respective agents, employees, or contractors.
(ix) without limitation, the due and punctual payment and full
and faithful performance of each and every obligation of the Borrower contained in (i)
that certain Unsecured Environmental Indemnity of even date herewith by Borrower in
favor of Lender and (ii) Section 6.20.3 of the Mortgage,
(b) Notwithstanding paragraph 2.l(a) above, Guarantor shall have
unlimited liability for the payment of and performance when due, whether at stated maturity or
by acceleration or otherwise, of the indebtedness and other obligations of Borrower to Lender
evidenced by the Loan Agreement and any other amounts that may become owing by Borrower
under the Mortgage or any other Loan Document (such indebtedness, obligations and other
amounts are hereinafter referred to as "Full Recourse Obligations," and together with the
Indemnity Obligations, the "Guaranteed Obligations") if any of the following shall occur
(individually, a "Full Recourse Event" and collectively, the "Full Recourse Events"):
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(i) a Transfer (as defined in the Mortgage) occurs without the prior
written consent of Lender (which consent shall be in Lender's sole and absolute discretion) or
except as permitted under the Loan Documents;
(ii) Borrower, Manager or any Guarantor files a voluntary petition
under the Bankmptcy Code or any other Federal or state bankmptcy or insolvency law (unless,
with respect to a voluntary petition filed by a Guarantor, a replacement Guarantor is duly
substituted for the affected Guarantor pursuant to the provisions of the Loan Agreement);
(iii) Any Member, Manager, any Guarantor, any other Affiliate of the
Borrower, or an officer, director, agent, representative or Person which owns or controls, directly
or indirectly, Borrower or any of the foregoing, files, or joins in the filing of, an involuntary
petition against Borrower under the Bankmptcy Code or any other Federal or state bankmptcy or
insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower from any Person;
(iv) Borrower files an answer consenting to or otherwise acquiescing in
or joining in any involuntary petition filed against it by any other Person under the Bankmptcy
Code or any other Federal or state bankmptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person;
(v) in any case or proceeding under the Bankmptcy Code or in any
other judicial proceeding, Borrower, any Member, Manager, any Guarantor or any other Affiliate
of the Borrower shall propose a plan of reorganization, or otherwise take any action to seek any
order, pursuant to which all or any portion of the lien of the Mortgage or the obligations of
Borrower to pay principal and interest as specified in the Loan Documents is rescinded, set aside,
or detennined to be void or unenforceable, or any of the terms of any of the Loan Documents are
modified without Lender's consent (and in any circumstance in which this clause applies, the
liability of Guarantors for the obligations set forth in the Loan Documents shall be detennined as
if there were no such rescission, set aside, determination of voidness or unenforceability, or
modification);
(vi) fraud, willful misrepresentation, misappropriation of funds or theft
is cormnitted by Borrower, any Member, Manager, any Guarantor or any other Affiliate of the
Borrower in connection with the Loan or the Property;
(vii) Borrower, Manager, any Guarantor or any other Affiliate of the
Borrower asserts any claim, defense, or offset against Lender that Borrower has acknowledged to
be untme, waived or agreed not to assert, including but not limited to that the transactions
contemplated by the Loan Documents establish a joint venture, partnership or other similar
arrangement between Borrower and Lender; or
(viii) any failure by Borrower or Manager to comply with the terms and
provisions of Section 4.1.2 of the Loan Agreement which failure results in a bankmptcy filing or
proceeding or a substantive consolidation of the assets of the Borrower with any other person or
entity.
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Furthermore, it is acknowledged that the Property is intended to be benefited by certain rights
with respect to certain adjoining property pursuant to the following agreements: (1) Lease
Agreement dated as of March 29, 2000 between Phoenix Limited Partnership of Raleigh, a
Delaware limited liability company ("Phoenix Limited Partnership"), as landlord, and LB
Raleigh Hotel LLC, a Delaware limited liability company ("LB Raleigh") (as successor-in-
interest to Raleigh Prism One Limited Partnership), as tenant, as modified by that certain Lease
Modification Agreement No. 1 dated as of December 14, 2005, (2) Access Agreement dated as
of June 1, 1999 between Phoenix Limited Partnership and LB Raleigh (as successor-in-interest to
Raleigh Prism One Limited Partnership) and (3) Parking License dated as of November 18,
1997 between Phoenix Limited Partnership (as successor-in-interest to City of Raleigh), as
licensor, and LB Raleigh (as successor-in-interest to Raleigh Plaza Hotel Limited Partnership),
as licensee (collectively, the "Property Agreements"), as same were assigned to Borrower
pursuant to General Assignment dated August 31, 2006 (the "General Assignment") by and
between LB Raleigh (as assignor) and Genwood Raleigh LLC (as assignee). It is further
acknowledged that the Property Agreements are material to the operation of the Property.
Accordingly, a Full Recourse Event shall be deemed to have occurred hereunder, and the
Guarantor shall have liability for the Full Recourse Obligations pursuant to this Section 2.1 (b),
but limited to Five Million Dollars ($5,000,000.00), from the date any of the Property
Agreements are terminated for failure to obtain any consents that may have been required in
connection with prior transfers of the Property. The potential liability of Guarantor as a result of
a tennination of any of the Property Agreements pursuant to this paragraph shall terminate at
such time as Borrower has obtained an Estoppel Agreement from Phoenix Limited Partnership
with respect to each of the Property Agreements in substantially the forms attached hereto as
Exhibit A.
(c) Each Guarantor hereby irrevocably and unconditionally covenants and agrees
that it is liable for the Indemnity Obligations and, after the occurrence of a Full Recourse Event,
the Full Recourse Obligations, as a primary obligor. Guarantor agrees that no portion of any
sums applied, from time to time, in reduction of the obligations of the Borrower under the Loan
Documents (other than sums paid by Guarantor pursuant to the provisions ofthis Guaranty out of
his, her or its personal funds not derived from the Project) shall be deemed to have been applied
in reduction of the Guaranteed Obligations unless, and only to the extent that, such payment
reduces the obligations of the Borrower below the maximum amount of the Guaranteed
Obligations. The Guaranteed Obligations shall be the last portion of the obligations of the
Bonower under the Loan Documents to be paid. Nothing in this Guaranty shall limit the liability
of any Guarantor that may arise out of the obligations set forth in the Environmental Indemnity
Agreement, of even date herewith, made by Guarantors in favor of Lender or any other
agreement of any Guarantor providing for personal liability to Lender.
2.2 Obligations Absolute. The obligations of Guarantor hereunder shall
remain in full force and effect without regard to, and shall not be affected or impaired by the
following, any of which may be taken without the consent of, or notice to, Guarantor, nor shall
any of the following give Guarantor any recourse or right of action against Lender:
(a) Any express or implied amendment, modification, renewal,
addition, supplement, extension (including extensions beyond the original term) or acceleration
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of or to any of the Loan Documents, other than amendments to this Agreement executed in
accordance with Section 3.3 hereof;
(b) Any exercise or nonexercise by Lender of any right or privilege
under this Guaranty or any of the Loan Documents;
(c) Any bankruptcy, insolvency, reorganization, compositiOn,
adjustment, dissolution, liquidation or other like proceeding relating to Borrower, Guarantor or
any other guarantor (which tenn shall include any other party at any time directly or contingently
liable for any of Borrower's obligations under the Loan Documents) or any affiliate of Borrower
or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in
any such proceeding, whether or not Guarantor shall have had notice or knowledge of any of the
foregoing;
(d) Any release or discharge of Borrower from its liability under any
of the Loan Documents or any release or discharge of any endorser or guarantor or of any other
party at any time directly or contingently liable for the Guaranteed Obligations;
(e) Any subordination, compromise, release (by operation of law or
otherwise), discharge, compound, collection, or liquidation of any or all of the Property or other
collateral described in any of the Loan Documents or otherwise in any manner, or any
substitution with respect thereto;
(f) Any assignment or other transfer of this Guaranty in whole or in
pari or of any of the Loan Documents;
(g) Any acceptance of partial performance of the Guaranteed
Obligations;
(h) Any consent to the transfer of the Property or any portion thereof
or any other collateral described in the Loan Documents or otherwise; and
( i) Any bid or purchase at any sale of the Property or any other
collateral described in the Loan Documents or otherwise.
2.3 Waivers. Each Guarantor unconditionally waives any defense to the
enforcement of this Guaranty, including:
(a) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of
this Guaranty;
(b) Any right to require Lender to proceed against Borrower or any
guarantor at any time or to proceed against or exhaust any security held by Lender at any time or
to pursue any other remedy whatsoever at any time;
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(c) The defense of any statute of limitations affecting the liability of
Guarantor hereunder or the liability of Borrower, or any guarantor under the Loan Documents, or
the enforcement hereof, to the extent permitted by law;
(d) Any defense arising by reason of any invalidity or unenforceability
of (or any limitation of liability in) any of the Loan Documents or any disability of Borrower or
any guarantor or of any manner in which Lender has exercised its rights and remedies under the
Loan Documents, or by any cessation from any cause whatsoever of the liability of Borrower or
any guarantor;
(e) Without limitation of clause (d) above, any defense based upon
any lack of authority of the officers, directors, partners or agents acting or purporting to act on
behalf of Borrower or any principal of Borrower or any defect in the formation of Borrower or
any principal of Borrower;
(f) Any defense based upon the application by Borrower of the
proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or
intended or understood by Lender or Guarantor;
(g) Any defense based upon an election of remedies by Lender,
including any election to proceed by judicial or nonjudicial foreclosure of any security, whether
real property or personal property security, or by deed in lieu thereof, and whether or not every
aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including
remedies relating to real property or personal property security, which destroys or otherwise
impairs the subrogation rights of Guarantor or the rights of Guarantor to proceed against
Borrower or any guarantor for reimbursement, or both;
(h) Any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in any other aspects more
burdensome than that of a principal;
(i) Any defense based upon Lender's election, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section 1111 (b )(2) of the
Federal Bankruptcy Code or any successor statute;
U) Any defense based upon any borrowing or any grant of a security
interest under Section 364 of the Federal Bankruptcy Code;
(k) Any duty of Lender to advise Guarantor of any information known
to Lender regarding the financial condition of Borrower and all other circumstances affecting
Borrower's ability to perform its obligations to Lender, it being agreed that Guarantor assumes
the responsibility for being and keeping informed regarding such condition or any such
circumstances; and
(1) Any right of subrogation, reimbursement, exoneration,
contribution or indemnity, or any right to enforce any remedy which Lender now has or may
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hereafter have against Borrower or any benefit of, or any right to participate in, any security now
or hereafter held by Lender.
2.4 Subrogation. Guarantor understands that the exercise by Lender of
certain rights and remedies may affect or eliminate Guarantor's right of subrogation against
Borrower or any guarantor and that Guarantor may therefore incur partially or totally
nonreimbursable liability hereunder. Nevertheless, Guarantor hereby authorizes and empowers
Lender, its successors, endorsees and assigns, to exercise in its or their sole discretion, any rights
and remedies, or any combination thereof, which may then be available, it being the purpose and
intent of Guarantor that the obligations hereunder shall be absolute, continuing, independent and
unconditional under any and all circumstances. Notwithstanding any other provision of this
Guaranty to the contrary, Guarantor hereby waives and releases, to the fullest extent pennitted by
law, any claim or other rights which Guarantor may now have or hereafter acquire against
Borrower or any other guarantor of all or any of the obligations of Guarantor hereunder that arise
from the existence or perfom1ance of Guarantor's obligations under this Guaranty or any of the
other Loan Documents, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification, any right to participate in any claim or remedy of Lender against
Borrower or any collateral which Lender now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity or under contract, statute or common law, by any payment
made hereunder or otherwise, including the right to take or receive from Borrower, directly or
indirectly, in cash or other property or by setoff or in any other manner, payment or security on
account of such claim or other rights.
2.5 Additional Waivers. Guarantor shall not be released or discharged, either
in whole or in part, by Lender's failure or delay to (a) perfect or continue the perfection of any
lien or security interest in any collateral which secures the obligations of Borrower, Guarantor or
any other guarantor, or (b) protect the property covered by such lien or security interest.
2.6 Independent. Separate and Unsecured Obligations. The obligation of
Guarantor hereunder is independent of the obligations of Borrower and, in the event of any
default hereunder, a separate action or actions may be brought and prosecuted against Guarantor
whether or not Guarantor is the alter ego of Borrower and whether or not Borrower is joined
therein or a separate action or actions are brought against Borrower. Lender's rights hereunder
shall not be exhausted until all of the Guaranteed Obligations have been fully paid and
performed. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall
not be deemed to be secured by any security instrument.
2. 7 Subordination. Without limitation of the waivers and releases contained
herein:
(a) Until all obligations secured by the Mortgage have been satisfied,
Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to
the obligations at any time owing by Borrower to Lender under the Loan Documents. Guarantor
assigns all such indebtedness to Lender as security for this Guaranty, the Note and other Loan
Documents.
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(b) During such time as any "Event of Default" exists as defined in the
Mortgage, Guarantor agrees to make no claim not to enforce or execute on any judgment on such
indebtedness until all obligations of Borrower under the Loan Documents have been fully
discharged.
(c) Guarantor further agrees not to assign all or any part of such
indebtedness unless Lender is given prior notice and such assignment is expressly made subject
to the terms of this Guaranty. If Lender so requests, (i) all instruments evidencing such
indebtedness shall be duly endorsed and delivered to Lender, (ii) all security for such
indebtedness shall be duly assigned and delivered to Lender, (iii) such indebtedness shall be
enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender
on account of the Loan but without reducing or affecting in any manner the liability of Guarantor
under the other provisions of this Guaranty, and (iv) Guarantor shall execute, file and record
such documents and instruments and take such other action as Lender deems reasonably
necessary or appropriate to perfect, preserve and enforce Lender's rights in and to such
indebtedness and any security therefor. If Guarantor fails to take any such action, Lender, as
attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor. The
foregoing power of attorney is coupled with an interest and cannot be revoked.
2.8 Bankruptcv No Discharge: Repavments. So long as any of the
obligations guaranteed hereunder shall be owing to Lender, Guarantor shall not, without the prior
written consent of Lender, commence or join with any other party in commencing any
bankruptcy, reorganization or insolvency proceedings of or against Borrower. Guarantor
understands and acknowledges that by virtue of this Guaranty, it has specifically assumed any
and all risks of a bankruptcy or reorganization case or proceeding with respect to Borrower. As
an example and not in any way of limitation, a subsequent modification of the Guaranteed
Obligations in any reorganization case concerning Borrower shall not affect the obligation of
Guarantor to pay and perform the Guaranteed Obligations in accordance with its original terms.
In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor
shall file all claims which Guarantor may have against Borrower or relating to any indebtedness
of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder. If
Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby
authorized to do so in the name of Guarantor or, in Lender's discretion, to assign the claim to a
nominee and to cause proof of claim to be filed in the name of Lender's nominee. The foregoing
power of attorney is coupled with an interest and cannot be revoked. Lender or its nominee shall
have the right, in its reasonable discretion, to accept or reject any plan proposed in such
proceeding and to take any other action which a party filing a claim is entitled to do. In all such
cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to
pay such claim shall pay to Lender the amount payable on such claim and, to the full extent
necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor's rights to any
such payments or distributions; provided, however, Guarantor's obligations hereunder shall not
be satisfied except to the extent that Lender receives cash by reason of any such payment or
distribution. If Lender receives anything hereunder other than cash, the same shall be held as
collateral for amounts due under this Guaranty. Notwithstanding anything to the contrary herein,
the liability of Guarantor hereunder shall be reinstated and revised, and the rights of Lender shall
continue, with respect to any amount at any time paid by or on behalf of Borrower on account of
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the Loan Documents which Lender shall restore or return by reason of the bankruptcy,
insolvency or reorganization of Borrower or for any other reasons, all as though such amount had
not been paid.
2.9 Setoff. Lender shall have a right of setoff against, and Guarantor hereby
grants a security interest in, all moneys, securities and other property of Guarantor now or
hereafter in the possession of, or on deposit with Lender, whether held in a general or special
account or deposit, or for safekeeping or otherwise. Such right is in addition to any right of
setoff Lender may have by law. All rights of setoff may be exercised without notice or demand
to Guarantor. No right of setoff shall be deemed to have been waived by any act or conduct on
the part of Lender, or by any neglect to exercise such right of setoff, or by any delay in doing so.
Every right of setoff shall continue in full force and effect until specifically waived or released
by an instmment in writing executed by Lender.
2.10 Pavments. It is understood that the obligations of Borrower to Lender
may at any time and from time to time exceed the aggregate liability of Guarantor hereunder
without impairing this Guaranty. Guarantor agrees that whenever Guarantor shall make any
payment to Lender hereunder on account of the liability hereunder, Guarantor will deliver such
payment to Lender at the address provided in Section 3.8 below and notify Lender in writing that
such payment is made under this Guaranty for such purpose. It is understood that Lender,
without impairing this Guaranty, may apply payments from Borrower to the Guaranteed
Obligations or to such other obligations owed by Borrower to Lender in such amounts and in
such order as Lender in its complete discretion determines. No payment made hereunder by
Guarantor to Lender shall constitute Guarantor as a creditor of Lender.
2.11 Financial Statements. Guarantor covenants and agrees to provide
Lender, within sixty (60) days after the end of each calendar year, with financial statements,
including a balance sheet and such other statements as may be required by Lender (including a
statement of changes in financial position), prepared in a fonn consistent with the financing
statements previously delivered and accepted by Lender, or in such other form as Lender may
approved in the exercise of its reasonable discretion, and certified as true and complete, without
qualification, by Guarantor or, if required by Lender, by a certified public accountant reasonably
acceptable to Lender; provided, however, that unless otherwise required by Lender, any financial
statement obligations of a certified public accountant hereunder shall be limited to presenting
compiled statements and not reviewed or audited statements. Guarantor further covenants and
agrees to immediately notify Lender of any material adverse change in Guarantor's financial
condition. Guarantor shall also provide any additional financial information, upon written
request by Lender, including certification as to liquidity and that no material adverse change has
occurred in Guarantor's financial condition.
ARTICLE III
MISCELLANEOUS
3.1 Expenses. Guarantor agrees to pay all reasonable and actual costs and
expenses, including reasonable attorneys' fees and costs (including costs and expenses of in-
house counsel allocated by Lender), which may be incurred by Lender in any effort to collect or
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enforce any of the Loan Documents or the obligations of Guarantor hereunder, whether or not
any lawsuit is filed, including all costs and reasonable attorneys' fees (including costs and
expenses of in-house counsel allocated by Lender) incurred by Lender in any bankruptcy
proceeding (including any action for relief from the automatic stay of any bankruptcy
proceeding) and in any judicial or nonjudicial foreclosure action. Such amounts shall bear
interest until paid at the Default Rate. Without limitation, if Lender used in-house counsel in any
effort to collect or enforce any of the Loan Documents or the obligations of Guarantor hereunder,
whether or not any lawsuit is filed, including in any bankruptcy proceeding (including any action
for relief from the automatic stay or any bankruptcy proceeding) and in any judicial or
nonjudicial foreclosure action, Guarantor expressly agrees that costs and expenses under this
paragraph shall include reasonable fees and costs for in-house counsel commensurate with the
fees and costs that would otherwise be charged by outside legal counsel selected by Lender in its
sole discretion for the work performed.
3.2 Complete Agreement. This Guaranty supersedes any prior negotiations,
discussions or communications between Guarantor and Lender and constitutes the entire
agreement between Lender and Guarantor with respect to this Guaranty.
3.3 Amendments. Neither this Guaranty nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or termination is sought.
3.4 Successors. All of the tern1s of this instrument shall be binding upon and
inure to the benefit of the parties hereto and their respective personal representatives, heirs
successors and assigns, except that Guarantor shall not have the right to assign any of its rights or
obligations under this Guaranty. The tenn "Borrower" shall mean both the named Borrower
and any other person or entity at any time assuming or otherwise becoming primarily liable on
all or any part of the obligations set forth in the Loan Documents.
3.5 Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Maryland (without regard to conflicts of law).
3.6 Assignabilitv bv Lender. Lender may, at any time and from time to time,
assign, conditionally or otherwise, all of the rights of Lender under the Loan Agreement and
under this Guaranty, whereupon such assignee shall succeed to all rights of Lender hereunder to
the extent that such rights may be assigned to it. Lender, or each successor under the Loan
Agreement, may give written notice to Guarantor of any such assignment, but any failure to give,
or delay in giving, such notice shall not affect the validity or enforceability of any such
assignment.
3. 7 Demands. Each demand by Lender for performance or payment
hereunder shall be in writing and shall be made in the manner set forth in Section 3.9 below.
3.8 Term. The obligations of Guarantor under the Guaranty shall continue in
full force and effect until the obligations under the Loan Documents shall have been fully paid
and performed and Lender's commitment to make advances under the Loan Documents shall
have been tenninated or shall have expired and the expiration of the period of time during which
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payments by Borrower to Lender may be deemed to be preferential payments under the Federal
Bankruptcy Code or other similar applicable laws.
3.9 Notices. Except when otherwise required by law, any notice which a
party is required or may desire to give the other shall be in writing and may be sent by personal
delivery or by mail (either by United States registered or certified mail, return receipt requested,
postage prepaid, or by Federal Express or similar generally recognized overnight carrier
regularly providing proof of delivery), addressed as provided below in this Section 3.9. Any
notice so given by mail shall be deemed to have been given as of the date of delivery (whether
accepted or refused) established by U.S. Post Office return receipt or the overnight carrier's
proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon
receipt of the same by the party to whom the same is to be given.
the Lender:
With a copy to:
the Guarantor:
With a copy to:
CSE Mortgage LLC
4445 Willard Avenue, lth Floor
Chevy Chase, Maryland 20815
Attention: Structured Finance Group Portfolio Manager
Troutman Sanders LLP
1660 International Drive, Suite 600
McLean, Virginia 22102
Attention: Allan B. Goldstein, Esq.
Karim Alibhai
801 Brickell A venue, PH2
Miami, Florida 33131
Fax: 305-442-9809
Innkeepers USA Limited Partnership
340 Royal Poinciana Way
Suite 306
Palm Beach, Florida 33480
Attention: Mark A. Murphy, Esq., General Counsel
Gardere Wynne Sewell LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201-4761
Attention: Cynthia Nelson, Esq.
Hunton & Williams LLP
1900 K Street NW
Washington, DC 20006
Attention: John M. Ratino, Esq.
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3.1 0 Time Is of the Essence. Time is of the essence under this
Guaranty and any amendment, modification, or revision of this Guaranty.
3.11 Financial Interest in the Borrower; Financial Statements. Each
Guarantor represents and warrants that Guarantor has a financial interest in the Borrower, that
he/it has examined or has had an opportunity to examine all documents referred to herein, that
he/it has full power, authority and legal right to execute and deliver this Guaranty and that this
Guaranty is a binding legal obligation ofthe Guarantor.
3.12 Jurisdiction. Each of the parties hereto, to the extent permitted by
law, knowingly, intentionally and voluntarily (a) submits to personal jurisdiction in
Montgomery County, Maryland over any suit, action or proceeding by any person arising from
or relating to this Agreement, (b) agrees that any such action, suit or proceeding may be
brought exclusively in any state court of competent jurisdiction sitting in Montgomery County,
Maryland or any federal court for the southern division of the District of Maryland, (c) to the
fullest extent pennitted by law, agrees that it will not bring any action, suit or proceeding in
any other forum other than in Montgomery County, Maryland, and (d) agrees that Montgomery
County, Maryland is the proper venue for any suit, action or proceeding by any person arising
from or relating to the Agreement.
3.13 Disposition of Interests. Except as otherwise permitted by the
Loan Documents, Guarantor covenants and agrees that Guarantor shall not sell, assign,
transfer, encumber or dispose of, in any manner whatsoever, any interest in Borrower, whether
direct or indirect, without the prior written consent of Lender, which consent may be withheld
by Lender, in its sole and absolute discretion. Any unpermitted sale, assignment, transfer,
encumbrance or disposition, in any manner whatsoever, of or on said interest shall constitute a
default herein and in the Loan Documents.
3.14 MUTUAL WAIVER OF JURY TRIAL. THE LENDER AND
GUARANTOR EACH, ON BEHALF OF HIMSELF/ITSELF AND HIS/ITS SUCCESSORS
AND ASSIGNS, WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ALL
RIGHT TO TRIAL BY JURY OF ANY AND ALL CLAIMS BETWEEN THEM ARISING
UNDER THE LOAN DOCUMENTS, THIS GUARANTY, OR ANY OTHER DOCUMENTS
AND AGREEMENTS EXECUTED, DIRECTLY OR INDIRECTLY, IN CONNECTION
WITH THE LOAN TRANSACTION, AND ANY AND ALL CLAIMS ARISING UNDER
COMMON LAW OR UNDER ANY STATUTE OF ANY STATE OR THE UNITED
STATES OF AMERICA, WHETHER ANY SUCH CLAIMS BE NOW EXISTING OR
HEREAFTER ARISING, NOW KNOWN OR UNKNOWN. IN MAKING THIS WAIVER,
THE LENDER AND GUARANTOR ACKNOWLEDGE AND AGREE THAT ANY AND
ALL CLAIMS MADE BY THE LENDER AGAINST GUARANTOR AND ALL CLAIMS
MADE BY GUARANTOR AGAINST THE LENDER SHALL BE HEARD BY A JUDGE
OF A COURT OF PROPER JURISDICTION AND SHALL NOT BE HEARD BY A JURY.
THE LENDER AND GUARANTOR ACKNOWLEDGE AND AGREE THAT THIS
WAIVER OF TRIAL BY JURY IS A MATERIAL ELEMENT OF THE CONSIDERATION
FOR THIS TRANSACTION. THE LENDER AND GUARANTOR, WITH ADVICE OF
COUNSEL, EACH ACKNOWLEDGES THAT HE/IT IS KNOWINGLY AND
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VOLUNTARILY WAIVING A LEGAL RIGHT BY AGREEING TO THIS WAIVER
PROVISION.
3.15 Additional Miscellaneous Provisions. No delay or failure by
Lender to exercise any remedy against Borrower or Guarantor will be construed as a waiver of
that right or remedy. All remedies of Lender are cumulative. The captions and section
headings appearing in this Guaranty are included solely for convenience of reference and are
not intended to affect the interpretation of any provision of this Guaranty. In the event that the
provisions of this Guaranty are claimed or held to be inconsistent with any other instrument
evidencing or securing the Loan, or the obligations of Guarantor, the terms of this Guaranty
shall remain fully valid and effective. If Guarantor consists of more than one person or entity,
the obligations hereunder shall be joint and several and in no event shall the liability of any
guarantor be conditioned upon the liability of any other guarantor (whether or not all stated
guarantors actually execute and deliver this Guaranty or any other guaranty). When the
context in which the words are used in this Guaranty indicates that such is the intent, words in
the singular number shall include the plural and vice-versa. Use of the word "include",
"includes", or "including" in this Guaranty shall be read as though the phrase ", without
limitation," followed the same. The defined tenn "Guarantor" shall mean collectively the
parties constituting Guarantor hereunder or either of them, as the context suggests. If any one
or more of the provisions of this Guaranty should be determined to be illegal or unenforceable,
all other provisions shall remain effective. This Guaranty may be executed simultaneously in
any number of counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument. The parties hereto agree
that faxed signatures shall be deemed originals. Initially capitalized terms not otherwise
defined herein shall have the meanings given them by the Loan Agreement
3.16 Severabilitv. Every provision of this Guaranty is intended to be
severable. In the event any term or provision herein is declared to be illegal, invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction, such illegality,
invalidity or unenforceability shall not affect the balance of the terms and provisions hereof,
which tenns and provisions shall remain in full force and effect.
3.17 Sale of Loan. Lender and its successors and assigns hereby (i)
designates and appoints CapitalSource Finance LLC, a Delaware limited liability company,
and its successors and assigns ("CapitalSource"), to act as agent for Lender and its successors
and assigns under this Guaranty and all other Loan Documents, (ii) irrevocably authorizes
CapitalSource to take all actions on its behalf under the provisions of this Guaranty and all
other Loan Documents, (iii) irrevocably authorizes CapitalSource to exercise all such powers
and rights, and to perform all such duties and obligations hereunder and thereunder, (iv)
irrevocably agrees not to take any such action or exercise any such powers or rights
individually or otherwise other than through CapitalSource in its capacity as agent hereunder
and (v) agrees that any right to control or replace CapitalSource in its capacity as such agent
shall be exercised by at least a majority in interest of the holders of the
Obligations. CapitalSource, on behalf of and for the pro rata benefit of each of the holders of
the Obligations, shall hold all Collateral (as defined in the Loan Agreement) and receive all
payments of principal and interest, fees, charges and collections received pursuant to this
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Guaranty and all other Loan Documents. Borrower acknowledges that each Lender and its
successors and assigns transfers and assigns to CapitalSource the sole and exclusive right to act
as Lender's agent, to hold, possess and/or perfect security interests in all Collateral, enforce all
rights, receive all payments and perfonn all obligations of each Lender contained herein and in
all of the other Loan Documents. Borrower shall within ten ( 1 0) Business Days after
CapitalSource's reasonable request, take such further actions, obtain such consents and
approvals and duly execute and deliver such further agreements, amendments, assignments,
instructions or documents as CapitalSource may request to further evidence the appointment
and designation of CapitalSource as agent for each Lender and any other holders of the
Obligations.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHERECF, the undersigned has executed and delivered this Guaranty
UNDER SEAL as of the date first above written.
GUARANTOR:
___ [SEAL]
KARIM
r
I HEREBY CERTIFY, tnat on this /3 day before me a Notary
Public of said State, personally appeared Karim Alibhai own to me (or satisfactorily proven)
to be the person(s) whose name:; are subscribed to e fa ,egoing instrument and acknowledged
that he/she executed the same for the purposes therei co a7.
WITNESS my hand and :'iotarial Seal.
I
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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r'
\ \ '
STATE OF 1 01, c\c'-
INNKEEPERS USA LIMITED PARTNERSHIP,
a Virginia limited partnership
By: Innkeepers Financial Corporation, a Virginia
corporation, its General Partner
By: [SEAL]
CFO
)
! iJv'
I HEREBY CERTIFY, that on this _1_- day before me, the
undersigned Notary Public of said State, personally appeared Dennis Craven, who acknowledged
himself to be a Chief Financial Officer of Innkeepers Financial Corporation, a Virginia
corporation, the General Partner of Innkeepers USA Limited Partnership, a Virginia limited
partnership, known to me (or satisfactorily proven) to be the person whose name is
subscribed to the within instrument, and acknowledged that he/she executed the same for the
purposes therein contained as the duly authorized Chief Financial Officer of the general partner
said limited partnership by signing the name of the limited pmtnership by himself as Chief
Financial Officer of its general partner.
otarial Seal.
d lou; Woodward
,, CoiT;i5sinn # DD524326
::::: \L\R. 01, 2010
i i;.r;... Co., Inc.
My Commission Expires: 3\
1
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USA LIMITED
a Virginia limited partnership
By: Innkeepers Financial Corporation, a Virginia
corporation, its General Partner
By:

[SEAL]
Dennis Craven
CFO
(out+t..) OF bMf &\,TO \VIT:
I HEREBY CERTIFY, that on this oft\(l\lf\l! kr 2006, before me, the
undersigned Notary Public of said State, personally appeared Dennis Craven, who acknowledged
himself to be a Chief Financial Officer of Innkeepers Financial Corporation, a Virginia
corporation, the General Partner of Innkeepers USA Limited Patinership, a Virginia limited
partnership, known to me (or satisfactorily proven) to be the person whose name is
subscribed to the within instrument, and acknowledged that he/she executed the same for the
purposes therein contained as the duly authorized Chief Financial Officer of the general partner
said limited partnership by signing the name of the limited partnership by himself as Chief
Financial Officer of its general partner.
My Commission Expires: 3ll \ 1 D
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CS/Sheroton Raleigh (Nonrecourse Guarallly)
Exhibit A
Forms of Estoppel Agreements
[See Attached]
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[Letterhead of Phoenix Limited Partnership of Raleigh]
Genwood Raleigh LLC
1200 Brickel Avenue, Suite 1460
Miami, Florida 33131
Attn: Greg Denton
Lehman Brothers Holdings Inc.
399 Park Avenue
New York, New York 10022
Attn: Joseph J. Flannery
Re: Real property cmd improvements located on land comm01tly knawn as 421 S.
Gentleman:
Salisbury Street, Raleigh, North Carolina and further defined Oft Exhibit "A"
attached hereto (the "Property'')
LB Raleigh Hotel LLC ("Seller") is the current owner of the Property and intends to sell
the Property to Genwood Raleigh LLC ("Buyer''). It is proposed that Lehman Brothers Holdings
Inc. ("Lender") will finance the acquisition by Buyer of the Property. As a condition to the
consummation of the foregoing purchase and :financing, each ofBuyer and Lender has requested
that Phoenix Limited Partnership of Raleigh (''Landlord") certify as to the following matters.
Accordingly, Landlord hereby certifies to Buyer, its successors and assigns, Fidelity National
Title Insurance Company or any other title insurance company issuing an owners or mortgagee
policy of title insurance ("Title Company"), and Lender, its successors and assigns, as follows:
l. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in that certain Lease Agreement, dated as of March 29, 2000, between Landlord and
Raleigh Prism One Limited Partnership, predecessor in interest to Seller, as Tenant, as affected
by that certain Lease Modification Agreement No. 1, dated as of December 14; 2005, executed
by Landlord and Seller, successor in interest to' Tenant (collectively, the ''Lease").
2. Attached hereto as Exhibit B is a true, correct and complete copy of the Lease.
3. The Lease is in full force and effect and there are no amendments or
modifications thereto.
4. The term of the Lease commenced on July 1, 1999. The Expiration Date is June
30, 2011, with the right of Tenant to extend the term for two (2) consecutive periods of five (5)
years each.
5. Tenant has paid rent for the Leased Premises for the period up to and including
_____ __, 2006. The Monthly Base Rent and any Additional Rent (including the
Tenant's share of taxes, insurance premiums, common area costs, utility charges and other costs
passed through to Tenant pursuant to the terms of the Lease) payable by Tenant presently is
DALlAS l656079vl
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$ per month. No such rent has been paid more than one (1) month in advance of its
due date. No security deposit has been paid to Landlord by Tenant.
6. There are no outstanding uncured notices of default from Landlord to Tenant
under the Lease. To the best of Landlord's knowledge, (i) no default by Landlord or Tenant
exists in the perfonnance of any of their respective obligations under the Lease, and (ii) no event
has occurred which, with the passage of time and/or the giving of notice, would constitute a
default by Landlord or Tenant thereunder.
7. No notice of termination of the Lease has been served by Landlord on Tenant.
8. Landlord acknowledges that Seller intends to sell the hotel and assign its interest
in the Lease to Purchaser. Landlord hereby consents to such assignment. Buyer hereby agrees to
be bound by the terms and provisions of the Lease from and after the date on which the Lease is
assigned to Buyer. Notwithstanding anything to the contrary contained in the Lease, Landlord
hereby agrees Seller shall have no further obligations or liabilities under the Lease from and after
such date.
9. This Certificate shall inure to the benefit of and is intended for the sole benefit of
Buyer, its successors and assigns, the Title Company and Lender, its successors and assigns, and
shall be binding upon Landlord and its successors and assigns.
10. Landlord agrees to provide notice. of any violations of the Lease to Buyer and
Lender at their respective addresses stated above. Notwithstanding such notification, Lender
shall have no obligation to cure any default under the Lease.
11. The undersigned is authorized to act on behalf of Landlord and to certify to the
foregoing.
DALLAS l656079vl
PHOENIX LIMITED PARTNERSHIP OF RALEIGH,
a Delaware limited partnership
By: Acquisition Group Inc.,
its Managing General Partner
By: ________________________ ___
Name (Print):------------
Title: ______________________________ __
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[Letterhead of Phoenix Limited Partnership of Raleigh]
Genwood Raleigh LLC
1200 Brickell Avenue, Suite 1460
Miami, Florida 33131
Attn: Greg Denton
Lehman Brothers Holdings Inc.
399 Park Avenue
New York, New York 10022
Attn: Joseph J. Flannery
Re: Real property and improvements located on land commonly known as 421 S.
Gentleman:
Salisbury Street, Raleigh, North Carolina and further defined on Exhibit "A"
attached hereto (the "Property'?
LB Raleigh Hotel LLC ("Seller") intends to sell the Property to Genwood Raleigh LLC
("Buyer"). It is proposed that Lehman Brothers Holdings Inc. ("Lender') will :finance the
acquisition by Buyer of the Property. As a condition to the consummation of the foregoing
purchase and :financing, each of Buyer and Lender has requested that Phoenix Limited
Partnership of Raleigh (''Phoenix") certify as to the following matters. Accordingly, Phoenix
hereby certifies to Buyer, its successors and assigns, Fidelity National Title Insurance Company
or any other title insurance company issuing an owners or mortgagee policy of title insurance
(''Title Company''), and Lender, its successors and assigns, as follows:
1. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in that certain Access Agreement, dated as of June 1, 1999, between Phoenix and
Raleigh Prism One Limited Partnership, predecessor in interest to Seller (the "Ag:reement").
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
Agreement.
3. The Agreement is in full force and effect and there are no amendments or
modifications thereto.
4. The Licenses created pursuant to the terms of the Agreement are in full force and
effect and Phoenix has received no notice that Seller intends to cease use of or terminate any
License under the Agreement.
5. The term of the Agreement commenced on June 1, 1999. The Agreement expires
upon termination of the Office Lease, a copy of which is attached hereto as Exhibit C.
6. There are no outstanding or delinquent amounts owed by Seller to Phoenix under
the Agreement.
421 S. Salisbury St, Raleigh, North Carolina
DALLAS 1657tSOvl
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7. There are no outstanding uncured notices of default from Phoenix to Seller under
the Agreement. To the best of Phoenix's knowledge, (i) no default by Phoenix or Seller exists in
the performance of any of their respective obligations under the Agreement, and (ii) no event has
occurred which, with the passage of time and/or the giving of notice, would constitute a default
by Phoenix or Seller thereunder.
8. No notice of tennination of the Office Lease, the Agreement or any of the
Licenses created pursuant to the terms of the Agreement has been served by Phoenix on Seller.
9. Phoenix acknowledges that Seller intends to sell the hotel and assign its interest as
Tenant under the Agreement to Purchaser. Phoenix hereby consents to such assignment.
Phoenix approves of as an Approved Franchisor. Buyer hereby agrees
to be bound by the terms and provisions of the Agreement from and after the date on which the
Agreement is assigned to Buyer. Notwithstanding anything to the contrary contained in the
Agreement, Phoenix hereby agrees Seller shall have no further obligations or liabilities under the
Agreement from and after such date.
10. This Certificate shall inure to the benefit of and is intended for the sole benefit of
Buyer, its successors and assigns, the Title Company and Lender, its successors and assigns, and
shall be binding upon Phoenix and its successors and assigns.
11. Phoenix agrees to provide notice of any violations of the Agreement to Buyer and
Lender at their respective addresses stated above. Notwithstanding such notification, Lender
shall have no obligation to cure any default under the Agreement.
12. The undersigned is authorized to act on behalf of Phoenix and to certify to the
foregoing.
PHOENIX LIMITED PARTNERSHIP OF RALEIGH,
a Delaware limited partnership
By: Acquisition Group Inc.,
its Managing General Partner
By. ____________________________ _
Name (Print):------------
Title:---------------
421 S. Salisbury St., Raleigh, North Carolina
DALLAS J657180vl
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,_.--
[Letterhead of Phoenix Limited Partnership ofRaleigh]
Genwood Raleigh LLC
1200 Brickel Avenue, Suite 1460
Miami, Florida 33131
Attn: Greg Denton
Lehman Brothers Holdings Inc.
399 Park Avenue
New York, New York 10022
Attn: Joseph J. Flannery
Re: Real property and improvements located on land commonly known as 421 S.
Gentleman:
Salisbury Street, Raleigh, North Carolina and further defined on Exhibit "A"
attached hereto (the "Property'?
LB Raleigh Hotel LLC ("Seller'') intends to sell the Property to Genwood Raleigh LLC
("Buyer"). It is proposed that Lehman Brothers Holdings Inc. ("Lender'') will finance the
acquisition by Buyer of the Property. As a condition to the consummation of the foregoing
purchase and financing, each of Buyer and Lender bas requested that Phoenix Limited
Partnership of Raleigh ("Phoenix") certify as to the following matters. Accordingly, Phoenix
hereby certifies to Buyer, its successors and assigns, Fidelity National Title Insurance Company
or any other title insurance company issuing an owners or mortgagee policy of title insurance
("Title Company"), and Lender, its successors and assigns, as follows:
1. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in that certain Parking License, dated as of November 18, 1997, between The City of
Raleigh (the "City''), predecessor in interest to Phoenix, and Raleigh Plaza Hotel Limited
Partnership, predecessor in interest to Seller (the "License").
2. Attached hereto as Exhibit B is a true, correct and complete copy of the License.
3. The License is made pursuant to that certain Parking Contract recorded in Book
3033, Page 672 ofthe Wake County Register of Deeds, is in full force and effect, and there are
no amendments or modifications thereto.
4. The term of the License commenced on November 18, 1997, and is scheduled to
expire on November 17, 2007, with the right to extend the term for two (2) successive periods of
ten (10) years each.
5. Monthly payment for spaces under the License is $ . Payment for said
spaces will next be adjusted on 200_. All payments and other charges, including
payments to the overage fund, payable by Seller under the License to the date hereof have been
paid.
421 S. Salisbury St., Raleigh, North Carolina
DALLAS 1656074vl
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Pg 47 of 49
6. There are no outstanding uncured notices of default from Phoenix to Seller under
the License. To the best of Phoenix's knowledge, (i) no default by Phoenix or Seller exists in the
performance of any of their respective obligations under the License, and (ii) no event has
occurred which, with the passage of time and/or the giving of notice, would constitute a default
by Phoenix or Seller thereunder.
7. No notice oftennination of the License has been served by Phoenix on Seller.
8. Phoenix acknowledges that Seller intends to sell the hotel and assign its interest in
the License to Purchaser. Phoenix hereby consents to such assignment. Buyer hereby agrees to
be bound by the terms and provisions of the License from and after the date on which the
License is assigned to Buyer. Notwithstanding anything to the contrary contained in the License,
Phoenix hereby agrees Seller shall have no further obligations or liabilities under the License
from and after such date.
9. This Certificate shall inure to the benefit of and is intended for the sole benefit of
Buyer, its successors and assigns, the Title Company and Lender, its successors and assigns, and
shall be binding upon Phoenix and its successors and assigns.
10. Phoenix agrees to provide notice of any violations of the License to Buyer and
Lender at their respective addresses stated above. Notwithstanding such notification, Lender
shall have no obligation to cure any default under the License.
11. The undersigned is authorized to act on behalf of Phoenix and to certify to the
foregoing.
421 S. Salisbury St., Raleigh, North Carolina
DALLAS 1656074vl
PHOENIX LIMITED PARTNERSHIP OF RA.LEIGH,
a Delaware limited partnership
By: Acquisition Group Inc.,
its Managing General Partner
By. ____________________________ __
Name (Print):-------------
Title:---------------
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[Letterhead ofPhnenix Limited Partnership of Raleigh]
April_, 2006
Gencom AcquisitionLLC
1200 Brickell Avenue, Suite 1460
Miami, Florida 33131
Attn: Greg_Denton
Lehman Brothers Holdings Inc .
. 399 Park Avenue
New York, New York 10022
Attn: Joseph J. Flannery
Re: Real. property. and improvements located on lilnd commonly known as 421 S.
Street, Raleigh, North Carolina tmii further defined on Exhibit "A"
attm:Jscil herew (the "Property")
Ladies and Gentlemen;
Gencom Acquisition LLC ("Buyer'') has entered into an agreement to purchase the
Property from LB Raleigh Hotel LLC ("Seller"), and jt proposed that Lehman Br<)thers
Holdings Inc. ("Lender") will finance the acquisition by Buyer of the Property: As a condition to
the consummation of the foregoing purcllase and financing, each of Buyer and Lender has
requested that Phoenix Limited Partnership of Raleigh (''Phoenix") certify as to. the following
matters. Accordingly, Phoenix hereby cerJfies to Buyer, its successors and assigns, Fidelity
National Title Insurance Company or any other title insurance company issuing an owner's or
mortgagee policy of title insurance ("Title Company"), and Lender and its successors and
assigns, as follows:
1. Gapitalized terms used herein bUt. not otherwise defined shall have the meaning
set fortlJ in that certain Easement Agreement recorded on March 21, 2000 in Book 8543, Page
1458 of the Wake County Register of Deeds (the "Agreement").
2. Attached hereto as Exhibit "B" -is a true, correct and complete copy of the
Agreement.
3. The Agreem.mt has not been amended or modified, and is in full force and effect.
4. As of the date hereof, neither Phoenix nor LB Raleigh HotelllC, as successor-
in-interest to Prism, haS constructed the Elevated WalkWay. Each of Phoenix and LB Raleigh
. Hotel LLC,. as successor-in-interest to Prism, has. a continued right to construct the Elevated
Walkway and to use and enjoy the Easements in accordance with the tenus and conditions of the
Agreement.
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Gencom Acquisition LLC
Lehman Brothers Holdings Jnc.
April_, 2006
Page2
5. There are no current violations of any provision set fo..-th in the Agreement.
6. This Certificate shall insure to the benefit of and is intended for the sole benefit of
Buyer, its successors and Msigns, the Title Company and Lender, its successors and assigns, and
shall be binding upon Phoenix and its successors am). assigns.
7. Phoenix agrees to provide of any violations of the Agreement to Buyer and
Lender at their respective addresses stated above.
8. The undersigned is authorized to act on behalf of and to e<:rtify to the
foregoing.
PHOENIX LIMITED PARTNERSHIP OF RALEIGH,
a Delaware limited partnership
By: Acquisition Group, lnc.,
its general partner .

Name:
Title:
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