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Cerberus/Chatham Committment Letter

Cerberus/Chatham Committment Letter

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Published by: DealBook on Aug 29, 2011
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08/29/2011

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K&E 18930801
EXHIBIT FCerberus/Chatham Commitment Letter
 
DOC ID-15930869.19
INKACQUISITIONLLCINKACQUISITIONIILLC
c/o Cerberus Real Estate Capital Management, LLC299 Park Avenue, 23rd FloorNew York, New York 10171May16, 2011Innkeepers USA Trust340 Royal Poinciana Way, Suite 306Palm Beach, Florida 33480Attn: Marc BeilinsonChief Restructuring Officer
Amended and RestatedBinding Commitment AgreementRegarding the Acquisition and Restructuringof Certain Subsidiaries of Innkeepers USA Trust
INK Acquisition LLC (“INK I”) and INK Acquisition II LLC(“INK II”, and together with INK I,individually or collectively, as the context may require, “New HoldCo”), Cerberus Series FourHoldings, LLC (“Cerberus”) and Chatham Lodging Trust (“Chatham”, and together with Cerberus,the “Plan Sponsors”), are pleased to present this amended and restated letter (the “Amended andRestated Commitment Letter”) to certain whollyowned direct and indirect subsidiaries of InnkeepersUSA Trust (together with all of its wholly owned direct and indirect subsidiaries, “Innkeepers” or the“Company”), that are identified on Exhibit A attached hereto (collectively, the “Fixed/FloatingDebtors”), which sets forth, among other things, the Plan Sponsors’ binding and irrevocablecommitment to provide equitycapital (the “Commitment”) for the restructuring of the debt andequityof the Fixed/Floating Debtors (the “Transaction”), resulting in New HoldCo directly orindirectlyowning all of the equity interests in the Fixed/Floating Debtors on the terms and subject tothe conditions set forth in the amended and restated term sheet (the “Amended and Restated TermSheet”) attached hereto as Exhibit B. This Amended and Restated Commitment Letter, together withthe Amended and Restated Term Sheet, the other Exhibits hereto and the other documents submittedherewith, constitute our Investment Documents and Bid (each as defined in the Bidding ProceduresOrder;
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the “Bid”). The undersigned hereto are collectively referred to as “Parties” and each a“Party.”We believe that the Commitment provides substantial value to the Fixed/Floating Debtors and putsthe Company on the path towards a consensual emergence from chapter 11 on an enterprise basispursuant to a confirmed chapter 11 plan. There are no due diligence or financing contingencies of anykind in connection with the Commitment, other than the availability of the Midland Financing (asdefined in the Bidding Procedures Order).
The Sponsors
The Plan Sponsors are each uniquely qualified to consummate the Transaction. Established in 1992,Cerberus Capital Management, L.P. is one of the world’s leading private investment firms withapproximately $23 billion under management in funds and accounts. Cerberus’ investors include
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All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Debtors’ Plansof Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, dated May 12, 2011, (the “Fixed/Floating Plan”).
 
DOC ID-15930869.19
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prominent state and local pension funds, charitable foundations, university endowments and insurancecompanies, as well as family savings. Cerberus is headquartered in New York City, with affiliateand/or advisory offices in the U.S., Europe and Asia. Cerberus’ dedicated team of investment andoperations professionals is active in private equity, distressed investments (corporate debt, mortgage,NPLs, structured products) lending/loans and real estate. On the lodging side, Cerberus, through anaffiliate, currently owns 5,160 keys including the Sheraton Waikiki (Waikiki, HI), Moana Surfrider(Waikiki, HI), Royal Hawaiian (Waikiki, HI), Princess Kaiulani (Waikiki, HI), Sheraton Maui (Maui,HI) and the Palace Hotel (San Francisco, CA). Additionally, Cerberus is in contract to acquireSilverleaf Resorts, a time-share vacation company.Chatham is aself-advised real estate investment trust that invests in upscale extended-stay hotels andpremium-branded select-service hotels. Chatham currently owns 13 hotels with an aggregate of 1,650rooms/suites in nine states and has one additional hotel under contract to purchase in Pittsburgh, PA.Island Hospitality Management, Inc. and its affiliates (collectively, “IHM”) are engaged in themanagement of hotels throughout the United States and is experienced in the various phases of hoteloperations. IHM currently provides comprehensive hotel management services to all but one of thehotels owned by the Fixed/Floating Debtors. Chatham currently has the capacity to invest over $300million in new hotel assets. Additional information about Chatham may be foundatwww.chathamlodgingtrust.com.The specific elements of our Commitment are set forth in this Amended and RestatedCommitment Letter, the Amended and Restated Term Sheet and the other InvestmentDocuments. This Amended and Restated Commitment Letter is not an offer or a solicitation withrespect to anysecurities of Innkeepers or a solicitation of acceptances of a chapter 11 plan.1.Conditions. The Transaction is subject to the satisfaction of the terms andconditions contained in the Amended and Restated Term Sheet and the Fixed/Floating Plan.2.Confidentiality. The Investment Documents are being delivered to you on theunderstanding that neither the Investment Documents, nor any of the terms or substance thereof, shallbe disclosed, directly or indirectly, to anyother person except (i) to your officers, directors,employees, attorneys, accountants and financial, legal and other advisors on a confidential and need-to-know basis; (ii) as required by applicable law, including the Bankruptcy Code or compulsorylegal process (in which case you agree to inform us promptly thereof); (iii) in connection with anyexercise of remedies under or in connection with a breach of this Amended and RestatedCommitment Letter; (iv) to
Midland Loan Services, a division of PNCBank, NationalAssociation, or any successor thereto, solelyin its capacityas special servicer for the C6 and C7Trusts that own and hold the Fixed Rate Pool Mortgage Loan Agreement Claims (“Midland”)and its officers, directors, employees, attorneys, accountants and financial, legal and otheradvisors on a confidential and need-to-know basis,
and Lehman ALI, Inc. (“Lehman”), or (v) asotherwise agreed by the Parties hereto. Notwithstanding the foregoing, the Investment Documentsmaybe (a) disclosed toother parties in interest in the Chapter 11 Cases in connection with theFixed/Floating Auction (as defined in the Bidding Procedures Order), and (b) filed with theBankruptcyCourt in connection with approval of the Disclosure Statement and the Fixed/Floating Planas a result of New HoldCo being declared the Successful Bidder at the Fixed/Floating Auction.3.Due Diligence/Financing. We have completed our diligence review, andintend to utilize the Midland Financing. The form of the Binding Commitment Regarding theAcquisition and Restructuring of Certain Subsidiaries of Innkeepers USA Trust addressed toMidland, that we are prepared to execute (the “New HoldCo/Midland Commitment”) is attached

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