10000003720

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEWYORK

)
In re: ) Chapter 11
)
INNKEEPERS USA TRUST, et al., ) Case No. 10-13800 (SCC)
)
Debtors. ) Jointly Administered
)
NOTICE OF FILING OF UNSEALED OBJECTION OF FIVE MILE
CAPITAL PARTNERS LLC TO DEBTORS MOTION FOR AN
ORDER (A) AUTHORIZING THE DEBTORS TO ASSUME THE
PLAN SUPPORT AGREEMENT AND (B) GRANTING RELATED RELIEF
PLEASE TAKE NOTICE that on August 23, 2010, Five Mile Capital Partners
LLC (Five Mile) filed under seal the Objection of Five Mile Capital Partners LLC to
Debtors Motion for an Order (A) Authorizing The Debtors to Assume The Plan Support
Agreement and (B) Granting Related Relief (the PSA Objection) [Docket No. 281].
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PLEASE TAKE FURTHER NOTICE that on August 31, 2010, the United
States Bankruptcy Court for the Southern District of New York entered the Order
Unsealing Objections and other Replies to Motion to Assume Plan Support Agreement
(the Unsealing Order) [Docket No. 356].
PLEASE TAKE FURTHER NOTICE that, pursuant to the Unsealing Order,
Five Mile hereby files its unsealed PSA Objection, which is attached hereto as Exhibit A.
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In addition to filing the PSA Objection under seal, Five Mile filed a placeholder indicating that the PSA
Objection had been filed under seal. [Docket No. 280].
Dated: August 31, 2010
New York, New York
By: /s/ Daniel A. Fliman
David M. Friedman
Adam L. Shiff
Daniel A. Fliman
KASOWITZ, BENSON, TORRES
& FRIEDMAN LLP
1633 Broadway
New York, New York 10019
Telephone: (212) 506-1700
Facsimile: (212) 506-1800
Attorneys for Five Mile Capital Partners
LLC
Exhibit A
FILED UNDER SEAL
David M. Friedman
Adam L. Shiff
Daniel A. Fliman
& FRIEDMAN LLP
1633 Broadway
Telephone: (212) 506-1700
Facsimile: (212) 506-1800
Attorneys for Five Mile Capital Partners LLC
SOUTHERN DISTRICT OF NEW YORK
Jnre
INNKEEPERS USA TRUST, et al.,
Debtors.
Chapter 11
Case No. 10-13800 (SCC)
(Jointly Administered)
OBJECTION OF FIVE MILE CAPITAL PARTNERS LLC TO DEBTORS'
MOTION FOR AN ORDER (A) AUTHORIZING THE DEBTORS TO ASSUME
THE PLAN SUPPORT AGREEMENT AND (B) GRANTING RELATED RELIEF
Five Mile Capital Partners LLC and its affiliates (collectively, "Five Mile"), by and
through the undersigned counsel, submits this objection (the "Objection"), to the Debtors'
Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B)
Granting Related Relief[Docket No. 15] (the "PSA Motion"), filed by the debtors and debtors-
in-possession (collectively, "Innkeepers" or the "Debtors") in the above-captioned, jointly-
administered chapter 11 cases (the "Bankruptcy Cases"). In support of this Objection, Five Mile
respectfully represents as follows:
FILED UNDER SEAL
PRELIMINARY STATEMENT
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The Debtors have started this case off on the wrong track and their ill-conceived efforts
should immediately be curtailed before any more damage is done to the reorganization process.
Already, the Debtors' pursuit of the PSA has spawued a request for an examiner, a motion for
Rule 2004 examinations and other motion practice that has needlessly caused the incurrence of
administrative expenses devoid of any benefit to the estates. The Debtors should know better:
they are represented by seasoned professionals who all must recognize that one does not begin a
case by seeking the Court's approval of an unvetted insider transaction that has not been market-
tested. Their willingness to proceed in this manner nonetheless casts serious doubts about their
capacity to observe rudimentary fiduciary duties.
The PSA an unprecedented and highly-prejudicial agreement intended to side-step
fundamental bankruptcy protections in order to advantage Apollo, the Debtors' controlling
shareholder, and Lehman, with whom Apollo has cut a side deal. If approved, the PSA would
deprive all constituents (other than Lehman and Apollo) any say in the Debtors' reorganization.
What is especially troubling is that by caving in to Apollo's demands, the Debtors have never
properly evaluated this deal: they never solicited competing bids, never assessed other plan
options, never contacted outside potential investors, never asked other creditors to participate,
and have consistently refused to interact with any other constituents and to even consider
alternative proposals. The reason for this is clear: Apollo knows that if the Debtors market-test
this transaction, it will immediately become evident that other parties are ready and willing to
make higher and better offers. Indeed, as set forth herein, Five Mile has presented a commitment
letter to Midland (Special Servicer for more than $825 million of Fixed Rate Mortgage claims)
Capitalized terms used in this Preliminary Statement, but not defined, are ascribed the definitions contained
elsewhere in this Objection.
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which would value the Debtors at $1.04 billion, which is higher than the valuation of$915
million in the PSA and would provide more value than the PSA through, among other things,
Five Mile's investment of$236.6 million of new equity capital.
At every tum, Apollo, Lehman and Innkeepers have attempted to conceal Apollo's
involvement. Indeed, to this day the Debtors maintain the artifice that the PSA is unrelated to
the Lehman-Apollo transaction. But the evidence speaks for itself. It is obvious that since at
least Apri12010, Lehman, Apollo and Innkeepers all agreed that Apollo (and no other entity)
would acquire 50% of the reorganized debtors' equity. Since then, Apollo, Lehman and
Innkeepers have worked together to document the deal (the "Apollo-Lehman-Innkeepers
Transaction"). Despite Apollo's central role, at the last minute before the chapter 11 filing, the
parties revised the transaction documents by dropping any mention of Apollo from the PSA.
Then, upon the chapter 11 filing, Innkeepers shockingly failed to disclose the fact that Apollo
would take back half of the company or the existence of the Stock Sale Term Sheet whereby it
would do so. Again, the reason for this is clear: Innkeepers realized that Apollo's involvement
would invoke heightened scrutiny over the deal and raise serious confirmation concerns since an
existing equity holder would improperly receive an exclusive opportunity to purchase new equity
in contravention of the absolute priority rule and the new value exception.
And, even if the PSA embodied a favorable transaction for the estates (and it plainly does
not) the PSA imposes no commitments upon Lehman to proceed. Rather, Lehman receives
under the PSA a "free option" to pursue a plan consistent with the PSA, if it so chooses. On the
other hand, the PSA imposes massive obligations on the Debtors causing insurmountable harm.
The PSA sets in motion a restructuring under terms that have never been subjected to market
scrutiny or competition; all while vesting current insiders with exclusive upside and control. The
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plan contemplated in the PSA is destined to fail, and trying to achieve confirmation is a futile
effort wasting time and resources. The Debtors cannot hijack exclusivity or hide behind the
standards applicable to contract assumption under section 365 of the Bankruptcy Code for that
ill-fated purpose.
Approving the PSA also is entirely unnecessary. If Lehman is committed to this deal
(and it has represented to its bankruptcy court that it "will maximize recovery") it will support a
corresponding plan even without the highly prejudicial protections sought. And, critically, the
Debtors have other- and better- options, which they have wrongly ignored. Five Mile, for
example, has already put forward a higher and better restructuring proposal- which would still
be subject to higher and better offers. However, the Debtors have shut parties such as Five Mile
out, by refusing to grant due diligence access, refusing to run any process, and refusing to engage
in meaningful discussions. The Debtors have abandoned their fiduciary duties to pursue
alternatives that maximize stakeholder recovery and approving the PSA will only encourage that
malfeasance by providing the Debtors a contractual cover.
For these reasons, and those set forth below, Five Mile respectfully requests that the
Court deny the Debtors' request for authority to assume the PSA.
JURISDICTION
1. The United States Bankruptcy Court for the Southern District of New York (the
"Court") has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334. This matter is
a core proceeding within the meaning of28 U.S.C. 157(b)(2).
2. Venue is proper pursuant to 28 U.S.C. 1408 and 1409.
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BACKGROUND
A. The Debtors' Mortgage Debt Pools
3. Prior to the Petition Date (as defined below), the Debtors incurred approximately
$1.29 billion of secured debt, consisting of(a) a securitized mortgage loan in the face amount of
$825 million (the "Fixed Rate Mortgage"), collateralized by 45 of the Debtors' hotel properties
(the "Fixed Rate Mortgage Collateral"), (b) a floating rate senior mortgage loan in the face
amount of $250 million (the "Floating Rate Mortgage") for which Lehman ALI, Inc. ("Lehman")
is the sole lender, collateralized by 20 hotel properties (the "Floating Rate Mortgage Collateral"),
and a junior mezzanine loan in the face amount of $118 million secured by the same 20 hotels,
and (c) seven additional secured mortgage loans (the "Individual Mortgages") ranging in
amounts from approximately $24 million to $48 million, each secured by individual properties,
with one additional mezzanine loan related to one of the Individual Mortgages.
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4. The Fixed Rate Mortgage has been assigned to two CMBS trusts, LB-UBS
Commercial Mortgage Trust 2007-C6 and LB-UBS Commercial Mortgage Trust 2007-C7, for
each of which Midland Loan Services, Inc. ("Midland") is the special servicer. Pursuant to the
applicable Pooling and Servicing Agreements, each trust holds a pool of commercial mortgages
(including interests in the Fixed Rate Mortgage) for the benefit of its certificate holders.
5. Five Mile, among other things, has entered into a commitment letter
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, dated July
16, 2010, wherein Five Mile commits to lend the Debtors up to $50,750,000 as post-petition
senior secured super-priority debtor-in-possession financing (the "Five Mile DIP Financing").
2
See Amended Declaration of Dennis Craven, Chief Financial Officer of Innkeepers USA Trust, In Support
of First Day Pleadings [Docket No. 33] '111! 8, 25-37.
A copy of the commitment letter is attached as "Exhibit A" to the Debtors' Debtors' Motion for the Entry
of an Order Authorizing the Debtors to Obtain Postpetition Financing from Five Mile Capital Partners on a
Priming Basis Pursuant to Sections 364(c)(J), 364(c)(2), 364(c)(3), and 364(e) of the Bankruptcy Code [Docket No.
201].
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The Five Mile DIP Financing is scheduled for a final hearing contemporaneous with the PSA
Motion.
B. Pre-Petition Negotiations Among
Innkeepers, Apollo And Lehman
6. On March 16, 2010, Innkeepers received several default notices from Marriott
International Inc. ("Marriott") claiming that Innkeepers failed to satisfy its property improvement
plan requirements ("PIPs") at 23 hotels constituting a default under Marriott's franchise
agreements (the "PIP Defaults"). Marriott gave Innkeepers ninety days to cure the PIP Defaults,
causing the franchise agreements to terminate automatically on June 14, 2010 without a cure of
the PIP Defaults. The Debtors and Marriott entered into two forbearance agreements extending
the cure period to June 28, 2010, and July 18,2010, respectively.
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Pursuant to the Five Mile DIP
Financing, Five Mile has stepped up to ensure that the necessary PIPs could be performed at the
hotels, securing the Fixed Rate Mortgage.
7. In mid-April, 2010, Lehman requested a meeting with Innkeepers to discuss
Innkeepers' interest payment defaults under various lending arrangements. (Apollo Dep. Tr.
75:9-19; 77:3-16).
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At that meeting- attended by representatives for Innkeepers, Lehman, and
Apollo Investment Corporation ("Apollo"), Iunkeepers' ultimate 100% shareholder- Marc
Beilinson ("Beilinson"), the Debtors' Chief Restructuring Officer, discussed the company's lack
ofliquidity, the Marriot default letters, and Innkeepers' need to begin discussions with creditors
immediately regarding a potential restructuring. (!d. 75:20-76:7). In particular, the attendees
4
Declaration Of Karl Grover In Support Of Marriott International, Inc.'s Motion For A Limited
Modification Of The Automatic Stay To Complete De-Identification Of A Single Hotel In Accordance With The
?repetition Termination Of The Franchise Agreement Which Is Effective On August 30, 20 I 0. [Docket No. 132]
1]23.
Citations herein to "Apollo Dep. Tr. __ "refer to portions of the transcript of the August 18, 2010
deposition of Schuyler Hewes, Apollo's Rule 30(b)(6) designee, a copy of which is attached as Exhibit A hereto.
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discussed Lehman exchanging its Floating Rate Mortgage for equity in reorganized Innkeepers.
(ld. 35:10-36:4).
8. Between the first meeting in mid-April, 2010 and April22, 2010, Lehman
considered the construct for its potential role in Innkeepers' restructuring. (Lehman Dep. Tr.
47:20-48:10).
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Lehman asked that Innkeepers, through its financial advisor Moelis & Company
("Moelis"), prepare a presentation in anticipation of their next meeting with Moelis's view of
Innkeepers' capital and debt structure, and the general outline of a restructuring. (Debtors Dep.
Tr. 116:14-24).
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During the days between the two meetings, Apollo considered internally the
possibility of purchasing a portion of the new equity that Apollo was causing Innkeepers to give
to Lehman. (Apollo Dep. Tr. 216:10-24).
9. On April22, 2010, Innkeepers, Lehman, and Apollo met again to discuss
Innkeepers' restructuring. (Apollo Dep. Tr. 80:2-81 :8). At that time, the participants already
knew that any deal would involve Apollo (to the exclusion of all other parties) purchasing a
portion of Lehman's new equity. See (Lehman Dep. Tr. 72:9-13) ("Q. So it is correct that from
the beginning of these negotiations, Apollo was to be the investor? ... A. Yes."). At the
meeting, Moelis provided the participants a presentation containing its valuation ranges for the
Innkeepers collateral showing, among other things, its estimates that the Fixed Rate Mortgage
Collateral was worth between $425 million and $575 million and the Floating Rate Mortgage
Collateral was worth between $150 million and $190 million (the "Moelis April 22
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Citations herein to "Lehman Dep. Tr. __ "refer to portions of the transcript of the August 19, 2010
deposition of Michael Lascher, Lehman's Rule 30(b)(6) designee, a copy of which is attached as Exhibit B hereto.
7
Citations herein to "Debtors Dep. Tr. __ "refer to portions of the transcript of the August 12, 2010
deposition of Marc Beilinson, the Debtors' Rule 30(b)(6) designee, a copy of which is attached as Exhibit C hereto.
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Presentation"). (Debtors Dep. Ex. 15, at 12; Exhibit C-1 hereto).
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The Moelis April22
Presentation also contained a slide called "Illustrative Pro Forma Structure" with the Fixed Rate
Mortgage reduced to between $400 million and $575 million, and the Floating Rate Mortgage
reduced to between $0 and $50 million. (!d., at 13). That slide also listed "Lehman/Investor" as
holding "95%" of new equity. Lehman understood that "Investor" meant Apollo (to the
exclusion of any other party). See (Lehman Dep. Tr. 71 :20-72:2).
1. Hiding Apollo's Involvement
10. Between April22, 2010 and the Petition Date, Innkeepers, Apollo, and Lehman
worked in tandem to identify terms and to document a deal. Originally, the parties worked on
one term sheet reflecting the full transaction contemplated, including the restructuring terms and
Lehman's sale of equity to Apollo. See (Lehman Dep. Exs. 12, 13, 14; Exhibits B-1, B-2 and B-
1 hereto, respectively).
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Throughout, that term sheet provided for the execution of a plan
support agreement. (!d.).
11. During months of discussions, all parties contemplated the plan support
agreement would be signed by Innkeepers, Lehman and Apollo. See (Lehman Dep. Ex. 13, at 6;
Exhibit B-2 hereto) (June 17, 2010 Dechert draft term sheet with a condition precedent that
"Lehman, Apollo, and the Company execute[] a plan support agreement."); (Lehman Dep. Ex.
14, at 6; Exhibit B-3 hereto) (June 22, 2010 Paul Weiss draft term sheet providing same);
(Debtors Dep. Ex. 14, at 12-13; Exhibit C-2 hereto) (July 7, 2010 Paul Weiss draft term sheet
providing same).
Citations herein to "Debtors Dep. Ex._" refer to exhibits marked at the August 12, 2010 deposition of
Marc Beilinson, the Debtors' Rule 30(b )( 6) designee.
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Citations herein to "Lehman Dep. Ex. "refer to exhibits marked at the August 19, 2010 deposition of
Michael Lascher, Lehman's Rule 30(b)(6) designee.
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12. On July 7, 2010, Paul Weiss (Apollo's counsel) circulated documents that, for the
first time, separated the term sheet into two documents, one for Lehman's sale of equity to
Apollo and another for the restructuring. (/d.). Paul Weiss's transmittal email explained: "As
discussed last week, we are attaching two termsheets (i) one relating to the proposed agreements
between Lehman and InnKeepers and (ii) the other relating to those between Lehman and AIC.
We think this approach more accurately reflects the transactions under discussion." (!d.). Apollo
still expected that they would sign the plan support agreement, which related solely to the
restructuring, not the stock sale from Lehman. (!d.).
13. On July 14, 2010,just five days before the filing, Dechert (counsel to Lehman)
sent Apollo's internal counsel an email, with a copy to others including Mr. Beilinson, listing
"terms on which Lehman will resolve the open issues with Apollo." (Lehman Dep. Ex. 2;
Exhibit B-4 hereto). One of those terms was that "AIC will not be a signatory to the PSA."
(!d.) (emphasis added).
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Lehman also demanded: "AIC or an affiliate of AIC shall be the
purchaser of the New Equity. Lehman will not consent to a third party purchaser." (/d.)
(emphasis added). Accordingly, despite the fact that Apollo was always expected to sign a plan
support agreement, and it was certain Apollo was the buyer of Lehman's new equity, the final
version of the plan support agreement filed with this Court (the "PSA") contained no mention of
Apollo. See generally, PSA.
14. Thus, as the Petition Date grew closer, the parties decided to remove any
reference to Apollo from the PSA or filings with this Court. While the explanation presented at
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Mr. Lascher, Lehman's Rnle 30(b)(6) designee, who was intimately involved in the negotiations, could not
explain why his counsel insisted that Apollo not sign the PSA. (Lehman Dep. Tr. 15:24-16:6).
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the deposition of Apollo was that it wanted to make clear it had no involvement in the PSA
11
,
given the history of negotiations (and Apollo's involvement therein) and that the Innkeepers deal
is contingent upon Lehman's ability to sell its new shares to Apollo, that reason is unpersuasive.
More likely, the parties removed all reference to Apollo in what was filed with this Court
because they recognized the apparent impropriety of its involvement in what has been heralded
as an arms-length deal. Indeed, that reason is consistent with the fact that Apollo's role was not
mentioned in any first day filings, but only referred to later by supplement, and that despite that
the transactions are undoubtedly intertwined and interdependent, Innkeepers- to this date- has
not filed the Stock Sale Term Sheet (as defined below) with this Court.
2. Mitigating Apollo's Guaranty
15. On June 29,2007, as part of the acquisition that placed Apollo in control of the
Debtors and layered the Fixed Rate Mortgage and Floating Rate Mortgage, Apollo executed a
Required Capital Improvements Guaranty (the "Apollo Guaranty").
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(Lehman Dep. Ex. 3;
Exhibit B-5 hereto). Therein, Apollo guaranteed Innkeepers' obligations to complete certain
capital improvements with respect to the Fixed Rate Mortgage Collateral. (!d.).
16. The history of negotiations regarding the Apollo-Innkeepers-Lehman Transaction
reveals that one of Apollo's primary motivations in committing to purchase equity to take control
of the Debtors' reorganization process, is to relieve the obligations under the Apollo Guaranty.
17. Originally, Lehman proposed that Apollo mitigate its exposure by making an
equity contribution of an unspecified amount "in respect of its guarantee of the Company's PIP
obligations with respect to the Fixed Rate Pool" and loan up to $75 million to be used for PIPs
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(Apollo Dep. Tr. 228:18-21) ("So the concept that we would contemplate signing the plan support
agreement simply doesn't make any sense. We had nothing to support a restructuring with.").
12
Midland has sued Apollo in state court for specific performance under the Apollo Guaranty.
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and cycle renovation. (Lehman Dep. Ex. 13; Exhibit B-2 hereto) (Jnne 17,2010 Dechert draft).
18. Apollo rejected that concept outright, proposing instead an optional $5 million
capital commitment for PIPs in exchange for a complete release of all the obligations covered by
the Apollo Guaranty. (Lehman Dep. Ex. 14; Exhibit B-3 hereto) (June 22, 2010 Paul Weiss
draft).
19. Next, Apollo revisited its position, withdrew the offer of any capital commitment,
and included in the draft term sheet, as a condition to closing: "termination of the Required
Capital Improvements Guaranty, dated as of June 29, 2007, by AIC for the benefit of Lehman
and release of all liabilities thereunder." (Debtors Dep. Ex. 14; Exhibit C-2 hereto) (July 7,
2010 Paul Weiss draft) (emphasis added).
20. In Lehman's July 14,2010 e-mail to the Debtors and Apollo (discussed above),
Lehman agreed not to object to Innkeepers paying capital improvement obligations that had been
guarantied by Apollo and, for 45 days from the filing, not to object to any settlement or
termination of that guaranty. (Lehman Dep. Ex. 2; Exhibit B-4 hereto). As discussed below, the
Stock Sale Term Sheet (never disclosed to this Court) contains extensive provisions
contemplating Innkeepers paying PIPs, specifically those covered by the Apollo Guaranty,
without Apollo providing any capital to Innkeepers.
21. Accordingly, Apollo succeeded in manipulating Innkeepers and Lehman so that
Innkeepers will foot the bill for the PIPs, and Apollo will pay nothing for them. Apollo
effectively has obtained releases from the Apollo Guaranty without paying any consideration.
3. Finalizing The Apollo-Lehman-Innkeepers Deal
22. Apollo, Innkeepers and Lehman continued to negotiate terms. On July 17, 2010,
just two days before the filing, Mr. Lascher (of Lehman) sent an e-mail to Mr. Beilinson with the
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subject "One More Decision". (Lehman Dep. Ex. 6; Exhibit B-6 hereto). In his e-mail, Mr.
Lascher asked "Can you live with giving me the ability to terminate cash collateral if you 'breach
your obligations to Lehman in connection with the Restructuring'?" (Jd. ). The next day, July
18, 2010, Mr. Beilinson responded "Not inclined. I understand its only a word but it gives
midland a real hook and I'm filing the motion to assume on day one and already reviewing a
plan." (!d.). Mr. Beilinson continued, "I won't be amending our deal without your consent. I'm
trusting that you won't terminate AIC in first 45 days ... please do the same with me on this
issue for this short period of time". (!d.).
C. The PSA
23. On or about July 17,2010, Innkeepers and Lehman executed the PSA.
Notwithstanding all of the earlier iterations, the PSA makes no mention whatsoever of Apollo.
Rather, it contains a basis for termination if"Lehman has not executed definitive agreements
with respect to the sale of 50% of the Lehman Shares for a purchase price of at least $107.5
million no later than 45 days after the Petition Date." (Section 6(b)). Despite that Innkeepers
and Lehman knew that sale would be to Apollo and nobody else, that is not disclosed
24. Generally, the PSA and the attached term sheet (the "PSA Term Sheet") outline
Lehman's and Apollo's support of a proposed plan of reorganization that will provide for (i) the
cram-down of all of the Debtors' secured creditors (other than Lehman's approximately $220
million of debt) and (ii) Lehman obtaining 100% of the equity in the reorganized debtors in
satisfaction of its Floating Rate Mortgage claims.
25. Notwithstanding Mr. Beilinson's July 18, 2010 e-mail to Mr. Lascher, the PSA
provides exactly as Lehman wanted. Section 8( a) provides that "[ u ]pon the occurrence of any of
the Termination Events set forth in Section 6(a) through 6(s) hereof, Lehman may terminate this
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Agreement and the use of its cash collateral." (PSA, 8(a)) (emphasis added).
26. The PSA prohibits the Debtors and Lehman from negotiating or engaging in any
discussions relating to any alternative chapter 11 plan or other restructuring transaction. (PSA,
5( c)). However, the PSA provides a so-called fiduciary out (the "Lehman Fiduciary Out"),
which would allow, in limited situations, Innkeepers to terminate the PSA and enter into a
separate agreement if it benefits Lehman. See (PSA, 25). Strangely and suspiciously, under
the Lehman Fiduciary Out, absent court order or waiver, Innkeepers can only enter into a
separate agreement based on a firm and binding written offer that would provide Lehman with
a "higher and better recovery" than under the PSA. (PSA, 25(c)). The Lehman Fiduciary Out
is especially problematic because it binds all Debtors, not just Floating Rate Mortgage obligors,
and thus binds Debtor entities that owe no duties or obligations to Lehman.
27. The PSA contains various provisions giving Lehman discretion to walk away with
no further obligations. Chief among them is a termination event occurring if the transactions
contemplated in the Stock Sale Term Sheet (as defined below) do not occur within 270 days of
the Petition Date. (PSA, 6(a)). Other walk-away events or rights include:
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14
If within 45 days of the Petition Date, Lehman has not executed
definitive agreements with respect to the sale of 50% of the Lehman
shares for a purchase price of at least $107.5 million;
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If within 45 days of the Petition Date, Lehman determines, in its sole
discretion, after completion of its tax due diligence, that the transaction
cannot be structured in a manner acceptable to Lehman;
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If within 120 days of the Petition Date, Lehman and Innkeepers do not
reach "mutual agreement" on terms for a sale process upon
termination;
15
and
(PSA, 6(b)).
(PSA, 6(q)).
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If within 270 days of the Petition Date, Lehman has not consummated
its sale of 50% of its new equity shares.
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The last provision listed above, essentially means that if either Apollo or Lehman decide not to
close on the Stock Sale Term Sheet (as defined below) agreements (regardless of whether doing
that is a breach of that agreement), Lehman can be excused from closing on the PSA.
28. Upon occurrence of any PSA termination event, Lehman can terminate the PSA
and stop the Debtors' use of its cash collateral. (PSA, 8(a)). The PSA contains more
draconian remedies in the event (a) a plan consistent with the PSA is not confirmed within 240
days of the Petition Date, (b) a plan consistent with the PSA does not go effective within 270
days of the Petition Date, (c) a trustee is appointed in certain of the Bankruptcy Cases, or (d)
Innkeepers files a motion to dismiss certain of the Bankruptcy Cases. In those instances,
Lehman not only can terminate the PSA and cash collateral use, but also is entitled either to
foreclose on the Floating Rate Mortgage Collateral or to compel the Debtors to sell it.
17
29. Notably, the PSA contains no mention, whatsoever, of the Apollo Guaranty nor
its satisfaction contemplated in the Stock Sale Term Sheet (as defined below).
D. The AIC/Lehman Stock Sale Term Sheet
30. On or about July 19, 2010- which is the Petition Date and just two days after the
PSA was signed-- Lehman and Apollo entered into a letter agreement (the "Stock Sale Term
Sheet") whereby Lehman agreed to sell to Apollo, for $107.5 million, 50% of the new equity
Lehman would receive under Innkeepers' PSA and the corresponding plan. A copy of the Stock
Sale Term Sheet is attached as Exhibit D hereto.
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16
17
(PSA, 6(a)(vi)).
(PSA, 6(c)).
(PSA, 8(b)).
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31. With respect to Apollo's guaranty obligations, the Stock Sale Term Sheet
provides that (a) during the Bankruptcy Cases, Lehman will not object to Innkeepers performing
PIPs which Apollo guarantied, and (b) post-emergence, that
(Pages 3-4).
Lehman and AI C shall authorize reorganized Innkeepers to agree
that any (a) non-immediate PIP obligations in the Fixed Rate Pool
described in Schedule XI to the related loan agreement that were
not satisfied before or during the chapter 11 cases and (b)
discretionary capital expenditures as set forth in Annex B attached
hereto will be funded from the proceeds of the Exit Funding (as
such term is defined in the Lehman-Innkeepers Term Sheet) or
excess cash flow after payment of all property level expenses,
FF&E reserves, debt obligations, corporate G&A, and working
capital holdbacks as reasonably determined by reorganized
Innkeepers.
32. The conditions precedent to the Stock Sale Term Sheet include "the
consummation of the proposed restructuring transaction between Lehman and Innkeepers on
the terms and as contemplated by the Lehman-Innkeepers Term Sheet." (Page 3).
E. Innkeepers, Lehman And Apollo
Shut Out All Other Parties
33. While Innkeepers hired Moelis to advise on the deal, it prevented Moelis from
conducting real diligence or making any effort to maximize value by seeking alternative bids.
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Neither Moelis nor Innkeepers contacted any outside investors to discuss another restructuring
construct to compete with the PSA.
19
34. Innkeepers did meet with Midland on or about April28, 2010. However,
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(Debtors Dep. Tr. 79:13-80:6) (Q. "On your instruction, did Moelis go out and shop alternative transactions
to the Lehman transaction? A. To people external to our capital structure? Q. Yes. A. No, they did not. Q. How
about internal to your capital structure, did Moelis go out and make presentations with respect to alternative
transactions to the Lehman one to the various other creditor constituencies? A. They were with me in trying to
explore what constituents were interested in alternative transactions including Midland").
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(Debtors Dep. Tr. 75:7-11) (Q. Did you shop the deal to any outside investors to come in and do a third-
party restructuring of the company not within the confines ofthe creditor constituency? A. No, I did not.").
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Innkeepers never mentioned the potential restructuring it was negotiating with Apollo and
Lehman. (Debtors Dep. Tr. 73:6-10) ("Q. So in the months that this Lehman transaction was
being negotiated, you didn't advise Midland, at least, about its existence until a day or two
before the filing; is that correct? A. Oh, that's correct."). Not only that, while Moelis provided a
presentation to Midland with similar information as contained in its presentation to Lehman and
Apollo on April22, 2010, it did not include the slides showing an illustrative pro forma
structure or any other transaction analysis. (Debtors Dep. Ex. 16; Exhibit C-3 hereto).
Critically, Moelis and Innkeepers omitted the valuation slides regarding Fixed Mortgage Debt
Collateral and Floating Mortgage Debt Collateral provided to Lehman only six days prior. !d.;
see also (Debtors Dep. Tr. 131:12-132:5). Indeed, at the April28, 2010 meeting, Innkeepers
never mentioned the discussions with Lehman and Apollo, much less that Innkeepers was
pursing a transaction that would reduce the Fixed Rate Mortgage by $250 million to $425
million.
20
35. Innkeepers never even informed its creditors of the Apollo-Lehman-Innkeepers
Transaction, until a few days before the Petition Date. While the Debtors defend their actions by
pointing out that they did inform Marriott, that disclosure was made solely to obtain forbearance.
If anything, the disclosure to Marriott only highlights that on June 25, 2010, Innkeepers already
knew on that it would pursue no other alternatives, and that it was fully locked into its deal with
20
Mr. Beilinson testified as follows:
Q And you don't think that at the time you met Midland that it was
appropriate to advise it six days earlier you had put together a suggestion of a
restructure which eliminated the 250 and 425 million dollars of their debt?
A No, because what I did with Lehman-- well, first of all, I was subject to I
believe a confidentiality agreement. It was a meeting to discuss resolution of
our claims, and if you'd notice, those values were all bracketed.
(Debtors Dep. Tr. 133:10-19).
16
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Lehman and Apollo. In a June 25,2010 side letter, Innkeepers asked Marriott to agree it would
not withhold consent to any "change of control" involving Apollo and Lehman, but nobody else.
The June 25, 2010 letter from Marriott states that
if upon the conclusion of the reorganization contemplated by this
Agreement, Apollo Investment Corporation or its affiliates
("Apollo") or Lehman Brothers Holdings, Inc., LAMCO, LLC,
Lehman ALI, Inc. or its or their affiliates ("Lehman") obtains,
individually, or collectively, a controlling interest in the Company
(Apollo and Lehman, individualli or collectively own at least fifty
percent (50%) of the Company).
2
F. The Bankruptcy Filing
36. On July 19,2010 (the "Petition Date"), the same day that the Stock Sale Term
Sheet was signed, each of the Debtors filed a petition with the Court under chapter 11 of Title 11
of the United States Code (the "Bankruptcy Code") commencing the Bankruptcy Cases.
37. The Debtors are operating their businesses and managing their properties as
debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
38. On the Petition Date, the Debtors filed the PSA Motion. In the PSA Motion, the
Debtors seek authority to assume the PSA and, in support thereof, the Debtors argue that the
PSA provides for a comprehensive restructuring of the Debtors, deleverages the balance sheet
and maximizes the Debtors' enterprise value going forward. The Debtors, however, point to no
precedent for assuming an agreement such as the PSA.
39. Also on the Petition Date, Innkeepers filed motions for authority (a) to enter into
the Five Mile DIP, (b) to enter into a $17,500,000 debtor-in-possession facility (the "Lehman
DIP") with Solar Finance, Inc., a Lehman affiliate, and (c) to use cash collateral.
21
See Marriott International, Inc.'s Limited Objection To And Reservation Of Rights Regarding Debtors'
Motion For An Order (A) Authorizing The Debtors To Assume The Plan Support Agreement And (B) Granting
Related Relief [Docket No. 246],, 10.
17
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G. Lehman Seeks Approval Of The PSA And Lehman DIP
40. On July 27, 2010, Lelunan Commercial Paper Inc. filed a motion (the "Lelunan
Motion"i
2
in its bankruptcy cases seeking court authority for its non-debtor affiliate, Lehman
ALI, Inc. (a) to enter into the PSA, (b) to consummate transactions provided in the PSA, and (c)
to make loans pursuant to the Lelunan DIP.
41. In the Lelunan Motion, Lelunan argued that the PSA maximizes the recovery
Lelunan would receive, which is higher than in a "free fall" bankruptcy. (I d., ~ 36). In further
support of that relief, Lelunan's unsecured creditors committee filed a statement which provides,
in pertinent part, as follows:
The Motion seeks solely authority for LCPI to enter into the Plan
Support Agreement, and plainly does not require the [Lehman]
Debtors to consummate any of the transaction specified
therein. The Plan Support Agreement, in turn, contains a number
of milestones and other termination events specifically intended to
preserve the [Lehman] Debtors' options, including, with respect to
the Apollo Sale, provisions (i) making the Apollo term sheet
terminable at will by either party until September 1, 2010; and (ii)
opening the door to other plan structures and sales if other
milestones (e.g., confirmation within 240 days) are not met.
23
42. On August 18,2010, the Lelunan bankruptcy court heard arguments regarding the
Lelunan Motion. Lelunan argued, among other things, that it can walk away from the PSA. See
Exhibit E hereto (Excerpt of August 18,2010 Hrg. Tr., Case No. 08-13555 (Bankr. S.D.N.Y.)).
Lelunan stated:
prior to September 1st, [Lelunan] can walk away from this
transaction -- from the sale of the equity, and that [Lelunan] can
always sell the mortgage loan, if it determines that it can maximize
22
In re Lehman Brothers Holdings, Inc., Chapter 11 Cases, Case No. 08-13555 (Bankr. S.D.N.Y.) [Docket
No. 10465].
23
In re Lehman Brothers Holdings, Inc., Chapter 11 Cases, Case No. 08-13555 (Bankr. S.D.N.Y.) [Docket
No. 10771], ~ 8 (emphasis added).
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value by doing that, at which time, Innkeepers could terminate the
plan support agreement. Additionally .. the term sheet and the
plan support agreement provide that if this direction is not
finalized within the period set forth in the plan support
agreement, approximately 240 days, at Innkeepers' option,
either the collateral can be sold to a third party, transferred to
LCPI or allowed to fore -- LCIP will be allowed to foreclose on
the collateral.
!d. at 75:7-10 (emphasis added). Lehman assured the Court that "between now and September
1st we [Lehman] can totally walk [from] the deal with Apollo, and that at any time we can
always sell our mortgage loan to the extent that there's a higher bidder for it." (!d. at 100:18-21).
The Lehman bankruptcy judge, Honorable James Peck, granted the Lehman Motion, noting "I
don't have a 363 problem if Lehman has flexibility ... " (Id. at 100:12-14).
H. Innkeepers Continues To Shut Out It Stakeholders
43. Following the Petition Date, Innkeepers has refused to engage in discussions with
constituents regarding a potential better transaction. The Debtors have even refused parties due
diligence to help formulate a deal.
44. Mr. Beilinson, at his deposition, made his intentions of blocking all other
potential deals very clear:
Q. And, therefore, since you are not saying you won't engage
in the dialogue, will you engage in a dialogue after people
do due diligence?
A No. Right now I believe that this integrated PSA that has
Marriott on board, two DIP lenders on board, to do an
internal restructuring of this enterprise is clearly in the best
interest of the bankruptcy estate. I intend to move forward
and file a plan in the next 30 days that all creditor
constituencies can then look at, consent to, object to,
negotiate with me and have their rights under 1129. So at
this point in time I see no reason to move forward with
anything other than an internal restructuring of this
enterprise.
19
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(Debtors Dep. Tr. 159:16-160:5).
I. The Midland I Five Mile Proposal
45. For some time now, Five Mile has been preparing a proposal that, it believes, is
higher and better than the PSA and will afford materially better creditor recovery. Doing so has
been difficult and futile because the Debtors have refused to grant Five Mile access to due
diligence and have made clear they would not consider this offer, as evidenced by Mr.
Beilinson's sworn testimony.
46. Nevertheless, on August 20, 2010, Five Mile executed that certain Binding
Commitment for the Acquisition of Innkeepers USA Trust (the "Five Mile Commitment Letter")
whereby Five Mile committed to Midland to fund approximately $236.6 million of new equity
capital in a restructuring of the Debtors, under the terms and conditions contained therein, which
would be accomplished pursuant to an alternative chapter 11 plan. A copy of the Five Mile
Commitment Letter is annexed as Exhibit F hereto.
47. Five Mile believes the plan (as contemplated by the Five Mile Commitment
Letter) is in the best interests oflnnkeepers and its bankruptcy estates as it is superior to the plan
contemplated under the PSA and beneficial to all creditors, not just Lehman and Apollo. The
proposed plan contemplated:
Values the Debtors at $1.04 billion, which is higher than the valuation of $915 million in
the Lehman Plan;
Provides for approximately $67.24 million in additional recovery value for the non-
Lehman creditors or 9% more and $187.1 million in cash pay downs of indebtedness,
including retirement of$67.75 million of debtor-in-possession financing and the purchase
of the B-Notes for $16.4 million;
Decreases execution risk by providing exit financing;
Provides Innkeepers with approximately $28.8 million in cash reserves to fund future,
fixtures, and equipment investments and PIP investments;
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Provides Innkeepers with an additional $17.3 million in general cash to manage
seasonality within the business, cover operating or interest shortfalls should they occur,
and provide funds to pay administrative and priority expenses upon emergence; and
Provides all secured creditors the option of either participating in the alternative proposed
plan or taking back their collateral.
48. Critically, the alternative plan contemplated in Five Mile Commitment Letter,
under the PSA, would be subjected to a fulsome bidding process and would be subject "to higher
and better offers for creditor treatment as may be reflected in competing reorganization plans."
49. Given the Debtors' position, including Mr. Beilinson's unequivocal testimony
above, the Five Mile Commitment Letter contemplates that Midland shall seek termination of
exclusivity and propose a plan consistent with the terms therein.
24
OBJECTION
I. NO VALID BASIS OR JUSTIFICATION
EXISTS TO ASSUME THE PSA
50. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor in
possession "subject to the court's approval, may assume or reject any executory contract or
unexpired lease of the debtor." 11 U.S.C. 365(a); see also Med. Malpractice Ins. Ass 'n v.
Hirsch (In re Lavigne), 114 F.3d 379, 386 (2d Cir. 1997). "[T]he purpose behind allowing the
assumption or rejection of executory contracts is to permit the trustee or debtor in possession to
use valuable property of the estate and to renounce title to and abandon burdensome property."
Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095,
1098 (2d Cir. 1993). Under any test, the PSA, which provides only burdens to the Debtors'
estates, cannot be assumed. Indeed, the Debtors cite no precedent for assumption of such an
24
Indeed, since the Debtors' plan is effectively a new value plan, exclusivity would have to be terminated in
any event.
21
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agreement.
A. Heigh ted Scrutiny Standard Applies
1. Applicable Case Law
51. In evaluating the Debtors' decision to assume the PSA, this Court cannot defer to
the Debtors' business judgment (as suggested by the Debtors)
25
, but rather must independently
use heightened scrutiny in assessing the wisdom of assumption. It is well established that
"[ s ]ales to fiduciaries are necessarily subjected to heightened scrutiny because they are rife with
the possibility of abuse." C & J Clark America, Inc. v. Carol Ruth, Inc. (In re Wingspread
Corp.), 92 B.R. 87, 93 (Bankr. S.D.N.Y. 1988).
52. As the Supreme Court held in Pepper v. Litton,
A director is a fiduciary. So is a dominant or controlling
stockholder or group of stockholders. Their powers are powers in
trust. Their dealings with the corporation are subjected to rigorous
scrutiny and where any of their contracts or engagements with the
corporation is challenged the burden is on the director or
stockholder not only to prove the good faith of the transaction but
also to show its inherent fairness from the viewpoint of the
corporation and those interested therein. The essence of the test is
whether or not under all the circumstances the transaction carries
the earmarks of an arm's length bargain. If it does not, equity will
set it aside.
308 U.S. 295, 307 (1939). "The fiduciary duties of directors pervade the bankruptcy
administration." In re Bidermann Industries U.S.A., Inc. (In re Bidermann), 203 B.R. 547, 551
(Bankr. S.D.N.Y. 1997) (herein, "Bidermann"). By contrast, "[t]he business judgment rule's
presumption shields corporate decision-makers and their decisions from judicial second-guessing
only when the following elements are present: '(1) a business decision, (2) disinterestedness, (3)
25
(PSA Motion, at 1!1! 15-16) ("the business judgment rule shields the debtor's management from judicial
second-guessing").
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due care, ( 4) good faith, and (5) according to some courts and commentators, no abuse of
discretion or waste of corporate assets." In reIntegrated Resources, 147 B.R. 650, 656
(S.D.N.Y. 1992). Because, as discussed below, the PSA is not a "disinterested" transaction, was
not the result of "due care" and was not reached in "good faith," the business judgment rule does
not apply.
53. Courts employ the business judgment test in analyzing motions to sell an asset of
the debtor under section 363 or to assume or reject a contract under section 365. In Gross v.
Russo, the Second Circuit directed the lower court, when determining whether to approve a
former trustee's acquisition of assets, to establish a full factual record, explaining "it is of course
appropriate for the court to consider whether the former fiduciary's bid or purchase tainted the
proceedings with wrongdoing, or stifled competition for the asset, or whether the former
fiduciary promulgated any impropriety. The integrity of the sale is the issue to be addressed .
. . " In re Russo, 762 F.2d 239, 243 (2d Cir. 1985) (citations omitted) (emphasis added); see also
In re Simon Transp. Services, Inc., 292 B.R. 207 (Bankr. D. Utah 2003) (When considering
setting aside a sale to an insider, the court must rigorously scrutinize all of the facts and
circumstances surrounding the sale).
54. The facts of Bidermann are strikingly similar to those in this case and highlight
likewise disturbing insider self-dealing. 203 B.R. 547. In that case, the debtors asked the court
to approve a letter agreement containing the broad terms of a leveraged buyout of the debtors.
The proposed buyers included Alvarez & Marsal, a turnaround consultant hired by the debtors,
whose partner, Bryan Marsal, was the debtors' CEO. Under the contemplated transaction, Mr.
Marsal would become CEO of the newly formed entity and would become chairman of the
board. Also under the contemplated transaction, Maurice Bidermann, the debtors' majority
23
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shareholder, would receive extensive incentives through various stock options in the newly
formed entity. No other shareholders were afforded such incentives.
55. Judge Brozman denied the letter agreement and issued a scathing opinion
castigating the insiders. The facts observed by Judge Brozman which she found most troubling
strikingly resemble those surrounding the Apollo-Lehman-Innkeepers Transaction in that
!d. at 551.
when the debtors decided to sell themselves, they committed to a
transaction with Mr. Marsal without retaining an investment
banker or even testing the waters to see if a more favorable
arrangement were available. Indeed, the objectants note that the
debtors have not responded to the one solicitation which they
received in September from a well-heeled investment firm, an
assertion which Mr. Marsal confirmed. Instead of responding to
the inquiry from that investment firm, Mr. Marsal told Vestar of
the letter--and, as Vestar's managing director testified, he informed
the investment firm that Vestar was well along in its negotiations
with the debtors, a patent attempt to discourage further interest.
56. Judge Brozman commented: "How the debtors could have determined to proceed
with this offer without knowing what else may be available defies any explanation other than
that Mr. Marsal had made up his mind and held Mr. Bidermann in his sway with lucrative
incentives." !d. "This sale process should have followed an intensive effort to drum up the
best price obtainable for the creditors. Instead, the process aims to cut off other possible
sales." !d. at 552. She thus concluded: "Viewed as a whole, the proposed sale does not reveal
the effective exercise of business judgment, but rather the illicit manipulation of a board's
deliberative process by self-interested corporate fiduciaries." !d. at 551.
57. Finally, it should be noted that in Bidermann, like here, the debtors "claim[ ed]
that the business judgment rule ought be applied to determine whether the[] provisions should be
approved." !d. at 552. Rejecting that proposition, Judge Brozman held: "The debtors are
completely misguided in their argument, given that this is a management-sponsored leveraged
24
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buyout whose equity contribution is to be determined by the purchasers, including A&M, and
that Mr. Biderrnann, who is the majority shareholder, is receiving hefty incentives to cooperate
with Mr. Marsal. There is lacking here both disinterestedness and due care .. . "!d.
58. As discussed below, due to the lack of disinterestedness, lack of due care, and
lack of good faith evidenced in connection with the Apollo-Lehman-Innkeepers Transaction, the
business judgment rule does not apply, the Court should scrutinize the PSA and the parties'
conduct, and the PSA does not withstand the applicable heightened scrutiny test.
2. The PSA Unquestionably Is An Insider Transaction
Subject to Heightened Scrutiny
59. The Apollo-Lehman-Innkeepers Transaction is a fully-integrated singular
transaction. "Under general contract law, the parties' intentions determine whether two
separately executed agreements are in reality one." In re Teligent, Inc., 268 B.R. 723, 728
(Bankr. S.D.N.Y. 2001) (herein, "Teligent").
60. In Teligent, the debtor had entered into a merger agreement to acquire another
entity as well as a non-compete agreement binding the selling company's shareholders. Judge
Bernstein held that the two agreements constituted a single fully-integrated transaction. !d. He
found highly indicative, among other things, that: (1) both sets of documents were executed the
same day, (2) neither party would have signed an agreement unless the other side signed the
second, and (3) the non-compete agreement acknowledged that it was a condition precedent to
the closing of the whole transaction. !d. at 729. The court explained that it was irrelevant that
certain parties signed one document, not both, because it was clear that "each party signed the
part of the overall agreement that touched on that party's rights." !d. at 729.
61. Consistent with the intent of the parties, the Apollo-Lehman-Innkeepers
Transaction is a single-integrated transaction. First, the PSA and the Stock Sale Term Sheet
25
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were executed substantially contemporaneously, and for months preceding, the parties negotiated
the two agreements in tandem, with one term sheet containing all terms for both agreements (and
filed the petitions for bankruptcy on the same day). ( S e e ~ ~ 6-22, supra). Second, Lehman
would not have signed the PSA without Apollo's commitment to buy its shares
26
, and Apollo
would not have signed the Stock Sale Term Sheet unless Innkeepers and Lehman signed the
PSA, as there would be nothing to purchase. Third, the PSA and the Stock Sale Term Sheet are
conditions precedent or termination events of each other?
7
62. The Apollo-Lehman-Innkeepers Transaction qualifies as an insider transaction
and is subject to heightened scrutiny not only because of Apollo's acquisition of equity (like
Alvarez & Marsal's), but also by virtue of Apollo's massive influence over the process from
which it will benefit immensely (like Bryan Marsal's).
63. The evidence clearly shows that Apollo has been directly and inextricably
involved in negotiations. Apollo undoubtedly had input in the terms placed in term sheets
leading to the PSA. Indeed, until days before the filing, Apollo was to be a party to the PSA.
64. The treatment of the Apollo Guaranty demonstrates Apollo's undue influence in
the formulation of the Apollo-Lehman-Innkeepers Transaction. Under the Apollo Guaranty,
Apollo has unique exposure on PIP obligations. If Innkeepers does not pay them, Apollo must.
The negotiation history leading up to the PSA and Stock Sale Term Sheet shows that Apollo was
singularly focused on that issue and insisted that any deal mitigate Apollo's liabilities
(notwithstanding its impact on the Debtor). For that reason Apollo asked repeatedly for releases
26
(Apollo Dep. Tr. 34:18-35:9).
27
See (PSA, 6(b)) (termination event ifLelnnan has not signed definitive agreements for the Stock Sale
Term Sheet within 45 days of the Petition Date),( 6(c)) (termination event if the transactions contemplated in the
Stock Sale Term Sheet are not consummated within 270 days of the Petition Date); Stock Sale Term Sheet, at 2
(execution of stock sale agreement conditioned upon Court approval of the PSA), at 3 (closing of the stock sale
conditioned upon consummation of the transactions contemplated in the PSA).
26
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of such obligations. And, that is why in the final Stock Sale Term Sheet, Lehman promised to
cause Innkeepers to use its own funds to pay PIPs that get Apollo off the hook. Indeed, while
originally there was contemplation that Apollo would infuse additional capital into Innkeepers
for relief on its guaranty, under the Apollo-Lehman-Innkeepers Transaction, it shall provide
none. Thus, Apollo's influence in the process resulted in Innkeepers bearing the burden of
mitigating the Apollo Guaranty.
65. The Apollo-Lehman-Innkeepers Transaction, and the PSA which is a part thereof,
is an insider transaction, which must be subjected to heightened scrutiny, and therefore denied.
B. The PSA Fails Heightened Scrutiny
1. No Due Care
66. The Debtors cannot satisfy the heightened scrutiny standard. Indeed, in the
motion they do not even attempt to point to any evidence on which they can rely. The Debtors
have not, and cannot, prove that the PSA was reached with "due care" because they admittedly
ran no process. The Debtors -- similar to the debtors in Bidermann -- never market-tested the
transaction, and unlike in Bidermann (where the debtors did not hire an investment banker), here
the Debtors did hire Moelis, but yet expressly told Moelis not to pursue other bidders or
transactions. (Debtors Dep. Tr. 79: 13-19).
67. Indeed, Mr. Beilinson testified that he has no interest in other offers and shall not
consider them. (Debtors Dep. Tr. 159:16-160:5) ("Q. And, therefore, since you are not saying
you won't engage in the dialogue, will you engage in a dialogue after people do due diligence?
A. No. Right now I believe that this integrated PSA that has Marriott on board, two DIP lenders
on board, to do an internal restructuring of this enterprise is clearly in the best interest of the
bankruptcy estate. I intend to move forward and file a plan in the next 30 days that all creditor
27
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constituencies can then look at, consent to, object to, negotiate with me and have their rights
under 1129. So at this point in time I see no reason to move forward with anything other
than an internal restrnctnring of this enterprise.") (emphasis added).
68. Not only that, the Debtors never analyzed whether the value of the Floating Rate
Mortgage that Lehman is giving up matches the value of the new shares Lehman and Apollo
shall receive. Mr. Beilinson admitted that in the following exchange from his deposition:
Q. Well, in your negotiations with Lehman, did you discuss
the value of hotels across the board since Lehman was
going to be the ultimate equity owner of all these hotels?
A. I primarily discussed the range of values with regard to
each pool of hotels. I mean, my view was pretty simple.
Maybe it was too simple. It was that if I was providing
what the court determines to be the secured amount of the
claim in a note to each of the secured parties other than
Lehman, that when Lehman equitizes, the only equity value
of the enterprise came as a result of them equitizing their
collateral since by definition everyone else is getting a
hundred percent of their secured claim in accordance with
the Bankruptcy Code.
(Debtors Dep. Tr. 62:24-63:15). The Debtors have ignored that the PSA gives Lehman and
Apollo a windfall.
69. Moreover, prior to the Petition Date, the Debtors took affirmative steps to prevent
all other transactions. In their negotiations with Marriott, the Debtors on June 25, 2010 obtained
Marriott's advance consent to any future change of control transaction but only involving
Lehman and/or Apollo. Thus, the Debtors' pre-petition conduct has made any other
restructuring materially more difficult.
70. The Debtors' failures to conduct diligence and exercise due care are especially
troubling because of Apollo's control and its economic interests directly adverse to those of the
Debtors and their stakeholders. First, Apollo-- as proposed purchaser of half of Lehman's
28
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shares-- is incentivized to deflate the Debtors' valuation in order to drive down the price it pays
Lehman. If, as Five Mile believes, Lehman's new equity is worth materially more than the
Floating Rate Mortgage, that fact would become clear through a comprehensive process, the
result of which would be that Apollo would need to pay more to Lehman. Second, Apollo, as
proposed new owner of Innkeepers, is motivated to understate the value of collateral held by
secured creditors, as that will bring added value to its shares. Apollo, thus, was incentivized to
shut secured lenders out of the process and hide the fact they would be expected to take huge
reductions while Lehman gets the company. Third, Apollo, by virtue of the Apollo Guaranty,
was benefitted by keeping others out ofthe process because surely any other party would have
opposed a draconian provision obligating Innkeepers post-emergence to mitigate Apollo's
obligations for PIPs.
71. Like in Bidermann, the Debtors' lack of diligence and due care, acting under
Apollo's control, means the Debtors are ill-equipped to make an informed decision regarding the
PSA and the Apollo-Lehman-Innkeepers Transaction. The Debtors, therefore, are not entitled to
the benefits of the business judgment rule.
2. No Good Faith
72. The Debtors also have not and cannot show that the PSA was entered into in good
faith. In addition to the fact that parties -- other than Lehman, Innkeepers and Apollo --have
been shut out the process, the lack of good faith is evidenced by the Lehman and the Debtors'
purposeful attempts to downplay and obfuscate Apollo's involvement.
73. The evidence shows that with each tum of the term sheet drafts, Apollo's
visibility diminished conspicuously, such that by the time the final PSA was prepared, there was
no mention of Apollo's agreement to buy 50% of Lehman's new stock, no mention of Apollo's
29
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guaranties being mitigated under the deal, and, in fact, no mention of Apollo's role whatsoever.
74. Indeed, notwithstanding months of negotiations in which Apollo was intimately
involved and known to all as the subsequent purchaser of Lehman's new shares, none of the
many pleadings filed on the Petition Date ever mentioned the Stock Sale Term Sheet or
Lehman's deal with Apollo.
28
75. That the PSA lacks good faith is clear in its terms and from the evidence.
II. THE PSA ACCORDS NO BENEFITS, ONLY HARMS
A. Lehman Has No Obligation To Innkeepers' Estates
76. The PSA accords no benefits, whatsoever, to Innkeepers. Lehman is bound to
nothing. It can walk away on a whim. The PSA provides sweeping termination provisions
allowing Lehman to walk away at its discretion. As discussed in above, if Lehman or Apollo
choose to terminate the Stock Sale Agreement within 270 days of the Petition Date, Lehman can
declare its PSA obligations ended. (PSA, 6(c)). Similarly, under section 6(a)(vi) of the PSA, a
termination event occurs if within 120 days of the Petition Date "Lehman and the Company shall
[not] have reached mutual agreement ... on the terms of a sale process upon the occurrence of'
certain termination events. If Lehman withholds that agreement (and there is not even an express
provision that it act reasonably), Lehman can terminate the PSA and walk away. If Lehman is
bound to nothing, the PSA is illusory and the Debtors should not assume it.
77. In exchange for getting nothing, Innkeepers is giving away a lot. It is agreeing to
28
See (Midland Objection at 1!15 [Docket No.36]). ("Under the PSA, Lehman has agreed to support a plan in
which Apollo, as Midland has been advised by the Debtors' chief restructuring officer, will receive 50% of the
reorganized Debtors' equity in what amounts to a new value plan with every other creditor taking a massive
haircut.''). It was only after this objection that the Debtors filed an amended first day declaration disclosing the Apollo
Sale. (Amended First-Day Declaration at 1!13, [Docket No. 33]). ("[i]t is Debtors' understanding that, subject to
certain terms and conditions, [Apollo] may become the purchaser [of a portion of Lehman's distributions of equity
in the reorganized Innkeepers].").
30
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refrain from trying to maximize value by seeking competitive proposals; it is agreeing to
reimburse Lehman's costs; and - most egregiously - it is consenting to lifting the automatic stay
or a forced sale of collateral if certain milestones are not met, such as denial of confirmation of a
PSA plan (without any of the protections of sections 362 or 363 of the Bankruptcy Code). Thus,
Innkeepers is sacrificing immensely, while Lehman gets a free option. There is also just no
reason to enter into the PSA. If, as Lehman contends, it supports the deal and believes it accords
a maximized recovery for its creditors, then there is no reason it would ever walk away. Indeed,
for the time it took to get a hearing on the PSA, they could have sought a disclosure statement
hearing. The protections do nothing but harm Innkeepers. Aside from benefitting Apollo, there
is no explainable reason why Innkeepers agreed to this.
B. The Proposed Plan Is Patently Unconfirmable
78. The PSA also harms the Debtors by forcing them to pursue a plan that is destined
to fail, leading to Lehman's foreclosure on, or sale of, its collateral. For the following reasons
the PSA leads to a plan that cannot be confirmed and a waste of judicial and estate resources:
29
Impermissible Treatment Of Apollo's Equity Interests (New Value Violation). The
PSA would permit Apollo, a current equity holder, to purchase Lehman's equity at a
negotiated, non-market tested price in violation of the absolute priority rule and the
holding of Bank Of America Nat. Trust And Sav. Assn v. North LaSalle Street
Partnership, 526 US 434, 458 (1999). "In the LaSalle decision, the Supreme Court
concluded that the absolute priority rule was violated where the debtor's plan permitted
only its shareholders to invest new capital to obtain all the equity in the company. The
Court was particularly concerned by the fact that the debtor had retained the exclusive
right to propose a plan, thereby precluding others (including the objecting creditor) from
proposing a plan "selling" the equity to another." In re Global Ocean Carriers, Ltd., 251
B.R. 31, 49 (Bankr. D. Del. 2000). As explained by the Supreme Court in LaSalle, "it is
that the exclusiveness of the opportunity, with its protection against the market's scrutiny
of the purchase price by means of competing bids or even competing plan proposals,
renders the partners' right a property interest extended 'on account of' the old equity
29
Inasmuch as confirmation issues are not the subject of the hearing on the PSA Motion, Five Mile herein
provides only a preliminary outline of its concerns and reserves the right to raise any other or further objections to
confirmation or disclosure statement approval.
31
FILED UNDER SEAL
30
31
position and therefore subject to an unpaid senior creditor class's objection." 526 U.S. at
456. The evidence is clear Apollo was the only party given the opportunity to purchase
50% of Lehman's shares. It obtained that right because of its position as majority
shareholder. Moreover, not only has Innkeepers not marketed the PSA to others, but
because Innkeepers maintains exclusivity, others cannot offer a higher and better bid for
the equity that Apollo will receive.
Impermissible Cram-Down Of Secured Claims. A dissenting class of creditors cannot
be crammed-down unless "the plan does not discriminate unfairly, and is fair and
equitable, with respect to [such] class." 11 U.S.C. 1129(b)(l). A plan is not "fair and
equitable" as to a secured creditor unless it retains liens "to the extent of the allowed
amount of such claims" and receives "on account of such claim deferred cash payments
totaling at least the allowed amount of such claim, of a value, as of the effective date of
the plan, of at least the value of such holders' interest in the estate's interest in such
property." 11 U.S.C. 1129(b)(2)(A)(i). The PSA provides that liens granted on
account of the Fixed Rate Mortgage shall be capped at $550 Million/
0
however, the
Fixed Rate Mortgage Collateral is worth substantially more (as demonstrated by, among
other things, the Five Mile Commitment Letter) and, as such, the PSA contemplates
impermissible cram-down.
Valuation is Flawed. The PSA contemplates issuing 100% of the Debtors' new equity
to Lehman, without ascribing a value to that equity. Since Apollo (an insider with
intimate knowledge of the Debtors' valuation) has agreed to purchase 50% of that new
equity for $107.5 million, all indication is that the new equity is worth at least $215
million (although Five Mile believes it is worth materially more). The PSA, therefore,
accords Lehman at least $215 million of value on account of the Floating Rate Mortgage.
Moelis's April 22, 2010 presentation to Apollo, Lehman, and Innkeepers shows that the
value of the Floating Rate Mortgage Collateral is between $150 million and $190 million
(though Five Mile believes it is even less). Thus, the PSA would provide Lehman more
than $215 million of value on less than $190 million of collateral. At the same time that
the PSA severely overcompensates Lehman, it deprives other creditors of their rightful
recovery by, for example, giving Midland only $550 million of collateral value on
account of the Fixed Rate Mortgage Collateral, which is worth materially more.

The PSA contemplates no accepting impaired class. Section 1129(a)(10) of the
Bankruptcy Code requires for confirmation that "[i]f a class of claims is impaired under
the plan, at least one class of claims that is impaired under the plan has accepted the plan,
determined without including any acceptance of the plan by any insider." 11 U.S.C.
1129(a)(10). Assuming the plan envisioned by the PSA will not contain substantive
consolidation, if Midland votes to reject the plan at each of the 45 debtors pledging Fixed
Rate Mortgage Collateral, each of those 45 Debtors will have no voting impaired
accepting class.
31
(PSA Term Sheet, at 2).
Under the PSA Term Sheet, inter-company claims are deemed to reject.
32
FILED UNDER SEAL
C. The Fiduciary Out Cannot Be Approved
79. An additional harm created by the PSA is the Lehman Fiduciary Out, which
contractually protects Lehman's interests and, indirectly, Apollo's interests. The PSA contains
relatively standard language providing that Innkeepers is entitled to take any action that it
determines is consistent with its fiduciary obligations. That provision, however, is curtailed by
an exception providing that notwithstanding what Innkeepers deems to be consistent with its
fiduciary duties, it cannot "annul, modify, amend, or otherwise alter any of the" PSA's plan
milestones unless it is doing so to pursue "an alternative transaction that will provide Lehman
with a higher and better recovery than the recovery proposed under the Plan [contemplated in the
PSA]." (PSA, 25(c)) (emphasis added). Thus, under the PSA, Lehman and Apollo would
contractually hijack Innkeepers' fiduciary duties. That they are doing so is especially concerning
since many of the Debtors constraining their fiduciary duties under this provision are not even
Floating Rate Mortgage obligors and owe no duties or obligations to Lehman. Thus, this
purported "fiduciary out" in reality prevents Innkeepers' exercise of its fiduciary duties.
80. The harm of the Lehman Fiduciary Out is real and knowable. Already the
Debtors have refused to engage with potential parties, shutting out higher and better bids. One
example is the Debtors' refusal to negotiate with Five Mile, who has expressed an interest in
conducting due diligence and submitting a proposal. As demonstrated by the Five Mile
Commitment Letter, Five Mile is ready, willing, and able to make a material equity contribution
under a construct that is far superior to the PSA. By pushing out parties like Five Mile, the
Debtors are harming their estates and stakeholders.
81. The Apollo-Lehman-Innkeepers Transaction would harm the Debtors and their
stakeholders while providing massive benefits to Apollo and Lehman. Given Apollo's extensive
33
FILED UNDER SEAL
role and potential upside in the deal, the PSA certainly is not a disinterested transaction. The
Court, in applying heightened scrutiny, should evaluate the parties' conduct, the history of
negotiations, the complete absence of any diligence, and the bad faith actions to date. Above all
else, the Court should consider that denying the PSA will not harm the Debtors and their
stakeholders, but rather open up a fair and comprehensive process where all parties, including
Lehman and Apollo if they so wish, can bid for the Debtors. For these reasons, the Court should
deny the Debtors authority to assume the PSA.
III. EVEN IF THE COURT FINDS GOOD REASON TO ASSUME THE PSA
(THERE IS NONE), THE PSA CANNOT BE ASSUMED AS A MATTER OF LAW
A. The PSA Is Not Executory
82. Given Lehman's complete lack of obligations, the PSA is not even an executory
contract capable of being assumed sunder section 365 of the Bankruptcy Code. The Bankruptcy
Code does not define the term "executory contract," thus courts have been forced to develop
their own definitions. Courts have developed three approaches in determining whether a contract
is executory: (i) the Countryman test; (ii) the "some performance due" test, and (iii) the
functional approach test. See In re Teligent, Inc. 268 B.R. 723, 729 (Bankr. S.D.N.Y. 2001).
32
83. The Countryman test defines an executory contract as one "under which the
obligation[s] of both the bankrupt and the other party ... are so far unperformed that the failure
of either to complete performance would constitute a material breach excusing performance of
the other." In re Riodizio, Inc., 204 B.R. 417,421 (Bankr. S.D.N.Y. 1997); In re Teligent, 268
B.R. at 730 (adopting Countryman definition).
84. Under the "some performance due" test a contract is executory "if each side must
The Second Circuit has not formally adopted the Countryman test, but many courts, including those in the
Southern District of New York, rely upon it. See id. at 730.
34
FILED UNDER SEAL
render performance, on account of an existing legal duty or to fulfill a condition, to obtain the
benefit of the other party's performance." In re Riodizio, Inc., 204 B.R. at 424. Stated
differently, the contract is executory under the some performance due test if "each party must
still give something to get something" and the assumption or rejection of the contract confers a
benefit on the estate. !d. at 422.
85. Under the functional approach test, a contract is executory if it promises a benefit
to the estate. !d. at 417. This approach is "more lenient" than the Countyman test. In re
Teligent, 268 B.R. at 732.
86. The PSA is not executory under any test. It fails the Countryman and the "some
performance due" tests because Lehman has no obligations. As discussed above, Lehman has no
closing obligations under the PSA, a fact it proudly announced to the court in its bankruptcy
case. In essence, the PSA gives Lehman a "free option" and therefore Lehman's failure to
perform neither "constitute[s] a material breach excusing performance" nor is required to obtain
corresponding performance by the Debtors. The PSA also fails the functional test because it
confers no benefit to Innkeepers. ( S e e ~ ~ 76-77, supra).
B. The PSA Is An Unassumable Contract For
Issuance Of Securities -11 U.S.C. 365(c){2)
87. Even if the Court determines that the PSA is an executory contract and that it
provides some benefit to the Debtors, the PSA is unassumable under section 365( c )(2) of the
Bankruptcy Code, which prohibits assumption of an executory contract if"such contract is a
contract to make a loan, or extend other debt financing or financial accommodations, to or for the
benefit of the debtor, or to issue a security of the debtor."
33
11 U.S.C. 365(c)(2) (emphasis
33
"Security," as defined by the Bankruptcy Code includes "both debt and equity instruments, such as notes,
stock, treasury stock, bonds and the like." In re Te/igent, Inc., 268 B.R. at 733; see also 11 U.S.C. 101(49).
35
FILED UNDER SEAL
added). "'[T]o issue a security of the debtor,' as used in 365(c)(2), refers to a pre-petition
agreement obligating the non-debtor to advance new cash or credit in exchange for the debtor's
note (a debt security) or its stock (an equity security)." In re Teligent, Inc., 268 B.R at 738.
34
88. The Apollo-Lehman-Innkeepers Transaction is an integrated transaction, which
the parties intended to be treated as one contract. (See,, 59-61, supra). The Apollo-Lehman-
Innkeepers Transaction is a pre-petition agreement that contemplates Apollo advancing new cash
and Lehman reducing its debt, in exchange for the Debtor's newly issued stock. (PSA Term
Sheet, at 2) ("Lehman will receive, in full and final satisfaction of its secured mortgage claims in
respect of the Floating Rate Debt, 1 00% of the issued and outstanding shares of common stock
issued by Innkeepers ... "). Unlike in Teligent, the issuance of stock is the whole purpose of the
Apollo-Lehman-Innkeepers Transaction; it is certainly not incidental. Thus, the PSA is
unassumable under section 365(c)(2) of the Bankruptcy Code.
34
In Teligent, Judge Bernstein held that the debtors' merger agreement, whereby the debtors were buying
another entity and paying with cash and current common stock, was a sale of goods. !d. at 734, 737-38 ("[i]fthe
extension of credit or the issuance of the security is incidental to a contract for the sale of goods or services, the
contract may be assumed (or rejected) notwithstanding 365(c)(2).").
36
FILED UNDER SEAL
CONCLUSION
WHEREFORE, for the above stated reasons, Five Mile respectfully requests that the
Court deny the PSA Motion and grant to Five Mile such other and further relief deemed just and
proper.
Dated: August 23,2010
New York, New York
By: ,-:...:::::..__ ____ _
David M. Friedman
Adam L. Shiff
Daniel A. Fliman
& FRIEDMAN LLP
1633 Broadway
Telephone: (212) 506-1700
Facsimile: (212) 506-1800
Attorneys for Five Mile Capital Partners LLC
37
EXHIBIT A
1
-----------------------------*
In re: Chapter 11
INNKEEPERS USA TRUST, et al., CASE NO.
Debtors. 10-13800 (SCC)
-----------------------------*
Deposition of SCHUYLER HEWES,
called as a witness for examination,
held at the offices of Paul Weiss
Rifkind Wharton & Garrison, LLP, 1285
Avenue of the Americas, New York, New
York, on Wednesday, the 18th day of
August 2010, commencing at 9:06 a.m.,
before Jennifer Ocampo-Guzman, a
Certified Livenote Reporter and Notary
Public of the State of New York.
JOB NO. 19802
450 Seventh Avenue - Ste 2803, New York, NY 10123 (212)705-8585
DAVID FELDMAN WORLDWIDE, INC.
2 (Pages 2 to 5)
2
1
2 A P P E A R A N C E S :
3
KIRKLAND & ELLIS, LLP
4 Attorneys for Debtors and
Debtors-in-Possession
5 655 Fifteenth Street, N.W.
Washington, DC 20005-5763
6
BY: JEFFREY M. GOULD, ESQ.
7 jeffrey.gould@kirkland.com
8 - and -
9 KIRKLAND & ELLIS, LLP
Attorneys for Debtors and
10 Debtors-in-Possession
300 North LaSalle Street
11 Chicago, Illinois 60654
12 BY: JEFFREY D. PAWLITZ, ESQ.
jeffrey.pawlitz@kirkland.com
13
14
HAYNES and BOONE, LLP
15 Attorneys for Midland Loan
Services, Inc.
16 1221 Avenue of the Americas, 26th Floor
New York, New York 10020-1007
17
BY: LOUIS SOLOMON, ESQ.
18 louis.solomon@haynesboone.com
19 - and -
20 HAYNES and BOONE, LLP
Attorneys for Midland Loan Services, Inc.
21 2323 Victory Avenue, Suite 700
Dallas, Texas 75219
22
BY: MARK ELMORE, ESQ.
23 mark.elmore@haynesboone.com
24
25
3
1
2 A P P E A R A N C E S (cont'd) :
3
KILPATRICK STOCKTON, LLP
4 Attorneys for Trimont Real Estate
Advisors
5 31 West 52nd Street, 14th Floor
6
BY: MICHAEL D. CRISP, ESQ.
7 mcrisp@kilparickstockton.com
8
BRYAN CAVE, LLP
9 Attorneys for LNR Partners, LLC
1290 Avenue of the Americas
10 New York, New York 10104-3300
11 BY: LAWRENCE P. GOTTESMAN, ESQ.
lawrence.gottesman@bryancave.com
12
13 PAUL, WEISS, RIFKIND,
WHARTON & GARRISON, LLP
14 Attorneys for Apollo Investment
Corporation
15 1285 Avenue of the Americas
16
BY: ANDREW J. EHRLICH, ESQ.
17 aehrlich@paulweiss.com
-and-
18 BY: AMY P. DIETERICH, ESQ.
adieterich@paulweiss.com
19
20
DECHERT, LLP
21 Attorneys for Lehman ALI Inc.
23 BY: KEVIN J. O'BRIEN, ESQ.
kevin.obrien@dechert.com
24 -and-
BY: NICOLE B. HERTHER-SPIRO, ESQ.
25 nicole.hertherspiro@dechert.com
4
1
3
MORRISON & FOERSTER, LLP
4 Attorneys for Unsecured Creditors
Committee
6
BY: PAUL GALANTE, ESQ.
7 pgalante@mofo.com
8
9 WILLKIE FARR & GALLAGHER, LLP
Attorneys for Appaloosa Investment L.P. I
10 787 Seventh Avenue
11
BY: BRIAN R. FAERSTEIN, ESQ.
12 bfaerstein@willkie.com
13
KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP
14 Attorneys for Five Mile Capital Partners
1633 Broadway
16 BY: DANIEL A. FLIMAN, ESQ.
dfliman@kasowitz.com
17
DEWEY & LeBOEUF LLP
18 Attorneys for Ad Hoc Committee of
Preferred Shareholders
20
BY: TIMOTHY Q. KARCHER, ESQ.
21 Tkarcher@dl.com
22
A L S O P R E S E N T :
23
JOSEPH GLATT
24 TRAVIS SHELHORSE, Trimont Real Estate Advisors
25
5
1
2 MR. SOLOMON: Louis M. Solomon from
3 Haynes and Boone.
4 MR. ELMORE: Mark Elmore, Haynes
5 and Boone.
6 MR. GOTTESMAN: Lawrence Gottesman,
7 Bryan Cave.
8 MR. CRISP: Mike Crisp, Kilpatrick
9 Stockton.
10 MR. FAERSTEIN: Brian Faerstein,
11 Willkie Farr & Gallagher.
12 MR. GALANTE: Paul Galante,
13 Morrison & Foerster.
14 MR. FLIMAN: Dan Fliman, Kasowitz,
15 Benson, Torres & Friedman.
16 MR. GOULD: Jeff Gould, Kirkland &
17 Ellis on behalf of the debtors.
18 MR. PAWLITZ: Jeff Pawlitz,
19 Kirkland & Ellis on behalf of the
20 debtors.
21 MS. HERTHER-SPIRO: Nicole
22 Herther-Spiro, Dechert, for Lehman ALI.
23 MS. DIETRICH: Amy Dietrich, Paul
24 Weiss.
25 MR. EHRLICH: Andrew Ehrlich, Paul
3 (Pages 6 to 9)
6
1
2 Weiss on behalf of AIC and the witness.
3 S C H U Y L E R H E W E S, having been
4 duly sworn, was examined and testified as
5 follows:
6 EXAMINATION BY
7 MR. SOLOMON:
8 Q. Good morning, sir.
9 A. Good morning to you.
10 Q. My name is Louis Solomon. I'm with
11 Haynes and Boone. I'm going to be asking you
12 a series of questions today.
13 A. Okay.
14 Q. If at any time you don't understand
15 a question, please tell me, I will attempt to
16 rephrase it or explain it. I don't want you
17 answering any questions that you don't
18 understand. Is that acceptable, sir?
19 A. That's fair.
20 Q. If at any point today you need a
21 break, please tell me and we will try and
22 accommodate you as soon as possible. When
23 I'm asking you a question, you may know what
24 I'm going to ask but please allow me to
25 finish. It's difficult for the court
7
1 Hewes
2 reporter to take down two people speaking at
3 the same time. In addition if you are in the
4 middle an answer and I interrupt you, please
5 tell me and I will generally attempt to let
6 you finish your answer.
7 Is that acceptable?
8 A. Uh-huh.
9 Q. As you see, we have a court
10 reporter here. She is taking down everything
11 that is said in the room while we are on the
12 record. If in response to my questions you
13 could give verbal answers, that would be
14 helpful to the court reporter. She cannot
15 take down a shake of the head or shrug of the
16 shoulders or any other physical gesture.
17 A. Okay.
18 Q. Are you on any medications that
19 would affect your ability to testify here
20 today?
21 A. No.
22 Q. Are you currently employed, sir?
23 A. Yes.
24 Q. By whom?
25 A. I'm an employee of Apollo Global
8
1 Hewes
2 Management. I work for a business unit
3 called Apollo Investment Management.
4 Q. Do you have any role at Apollo
5 Investment Corporation?
6 A. Apollo Investment Management is the
7 investment manager by contractor for Apollo
8 Investment Corporation.
9 Q. So are you or do you have any
10 direct role with the Apollo Investment
11 Corporation?
12 A. My job is to, is to make and manage
13 investments on behalf of Apollo Investment
14 Corporation through my role at AIM.
15 Q. Through your AIM Apollo Investment
16 Management?
17 A. Correct.
18 Q. Are you part of Apollo Investment
19 Corporation's investment team?
20 MR. EHRLICH: Objection to form.
21 You can answer.
22 A. Again, I'm not sure if it's clear
23 but -- from the outside but Apollo Investment
24 Management is, is an entity with a group of
25 employees. I'm on the investment team at
9
1 Hewes
2 that entity. That entity manages the
3 portfolio of Apollo Investment Corporation.
4 Q. Sir, I'm not trying to trick you
5 here. Let me show you a document that we've
6 printed from one of Apollo entities'
7 websites. That's all. If we could mark as
8 Exhibit 1.
9 (Exhibit Hewes-1, Website printout
10 of Apollo Investment Corporation
11 entitled "Our Business," marked for
12 identification, this date.)
13 Q. Sir, I will represent to you that
14 this was printed from Apollo Investment
15 Corporation's website yesterday.
16 A. Okay.
17 Q. Do you see on the bottom right
18 8/17/2010?
19 A. Uh-huh.
20 Q. Description of "Our Business," I
21 assume -- withdrawn.
22 Do you know if that's referring to
23 Apollo Investment Corporation when it says
24 "Our Business" right in the middle of the
25 page?
4 (Pages 10 to 13)
10
1 Hewes
2 A. I assume so, yes. I mean perhaps
3 I'm drawing a technical distinction that's
4 not meaningful. So when I describe my
5 employer and my role, those are accurate
6 statements. This is a website. I'm not sure
7 what this, the distinction is, is meaningful.
8 Q. If you see on the right-hand side
9 it lists the investment team?
10 A. Uh-huh.
11 Q. And your name is on that list?
12 A. That's correct.
13 Q. To the extent you perform any
14 functions as part of an investment team for
15 either Apollo Investment Corporation or
16 Apollo Investment Management, what do those
17 responsibilities entail?
18 A. It entails a large number of
19 things. Can you be more specific?
20 Q. Does Apollo Investment Corporation
21 make investments?
22 A. It does.
23 Q. How does it go about making
24 investments?
25 A. We -- we review a significant
11
1 Hewes
2 number of investment opportunities. We being
3 companies and securities within companies or
4 portions of a capital structure, we review
5 the business first, determine whether it's an
6 industry or a company that we feel is
7 interesting, attractive. Then we review the
8 investment opportunity itself. Not every
9 attractive company makes for a good
10 investment. And we proceed from there to
11 discussions about whether or not we proceed
12 to work on something, meaning perform due
13 diligence, ask questions, meet with
14 management teams, in some cases legal due
15 diligence, et cetera. And then we structure
16 investments, make proposals. Some of those
17 proposals are accepted, some of them are not.
18 And to the extent that they are, we complete
19 our due diligence, complete our structuring
20 work and complete investments and funding.
21 Q. And are you involved in all aspects
22 of that process?
23 A. Generally speaking, yes.
24 Q. For these investments, do they
25 include equity investments in certain cases?
12
1 Hewes
2 A. In certain cases, yes.
3 Q. Do these investments also include
4 purchasing notes that may be outstanding by a
5 company?
6 A. Yes.
7 Q. Do these activities or investments
8 also include making direct loans to the
9 companies?
10 A. Yes, they do.
11 Q. Are you familiar with any selection
12 process that's used by either AIC or AIM with
13 respect to these investments?
14 A. Selection process?
15 Q. Yes.
16 A. Yeah, I believe that's what I just
17 described.
18 MR. SOLOMON: I am going to ask the
19 court reporter to mark this as Hewes
20 Exhibit 2, please.
21 (Exhibit Hewes-2, Website printout
22 of Apollo Investment Corporation
23 entitled "Selection Process," marked for
25 Q. Sir, the court reporter has put in
13
1 Hewes
2 front of you what's been marked as Exhibit 2.
3 It's a document, again I'll represent to you,
4 is printed from Apollo Investment
5 Corporation's website yesterday.
6 A. Uh-huh.
7 Q. It describes "Selection Process."
8 A. Uh-huh, uh-huh.
9 Q. And there are six bullet points?
10 A. Yep.
11 Q. Are those the -- some of the --
12 A. Yes, these are -- these are some of
13 the criteria that we evaluate, as I mentioned
14 earlier. This list is obviously short. It's
15 not everything that we evaluate. There's a
16 lot of questions that we ask in every case.
17 Q. How long have you been affiliated
18 with the Apollo Investment Management or
19 Apollo Investment Corporation?
20 A. I began working there in March of
21 2007.
22 Q. And since that time, how many
23 transactions have you worked on, or
24 investment opportunities have you worked on?
5 (Pages 14 to 17)
14
1 Hewes
2 You can answer.
3 MR. SOLOMON: I'll rephrase it.
4 Q. How many -- you testified earlier
5 about potential investments. Do you recall
6 that?
8 Q. How many potential investments have
9 you worked on since March of 2007 on behalf
10 of either AIM or AIC?
11 A. Including the universe of potential
12 investments not completed?
13 Q. Correct.
14 A. I've never counted, to be honest,
15 but I would say it's more than 100, less than
16 250.
17 Q. And how many have you worked on
18 during that same time period that were
19 completed?
20 A. Between ten and 20.
21 Q. Were any of these ten to 20 that
22 were completed, did any of them involve an
23 equity investment?
24 A. First, those numbers in both cases
25 were approximate estimations.
15
1 Hewes
2 Did any of them include an equity
3 investment?
4 Q. Yes.
5 A. Yes.
6 Q. In connection with the equity
7 investment, did you or anyone at your
8 direction undertake to determine the value of
9 the entity itself prior to making the
10 investment?
12 A. Generally, no. The -- in the cases
13 where we made equity investments, they were
14 limited to, again, generally to
15 co-investments where our primary role in the
16 transaction was to provide debt financing or
17 invest in debt securities and in connection
18 with that role an opportunity to invest in
19 the equity of that business was presented to
20 us. And in those cases where it's a
21 co-investment, the purchase price or
22 valuation of the entity had already been
23 determined in the course of the transaction.
24 Q. In those instances --
25 (Discussion off the record.)
16
1 Hewes
2 Q. In those situations in which the
3 valuation was determined in the course of the
4 transaction, did a third party provide the
5 valuation to AIC or AIM?
6 MR. EHRLICH: Objection to form. I
7 don't see the relevance to the debt
8 business judgment PSA, but you can
9 answer.
10 A. Do you mean -- what do you mean by
11 third party?
12 Q. Sure. You said the valuation was
13 determined in the course of the transaction.
14 I just want to understand who did the
15 valuation.
16 A. In many cases our investments are
17 made in connection with the acquisition of a
18 company. Typically by a sponsor or firms we
19 refer to as financial sponsors and they may
20 have reached an agreement to acquire a
21 business at a price privately in the
22 negotiated process that we were not part of
23 or privy to, or they may have reached an
24 agreement to acquire a business in an
25 auction. Again, part of a valuation process
17
1 Hewes
2 that we were not part of or privy to.
3 Q. Prior to commencing work at AIM in
4 2007, were you employed?
5 A. I was employed for -- by UBS
6 Investment Banker, which is the marketing
7 name for UBS Securities, LLC.
8 Q. And how long did you work for UBS?
9 A. I believe since 2002, early 2002.
10 Sorry, 2001.
11 Q. I understand the time frames are
12 approximate.
13 Prior to working at UBS were you
14 employed?
15 A. Yes, I was.
16 Q. By whom?
17 A. Immediately prior to that I worked
18 for approximately 1 year for a technology
19 startup in Los Angeles, California. A
20 company called NAMESAFE and then prior to
21 that I was employed for, by DLF Securities or
22 Donaldson Lufkin & Jenrette, which was at the
23 time an investment bank.
24 Q. What was your role at UBS during
25 the time period, just generally?
6 (Pages 18 to 21)
18
1 Hewes
2 A. Generally for, I believe I was
3 there for around 6 years in total. For most
4 of that time I was employed working to
5 finance financial sponsor acquisitions, so
6 providing debt financing in a different
7 capacity. But it's a business area that is
8 commonly referred to as leveraged finance.
9 Q. And at DLJ what were your
10 responsibilities?
11 A. At DLJ I -- it was my first job --
12 I was an analyst and I was what was called a
13 generalist, which means I did whatever they
14 told me to do.
15 Q. Do you currently serve on any
16 boards?
17 A. I do.
18 Q. Which boards are those?
19 A. Innkeepers USA Trust.
20 Q. Do you serve on any other boards?
21 A. I do not, no.
22 Q. How did you come to serve on the
23 Innkeepers's trust board?
24 A. There was a vacancy on the board
25 earlier this year and I believe I was
19
1 Hewes
2 nominated given my involvement over the
3 recent period of time in the business and the
4 nomination was accepted by the board.
5 Q. Do you serve on the board of
6 Innkeepers's trust -- excuse me -- Innkeepers
7 USA Trust as a result of or in connection
8 with your position at AIM or AIC?
10 You can answer.
11 A. I believe that's a fair statement,
12 yes.
13 Q. Are you an independent director on
14 the Innkeepers USA Trust board?
15 A. No.
17 court reporter to mark as Exhibit 3.
18 (Exhibit Hewes-3, Amended Notice of
19 Deposition of Corporate Representative
20 of Apollo Investment Corporation and
21 subpoena duces tecum, marked for
25 It's the Amended Notice of Deposition of
20
1 Hewes
2 Corporate Representative of Apollo Investment
3 Corporation and subpoena duces tecum dated
4 August 7, 2010.
5 Have you seen this document before
6 today?
7 A. I believe so, although I'm -- I
8 believe so, yes.
9 Q. When did you see it?
10 A. I don't recall. I mean in recent
11 weeks.
12 Q. Who showed it to you?
13 A. I don't recall.
14 Q. Where were you when you reviewed
15 this document -- withdrawn.
16 Where were you when you saw this
17 document?
18 A. Likely in my office.
19 Q. Did you review -- I'm sorry.
20 A. I mean at my work place but I don't
21 recall.
22 Q. When you received this document,
23 did you review it?
24 A. I believe I reviewed it briefly.
25 Q. If you look on the second page,
21
1 Hewes
2 there is a heading, Rule 30(b)(6) Topics. Do
3 you see that?
4 A. Uh-huh.
5 Q. Did you review that section?
6 A. Yes, I've reviewed this section.
7 Q. And are you appearing here today
8 pursuant to this notice?
9 A. Yes.
10 MR. EHRLICH: Please note that he's
11 appearing subject to the objections that
12 AIC served in response to this notice.
13 Q. Sir, did you do anything to prepare
14 for today's deposition?
15 A. Yes. I met with my counsel at Paul
16 Weiss on, earlier this week. I also, or I
17 should say included in those meetings were
18 other representatives from Apollo and we, you
19 know, reviewed the topic matters to be --
20 that you have requested that we discuss
21 today.
22 Q. Which counsel is that? Was it
23 attorneys from Paul Weiss?
24 A. It was attorneys from Paul Weiss,
25 yes.
7 (Pages 22 to 25)
22
1 Hewes
2 Q. Were there any other attorneys
3 present?
4 A. The internal counsel for Apollo
5 Investment Corporation, Joe Glatt attended
6 portions of those meetings.
7 Q. Who else from Apollo, if anyone,
8 attended?
9 A. Justin Korval, who works for me,
10 attended portions of those meetings and Jim
11 Zelter, who is the CEO of Apollo Investment
12 Corporation and my boss, attended portions of
13 those meetings.
14 Q. Anyone else?
15 A. No.
16 Q. During these meetings, sir -- this
17 is a yes or no question. During these
18 meetings, did you review any documents?
19 A. Yes, we did.
20 Q. Did any of the documents that you
21 reviewed refresh your recollection about any
22 of the topics identified in the 30(b)(6)
23 section of the notice?
24 MR. EHRLICH: Again, that's a yes
25 or no question.
23
1 Hewes
2 A. I'm sorry, can you repeat the
3 question.
4 MR. SOLOMON: Sure. Could you read
5 it back.
6 (A portion of the record was read.)
7 A. I think that's a fair statement.
8 Q. Sorry, could you explain your
9 answer. It was a yes or no question.
10 A. I'm sorry, yes.
11 Q. Which documents did you review that
12 refreshed your recollection about any of the
13 topics identified in the 30(b)(6) notice?
14 A. I reviewed a binder containing
15 documents, including -- including some
16 financial presentations, drafts, multiple
17 drafts of term sheets, some of the filings, I
18 believe, in connection with -- I mean there
19 was several hundred pages of stuff. I don't
20 recall every document.
21 Q. I understand. I can only ask for
22 your recollection as you sit here.
23 A. There were general materials that
24 you would expect that I would review in
25 connection with these matters.
24
1 Hewes
2 Q. I don't expect anything. If there
3 are any others that you recall, please tell
4 me. If you don't recall any others, that's
5 fine also.
6 A. Specific documents, again, no.
7 Just trying to describe the nature of the
8 materials.
9 Q. I'm going to be showing you several
10 documents today. If at any point that I show
11 a document that is one of the documents you
12 reviewed during your preparation that
13 refreshed your recollection, I would
14 appreciate it if you would identify that for
15 me.
16 MR. EHRLICH: Why don't you ask him
17 in connection with the document. I
18 don't think it's fair to have a standing
19 that lasts for the course of the day.
20 MR. SOLOMON: I have my request
21 there and you've made your objection.
22 MR. EHRLICH: Note my objection.
23 Q. Sir, do you know who Dennis Craven
24 is?
25 A. Yes.
25
1 Hewes
2 Q. Who is he?
3 A. He up until -- he was the chief
4 financial officer of Innkeepers up until he
5 decided to resign, I believe, in June or
6 July.
7 Q. Of this year?
8 A. Uh-huh.
10 Q. Do you know why Mr. Craven decided
11 to resign?
12 A. I do not. I did not speak to him
13 about his resignation.
14 Q. Did you speak to anyone about his
15 resignation?
16 A. It was discussed among members of
17 our team generally when it occurred, not in
18 any great detail. We were informed that he
19 resigned, I believe, by Marc Beilinson.
20 Q. During these discussions, did
21 anyone say in form or substance or explain in
22 form or substance as to why they believed Mr.
23 Craven resigned?
24 A. No.
25 Q. Are you aware that Mr. Craven
8 (Pages 26 to 29)
26
1 Hewes
2 submitted a declaration dated July 19, 2010,
3 in this proceeding?
4 A. I'm aware, yes.
5 Q. Is that one of the documents you
6 reviewed in preparation for today?
7 A. No.
9 court reporter to mark as next in order.
10 (Exhibit Hewes-4, Amended
11 Declaration of Dennis Craven, Chief
12 Financial Officer of Innkeepers USA
13 Trust, In Support of First-Day
14 Pleadings, marked for identification,
15 this date.)
16 Q. Sir, take a moment to review the
17 document, to the extent you need to. But my
18 first question is, have you seen this
19 document before today?
20 A. Yes, I have seen it several times.
22 A. I believe the first time I saw it
23 was when I downloaded it from the Omni
24 Management website after it had been posted.
25 Q. Is that a website that has the
27
1 Hewes
2 pleadings in this proceeding?
3 A. Yes. I don't know the exact nature
4 of the word "pleadings" in the context of the
5 papers.
6 Q. I'll rephrase my question.
7 A. It has a lot of documents
8 related --
9 Q. I'll rephrase my question.
10 Is the first time you saw this
11 document after it was executed?
12 A. Yes, I believe so.
13 Q. Feel free to look at whatever
14 section of the document or the entirety of
15 the document that you'd like, but I would
16 like to direct your attention to paragraphs
17 10 through 13 for the moment.
18 MR. EHRLICH: Why don't you read
19 those paragraphs.
20 Q. Just let me know when you are
21 ready.
22 A. Sure.
23 Okay.
24 Q. Let me direct your attention to
25 paragraph 10 for a moment. You see the first
28
1 Hewes
2 sentence in paragraph 10, quote, The debtors
3 have successfully negotiated a consensual
4 integrated restructuring transaction which
5 includes three separate yet wholly
6 interrelated agreements.
7 Do you see that?
8 A. Yes.
9 Q. As you sit here today, do you have
10 any understanding as to what transaction
11 Mr. Craven is referring to in paragraph 10 in
12 that first sentence?
14 You can answer.
15 Are you asking him based on his
16 reading of the document?
17 MR. SOLOMON: Yes.
18 A. Yeah, I mean, I believe it's
19 relatively clear. He proceeds to describe
20 the various agreements that he's referring to
21 in the transaction.
22 Q. I understand it appears to be
23 clear. I need to ask certain questions so
24 that I can ask later questions, so if you
25 bear with us, I would appreciate that.
29
1 Hewes
2 A. Okay. Can you repeat your
3 question.
4 Q. Do you have an understanding, as
5 you sit here today, as to the transaction
6 Mr. Craven is referring to in the first -- or
7 transactions Mr. Craven is referring to in
8 the first sentence of paragraph 10?
10 You can answer.
11 A. Did I have an understanding -- I'm
12 sorry, can up repeat the question again.
13 Q. Cut straight to it. Do you know
14 what transactions Mr. Craven is referring to
15 in that sentence?
16 A. Yes.
17 Q. What transactions are those?
18 A. He, I believe, because these are
19 his words, he is referring to the Marriott
20 agreement, the DIP financings, and the
21 agreement with Lehman Brothers.
22 Q. Based upon your experience --
23 withdrawn.
24 Are you familiar with the
25 transactions separate and apart -- withdrawn.
9 (Pages 30 to 33)
30
1 Hewes
2 Are you familiar with the
3 transactions that you've just mentioned
4 separate and apart from reviewing
5 Mr. Craven's declaration?
7 You can answer.
8 A. Am I familiar --
9 Q. Prior to reading this --
10 A. Can you be more specific?
11 Q. Certainly.
12 Prior to reading this declaration
13 were you wear of the Marriott agreement
14 that's referred to herein?
15 A. I was aware that the company was
16 working to secure an agreement with Marriott.
17 I had not seen it and reviewed it.
18 Q. Did there come a time that you
19 learned that they did, in fact, secure an
20 agreement with Marriott?
21 A. Yes.
22 Q. Prior to reviewing this declaration
23 were you aware of the agreement for the DIP
24 financing that's referred to herein?
25 A. Prior to reviewing this document?
31
1 Hewes
2 Q. Yes.
3 A. Yes.
4 Q. Prior to reviewing this document
5 were you familiar with the PSA, Plan Support
6 Agreement?
8 You can answer.
9 A. Prior to reviewing this document, I
10 believe so, yes.
11 Q. Prior to reviewing this document,
12 did you know whether the debtors had entered
13 into the PSA?
14 MR. EHRLICH: You mean prior to his
15 first review of it whenever it is he
16 downloaded it off of the Omni website?
17 MR. SOLOMON: Correct. Correct.
18 A. I believe I learned that the
19 debtors had entered into the PSA sometime
20 during the weekend prior to the company
21 filing for bankruptcy. I don't recall
22 exactly when.
23 Q. The three agreements, the Marriott
24 agreement, the DIP financing agreement, and
25 the PSA, do you believe those three
32
1 Hewes
2 agreements are integrated restructuring --
3 withdrawn.
4 Do you believe the three
5 agreements: the Marriott agreement, the DIP
6 financing agreement, and the PSA are part of
7 an integrated restructuring transaction?
9 Calls for opinion testimony.
10 You can answer.
11 A. In that they appear to rely on each
12 other in certain respects, I would call that
13 integrated.
14 Q. Do you believe they are
15 interrelated agreements?
17 You can answer.
18 A. Is there a distinction between
19 integrated and interrelated?
20 Q. Do you believe there's one?
21 A. Not a material one, no.
22 Q. Okay. Turn your attention to
23 paragraph 13.
24 A. Sure.
25 Q. In the first sentence, Mr. Craven
33
1 Hewes
2 is referring to the debtors' understanding
3 about the Lehman's willingness, do you see
4 that, in the very beginning?
5 A. Yes, I see that's what it says.
7 any knowledge as to how Mr. Craven may have
8 come to that understanding?
10 First of all, read the complete
11 sentence before you answer, and I would
12 object.
13 A. Can you repeat the question?
14 Q. Sure.
15 MR. SOLOMON: Could you read it
16 back.
18 MR. EHRLICH: Please note my
19 objection to a question better suited to
20 the debtors or Lehman.
21 A. I think you would have to ask
22 Mr. Craven how he came to know that. I don't
23 -- I mean do I know specifically, no.
24 Q. You're on the Innkeepers board,
25 correct?
10 (Pages 34 to 37)
34
1 Hewes
2 A. Correct.
3 Q. As part of your role on the board,
4 you are responsible for certain activities of
5 the company, correct?
7 You can answer.
8 A. Responsible for certain activities
9 of the company, I don't think that's an
10 accurate description of my role on the board.
11 Q. As part of your role on the board
12 you are presented with information from time
13 to time concerning the company, correct?
14 A. Correct.
16 You can answer.
17 A. Correct.
18 Q. At any time prior to today were you
19 in your role as a board member of Innkeepers
20 provided with information that led to you
21 believe that Lehman's willingness to enter
22 into the PSA was conditioned upon its ability
23 to sell a portion of its distribution equity
24 in the reorganized enterprise to a third
25 party?
35
1 Hewes
3 You can answer.
4 A. That was a long question. Can you
5 reread it.
7 MR. SOLOMON: That was good. You
8 got that all.
9 A. Yes.
10 Q. And how did you come to that
11 understanding?
12 A. The -- I don't specifically recall.
13 There were -- subsequent to initial
14 discussions between the company and Lehman
15 about -- I guess the interest payment default
16 would have triggered the first series of
17 conversations. Subsequent to an initial, an
18 initial meeting between the company and
19 Lehman where a discussion occurred about
20 Lehman having a role in the company's
21 restructuring as a, you know, in a potential
22 conversion of its note to equity, sometime
23 after that conversation I believe discussions
24 were had where the topic was raised that
25 Lehman may want to, you know, I guess as it's
36
1 Hewes
2 described here, sell a portion of its
3 distribution of equity, if such a transaction
4 were to occur.
5 Q. Do you recall when the first
6 conversations or discussions where the topic
7 was raised concerning Lehman potentially
8 wanting to sell a portion of its distribution
9 equity?
10 MR. EHRLICH: Conversations between
11 whom and whom?
12 MR. SOLOMON: Conversations he
13 identified or discussions or topics he
14 identified in his last answer.
15 A. The specific date and time, no.
16 Generally I would say it was relatively soon
17 after the initial meeting I described, which
18 would have been in late April, if my memory
19 serves correct.
20 Q. April 22, 2010?
21 A. That sounds like the initial
22 meeting I was referring to, yes.
23 Q. Approximately how soon after is
24 relatively soon?
37
1 Hewes
2 Q. Within a week?
3 A. That sounds reasonable.
4 Q. Was the subject of Lehman's
5 potentially or possibly wanting to sell a
6 portion of its distribution equity ever
7 discussed by the Innkeepers board?
8 A. Was discussed --
9 THE WITNESS: Can you repeat the
10 question.
12 A. I believe at the final board
13 meeting immediately prior to -- immediately
14 prior to the bankruptcy filing, the
15 transactions that ultimately are reflected in
16 this document were discussed. Prior to that,
17 I don't recall.
18 Q. And among those transactions you're
19 referring to in your last answer was the
20 potential for Lehman to sell a portion of its
21 debt equity; is that correct?
22 A. Yes.
23 Q. What was said on that subject?
24 A. The -- the bulk of that
25 conversation, in fact, that conversation in
11 (Pages 38 to 41)
38
1 Hewes
2 its entirety was, to my understanding, was
3 discussed at an independent session, which I
4 did not attend, so I -- I can't tell you.
5 Q. Did anyone report to you what was
6 discussed at the independent session?
7 A. The -- subsequent to the conclusion
8 of the independent session, the topics that
9 were discussed were disclosed to the full
10 board in summary format which was an outline
11 of the transactions expected to be entered
12 into in connection with the bankruptcy, which
13 at the time I don't believe any of them were
14 final or complete.
15 Q. And was one of the transactions
16 that was expected to be entered into Lehman
17 selling a portion of its debt equity --
18 excuse me -- withdrawn.
19 Was one of the transactions that
20 was discussed, either in summary form or
21 otherwise, the transaction by which Lehman
22 may or might sell a portion of its
23 distribution equity?
24 A. I believe that that fact -- that
25 concept was certainly disclosed during the
39
1 Hewes
2 independent discussion, but I don't know at
3 what length it was discussed. I wasn't
4 there.
5 Q. At or prior to this time that
6 you've been describing, are you aware of any
7 discussions about who the potential
8 purchasers were for Lehman's distribution, or
9 a portion of Lehman's distribution equity?
11 A. At any time -- I'm sorry, can you
12 repeat the question.
13 MR. SOLOMON: Sure. I'll rephrase.
14 Q. You've identified a board meeting
15 at which certain topics were discussed.
16 A. Uh-huh.
17 Q. You also mentioned, if I recall
18 correctly, there was a summary provided about
19 what happened at an independent session.
20 A. Uh-huh.
21 Q. At that time were you aware of any
22 potential purchasers for any portion of
23 Lehman's distribution equity?
25 A. At that time of that meeting?
40
1 Hewes
2 Q. Yes.
3 A. Other than Apollo Investment
4 Corporation, no, I was not aware of any
5 potential purchasers.
6 Q. Is it your testimony that Apollo
7 Investment Corporation was one of the
8 potential purchasers?
9 A. I believe that's the implication in
10 my statement, yes.
11 Q. When for the first time did you
12 learn that Apollo Investment Corporation was
13 a potential purchaser for any portion of the
14 distribution of equity to be received by
15 Lehman?
16 A. Can you repeat the question.
17 MR. SOLOMON: Sure.
19 A. When did I learn that -- I'm having
20 a hard time with the nature of that question.
21 The -- the concept or the interest in
22 becoming a potential purchaser I think arose
23 -- arose in the late April time frame but
24 the, you know, at the time it was a concept.
25 Q. And did you learn about it in the
41
1 Hewes
2 late April time frame?
3 A. I believe that's accurate, yeah.
4 Q. Between the late April time frame
5 and July 19th were you aware of -- withdrawn.
6 Prior to the late April time frame
7 that you've been describing, did Apollo
8 Investment Corporation have any interest in
9 Innkeepers?
10 MR. EHRLICH: Any economic
11 interest?
12 Q. Any economic interest?
13 A. You need to be specific. I mean
14 there is a lot of time prior to late April 2,
15 2010.
16 Q. Between January 1 and 2007 --
17 withdrawn.
18 Between January 1, 2007, and late
19 April 2010 did Apollo Investment Corp. have
20 any economic interest in Innkeepers?
21 A. Between January 1 and late
22 April 2010 we were obviously the sole
23 shareholder of the company. The events that
24 ultimately unfolded and were largely
25 precipitated by what we refer to as the
12 (Pages 42 to 45)
42
1 Hewes
2 Marriott termination letter were certainly
3 not clear to us on the 1st of January and so
4 I think the question of, as to whether we had
5 an economic interest was -- was uncertain.
6 At the beginning of that time frame and
7 towards the end of the time frame I think it
8 became certainly more certain that we did not
9 have an economic interest.
10 Q. Why did it become more certain that
11 you did not have an economic interest?
12 A. Well, as I just described, the
13 business had been struggling for some time
14 to, you know, given the industry performance
15 and the economy, the Marriott termination
16 letter created certain, what I would
17 characterize as emergency or immediate
18 liquidity issues. They required the company
19 to invest significant amounts of dollars in
20 certain properties in a limited period of
21 time and given the analysis of the amount
22 money and the duration in which Marriott
23 requested it be spent, it became clear that
24 the company did not have those funds and
25 could not raise those funds given its current
43
1 Hewes
2 capital structure which, therefore, required
3 either a restructuring of the capital
4 structure or a bankruptcy. I guess those two
5 could describe the same thing.
6 Q. Was it your view that the shares in
7 the company held by AIC were virtually
8 worthless at that time?
10 You can answer.
11 A. At which time?
12 Q. After receiving the Marriott
13 termination letter that you described.
14 A. I think it's fair to say that the,
15 you know, subsequent to the Marriott
16 termination letter, which took us some time
17 to review and digest the implications, it
18 became clear that there was a, it was highly
19 unlikely that our interests in the company
20 would have any value, after due consideration
21 of the implications of that letter.
22 Q. What was the date of the Marriott
23 termination letter, if you recall?
24 A. I believe it was late March. I
25 don't recall the exact date.
44
1 Hewes
2 Q. 2010?
3 A. Yes.
4 Q. You mentioned that the AIC was the
5 sole shareholder of the company, do you
6 recall that?
7 A. Yes, and I would, I would qualify
8 that by saying I believe management owned a
9 small percentage of the shares, it's
10 relatively material.
11 Q. When did AIC become a shareholder
12 of the company?
13 A. In, I believe, the acquisition of
14 the company closed in June of 2007.
15 Q. Did you have any role in the
16 transaction?
17 A. I did not.
19 court reporter to mark as Exhibit 5 the
20 following binder.
21 (Exhibit Hewes-5, Plan Support
22 Agreement, marked for identification,
23 this date.)
45
1 Hewes
2 It's entitled Plan Support Agreement.
3 A. Uh-huh.
4 Q. Take whatever time you need to
5 review it but my first question is, have you
6 seen this document before today?
7 A. Yes, I have.
9 MR. EHRLICH: First?
10 Q. First time.
11 And when I ask "this document," I'm
12 referring to the actual executed version of
13 this document.
14 A. Oh, the actual executed version, I
15 think the first time I saw it was around the
16 time of the bankruptcy and I can't really --
17 don't recall if I saw the actual executed
18 version immediately prior to or immediately
19 after the bankruptcy.
20 Q. Some point in and around July of
21 this year?
22 A. Yeah.
23 Q. Mid July?
24 A. Correct.
25 Q. Is AIC a signatory to the Plan
13 (Pages 46 to 49)
46
1 Hewes
2 Support Agreement? And I'm going to refer to
3 it as PSA for shorthand if that's okay.
4 A. Sure.
5 Q. Is AIC a signatory to the PSA?
6 A. I don't see an AIC signatory on
7 these pages.
8 Q. Do you know if AIC ever
9 contemplated being a signatory to the PSA?
10 A. I don't believe so, no.
11 Q. If I could ask you to flip in
12 approximately about 25 pages or so, there's a
13 document entitled "Term Sheet." It is
14 Exhibit A, "Plan Term Sheet."
15 A. 25 pages from the beginning of the
16 book?
17 Q. Approximately, yes.
18 MR. SOLOMON: Counsel, could you
19 just point it out to him?
20 THE WITNESS: Are we looking at the
21 same thing?
22 MR. SOLOMON: I think so.
23 MR. EHRLICH: "Illustrative Terms
24 of Restructuring, July 17"?
25 MR. SOLOMON: Yes, it is.
47
1 Hewes
2 MR. EHRLICH: At the top?
3 MR. SOLOMON: Sure.
4 MR. EHRLICH: Okay.
5 Q. Have you seen this document before
6 today? And by "this document" I'm referring
7 to the term sheet that's attached as
8 Exhibit A to the PSA.
9 A. Can you confirm that this is the
10 execution version?
11 Q. I can confirm that this is what was
12 filed with the court, yes?
13 A. Okay. Then I've seen it, yes.
15 MR. EHRLICH: And again, you're
16 referring to the final as the final
17 version?
18 MR. SOLOMON: Yes, the version
19 that's filed that's attached to the PSA.
20 A. Right. Yeah, I would say I saw it
21 at the same time I saw the PSA, I believe.
22 Q. Is this one of the documents you
23 reviewed with counsel?
24 A. Yes.
25 Q. Did this document refresh your
48
1 Hewes
2 recollection about any of the events
3 referenced in the document or any of the
4 potential transactions or occurrences
5 referenced in the document?
6 A. Yes.
8 You can answer.
9 Q. What was your answer, sir?
10 A. It was yes.
11 Q. What did you discuss about this
12 document?
13 MR. EHRLICH: With counsel? That's
14 -- I direct the witness not to answer
15 that question.
16 MR. SOLOMON: My question stands.
17 The witness indicated that this document
18 refreshed his recollection.
19 MR. EHRLICH: You can ask him about
20 what recollection was refreshed but you
21 cannot ask him about conversations with
22 counsel.
23 MR. SOLOMON: I disagree. You've
24 made your direction. My question
25 stands.
49
1 Hewes
2 Q. What recollections were refreshed
3 by the review of this document?
4 MR. SOLOMON: But my question still
5 stands.
6 MR. EHRLICH: And I would direct
7 you to answer only if reviewing this
8 document in the course of our
9 preparation refreshed your recollection,
10 you can tell counsel what, if any,
11 recollection is refreshed.
12 A. I'm familiar with this document. I
13 don't -- and I'm familiar with the various
14 components of it. I don't, you know -- I'm
15 not sure how to answer your question.
16 Q. You've testified --
17 A. Did it refresh my memory that I
18 already had read it, yeah. I had read it and
19 reviewed it in and around the time of the
20 bankruptcy, you know, once an execution
21 version was presented but.
22 Q. Did it refresh your recollection
23 about any of the events, occurrences, or
24 transactions identified in the document?
25 A. Did it -- when you say refresh, it
14 (Pages 50 to 53)
50
1 Hewes
2 implies that it somehow brought back memories
3 that I didn't have before. Again, I stated,
4 I was -- had reviewed this document
5 previously. I'm familiar with it. The fact
6 that I reviewed it with counsel 2 days ago,
7 reminded me only that I had read it before
8 and was familiar with it.
9 Q. Prior to mid July of this year, had
10 you seen earlier drafts of the term sheet?
11 A. I don't recall -- the first time
12 that we saw the Plan Support Agreement, as I
13 mentioned earlier, I believe was immediately
14 prior to the bankruptcy filing. Prior to
15 that, we had not reviewed drafts of the Plan
16 Support Agreement.
17 Q. My question was a little different.
18 My question concerned the term sheet as
19 attached to the Plan Support Agreement?
20 A. I'm sorry.
21 Q. Have you seen earlier drafts of
22 that?
23 A. Of this term sheet? I don't -- you
24 know, I believe my prior statement remains
25 accurate. I don't think we saw the term
51
1 Hewes
2 sheet that was attached to the CSA -- the PSA
3 until immediately prior to the filing.
4 Q. My question also included drafts of
5 it though.
7 MR. SOLOMON: I'm going to ask the
8 court reporter to mark as Exhibit 6 a
9 document with Bates numbers LEH-ALI 1
10 through 4.
11 (Exhibit Hewes-6, Illustrative
12 Terms of Proposed Restructuring, May
13 [25] 2010, Bates Nos. LEH-ALI 000001
14 through LEH-ALI 000004, marked for
18 Take whatever time you need to review it but
19 my first question is, have you ever seen this
21 A. The first time I saw this document
22 was or I should say a document that appears
23 to be the same -- without comparison I can't
24 confirm it's identical -- would have been
25 earlier this week in reviewing materials for
52
1 Hewes
2 this deposition, and it was in a binder
3 prepared by Paul Weiss.
4 Q. Did the review of this document
5 refresh your recollection about any of the
6 events, transactions, or occurrences
7 referenced in the document?
8 A. I'm not sure what you mean. I
9 hadn't seen the document prior to 48 hours
10 ago.
11 Q. I understand, sir. But if you look
12 at the document, let me give you an example,
13 the second paragraph refers to a transaction
14 structure outlined herein assumes an
15 enterprise value for the reorganized company
16 of, paren, 975, close paren, million with a
17 footnote there, and a value of a floating
18 rate collateral of, paren, 200, close paren,
19 million.
20 Do you see that?
21 A. Yeah, I see the paragraph.
22 Q. In reviewing this document with
23 counsel, did any of the provisions in this
24 refresh your recollection about the structure
25 of any potential transaction or anything else
53
1 Hewes
2 having to do with the transaction that was
3 ultimately entered into by Innkeepers?
4 A. The terms of this document, which I
5 didn't review in detail earlier this week,
6 but I, as I said, I had saw it for the first
7 time, I believe, on Monday, are generally
8 unfamiliar to me. The numbers herein and the
9 structure of the transaction contemplated by
10 this term sheet were something I'm not
11 familiar with.
12 Q. My question was a little different.
13 MR. SOLOMON: Would you read my
14 question back.
15 A. Sure.
16 Q. It had to do with refreshing your
17 recollection, sir. Please listen.
19 A. I don't understand the meaning of
20 your question.
21 Q. After reviewing this document with
22 counsel, did you remember things about the
23 transaction or any transaction that was
24 entered into by Innkeepers that had not
25 remembered prior to reviewing this document?
15 (Pages 54 to 57)
54
1 Hewes
3 Q. Sir, I understand you had not seen
4 the document until a few days ago, but do you
5 know who prepared this document?
6 MR. EHRLICH: Objection, form,
7 foundation.
8 You can answer.
9 A. I don't know. I mean other than
10 looking at it and seeing that it says
11 prepared with counsel, it doesn't identify
12 the author.
13 Q. Sir, I'm not asking you to read the
14 document and make an assumption --
15 A. Oh, sorry.
16 Q. -- as to who might have prepared
17 it. My question is a little bit more direct.
18 Do you know or do you have any knowledge as
19 to who prepared this document?
20 A. I believe that upon seeing it
21 earlier this week it was mentioned --
22 MR. EHRLICH: I don't want you to
23 reveal anything you were told by
24 counsel. If you know based on
25 independent knowledge --
55
1 Hewes
2 THE WITNESS: I don't know.
3 MR. EHRLICH: -- from events that
4 happened during the case --
5 A. No, I don't know.
6 Q. Do you know to whom this document
7 was circulated, if anyone?
8 A. Having not seen it, I would have no
9 knowledge who it was circulated to.
10 Q. Well, I disagree. Let me explain a
11 potential situation.
12 You may have or someone may have
13 discussed this document in your presence.
14 Did that ever occur?
15 A. This document?
16 Q. Or the terms contained therein.
19 court reporter to mark as Exhibit 7 --
20 actually, let's go back to this document
21 for one moment if we can.
22 Q. If you turn to the second page of
23 this document, under the heading on the left
24 side "Backstop." Do you see that?
25 A. Yes, I see that heading.
56
1 Hewes
2 Q. Did you -- please read what's
3 described as the "Backstop" there.
4 A. You want me to read the paragraph?
5 Q. Yes. Not into the record, just to
6 yourself for a moment.
7 A. Okay.
8 Q. You had a chance to review that
9 paragraph?
10 A. Sure.
11 Q. Separate and apart from this
12 particular document, were you aware of any
13 discussions involving AIC providing a
14 "backstop" in form or substance as identified
15 here?
17 question.
19 A. No.
22 document bearing Bates numbers LEH-ALI
23 14 through 22.
25 Terms of Proposed Restructuring, June
57
1 Hewes
2 [2], 2010, Bates Nos. LEH-ALI 000014
5 THE WITNESS: Can we take a break
6 whenever it's convenient?
7 MR. SOLOMON: It's a fine time.
8 THE WITNESS: Now?
9 MR. SOLOMON: Sure. I will
10 accommodate you when there is no
11 question pending.
12 (A brief recess was taken.)
13 MR. SOLOMON: Are we back on the
14 record.
15 I will remind the witness that he
16 is still under oath.
17 THE WITNESS: Thank you.
18 Q. Sir, I want to go back and clarify
19 one or two things.
20 A. Sure.
21 Q. Earlier I asked you about what, if
22 anything, you did to prepare.
23 Other than meet with counsel and
24 review documents with counsel, did you do
25 anything else?
16 (Pages 58 to 61)
58
1 Hewes
2 A. Well, as I mentioned earlier, I met
3 with other members of AIC.
4 Q. That was while counsel was present,
5 correct?
6 A. Correct.
7 Q. Did you meet with other members of
8 AIC without counsel?
9 A. No, not to prepare specifically.
10 Q. Sorry? What was the last part of
11 your answer?
12 A. Not to prepare specifically, no.
13 Q. What about generally?
14 A. I --
15 MR. EHRLICH: Objection to form,
16 asked and answered.
17 Q. You can still answer.
18 A. I have an office on a floor full of
19 colleagues, so, you know, it was generally
20 known that I would provide this deposition as
21 a representative but in, you know, no, there
22 was no preparation.
23 Q. Did you attempt to ascertain
24 whatever information your colleagues at AIC
25 had with respect to the topics identified in
59
1 Hewes
2 the notice?
3 MR. EHRLICH: Subject to our
4 objections you can answer.
5 A. Are you asking did we confirm with
6 our colleagues that we had sufficient
7 information to answer your questions or did I
8 gather information from my colleagues? Is
9 that your question?
10 Q. You can answer that.
11 A. I prefer if you pose it as a
12 question.
13 MR. SOLOMON: You want to read that
14 back as a question, please.
16 Q. Sir, did you confirm with your
17 colleagues whether you had sufficient
18 information to answer the questions or
19 address the topics identified in the 30(b)(6)
20 notice?
21 A. We -- as I said earlier, we -- we
22 -- we met, relevant individuals were included
23 and I gathered information or discussed
24 information with those individuals so that I
25 could act as a representative of AIC here
60
1 Hewes
2 today.
3 Q. With respect to the areas
4 identified in the 30(b)(6) notice, correct?
5 A. Yes.
6 MR. EHRLICH: Subject to our
7 objections.
8 Q. I would like to take you back for a
9 moment to Exhibit 6. That's the Lehman --
10 excuse me -- that's the LEH-ALI 0001
11 document. Do you that have?
12 A. Yes.
13 Q. I believe you testified you had not
14 seen this before today, correct?
15 A. Correct. No, that's not what I
16 testified.
17 Q. I'm sorry. Withdrawn.
18 A. I testified that I had not seen it
19 prior to --
20 Q. Review with counsel.
21 A. Correct.
22 Q. Understood.
23 And I would like you to put to one
24 side for a moment review with counsel.
25 A. Okay.
61
1 Hewes
2 Q. Did you do anything to inquire as
3 to whether anyone at AIC saw this document
4 prior to today?
5 A. Did I inquire as to whether --
6 Q. Yes.
7 A. -- others had seen this document?
8 Q. Yes.
9 A. No, I did not.
10 Q. So as you sit here today, you can't
11 tell me whether one, two or no one at AIC had
12 seen this document, correct?
13 A. I don't believe anyone had seen
14 this document.
15 Q. And what do you base that belief
16 on?
17 A. The terms of it are wholly
18 unfamiliar to me and --
19 Q. Is it -- sorry.
20 MR. EHRLICH: Let --
21 A. -- and as the individual who has
22 been significantly involved in the events
23 leading up to the bankruptcy and at later
24 stages -- strike that part.
25 But I believe I would have been
17 (Pages 62 to 65)
62
1 Hewes
2 aware had someone seen this document.
3 Q. So I understand, it's your
4 testimony that you would be aware if someone
5 at AIC had seen this document prior to this
6 week?
7 A. Yes, I believe I would be aware if
8 someone at AIC had seen this document.
9 Q. In preparation for your deposition,
10 did you review a -- did you review AIC's
11 files?
13 A. Did I review our files?
14 Q. Yes.
15 A. I'm not sure what you mean.
16 Q. Withdrawn.
17 In preparation for your deposition,
18 in your designation as AIC's 30(b)(6)
19 witness, did you review AIC's documentary
20 files?
22 foundation.
23 A. That question is too broad.
24 Q. In preparation for --
25 A. The reason it's too broad is we
63
1 Hewes
2 have millions of pages of electronic
3 documents. There is no possible way I could
4 have reviewed all of AIC's files.
5 Q. That wasn't my question. I didn't
6 ask if you reviewed all of them. I just
7 asked if you reviewed any of them in
8 preparation for your deposition.
9 A. I reviewed --
10 Q. And I'm referring to other than
11 documents you may have been shown by counsel.
12 A. No. In preparation for this
13 meeting, no.
14 Q. So the only documents you reviewed
15 in preparation for this deposition here today
16 are those selected and presented to you by
17 counsel; is that correct?
18 MR. EHRLICH: I object to the form
19 of that question and the implication
20 that there is something improper in
21 that.
22 But you can answer.
23 MR. SOLOMON: No implication at
24 all, I'm just trying to understand the
25 witness' testimony. He's told me there
64
1 Hewes
2 are millions of documents at the company
3 and I just want to make sure I
4 understand what he has reviewed and what
5 he has not reviewed.
6 MR. EHRLICH: Okay.
7 You can answer.
8 A. What is your specific question?
9 Can you repeat it.
10 MR. SOLOMON: Please read back.
11 THE WITNESS: After all that...
13 A. Not exactly.
14 Q. Why is that not correct?
15 A. Well, I've reviewed prior versions
16 of these documents as well as some of the
17 other docket filings in the case over the
18 past several weeks since the company filed
19 for bankruptcy. And I would include those
20 not as preparation specifically for this
21 meeting, but as -- as my being diligent and
22 aware of the proceedings of the case.
23 Q. Other than filings -- and I assume
24 you are referring to public filings in the
25 bankruptcy proceeding; is that correct?
65
1 Hewes
2 A. Correct.
3 Q. -- what other documents did you
4 review?
5 MR. EHRLICH: In the course of his
6 doing his work at AIC?
7 MR. SOLOMON: Yes.
8 MR. EHRLICH: You can answer.
9 A. I review documents every day in the
10 course of doing my work at AIC.
11 Q. But with respect to this
12 transaction or situation.
13 A. In preparation for this meeting?
14 Q. Yes.
15 A. I didn't -- No.
16 Q. The court reporter has marked as
17 Exhibit 7, Bates number LEH-ALI 14 through
18 22. Do you see that, sir?
19 A. Uh-huh. Yes.
20 Q. "Illustrative Terms of Proposed
21 Restructuring June (2) 2010" across the top.
22 Do you see that?
23 A. I do.
24 Q. Prior to your meeting with counsel,
25 had you seen this document?
18 (Pages 66 to 69)
66
1 Hewes
2 A. Prior to my review with counsel, I
3 don't believe I've seen this document
4 previously.
5 Q. Do you know if anyone at AIC had
6 seen this document prior to your meeting with
7 counsel?
8 A. I cannot confirm specifically but I
9 don't believe anyone at AIC would have seen
10 or has seen this document, because the terms
11 of it, again, look unfamiliar.
12 Q. And is your testimony based on the
13 fact that since you were involved in this
14 situation that if someone at AIC had seen
15 this document, you would be aware of that?
16 A. Yes, in addition to, as I
17 mentioned, the terms of this document look
18 wholly unfamiliar and had certain of these
19 terms been in a document that someone at AIC
20 reviewed, I would have believed that I would
21 have heard about it.
22 Q. What terms are those that you're
23 referring to in your last answer, sir?
24 A. Well, specifically I remember some
25 things by numbers, so for example, the
67
1 Hewes
2 percentages outlined herein around equity
3 offering and some of these other percentages,
4 these dollar amounts 171 million, breakup
5 fee, 4.275 million, I don't -- I'm not
6 familiar with, nor had I seen previously, nor
7 do I recall discussions of these figures at
8 all.
9 Q. And those are the provisions
10 referring to on the page Bates stamped
11 LEH-ALI 18?
12 A. A subset of them, yes. There's a
13 lot of provisions on that page.
14 Q. You're referring to equity offering
15 and then you referred to the numbers on the
16 page?
17 A. Correct.
18 Q. I just want to make sure the record
19 is clear which page you're referring to.
20 A. I'm not testifying to the entire
21 page. I'm just calling out certain things.
22 Q. Anything else?
23 A. No.
24 Q. Were you or anyone at AIC aware of
25 any discussions about AIC purchasing
68
1 Hewes
2 approximately 62 percent of the new equity?
4 You can answer.
5 Q. New equity as referred to in this
6 document?
7 A. Yeah, I mean that's -- that's
8 precisely one of the reasons I know I didn't
9 see this document and I'm also confident that
10 no one else at AIC did because I don't
11 remember any iteration of this transaction
12 that contemplated 62 percent of the equity
13 being purchased by AIC ever.
14 Q. Do you know if this document,
15 Exhibit 7, was circulated to anyone?
16 MR. EHRLICH: Anyone in the world?
17 MR. SOLOMON: Anyone in the world,
18 correct.
20 You can answer.
21 A. I can't possibly know that.
22 Q. Did you discuss this document with
23 anyone at any time?
25 He's testified he hasn't seen it.
69
1 Hewes
2 But you can answer. Excluding our
3 preparation.
4 A. I believe I answered that question.
5 Q. You indicated you hadn't seen the
6 document and I understand that. I'm asking
7 if you had discussed it prior?
8 A. Prior to --
9 Q. Prior to you're meeting with
10 counsel, did you discuss this document with
11 anyone?
13 foundation. How can he discuss a
14 document he hasn't seen and that he
15 testified he does not have any
16 familiarity with the concepts contained
17 therein.
19 A. No.
20 Q. Were you aware of any discussions
21 between May 25th and June 2nd of 2010 with
22 respect to a proposed restructuring for
23 Innkeepers?
25 question.
19 (Pages 70 to 73)
70
1 Hewes
3 A. Yes.
4 Q. What discussions were those?
5 A. I was aware only that the company
6 was discussing a potential restructuring in
7 some format with Lehman Brothers.
8 Q. Were you aware of any of the terms
9 of the potential restructuring?
11 Same time frame?
12 MR. SOLOMON: Same time frame, yes,
13 between May 25th and June 2nd.
14 A. Other than the concept that Lehman
15 may convert some or all of its debt into
16 equity. Other terms, no.
17 Q. How did you become aware of that?
18 A. Which?
19 Q. That Lehman may convert some of its
20 debt into equity?
21 A. Like I said earlier, there was a
22 meeting in late April in which that concept
23 was originally discussed and I believe that
24 would be when I became aware of it.
25 Q. Are you aware of any specific
71
1 Hewes
2 conversations on that subject that occurred
3 between May 25th and June 2nd of 2010?
4 A. Am I aware of any -- no, I don't
5 believe so.
8 document Bates stamped INN_MID 3533
9 through 3548.
10 (Exhibit Hewes-8, Document
11 entitled, "Project Tavern, Lehman
12 Discussion Materials," Bates Nos.
13 INN_MID00003533 through INN_MID00003548,
14 marked for identification, this date.)
15 Q. Sir, have you seen this document
16 before today?
17 A. I believe so, yes.
18 Q. Did you see it before your meeting
19 with counsel?
21 Q. Did you see it on or about
22 April 22, 2010?
24 You asked me a question earlier
25 about April 22nd, maybe an hour ago. Can you
72
1 Hewes
2 return to that question when appropriate?
3 MR. SOLOMON: As your counsel will
4 tell you, you will have an opportunity
5 to review the transcript and if there is
6 anything you think needs to be changed,
7 corrected, modified in any way, you will
8 have that opportunity.
9 THE WITNESS: Okay.
10 Q. Is there an answer you wish -- as
11 you sit here right now, is there an answer
12 you recall that you wish to change, modify,
13 correct or amend in any way?
14 A. I don't recall the answer. I just
15 remember the topic of April 22nd so I wanted
16 to ensure that you had the correct answer.
17 Q. I appreciate that.
18 Are you familiar with Moelis &
19 Company?
20 A. Yes.
21 Q. Who or what is Moelis & Company?
22 A. It is a, what's commonly described
23 as a boutique investment bank. They provide
24 advisory services. Among them restructuring
25 and other advisory services.
73
1 Hewes
2 Q. To your knowledge, did they provide
3 any services to Innkeepers?
4 A. Prior to --
5 Q. Between January 1, 2010, and the
6 present time, to your knowledge has Moelis
7 provided any services to Innkeepers?
8 A. Yes, they've been engaged by the
9 company as an advisor. I don't know the date
10 of that engagement but yes, they have
11 provided services.
12 Q. Do see what's been marked as
13 Exhibit 8, it's been in front of you. Was
14 this document provided to you in or during a
15 meeting -- withdrawn.
16 How did you receive a copy of this
17 document on or about April 22, 2010?
18 A. I believe it was circulated at a
19 meeting.
20 Q. What meeting was this?
21 A. This was a follow-up meeting. It
22 was the second meeting, if memory serves me
23 correct, with, or I should say between the
24 company Lehman Brothers and certain of their
25 respective advisors to discuss a potential
20 (Pages 74 to 77)
74
1 Hewes
2 restructuring of the company.
3 Q. When was the first meeting?
4 A. The first meeting was, I believe,
5 about a week prior, a week to 10 days prior.
6 I don't recall the exact date.
7 Q. Who attended the first meeting?
8 A. There were a large number of people
9 in the first meeting. I don't know many of
10 the participants. But among them were Marc
11 Beilinson, Mark Murphy from the company.
12 Dennis Craven may have been there, I don't
13 recall. Representatives from Moelis &
14 Company, representatives from K&E, I believe,
15 on behalf of the company, a significant
16 number of people from Lehman Brothers, and
17 myself and Justin Korval.
18 That was the first meeting,
19 correct.
20 Q. That's what I'm asking about. You
21 said approximately a week before April 22nd,
22 correct?
23 A. Yeah.
24 Q. Approximately?
25 A. Yeah, you know, a week, 10 days, I
75
1 Hewes
2 don't recall.
3 Q. Did you take notes at that meeting,
4 first meeting?
5 A. No.
6 Q. Do you know if Mr. Korval took
7 notes at that meeting?
8 A. I don't believe he did, no.
9 Q. Do you recall what was discussed at
10 that meeting?
11 A. The -- if memory serves me correct,
12 the meeting was requested by Lehman Brothers.
13 The company had, on or about the first week
14 of April had defaulted on interest payments
15 to, I believe, substantially all of its
16 lending agreements and, as you might expect,
17 a lender who didn't receive an interest
18 payment requested a meeting with the company
19 to inquire as to what was going on generally.
20 Q. What did the company say in
21 response to that inquiry?
22 A. I believe Marc Beilinson in
23 response to that general inquiry gave a
24 history of recent events, what precipitated
25 his need to preserve liquidity and,
76
1 Hewes
2 therefore, not make interest payments, the
3 Marriott termination letter and the potential
4 implications of that letter and the company's
5 need to begin discussions with creditors
6 immediately regarding any potential
7 restructuring, consensual or otherwise.
8 Q. What did Mr. Beilinson say
9 precipitated the need to preserve liquidity?
10 A. What did he say precipitated the
11 need?
12 Q. Yes.
13 A. I don't know that he said anything
14 specifically that precipitated the need to
15 preserve liquidity. They were short on cash.
16 That was relatively obvious.
17 MR. SOLOMON: Could I have two
18 answers ago read back, please.
20 MR. SOLOMON: Stop.
21 Q. And your answer continues on. I've
22 asked the court reporter to stop. I just
23 want to understand what you were referring to
24 --
25 A. I'm sorry, can you repeat your last
77
1 Hewes
2 question, then?
3 Q. What did Mr. Beilinson say
4 precipitated the need to preserve liquidity?
5 A. Well, he had been delivered a
6 termination letter from Marriott that
7 required significant amounts of capital to
8 complete that he didn't have, that the
9 company didn't have. The -- you know, the
10 company's ability to service its debt was
11 certainly in question. Meaning, you know,
12 making monthly interest payments and having
13 any amount of liquidity left over what you
14 might define as an appropriate amount was
15 challenging, if not impossible. Things of
16 that nature.
17 Q. Do you have an understanding why --
18 withdrawn.
19 Was AIC invited to attend this
20 meeting?
21 A. Yes.
23 You can answer.
24 A. Yes.
25 Q. By whom?
21 (Pages 78 to 81)
78
1 Hewes
2 A. I don't recall specifically. I
3 mean it would have been the company.
4 Q. Generally.
5 Did you ever obtain an
6 understanding as to why the company invited
7 AIC to attend this meeting?
8 A. Did I ever -- no. I mean we were
9 -- no, we were just invited.
10 Q. To your knowledge, was a copy of
11 Exhibit 8 distributed to everyone who
12 attended the meeting?
13 MR. EHRLICH: The April 22nd
14 meeting or the preceding meeting?
15 MR. SOLOMON: The preceding
16 meeting. That's still the meeting we're
17 on. We have not left the meeting that
18 occurred --
19 MR. EHRLICH: I just wanted the
20 record to be clear that you're referring
21 to the distribution of Exhibit 8.
22 MR. SOLOMON: Correct.
23 MR. EHRLICH: At the preceding
24 meeting.
25 MR. SOLOMON: Correct.
79
1 Hewes
2 Q. The attendees at the meeting that
3 occurred approximately a week to 10 days
4 before April 22nd --
6 Q. -- were those attendees given a
7 copy at any time after that, obviously, of
8 what we've marked as Exhibit 8?
9 A. Were they given a copy at any time
10 after the meeting --
11 Q. Yes.
12 A. -- or were they given a copy during
13 the meeting? That was your first question.
14 Q. At any time.
15 A. To my recollection, there were no
16 documents that exchanged hands at the first
17 meeting. Attendees -- and then your second
18 question.
19 Q. There was no second question.
20 There was just one and you've answered it.
21 A. There were no documents distributed
22 at that meeting.
23 Q. Thank you.
24 A. There was no agenda for the
25 meeting.
80
1 Hewes
2 Q. The second meeting now, the one
3 that occurred on or about April 22nd, who
4 attended that meeting?
5 A. Again, there was -- well, let me
6 start by saying I attended a portion of that
7 meeting. There was a significant portion
8 which I was not present at and I can't
9 testify as to the attendees during that
10 portion of the meeting. From Lehman Brothers
11 I recall Michael Lascher and Susanne Frey,
12 only because they're the only names I know
13 there. There may have been someone else
14 there from Lehman, I don't recall. I believe
15 they brought advisors.
16 Q. They being Lehman in that answer?
17 A. Yeah, and again, my memory is
18 fuzzy, I don't recall specifically but they
19 may have had someone there from, from their
20 outside counsel and representatives from the
21 company.
22 Q. The company being Innkeepers?
23 A. Uh-huh.
24 Q. Is that a yes, sir?
25 A. Yes.
81
1 Hewes
2 THE WITNESS: Sorry. I'm trying to
3 think.
4 A. (Continuing) And one or two
5 representatives from Moelis & Company.
6 Q. You indicated that you attended a
7 portion of the meeting?
8 A. Correct.
9 Q. Was anyone else from AIC there?
10 A. I believe Justin Korval attended
11 the same portion of the meeting that I did.
12 Q. And what portion was that? What
13 was discussed during that portion?
14 A. It was the beginning portion of the
15 meeting. The -- if you go back to the first
16 meeting, as you recall, I indicated that
17 Lehman had requested a meeting with the
18 company to discuss the interest payment
19 default and other issues. The company
20 indicated it was in such a severe situation
21 that some sort of restructuring would be
22 required. Given that there had been no real
23 agenda for that initial meeting, there was no
24 preparation or there were -- and as I
25 indicated, there were no materials
22 (Pages 82 to 85)
82
1 Hewes
2 distributed, the request by Lehman to have
3 the second meeting was to better understand
4 through the preparation of some information
5 what the company's situation was, what
6 financial performance had been and might look
7 like in the company's estimation in the near
8 term, and based on -- I'm sorry, what was the
9 question?
10 Q. You were telling us what was
11 discussed --
12 A. What was discussed, okay.
13 Q. -- during the portion that you
14 attended.
15 A. And, you know, I believe Moelis &
16 Company as the company's advisor generally
17 walked representatives from Lehman and their
18 advisors through these materials in response
19 to that request.
20 Q. During the portion that you
21 attended, was there any discussion about a
22 potential restructuring transaction?
23 A. Other than the fact that one needed
24 to occur, I don't recall any specific
25 discussion about a restructuring transaction
83
1 Hewes
2 or what it might look like, no.
3 Q. Am I correct, you and Mr. Korval
4 left the meeting at the same time?
5 A. I believe so, yeah. I mean we -- I
6 recall we didn't leave together because I
7 think we were going different places, but as
8 far as I'm aware, he left at the same time.
9 Q. And you both left before the
10 meeting had concluded; is that correct?
11 A. Correct.
12 Q. Why did you both leave before the
13 meeting was concluded?
14 A. We were -- we were asked to leave.
15 I couldn't -- we were asked to leave because
16 the company wanted to have conversations with
17 Lehman Brothers without us there.
18 Q. Did you ever come to learn what
19 those conversations were -- withdrawn.
20 Did anyone ever report to you in
21 form or substance what conversations occurred
22 after you and Mr. Korval left the meeting?
23 A. Specifically?
24 Q. Or in general.
25 A. I mean I only infer that they
84
1 Hewes
2 continued to discuss information in these
3 materials but specifically I don't recall
4 receiving an update as to what they
5 discussed, no.
6 Q. Do you know if anyone at AIC ever
7 received an update as to what they discussed?
8 A. I don't know.
9 Q. In preparation for your testimony
10 here today, did you ask if anyone at AIC was
11 aware of what was discussed after you and Mr.
12 Korval left?
13 A. No. I don't recall it being that
14 significant of an event so, no.
15 Q. Was Project Tavern the code name
16 that was given to the potential
17 restructuring?
19 You can answer.
20 A. It appears to be.
21 Q. Do you know one way or the other?
22 A. It's on this document.
23 Q. Other than it appearing on the
24 document, do you have any knowledge?
25 A. It's on this document. It's on a
85
1 Hewes
2 document prepared by Moelis & Company. I
3 believe it's Project Tavern, yes.
6 document Bates -- a document.
7 (Exhibit Hewes-9, Document entitled
8 "Project Tavern, Midland Discussion
9 Materials," [not Bates stamped], marked
10 for identification, this date.)
12 front of you what has been marked as
13 Exhibit 9.
14 A. Uh-huh.
15 Q. Have you seen that document before
16 today?
17 A. Other than in preparation for this
18 meeting, and I should say I believe, because
19 I didn't spend a lot of time looking at it,
20 but I believe this document was included in
21 the materials that Paul Weiss presented me on
22 Monday and Tuesday. But prior to that, no, I
23 have not seen it.
24 Q. Prior to your meeting with your
25 counsel, were you aware of a meeting
23 (Pages 86 to 89)
86
1 Hewes
2 involving Midland and the -- and the company,
3 Innkeepers, on or about April 22, 2010?
4 MR. EHRLICH: You mean 28?
5 MR. SOLOMON: What did I say?
6 MR. EHRLICH: 22nd.
7 MR. SOLOMON: I'm sorry. I'll
8 withdraw the question. Thank you.
9 Q. Prior to your preparation with
10 counsel, were you aware of any meeting
11 between Midland and Innkeepers on or about
12 April 28, 2010?
13 A. Yes, I am aware and I'm not sure
14 how I would characterize it, as a meeting or
15 an attempt to have a meeting. The event
16 sticks out in my mind only because I had
17 heard that a number of people went to
18 Midland's offices, presumably to discuss --
19 MR. SOLOMON: Bless you.
20 A. -- the situation much as they had
21 with other creditors and upon arriving at
22 Midland's offices, they waited for what I
23 heard was most of the day, because Midland
24 wanted them to sign something that they
25 couldn't sign, or didn't sign, or hadn't
87
1 Hewes
2 discussed prior to showing up or whatever, I
3 don't know. But they went. They sat there
4 for six hours. What they did after that, I
5 don't know what happened.
6 Q. So you don't know if that document
7 that you just referenced was discussed before
8 the representatives from the company showed
9 up at Midland?
10 A. Well, no, I -- there was a, some
11 sort of agreement that the Midland asked the
12 company to sign before having a meeting. My
13 understanding is, they didn't ask the company
14 to sign that agreement until they showed up
15 and the representatives from Midland refused
16 to meet until this agreement was entered
17 into. And, therefore, they sat there for six
18 hours.
19 Q. How did you obtain that
20 understanding?
21 A. I believe that, and forgive me, I
22 don't know -- understand the exact nature of
23 this agreement. It was some sort of
24 agreement to negotiate or have a conversation
25 or whatever and I believe they were also
88
1 Hewes
2 asking -- they were asking for AIC to sign it
3 or agree to it or something and that's how I
4 came to know about it.
5 Q. Was AIC present in Midland's
6 offices at that time, that you were just
7 describing where someone allegedly waited six
8 hours?
9 A. No, no representatives from AIC
10 were there.
11 Q. So how did you come to understand
12 that someone was waiting approximately six
13 hours for a meeting?
14 A. Well, as I said, there was a
15 request that AIC sign something and it took
16 us a period of time to get to it and our
17 understanding, because --
18 Q. Let me see if I could -- who told
19 you this?
20 A. If I recall correctly, internal
21 counsel Joe Glatt was reviewing whatever this
22 agreement was.
23 MR. EHRLICH: I think the --
24 counsel's question is, who told you they
25 were waiting for the meeting.
89
1 Hewes
2 MR. SOLOMON: We will start with
3 that. That's fine.
4 A. Well, I mean it would have either
5 been, and I don't recall specifically, it
6 would have either been Joe Glatt or Marc
7 Beilinson, likely.
8 Q. And that they were waiting for the
9 meeting with representatives from Innkeepers
10 and Moelis, correct?
11 A. I don't know who specifically went
12 but I believe it would have been the same, it
13 would have been the company and presumably
14 both of its advisors, Moelis & Company and
15 K&E, but I don't know specifically. I wasn't
16 there.
17 Q. I would like you to open Exhibit 8
18 to the last page, please.
19 A. You said the last page?
20 Q. The last page of Exhibit 8.
21 A. Sure.
22 Q. Entitled "Proposed Governance
23 Structure." Do you see that?
24 A. Sure.
25 Q. Now, look at Exhibit 9, the last
24 (Pages 90 to 93)
90
1 Hewes
2 page or anywhere in that, do you see any
3 information about a proposed governance
4 structure in Exhibit 9?
6 I'm not sure what the benefit of having
7 this witness compare documents is but if
8 that's how you want to use your time, go
9 for it.
10 A. You want me to review all of
11 Exhibit 9 to look for --
12 Q. I want you to review whatever you
13 need to answer my question.
14 Let me see if I can shorten it. I
15 will withdraw my last question.
16 If you go to the last page of
17 Exhibit 9, does the last page of Exhibit 9
18 discuss any proposed any governance
19 structure?
20 A. No. The last page I have is marked
21 page number 15 and it appears to be a set of
22 financial metrics. I don't see anything
23 about that governance structure on this page.
24 Q. Looking at the last page of
25 Exhibit 8, leaving that open, please, it
91
1 Hewes
2 refers to "Lehman and investor to share
3 control of the trust."
4 Do you see that?
5 A. I do.
6 Q. At the meeting held on or about
7 April 22nd, was there any discussion as to
8 who that investor would be?
9 A. I don't recall. I mean I think
10 that Lehman had indicated a desire, should it
11 exchange its debt for equity, not to be the
12 sole individual shareholder. Presumably
13 that's what this is referring to.
14 Q. Was there any discussion as to who
15 would be or could be the other or other
16 shareholders?
17 MR. EHRLICH: At the April 22nd
18 meeting?
19 Q. At the April 22nd meeting.
20 A. I believe that -- I believe that we
21 had, we being AIC, had expressed only an
22 interest in investing new money into a
23 situation under the right terms, scenario,
24 whatever you want to call it.
25 Q. And when for the first time was
92
1 Hewes
2 that expressed by AIC?
3 A. I don't recall specifically, but it
4 would have been -- it would have been around
5 this time frame.
6 Q. When for the first time did AIC
7 contemplate the potential for purchasing a
8 portion of the equity.
9 Do you understand the difference
10 between my questions? My first question was
11 when it was expressed, and you've answer
12 that. I want to know if AIC had contemplated
13 that scenario before expressing it and if so,
14 when?
16 You can answer.
17 A. I think prior to the first meeting
18 that we discussed earlier, candidly it wasn't
19 clear to us in any way what the outcome of
20 the company's issues might be. And so I
21 would say I don't recall any contemplation
22 prior to that first meeting of investing in
23 new money into any sort of restructuring
24 transaction. I mean candidly we thought, we
25 didn't see that scenario as a possibility.
93
1 Hewes
4 document LEH-ALI 41 through 50.
6 Terms of Proposed Restructuring, June 4,
7 2010, Bates Nos. LEH-ALI 000041 through
8 LEH-ALI 000050, marked for
10 Q. Have you seen this document before
11 today?
12 A. Other than in preparation for this
13 meeting, I don't believe so, no.
14 Q. Prior to your meeting with counsel,
15 had anyone at AIC seen this document?
17 You can answer.
18 A. I don't believe so, no. And again,
19 the reason that I say that is the figures,
20 the numbers in this document are wholly
21 unfamiliar to me. You know, the -- there
22 appears to be this concept of a backstop in
23 here again, a percentage of 61.82 percent.
24 Numbers like that have never been discussed
25 among our team, the concept of a breakup fee.
25 (Pages 94 to 97)
94
1 Hewes
2 I don't -- I hadn't seen this document prior
3 to preparation and I don't think anyone else
4 had on our team.
7 document AIC 233 through 245.
8 (Exhibit Hewes-11, E-mail dated
9 6/17/10 with attachment, Bates Nos.
10 AIC 00000233 through AIC 00000245,
12 Q. Sir, take a moment to review this,
13 but I'll point out the cover e-mail indicates
14 that Mr. Beilinson sent it to you and Mr.
15 Korval on or about June 17 at 8:44 p.m.
16 Do you see that?
17 A. I do.
18 Q. My question is, have you seen this
19 document before preparation with counsel?
20 A. This looks familiar, yes.
21 Q. And do you believe you saw it on or
22 about June 17th?
23 A. It appears I received it on
24 June 17th. I don't recall candidly when I
25 first reviewed it.
95
1 Hewes
2 Q. Was it short -- at or shortly after
3 June 17th?
4 A. Yes, presumably.
5 Q. Do you have understanding as to why
6 Mr. Beilinson sent this document to you?
8 You can answer.
9 A. Do I know why he sent it to me, is
10 that the question?
11 Q. Do you have any understanding as to
12 why he sent it to you?
14 calls for speculation.
15 A. I mean it contemplates a
16 transaction with AIC, I assume that's why he
17 sent it to me.
18 Q. We've seen other documents that
19 contemplates a transaction with AIC earlier
20 today, do you recall those?
21 A. Uh-huh.
22 Q. You didn't receive those -- neither
23 you nor anyone at AIC received those, though,
24 correct?
25 A. That is my belief, correct.
96
1 Hewes
2 Q. Did you review this document after
3 receiving it?
5 Q. Do you have an understanding as to
6 the reference in the very first page of the
7 document itself, not the e-mail cover, to
8 term sheet alternative A?
9 Do you understand or have any
10 reason to understand why -- withdrawn.
11 Why is it alternative A? Was there
12 a B, C, or D?
14 You can answer.
15 A. My understanding was or is that at
16 the time Lehman and the company were also
17 discussing a transaction that did not involve
18 AIC.
19 Q. How did you reach that
20 understanding?
21 A. I believe Marc Beilinson indicated
22 that to members of AIC.
23 Q. When?
25 Q. Was it in writing?
97
1 Hewes
2 A. I don't -- I don't recall. I don't
3 think so.
4 Q. Who at AIC did Mr. Beilinson advise
5 of that fact?
6 A. I recall being told that the
7 company and Lehman Brothers were
8 contemplating an alternative scenario that
9 did not involve AIC. I can't testify as to
10 whether other people also heard the same
11 thing but it wouldn't surprise me if they
12 had.
13 Q. I'm asking you, though, in your
14 role now as a representative of AIC, do you
15 know whether other people -- I understand
16 personally you may not be able to testify as
17 to what other people said, heard and the
18 like, but as a representative of AIC, do you
19 know whether anyone else at AIC had a
20 conversation with Mr. Beilinson during which
21 he indicated in form or substance that the
22 company was contemplating a transaction with
23 Lehman that did not involve AIC?
24 A. I honestly don't recall. It's
25 possible, but it's possible also that they
26 (Pages 98 to 101)
98
1 Hewes
2 heard it, you know, it became generally known
3 from me passing it on to them or vice versa,
4 I don't recall.
5 Q. At that time did you have an
6 understanding as to any of the basic terms of
7 what was being discussed between Lehman and
8 the company?
9 MR. EHRLICH: Not involving AIC?
10 Q. With respect to the transaction
11 that did not involve AIC?
12 A. No, no.
13 Q. Did Mr. Beilinson give you any
14 information other than -- withdrawn.
15 At that time did Mr. Beilinson give
16 you any information other than we are
17 contemplating a transaction with Lehman that
18 does not involve AIC?
19 A. Did he -- can you repeat the
20 question?
21 Q. Sure.
23 Q. At the time Mr. Beilinson advised
24 you that the company was discussing a
25 potential transaction with Lehman that did
99
1 Hewes
2 not involve AIC, did Mr. Beilinson give you
3 any other information about that potential
4 transaction?
5 A. About the alternative transaction
6 with Lehman Brothers?
7 Q. Correct.
8 A. No, I don't -- I don't believe so.
9 Q. Do you know if he provided that
10 information to anyone else at AIC?
11 A. I don't believe so.
12 Q. So as you sit here today, you do
13 not know any of the terms or provisions that
14 were under discussion between the company and
15 Lehman with respect to the transaction that
16 did not involve AIC; is that correct?
17 MR. EHRLICH: Objection, asked and
18 answered.
19 A. We weren't involved in those
20 conversations. We didn't -- so, no, I'm not
21 familiar with what alternative transaction
22 the company and Lehman Brothers may have
23 discussed.
24 Q. Please turn to page 5.
25 A. Sure.
100
1 Hewes
2 MR. EHRLICH: Of the term sheet?
3 MR. SOLOMON: Exhibit 11. Of the
4 attachment not the -- page marked number
5 5 at the bottom.
6 MR. EHRLICH: Bates numbers 238.
7 THE WITNESS: Sure.
8 Q. You see at the bottom there is a
9 heading AIC Purchase of New Equity. Do you
10 see that?
11 A. I do see the heading.
12 Q. When you read that provision, I
13 would ask you does that appear to you to be
14 the structure or form that AIC discussed with
15 the company about -- with the company or
16 Lehman -- about its potential purchase of new
17 equity?
19 foundation.
20 You can answer.
22 question.
24 Q. You've had an opportunity to review
25 that provision?
101
1 Hewes
2 A. Yes.
3 Q. You remember earlier today you
4 indicated that based upon the existence of
5 the 82.18 percent and some of the other
6 numbers contained in the documents that we
7 saw, you believed AIC had not seen those
8 documents. Do you recall that?
9 A. Yes.
10 Q. Now, I'm asking you based on the
11 117.5 million number contained in here and
12 the 50 percent of the initial Lehman shares?
13 A. Uh-huh.
14 Q. Is -- are those numbers and those
15 percentages the terms that AIC was discussing
16 with either Lehman or the company with
17 respect to the purchase of new equity?
19 You can answer.
20 A. I believe there -- these are early
21 iterations of the terms or perhaps the first
22 iteration, I'm not sure, of the terms under
23 which we would purchase post reorganization
24 equity from Lehman Brothers. However, as you
25 can see, the terms of this agreement are --
27 (Pages 102 to 105)
102
1 Hewes
2 are different than, there are certain aspects
3 of this agreement that were not acceptable to
4 us.
5 Q. The purchase price of 117.5 million
6 that's identified there, do you see that?
8 Q. To your knowledge, did anyone at
9 AIC have any role in coming up with that
10 number?
11 MR. EHRLICH: Objection to form. I
12 just note for the record this is not an
13 AIC generated document.
14 A. Yeah, I don't know. Did we have
15 any role in coming up with 117.5, no.
16 Q. Prior to June 17, 2010, do you know
17 or, to your knowledge, did anyone at AIC
18 discuss with anyone, either at the company or
19 at Lehman, what the value of 50 percent of
20 the initial Lehman shares might be?
22 A. I don't recall a discussion of that
23 nature.
24 MR. SOLOMON: I'm asking the court
25 reporter to mark as Exhibit 12 document
103
1 Hewes
2 Bates number LEH-ALI 230 through 241.
3 (Exhibit Hewes-12, Term Sheet
4 Alternative A, Illustrative Terms of
5 Proposed Restructuring, June 17, 2010,
6 Bates Nos. LEH-ALI 000230 through
9 A. Sorry. Was there a question?
10 Q. Not at the moment. I wanted to
11 give you an opportunity to look at the
12 document. But I will point out to you, sir,
13 if you open Exhibit 11 to the second page --
14 A. Exhibit 11.
15 Q. Not the fax cover page but the
16 first page of the term sheet.
17 A. Uh-huh. Oh, sorry.
18 Q. I want to clarify something for
19 you.
20 A. Sure.
21 Q. I'm not trying to trick you here,
22 sir. Although both Exhibit 11 and Exhibit 12
23 say Illustrative Terms of Proposed
24 Restructuring June 17, 2010, in the upper
25 right of Exhibit A is Dechert draft 6/17/10
104
1 Hewes
2 and the upper right of Exhibit 12 is PW
3 comment 6/22/10.
4 Do you see that?
5 A. I do see that.
6 Q. I wanted to point out to you that
7 although they're dated the same, it's not
8 necessarily the same document.
9 A. Thank you, I appreciate that.
10 Q. Have you ever seen Exhibit 12
11 before today -- withdrawn.
12 Have you ever seen Exhibit 12
13 before your preparation session with counsel?
14 A. There were -- it's my
15 understanding, and consistent with the fact
16 that this is marked with a document that was
17 commented on by Paul Weiss, there were
18 versions of this term sheet that went back
19 and forth. It's difficult for me to confirm
20 that I reviewed this specific version. I
21 don't recall.
22 Q. In preparation for your deposition,
23 did you review your files to determine
24 whether you received this document?
25 A. Not specifically, no.
105
1 Hewes
2 Q. Turn to page 5, please.
3 A. Sure.
4 Q. If you look under the section, if
5 you look at the same heading that we looked
6 at earlier, AIC Purchase of New Equity. Do
7 you see that?
8 A. Yes.
9 Q. Now there's the purchase price of
10 85 million recited in there. Do you see
11 that?
12 A. Yes.
13 Q. That is 50 percent of the initial
14 Lehman shares?
15 A. Yes.
16 Q. Does the existence of the
17 $85 million number in this draft of the
18 document refresh your recollection as to
19 whether you received it or not?
20 A. Again, I -- and I'm not trying to
21 be cute, the -- the number sounds familiar.
22 I don't recall whether I reviewed this
23 specific draft of the document personally.
24 Q. Do you know if anyone at AIC
25 reviewed this draft of the document?
28 (Pages 106 to 109)
106
1 Hewes
2 A. I believe that at a minimum Joe
3 Glatt would have reviewed this document?
4 Q. What do you base your belief on?
5 A. That, simply that Joe corresponded
6 with our counsel at Paul Weiss regarding
7 comments to and drafts of this term sheet.
8 Q. Did you discuss this specific
9 version of the term sheet with Mr. Glatt?
11 Q. So as you sit here today, you don't
12 know for certain whether Mr. Glatt commented
13 upon this, do you?
14 A. I don't -- I don't believe Paul
15 Weiss would have sent out drafts for
16 responses to this document without input from
17 our internal counsel.
18 Q. I understand that, sir. My
19 question was a little different.
20 MR. SOLOMON: Can I have it read
21 back, please.
24 You can answer.
25 A. I don't think I would make that
107
1 Hewes
2 statement. The statement I would make is,
3 again to repeat, Joe corresponded with Paul
4 Weiss regarding comments to this term sheet,
5 and the figure of 85 million by example, I
6 believe was a counterproposal by AIC that
7 could have only made its way into this
8 document if Joe had commented on it, or
9 someone else at AIC. But again, I don't -- I
10 couldn't tell you specifically that I
11 reviewed this document.
12 Q. So I understand, you can't tell me
13 specifically whether you reviewed this
14 document, correct?
15 A. This draft of it.
16 Q. This draft of this document?
17 A. This specific draft.
18 Q. But you believe Mr. Glatt did
19 review this draft of this document?
20 A. I believe that's correct, yes.
21 Q. Turn to page 2 of the document,
22 Exhibit 12?
23 A. Uh-huh.
24 Q. Under the heading "Fixed Rate Debt"
25 on the left side?
108
1 Hewes
2 A. Uh-huh.
3 Q. Please take a moment just to look
4 at that provision.
5 A. Okay.
6 Q. Do you see that there's in the
7 second paragraph an indication that the
8 present value of the new fixed rate debt note
9 reflecting such election shall not exceed
10 $550 million?
11 Do you see that?
12 A. Yes, I do.
13 Q. Other than conversations with
14 counsel, do you have an understanding how
15 that number was arrived at in this document?
16 A. No, I don't.
17 Q. Take as much time as you need.
18 A. What was the first draft that we
19 received? This -- sorry. The June 17 draft.
20 This is also June 17.
21 It appears to be, that same figure
22 appears to be in the initial draft we
23 received that you gave me as Exhibit 11.
24 Q. And that came from counsel for
25 Lehman, correct, initially?
109
1 Hewes
2 A. Yes, it's marked Dechert draft.
3 Q. And it was forwarded to
4 Mr. Beilinson and then on to you, correct?
5 A. Correct.
6 Q. So that 550 number was in there
7 before, $550 million number was in there
8 before?
10 A. It appears to be in the first
11 draft, yes.
12 Q. Now, in the version you sent back
13 -- withdrawn.
14 In the version that your attorneys
15 sent back -- withdrawn.
16 In the version that was commented
17 upon by your attorneys on or about June 22nd
18 --
19 A. Uh-huh.
20 Q. -- you said, if I remember
21 correctly, there was a counterproposal of the
22 $85 million number in the AIC purchase of new
23 equity; is that correct?
24 A. Yes.
25 MR. EHRLICH: I would just note for
29 (Pages 110 to 113)
110
1 Hewes
2 the record that this document does as PW
3 comments on the first page although not
4 subsequent pages, it appears from
5 Lehman's files without a transmittal
6 document. You know, we can assume it
7 reflects comments but I don't think
8 we've established a foundation for that
9 and I just want the record to reflect
10 that.
11 THE WITNESS: I'm sorry. I wasn't
12 aware of that previously.
13 MR. EHRLICH: Right. I mean there
14 is no black line here. And the PW
15 comments only appears on the first page
16 so, you know, we can assume for the
17 purposes of this discussion that they
18 reflect comments but there may have
19 changes made subsequent by Dechert to
20 this document that aren't reflected
21 here, and given that it comes from the
22 Lehman, you know, I don't think it's
23 fair to assume necessarily that this
24 reflects comments on behalf of AIC.
25 MR. SOLOMON: Are you done with
111
1 Hewes
2 your objection?
3 MR. EHRLICH: Yes. I just want the
4 record to be clear. I would assume you
5 do too.
6 THE WITNESS: Was there a question
7 pending?
8 MR. SOLOMON: There will be in a
9 moment.
10 Q. Do you know whether Innkeepers or
11 anyone acting on Innkeepers' behalf ever
12 negotiated with the holders of the mortgage
13 debt secured by the properties in the fixed
14 rate pool to come to that $550 million number
15 that's reflected in this exhibit?
17 foundation.
18 You can answer.
19 A. I'm sorry. Can you repeat the
20 parties?
22 MR. EHRLICH: Note my objection.
23 A. Do I know if they negotiated with
24 the fixed rate lender? I don't -- I'm not
25 aware of such a negotiation.
112
1 Hewes
2 Q. Do you know if anyone acting on
3 behalf of AIC negotiated with the holders of
4 the mortgage debt secured by the properties
5 in the fixed rate pool with respect to that
6 $550 million number?
7 MR. EHRLICH: Objection to form and
8 foundation.
9 You can answer.
10 A. I don't believe AIC negotiated that
11 figure, no.
12 Q. Do you know if there were any
13 negotiations between anyone and the holders
14 of the mortgage debt secured by the
15 properties in the fixed rate pool to arrive
16 at that $550 million?
17 A. I couldn't possibly answer that
18 question. You'll have to be more specific.
19 Q. As you sit here today are you aware
20 --
21 A. You said anyone negotiated anything
22 regarding that figure. It's too broad of a
23 question.
24 Q. I'm asking if you are aware of any
25 such negotiations?
113
1 Hewes
2 A. I'm aware that the company has had
3 or attempted to have conversations,
4 negotiations, discussions, what have you,
5 with Midland. I don't know the nature of
6 those conversations. I haven't been involved
7 in any conversation with Midland nor, to my
8 knowledge, has anyone from AIC at any point
9 in time during the past several months, but I
10 couldn't possibly testify whether anyone had
11 any negotiation with Midland as to this
12 figure because I was never nor were other
13 members of AIC ever involved in those
14 conversations. That's why I said your
15 statement was too broad.
16 Q. I'm not asking if those
17 negotiations occurred, if at all. I'm asking
18 if you know of any negotiations, and that you
19 can respond to.
21 A. Again, I can't. I couldn't
22 possibly.
23 Q. You can't testify as to what you
24 know and what you don't know?
25 A. I don't know whether or not any of
30 (Pages 114 to 117)
114
1 Hewes
2 those parties other than AIC negotiated,
3 attempted to negotiate or discussed this
4 number with the holders of the fixed rate
5 mortgage. I couldn't possibly know. It
6 doesn't mean it didn't happen. They're two
7 different issues.
8 Q. I understand, sir, and you may be
9 misunderstanding my question. I'm not asking
10 you if it ever happened. I'm asking if you
11 know.
12 A. Well, that was -- that was my
13 interpretation of your earlier question. It
14 was very broad, anyone ever discussed
15 anything about, there were a lot of broad
16 words.
17 Q. The record will reflect what my
18 question was. But let me see if I can
19 clarify for purposes of moving forward.
20 A. Okay.
21 Q. As you sit here today, are you,
22 either personally or in your role as a
23 30(b)(6) designee of AIC, aware of any
24 discussions with the holders of the mortgage
25 debt secured by the properties in the fixed
115
1 Hewes
2 rate pool with respect to the $550 million
3 number that we saw in, on page 2 of
4 Exhibit 12?
5 A. As I testified earlier, I'm aware
6 that the company has had discussions with
7 Midland on, as the representative of the
8 fixed rate lenders. I don't know the content
9 of those discussions. I'm not aware of the
10 content.
11 MR. EHRLICH: We've been going for
12 quite a while. When it's convenient,
13 can we take a short break?
14 MR. SOLOMON: I would like to move
15 through as quickly as possible. But if
16 you are asking for a break this is a
17 fine time.
18 MR. EHRLICH: Would you rather --
19 let's go off the record for a second.
22 MR. SOLOMON: I remind the witness
23 that he is still under oath.
25 MR. SOLOMON: I would ask the court
116
1 Hewes
2 reporter to mark as Exhibit 13, a
3 document Bates stamped LEH-ALI 141
4 through 151.
11 Q. Sir, have you had an opportunity to
12 review Exhibit 13?
13 A. Briefly, yes.
14 Q. Did you see this document before
15 your preparation session with counsel?
16 A. I'm trying to jog my memory. It's
17 possible, although I don't recall
18 specifically whether I have seen this draft
19 prior to review with counsel.
20 Q. Do you know if anyone at ALI --
21 excuse me -- do you know if anyone at AIC saw
22 this version of the document prior to your
23 review with counsel?
25 You can answer.
117
1 Hewes
2 A. I would give the same answer.
3 Certainly I suppose it's possible but I don't
4 know specifically whether others at AIC
5 reviewed this specific draft.
6 Q. Do you know if they received it?
7 A. Same answer.
8 Q. Did you do anything to inquire in
9 preparation for your deposition here today as
10 to whether anyone at AIC received this
11 particular draft?
13 Q. Turn to page, the bottom of page 5,
14 carrying over to the top of page 6, there's a
15 reference to AIC purchase of new equity. Do
16 you see that?
17 A. Yes, I do.
18 Q. Do you see that the purchase price
19 there for 50 percent of initial Lehman shares
20 is now 110 million in this document?
21 A. I see that, yes.
22 Q. Does that refresh your recollection
23 as to whether or not you saw this document
24 prior to your review with counsel?
25 A. As to whether I saw it?
31 (Pages 118 to 121)
118
1 Hewes
2 Q. Yes.
3 A. Again, it's possible that I've seen
4 this specific draft. I don't recall
5 specifically whether I have or not.
6 Q. Does the $110 million number
7 contained in that provision refresh your
8 recollection as to whether anyone at AIC saw
9 the document before your meeting with
10 counsel?
11 A. I recall that number being
12 discussed. I don't know whether that was
13 specifically as a result of someone reviewing
14 this specific draft or whether it was
15 communicated in some other format.
16 Q. If you see, there's a footnote
17 after the $110 million number at the top of
18 page 6. Do you see that?
19 A. I do.
20 Q. And it's footnote number 3 and at
21 the bottom it says, "Discuss characterization
22 of payments, including in respect of AIC's
23 guarantee of Fixed Rate Pool PIPs."
24 Do you see that?
25 A. Yes.
119
1 Hewes
3 any understanding as to what that refers to?
5 You can answer.
7 question.
8 MR. SOLOMON: Would you read it
9 back, please.
12 objection to foundation, to substantive
13 examination of the witness on this
14 document as opposed to whether or not it
15 refreshes his recollection when it has
16 not been established that AIC ever
17 received this or even believed that it
18 was transmitted outside of Dechert but
19 you know you can answer.
20 A. I'm sorry. I think the reporter
21 repeated a shorter portion of the question.
22 Can you repeat the entire question.
25 objection as to the use of this
120
1 Hewes
2 document.
3 A. This footnote was obviously
4 included in the draft prepared by Dechert. I
5 believe that the footnote simply refers to
6 the concept that as part of the transaction,
7 should one occur, that AIC was interested in
8 ensuring that the company completed the PIP
9 work that it was obligated to complete
10 previously and had not. Or may not have.
11 Q. Was AIC involved in negotiating the
12 terms contained in this term sheet?
14 foundation.
15 A. There are a number of terms in this
16 document. I think you will need to be
17 specific as to which terms you're referring
18 to.
19 Q. I was asking generally in any of
20 them.
21 MR. EHRLICH: And what does
22 involved in mean? This could be an
23 internal Dechert draft for all we know.
24 A. The -- the -- many of the terms
25 appear as they did in the initial draft,
121
1 Hewes
2 which neither we nor our counsel, is my
3 understanding, created. At certain points we
4 responded or commented but you would have to
5 ask me a specific question about a specific
6 term for me to help you better.
7 Q. I appreciate that.
8 In an answer a few moments ago, you
9 started by saying as part of the transaction,
10 should one occur, that AIC was interested in
11 ensuring that the company completed the PIP
12 work that it was obligated to complete
13 previously and may not have. Do you recall
14 that?
15 A. Yes.
16 Q. What transaction were you referring
17 to there?
18 A. The -- the transaction broadly
19 contemplated by this term sheet and drafts of
20 this term sheet.
21 Q. And who, if anyone, on behalf of
22 AIC was responsible for negotiating the
23 transaction that you just referred to?
24 A. Negotiating the transaction or
25 negotiating the --
32 (Pages 122 to 125)
122
1 Hewes
2 Q. Negotiating the transaction that
3 you just referred to. I'm asking on behalf
4 of AIC.
5 MR. EHRLICH: Objection.
6 Q. Who at AIC was responsible for
7 negotiating the transaction you referred to?
8 A. Can you be more specific as to
9 which components of the transaction you're
10 referring to?
11 Q. Well, let's ask right now for any
12 components of the transaction. You used the
13 term "transaction" in your answer.
14 A. Uh-huh.
15 Q. The transaction you're referring
16 to --
17 A. The transaction -- so in the
18 context of the transaction being an
19 acquisition of equity from Lehman, should
20 Lehman come in the possession of post
21 reorganization equity, there were several
22 members of our team that were responsible in
23 considering an investment in the post
24 reorganization equity. That group included
25 myself, it included Joseph Glatt. It
123
1 Hewes
2 included Jim Zelter. It included Patrick
3 Dalton. The last two individuals in their
4 capacity as senior executives and --
5 Q. Senior executives AIC?
6 A. Correct.
7 And it included Justin Korval, and
8 Joseph Glatt if I didn't mention him.
9 Q. Anyone else?
10 A. Not that -- not specifically, no.
11 Q. Were there any other individuals at
12 AIC that had any role in the negotiations for
13 any other part of the transaction that you
14 were referring to in your earlier answer?
16 Q. Did you have internal discussions
17 at AIC as to the valuation of the new equity
18 that Lehman was to receive if there were
19 going to be a transaction?
21 You're getting awfully far afield from
22 the topics in the notice and what the
23 court said. I think the court said
24 valuation was not on the table for the
25 PSA hearing but at least at this point
124
1 Hewes
2 you can answer.
3 MR. SOLOMON: I was just to go ask
4 the negotiation of the term sheets that
5 we've seen back and forth and the
6 witness does not recall which ones he's
7 specifically seen. And if we can
8 establish that there were discussions at
9 certain periods of time, the witness
10 himself has said the valuation may
11 trigger his memory as to which of the
12 term sheets he has seen and which he may
13 not have.
14 MR. EHRLICH: I wasn't instructing
15 him not to answer.
16 MR. SOLOMON: My question stands.
18 MR. SOLOMON: Would you read it
19 back, please.
21 MR. EHRLICH: I don't think that
22 goes to refreshing his recollection.
23 But you can answer this question.
24 A. We had discussions about the
25 requested purchase price of the new equity.
125
1 Hewes
2 Q. Did these discussions occur --
3 withdrawn.
4 In terms of these, or with respect
5 to these discussions, do you recall any
6 discussions concerning a valuation of
7 approximately 50 percent of the new equity
8 being worth $110 million?
9 MR. EHRLICH: Objection, beyond the
10 scope.
11 You can answer.
12 A. Did we have any discussions about
13 whether the equity was worth $110 million.
14 Q. Approximately $110 million?
16 Q. Did those discussions occur as a
17 result of receiving a proposal or a term
18 sheet or any indication from either Lehman or
19 the company as to a valuation of
20 approximately $110 million for approximately
21 50 percent of the new equity?
22 A. I'm sorry. Can you repeat the
23 question?
24 MR. SOLOMON: Read it back, please.
33 (Pages 126 to 129)
126
1 Hewes
4 as to whether or not you received and
5 reviewed Exhibit 13?
6 A. No, the words you used were a term
7 sheet, an indication or any other
8 communication, which to me suggests that the
9 communication may have been made from Dechert
10 to Paul Weiss, Paul Weiss to Joe Glatt and
11 Joe Glatt to me regarding a number and we may
12 have discussed it.
13 Q. I understand. I'm just asking if
14 that refreshed your recollection or not.
15 A. No.
18 document Bates stamped as LEH-ALI 254
19 through 264.
20 (Exhibit Hewes-14, Term Sheet,
22 Proposed Restructuring June 29, 2010,
127
1 Hewes
2 Q. I show you what has been marked by
3 the court reporter as Exhibit 14, "Term
4 Sheet, Alternative A," Dechert Draft,
5 6/29/10.
6 Did you see this document before
7 your review with counsel?
8 A. Can I make a point that the date
9 stamps on these pages are different?
10 Q. You can and --
11 A. Is this a one complete document
12 in --
13 Q. I am representing --
14 A. -- in complete draft form?
15 Q. I am representing to you this is
16 exactly how it was it produced to us by
17 Lehman in consecutive Bates number order.
18 A. Okay. And your question was, have
19 I seen it prior to?
20 Q. Review with counsel.
21 A. This appears to be a draft of the
22 term sheet that was ultimately attached to
23 Lehman's plan support agreement; is that
24 correct?
25 Q. Do you recognize it to be that,
128
1 Hewes
2 sir?
3 A. Well, I said that's what it appears
4 to be. I don't think we reviewed this in
5 draft format, no.
6 Q. Who is the "we" in your last
7 answer?
8 A. AIC.
9 Q. So as you sit here today, do you
10 know whether anyone at AIC received a copy of
11 this document?
12 A. I don't believe anyone at AIC
13 received a copy of this document, no.
14 Q. I will represent to you that in
15 this version of the document, there is no
16 subheading on the left column, AIC purchase
17 of new equity.
18 A. I understand that, yes.
19 Q. I'm not trying to ask you if
20 something is not in there, I'm telling you,
21 sir, it's not in there.
22 A. Okay. Thank you.
23 Q. So for purposes of my questions
24 assume that it's not in there.
25 A. Okay.
129
1 Hewes
2 Q. Did there come a time during the
3 negotiations that the concept of having AIC
4 purchase the new equity and having that
5 recited in the document changed?
7 You can answer.
8 Q. Do you understand the question?
9 A. Yeah, I'm thinking and I'm a little
10 bit confused. Give me a moment.
11 I'm sorry, can you go back to the
12 question.
14 A. In having that recited in the
15 document, meaning the term sheet for the plan
16 support agreement?
17 Q. Yes.
18 A. I believe at some point that, that
19 the concept that AIC would be a party to plan
20 support agreement in any format was
21 determined that that didn't make sense and --
22 I'm sorry, did that answer your question?
23 Q. If that's your answer. Have you
24 completed it?
25 A. Again, I'm having trouble
34 (Pages 130 to 133)
130
1 Hewes
2 remembering the question.
3 MR. SOLOMON: Why don't you read
4 back the question and answer again.
5 THE WITNESS: Can you read back
6 question again.
8 A. I think that's complete.
9 Q. That's your answer, you've
10 completed it?
11 A. Yes.
13 court reporter to mark as Exhibit 15 --
15 7/7/10 with attachment, Bates Nos. AIC
16 00000127 through AIC 00000144, marked
19 front of you what's been marked as
20 Exhibit 15, Bates stamp AIC 127 through AIC
21 144.
22 A. Okay.
23 Q. This fax -- excuse me -- the e-mail
24 -- showing my age. The e-mail cover is dated
25 Wednesday, July 7th to Mr. Beilinson from
131
1 Hewes
2 Mr. Glatt, that's at the top.
3 Do you see that? And that's
4 forwarding on an e-mail from Mr. Kornberg?
5 A. Uh-huh.
6 Q. And the e-mail indicates it's
7 attaching two term sheets?
8 A. Uh-huh.
9 Q. One relating to the proposed
10 agreements between Lehman and Innkeepers and
11 the other relating to those between Lehman
12 and AIC. Do you see that?
13 A. Yeah, I see that language.
14 Q. Did you see a copy of this e-mail
15 in or about, or on or about July 7, 2010?
16 A. Did I see a copy of the e-mail from
17 Joseph Glatt to Marc Beilinson? The answer
18 would be no.
19 Q. Did you see a copy of the e-mail
20 from Mr. Kornberg?
21 A. No.
22 Q. Did you ever discuss the contents
23 of this e-mail with anyone at AIC?
24 A. If I did, it would have been with
25 Joe Glatt.
132
1 Hewes
2 Q. And did you discuss this with
3 Mr. Glatt -- withdrawn.
4 In preparation for your deposition
5 and in connection with your designation as a
6 30(b)(6) witness, did you discuss the
7 documents attached to this e-mail with anyone
8 at AIC?
9 A. Not specifically. I mean these
10 appear to be, again, drafts of documents that
11 evolved into agreements eventually, but not
12 these specific drafts we didn't.
13 Q. Do you see the Bates stamp at the
14 bottom AIC?
15 A. Yes.
16 Q. I'm going to represent to you that
17 this document in this form was produced to us
18 by AIC?
19 A. I'm not disputing that.
20 Q. Sorry. What I'm trying to
21 understand, sir, you've been put forward as a
22 designee for the company and someone who can
23 speak on behalf of the company with respect
24 to the matters designated in the 30(b)(6)
25 notice subject to your counsel's objection,
133
1 Hewes
2 and I'm curious as to whether you have any
3 knowledge or information with respect to the
4 reason behind the use of two term sheets as
5 of July 7, 2010?
6 MR. EHRLICH: As opposed to one.
7 MR. SOLOMON: As opposed to one, or
8 seven.
9 A. You know, the -- my understanding
10 is, is our counsel internally and externally
11 went back and forth on drafts of these
12 documents for some period of time. I was not
13 involved heavily in the drafting or
14 commenting or responses to drafts. Although
15 it was my understanding simply that to the
16 extent AIC entered into an agreement with
17 Lehman to purchase post reorganization equity
18 or new equity in Innkeepers, that that
19 concept should simply be reflected in an
20 agreement to purchase post reorganization
21 equity from Lehman should restructuring
22 occur.
23 Q. And to your knowledge, again, sir,
24 I'm only asking to your knowledge, is that
25 why there was a second term sheet used that
35 (Pages 134 to 137)
134
1 Hewes
2 had the agreement between AIC and Lehman?
3 MR. EHRLICH: I'm not sure it's
4 possible to answer that question without
5 revealing privileged information, but on
6 a no waiver basis I'll --
7 MR. SOLOMON: If you want to take a
8 moment and find out if he has
9 nonprivileged information, or just let
10 him answer it yes or no. It's up to
11 you.
12 MR. EHRLICH: Can we go off the
13 record and confer for 30 seconds? If we
14 can just step outside.
16 MR. EHRLICH: Back on the record.
17 MR. SOLOMON: There was a question
18 pending and there was a conference with
19 respect to a privilege issue. I would
20 like the question read back, please.
22 A. Is that why, and that's referring
23 to the prior question.
24 MR. EHRLICH: I think why the two
25 term sheets were separated.
135
1 Hewes
2 Q. So earlier we had seen one term
3 sheet?
4 A. Right.
5 Q. Now, there are two.
6 A. So -- so I'll repeat my prior
7 answer and maybe try to make it more clear
8 for you, which was, as I stated, Joseph Glatt
9 and Paul Weiss together handled much of the
10 documentation phase, if you will, so that
11 that review of drafts of term sheets and
12 comment thereon, and it's my understanding,
13 as I stated earlier, simply that if AIC were
14 to enter into an agreement to acquire post
15 reorganization equity from Lehman, if -- if
16 the general transaction contemplated by the
17 plan support agreement were to come to
18 fruition, that from a business perspective
19 that, our agreement to acquire equity from
20 them post reorganization should simply be
21 reflected in an agreement to acquire equity
22 from them, post reorganization. And so the
23 documents came to reflect simply a
24 transaction wherein AIC would purchase from
25 Lehman for a price equity that it may receive
136
1 Hewes
2 in connection with restructuring.
3 Q. Did you have an under- -- did you
4 or anyone at AIC, to your knowledge, have an
5 understanding that Lehman was conditioning
6 its performance under its agreement with
7 Innkeepers on entering into an agreement with
8 AIC?
9 A. Was conditioning its performance --
10 I think I stated earlier that it was our
11 understanding that Lehman was contemplating a
12 transaction and may have been negotiating a
13 transaction with the company that didn't
14 include AIC, so I'm not clear whether or not
15 that means their performance under the PSA is
16 conditioned upon the agreement with AIC,
17 because I wasn't part of those discussions.
18 Q. Turn back for a moment to
19 Exhibit 11.
20 A. Sure.
21 Q. This was the term sheet you had
22 received, correct?
23 A. Correct.
24 Q. Turn to page 6. The left-hand
25 column conditions precedent to Lehman's
137
1 Hewes
2 obligations under PSA. Do you see that?
3 A. Uh-huh.
4 Q. Third bullet point, agreement
5 reached with AIC in form and substance
6 satisfactory to Lehman; and.
7 Do you see that?
8 A. Yes.
10 that at some point in time during the
11 discussions one of the conditions precedent
12 to Lehman's obligations under the PSA was
13 that it reached a satisfactory agreement with
14 AIC?
15 A. Yes, although the alternative
16 transaction -- I guess where I'm a little
17 fuzzy in my memory is that I'm not clear what
18 overlap the concept that Lehman may have been
19 having with the company about an alternative
20 transaction had with the negotiation of these
21 documents.
22 Q. Do you know --
23 A. So, yes, I understand that as part
24 of the plan support agreement that was
25 ultimately executed and the agreement between
36 (Pages 138 to 141)
138
1 Hewes
2 AIC and Lehman that was ultimately executed
3 that it certainly became a requirement, but
4 as I stated, there were points in time where
5 potentially they were contemplating something
6 else.
7 Q. Do you know, I'm asking if you
8 know, either in your own capacity or as
9 representative of AIC, whether by June 17th
10 Lehman was still having discussions, if any,
11 with the company, Innkeepers, about a
12 transaction that did not involve AIC?
14 MR. SOLOMON: The witness when we
15 were off the record had asked for a
16 lunch break when we reached a convenient
17 point. I think this is such a time.
18 THE WITNESS: Great. Thanks.
19 MR. EHRLICH: Off the record.
21 (Lunch recess taken at 12:41 p.m.)
22
23
24
25
139
1 Hewes
2 A F T E R N O O N S E S S I O N
3 (Time noted: 1:29 p.m.)
4 S C H U Y L E R H E W E S, resumed.
5 EXAMINATION (Cont'd.)
6 BY MR. SOLOMON:
7 Q. I will remind the witness that he
8 is still under oath.
9 A. Thank you.
10 Q. Did there come a time that Lehman
11 and AIC finalized a term sheet with respect
12 to the potential new equity?
13 A. Yes.
14 Q. When was that?
15 A. The agreement with Lehman I believe
16 was finalized and executed on the weekend
17 prior to July 19th.
18 Q. When you say executed, are you
19 referring to any potential -- letter
20 agreement that may have accompanied the
21 actual term sheet or did you believe that the
22 term sheet itself was executed?
23 A. The letter agreement that was, to
24 which the term sheet would have been
25 attached.
140
1 Hewes
4 document entitled Term Sheet Lehman/AIC.
6 Lehman/AIC, July 19, 2010, [not Bates
7 stamped], marked for identification,
8 this date.)
9 Q. And, sir, is that the final term
10 sheet you were referring to in your last
11 answer -- Excuse me -- in your earlier
12 answers?
13 A. It appears to be, yes.
14 MR. EHRLICH: And you represent
15 that this is the final as was --
16 MR. SOLOMON: I will represent that
17 this was the document that was attached
18 to the Lehman motion filed as Exhibit D
19 in Lehman's proceeding. They've made
20 certain representations that I'm not
21 going to necessarily back, but I will
22 tell you that's where it came from.
23 MR. EHRLICH: If this is Exhibit D
24 to that motion, then we will accept it
25 as the final.
141
1 Hewes
3 Q. Sir, on page 2 there are conditions
4 to execution of stock purchase agreement. Do
5 you see that?
6 A. Yes.
7 Q. Second bullet point refers to AIC
8 and Lehman debt -- excuse me -- receipt by
9 AIC and Lehman of all necessary and final
10 approvals to consummate the transaction.
11 Do you see that?
12 A. I do.
13 Q. Are there any pending internal
14 approvals that are still necessary to be
15 received from AIC -- withdrawn.
16 Are there any final approvals left
17 for AIC?
18 A. Are there -- yes, I'm sorry, could
19 you repeat the question.
20 Q. Sure.
22 A. Are there any final approvals left,
23 yes, there are final approvals that are
24 not --
25 Q. Which ones?
37 (Pages 142 to 145)
142
1 Hewes
2 A. It's not so much as a list as it is
3 the concept that there are still aspects of
4 the transaction to be memorialized in
5 documentation which are not yet complete and
6 final approval would require review of,
7 review and discussion of the documentation
8 I'm describing.
11 document Bates stamped INN_MID 3311 and
12 3312.
14 7/17/10, Bates Nos. INN_MID00003311 and
15 INN_MID00003312, marked for
17 Q. Sir, this is an e-mail chain
18 attaching a one-page document, it appears,
19 and you are listed as a recipient of the
20 documents sent by Marc Beilinson on May 24th,
21 do you see that, in the portion about a third
22 of the way down the page?
23 A. Uh-huh, I do.
24 Q. Did you receive this document on or
25 about May 24th?
143
1 Hewes
2 A. It appears that I did, yes.
3 Q. Did you review it at that time?
4 A. Yes.
5 Q. Did you understand what was being
6 referred to in this document?
7 A. I understood that the document
8 referred to company work product, yes.
9 Q. What do you mean by company work
10 product?
11 A. It was prepared by the company.
12 Q. You see in the first line, directed
13 to you, from Mr. Beilinson, "As you know, we
14 are meeting with Paul Weiss and Kirkland
15 tomorrow to walk through the entire guaranty
16 analysis."
17 Do you see that?
18 A. Yes.
19 Q. What was the guaranty analysis you
20 understood Mr. Beilinson to be referring to
21 in that sentence?
22 MR. EHRLICH: Wait, hold on. Let
23 me object. On what possible basis does
24 this relate to the development of PSA or
25 the plan documents?
144
1 Hewes
2 MR. SOLOMON: That's what I want to
3 know. I'm entitled to inquire. This
4 was circulated the day before the first
5 draft that we saw of one of the
6 agreements or that was produced. And
7 then it was also circulated on the
8 Saturday before the actual term sheet
9 was executed. So I do have some
10 latitude to inquire if there is any
11 relevance. And if you have an
12 objection, you can make an objection.
13 If you are going to direct the witness,
14 you can direct him, but otherwise I
15 intend to proceed.
16 MR. EHRLICH: You can answer his
17 question.
19 question?
20 MR. SOLOMON: Please read it back.
22 THE WITNESS: Can I ask you a
23 question?
24 MR. EHRLICH: Absolutely. Is --
25 MR. SOLOMON: There is a pending
145
1 Hewes
2 question. Does it have to do with
3 privilege? Do you have question as to
4 whether this is information that you
5 obtained from an attorney? I mean I'm
6 asking you, you told me you received
7 this document from Mr. Beilinson, you
8 told me you reviewed it, you told me you
9 understood it --
10 THE WITNESS: Yeah. Correct.
11 MR. SOLOMON: -- and generally what
12 it was referring to.
13 And I have pending question that I
14 actually would like an answer to unless
15 you tell me whether you have an issue as
16 to whether something is privileged. If
17 you can make that representation, that's
18 one thing, but other than that, I want
19 an answer to my question, please.
20 THE WITNESS: I want to -- I want
21 to confirm a conversation that was
22 privileged, yes.
23 MR. SOLOMON: With whom was this
24 conversation that you are referring?
25 MR. EHRLICH: The witness has a
38 (Pages 146 to 149)
146
1 Hewes
2 concern about privilege. We're going to
3 go off the record and I'm going --
4 MR. SOLOMON: I would like --
5 before you go off the record with a
6 pending question I have a right to know
7 what counsel he's referring to here if
8 there's a question of privilege. That
9 does not invade the privilege and I have
10 a right to that if he's asking for a
11 break. When I ask a simple question as
12 to what that Mr. Beilinson, who is not
13 an attorney, was referring to when this
14 witness said he received and understood
15 this.
16 MR. EHRLICH: This document was
17 created 3 days after your client sued
18 Apollo Investment Corporation and it is
19 interlaced issues of privilege and I
20 know why the witness wants to confer.
21 MR. SOLOMON: Note my objection to
22 the conference.
23 MR. EHRLICH: Your objection is
24 noted. We're going off the record.
25 MR. SOLOMON: Please note that the
147
1 Hewes
2 conference was held over my objection.
5 MR. SOLOMON: Would you please read
6 the pending question.
8 MR. EHRLICH: You can answer that
9 as long as it doesn't reveal privileged
10 information.
11 A. The analysis that I understand
12 Mr. Beilinson to be referring to in this
13 sentence was a legal analysis of the
14 contracts which evidenced the guaranty
15 concept from 2007.
16 MR. SOLOMON: Could you read that
17 back, please.
19 Q. Is Mr. Beilinson an attorney, to
20 your knowledge?
21 A. I understand he was an attorney.
22 I'm not familiar with his current status.
23 Q. You don't know if he's currently an
24 attorney?
25 A. I don't know if he's currently a
148
1 Hewes
2 practicing attorney.
3 Q. Did Mr. Beilinson ever --
4 withdrawn.
5 In your answer you referred to the
6 guaranty concept from 2007. What did you
7 mean by guaranty concept?
8 A. Well, you will see that Mr.
9 Beilinson references documents. There are
10 agreements that were part of the original
11 loan documents that discuss a guarantee of
12 certain capital obligations and, as I said,
13 the analysis he was referring to was a legal
14 analysis of those documents, which he
15 proceeds to say in the next sentence.
16 Q. Right. He refers to, quote, since
17 the documents are ambiguous, is that what
18 you're referring to when you say the next
19 sentence?
20 A. Correct.
21 Q. Nowhere does he say it's a legal
22 analysis, does he?
23 A. This was a -- you asked me what my
24 understanding of this sentence that he wrote
25 was.
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1 Hewes
2 Q. That was an earlier question, sir.
3 In your last answer you said Mr. Beilinson
4 refers to it as a legal analysis in the next
5 sentence.
6 A. No, I didn't say Mr. Beilinson
7 refers to it as a legal analysis. I said my
8 understanding of the analysis in the first
9 sentence was that there was a meeting to
10 discuss a legal analysis of the contracts as
11 you can see with my counsel and the company's
12 counsel.
13 And I merely pointed out in the
14 second sentence that he's referring to the
15 documents, which is consistent with my
16 statement, that the analysis was a legal
17 analysis of the documents.
18 Q. In an answer a moment ago you
19 referenced a guarantee of certain capital
20 obligations.
21 What were you referring to by that
22 guarantee specifically, to your knowledge,
23 who guaranteed what to whom?
24 A. There is an agreement contained in
25 the original loan documents that contemplate
39 (Pages 150 to 153)
150
1 Hewes
2 a guarantee by AIC of a limited universe of
3 property improvements to be completed within
4 the company's portfolio of hotels.
5 Q. Was that guarantee that you're just
6 referring to ever the subject of any
7 discussions, to your knowledge, with respect
8 to the transaction between the company and
9 Lehman or between Lehman and AIC?
10 A. I have no knowledge of whether it
11 was a topic of discussion between Lehman and
12 the company. It was a topic of discussion
13 between AIC and Lehman.
14 Q. In connection with the transaction
15 that ultimately resulted in the term sheet
16 that we saw a few moments ago?
17 MR. EHRLICH: Exhibit 16.
18 Q. Exhibit 16?
19 A. Yes, in connection with this
20 agreement.
21 Q. What was discussed with respect to
22 the guarantee in that context?
24 A. The discussion was simply that AIC
25 had a desire to ensure that the company
151
1 Hewes
2 complete the capital project, which, as you
3 know, has -- is important for the company's
4 business of operating and maintaining its
5 hotels.
6 Q. Was there anything else discussed
7 with respect to the guarantee in connection
8 with the transaction? Between AIC and
9 Lehman.
10 MR. EHRLICH: Objection to the
11 form.
12 A. Can you be more specific?
13 Q. I'm asking generally, any other
14 discussions that concerned or related to the
15 guarantee in connection with the transaction
16 that we've been talking about.
17 A. I think what I just stated was that
18 AIC -- AIC wanted to make sure in connection
19 with the transaction evidenced by this term
20 sheet and the potential for AIC to invest
21 dollars to acquire new equity or post
22 reorganization equity from Lehman Brothers
23 that that work was completed, which or I
24 should say any work that would not have been
25 completed would be completed. And that was
152
1 Hewes
2 the general nature of all discussions on this
3 topic.
4 Q. You indicated in your last answer
5 that AIC wanted to ensure that work not
6 completed would be completed.
7 A. I said may not have been completed.
8 Q. In form or substance, I accept
9 that. What, if anything, did AIC do in
10 connection with the negotiation of this
11 transaction to ensure that outcome?
12 A. To ensure which outcome?
13 Q. That work which may not have been
14 completed would be completed.
15 A. We -- we discussed and negotiated
16 language in our agreement with Lehman that,
17 that says in essence that the company will
18 complete any work that may have not been
19 completed.
20 Q. When you reference the agreement
21 with Lehman, are you referring to the term
22 sheet that we've seen that's been marked as
23 Exhibit 16?
24 A. Yes, as a component of the
25 agreement.
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1 Hewes
2 Q. And is that a provision in this
3 document, to your recollection, sir?
4 A. Yes, it is.
5 Q. Could you show me which provision
6 you're referring to in your answer?
7 A. On the bottom of page 3, the carry
8 over paragraph, that starts with the
9 language, "So long as..."
10 Q. Yes. Is there any other provision
11 in the agreement?
12 A. I don't believe so. Are you asking
13 are there other provisions of the agreement
14 outside of this one or --
15 Q. No, that you were referring to it
16 in your last answer. I wanted to make sure
17 that you had a chance to complete your
18 answer.
19 A. No, I believe that is the -- I
20 believe that's the only language that
21 discusses this topic in the agreement.
22 Q. Is it your testimony that this
23 provision was negotiated between AIC and
24 Lehman? The provision that you just
25 identified starting at the bottom of page 3.
40 (Pages 154 to 157)
154
1 Hewes
2 A. Yes.
3 Q. Who on behalf of AIC was
4 responsible for those negotiations?
5 A. Joseph Glatt and myself.
6 Q. Did you negotiate directly with
7 representatives of Lehman on that subject?
8 A. At a point in time, yes, although,
9 I believe some, some negotiations may have
10 also been conducted by Mr. Glatt on this
11 topic as well.
12 Q. With whom at Lehman did you
13 negotiate?
14 A. Michael Lascher.
15 Q. Do you recall what the first
16 proposal was with respect to the desire to
17 ensure that work that may not have been
18 completed would be completed?
20 A. I don't recall specifically what
21 the initial proposal was, no. But it was
22 different than this.
23 Q. Do you recall whether it was Lehman
24 or AIC that made the initial proposal?
25 A. I don't recall who made the initial
155
1 Hewes
2 proposal.
3 Q. Was the proposal made in writing?
4 A. I believe that some form of this
5 concept had been in drafts of a term sheet
6 for some time -- I'm sorry, what was the
7 original question?
10 A. As I stated, I believe some form of
11 this concept had been in term sheets for some
12 period of time, so, yes, it would have been
13 in writing.
14 Q. When you refer to term sheets in
15 your last answer, do you recall earlier, sir,
16 that we saw that there was one term sheet
17 that had references to the company Lehman and
18 AIC but at some point in time there was a
19 split to two separate term sheets; do you
20 recall that?
21 A. Yes.
22 Q. When you referenced term sheets in
23 that answer a moment ago as containing
24 earlier provisions with respect to what we've
25 been discussing at the bottom of page 3 --
156
1 Hewes
2 A. Uh-huh.
3 Q. -- were those earlier provisions in
4 the one term sheet or was it in the separate
5 term sheets that you're referring to?
6 A. I believe I was referring to term
7 sheets between AIC and Lehman.
8 Q. Are you aware, either in your own
9 capacity or as a representative of the
10 company as a 30(b)(6) designee as to whether
11 any of the earlier provisions with respect to
12 ensuring that the work that may not have been
13 completed would be completed appeared when
14 there was only the one term sheet?
15 MR. EHRLICH: Objection as to form.
16 You can answer.
17 A. That was a long question. Can you
18 repeat it back.
19 MR. SOLOMON: Sure. I'll rephrase
20 it.
21 Q. Are you aware, either in your own
22 capacity or as the 30(b)(6) designee of AIC
23 whether earlier versions of the provision
24 that we've been discussing --
25 A. Uh-huh.
157
1 Hewes
2 Q. -- appeared in the term sheets that
3 referenced Lehman, AIC and the company
4 Innkeepers?
6 You can answer.
7 A. The -- the -- I think as we covered
8 earlier this morning, the term sheets that
9 circulated between Lehman and the company for
10 some period of time I had not seen and I
11 don't believe representatives of AIC had seen
12 until preparation for this process. So I was
13 not aware of -- of the contents or specific
14 provisions in those agreements, or draft
15 agreements, term sheets, whatever the right
16 terminology is.
17 Q. Did you review the term sheet
18 between Lehman and AIC before it was
19 finalized on July 19, 2010, Exhibit 16 that
20 we have in front of you?
21 A. Did I review this final version on
22 July 19th?
23 Q. Final version on or before
24 July 19th.
25 A. I can't say with certainty that I
41 (Pages 158 to 161)
158
1 Hewes
2 reviewed the final version. It's possible
3 that I did. It's also possible that the
4 final revision -- version would have only
5 been reviewed by counsel.
6 Q. How many -- withdrawn.
7 Am I correct, sir, you indicated
8 earlier, you had, you were involved in
9 negotiations with representatives -- at least
10 one or more representatives of Lehman with
11 respect to the provision that we've been
12 talking about beginning on the bottom of page
13 3, correct?
14 A. Yes, that's correct.
15 Q. Were these negotiations conducted
16 by telephone?
17 A. The negotiation of this provision?
18 Q. Yes.
19 A. A certain amount of it was
20 conducted by exchange of e-mails. There may
21 have been -- I believe there was at least one
22 phone call between AIC and Lehman regarding
23 this provision.
24 Q. Any other communications that you
25 recall?
159
1 Hewes
2 A. Other than telephone or e-mail?
3 No.
4 Q. No in-person meetings?
5 A. No, definitely not.
6 Q. Who was on the phone call between
7 AIC and Lehman during which that provision as
8 negotiated?
9 A. I believe that for Lehman it was
10 Michael Lascher and for AIC it would have
11 been myself and I'm -- I'm -- I believe Joe
12 Glatt may have also been on the phone but I'm
13 not certain.
14 Q. Do you recall specifically what was
15 discussed during this phone call?
16 A. Well, our -- AIC's concern was
17 simply to make sure that this language
18 reflected what we had agreed to with Lehman,
19 which was this concept that you see here.
20 Q. Do you recall what response, if
21 any, Lehman had to that?
22 A. We spent some time perfecting the
23 language in the provision.
24 Q. Did the concept --
25 A. There were concepts of they
160
1 Hewes
2 disagreed with the way words were written and
3 we disagreed with the way words were written
4 and we ultimately reached an agreement on the
5 order of words.
6 Q. Other than a discussion about the
7 actual words appearing in the document, were
8 there any discussions during this phone
9 conversation about the concepts that were to
10 it be incorporated into the provision?
11 A. When you say concepts, can you more
12 specific?
13 Q. Well, just by way of example, I
14 mean the provision carries on to the next
15 page but, for example, A, not immediate PIP
16 obligations in the fixed rate pool described
17 in Schedule 11, and it goes on.
18 A. Uh-huh.
19 Q. You know, that's a concept that
20 appears in there, a reference to not
21 immediate PIP obligation?
22 A. Did we discuss the concept?
23 Q. Did you discuss concepts as opposed
24 to just a drafting session is my question?
25 A. Well, yes as in so much as we
161
1 Hewes
2 drafted this language, yes, we discussed
3 these concepts.
4 Q. But did you discuss the concepts in
5 a negotiation context or did you just discuss
6 the concepts in order to attempt to have the
7 words accurately reflect what was previously
8 agreed to?
9 A. I would characterize it as the
10 latter, which was our discussion revolved
11 around ensuring that the words accurately
12 reflected what we had agreed to.
13 Q. You referenced e-mails, that there
14 may have been e-mails containing drafts or
15 negotiations, proposals, correct?
16 A. There may have been a limited
17 number, yes.
18 MR. SOLOMON: We've received some.
19 To the extent they haven't been
20 previously produced, we would just ask
21 for the production of any e-mails
22 containing drafts of the provision.
23 MR. EHRLICH: They should have been
24 called for and produced to you.
25 MR. SOLOMON: Counsel, I'm not
42 (Pages 162 to 165)
162
1 Hewes
2 indicating that anything was not. I'm
3 just --
4 MR. EHRLICH: I understand.
5 MR. SOLOMON: I just want to have
6 the request on the record.
7 MR. EHRLICH: The collection that
8 we engaged in, if they exist, they
9 should be included within it, based on
10 time frame and custodians and scope.
11 Q. Let's go back to Exhibit 17 for a
12 moment now, please.
13 A. Sure.
14 Q. Do you recall when had the plan
15 support agreement was executed?
16 A. I believe it was --
17 Q. You can look at Exhibit 5.
18 A. That would be helpful.
19 MR. EHRLICH: Can you repeat the
20 question, please. I'm sorry.
22 Q. Very first page.
23 A. July 17th, appears to be the date
24 of this document. I don't --
25 Q. And then the signature pages follow
163
1 Hewes
2 page 18.
3 A. Yeah.
4 Q. All of the signatures are dated
5 July 17th, I think, you see that?
6 A. Correct. Yep, correct.
7 Q. Why did you recirculate this
8 document that's been marked as Exhibit 17,
9 the bottom portion of it --
10 A. Uh-huh.
11 Q. -- on the same day that the plan
12 support agreement was signed?
13 A. We had agreed to the language that
14 you see, beginning on page 3, with Lehman
15 Brothers, if I recall correctly on Friday,
16 the 16th and in the morning of the 17th,
17 Lehman Brothers asked that an appendix or a
18 schedule be attached to our agreement with
19 Lehman Brothers.
20 Q. Are you referring to the term sheet
21 we've marked as Exhibit 16, when you say your
22 agreement with Lehman Brothers?
23 A. Yes, inclusive of this term sheet.
24 The concept that a schedule would
25 be included hadn't been previously discussed
164
1 Hewes
2 prior to the morning of Saturday, the 17th,
3 and they served up a schedule that they
4 proposed attaching to this agreement, this
5 term sheet.
6 Q. Who is the "they" in that answer at
7 your end?
8 A. Lehman provided us with a schedule
9 that Lehman proposed attaching to this term
10 sheet.
11 Q. Why did you circulate or
12 recirculate the document marked as
13 Exhibit 17?
14 A. The schedule that Lehman proposed
15 did not embody the spirit of the language in
16 the provision that begins on page 3. It
17 contemplated a different set of capital
18 expenditures than the language describes and
19 so it was not the schedule that they
20 proposed, that Lehman proposed was not in the
21 spirit of our agreement.
22 Q. I understand why you thought the
23 Lehman proposed schedule was not in the
24 spirit as you described it, but why did you
25 circulate or recirculate Exhibit 17 on
165
1 Hewes
2 July 17th?
3 A. I recirculated Exhibit 17 on
4 July 17th because at the time, given the
5 pending filing of the bankruptcy and the
6 requests by Lehman at the very last minute to
7 include a schedule as an attachment to the
8 term sheet, this was the only information I
9 had at that time, and time was of the
10 essence, that was consistent with the
11 language that we had agreed to with Lehman on
12 the prior day.
13 Q. Was the schedule that you
14 circulated or recirculated on July 17th
15 attached to the term sheet?
16 A. No, I don't believe so.
17 Q. Do you know why it was not?
18 A. Do I know why it was not? No, I
19 don't know why it was not.
20 Q. Did you ever have any discussions
21 with anyone about whether the schedule that's
22 attached to and part of Exhibit 17 should
23 have been attached to the term sheet between
24 AIC and Lehman?
25 MR. EHRLICH: That excludes
43 (Pages 166 to 169)
166
1 Hewes
2 conversations with counsel on that
3 point.
7 A. No.
8 Q. In negotiating the provision that
9 starts on the bottom, or the portion that
10 you've identified, starting on the bottom of
11 page 3 of the term sheet, Exhibit 16, did you
12 have an understanding as to whether that
13 provision affected Apollo's obligations under
14 a guarantee, if any existed?
16 question if you are capable of answering
17 it without revealing privileged
18 information.
20 question.
22 Q. I'm directing you now to the
23 provision that we have been discussing a
24 little earlier at the bottom of page 3 --
25 A. Yes, yes.
167
1 Hewes
2 Q. -- in Exhibit 16 the term between
3 Lehman and AIC. Did you have an
4 understanding as to whether or not that
5 provision would affect any guarantee
6 obligations Apollo or AIC might have with
7 respect to or owed to Innkeepers? Or any --
8 withdrawn. Let me rephrase it.
9 A. By effect, you mean?
10 Q. Let me -- I'm going to rephrase the
11 question.
12 Again, directing your attention to
13 the provision on the bottom of page 3, term
14 sheet Exhibit 16, did you have any
15 understanding as to whether or not that
16 provision would have any effect on any
17 guarantee obligations Apollo had, if any
18 existed, with respect to Innkeepers or any
19 properties held by Innkeepers?
20 MR. EHRLICH: Objection to form and
21 I would direct you to answer that only
22 to the extent that it doesn't implicate
23 analysis you learned from counsel.
24 A. I'm -- I don't understand what you
25 mean by does this language affect, and the
168
1 Hewes
2 word "affect" is giving me some trouble. Can
3 you rephrase?
4 Q. Does it change, alter or modify any
5 obligations that I was referring to in my
6 last question?
7 MR. EHRLICH: Same instruction.
8 Q. Do you understand it, if we changed
9 the word "affect" to change alter or modify?
10 A. Yeah, that is more clear. I'm not
11 a lawyer but as a businessperson, I don't see
12 how a provision in one term sheet could
13 change, alter or modify another set of
14 documents. So I guess the answer would be
15 no.
16 Q. Let's talk for a moment, if we can,
17 about Innkeepers' filing on or about July 19,
18 2010.
19 Are you familiar with that?
20 A. Filing?
21 Q. For bankruptcy protection.
22 A. Yes, I am.
23 Q. Prior to that time did the AIC --
24 withdrawn.
25 Prior to that time did the
169
1 Hewes
2 Innkeepers' board authorize the filing?
3 A. Yes.
4 Q. Was there a board meeting held at
5 which the board members were physically
6 present in the same room?
7 A. Yes.
8 Q. When did that occur?
9 A. The exact date I don't recall. I
10 believe it was the week prior to July 19th.
11 Q. And did you attend that meeting in
12 person?
13 A. If memory serves.
14 Yes, I did.
15 Q. Who else attended the meeting? Let
16 me go through and you'll tell me if these
17 people are board members and if they attended
18 the meeting, how's that? I'm not --
19 A. That's easier.
20 Q. It's not a memory contest.
21 Mr. Beilinson, did he attend the meeting?
22 A. Yes.
23 Q. Is he a board member of Innkeepers?
24 A. Yes.
25 Q. Mr. Ruisi, R-u-i-s-i, Larry Ruisi?
44 (Pages 170 to 173)
170
1 Hewes
2 A. Yes.
3 Q. Is he a board member of Innkeepers?
4 A. Yes.
5 Q. Did he attend the meeting?
6 A. Yes.
7 Q. Mr. Zuroff, Bernie Zuroff,
8 Z-u-r-o-f-f, did he attend the meeting?
9 A. Yes.
10 Q. And is he a board member?
11 A. Yes.
12 Q. Mr. Kleisner, is he a board member?
13 K-l-e-i-s-n-e-r.
14 A. Yes.
15 Q. And did he attend the meeting?
17 Q. Mr. Zelter?
18 A. Yes.
19 Q. He is a board member?
20 A. Yes.
21 Q. And he attended the meeting?
22 A. Yes.
23 Q. Mr. Dalton, is he a board member?
24 A. Yes.
171
1 Hewes
2 A. Yes.
3 Q. Mr. Korval, board member?
4 A. Yes.
6 A. Yes.
7 Q. Mr. Hewes, board member?
8 A. Yes.
10 A. Yes.
11 Q. Mr. Ricache, if I'm pronouncing
12 that correctly, R-i-c-a-c-h-e, Ken is the
13 first name?
14 A. Oh, you have a bad spelling there.
15 It's with a P.
16 Q. Typo on my document. I apologize.
17 Mr. Picache.
18 A. I thought I didn't know a board
19 member. It's Picache, yes.
20 Q. Board member and attended the
21 meeting?
22 A. Yes.
23 Q. Was a vote taken to authorize the
24 bankruptcy filing?
25 A. I'm trying to remember whether that
172
1 Hewes
2 particular vote was taken by the full board
3 or the independent board. It certainly would
4 have been taken by the independent board. I
5 believe it was taken by the full board as
6 well.
7 Q. You've anticipated my next series
8 of questions.
9 So you do recall that it was taken
10 by the independent directors, correct?
11 A. Certainly.
12 Q. Or trustees, excuse me?
13 A. Certainly at a minimum, yes.
14 Q. Do you recall one way or the other
15 as to whether the entire board voted on
16 authorizing the bankruptcy filing?
17 A. I believe that the entire board
18 voted to authorize the filing, but I -- there
19 were a certain number of things that were
20 only voted on by the full board and I'm
21 having trouble remembering exactly the
22 distinctions.
23 MR. EHRLICH: Please don't
24 speculate.
25 Q. Were there board minutes that would
173
1 Hewes
2 reflect those votes?
3 A. I believe so, yeah.
4 MR. SOLOMON: I realize documents
5 have been produced. If they haven't
6 been produced up to this point, we would
7 just ask for a copy of those minutes so
8 that we can clarify which entities or
9 which individuals were involved in which
10 votes.
11 MR. EHRLICH: I would suggest you
12 ask the company for those.
13 MR. SOLOMON: Well, it may in this
14 witness' possession, however, since he
15 is a board member.
16 MR. EHRLICH: It's possible. Taken
17 under advisement.
18 Q. During this meeting and prior to
19 the vote, was any disclosure made as to the
20 existence of the draft agreement between AIC
21 and Lehman with respect to the purchase of
22 new equity?
24 You can answer.
25 A. There was -- I think we, this was
45 (Pages 174 to 177)
174
1 Hewes
2 mentioned this morning, there was a lengthy
3 session at the board meeting that day that
4 included only the independent members of the
5 board and I believe certain members of
6 management were in that session, although I
7 wasn't there, so I'm not certain.
8 As I mentioned earlier, when the
9 board meeting opened up to nonindependent
10 members of the board, the remaining
11 representatives joined the meeting, a brief
12 summary of what had been discussed with the
13 independent members was provided and it's my
14 recollection that when summarized it was
15 indicated that substantially all of the
16 transactions around the company's pending
17 filing for bankruptcy, the agreements with
18 Lehman Brothers, Marriott, DIP financing
19 sources, and the agreement between Lehman and
20 AIC were all disclosed to the independent
21 members of the board and discussed at
22 considerable length.
23 Q. From your answer a moment ago, you
24 said substantially all of the transactions.
25 A. Sorry, I should correct, I should
175
1 Hewes
2 say all.
4 court reporter to mark as Exhibit 18, a
5 one-page document, Bates stamped AIC
6 219.
8 6/13/10, Bates No. AIC 00000219, marked
10 Q. Sir, do you see that you are a
11 recipient or indicated as a recipient of this
12 document?
13 A. Yes.
14 Q. Did you actually receive it on or
15 about June 13th?
16 A. According to this e-mail, yes.
17 Q. Did you know who -- or do you know
18 who JZ is that's referenced to in this?
19 A. JZ would be Jim Zelter.
20 Q. MB, who is that?
21 A. Marc Beilinson.
22 Q. And JG?
23 A. Joseph Glatt.
24 Q. Did that call, in fact, occur that
25 evening? The call that's referenced in the
176
1 Hewes
2 e-mail.
3 A. Yeah, I don't recall -- so I see
4 here that I was invited. I don't recall
5 participating and if I didn't participate, I
6 don't -- I wouldn't be able to confirm
7 whether it occurred.
8 Q. Well, that's not necessarily true.
9 Did anyone ever report to you that this call
10 occurred?
11 A. I don't recall anyone reporting to
12 me that this call occurred. I simply don't
13 remember.
14 Q. So as you sit here today, you don't
15 know if the call occurred and if it did
16 occur, you don't know anything about what was
17 discussed on that call, correct?
18 A. Correct.
19 Q. Other than conversations with
20 counsel, did you do anything in preparation
21 for your deposition here today to determine
22 whether this call occurred or what was
23 discussed on this call?
24 A. No, I did not.
25 Q. During your testimony earlier
177
1 Hewes
2 today, do you recall mentioning a notice that
3 Innkeepers had received from Marriott in or
4 about March of 2010?
5 A. Do I recall that the company
6 received --
7 Q. Yes.
8 A. -- the termination notice from --
9 yes.
10 Q. How did you come to learn that the
11 company received the termination notice?
12 A. I believe Marc Beilinson informed
13 AIC that he had received a notice from
14 Marriott, you know, saying that they would
15 terminate within a certain period of time the
16 company's franchise agreements on a list of
17 hotels unless the company completed a certain
18 amount, a significant amount of work on those
19 hotels prior to the time period in the
20 notice, which I believe was originally
21 90 days.
22 Q. To whom at AIC did Mr. Beilinson
23 provide this information?
24 A. I'm not certain who he provided it
25 to first, but my recollection, it's likely he
46 (Pages 178 to 181)
178
1 Hewes
2 would have notified, you know, multiple
3 people within AIC, certainly myself,
4 potentially Jim, potentially Patrick,
5 independently I don't recall.
6 Q. Do you have an understanding --
7 withdrawn.
8 Did you ever discuss with Mr.
9 Beilinson why he notified AIC about the
10 Marriott termination letter?
12 You can answer.
13 MR. SOLOMON: My question was did
14 you ever have a conversation with Mr. --
15 can you read back my question.
17 MR. SOLOMON: Are you maintaining
18 your objection?
19 MR. EHRLICH: I'll withdraw the
20 objection.
21 A. Did I ask him why he notified me?
22 MR. SOLOMON: Would you read the
23 question back.
24 A. Did I discuss with him why, I
25 don't -- no, I didn't discuss with him why he
179
1 Hewes
2 notified us. It seemed like something that
3 he should notify us about.
4 Q. Did Mr. Beilinson have a --
5 withdrawn.
6 Did Mr. Beilinson from time to time
7 notify AIC about material developments at
8 Innkeepers?
9 A. From time to time, yes.
10 Q. In your estimation was it a regular
11 part of his practice to do so?
12 A. To the extent they were material
13 developments, sure.
14 Q. What, if anything, did AIC do in
15 connection with the Marriott termination
16 letter after receiving --
18 Q. -- after receiving notification
19 from Mr. Beilinson?
21 You can answer.
22 A. I believe we discussed the
23 potential implications of the Marriott
24 termination letter, including the significant
25 amount of capital required to satisfy
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1 Hewes
2 Marriott's requests, the company's inability
3 to generate sufficient cash on its own during
4 the time period to complete the work
5 underlying Marriott's requests, the inability
6 candidly even if the company did have the
7 funds to do the work in 90 days, the
8 potential consequences of such a termination,
9 i.e., the termination of franchise agreements
10 with certain hotels, what that means, what it
11 does to the business in that hotel, and the
12 implication that all of those things when
13 taken together suggested that the company
14 would need to restructure its balance sheet
15 in some format relatively soon.
16 Q. Did anyone at AIC, to your
17 knowledge, instruct Mr. Beilinson on how to
18 respond to Marriott?
19 A. No.
20 Q. Did anyone at AIC, to your
21 knowledge, respond to Marriott?
22 A. Directly?
23 Q. Yes.
24 A. No. I don't believe so.
25 Q. Did anyone at AIC respond
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1 Hewes
2 indirectly to Marriott?
4 MR. SOLOMON: If we could take a
5 two-minute break.
6 MR. EHRLICH: That's fine. Let's
7 go off the record.
9 MR. SOLOMON: Can we begin?
10 MR. EHRLICH: Please.
11 Q. I will remind the witness he is
12 still under oath.
13 A. Thank you.
14 Q. Sir, the board meeting that we were
15 discussing shortly before the break at which
16 time Innkeepers was authorized to file for
17 bankruptcy protection, do you recall that?
18 A. Yes.
19 Q. I gave you a list of names and you
20 told me that those people that I had
21 identified had attended the meeting. Do you
22 recall that?
23 A. Yes.
24 Q. Was there anyone else who attended
25 the meeting that I did not name, whether
47 (Pages 182 to 185)
182
1 Hewes
2 board member or otherwise?
3 A. Yes, certain members of the
4 management team, Tim Walker, general counsel
5 Mark Murphy, the -- I believe the interim
6 CFO, whose name I don't recall at the moment,
7 the company's external legal advisors from
8 Kirkland, and I believe one or two members
9 from the company's financial advisors.
10 Q. Who were the financial advisors,
11 was that Moelis?
12 A. Correct.
13 Q. Anyone else?
15 Q. Shortly before the break, I had
16 asked you as to whether AIC has responded, to
17 your knowledge, to the Marriott termination
18 letter. Do you recall that?
19 A. I do.
20 Q. And I believe you indicated you are
21 not aware of any such response, correct?
22 A. I did.
23 Q. You hesitated, is that still
24 accurate?
25 A. No, there -- I need to talk to him
183
1 Hewes
2 for a second.
3 Q. Does it have to do with a matter of
4 privilege, sir?
5 A. It has to do with a conversation we
6 just had, so, yes.
7 MR. SOLOMON: Let's take a moment.
9 A. Sorry. Can you ask the question
10 again?
12 A. You were referring to a direct
13 response to Marriott; is that correct?
14 Q. I had actually asked direct or
15 indirect before the break.
16 A. But to Marriott?
17 Q. Excuse me?
18 A. Your question was, responded
19 directly or indirectly to Marriott; is that
20 correct?
21 Q. Yes.
22 A. I'm aware of a communication at
23 some time later and so when I indicated --
24 when you questioned earlier in response to
25 the Marriott termination letter, the
184
1 Hewes
2 communication I have in my mind was not
3 necessarily in direct response to the
4 Marriott termination letter. To clarify, but
5 I'm aware of a communication at some point
6 later from an individual at Apollo to
7 Marriott and, again, not specifically related
8 to the termination letter but expressing a,
9 that Marriott support the company's efforts
10 to negotiate with its creditors. That was, I
11 believe, the essence of the communication.
12 Q. Who at Apollo sent that letter?
13 A. I believe Rick Press.
14 Q. And who is Mr. Press?
15 A. Mr. Press is a partner at Apollo,
16 he works in the private equity group.
17 Q. Which Apollo entity?
18 A. Internally it would be what we
19 refer to as the private equity group. I
20 couldn't tell you which specific entity he
21 works for. I don't know.
22 Q. And when did Mr. Press respond?
23 A. I don't recall the date of that
24 communication. I believe, as I indicated
25 earlier, it was considerably after, as in
185
1 Hewes
2 months after the original Marriott
3 termination letter.
4 Q. And the original Marriott
5 termination letter was March of 2010,
6 correct?
7 A. Correct.
8 MR. SOLOMON: Could you read back
9 his response where I asked where the
10 substantive letter was, please.
12 Q. When you said expressing that
13 Marriott support the company's efforts to
14 negotiate with its creditors, was the company
15 there Innkeepers that you're referring to?
16 A. Yes.
17 Q. And what efforts to negotiate with
18 its creditors were you referring to in that
19 answer?
20 A. Well, the -- the issue was the
21 Marriott termination letter as delivered in
22 March of 2010 required action by the company
23 within 90 days that with capital or without
24 capital it could not complete, it did not
25 have the capital and, therefore, without any
48 (Pages 186 to 189)
186
1 Hewes
2 amendment of the 90-day period of time, would
3 result almost certainly in the company filing
4 for bankruptcy on or before the 90-day
5 expiration in the Marriott termination
6 letter.
7 As a result, the company began
8 efforts to meet with its creditors, discuss
9 its liquidity and capital issues, the company
10 defaulted on interest payments in early
11 April, hired financial advisors, hired legal
12 advisors in an attempt to -- to either
13 restructure itself out of bankruptcy or, if
14 necessary, in bankruptcy, and Marriott was an
15 important, if not critical, constituent in
16 the entire process, and, therefore, their
17 support was required.
18 Q. Did the letter that you've been
19 referring to mention or refer to the
20 potential bankruptcy filing?
21 A. I don't recall specifically.
22 Q. Did it refer to any restructuring
23 or reorganization of the company?
24 A. I don't recall but it's likely.
25 Q. And did you see the letter at or
187
1 Hewes
2 about the time it was sent to Marriott?
3 A. You're referring to the
4 communication that I made you aware of?
5 Q. The communication that you've been
6 referring to, is that a letter?
7 A. I believe it was an e-mail.
8 Q. Did you see the e-mail at or about
9 the time it was sent?
10 A. I don't recall exactly when I saw
11 it, it was forwarded to me, I believe,
12 sometime after it was sent. I don't recall
13 the proximity.
14 Q. Who forwarded it to you?
15 A. That I also don't recall. It would
16 have been Rick or someone else on the team.
17 Q. Is that the team you identified
18 earlier as involved in the Innkeepers --
19 A. Yes.
20 Q. -- transactions?
21 A. Correct.
22 MR. SOLOMON: If it hasn't been
23 produced, we would ask for the
24 production of a copy of that e-mail.
25 MR. EHRLICH: We will take that
188
1 Hewes
2 under advisement. I said we will take
3 that under advisement.
4 Q. Did you discuss the contents of the
5 e-mail?
6 MR. EHRLICH: At any point in time?
7 MR. SOLOMON: At any point in time.
8 MR. EHRLICH: Exclude from that --
9 your answer any conversations with
10 counsel.
11 MR. SOLOMON: My question is a yes
12 or no. I believe I'm entitled to know
13 if he discussed it.
14 MR. EHRLICH: That's fair. That's
15 fair.
16 MR. SOLOMON: So are you
17 withdrawing your objection or direction?
18 MR. EHRLICH: Correct.
19 Q. You can answer my question, sir.
20 A. I don't recall discussing it, no.
21 Q. Did you comment upon the e-mail in
22 any way before it was sent?
23 A. No, I wasn't even aware it was
24 sent.
25 Q. Until after it was --
189
1 Hewes
2 A. Until after it was sent.
3 Q. -- sent.
4 MR. SOLOMON: I think I'm going to
5 pass the witness. Who is next?
6 Subject to the requests that we've
7 made on the record for additional
8 documents and rights we may have, with
9 respect to the witness' preparation and
10 knowledge with respect to the 30(b)(6)
11 notice, subject to your objections to
12 that notice.
13 MR. EHRLICH: So noted.
14 EXAMINATION BY
15 MR. GOTTESMAN:
16 Q. Good afternoon. My name is
17 Lawrence Gottesman, I'm a partner at Bryan
18 Cave. We represent LNR Partners, LLC,
19 special servicer to two securitization
20 trusts. Just for the record, one is CSFB
21 2007-C1, which holds loans secured by the
22 Residence Inn Mission Valley in San Diego and
23 Residence Inn in Garden Grove, and also the
24 securitization trust known as ML-CFC 2006-4.
25 That one holds loans secured by the
49 (Pages 190 to 193)
190
1 Hewes
2 Doubletree Guest Suites in Washington, D.C.;
3 the Residence Inn Tysons Corner, Homewood
4 Suites in San Antonio.
5 Are you familiar with any of those
6 loans?
7 A. Generally.
8 Q. Can you tell me what your knowledge
9 is with respect to each of them?
10 A. I'm -- I'm aware of the company's
11 capital structure, the -- the loan that we
12 commonly refer to as the fix rate loan, the
13 loans made to the company by Lehman Brothers
14 and then each of the individual loans that
15 are securitized by individual properties of
16 the companies. I apologize. I don't
17 remember all of them by their -- by their
18 specific names.
19 Q. Sure. It might be helpful if you
20 have Exhibit 5 that was marked earlier today.
21 A. Sure. That certainly would be
22 helpful.
23 Q. Once again, it's not a memory test.
24 A. Yeah, no, I -- they all sound like
25 code words.
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1 Hewes
2 Q. I had to read from my notes as to
3 which trust. I can't memorize those either.
4 A. Which -- is there a page in here?
5 Q. What I'm looking at is the second
6 page of the plan term sheet.
7 MR. EHRLICH: That's the one with
8 the flag. Second page, is it?
9 Q. So annexed to the support plan
10 agreement is Exhibit A the plan term sheet?
11 A. Yes.
12 Q. And then page 2 of that, there's a
13 box at the lower left-hand corner called
14 other secured debt?
15 A. Yes.
16 Q. Is it your understanding that these
17 loans, among others, are in that bucket under
18 the plan term sheet?
19 A. Yeah. We think of it as the other
20 bucket, yes.
21 Q. What's defined in the term sheet as
23 A. Yes.
24 Q. And which is collateralized by
25 what's called the other secured debt
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1 Hewes
2 collateral?
3 A. Yes.
4 Q. Which would be the various hotels
5 that I described earlier?
6 A. Correct.
7 Q. Are you familiar with any of those
8 hotels?
9 A. I believe one of those loans is
10 against the San Diego Residence Inn; is that
11 correct?
12 Q. Yes, it is.
13 A. And I believe one of those loans is
14 against the Anaheim Hilton; is that correct?
15 Q. It's --
16 A. And one against the Ontario Hilton?
17 Q. I can refresh your memory that it's
18 the Residence Inn Mission Valley and San
19 Diego, Residence Inn Garden Grove, Doubletree
20 in Washington, D.C., Residence Inn Tysons
21 Corner, Vienna, Virginia, and Homewood Suites
22 in San Antonio?
23 A. I'm familiar with some of those,
24 primarily the ones in southern California or
25 I should say only the ones in southern
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1 Hewes
2 California.
3 Q. Okay. Do you know if at any point
4 during the process there was -- extensively
5 covered by counsel for Midland, there were
6 discussions within Apollo regarding these
7 particular hotels?
8 A. I'm sorry, can you repeat that.
9 Q. As opposed to Innkeepers more
10 generally?
11 A. Yeah, I want to be sure I answer
12 your question.
13 THE WITNESS: Can you repeat it
14 back.
16 A. The process meaning the
17 negotiation?
18 Q. Yes, that's correct, sir.
19 A. There -- there were some
20 discussions, although they were limited.
21 Q. Can you tell me what you recall
22 with regard to those discussions?
23 A. The term sheet as we originally
24 received it contemplated, I believe in the
25 original draft contemplated this number, the
50 (Pages 194 to 197)
194
1 Hewes
2 150 million of potential new notes against
3 those seven original mortgage notes in what
4 we refer to as the other secured debt. We
5 looked in summary fashion at the relative
6 level of impairment or potential impairment
7 of those mortgages as compared to the other
8 portions of the transaction and beyond that,
9 candidly we didn't spend a whole lot of time
10 discussing it.
11 Q. And when you say the other portions
12 of the transaction, to what were you
13 referring?
14 A. Primarily the fixed rate pool.
15 Q. The Midland pool?
16 A. Correct.
17 Q. And did you look at it in
18 comparison with the Lehman debt as well?
19 A. I don't recall doing so.
20 Q. And did that 150 number go up or
21 down at all during this process? I mean is
22 that where it started?
23 A. It's my recollection and I believe
24 it's consistent with the documents we
25 discussed earlier that the first draft we
195
1 Hewes
2 received had 150 million in it and it stayed
3 there since.
4 Q. And Exhibit 5, which you have in
5 front you, has the $150 million number?
6 A. Correct, so to answer your
7 question, I don't think it ever went up or
8 ever went down at any point in between.
9 Q. Was that number negotiated between
10 AIC and anyone else?
11 MR. EHRLICH: Objection, form.
12 You can answer.
13 A. As I indicated, that number was in
14 the original term sheet draft we received
15 from Lehman. AIC, to my knowledge, did not
16 negotiate that number with anyone. I
17 couldn't speak as to whether Lehman or the
18 company or other parties negotiated.
19 Q. You have no knowledge one way or
20 the other as to whether, let's take them one
21 at a time, Lehman negotiated that number with
22 any of the servicers with respect to that
24 A. Correct.
25 Q. And the same answer would be true
196
1 Hewes
2 with respect to the company Innkeepers as
3 well?
4 A. Yes, correct.
5 Q. You are a member of the board of
6 Innkeepers, as well?
7 A. Yes.
8 Q. I want to go back to the board
9 meeting that you testified to during your
10 examination by Midland's counsel.
11 Was there discussion of a plan term
12 sheet at that board meeting?
13 A. Was there a discussion of the plan
14 term sheet?
15 Q. Yes, the document that you are
16 looking at now, or any earlier iteration of
17 it?
18 A. As I indicated earlier, I believe
19 that the agreement the company contemplated
20 entering into in connection with the
21 bankruptcy were discussed at length. I know
22 that because there way a scheduled start time
23 for the board meeting and the meeting began
24 with the independent members of the board and
25 the AIC affiliated members of the board did
197
1 Hewes
2 not join until sometime thereafter. And it's
3 my understanding based on the summary that
4 was described earlier about what was
5 discussed during that, that session of the
6 board meeting, that all of these agreements
7 were discussed.
8 Q. By the way, do you recall
9 approximately what time that meeting started?
10 A. I don't. It started in the
11 morning.
12 Q. Do you recall roughly how long it
13 lasted from beginning to end?
14 A. A few hours.
15 Q. Two to three approximately?
16 A. Maybe longer. But rough ballpark.
17 Q. If that seems about right?
18 A. Approximately.
19 Q. Okay. At the board meeting, do you
20 know if there was any discussion as to --
21 strike that.
22 We've referred generally during
23 this process to the Innkeepers Chapter 11
24 filing, correct?
25 A. Uh-huh.
51 (Pages 198 to 201)
198
1 Hewes
2 Q. But that, in fact, involves
3 multiple entities that filed for protection
4 under the Chapter 11 for the bankruptcy code;
5 is that correct?
6 A. That is my understanding. I'm not
7 an expert.
8 Q. Understood that you are not a
9 lawyer.
10 Do you know if at the board meeting
11 there was any discussion as to which
12 particular entity should file or should not
13 file for Chapter 11?
14 A. I do recall a discussion of that
15 nature and it was, if I remember correctly,
16 the company's and its counsel's
17 recommendation that it file basically every
18 entity within the company's organizational
19 structure, which is 90-some odd.
20 Q. So if you look at the global
21 Innkeepers organizational chart, there is no
22 one left out of the Chapter 11 filing?
23 A. I don't think so, no. I think, and
24 again, I'm not an expert and I didn't take
25 entirely the 90 names, but I think it's
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1 Hewes
2 everything.
3 Q. That's just your understanding?
4 A. Yeah.
5 Q. And do you know what criteria, if
6 any, was used in deciding to file all of
7 these entities?
8 A. I mean generally speaking? Or
9 specifically? Generally speaking, and again,
10 it's -- I'll testify the businessman's
11 knowledge is that, or the businessman's
12 understanding is that many of these entities
13 were at some level insolvent or had cash flow
14 issues or trouble servicing their debt
15 obligations, or I should say trouble
16 servicing their debt obligations in addition
17 to trouble servicing their obligations to
18 franchisors, which include certain
19 obligations to maintain properties and
20 operate them at certain standards that the
21 branch require.
22 Q. Do you know if that was true with
23 respect to all the entities which ultimately
24 filed for Chapter 11?
25 A. Well, it's my understanding that
200
1 Hewes
2 within the pooled loans, they're all -- so in
3 the fixed rate pool, for example, each of the
4 entities is -- is -- that loan is secured by
5 each of the hotels and each of the hotels has
6 an individual corporate entity, and they're
7 all cross-collateralized.
8 So I'm not, if it's true that in
9 aggregate, in the fixed rate pool that
10 statement is true, then it doesn't matter
11 whether or not it's true for an individual
12 property. I'm not sure that that concept
13 applies. That's my understanding.
14 Q. Do you know if that is -- if that
15 concept applies with respect to the borrowers
16 in the hotels that are in the other secured
17 debt bucket in the plan term sheet?
19 extent this calls for a legal analysis.
21 A. As I mentioned earlier, I'm more
22 familiar with a handful of those properties
23 than others and so I can give you a limited
24 answer.
25 The Ontario Hilton property is in a
201
1 Hewes
2 market that has been severely impacted by the
3 recession and specific economic activity in
4 Ontario. That hotel's performance does not
5 cover its debt service. I know that
6 specifically.
7 With respect to the San Diego
8 property, I don't know specifically, although
9 I do know that property has a significance
10 amount of debt on it and I also know that
11 that property is in need of a significant
12 capital refresh. I couldn't tell you
13 specifically whether or not it's able to
14 service those two, those two obligations at
15 the same time.
16 And -- sorry, was the Anaheim
17 Hilton also one of those properties, the
18 senior loan?
19 Q. You've got the Residence Inn
20 Mission Valley San Diego, you got Residence
21 Inn Garden Grove, Doubletree Guest Suites,
22 Washington, D.C., Residence Inn Tysons
23 Corner, Vienna, Virginia, Homewood Suites San
24 Antonio.
25 A. I would make similar statements
52 (Pages 202 to 205)
202
1 Hewes
2 about the Garden Grove property, which is
3 right next to Disneyland. I've, I think,
4 visited that property once. It's in a market
5 where there must be 100 hotels stacked right
6 on top of each other and it also gets a
7 significant amount of wear and tear and
8 requires a significant amount of refreshing.
9 The other properties I don't know
10 specifically.
11 Q. Okay. Was the analysis that you
12 just ran through discussed at the board
13 meeting?
14 A. With respect to those individual
15 properties?
16 Q. Yes, sir.
17 A. No.
18 Q. Do you know if that information was
19 provided to the directors prior to or
20 independent of that board needing?
21 A. I don't know.
22 Q. The loans that we've been
23 discussing, do you know if they're
24 cross-collateralized?
25 A. It's my understanding that they are
203
1 Hewes
2 not. I believe they're individual.
3 Q. Each of those hotels -- strike
4 that.
5 Do you know how each of these
6 hotels is owned?
7 A. Legally or --
8 Q. Yes, sir.
9 A. I'm not terribly familiar, no.
10 Q. Do you know if they're owned by
11 separate limited liability companies or a
12 single company?
13 A. I don't know.
14 Q. Do you know if those loans were
15 sold into the securitization market?
16 A. I believe that's what those code
17 words represent, yes. I wasn't around at the
18 time AIC acquired the company so I'm less
19 familiar with the structuring of the original
20 debt agreement and how they came to exist,
21 so.
22 Q. Given your business background and
23 history, do you have a general understanding
24 as to what the CMBS markets are or were?
25 A. Oh, yes. Yes.
204
1 Hewes
2 Q. Do you know if any of those
3 borrowers had what is commonly referred as
4 independent managers or directors?
5 A. I believe -- I believe that each of
6 the borrowers for what you would call the
7 special purpose entities and, I don't know at
8 what level, but I believe they all have
9 independent directors.
10 Q. And that would be true for what
11 we're calling the other secured debt bucket
12 as well as the fixed rate debt bucket, to
13 your knowledge?
14 A. Yeah, and again, this part is not
15 something I was terribly involved in or
16 familiar with, but that's my understanding.
17 I couldn't be certain as to whether each
18 individual of the other debt bucket that's
19 true, but I believe so.
20 Q. Okay. Do you know who these
21 independent directors or managers were?
22 A. I forget the name of the
23 organization that does that. But it was
24 discussed, it was discussed at the board
25 meeting that the company had been working
205
1 Hewes
2 with the independent directors of each of the
3 borrowing entities and in parallel with the
4 company's bringing the Innkeepers board up to
5 speed, they had also been bringing those
6 parties up to speed with a similar set of
7 information about the performance of the
8 business, the obligations to franchisors and
9 debt service and liquidity and all of the
10 issues that the company was having.
11 Q. Do you know how these independent
12 directors were brought up to speed?
13 A. By the company. I don't -- I
14 wasn't -- I didn't participate so I don't
15 know what materials they saw or exactly when
16 those meetings occurred but it was discussed
17 at our board meeting that the company had met
18 with, briefed, prepared, they had done due
19 diligence, they had -- I think the company
20 indicated they had hired counsel to -- to
21 review the situation as well and that they
22 had performed some level of due diligence on
23 the situation and the company had complied
24 with their requests and done everything they
25 could to get them up to speed.
53 (Pages 206 to 209)
206
1 Hewes
2 Q. When you say they, you're referring
3 to the independent managers?
4 A. And independent directors you're
5 referring to, yes, and again, I don't, it's
6 something we never had involvement with
7 directly, so I don't know the specifics.
8 Q. Do you know what that counsel that
9 was that the independent directors retained?
10 A. No idea.
11 Q. That wasn't discussed at the board
12 meeting?
14 Q. Was counsel for the independent
15 directors present either in person or
16 telephonically at the board meeting?
17 A. No.
18 Q. And you don't know whether this
19 information was provided telephonically or in
20 writing to these independent directors?
21 A. Again, I didn't -- I didn't
22 participate so I don't recall.
23 Q. But was it discussed at the board
24 meeting?
25 A. No, it was not discussed how they
207
1 Hewes
2 were communicated.
3 Q. And none of these independent
4 directors attended the board meeting I take
5 it?
6 A. No. They're different -- my
7 understanding is, no, they didn't.
8 Q. And attended, to be very clear,
9 either in person or telephonically?
10 A. No.
11 Q. I think -- my recollection is that
12 your testimony is that, in fact, minutes were
13 prepared for the board meeting; is that
14 correct?
15 A. I assume that they were. Because
16 minutes were generally prepared for board
17 meetings but I don't know that I reviewed
18 them.
19 Q. And when minutes were generally
20 prepared for board meetings were they at some
21 point in time distributed to the members of
22 the board?
23 A. Minutes from the prior board
24 meeting were typically distributed shortly
25 before the next board meeting and then --
208
1 Hewes
2 Q. Who -- I'm sorry. I didn't mean to
3 cut you off.
4 A. -- reviewed and approved at the
5 beginning of a board meeting.
6 Q. Who prepared the minutes on a
7 normal basis?
8 A. I believe Mark Murphy, the general
9 counsel, prepares them.
10 Q. And would he have prepared minutes
11 from the board meeting in question, the one
12 right before the Chapter 11 filings?
13 A. Again, I assume so but I don't
14 recall whether I've seen them or reviewed
15 them or even asked him if he prepared them.
16 Q. Has there been a board meeting
17 subsequent to the Chapter 11 filing?
18 A. I'm trying to think. It's my
19 understanding that Marc Beilinson conducts
20 updates with the independent members of the
21 board. That was a process that he began
22 sometime before the bankruptcy filing. I
23 don't know when the last update he may have,
24 may or may not have had since the bankruptcy
25 filing was. I don't believe there's been a
209
1 Hewes
2 full board meeting since the one you're
3 asking about.
4 Q. Since the one shortly before the
5 petition?
6 A. Correct.
7 Q. Has one been scheduled or noticed?
8 A. There was -- if you will allow me
9 to confirm, I believe there was an update
10 call scheduled for today with the -- with the
11 board, but I need to confirm that, which I
12 could do right now if you'd like me to.
13 Q. We can take a break and you can do
14 that.
15 MR. EHRLICH: Not confirming facts.
16 If you know it, you can answer. We're
17 not going to start doing research.
18 THE WITNESS: Okay.
19 Q. But you haven't seen minutes of the
20 board meeting that occurred prior to the
21 Chapter 11 filing?
22 A. I don't recall seeing the minutes,
23 no.
24 Q. And would it be your expectation as
25 a board member that if such minutes existed
54 (Pages 210 to 213)
210
1 Hewes
2 it would recite what you described regarding
3 the independent directors of the property
4 being briefed and having retained counsel?
5 A. I can't testify as to what's in the
6 minutes. I would assume they're complete.
7 Q. By the way, have you ever served on
8 other boards of directors of other companies?
9 A. I have not served on another board,
10 no.
11 MR. GOTTESMAN: Can you read back
12 the answer, please, the question and
13 answer.
15 MR. GOTTESMAN: I pass the witness.
16 Thank you very much.
18 MR. EHRLICH: Anyone else?
19 MR. FLIMAN: I have very few
20 questions, but if we could just take a
21 two-minute break, I would like to move
22 over there.
23 MR. EHRLICH: Sure. Go off the
24 record.
211
1 Hewes
2 EXAMINATION BY
3 MR. FLIMAN:
4 Q. Good afternoon. My name is Dan
5 Fliman. I'm with the firm Kasowitz, Benson,
6 Torres & Friedman and we represent the Five
7 Mile Capital Partners in this case. I'm
8 going to ask you a few questions and I may go
9 over some of the questions that have already
10 been asked and I apologize. I'm asking those
11 questions in order to lay the foundation for
12 the questions that I want to introduce.
13 We discussed earlier an April 22nd
14 meeting between Innkeepers, Lehman, a part of
15 which AIC designees attended. Do you recall
16 that?
17 A. I do.
18 Q. And it was yourself and Mr. Koral
19 (phonetic), I believe, that attended a
20 portion of that meeting, right?
21 A. Korval.
22 Q. Korval, sorry.
23 And I believe your testimony was
24 that you had been asked to leave the meeting
25 at some point; is that right?
212
1 Hewes
3 Q. And Mr. Korval also was asked to
4 leave; is that right?
5 A. Correct.
6 Q. And the two of you were the only
7 AIC employees or designees at the meeting,
8 right?
9 A. That is the reason we were asked to
10 leave, yes, correct.
11 Q. I didn't ask you the reason, but --
12 A. Correct.
13 Q. Okay. Who asked you to leave the
14 meeting?
15 A. I don't recall specifically. I
16 think I said earlier it was either the
17 company -- I believe it was the company but I
18 don't recall specifically.
19 Q. Was company counsel at the meeting?
20 A. I believe -- I believe someone from
21 Kirkland was at that meeting.
22 Q. Was AIC's counsel at the meeting?
23 A. No.
24 Q. Do you know why you were asked to
25 leave the meeting?
213
1 Hewes
2 A. No.
3 Q. Did you ask why you were being
4 asked to leave the meeting?
5 A. Not -- I don't recall if I asked.
6 I believe -- I believe perhaps it was
7 indicated that the company and Lehman
8 Brothers wanted to continue discussions
9 privately and we were asked to leave.
10 Q. Is that your recollection or you're
11 guessing?
12 A. That's my recollection.
13 Q. Do you know why it is that Lehman
14 Brothers and the company wanted to have
15 private discussions?
16 A. No.
17 Q. Did you ask why?
18 A. I don't recall asking why.
19 Q. Roughly how many meetings have you
20 attended that involved Innkeepers?
21 MR. EHRLICH: Any kind on any topic
22 since he's been at Apollo, or AIC
23 rather?
24 MR. FLIMAN: Yes.
25 A. I couldn't speculate as to a
55 (Pages 214 to 217)
214
1 Hewes
2 number.
3 Q. Well, would it be more than 20?
4 A. It depends on what you consider a
5 meeting. Is a conversation in the hallway a
6 meeting? It could be construed as such. We
7 have conversations in the hallway about all
8 of our investments all the time.
9 Q. Okay. So how many meetings did you
10 have in which members of Innkeepers'
11 management team were participants?
12 A. Members of the management team?
13 Q. Yes.
14 A. Again, it would be difficult to
15 speculate as to a number.
16 Q. Okay. Have you ever been asked to
17 leave a meeting before?
18 MR. EHRLICH: In his life?
19 MR. FLIMAN: Yes.
20 A. I'm sure that I have.
21 Q. Okay. Were the reasons cited
22 because they wanted to have private
23 conversations?
24 A. About any potential meeting
25 throughout my life from which I may have been
215
1 Hewes
2 excused?
3 Q. Yes.
5 Q. Did you find it strange that you
6 were asked to leave the meeting on
7 April 22nd?
9 A. Not -- not really, no.
10 Q. Why?
11 A. The company was having a discussion
12 with a creditor. It's not surprising to me
13 that they wanted to have a private
14 discussion.
15 Q. Has Innkeepers ever asked you to
16 leave a meeting when they were having a
17 discussion with a creditor before?
18 A. I'm not sure that I, prior to --
19 before that date you're asking?
20 Q. Yes.
21 A. I don't think so, no.
22 Q. I believe you were asked earlier
23 today when was the first time that AIC
24 contemplated making a new money investment in
25 Innkeepers. Do you remember those questions?
216
1 Hewes
2 A. Uh-huh.
3 Q. And as I recall, your answer was
4 you weren't sure but it wasn't before any of
5 the April 2010 meetings; is that right?
6 A. I believe that's correct, yes.
7 Q. Do you know when since the
8 April 10 -- the April 2010 meetings -- let me
9 strike that.
10 Other than pinning down the fact
11 that it wasn't before April 2010, can you
12 give us a more definitive time frame of when
13 it was that AIC first contemplated making a
14 new money investment in Innkeepers?
15 A. I would say sometime during
16 April 2010.
17 Q. Before or --
18 A. But not subsequent, not before the
19 initial meeting with Lehman Brothers.
20 Q. And you're referring to the meeting
21 that occurred, I think you had testified, a
22 week to 10 days before the April 22nd
23 meeting; is that right?
25 Q. Okay. So to the best your
217
1 Hewes
2 knowledge, is the first time that AIC
4 Innkeepers before or after the April 22nd
5 meeting that we were just discussing?
7 A. The concept that Lehman Brothers
8 might support a restructuring of Innkeepers'
9 balance sheet in a manner that required a
10 conversion of their debt to equity, I believe
11 is what generated the idea that if they were
12 to do that, if they were to convert their
13 debt to equity, we might have an interesting
14 purchasing post reorganization equity.
15 Q. So my question to you was: To the
16 best of your knowledge, is the first time AIC
18 Innkeepers before or after the April 22nd
19 meeting that we were just discussing? I
20 don't believe you answered my question.
22 You can answer as best you can.
23 A. Sorry. I thought I was trying to
24 be helpful.
25 I think it was before the
56 (Pages 218 to 221)
218
1 Hewes
2 April 22nd meeting.
3 Q. Between the first April meeting --
4 and do you know what I mean when I saw the
5 first April meeting? Between the first April
6 meeting, and the April 22nd meeting, did AIC
7 have any discussions with Lehman about an
8 Innkeepers restructuring?
10 Q. Between the first April meeting and
11 the April 22nd meeting, did AIC have any
12 discussions with Innkeepers about an
13 Innkeepers restructuring?
14 A. That period of time -- that period
15 of time was reasonably close in proximity to
16 the company's default in interest payments on
17 its obligations. There were a number of
18 things that were happening at the time. It
19 was also reasonably soon after the Marriott
20 termination letter and during that period of
21 time we were having, I believe, somewhat
22 regular conversations with the company about
23 its efforts to discuss its situation with
24 lenders and other parties.
25 Q. So did the conversations between
219
1 Hewes
2 the first April meeting and the April 22nd
3 meeting between AIC and Innkeepers address a
4 potential Lehman transaction?
5 A. I don't recall the specific nature
6 of conversations during that period of time,
7 other than the concept of Lehman converting
8 its debt to equity was discussed.
9 Q. Do you know whether at the
10 April 22nd meeting after you left there was a
11 discussion among Innkeepers and Lehman of the
12 possibility of AIC buying a portion of
13 Lehman's new equity issuance?
15 You can answer.
16 A. I don't know the specifics of what
17 were discussed.
18 Q. I'm not asking for specifics. I'm
19 asking do you know whether that topic was
20 discussed?
22 answered.
23 You can answer again.
24 A. My prior answer intended to mean I
25 don't know whether that was discussed.
220
1 Hewes
2 Q. Now, the AIC deal with Lehman, and
3 we've seen some of the documents on that, but
4 the AIC deal with Lehman contemplates AIC's
5 purchase of 50 percent of the equity that
6 Lehman will receive for $107.5 million; is
7 that right?
9 Q. Do you believe that that's a fair
10 price for AIC to pay for that equity?
12 You can answer.
13 A. I believe it's a -- it's a price.
14 I don't -- I don't know how to answer your
15 question.
16 Q. Well, you owe fiduciary duties to
17 investors in Apollo funds, right?
19 Q. From that perspective, do you
20 believe that the purchase price that we just
21 discussed is a good price?
22 A. I believe it's a reasonable price.
23 Q. What leads you to the conclusion?
25 beyond the scope of the 30(b)(6) notice,
221
1 Hewes
2 calls for improper opinion testimony.
3 You can answer, if you can.
4 A. You know, we looked at the -- often
5 when we look at investments we look at
6 whether or not the prospects for a return or
7 a range of returns is reasonable given the
8 risk in making an investment, and in the case
9 of the purchase price you mentioned in
10 connection with this transaction, it was our
11 opinion that the prospects for a return on
12 that investment were reasonable given the
13 risks.
14 Q. What analysis did you do to get to
15 that answer?
16 MR. EHRLICH: Objection, way beyond
17 the scope. How does this relate to the
18 debtors' reasonable business judgment
19 entering the PSA?
20 MR. FLIMAN: Are you instructing
21 him not to answer?
22 MR. EHRLICH: I'm inquiring of
23 counsel how is this relevant to the
24 topics noticed for this deposition or
25 the September 1st hearing.
57 (Pages 222 to 225)
222
1 Hewes
2 MR. FLIMAN: I believe it's
3 relevant.
4 MR. EHRLICH: And I would like you
5 to explain why.
6 MR. FLIMAN: I don't want to get
7 into this. I mean I can give you a
8 million reasons why this is relevant to
9 whether the court the PSA. The PSA
10 transaction has with it a transaction
11 between Lehman and AIC for the purchase
12 of this stock. That purchase price is
13 one of the overall terms, one part of
14 the overall terms of the transaction.
15 MR. EHRLICH: From which either
16 part can walk. But in any event, you
17 can answer this question but I'm going
18 to cut this off if it goes on much
19 longer. This is not about valuation and
20 the judge was very clear that this
21 hearing is not going to be a valuation.
22 If you have valuation objections,
23 they're confirmation objections.
24 MR. FLIMAN: I said nothing about
25 valuation, so I think it might make
223
1 Hewes
2 sense --
3 MR. EHRLICH: The reasonableness of
4 purchase price inherently is a question
5 of valuation.
6 MR. FLIMAN: If your client wants
7 to testify to that, that's fine. So
8 let's go back.
9 Q. So my question to you was, what
10 analysis did you do to reach the conclusion
11 that you had testified to?
13 question, subject to my objections.
14 A. We -- we reviewed the company's --
15 the company's projections. We looked at the
16 prospects for the company to have the ability
17 to service debt obligations and its capital
18 obligations should the restructuring occur on
19 the terms that were outlined, i.e., will it
20 be a solvent entity, and we looked at -- we
21 looked at independent projections about the
22 financial performance of the industry in the
23 future. And we reached the conclusion that
24 if the company could service its obligations
25 on a cash basis to its lenders and to its
224
1 Hewes
2 franchise partners if the restructuring is
3 completed contemplated and that if the
4 business' performance improved consistent
5 with what the market's expectation is for the
6 industry that there was a reasonable risk
7 return proposition for this investment.
8 Q. Now, as a member of the board of
9 Innkeepers, you also have fiduciary duties to
10 creditors of Innkeepers, correct?
12 Q. Now, in that capacity -- strike
13 that.
14 From the perspective of those
15 fiduciary duties, do you believe that the
16 $107.5 million -- actually, strike that.
17 From the perspective of those
18 fiduciary duties, do you believe that the
19 plan support agreement provides the best
20 outcome for Innkeepers' creditors?
22 Calls for a legal conclusion.
23 You can answer.
24 A. The plan support agreement
25 contemplates, as it's relevant to your
225
1 Hewes
2 question, that the company's debt
3 obligations, exclusive of Lehman's
4 obligations, would be structured to lower
5 amounts than their current principal amount
6 and, therefore, a loss would be realized by
7 those lenders should the restructuring occur
8 under those terms.
9 It's no secret that the real estate
10 industry has been severely impacted by the
11 recession, by a lack of pricing power,
12 particularly in the hotel sector because you
13 have no contractual rents of any kind, as
14 opposed to, for example, the office space
15 real estate sector where you do have
16 contractual rents and long term. So the
17 concept that there was a loss that was going
18 to be realized by not only us, AIC, which in
19 this case is a total loss, and the concept
20 that lenders may realize a loss as well was a
21 simple concept.
22 As a -- as a board member the
23 company and its advisors discussed the
24 potential ranges of valuation depending upon
25 a number of things that might be determined
58 (Pages 226 to 229)
226
1 Hewes
2 as fair value for each of these other
3 obligations within the company's capital
4 structure and based on -- based on that
5 information and based on candidly outcomes
6 that may result in significantly lower
7 recoveries for the fixed rate lender and for
8 the other secured debt, it was our -- or it
9 was my opinion that this was a fair outcome
10 if it occurred. If not, better than perhaps
11 some of the alternatives. And part of the
12 reason I reached that conclusion, to cover
13 two topics specifically, are that applying a
14 number of valuation concepts to these assets
15 may result in values that are lower than 550,
16 number one, and number two, that if Marriott
17 were to terminate its franchise obligations
18 on any of the company's hotels, it would
19 result in substantially greater impairment
20 than these numbers here.
21 Q. You had referred in your answer to
22 the fact that based on -- the information
23 based on candidly outcomes that may result in
24 significantly lower recoveries for the fixed
25 rate lenders and for other secured debt.
227
1 Hewes
2 What were you referring to?
3 A. The other potential outcomes? I
4 mean if Marriott pulls the flags from the
5 hotels, they're worth a fraction of what
6 they're worth today.
7 Q. Originally AIC was contemplated to
8 be a party to the PSA; is that right?
9 A. I don't -- I don't believe -- I
10 don't believe we contemplated being a party
11 to the PSA.
12 Q. The parties that were exchanging
13 drafts at some point contemplated that AIC
14 would be a party to the PSA, correct?
15 A. Would you like to refer to a
16 specific draft?
17 Q. I can do so. Let me just tell you
18 my subsequent question.
19 A. Okay.
20 Q. It was going to be, I seem to
21 recall that you testified that you were told
22 that it no longer made sense for AIC to be a
23 signatory to the PSA and I was going to ask
24 you why, but we can look at specific
25 documents if it would be helpful.
228
1 Hewes
2 MR. EHRLICH: I don't think that
3 quite states the testimony but why don't
4 you try to answer the question.
5 Q. Please correct me if --
6 A. Yeah. I think my testimony was the
7 only thing that we contemplated doing was
8 purchasing post reorganization equity, new
9 equity from Lehman Brothers if the Lehman
10 plan support agreement were to -- were to be
11 completed.
12 In connection with the filing AIC
13 recognized in all manner of speaking that its
14 existing equity interest in the business were
15 worthless and in no part of this process has
16 AIC sought any recovery or consideration on
17 any prepetition interest in the company.
18 So the concept that we would
19 contemplate signing the plan support
20 agreement simply doesn't make any sense. We
21 had nothing to support a restructuring with.
22 Q. If I could turn your attention to
23 Exhibit 17.
24 A. Sure.
25 Q. Before I ask you about the exhibit,
229
1 Hewes
2 let me just ask you this. Has AIC --
3 THE WITNESS: I'm going to get some
4 ice. You can wait, if you want.
5 Okay.
6 Q. Has AIC ever performed an analysis
7 of what its exposure on the capital
8 improvement guarantees could be?
9 MR. EHRLICH: Answer that question
10 yes or no.
11 A. No.
12 Q. Do you have a sense of what that
13 amount could be?
14 A. No.
15 Q. Do you have a -- strike that.
16 Do you have a general sense of
17 whether we're talking about 50 million, 100
18 million, 10 million?
19 MR. EHRLICH: Objection, calls for
20 speculation.
21 I don't want you to answer
22 speculative questions.
23 Q. Do you have a general sense?
24 My question simply is whether you
25 -- you're saying you don't have a specific
59 (Pages 230 to 233)
230
1 Hewes
2 number or you just literally have no idea
3 what it could be?
4 A. I -- I haven't performed an
5 analysis of what it could be. I haven't due
6 diligenced in any way what it could be and so
7 I don't have the foundation to form an
8 opinion as to whether or not, as to what
9 amount it might be, if any.
10 Q. Okay. So if we look at Exhibit 17
11 and the second page of it has a
12 spreadsheet -- can you just describe for me
13 generally what I'm looking at, what this
14 chart is?
15 MR. EHRLICH: Can you explain the
16 relevance of that to any issue on to
17 September 1st.
18 MR. FLIMAN: Yes, we're talking
19 about the amount of the guarantees.
20 MR. EHRLICH: And why is that
21 relevant to the issues on September 1?
22 MR. FLIMAN: Because it's one of
23 the terms that we're seeing here that
24 the capital improvement seems to be
25 covered. We just went through this.
231
1 Hewes
2 MR. EHRLICH: Well, capital
3 improvements seem to be covered.
4 MR. FLIMAN: And isn't --
5 MR. EHRLICH: It's a separate
6 issue.
7 MR. FLIMAN: Maybe I need a
8 clarification.
9 Q. Is it the case that the capital
10 improvements that are covered under the
11 Lehman deal that we looked at is going to
12 diminish AIC's guarantee?
13 MR. EHRLICH: I think that's
14 already been asked and answered by
15 counsel for Midland.
16 MR. FLIMAN: If the answer's yes, I
17 have no idea --
18 MR. SOLOMON: I didn't ask that
19 question actually.
20 MR. FLIMAN: If the answer is yes,
21 I have no idea why you are objecting.
22 So let me repeat the question.
23 MR. EHRLICH: Well, you go ahead
24 and repeat the question.
25 Q. Is it the case that the capital
232
1 Hewes
2 improvements that are covered under the
3 Lehman deal is going to diminish AIC's
4 guarantee?
5 MR. EHRLICH: I believe that was
6 asked and answered.
7 A. I will refer you to my prior
8 testimony.
9 Q. You can't do that. What's the
10 answer?
11 MR. EHRLICH: He can answer however
12 he sees appropriate.
13 If that's your answer, you can
14 stand on it.
15 A. That's my answer.
16 Q. So I object to the answer which is
17 not responsive.
18 MR. EHRLICH: Okay. You can
19 object.
20 MR. FLIMAN: So I ask the question
21 again and you can't object as asked and
22 answered.
23 MR. EHRLICH: I can object asked
24 and answered.
25 MR. FLIMAN: Because it hasn't been
233
1 Hewes
2 answered so --
3 MR. EHRLICH: That's your opinion,
4 Counsel.
5 MR. FLIMAN: Okay. So it's not
6 productive but we can take a break and
7 go back and look at the record and find
8 his answer.
9 MR. EHRLICH: Let's keep going.
10 This is of no relevance to the issues on
11 September 1st. It's the subject --
12 MR. FLIMAN: I disagree. I
13 disagree.
14 MR. EHRLICH: Counsel, it is the
15 subject of litigation brought by Midland
16 who represents your client as one of the
17 largest holders of the share and I'm not
18 going to let this be a fishing
19 expedition into matters that are the
20 subject of a separate litigation.
21 MR. FLIMAN: It's really not. What
22 I'm getting at is the Lehman deal. I'm
23 trying to figure out the term that's in
24 there and what effect that it has on
25 AIC's guarantee. That's what I'm going
60 (Pages 234 to 237)
234
1 Hewes
2 to.
3 MR. EHRLICH: Well, why don't you
4 ask him about that then as opposed to
5 this schedule.
6 MR. FLIMAN: I did. You didn't let
7 him answer the question.
8 MR. EHRLICH: I thought he answered
9 already. Ask him again and you can try
10 to answer again.
11 Q. Okay. So one of the contemplations
12 in the Lehman deal is that certain capital
13 improvements will be paid post emergence,
14 correct?
15 A. If, in fact, they exist.
16 Q. Okay. Capital improvements, if
17 necessary, will be paid?
18 A. If necessary.
19 Q. And what effect will payment of
20 capital improvements have on AIC's guarantee,
21 to your understanding?
22 A. I believe I asked this gentleman
23 sitting to your left to clarify the concept
24 of a fact earlier and I would ask you to do
25 the same. I'm not sure I understand your
235
1 Hewes
2 question.
3 Q. You don't understand the word
4 "effect," is that what you need me to
5 explain?
6 A. I would like you to be more
7 specific.
8 Q. Well, let me ask you this way.
9 Will payment of capital improvements that are
10 contemplated as possibly being made under the
11 Lehman deal potentially reduce AIC's
12 guaranties?
13 A. The -- I believe what I stated
14 earlier was that as a businessperson, I don't
15 -- I don't believe the provision that you're
16 referring to in the AIC's Lehman term sheet
17 is capable of modifying a separate agreement
18 that Lehman is not a party to and so I don't
19 believe the provision affects the agreement.
20 Q. My question was whether it affects
21 AIC's guarantee?
22 MR. EHRLICH: And he answered it.
23 Q. Other than affecting the agreement,
24 does it affect the obligations?
25 A. I have no idea. I mean -- I don't
236
1 Hewes
2 have an estimate as to whether or not there
3 are indeed obligations and I don't believe
4 that provision modifies the separate
5 agreement.
6 Q. What payments that are paid on
7 capital improvements is contemplated in the
8 Lehman AIC term sheet mitigate any of AIC's
9 exposure on its guaranties?
10 A. As -- you know, I don't know. It's
11 difficult to have any conclusion without
12 knowing if there are, in fact, any
13 liabilities.
14 Q. Why is that?
15 A. Because you're asking if, if it
16 changes anything out of a guarantee. I don't
17 know.
18 Q. Well, AIC wanted that provision in
19 the Lehman/AIC deal, right?
21 Q. Why did it want that provision in
22 there?
23 A. We wanted to, as I stated earlier,
24 ensure that the company completed all of the
25 capital expenditure work, or PIP work as it's
237
1 Hewes
2 referred to in the industry that it was
3 required to complete so that it would going
4 forward not have disagreements or complaints
5 or termination letters or any other issues
6 with any of its franchise partners. And so
7 we wanted to make sure that if there was work
8 to be done, that it got done.
9 Q. And those were the only reasons why
10 AIC wanted a provision in the AIC/Lehman
11 deal?
12 A. I think that's a fair statement.
13 Q. We had -- there was testimony about
14 the meeting right before the filing, and I
15 believe your testimony was that there was a
16 meeting that you didn't attend of the
17 independent directors; is that correct?
18 A. Of the independent directors of
19 Innkeepers?
20 Q. Yes.
21 A. Yes.
22 Q. Are you aware of any of the
23 discussions that occurred in that meeting?
24 A. As I discussed earlier, there was a
25 brief summary of the topics covered during
61 (Pages 238 to 241)
238
1 Hewes
2 the independent session and when the full
3 board convened, I recall that summary
4 included that the independent members of the
5 board had been briefed on all of the
6 transactions and issues surrounding the
7 potential bankruptcy filing and -- I'm sorry,
8 what was the question? I think I may have
9 answered it.
10 Q. You did answer the question.
11 A. Okay. Yeah, I think that's it.
12 Q. Do you know whether there was any
13 criticism or opposition by any of the
14 independent directors of any of the
15 transactions that were presented to them at
16 that meeting?
17 A. I'm not aware of any.
18 Q. In preparing for this deposition,
19 did you meet or otherwise discuss Innkeepers
20 with Mr. Zelter?
21 A. Yes, Mr. Zelter participated, I
22 believe I indicated this morning, in meeting
23 with counsel to prepare for this deposition.
24 Q. And in discussing with Mr. Zelter,
25 did you discuss all the various conversations
239
1 Hewes
2 he's had with either Innkeepers or Lehman
3 regarding the PSA or any related
4 transactions?
6 You can answer.
7 A. We -- we did inquire of him as to
8 his recollection of conversations he may have
9 had that were relevant to the deposition
10 request.
11 Q. I'm sorry, who is we in that
12 sentence?
13 A. Myself, Joseph Glatt and Paul
14 Weiss.
15 Q. Is it possible that Mr. Zelter had
16 conversations with Innkeepers that you don't
17 know about?
18 MR. EHRLICH: Is it theoretically
19 possible. Objection. I mean you can
20 answer that.
21 A. Sure, it's possible.
22 Q. But no, you feel confident that
23 Mr. Zelter told you about all of the
24 conversations he had regarding Innkeepers --
25 with anybody at Innkeepers? I'm sorry.
240
1 Hewes
2 A. Am I confident that he -- sorry.
3 Repeat the question, please.
5 A. Yeah, I -- I feel confident that
6 I'm aware of -- of Mr. Zelter's discussions
7 with Innkeepers regarding this process.
8 Q. If we could turn to Exhibit 18,
9 please.
10 Did Mr. Zelter have a conversation
11 with Mr. Sathy on June 13th?
12 A. As I indicated earlier, it appears
13 that there was a request for a conversation.
14 I don't recall -- I don't recall whether I
15 participated and I don't recall what the
16 nature of this discussion was or discussing
17 after the fact.
18 Q. So my question was: Do you know
19 whether Mr. Zelter had a conversation with
20 Mr. Sathy on June 13th?
21 A. I do not know specifically, no.
22 Q. Mr. Sathy's e-mail states we're
23 having a call with JZ, MB and JG tonight to
24 discuss some CMBS questions/strategies. Do
25 you see that?
241
1 Hewes
2 A. Yes.
3 Q. Do you understand what he means by
4 CMBS questions/strategies?
6 Q. Do you have a general understanding
7 of what he meant?
8 A. In connection with this e-mail, no.
9 Q. Did you understand it when you
10 received the e-mail?
12 Q. You don't recall whether you
13 understood the e-mail?
14 A. This e-mail, it doesn't say a whole
15 lot and it doesn't jog a lot of memories, to
16 be honest. I don't recall anything about
17 this e-mail.
18 Q. Do you know whether Mr. Zelter had
19 any conversations with Mr. Sathy regarding
20 CMBS questions or strategies?
22 You can answer.
23 A. I don't know specifically.
24 Q. Do you know generally?
25 A. Sorry. I meant -- my prior answer
62 (Pages 242 to 245)
242
1 Hewes
2 meant to state I don't know whether Mr.
3 Zelter had conversations with Mr. Sathy about
4 whatever you asked about.
5 Q. About CMBS questions and
6 strategies?
7 A. Correct.
8 MR. FLIMAN: Thank you. That's all
9 I have.
10 MR. EHRLICH: Are we done?
11 MR. KARCHER: I just have a couple
12 of follow-up questions. I think
13 everything was addressed but.
14 MR. EHRLICH: Could you introduce
15 yourself. I don't think you were here
16 when appearances were taken earlier.
17 Sure. My name is Timothy Karcher
18 from the law firm of Dewey & LeBoeuf. I
19 represent the ad hoc committee of
20 preferred shareholders.
21 EXAMINATION BY
22 MR. KARCHER:
23 Q. I just wanted to follow up on some
24 of the questions --
25 MR. EHRLICH: Sure.
243
1 Hewes
2 Q. -- that were asked and some of the
3 answers you gave earlier. I understand that
4 you've been employed by Apollo Investment
5 Management since 2007 and that you recently
6 became a trustee of Innkeepers USA Trust,
7 correct?
8 A. Correct.
9 Q. You testified earlier that you
10 recently became a director because you had
11 been involved with the Innkeepers project
12 beforehand. Can you elaborate on what that
13 involvement was before your appointment as a
14 director?
15 A. Sure. The investment in Innkeepers
16 is the only sole shareholder private equity
17 investment in AIC's portfolio and, therefore,
18 it's different from in certain respects, it's
19 different from typical investments that we
20 make.
21 Typically our portfolio consists of
22 debt investments, fixed income securities,
23 investments where we have less influence or
24 control or candidly information directly from
25 the company. We don't sit on boards, we
244
1 Hewes
2 don't control the equity. Things of that
3 nature.
4 In the fourth quarter of 2008,
5 subsequent to the bankruptcy filing of Lehman
6 Brothers and the stock market declining
7 500 points every day and the general
8 cessation of economic activity around the
9 world at some level, the individuals who were
10 involved or had primary responsibility for
11 the Innkeepers investment began to see a
12 precipitous decline in the company's
13 financial performance, not inconsistent with
14 issues being seen elsewhere in the world.
15 And as a result of the attention that the
16 situation may require, I was asked as a
17 senior member of our team to get involved.
18 Q. And by getting involved, you mean
19 become a director?
21 A. Not --
22 MR. EHRLICH: You can answer.
23 A. Not at the time, no. I was asked
24 to familiarize myself with the company, its
25 operations and lend whatever assistance I
245
1 Hewes
2 could to the situation so --
3 Q. And that assistance would take
4 advantage of the fact that this being, as I
5 think you testified, a unique situation where
6 you could have more influence or control over
7 the situation, you would, you would exercise
8 that ability; is that correct?
9 MR. EHRLICH: Objection,
10 mischaracterizes his testimony.
11 A. Yeah, I don't think that's the
12 point. I think control is perhaps a loaded
13 word.
14 Q. It's your word.
15 A. What I mean is -- well, I know and
16 so I'm going to explain.
17 MR. EHRLICH: Let the witness
18 finish.
19 A. What I mean is we owned 100 percent
20 of the stock. We had, therefore, a
21 significantly greater responsibility to
22 manage the situation than we, than we do in
23 other situations.
24 Q. Aside from you, are there other --
25 who are the other -- are there other Apollo
63 (Pages 246 to 249)
246
1 Hewes
2 directors?
4 answered. You can tell him again.
5 A. The other Apollo affiliated
6 directors, forgive me if I miss one on the
7 list --
8 Q. Sure.
9 A. -- are Jim Zelter, Patrick Dalton,
10 Justin Korval, Ken Picache and myself.
11 Q. Okay. You said that you've been
12 involved in more than 100 deals and that 10
13 to 20 of them have been completed. Do you
14 recall that testimony?
15 A. I would correct your statement. I
16 said I had reviewed a significant number of
17 potential investments, or potential deals, to
18 use your word, and that it was perhaps
19 greater than 100 and perhaps less than some
20 other number. I don't recall what I said but
21 it was a large number.
22 Q. Have you been involved in other
23 Chapter 11 cases?
24 A. There are other investments in our
25 portfolio that have been distressed during
247
1 Hewes
2 the last 2 years. Some of those, and some of
3 those cases where we're always a creditor, we
4 -- there was a potential for bankruptcy.
5 With respect to the investments that I have
6 been involved with, to the best of my
7 recollection, only one has filed for
8 bankruptcy.
9 Q. In addition to Innkeepers?
10 A. In addition to Innkeepers, although
11 I'm not certain there aren't others.
12 Q. And what was the case that you were
13 recalling?
14 A. It's a company by the name of
15 American Safety Razor or it has a slightly
16 different corporate name but that's kind of
17 the name people know it by.
18 Q. Moving on to the hotel properties
19 themselves, it's my understanding that
20 they're held by the subsidiaries of the
21 Innkeepers USA, Innkeepers Trust USA; is that
22 correct?
23 A. I believe so, yeah.
24 Q. And it may be easier if we referred
25 to Exhibit 5, and the chart on page 16. I'm
248
1 Hewes
2 sorry, that's not the exhibit. It's
3 Exhibit 4.
4 Have you seen this chart before?
5 MR. EHRLICH: Let the witness get
6 to the page.
7 Q. I'm sorry, I will let you get it.
8 A. What's the page number again?
9 Q. 16.
10 A. Yes, I've seen this before, I've
11 reviewed this document.
12 Q. I'm going to direct your attention
13 to the six square shape boxes down sort of
14 right in the center and each one of those
15 boxes has a different name of an LLC,
16 starting with KPA HI Ontario LLC, KPA RIMV
17 LLC, KPA RIGG LLC, KPA Tysons Corner RI LLC,
18 KPA Washington D.C., LLC and KPA San Antonio
19 LLC. Do you see those boxes?
20 A. I do.
21 Q. Earlier we talked about the six or
22 seven properties that were held outside of
23 the debt structure that I'll call the
24 floating or the fixed debt structure of the
25 independent properties.
249
1 Hewes
2 A. Uh-huh.
3 Q. Are those independent properties
4 represented by those boxes there?
5 A. I didn't create this chart but I
6 believe that's the, that's what these
7 represent.
8 Q. Okay. And so --
9 A. I don't know -- yeah. Sorry, go
10 ahead.
11 Q. Now, Innkeepers USA Trust, which is
12 up at the top, it's not liable for the debts
13 of the subsidiaries in these boxes, is it?
15 You can answer. Calls for a legal
16 conclusion.
17 A. Yeah, that's a little technical. I
18 don't -- I didn't -- just to reiterate some
19 history that was covered earlier, I wasn't
20 involved in this initial transaction in 2007.
21 I didn't work on it in any way. I was only
22 aware of it in my capacity as an employee who
23 had started at the firm in March of 2007.
24 Given the complexity, there are certain
25 details of the capital structure and the debt
64 (Pages 250 to 253)
250
1 Hewes
2 structure that while I'm generally familiar
3 with, I'm not an expert. I don't believe, to
4 the best of my recollection, that Innkeepers
5 USA Trust guaranteed those debt obligations,
6 which I think is the translation of the
7 question you just asked, which is, is
8 Innkeepers liable for those debts?
9 Q. That's part of the question, sure.
10 A. Okay.
11 Q. The real question is, to the extent
12 that those entities have equity value --
13 A. Uh-huh.
14 Q. -- that value would inure to
15 Innkeepers to the credit -- to the
16 shareholders of Innkeepers trust and
17 Grandview Holdings; is that correct?
18 MR. EHRLICH: Objection, that calls
19 for a legal conclusion.
20 You can answer if you know, but
21 only in your personal capacity and
22 certainly not as a 30(b)(6) witness.
23 A. Yeah, I think that's a little bit
24 technical in nature. But I don't -- it's my
25 understanding that each of the -- each of
251
1 Hewes
2 these properties has secured debt on it.
3 Q. Well, let's break that down.
4 If each of them have secured debt,
5 and I thinks as Craven says in his
6 declaration, each of these properties is
7 secured by a mortgage but are not part of the
8 Lehman pools. Do you understand what I'm
9 talking about when I say that?
10 A. Correct, I understand what you're
11 talking about.
12 Q. So to the extent that any of those
13 individual properties are worth more than the
14 debt obligations that they have in that
15 individual box, where does that value go to?
16 MR. EHRLICH: Objection. Again,
17 call or renew my objection, that calls
18 for a legal conclusion from a lay
19 witness.
20 If you know in your personal
21 capacity and not as a corporate
22 representative, you can testify.
23 A. Let me answer your question a
24 little bit differently.
25 It is my understanding that the
252
1 Hewes
2 public preferred, which I think is the line
3 of questioning you're focused on, is pari
4 passu with the preferred security that Apollo
5 Investment Corporation owns. If we had any
6 opinion that there were any value that would
7 accrue to the preferred securities in the
8 capital structure, again my understanding is
9 that as pari passu preferreds such value, if
10 any, would accrue equally to those two
11 instruments. It's not our conclusion or
12 belief that there's any value there.
13 Q. Under what scenario would any of
14 that value go to Lehman based on your
15 understanding of the debt structure?
16 MR. EHRLICH: Objection, calls for
17 a legal conclusion.
18 You can answer, to the extent you
19 can.
20 A. I don't -- I'm not aware of any
21 scenario where that would make sense.
22 Q. Okay. In connection with the PSA
23 and the DIP and the determination to commence
24 the Chapter 11 proceedings, did Apollo, as
25 member of the board of trustees, look into
253
1 Hewes
2 the value of any of these six properties
3 represented by the boxes on page 16?
4 MR. EHRLICH: Objection on
5 foundation grounds.
6 You can answer.
7 A. If your question is, did we perform
8 an independent analysis of the value, the
9 answer would be no. We relied on the company
10 and its financial advisors' estimation that
11 all of its secured creditors were impaired
12 which implies that there is no equity value
13 in any of these entities.
14 Q. You testified earlier that many
15 entities had problems when you were
16 discussing whether or not the company should
17 commence Chapter 11 proceedings.
18 Do you recall that testimony?
19 A. Not the specific sentence but it
20 sounds accurate.
21 Q. But you didn't say that all of the
22 entities have problems.
23 A. Well, I believe if you -- if you
24 review the testimony, I proceeded to explain
25 why it's not necessarily relevant that every
65 (Pages 254 to 257)
254
1 Hewes
2 entity is, every entity or it's simpler to
3 say every hotel is in financial distress
4 because in the case of the pools of hotels,
5 they're cross-collateralized and so whether
6 every single entity is not generating cash or
7 it doesn't generate sufficient cash is not
8 the right question.
9 Q. Well, what about for properties
10 that are not cross-collateralized?
11 MR. EHRLICH: Note my continuing
12 objection.
13 A. What was the question?
14 Q. The question is whether or not it's
15 relevant to look at the values. You said you
16 didn't look at the values because for every
17 entity because they were
19 A. No, I said we didn't perform an
20 independent analysis of the values and we
21 relied on the company and its advisors'
22 conclusions that all of the company's senior
23 members were impaired.
24 Q. And you said it was not relevant
25 because the properties were
255
1 Hewes
3 MR. EHRLICH: Is there a question?
4 Q. Was that your testimony?
5 A. You're mixing concepts. You're
6 mixing concepts.
7 Q. Let me him ask a question.
8 A. Yeah. If you could ask me a
9 question, I'm happy to answer it.
10 Q. Do you believe that it's relevant
11 to look at property values for properties
12 that are not cross-collateralized?
13 MR. EHRLICH: Relevant for what?
14 Q. In your determination to advise the
15 company to commence Chapter 11 proceedings.
17 mischaracterizes the facts but you can
18 answer.
19 A. Yeah, I believe it's relevant to
20 consider the financial performance of each
21 loan and the cash flows generated by the
22 asset that loan is securitized by as well as
23 any other obligations that hotel or that
24 entity may have to other parts of the
25 organization, or to a franchisor.
256
1 Hewes
2 Q. And that was not done for these six
3 individual properties; is that correct?
4 A. That was not my statement. My
5 statement was that we relied on the
6 conclusions of the company and its financial
7 advisors that -- that all of the company's
8 secured lenders were impaired and the
9 implications are of that statement that
10 analysis was conducted, although we didn't
11 conduct it independently, that each of these
12 entities had its own issues and candidly the
13 conclusion that any or all of these loans
14 were impaired, given that they were all
15 originally structured to similar loan to
16 value type ratios, I assume, was not --
17 doesn't seem strange to me.
18 Q. So you could take properties in
19 various geographic areas and make the same
20 conclusion because of the LTD?
22 Mischaracterizes the testimony.
23 You can answer.
24 A. No, I don't think -- that was not
25 my testimony. My statement was that we
257
1 Hewes
2 relied on the company and its advisors'
3 analysis of all of its operations and -- in
4 each of these entities and each of these
5 secured loans and it is our understanding
6 that their conclusion was that all of the
7 secured lenders are impaired and that
8 suggests that there's no equity value in any
9 of those entities.
10 Q. Okay. Let's focus for a second on
11 KPARIMV LLC then.
12 That's the Mission Valley property
13 in San Diego, right?
14 A. If you tell me it is, I'll accept
15 that statement, but I don't -- I'm not
16 familiar with every one of these entities'
17 name and the hotel.
18 Q. Well, you testified earlier that
19 San Diego property had a significant amount
20 of debt on it. It was one that you were
21 familiar with because it was in California
22 and I know I'm --
23 A. I've been to the property, that's
24 -- yes, and I'm aware that it's one of these
25 boxes.
66 (Pages 258 to 261)
258
1 Hewes
2 Q. And it's one of these boxes that
3 you've just said has no value; is that
4 correct?
6 A. I believe my statement was -- it's
7 my understanding that there is no equity
8 value in these boxes. That doesn't mean
9 there's no value.
10 Q. Understood.
11 You are familiar where the Five
12 Mile DIP, the debtors application for an
13 order authorizing their entry into the Five
14 Mile DIP?
15 A. Did the court order, authorize
16 the --
17 Q. No. They've made an application?
18 A. Sorry, you said application, I
19 heard the second part. Yes.
20 Q. And part of the DIP commitment, and
21 I'm sorry only I only have one copy of this,
22 I can share it with you if you'd like
23 but essentially --
24 THE WITNESS: Excuse me. Let me
25 just turn this off.
259
1 Hewes
2 Q. -- it provides that as part of the
3 DIP commitment there is going to be a
4 facility allocated to the property securing
5 the Mission Valley loan and the Tysons Corner
6 loan.
7 Is the Mission Valley loan the same
8 Mission Valley property that we were talking
9 about as KPA RIMV LLC?
10 A. Can you refer me to a page number?
11 MR. EHRLICH: Do we all have a term
12 sheet before us because I don't really
13 think it's appropriate to question on a
14 document without the document. The DIP
15 term sheet, it's an appendix to the PSA.
16 MR. KARCHER: Exhibit D?
17 MR. EHRLICH: Are you talking about
18 the Five Mile DIP?
19 MR. KARCHER: The Five Mile.
20 MR. EHRLICH: Then it's Exhibit D.
21 A. Okay. I'm sorry. Can you refer me
22 to a clause or a page?
23 Q. I'm trying to get there myself.
24 Well, it's about halfway through
25 the book.
260
1 Hewes
2 A. Is there a page number?
3 Q. On a page without a page number.
4 Exhibit A to the -- Exhibit A.
5 MR. EHRLICH: Exhibit A to Exhibit
6 D.
7 Q. To Exhibit D or you can look at the
8 Schedule 2?
9 MR. EHRLICH: Are we looking -- we
10 should all be looking at the same thing.
11 You mean the term sheet that's Exhibit A
12 following the --
13 A. Schedule 2 tranche B borrower.
14 Q. Yes. No, it's tranche B borrower.
15 A. Does it also say Schedule 2 in the
16 upper right-hand corner?
17 Q. Yes.
18 A. Okay. Sorry, what was your
19 question?
20 Q. Thank you. I don't mean to
21 complicate it, it's just to point out that
22 under the Five Mile DIP the Mission Valley
23 property and the Tysons Corner property are
24 pledged as collateral for that DIP as
25 evidenced by the fact that they are listed as
261
1 Hewes
2 borrowers under tranche B and tranche B
3 borrowers; is that correct?
4 MR. EHRLICH: You're asking him
5 whether the DIP states that?
6 A. That appears to be correct.
7 Q. And do you know what the proceeds
8 from that DIP will be used for?
9 A. As I stated earlier, I'm aware just
10 generally that the San Diego property is in
11 need of a significant renovation. I'm not
12 familiar with the specifics of what the
13 proceeds of that loan will be used for, to be
14 honest.
15 Q. So some of the loan will be used
16 for PIP obligations?
17 MR. EHRLICH: If you know. I don't
18 want you to speculate.
19 A. I don't know and I don't want to
20 speculate. There are different capital
21 obligations that occur in these properties.
22 Some you might call PIP, some you might call
23 other things. The term "cycle renovation" is
24 used quite often. I don't know the
25 distinction, to be honest, at this specific
67 (Pages 262 to 265)
262
1 Hewes
2 property what the issues are.
3 Q. So your answer was, they're not
4 going to be used, you don't know whether
5 they're going to be used for PIP obligations?
7 mischaracterizes the testimony. He can
8 answer again.
9 A. I'm sorry, what was your question?
10 Q. I'm -- I'll restate the question.
11 Do you know whether or not they're
12 going to use monies from the DIP, Five Mile
13 DIP to perform PIP obligations?
14 MR. EHRLICH: Innkeepers is going
15 to use money?
16 MR. KARCHER: Innkeepers.
17 A. It's my understanding that they
18 will use monies from the DIP facility to
19 perform capital improvements of -- at the
20 Mission Valley property. Whether those
21 capital improvements specifically are
22 characterized as PIPs or other capital
23 improvements, I don't know specifically.
24 Q. Now, in addition to the Mission
25 Valley property, the Tysons Corner property
263
1 Hewes
2 is also a borrower under the --
3 A. Yes.
4 Q. -- and pledged under the Five Mile
5 DIP?
6 A. Yes, that would be the property
7 listed on Schedule 3.
8 Q. Now, on the term sheet, if you
9 continue in that document under Exhibit A, it
10 keeps going, I guess it's two more pages, and
11 if you go to page 5 of that agreement,
12 there's something that says use of proceeds.
13 Can you read that paragraph to yourself?
14 A. Sure.
15 Q. And you can skip to the last
16 sentence there.
17 A. Okay.
18 Q. Does reviewing that use of proceeds
19 provision in the Five Mile DIP facility
20 refresh your recollection about how the
21 proceeds will be used for the -- from the
22 Five Mile DIP?
23 A. Well, I would say it confirms your
24 question as to whether or not these proceeds
25 will be used to perform PIP work.
264
1 Hewes
2 MR. EHRLICH: Hold on. I want the
3 record -- PIP work is a defined term
4 which is defined elsewhere in the
5 document and reference should be made to
6 that defined term.
7 Page 17 of the -- there is a
8 definition of some of these terms that
9 may be relevant.
10 THE WITNESS: I don't have a page
11 17.
12 Here we go.
13 Q. Now, page -- there was an interim
14 order authorizing the debtors to use the
15 adequate protection parties cash collateral
16 to provide adequate protection. If you
17 continue further in the document under
18 Exhibit B -- Exhibit E, rather, the cash
19 collateral order, and if you follow along in
20 that page 17, there's a series of
21 definitions. One of the definitions is PIP
22 work. It says it means the construction
23 labor and materials necessary to satisfy
24 Marriott or any other applicable franchisor
25 that each of the requirements of each of the
265
1 Hewes
2 PIPs has been satisfied.
3 So I ask you again: Is the Five
4 Mile, are the proceeds from the Five Mile DIP
5 going to be used to satisfy PIP obligations?
6 MR. EHRLICH: Counsel, this record
7 is a complete confusion. Are you
8 representing defined terms in the
9 interim cash collateral order are the
10 same defined terms as in the term sheet?
11 Because my best reading of these
12 documents is that the defined terms in
13 the term sheet, excuse me, in the DIP
14 agreement are the same as in the term
15 sheet. And they're not the same in all
16 respects. Do you know?
17 MR. KARCHER: I don't know. But
18 maybe I can simplify it by asking
19 whether or not it's your understanding
20 that the 5-mile DIP proceeds will be
21 used to satisfy the Marriott.
23 A. It's my understanding that the Five
24 Mile DIP facility proceeds will be used to
25 fund capital improvements regardless of what
68 (Pages 266 to 269)
266
1 Hewes
2 you call them in those properties. Is that
3 helpful?
4 Q. It is. Are those property
5 improvements the same property improvements
6 that Apollo is -- has a guarantee to perform
7 in the event that they are not satisfied by
8 Innkeepers?
10 You can answer.
11 A. It is my understanding that --
12 THE WITNESS: I'm sorry, can you
13 repeat the full question.
15 A. No, I don't believe so.
16 MR. KARCHER: I have no further
17 questions.
19 MR. EHRLICH: Anyone else?
20 I just have a couple of questions.
21 EXAMINATION BY
22 MR. EHRLICH:
23 Q. Mr. Hewes, when did Apollo first
24 see a draft of the plan support agreement
25 that ultimately was submitted for approval to
267
1 Hewes
2 the court?
3 A. It's my recollection that the first
4 time Apollo received the plan support
5 agreement or a draft of the plan support
6 agreement at the time was sometime the
7 weekend prior or the Friday or Saturday prior
8 to July 19th.
9 Q. Did Apollo participate in
10 negotiations concerning the document that
11 became the plan support agreement?
12 A. No.
13 Q. Did Apollo give instructions to the
14 company as to negotiations over specific
15 terms in the plan support agreement?
16 A. I'm not aware of any, no.
17 MR. EHRLICH: I have nothing
18 further.
20 MR. SOLOMON: I actually have one
21 or two questions.
22 BY MR. SOLOMON:
23 Q. Sir, your counsel asked you, quote,
24 did Apollo give instructions to the company
25 as to negotiations over specific terms in the
268
1 Hewes
2 plan support agreement. Do you recall that a
3 moment ago?
4 A. Uh-huh, yes.
5 Q. Did Apollo give instructions to the
6 company as to negotiations over specific
7 terms in the term sheet between Apollo and
8 Lehman?
9 MR. EHRLICH: You mean between
10 Innkeepers and Lehman?
11 Q. No, between Apollo and Lehman?
12 MR. EHRLICH: Did Apollo give
13 specific instructions to the --
14 MR. SOLOMON: I'm sorry, you're
15 correct.
16 Q. Between Innkeepers and Lehman.
17 I'll rephrase the question.
18 Did Apollo give instructions to the
19 company Innkeepers as to the negotiations
20 over specific terms in the term sheet between
21 Innkeepers and Lehman?
22 A. Are you reasking the question? I'm
23 sorry.
24 MR. SOLOMON: Could you please
25 repeat the question, read it back.
269
1 Hewes
2 Q. It's a different question than what
3 your counsel asked you. Your counsel asked
4 you about the PSA, I'm asking about the term
5 sheet.
6 A. I took the term sheet to mean --
7 Q. Let her reread the question.
10 Q. If anyone at Apollo had given any
11 such instructions, would you be aware of
12 them?
13 A. I believe I would be aware of them,
14 yes.
15 Q. Did you do anything in preparation
16 for your deposition to confirm whether or not
17 any such instructions were given?
18 A. I had conversations with -- with
19 Joe Glatt about the final days of these
20 agreements. I didn't ask -- I didn't address
21 that issue specifically.
22 Q. Did you address it with anyone
23 else?
25 Q. Generally?
69 (Pages 270 to 273)
270
1 Hewes
2 A. No.
3 MR. SOLOMON: I have nothing
4 further.
5 MR. EHRLICH: Okay. Off the
6 record.
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3 J U R A T
4
5 I, SCHUYLER HEWES, the witness
6 herein, the foregoing testimony of the
7 pages of this deposition, do hereby
8 certify it to be a true and correct
9 transcript, subject to the corrections,
10 if any, shown on the attached page.
11 ____________________
12 SCHUYLER HEWES
13
14 Subscribed and sworn to before me
15 this ___ day of __________, 2010.
16
17 _________________________________
18 NOTARY PUBLIC
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1 INSTRUCTIONS TO WITNESS
2
3 Please read your deposition over carefully
4 and make any necessary corrections. You should state
5 the reason in the appropriate space on the errata
6 sheet for any corrections that are made.
7 After doing so, please sign the errata sheet
8 and date it.
9 You are signing same subject to the changes
10 you have noted on the errata sheet, which will be
11 attached to your deposition.
12 It is imperative that you return the original
13 errata sheet to the deposing attorney within thirty
14 (30) days of receipt of the deposition transcript by
15 you. In you fail to do so, the deposition transcript
16 may be deemed to be accurate and may be used in court.
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5 I wish to make the following changes,
6 for the following reasons:
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9 ___ ___ CHANGE:__________________________
10 REASON:___________________________________
11 ___ ___ CHANGE:__________________________
12 REASON:___________________________________
13 ___ ___ CHANGE:___________________________
14 REASON:___________________________________
15 ___ ___ CHANGE: __________________________
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22 _________________________ _____________
23 WITNESS' SIGNATURE DATE
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STATE OF NEW YORK )
4 : ss.
COUNTY OF NEW YORK )
5
6 I, JENNIFER OCAMPO-GUZMAN, a
7 Shorthand Reporter and Notary Public within
8 and for the State of New York, do hereby
9 certify:
10 That SCHUYLER HEWES, the witness
11 whose deposition is hereinbefore set forth,
12 was duly sworn and that such deposition is a
13 true record of the testimony of such witness.
14 I further certify that I am not
15 related to any of the parties to this action
16 by blood or marriage, and that I am in no way
17 interested in the outcome of this matter.
18 IN WITNESS WHEREOF, I have hereunto
19 set my hand this 19th day of August 2010.
20
21 __________________________
22 JENNIFER OCAMPO-GUZMAN
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3 WITNESS PAGE
4 SCHUYLER HEWES
5 BY MR. SOLOMON 6, 267
6 BY MR. GOTTESMAN 189
7 BY MR. FLIMAN 211
8 BY MR. KARCHER 242
9 BY MR. ERLICH 266
10 E X H I B I T S
11 DESCRIPTION PAGE
12 Exhibit Hewes-1, Website printout of
Apollo Investment Corporation entitled
13 "Our Business".............................9
14 Exhibit Hewes-2, Website printout of
Apollo Investment Corporation entitled
15 "Selection Process"........................12
16 Exhibit Hewes-3, Amended Notice of
Deposition of Corporate Representative of
17 Apollo Investment Corporation and
subpoena duces tecum.......................19
18
Exhibit Hewes-4, Amended Declaration of
19 Dennis Craven, Chief Financial Officer of
Innkeepers USA Trust, In Support of
20 First-Day Pleadings........................26
21 Exhibit Hewes-5, Plan Support Agreement....44
22 Exhibit Hewes-6, Illustrative Terms of
Proposed Restructuring, May [25] 2010,
LEH-ALI 000004.............................51
24
25
276
1
2 (Continued):
E X H I B I T S
3
DESCRIPTION PAGE
4
Exhibit Hewes-7, Illustrative Terms of
5 Proposed Restructuring, June [2], 2010,
Bates Nos. LEH-ALI 000014 through
6 LEH-ALI 000022.............................56
7 Exhibit Hewes-8, Document entitled,
"Project Tavern, Lehman Discussion
8 Materials," Bates Nos. INN_MID00003533
through INN_MID00003548...................71
9
Exhibit Hewes-9, Document entitled
10 "Project Tavern, Midland Discussion
Materials," [not Bates stamped]...........85
11
Exhibit Hewes-10, Illustrative Terms of
13 LEH-ALI 000050............................93
14 Exhibit Hewes-11, E-mail dated 6/17/10
with attachment, Bates Nos. AIC 00000233
15 through AIC 00000245......................94
16 Exhibit Hewes-12, Term Sheet Alternative A,
Illustrative Terms of Proposed
17 Restructuring, June 17, 2010, Bates Nos.
LEH-ALI 000230 through LEH-ALI 000241.....103
18
Exhibit Hewes-13, Term Sheet,
Proposed Restructuring, June 22, 2010,
LEH-ALI 000151............................116
21
Exhibit Hewes-14, Term Sheet,
Proposed Restructuring June 29, 2010,
LEH-ALI 000264............................126
24
25
277
1
2 (Continued):
E X H I B I T S
3
DESCRIPTION PAGE
4
Exhibit Hewes-15, E-mail dated 7/7/10
5 with attachment, Bates Nos. AIC 00000127
through AIC 00000144......................130
6
Exhibit Hewes-16, Term Sheet Lehman/AIC,
7 July 19, 2010, [not Bates stamped]........140
8 Exhibit Hewes-17, E-mail dated 7/17/10,
Bates Nos. INN_MID00003311 and
9 INN_MID00003312...........................142
10 Exhibit Hewes-18, E-mail dated 6/13/10,
Bates No. AIC 00000219....................175
11
12 DOCUMENT REQUESTS
Page Line
13 161 18
173 4
14 187 22
15
16
17
18
19
20
21
22
23
24
25
278
A
ability 7:19
34:22 77:10
223:16 245:8
able 97:16 176:6
201:13
Absolutely
144:24
accept 140:24
152:8 257:14
acceptable 6:18
7:7 102:3
accepted 11:17
19:4
accommodate
6:22 57:10
accompanied
139:20
accrue 252:7,10
accurate 10:5
34:10 41:3
50:25 182:24
253:20 272:16
accurately 161:7
161:11
acquire 16:20,24
135:14,19,21
151:21
acquired 203:18
acquisition
16:17 44:13
122:19
acquisitions
18:5
act 59:25
acting 111:11
112:2
action 185:22
274:15
activities 12:7
34:4,8
activity 201:3
244:8
actual 45:12,14
45:17 139:21
144:8 160:7
ad 4:18 242:19
addition 7:3
66:16 199:16
247:9,10
262:24
additional 189:7
address 59:19
219:3 269:20
269:22
addressed
242:13
adequate 264:15
264:16
adieterich@p...
3:18
advantage 245:4
advise 97:4
255:14
advised 98:23
advisement
173:17 188:2,3
advisor 73:9
82:16
advisors 3:4
4:24 73:25
80:15 82:18
89:14 182:7,9
182:10 186:11
186:12 225:23
253:10 254:21
256:7 257:2
advisory 72:24
72:25
aehrlich@pau...
3:17
affect 7:19 167:5
167:25 168:2,9
235:24
affiliated 13:17
196:25 246:5
afield 123:21
afternoon
189:16 211:4
age 130:24
agenda 79:24
81:23
aggregate 200:9
ago 50:6 52:10
54:4 71:25
76:18 121:8
149:18 150:16
155:23 174:23
268:3
agree 88:3
agreed 159:18
161:8,12
163:13 165:11
agreement 16:20
16:24 29:20,21
30:13,16,20,23
31:6,24,24
32:5,6 44:22
45:2 46:2
50:12,16,19
87:11,14,16,23
87:24 88:22
101:25 102:3
127:23 129:16
129:20 133:16
133:20 134:2
135:14,17,19
135:21 136:6,7
136:16 137:4
137:13,24,25
139:15,20,23
141:4 149:24
150:20 152:16
152:20,25
153:11,13,21
160:4 162:15
163:12,18,22
164:4,21
173:20 174:19
191:10 196:19
203:20 224:19
224:24 228:10
228:20 235:17
235:19,23
236:5 263:11
265:14 266:24
267:5,6,11,15
268:2 275:21
agreements 28:6
28:20 31:23
32:2,5,15
75:16 131:10
132:11 144:6
148:10 157:14
157:15 174:17
177:16 180:9
197:6 269:20
ahead 231:23
249:10
AIC6:2 12:12
14:10 16:5
19:8 21:12
43:7 44:4,11
45:25 46:5,6,8
56:13 58:3,8
58:24 59:25
61:3,11 62:5,8
65:6,10 66:5,9
66:14,19 67:24
67:25 68:10,13
77:19 78:7
81:9 84:6,10
88:2,5,9,15
91:21 92:2,6
92:12 93:15
94:7,10,10
95:16,19,23
96:18,22 97:4
97:9,14,18,19
97:23 98:9,11
98:18 99:2,10
99:16 100:9,14
101:7,15 102:9
102:13,17
105:6,24 107:6
107:9 109:22
110:24 112:3
112:10 113:8
113:13 114:2
114:23 116:21
117:4,10,15
118:8 119:16
120:7,11
121:10,22
122:4,6 123:5
123:12,17
128:8,10,12,16
129:3,19
130:15,16,20
130:20 131:12
131:23 132:8
132:14,18
133:16 134:2
135:13,24
136:4,8,14,16
137:5,14 138:2
138:9,12
139:11 141:7,9
141:15,17
150:2,9,13,24
151:8,18,18,20
152:5,9 153:23
154:3,24
155:18 156:7
156:22 157:3
157:11,18
158:22 159:7
159:10 165:24
167:3,6 168:23
173:20 174:20
175:5,8 177:13
177:22 178:3,9
179:7,14
180:16,20,25
182:16 195:10
195:15 196:25
203:18 211:15
212:7 213:22
215:23 216:13
217:2,16 218:6
218:11 219:3
219:12 220:2,4
220:10 222:11
225:18 227:7
227:13,22
228:12,16
229:2,6 236:8
236:18 237:10
276:14,15
277:5,5,10
AIC's 62:10,18
62:19 63:4
118:22 159:16
212:22 220:4
231:12 232:3
233:25 234:20
235:11,16,21
236:8 243:17
AIC/Lehman
237:10
279
AIM8:14,15
12:12 14:10
16:5 17:3 19:8
al 1:5
ALI 3:21 5:22
116:20
allegedly 88:7
allocated 259:4
allow6:24 209:8
alter 168:4,9,13
alternative 96:8
96:11 97:8
99:5,21 103:4
116:6 126:21
127:4 137:15
137:19 276:16
276:19,22
alternatives
226:11
ambiguous
148:17
amend 72:13
Amended 19:18
19:25 26:10
275:16,18
amendment
186:2
American
247:15
Americas 1:12
2:16 3:9,15,21
4:5,19
amount 42:21
77:13,14
158:19 177:18
177:18 179:25
201:10 202:7,8
225:5 229:13
230:9,19
257:19
amounts 42:19
67:4 77:7
225:5
Amy 3:18 5:23
Anaheim192:14
201:16
analysis 42:21
143:16,19
147:11,13
148:13,14,22
149:4,7,8,10
149:16,17
167:23 200:19
202:11 221:14
223:10 229:6
230:5 253:8
254:20 256:10
257:3
analyst 18:12
Andrew3:16
5:25
Angeles 17:19
annexed 191:9
answer 7:4,6
8:21 14:2 16:9
19:10 23:9
28:14 29:10
30:7 31:8
32:10,17 33:11
34:7,16 35:3
36:14 37:19
43:10 48:8,9
48:14 49:7,15
54:8 58:11,17
59:4,7,10,18
63:22 64:7
65:8 66:23
68:4,20 69:2
69:18 72:10,11
72:14,16 76:21
77:23 80:16
84:19 90:13
92:11,16 93:17
95:8 96:14
100:20 101:19
106:24 111:18
112:9,17
116:25 117:2,7
119:5,19 121:8
122:13 123:14
124:2,15,23
125:11 128:7
129:7,22,23
130:4,9 131:17
134:4,10 135:7
140:11 144:16
145:14,19
147:8 148:5
149:3,18 152:4
153:6,16,18
155:15,23
156:16 157:6
164:6 166:15
167:21 168:14
173:24 174:23
178:12 179:21
185:19 188:9
188:19 193:11
195:6,12,25
200:20,24
209:16 210:12
210:13 216:3
217:22 219:15
219:23,24
220:12,14
221:3,15,21
222:17 223:12
224:23 226:21
228:4 229:9,21
231:20 232:10
232:11,13,15
232:16 233:8
234:7,10
238:10 239:6
239:20 241:22
241:25 244:22
249:15 250:20
251:23 252:18
253:6,9 255:9
255:18 256:23
262:3,8 266:10
answered 58:16
69:4 79:20
99:18 217:20
219:22 231:14
232:6,22,24
233:2 234:8
235:22 238:9
246:4
answering 6:17
166:16
answers 7:13
76:18 140:12
243:3
answer's 231:16
anticipated
172:7
Antonio 190:4
192:22 201:24
248:18
anybody 239:25
apart 29:25 30:4
56:11
Apollo 3:14 7:25
8:3,4,6,7,10,13
8:15,18,23 9:3
9:6,10,14,23
10:15,16,20
12:22 13:4,18
13:19 19:20
20:2 21:18
22:4,7,11 40:3
40:6,12 41:7
41:19 146:18
167:6,17 184:6
184:12,15,17
193:6 213:22
220:17 243:4
245:25 246:5
252:4,24 266:6
266:23 267:4,9
267:13,24
268:5,7,11,12
268:18 269:10
275:12,14,17
Apollo's 166:13
apologize 171:16
190:16 211:10
Appaloosa 4:9
appear 32:11
100:13 120:25
132:10
appearances
242:16
appeared 156:13
157:2
appearing 21:7
21:11 84:23
160:7
appears 28:22
51:22 84:20
90:21 93:22
94:23 108:21
108:22 109:10
110:4,15
127:21 128:3
140:13 142:18
143:2 160:20
162:23 240:12
261:6
appendix 163:17
259:15
applicable
264:24
application
258:12,17,18
applies 200:13
200:15
applying 226:13
appointment
243:13
appreciate 24:14
28:25 72:17
104:9 121:7
appropriate
72:2 77:14
232:12 259:13
272:5
approval 142:6
266:25
approvals
141:10,14,16
141:22,23
approved 208:4
approximate
14:25 17:12
approximately
17:18 36:23
46:12,17 68:2
74:21,24 79:3
88:12 125:7,14
125:20,20
197:9,15,18
April 36:18,20
40:23 41:2,4,6
41:14,19,22
70:22 71:22,25
72:15 73:17
74:21 75:14
78:13 79:4
280
80:3 86:3,12
91:7,17,19
186:11 211:13
215:7 216:5,8
216:8,11,16,22
217:4,18 218:2
218:3,5,5,6,10
218:11 219:2,2
219:10
area 18:7
areas 60:3
256:19
arose 40:22,23
arrive 112:15
arrived 108:15
arriving 86:21
ascertain 58:23
Aside 245:24
asked 57:21
58:16 63:7
71:24 76:22
83:14,15 87:11
99:17 138:15
148:23 163:17
182:16 183:14
185:9 208:15
211:10,24
212:3,9,13,24
213:4,5,9
214:16 215:6
215:15,22
219:21 231:14
232:6,21,23
234:22 242:4
243:2 244:16
244:23 246:3
250:7 267:23
269:3,3
asking 6:11,23
28:15 54:13
59:5 69:6
74:20 88:2,2
97:13 101:10
102:24 112:24
113:16,17
114:9,10
115:16 120:19
122:3 126:13
133:24 138:7
145:6 146:10
151:13 153:12
209:3 211:10
213:18 215:19
219:18,19
236:15 261:4
265:18 269:4
aspects 11:21
102:2 142:3
asset 255:22
assets 226:14
assistance
244:25 245:3
assume 9:21
10:2 64:23
95:16 110:6,16
110:23 111:4
128:24 207:15
208:13 210:6
256:16
assumes 52:14
assumption
54:14
attached 47:7,19
50:19 51:2
127:22 132:7
139:25 140:17
163:18 165:15
165:22,23
271:10 272:11
attaching 131:7
142:18 164:4,9
attachment 94:9
100:4 130:15
165:7 276:14
277:5
attempt 6:15 7:5
58:23 86:15
161:6 186:12
attempted 113:3
114:3
attend 38:4
77:19 78:7
169:11,21
170:5,8,15,25
171:5,9 237:16
attended 22:5,8
22:10,12 74:7
78:12 80:4,6
81:6,10 82:14
82:21 169:15
169:17 170:21
171:20 181:21
181:24 207:4,8
211:15,19
213:20
attendees 79:2,6
79:17 80:9
attention 27:16
27:24 32:22
167:12 228:22
244:15 248:12
attorney 145:5
146:13 147:19
147:21,24
148:2 272:13
attorneys 2:4,9
2:15,20 3:4,9
3:14,21 4:4,9
4:14,18 21:23
21:24 22:2
109:14,17
attractive 11:7,9
auction 16:25
August 1:13
20:4 274:19
author 54:12
authorize 169:2
171:23 172:18
258:15
authorized
181:16
authorizing
172:16 258:13
264:14
Avenue 1:12
2:16,21 3:9,15
3:21 4:5,10,19
aware 25:25
26:4 30:15,23
39:6,21 40:4
41:5 56:12
62:2,4,7 64:22
66:15 67:24
69:20 70:5,8
70:17,24,25
71:4 83:8
84:11 85:25
86:10,13
110:12 111:25
112:19,24
113:2 114:23
115:5,9 156:8
156:21 157:13
182:21 183:22
184:5 187:4
188:23 190:10
237:22 238:17
240:6 249:22
252:20 257:24
261:9 267:16
269:11,13
awfully 123:21
a.m1:13
B
B3:24 96:12
260:13,14
261:2,2 264:18
275:10 276:2
277:2
back 23:5 33:16
50:2 53:14
55:20 57:13,18
59:14 60:8
64:10 76:18
81:15 104:18
106:21 109:12
109:15 119:9
124:5,19
125:24 129:11
130:4,5 133:11
134:16,20
136:18 140:21
144:20 147:17
155:8 156:18
162:11 166:5
178:15,23
185:8 193:14
196:8 210:11
223:8 233:7
268:25
background
203:22
backstop 55:24
56:3,14 93:22
bad 171:14
balance 180:14
217:9
ballpark 197:16
bank 17:23
72:23
Banker 17:6
bankruptcy 1:2
31:21 37:14
38:12 43:4
45:16,19 49:20
50:14 61:23
64:19,25 165:5
168:21 171:24
172:16 174:17
181:17 186:4
186:13,14,20
196:21 198:4
208:22,24
238:7 244:5
247:4,8
base 61:15 106:4
based 28:15
29:22 54:24
66:12 82:8
101:4,10 162:9
197:3 226:4,4
226:5,22,23
252:14
basic 98:6
basically 198:17
basis 134:6
143:23 208:7
223:25
Bates 51:9,13
56:22 57:2
65:17 67:10
71:8,12 85:6,9
93:7 94:9
100:6 103:2,6
116:3,8 126:18
126:23 127:17
130:15,20
132:13 140:6
142:11,14
281
175:5,8 275:23
276:5,8,10,12
276:14,17,20
276:23 277:5,7
277:8,10
bear 28:25
bearing 56:22
becoming 40:22
began 13:20
186:7 196:23
208:21 244:11
beginning 33:4
42:6 46:15
81:14 158:12
163:14 197:13
208:5
begins 164:16
behalf 5:17,19
6:2 8:13 14:9
74:15 110:24
111:11 112:3
121:21 122:3
132:23 154:3
Beilinson 25:19
74:11 75:22
76:8 77:3 89:7
94:14 95:6
96:21 97:4,20
98:13,15,23
99:2 109:4
130:25 131:17
142:20 143:13
143:20 145:7
146:12 147:12
147:19 148:3,9
149:3,6 169:21
175:21 177:12
177:22 178:9
179:4,6,19
180:17 208:19
belief 61:15
95:25 106:4
252:12
believe 12:16
17:9 18:2,25
19:11 20:7,8
20:24 23:18
25:5,19 26:22
27:12 28:18
29:18 31:10,18
31:25 32:4,14
32:20 34:21
35:23 37:12
38:13,24 40:9
41:3 43:24
44:8,13 46:10
47:21 50:13,24
53:7 54:2,20
60:13 61:13,25
62:7 66:3,9
69:4 70:23
71:5,17,20,23
73:18 74:4,14
75:8,15,22
80:14 81:10
82:15 83:5
85:3,18,20
87:21,25 89:12
91:20,20 93:13
93:18 94:21
96:4,21 99:8
99:11 101:20
106:2,14 107:6
107:18,20
112:10 120:5
123:15 125:15
126:2 128:12
129:18 139:15
139:21 153:12
153:19,20
154:9 155:4,10
156:6 157:11
158:21 159:9
159:11 162:16
165:16 169:10
170:16 172:5
172:17 173:3
174:5 177:12
177:20 179:22
180:24 181:3
182:5,8,14,20
184:11,13,24
187:7,11
188:12 192:9
192:13 193:24
194:23 196:18
203:2,16 204:5
204:5,8,19
208:8,25 209:9
211:19,23
212:17,20,20
213:6,6 215:22
216:6 217:10
217:20 218:9
218:21 220:9
220:13,20,22
222:2 224:15
224:18 227:9
227:10 232:5
234:22 235:13
235:15,19
236:3 237:15
238:22 247:23
249:6 250:3
253:23 255:10
255:19 258:6
266:15 269:9
269:13
believed 25:22
66:20 101:7
119:17
benefit 90:6
Benson 4:13
5:15 211:5
Bernie 170:7
best 216:25
217:16,22
224:19 247:6
250:4 265:11
better 33:19
82:3 121:6
226:10
beyond 125:9
194:8 220:25
221:16
bfaerstein@wi...
4:12
binder 23:14
44:20 52:2
bit 54:17 129:10
250:23 251:24
black 110:14
Bless 86:19
blood 274:16
board 18:23,24
19:4,5,14
33:24 34:3,10
34:11,19 37:7
37:12 38:10
39:14 169:2,4
169:5,17,23
170:3,10,12,19
170:23 171:3,7
171:18,20
172:2,3,4,5,15
172:17,20,25
173:15 174:3,5
174:9,10,21
181:14 182:2
196:5,8,12,23
196:24,25
197:6,19
198:10 202:12
202:20 204:24
205:4,17
206:11,16,23
207:4,13,16,20
207:22,23,25
208:5,11,16,21
209:2,11,20,25
210:9 224:8
225:22 238:3,5
252:25
boards 18:16,18
18:20 210:8
243:25
book 46:16
259:25
Boone 2:14,20
5:3,5 6:11
borrower
260:13,14
263:2
borrowers
200:15 204:3,6
261:2,3
borrowing 205:3
boss 22:12
bottom9:17
100:5,8 117:13
118:21 132:14
153:7,25
155:25 158:12
163:9 166:9,10
166:24 167:13
boutique 72:23
box 191:13
251:15
boxes 248:13,15
248:19 249:4
249:13 253:3
257:25 258:2,8
branch 199:21
break 6:21 57:5
115:13,16
138:16 146:11
181:5,15
182:15 183:15
209:13 210:21
233:6 251:3
breakup 67:4
93:25
Brian 4:11 5:10
brief 57:12
115:21 174:11
181:8 210:25
237:25
briefed 205:18
210:4 238:5
briefly 20:24
116:13
bringing 205:4,5
broad 62:23,25
112:22 113:15
114:14,15
broadly 121:18
Broadway 4:14
Brothers 29:21
70:7 73:24
74:16 75:12
80:10 83:17
97:7 99:6,22
101:24 151:22
163:15,17,19
163:22 174:18
190:13 213:8
213:14 216:19
217:7 228:9
244:6
brought 50:2
282
80:15 205:12
233:15
Bryan 3:8 5:7
189:17
bucket 191:17
191:20 200:17
204:11,12,18
bulk 37:24
bullet 13:9 137:4
141:7
business 8:2
9:11,20,24
11:5 15:19
16:8,21,24
18:7 19:3
42:13 135:18
151:4 180:11
203:22 205:8
221:18 224:4
228:14 275:13
businessman's
199:10,11
businessperson
168:11 235:14
buying 219:12
C
C2:2 3:2 4:2 6:3
96:12 139:4
274:2,2
California 17:19
192:24 193:2
257:21
call 32:12 91:24
158:22 159:6
159:15 175:24
175:25 176:9
176:12,15,17
176:22,23
204:6 209:10
240:23 248:23
251:17 261:22
261:22 266:2
called 1:10 8:3
17:20 18:12
161:24 191:13
191:25
calling 67:21
204:11
calls 32:9 95:14
200:19 221:2
224:22 229:19
249:15 250:18
251:17 252:16
candidly 92:18
92:24 94:24
180:6 194:9
226:5,23
243:24 256:12
capable 166:16
235:17
capacity 18:7
123:4 138:8
156:9,22
224:12 249:22
250:21 251:21
capital 4:14 11:4
43:2,3 77:7
148:12 149:19
151:2 164:17
179:25 185:23
185:24,25
186:9 190:11
201:12 211:7
223:17 226:3
229:7 230:24
231:2,9,25
234:12,16,20
235:9 236:7,25
249:25 252:8
261:20 262:19
262:21,22
265:25
carefully 272:3
carries 160:14
carry 153:7
carrying 117:14
case 1:5 13:16
55:4 64:17,22
211:7 221:8
225:19 231:9
231:25 247:12
254:4
cases 11:14,25
12:2 14:24
15:12,20 16:16
246:23 247:3
cash 76:15 180:3
199:13 223:25
254:6,7 255:21
264:15,18
265:9
Cave 3:8 5:7
189:18
center 248:14
CEO22:11
certain 11:25
12:2 28:23
32:12 34:4,8
39:15 42:8,10
42:16,20 66:18
67:21 73:24
102:2 106:12
121:3 124:9
140:20 148:12
149:19 158:19
159:13 172:19
174:5,7 177:15
177:17,24
180:10 182:3
199:18,20
204:17 234:12
243:18 247:11
249:24
certainly 30:11
38:25 42:2,8
77:11 117:3
138:3 172:3,11
172:13 178:3
186:3 190:21
250:22
certainty 157:25
Certified 1:14
certify 271:8
274:9,14
cessation 244:8
cetera 11:15
CFO182:6
chain 142:17
challenging
77:15
chance 56:8
153:17
change 72:12
168:4,9,13
273:9,11,13,15
273:17,19
changed 72:6
129:5 168:8
changes 110:19
236:16 272:9
273:5
Chapter 1:4
197:23 198:4
198:13,22
199:24 208:12
208:17 209:21
246:23 252:24
253:17 255:15
characterization
118:21
characterize
42:17 86:14
161:9
characterized
262:22
chart 198:21
230:14 247:25
248:4 249:5
Chicago 2:11
chief 25:3 26:11
275:19
circulate 164:11
164:25
circulated 55:7,9
68:15 73:18
144:4,7 157:9
165:14
cited 214:21
clarification
231:8
clarify 57:18
103:18 114:19
173:8 184:4
234:23
clause 259:22
clear 8:22 28:19
28:23 42:3,23
43:18 67:19
78:20 92:19
111:4 135:7
136:14 137:17
168:10 207:8
222:20
client 146:17
223:6 233:16
close 52:16,18
218:15
closed 44:14
CMBS 203:24
240:24 241:4
241:20 242:5
code 84:15
190:25 198:4
203:16
collateral 52:18
192:2 260:24
264:15,19
265:9
collateralized
191:24
colleagues 58:19
58:24 59:6,8
59:17
collection 162:7
column 128:16
136:25
come 18:22
30:18 33:8
35:10 83:18
88:11 111:14
122:20 129:2
135:17 139:10
177:10
comes 110:21
coming 102:9,15
commence
252:23 253:17
255:15
commencing
1:13 17:3
comment 104:3
135:12 188:21
commented
104:17 106:12
107:8 109:16
121:4
commenting
133:14
comments 106:7
283
107:4 110:3,7
110:15,18,24
commitment
258:20 259:3
committee 4:4
4:18 242:19
commonly 18:8
72:22 190:12
204:3
communicated
118:15 207:2
communication
126:8,9 183:22
184:2,5,11,24
187:4,5
communicatio...
158:24
companies 11:3
11:3 12:9
190:16 203:11
210:8
company 11:6,9
12:5 16:18
17:20 30:15
31:20 34:5,9
34:13 35:14,18
41:23 42:18,24
43:7,19 44:5
44:12,14 52:15
64:2,18 70:5
72:19,21 73:9
73:24 74:2,11
74:14,15 75:13
75:18,20 77:9
78:3,6 80:21
80:22 81:5,18
81:19 82:16
83:16 85:2
86:2 87:8,12
87:13 89:13,14
96:16 97:7,22
98:8,24 99:14
99:22 100:15
100:15 101:16
102:18 113:2
115:6 120:8
121:11 125:19
132:22,23
136:13 137:19
138:11 143:8,9
143:11 150:8
150:12,25
152:17 155:17
156:10 157:3,9
173:12 177:5
177:11,17
180:6,13
185:14,22
186:3,7,9,23
190:13 195:18
196:2,19
203:12,18
204:25 205:10
205:13,17,19
205:23 212:17
212:17,19
213:7,14
215:11 218:22
223:16,24
225:23 228:17
236:24 243:25
244:24 247:14
253:9,16
254:21 255:15
256:6 257:2
267:14,24
268:6,19
company's
35:20 76:4
77:10 82:5,7
82:16 92:20
149:11 150:4
151:3 174:16
177:16 180:2
182:7,9 184:9
185:13 190:10
198:16,18
205:4 218:16
223:14,15
225:2 226:3,18
244:12 254:22
256:7
compare 90:7
compared 194:7
comparison
51:23 194:18
complaints
237:4
complete 11:18
11:19,20 33:10
38:14 77:8
120:9 121:12
127:11,14
130:8 142:5
151:2 152:18
153:17 180:4
185:24 210:6
237:3 265:7
completed 14:12
14:19,22 120:8
121:11 129:24
130:10 150:3
151:23,25,25
152:6,6,7,14
152:14,19
154:18,18
156:13,13
177:17 224:3
228:11 236:24
246:13
complexity
249:24
complicate
260:21
complied 205:23
component
152:24
components
49:14 122:9,12
concept 38:25
40:21,24 70:14
70:22 93:22,25
120:6 129:3,19
133:19 137:18
142:3 147:15
148:6,7 155:5
155:11 159:19
159:24 160:19
160:22 163:24
200:12,15
217:7 219:7
225:17,19,21
228:18 234:23
concepts 69:16
159:25 160:9
160:11,23
161:3,4,6
226:14 255:5,6
concern 146:2
159:16
concerned 50:18
151:14
concerning
34:13 36:7
125:6 267:10
concluded 83:10
83:13
conclusion 38:7
220:23 223:10
223:23 224:22
226:12 236:11
249:16 250:19
251:18 252:11
252:17 256:13
256:20 257:6
conclusions
254:22 256:6
conditioned
34:22 136:16
conditioning
136:5,9
conditions
136:25 137:11
141:3
conduct 256:11
conducted
154:10 158:15
158:20 256:10
conducts 208:19
confer 134:13
146:20
conference
134:18 146:22
147:2
confident 68:9
239:22 240:2,5
confirm47:9,11
51:24 59:5,16
66:8 104:19
145:21 176:6
209:9,11
269:16
confirmation
222:23
confirming
209:15
confirms 263:23
confused 129:10
confusion 265:7
connection 15:6
15:17 16:17
19:7 23:18,25
24:17 38:12
132:5 136:2
150:14,19
151:7,15,18
152:10 179:15
196:20 221:10
228:12 241:8
252:22
consecutive
127:17
consensual 28:3
76:7
consequences
180:8
consider 214:4
255:20
considerable
174:22
considerably
184:25
consideration
43:20 228:16
considering
122:23
consistent
104:15 149:15
165:10 194:24
224:4
consists 243:21
constituent
186:15
construction
264:22
construed 214:6
consummate
141:10
contained 55:16
69:16 101:6,11
284
118:7 120:12
149:24
containing 23:14
155:23 161:14
161:22
contemplate
92:7 149:25
228:19
contemplated
46:9 53:9
68:12 92:12
121:19 135:16
164:17 193:24
193:25 196:19
215:24 216:13
217:3,17 224:3
227:7,10,13
228:7 235:10
236:7
contemplates
95:15,19 220:4
224:25
contemplating
97:8,22 98:17
136:11 138:5
contemplation
92:21
contemplations
234:11
content 115:8,10
contents 131:22
157:13 188:4
contest 169:20
context 27:4
122:18 150:22
161:5
continue 213:8
263:9 264:17
continued 84:2
276:2 277:2
continues 76:21
continuing 81:4
254:11
contractor 8:7
contracts 147:14
149:10
contractual
225:13,16
control 91:3
243:24 244:2
245:6,12
cont'd 3:2 4:2
139:5
convened 238:3
convenient 57:6
115:12 138:16
conversation
35:23 37:25,25
87:24 97:20
113:7 145:21
145:24 160:9
178:14 183:5
214:5 240:10
240:13,19
conversations
35:17 36:6,10
36:12 48:21
71:2 83:16,19
83:21 99:20
108:13 113:3,6
113:14 166:2
176:19 188:9
214:7,23
218:22,25
219:6 238:25
239:8,16,24
241:19 242:3
269:18
conversion
35:22 217:10
convert 70:15,19
217:12
converting
219:7
copy 73:16 78:10
79:7,9,12
128:10,13
131:14,16,19
173:7 187:24
258:21
corner 190:3
191:13 192:21
201:23 248:17
259:5 260:16
260:23 262:25
Corp 41:19
corporate 19:19
20:2 200:6
247:16 251:21
275:16
Corporation
3:14 8:5,8,11
8:14 9:3,10,23
10:15,20 12:22
13:19 19:20
20:3 22:5,12
40:4,7,12 41:8
146:18 252:5
275:12,14,17
Corporation's
8:19 9:15 13:5
correct 8:17
10:12 14:13
31:17,17 33:25
34:2,5,13,14
34:17 36:19
37:21 45:24
58:5,6 60:4,14
60:15,21 61:12
63:17 64:14,25
65:2 67:17
68:18 72:13,16
73:23 74:19,22
75:11 78:22,25
81:8 83:3,10
83:11 89:10
95:24,25 99:7
99:16 107:14
107:20 108:25
109:4,5,23
123:6 127:24
136:22,23
145:10 148:20
158:7,13,14
161:15 163:6,6
172:10 174:25
176:17,18
182:12,21
183:13,20
185:6,7 187:21
188:18 192:6
192:11,14
193:18 194:16
195:6,24 196:4
197:24 198:5
207:14 209:6
212:2,5,10,12
216:6,24 220:8
220:18 224:10
224:11 227:14
228:5 234:14
236:20 237:17
242:7 243:7,8
245:8 246:15
247:22 250:17
251:10 256:3
258:4 261:3,6
268:15 271:8
corrected 72:7
corrections
271:9 272:4,6
correctly 39:18
88:20 109:21
163:15 171:12
198:15
corresponded
106:5 107:3
counsel 21:15,22
22:4 46:18
47:23 48:13,22
49:10 50:6
52:23 53:22
54:11,24 57:23
57:24 58:4,8
60:20,24 63:11
63:17 65:24
66:2,7 69:10
71:19 72:3
80:20 85:25
86:10 88:21
93:14 94:19
104:13 106:6
106:17 108:14
108:24 116:15
116:19,23
117:24 118:10
121:2 127:7,20
133:10 146:7
149:11,12
158:5 161:25
166:2 167:23
176:20 182:4
188:10 193:5
196:10 205:20
206:8,14 208:9
210:4 212:19
212:22 221:23
231:15 233:4
233:14 238:23
265:6 267:23
269:3,3
counsel's 88:24
132:25 198:16
counted 14:14
counterpropos...
107:6 109:21
COUNTY274:4
couple 242:11
266:20
course 15:23
16:3,13 24:19
49:8 65:5,10
court 1:2 6:25
7:9,14 12:19
12:25 19:17,23
26:9 44:19,24
47:12 51:8,16
55:19 56:21
65:16 71:7
76:22 85:5,11
93:3 94:6
102:24 115:25
123:23,23
126:17 127:3
130:13,18
140:3 142:10
175:4 222:9
258:15 267:2
272:16
cover 94:13 96:7
103:15 130:24
201:5 226:12
covered 157:7
193:5 230:25
231:3,10 232:2
237:25 249:19
co-investment
15:21
co-investments
15:15
285
Craven 24:23
25:10,23,25
26:11 28:11
29:6,7,14
32:25 33:7,22
74:12 251:5
275:19
Craven's 30:5
create 249:5
created 42:16
121:3 146:17
credit 250:15
creditor 215:12
215:17 247:3
creditors 4:4
76:5 86:21
184:10 185:14
185:18 186:8
224:10,20
253:11
Crisp 3:6 5:8,8
criteria 13:13
199:5
critical 186:15
criticism238:13
cross-collatera...
200:7 202:24
254:5,10,18
255:2,12
CSA51:2
CSFB189:20
curious 133:2
current 42:25
147:22 225:5
currently 7:22
18:15 147:23
147:25
custodians
162:10
cut 29:13 208:3
222:18
cute 105:21
cycle 261:23
D
D2:12 3:6 96:12
140:18,23
259:16,20
260:6,7 275:2
Dallas 2:21
Dalton 123:3
170:23 246:9
Dan 5:14 211:4
DANIEL4:16
date 9:12 12:24
19:22 26:15
36:15 43:22,25
44:23 51:15
57:4 71:14
73:9 74:6
85:10 93:9
94:11 103:8
116:10 126:25
127:8 130:17
140:8 142:16
162:23 169:9
175:9 184:23
215:19 272:8
273:23
dated 20:3 26:2
94:8 104:7
130:14,24
142:13 163:4
175:7 276:14
277:4,8,10
day 1:12 24:19
65:9 86:23
144:4 163:11
165:12 174:3
244:7 271:15
274:19
days 50:6 54:4
74:5,25 79:3
146:17 177:21
180:7 185:23
216:22 269:19
272:14
DC2:5
deal 220:2,4
231:11 232:3
233:22 234:12
235:11 236:19
237:11
deals 246:12,17
debt 15:16,17
16:7 18:6
37:21 38:17
70:15,20 77:10
91:11 107:24
108:8 111:13
112:4,14
114:25 141:8
191:14,22,25
194:4,18
195:23 199:14
199:16 200:17
201:5,10
203:20 204:11
204:12,18
205:9 217:10
217:13 219:8
223:17 225:2
226:8,25
243:22 248:23
248:24 249:25
250:5 251:2,4
251:14 252:15
257:20
debtors 1:6 2:4,9
5:17,20 28:2
31:12,19 33:2
33:20 221:18
258:12 264:14
Debtors-in-Po...
2:4,10
debts 249:12
250:8
Dechert 3:20
5:22 103:25
109:2 110:19
119:18 120:4
120:23 126:9
127:4
decided 25:5,10
deciding 199:6
declaration 26:2
26:11 30:5,12
30:22 251:6
275:18
decline 244:12
declining 244:6
deemed 272:16
default 35:15
81:19 218:16
defaulted 75:14
186:10
define 77:14
defined 191:21
264:3,4,6
265:8,10,12
definitely 159:5
definition 264:8
definitions
264:21,21
definitive 216:12
delivered 77:5
185:21
Dennis 24:23
26:11 74:12
275:19
depending
225:24
depends 214:4
deposing 272:13
deposition 1:10
19:19,25 21:14
52:2 58:20
62:9,17 63:8
63:15 104:22
117:9 132:4
176:21 221:24
238:18,23
239:9 269:16
271:7 272:3,11
272:14,15
274:11,12
275:16
describe 10:4
24:7 28:19
43:5 230:12
described 12:17
36:2,17 42:12
43:13 56:3
72:22 160:16
164:24 192:5
197:4 210:2
describes 13:7
164:18
describing 39:6
41:7 88:7
142:8
description 9:20
34:10 275:11
276:3 277:3
designated
132:24
designation
62:18 132:5
designee 114:23
132:22 156:10
156:22
designees 211:15
212:7
desire 91:10
150:25 154:16
detail 25:18 53:5
details 249:25
determination
252:23 255:14
determine 11:5
15:8 104:23
176:21
determined
15:23 16:3,13
129:21 225:25
development
143:24
developments
179:7,13
Dewey 4:17
242:18
dfliman@kaso...
4:16
Diego 189:22
192:10,19
201:7,20
257:13,19
261:10
DIETERICH
3:18
Dietrich 5:23,23
difference 92:9
different 18:6
50:17 53:12
83:7 102:2
106:19 114:7
127:9 154:22
164:17 207:6
243:18,19
247:16 248:15
286
261:20 269:2
differently
251:24
difficult 6:25
104:19 214:14
236:11
digest 43:17
diligence 11:13
11:15,19
205:19,22
diligenced 230:6
diligent 64:21
diminish 231:12
232:3
DIP29:20 30:23
31:24 32:5
174:18 252:23
258:12,14,20
259:3,14,18
260:22,24
261:5,8 262:12
262:13,18
263:5,19,22
265:4,13,20,24
direct 8:10 12:8
27:16,24 48:14
49:6 54:17
144:13,14
167:21 183:12
183:14 184:3
248:12
directed 143:12
directing 166:22
167:12
direction 15:8
48:24 188:17
directly 154:6
180:22 183:19
206:7 243:24
director 19:13
243:10,14
244:19
directors 172:10
202:19 204:4,9
204:21 205:2
205:12 206:4,9
206:15,20
207:4 210:3,8
237:17,18
238:14 246:2,6
disagree 48:23
55:10 233:12
233:13
disagreed 160:2
160:3
disagreements
237:4
disclosed 38:9
38:25 174:20
disclosure
173:19
discuss 21:20
48:11 68:22
69:10,13 73:25
81:18 84:2
86:18 90:18
102:18 106:8
118:21 131:22
132:2,6 148:11
149:10 160:22
160:23 161:4,5
178:8,24,25
186:8 188:4
218:23 238:19
238:25 240:24
discussed 25:16
37:7,8,16 38:3
38:6,9,20 39:3
39:15 55:13
59:23 69:7
70:23 75:9
81:13 82:11,12
84:5,7,11 87:2
87:7 92:18
93:24 98:7
99:23 100:14
114:3,14
118:12 126:12
150:21 151:6
152:15 159:15
161:2 163:25
174:12,21
176:17,23
179:22 188:13
194:25 196:21
197:5,7 202:12
204:24,24
205:16 206:11
206:23,25
211:13 219:8
219:17,20,25
220:21 225:23
237:24
discusses 153:21
discussing 70:6
96:17 98:24
101:15 155:25
156:24 166:23
181:15 188:20
194:10 202:23
217:5,19
238:24 240:16
253:16
discussion 15:25
25:9 35:19
39:2 71:12
82:21,25 85:8
91:7,14 99:14
102:22 110:17
115:20 134:15
138:20 141:2
142:7 147:3
150:11,12,24
160:6 161:10
183:8 196:11
196:13 197:20
198:11,14
215:11,14,17
219:11 240:16
267:19 276:7
276:10
discussions
11:11 25:20
35:14,23 36:6
36:13 39:7
56:13 67:7,25
69:20 70:4
76:5 113:4
114:24 115:6,9
123:16 124:8
124:24 125:2,5
125:6,12,16
136:17 137:11
138:10 150:7
151:14 152:2
160:8 165:20
193:6,20,22
213:8,15 218:7
218:12 237:23
240:6
Disneyland
202:3
disputing 132:19
distinction 10:3
10:7 32:18
261:25
distinctions
172:22
distress 254:3
distressed
246:25
distributed
78:11 79:21
82:2 207:21,24
distribution
34:23 36:3,8
37:6 38:23
39:8,9,23
40:14 78:21
DISTRICT1:2
DLF17:21
DLJ 18:9,11
docket 64:17
document 9:5
13:3 20:5,15
20:17,22 23:20
24:11,17 26:17
26:19 27:11,14
27:15 28:16
30:25 31:4,9
31:11 37:16
45:6,11,13
46:13 47:5,6
47:25 48:3,5
48:12,17 49:3
49:8,12,24
50:4 51:9,20
51:21,22 52:4
52:7,9,12,22
53:4,21,25
54:4,5,14,19
55:6,13,15,20
55:23 56:12,22
60:11 61:3,7
61:12,14 62:2
62:5,8 65:25
66:3,6,10,15
66:17,19 68:6
68:9,14,22
69:6,10,14
71:8,10,15
73:14,17 84:22
84:24,25 85:2
85:6,6,7,15,20
87:6 93:4,10
93:15,20 94:2
94:7,19 95:6
96:2,7 102:13
102:25 103:12
104:8,16,24
105:18,23,25
106:3,16 107:8
107:11,14,16
107:19,21
108:15 110:2,6
110:20 116:3
116:14,22
117:20,23
118:9 119:14
120:2,16
126:18 127:6
127:11 128:11
128:13,15
129:5,15
132:17 140:4
140:17 142:11
142:18,24
143:6,7 145:7
146:16 153:3
160:7 162:24
163:8 164:12
171:16 175:5
175:12 196:15
248:11 259:14
259:14 263:9
264:5,17
267:10 276:7,9
277:12
documentary
62:19
287
documentation
135:10 142:5,7
documents
22:18,20 23:11
23:15 24:6,10
24:11 26:5
27:7 47:22
57:24 63:3,11
63:14 64:2,16
65:3,9 79:16
79:21 90:7
95:18 101:6,8
132:7,10
133:12 135:23
137:21 142:20
143:25 148:9
148:11,14,17
149:15,17,25
168:14 173:4
189:8 194:24
220:3 227:25
265:12
doing 65:6,10
194:19 209:17
228:7 272:7
dollar 67:4
dollars 42:19
151:21
Donaldson
17:22
Doubletree
190:2 192:19
201:21
downloaded
26:23 31:16
draft 103:25
105:17,23,25
107:15,16,17
107:19 108:18
108:19,22
109:2,11
116:18 117:5
117:11 118:4
118:14 120:4
120:23,25
127:4,14,21
128:5 144:5
157:14 173:20
193:25 194:25
195:14 227:16
266:24 267:5
drafted 161:2
drafting 133:13
160:24
drafts 23:16,17
50:10,15,21
51:4 106:7,15
121:19 132:10
132:12 133:11
133:14 135:11
155:5 161:14
161:22 227:13
drawing 10:3
duces 19:21 20:3
275:17
due 11:12,14,19
43:20 205:18
205:22 230:5
duly 6:4 274:12
duration 42:22
duties 220:16
224:9,15,18
D.C190:2
192:20 201:22
248:18
E
E2:2,2 3:2,2 4:2
4:2,22,22 6:3,3
6:3 139:2,2,4,4
139:4 264:18
273:1 274:2,2
275:2,10 276:2
277:2
earlier 13:14
14:4 18:25
21:16 50:10,13
50:21 51:25
53:5 54:21
57:21 58:2
59:21 70:21
71:24 92:18
95:19 101:3
105:6 114:13
115:5 123:14
135:2,13
136:10 140:11
149:2 155:15
155:24 156:3
156:11,23
157:8 158:8
166:24 174:8
176:25 183:24
184:25 187:18
190:20 192:5
194:25 196:16
196:18 197:4
200:21 211:13
212:16 215:22
234:24 235:14
236:23 237:24
240:12 242:16
243:3,9 248:21
249:19 253:14
257:18 261:9
early 17:9
101:20 186:10
easier 169:19
247:24
economic 41:10
41:12,20 42:5
42:9,11 201:3
244:8
economy 42:15
effect 167:9,16
233:24 234:19
235:4
efforts 184:9
185:13,17
186:8 218:23
Ehrlich 3:16
5:25,25 8:20
13:25 15:11
16:6 19:9
21:10 22:24
24:16,22 27:18
28:13 29:9
30:6 31:7,14
32:8,16 33:9
33:18 34:6,15
35:2 36:10
39:10,24 41:10
43:9 45:9
46:23 47:2,4
47:15 48:7,13
48:19 49:6
54:6,22 55:3
58:15 59:3
60:6 61:20
62:12,21 63:18
64:6 65:5,8
68:3,16,19,24
69:12 70:10
77:22 78:13,19
78:23 84:18
86:4,6 88:23
90:5 91:17
92:15 93:16
95:7,13 96:13
98:9 99:17
100:2,6,18
101:18 102:11
102:21 106:23
109:9,25
110:13 111:3
111:16,22
112:7 113:20
115:11,18
116:24 119:4
119:11,24
120:13,21
122:5 123:20
124:14,21
125:9 129:6
133:6 134:3,12
134:16,24
138:19 140:14
140:23 143:22
144:16,24
145:25 146:16
146:23 147:8
150:17,23
151:10 154:19
156:15 157:5
161:23 162:4,7
162:19 165:25
166:15 167:20
168:7 172:23
173:11,16,23
178:11,19
179:17,20
181:6,10
187:25 188:6,8
188:14,18
189:13 191:7
195:11 200:18
209:15 210:18
210:23 213:21
214:18 215:8
217:6,21
219:14,21
220:11,24
221:16,22
222:4,15 223:3
223:12 224:21
228:2 229:9,19
230:15,20
231:2,5,13,23
232:5,11,18,23
233:3,9,14
234:3,8 235:22
239:5,18
241:21 242:10
242:14,25
244:20,22
245:9,17 246:3
248:5 249:14
250:18 251:16
252:16 253:4
254:11 255:3
255:13,16
256:21 258:5
259:11,17,20
260:5,9 261:4
261:17 262:6
262:14 264:2
265:6,22 266:9
266:19,22
267:17 268:9
268:12 270:5
either 10:15
12:12 14:10
38:20 43:3
89:4,6 101:16
102:18 114:22
125:18 138:8
156:8,21
186:12 191:3
206:15 207:9
212:16 222:15
288
239:2
elaborate 243:12
election 108:9
electronic 63:2
Ellis 2:3,9 5:17
5:19
Elmore 2:22 5:4
5:4
embody 164:15
emergence
234:13
emergency
42:17
employed 7:22
17:4,5,14,21
18:4 243:4
employee 7:25
249:22
employees 8:25
212:7
employer 10:5
engaged 73:8
162:8
engagement
73:10
ensure 72:16
150:25 152:5
152:11,12
154:17 236:24
ensuring 120:8
121:11 156:12
161:11
entail 10:17
entails 10:18
enter 34:21
135:14
entered 31:12,19
38:11,16 53:3
53:24 87:16
133:16
entering 136:7
196:20 221:19
enterprise 34:24
52:15
entire 67:20
119:22 143:15
172:15,17
186:16
entirely 198:25
entirety 27:14
38:2
entities 9:6
173:8 198:3
199:7,12,23
200:4 204:7
205:3 250:12
253:13,15,22
256:12 257:4,9
257:16
entitled 9:11
12:23 45:2
46:13 71:11
85:7 89:22
140:4 144:3
188:12 275:12
275:14 276:7,9
entity 8:24 9:2,2
15:9,22 184:17
184:20 198:12
198:18 200:6
223:20 254:2,2
254:6,17
255:24
entry 258:13
equally 252:10
equity 11:25
14:23 15:2,6
15:13,19 34:23
35:22 36:3,9
37:6,21 38:17
38:23 39:9,23
40:14 67:2,14
68:2,5,12
70:16,20 91:11
92:8 100:9,17
101:17,24
105:6 109:23
117:15 122:19
122:21,24
123:17 124:25
125:7,13,21
128:17 129:4
133:17,18,21
135:15,19,21
135:25 139:12
151:21,22
173:22 184:16
184:19 217:10
217:13,14
219:8,13 220:5
220:10 228:8,9
228:14 243:16
244:2 250:12
253:12 257:8
258:7
ERLICH275:9
errata 272:5,7
272:10,13
ESQ2:6,12,17
2:22 3:6,11,16
3:18,23,24 4:6
4:11,16,20
essence 152:17
165:10 184:11
essentially
258:23
establish 124:8
established
110:8 119:16
estate 3:4 4:24
225:9,15
estimate 236:2
estimation 82:7
179:10 253:10
estimations
14:25
et 1:5 11:15
evaluate 13:13
13:15
evening 175:25
event 84:14
86:15 222:16
266:7
events 41:23
48:2 49:23
52:6 55:3
61:22 75:24
eventually
132:11
evidenced
147:14 151:19
260:25
evolved 132:11
exact 27:3 43:25
74:6 87:22
169:9
exactly 31:22
64:13 127:16
172:21 187:10
205:15
examination
1:10 6:6
119:13 139:5
189:14 196:10
211:2 242:21
266:21
examined 6:4
example 52:12
66:25 107:5
160:13,15
200:3 225:14
exceed 108:9
exchange 91:11
158:20
exchanged 79:16
exchanging
227:12
Exclude 188:8
excludes 165:25
Excluding 69:2
exclusive 225:3
excuse 19:6
38:18 60:10
116:21 130:23
140:11 141:8
172:12 183:17
258:24 265:13
excused 215:2
executed 27:11
45:12,14,17
137:25 138:2
139:16,18,22
144:9 162:15
execution 47:10
49:20 141:4
executives 123:4
123:5
exercise 245:7
exhibit 9:8,9
12:20,21 13:2
19:17,18,24
26:10 44:19,21
44:25 46:14
47:8 51:8,11
51:17 55:19
56:21,24 60:9
65:17 68:15
71:7,10 73:13
78:11,21 79:8
85:5,7,13
89:17,20,25
90:4,11,17,17
90:25 93:3,5
94:6,8 100:3
102:25 103:3
103:13,14,22
103:22,25
104:2,10,12
107:22 108:23
111:15 115:4
116:2,5,12
126:5,17,20
127:3 130:13
130:14,20
136:19 140:3,5
140:18,23
142:10,13
150:17,18
152:23 157:19
162:11,17
163:8,21
164:13,25
165:3,22
166:11 167:2
167:14 175:4,7
190:20 191:10
195:4 228:23
228:25 230:10
240:8 247:25
248:2,3 259:16
259:20 260:4,4
260:5,5,7,11
263:9 264:18
264:18 275:12
275:14,16,18
275:21,22
276:4,7,9,11
276:14,16,18
276:21 277:4,6
277:8,10
289
exist 162:8
203:20 234:15
existed 166:14
167:18 209:25
existence 101:4
105:16 173:20
existing 228:14
expect 23:24
24:2 75:16
expectation
209:24 224:5
expected 38:11
38:16
expedition
233:19
expenditure
236:25
expenditures
164:18
experience
29:22
expert 198:7,24
250:3
expiration 186:5
explain 6:16
23:8 25:21
55:10 222:5
230:15 235:5
245:16 253:24
exposure 229:7
236:9
expressed 91:21
92:2,11
expressing 92:13
184:8 185:12
extensively
193:4
extent 10:13
11:18 26:17
133:16 161:19
167:22 179:12
200:19 250:11
251:12 252:18
external 182:7
externally
133:10
e-mail 94:8,13
96:7 130:14,23
130:24 131:4,6
131:14,16,19
131:23 132:7
142:13,17
159:2 175:7,16
176:2 187:7,8
187:24 188:5
188:21 240:22
241:8,10,13,14
241:17 276:14
277:4,8,10
e-mails 158:20
161:13,14,21
F
F 139:2 274:2
facility 259:4
262:18 263:19
265:24
fact 30:19 37:25
38:24 50:5
66:13 82:23
97:5 104:15
175:24 198:2
207:12 216:10
226:22 234:15
234:24 236:12
240:17 245:4
260:25
facts 209:15
255:17
Faerstein 4:11
5:10,10
fail 272:15
fair 6:19 19:11
23:7 24:18
43:14 110:23
188:14,15
220:9 226:2,9
237:12
familiar 12:11
29:24 30:2,8
31:5 49:12,13
50:5,8 53:11
67:6 72:18
94:20 99:21
105:21 147:22
168:19 190:5
192:7,23
200:22 203:9
203:19 204:16
250:2 257:16
257:21 258:11
261:12
familiarity
69:16
familiarize
244:24
far 83:8 123:21
Farr 4:9 5:11
fashion 194:5
fax 103:15
130:23
fee 67:5 93:25
feel 11:6 27:13
239:22 240:5
fiduciary 220:16
224:9,15,18
Fifteenth 2:5
figure 107:5
108:21 112:11
112:22 113:12
233:23
figures 67:7
93:19
file 181:16
198:12,13,17
199:6
filed 47:12,19
64:18 140:18
198:3 199:24
247:7
files 62:11,13,20
63:4 104:23
110:5
filing 31:21
37:14 50:14
51:3 165:5
168:17,20
169:2 171:24
172:16,18
174:17 186:3
186:20 197:24
198:22 208:17
208:22,25
209:21 228:12
237:14 238:7
244:5
filings 23:17
64:17,23,24
208:12
final 37:12 38:14
47:16,16 140:9
140:15,25
141:9,16,22,23
142:6 157:21
157:23 158:2,4
269:19
finalized 139:11
139:16 157:19
finance 18:5,8
financial 16:19
18:5 23:16
25:4 26:12
82:6 90:22
182:9,10
186:11 223:22
244:13 253:10
254:3 255:20
256:6 275:19
financing 15:16
18:6 30:24
31:24 32:6
174:18
financings 29:20
find 134:8 215:5
233:7
fine 24:5 57:7
89:3 115:17
181:6 223:7
finish 6:25 7:6
245:18
firm211:5
242:18 249:23
firms 16:18
first 11:5 14:24
18:11 26:18,22
27:10,25 28:12
29:6,8 31:15
32:25 33:10
35:16 36:5
40:11 45:5,9
45:10,15 50:11
51:19,21 53:6
74:3,4,7,9,18
75:4,13 79:13
79:16 81:15
91:25 92:6,10
92:17,22 94:25
96:6 101:21
103:16 108:18
109:10 110:3
110:15 143:12
144:4 149:8
154:15 162:22
171:13 177:25
194:25 215:23
216:13 217:2
217:16 218:3,5
218:5,10 219:2
266:23 267:3
First-Day 26:13
275:20
fishing 233:18
Five 4:14 211:6
258:11,13
259:18,19
260:22 262:12
263:4,19,22
265:3,4,23
fix 190:12
fixed 107:24
108:8 111:13
111:24 112:5
112:15 114:4
114:25 115:8
118:23 160:16
194:14 200:3,9
204:12 226:7
226:24 243:22
248:24
flag 191:8
flags 227:4
Fliman 4:16
5:14,14 210:19
211:3,5 213:24
214:19 221:20
222:2,6,24
223:6 230:18
230:22 231:4,7
231:16,20
232:20,25
290
233:5,12,21
234:6 242:8
275:7
flip 46:11
floating 52:17
248:24
floor 2:16 3:5
58:18
flow199:13
flows 255:21
focus 257:10
focused 252:3
Foerster 4:3
5:13
follow162:25
242:23 264:19
following 44:20
260:12 273:5,6
follows 6:5
follow-up 73:21
242:12
footnote 52:17
118:16,20
120:3,5
foregoing 271:6
forget 204:22
forgive 87:21
246:6
form8:20 13:25
15:11 16:6
19:9 25:21,22
28:13 29:9
30:6 31:7 32:8
32:16 33:9
34:6,15 35:2
38:20 39:10,24
43:9 48:7 54:6
56:14 58:15
62:12,21 63:18
68:3,19,24
69:12 70:10
77:22 83:21
84:18 90:5
92:15 93:16
95:7,13 96:13
97:21 100:14
100:18 101:18
102:11,21
106:23 109:9
111:16 112:7
113:20 116:24
119:4 120:13
123:20 127:14
129:6 132:17
137:5 150:23
151:11 152:8
154:19 155:4
155:10 156:15
167:20 173:23
178:11 179:20
195:11 215:8
217:6,21
219:14 220:11
220:24 224:21
230:7 239:5
241:21 249:14
256:21 265:22
266:9
format 38:10
70:7 118:15
128:5 129:20
180:15
forth 104:19
124:5 133:11
274:11
forward 114:19
132:21 237:4
forwarded 109:3
187:11,14
forwarding
131:4
foundation 54:7
62:22 69:13
100:19 110:8
111:17 112:8
119:12 120:14
211:11 230:7
253:5
fourth 244:4
fraction 227:5
frame 40:23
41:2,4,6 42:6,7
70:11,12 92:5
162:10 216:12
frames 17:11
franchise 177:16
180:9 224:2
226:17 237:6
franchisor
255:25 264:24
franchisors
199:18 205:8
free 27:13
Frey 80:11
Friday 163:15
267:7
Friedman 4:13
5:15 211:6
front 13:2 19:24
44:25 51:17
73:13 85:12
130:19 157:20
195:5
fruition 135:18
full 38:9 58:18
172:2,5,20
209:2 238:2
266:13
functions 10:14
fund 265:25
funding 11:20
funds 42:24,25
180:7 220:17
further 264:17
266:16 267:18
270:4 274:14
future 223:23
fuzzy 80:18
137:17
G
Galante 4:6 5:12
5:12
Gallagher 4:9
5:11
Garden 189:23
192:19 201:21
202:2
Garrison 1:11
3:13
gather 59:8
gathered 59:23
general 23:23
75:23 83:24
135:16 152:2
182:4 203:23
208:8 229:16
229:23 241:6
244:7
generalist 18:13
generally 7:5
11:23 15:12,14
17:25 18:2
25:17 36:16
53:7 58:13,19
75:19 78:4
82:16 98:2
120:19 145:11
151:13 190:7
193:10 197:22
199:8,9 207:16
207:19 230:13
241:24 250:2
261:10 269:25
generate 180:3
254:7
generated
102:13 217:11
255:21
generating
254:6
gentleman
234:22
geographic
256:19
gesture 7:16
getting 123:21
233:22 244:18
give 7:13 52:12
98:13,15 99:2
103:11 117:2
129:10 200:23
216:12 222:7
267:13,24
268:5,12,18
given 19:2 42:14
42:21,25 79:6
79:9,12 81:22
84:16 110:21
165:4 203:22
221:7,12
249:24 256:14
269:10,17
giving 168:2
Glatt 4:23 22:5
88:21 89:6
106:3,9,12
107:18 122:25
123:8 126:10
126:11 131:2
131:17,25
132:3 135:8
154:5,10
159:12 175:23
239:13 269:19
global 7:25
198:20
go 10:23 55:20
57:18 81:15
90:8,16 115:19
124:3 129:11
134:12 146:3,5
162:11 169:16
181:7 194:20
196:8 210:23
211:8 223:8
231:23 233:7
249:9 251:15
252:14 263:11
264:12
goes 124:22
160:17 222:18
going 6:11,24
12:18 19:16
24:9 26:8
44:18 46:2
51:7 55:18
56:20 71:6
75:19 83:7
85:4 93:2 94:5
115:11 123:19
126:16 130:12
132:16 140:2
140:21 142:9
144:13 146:2,3
146:24 167:10
175:3 189:4
209:17 211:8
222:17,21
225:17 227:20
291
227:23 229:3
231:11 232:3
233:9,18,25
237:3 245:16
248:12 259:3
262:4,5,12,14
263:10 265:5
good 6:8,9 11:9
35:7 189:16
211:4 220:21
Gottesman 3:11
5:6,6 189:15
189:17 210:11
210:15 275:6
Gould 2:6 5:16
5:16
governance
89:22 90:3,18
90:23
Grandview
250:17
great 25:18
138:18
greater 226:19
245:21 246:19
grounds 253:5
group 8:24
122:24 184:16
184:19
Grove 189:23
192:19 201:21
202:2
guarantee
118:23 148:11
149:19,22
150:2,5,22
151:7,15
166:14 167:5
167:17 231:12
232:4 233:25
234:20 235:21
236:16 266:6
guaranteed
149:23 250:5
guarantees
229:8 230:19
guaranties
235:12 236:9
guaranty 143:15
143:19 147:14
148:6,7
guess 35:15,25
43:4 137:16
168:14 263:10
guessing 213:11
Guest 190:2
201:21
H
H6:3,3 139:4,4
275:10 276:2
277:2
halfway 259:24
hallway 214:5,7
hand 274:19
handful 200:22
handled 135:9
hands 79:16
happen 114:6
happened 39:19
55:4 87:5
114:10
happening
218:18
happy 255:9
hard 40:20
Haynes 2:14,20
5:3,4 6:11
head 7:15
heading 21:2
55:23,25 100:9
100:11 105:5
107:24
heard 66:21
86:17,23 97:10
97:17 98:2
258:19
hearing 123:25
221:25 222:21
heavily 133:13
held 1:11 43:7
91:6 147:2
167:19 169:4
247:20 248:22
help 121:6
helpful 7:14
162:18 190:19
190:22 217:24
227:25 266:3
hereinbefore
274:11
hereunto 274:18
Herther-Spiro
3:24 5:21,22
hesitated 182:23
Hewes 1:10 7:1
8:1 9:1 10:1
11:1 12:1,19
13:1 14:1 15:1
16:1 17:1 18:1
19:1 20:1 21:1
22:1 23:1 24:1
25:1 26:1 27:1
28:1 29:1 30:1
31:1 32:1 33:1
34:1 35:1 36:1
37:1 38:1 39:1
40:1 41:1 42:1
43:1 44:1 45:1
46:1 47:1 48:1
49:1 50:1 51:1
52:1 53:1 54:1
55:1 56:1 57:1
58:1 59:1 60:1
61:1 62:1 63:1
64:1 65:1 66:1
67:1 68:1 69:1
70:1 71:1 72:1
73:1 74:1 75:1
76:1 77:1 78:1
79:1 80:1 81:1
82:1 83:1 84:1
85:1 86:1 87:1
88:1 89:1 90:1
91:1 92:1 93:1
94:1 95:1 96:1
97:1 98:1 99:1
100:1 101:1
102:1 103:1
104:1 105:1
106:1 107:1
108:1 109:1
110:1 111:1
112:1 113:1
114:1 115:1
116:1 117:1
118:1 119:1
120:1 121:1
122:1 123:1
124:1 125:1
126:1 127:1
128:1 129:1
130:1 131:1
132:1 133:1
134:1 135:1
136:1 137:1
138:1 139:1
140:1 141:1
142:1 143:1
144:1 145:1
146:1 147:1
148:1 149:1
150:1 151:1
152:1 153:1
154:1 155:1
156:1 157:1
158:1 159:1
160:1 161:1
162:1 163:1
164:1 165:1
166:1 167:1
168:1 169:1
170:1 171:1,7
172:1 173:1
174:1 175:1
176:1 177:1
178:1 179:1
180:1 181:1
182:1 183:1
184:1 185:1
186:1 187:1
188:1 189:1
190:1 191:1
192:1 193:1
194:1 195:1
196:1 197:1
198:1 199:1
200:1 201:1
202:1 203:1
204:1 205:1
206:1 207:1
208:1 209:1
210:1 211:1
212:1 213:1
214:1 215:1
216:1 217:1
218:1 219:1
220:1 221:1
222:1 223:1
224:1 225:1
226:1 227:1
228:1 229:1
230:1 231:1
232:1 233:1
234:1 235:1
236:1 237:1
238:1 239:1
240:1 241:1
242:1 243:1
244:1 245:1
246:1 247:1
248:1 249:1
250:1 251:1
252:1 253:1
254:1 255:1
256:1 257:1
258:1 259:1
260:1 261:1
262:1 263:1
264:1 265:1
266:1,23 267:1
268:1 269:1
270:1 271:5,12
274:10 275:4
Hewes-1 9:9
275:12
Hewes-10 93:5
276:11
Hewes-11 94:8
276:14
Hewes-12 103:3
276:16
Hewes-13 116:5
276:18
Hewes-14
126:20 276:21
Hewes-15
130:14 277:4
Hewes-16 140:5
277:6
292
Hewes-17
142:13 277:8
Hewes-18 175:7
277:10
Hewes-2 12:21
275:14
Hewes-3 19:18
275:16
Hewes-4 26:10
275:18
Hewes-5 44:21
275:21
Hewes-6 51:11
275:22
Hewes-7 56:24
276:4
Hewes-8 71:10
276:7
Hewes-9 85:7
276:9
HI 248:16
highly 43:18
Hilton 192:14,16
200:25 201:17
hired 186:11,11
205:20
history 75:24
203:23 249:19
hoc 4:18 242:19
hold 143:22
264:2
holders 111:12
112:3,13 114:4
114:24 233:17
Holdings 250:17
holds 189:21,25
Homewood
190:3 192:21
201:23
honest 14:14
241:16 261:14
261:25
honestly 97:24
hotel 180:11
225:12 247:18
254:3 255:23
257:17
hotels 150:4
151:5 177:17
177:19 180:10
192:4,8 193:7
200:5,5,16
202:5 203:3,6
226:18 227:5
254:4
hotel's 201:4
hour 71:25
hours 52:9 87:4
87:18 88:8,13
197:14
how's 169:18
hundred 23:19
I
ice 229:4
idea 206:10
217:11 230:2
231:17,21
235:25
identical 51:24
identification
9:12 12:24
19:22 26:14
44:22 51:15
57:4 71:14
85:10 93:9
94:11 103:8
116:10 126:25
130:17 140:7
142:16 175:9
identified 22:22
23:13 36:13,14
39:14 49:24
56:14 58:25
59:19 60:4
102:6 153:25
166:10 181:21
187:17
identify 24:14
54:11
Illinois 2:11
Illustrative
46:23 51:11
56:24 65:20
93:5 103:4,23
116:6 126:21
275:22 276:4
276:11,16,19
276:22
immediate 42:17
160:15,21
immediately
17:17 37:13,13
45:18,18 50:13
51:3 76:6
impacted 201:2
225:10
impaired 253:11
254:23 256:8
256:14 257:7
impairment
194:6,6 226:19
imperative
272:12
implicate 167:22
implication 40:9
63:19,23
180:12
implications
43:17,21 76:4
179:23 256:9
implies 50:2
253:12
important 151:3
186:15
impossible 77:15
improper 63:20
221:2
improved 224:4
improvement
229:8 230:24
improvements
150:3 231:3,10
232:2 234:13
234:16,20
235:9 236:7
262:19,21,23
265:25 266:5,5
inability 180:2,5
include 11:25
12:3,8 15:2
64:19 136:14
165:7 199:18
included 21:17
51:4 59:22
85:20 120:4
122:24,25
123:2,2,7
162:9 163:25
174:4 238:4
includes 28:5
including 14:11
23:15,15
118:22 179:24
inclusive 163:23
income 243:22
inconsistent
244:13
incorporated
160:10
independent
19:13 38:3,6,8
39:2,19 54:25
172:3,4,10
174:4,13,20
196:24 202:20
204:4,9,21
205:2,11 206:3
206:4,9,14,20
207:3 208:20
210:3 223:21
237:17,18
238:2,4,14
248:25 249:3
253:8 254:20
independently
178:5 256:11
indicated 48:17
69:5 81:6,16
81:20,25 91:10
96:21 97:21
101:4 152:4
158:7 174:15
175:11 182:20
183:23 184:24
195:13 196:18
205:20 213:7
238:22 240:12
indicates 94:13
131:6
indicating 162:2
indication 108:7
125:18 126:7
indirect 183:15
indirectly 181:2
183:19
individual 61:21
91:12 184:6
190:14,15
200:6,11
202:14 203:2
204:18 251:13
251:15 256:3
individuals
59:22,24 123:3
123:11 173:9
244:9
industry 11:6
42:14 223:22
224:6 225:10
237:2
infer 83:25
influence 243:23
245:6
information
34:12,20 58:24
59:7,8,18,23
59:24 82:4
84:2 90:3
98:14,16 99:3
99:10 133:3
134:5,9 145:4
147:10 165:8
166:18 177:23
202:18 205:7
206:19 226:5
226:22 243:24
informed 25:18
177:12
inherently 223:4
initial 35:13,17
35:18 36:17,21
81:23 101:12
102:20 105:13
108:22 117:19
120:25 154:21
154:24,25
216:19 249:20
initially 108:25
Inn 189:22,23
293
190:3 192:10
192:18,19,20
201:19,21,22
Innkeepers 1:5
18:19 19:6,14
25:4 26:12
33:24 34:19
37:7 41:9,20
53:3,24 69:23
73:3,7 80:22
86:3,11 89:9
111:10,11
131:10 133:18
136:7 138:11
157:4 167:7,18
167:19 168:17
169:2,23 170:3
177:3 179:8
181:16 185:15
187:18 193:9
196:2,6 197:23
198:21 205:4
211:14 213:20
214:10 215:15
215:25 216:14
217:4,8,18
218:8,12,13
219:3,11 224:9
224:10,20
237:19 238:19
239:2,16,24,25
240:7 243:6,11
243:15 244:11
247:9,10,21,21
249:11 250:4,8
250:15,16
262:14,16
266:8 268:10
268:16,19,21
275:19
Innkeepers's
18:23 19:6
INN_MID71:8
142:11
INN_MID000...
142:14 277:8
INN_MID000...
142:15 277:9
INN_MID000...
71:13 276:8
INN_MID000...
71:13 276:8
input 106:16
inquire 61:2,5
75:19 117:8
144:3,10 239:7
inquiring 221:22
inquiry 75:21,23
insolvent 199:13
instances 15:24
instruct 180:17
instructing
124:14 221:20
instruction
168:7
instructions
267:13,24
268:5,13,18
269:11,17
272:1
instruments
252:11
integrated 28:4
32:2,7,13,19
intend 144:15
intended 219:24
interest 35:15
40:21 41:8,11
41:12,20 42:5
42:9,11 75:14
75:17 76:2
77:12 81:18
91:22 186:10
218:16 228:14
228:17
interested 120:7
121:10 274:17
interesting 11:7
217:13
interests 43:19
interim182:5
264:13 265:9
interlaced
146:19
internal 22:4
88:20 106:17
120:23 123:16
141:13
internally
133:10 184:18
interpretation
114:13
interrelated
28:6 32:15,19
interrupt 7:4
introduce
211:12 242:14
inure 250:14
invade 146:9
invest 15:17,18
42:19 151:20
investing 91:22
92:22
investment 3:14
4:9 8:3,5,6,7,8
8:10,13,15,18
8:19,23,25 9:3
9:10,14,23
10:9,14,15,16
10:20 11:2,8
11:10 12:22
13:4,18,19,24
14:23 15:3,7
15:10 17:6,23
19:20 20:2
22:5,11 40:3,7
40:12 41:8,19
72:23 122:23
146:18 215:24
216:14 217:3
217:17 221:8
221:12 224:7
243:4,15,17
244:11 252:5
275:12,14,17
investments
8:13 10:21,24
11:16,20,24,25
12:3,7,13 14:5
14:8,12 15:13
16:16 214:8
221:5 243:19
243:22,23
246:17,24
247:5
investor 91:2,8
investors 220:17
invited 77:19
78:6,9 176:4
involve 14:22
96:17 97:9,23
98:11,18 99:2
99:16 138:12
involved 11:21
61:22 66:13
99:19 113:6,13
120:11,22
133:13 158:8
173:9 187:18
204:15 213:20
243:11 244:10
244:17,18
246:12,22
247:6 249:20
involvement
19:2 206:6
243:13
involves 198:2
involving 56:13
86:2 98:9
in-person 159:4
issuance 219:13
issue 134:19
145:15 185:20
230:16 231:6
269:21
issues 42:18
81:19 92:20
114:7 146:19
186:9 199:14
205:10 230:21
233:10 237:5
238:6 244:14
256:12 262:2
iteration 68:11
101:22 196:16
iterations
101:21
i.e 180:9 223:19
J
J 3:16,23 271:3
January 41:16
41:18,21 42:3
73:5
Jeff 5:16,18
JEFFREY2:6
2:12
jeffrey.gould...
2:7
jeffrey.pawlitz...
2:12
Jennifer 1:13
274:6,22
Jenrette 17:22
JG175:22
240:23
Jim22:10 123:2
175:19 178:4
246:9
job 1:16 8:12
18:11
Joe 22:5 88:21
89:6 106:2,5
107:3,8 126:10
126:11 131:25
159:11 269:19
jog 116:16
241:15
join 197:2
joined 174:11
Joseph 4:23
122:25 123:8
131:17 135:8
154:5 175:23
239:13
judge 222:20
judgment 16:8
221:18
July 25:6 26:2
41:5 45:20,23
46:24 50:9
130:25 131:15
133:5 139:17
140:6 157:19
157:22,24
162:23 163:5
165:2,4,14
168:17 169:10
267:8 277:7
294
June 25:5 44:14
56:25 65:21
69:21 70:13
71:3 93:6
94:15,22,24
95:3 102:16
103:5,24
108:19,20
109:17 116:7
126:22 138:9
175:15 240:11
240:20 276:5
276:12,17,19
276:22
Justin 22:9
74:17 81:10
123:7 246:10
JZ175:18,19
240:23
K
Karcher 4:20
242:11,17,22
259:16,19
262:16 265:17
266:16 275:8
Kasowitz 4:13
5:14 211:5
keep 233:9
keeps 263:10
Ken 171:12
246:10
KEVIN3:23
kevin.obrien...
3:23
Kilpatrick 3:3
5:8
kind 213:21
225:13 247:16
Kirkland 2:3,9
5:16,19 143:14
182:8 212:21
Kleisner 170:12
know6:23 9:22
21:19 24:23
25:10 27:3,20
29:13 31:12
33:22,23 35:21
35:25 39:2
40:24 42:14
43:15 46:8
49:14,20 50:24
54:5,9,18,24
55:2,5,6 58:19
58:21 66:5
68:8,14,21
73:9 74:9,25
75:6 76:13
77:9,11 80:12
82:15 84:6,8
84:21 87:3,5,6
87:22 88:4
89:11,15 92:12
93:21 95:9
97:15,19 98:2
99:9,13 102:14
102:16 105:24
106:12 110:6
110:16,22
111:10,23
112:2,12 113:5
113:18,24,24
113:25 114:5
114:11 115:8
116:20,21
117:4,6 118:12
119:19 120:23
128:10 133:9
137:22 138:7,8
143:13 144:3
146:6,20
147:23,25
151:3 160:19
165:17,18,19
171:18 175:17
175:17 176:15
176:16 177:14
178:2 184:21
188:12 193:3
196:21 197:20
198:10 199:5
199:22 200:14
201:5,8,9,10
202:9,18,21,23
203:5,10,13,14
204:2,7,20
205:11,15
206:7,8,18
207:17 208:23
209:16 212:24
213:13 216:7
218:4 219:9,16
219:19,25
220:14 221:4
236:10,10,17
238:12 239:17
240:18,21
241:18,23,24
242:2 245:15
247:17 249:9
250:20 251:20
257:22 261:7
261:17,19,24
262:4,11,23
265:16,17
knowing 236:12
knowledge 33:7
54:18,25 55:9
73:2,6 78:10
84:24 102:8,17
113:8 133:3,23
133:24 136:4
147:20 149:22
150:7,10
180:17,21
182:17 189:10
190:8 195:15
195:19 199:11
204:13 217:2
217:16
known 58:20
98:2 189:24
Koral 211:18
Kornberg 131:4
131:20
Korval 22:9
74:17 75:6
81:10 83:3,22
84:12 94:15
123:7 171:3
211:21,22
212:3 246:10
KPA248:16,16
248:17,17,18
248:18 259:9
KPARIMV
257:11
K&E74:14
89:15
K-l-e-i-s-n-e-r
170:13
L
L4:22 6:3 139:4
labor 264:23
lack 225:11
language 131:13
152:16 153:9
153:20 159:17
159:23 161:2
163:13 164:15
164:18 165:11
167:25
large 10:18 74:8
246:21
largely 41:24
largest 233:17
Larry 169:25
LaSalle 2:10
Lascher 80:11
154:14 159:10
lasted 197:13
lasts 24:19
late 36:18 40:23
41:2,4,6,14,18
41:21 43:24
70:22
latitude 144:10
law242:18
Lawrence 3:11
5:6 189:17
lawrence.gotte...
3:11
lawyer 168:11
198:9
lay 211:11
251:18
leading 61:23
leads 220:23
learn 40:12,19
40:25 83:18
177:10
learned 30:19
31:18 167:23
leave 83:6,12,14
83:15 211:24
212:4,10,13,25
213:4,9 214:17
215:6,16
leaving 90:25
LeBOEUF4:17
242:18
led 34:20
left 55:23 77:13
78:17 83:4,8,9
83:22 84:12
107:25 128:16
141:16,22
198:22 219:10
234:23
left-hand 136:24
191:13
legal 11:14
147:13 148:13
148:21 149:4,7
149:10,16
182:7 186:11
200:19 224:22
249:15 250:19
251:18 252:17
Legally 203:7
Lehman 3:21
5:22 29:21
33:20 35:14,19
35:20,25 36:7
37:20 38:16,21
40:15 60:9
70:7,14,19
71:11 73:24
74:16 75:12
80:10,14,16
81:17 82:2,17
83:17 91:2,10
96:16 97:7,23
98:7,17,25
99:6,15,22
100:16 101:12
101:16,24
102:19,20
105:14 108:25
295
110:22 117:19
122:19,20
123:18 125:18
127:17 131:10
131:11 133:17
133:21 134:2
135:15,25
136:5,11 137:6
137:18 138:2
138:10 139:10
139:15 140:18
141:8,9 150:9
150:9,11,13
151:9,22
152:16,21
153:24 154:7
154:12,23
155:17 156:7
157:3,9,18
158:10,22
159:7,9,18,21
163:14,17,19
163:22 164:8,9
164:14,20,23
165:6,11,24
167:3 173:21
174:18,19
190:13 194:18
195:15,17,21
211:14 213:7
213:13 216:19
217:7 218:7
219:4,7,11
220:2,4,6
222:11 228:9,9
231:11 232:3
233:22 234:12
235:11,16,18
236:8 239:2
244:5 251:8
252:14 268:8
268:10,11,16
268:21 276:7
Lehman's 33:3
34:21 37:4
39:8,9,23
110:5 127:23
136:25 137:12
140:19 219:13
225:3
Lehman/AIC
140:4,6 236:19
277:6
LEH-ALI 51:9
51:13,14 56:22
57:2,3 60:10
65:17 67:11
93:4,7,8 103:2
103:6,7 116:3
116:8,9 126:18
126:23,24
275:23,23
276:5,6,12,13
276:17,17,20
276:20,23,23
lend 244:25
lender 75:17
111:24 226:7
lenders 115:8
218:24 223:25
225:7,20
226:25 256:8
257:7
lending 75:16
length 39:3
174:22 196:21
lengthy 174:2
letter 42:2,16
43:13,16,21,23
76:3,4 77:6
139:19,23
178:10 179:16
179:24 182:18
183:25 184:4,8
184:12 185:3,5
185:10,21
186:6,18,25
187:6 218:20
letters 237:5
let's 55:20
115:19 122:11
162:11 168:16
181:6 183:7
195:20 223:8
233:9 251:3
257:10
level 194:6
199:13 204:8
205:22 244:9
leveraged 18:8
liabilities 236:13
liability 203:11
liable 249:12
250:8
life 214:18,25
limited 15:14
42:20 150:2
161:16 193:20
200:23 203:11
line 110:14
143:12 252:2
273:8 277:12
liquidity 42:18
75:25 76:9,15
77:4,13 186:9
205:9
list 10:11 13:14
142:2 177:16
181:19 246:7
listed 142:19
260:25 263:7
listen 53:17
lists 10:9
literally 230:2
litigation 233:15
233:20
little 50:17 53:12
54:17 106:19
129:9 137:16
166:24 249:17
250:23 251:24
Livenote 1:14
LLC3:9 17:7
189:18 248:15
248:16,17,17
248:17,18,19
257:11 259:9
LLP1:11 2:3,9
2:14,20 3:3,8
3:13,20 4:3,9
4:13,17
LNR3:9 189:18
loaded 245:12
loan 2:15,20
148:11 149:25
190:11,12
200:4 201:18
255:21,22
256:15 259:5,6
259:7 261:13
261:15
loans 12:8
189:21,25
190:6,13,14
191:17 192:9
192:13 200:2
202:22 203:14
256:13 257:5
long 13:17 17:8
35:4 147:9
153:9 156:17
197:12 225:16
longer 197:16
222:19 227:22
look 20:25 27:13
52:11 66:11,17
82:6 83:2
89:25 90:11
103:11 105:4,5
108:3 162:17
194:17 198:20
221:5,5 227:24
230:10 233:7
252:25 254:15
254:16 255:11
260:7
looked 105:5
194:5 221:4
223:15,20,21
231:11
looking 46:20
54:10 85:19
90:24 191:5
196:16 230:13
260:9,10
looks 94:20
Los 17:19
loss 225:6,17,19
225:20
lot 13:16 27:7
41:14 67:13
85:19 114:15
194:9 241:15
241:15
Louis 2:17 5:2
6:10
louis.solomon...
2:18
lower 191:13
225:4 226:6,15
226:24
Lufkin 17:22
lunch 138:16,21
L.P4:9
M
M2:6 5:2
maintain 199:19
maintaining
151:4 178:17
making 10:23
12:8 15:9
77:12 215:24
216:13 217:3
217:17 221:8
manage 8:12
245:22
management 8:2
8:3,6,16,24
10:16 11:14
13:18 26:24
44:8 174:6
182:4 214:11
214:12 243:5
manager 8:7
managers 204:4
204:21 206:3
manages 9:2
manner 217:9
228:13
Marc 25:19
74:10 75:22
89:6 96:21
131:17 142:20
175:21 177:12
208:19
March 13:20
14:9 43:24
177:4 185:5,22
249:23
296
mark 2:22 5:4
9:7 12:19
19:17 26:9
44:19 51:8
55:19 56:21
71:7 74:11
85:5 93:3 94:6
102:25 116:2
126:17 130:13
140:3 142:10
175:4 182:5
208:8
marked 9:11
12:23 13:2
19:21,24 26:14
44:22,25 51:14
51:17 57:3
65:16 71:14
73:12 79:8
85:9,12 90:20
93:8 94:11
100:4 103:7
104:16 109:2
116:9 126:24
127:2 130:16
130:19 140:7
142:15 152:22
163:8,21
164:12 175:8
190:20
market 201:2
202:4 203:15
244:6
marketing 17:6
markets 203:24
market's 224:5
mark.elmore...
2:23
marriage 274:16
Marriott 29:19
30:13,16,20
31:23 32:5
42:2,15,22
43:12,15,22
76:3 77:6
174:18 177:3
177:14 178:10
179:15,23
180:18,21
181:2 182:17
183:13,16,19
183:25 184:4,7
184:9 185:2,4
185:13,21
186:5,14 187:2
218:19 226:16
227:4 264:24
265:21
Marriott's 180:2
180:5
material 32:21
44:10 179:7,12
materials 23:23
24:8 51:25
71:12 81:25
82:18 84:3
85:9,21 205:15
264:23 276:8
276:10
matter 183:3
200:10 274:17
matters 21:19
23:25 132:24
233:19
MB175:20
240:23
mcrisp@kilpa...
3:7
mean 10:2 16:10
16:10 20:10,20
23:18 28:18
31:14 33:23
41:13 52:8
54:9 62:15
68:7 78:3,8
83:5,25 86:4
89:4 91:9
92:24 95:15
110:13 114:6
120:22 132:9
143:9 145:5
148:7 160:14
167:9,25
194:21 199:8
208:2 218:4
219:24 222:7
227:4 235:25
239:19 244:18
245:15,19
258:8 260:11
260:20 268:9
269:6
meaning 11:12
53:19 77:11
129:15 193:16
meaningful 10:4
10:7
means 18:13
136:15 180:10
241:3 264:22
meant 241:7,25
242:2
medications
7:18
meet 11:13
57:23 58:7
87:16 186:8
238:19
meeting 35:18
36:17,22 37:13
39:14,25 63:13
64:21 65:13,24
66:6 69:9
70:22 71:18
73:15,19,20,21
73:22 74:3,4,7
74:9,18 75:3,4
75:7,10,12,18
77:20 78:7,12
78:14,14,16,16
78:17,24 79:2
79:10,13,17,22
79:25 80:2,4,7
80:10 81:7,11
81:15,16,17,23
82:3 83:4,10
83:13,22 85:18
85:24,25 86:10
86:14,15 87:12
88:13,25 89:9
91:6,18,19
92:17,22 93:13
93:14 118:9
143:14 149:9
169:4,11,15,18
169:21 170:5,8
170:15,21,25
171:5,9,21
173:18 174:3,9
174:11 181:14
181:21,25
196:9,12,23,23
197:6,9,19
198:10 202:13
204:25 205:17
206:12,16,24
207:4,13,24,25
208:5,11,16
209:2,20
211:14,20,24
212:7,14,19,21
212:22,25
213:4 214:5,6
214:17,24
215:6,16
216:19,20,23
217:5,19 218:2
218:3,5,6,6,10
218:11 219:2,3
219:10 237:14
237:16,23
238:16,22
meetings 21:17
22:6,10,13,16
22:18 159:4
205:16 207:17
207:20 213:19
214:9 216:5,8
member 34:19
169:23 170:3
170:10,12,19
170:23 171:3,7
171:19,20
173:15 182:2
196:5 209:25
224:8 225:22
244:17 252:25
members 25:16
58:3,7 96:22
113:13 122:22
169:5,17 174:4
174:5,10,13,21
182:3,8 196:24
196:25 207:21
208:20 214:10
214:12 238:4
254:23
memorialized
142:4
memories 50:2
241:15
memorize 191:3
memory 36:18
49:17 73:22
75:11 80:17
116:16 124:11
137:17 169:13
169:20 190:23
192:17
mention 123:8
186:19
mentioned 13:13
30:3 39:17
44:4 50:13
54:21 58:2
66:17 174:2,8
200:21 221:9
mentioning
177:2
merely 149:13
met 21:15 58:2
59:22 205:17
metrics 90:22
Michael 3:6
80:11 154:14
159:10
mid 45:23 50:9
middle 7:4 9:24
Midland 2:15,20
85:8 86:2,11
86:23 87:9,11
87:15 113:5,7
113:11 115:7
193:5 194:15
231:15 233:15
276:10
Midland's 86:18
86:22 88:5
196:10
Mike 5:8
297
Mile 4:14 211:7
258:12,14
259:18,19
260:22 262:12
263:4,19,22
265:4,4,24
million 52:16,19
67:4,5 101:11
102:5 105:10
105:17 107:5
108:10 109:7
109:22 111:14
112:6,16 115:2
117:20 118:6
118:17 125:8
125:13,14,20
194:2 195:2,5
220:6 222:8
224:16 229:17
229:18,18
millions 63:2
64:2
mind 86:16
184:2
minimum106:2
172:13
minute 165:6
minutes 172:25
173:7 207:12
207:16,19,23
208:6,10
209:19,22,25
210:6
mischaracteri...
245:10 255:17
256:22 262:7
Mission 189:22
192:18 201:20
257:12 259:5,7
259:8 260:22
262:20,24
misunderstan...
114:9
mitigate 236:8
mixing 255:5,6
ML-CFC189:24
modified 72:7
modifies 236:4
modify 72:12
168:4,9,13
modifying
235:17
Moelis 72:18,21
73:6 74:13
81:5 82:15
85:2 89:10,14
182:11
moment 26:16
27:17,25 55:21
56:6 60:9,24
94:12 103:10
108:3 111:9
129:10 134:8
136:18 149:18
155:23 162:12
168:16 174:23
182:6 183:7
268:3
moments 121:8
150:16
Monday 53:7
85:22
money 42:22
91:22 92:23
215:24 216:14
217:3,17
262:15
monies 262:12
262:18
monthly 77:12
months 113:9
185:2
morning 6:8,9
157:8 163:16
164:2 174:2
197:11 238:22
Morrison 4:3
5:13
mortgage
111:12 112:4
112:14 114:5
114:24 194:3
251:7
mortgages 194:7
motion 140:18
140:24
move 115:14
210:21
moving 114:19
247:18
multiple 23:16
178:2 198:3
Murphy 74:11
182:5 208:8
N
N2:2 3:2 4:2,22
139:2,2,2
275:2
name 6:10 10:11
17:7 84:15
171:13 181:25
182:6 189:16
204:22 211:4
242:17 247:14
247:16,17
248:15 257:17
names 80:12
181:19 190:18
198:25
NAMESAFE
17:20
nature 24:7 27:3
40:20 77:16
87:22 102:23
113:5 152:2
198:15 219:5
240:16 244:3
250:24
near 82:7
necessarily
104:8 110:23
140:21 176:8
184:3 253:25
necessary 141:9
141:14 186:14
234:17,18
264:23 272:4
need 6:20 26:17
28:23 41:13
45:4 51:18
75:25 76:5,9
76:11,14 77:4
90:13 108:17
120:16 180:14
182:25 201:11
209:11 231:7
235:4 261:11
needed 82:23
needing 202:20
needs 72:6
negotiate 87:24
114:3 154:6,13
184:10 185:14
185:17 195:16
negotiated 16:22
28:3 111:12,23
112:3,10,21
114:2 152:15
153:23 159:8
195:9,18,21
negotiating
120:11 121:22
121:24,25
122:2,7 136:12
166:8
negotiation
111:25 113:11
124:4 137:20
152:10 158:17
161:5 193:17
negotiations
112:13,25
113:4,17,18
123:12 129:3
154:4,9 158:9
158:15 161:15
267:10,14,25
268:6,19
neither 95:22
121:2
never 14:14
93:24 113:12
206:6
new1:2,12,12,14
2:16,16 3:5,5
3:10,10,15,15
3:22,22 4:5,5
4:10,10,15,15
4:19,19 68:2,5
91:22 92:23
100:9,16
101:17 105:6
108:8 109:22
117:15 123:17
124:25 125:7
125:21 128:17
129:4 133:18
139:12 151:21
173:22 194:2
215:24 216:14
217:3,17
219:13 228:8
274:3,4,8
Nicole 3:24 5:21
nicole.herther...
3:25
nominated 19:2
nomination 19:4
nonindependent
174:9
nonprivileged
134:9
normal 208:7
North 2:10
Nos 51:13 57:2
71:12 93:7
94:9 103:6
116:8 126:23
130:15 142:14
275:23 276:5,8
276:12,14,17
276:20,23
277:5,8
Notary 1:14
271:18 274:7
note 21:10 24:22
33:18 35:22
102:12 108:8
109:25 111:22
119:11,24
146:21,25
254:11
noted 139:3
146:24 189:13
270:7 272:10
notes 12:4 75:3,7
191:2 194:2,3
notice 19:18,25
21:8,12 22:23
298
23:13 59:2,20
60:4 123:22
132:25 177:2,8
177:11,13,20
189:11,12
220:25 275:16
noticed 209:7
221:24
notification
179:18
notified 178:2,9
178:21 179:2
notify 179:3,7
number 10:18
11:2 65:17
74:8,16 86:17
90:21 100:4
101:11 102:10
103:2 105:17
105:21 108:15
109:6,7,22
111:14 112:6
114:4 115:3
118:6,11,17,20
120:15 126:11
127:17 161:17
172:19 193:25
194:20 195:5,9
195:13,16,21
214:2,15
218:17 225:25
226:14,16,16
230:2 246:16
246:20,21
248:8 259:10
260:2,3
numbers 14:24
51:9 53:8
56:22 66:25
67:15 93:20,24
100:6 101:6,14
226:20
N.W2:5
O
O4:22 139:2,2,2
oath 57:16
115:23 139:8
181:12
object 33:12
63:18 143:23
232:16,19,21
232:23
objecting 231:21
objection 8:20
13:25 15:11
16:6 19:9
24:21,22 28:13
29:9 30:6 31:7
32:8,16 33:9
33:19 34:6,15
35:2 39:10,24
43:9 48:7 54:6
58:15 62:12,21
68:3,19,24
69:12 70:10
77:22 84:18
90:5 92:15
93:16 95:7,13
96:13 99:17
100:18 101:18
102:11,21
106:23 109:9
111:2,16,22
112:7 113:20
116:24 119:4
119:12,25
120:13 122:5
123:20 125:9
129:6 132:25
144:12,12
146:21,23
147:2 150:23
151:10 154:19
156:15 157:5
167:20 173:23
178:11,18,20
179:17,20
188:17 195:11
200:18 215:8
217:6,21
219:14,21
220:11,24
221:16 224:21
229:19 239:5
239:19 241:21
244:20 245:9
246:3 249:14
250:18 251:16
251:17 252:16
253:4 254:12
255:16 256:21
258:5 262:6
265:22 266:9
objections 21:11
59:4 60:7
189:11 222:22
222:23 223:13
obligated 120:9
121:12
obligation
160:21
obligations
137:2,12
148:12 149:20
160:16 166:13
167:6,17 168:5
199:15,16,17
199:19 201:14
205:8 218:17
223:17,18,24
225:3,4 226:3
226:17 235:24
236:3 250:5
251:14 255:23
261:16,21
262:5,13 265:5
obtain 78:5
87:19
obtained 145:5
obvious 76:16
obviously 13:14
41:22 79:7
120:3
Ocampo-Guz...
1:13 274:6,22
occur 36:4 55:14
82:24 120:7
121:10 125:2
125:16 133:22
169:8 175:24
176:16 223:18
225:7 261:21
occurred 25:17
35:19 71:2
78:18 79:3
80:3 83:21
113:17 176:7
176:10,12,15
176:22 205:16
209:20 216:21
226:10 237:23
occurrences
48:4 49:23
52:6
odd 198:19
offering 67:3,14
office 20:18
58:18 225:14
officer 25:4
26:12 275:19
offices 1:11
86:18,22 88:6
Oh 45:14 54:15
103:17 171:14
203:25
okay 6:13 7:17
9:16 27:23
29:2 32:22
46:3 47:4,13
56:7 60:25
64:6 72:9
82:12 108:5
114:20 127:18
128:22,25
130:22 193:3
197:19 202:11
204:20 209:18
212:13 214:9
214:16,21
216:25 227:19
229:5 230:10
232:18 233:5
234:11,16
238:11 246:11
249:8 250:10
252:22 257:10
259:21 260:18
263:17 270:5
Omni 26:23
31:16
once 49:20
190:23 202:4
ones 124:6
141:25 192:24
192:25
one-page 142:18
175:5
Ontario 192:16
200:25 201:4
248:16
open 89:17
90:25 103:13
opened 174:9
operate 199:20
operating 151:4
operations
244:25 257:3
opinion 32:9
221:2,11 226:9
230:8 233:3
252:6
opportunities
11:2 13:24
opportunity
11:8 15:18
72:4,8 100:24
103:11 116:11
opposed 119:14
133:6,7 160:23
193:9 225:14
234:4
opposition
238:13
order 26:9
127:17 160:5
161:6 211:11
258:13,15
264:14,19
265:9
organization
204:23 255:25
organizational
198:18,21
original 148:10
149:25 155:7
185:2,4 193:25
194:3 195:14
203:19 272:12
originally 70:23
299
177:20 193:23
227:7 256:15
outcome 92:19
152:11,12
224:20 226:9
274:17
outcomes 226:5
226:23 227:3
outline 38:10
outlined 52:14
67:2 223:19
outside 8:23
80:20 119:18
134:14 153:14
248:22
outstanding
12:4
overall 222:13
222:14
overlap 137:18
owe 220:16
owed 167:7
owned 44:8
203:6,10
245:19
owns 252:5
O'BRIEN3:23
P
P 2:2,2 3:2,2,11
3:18 4:2,2,22
171:15
page 9:25 20:25
55:22 67:10,13
67:16,19,21
89:18,19,20
90:2,16,17,20
90:21,23,24
96:6 99:24
100:4 103:13
103:15,16
105:2 107:21
110:3,15 115:3
117:13,13,14
118:18 136:24
141:3 142:22
153:7,25
155:25 158:12
160:15 162:22
163:2,14
164:16 166:11
166:24 167:13
191:4,6,8,12
230:11 247:25
248:6,8 253:3
259:10,22
260:2,3,3
263:11 264:7
264:10,13,20
271:10 273:8
275:3,11 276:3
277:3,12
pages 23:19 46:7
46:12,15 63:2
110:4 127:9
162:25 263:10
271:7
paid 234:13,17
236:6
papers 27:5
paragraph
27:25 28:2,11
29:8 32:23
52:13,21 56:4
56:9 108:7
153:8 263:13
paragraphs
27:16,19
parallel 205:3
paren 52:16,16
52:18,18
pari 252:3,9
part 8:18 10:14
16:22,25 17:2
32:6 34:3,11
58:10 61:24
120:6 121:9
123:13 136:17
137:23 148:10
165:22 179:11
204:14 211:14
222:13,16
226:11 228:15
250:9 251:7
258:19,20
259:2
participants
74:10 214:11
participate
176:5 205:14
206:22 267:9
participated
238:21 240:15
participating
176:5
particular 56:12
117:11 172:2
193:7 198:12
particularly
225:12
parties 111:20
114:2 195:18
205:6 218:24
227:12 264:15
274:15
partner 184:15
189:17
partners 3:9
4:14 189:18
211:7 224:2
237:6
parts 255:24
party 16:4,11
34:25 129:19
227:8,10,14
235:18
pass 189:5
210:15
passing 98:3
passu 252:4,9
Patrick 123:2
178:4 246:9
Paul 1:11 3:13
4:6 5:12,23,25
21:15,23,24
52:3 85:21
104:17 106:6
106:14 107:3
126:10,10
135:9 143:14
239:13
Pawlitz 2:12
5:18,18
pay 220:10
payment 35:15
75:18 81:18
234:19 235:9
payments 75:14
76:2 77:12
118:22 186:10
218:16 236:6
pending 57:11
111:7 134:18
141:13 144:25
145:13 146:6
147:6 165:5
174:16
people 7:2 74:8
74:16 86:17
97:10,15,17
169:17 178:3
181:20 247:17
percent 68:2,12
93:23 101:5,12
102:19 105:13
117:19 125:7
125:21 220:5
245:19
percentage 44:9
93:23
percentages
67:2,3 101:15
perfecting
159:22
perform10:13
11:12 253:7
254:19 262:13
262:19 263:25
266:6
performance
42:14 82:6
136:6,9,15
201:4 205:7
223:22 224:4
244:13 255:20
performed
205:22 229:6
230:4
period 14:18
17:25 19:3
42:20 88:16
133:12 155:12
157:10 177:15
177:19 180:4
186:2 218:14
218:14,20
219:6
periods 124:9
person 169:12
206:15 207:9
personal 250:21
251:20
personally 97:16
105:23 114:22
perspective
135:18 220:19
224:14,17
petition 209:5
pgalante@mo...
4:7
phase 135:10
phone 158:22
159:6,12,15
160:8
phonetic 211:19
physical 7:16
physically 169:5
Picache 171:17
171:19 246:10
pinning 216:10
PIP 120:8
121:11 160:15
160:21 236:25
261:16,22
262:5,13
263:25 264:3
264:21 265:5
PIPs 118:23
262:22 265:2
place 20:20
places 83:7
plan 31:5 44:21
45:2,25 46:14
50:12,15,19
127:23 129:15
129:19 135:17
137:24 143:25
162:14 163:11
191:6,9,10,18
196:11,13
300
200:17 224:19
224:24 228:10
228:19 266:24
267:4,5,11,15
268:2 275:21
pleadings 26:14
27:2,4 275:20
please 6:15,21
6:24 7:4 12:20
21:10 24:3
33:18 53:17
56:2 59:14
64:10 76:18
89:18 90:25
99:24 105:2
106:21 108:3
119:9,11,24
124:19 125:24
134:20 144:20
145:19 146:25
147:5,17 155:8
162:12,20
166:5 172:23
181:10 185:10
210:12 228:5
240:3,9 268:24
272:3,7
pledged 260:24
263:4
point 6:20 24:10
45:20 46:19
94:13 103:12
104:6 113:8
123:25 127:8
129:18 137:4
137:10 138:17
141:7 154:8
155:18 166:3
173:6 184:5
188:6,7 193:3
195:8 207:21
211:25 227:13
245:12 260:21
pointed 149:13
points 13:9
121:3 138:4
244:7
pool 111:14
112:5,15 115:2
118:23 160:16
194:14,15
200:3,9
pooled 200:2
pools 251:8
254:4
portfolio 9:3
150:4 243:17
243:21 246:25
portion 23:6
33:17 34:23
35:6 36:2,8
37:6,11,20
38:17,22 39:9
39:22 40:13,18
53:18 56:18
59:15 64:12
70:2 76:19
80:6,7,10 81:7
81:11,12,13,14
82:13,20 92:8
106:22 111:21
119:10,21,23
124:20 125:25
129:13 130:7
134:21 141:21
142:21 144:21
147:7,18 155:9
162:21 163:9
166:6,9 178:16
183:11 185:11
193:15 210:14
211:20 219:12
240:4 266:14
269:8
portions 11:4
22:6,10,12
194:8,11
pose 59:11
position 19:8
possession
122:20 173:14
possibility 92:25
219:12
possible 6:22
63:3 97:25,25
115:15 116:17
117:3 118:3
134:4 143:23
158:2,3 173:16
239:15,19,21
possibly 37:5
68:21 112:17
113:10,22
114:5 235:10
post 101:23
122:20,23
133:17,20
135:14,20,22
151:21 217:14
228:8 234:13
posted 26:24
potential 14:5,8
14:11 35:21
37:20 39:7,22
40:5,8,13,22
48:4 52:25
55:11 70:6,9
73:25 76:3,6
82:22 84:16
92:7 98:25
99:3 100:16
139:12,19
151:20 179:23
180:8 186:20
194:2,6 214:24
219:4 225:24
227:3 238:7
246:17,17
247:4
potentially 36:7
37:5 138:5
178:4,4 235:11
power 225:11
practice 179:11
practicing 148:2
precedent
136:25 137:11
preceding 78:14
78:15,23
precipitated
41:25 75:24
76:9,10,14
77:4
precipitous
244:12
precisely 68:8
prefer 59:11
preferred 4:18
242:20 252:2,4
252:7
preferreds 252:9
preparation
24:12 26:6
49:9 58:22
62:9,17,24
63:8,12,15
64:20 65:13
69:3 81:24
82:4 84:9
85:17 86:9
93:12 94:3,19
104:13,22
116:15 117:9
132:4 157:12
176:20 189:9
269:15
prepare 21:13
57:22 58:9,12
238:23
prepared 52:3
54:5,11,16,19
85:2 120:4
143:11 205:18
207:13,16,20
208:6,10,15
prepares 208:9
preparing
238:18
prepetition
228:17
presence 55:13
present 22:3
58:4 73:6 80:8
88:5 108:8
169:6 206:15
presentations
23:16
presented 15:19
34:12 49:21
63:16 85:21
238:15
preserve 75:25
76:9,15 77:4
Press 184:13,14
184:15,22
presumably
86:18 89:13
91:12 95:4
previously 50:5
66:4 67:6
110:12 120:10
121:13 161:7
161:20 163:25
price 15:21
16:21 102:5
105:9 117:18
124:25 135:25
220:10,13,20
220:21,22
221:9 222:12
223:4
pricing 225:11
primarily
192:24 194:14
primary 15:15
244:10
principal 225:5
printed 9:6,14
13:4
printout 9:9
12:21 275:12
275:14
prior 15:9 17:3
17:13,17,20
30:9,12,22,25
31:4,9,11,14
31:20 34:18
37:13,14,16
39:5 41:6,14
45:18 50:9,14
50:14,24 51:3
52:9 53:25
60:19 61:4
62:5 64:15
65:24 66:2,6
69:7,8,9 73:4
74:5,5 85:22
85:24 86:9
87:2 92:17,22
93:14 94:2
301
102:16 116:19
116:22 117:24
127:19 134:23
135:6 139:17
164:2 165:12
168:23,25
169:10 173:18
177:19 202:19
207:23 209:20
215:18 219:24
232:7 241:25
267:7,7
private 184:16
184:19 213:15
214:22 215:13
243:16
privately 16:21
213:9
privilege 134:19
145:3 146:2,8
146:9,19 183:4
privileged 134:5
145:16,22
147:9 166:17
privy 16:23 17:2
problems 253:15
253:22
proceed 11:10
11:11 144:15
proceeded
253:24
proceeding 26:3
27:2 64:25
140:19
proceedings
64:22 252:24
253:17 255:15
proceeds 28:19
148:15 261:7
261:13 263:12
263:18,21,24
265:4,20,24
process 11:22
12:12,14,23
13:7 16:22,25
157:12 186:16
193:4,16
194:21 197:23
208:21 228:15
240:7 275:15
produced
127:16 132:17
144:6 161:20
161:24 173:5,6
187:23
product 143:8
143:10
production
161:21 187:24
productive
233:6
project 71:11
84:15 85:3,8
151:2 243:11
276:7,10
projections
223:15,21
pronouncing
171:11
properties 42:20
111:13 112:4
112:15 114:25
167:19 190:15
199:19 200:22
201:17 202:9
202:15 247:18
248:22,25
249:3 251:2,6
251:13 253:2
254:9,25
255:11 256:3
256:18 261:21
266:2
property 150:3
200:12,25
201:8,9,11
202:2,4 210:3
255:11 257:12
257:19,23
259:4,8 260:23
260:23 261:10
262:2,20,25,25
263:6 266:4,5
proposal 125:17
154:16,21,24
155:2,3
proposals 11:16
11:17 161:15
proposed 51:12
56:25 65:20
69:22 89:22
90:3,18 93:6
103:5,23 116:7
126:22 131:9
164:4,9,14,20
164:20,23
275:22 276:5
276:12,16,19
276:22
proposition
224:7
prospects 221:6
221:11 223:16
protection
168:21 181:17
198:3 264:15
264:16
provide 15:16
16:4 58:20
72:23 73:2
177:23 264:16
provided 34:20
39:18 73:7,11
73:14 99:9
164:8 174:13
177:24 202:19
206:19
provides 224:19
259:2
providing 18:6
56:13
provision 100:12
100:25 108:4
118:7 153:2,5
153:10,23,24
156:23 158:11
158:17,23
159:7,23
160:10,14
161:22 164:16
166:8,13,23
167:5,13,16
168:12 235:15
235:19 236:4
236:18,21
237:10 263:19
provisions 52:23
67:9,13 99:13
153:13 155:24
156:3,11
157:14
proximity
187:13 218:15
PSA16:8 31:5
31:13,19,25
32:6 34:22
46:3,5,9 47:8
47:19,21 51:2
123:25 136:15
137:2,12
143:24 221:19
222:9,9 227:8
227:11,14,23
239:3 252:22
259:15 269:4
public 1:14
64:24 252:2
271:18 274:7
pulls 227:4
purchase 15:21
100:9,16
101:17,23
102:5 105:6,9
109:22 117:15
117:18 124:25
128:16 129:4
133:17,20
135:24 141:4
173:21 220:5
220:20 221:9
222:11,12
223:4
purchased 68:13
purchaser 40:13
40:22
purchasers 39:8
39:22 40:5,8
purchasing 12:4
67:25 92:7
217:14 228:8
purpose 204:7
purposes 110:17
114:19 128:23
pursuant 21:8
put 12:25 19:23
44:24 51:16
60:23 85:11
130:18 132:21
PW104:2 110:2
110:14
p.m94:15
138:21 139:3
270:7
Q
qualify 44:7
quarter 244:4
question 6:15,23
22:17,25 23:3
23:9 26:18
27:6,9 29:3,12
33:13,19 35:4
37:10 39:12
40:16,20 42:4
45:5 48:15,16
48:24 49:4,15
50:17,18 51:4
51:19 53:12,14
53:20 54:17
56:17 57:11
59:9,12,14
62:23 63:5,19
64:8 69:4,25
71:24 72:2
77:2,11 79:13
79:18,19 82:9
86:8 88:24
90:13,15 92:10
94:18 95:10
98:20 100:22
103:9 106:19
111:6 112:18
112:23 114:9
114:13,18
119:7,21,22
121:5 124:16
124:17,23
125:23 127:18
129:8,12,22
130:2,4,6
302
134:4,17,20,23
141:19 144:17
144:19,23
145:2,3,13,19
146:6,8,11
147:6 149:2
155:7 156:17
160:24 162:20
166:4,16,20
167:11 168:6
178:13,15,23
183:9,18
188:11,19
193:12 195:7
208:11 210:12
217:15,20
220:15 222:17
223:4,9,13
225:2 227:18
228:4 229:9,24
231:19,22,24
232:20 234:7
235:2,20 238:8
238:10 240:3
240:18 250:7,9
250:11 251:23
253:7 254:8,13
254:14 255:3,7
255:9 259:13
260:19 262:9
262:10 263:24
266:13 268:17
268:22,25
269:2,7
questioned
183:24
questioning
252:3
questions 6:12
6:17 7:12
11:13 13:16
28:23,24 59:7
59:18 92:10
128:23 172:8
210:20 211:8,9
211:11,12
215:25 229:22
241:20 242:5
242:12,24
266:17,20
267:21
questions/stra...
240:24 241:4
quickly 115:15
quite 115:12
228:3 261:24
quote 28:2
148:16 267:23
R
R2:2 3:2 4:2,11
4:22 6:3 139:2
139:4 271:3
273:1,1 274:2
raise 42:25
raised 35:24
36:7
ran 202:12
range 221:7
ranges 225:24
rate 52:18
107:24 108:8
111:14,24
112:5,15 114:4
115:2,8 118:23
160:16 190:12
194:14 200:3,9
204:12 226:7
226:25
ratios 256:16
Razor 247:15
reach 96:19
223:10
reached 16:20
16:23 137:5,13
138:16 160:4
223:23 226:12
read 23:4,6
27:18 33:10,15
33:17 35:6
37:11 40:18
49:18,18 50:7
53:13,18 54:13
56:2,4,18
59:13,15 64:10
64:12 70:2
76:18,19
100:12 106:20
106:22 111:21
119:8,10,23
124:18,20
125:24,25
129:13 130:3,5
130:7 134:20
134:21 141:21
144:20,21
147:5,7,16,18
155:8,9 162:21
166:5,6 178:15
178:16,22
183:11 185:8
185:11 191:2
193:15 210:11
210:14 240:4
263:13 266:14
268:25 269:8
272:3
reading 28:16
30:9,12 265:11
ready 27:21
real 3:4 4:24
81:22 225:9,15
250:11
realize 173:4
225:20
realized 225:6
225:18
really 45:16
215:9 233:21
259:12
reasking 268:22
reason 62:25
93:19 96:10
133:4 212:9,11
226:12 272:5
273:10,12,14
273:16,18,20
reasonable 37:3
220:22 221:7
221:12,18
224:6
reasonableness
223:3
reasonably
218:15,19
reasons 68:8
214:21 222:8
237:9 273:6
recall 14:5 20:10
20:13,21 23:20
24:3,4 31:21
35:12 36:5,25
37:17 39:17
43:23,25 44:6
45:17 50:11
51:6 55:17
67:7 72:12,14
74:6,13 75:2,9
78:2 80:11,14
80:18 81:16
82:24 83:6
84:3,13 88:20
89:5 91:9 92:3
92:21 94:24
95:20 96:24
97:2,6,24 98:4
101:8 102:22
104:21 105:22
106:10 116:17
118:4,11
121:13 124:6
125:5 138:13
154:15,20,23
154:25 155:15
155:20 158:25
159:14,20
162:14 163:15
169:9 172:9,14
176:3,4,11
177:2,5 178:5
181:17,22
182:6,18
184:23 186:21
186:24 187:10
187:12,15
188:20 193:21
194:19 197:8
197:12 198:14
206:13,22
208:14 209:22
211:15 212:15
212:18 213:5
213:18 215:4
216:3 219:5
227:21 238:3
240:14,14,15
241:11,12,16
246:14,20
253:18 268:2
recalling 247:13
receipt 141:8
272:14
receive 73:16
75:17 95:22
123:18 135:25
142:24 175:14
220:6
received 20:22
40:14 84:7
94:23 95:23
104:24 105:19
108:19,23
117:6,10
119:17 126:4
128:10,13
136:22 141:15
145:6 146:14
161:18 177:3,6
177:11,13
193:24 195:2
195:14 241:10
267:4
receiving 43:12
84:4 96:3
125:17 179:16
179:18
recess 57:12
115:21 138:21
181:8 210:25
recession 201:3
225:11
recipient 142:19
175:11,11
recirculate
163:7 164:12
164:25
recirculated
165:3,14
recite 210:2
recited 105:10
303
129:5,14
recognize
127:25
recognized
228:13
recollection
22:21 23:12,22
24:13 48:2,18
48:20 49:9,11
49:22 52:5,24
53:17 79:15
105:18 117:22
118:8 119:15
124:22 126:3
126:14 137:9
153:3 174:14
177:25 194:23
207:11 213:10
213:12 239:8
247:7 250:4
263:20 267:3
recollections
49:2
recommendati...
198:17
record 7:12
15:25 23:6
25:9 33:17
35:6 37:11
40:18 53:18
56:5,18 57:14
59:15 64:12
67:18 70:2
76:19 78:20
102:12 106:22
110:2,9 111:4
111:21 114:17
115:19,20
119:10,23
124:20 125:25
129:13 130:7
134:13,15,16
134:21 138:15
138:19,20
141:2,21
144:21 146:3,5
146:24 147:3,7
147:18 155:9
162:6,21 166:6
178:16 181:7
183:8,11
185:11 189:7
189:20 193:15
210:14,24
233:7 240:4
264:3 265:6
266:14 267:19
269:8 270:6
274:13
recoveries 226:7
226:24
recovery 228:16
reduce 235:11
refer 16:19
41:25 46:2
155:14 184:19
186:19,22
190:12 194:4
227:15 232:7
259:10,21
reference 96:6
117:15 152:20
160:20 264:5
referenced 48:3
48:5 52:7 87:7
149:19 155:22
157:3 161:13
175:18,25
references 148:9
155:17
referred 18:8
30:14,24 67:15
68:5 121:23
122:3,7 143:6
143:8 148:5
197:22 204:3
226:21 237:2
247:24
referring 9:22
28:11,20 29:6
29:7,14,19
33:2 36:22
37:19 45:12
47:6,16 63:10
64:24 66:23
67:10,14,19
76:23 78:20
91:13 120:17
121:16 122:10
122:15 123:14
134:22 139:19
140:10 143:20
145:12,24
146:7,13
147:12 148:13
148:18 149:14
149:21 150:6
152:21 153:6
153:15 156:5,6
163:20 168:5
183:12 185:15
185:18 186:19
187:3,6 194:13
206:2,5 216:20
227:2 235:16
refers 52:13 91:2
119:3 120:5
141:7 148:16
149:4,7
reflect 110:9,18
114:17 135:23
161:7 173:2
reflected 37:15
110:20 111:15
133:19 135:21
159:18 161:12
reflecting 108:9
reflects 110:7,24
refresh 22:21
47:25 49:17,22
49:25 52:5,24
105:18 117:22
118:7 126:3
137:9 192:17
201:12 263:20
refreshed 23:12
24:13 48:18,20
49:2,9,11
126:14
refreshes 119:15
refreshing 53:16
124:22 202:8
refused 87:15
regard 193:22
regarding 76:6
106:6 107:4
112:22 126:11
158:22 193:6
210:2 239:3,24
240:7 241:19
regardless
265:25
regular 179:10
218:22
reiterate 249:18
relate 143:24
221:17
related 27:8
151:14 184:7
239:3 274:15
relating 131:9
131:11
relative 194:5
relatively 28:19
36:16,24 44:10
76:16 180:15
relevance 16:7
144:11 230:16
233:10
relevant 59:22
221:23 222:3,8
224:25 230:21
239:9 253:25
254:15,24
255:10,13,19
264:9
relied 253:9
254:21 256:5
257:2
rely 32:11
remaining
174:10
remains 50:24
remember 53:22
66:24 68:11
72:15 101:3
109:20 171:25
176:13 190:17
198:15 215:25
remembered
53:25
remembering
130:2 172:21
remind 57:15
115:22 139:7
181:11
reminded 50:7
renew251:17
renovation
261:11,23
rents 225:13,16
reorganization
101:23 122:21
122:24 133:17
133:20 135:15
135:20,22
151:22 186:23
217:14 228:8
reorganized
34:24 52:15
repeat 23:2 29:2
29:12 33:13
37:9 39:12
40:16 56:16
64:9 69:24
76:25 98:19
100:21 107:3
111:19 119:6
119:22 124:17
125:22 135:6
141:19 144:18
156:18 162:19
166:4,19 193:8
193:13 231:22
231:24 240:3
266:13 268:25
repeated 119:21
rephrase 6:16
14:3 27:6,9
39:13 98:22
100:23 156:19
166:21 167:8
167:10 168:3
268:17
report 38:5
83:20 176:9
reporter 1:14
7:2,10,14
12:19,25 19:17
19:23 26:9
304
44:19,24 51:8
51:16 55:19
56:21 65:16
71:7 76:22
85:5,11 93:3
94:6 102:25
116:2 119:20
126:17 127:3
130:13,18
140:3 142:10
175:4 274:7
reporting
176:11
represent 9:13
13:3 128:14
132:16 140:14
140:16 189:18
203:17 211:6
242:19 249:7
representation
145:17
representations
140:20
representative
19:19 20:2
58:21 59:25
97:14,18 115:7
138:9 156:9
251:22 275:16
representatives
21:18 74:13,14
80:20 81:5
82:17 87:8,15
88:9 89:9
154:7 157:11
158:9,10
174:11
represented
249:4 253:3
representing
127:13,15
265:8
represents
233:16
request 24:20
82:2,19 88:15
162:6 239:10
240:13
requested 21:20
42:23 75:12,18
81:17 124:25
requests 165:6
180:2,5 189:6
205:24 277:12
require 142:6
199:21 244:16
required 42:18
43:2 77:7
81:22 179:25
185:22 186:17
217:9 237:3
requirement
138:3
requirements
264:25
requires 202:8
reread 35:5
269:7
research 209:17
Residence
189:22,23
190:3 192:10
192:18,19,20
201:19,20,22
resign 25:5,11
resignation
25:13,15
resigned 25:19
25:23
respect 12:13
58:25 60:3
65:11 69:22
98:10 99:15
101:17 112:5
115:2 118:22
125:4 132:23
133:3 134:19
139:11 150:7
150:21 151:7
154:16 155:24
156:11 158:11
167:7,18
173:21 189:9
189:10 190:9
195:22 196:2
199:23 200:15
201:7 202:14
247:5
respective 73:25
respects 32:12
243:18 265:16
respond 113:19
180:18,21,25
184:22
responded 121:4
182:16 183:18
response 7:12
21:12 75:21,23
82:18 159:20
182:21 183:13
183:24 184:3
185:9
responses
106:16 133:14
responsibilities
10:17 18:10
responsibility
244:10 245:21
responsible 34:4
34:8 121:22
122:6,22 154:4
responsive
232:17
restate 262:10
restructure
180:14 186:13
restructuring
28:4 32:2,7
35:21 43:3
46:24 51:12
56:25 65:21
69:22 70:6,9
72:24 74:2
76:7 81:21
82:22,25 84:17
92:23 93:6
103:5,24 116:7
126:22 133:21
136:2 186:22
217:8 218:8,13
223:18 224:2
225:7 228:21
275:22 276:5
276:12,17,19
276:22
result 19:7
118:13 125:17
186:3,7 226:6
226:15,19,23
244:15
resulted 150:15
resumed 139:4
retained 206:9
210:4
return 72:2
221:6,11 224:7
272:12
returns 221:7
reveal 54:23
147:9
revealing 134:5
166:17
review10:25
11:4,7 20:19
20:23 21:5
22:18 23:11,24
26:16 31:15
43:17 45:5
49:3 51:18
52:4 53:5 56:8
57:24 60:20,24
62:10,10,13,19
65:4,9 66:2
72:5 90:10,12
94:12 96:2
100:24 104:23
107:19 116:12
116:19,23
117:24 127:7
127:20 135:11
142:6,7 143:3
157:17,21
205:21 253:24
reviewed 20:14
20:24 21:6,19
22:21 23:14
24:12 26:6
30:17 47:23
49:19 50:4,6
50:15 63:4,6,7
63:9,14 64:4,5
64:15 66:20
94:25 104:20
105:22,25
106:3 107:11
107:13 117:5
126:5 128:4
145:8 158:2,5
207:17 208:4
208:14 223:14
246:16 248:11
reviewing 30:4
30:22,25 31:4
31:9,11 49:7
51:25 52:22
53:21,25 88:21
118:13 263:18
revision 158:4
revolved 161:10
RI 248:17
Ricache 171:11
Rick 184:13
187:16
Rifkind 1:11
3:13
RIGG248:17
right 9:17,24
47:20 72:11
91:23 103:25
104:2 110:13
122:11 135:4
146:6,10
148:16 157:15
197:17 202:3,5
208:12 209:12
211:20,25
212:4,8 216:5
216:23 220:7
220:17 227:8
236:19 237:14
248:14 254:8
257:13
rights 189:8
right-hand 10:8
260:16
RIMV248:16
259:9
risk 221:8 224:6
risks 221:13
role 8:4,10,14
305
10:5 15:15,18
17:24 34:3,10
34:11,19 35:20
44:15 97:14
102:9,15
114:22 123:12
room7:11 169:6
rough 197:16
roughly 197:12
213:19
Ruisi 169:25,25
Rule 21:2
R-i-c-a-c-h-e
171:12
R-u-i-s-i 169:25
S
S 2:2 3:2 4:2,22
4:22 6:3,3
139:2,2,2,4,4
275:10 276:2
277:2
Safety 247:15
San 189:22
190:4 192:10
192:18,22
201:7,20,23
248:18 257:13
257:19 261:10
sat 87:3,17
Sathy 240:11,20
241:19 242:3
Sathy's 240:22
satisfactory
137:6,13
satisfied 265:2
266:7
satisfy 179:25
264:23 265:5
265:21
Saturday 144:8
164:2 267:7
saw20:16 26:22
27:10 45:15,17
47:20,21 50:12
50:25 51:21
53:6 61:3
94:21 101:7
115:3 116:21
117:23,25
118:8 144:5
150:16 155:16
187:10 205:15
218:4
saying 44:8 80:6
121:9 177:14
229:25
says 9:23 33:5
54:10 118:21
152:17 251:5
263:12 264:22
SCC1:6
scenario 91:23
92:13,25 97:8
252:13,21
schedule 160:17
163:18,24
164:3,8,14,19
164:23 165:7
165:13,21
234:5 260:8,13
260:15 263:7
scheduled
196:22 209:7
209:10
SCHUYLER
1:10 271:5,12
274:10 275:4
scope 125:10
162:10 220:25
221:17
second 20:25
52:13 55:22
73:22 79:17,19
80:2 82:3
103:13 108:7
115:19 133:25
141:7 149:14
183:2 191:5,8
230:11 257:10
258:19
seconds 134:13
secret 225:9
section 21:5,6
22:23 27:14
105:4
sector 225:12,15
secure 30:16,19
secured 111:13
112:4,14
114:25 189:21
189:25 191:14
191:22,25
194:4 195:23
200:4,16
204:11 226:8
226:25 251:2,4
251:7 253:11
256:8 257:5,7
securing 259:4
securities 11:3
15:17 17:7,21
243:22 252:7
securitization
189:19,24
203:15
securitized
190:15 255:22
security 252:4
see 7:9 9:17 10:8
16:7 20:9 21:3
26:21 27:25
28:7 33:3,5
45:8 46:6
47:14 52:20,21
55:24,25 65:18
65:22 68:9
71:18,21 73:12
88:18 89:23
90:2,14,22
91:4 92:25
94:16 100:8,10
100:11 101:25
102:6 104:4,5
105:7,10 108:6
108:11 114:18
116:14 117:16
117:18,21
118:16,18,24
127:6 131:3,12
131:13,14,16
131:19 132:13
137:2,7 141:5
141:11 142:21
143:12,17
148:8 149:11
159:19 163:5
163:14 168:11
175:10 176:3
186:25 187:8
240:25 244:11
248:19 266:24
seeing 54:10,20
209:22 230:23
seen 20:5 26:18
26:20 30:17
45:6 47:5,13
50:10,21 51:19
52:9 54:3 55:8
60:14,18 61:7
61:12,13 62:2
62:5,8 65:25
66:3,6,9,10,14
67:6 68:25
69:5,14 71:15
85:15,23 93:10
93:15 94:2,18
95:18 101:7
104:10,12
116:18 118:3
124:5,7,12
127:19 135:2
152:22 157:10
157:11 208:14
209:19 220:3
244:14 248:4
248:10
sees 232:12
selected 63:16
selection 12:11
12:14,23 13:7
275:15
sell 34:23 36:2,8
37:5,20 38:22
selling 38:17
senior 123:4,5
201:18 244:17
254:22
sense 129:21
223:2 227:22
228:20 229:12
229:16,23
252:21
sent 94:14 95:6,9
95:12,17
106:15 109:12
109:15 142:20
184:12 187:2,9
187:12 188:22
188:24 189:2,3
sentence 28:2,12
29:8,15 32:25
33:11 143:21
147:13 148:15
148:19,24
149:5,9,14
239:12 253:19
263:16
separate 28:5
29:25 30:4
56:11 155:19
156:4 203:11
231:5 233:20
235:17 236:4
separated
134:25
September
221:25 230:17
230:21 233:11
series 6:12 35:16
172:7 264:20
serve 18:15,20
18:22 19:5
served 21:12
164:3 210:7,9
serves 36:19
73:22 75:11
169:13
service 77:10
201:5,14 205:9
223:17,24
servicer 189:19
servicers 195:22
services 2:15,20
72:24,25 73:3
73:7,11
servicing 199:14
199:16,17
session 38:3,6,8
39:19 104:13
306
116:15 160:24
174:3,6 197:5
238:2
set 90:21 164:17
168:13 205:6
274:11,19
seven 133:8
194:3 248:22
Seventh 4:10
severe 81:20
severely 201:2
225:10
shake 7:15
shape 248:13
share 91:2
233:17 258:22
shareholder
41:23 44:5,11
91:12 243:16
shareholders
4:18 91:16
242:20 250:16
shares 43:6 44:9
101:12 102:20
105:14 117:19
sheet 46:13,14
47:7 50:10,18
50:23 51:2
53:10 96:8
100:2 103:3,16
104:18 106:7,9
107:4 116:5
120:12 121:19
121:20 125:18
126:7,20 127:4
127:22 129:15
133:25 135:3
136:21 139:11
139:21,22,24
140:4,5,10
144:8 150:15
151:20 152:22
155:5,16 156:4
156:14 157:17
163:20,23
164:5,10 165:8
165:15,23
166:11 167:14
168:12 180:14
191:6,10,18,21
193:23 195:14
196:12,14
200:17 217:9
235:16 236:8
259:12,15
260:11 263:8
265:10,13,15
268:7,20 269:5
269:6 272:6,7
272:10,13
276:16,18,21
277:6
sheets 23:17
124:4,12 131:7
133:4 134:25
135:11 155:11
155:14,19,22
156:5,7 157:2
157:8,15
SHELHORSE
4:24
short 13:14
76:15 95:2
115:13
shorten 90:14
shorter 119:21
shorthand 46:3
274:7
shortly 95:2
181:15 182:15
207:24 209:4
shoulders 7:16
show9:5 24:10
127:2 153:5
showed 20:12
87:8,14
showing 24:9
87:2 130:24
shown 63:11
271:10
shrug 7:15
side 10:8 55:24
60:24 107:25
sign 86:24,25,25
87:12,14 88:2
88:15 272:7
signatory 45:25
46:5,6,9
227:23
signature 162:25
273:23
signatures 163:4
signed 163:12
significance
201:9
significant 10:25
42:19 74:15
77:7 80:7
84:14 177:18
179:24 201:11
202:7,8 246:16
257:19 261:11
significantly
61:22 226:6,24
245:21
signing 228:19
272:9
similar 201:25
205:6 256:15
simple 146:11
225:21
simpler 254:2
simplify 265:18
simply 106:5
120:5 133:15
133:19 135:13
135:20,23
150:24 159:17
176:12 228:20
229:24
single 203:12
254:6
sir 6:8,18 7:22
9:4,13 12:25
19:23 21:13
22:16 24:23
26:16 44:24
48:9 51:16
52:11 53:17
54:3,13 57:18
59:16 65:18
66:23 71:15
80:24 85:11
94:12 103:12
103:22 106:18
114:8 116:11
128:2,21
130:18 132:21
133:23 140:9
141:3 142:17
149:2 153:3
155:15 158:7
175:10 181:14
183:4 188:19
193:18 202:16
203:8 267:23
sit 23:22 28:9
29:5 33:6
61:10 72:11
99:12 106:11
112:19 114:21
119:2 128:9
176:14 243:25
sitting 234:23
situation 55:11
65:12 66:14
81:20 82:5
86:20 91:23
205:21,23
218:23 244:16
245:2,5,7,22
situations 16:2
245:23
six 13:9 87:4,17
88:7,12 248:13
248:21 253:2
256:2
skip 263:15
slightly 247:15
small 44:9
sold 203:15
sole 41:22 44:5
91:12 243:16
Solomon 2:17
5:2,2 6:7,10
12:18 14:3
19:16 23:4
24:20 26:8
28:17 31:17
33:15 35:7
36:12 39:13
40:17 44:18
46:18,22,25
47:3,18 48:16
48:23 49:4
51:7 53:13
55:18 56:20
57:7,9,13
59:13 63:23
64:10 65:7
68:17 70:12
71:6 72:3
76:17,20 78:15
78:22,25 85:4
86:5,7,19 89:2
93:2 94:5
98:22 100:3,23
102:24 106:20
110:25 111:8
115:14,22,25
119:8 124:3,16
124:18 125:24
126:16 130:3
130:12 133:7
134:7,17
138:14 139:6
140:2,16 142:9
144:2,20,25
145:11,23
146:4,21,25
147:5,16 155:8
156:19 161:18
161:25 162:5
166:5,21 173:4
173:13 175:3
178:13,17,22
181:4,9 183:7
185:8 187:22
188:7,11,16
189:4 231:18
267:20,22
268:14,24
270:3 275:5
solvent 223:20
somewhat
218:21
soon 6:22 36:16
36:23,24
180:15 218:19
sorry 17:10
307
20:19 23:2,8
23:10 29:12
39:11 50:20
54:15 56:16
58:10 60:17
61:19 69:24
76:25 81:2
82:8 86:7
100:21 103:9
103:17 108:19
110:11 111:19
119:6,20
125:22 129:11
129:22 132:20
141:18 155:6
162:20 174:25
183:9 193:8
201:16 208:2
211:22 217:23
238:7 239:11
239:25 240:2
241:25 248:2,7
249:9 258:18
258:21 259:21
260:18 262:9
266:12 268:14
268:23
sort 81:21 87:11
87:23 92:23
248:13
sought 228:16
sound 190:24
sounds 36:21
37:3 105:21
253:20
sources 174:19
southern 1:2
192:24,25
space 225:14
272:5
speak 25:12,14
132:23 195:17
speaking 7:2
11:23 199:8,9
228:13
special 189:19
204:7
specific 10:19
24:6 30:10
36:15 41:13
64:8 70:25
82:24 104:20
105:23 106:8
107:17 112:18
117:5 118:4,14
120:17 121:5,5
122:8 132:12
151:12 157:13
160:12 184:20
190:18 201:3
219:5 227:16
227:24 229:25
235:7 253:19
261:25 267:14
267:25 268:6
268:13,20
specifically
33:23 35:12
58:9,12 64:20
66:8,24 76:14
78:2 80:18
83:23 84:3
89:5,11,15
92:3 104:25
107:10,13
116:18 117:4
117:12 118:5
118:13 123:10
124:7 132:9
149:22 154:20
159:14 184:7
186:21 199:9
201:6,8,13
202:10 212:15
212:18 226:13
240:21 241:5
241:23 262:21
262:23 269:21
269:24
specifics 206:7
219:16,18
261:12
speculate 172:24
213:25 214:15
261:18,20
speculation
95:14 229:20
speculative
229:22
speed 205:5,6,12
205:25
spelling 171:14
spend 85:19
194:9
spent 42:23
159:22
spirit 164:15,21
164:24
split 155:19
sponsor 16:18
18:5
sponsors 16:19
spreadsheet
230:12
square 248:13
ss 274:4
stacked 202:5
stages 61:24
stamp 130:20
132:13
stamped 67:10
71:8 85:9
116:3 126:18
140:7 142:11
175:5 276:10
277:7
stamps 127:9
stand 232:14
standards
199:20
standing 24:18
stands 48:16,25
49:5 124:16
start 80:6 89:2
196:22 209:17
started 121:9
194:22 197:9
197:10 249:23
starting 153:25
166:10 248:16
starts 153:8
166:9
startup 17:19
state 1:14 242:2
272:4 274:3,8
stated 50:3
135:8,13
136:10 138:4
151:17 155:10
235:13 236:23
261:9
statement 19:11
23:7 40:10
50:24 107:2,2
113:15 149:16
200:10 237:12
246:15 256:4,5
256:9,25
257:15 258:6
statements 10:6
201:25
states 1:2 228:3
240:22 261:5
status 147:22
stayed 195:2
step 134:14
sticks 86:16
stock 141:4
222:12 244:6
245:20
Stockton 3:3 5:9
stop 76:20,22
straight 29:13
strange 215:5
256:17
strategies
241:20 242:6
Street 2:5,10 3:5
strike 61:24
197:21 203:3
216:9 224:12
224:16 229:15
structure 11:4
11:15 43:2,4
52:14,24 53:9
89:23 90:4,19
90:23 100:14
190:11 198:19
226:4 248:23
248:24 249:25
250:2 252:8,15
structured 225:4
256:15
structuring
11:19 203:19
struggling 42:13
stuff 23:19
subheading
128:16
subject 21:11
37:4,23 59:3
60:6 71:2
132:25 150:6
154:7 189:6,11
223:13 233:11
233:15,20
271:9 272:9
submitted 26:2
266:25
subpoena 19:21
20:3 275:17
Subscribed
271:14
subsequent
35:13,17 38:7
43:15 110:4,19
208:17 216:18
227:18 244:5
subset 67:12
subsidiaries
247:20 249:13
substance 25:21
25:22 56:14
83:21 97:21
137:5 152:8
substantially
75:15 174:15
174:24 226:19
substantive
119:12 185:10
successfully 28:3
sued 146:17
sufficient 59:6
59:17 180:3
254:7
suggest 173:11
suggested
180:13
suggests 126:8
257:8
308
Suite 2:21
suited 33:19
Suites 190:2,4
192:21 201:21
201:23
summarized
174:14
summary 38:10
38:20 39:18
174:12 194:5
197:3 237:25
238:3
support 26:13
31:5 44:21
45:2 46:2
50:12,16,19
127:23 129:16
129:20 135:17
137:24 162:15
163:12 184:9
185:13 186:17
191:9 217:8
224:19,24
228:10,19,21
266:24 267:4,5
267:11,15
268:2 275:19
275:21
suppose 117:3
sure 8:22 10:6
16:12 23:4
27:22 32:24
33:14 39:13
40:17 46:4
47:3 49:15
52:8 53:15
56:10 57:9,20
62:15 64:3
67:18 86:13
89:21,24 90:6
98:21 99:25
100:7 101:22
103:20 105:3
134:3 136:20
141:20 151:18
153:16 156:19
159:17 162:13
179:13 190:19
190:21 193:11
200:12 210:23
214:20 215:18
216:4 228:24
234:25 237:7
239:21 242:17
242:25 243:15
246:8 250:9
263:14
surprise 97:11
surprising
215:12
surrounding
238:6
Susanne 80:11
sworn 6:4
271:14 274:12
T
T4:22 139:2
271:3 273:1
274:2,2 275:10
276:2 277:2
table 123:24
take 7:2,15
26:16 45:4
51:18 57:5
60:8 75:3
94:12 108:3,17
115:13 134:7
181:4 183:7
187:25 188:2
195:20 198:24
207:4 209:13
210:20 233:6
245:3 256:18
taken 57:12
115:21 138:21
171:23 172:2,4
172:5,9 173:16
180:13 181:8
210:25 242:16
talk 168:16
182:25
talked 248:21
talking 151:16
158:12 229:17
230:18 251:9
251:11 259:8
259:17
Tavern 71:11
84:15 85:3,8
276:7,10
team8:19,25
10:9,14 25:17
93:25 94:4
122:22 182:4
187:16,17
214:11,12
244:17
teams 11:14
tear 202:7
technical 10:3
249:17 250:24
technology
17:18
tecum19:21
20:3 275:17
telephone
158:16 159:2
telephonically
206:16,19
207:9
tell 6:15,21 7:5
24:3 38:4
49:10 61:11
72:4 107:10,12
140:22 145:15
169:16 184:20
190:8 193:21
201:12 227:17
246:4 257:14
telling 82:10
128:20
ten 14:20,21
term23:17
46:13,14 47:7
50:10,18,23,25
53:10 82:8
96:8 100:2
103:3,16
104:18 106:7,9
107:4 116:5
120:12 121:6
121:19,20
122:13 124:4
124:12 125:17
126:6,20 127:3
127:22 129:15
131:7 133:4,25
134:25 135:2
135:11 136:21
139:11,21,22
139:24 140:4,5
140:9 144:8
150:15 151:19
152:21 155:5
155:11,14,16
155:19,22
156:4,5,6,14
157:2,8,15,17
163:20,23
164:5,9 165:8
165:15,23
166:11 167:2
167:13 168:12
191:6,10,18,21
193:23 195:14
196:11,14
200:17 225:16
233:23 235:16
236:8 259:11
259:15 260:11
261:23 263:8
264:3,6 265:10
265:13,14
268:7,20 269:4
269:6 276:16
276:18,21
277:6
terminate
177:15 226:17
termination
42:2,15 43:13
43:16,23 76:3
77:6 177:8,11
178:10 179:15
179:24 180:8,9
182:17 183:25
184:4,8 185:3
185:5,21 186:5
218:20 237:5
terminology
157:16
terms 46:23
51:12 53:4
55:16 56:25
61:17 65:20
66:10,17,19,22
70:8,16 91:23
93:6 98:6
99:13 101:15
101:21,22,25
103:4,23 116:6
120:12,15,17
120:24 125:4
126:21 222:13
222:14 223:19
225:8 230:23
264:8 265:8,10
265:12 267:15
267:25 268:7
268:20 275:22
276:4,11,16,19
276:22
terribly 203:9
204:15
test 190:23
testified 6:4 14:4
49:16 60:13,16
60:18 68:25
69:15 115:5
196:9 216:21
223:11 227:21
243:9 245:5
253:14 257:18
testify 7:19 80:9
97:9,16 113:10
113:23 199:10
210:5 223:7
251:22
testifying 67:20
testimony 32:9
40:6 62:4
63:25 66:12
84:9 153:22
176:25 207:12
211:23 221:2
228:3,6 232:8
237:13,15
245:10 246:14
253:18,24
309
255:4 256:22
256:25 262:7
271:6 274:13
Texas 2:21
Thank 57:17
79:23 86:8
104:9 115:24
128:22 139:9
147:4 181:13
210:16,17
242:8 260:20
266:18
Thanks 138:18
theoretically
239:18
thereon 135:12
thing 43:5 46:21
97:11 145:18
228:7 260:10
things 10:19
53:22 57:19
66:25 67:21
77:15 172:19
180:12 218:18
225:25 244:2
261:23
think 23:7 24:18
33:21 34:9
40:22 42:4,7
43:14 45:15
46:22 50:25
72:6 81:3 83:7
88:23 91:9
92:17 94:3
97:3 106:25
110:7,22
119:20 120:16
123:23 124:21
128:4 130:8
134:24 136:10
138:17 151:17
157:7 163:5
173:25 189:4
191:19 195:7
198:23,23,25
202:3 205:19
207:11 208:18
212:16 215:21
216:21 217:25
222:25 228:2,6
231:13 237:12
238:8,11
242:12,15
245:5,11,12
250:6,23 252:2
256:24 259:13
thinking 129:9
thinks 251:5
third 16:4,11
34:24 137:4
142:21
thirty 272:13
thought 92:24
164:22 171:18
217:23 234:8
three 28:5 31:23
31:25 32:4
197:15
Tim182:4
time 6:14 7:3
13:22 14:18
17:11,23,25
18:4 19:3
26:22 27:10
30:18 34:12,13
34:18 36:15
38:13 39:5,11
39:21,25 40:11
40:20,23,24
41:2,4,6,14
42:6,7,13,21
43:8,11,16
45:4,10,15,16
47:21 49:19
50:11 51:18,21
53:7 57:7
68:23 70:11,12
73:6 79:7,9,14
83:4,8 85:19
88:6,16 90:8
91:25 92:5,6
96:16 98:5,15
98:23 108:17
113:9 115:17
124:9 129:2
133:12 137:10
138:4,17 139:3
139:10 143:3
154:8 155:6,12
155:18 157:10
159:22 162:10
165:4,9,9
168:23,25
177:15,19
179:6,6,9,9
180:4 181:16
183:23 186:2
187:2,9 188:6
188:7 194:9
195:21 196:22
197:9 201:15
203:18 207:21
214:8 215:23
216:12 217:2
217:16 218:14
218:15,18,21
219:6 244:23
267:4,6 270:7
times 26:20
Timothy 4:20
242:17
Tkarcher@dl....
4:21
today 6:12,20
7:20 20:6 21:7
21:21 24:10
26:6,19 28:9
29:5 33:6
34:18 45:6
47:6 51:20
60:2,14 61:4
61:10 63:15
71:16 84:10
85:16 93:11
95:20 99:12
101:3 104:11
106:11 112:19
114:21 117:9
119:2 128:9
176:14,21
177:2 190:20
209:10 215:23
227:6
today's 21:14
told 18:14 54:23
63:25 88:18,24
97:6 145:6,8,8
181:20 227:21
239:23
tomorrow
143:15
tonight 240:23
top 47:2 65:21
117:14 118:17
131:2 202:6
249:12
topic 21:19
35:24 36:6
72:15 150:11
150:12 152:3
153:21 154:11
213:21 219:19
topics 21:2 22:22
23:13 36:13
38:8 39:15
58:25 59:19
123:22 221:24
226:13 237:25
Torres 4:13 5:15
211:6
total 18:3 225:19
tranche 260:13
260:14 261:2,2
transaction
15:16,23 16:4
16:13 28:4,10
28:21 29:5
32:7 36:3
38:21 44:16
52:13,25 53:2
53:9,23,23
65:12 68:11
82:22,25 92:24
95:16,19 96:17
97:22 98:10,17
98:25 99:4,5
99:15,21 120:6
121:9,16,18,23
121:24 122:2,7
122:9,12,13,15
122:17,18
123:13,19
135:16,24
136:12,13
137:16,20
138:12 141:10
142:4 150:8,14
151:8,15,19
152:11 194:8
194:12 219:4
221:10 222:10
222:10,14
249:20
transactions
13:23 29:7,14
29:17,25 30:3
37:15,18 38:11
38:15,19 48:4
49:24 52:6
174:16,24
187:20 238:6
238:15 239:4
transcript 72:5
271:9 272:14
272:15
translation
250:6
transmittal
110:5
transmitted
119:18
TRAVIS 4:24
trick 9:4 103:21
trigger 124:11
triggered 35:16
Trimont 3:4
4:24
trouble 129:25
168:2 172:21
199:14,15,17
true 176:8
195:25 199:22
200:8,10,11
204:10,19
271:8 274:13
trust 1:5 18:19
18:23 19:6,7
19:14 26:13
91:3 189:24
191:3 243:6
310
247:21 249:11
250:5,16
275:19
trustee 243:6
trustees 172:12
252:25
trusts 189:20
try 6:21 135:7
228:4 234:9
trying 9:4 24:7
63:24 81:2
103:21 105:20
116:16 128:19
132:20 171:25
208:18 217:23
233:23 259:23
Tuesday 85:22
turn 32:22 55:22
99:24 105:2
107:21 117:13
136:18,24
228:22 240:8
258:25
two 7:2 43:4
57:19 61:11
76:17 81:4
114:6 123:3
131:7 133:4
134:24 135:5
155:19 182:8
189:19 197:15
201:14,14
212:6 226:13
226:16 252:10
263:10 267:21
two-minute
181:5 210:21
type 256:16
typical 243:19
typically 16:18
207:24 243:21
Typo 171:16
Tysons 190:3
192:20 201:22
248:17 259:5
260:23 262:25
U
U6:3 139:4
271:3
UBS 17:5,7,8,13
17:24
uh-huh 7:8 9:19
10:10 13:6,8,8
14:7,7 21:4
25:8 39:16,20
45:3 65:19
79:5,5 80:23
85:14 95:21
101:13 102:7,7
103:17 107:23
108:2 109:19
122:14 131:5,8
137:3 142:23
156:2,25
160:18 163:10
197:25 216:2
249:2 250:13
268:4
ultimately 37:15
41:24 53:3
127:22 137:25
138:2 150:15
160:4 199:23
266:25
uncertain 42:5
underlying
180:5
understand 6:14
6:18 16:14
17:11 23:21
28:22 52:11
53:19 54:3
62:3 63:24
64:4 69:6
76:23 82:3
87:22 88:11
92:9 96:9,10
97:15 106:18
107:12 114:8
126:13 128:18
129:8 132:21
137:23 143:5
147:11,21
162:4 164:22
167:24 168:8
234:25 235:3
241:3,9 243:3
251:8,10
understanding
28:10 29:4,11
33:2,8 35:11
38:2 77:17
78:6 87:13,20
88:17 95:5,11
96:5,15,20
98:6 104:15
108:14 119:3
121:3 133:9,15
135:12 136:5
136:11 148:24
149:8 166:12
167:4,15 178:6
191:16 197:3
198:6 199:3,12
199:25 200:13
202:25 203:23
204:16 207:7
208:19 234:21
241:6 247:19
250:25 251:25
252:8,15 257:5
258:7 262:17
265:19,23
266:11
understood
60:22 143:7,20
145:9 146:14
198:8 241:13
258:10
undertake 15:8
unfamiliar 53:8
61:18 66:11,18
93:21
unfolded 41:24
unique 245:5
unit 8:2
UNITED1:2
universe 14:11
150:2
Unsecured 4:4
update 84:4,7
208:23 209:9
updates 208:20
upper 103:24
104:2 260:16
USA1:5 18:19
19:7,14 26:12
243:6 247:21
247:21 249:11
250:5 275:19
use 90:8 119:25
133:4 246:18
262:12,15,18
263:12,18
264:14
V
vacancy 18:24
Valley 189:22
192:18 201:20
257:12 259:5,7
259:8 260:22
262:20,25
valuation 15:22
16:3,5,12,15
16:25 123:17
123:24 124:10
125:6,19
222:19,21,22
222:25 223:5
225:24 226:14
value 15:8 43:20
52:15,17
102:19 108:8
226:2 250:12
250:14 251:15
252:6,9,12,14
253:2,8,12
256:16 257:8
258:3,8,9
values 226:15
254:15,16,20
255:11
various 28:20
49:13 192:4
238:25 256:19
verbal 7:13
versa 98:3
version 45:12,14
45:18 47:10,17
47:18 49:21
104:20 106:9
109:12,14,16
116:22 128:15
157:21,23
158:2,4
versions 64:15
104:18 156:23
vice 98:3
Victory 2:21
Vienna 192:21
201:23
view43:6
Virginia 192:21
201:23
virtually 43:7
visited 202:4
vote 171:23
172:2 173:19
voted 172:15,18
172:20
votes 173:2,10
W
W6:3 139:4
wait 143:22
229:4
waited 86:22
88:7
waiting 88:12,25
89:8
waiver 134:6
walk 143:15
222:16
walked 82:17
Walker 182:4
want 6:16 16:14
35:25 54:22
56:4 57:18
59:13 64:3
67:18 76:23
90:8,10,12
91:24 92:12
103:18 110:9
111:3 134:7
144:2 145:18
145:20,20
162:5 193:11
196:8 211:12
311
222:6 229:4,21
236:21 261:18
261:19 264:2
wanted 72:15
78:19 83:16
86:24 103:10
104:6 151:18
152:5 153:16
213:8,14
214:22 215:13
236:18,23
237:7,10
242:23
wanting 36:8
37:5
wants 146:20
223:6
Washington 2:5
190:2 192:20
201:22 248:18
wasn't 39:3 63:5
89:15 92:18
110:11 124:14
136:17 174:7
188:23 203:17
205:14 206:11
216:4,11
249:19
way 63:3 72:7,13
84:21 92:19
107:7 142:22
160:2,3,13
172:14 188:22
195:19 196:22
197:8 210:7
221:16 230:6
235:8 249:21
274:16
wear 30:13
202:7
website 9:9,15
10:6 12:21
13:5 26:24,25
31:16 275:12
275:14
websites 9:7
Wednesday 1:12
130:25
week 21:16 37:2
51:25 53:5
54:21 62:6
74:5,5,21,25
75:13 79:3
169:10 216:22
weekend 31:20
139:16 267:7
weeks 20:11
64:18
Weiss 1:11 3:13
5:24 6:2 21:16
21:23,24 52:3
85:21 104:17
106:6,15 107:4
126:10,10
135:9 143:14
239:14
went 86:17 87:3
89:11 104:18
133:11 195:7,8
230:25
weren't 99:19
216:4
West 3:5
we're 78:16
146:2,24
204:11 209:16
229:17 230:18
230:23 240:22
247:3
we've 9:5 79:8
95:18 110:8
115:11 124:5
151:16 152:22
155:24 156:24
158:11 161:18
163:21 189:6
197:22 202:22
220:3
Wharton 1:11
3:13
WHEREOF
274:18
wholly 28:5
61:17 66:18
93:20
willingness 33:3
34:21
Willkie 4:9 5:11
wish 72:10,12
273:5
withdraw86:8
90:15 178:19
withdrawing
188:17
withdrawn 9:21
20:15 29:23,25
32:3 38:18
41:5,17 60:17
62:16 73:15
77:18 83:19
96:10 98:14
104:11 109:13
109:15 125:3
132:3 141:15
148:4 158:6
167:8 168:24
178:7 179:5
witness 1:10 6:2
37:9 46:20
48:14,17 55:2
57:5,8,15,17
62:19 63:25
64:11 72:9
81:2 90:7
100:7 110:11
111:6 115:22
115:24 119:13
124:6,9 130:5
132:6 138:14
138:18 139:7
144:13,18,22
145:10,20,25
146:14,20
147:4 166:19
173:14 181:11
189:5,9 193:13
209:18 210:15
210:17 229:3
245:17 248:5
250:22 251:19
258:24 264:10
266:12,18
271:5 272:1
273:23 274:10
274:13,18
275:3
word 27:4 168:2
168:9 235:3
245:13,14
246:18
words 29:19
114:16 126:6
160:2,3,5,7
161:7,11
190:25 203:17
work 8:2 11:12
11:20 17:3,8
20:20 65:6,10
120:9 121:12
143:8,9 151:23
151:24 152:5
152:13,18
154:17 156:12
177:18 180:4,7
236:25,25
237:7 249:21
263:25 264:3
264:22
worked 13:23,24
14:9,17 17:17
working 13:20
17:13 18:4
30:16 204:25
works 22:9
184:16,21
world 68:16,17
244:9,14
worth 125:8,13
227:5,6 251:13
worthless 43:8
228:15
wouldn't 97:11
176:6
writing 96:25
155:3,13
206:20
written 160:2,3
wrote 148:24
X
X275:2,10 276:2
277:2
Y
Y6:3 139:4
yeah 12:16 28:18
41:3 45:22
47:20 49:18
52:21 68:7
74:23,25 80:17
83:5 102:14
129:9 131:13
145:10 163:3
168:10 173:3
176:3 190:24
191:19 193:11
199:4 204:14
228:6 238:11
240:5 245:11
247:23 249:9
249:17 250:23
255:8,19
year 17:18 18:25
25:7 45:21
50:9
years 18:3 247:2
Yep 13:10 163:6
yesterday 9:15
13:5
York 1:2,12,12
1:14 2:16,16
3:5,5,10,10,15
3:15,22,22 4:5
4:5,10,10,15
4:15,19,19
274:3,4,8
Z
Zelter 22:11
123:2 170:17
175:19 238:20
238:21,24
239:15,23
240:10,19
241:18 242:3
246:9
Zelter's 240:6
Zuroff 170:7,7
Z-u-r-o-f-f 170:8
$
312
$107.5 220:6
224:16
$110 118:6,17
125:8,13,14,20
$150 195:5
$550 108:10
109:7 111:14
112:6,16 115:2
$85 105:17
109:22
0
000001 51:13
275:23
00000127 130:16
277:5
00000144 130:16
277:5
00000219 175:8
277:10
00000233 94:10
276:14
00000245 94:10
276:15
000004 51:14
275:23
000014 57:2
276:5
000022 57:3
276:6
000041 93:7
276:12
000050 93:8
276:13
0001 60:10
000141 116:8
276:20
000151 116:9
276:20
000230 103:6
276:17
000241 103:7
276:17
000254 126:23
276:23
000264 126:24
276:23
1
1 9:8 17:18
41:16,18,21
51:9 73:5
230:21
1st 42:3 221:25
230:17 233:11
1:29 139:3
10 27:17,25 28:2
28:11 29:8
74:5,25 79:3
93:3 216:8,22
229:18 246:12
10-13800 1:6
100 14:15 202:5
229:17 245:19
246:12,19
10019 3:5
10019-6064 3:15
10019-6092 4:19
10019-6099 4:10
10019-6799 4:15
10020-1007 2:16
10036-6797 3:22
10104-0050 4:5
10104-3300 3:10
103 276:17
1095 3:21
11 1:4 94:6
100:3 103:13
103:14,22
108:23 136:19
160:17 197:23
198:4,13,22
199:24 208:12
208:17 209:21
246:23 252:24
253:17 255:15
110 117:20
116 276:20
117.5 101:11
102:5,15
12 102:25 103:22
104:2,10,12
107:22 115:4
275:15
12:41 138:21
1221 2:16
126 276:23
127 130:20
1285 1:11 3:15
1290 3:9 4:5
13 27:17 32:23
116:2,12 126:5
13th 175:15
240:11,20
130 277:5
1301 4:19
14 56:23 65:17
126:17 127:3
14th 3:5
140 277:7
141 116:3
142 277:9
144 130:21
15 90:21 130:13
130:20
150 194:2,20
195:2
151 116:4
16 140:3 150:17
150:18 152:23
157:19 163:21
166:11 167:2
167:14 247:25
248:9 253:3
16th 163:16
161 277:13
1633 4:14
17 46:24 94:15
102:16 103:5
103:24 108:19
108:20 142:10
162:11 163:8
164:13,25
165:3,22
228:23 230:10
264:7,11,20
276:17
17th 94:22,24
95:3 138:9
162:23 163:5
163:16 164:2
165:2,4,14
171 67:4
173 277:13
175 277:10
18 67:11 163:2
175:4 240:8
277:13
18th 1:12
187 277:14
189 275:6
19 26:2 140:6
157:19 168:17
275:17 277:7
19th 41:5 139:17
157:22,24
169:10 267:8
274:19
19802 1:16
2
2 12:20 13:2
41:14 50:6
57:2 65:21
107:21 115:3
141:3 191:12
247:2 260:8,13
260:15 276:5
2nd 69:21 70:13
71:3
20 14:20,21
214:3 246:13
200 52:18
20005-5763 2:5
2001 17:10
2002 17:9,9
2006-4 189:24
2007 13:21 14:9
17:4 41:16,18
44:14 147:15
148:6 243:5
249:20,23
2007-C1 189:21
2008 244:4
2010 1:13 20:4
26:2 36:20
41:15,19,22
44:2 51:13
57:2 65:21
69:21 71:3,22
73:5,17 86:3
86:12 93:7
102:16 103:5
103:24 116:7
126:22 131:15
133:5 140:6
157:19 168:18
177:4 185:5,22
216:5,8,11,16
271:15 274:19
275:22 276:5
276:12,17,19
276:22 277:7
211 275:7
219 175:6
22 36:20 56:23
65:18 71:22
73:17 86:3
116:7 276:19
277:14
22nd 71:25
72:15 74:21
78:13 79:4
80:3 86:6 91:7
91:17,19
109:17 211:13
215:7 216:22
217:4,18 218:2
218:6,11 219:2
219:10
230 103:2
2323 2:21
233 94:7
238 100:6
24th 142:20,25
241 103:2
242 275:8
245 94:7
25 46:12,15
51:13 275:22
25th 69:21 70:13
71:3
250 14:16
254 126:18
26 275:20
26th 2:16
264 126:19
266 275:9
267 275:5
28 86:4,12
313
29 126:22 276:22
3
3 19:17,24
118:20 146:17
153:7,25
155:25 158:13
163:14 164:16
166:11,24
167:13 263:7
30 134:13 272:14
30(b)(6) 21:2
22:22 23:13
59:19 60:4
62:18 114:23
132:6,24
156:10,22
189:10 220:25
250:22
300 2:10
31 3:5
3311 142:11
3312 142:12
3533 71:8
3548 71:9
4
4 51:10 93:6
248:3 276:12
277:13
4.275 67:5
4:49 270:7
41 93:4
44 275:21
48 52:9
5
5 44:19,25 99:24
100:5 105:2
117:13 162:17
190:20 195:4
247:25 263:11
5-mile 265:20
50 93:4 101:12
102:19 105:13
117:19 125:7
125:21 220:5
229:17
500 244:7
51 275:23
52nd 3:5
550 109:6 226:15
56 276:6
6
6 18:3 51:8,17
60:9 117:14
118:18 136:24
275:5
6/13/10 175:8
277:10
6/17/10 94:9
103:25 276:14
6/22/10 104:3
6/29/10 127:5
60654 2:11
61.82 93:23
62 68:2,12
655 2:5
7
7 20:4 55:19
56:21 65:17
68:15 131:15
133:5
7th 130:25
7/17/10 142:14
277:8
7/7/10 130:15
277:4
700 2:21
71 276:8
75219 2:21
787 4:10
8
8 71:7 73:13
78:11,21 79:8
89:17,20 90:25
8/17/2010 9:18
8:44 94:15
82.18 101:5
85 105:10 107:5
276:10
9
9 85:5,13 89:25
90:4,11,17,17
275:13
9:06 1:13
90 177:21 180:7
185:23 198:25
90-day 186:2,4
90-some 198:19
93 276:13
94 276:15
975 52:16
EXHIBIT B
1
-----------------------------*
In re: Chapter 11
INNKEEPERS USA TRUST, et al., CASE NO.
Debtors. 10-13800 (SCC)
-----------------------------*
Deposition of MICHAEL LASCHER,
called as a witness for examination,
held at the offices of Dechert LLP, 1095
Avenue of the Americas, New York, New
York, on Thursday, the 19th day of
August 2010, commencing at 12:18 p.m.,
before Jennifer Ocampo-Guzman, a
Certified Livenote Reporter and Notary
Public of the State of New York.
JOB NO. 19803
2 (Pages 2 to 5)
2
1
3
KIRKLAND & ELLIS, LLP
4 Attorneys for Debtors and
Debtors-in-Possession
Washington, DC 20005-5763
6
BY: JEFFREY M. GOULD, ESQ.
7 jgould@kirkland.com
8 - and -
Attorneys for Debtors and
10 Debtors-in-Possession
300 North LaSalle Street
jeffrey.pawlitz@kirkland.com
13
14
HAYNES and BOONE, LLP
15 Attorneys for Midland Loan
Services, Inc.
17
BY: LENARD M. PARKINS, ESQ.
18 Lenard.parkins@haynesboone.com
19 - and -
Attorneys for Midland Loan Services, Inc.
Dallas, Texas 75219
22
BY: MARK ELMORE, ESQ.
24
25
3
1
3
KILPATRICK STOCKTON, LLP
4 Attorneys for Trimont Real Estate
Advisors
6
BY: MICHAEL D. CRISP, ESQ.
7 mcrisp@KilpatrickStockton.com
8
BRYAN CAVE, LLP
lawrence.gottesman@bryancave.com
12
13 PAUL, WEISS, RIFKIND,
WHARTON & GARRISON, LLP
14 Attorneys for Apollo Investment
Corporation
16
BY: ANDREW J. EHRLICH, ESQ.
-and-
18 BY: AMY P. DIETERICH, ESQ.
adieterich@paulweiss.com
19
20
DECHERT, LLP
23 BY: KEVIN J. O'BRIEN, ESQ.
kevin.obrien@dechert.com
24 -and-
BY: BRIAN E. GREER, ESQ.
25 Brian.greer@dechert.com
4
1
3
MORRISON & FOERSTER, LLP
4 Attorneys for Unsecured Creditors
Committee
6
BY: PAUL GALANTE, ESQ.
7 pgalante@mofo.com
8
Attorneys for Appaloosa Investment L.P. I
11
BY: BRIAN R. FAERSTEIN, ESQ.
13
KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP
1633 Broadway
dfliman@kasowitz.com
17
18
19
20
21
22
23
24
25
5
1
2 M I C H A E L L A S C H E R, having been
3 duly sworn, was examined and testified as
4 follows:
5 EXAMINATION BY
6 MR. PARKINS:
7 Q. Would you state your name, please.
8 A. Michael Lascher.
9 Q. And, Mr. Lascher, how have you
10 presently employed?
11 A. I'm an employee of Lamco.
12 Q. Lamco is an affiliate of Lehman
13 Brothers?
14 A. Yes.
15 Q. Before we get further in the
16 deposition I think we will go around the
17 table and make appearances for your
18 deposition.
19 MR. PARKINS: My name is Lenard
20 Parkins. I'm with the law firm of
21 Haynes and Boone and next to me is Mark
22 Elmore, and we represent Midland Loan
23 Services, Inc.
25 Bryan Cave, LLP on behalf of the LNR
3 (Pages 6 to 9)
6
1 Lascher
2 Partners, LLC.
4 Ellis on behalf of the debtors.
5 MR. PAWLITZ: Jeff Pawlitz,
6 Kirkland & Ellis on behalf of the
7 debtors.
8 MR. GALANTE: Paul Galante,
9 Morrison & Foerster for the Unsecured
10 Creditors Committee.
11 MR. CRISP: Mike Crisp from
12 Kilpatrick Stockton for Trimont as the
13 special servicer on the mezz loans.
15 Willkie Farr & Gallagher for Appaloosa
16 Investment L.P. I.
18 Benson, Torres & Friedman on behalf of
19 Five Mile Capital.
20 MS. DIETERICH: Amy Dieterich on
21 behalf of Paul Weiss for Apollo.
22 MR. EHRLICH: Andrew Ehrlich, also
23 Paul Weiss, on behalf of Apollo
24 Investment Corporation.
25 MR. GREER: Brian Greer of Dechert
7
1 Lascher
2 for Lehman ALI.
3 MR. O'BRIEN: Hopefully you know me
4 by now. Kevin O'Brien of Dechert.
5 BY MR. PARKINS:
6 Q. Mr. Lascher, I'm going to be asking
7 some questions and other lawyers are going to
8 be asking you some questions this afternoon
9 and my first question is, have you ever been
10 deposed before?
11 A. Yes.
12 Q. So you understand that when people
13 ask you questions you need to respond
14 verbally so that the court reporter can take
15 down your answers?
16 A. Yes.
17 Q. If there's any issues of not
18 understanding my questions or I'm sure other
19 counsel's questions, let us know, we will try
20 to clarify the questions for you.
21 Do you understand that?
22 A. Yes.
23 Q. And we will attempt, all of us, try
24 to not to talk over each other. In the
25 enthusiasm in asking and answering questions
8
1 Lascher
2 it sometimes happens okay?
3 A. Okay.
4 Q. Lastly, there will be times when
5 your counsel or other may interject
6 objections and those have to be put on the
7 record and handled here as we go along. But
8 we will deal with those as it's happening.
9 Is that acceptable?
10 A. Yes.
11 MR. EHRLICH: Len, let me just
12 state for the record before we start
13 that Mr. Lascher is appearing today
14 subject to all of the objections, I this
15 we filed two sets in response to
16 different notices of deposition, two
17 objections, two sets of objections in
18 this matter.
19 MR. PARKINS: We got them both.
20 Would you mark this Exhibit 1.
21 (Exhibit Lascher-1, Amended Notice
22 of Deposition of Corporate
23 Representative of Lehman ALI, Inc. and
24 subpoena duces tecum, marked for
9
1 Lascher
2 Q. Mr. Lascher, I've handed you what
3 I've marked as Exhibit 1. It's entitled
4 Amended Notice of Deposition of Corporate
5 Representative of Lehman ALI, Inc. and
6 subpoena duces tecum.
7 Are you here today as the
8 representative of Lehman ALI, Inc.?
9 A. Yes.
10 Q. What did you do to prepare for
11 today's deposition?
12 A. Spoke with my attorneys.
13 Q. Did you review documents of Lehman
14 ALI, Inc.?
15 A. Some of them, yes.
16 Q. Did you talk to other employees of
17 Lehman ALI, Inc.?
18 A. Yes.
19 Q. Did you review documents that were
20 produced to Midland in response to its
21 document requests?
22 A. Yes.
23 Q. For ease of getting through this,
24 I'm going to use Lehman ALI, Inc. as Lehman
25 for the purposes of this deposition only,
4 (Pages 10 to 13)
10
1 Lascher
2 okay, so I don't get tied up.
3 A. Okay.
4 Q. Is that acceptable?
5 A. Yes.
6 Q. If it changes in the context of our
7 questioning other than in the context of
8 Lehman ALI, Inc., we will try to clear that
9 up as we go, okay?
10 A. Okay.
11 Q. Thank you. Lehman and Innkeepers,
12 sometimes I'll refer to them as the debtors,
13 have signed a plan support agreement which we
14 will call a PSA; is that correct?
15 A. Yes.
16 Q. And I believe yesterday in Lehman's
17 bankruptcy case, the Lehman bankruptcy court
18 approved Lehman's authority to enter into the
19 PSA; is that correct?
20 A. Yes.
21 Q. Among other relief requested with
22 respect to that transaction?
23 A. Yes.
24 Q. It approved Lehman's authority to
25 enter into a transaction with Apollo
11
1 Lascher
2 Investment Corporation, correct?
3 A. Correct.
4 Q. Were you present in court
5 yesterday?
6 A. Yes.
7 Q. You also submitted a declaration in
8 support of those motions, didn't you?
9 A. Yes.
10 MR. PARKINS: Mark this as
11 Exhibit 2, please.
12 (Exhibit Lascher-2, E-mails, Bates
13 Nos. LEH-ALI 005298 and LEH-ALI 005299,
16 I've marked as Exhibit 2. It is a two-page
17 document with Bates stamp numbers from Lehman
18 ALI 5298 and 5299. Would you take a moment
19 to review that, please.
20 A. Yes.
21 Q. Just let me know when you are done.
22 A. Okay.
23 Q. Mr. Lascher, were you involved in
24 the negotiation of the PSA from the Lehman
25 side?
12
1 Lascher
2 A. Yes.
3 Q. Describe for me your involvement.
4 A. I was involved in most, if not all,
5 of the discussions about the PSA.
6 Q. Were you the person most
7 responsible for those negotiations from the
8 Lehman side?
9 A. Yes.
10 Q. So you were in charge of those
11 negotiations?
12 A. Yes.
13 Q. When did you first become involved
14 in negotiations with the debtors with respect
15 to the PSA?
16 A. We started having conversations
17 with Innkeepers about their filing and
18 potentially entering into a plan support
19 agreement in April of this year.
20 Q. And when did you first have
21 discussions with Apollo or I'll call them AIC
22 -- I'm going to use Apollo to be AIC for the
23 purposes of this deposition -- with respect
24 to a PSA?
25 A. Around the same time.
13
1 Lascher
2 Q. Was your law -- was Dechert your
3 law firm during the entirety of the
4 representation?
5 A. Yes.
6 MR. EHRLICH: When you say his law
7 firm, you mean Lehman's law firm?
8 MR. PARKINS: Lehman's law firm.
9 A. Yes, they were.
10 Q. In the context of the negotiations
11 if a proposal was made on behalf of Lehman
12 through your law firm Dechert, do you know
13 whether that it would have been blessed by
14 you or at least discussed with you before
15 such an offer was made?
16 MR. EHRLICH: Object to the form.
17 A. It depended on the circumstance.
18 In some -- in many cases, yes. In certain
19 cases, no.
20 Q. Well, let's go back to Exhibit 2.
21 A. Okay.
22 Q. This is an e-mail from, at the top
23 of the page from Brian Greer at Dechert to
24 Joseph Glatt with a cc to a number of people,
25 including you.
5 (Pages 14 to 17)
14
1 Lascher
2 The letter -- the e-mail reads,
3 Joseph has requested below are the terms on
4 which Lehman will resolve the open issues
5 with Apollo. The following remains subject
6 to client review and comment and this e-mail
7 is subject to Rule 408. All over caveats
8 apply. And then there's a number of bullet
9 points under that. Do you see that?
10 A. Yes.
11 Q. Was this e-mail authorized to be
12 sent?
13 A. I don't remember.
14 Q. Did you ever see this e-mail before
15 today?
16 A. In that I'm copied on it, but I
17 don't remember it.
18 Q. This e-mail was dated 4 or 5 days
19 before the filing of the Innkeepers
20 bankruptcy; is that correct?
21 A. Yes.
22 Q. And during this period of time
23 there were ongoing regular negotiations
24 between Lehman and Innkeepers and Apollo with
25 respect to the PSA; is that correct?
15
1 Lascher
2 A. We were having negotiations with
3 Innkeepers on the PSA and we were having
4 negotiations with Apollo on our sale
5 transaction, yes.
6 Q. Well, let's look at this e-mail
7 here.
8 First bullet point, mutual
9 termination of after 45 days from petition
10 date. I take it that's the Innkeepers
11 petition date?
12 A. That is.
13 Q. AIC will not be signatory to the
14 PSA. Do you see that?
15 A. Yes.
16 Q. But it was contemplated in earlier
17 documentation exchanged by the parties that
18 Apollo would be a signatory to the PSA. Do
19 you recall that?
20 MR. O'BRIEN: Objection.
21 You can answer.
22 Q. Do you recall that?
23 A. Yes, I do.
24 Q. Do you know why Lehman through its
25 counsel put this bullet point in here on this
16
1 Lascher
2 date?
4 Q. Did you instruct them to put this
5 bullet point in here?
7 Q. Do you view this bullet point as
8 significant in your mind with respect to the
9 negotiations of the PSA?
10 MR. O'BRIEN: Object to the form.
11 A. No.
12 Q. Do you view whether AIC was a
13 signatory to the PSA significant or not?
14 MR. O'BRIEN: Object.
15 A. Isn't that what you just asked me?
16 Q. I'm asking it again. Do you view
17 it as significant?
18 A. Do I view it -- do I view
19 whether --
20 Q. Whether they were signatory to the
21 PSA significant or not?
22 MR. O'BRIEN: Same objection.
23 A. No.
24 Q. The next line, AIC or an affiliate
25 of AIC shall be the purchaser of the new
17
1 Lascher
2 equity. Do you see that?
3 A. Yes.
4 Q. Lehman will not consent to a
5 third-party purchaser?
6 A. Correct.
7 Q. Was that Lehman's position on the
8 day this was sent out?
9 A. It was our position generally.
10 Whether it was on that specific day, I don't
11 know.
12 Q. So this is an accurate statement of
13 Lehman's position?
14 A. Correct.
15 Q. As of this date, are the rest of
16 the bullet points an accurate statement of
17 Lehman's position?
18 MR. O'BRIEN: You're asking just
19 about the bullet points.
20 MR. PARKINS: Yes.
21 A. The bullet points below that one,
22 right?
23 Q. All the bullet points, mutual, from
24 all the bullet points --
25 A. Oh, okay. So mutual termination,
6 (Pages 18 to 21)
18
1 Lascher
2 yes.
3 AIC not being a signatory, yes.
4 Yes, on AIC being the purchaser of
5 the equity.
6 Materiality thresholds, I don't
7 remember where we came out on that point.
8 Yes, on AIC's counsel fees.
9 On the -- on the language regarding
10 the guaranty, this was a proposal at some
11 point.
12 Q. With respect to the guaranty issue,
13 this involved a guaranty that had been
14 executed by Apollo in 2007 as part of the
15 acquisition transaction. Are you aware of
16 that?
17 A. Correct, yes.
18 Q. And part of the negotiations that
19 was going on with Apollo, which was copied on
20 the company also, was a method to release
21 Apollo from liability under that guaranty; is
22 that correct?
23 A. No.
24 Q. No?
25 Okay. Well, let's look at this
19
1 Lascher
2 document and see what it says, this e-mail
3 from your counsel.
4 A. Okay.
5 Q. Especially starting three lines
6 from the bottom of that, four lines really,
7 in addition Lehman shall not object to the
8 settlement or termination of the guaranty so
9 long as such settlement or termination occurs
10 at least 45 days after the petition date.
11 Do you see that sentence?
12 A. Yes, I do.
13 Q. What settlement or termination of
14 the guaranty was in your mind on this date
15 that this refers to?
16 A. If Apollo was to come to terms with
17 Midland on the settlement of the guaranty,
18 that I would -- that Lehman wouldn't object
19 to that.
20 Q. And why would Lehman believe it had
21 a reason to object?
22 A. I didn't necessarily think we did.
23 Q. Well, let's go earlier on in this
24 document.
25 In this paragraph here with respect
20
1 Lascher
2 to the guaranty, it says, Lehman shall not
3 object to Innkeepers' performance of the
4 primary obligations underlying the required
5 capital improvements guaranty dated as of
6 June 29, 2007.
7 Do you see that?
8 A. Yes.
9 Q. Did you review that guaranty that's
10 referred to here?
11 A. I haven't looked at it in years.
12 Q. Did you know how much obligation at
13 least the company thought Apollo had as of
14 this date with respect to that guaranty?
15 A. You mean a dollar amount or --
16 Q. Yes.
17 A. They -- they did -- they had an
18 idea, yeah.
19 Q. Do you recall what that number is?
20 A. No.
21 Q. Did you ever have discussions with
22 anyone from the company regarding what that
23 number of exposure of Apollo was?
24 A. Yes.
25 Q. In the context of these
21
1 Lascher
2 negotiations with the debtors and Apollo,
3 with respect to the -- related to the PSA,
4 who else negotiated on behalf of Lehman?
5 A. Say that again, please.
6 Q. In the context of these
7 negotiations with Innkeepers and Apollo, who
8 else was negotiating this on the Lehman side,
9 other than you?
10 A. It was Susanne Frey and Nancy
11 Shanik, who is an A & M employee.
12 Q. But you had ultimate responsibility
13 and authority with respect to those
14 negotiations; is that correct?
15 A. I mean I was in the middle of those
16 negotiations. I mean in terms of our
17 technical chain of command, Nancy Shanik, who
18 works for A & M is my boss. So --
19 Q. And A & M stands for Alvarez &
20 Marsal?
21 A. Correct.
22 Q. And what role does Alvarez & Marsal
23 have with respect to being your boss?
24 A. They are members of -- they are
25 employees of Alvarez & Marsal who work within
7 (Pages 22 to 25)
22
1 Lascher
2 the commercial real estate area at Lehman and
3 oversee what we did.
4 Q. Did you report to this person with
5 respect to these negotiations concerning the
6 PSA?
7 A. Yes.
8 Q. And before this e-mail was sent out
9 by counsel for Lehman, was that discussed
10 with Alvarez & Marsal? Did you have
11 discussions with Alvarez & Marsal?
12 MR. O'BRIEN: You mean the top
13 e-mail in Exhibit 2?
14 MR. SOLOMON: Yes, the top e-mail.
15 A. No.
16 Q. What did you -- when did you have
17 discussions with Alvarez & Marsal in the
18 context of seeking approval to enter into the
19 PSA?
20 A. Well, Nancy Shanik works within our
21 real estate group and is, you know,
22 day-to-day a part of what we do, so she was
23 aware of the ongoing discussions. She just
24 wasn't on every phone call or e-mail, so, you
25 know, in terms of specific terms it was
23
1 Lascher
2 fluid, you know, a fluid discussion with her.
3 Q. So it's your testimony, let me
4 clear it up before we move on, that you
5 didn't authorize this e-mail to be sent by
6 Dechert before it was sent, did you?
7 A. I think I told you I don't -- I
8 don't really remember. I don't think so.
9 Q. I'm sorry. I didn't mean to talk
10 over you. It's my fault.
11 A. It's okay.
12 Q. But you agree that this
13 represented, at least on this date, Lehman's
14 position with respect to the transaction on
15 these points, correct?
16 A. Yeah, I would say it's likely he
17 did.
18 MR. O'BRIEN: I think he testified
19 he wasn't sure about one or more bullet
20 points to be accurate.
21 Q. Now, this guaranty language,
22 generally the concept, as I understand it,
23 and tell me if I'm correct, was that if the
24 DIP financing being provided by Five Mile
25 paid for the project improvement plan or the
24
1 Lascher
2 PIPs. You understand what a PIP is?
3 A. Yes.
4 Q. The PIPs, that Lehman would view
5 that as satisfying the guaranty that Apollo
6 had entered into. Is that basically what was
7 being discussed?
8 A. No.
9 Q. Okay. Well, tell me what was being
10 discussed in the context of this paragraph?
11 A. What was being discussed is that if
12 Apollo was able to come to some agreement
13 with its lender, meaning Midland, on the
14 guaranty, that I wouldn't get in the way.
15 Meaning Lehman wouldn't stand in their way or
16 object to that happening, and that as long as
17 there were funds available, whether it be
18 from a DIP or cash flow, in order to do the
19 PIP work, we wouldn't stand in the way of
20 their doing that either.
21 Q. Now, in your recollection during
22 the various iterations of documents that were
23 exchanged by the various parties, and we will
24 look at them in particular in a while --
25 A. Uh-huh.
25
1 Lascher
2 Q. -- do you recall testimony that
3 Apollo limiting or coming off its guaranty
4 had come up time and time again in
5 negotiations as reflected in the various
6 documents?
7 A. I remember that it --
9 form.
10 A. I remember that it came up, yes.
11 Q. And were you involved in those
12 discussions of that point with Apollo in the
13 context of negotiations that led up to the
14 signing of the PSA and the Apollo Lehman term
15 sheets?
16 A. I'm sorry, say that again.
17 Q. Were you involved personally in the
18 discussions regarding that point?
19 A. The point of?
20 MR. O'BRIEN: Which point?
21 Q. The point of Apollo getting off its
22 guaranty liability?
24 form.
25 A. I was involved in discussions about
8 (Pages 26 to 29)
26
1 Lascher
2 their guaranty, yes.
3 Q. And this was since the commencement
4 of the negotiations regarding this PSA which
5 you said started sometime in April of 2010;
6 is that correct?
7 A. I mean there's two -- there's two
8 separate documents here and our document with
9 Apollo is, you know, represents the sale
10 transaction. It's all part of the PSA so on
11 some level I'm just getting confused when you
12 are asking me about this because really our
13 discussions with Apollo were about this sale
14 transaction.
15 Q. And you say they weren't involved
16 in the negotiations that Innkeepers was
17 involved in?
19 A. No, I'm not saying they weren't
20 involved in any of those discussions but in
21 terms of my discussions with them about a
22 guaranty, they were my discussions with them
23 about their guaranty.
24 Q. Are you testifying that those
25 discussions with Apollo with respect to this
27
1 Lascher
2 guaranty weren't part of an integrated single
3 document for such of the negotiating period
4 before the PSA was signed?
6 A. It was all one document at one
7 point.
8 Q. Almost up to the time it was signed
9 it remained one document, isn't that your
10 recollection?
11 A. It changed at some point and I
12 don't remember.
13 Q. About a week before the filing, is
14 that your recollection?
17 MR. PARKINS: Mark this.
18 (Exhibit Lascher-3, Required
19 Capital Improvements Guaranty, marked
21 MR. O'BRIEN: Do you have any more
22 of those, Len?
23 MR. PARKINS: They're coming
24 around.
25 I will wait a second before asking
28
1 Lascher
2 any more questions.
3 Q. I've handed you what's been marked
4 as Exhibit 3. It's a document entitled
5 Required Capital Improvements Guaranty. Do
6 you see that?
7 A. Yes.
8 Q. Look back with me at Exhibit 2.
9 A. Okay.
10 Q. And the first two lines under the
11 guaranty language it refers to required
12 capital improvements guaranty dated as of
13 June 29, 2007?
14 A. Yes.
15 Q. As you look now at Exhibit 3,
16 that's the date of this document, marked as
17 Exhibit 3, correct?
18 A. Yes.
19 Q. As far as you know, is this the
20 guaranty referred to in this Exhibit 2?
21 A. Yes.
22 (Exhibit Lascher-4, Handwritten
23 notes, Bates Nos. LEH-ALI 004721 through
29
1 Lascher
2 MR. PARKINS: Off the record.
5 has been marked as Exhibit 4.
6 A. Yes.
7 Q. It is a series of documents with a
8 Lehman production Bates stamp numbers 4721
9 through 4731. Do you see that?
10 A. Yes.
11 Q. Would you take a moment and review
12 these, please. I want to ask you some
13 questions about them.
14 MR. O'BRIEN: You want him to look
15 at every single page?
17 A. Okay.
18 Q. Mr. Lascher, you're an attorney by
19 education; is that correct?
20 A. Yes.
21 Q. And you worked as an attorney for
22 5 years, I believe, at Cadwalader here?
23 A. Yes.
24 Q. And did you have an area of
25 specialization?
9 (Pages 30 to 33)
30
1 Lascher
2 A. Real estate.
3 Q. And since leaving Cadwalader you
4 work for Lehman; is that correct?
5 A. Correct.
6 Q. In your experience, either at
7 Cadwalader or Lehman, have you been involved
8 in bankruptcy cases before?
9 A. No.
10 Q. Have you ever been involved in
11 out-of-court restructurings?
12 A. Yes.
13 Q. And is that at Cadwalader or Lehman
14 or both?
15 A. Lehman.
16 Q. And describe your job
17 responsibility at Lehman in the context of
18 restructurings?
19 MR. O'BRIEN: Currently?
20 MR. PARKINS: Currently.
21 A. I oversee our hotel investments and
22 a lot of those hotel investments are in
23 various stages of workout and foreclosure.
24 So depending on the exact deal, I'm, you
25 know, involved more day-to-day or just in an
31
1 Lascher
2 oversight capacity.
3 Q. And how long have you been in that
4 responsibility with respect to Lehman's hotel
5 investments?
6 A. About, since the beginning of this
7 year.
8 Q. Beginning of 2010?
9 A. Correct.
10 Q. Prior to that time what was your
11 job responsibility at Lehman?
12 A. Starting with? When I started at
13 Lehman?
14 Q. Yes.
15 A. So in mid 2004 I started Lehman in
16 a group called large loan origination, which
17 basically originated, structured and closed
18 large commercial real estate loans, many of
19 which were securitized and, you know, and/or
20 syndicated. And so I worked in that area
21 through the bankruptcy, and then after the
22 bankruptcy I was an in-house attorney from
23 September of '08 until just before, you know,
24 until the end of last year essentially. And
25 in certain instances, you know, maintained my
32
1 Lascher
2 deal role that I had from prior to the
3 bankruptcy.
4 Q. In the context of restructurings,
5 with respect to hospitality, that
6 responsibility has really started since you
7 took on this most recent position at Lehman;
8 is that correct?
9 A. Correct.
10 Q. Looking at Exhibit 4 --
11 A. Yep.
12 Q. -- are any of these handwritten
13 notes on any of these pages yours?
14 A. Yes.
15 Do you want me to give you the
16 numbers?
17 Q. Yes.
18 A. Just the last two numbers okay?
19 Q. Yes.
20 A. 24, 25, 26, 27.
21 Q. Do you recognize the handwriting
22 from other people?
23 A. Yes.
24 Q. Okay. Can you tell me who they
25 are?
33
1 Lascher
2 A. Susan Frey.
3 Q. And identify them by number,
4 please. So it's easier --
5 A. On 21, 22, 23. Those look like
6 Susanne Frey's notes.
7 And 28, 29, 30, 31 I believe are
8 from Sam Gleason.
9 Q. Who?
10 A. Sam Gleason who is a junior -- who
11 is an associate in our group who is
12 supporting us on the deal.
13 Q. Go with me to the page that has
14 Bates stamp number 4726 on it.
15 A. Okay.
16 Q. The top of that page says
17 "Innkeepers Meeting 5/20"?
18 A. Correct.
19 Q. I take it, it was 5/20 of this
20 year, correct?
21 A. Yes.
22 Q. Do you recall where this meeting
23 was?
24 A. No.
25 Q. Do you recall who was there from
10 (Pages 34 to 37)
34
1 Lascher
2 Lehman?
3 A. No.
4 Q. Well, you were there from Lehman?
5 A. I would imagine I was.
6 Q. You don't recall -- you don't
7 recall if you were alone in that meeting from
8 Lehman?
9 A. I just don't remember which meeting
10 it was.
11 Q. Do you recall whether your lawyers
12 from Dechert were at this meeting with you?
14 Q. Who was there from Innkeepers?
16 Q. Well, was Marc Beilinson there from
17 Innkeepers?
18 A. Based on there's a reference to MB
19 on this page I would -- I would guess that he
20 was.
21 Q. Well, without guessing from the
22 Innkeepers side who else would you have
23 written down initials for MB for?
24 A. He would have been it.
25 Q. So was there anyone else from the
35
1 Lascher
2 Innkeepers side at this meeting on 5/20?
4 Q. So we know at least you were there
5 and Mr. Beilinson was there, correct?
6 A. Yes.
7 Q. Let's look at some of the line
8 items here, 1, 2, 3 and 4. Under risks it
9 says per MB, per Mr. Beilinson, correct?
10 A. Yes.
11 Q. LB and Apollo need to agree to a
12 capitalization?
13 A. Yes.
14 Q. Now, Mr. Beilinson identified that
15 as a risk?
16 MR. O'BRIEN: Is that right,
17 Michael? What do you remember?
18 A. Yes.
19 Q. Or is this your interpretation of
20 what Mr. Beilinson said?
21 A. It's what I wrote down.
22 Q. So did Mr. Beilinson say, Mr.
23 Lascher, these are the risks I see? Do you
24 recall?
25 A. I don't --
36
1 Lascher
2 MR. O'BRIEN: Object. Object.
3 Q. You can answer.
4 A. I don't really remember.
5 Q. The second is "impaired accepting
6 class"?
7 A. Yes.
8 Q. Do you know what "impaired
9 accepting class" meant in the context of your
10 notes here?
11 A. Not exactly.
12 Q. Well, tell me what you understood
13 it to be at the time, as best you can recall.
14 A. I think it's having a class who's
15 not recovering at par vote in favor of a
16 plan.
17 Q. And who told you that at this
18 meeting, Mr. Beilinson?
19 A. Based on the notes it looks like
20 that, yes.
21 Q. Going back to number 1, what is
22 Apollo and Lehman need to agree to a
23 capitalization, what is your understanding of
24 what that meant?
25 A. What the debt and equity in the new
37
1 Lascher
2 company would look like, in a reorganized
3 company would look like.
4 Q. Why is Apollo on this line?
6 A. Because our plan was to sell them
7 half of the equity.
8 Q. Thank you.
9 Number 3, sub rosa new value plan,
10 Mr. Beilinson mentioned that to you?
11 A. Based on the notes it looks like
12 it.
13 Q. Is that a phrase that you use
14 commonly?
15 A. No.
16 Q. Do you know what sub rosa new value
17 plan means?
18 A. I have a good idea of what it
19 means.
20 Q. Tell me what it means in your own
21 words.
22 A. That it's due value plan, that what
23 we were trying to do would be -- could be
24 construed adds a new value plan even though
25 it was presented as one.
11 (Pages 38 to 41)
38
1 Lascher
2 Q. And that's because -- that's
3 because Apollo is going to end up with
4 50 percent of the equity in the restructured
5 company, correct?
7 Q. Is that your understanding?
8 A. Yes.
9 Q. What does sub rosa mean in the
10 context of this line item here?
11 A. That I thought was the part where I
12 said even though it's not presented as a new
13 value plan, it is one.
14 Q. Okay.
15 A. Or it could be construed as one.
16 Q. Well, it is true that under the
17 transaction you were negotiating, Apollo was
18 going to end up with 50 percent of the
19 equity, correct?
21 A. That's our plan.
22 Q. And it is true that at this time
23 and at the time of these meetings Apollo
24 owned 100 percent of the equity, ultimate
25 equity on it, correct?
39
1 Lascher
3 Q. So they were going to go from
4 100 percent equity owner to after this
5 transaction closed 50 percent equity owner,
6 correct?
8 A. At the end -- at the end of all the
9 different pieces, yes.
10 Q. And you are talking about pieces of
11 the entire deal that was being put together,
12 correct?
13 A. All the different pieces of the
14 transaction, yeah.
15 Q. Thank you.
16 Go to the next page, please, the
17 number 4727.
18 A. Okay.
19 Q. Could you tell me what the -- read
20 the first line to me, because I could not
21 make out what some of these words.
22 If LB and -- I couldn't make out
23 who that is.
24 A. Marriott.
25 Q. Marriott.
40
1 Lascher
2 A. Have plan support agreement in
3 place, Midland is the only major impediment.
4 Q. Per MB, I take it that's
5 Mr. Beilinson, plan is to ask for valuation
6 hearing early on?
7 A. Correct.
8 Q. I take it this is what he told you
9 and you took notes on that, correct?
10 A. That's likely, yes.
11 Q. And it goes down a couple of
12 spaces, Midland's attorneys will argue and it
13 has dash valuation, right, and it has dash
14 question mark?
15 A. Yeah, I didn't understand whatever
16 it was he said next.
17 Q. And the next one says, I take it,
18 subcon?
19 A. Correct.
20 Q. Do you know what subcon stands for?
21 A. Substantive consolidation.
22 Q. Do you have any idea what that
23 means?
24 A. Yes.
25 Q. What is that?
41
1 Lascher
2 A. That all the entities would be
3 collapsed into one case.
4 Q. And did you come to learn that in
5 the context of these negotiations or in your
6 experience in other restructurings?
7 A. I knew about it from, you know, we
8 get a these nonconsolidation opinions in real
9 estate loan transactions and at Cadwalader I
10 learned a little bit about it.
11 Q. Did you learn of the phrase sub
12 rosa a new value plan in the context of these
13 negotiations or elsewhere?
14 A. These negotiations.
15 Q. This is where you heard of that
16 phrase, correct?
17 A. Correct.
18 Q. And Mr. Beilinson told you that,
19 correct?
20 A. I don't know if he was the first
21 person to tell me that or if -- or my lawyer
22 -- I don't know.
23 Q. Well, it was certainly in your
24 notes from your meeting with Mr. Beilinson
25 here, right, we just read them?
12 (Pages 42 to 45)
42
1 Lascher
2 A. Correct.
3 Q. Okay. Artificial; is that right?
4 A. Uh-huh.
5 Q. Artificial and it has a comma.
6 What does artificial mean?
7 A. I think it says artificial
8 impairment.
9 Q. Artificial impairment?
10 A. I don't really know what that
11 means.
12 Q. So you just wrote down what
13 Mr. Beilinson said?
14 A. What somebody was saying. I don't
15 know if --
16 Q. Who else was there if it wasn't
17 Mr. Beilinson?
18 A. I told you, I don't remember who
19 else was there.
20 Q. Then it's sub rosa new val plan,
21 right?
22 A. Correct.
23 Q. So let me ask you, was the issue of
24 a sub rosa new value plan the subject of
25 discussions several times during this
43
1 Lascher
2 meeting?
3 A. It looks like it was.
4 Q. Go with me to the first page of
5 this exhibit, if you would, 4721.
6 A. Okay.
7 Q. This says 6/25, Innkeepers meeting?
9 MR. PARKINS: Sorry.
10 MR. O'BRIEN: It's not clear it
11 says that.
12 Q. Sorry. Can you read the top of --
13 the left-hand corner of this page, what do
14 you read it to say?
15 MR. O'BRIEN: I object. It's not
16 his handwriting, you're asking him to
17 speculate.
18 MR. PARKINS: I'm asking him to
19 read what he thinks it says.
20 MR. O'BRIEN: What's your guess?
21 A. I'm not 100 percent sure.
22 Q. So you can't read that. Does it
23 say -- can you read Innkeepers in that first
24 line?
25 A. Yes.
44
1 Lascher
2 Q. Does it look like 6/25 to you or
3 not?
4 A. It looks like it could say 6/25.
5 Q. Okay. The first line says, "DIP
6 cash collateral, consistent across lenders."
7 First phrase underlined. Do you see that?
8 A. I see it. I mean this is all hard
9 to read but.
10 MR. O'BRIEN: I object on that
11 basis.
12 Q. Were you at a meeting on June 25 --
14 Q. -- regarding Innkeepers?
16 Q. Do you have a calendar?
17 A. Do I have a calendar?
18 Q. Do you keep a calendar?
19 A. I have a calendar, yes.
20 Q. Did you produce your calendar?
21 A. I don't think so.
22 MR. PARKINS: I would like to see
23 the calendar so we can see who's at --
24 MR. O'BRIEN: We will take it under
25 advisement. It frankly falls way
45
1 Lascher
2 outside the scope of what the judge
3 articulated at our discovery conference.
4 MR. PARKINS: I want to know the
5 dates he was meeting on the PSA,
6 Counsel.
7 MR. O'BRIEN: I know you want to
8 know. I'm just saying it falls outside
9 the scope of what the judge ordered for
10 this case. But we'll take it under
11 advisement.
12 MR. PARKINS: We will send you a
13 letter to that effect so it's on the
14 record.
15 Q. Do you recall a meeting where the
16 issue of Innkeepers' exposure for breach of
17 fiduciary duty ever came up, did you ever
18 hear of that phrase?
19 A. This is a discussion about a
20 fiduciary out, is that what you're talking
21 about?
22 Q. My first question is about
23 Innkeepers' exposure for breach of fiduciary
24 duty.
25 A. No.
13 (Pages 46 to 49)
46
1 Lascher
2 Q. Did you ever have discussions
3 regarding Innkeepers' fiduciary duty with
4 anyone from Innkeepers?
5 A. No.
6 Q. Did you have discussions with
7 anyone from Innkeepers with what's been
8 called a fiduciary out?
9 A. Yes.
10 Q. In your practice of law, do you
11 know what a fiduciary out is?
12 A. Not from my practice of law. This
13 is the first time I've heard of it.
14 Q. In the context of --
15 A. Of this.
16 Q. -- these negotiations for the PSA?
17 A. Correct.
18 Q. And when was the first time the
19 issue of fiduciary out came to your knowledge
20 in the context of these negotiations?
22 Q. Go with me to the page marked --
23 numbered 4724, please, to 4725.
24 A. Okay.
25 Q. These are your notes, right?
47
1 Lascher
2 A. Correct.
3 Q. At the top of this page says
4 Innkeepers meeting 4/22?
5 A. Uh-huh.
6 Q. Do you recall being at a meeting
7 regarding Innkeepers on April 22nd of this
8 year?
9 A. I don't remember the exact date but
10 if -- if that's what's in the notebook, I'm
11 sure there was a meeting.
12 Q. Was this a meeting at which
13 financial advisors for Innkeepers, Moelis,
14 was present?
15 A. Yes.
16 Q. And you received a handout from
17 Moelis and Innkeepers during that meeting,
18 correct?
19 A. Yes.
20 Q. Prior to this meeting on April 22,
21 2010, had you personally been involved with
22 discussions with anyone from Innkeepers
23 regarding a restructuring of Innkeepers?
24 A. We had one meeting with them prior
25 to this one where we got just a general, just
48
1 Lascher
2 a general description of what was going on
3 with the company and we talked about working
4 together to, you know, possibly enter into
5 some plan support agreement.
6 Q. Do you recall where that was
7 meeting was, sir?
8 A. I would say -- I don't remember
9 exactly but I would say it was somewhere
10 within a week or 10 days before.
11 Q. Prior to this meeting?
12 A. Yeah.
13 (Exhibit Lascher-5, Plan Support
14 Agreement, marked for identification,
15 this date.)
17 I've marked as Exhibit 5 and I would like you
18 to agree with me that it is a complete copy
19 of the executed PSA with all attachments for
20 the purposes of this deposition without
21 having you go through every page of it?
22 A. And it looks like it.
23 Q. Okay. This document seems to be
24 signed by Lehman, by Nancy Shanik; is that
25 right?
49
1 Lascher
2 A. Correct.
3 MR. O'BRIEN: Can you give us a
4 page?
5 MR. PARKINS: Sure. It doesn't
6 have a page number, but looks like 19.
7 MR. O'BRIEN: Right.
8 Q. And then the next page appears to
9 be signed by Mr. Beilinson and Mr. Murphy on
10 the next page for several entities, correct?
11 A. Correct.
12 Q. Did you negotiate this PSA on
13 behalf of Lehman?
14 A. Yes.
15 Q. What was Lehman's goal in
16 negotiating this PSA?
17 A. The goal was to convert our, our
18 debt, into, you know, essentially 100 percent
19 ownership in the company subject to certain
20 requirements and milestones being met.
21 Q. Was it your goal that, in fact,
22 upon execution of this PSA that the parties
23 would pursue what is defined in here as the
24 plan and no other plan?
25 A. Yes.
14 (Pages 50 to 53)
50
1 Lascher
2 Q. And that was important to Lehman?
3 Was it important to Lehman, that the company,
4 the debtors pursue the plan as defined in
5 this agreement and no other plan?
6 A. I never really thought about it
7 that way. I mean this was the plan that we
8 were pursuing.
9 Q. But I take it, you, Lehman, wanted
10 the company to pursue that plan exclusively,
11 correct?
12 MR. O'BRIEN: Asked and answered.
13 A. I never -- I never thought that
14 they would do otherwise.
15 Q. Okay.
16 MR. PARKINS: Give me one second.
17 We're looking for an exhibit.
18 MR. O'BRIEN: Sure.
19 (Exhibit Lascher-6, E-mails, Bates
20 No. LEH-ALI 005676, marked for
23 Exhibit 6.
24 A. Yes.
25 Q. It is a single piece of piece with
51
1 Lascher
2 a Lehman Bates stamp number 5676, which has
3 two e-mails on it. Do you see that there?
4 A. Yes, I do.
5 Q. Let's start with the bottom part of
6 the page, looks like an e-mail from you to
7 Mr. Beilinson. Do you see that?
8 A. Yes, I do.
9 Q. Subject one more decision?
10 A. Uh-huh.
11 Q. The e-mail states, can you live
12 with giving me the ability to terminate cash
13 collateral if you, quote, breach your
14 obligations to Lehman in connection with the
15 restructuring, quote.
16 A. Right.
17 Q. Question mark.
18 A. Uh-huh.
19 Q. What did you mean by the word
20 "restructuring" when you sent this?
21 A. Basically the PSA.
22 Q. I'm sorry, I didn't hear you.
23 A. Basically what we were doing under
24 the PSA.
25 Q. Okay. And this was sent Saturday,
52
1 Lascher
2 July 17, and I see here a reply from
3 Mr. Beilinson on Sunday, July 18?
4 A. Correct.
5 Q. And the e-mail was sent back to
6 you. Do you recall receiving this e-mail?
7 A. Yes.
8 Q. Mr. Beilinson's e-mail says not
9 inclined. I understand it's only a word, but
10 it gives Midland a real hook and I'm filing
11 the motion to assume on day one and already
12 reviewing the plan.
13 Did you understand that to mean
14 he's already reviewing the plan of
15 reorganization?
16 A. I didn't really --
18 A. I didn't really understand what he
19 meant.
20 Q. I won't be amending our deal
21 without your consent. I am trusting that you
22 won't terminate AIC in first 45 days. Four
23 dots. Please do the same with me on this
24 issue for this short period of time.
25 Do you see that?
53
1 Lascher
2 A. Yes.
4 Mr. Beilinson regarding his reply e-mail?
5 A. Yes, I did.
6 Q. Did the discussions take place on
7 Sunday, July 18th?
8 A. Yeah, they must have.
9 Q. The filing occurred on Monday,
10 July 19th, correct?
11 A. Right.
12 Q. So the discussions took place
13 before the filing in any event?
14 A. Yes.
15 Q. Sometime after this e-mail and the
16 filing, correct?
17 A. Yes.
18 Q. Did you call Mr. Beilinson to
19 respond to his e-mail?
20 A. I don't remember but I know we
21 ended up talking about it.
22 Q. And what did -- and what did you
23 talk to him about?
24 A. That we were letting them use cash
25 collateral on an interim basis assuming that
15 (Pages 54 to 57)
54
1 Lascher
2 they were, you know, moving ahead with trying
3 to get our plan done and that if they did
4 something that was contrary to that, I wanted
5 to be able to terminate the interim cash
6 collateral.
7 Q. The e-mail from Mr. Beilinson says
8 not inclined. Do you see that?
9 A. Yes.
10 Q. In fact, Innkeepers agreed to that
11 provision, didn't they?
12 A. I believe that's right.
13 Q. Look with me at Exhibit 5, the
14 PSA --
15 A. Okay.
16 Q. -- I handed you before.
17 A. Uh-huh.
18 Q. I take it you're pretty familiar
19 with this document, correct?
20 A. I'm very familiar with the terms
21 included in the document. I'm more familiar
22 with the term sheet than the -- but yeah.
23 Q. Look with me at, it's Section 6,
24 which is called "Termination of this
25 Agreement"?
55
1 Lascher
2 A. Okay.
3 Q. Were you involved in negotiating
4 this section as well as other sections of
5 this agreement?
6 A. Yes.
7 Q. Look with me then on page 10 of
8 this document, I think it's section 6(r).
9 A. Okay.
10 Q. (r) reads: "The material breach by
11 any Party of any of their undertakings,
12 representations, warranties or covenants set
13 forth this Agreement." Did I read it
14 correctly?
15 A. Yes.
16 Q. Go with me to section 4 on page 5
17 of this document, if you would.
18 A. Section 4 you said?
19 Q. Section 4, yes, on page 5, and it
20 carries over to page 6.
21 A. Okay.
22 Q. Section 4 is entitled "Support of
23 the Transaction; Additional Covenants"?
24 A. Yes.
25 Q. Take a moment to read that, would
56
1 Lascher
2 you, section 4.
3 A. All of section 4?
4 Q. Yes.
5 A. Okay. Well, I've read (a), do you
6 want me to read (b) and (c) too?
7 Q. Sorry?
8 A. I've read 4(a). Do you want me to
9 read (b) and (c) as well?
10 Q. No, (a) is fine.
11 A. Okay.
12 Q. Now, this provision embodies
13 certainly -- I think your testimony was a few
14 minutes ago that you wanted the company to
15 perform under this agreement or you wanted
16 the right to terminate cash collateral from
17 Lehman's side, correct?
18 A. Yes.
20 Q. So going back to your e-mail we've
21 referenced on Exhibit 6, please, the bottom
22 part of that?
23 A. Yes.
24 Q. The company agreed with you because
25 it's embodied in the PSA that you would have
57
1 Lascher
2 that right if they breached their obligation
3 in connection with the restructuring then,
4 correct?
6 A. I don't think this is about cash
7 collateral, that the e-mail is about cash
8 collateral and this is about the plan support
9 agreement.
10 MR. O'BRIEN: Len, to the extent
11 you are asking him for a legal opinion,
12 it's an inappropriate question. I mean
13 you want to ask him about a specific
14 discussion --
15 MR. PARKINS: I'm asking whether he
16 believes this satisfied the request he
17 made of Mr. Beilinson in his e-mail.
18 MR. O'BRIEN: I object. It calls
19 for a legal opinion from this witness.
20 Q. Were you satisfied that this
21 document satisfied your request from
22 Mr. Beilinson?
24 A. I'm not really -- I'm not really
25 sure. I think this is about cash -- the
16 (Pages 58 to 61)
58
1 Lascher
2 e-mail is about cash collateral.
3 Q. All right. Well, let's look at
4 section 8 of this agreement, please.
5 A. Section 8?
6 Q. Yes.
7 A. Okay.
8 Q. Now, section 6 we looked at a few
9 minutes ago is called "Termination of This
10 Agreement" and it defines termination events,
11 correct, section 6?
12 A. Yeah.
13 Q. Section 8 says "Effect of
14 Termination." Read 8 through 8(a).
15 A. Okay.
16 Q. So going back to your testimony a
17 few minutes ago, your e-mail of July 17
18 related to the ability of Lehman to terminate
19 the use of cash collateral, correct?
20 A. Say that again.
21 Q. Your e-mail --
22 A. Yes.
23 Q. -- Exhibit 6 --
24 A. Yes.
25 Q. -- okay, related -- I think your
59
1 Lascher
2 testimony was Lehman wanted the desire to
3 terminate cash collateral if the company
4 breached, correct?
5 A. That's right.
6 Q. And 8(a) appears to say that, does
7 it not?
9 A. I mean, look, it says if there's a
10 termination event, we can terminate the use
11 of our cash collateral.
12 Q. Now, termination event, we just
13 read, includes breach of any covenant by any
14 party, correct? That's 6(r).
16 A. Yeah.
17 Q. And section 4 says support of
18 transaction additional covenants, correct?
19 A. 4 is the additional covenants,
20 yeah.
21 Q. Now, going with me to Exhibit 6
22 here. Mr. Beilinson's response. The second
23 sentence, I understand it's only a word but
24 it gives Midland a real hook. Did you
25 discuss with Mr. Beilinson what giving
60
1 Lascher
2 Midland a real hook meant?
3 A. No, I don't -- I don't really know
4 what he meant.
5 Q. Did you have discussion with
6 Mr. Beilinson about his e-mail?
7 A. I told you I did, but I had
8 discussions with him about wanting to get
9 what I wanted to get out of this, which was
10 the ability to terminate cash collateral.
11 Q. And he said in this e-mail he was
12 not inclined to do so, right?
13 A. Right.
14 Q. So in your discussions did he give
15 you any particulars as to why he was not
16 inclined to do so?
17 MR. O'BRIEN: Asked and answered.
19 Q. The last -- well, not the last, in
20 the second line of Mr. Beilinson's e-mail --
21 A. Yes.
22 Q. -- it starts, "I'm trusting that
23 you won't terminate AIC in first 45 days."
24 A. Right.
25 Q. "Please do the same with me on this
61
1 Lascher
2 issue for this short period of time."
3 Did you discuss that part of his
4 response with Mr. Beilinson?
5 A. I kind of remember having a
6 conversation about it.
7 Q. Well, this is one day before the
8 filing of bankruptcy for Innkeepers. Fairly
9 close to a fairly significant day for
10 Innkeepers and Lehman with respect to the
11 PSA, correct?
12 A. Yes.
13 Q. So as you remember that
14 transaction -- that discussion, I'm sorry,
15 tell me what you remember.
16 MR. O'BRIEN: We're talking now
17 about the discussion that was a
18 follow-up to this e-mail?
19 MR. PARKINS: Correct, Counsel.
20 That's correct.
21 MR. O'BRIEN: Generally or some
22 specific --
23 Q. I'm trusting you won't terminate
24 AIC in the first 45 days. Please do the same
25 with me on this issue for this short period
17 (Pages 62 to 65)
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2 of time, yes.
3 A. There is a 45 day out for both us
4 and Apollo in our sale -- I just can't
5 remember the name of that document -- but in
6 our sale transaction with them that he didn't
7 want me to terminate but there was no, you
8 know, there was no -- it was just a 45-day
9 termination right, he would have no control
10 over whether I exercised that or not.
11 Q. Did you respond to him with respect
12 to his statement that I'm trusting you won't
13 terminate AIC?
14 A. Well, I mean just to finish
15 answering your other question.
16 Q. Okay.
17 A. He was saying he was trusting me
18 not to terminate my sale agreement with
19 Apollo and so I should just trust him not to
20 do any -- not to -- what does it say breach
21 his obligations to us under the PSA.
22 Q. Okay. But you wanted it in
23 writing, I take it, because you got the PSA?
25 A. I mean I wanted it in writing,
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2 yeah.
3 Q. And you did not terminate AIC from
4 this date through at least --
5 A. I have not.
6 Q. -- today, correct?
7 A. I have not.
8 Q. Is it your present intention to
9 terminate AIC?
10 A. No.
11 MR. PARKINS: Take a five-minute
12 break.
13 MR. O'BRIEN: Sure. That would be
14 great.
16 MR. PARKINS: Back on the record.
17 Q. Mr. Lascher, before I ask you any
18 more questions, I just want to state I'm
19 getting notes from people to state that we're
20 going to treat exhibits and testimony about
21 the exhibits pursuant to the agreed-upon
22 protective order that we have in this case.
23 I'm putting it on the record. Every counsel,
24 I think, is nodding acquiescence.
25 MR. O'BRIEN: We're in agreement
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2 with that.
3 MR. GOULD: Just a clarification.
5 MR. GOULD: I just wanted to
6 clarify whether Appaloosa had executed
7 the protective order in this case. And
8 he said yes.
9 MR. FAERSTEIN: Yes, we sent it to
10 Kirkland & Ellis last week.
11 (Exhibit Lascher-7, Document
12 entitled, "Project Tavern, Lehman
13 Discussion Materials, April 22, 2010, by
14 Moelis," Bates Nos. INN_MID00003533
15 through INN_MID00003548, marked for
18 I've had marked as I think is Exhibit number
19 7. It's a document with Innkeepers Bates
20 stamp numbers 3533 through 3548.
21 A. Okay.
22 Q. And it's entitled, "Project
23 Tavern" --
24 A. Yes.
25 Q. -- "Lehman Discussions Materials
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2 dated April 22, 2010," by Moelis. Correct?
3 A. Yes.
4 Q. Do you recall receiving a copy of
5 this document?
6 A. Yes.
7 Q. Going back to Exhibit number 4,
8 Bates stamp number 4724, is this the
9 April 22nd meeting?
10 A. Yes.
11 Q. Okay. To which your notes on
12 Exhibit 4 refresh your recollection about?
13 A. Yes.
14 Q. If you would go with me to page 13
15 of Exhibit number 7.
16 A. Okay.
17 Q. Do you recall seeing this page as
18 part of presentation?
19 A. Yes.
20 Q. It's entitled, "Illustrative Pro
21 Forma Structure."
22 A. Yes.
23 Q. It shows at the top center, "Parent
24 Equity Lehman Deal/Investor 95 percent,
25 Others 5 percent."
18 (Pages 66 to 69)
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2 Do you see that?
3 A. Yes.
4 Q. Was the transaction reflected by
5 the illustrative pro forma structure on page
6 13 that we see here, was April 22nd the first
7 time you had seen a document reflecting the
8 structure of that transaction?
9 A. Yes.
10 Q. Was it the first time you had
11 discussed the structure of the transaction,
12 albeit without a document, memorializing it
13 in a picture?
14 A. Yes, there was that one other
15 meeting that was a week or 10 days before
16 this one.
17 Q. Okay. Now in the, we will call it
18 the prior meeting --
19 A. Okay.
20 Q. -- in the prior meeting --
21 A. Uh-huh.
22 Q. -- this structure reflected in this
23 document was, in fact, discussed then, right?
24 A. The idea of reducing the amount of
25 debt outstanding on the other collateral
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1 Lascher
2 pools was discussed. But I don't think the
3 specifics of -- I don't think we had any
4 numbers that we talked about then.
5 Q. Was Lehman being the 100 percent
6 equity owner as a result of that
7 restructuring discussed in the prior meeting?
8 A. I'm -- I think we, you know what,
9 I'm not 100 percent sure.
10 Q. Do you recall who was at the prior
11 meeting from Lehman other than yourself?
12 A. Susanne Frey, Sam Gleason, Nancy
13 Shanik from Alvarez & Marsale, as well as
14 Jeff Fitts from Alvarez & Marsale.
15 Q. Do you recall where that meeting
16 was?
17 A. The prior meeting was at Lehman's
18 office.
19 Q. And there was a representative from
20 Apollo there too, wasn't there?
21 A. Yes.
22 Q. Do you recall who it was?
23 A. I can't remember if it was Schuyler
24 Hewes or Justin -- I can't remember his last
25 name.
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2 Q. Do you know Mr. Hewes?
3 A. Yes.
4 Q. Have you had discussions with Mr.
5 Hewes regarding the transaction relating to
6 the PSA?
7 A. I mean most of my discussions with
8 him have really been about Apollo buying half
9 of our equity and what the company would look
10 like. You know, it's probably a little bit
11 on the PSA, but not, you know, more
12 informative.
13 Q. Between the time period -- and I'm
14 sorry, but going back to the prior meeting,
15 Mr. Beilinson was there for the company; is
16 that correct?
17 A. Correct.
18 Q. Do you recall who else was there
19 from the company?
20 A. Mark Murphy, Dennis Craven.
21 Q. Were there lawyers at this meeting?
22 A. Yes.
23 Q. Were your lawyers from Dechert at
24 that meeting?
25 A. Yes.
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2 Q. Was Kirkland & Ellis at the
3 meeting?
4 A. Yes.
5 Q. Was Paul Weiss at the meeting?
7 Q. Did Apollo have an in-house lawyer
8 at the meeting?
10 Q. Mr. Glatt, do you know Mr. Glatt?
11 A. I've spoken to him, but I've never
12 met him in person.
13 Q. So as far as you recall no one
14 identified themselves as in-house counsel for
15 Apollo at that meeting, correct?
16 A. Correct.
17 Q. Between the prior meeting and the
18 April 22nd meeting, did you have discussions
19 with anyone from Apollo regarding what had
20 been discussed at the prior meeting?
22 Q. Between the prior meeting and the
23 April 22nd meeting, did you have discussions
24 with anyone from the company?
25 A. With Mark Beilinson.
19 (Pages 70 to 73)
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2 Q. And how often did you have
3 discussions between the prior meeting and the
4 April 22nd meeting?
5 A. I talked to him pretty regularly,
6 but I don't -- but, you know, how many times
7 in that week or so period, I don't really
8 remember.
9 Q. Did you begin talking to him pretty
10 regularly because -- after the prior meeting
11 or was it before the prior meeting?
12 A. I had spoken to him -- I mean the
13 conversations became much more regular again
14 after the prior meeting.
15 Q. Saved me a question. Okay.
16 And did you discuss the anticipated
17 presentation that was provided to you on
18 April 22nd with Mr. Beilinson prior to the
19 actual date of the meeting?
20 A. We talked about the fact that there
21 was going to be a presentation at this
22 April 22nd meeting and about the fact that I
23 thought at the prior meeting there would have
24 been, you know, some kind of presentation but
25 that there wasn't.
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2 Q. There wasn't a handout?
3 A. Right.
4 Q. And he assured you there would be a
5 handout at the April 22nd meeting?
6 A. Yes.
7 Q. Now at the April 22nd meeting,
8 where did that take place?
9 A. That was at Kirkland's office.
10 Q. And from Lehman, other than you,
11 who else was there for that meeting?
12 A. Susanne Frey, Sam Gleason, and I
13 believe Nancy Shanik had to dial in.
14 Q. And from Innkeepers?
15 A. Mark Beilinson, definitely Mark
16 Murphy, I think Dennis Craven as well.
17 Q. And from Apollo?
18 A. I think both Schuyler and Justin
19 were there.
20 Q. As we look at page 13 here --
21 A. Uh-huh.
22 Q. -- it says, "Parent Equity,
23 Lehman/Investor," Apollo was intended to be
24 the investor; isn't that correct, in your
25 understanding?
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2 A. Yes.
3 Q. Did you ever go to a meeting with
4 Innkeepers regarding this structure --
5 A. Uh-huh.
6 Q. -- where someone other than Apollo
7 was intended to be the investor?
8 A. No.
9 Q. So it is correct that from the
10 beginning of these negotiations, Apollo was
11 to be the investor?
13 A. Yes.
14 Q. Look with me on page 12, if you
15 would, sir.
16 A. Okay.
17 Q. Page 12 is entitled, "Illustrative
18 Valuation Ranges."
19 Do you see that?
20 A. Yes.
22 Innkeepers or anyone from Moelis regarding
23 these numbers that were handed out to you on
24 the 22nd at that meeting?
25 A. I mean they talked us through the
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2 whole book.
3 Q. Did they explain to you the genesis
4 of the various numbers that appear on page
5 12?
6 A. What do you mean by that?
7 Q. Did they tell you where the numbers
8 came from, how they got to these numbers?
9 A. Yes.
10 Q. And who did that part of the
11 presentation?
13 Q. Well, what -- did the Innkeepers
14 side of the presentation tell you how they
15 got to these numbers?
16 A. How they got to these --
17 Q. Illustrative value numbers, let's
18 take the first line, the illustrative value
19 numbers for the Lehman hotels and the other
20 columns that are there?
21 A. I mean I don't remember the exact
22 conversation, but they took us through, you
23 know, cash flow projections for 2010, 2011,
24 assumptions they were making on, you know,
25 PIP work and other cap ex that needed to be
20 (Pages 74 to 77)
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2 done, assets that, you know, were running out
3 of time on their franchise agreements and
4 would be losing their flag and how they
5 accounted for a loss in revenue from those
6 assets and plans to sell those assets within
7 certain periods of time following the
8 deflagging.
9 Q. Okay. Following the deflagging?
10 A. Yes, so when the franchise
11 agreement ran out.
12 Q. At the time of the April 22nd
13 meeting, at least as to the Lehman hotels,
14 did Lehman have any ideas as to what the
15 value of its hotels were relative to the
16 illustrative value presented by the company?
17 A. And why did that matter?
18 Q. Well, I'm asking -- it will be the
19 judge to decide whether it matters.
20 My question is: Did you have any
21 values in mind for your hotels as compared to
22 the illustrative values presented by Moelis?
23 A. Yeah.
24 Q. Did you have any values in mind
25 with respect to the other pools of collateral
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2 other than yours at the time of this meeting?
3 A. At this point the -- no.
4 Q. Okay. Now, Lazard Freres, I will
5 call them Lazard for the deposition, okay,
6 has been retained as the investment banker
7 for Lehman.
8 A. Correct.
9 Q. And Lazard, was Lazard at this
10 meeting?
11 A. No.
12 Q. Lazard was charged by Lehman to go
13 do some work, due diligence work with respect
14 to this presentation; is that correct?
15 A. Yes.
16 Q. And they did do work, didn't they?
17 A. Yes.
18 Q. Do you know if that work has been
19 presented to us in document production?
20 A. I don't know.
21 MR. O'BRIEN: Len, it has not and
22 the reason is, number 1, it's protected
23 by the attorney-client privilege as well
24 as work product. And number 2, it's
25 well outside the scope of these
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1 Lascher
2 proceedings.
3 The judge was very clear that the
4 emphasis -- let me just finish so it's
5 on the record since you've raised it.
6 The focus of these discovery
7 proceedings should be on the business
8 judgment of the debtor, not Lehman.
9 That subject was raised in the
10 conference with the judge, your partner
11 was there, I was there and she couldn't
12 have been clearer so on those grounds we
13 declined to produce anything along those
14 lines.
15 MR. PARKINS: Okay. We will deal
16 with that issue, but certainly to the
17 extent you're claiming privilege as work
18 product, I'll acknowledge and accept
19 that. As to the other we'll see what
20 happens.
21 MR. O'BRIEN: Okay. And that's all
22 a prologue, I guess, to my instruction
23 to this witness not to answer any
24 questions about the substance of what
25 Lazard may or may not have done as far
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2 as valuation.
3 MR. PARKINS: Counsel, if you're
4 claiming work product privilege and
5 attorney-client privilege certainly,
6 that's what the rule says you're
7 entitled to do and I will honor that for
8 purposes of the deposition.
9 MR. O'BRIEN: I appreciate it.
10 MR. PARKINS: If we have a problem
11 with that, that's what the judge is for.
12 Q. So particular meeting --
13 MR. O'BRIEN: Sorry.
14 Q. At this April 22nd meeting, were
15 there any next steps discussed with respect
16 to going forward with the proposal embodied
17 in this document?
18 A. Yes, they were, I think Moelis was
19 going to send us detailed cash flows that we
20 could look at.
21 Q. And I take it that Lehman was going
22 to think on the proposal that was made, I
23 take it, is that accurate?
24 A. Yes.
25 Q. And what was said, if anything, by
21 (Pages 78 to 81)
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2 the Apollo representatives at the meeting?
3 A. Nothing.
4 Q. And what was said by Innkeepers at
5 the meeting as sort of the next steps from
6 their point of view?
8 Q. Was a timing issue discussed at
9 this meeting with respect to a need to file
10 Chapter 11 from Innkeepers' point of view by
11 a certain date?
12 A. Yes.
13 Q. And do you recall what the nature
14 of that discussion was regarding the timing
15 of filing?
16 A. Yeah, they needed to file in
17 advance of Marriott having the ability to
18 terminate the franchise agreements on a
19 number of their hotels.
20 Q. Was it discussed at that meeting by
21 Innkeepers a desire that an agreement, call
22 it a PSA or other similar agreement, be
23 entered into by the parties at that meeting
24 prior to the filing of a bankruptcy case?
25 A. You mean with Lehman or with
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2 Marriott?
3 Q. I'm asking with the parties at that
4 meeting. You didn't mention Marriott being
5 at the meeting.
6 A. Right, they weren't there.
7 Q. Let me ask the question again.
8 Was -- did Innkeepers raise a
9 desire to have an agreement reached among the
10 parties at that meeting prior to the filing
11 of their bankruptcy case?
12 A. I mean the goal was for Lehman to
13 enter into some agreement with Innkeepers,
14 yeah.
15 Q. Was the goal mentioned that Apollo
16 would also enter into some agreement?
17 A. Yeah.
18 Q. The structure of that agreement was
19 discussed, was it to be one agreement,
20 multiple agreements at that meeting?
21 A. Didn't discuss that.
22 (Exhibit Lascher-8, Illustrative
23 Terms of Proposed Structuring, May 25,
24 2010, Bates Nos. LEH-ALI 000001 through
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1 Lascher
4 as Exhibit number 8, it is a Lehman
5 production document marked Bates stamped
6 numbers 1 through 4, do you have it in front
7 of you, sir?
8 A. Exhibit 8, yes.
9 Q. Do you recall whether this document
10 was prepared by Lehman or its counsel
11 Dechert?
12 A. This was not prepared by Lehman.
13 Q. Was it prepared by Lehman's
14 counsel, Dechert?
15 A. No.
16 Q. Who prepared this document?
17 A. Lazard.
19 entitled, "Illustrative Terms of
20 Proposed Restructuring, June 2, 1010,"
25 Exhibit number 9. It's also a Lehman
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1 Lascher
2 production document. Bates stamped numbers
3 14 through 22.
4 Do you have it?
5 A. Yes.
6 Q. I'd ask you, this document on the
7 right-hand top of the page says, "Dechert
8 draft 6/1/10 Preliminary and Confidential
9 Subject to FRE 408."
10 Do you see that?
11 A. Yes.
12 Q. I would ask you to go down to the
13 left-hand corner of this page where it has
14 some numbers.
15 A. Right.
16 Q. 15703581.3 Business; do you see
17 that?
18 A. Yes.
19 Q. Now go with me to Exhibit number 8.
20 A. Okay.
21 Q. And look at the numbers on the
22 left-hand corner of this page and they are
23 15703581.1 Business, correct?
24 A. Yes.
25 Q. Does this refresh your recollection
22 (Pages 82 to 85)
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1 Lascher
2 as to whether Dechert prepared Exhibit number
3 8?
4 A. My recollection is still that this
5 is something Lazard prepared.
6 Q. Okay. We will go with your
7 recollection.
8 A. That is number 8, that's Exhibit
9 number 8 we're talking about.
10 Q. Yes, correct.
11 Do you recall reviewing this
13 A. Yes.
14 Q. Go with me to the first page.
15 A. We're on 8?
16 Q. Yes, on Exhibit 8.
17 A. Okay.
18 Q. The second paragraph speaks to the
19 transaction structure outlined herein assumes
20 an enterprise value for their organized
21 company, it has bracketed, 975 million with a
22 footnote, and a value of the floating rate
23 collateral of bracket, 200 million, correct?
24 A. Yes.
25 Q. And the footnote 1 without reading
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2 the whole thing says, "Values are based on
3 the Moelis presentation" --
4 A. Right.
5 Q. -- "and have been included for
6 illustrative purposes only."
7 A. Yes.
8 Q. Is the Moelis presentation, as you
9 understand, the one we looked at before?
10 A. Yes.
11 Q. Go with me to page number 2 of this
12 Exhibit number 8.
13 A. Okay.
14 Q. In the area identified as "Equity
15 Offering," there it appears that Lehman will
16 receive, the company will conduct an equity
17 offering in which the company will sell a
18 total of 62.18 percent, in brackets, of its
19 equity to a new holder, new owner.
20 27.27 percent of the equity will be sold
21 through a primary issuance by the company,
22 the primary shares.
23 And the rest I won't go through
24 each reading here, okay?
25 A. Yes.
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1 Lascher
2 Q. So there was to be, as I see, a
3 primary and secondary offering of shares, if
4 you understand it correctly; is that correct?
5 A. Yeah, that's right.
6 Q. The backstop portion provided that
7 Apollo would provide a backstop to purchase
8 the 62.18 percent of the equity in the equity
9 offering at a price of $171 million, in
10 brackets, which consists of 95 million, in
11 brackets, for the 34.91 percent of the
12 secondary shares and 75 million for the
13 27.27 percent of the primary shares. Do you
14 see that?
15 A. Yes.
16 Q. Do you know what a backstop is?
17 A. Yes.
18 Q. What is a backstop?
19 A. That they would commit to buy at a
20 price with the intention of an auction being
21 conducted.
22 Q. Okay. And the auction being
23 conducted leads us to the next paragraph of a
24 break-up fee discussion, correct?
25 A. Right, yes.
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2 Q. Do you recall having discussions
3 with Apollo regarding a backstop and a
4 break-up fee?
5 A. I don't remember having discussions
6 this early on with them about that, but at
7 some point, yes.
8 Q. And at what point do you recall
9 having discussions about Apollo being a
10 backstop, let's take that point first, as a
11 backstop?
12 MR. O'BRIEN: For the first time?
13 MR. PARKINS: For the first time.
14 A. I don't remember exactly.
15 Q. Was it after this date?
16 A. Yes.
17 Q. After May 25?
18 A. Yes.
19 Q. At the same time would there have
20 been a first discussion regarding Apollo
21 getting a break-up fee?
22 A. For -- for providing the backstop
23 you're saying?
24 Q. Yes.
25 A. Yes.
23 (Pages 86 to 89)
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1 Lascher
2 Q. So those discussions would have
3 been in tandem?
4 A. Yes.
5 Q. Backstop, break-up fee; is that
6 correct?
7 A. Yes.
8 Q. How many discussions with Apollo
9 did you have regarding a structure where
10 Apollo would be a backstop?
11 A. Very few.
12 Q. Very few. And who did you have
13 discussions with from Apollo?
14 A. Jim Zelter, from Apollo at the
15 early stage it was mostly him.
16 Q. And do you know the position that
17 Mr. Zelter held at Apollo at that time?
18 A. I don't remember his title but he
19 runs Apollo Investment Corporation.
20 Q. Okay. Look with me at Exhibit
21 number 9.
22 A. Okay.
23 Q. This is a document that on the
24 right-hand part of the page top says,
25 "Dechert Draft 6/1/10 Preliminary and
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1 Lascher
2 Confidential Subject to FRE 408."
3 Do you see that?
4 A. Yes.
5 Q. Do you recall whether or not you
6 authorized this document to be prepared by
7 your counsel?
8 A. To be prepared?
9 Q. Yes.
10 A. Yes.
11 Q. Did you authorize to prepare this
12 document?
13 A. Yes.
14 Q. Was this document prepared in
15 response to Exhibit number 8?
16 A. I believe they took number 8 and
17 expanded on it.
18 Q. Okay. Between the preparation --
19 between the date of Exhibit number 8, which
20 is May 25, 2010, and June 2nd, or June 1,
21 2010, when this Dechert draft notes it was
22 prepared, did you have discussions with
23 Apollo with respect to the transactions
24 reflected in these documents?
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1 Lascher
3 Innkeepers during this period of time with
4 respect to the transactions reflected in
5 these documents?
6 A. Probably.
7 Q. Okay. And with who would you have
8 had discussions at Innkeepers?
9 A. Mark Beilinson.
10 Q. On behalf of Innkeepers did you
11 talk to anybody else but Mr. Beilinson,
12 businessperson to businessperson?
13 A. For the most part it was really
14 with Mark. We had some conversations about
15 specific items with Dennis or with Mark
16 Murphy.
17 Q. Okay. If you look with me in the
18 first paragraph of Exhibit 9 --
19 A. Yes.
20 Q. -- six lines from the bottom, the
21 sentence that starts, "As a condition..."
22 Do you see that?
23 A. Yes.
24 Q. Just read that for a second. I
25 want to ask you a question or two about it.
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1 Lascher
2 A. Okay.
3 Q. The reference there that is part of
4 the offering Lehman will sell a portion of
5 its equity; do you see that?
6 A. Yes.
7 Q. Was it Lehman's intention to sell a
8 portion of its equity to Apollo as of this
9 date?
10 A. Yes.
11 Q. Okay.
12 A. Well, actually, it was to Apollo,
13 but I think we may have had something in here
14 about an auction, so if we ended up doing an
15 auction, I don't know.
16 Q. Then we will go to the document.
17 Go with me to page 5 of Exhibit 9,
18 please.
19 A. Okay.
20 Q. This again speaks to equity
21 offering, an equity offering backstop; is
22 that correct?
23 A. Yes.
24 Q. And this still has Apollo providing
25 a backstop and Apollo getting a break-up
24 (Pages 90 to 93)
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2 fee --
3 A. Yes.
4 Q. -- correct?
5 Now after this document was
6 prepared, did you have discussion with Apollo
7 with respect to the structure of this
8 transaction as reflected in this Exhibit
9 number 9?
10 My question is the structure.
11 A. Of the backstop you're saying?
12 Q. Correct.
13 A. I don't know if we had discussions
14 with them or once we showed this to Mark
15 Beilinson he showed it to them and they told
16 him that they didn't want to do that.
17 Q. Did you have direct input from
18 Apollo with respect to this document?
20 A. Not this draft but, you know, the
21 document at certain points, we did, yeah.
22 Q. This document under the "Conditions
23 Precedent" section there?
24 A. Yes.
25 Q. Provides from your counsel that,
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2 that the transaction will become binding on
3 Lehman when Lehman, AIC and the company
4 execute a plan support agreement that
5 incorporates the transaction set forth
6 herein, correct?
7 A. Yes.
8 Q. So approximately 45 days from the
9 filing of the bankruptcy case it was Lehman's
10 proposal that contemplated a single document
11 with Apollo, Lehman and the company signing,
12 correct?
13 A. That's what it says here.
14 Q. Right. The third bullet point
15 under "Conditions Precedent" on page 5? Do
16 you see that?
17 A. Yes.
18 Q. "Agreement reached with AIC in form
19 and substance satisfactory to Lehman."
20 A. Yes.
21 Q. Is there anywhere in this document
22 I can see that -- find where an alternative
23 to AIC is discussed or contemplated by
24 Lehman; do you know?
25 A. An alternative to what?
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2 Q. AIC being the purchaser?
3 A. Well, there's a --
4 MR. O'BRIEN: He did talk about the
5 auction.
6 A. Well, there's a break-up fee or a
7 backup, backstop here, if they're not the new
8 owner.
9 Q. But it says here, "Condition
10 precedent to Lehman's obligation under the
11 PSA was agreement reached with AIC."
12 A. Right.
13 Q. It didn't say AIC or an alternative
14 to AIC, does it, anywhere?
15 A. It could have been an agreement as
16 to the backstop.
17 Q. Who was going to pay the backstop
18 fee, Lehman or the company?
19 A. I mean it was Lehman who would have
20 been selling the equity so I assume Lehman.
21 Q. Lehman would have paid the backstop
22 fee?
23 MR. O'BRIEN: That's what he
24 assumes.
25 A. That's what I assume, I mean --
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2 Q. Well, when this proposal was -- was
3 this proposal authorized by you to be sent
4 out by your counsel?
5 A. I don't know that it was ever sent
6 out.
7 Q. Was it sent, it was clearly sent to
8 the debtor because you said the debtor and
9 you discussed it, correct?
10 A. Yeah.
11 Q. So was it your instruction that,
12 was it your instruction that this, or
13 intention, I'm sorry, at the time that Lehman
14 would be paying the backstop fee?
15 A. Yeah, we were selling the equity.
16 I mean that would make sense.
17 Q. Before we leave Exhibit number 9, I
18 want you to look at footnote number 2 again,
19 and provides here that "values are based on
20 Moelis presentation and have been included
21 for illustrative purposes only"?
22 A. Yes.
23 Q. So you're still using the Moelis
24 numbers from the presentation we talked about
25 earlier?
25 (Pages 94 to 97)
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2 A. Yes.
3 MR. PARKINS: Exhibit 10.
11 as Exhibit number 10. It has, it's a Lehman
12 production Bates stamp numbers 23 through 31.
13 You have that in front of you, sir?
14 A. Yes.
15 Q. It's also marked a "Dechert Draft
16 6/1/10 Preliminary and Confidential Subject
17 to FRE 408."
18 A. Right.
19 Q. Now, let's start with footnote
20 number 2 in this document. Footnote number 2
21 now has an added sentence that "Lehman is
22 completing its own quantitative analysis of
23 the value of the company and will
24 supplemental this term sheet once that
25 analysis has been completed." Do you see
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2 that?
3 A. Yes.
4 Q. Did, in fact, Lehman do such a
5 quantitative analysis?
6 A. We, I think it was part of what we
7 hired Lazard to do.
8 Q. Okay. And do you recall whether or
9 not Lehman supplemented this term sheet at
10 any point in time with respect to the
11 consequences of that subsequent analysis?
12 A. I don't really know what's meant by
13 that but, you know, at some point a real
14 purchase price would go in for Apollo buying
15 the equity. We have to agree with the
16 company on the numbers for the debt levels at
17 all the other, all the other silos of debt.
18 Q. So this is part of the iterative
19 process with respect to the economic terms of
20 this term sheet that led to the PSA; is that
21 correct?
22 A. Yes.
23 Q. Look with me at pages 4 and 5 of
24 this document, this exhibit?
25 A. Okay.
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2 Q. Like the prior exhibit, this
3 document contemplates an equity offering, an
4 equity backstop by Apollo and a break-up fee,
5 correct?
6 A. Yes.
7 Q. And this draft also in "Conditions
8 Precedent" provides that Lehman, Apollo and
9 the company will execute the PSA, correct?
10 A. Yeah.
11 Q. Go with me to page 8 of this
12 document, please.
13 A. Okay.
14 Q. Specifically the pro forma capital
15 structure.
16 A. Uh-huh.
17 Q. These numbers here appear to be the
18 ones from the Moelis presentations; am I
19 correct?
20 A. Yes.
21 Q. The governance provisions here,
22 board of directors to initially consist of
23 seven members, seven in brackets, I want to
24 read it for the record correctly, which three
25 to be nominated by Lehman and four to be
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2 nominated by new owner?
3 A. Right.
4 Q. New owner was to be Apollo,
5 correct?
6 A. Or whoever was the highest bidder
7 at the auction.
8 Q. Tell me about this auction that
9 occurred. Was there ever an auction?
10 A. No.
18 as Exhibit number 11. It has, again, Lehman
19 production Bates stamped numbers 32 through
20 --
21 MR. FLIMAN: Do you have any more
22 copies?
23 MR. PARKINS: Is it going around?
24 MR. ELMORE: We must have run out.
26 (Pages 98 to 101)
98
1 Lascher
2 MR. PARKINS: Back on the record.
3 Q. What has been marked as Exhibit
4 number 11, sir?
5 A. Yes.
6 Q. It's a Dechert draft dated 6/2/10,
7 Illustrative Terms of Proposed Restructuring
8 with a date of June 2, 2010. Do you see
9 that?
10 A. Yes.
11 Q. The second paragraph on page 1
12 reflects an assumption of enterprise value
13 for the reorganized company of 975 million
14 and a value of the floating rate collateral
15 of 200 million, correct?
16 A. Correct.
17 Q. Floating rate collateral was a
18 Lehman collateral, correct?
19 A. Correct.
20 Q. These numbers again were Moelis
21 numbers, correct?
22 A. Correct.
23 Q. Now, before this June 2nd draft
24 document was prepared did you have
25 discussions with Apollo regarding, again, the
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2 structure of the transaction embodied in the
3 term sheets here?
6 Mr. Beilinson regarding the structure?
7 A. You mean between the first and the
8 second?
9 Q. Yes, and the date between the first
10 and the second?
11 A. I don't remember. I don't
12 remember.
13 Q. Do you recall whether Mr. Beilinson
14 in response to the term sheet dated June 1
15 said, I'm not going to agree to that
16 structure?
17 A. I don't know which, if any, of
18 these went out.
19 Q. Okay. Were the exhibits we've
20 looked at so far that reflect Dechert drafts,
21 were they authorized to be prepared by you on
22 behalf of Lehman?
23 MR. O'BRIEN: You mean did he
24 authorize them?
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2 A. Yeah. I mean they were our counsel
3 on the deal.
4 Q. This document, likewise, if you
5 look at the equity offering, equity offering
6 backstop and conditions precedent seem to be
7 identical as in the prior draft.
8 MR. O'BRIEN: Is that a question?
9 Q. Do you agree with that?
10 MR. PARKINS: That's the question.
11 A. I'll tell you in a second.
12 They look a little bit different,
13 the equity offering section has dollar
14 amounts instead of percentages.
15 Q. But the structure is the same,
16 correct?
17 A. It's pretty similar, yeah.
18 Q. And, again, and this document
19 prepared by your counsel, the conditions
20 precedent the transaction contemplates being
21 binding on Lehman, on Lehman, Apollo and the
22 company, execute a plan support agreement,
23 correct?
24 A. This is in 11 you're asking me
25 about?
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2 Q. Yes, at the bottom of page 5.
3 MR. O'BRIEN: Top of 6.
4 A. The conditions precedent was, which
5 one were you asking about?
6 Q. The first, the introduction to
7 "Conditions Precedent," if you look at the
8 bottom of page 5, "The transaction will
9 become binding on Lehman when Lehman, AIC and
10 the company execute a plan support
11 agreement."
12 A. That's correct, it says that.
19 Q. The document I've handed you, sir,
20 is marked Exhibit number 12. It's a document
21 titled "Dechert Draft Designation 6/4/10,"
22 and it's entitled, "Illustrative Terms of
23 Proposed Restructuring," dated June 4, 2010;
24 do you see that?
25 A. Yes.
27 (Pages 102 to 105)
102
1 Lascher
2 Q. On the first page, second
3 paragraph, the same numbers for the
4 enterprise value of 975 and the value of the
5 floating rate collateral is at 200 still,
6 correct?
7 A. Yes.
8 Q. Go with me, however, to pages 5 and
9 6, under "New Equity, New Equity
10 Capitalization Options."
11 A. Uh-huh.
12 Q. Which continues on to page 6 as
13 well as "Conditions Precedent."
14 Do you want to take a moment to
15 read them?
16 A. Wait. I'm sorry, just tell me
17 again, which sections did you want me to look
18 at?
19 Q. "New Equity Capitalization Options"
20 and "Conditions Precedent."
21 A. Okay.
22 Okay.
23 Q. Under the provisions of the "New
24 Equity Capitalization Options," okay, it
25 provides that "Lehman, in its sole
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2 discretion, shall select one of the following
3 post effective date new equity capitalization
4 options."
5 A. Yes.
6 Q. "Capitalization Option A," and then
7 on the next page is "Capitalization Option
8 B."
9 A. Right.
10 Q. A, involves an equity offering with
11 Apollo being a backstop with a break-up fee
12 again, correct?
13 A. Correct.
14 Q. B, involves Lehman retaining all
15 the shares no backstop by Apollo and no
16 break-up fee, correct?
17 A. Right.
18 Q. Did B still contemplate Lehman
19 selling a portion of the equity it was going
20 to get?
21 A. It doesn't look like it does.
22 Q. Well, if I look at the "Conditions
23 Precedent" next section.
24 A. Uh-huh.
25 Q. It says, again, "The transaction
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2 will become binding on Lehman when Lehman,
3 AIC and the Company execute a plan support
4 agreement."
5 A. Right.
6 Q. The third bullet point there under
7 that says, "Agreement reached with AIC in
8 form and substance satisfactory to Lehman."
9 What agreement would that have
10 been, sir?
11 A. Again, it's, you know, sort of same
12 as the last one. It could have been an
13 agreement on the backstop.
14 Q. Was it an agreement to sell shares?
15 A. I don't know.
16 Q. Who would know if you don't know
17 for Lehman's side?
18 MR. O'BRIEN: Are you finished
19 answering his first question?
20 THE WITNESS: What's the first
21 question?
22 MR. O'BRIEN: What agreement was
23 contemplated by that provision? The
24 agreement with AIC in form and substance
25 satisfactory to Lehman.
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2 THE WITNESS: Yeah, I mean, yeah,
3 I'm done answering.
4 Q. Could that agreement be the
5 agreement to sell shares to Apollo?
6 A. Under this construct it looks like
7 there's one scenario where they would provide
8 a backstop and we would auction the equity.
9 In another scenario where we would just hold
10 all the equity ourselves.
11 Q. So is it, in the contemplation of
12 Lehman that it would, it would be prepared to
13 assume the risk of owning all this stock of
14 the reorganized company?
15 A. I mean this is really just a
16 negotiation.
17 Q. Well, do you know if this went out
18 to anybody?
19 A. I don't.
20 Q. So I'm asking you at this point in
21 time was it your contemplation that Lehman
22 would agree to own all the stock of the
23 company?
24 A. We didn't want to own the whole
25 company.
28 (Pages 106 to 109)
106
1 Lascher
2 Q. In fact, I think in the court
3 filings in the Lehman case it was the
4 company's position that they wanted to lay
5 off some of the risk, 50 percent of the risk,
6 correct?
7 A. It was Lehman's position?
8 Q. Yes.
9 A. Yes.
10 Q. Was that the position of Lehman at
11 this time?
12 A. Yes.
13 Q. Did Lehman have anybody else that
14 was intending to sell to but Apollo at this
15 time?
16 A. The equity at --
17 Q. Yes.
18 A. -- at emerging from bankruptcy?
19 Q. Yes.
20 A. No.
21 MR. PARKINS: Give me a moment,
22 please.
24 (Exhibit Lascher-13, E-mail dated
25 6/17/10 with attachment, "Illustrative
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1 Lascher
2 Terms of Proposed Restructuring, June
3 17, 1010," Bates Nos. LEH-ALI 004791
6 Q. I'm handing you what's been marked
7 as Exhibit 13.
8 A. Yes.
9 Q. This is a document with Lehman
10 Bates stamp numbers 4791 through 4803.
11 A. Yes.
12 Q. The first page of this exhibit is
13 an e-mail from Mr. Brian Greer at Dechert --
14 A. Yes.
15 Q. -- to Mr. Zelter at Apollo and a
16 number of other people cc'd, correct?
17 A. Yes.
18 Q. And you received this document,
19 didn't you?
20 A. Yes.
21 Q. Okay. Do you remember receiving
22 this document?
23 A. No. I don't remember specifically
24 receiving it.
25 Q. This document is dated June 17,
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1 Lascher
2 2010, approximately 30 days before the filing
3 of the Innkeepers bankruptcy, correct?
4 A. No. Innkeepers filed in July.
5 Q. I said 30 days before Innkeepers
6 filed bankruptcy.
7 A. Yes.
8 Q. About 30 days.
9 A. Yes.
10 Q. Look with me on page 4 of this
11 document.
12 A. Okay.
13 Q. "Use of Cash Collateral."
14 A. Yes.
15 Q. The third bullet of page 4 that
16 flows over to the next page.
17 A. Right.
18 Q. "Company's use of Lehman's cash
19 collateral shall be limited to use for the
20 benefit of the floating rate collateral. "
21 A. Correct.
22 Q. That's Lehman's collateral,
23 correct?
24 A. Yes.
25 Q. That was the proposal that Lehman
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2 made?
3 A. Yes.
4 Q. Going on to the -- down on page 5
5 the "AIC Purchase of New Equity."
6 A. Uh-huh.
7 Q. This provides that Apollo will
8 acquire for cash an amount equal to
9 $117 million of equity, which is 50 percent
10 of the Lehman shares, correct?
11 A. That's right.
12 Q. It also provides later on in that
13 box that there shall be a $70 million senior
14 secured debt made available by Apollo as an
15 equity contribution. Do you see that?
16 A. (Witness reading document.)
17 Q. I'm sorry, I read that wrong.
18 There will be $75 million of new debt less
19 the amount of the AIC equity contribution
20 defined as the new debt.
21 A. Right, I see that.
22 Q. And that's to be provided by
23 Apollo, correct?
24 A. Yes.
25 Q. And if we turn the page to page 6,
29 (Pages 110 to 113)
110
1 Lascher
2 we see that AIC shall make an additional
3 equity contribution in an amount equal to
4 blank million in respect of its guaranty of
5 the company's PIP obligations with respect to
6 the fixed rate pool; do you see that?
7 A. Yes.
8 Q. That's defined as AIC's equity
9 contribution?
10 A. Right.
11 Q. Prior to this document being
12 prepared by your law firm, Lehman's law firm,
13 and it's dated 6/17/10, did you have
14 discussions with Apollo regarding the change
15 in the structure from this document to the
16 prior term sheets prepared?
17 A. I believe this term sheet probably
18 represents the term sheet, you know, the
19 first time we really shared a draft of it
20 with Apollo.
21 Q. My question again, sir, and I
22 appreciate your answer. Between the prior
23 term sheets dated earlier than June 17 and
24 June 17, did you have discussion with Apollo
25 with respect to what was going to be in the
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2 substance of this document?
3 MR. O'BRIEN: By that earlier date,
4 do you mean June 4th?
5 MR. PARKINS: Yes.
6 MR. O'BRIEN: 2010?
9 Mr. Beilinson on behalf of the company with
10 respect to what was going to come out on this
11 document?
12 A. Yes.
13 Q. And when did you have those
14 discussions?
16 Q. Did you tell him there was going to
17 be two different proposals prepared by
18 Lehman?
19 A. What do you mean?
20 Q. Well, my question is: Did you tell
21 Mr. Beilinson there were going to be tough
22 different proposals prepared?
24 I believe only one proposal went to
25 Apollo.
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2 THE WITNESS: You know what, I
3 remember.
4 A. There were two proposals that were
5 sent to Innkeepers and only one was sent to
6 Apollo. Whether we had a conversation with
7 Mark to highlight that, I don't remember.
8 Q. The reason I ask, sir, because the
9 first page of the term sheet says, "Term
10 Sheet Alternative A"?
11 A. Right.
12 Q. There was a different alternative I
13 take it considered?
14 A. Yeah, and I think it was similar to
15 what was in the previous exhibit which stated
16 that Lehman would own all of the equity.
17 Q. So look with me again on page 6.
18 A. Okay.
19 MR. O'BRIEN: Exhibit 13?
21 A. Okay.
22 Q. Exhibit 6 shows in the top box,
23 after the definition of "AIC equity
24 contribution," it says, "on the effective
25 date Innkeepers shall distribute the new
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1 Lascher
2 equity as follows:" 48 and a half percent to
3 Lehman, same to AIC and 3 percent to
4 company's management and/or unsecured
5 creditors.
6 Do you see that?
7 A. Yes.
8 Q. The "Conditions Precedent" which is
9 the next box?
10 A. Yep.
11 Q. Reflects that the PSA is a
12 condition precedent would be binding on
13 Lehman when Lehman, AIC and the company
14 executed a PSA. Do you see that?
15 A. Yes, I do.
16 Q. You see here in the third bullet
17 point in that box "Conditions Precedent," the
18 language we saw earlier, "Agreement reached
19 with AIC in form and substance satisfactory
20 to Lehman"?
21 A. Right.
22 Q. Do you understand what that meant
23 at this time?
24 A. It would have meant a sale of the,
25 of half the equity to Apollo.
30 (Pages 114 to 117)
114
1 Lascher
2 Q. And if we turn to page 7 of this
3 document, the proposal embodied in this
4 document, if you go down to the first dark
5 bullet point on page 7?
6 A. Yes.
7 Q. It says, "The failure by AIC to
8 purchase the shares by April 15, 2011."
9 Correct?
10 A. Yes.
11 Q. Now as I go to page 9 of this
12 document.
13 A. Okay.
14 Q. The last two bullet points on that
15 page provide, next to the last one is the
16 occurrence of, one, a change that has
17 material adverse effect on the use, value or
18 condition of the company or Apollo.
19 A. Right.
20 Q. Their respective assets or the
21 legal or financial status or business
22 operation of the company or Apollo or, two,
23 material disruption or material adverse
24 change in the financial real estate, banking
25 or capital markets?
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1 Lascher
2 A. Right.
3 Q. And then the last one is when the
4 Lehman determined to the sole discretion
5 after completion of its tax due diligence
6 that the anticipated tax obligations of the
7 company on the effective date are
8 unacceptable to Lehman?
9 A. Yes.
10 Q. Now this bullet point has embodied
11 similar language in the PSA?
12 A. The last bullet you're talking?
13 Q. Yes.
14 A. Yes.
15 Q. And there's a 45-day deadline by
16 which Lehman has to make that determination,
17 correct?
18 A. Correct.
19 Q. Has Lehman made that determination
20 yet?
21 A. No.
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5 Q. I've handed you an exhibit marked
6 number 14 that says on the first page, "PW
7 Comments." Do you know what PW stands for?
8 A. Paul Weiss.
9 Q. 6/22/10.
10 As presented to us, this document,
11 if you go to the next page, has Dechert draft
12 6/17, 18, do you have any reason why it reads
13 like that?
14 A. I would imagine they were working
15 off a Dechert document and didn't change the
16 header.
17 Q. But you don't know?
18 A. No.
19 Q. Me neither.
20 Okay. I see that on this document,
21 Exhibit 14, the language with respect to
22 Lehman conducting its own analysis in
23 footnote 2 is gone, in fact, there is no
24 footnote 2 any more, correct?
25 A. There's a footnote 2 on the second
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1 Lascher
2 page.
3 Q. But it's not footnote 2 with
4 respect to Lehman conducting its own analysis
5 any more, correct?
6 A. It's not -- the one that had been
7 there in some of the previous versions isn't
8 there.
9 Q. Do you know whether Lehman had
10 completed its analysis by June 17th?
12 Q. How about by June 22nd?
15 exhibit, please. "Use of Cash Collateral."
16 A. Okay.
17 Q. In the first paragraph under "Use
18 of Cash Collateral." "In addition to
19 providing the Floating Rate DIP Facility,
20 Lehman will consent to the use of its cash
21 collateral in terms acceptable to Lehman
22 provided however the company's use of
23 Lehman's cash collateral shall be limited to
24 use for the benefit of floating rate
25 collateral."
31 (Pages 118 to 121)
118
1 Lascher
2 A. I see that.
3 Q. That's similar to the language in
4 the prior term sheet that was created,
5 correct?
6 A. Yes.
7 Q. Reading on, on the "Use of Cash
8 Collateral" provides, "Company's use of
9 Lehman's cash collateral will terminate
10 immediately upon the occurrence of a
11 termination event, as defined below,
12 including the failure of the company to meet
13 the plan milestones as defined below."
14 Do you see that?
15 A. Yes.
16 Q. Then as we get into the "AIC
17 Purchase of New Equity" provision of this
18 document, I see that the price has changed
19 from the prior term sheet. Take a moment and
20 take a look.
21 A. Yes, I see that.
22 Q. The price went down?
23 A. Yeah.
24 Q. The price went down still for a
25 50 percent of the stock, though, correct?
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1 Lascher
2 A. Yes.
3 Q. Explain to me why you made an offer
4 with the price going down?
5 A. I didn't make an offer. This is
6 their counteroffer to me.
7 Q. Okay. Good.
8 Now it also provides in here for
9 AIC making, paying Lehman an option premium
10 of $10 million at closing.
11 A. Uh-huh.
12 Q. Do you know what that option
13 premium was for?
14 A. I mean -- the truth -- I didn't
15 care about any of this. I wanted money. I
16 wanted the most money that I could get from
17 them in selling the equity. Whatever all
18 this means is irrelevant to me.
19 Q. And my question is, do you know
20 what is meant by the option premium on what,
21 is what I'm asking, do you know what that
22 meant?
23 A. To buy the equity.
24 Q. To buy the rest of the equity, the
25 other 50 percent?
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2 A. No, to buy the 50 percent we were
3 selling.
4 Q. Okay. Then it says in here --
5 A. Without us auctioning.
6 Q. I'm sorry, okay.
7 "AIC may consider an additional
8 capital commitment of up to five million to
9 fund property improvement plans in exchange
10 for a complete release of any liability for
11 payment or performance of any PIP related
12 obligations, if any, of AIC"; do you see
13 that?
14 A. Yes.
15 Q. Now, did you have discussions
16 regarding Apollo's desire to get a complete
17 release on any guaranty to do PIP work on or
18 about the date of this document?
19 A. I mean this definitely came up in
20 the context of what they wrote here. But I
21 have no ability to release them from a
22 guaranty that's not for my benefit.
23 Q. But it was something that Apollo
24 asked for?
25 A. That's what it says here.
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1 Lascher
2 MR. EHRLICH: Object to form.
3 Q. Going to the next page, page 6 of
4 this document, likewise, it has in the top
5 box that the equity ownership would be 48.5
6 to Lehman, 48.5 to AIC or to one of more of
7 its designees?
8 A. Right.
9 Q. That's a new add from the prior
10 draft, correct?
11 A. Right.
12 Q. And then "Conditions Precedent"
13 still provide that there will be transactions
14 binding on Lehman when Lehman, again, Apollo
15 and the company execute a plan support
16 agreement, correct?
17 A. Yes, I see that.
18 Q. So at least whichever date you
19 pick, June 17 or June 22nd, okay, as a
20 proposal from Apollo everybody sign --
21 everyone, AIC, Lehman and the company are
22 still signing a single PSA for this to be
23 binding on Lehman, correct?
24 A. That's what it says in the term
25 sheet.
32 (Pages 122 to 125)
122
1 Lascher
2 Q. Going to page 7, you have the first
3 dark box bullet point again a failure by AIC
4 to purchase the shares by blank date in 2011?
5 A. Right.
6 MR. PARKINS: Take a break.
7 MR. O'BRIEN: How long?
8 MR. PARKINS: How long you want,
9 10 minutes, is that good for you?
11 MR. EHRLICH: Could we say 15?
12 MR. PARKINS: You want to pick up
13 at ten before the hour? Is that good?
16 (Exhibit Lascher-15, Dechert Draft
17 6/29/10, Term Sheet Alternative A,
18 Illustrative Terms of Proposed
19 Restructuring, June 29, 2010, Bates Nos.
20 LEH-ALI 000254 through LEH-ALI 000264,
22 Q. I've handed you a document marked
23 Exhibit 15.
24 A. Yes.
25 Q. Again, it's a Lehman production,
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1 Lascher
2 Bates stamp numbers 254 through 264.
3 A. Yes.
4 Q. On the right-hand top of the first
5 page it says "Dechert Draft 6/29/10, Term
6 Sheet Alternative A, Illustrative Terms of
7 Proposed Restructuring, June 29, 2010."
8 A. Yes.
10 document. Looking at the "General Unsecured
11 Claim" box?
12 A. Yes.
13 Q. It says "Shall not receive any
14 recovery under the Plan and shall be deemed
15 and voted against the Plan. Lehman shall
16 determine, in its sole discretion, whether to
17 provide a gift of cash or equity to any class
18 of general unsecured claims. [Discuss
19 impaired accepting class and REIT issues]."
20 A. Yes.
21 Q. Do you know if this document,
22 Exhibit 15, this term sheet, was distributed
23 to Innkeepers and Apollo?
24 A. I don't know.
25 Q. Do you remember discussing and
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1 Lascher
2 authorizing the preparation of this term
3 sheet?
4 A. Specifically this term sheet?
5 Q. Yes.
6 A. No.
7 Q. Do you remember discussing this
8 term sheet with Mr. Beilinson?
9 A. I remember discussing all, you
10 know, a lot of the term sheets with Marc, but
11 whether it was this specific one, I don't
12 really know.
13 Q. Okay. Go with me to page 5 of this
14 document, please.
15 A. Okay.
16 Q. Under "Distribution of New Equity"
17 it provides that Lehman will get 97 percent,
18 correct?
19 A. Yes.
20 Q. And "Conditions Precedent to
21 Lehman's Obligations Under PSA"?
22 A. Yes.
23 Q. This document provides it will be
24 binding on Lehman when Lehman and the company
25 execute a plan. It doesn't have Apollo in
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1 Lascher
2 here, this draft, does it?
3 A. That's right.
4 Q. It does have in the third bullet
5 point "Agreement reached with Apollo
6 Investment Corp. ('AIC') in form and
7 substance satisfactory to Lehman." Is that
8 the purchase of equity --
9 A. Yes.
10 Q. -- It's referring to here?
11 Yes?
12 A. Yeah, I would imagine.
13 Q. Was there any other agreement you
14 were contemplating with Apollo Investment
15 Corporation at this time other than the
16 purchase of equity?
17 A. I can't remember if at this point
18 we were still talking about Apollo providing
19 a backstop for a sale of the equity.
20 Q. Well, you don't see any backstop in
21 this document, do you? Take a look if you
22 need to.
23 A. That's right, but I also don't see
24 anything about a sale.
25 Q. Well, were you intending to sell
33 (Pages 126 to 129)
126
1 Lascher
2 50 percent of your stock, Lehman stock, if it
3 got it all, still at this time to Apollo?
4 A. Yes. We were still planning on
5 selling half of it whether we were settled on
6 at that point selling it to Apollo or not?
7 Q. Weren't you about to sign a term
8 sheet with Apollo on or about this date to
9 sell the stock to Apollo, contemplate a sale
10 of stock to Apollo?
11 A. I'm just saying in terms of the
12 time continuum I can't remember where we were
13 in our thinking on June 23rd -- or 29th or
14 23rd, whatever.
15 Q. You were negotiating at this time,
16 though, a term sheet with Apollo to sell this
17 50 percent of the stock to Apollo, correct?
18 MR. O'BRIEN: Do you mean at or
19 around June 29th?
21 A. I'm just telling you, I can't
22 remember in terms of the time continuum when
23 we started doing that, but yes, at some point
24 we settled on we were going to sell it to
25 Apollo.
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2 Q. Okay. Did you ever have
3 discussions with anybody else about a
4 specific term sheet where Lehman would sell
5 50 percent of the stock to anybody else other
6 than to Apollo?
7 A. No.
8 Q. Okay.
10 7/7/10 with attachment, Bates Nos. AIC
11 00000127 through AIC 00000144, marked
14 has been marked as Exhibit 16.
15 A. Yes.
16 Q. These documents were produced by
17 Apollo. They have AIC numbers, Bates stamp
18 numbers 127 through 144.
19 A. Yes.
20 Q. The first page of this document has
21 two e-mails on it. The earlier -- the
22 earlier dated e-mail and time is an e-mail
23 from Mr. Alan Kornberg at Paul Weiss to a
24 group of people, lawyers, both at Dechert and
25 at Kirkland and the second was an e-mail from
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2 Mr. Glatt at Apollo to Mr. Beilinson.
3 Do you see that?
4 A. Yes.
5 Q. Did you ever see they e-mail
6 before?
7 A. I don't remember seeing it.
8 Q. Go with me to the documents behind
9 the e-mail.
10 A. Okay.
11 Q. If you look with me at pages 128,
12 the Bates stamp numbers 128 through 133 --
13 A. Yep.
14 Q. -- I see there a document marked
15 Term Sheet, Lehman/AIC. Do you see that?
16 A. Right.
17 Q. Have you ever seen this term sheet
18 before?
19 A. I think so.
20 Q. Okay. This term sheet has at the
21 top right, doesn't it, the initials of Paul
22 Weiss law firm, draft 7/6/10, correct?
23 A. Yes.
24 Q. And this document from the Paul
25 Weiss firm who represents Apollo, provides --
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2 if you look with me on Bates stamp number
3 128, this is the first page of that. Do you
4 have it?
5 A. Yes.
6 Q. -- the seller of stock is going to
7 be Lehman and the acquirer is going to be
8 Apollo, correct?
9 MR. O'BRIEN: Under this term
10 sheet.
11 MR. PARKINS: Under the term sheet,
12 correct, that's what the term sheet
13 provides.
14 A. It says after confirmation Lehman
15 will agree to sell AIC the right to receive
16 half the equity in the company.
17 Q. Right. Going on to the next page,
18 Bates stamp number 129, "Distribution of
19 Innkeepers Equity" provides 48.5 percent to
20 Lehman, 48.5 to Apollo, correct?
21 A. Right.
22 Q. Conditions precedent -- I'm
23 sorry -- "Conditions to Execution of Stock
24 Purchase Agreement," that paragraph starts
25 out, the execution of the Stock Purchase
34 (Pages 130 to 133)
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1 Lascher
2 Agreement will be subject to the satisfaction
3 or waiver by Lehman or Apollo, as applicable,
4 to the following conditions.
5 So pursuant to this term sheet,
6 there was going to be a stock purchase
7 agreement?
8 A. Right.
9 Q. If I go to the next page, which is
10 130, "Conditions to Closing," that section
11 starts out, "The consummation of a
12 transaction on the terms described herein
13 will be" the subject -- "will be subject to
14 the satisfaction or waiver by Lehman or AIC,
15 as applicable, of customary closing
16 conditions including, without limitation, the
17 following."
18 And it lists there as a customary
19 closing condition the third bullet point, the
20 termination of the guaranty we talked about
21 earlier, correct?
22 A. Yes, that's what it says.
23 Q. Moving on, sir, to the Bates stamp
24 number page 134 -- 134, that's a Paul Weiss
25 draft document dated the same day, 7/6/10,
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2 "Term Sheet Alternative A (Lehman
3 Innkeepers)."
4 Do you see that? Have you seen
5 this document before?
7 Q. Now, if you go with me to page 5 of
8 this document, Bates stamp number 138 --
9 A. Okay.
10 Q. -- under the "New Equity" box 97
11 percent of the new equity is going to go to
12 Lehman under this proposal.
13 A. Right.
14 Q. Okay. And a condition precedent to
15 this term sheet proposal is the transaction,
16 again, becoming binding on Lehman with Lehman
17 -- when Lehman, Apollo Investment Corp. (AIC)
18 and the company execute a Plan Support
19 Agreement, correct?
20 A. That's what it says.
21 Q. And if you go to the next page,
22 this document, at the top box, the second
23 bullet point says "Execution of the
24 definitive agreements contemplated by the
25 term sheet, dated as of July [ ], 2010, by
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2 and between Lehman and AIC (the 'Lehman-AIC
3 Term Sheet')."
4 A. Yes.
5 Q. Does this refresh your recollection
6 that on or about or prior to July 6th there,
7 in fact, did exist a term sheet reflecting an
8 agreement to sell the shares to AIC?
9 A. Wasn't that the term sheet that we
10 just went through?
11 Q. I'm asking you whether or not you
12 recall there being a definitive term sheet,
13 if there is such a thing, a term sheet.
14 A. There is a draft term sheet that
15 was attached --
16 Q. A term sheet reflecting the terms
17 under which Lehman would sell 50 percent of
18 the stock to Apollo.
19 A. The term sheet that we just went
20 through that was attached to this e-mail was
21 the term sheet to sell half of what we got to
22 Apollo.
24 Apollo regarding their proposal reflected in,
25 as attached to this cover e-mail, the two
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2 proposals?
3 MR. O'BRIEN: Wait a minute.
4 You're asking if he had discussions with
5 Apollo --
6 MR. PARKINS: With Apollo.
7 MR. O'BRIEN: -- about this
8 specific term sheet?
9 MR. PARKINS: Both of them. Both
10 of them that are attached to this cover
11 e-mail.
12 MR. O'BRIEN: Well, one is a term
13 sheet with Apollo, the other is an
14 agreement with Innkeepers.
15 MR. PARKINS: Right, but both
16 involve Apollo participating to some
17 extent.
18 Q. My question is did you have
19 discussions with the Apollo regarding both of
20 these term sheets?
23 Q. Were you having discussions with
24 Apollo at this time regarding the acquisition
25 of stock that Lehman was going to get as part
35 (Pages 134 to 137)
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1 Lascher
2 of the PSA?
3 A. Yes.
4 Q. So you don't remember specifically
5 talking about these term sheets; is that your
6 answer?
7 A. Yes. These versions of the term
8 sheets.
9 Q. I'm sorry?
10 A. These versions of the term sheets.
11 Q. Okay.
12 MR. PARKINS: Give me a second.
15 7/17/10 with attachment, Bates Nos.
16 INN_MID00003311 and INN_MID00003312,
19 as Exhibit 17.
20 A. Yes.
21 Q. It's a document that is an
22 Innkeepers production. It's Bates stamp
23 number 3311 to 3312.
24 A. Right.
25 Q. Contains on the first page of it
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2 two e-mails.
3 The first is an e-mail from -- on
4 the lower part of the document -- the first
5 an e-mail from Mr. Marc Beilinson to Joseph
6 Glatt and Schuyler Hewes, subject Guaranty
7 Analysis Based Upon Reading of Schedule 11
8 Only.
9 And the second top part of this
10 document is an e-mail from Mr. Hewes to
11 Mr. Beilinson and Mark Murphy and other
12 individuals at Apollo. Do you see that?
13 A. Yes.
14 Q. The second page of this document
15 has a bunch of numbers on it. It's entitled
16 "Innkeepers USA Trust Summary of Schedule
17 XI."
18 A. Right.
19 Q. Have you seen this document before?
20 A. I've seen something like this.
21 Q. And when you say this, are you
22 referring to the second page or both the
23 entire document I've handed you?
24 A. I never saw the e-mail. But I've
25 seen something like this schedule.
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2 Q. Okay. If you look at the schedule
3 here, when you look at the right-hand column,
4 the very right column, it says $13,665,381
5 (sic), right?
6 A. 13,665,581.
7 Q. Right. Is that the number you
8 understand to be the company's position on
9 what Apollo's exposure is on a guaranty?
11 Please note my objection. This is a
12 totally improper question, beyond the
13 scope of this notice and improper
14 discovery in a state court litigation
15 that Midland has brought.
16 MR. PARKINS: Okay. You can
17 answer.
18 THE WITNESS: Can I answer it?
19 MR. O'BRIEN: I join in the
20 objection. It is outside the scope, but
21 I'm not going to instruct the witness
22 not to answer the question.
23 A. I don't really know what they think
24 is there -- actually, can you just ask me the
25 question again.
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2 Q. This $13 million odd number is that
3 a number you had discussed with Innkeepers as
4 their view of the exposure of Apollo on the
5 guaranty we've been talking about?
6 MR. O'BRIEN: Well, you make it
7 sound like his numbers.
8 MR. PARKINS: No, I'm asking if
9 this is what Innkeepers --
10 MR. O'BRIEN: All my client said
11 was that he had seen a schedule like
12 this before.
13 Q. And my question is, did Innkeepers
14 discuss this number in the context of
15 developing the PSA as dealing with the Apollo
16 guaranty problem with this magnitude of
17 dollars?
19 A. I don't remember the number. We
20 looked at this schedule, we looked at a
21 schedule similar to this in agreeing to what
22 scope of work we would commit to having the
23 company do as long as there were funds
24 available post emergence from bankruptcy,
25 assuming that we own the company together.
36 (Pages 138 to 141)
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1 Lascher
2 Q. That was in the context of these
3 negotiations for the PSA, correct?
4 A. It was in the context of our
5 negotiations over the sale of the equity to
6 Apollo.
7 Q. Bu you didn't just mention what the
8 company would do, you are going to end up
9 owning the company pursuant to the PSA if
10 it's implemented, right?
11 A. Yes, yes.
13 A. But in terms of what their
14 perspective, on whether, you know, this was
15 the number that they were liable for under
16 the guaranty, no.
17 Q. I understand. I just want to know
18 if this was discussed between Innkeepers and
19 you.
20 MR. PARKINS: I pass the witness.
21 I think there is other counsel who have
22 questions here.
23 MR. O'BRIEN: Next.
24 EXAMINATION BY
25 MR. GOTTESMAN:
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2 Q. Good afternoon. My name is
3 Lawrence Gottesman of Bryan Cave. We
4 represent LNR Partners, LLC, which is the
5 special servicer group to securitization
6 trust. Just for the record one of those is
7 CSFB 2007-C1 which services two loans, one of
8 which relates to the Residence Inn Mission
9 Valley in San Diego and the other of which
10 relates to the Residence Inn Garden Grove.
11 The other trust is called ML-CFC 2006-4 and
12 that trust has three Innkeepers' loans, one
13 of which is the Doubletree Guest Suites in
14 Washington, D.C., another of which is a
15 Residence Inn Tyson's Corner, Vienna,
16 Virginia, and the third is the Homewood
17 Suites in San Antonio.
18 Are you familiar with any of those
19 loans as part of the planned negotiation and
20 plan support process that you described in
21 your prior testimony?
22 A. Yes.
23 Q. Can you tell me what your
24 familiarity is?
25 A. As part of our PSA, we -- you know,
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2 there's about $150 million of debt that would
3 remain on those assets and one other in the
4 restructured company.
5 Q. And were there discussions between
6 Lehman on the one hand and Innkeepers on the
7 other with respect to those hotels?
8 A. About the debt on those hotels.
9 Q. And let me -- probably it's just
10 easier if we go back to what was marked
11 earlier today as Exhibit 5, which is the Plan
12 Support Agreement.
13 A. Okay.
14 Q. And I would direct your attention
15 to, it's the one that's bound, to the term
16 sheet that's annexed to the Plan Support
17 Agreement. I guess page 2 of that, if you
18 could get there, please.
19 A. Okay.
20 Q. And your answer a moment or two
21 ago, you were referring to what's called
22 other secured debt in the term sheet; is that
23 correct?
24 A. Yes.
25 Q. And were there discussions between
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2 Lehman on the one hand and Innkeepers on the
3 other with respect to that other secured
4 debt?
5 A. Yes.
6 Q. Can you tell me when the
7 discussions with respect to the other secured
8 debt started in the process that you
9 described earlier today?
10 A. I mean they would have started at
11 our first meeting back in April, I think it
12 was the April 22nd meeting. They were part
13 of the, you know, the organizational chart
14 that's attached to the Moelis presentation
15 and there was always an amount of debt that
16 was allocated to assets other than the fixed
17 rate and floating rate pools.
18 Q. What I would like to know is in
19 this process who allocated that debt? I mean
20 there was a certain amount outstanding; is
21 that correct?
22 A. Yes.
23 Q. And what's that amount
24 approximately, if you know?
25 A. I don't remember offhand.
37 (Pages 142 to 145)
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1 Lascher
2 Q. Okay. And there was a certain
3 amount allocated in terms of treatment; is
4 that correct?
5 A. That's right.
6 Q. Do you know who initially made that
7 allocation?
8 A. We started with the Moelis
9 presentation.
10 Q. Okay. And was there a bid and ask
11 in terms of what Innkeepers wanted as opposed
12 to what Lehman wanted with respect to that,
13 or was there immediate agreement as to how
14 that allocation would proceed or be made?
15 A. I mean there wasn't immediate
16 agreement, because we wanted to do our own
17 investigation into, you know, what we thought
18 the value of the assets were.
19 Q. Well, let me state it different.
20 Was there a deal point for Lehman that there
21 be a particular number attached to that
22 bucket?
23 A. To the bucket other than fixed and
24 floating rate pool assets, yes.
25 Q. And did Lehman ever make a proposal
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2 as to what that number should be?
3 A. I mean we ended up with
4 $150 million. I don't remember -- I don't
5 remember --
6 Q. I have the term sheet. I'm trying
7 to understand where you started as opposed to
8 where you ended up.
9 A. I don't remember. We started with
10 the Moelis number and we ended up with what's
11 in the term sheet.
12 Q. Let me see if I can try and get to
13 this a different way.
14 Was there negotiation, sort of the
15 normal back and forth with respect to the
16 number between Lehman and Innkeepers?
17 A. It wasn't really a negotiation. I
18 mean we had a conversation about whether --
19 we had conversations about whether we agreed
20 with their number or not. It wasn't -- I
21 mean, I don't know if I would characterize it
22 as negotiations. There were discussions
23 about it.
24 Q. Well, was there ever a point where
25 Lehman indicated that it was unwilling to
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2 proceed with the deal if it were a different
3 number?
4 MR. O'BRIEN: On this subject?
5 MR. GOTTESMAN: With respect to the
6 treatment of the other --
7 MR. O'BRIEN: Yes.
8 MR. GOTTESMAN: -- what is called
9 the other secured debt in the term
10 sheet.
11 MR. O'BRIEN: Exactly.
12 A. I don't think we were ever that far
13 apart on what the number should be, but the
14 interim discussions I really don't remember
15 specifically.
16 Q. Did Lehman have an internal
17 analysis as to what number it would accept as
18 part of this process in order to go forward
19 with the transaction contemplated by the plan
20 term sheet and the Plan Support Agreement?
21 A. I mean it was part of what we -- it
22 was part of what Lazard was engaged to help
23 us with.
24 Q. Let me state it differently.
25 The basic economic deal from
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2 Lehman's perspective is that it was willing
3 to convert its debt to equity; is that
4 correct?
5 A. Yes.
6 Q. And was it a condition of that that
7 the other debt of the company somehow be
8 addressed?
9 A. Yes.
10 Q. Okay. Who, who stated at the
11 outset as to what that treatment had to be?
12 A. Well, if you go back to the Moelis
13 presentation, you can see what's proposed in
14 terms of -- and then we had discussion about
15 it. I mean I don't -- we had discussions
16 about the debt and where we thought the
17 outstanding debt should be when the company
18 emerged from bankruptcy.
19 Q. Let me state it differently. If
20 the debt were reinstated, was Lehman willing
21 to proceed with the Plan Support Agreement?
22 A. Reinstated in full you're saying?
23 Q. Correct.
24 A. I mean the Plan Support Agreement
25 says $150 million of debt, that those are the
38 (Pages 146 to 149)
146
1 Lascher
2 terms under which we're willing to proceed.
3 Q. No, I understand. I asked the
4 question in terms of what Lehman's goal was
5 in the negotiations, which went on for some
6 period of time, right?
7 A. Right.
8 Q. Was Lehman willing to live with an
9 outcome in which that debt was reinstated?
10 A. And when you say reinstated, you
11 mean in full?
12 Q. Correct. Unimpaired.
13 A. No, that's why we have $150 million
14 as where we want to see the debt on the other
15 asset.
16 Q. So Lehman's position as part of the
17 negotiation was that in order for it to
18 convert its debt to equity it needed to reach
19 agreement or at least dictate the terms of
20 how other creditors would be treated in the
21 context of an overall reorganization; is that
22 correct?
24 A. No -- I mean we had a discussion
25 with our borrower and this is where we agreed
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1 Lascher
2 would be an appropriate debt level on those
3 assets.
4 Q. Does Lehman have claims against the
5 borrowers with respect to the other secured
6 debt?
7 A. No.
8 Q. So in the context of Lehman
9 deciding its own treatment or negotiating its
10 own treatment, more accurately, there were
11 discussions as a condition to that as to how
12 other creditors would be treated; is that
13 correct?
14 A. I mean that's what's laid out in
15 the PSA, right?
16 Q. I understand. I'm asking about the
17 discussions as opposed to what's in the
18 document itself.
19 A. I mean, yeah, we would never -- it
20 would have never gotten into the document if
21 we didn't have a discussion about it.
22 Q. Was Lehman willing to simply do a
23 deal where it converted its debt to equity
24 and then left the company off to figure out
25 how to deal with its other issues?
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2 A. I wouldn't invest in a company
3 without being comfortable with the capital
4 structure of the company.
5 Q. And Lehman viewed the conversion of
6 its existing debt to equity as an investment?
7 A. I mean as part of our workout, we
8 would be an owner of this company.
9 Q. Did you have any discussions with
10 any of the other, with any of the debtor
11 holders of the unsecured debt as part of
12 these discussions?
13 A. Like who?
14 Q. Any of the securitization of or the
15 services with respect to that.
16 A. With which, for which loans?
17 Q. With respect to what's called the
18 other secured debt in the term sheet.
19 A. Well, you're the servicer for --
20 your client is a servicer for all of those
21 loans except for one; is that right? I'm
22 just trying to figure out who you're asking
23 me if I talked to.
24 Q. What I'm trying to find out, during
25 the process that you described, was Lehman a
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1 Lascher
2 party to any discussions with anyone other
3 than Innkeepers and Apollo as to the
4 transactions that are ultimately memorialized
5 in the Plan Support Agreement and in the term
6 sheet annexed to that?
7 A. We had conversations with Marriott
8 and we had conversations with -- we had a
9 conversation or two with Trimont.
10 Q. Anyone else?
11 A. I mean who else? I don't know who
12 else there is.
13 Q. Did you have a conversation with
14 any of the special servicers for the other
15 secured debt?
16 A. I don't remember having
17 conversations.
18 Q. Okay.
19 MR. GOTTESMAN: I have no further
20 questions.
21 MR. CRISP: Can we take a
22 two-minute break so I can move down
23 there a little closer?
39 (Pages 150 to 153)
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1 Lascher
2 EXAMINATION BY
3 MR. CRISP:
4 Q. Mr. Lascher, my name is Mike Crisp.
5 I'm with the firm of Kilpatrick Stockton and
6 we represent Trimont Real Estate Advisors,
7 which is a special servicer on the floating
8 rate mezz loan and also on the Anaheim mezz
9 loan. Are you familiar with those two loans
10 generally?
11 A. Yes.
12 Q. And I remind you, you are still
13 under oath even though the interrogator has
14 changed.
15 A. Okay.
16 Q. When did you first get involved
17 with the workout of the Innkeepers debt,
18 Lehman's Innkeepers debt?
19 A. The workout that's going on right
20 now or --
21 Q. Right.
22 A. I mean we started having detailed
23 conversations about it in April of this year.
24 Q. When was the default on the Lehman
25 loan by Innkeepers?
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2 A. I think they officially went into
3 default, I can't remember the exact date, but
4 it was -- there was a default if a certain
5 number of days had passed after they lost a
6 flag.
7 Q. Was it a default that led to your
8 involvement?
9 A. No, I had been involved for quite
10 some time.
11 Q. Did Innkeepers at any point stop
12 paying on the Lehman debt?
14 Q. When did you learn from Innkeepers
15 that the company was going to be unable to
16 continue the services debt?
17 A. Its debts generally you're saying?
18 Q. Uh-huh.
19 A. In April.
20 Q. That's what we referred to earlier
21 as the prior meeting?
22 A. Yes.
23 Q. Which was the meeting a week or
24 10 days prior to the April 22nd meeting?
25 A. Yes.
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1 Lascher
2 Q. Okay. And when you went to that
3 meeting, was it your view that -- let me back
4 up one step.
5 The Lehman loan is an asset that
6 Lehman, is it Lehman-ALI that holds that
7 asset or is it some other Lehman entity?
8 A. I think Lehman-ALI is the named
9 lender on it. There's -- I think Lehman
10 commercial paper has the economic interest in
11 the loan but Lehman-ALI is the lender of
12 record.
13 Q. Okay. And when you went to the
14 prior meeting, was it your view that the
15 Lehman loan was fully secured?
16 A. When I went to the prior meeting
17 did I think that that senior -- the senior
18 debt was fully secured?
19 Q. Right.
20 A. No.
21 Q. No, you did not think that?
22 A. No, I did not think that.
23 Q. Okay. Has any Lehman entity,
24 either ALI or Lehman commercial paper, ever
25 taken any impairment or reserve against loan
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1 Lascher
2 losses for the loan to Innkeepers?
3 A. I mean we don't, because we're
4 bankrupt we don't hold reserves against
5 positions. The last time we did a valuation
6 was over 6 months ago and I can't remember
7 offhand what the -- what we thought the
8 current value of the assets were.
9 Q. But the answer is as of today,
10 either because of bankruptcy or any other
11 reason, there has been no impairment or loan
12 loss reserve against that asset?
13 A. There is no reserve against the
14 asset.
15 Q. Has there been any impairment of
16 the asset in any other sense from an internal
17 accounting standpoint to any Lehman entity,
18 to your knowledge.
19 A. I'm not sure I understand what you
20 mean.
21 Q. Well, you've testified about there
22 not being a loan loss on the asset.
23 A. You mean that we didn't -- I didn't
24 think they were fully secured.
25 Q. And my question is internally by
40 (Pages 154 to 157)
154
1 Lascher
2 any other mechanism, have you indicated there
3 is an impairment of that asset?
4 A. I don't know.
5 Q. Let's talk for a minute about
6 the -- the original face amount of the Lehman
7 loan was $250 million?
8 A. 238 million.
9 Q. That that was the original?
10 A. Oh, no. 250, you're right, and
11 there were some paydowns with asset sales.
12 Q. Is 238 roughly the current
13 outstanding balance on the loan?
14 A. 220.2.
15 Q. And that loan is secured by the 20
16 hotels that are in that pool?
17 A. Yes.
18 Q. Now, I don't want to ask you what
19 the Lazard analysis was, but was a valuation
20 of those 20 hotels part of what Lazard did
21 for Lehman?
22 A. Yes.
23 Q. And then you understand there's a
24 borrower on a junior mezzanine loan where the
25 collateral is the equity interest in the 20
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1 Lascher
2 entities that own the 20 properties that
3 secured the Lehman loan?
4 A. Yes.
5 Q. And do you have an understanding
6 about the treatment -- let's just call that
7 the floating rate mezz, if that's okay with
8 you?
9 A. That's fine.
10 Q. Do you have an understanding about
11 what the treatment is of the floating rate
12 mezz under the PSA in the term sheet?
13 A. Yeah, they would get wiped out.
14 Q. And is Lehman supportive of that
15 treatment?
16 A. Yes.
17 Q. Why?
18 A. Because we don't think there is any
19 value in the position.
20 Q. Based on what?
21 A. Based on our -- the work that we
22 did or that Lazard did to understand the
23 value of the assets.
24 Q. Let's talk about the Anaheim one.
25 There's a $13.7 million loan on the Hilton
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1 Lascher
2 suites in Anaheim, California. Are you
3 familiar with that loan?
4 A. Yes.
5 Q. And then there's also a
6 $21.3 million junior mezzanine loan on the
7 same property. Are you familiar with that?
8 A. Yes.
9 Q. And what is the treatment, we'll
10 call that the Anaheim mezzanine loan, if
11 that's okay with you?
12 A. Okay.
13 Q. What, under the PSA in the term
14 sheet, is the treatment of the Anaheim mezz
15 loan?
16 A. There's $150 million of debt
17 available for seven assets and so however
18 that plays out. I think there is something
19 that's contradictory in the term sheet that
20 says it would be wiped out but from our
21 perspective whatever, whatever happens with
22 that -- the $150 million is available for the
23 seven assets.
24 Q. So sitting here today, your view is
25 that the Anaheim mezzanine loan would be not
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2 treated the way the mezzanine loans are
3 indicated to be in the PSA in the term sheet
4 but it would be moved over into the $150
5 million available to fund the secured loans
6 on not just the six hotels for which LNR is
7 the servicer but also for the Anaheim
8 property?
9 A. That could be.
10 Q. Is that your understanding today?
11 A. I mean that's my view. I don't --
12 I'm not sure that that's entirely, that's
13 accurately reflected in the PSA.
14 Q. There's a disconnect between the
15 PSA and what you currently understand today;
16 is that correct?
17 A. Yes.
18 Q. Has Lehman undertaken any efforts
19 to test the market's appetite for equity in
20 the post reorganization company?
21 A. No.
22 Q. Is it Lehman's intention post
23 reorganization to at some point in the future
24 market its 50 percent of the -- of the
25 distribution equity that it's retaining?
41 (Pages 158 to 161)
158
1 Lascher
2 A. Not in the near term.
3 Q. Well, there's a provision in the
4 term sheet, isn't there, that indicates that
5 Lehman and AIC within 3 years would undertake
6 to retain the services of a banker to market
7 and sell the stock in Innkeepers, sell the
8 company?
9 A. There's something to that effect in
10 there, yes.
11 Q. Other than the reorganization
12 transaction that's reflected in the PSA in
13 the term sheet with Innkeepers, and the
14 various iterations going back of the term
15 sheets that went back and forth, did Lehman
16 ever consider any other form of restructuring
17 other than the general scope, general
18 character of the transaction that's reflected
19 in those documents?
20 A. I mean we -- another restructuring
21 with -- with the company or the borrower
22 you're saying?
23 Q. Yes, something other than that a
24 debt for equity swap and the general
25 structure that we see pretty much from mid
159
1 Lascher
2 April through the documents that were filed
3 with the court.
4 A. We weren't --
6 A. We weren't willing to enter into
7 another restructuring. I mean we would have
8 taken the assets back but we weren't -- we
9 didn't want to restructure the loan.
10 Q. Was there ever any discussion
11 between you and Innkeepers about simply
12 modifying the terms of the Lehman loan?
13 A. Isn't that the same --
14 Q. In other words, push out the
15 maturity, reduce the interest rate, was there
16 any discussion between Lehman and Innkeepers
17 about that in April of 2010?
18 A. Previously, there were other
19 discussions with Innkeepers about that.
20 Q. Prior to April 2010?
21 A. Yeah.
22 Q. And tell me generally about those
23 discussions.
24 A. We talked about, you know, we were
25 asked if we would restructure the debt
160
1 Lascher
2 perhaps, you know, forgive some of the
3 principal balance in exchange for some piece
4 of equity in the company but we never got to
5 terms that we were comfortable with.
6 MR. CRISP: That's all I've got.
7 Thank you, Mr. Lascher.
8 MR. O'BRIEN: Anyone?
9 MR. GOULD: I have just a couple of
10 questions.
11 EXAMINATION BY
12 MR. GOULD:
13 Q. Mr. Lascher, I'm Jeff Gould with
14 Kirkland & Ellis on behalf of the debtors. I
15 just wanted to circle back to a couple points
16 you were asked about earlier.
17 A. Okay.
18 Q. This morning you were asked if you
19 had knowledge of whether Innkeepers was
20 considering any other plan other than that
21 anticipated by the PSA, and if I got my notes
22 right, your answer was that you never thought
23 they would do otherwise?
24 A. Right.
25 Q. Now, I just want to go back and ask
161
1 Lascher
2 you about that particular question, Your
3 knowledge of whether the debtor, whether
4 Innkeepers was considering any other plans.
5 So do you have any knowledge one way or
6 another?
7 A. No.
8 MR. O'BRIEN: Why don't you listen
9 to that?
10 Were you -- Mr. Gould, did you
11 complete your question? I just wanted
12 to make sure.
13 MR. GOULD: I did, but for the sake
14 of the record, let's clarify.
15 Q. Do you have knowledge one way or
16 the other whether Innkeepers was considering
17 any other plan other than that anticipated by
18 the PSA?
19 A. No.
20 Q. On another point I thought you said
21 a bit earlier this afternoon that Apollo --
22 that AIC would be getting equity pursuant to
23 the PSA and I just want to clarify that point
24 as well.
25 The PSA does not provide for AIC to
42 (Pages 162 to 165)
162
1 Lascher
2 get equity, does it?
3 A. That's correct. It's a --
4 Q. It's a separate agreement between
5 Lehman-ALI and AIC by which Apollo would
6 purchase any equity distribution in the event
7 such a plan occurs; is that correct?
9 MR. GOULD: Thank you. That's all.
10 MR. O'BRIEN: I think we're done,
11 Jennifer.
13
14
15
16
17
18
19
20
21
22
23
24
25
163
1
2 J U R A T
3
4 I, MICHAEL LASCHER, the witness
5 herein, the foregoing testimony of the
6 pages of this deposition, do hereby
7 certify it to be a true and correct
8 transcript, subject to the corrections,
9 if any, shown on the attached page.
10 ____________________
11 MICHAEL LASCHER
12
13 Subscribed and sworn to before me
14 this ___ day of __________, 2010.
15
16 _________________________________
17 NOTARY PUBLIC
18
19
20
21
22
23
24
25
164
2
8 and date it.
17
18
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20
21
22
23
24
25
165
1 E R R A T A
2
3
4
7
8 PAGE LINE
9 ___ ___ CHANGE:__________________________
10 REASON:___________________________________
11 ___ ___ CHANGE:__________________________
12 REASON:___________________________________
13 ___ ___ CHANGE:___________________________
14 REASON:___________________________________
15 ___ ___ CHANGE: __________________________
16 REASON:___________________________________
17 ___ ___ CHANGE: __________________________
18 REASON:___________________________________
19 ___ ___ CHANGE: __________________________
20 REASON:___________________________________
21
22 _________________________ _____________
24
25
43 (Pages 166 to 169)
166
1
3
STATE OF NEW YORK )
4 : ss.
COUNTY OF NEW YORK )
5
6 I, JENNIFER OCAMPO-GUZMAN, a
7 Shorthand Reporter and Notary Public within
8 and for the State of New York, do hereby
9 certify:
10 That MICHAEL LASCHER, the witness
11 whose deposition is hereinbefore set forth,
12 was duly sworn and that such deposition is a
13 true record of the testimony of such witness.
14 I further certify that I am not
15 related to any of the parties to this action
18 IN WITNESS WHEREOF, I have hereunto
19 set my hand this 20th day of August 2010.
20
21 __________________________
22 JENNIFER OCAMPO-GUZMAN
23
24
25
167
1
2 I N D E X
3 WITNESS PAGE
4 MICHAEL LASCHER
BY MR. PARKINS 5
5 BY MR. GOTTESMAN 138
BY MR. CRISP 150
6 BY MR. GOULD 160
7
E X H I B I T S
8
DESCRIPTION PAGE
9
Exhibit Lascher-1, Amended Notice of
10 Deposition of Corporate Representative
of Lehman ALI, Inc. and subpoena
11 duces tecum................................8
12 Exhibit Lascher-2, E-mails, Bates Nos.
LEH-ALI 005298 and LEH-ALI 005299..........11
13
Exhibit Lascher-3, Required Capital
14 Improvements Guaranty......................27
15 Exhibit Lascher-4, Handwritten notes,
16 LEH-ALI 004731.............................28
17 Exhibit Lascher-5, Plan Support
Agreement..................................48
18
Exhibit Lascher-6, E-mails, Bates No.
19 LEH-ALI 005676.............................50
20 Exhibit Lascher-7, Document entitled,
"Project Tavern, Lehman Discussion
21 Materials, April 22, 2010, by Moelis,"
Bates Nos. INN_MID00003533 through
22 INN_MID00003548............................64
23 Exhibit Lascher-8, Illustrative Terms of
Proposed Structuring, May 25, 2010,
LEH-ALI 000004.............................79
25
168
1
2 (Continued):
E X H I B I T S
3
DESCRIPTION PAGE
4
Exhibit Lascher-9, Document entitled,
5 "Illustrative Terms of Proposed
Restructuring, June 2, 1010," Bates Nos.
6 LEH-ALI 000014 through LEH-ALI 000022......80
"Illustrative Terms of Proposed
8 Restructuring, June 2, 1010," Bates Nos.
LEH-ALI 000023 through LEH-ALI 000031......94
9
11 LEH-ALI 000032 through LEH-ALI 000040......97
"Illustrative Terms of Proposed
13 Restructuring, June 2, 1010," Bates Nos.
LEH-ALI 000041 through LEH-ALI 000050.....101
14
Exhibit Lascher-13, E-mail dated 6/17/10
15 with attachment, "Illustrative Terms of
Proposed Restructuring, June 17, 1010,"
LEH-ALI 004803............................106
17
19 LEH-ALI 000230 through LEH-ALI 000241.....115
20 Exhibit Lascher-15, Dechert Draft 6/29/10,
Term Sheet Alternative A, Illustrative
21 Terms of Proposed Restructuring, June 29,
2010, Bates Nos. LEH-ALI 000254 through
22 LEH-ALI 000264............................122
23 Exhibit Lascher-16, E-mail dated 7/7/10
with attachment, Bates Nos. AIC 00000127
24 through AIC 00000144......................127
25
169
1
2 (Continued):
E X H I B I T S
3
DESCRIPTION PAGE
4
Exhibit Lascher-17, E-mail dated 7/17/10
5 with attachment, Bates Nos.
INN_MID00003311 and INN_MID00003312.......134
6
7 DOCUMENT REQUEST
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commencement
26:3
commencing
1:12
comment 14:6
Comments
116:7
commercial 22:2
31:18 152:10
152:24
commit 84:19
137:22
commitment
120:8
Committee 4:4
173
6:10
commonly 37:14
company 18:20
20:13,22 37:2
37:3 38:5 48:3
49:19 50:3,10
56:14,24 59:3
68:9,15,19
69:24 74:16
82:21 83:16,17
83:21 91:3,11
92:18 94:23
95:16 96:9
98:13 100:22
101:10 104:3
105:14,23,25
111:9 113:13
114:18,22
115:7 118:12
121:15,21
124:24 129:16
131:18 137:23
137:25 138:8,9
140:4 145:7,17
147:24 148:2,4
148:8 151:15
157:20 158:8
158:21 160:4
company's
106:4 108:18
110:5 113:4
117:22 118:8
136:8
compared 74:21
complete 48:18
120:10,16
161:11
completed 94:25
117:10
completing
94:22
completion
115:5
concept 23:22
concerning 22:5
condition 88:21
92:9 113:12
114:18 130:19
131:14 145:6
147:11
conditions 90:22
91:15 96:7
100:6,19 101:4
101:7 102:13
102:20 103:22
113:8,17
121:12 124:20
129:22,23
130:4,10,16
conduct 83:16
conducted 84:21
84:23
conducting
116:22 117:4
conference 45:3
76:10
Confidential
81:8 87:2
94:16
confirmation
129:14
confused 26:11
connection
51:14 57:3
consent 17:4
52:21 117:20
consequences
95:11
consider 120:7
158:16
considered
112:13
considering
160:20 161:4
161:16
consist 96:22
consistent 44:6
consists 84:10
consolidation
40:21
construct 105:6
construed 37:24
38:15
consummation
130:11
Contains 134:25
contemplate
103:18 126:9
contemplated
15:16 91:10,23
104:23 131:24
144:19
contemplates
96:3 100:20
contemplating
125:14
contemplation
105:11,21
context 10:6,7
13:10 20:25
21:6 22:18
24:10 25:13
30:17 32:4
36:9 38:10
41:5,12 46:14
46:20 120:20
137:14 138:2,4
146:21 147:8
continue 151:16
Continued 168:2
169:2
continues
102:12
continuum
126:12,22
contradictory
156:19
contrary 54:4
contribution
109:15,19
110:3,9 112:24
control 62:9
cont'd 3:2 4:2
conversation
61:6 73:22
112:6 143:18
149:9,13
conversations
12:16 70:13
88:14 143:19
149:7,8,17
150:23
conversion
148:5
convert 49:17
145:3 146:18
converted
147:23
copied 14:16
18:19
copies 97:22
copy 48:18 65:4
corner 43:13
81:13,22
139:15
Corp 125:6
131:17
Corporate 8:22
9:4 167:10
Corporation
3:14 6:24 11:2
86:19 125:15
correct 10:14,19
11:2,3 14:20
14:25 17:6,14
18:17,22 21:14
21:21 23:15,23
26:6 28:17
29:19 30:4,5
31:9 32:8,9
33:18,20 35:5
35:9 38:5,19
38:25 39:2,6
39:12 40:7,9
40:19 41:16,17
41:19 42:2,22
46:17 47:2,18
49:2,10,11
50:11 52:4
53:10,16 54:19
56:17 57:4
58:11,19 59:4
59:14,18 61:11
61:19,20 63:6
65:2 68:16,17
69:15,16 71:24
72:9 75:8,14
81:23 82:10,23
84:4,24 86:6
89:22 90:4,12
91:6,12 93:9
95:21 96:5,9
96:19 97:5
98:15,16,18,19
98:21,22
100:16,23
101:12 102:6
103:12,13,16
106:6 107:16
108:3,21,23
109:10,23
114:9 115:17
115:18 116:24
117:5 118:5,25
121:10,16,23
124:18 126:17
128:22 129:8
129:12,20
130:21 131:19
138:3 140:23
141:21 142:4
145:4,23
146:12,22
147:13 157:16
162:3,7,8
163:7
corrections
163:8 164:4,6
correctly 55:14
84:4 96:24
counsel 8:5
15:25 18:8
19:3 22:9 45:6
61:19 63:23
69:14 77:3
80:10,14 87:7
90:25 93:4
100:2,19
138:21
counsel's 7:19
counteroffer
119:6
COUNTY166:4
couple 40:11
160:9,15
court 1:2 7:14
10:17 11:4
106:2 136:14
159:3 164:16
covenant 59:13
174
covenants 55:12
55:23 59:18,19
cover 132:25
133:10
Craven 68:20
71:16
created 118:4
creditors 4:4
6:10 113:5
146:20 147:12
Crisp 3:6 6:11
6:11 149:21
150:3,4 160:6
167:5
CSFB139:7
current 153:8
154:12
currently 30:19
30:20 157:15
customary
130:15,18
D
D2:12 3:6 167:2
Dallas 2:21
Dan 6:17
DANIEL4:16
dark 114:4
122:3
dash 40:13,13
date 8:25 11:14
15:10,11 16:2
17:15 19:10,14
20:14 23:13
27:20 28:16,25
47:9 48:15
50:21 63:4
64:16 70:19
78:11 80:2,23
85:15 87:19
89:9 94:9
97:16 98:8
99:9 101:18
103:3 107:5
111:3 112:25
115:7 116:3
120:18 121:18
122:4,21 126:8
127:12 134:17
151:3 164:8
165:23
dated 14:18 20:5
28:12 65:2
98:6 99:14
101:23 106:24
107:25 110:13
110:23 127:9
127:22 130:25
131:25 134:14
168:14,23
169:4
dates 45:5
day 1:11 17:8,10
52:11 61:7,9
62:3 130:25
163:14 166:19
days 14:18 15:9
19:10 48:10
52:22 60:23
61:24 66:15
91:8 108:2,5,8
151:5,24
164:14
day-to-day
22:22 30:25
DC2:5
deadline 115:15
deal 8:8 30:24
32:2 33:12
39:11 52:20
76:15 100:3
142:20 144:2
144:25 147:23
147:25
dealing 137:15
Deal/Investor
65:24
debt 36:25 49:18
66:25 95:16,17
109:14,18,20
140:2,8,22
141:4,8,15,19
144:9 145:3,7
145:16,17,20
145:25 146:9
146:14,18
147:2,6,23
148:6,11,18
149:15 150:17
150:18 151:12
151:16 152:18
156:16 158:24
159:25
debtor 76:8 93:8
93:8 148:10
161:3
debtors 1:6 2:4,9
6:4,7 10:12
12:14 21:2
50:4 160:14
Debtors-in-Po...
2:4,10
debts 151:17
Dechert 1:10
3:20 6:25 7:4
13:2,12,23
23:6 34:12
68:23 80:11,14
81:7 82:2
86:25 87:21
94:15 98:6
99:20 101:21
107:13 116:11
116:15 122:16
123:5 127:24
168:20
decide 74:19
deciding 147:9
decision 51:9
declaration 11:7
declined 76:13
deemed 123:14
164:16
default 150:24
151:3,4,7
defined 49:23
50:4 109:20
110:8 118:11
118:13
defines 58:10
definitely 71:15
120:19
definition
112:23
definitive 131:24
132:12
deflagging 74:8
74:9
Dennis 68:20
71:16 88:15
depended 13:17
depending 30:24
deposed 7:10
deposing 164:13
deposition 1:9
5:16,18 8:16
8:22 9:4,11,25
12:23 48:20
75:5 77:8
163:6 164:3,11
164:14,15
166:11,12
167:10
describe 12:3
30:16
described
130:12 139:20
141:9 148:25
description 48:2
167:8 168:3
169:3
Designation
101:21
designees 121:7
desire 59:2
78:21 79:9
120:16
detailed 77:19
150:22
determination
115:16,19
determine
123:16
determined
115:4
developing
137:15
dfliman@kaso...
4:16
dial 71:13
dictate 146:19
Diego 139:9
Dieterich 3:18
6:20,20
different 8:16
39:9,13 100:12
111:17,22
112:12 142:19
143:13 144:2
differently
144:24 145:19
diligence 75:13
115:5
DIP23:24 24:18
44:5 117:19
direct 90:17
140:14
directors 96:22
disconnect
157:14
discovery 45:3
76:6 136:14
discretion 103:2
115:4 123:16
discuss 59:25
61:3 70:16
79:21 123:18
137:14
discussed 13:14
22:9 24:7,10
24:11 66:11,23
67:2,7 69:20
77:15 78:8,20
79:19 91:23
93:9 137:3
138:18
discussing
123:25 124:7,9
discussion 23:2
29:3 45:19
57:14 60:5
61:14,17 64:4
64:13 78:14
84:24 85:20
90:6 97:25
110:24 116:4
134:13 145:14
146:24 147:21
159:10,16
167:20
175
discussions 12:5
12:21 20:21
22:11,17,23
25:12,18,25
26:13,20,21,22
26:25 42:25
46:2,6 47:22
53:3,6,12 60:8
60:14 64:25
68:4,7 69:18
69:23 70:3
72:21 85:2,5,9
86:2,8,13
87:22 88:2,8
90:13 98:25
99:5 110:14
111:8,14
120:15 127:3
132:23 133:4
133:19,23
140:5,25 141:7
143:22 144:14
145:15 147:11
147:17 148:9
148:12 149:2
159:19,23
disruption
114:23
distribute
112:25
distributed
123:22
distribution
124:16 129:18
157:25 162:6
DISTRICT1:2
document 9:21
11:17 19:2,24
26:8 27:3,6,9
28:4,16 48:23
54:19,21 55:8
55:17 57:21
62:5 64:11,19
65:5 66:7,12
66:23 75:19
77:17 80:5,9
80:16,18 81:2
81:6 82:12
86:23 87:6,12
87:14 89:16
90:5,18,21,22
91:10,21 94:4
94:20 95:24
96:3,12 97:11
98:24 100:4,18
101:13,19,20
107:9,18,22,25
108:11 109:16
110:11,15
111:2,11 114:3
114:4,12
115:22 116:10
116:15,20
118:18 120:18
121:4 122:22
123:10,21
124:14,23
125:21 127:20
128:14,24
130:25 131:5,8
131:22 134:21
135:4,10,14,19
135:23 147:18
147:20 167:20
168:4,7,9,12
168:17 169:7
documentation
15:17
documents 9:13
9:19 24:22
25:6 26:8 29:7
87:24 88:5
127:16 128:8
158:19 159:2
doing 24:20
51:23 89:14
126:23 164:7
dollar 20:15
100:13
dollars 137:17
dots 52:23
Doubletree
139:13
draft 81:8 86:25
87:21 90:20
94:15 96:7
98:6,23 100:7
101:21 110:19
116:11 121:10
122:16 123:5
125:2 128:22
130:25 132:14
168:20
drafts 99:20
duces 8:24 9:6
167:11
due 37:22 75:13
115:5
duly 5:3 166:12
duty 45:17,24
46:3
D.C139:14
E
E2:2,2 3:2,2,24
4:2,2 5:2,2
165:1 166:2,2
167:2,7 168:2
169:2
earlier 15:16
19:23 93:25
110:23 111:3
113:18 127:21
127:22 130:21
140:11 141:9
151:20 160:16
161:21
early 40:6 85:6
86:15
ease 9:23
easier 33:4
140:10
economic 95:19
144:25 152:10
education 29:19
effect 45:13
58:13 114:17
158:9
effective 103:3
112:24 115:7
efforts 157:18
Ehrlich 3:16
6:22,22 8:11
13:6,16 25:8
25:23 39:7
121:2 122:11
133:21 136:10
137:18 138:12
either 24:20 30:6
152:24 153:10
Ellis 2:3,9 6:4,6
64:10 69:2
160:14
Elmore 2:22
5:22 97:24
embodied 56:25
77:16 99:2
114:3 115:10
embodies 56:12
emerged 145:18
emergence
137:24
emerging 106:18
emphasis 76:4
employed 5:10
employee 5:11
21:11
employees 9:16
21:25
ended 53:21
89:14 143:3,8
143:10
engaged 144:22
enter 10:18,25
22:18 48:4
79:13,16 159:6
entered 24:6
78:23
entering 12:18
enterprise 82:20
98:12 102:4
enthusiasm7:25
entire 39:11
135:23
entirely 157:12
entirety 13:3
entities 41:2
49:10 155:2
entitled 9:3 28:4
55:22 64:12,22
65:20 72:17
77:7 80:19
94:5 97:12
101:14,22
115:23 135:15
167:20 168:4,7
168:9,12,17
entity 152:7,23
153:17
equal 109:8
110:3
equity 17:2 18:5
36:25 37:7
38:4,19,24,25
39:4,5 65:24
67:6 68:9
71:22 83:14,16
83:19,20 84:8
84:8 89:5,8,20
89:21 92:20
93:15 95:15
96:3,4 100:5,5
100:13 102:9,9
102:19,24
103:3,10,19
105:8,10
106:16 109:5,9
109:15,19
110:3,8 112:16
112:23 113:2
113:25 118:17
119:17,23,24
121:5 123:17
124:16 125:8
125:16,19
129:16,19
131:10,11
138:5 145:3
146:18 147:23
148:6 154:25
157:19,25
158:24 160:4
161:22 162:2,6
errata 164:5,7
164:10,13
Especially 19:5
ESQ2:6,12,17
2:22 3:6,11,16
3:18,23,24 4:6
4:11,16
176
essentially 31:24
49:18
estate 3:4 22:2
22:21 30:2
31:18 41:9
114:24 150:6
et 1:5
event 53:13
59:10,12
118:11 162:6
events 58:10
everybody
121:20
ex 73:25
exact 30:24 47:9
73:21 151:3
exactly 36:11
48:9 85:14
144:11
examination
1:10 5:5
138:24 150:2
160:11
examined 5:3
exchange 120:9
160:3
exchanged 15:17
24:23
exclusively
50:10
execute 91:4
96:9 100:22
101:10 104:3
121:15 124:25
131:18
executed 18:14
48:19 64:6
113:14
execution 49:22
129:23,25
131:23
exercised 62:10
exhibit 8:20,21
9:3 11:11,12
11:16 13:20
22:13 27:18
28:4,8,15,17
28:20,22 29:5
32:10 43:5
48:13,17 50:17
50:19,23 54:13
56:21 58:23
59:21 64:11,18
65:7,12,15
79:22 80:4,8
80:18,25 81:19
82:2,8,16
83:12 86:20
87:15,19 88:18
89:17 90:8
93:17 94:3,4
94:11 95:24
96:2 97:11,18
98:3 101:13,20
106:24 107:7
107:12 112:15
112:19,22
115:22 116:5
116:21 117:15
122:16,23
123:22 127:9
127:14 134:14
134:19 140:11
167:9,12,13,15
167:17,18,20
167:23 168:4,7
168:9,12,14,17
168:20,23
169:4
exhibits 63:20
63:21 99:19
exist 132:7
existing 148:6
expanded 87:17
experience 30:6
41:6
explain 73:3
119:3
exposure 20:23
45:16,23 136:9
137:4
extent 57:10
76:17 133:17
e-mail 13:22
14:2,6,11,14
14:18 15:6
19:2 22:8,13
22:14,24 23:5
51:6,11 52:5,6
52:8 53:4,15
53:19 54:7
56:20 57:7,17
58:2,17,21
60:6,11,20
61:18 106:24
107:13 127:9
127:22,22,25
128:5,9 132:20
132:25 133:11
134:14 135:3,5
135:10,24
168:14,23
169:4
e-mails 11:12
50:19 51:3
127:21 135:2
167:12,18
F
F 166:2
face 154:6
Facility 117:19
fact 49:21 54:10
66:23 70:20,22
95:4 106:2
116:23 132:7
Faerstein 4:11
6:14,14 64:9
fail 164:15
failure 114:7
118:12 122:3
fairly 61:8,9
falls 44:25 45:8
familiar 54:18
54:20,21
139:18 150:9
156:3,7
familiarity
139:24
far 28:19 69:13
76:25 99:20
144:12
Farr 4:9 6:15
fault 23:10
favor 36:15
fee 84:24 85:4,21
86:5 90:2 92:6
92:18,22 93:14
96:4 103:11,16
fees 18:8
fiduciary 45:17
45:20,23 46:3
46:8,11,19
Fifteenth 2:5
figure 147:24
148:22
file 78:9,16
filed 8:15 108:4
108:6 159:2
filing 12:17
14:19 27:13
52:10 53:9,13
53:16 61:8
78:15,24 79:10
91:9 108:2
filings 106:3
financial 47:13
114:21,24
financing 23:24
find 91:22
148:24
fine 56:10 155:9
finish 62:14 76:4
finished 104:18
firm5:20 13:3,7
13:7,8,12
110:12,12
128:22,25
150:5
first 7:9 12:13
12:20 15:8
28:10 39:20
41:20 43:4,23
44:5,7 45:22
46:13,18 52:22
60:23 61:24
66:6,10 73:18
82:14 85:10,12
85:13,20 88:18
99:7,9 101:6
102:2 104:19
104:20 107:12
110:19 112:9
114:4 116:6
117:17 122:2
123:4 127:20
129:3 134:25
135:3,4 141:11
150:16
Fitts 67:14
five 4:14 6:19
23:24 120:8
five-minute
63:11
fixed 110:6
141:16 142:23
flag 74:4 151:6
Fliman 4:16
6:17,17 97:21
floating 82:22
98:14,17 102:5
108:20 117:19
117:24 141:17
142:24 150:7
155:7,11
Floor 3:5
flow24:18 73:23
flows 77:19
108:16
fluid 23:2,2
focus 76:6
Foerster 4:3 6:9
following 14:5
74:7,9 103:2
130:4,17 165:5
165:6
follows 5:4 113:2
follow-up 61:18
footnote 82:22
82:25 93:18
94:19,20
116:23,24,25
117:3
foreclosure
30:23
foregoing 163:5
forgive 160:2
form13:16
16:10 25:9,24
26:18 27:5
177
39:7 91:18
104:8,24
113:19 121:2
125:6 133:21
136:10 138:12
146:23 158:16
159:5
forma 65:21
66:5 96:14
forth 55:13 91:5
143:15 158:15
166:11
forward 77:16
144:18
four 19:6 52:22
96:25
franchise 74:3
74:10 78:18
frankly 44:25
FRE81:9 87:2
94:17
Freres 75:4
Frey 21:10 33:2
67:12 71:12
Frey's 33:6
Friedman 4:13
6:18
front 80:6 94:13
full 145:22
146:11
fully 152:15,18
153:24
fund 120:9 157:5
funds 24:17
137:23
further 5:15
149:19 166:14
future 157:23
G
Galante 4:6 6:8
6:8
Gallagher 4:9
6:15
Garden 139:10
GARRISON
3:13
general 47:25
48:2 123:10,18
158:17,17,24
generally 17:9
23:22 61:21
150:10 151:17
159:22
genesis 73:3
getting 9:23
25:21 26:11
63:19 85:21
89:25 161:22
gift 123:17
give 32:15 49:3
50:16 60:14
106:21 134:12
gives 52:10
59:24
giving 51:12
59:25
Glatt 13:24
69:10,10 128:2
135:6
Gleason 33:8,10
67:12 71:12
go 5:16 8:7 10:9
13:20 19:23
33:13 39:3,16
43:4 46:22
48:21 55:16
65:14 72:3
75:12 81:12,19
82:6,14 83:11
83:23 89:16,17
95:14 96:11
102:8 114:4,11
116:11 117:14
123:9 124:13
128:8 130:9
131:7,11,21
140:10 144:18
145:12 160:25
goal 49:15,17,21
79:12,15 146:4
goes 40:11
going 7:6,7 9:24
12:22 18:19
36:21 38:3,18
39:3 48:2
56:20 58:16
59:21 63:20
65:7 68:14
70:21 77:16,19
77:21 92:17
97:23 99:15
103:19 109:4
110:25 111:10
111:16,21
119:4 121:3
122:2 126:24
129:6,7,17
130:6 131:11
133:25 136:21
138:8 150:19
151:15 158:14
good 37:18
119:7 122:9,13
139:2
gotten 147:20
Gottesman 3:11
5:24,24 138:25
139:3 144:5,8
149:19 167:5
Gould 2:6 6:3,3
64:3,5 160:9
160:12,13
161:10,13
162:9 167:6
governance
96:21
great 63:14
Greer 3:24 6:25
6:25 13:23
107:13
grounds 76:12
group 22:21
31:16 33:11
127:24 139:5
Grove 139:10
guaranty 18:10
18:12,13,21
19:8,14,17
20:2,5,9,14
23:21 24:5,14
25:3,22 26:2
26:22,23 27:2
27:19 28:5,11
28:12,20 110:4
120:17,22
130:20 135:6
136:9 137:5,16
138:16 167:14
guess 34:19
43:20 76:22
140:17
guessing 34:21
Guest 139:13
H
H5:2,2 167:7
168:2 169:2
half 37:7 68:8
113:2,25 126:5
129:16 132:21
hand 140:6
141:2 166:19
handed 9:2
11:15 28:3
29:4 48:16
50:22 54:16
64:17 72:23
80:3,24 94:10
97:17 101:19
116:5 122:22
127:13 134:18
135:23
handing 107:6
handled 8:7
handout 47:16
71:2,5
handwriting
32:21 43:16
handwritten
28:22 32:12
167:15
happening 8:8
24:16
happens 8:2
76:20 156:21
hard 44:8
Haynes 2:14,20
5:21
header 116:16
hear 45:18 51:22
heard 41:15
46:13
hearing 40:6
held 1:10 86:17
help 144:22
hereinbefore
166:11
hereunto 166:18
Hewes 67:24
68:2,5 135:6
135:10
highest 97:6
highlight 112:7
Hilton 155:25
hired 95:7
hold 105:9 153:4
holder 83:19
holders 148:11
holds 152:6
Homewood
139:16
honor 77:7
hook 52:10
59:24 60:2
Hopefully 7:3
hospitality 32:5
hotel 30:21,22
31:4
hotels 73:19
74:13,15,21
78:19 140:7,8
154:16,20
157:6
hour 122:13
I
idea 20:18 37:18
40:22 66:24
ideas 74:14
identical 100:7
identification
8:25 11:14
27:20 28:25
48:14 50:21
64:16 80:2,23
94:9 97:16
101:18 107:5
116:3 122:21
127:12 134:17
178
identified 35:14
69:14 83:14
identify 33:3
Illinois 2:11
illustrative
65:20 66:5
72:17 73:17,18
74:16,22 79:22
80:19 83:6
93:21 94:5
97:12 98:7
101:14,22
106:25 115:23
122:18 123:6
167:23 168:5,7
168:10,12,15
168:18,20
imagine 34:5
116:14 125:12
immediate
142:13,15
immediately
118:10
impaired 36:5,8
123:19
impairment
42:8,9 152:25
153:11,15
154:3
impediment
40:3
imperative
164:12
implemented
138:10
important 50:2
50:3
improper
136:12,13
improvement
23:25 120:9
improvements
20:5 27:19
28:5,12 167:14
inappropriate
57:12
inclined 52:9
54:8 60:12,16
included 54:21
83:5 93:20
includes 59:13
including 13:25
118:12 130:16
incorporates
91:5
indicated 143:25
154:2 157:3
indicates 158:4
individuals
135:12
informative
68:12
initially 96:22
142:6
initials 34:23
128:21
Inn 139:8,10,15
Innkeepers 1:5
10:11 12:17
14:19,24 15:3
15:10 20:3
21:7 26:16
33:17 34:14,17
34:22 35:2
43:7,23 44:14
45:16,23 46:3
46:4,7 47:4,7
47:13,17,22,23
54:10 61:8,10
64:19 71:14
72:4,22 73:13
78:4,10,21
79:8,13 88:3,8
88:10 108:3,4
108:5 112:5,25
123:23 129:19
131:3 133:14
134:22 135:16
137:3,9,13
138:18 139:12
140:6 141:2
142:11 143:16
149:3 150:17
150:18,25
151:11,14
153:2 158:7,13
159:11,16,19
160:19 161:4
161:16
INN_MID000...
134:16 169:5
INN_MID000...
134:16 169:5
INN_MID000...
64:14 167:21
INN_MID000...
64:15 167:22
input 90:17
instances 31:25
instruct 16:4
136:21
instruction
76:22 93:11,12
INSTRUCTI...
164:1
integrated 27:2
intended 71:23
72:7
intending
106:14 125:25
intention 63:8
84:20 89:7
93:13 157:22
interest 152:10
154:25 159:15
interested
166:17
interim53:25
54:5 144:14
interject 8:5
internal 144:16
153:16
internally
153:25
interpretation
35:19
interrogator
150:13
introduction
101:6
invest 148:2
investigation
142:17
investment 3:14
4:9 6:16,24
11:2 75:6
86:19 125:6,14
131:17 148:6
investments
30:21,22 31:5
investor 71:24
72:7,11
involve 133:16
involved 11:23
12:4,13 18:13
25:11,17,25
26:15,17,20
30:7,10,25
47:21 55:3
150:16 151:9
involvement
12:3 151:8
involves 103:10
103:14
in-house 31:22
69:7,14
irrelevant
119:18
issuance 83:21
issue 18:12
42:23 45:16
46:19 52:24
61:2,25 76:16
78:8
issues 7:17 14:4
123:19 147:25
item38:10
items 35:8 88:15
iterations 24:22
158:14
iterative 95:18
J
J 3:16,23 163:2
Jeff 6:3,5 67:14
160:13
JEFFREY2:6
2:12
jeffrey.pawlitz...
2:12
Jennifer 1:12
162:11 166:6
166:22
jgould@kirkl...
2:7
Jim86:14
job 1:15 30:16
31:11
join 136:19
Joseph 13:24
14:3 135:5
judge 45:2,9
74:19 76:3,10
77:11
judgment 76:8
July 52:2,3 53:7
53:10 58:17
108:4 131:25
132:6
June 20:6 28:13
44:12 80:20
87:20,20 94:6
97:13 98:8,23
99:14 101:15
101:23 107:2
107:25 110:23
110:24 111:4
115:24 117:10
117:12 121:19
121:19 122:19
123:7 126:13
126:19 168:5,8
168:10,13,15
168:18,21
junior 33:10
154:24 156:6
Justin 67:24
71:18
K
Kasowitz 4:13
6:17
keep 44:18
Kevin 3:23 7:4
kevin.obrien...
3:23
Kilpatrick 3:3
6:12 150:5
kind 61:5 70:24
Kirkland 2:3,9
179
6:3,6 64:10
69:2 127:25
160:14
Kirkland's 71:9
knew41:7
know7:3,19
11:21 13:12
15:24 17:11
20:12 22:21,25
23:2 26:9
28:19 30:25
31:19,23,25
35:4 36:8
37:16 40:20
41:7,20,22
42:10,15 45:4
45:7,8 46:11
48:4 49:18
53:20 54:2
60:3 62:8 67:8
68:2,10,11
69:10 70:6,24
73:23,24 74:2
75:18,20 84:16
86:16 89:15
90:13,20 91:24
93:5 95:12,13
99:17 104:11
104:15,16,16
105:17 110:18
112:2 116:7,17
117:9 119:12
119:19,21
123:21,24
124:10,12
136:23 138:14
138:17 139:25
141:13,18,24
142:6,17
143:21 149:11
154:4 159:24
160:2
knowledge
46:19 153:18
160:19 161:3,5
161:15
Kornberg
127:23
L
L5:2,2
laid 147:14
Lamco 5:11,12
language 18:9
23:21 28:11
113:18 115:11
116:21 118:3
large 31:16,18
LaSalle 2:10
Lascher 1:9 5:8
5:9 6:1 7:1,6
8:1,13 9:1,2
10:1 11:1,15
11:23 12:1
13:1 14:1 15:1
16:1 17:1 18:1
19:1 20:1 21:1
22:1 23:1 24:1
25:1 26:1 27:1
28:1 29:1,4,18
30:1 31:1 32:1
33:1 34:1 35:1
35:23 36:1
37:1 38:1 39:1
40:1 41:1 42:1
43:1 44:1 45:1
46:1 47:1 48:1
48:16 49:1
50:1 51:1 52:1
53:1 54:1 55:1
56:1 57:1 58:1
59:1 60:1 61:1
62:1 63:1,17
64:1,17 65:1
66:1 67:1 68:1
69:1 70:1 71:1
72:1 73:1 74:1
75:1 76:1 77:1
78:1 79:1 80:1
81:1 82:1 83:1
84:1 85:1 86:1
87:1 88:1 89:1
90:1 91:1 92:1
93:1 94:1 95:1
96:1 97:1 98:1
99:1 100:1
101:1 102:1
103:1 104:1
105:1 106:1
107:1 108:1
109:1 110:1
111:1 112:1
113:1 114:1
115:1 116:1
117:1 118:1
119:1 120:1
121:1 122:1
123:1 124:1
125:1 126:1
127:1,13 128:1
129:1 130:1
131:1 132:1
133:1 134:1
135:1 136:1
137:1 138:1
139:1 140:1
141:1 142:1
143:1 144:1
145:1 146:1
147:1 148:1
149:1 150:1,4
151:1 152:1
153:1 154:1
155:1 156:1
157:1 158:1
159:1 160:1,7
160:13 161:1
162:1 163:4,11
166:10 167:4
Lascher-1 8:21
167:9
Lascher-10 94:4
168:7
Lascher-11
97:11 168:9
Lascher-12
101:13 168:12
Lascher-13
106:24 168:14
Lascher-14
115:22 168:17
Lascher-15
122:16 168:20
Lascher-16
127:9 168:23
Lascher-17
134:14 169:4
Lascher-2 11:12
167:12
Lascher-3 27:18
167:13
Lascher-4 28:22
167:15
Lascher-5 48:13
167:17
Lascher-6 50:19
167:18
Lascher-7 64:11
167:20
Lascher-8 79:22
167:23
Lascher-9 80:18
168:4
Lastly 8:4
law5:20 13:2,3,6
13:7,8,12
46:10,12
110:12,12
128:22
Lawrence 3:11
5:24 139:3
lawrence.gotte...
3:11
lawyer 41:21
69:7
lawyers 7:7
34:11 68:21,23
127:24
lay 106:4
Lazard 75:4,5,9
75:9,12 76:25
80:17 82:5
95:7 144:22
154:19,20
155:22
LB35:11 39:22
leads 84:23
learn 41:4,11
151:14
learned 41:10
leave 93:17
leaving 30:3
led 25:13 95:20
151:7
left 147:24
left-hand 43:13
81:13,22
legal 57:11,19
114:21
Lehman 3:21
5:12 7:2 8:23
9:5,8,13,17,24
9:24 10:8,11
10:17 11:17,24
12:8 13:11
14:4,24 15:24
17:4 19:7,18
19:20 20:2
21:4,8 22:2,9
24:4,15 25:14
29:8 30:4,7,13
30:15,17 31:11
31:13,15 32:7
34:2,4,8 36:22
48:24 49:13
50:2,3,9 51:2
51:14 58:18
59:2 61:10
64:12,25 65:24
67:5,11 71:10
73:19 74:13,14
75:7,12 76:8
77:21 78:25
79:12 80:4,10
80:12,25 83:15
89:4 91:3,3,11
91:19,24 92:18
92:19,20,21
93:13 94:11,21
95:4,9 96:8,25
97:18 98:18
99:22 100:21
100:21 101:9,9
102:25 103:14
103:18 104:2,2
104:8,25
105:12,21
106:3,10,13
107:9 108:25
109:10 111:18
112:16 113:3
180
113:13,13,20
115:4,8,16,19
116:22 117:4,9
117:20,21
119:9 121:6,14
121:14,21,23
122:25 123:15
124:17,24,24
125:7 126:2
127:4 129:7,14
129:20 130:3
130:14 131:2
131:12,16,16
131:17 132:2
132:17 133:25
140:6 141:2
142:12,20,25
143:16,25
144:16 145:20
146:8 147:4,8
147:22 148:5
148:25 150:24
151:12 152:5,6
152:7,9,15,23
152:24 153:17
154:6,21 155:3
155:14 157:18
158:5,15
159:12,16
167:10,20
Lehman's 10:16
10:18,24 13:7
13:8 17:7,13
17:17 23:13
31:4 49:15
56:17 67:17
80:13 89:7
91:9 92:10
104:17 106:7
108:18,22
110:12 117:23
118:9 124:21
145:2 146:4,16
150:18 157:22
Lehman-AIC
132:2
Lehman-ALI
152:6,8,11
162:5
Lehman/AIC
128:15
Lehman/Inves...
71:23
LEH-ALI 11:13
11:13 28:23,24
50:20 79:24,25
80:21,22 94:7
94:8 97:14,15
101:16,17
107:3,4 115:25
116:2 122:20
122:20 167:12
167:12,15,16
167:19,24,24
168:6,6,8,8,11
168:11,13,13
168:16,16,19
168:19,21,22
Len 8:11 27:22
57:10 75:21
Lenard 2:17
5:19
Lenard.parki...
2:18
lender 24:13
152:9,11
lenders 44:6
letter 14:2 45:13
letting 53:24
let's 13:20 15:6
18:25 19:23
35:7 51:5 58:3
73:17 85:10
94:19 154:5
155:6,24
161:14
level 26:11 147:2
levels 95:16
liability 18:21
25:22 120:10
liable 138:15
likewise 100:4
121:4
limitation
130:16
limited 108:19
117:23
limiting 25:3
line 16:24 35:7
37:4 38:10
39:20 43:24
44:5 60:20
73:18 165:8
169:7
lines 19:5,6
28:10 76:14
88:20
listen 161:8
lists 130:18
litigation 136:14
little 41:10 68:10
100:12 149:23
live 51:11 146:8
Livenote 1:13
LLC3:9 6:2
139:4
LLP1:10 2:3,9
2:14,20 3:3,8
3:13,20 4:3,9
4:13 5:25
LNR3:9 5:25
139:4 157:6
loan 2:15,20
5:22 31:16
41:9 150:8,9
150:25 152:5
152:11,15,25
153:2,11,22
154:7,13,15,24
155:3,25 156:3
156:6,10,15,25
159:9,12
loans 6:13 31:18
139:7,12,19
148:16,21
150:9 157:2,5
long 19:9 24:16
31:3 122:7,8
137:23
look 15:6 18:25
24:24 28:8,15
29:14 33:5
35:7 37:2,3
44:2 54:13,23
55:7 58:3 59:9
68:9 71:20
72:14 77:20
81:21 86:20
88:17 93:18
95:23 100:5,12
101:7 102:17
103:21,22
108:10 112:17
118:20 125:21
128:11 129:2
136:2,3
looked 20:11
58:8 83:9
99:20 137:20
137:20
looking 32:10
50:17 123:10
looks 36:19
37:11 43:3
44:4 48:22
49:6 51:6
105:6
losing 74:4
loss 74:5 153:12
153:22
losses 153:2
lost 151:5
lot 30:22 124:10
lower 135:4
L.P4:9 6:16
M
M2:6,17 5:2
21:11,18,19
magnitude
137:16
maintained
31:25
major 40:3
making 73:24
119:9
management
113:4
Marc 34:16
124:10 135:5
mark 2:22 5:21
8:20 11:10
27:17 40:14
51:17 68:20
69:25 71:15,15
88:9,14,15
90:14 112:7
135:11
marked 8:24 9:3
11:14,16 27:19
28:3,16,24
29:5 46:22
48:14,17 50:20
50:22 64:15,18
79:25 80:3,5
80:22,24 94:8
94:10,15 97:15
97:17 98:3
101:17,20
107:4,6 116:2
116:5 122:21
122:22 127:11
127:14 128:14
134:17,18
140:10
market 157:24
158:6
markets 114:25
market's 157:19
mark.elmore...
2:23
marriage 166:16
Marriott 39:24
39:25 78:17
79:2,4 149:7
Marsal 21:20,22
21:25 22:10,11
22:17
Marsale 67:13
67:14
material 55:10
114:17,23,23
Materiality 18:6
Materials 64:13
64:25 167:21
matter 8:18
74:17 166:17
matters 74:19
maturity 159:15
MB34:18,23
181
35:9 40:4
mcrisp@Kilp...
3:7
mean 13:7 20:15
21:15,16 22:12
23:9 26:7 38:9
42:6 44:8 50:7
51:19 52:13
57:12 59:9
62:14,25 68:7
70:12 72:25
73:6,21 78:25
79:12 92:19,25
93:16 99:7,23
100:2 105:2,15
111:4,19
119:14 120:19
126:18 141:10
141:19 142:15
143:3,18,21
144:21 145:15
145:24 146:11
146:24 147:14
147:19 148:7
149:11 150:22
153:3,20,23
157:11 158:20
159:7
meaning 24:13
24:15
means 37:17,19
37:20 40:23
42:11 119:18
meant 36:9,24
52:19 60:2,4
95:12 113:22
113:24 119:20
119:22
mechanism
154:2
meet 118:12
meeting 33:17
33:22 34:7,9
34:12 35:2
36:18 41:24
43:2,7 44:12
45:5,15 47:4,6
47:11,12,17,20
47:24 48:7,11
65:9 66:15,18
66:20 67:7,11
67:15,17 68:14
68:21,24 69:3
69:5,8,15,17
69:18,20,22,23
70:3,4,10,11
70:14,19,22,23
71:5,7,11 72:3
72:24 74:13
75:2,10 77:12
77:14 78:2,5,9
78:20,23 79:4
79:5,10,20
141:11,12
151:21,23,24
152:3,14,16
meetings 38:23
members 21:24
96:23
memorialized
149:4
memorializing
66:12
mention 79:4
138:7
mentioned 37:10
79:15
met 49:20 69:12
method 18:20
mezz 6:13 150:8
150:8 155:7,12
156:14
mezzanine
154:24 156:6
156:10,25
157:2
Michael 1:9 3:6
5:8 35:17
163:4,11
166:10 167:4
mid 31:15
158:25
middle 21:15
Midland 2:15,20
5:22 9:20
19:17 24:13
40:3 52:10
59:24 60:2
136:15
Midland's 40:12
Mike 6:11 150:4
Mile 4:14 6:19
23:24
milestones 49:20
118:13
million 82:21,23
84:9,10,12
98:13,15 109:9
109:13,18
110:4 119:10
120:8 137:2
140:2 143:4
145:25 146:13
154:7,8 155:25
156:6,16,22
157:5
mind 16:8 19:14
74:21,24
minute 133:3
154:5
minutes 56:14
58:9,17 122:9
Mission 139:8
ML-CFC139:11
modifying
159:12
Moelis 47:13,17
64:14 65:2
72:22 74:22
77:18 83:3,8
93:20,23 96:18
98:20 141:14
142:8 143:10
145:12 167:21
moment 11:18
29:11 55:25
102:14 106:21
118:19 140:20
Monday 53:9
money 119:15
119:16
months 153:6
morning 160:18
Morrison 4:3
6:9
motion 52:11
motions 11:8
move 23:4
149:22
moved 157:4
moving 54:2
130:23
multiple 79:20
Murphy 49:9
68:20 71:16
88:16 135:11
mutual 15:8
17:23,25
N
N2:2 3:2 4:2
167:2
name 5:7,19
62:5 67:25
139:2 150:4
named 152:8
Nancy 21:10,17
22:20 48:24
67:12 71:13
nature 78:13
near 158:2
necessarily
19:22
necessary 164:4
need 7:13 35:11
36:22 78:9
125:22
needed 73:25
78:16 146:18
negotiate 49:12
negotiated 21:4
negotiating 21:8
27:3 38:17
49:16 55:3
126:15 147:9
negotiation
11:24 105:16
139:19 143:14
143:17 146:17
negotiations
12:7,11,14
13:10 14:23
15:2,4 16:9
18:18 21:2,7
21:14,16 22:5
25:5,13 26:4
26:16 41:5,13
41:14 46:16,20
72:10 138:3,5
143:22 146:5
neither 116:19
never 50:6,13,13
69:11 135:24
147:19,20
160:4,22
new1:2,11,11,13
2:16,16 3:5,5
3:10,10,15,15
3:22,22 4:5,5
4:10,10,15,15
16:25 36:25
37:9,16,24
38:12 41:12
42:20,24 83:19
83:19 92:7
97:2,4 102:9,9
102:19,23
103:3 109:5,18
109:20 112:25
118:17 121:9
124:16 131:10
131:11 166:3,4
166:8
nodding 63:24
nominated
96:25 97:2
nonconsolidati...
41:8
normal 143:15
North 2:10
Nos 11:13 28:23
64:14 79:24
80:21 94:7
97:14 101:16
107:3 115:25
122:19 127:10
134:15 167:12
167:15,21,24
168:5,8,10,13
168:16,18,21
182
168:23 169:5
Notary 1:13
163:17 166:7
note 136:11
notebook 47:10
noted 162:12
164:10
notes 28:23
32:13 33:6
36:10,19 37:11
40:9 41:24
46:25 63:19
65:11 87:21
160:21 167:15
notice 8:21 9:4
136:13 167:9
notices 8:16
number 13:24
14:8 20:19,23
33:3,14 36:21
37:9 39:17
49:6 51:2
64:18 65:7,8
65:15 75:22,24
78:19 80:4,25
81:19 82:2,8,9
83:11,12 86:21
87:15,16,19
90:9 93:17,18
94:11,20,20
97:18 98:4
101:20 107:16
116:6 129:2,18
130:24 131:8
134:23 136:7
137:2,3,14,19
138:15 142:21
143:2,10,16,20
144:3,13,17
151:5
numbered 46:23
numbers 11:17
29:8 32:16,18
64:20 67:4
72:23 73:4,7,8
73:15,17,19
80:6 81:2,14
81:21 93:24
94:12 95:16
96:17 97:19
98:20,21 102:3
107:10 123:2
127:17,18
128:12 135:15
137:7
N.W2:5
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object 13:16
16:10,14 19:7
19:18,21 20:3
24:16 26:18
27:5 36:2,2
43:15 44:10
57:18 121:2
146:23 159:5
objection 15:20
16:22 25:8,23
27:15 37:5
38:6,20 39:7
43:8 52:17
56:19 57:5,23
59:8,15 62:24
72:12 90:19
133:21 136:10
136:11,20
137:18 138:12
objections 8:6
8:14,17,17
obligation 20:12
57:2 92:10
obligations 20:4
51:14 62:21
110:5 115:6
120:12 124:21
Ocampo-Guz...
1:12 166:6,22
occurred 53:9
97:9
occurrence
114:16 118:10
occurs 19:9
162:7
odd 137:2
offer 13:15
119:3,5
offering 83:15
83:17 84:3,9
89:4,21,21
96:3 100:5,5
100:13 103:10
offhand 141:25
153:7
office 67:18 71:9
offices 1:10
officially 151:2
Oh 17:25 154:10
okay 8:2,3 10:2
10:3,9,10
11:22 13:21
17:25 18:25
19:4 23:11
24:9 28:9
29:17 32:18,24
33:15 38:14
39:18 42:3
43:6 44:5
46:24 48:23
50:15 51:25
54:15 55:2,9
55:21 56:5,11
58:7,15,25
62:16,22 64:21
65:11,16 66:17
66:19 70:15
72:16 74:9
75:4,5 76:15
76:21 81:20
82:6,17 83:13
83:24 84:22
86:20,22 87:18
88:7,17 89:2
89:11,19 95:8
95:25 96:13
99:19 102:21
102:22,24
107:21 108:12
112:18,21
114:13 116:20
117:16 119:7
120:4,6 121:19
124:13,15
127:2,8 128:10
128:20 131:9
131:14 134:11
136:2,16
140:13,19
142:2,10
145:10 149:18
150:15 152:2
152:13,23
155:7 156:11
156:12 160:17
once 90:14 94:24
ones 96:18
ongoing 14:23
22:23
open 14:4
operation
114:22
opinion 57:11,19
opinions 41:8
opposed 142:11
143:7 147:17
option 103:6,7
119:9,12,20
options 102:10
102:19,24
103:4
order 24:18
63:22 64:7
144:18 146:17
ordered 45:9
organizational
141:13
organized 82:20
original 154:6,9
164:12
originated 31:17
origination
31:16
outcome 146:9
166:17
outlined 82:19
outset 145:11
outside 45:2,8
75:25 136:20
outstanding
66:25 141:20
145:17 154:13
out-of-court
30:11
overall 146:21
oversee 22:3
30:21
oversight 31:2
owned 38:24
owner 39:4,5
67:6 83:19
92:8 97:2,4
148:8
ownership 49:19
121:5
owning 105:13
138:9
O'Brien 3:23 7:3
7:4 15:20
16:10,14,22
17:18 22:12
23:18 25:20
26:18 27:5,15
27:21 29:14
30:19 35:16
36:2 37:5 38:6
38:20 43:8,10
43:15,20 44:10
44:24 45:7
49:3,7 50:12
50:18 52:17
56:19 57:5,10
57:18,23 59:8
59:15 60:17
61:16,21 62:24
63:13,25 72:12
75:21 76:21
77:9,13 85:12
90:19 92:4,23
99:23 100:8
101:3 104:18
104:22 106:23
111:3,6 112:19
122:7,10,14
126:18 129:9
133:3,7,12
136:19 137:6
137:10 138:23
144:4,7,11
146:23 149:24
159:5 160:8
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161:8 162:10
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39:16 43:4,13
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48:21 49:4,6,8
49:10 51:6
55:7,16,19,20
65:14,17 66:5
71:20 72:14,17
73:4 81:7,13
81:22 82:14
83:11 86:24
89:17 91:15
96:11 98:11
101:2,8 102:2
102:12 103:7
107:12 108:10
108:15,16
109:4,25,25
112:9,17 114:2
114:5,11,15
116:6,11 117:2
117:14 121:3,3
122:2 123:5,9
124:13 127:20
129:3,17 130:9
130:24 131:7
131:21 134:25
135:14,22
140:17 163:9
165:8 167:3,8
168:3 169:3,7
pages 32:13
95:23 102:8
128:11 163:6
paid 23:25 92:21
paper 152:10,24
par 36:15
paragraph
19:25 24:10
82:18 84:23
88:18 98:11
102:3 117:17
129:24
Parent 65:23
71:22
Parkins 2:17 5:6
5:19,20 7:5
8:19 11:10
13:8 17:20
27:17,23 29:2
29:16 30:20
43:9,18 44:22
45:4,12 49:5
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61:19 63:11,16
76:15 77:3,10
85:13 94:3
97:23 98:2
99:25 100:10
106:21 111:5
112:20 122:6,8
122:12 126:20
129:11 133:6,9
133:15 134:12
136:16 137:8
138:20 167:4
part 18:14,18
22:22 26:10
27:2 38:11
51:5 56:22
61:3 65:18
73:10 86:24
88:13 89:3
95:6,18 133:25
135:4,9 139:19
139:25 141:12
144:18,21,22
146:16 148:7
148:11 154:20
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133:16
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77:12 142:21
161:2
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60:15
parties 15:17
24:23 49:22
78:23 79:3,10
166:15
partner 76:10
Partners 3:9
4:14 6:2 139:4
party 55:11
59:14 149:2
pass 138:20
passed 151:5
Paul 3:13 4:6 6:8
6:21,23 69:5
116:8 127:23
128:21,24
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Pawlitz 2:12 6:5
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paydowns
154:11
paying 93:14
119:9 151:12
payment 120:11
people 7:12
13:24 32:22
63:19 107:16
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percent 38:4,18
38:24 39:4,5
43:21 49:18
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106:5 109:9
113:2,3 118:25
119:25 120:2
124:17 126:2
126:17 127:5
129:19 131:11
132:17 157:24
percentages
100:14
perform56:15
performance
20:3 120:11
period 14:22
27:3 52:24
61:2,25 68:13
70:7 88:3
146:6
periods 74:7
person 12:6 22:4
41:21 69:12
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47:21
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138:14 145:2
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4:7
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phrase 37:13
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picture 66:13
piece 50:25,25
160:3
pieces 39:9,10
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PIP 24:2,19
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PIPs 24:2,4
place 40:3 53:6
53:12 71:8
plan 10:13 12:18
23:25 36:16
37:6,9,17,22
37:24 38:13,21
40:2,5 41:12
42:20,24 48:5
48:13 49:24,24
50:4,5,7,10
52:12,14 54:3
57:8 91:4
100:22 101:10
104:3 118:13
121:15 123:14
123:15 124:25
131:18 139:20
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161:17 162:7
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planning 126:4
plans 74:6 120:9
161:4
plays 156:18
please 5:7 11:11
11:19 21:5
29:12 33:4
39:16 46:23
52:23 56:21
58:4 60:25
61:24 89:18
96:12 106:22
117:15 124:14
136:11 140:18
164:3,7
point 15:8,25
16:5,7 18:7,11
25:12,18,19,20
25:21 27:7,11
75:3 78:6,10
85:7,8,10
91:14 95:10,13
104:6 105:20
113:17 114:5
115:10 122:3
125:5,17 126:6
126:23 130:19
131:23 142:20
143:24 151:11
157:23 161:20
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points 14:9
17:16,19,21,23
17:24 23:15,20
90:21 114:14
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pool 110:6
142:24 154:16
pools 67:2 74:25
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portion 84:6
89:4,8 103:19
position 17:7,9
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32:7 86:16
106:4,7,10
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136:8 146:16
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post 103:3
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12:18
practice 46:10
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precedent 90:23
91:15 92:10
96:8 100:6,20
101:4,7 102:13
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121:12 124:20
129:22 131:14
Preliminary
81:8 86:25
94:16
premium119:9
119:13,20
preparation
87:18 124:2
prepare 9:10
87:11
prepared 80:10
80:12,13,16
82:2,5 87:6,8
87:14,22 90:6
98:24 99:21
100:19 105:12
110:12,16
111:17,22
present 11:4
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presentation
65:18 70:17,21
70:24 73:11,14
75:14 83:3,8
93:20,24
141:14 142:9
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presentations
96:18
presented 37:25
38:12 74:16,22
75:19 116:10
presently 5:10
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70:5,9 100:17
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previous 112:15
117:7
Previously
159:18
price 84:9,20
95:14 118:18
118:22,24
119:4
primary 20:4
83:21,22 84:3
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principal 160:3
prior 31:10 32:2
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66:18,20 67:7
67:10,17 68:14
69:17,20,22
70:3,10,11,14
70:18,23 78:24
79:10 96:2
100:7 110:11
110:16,22
118:4,19 121:9
132:6 139:21
151:21,24
152:14,16
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privilege 75:23
76:17 77:4,5
pro 65:20 66:5
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88:6 110:17
140:9
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proceed 142:14
144:2 145:21
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proceedings
76:2,7
process 95:19
139:20 141:8
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produce 44:20
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product 75:24
76:18 77:4
production 29:8
75:19 80:5
81:2 94:12
97:19 122:25
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project 23:25
64:12,22
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projections
73:23
prologue 76:22
properties 155:2
property 120:9
156:7 157:8
proposal 13:11
18:10 77:16,22
91:10 93:2,3
108:25 111:24
114:3 121:20
131:12,15
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proposals
111:17,22
112:4 133:2
proposed 79:23
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97:13 98:7
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107:2 115:24
122:18 123:7
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protective 63:22
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105:7 114:15
121:13 123:17
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provided 23:24
70:17 84:6
109:22 117:22
provides 90:25
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102:25 109:7
109:12 118:8
119:8 124:17
124:23 128:25
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providing 85:22
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provision 54:11
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118:17 158:3
provisions 96:21
102:23
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12:24 14:25
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21:3 22:6,19
25:14 26:4,10
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56:25 61:11
62:21,23 68:6
68:11 78:22
92:11 95:20
96:9 113:11,14
115:11 121:22
124:21 134:2
137:15 138:3,9
139:25 147:15
155:12 156:13
157:3,13,15
158:12 160:21
161:18,23,25
Public 1:13
163:17 166:7
purchase 84:7
95:14 109:5
114:8 118:17
122:4 125:8,16
129:24,25
130:6 162:6
purchaser 16:25
17:5 18:4 92:2
purposes 9:25
12:23 48:20
77:8 83:6
93:21
pursuant 63:21
130:5 138:9
161:22
pursue 49:23
50:4,10
pursuing 50:8
push 159:14
put 8:6 15:25
16:4 39:11
putting 63:23
PW116:6,7
p.m1:12 162:12
Q
quantitative
94:22 95:5
question 7:9
40:14 45:22
51:17 57:12
62:15 70:15
74:20 79:7
88:25 90:10
100:8,10
104:19,21
110:21 111:20
119:19 133:18
136:12,22,25
137:13 146:4
153:25 161:2
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questioning 10:7
questions 7:7,8
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quite 151:9
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raised 76:5,9
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Ranges 72:18
rate 82:22 98:14
98:17 102:5
108:20 110:6
117:19,24
141:17,17
142:24 150:8
155:7,11
159:15
reach 146:18
reached 79:9
91:18 92:11
104:7 113:18
125:5
read 39:19 41:25
43:12,14,19,22
43:23 44:9
55:13,25 56:5
56:6,8,9 58:14
59:13 88:24
96:24 102:15
109:17 164:3
reading 82:25
83:24 109:16
118:7 135:7
reads 14:2 55:10
116:12
real 3:4 22:2,21
30:2 31:18
41:8 52:10
59:24 60:2
95:13 114:24
150:6
really 19:6 23:8
26:12 32:6
36:4 42:10
50:6 52:16,18
57:24,24 60:3
68:8 70:7
73:12 78:7
88:13 95:12
105:15 110:19
124:12 136:23
143:17 144:14
reason 19:21
75:22 112:8
116:12 153:11
164:5 165:10
165:12,14,16
165:18,20
reasons 165:6
recall 15:19,22
16:3,6 20:19
25:2 33:22,25
34:6,7,11
35:24 36:13
45:15 47:6
48:6 52:6 65:4
65:17 67:10,15
67:22 68:18
69:13 78:13
80:9 82:11
85:2,8 87:5
95:8 99:13
132:12
receipt 164:14
receive 83:16
123:13 129:15
received 47:16
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receiving 52:6
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recess 63:15
122:15 149:25
recognize 32:21
recollection
24:21 27:10,14
65:12 81:25
82:4,7 132:5
record 8:7,12
29:2,3 45:14
63:16,23 64:4
76:5 96:24
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116:4 134:13
139:6 152:12
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recovering
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reduce 159:15
reducing 66:24
refer 10:12
reference 34:18
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56:21
referred 20:10
28:20 151:20
referring 125:10
135:22 140:21
refers 19:15
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reflect 99:20
reflected 25:5
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88:4 90:8
132:24 157:13
158:12,18
reflecting 66:7
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reflects 98:12
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refresh 65:12
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regarding 18:9
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53:4 68:5
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78:14 85:3,20
86:9 98:25
99:6 110:14
120:16 132:24
133:19,24
regular 14:23
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regularly 70:5
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reinstated
145:20,22
146:9,10
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related 21:3
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120:11 166:15
relates 139:8,10
relating 68:5
relative 74:15
release 18:20
120:10,17,21
relief 10:21
remain 140:3
remained 27:9
remains 14:5
remember 14:13
14:17 18:7
23:8 25:7,10
27:12,16 34:9
34:13,15 35:3
35:17 36:4
42:18 44:13,15
46:21 47:9
48:8 53:20
60:18 61:5,13
61:15 62:5
67:23,24 70:8
73:12,21 78:7
85:5,14 86:18
87:25 99:11,12
107:21,23
111:7,15,23
112:3,7 117:11
117:13 123:25
124:7,9 125:17
126:12,22
128:7 133:22
134:4 137:19
141:25 143:4,5
143:9 144:14
149:16 151:3
153:6
remind 150:12
reorganization
52:15 146:21
157:20,23
158:11
reorganized
37:2 98:13
105:14
reply 52:2 53:4
report 22:4
reporter 1:13
7:14 166:7
represent 5:22
139:4 150:6
representation
13:4
representations
55:12
representative
8:23 9:5,8
67:19 167:10
representatives
78:2
represented
23:13
represents 26:9
110:18 128:25
request 57:16,21
169:7
requested 10:21
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required 20:4
27:18 28:5,11
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requirements
49:20
reserve 152:25
153:12,13
reserves 153:4
Residence 139:8
139:10,15
resolve 14:4
respect 10:22
12:14,23 14:25
16:8 18:12
19:25 20:14
21:3,13,23
22:5 23:14
26:25 31:4
32:5 61:10
62:11 74:25
75:13 77:15
78:9 87:23
88:4 90:7,18
95:10,19 110:4
110:5,25
111:10 116:21
117:4 140:7
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141:3,7 142:12
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147:5 148:15
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114:20
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response 8:15
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61:4 87:15
99:14
responsibility
21:12 30:17
31:4,11 32:6
responsible 12:7
rest 17:15 83:23
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restructure
159:9,25
restructured
38:4 140:4
restructuring
47:23 51:15,20
57:3 67:7
80:20 94:6
97:13 98:7
101:15,23
107:2 115:24
122:19 123:7
158:16,20
159:7 168:5,8
168:10,13,15
168:18,21
restructurings
30:11,18 32:4
41:6
result 67:6
retain 158:6
retained 75:6
retaining 103:14
157:25
return 164:12
revenue 74:5
review9:13,19
11:19 14:6
20:9 29:11
reviewing 52:12
52:14 82:11
RIFKIND3:13
right 17:22
35:16 40:13
41:25 42:3,21
46:25 48:25
49:7 51:16
53:11 54:12
56:16 57:2
58:3 59:5
60:12,13,24
62:9 66:23
71:3 79:6
81:15 83:4
84:5,25 91:14
92:12 94:18
97:3 103:9,17
104:5 108:17
109:11,21
110:10 112:11
113:21 114:19
115:2 121:8,11
122:5 125:3,23
128:16,21
129:15,17,21
130:8 131:13
133:15 134:24
135:18 136:4,5
136:7 138:10
142:5 146:6,7
147:15 148:21
150:19,21
152:19 154:10
160:22,24
right-hand 81:7
86:24 123:4
136:3
risk 35:15
105:13 106:5,5
risks 35:8,23
role 21:22 32:2
rosa 37:9,16
38:9 41:12
42:20,24
roughly 154:12
rule 14:7 77:6
run 97:24
running 74:2
runs 86:19
S
S 2:2 3:2 4:2 5:2
167:7 168:2
169:2
sake 161:13
sale 15:4 26:9,13
62:4,6,18
113:24 125:19
125:24 126:9
138:5
sales 154:11
Sam33:8,10
67:12 71:12
San 139:9,17
satisfaction
130:2,14
satisfactory
91:19 104:8,25
113:19 125:7
satisfied 57:16
57:20,21
satisfying 24:5
Saturday 51:25
Saved 70:15
saw113:18
135:24
saying 26:19
42:14 45:8
62:17 85:23
90:11 126:11
145:22 151:17
158:22
says 19:2 20:2
33:16 35:9
40:17 42:7
43:7,11,19
44:5 47:3 52:8
54:7 58:13
59:9,17 71:22
77:6 81:7 83:2
86:24 91:13
92:9 101:12
103:25 104:7
112:9,24 114:7
116:6 120:4,25
121:24 123:5
123:13 129:14
130:22 131:20
131:23 136:4
145:25 156:20
SCC1:6
scenario 105:7,9
schedule 135:7
135:16,25
136:2 137:11
137:20,21
Schuyler 67:23
71:18 135:6
scope 45:2,9
75:25 136:13
136:20 137:22
158:17
second 27:25
36:5 50:16
59:22 60:20
82:18 88:24
98:11 99:8,10
100:11 102:2
116:25 127:25
131:22 134:12
135:9,14,22
secondary 84:3
84:12
section 54:23
55:4,8,16,18
55:19,22 56:2
56:3 58:4,5,8
58:11,13 59:17
90:23 100:13
103:23 130:10
sections 55:4
102:17
secured 109:14
140:22 141:3,7
144:9 147:5
148:18 149:15
152:15,18
153:24 154:15
155:3 157:5
securitization
139:5 148:14
securitized
31:19
see 14:9,14
15:14 17:2
19:2,11 20:7
28:6 29:9
35:23 44:7,8
44:22,23 51:3
51:7 52:2,25
54:8 66:2,6
72:19 76:19
81:10,16 84:2
84:14 87:3
88:22 89:5
91:16,22 94:25
98:8 101:24
109:15,21
110:2,6 113:6
113:14,16
116:20 118:2
118:14,18,21
120:12 121:17
125:20,23
128:3,5,14,15
131:4 135:12
143:12 145:13
146:14 158:25
seeing 65:17
128:7
seeking 22:18
seen 66:7 128:17
131:4 135:19
135:20,25
137:11
select 103:2
sell 37:6 74:6
83:17 89:4,7
104:14 105:5
106:14 125:25
126:9,16,24
127:4 129:15
132:8,17,21
158:7,7
seller 129:6
selling 92:20
93:15 103:19
119:17 120:3
126:5,6
send 45:12 77:19
senior 109:13
152:17,17
187
sense 93:16
153:16
sent 14:12 17:8
22:8 23:5,6
51:20,25 52:5
64:9 93:3,5,7,7
112:5,5
sentence 19:11
59:23 88:21
94:21
separate 26:8
162:4
September
31:23
series 29:7
servicer 6:13
139:5 148:19
148:20 150:7
157:7
servicers 149:14
services 2:15,20
5:23 139:7
148:15 151:16
158:6
set 55:12 91:5
166:11,19
sets 8:15,17
settled 126:5,24
settlement 19:8
19:9,13,17
seven 96:23,23
156:17,23
Seventh 4:10
Shanik 21:11,17
22:20 48:24
67:13 71:13
shared 110:19
shares 83:22
84:3,12,13
103:15 104:14
105:5 109:10
114:8 122:4
132:8
sheet 54:22
94:24 95:9,20
99:14 110:17
110:18 112:9
112:10 118:4
118:19 121:25
122:17 123:6
123:22 124:3,4
124:8 126:8,16
127:4 128:15
128:17,20
129:10,11,12
130:5 131:2,15
131:25 132:3,7
132:9,12,13,14
132:16,19,21
133:8,13
140:16,22
143:6,11
144:10,20
148:18 149:6
155:12 156:14
156:19 157:3
158:4,13 164:6
164:7,10,13
168:20
sheets 25:15
99:3 110:16,23
124:10 133:20
134:5,8,10
158:15
short 52:24 61:2
61:25
Shorthand
166:7
showed 90:14,15
shown 163:9
shows 65:23
112:22
sic 136:5
side 11:25 12:8
21:8 34:22
35:2 56:17
73:14 104:17
sign 121:20
126:7 164:7
signatory 15:13
15:18 16:13,20
18:3
SIGNATURE
165:23
signed 10:13
27:4,8 48:24
49:9
significant 16:8
16:13,17,21
61:9
signing 25:14
91:11 121:22
164:9
silos 95:17
similar 78:22
100:17 112:14
115:11 118:3
137:21
simply 147:22
159:11
single 27:2 29:15
50:25 91:10
121:22
sir 48:7 72:15
80:7 94:13
98:4 101:19
104:10 110:21
112:8 130:23
sitting 156:24
six 88:20 157:6
sold 83:20
sole 102:25
115:4 123:16
SOLOMON
22:14
somebody 42:14
sorry 23:9 25:16
43:9,12 51:22
56:7 61:14
68:14 77:13
93:13 102:16
109:17 120:6
129:23 134:9
sort 78:5 104:11
143:14
sound 137:7
SOUTHERN
1:2
space 164:5
spaces 40:12
speaks 82:18
89:20
special 6:13
139:5 149:14
150:7
specialization
29:25
specific 17:10
22:25 57:13
61:22 88:15
124:11 127:4
133:8
specifically
96:14 107:23
124:4 134:4
144:15
specifics 67:3
speculate 43:17
Spoke 9:12
spoken 69:11
70:12
ss 166:4
stage 86:15
stages 30:23
stamp 11:17
29:8 33:14
51:2 64:20
65:8 94:12
107:10 123:2
127:17 128:12
129:2,18
130:23 131:8
134:22
stamped 80:5
81:2 97:19
stand 24:15,19
standpoint
153:17
stands 21:19
40:20 116:7
start 8:12 51:5
94:19
started 12:16
26:5 31:12,15
32:6 126:23
141:8,10 142:8
143:7,9 150:22
starting 19:5
31:12
starts 60:22
88:21 129:24
130:11
state 1:13 5:7
8:12 63:18,19
136:14 142:19
144:24 145:19
164:4 166:3,8
stated 112:15
145:10
statement 17:12
17:16 62:12
states 1:2 51:11
status 114:21
step 152:4
steps 77:15 78:5
stock 105:13,22
118:25 126:2,2
126:9,10,17
127:5 129:6,23
129:25 130:6
132:18 133:25
158:7
Stockton 3:3
6:12 150:5
stop 151:11
Street 2:5,10 3:5
structure 65:21
66:5,8,11,22
72:4 79:18
82:19 86:9
90:7,10 96:15
99:2,6,16
100:15 110:15
148:4 158:25
structured 31:17
Structuring
79:23 167:23
sub 37:9,16 38:9
41:11 42:20,24
subcon 40:18,20
subject 8:14
14:5,7 42:24
49:19 51:9
76:9 81:9 87:2
94:16 130:2,13
130:13 135:6
144:4 163:8
164:9
submitted 11:7
subpoena 8:24
188
9:6 167:10
Subscribed
163:13
subsequent
95:11
substance 76:24
91:19 104:8,24
111:2 113:19
125:7
Substantive
40:21
Suite 2:21
suites 139:13,17
156:2
Summary
135:16
Sunday 52:3
53:7
supplemental
94:24
supplemented
95:9
support 10:13
11:8 12:18
40:2 48:5,13
55:22 57:8
59:17 91:4
100:22 101:10
104:3 121:15
131:18 139:20
140:12,16
144:20 145:21
145:24 149:5
167:17
supporting
33:12
supportive
155:14
sure 7:18 23:19
43:21 47:11
49:5 50:18
57:25 63:13
67:9 106:23
122:10,14
149:24 153:19
157:12 161:12
Susan 33:2
Susanne 21:10
33:6 67:12
71:12
swap 158:24
sworn 5:3
163:13 166:12
syndicated
31:20
T
T163:2 165:1
166:2,2 167:7
168:2 169:2
table 5:17
take 7:14 11:18
15:10 29:11
33:19 40:4,8
40:17 44:24
45:10 50:9
53:6 54:18
55:25 62:23
63:11 71:8
73:18 77:21,23
85:10 102:14
112:13 118:19
118:20 122:6
125:21 149:21
taken 63:15
122:15 149:25
152:25 159:8
talk 7:24 9:16
23:9 53:23
88:11 92:4
154:5 155:24
talked 48:3 67:4
70:5,20 72:25
93:24 130:20
148:23 159:24
talking 39:10
45:20 53:21
61:16 70:9
82:9 115:12
125:18 134:5
137:5
tandem86:3
Tavern 64:12,23
167:20
tax 115:5,6
technical 21:17
tecum8:24 9:6
167:11
tell 23:23 24:9
32:24 36:12
37:20 39:19
41:21 61:15
73:7,14 97:8
100:11 102:16
111:16,20
139:23 141:6
159:22
telling 126:21
ten 122:13
term25:14
54:22 94:24
95:9,20 99:3
99:14 110:16
110:17,18,23
112:9,9 118:4
118:19 121:24
122:17 123:5
123:22 124:2,4
124:8,10 126:7
126:16 127:4
128:15,17,20
129:9,11,12
130:5 131:2,15
131:25 132:3,7
132:9,12,13,14
132:16,19,21
133:8,12,20
134:5,7,10
140:15,22
143:6,11 144:9
144:20 148:18
149:5 155:12
156:13,19
157:3 158:2,4
158:13,14
168:20
terminate 51:12
52:22 54:5
56:16 58:18
59:3,10 60:10
60:23 61:23
62:7,13,18
63:3,9 78:18
118:9
termination
15:9 17:25
19:8,9,13
54:24 58:9,10
58:14 59:10,12
62:9 118:11
130:20
terms 14:3 19:16
21:16 22:25,25
26:21 54:20
79:23 80:19
94:5 95:19
97:12 98:7
101:14,22
107:2 115:23
117:21 122:18
123:6 126:11
126:22 130:12
132:16 138:13
142:3,11
145:14 146:2,4
146:19 159:12
160:5 167:23
168:5,7,10,12
168:15,18,21
test 157:19
testified 5:3
23:18 153:21
testifying 26:24
testimony 23:3
25:2 56:13
58:16 59:2
63:20 139:21
163:5 166:13
Texas 2:21
Thank 10:11
37:8 39:15
160:7 162:9
thing 83:2
132:13
think 5:16 19:22
23:7,8,18
36:14 42:7
44:21 55:8
56:13 57:6,25
58:25 63:24
64:18 67:2,3,8
69:6,9,21
71:16,18 77:18
77:22 89:13
95:6 106:2
112:14 128:19
136:23 138:21
141:11 144:12
151:2,13 152:8
152:9,17,21,22
153:24 155:18
156:18 162:10
thinking 126:13
thinks 43:19
third 91:14
104:6 108:15
113:16 125:4
130:19 139:16
third-party 17:5
thirty 164:13
thought 20:13
38:11 50:6,13
70:23 142:17
145:16 153:7
160:22 161:20
three 19:5 96:24
139:12
thresholds 18:6
Thursday 1:11
tied 10:2
time 12:25 14:22
25:4,4 27:8
31:10 36:13
38:22,23 46:13
46:18 52:24
61:2 62:2 66:7
66:10 68:13
74:3,7,12 75:2
85:12,13,19
86:17 88:3
93:13 95:10
105:21 106:11
106:15 110:19
113:23 125:15
126:3,12,15,22
127:22 133:24
146:6 151:10
153:5 162:12
times 8:4 42:25
70:6
189
timing 78:8,14
title 86:18
titled 101:21
today 8:13 9:7
14:15 63:6
82:12 140:11
141:9 153:9
156:24 157:10
157:15
today's 9:11
told 23:7 36:17
40:8 41:18
42:18 60:7
90:15
top 13:22 22:12
22:14 33:16
43:12 47:3
65:23 81:7
86:24 101:3
112:22 121:4
123:4 128:21
131:22 135:9
Torres 4:13 6:18
total 83:18
totally 136:12
tough 111:21
transaction
10:22,25 15:5
18:15 23:14
26:10,14 38:17
39:5,14 55:23
59:18 61:14
62:6 66:4,8,11
68:5 82:19
90:8 91:2,5
99:2 100:20
101:8 103:25
130:12 131:15
144:19 158:12
158:18
transactions
41:9 87:23
88:4 121:13
149:4
transcript 163:8
164:14,15
treat 63:20
treated 146:20
147:12 157:2
treatment 142:3
144:6 145:11
147:9,10 155:6
155:11,15
156:9,14
Trimont 3:4
6:12 149:9
150:6
true 38:16,22
163:7 166:13
trust 1:5 62:19
135:16 139:6
139:11,12
trusting 52:21
60:22 61:23
62:12,17
truth 119:14
try 7:19,23 10:8
143:12
trying 37:23
54:2 143:6
148:22,24
turn 109:25
114:2
two 8:15,16,17
26:7,7 28:10
32:18 51:3
88:25 111:17
112:4 114:14
114:22 127:21
132:25 135:2
139:7 140:20
149:9 150:9
two-minute
149:22
two-page 11:16
Tyson's 139:15
U
U163:2
Uh-huh 24:25
42:4 47:5
51:10,18 54:17
66:21 71:21
72:5 96:16
102:11 103:24
109:6 119:11
151:18
ultimate 21:12
38:24
ultimately 149:4
unable 151:15
unacceptable
115:8
underlined 44:7
underlying 20:4
understand 7:12
7:21 23:22
24:2 40:15
52:9,13,18
59:23 83:9
84:4 113:22
136:8 138:17
143:7 146:3
147:16 153:19
154:23 155:22
157:15
understanding
7:18 36:23
38:7 71:25
155:5,10
157:10
understood
36:12
undertake 158:5
undertaken
157:18
undertakings
55:11
Unimpaired
146:12
UNITED1:2
unsecured 4:4
6:9 113:4
123:10,18
148:11
unwilling 143:25
USA1:5 135:16
use 9:24 12:22
37:13 53:24
58:19 59:10
108:13,18,19
114:17 117:15
117:17,20,22
117:24 118:7,8
V
val 42:20
Valley 139:9
valuation 40:5
40:13 72:18
77:2 153:5
154:19
value 37:9,16,22
37:24 38:13
41:12 42:24
73:17,18 74:15
74:16 82:20,22
94:23 98:12,14
102:4,4 114:17
142:18 153:8
155:19,23
values 74:21,22
74:24 83:2
93:19
various 24:22,23
25:5 30:23
73:4 158:14
verbally 7:14
versions 117:7
134:7,10
Victory 2:21
Vienna 139:15
view16:7,12,16
16:18,18 24:4
78:6,10 137:4
152:3,14
156:24 157:11
viewed 148:5
Virginia 139:16
vote 36:15
voted 123:15
W
wait 27:25
102:16 133:3
waiver 130:3,14
want 29:12,14
32:15 45:4,7
56:6,8 57:13
62:7 63:18
88:25 90:16
93:18 96:23
102:14,17
105:24 122:8
122:12 138:17
146:14 154:18
159:9 160:25
161:23
wanted 50:9
54:4 56:14,15
59:2 60:9
62:22,25 64:5
106:4 119:15
119:16 142:11
142:12,16
160:15 161:11
wanting 60:8
warranties
55:12
Washington 2:5
139:14
wasn't 22:24
23:19 42:16
67:20 70:25
71:2 132:9
142:15 143:17
143:20
way 24:14,15,19
44:25 50:7
143:13 157:2
161:5,15
166:16
week 27:13
48:10 64:10
66:15 70:7
151:23
Weiss 3:13 6:21
6:23 69:5
116:8 127:23
128:22,25
130:24
went 99:18
105:17 111:24
118:22,24
132:10,19
146:5 151:2
152:2,13,16
158:15
weren't 26:15,19
27:2 79:6
126:7 159:4,6
190
159:8
West 3:5
we'll 45:10 76:19
156:9
we're 50:17
61:16 63:19,25
82:9,15 146:2
153:3 162:10
we've 56:20
99:19 137:5
WHARTON
3:13
WHEREOF
166:18
whichever
121:18
willing 145:2,20
146:2,8 147:22
159:6
Willkie 4:9 6:15
wiped 155:13
156:20
wish 165:5
witness 1:10
57:19 76:23
104:20 105:2
109:16 112:2
136:18,21
138:20 163:4
164:1 165:23
166:10,13,18
167:3
word 51:19 52:9
59:23
words 37:21
39:21 159:14
work 21:25
24:19 30:4
73:25 75:13,13
75:16,18,24
76:17 77:4
120:17 137:22
155:21
worked 29:21
31:20
working 48:3
116:14
workout 30:23
148:7 150:17
150:19
works 21:18
22:20
wouldn't 19:18
24:14,15,19
148:2
writing 62:23,25
written 34:23
wrong 109:17
wrote 35:21
42:12 120:20
X
X167:2,7 168:2
169:2
XI 135:17
Y
yeah 20:18 23:16
39:14 40:15
48:12 53:8
54:22 58:12
59:16,20 63:2
74:23 78:16
79:14,17 84:5
90:21 93:10,15
96:10 100:2,17
105:2,2 112:14
118:23 125:12
147:19 155:13
159:21
year 12:19 31:7
31:24 33:20
47:8 150:23
years 20:11
29:22 158:5
Yep 32:11
113:10 128:13
yesterday 10:16
11:5
York 1:2,11,11
1:13 2:16,16
3:5,5,10,10,15
3:15,22,22 4:5
4:5,10,10,15
4:15 166:3,4,8
Z
Zelter 86:14,17
107:15
$
$10 119:10
$117 109:9
$13 137:2
$13,665,381
136:4
$13.7 155:25
$150 140:2 143:4
145:25 146:13
156:16,22
157:4
$171 84:9
$21.3 156:6
$250 154:7
$70 109:13
$75 109:18
0
000001 79:24
167:24
00000127 127:11
168:23
00000144 127:11
168:24
000004 79:25
167:24
000014 80:21
168:6
000022 80:22
168:6
000023 94:7
168:8
000031 94:8
168:8
000032 97:14
168:11
000040 97:15
168:11
000041 101:16
168:13
000050 101:17
168:13
000230 115:25
168:19
000241 116:2
168:19
000254 122:20
168:21
000264 122:20
168:22
004721 28:23
167:15
004731 28:24
167:16
004791 107:3
168:16
004803 107:4
168:16
005298 11:13
167:12
005299 11:13
167:12
005676 50:20
167:19
08 31:23
1
1 8:20 9:3 35:8
36:21 75:22
80:6 82:25
87:20 98:11
99:14
10 48:10 55:7
66:15 94:3,11
122:9 151:24
10-13800 1:6
100 38:24 39:4
43:21 49:18
67:5,9
10019 3:5
10019-6064 3:15
10019-6099 4:10
10019-6799 4:15
10020-1007 2:16
10036-6797 3:22
101 168:13
1010 80:20 94:6
97:13 101:15
107:3 115:24
168:5,8,10,13
168:15,18
10104-0050 4:5
10104-3300 3:10
106 168:16
1095 1:10 3:21
11 1:4 78:10
97:18 98:4
100:24 135:7
167:12
115 168:19
12 72:14,17 73:5
101:20
12:18 1:12
122 168:22
1221 2:16
127 127:18
168:24
128 128:11,12
129:3
1285 3:15
129 129:18
1290 3:9 4:5
13 65:14 66:6
71:20 107:7
112:19
13,665,581 136:6
130 130:10
133 128:12
134 130:24,24
169:5
138 131:8 167:5
14 81:3 116:6,21
14th 3:5
144 127:18
15 114:8 122:11
122:23 123:22
150 167:5
15703581.1
81:23
15703581.3
81:16
16 127:14
160 167:6
1633 4:14
17 52:2 58:17
107:3,25
110:23,24
115:24 121:19
134:19 168:15
168:18
17th 117:10
191
18 52:3 116:12
18th 53:7
19 49:6
19th 1:11 53:10
19803 1:15
2
2 11:11,16 13:20
22:13 28:8,20
35:8 75:24
80:20 83:11
93:18 94:6,20
94:20 97:13
98:8 101:15
116:23,24,25
117:3 140:17
168:5,8,10,13
2nd 87:20 98:23
20 154:15,20,25
155:2
20th 166:19
200 82:23 98:15
102:5
20005-5763 2:5
2004 31:15
2006-4 139:11
2007 18:14 20:6
28:13
2007-C1 139:7
2010 1:12 26:5
31:8 47:21
64:13 65:2
73:23 79:24
87:20,21 98:8
101:23 108:2
111:6 122:19
123:7 131:25
159:17,20
163:14 166:19
167:21,23
168:21
2011 73:23 114:8
122:4
21 33:5
22 33:5 47:20
64:13 65:2
81:3 167:21
169:8
22nd 47:7 65:9
66:6 69:18,23
70:4,18,22
71:5,7 72:24
74:12 77:14
117:12 121:19
141:12 151:24
220.2 154:14
23 33:5 94:12
23rd 126:13,14
2323 2:21
238 154:8,12
24 32:20
25 32:20 44:12
79:23 85:17
87:20 167:23
250 154:10
254 123:2
26 32:20
264 123:2
27 32:20 167:14
27.27 83:20
84:13
28 33:7 167:16
29 20:6 28:13
33:7 122:19
123:7 168:21
29th 126:13,19
3
3 28:4,15,17 35:8
37:9 113:3
123:9 158:5
3:43 162:12
30 33:7 108:2,5,8
164:14
300 2:10
31 3:5 33:7
94:12
32 97:19
3311 134:23
3312 134:23
34.91 84:11
3533 64:20
3548 64:20
4
4 14:18 29:5
32:10 35:8
55:16,18,19,22
56:2,3 59:17
59:19 65:7,12
80:6 95:23
101:23 108:10
108:15 117:14
4th 111:4
4(a) 56:8
4/22 47:4
408 14:7 81:9
87:2 94:17
44 169:8
45 15:9 19:10
52:22 60:23
61:24 62:3
91:8
45-day 62:8
115:15
4721 29:8 43:5
4724 46:23 65:8
4725 46:23
4726 33:14
4727 39:17
4731 29:9
4791 107:10
48 113:2 167:17
48.5 121:5,6
129:19,20
4803 107:10
5
5 14:18 29:22
48:17 54:13
55:16,19 65:25
89:17 91:15
95:23 101:2,8
102:8 109:4
124:13 131:7
140:11 167:4
5/20 33:17,19
35:2
50 38:4,18 39:5
106:5 109:9
118:25 119:25
120:2 126:2,17
127:5 132:17
157:24 167:19
52nd 3:5
5298 11:18
5299 11:18
5676 51:2
6
6 50:23 54:23
55:20 56:21
58:8,11,23
59:21 101:3
102:9,12
109:25 112:17
112:22 121:3
153:6
6th 132:6
6(r) 55:8 59:14
6/1/10 81:8
86:25 94:16
6/17 116:12
6/17/10 106:25
110:13 168:14
6/2/10 98:6
6/22/10 116:9
6/25 43:7 44:2,4
6/29/10 122:17
123:5 168:20
6/4/10 101:21
60654 2:11
62.18 83:18 84:8
64 167:22
655 2:5
7
7 64:19 65:15
114:2,5 122:2
7/17/10 134:15
169:4
7/6/10 128:22
130:25
7/7/10 127:10
168:23
700 2:21
75 84:12
75219 2:21
787 4:10
79 167:24
8
8 58:4,5,13,14
80:4,8 81:19
82:3,8,9,15,16
83:12 87:15,16
87:19 96:11
167:11
8(a) 58:14 59:6
80 168:6
9
9 80:25 86:21
88:18 89:17
90:9 93:17
114:11
94 168:8
95 65:24 84:10
97 124:17 131:10
168:11
975 82:21 98:13
102:4
EXHIBIT B-1
.. ~
Dechert Draft 6/4/10
Preliminary and Confidential
Subject to FRE 408
Illustrative Terms of Proposed Restructuring
June4,2010
The following are the proposed principal terms of a restructuring transaction between
Lehman ALI Inc. ("Lehman"), as mortgage lender, and Innkeepers USA Trust
("Innkeepers" and, collectively with its subsidiaries, the "Company").
1
The transaction
(the "Transaction") contemplates a conversion of the Company's obligations under that
certain mortgage loan agreement, dated as of June 29, 2007, among Lehman and the
affiliates of the Company parties thereto (the "Floating Rate Debf') into significantly all
the equity of the reorganized Company. The Transaction would be effectuated through a
prepackaged or prearranged plan of reorganization (the "Plan") in chapter II bankruptcy
cases filed by Innkeepers and its subsidiaries (the "Chapter 11 Cases") in the United
States Bankruptcy Court for the Southern District ofNew York (the "Bankruptcy
Court"). As a condition to the effective date of the Plan (the ''Effective Date"), prior to
emergence from bankruptcy but after confirmation of the Plan, the Company will conduct
an equity offering in which Innkeepers will issue new equity and, as part ofthe offering,
Lehman will sell a portion of its equity. This term sheet has been prepared for discussion
purposes only and is non-binding, but shall serve as the basis for further negotiations
regarding a definitive agreement.
'
The Transaction structure outlined herein assumes an enterprise value for the reorganized
Company of$[975f million and a value ofthe Floating Rate collateral of$[200] million.
The terms discussed herein are an integrated offer, are not divisible except as described
herein, and are subject to the terms and conditions hereof. This term sheet is provided in
confidence and may be distributed only with the express written consent of Lehman.
This term sheet does not include a description of all ofthe terms, conditions and other
provisions that are to be contained in the defmitive documentation governing such
matters, which remain sttbject to discussion and negotiation to the extent not inconsistent
with the specific matters set forth herein. This term sheet is proffered in the nature of a
settlement proposal in furtherance of settlement discussions, and is intended to be entitled
to the protections of Rule 408 of the Federal Rules of Evidence and any other applicable
statutes or doctrines protecting the use or disclosure of confidential information and
information exchanged in the context of settlement discussions, and shall not be treated
as an admission regarding the truth, accuracy or completeness of any fact or the
applicability or strength of any legal theory.
2
This term sheet is not being provided on behalf of SASCO 2008-C2, LLC {the "Mezzanine
Lender") in connection with the mezzanine loans with respect to the collateral securing the
Floating Rate Debt or the mezzanine loan with respect to the Anaheim property (the "Mezzanine
Debt"). Lehman does not make any representations with respect to the Mezzanine Lender.
Values are based on the Moelis & Co. presentation and have been included for illustrative
purposes only. Lehman is completing its own quantitative analysis ofthe value of the Company
and will supplement this term sheet once that analysis has been completed.
15703581.6.BUSINESS
DEPOSITIOl-
1 EXHIBIT
1
t---r:t-sch fit..,- I o ~ - - LEH-All 000041
Subject to FRE 408
The entry into any definitive transaction on the terms set forth in this Term Sheet, or
otherwise, are subject to approval of the United States Bankruptcy Court administering
the chapter 11 case of Lehman Brothers Holdings Inc.
THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH
RESPECT TO ANY SECURITIES OF THE COMPANY OR A SOLICITATION
OF ACCEPTANCES OF A CHAPTER 11 PLAN. ANY SUCH OFFER OR
SOLICITATION SHALL COMPLY Wim ALL APPLICABLE SECURITIES
LAWS, IF ANY, AND/OR PROVISIONS OF THE BANKRUPTCY CODE.
Terms:
Treatment of Claims and E q ~ i t y Interests Under the Plan:
3
Floating Rate Debt Lehman will receive, in full and final satisfaction of its secured
mortgage claims in respect of the Floating Rate Debt, [95]% of the
issued and outstanding New Equity (as defmed below).
Mezzanine Debt The Mezzanine Debt will be deemed cancelled, and the Mezzanine
Lender will not retain any property or interest on account of such debt
under the Plan. The Mezzanine Lender will be deemed to vote against
the Plan. No action by the Mezzanine Lender will be required under
this Term Sheet or any definitive documentation with respect to the
terms set herein.
Fixed Rate Debt Holders of the mortgage debt secured by the properties in the Fixed
Rate Pool (the "Fixed Rate Debt") will receive, in full and final
satisfaction of their claims in respect of such debt, new mortgage
notes in an aggregate face amount not to exceed $[550] million,
secured by mortgages on the by the properties in the Fixed Rate Pool.
The terms ofthe new Fixed Rate Debt notes are subject to approval, in
form and substance, by Lehman and the Company.
Other Secured
Debt
[NTD: treatment of potential 1111(b) election TBD]
Holders of secured mortgage debt secured by mortgages at the
existing seven properties (the "Other Properties") outside the
Floating Rate Pool and the Fixed Rate Pool (the "Other Secured
Debt") will receive, in full and final satisfaction of their claims in
respect of such debt, new mortgage notes in an aggregate face amount
not to exceed $[150] million, secured by mortgages on the Other
Properties. The terms of the new Other Secured Debt notes are
subject to approval, in form and substance, by Lehman and the
The descriptions herein of the expected treatment of holders of the Mezzanine Debt, the Fixed
Rate Debt and Other Secured Debt are based on the Moelis & Co presentation.
15703581.6.BUSINESS 2
LEH-ALI 000042
General Unsecured
Claims
Deficiency Claims
Administrative
Claims
Priority Claims
Existing Equity
15703581.6.BUSINESS
Company.
Dechert Draft 6/4110
Prellininary and Confidential
Subject to FRE 408
[NTD: discuss differentiation between assets, which assets to be kept
in system]
Shall not receive any recovery under the Plan and shall be deemed to
have voted against the Plan. [Discuss gifting some cash or equity
recovery paid by estates to GUCs in both Fixed and Floating Rate
pools to ensure impaired accepting classes for all Debtors].
Unsecured deficiency claims ofholders of Fixed Rate Debt and Other
Secured Debt shall not receive any recovery under the Plan without
the consent of Lehman and the Company, and shall be deemed to have
voted against the Plan
Shall be paid in cash in the ordinary course of business or upon the
Effective Date of the Plan, unless the holders of such Administrative
Claims agree to different treatment.
Shall be paid in cash on the Effective Date of the Plan; provided, that
on the Effective Date Lehman and the Company may determine to
defer priority tax claims in accordance with the Bankruptcy Code.
On the effective date of the Plan, all prepetition common and
preferred shares of Innkeepers will be cancelled, and holders of such
interests would not retain any property on account of such interests
under the Plan. To the extent Lehman and the Company determine
that the Company's existing corporate structure would be the most tax
efficient for Lehman and the Company on the Effective Date, the
prepetition equity interests of each of Innkeepers' subsidiaries will be
deemed reissued in accordance with the Company's prepetition
corporate structure. IfLehman and the Company determine that a
different structure would be more beneficial to Lehman and the
Company on the Effective Date, the Plan shall provide for such
structure, provided, however, that the tax objectives of Lehman shall
be prevailing.
3
LEH-ALI 000043
Subject to FRE 408
Means of Implementation:
DIP Financing
Use of Cash
Collateral
\5703581.6.BUSINESS
DIP financing to be provided in two separate facilities:
(i) a DIP facility provided by in an amount equal to $L_j
million, which is necessary to complete certain Marriott PIP
requirements, secured by senior, priming liens on the Fixed Rate
Collateral on terms to be reasonably agreed by Lehman (the "Fixed
Rate DIP Facility"). The Fixed Rate DIP Facility shall have a
maturity date at least [12 months] after the Petition Date and shall
have no fmancial covenants or any control features. On the Effective
Date of the Plan which is consistent with the terms hereof, all amounts
outstanding under the Fixed Rate DIP Facility shall be repaid from the
proceeds of either the Equity Offering (as defined below) or the
Lehman Capital Contribution (as defined below).
(ii) a DIP facility provided by Lehman in an amount equal to $18.9
million (funded by $12.5 million from the PIP escrow and $6.4
million FF&E escrow), secured by senior, priming liens on the
Floating Rate Collateral on terms to be agreed between the Company
and Lehman (the "Floating Rate DIP Facility"). Immediately prior
to the commencement of the Chapter 11 Cases, Lehman will sweep all
funds from the Company's blocked accounts that constitute its cash
collateral, which funds will be made available as loans under the
Floating Rate DIP Facility. The other terms of the Floating Rate DIP
Facility are to be determined. On the Effective Date of the Plan which
is consistent with the terms hereof, all amounts outstanding under the
Floating Rate DIP Facility shall convert to New Equity.
In addition to providing the Floating Rate DIP Facility, Lehman will
consent to the use of its cash collateral on terms acceptable to
Lehman, including the following:
Current payment of Lehman's legal and financial advisors'
fees and expenses;
Current payment of interest during the pendency ofthe Chapter
11 Cases at an interest rate equal to LJ%;
Company's use of Lehman's cash collateral shall be limited to
use for the benefit of the Floating Rate Collateral; and
Company's use of Lehman's cash collateral will terminate
immediately upon the occurrence of a Termination Event (as
defined below, including the failure of the Company to meet
the. Plan Milestones (as defined below).
4
LEH-All 000044
New Equity
New Equity
Capitalization
Options
15703581.6.BUSINESS
Subject to FRE 408
The Plan shall provide that, on the Effective Date, Innkeepers will
issue new shares of common stock (the "New Equity"), which shall
be initially allocated as follows:
Shares ofthe New Equity having a value of$[190] million will
be distributed to Lehman pursuant to the Plan in full
satisfaction of the Floating Rate Debt (the "Initial Lehman
Shares");
Shares ofthe New Equity having a value of$[10] million will
be distributed to the [Company's management] [unsecured
creditors]; and
Shares of the New Equity having a value of $[75] million will
be distributed either (i) to the New Owner (as defmed below)
under Capitalization Option A (as described below) or (ii) to
Lehman under Capitalization Option B (as described below).
Lehman, in its sole discretion, shall select one of the following post-
Effective Date New Equity Capitalization Options:
Capitalization Option A: Equity Offering with AIC Backstop
Prior to the Effective Date, Innkeepers will conduct an equity offering
(the "Equity Offering") in which Innkeepers will sell shares of the
New Equity having a total value of$[170] million to a new holder (the
''New Owner"). Shares oftheNew Equity having a value of$[75]
million will be sold through a primary issuance by Innkeepers (the
"Primary Shares"), with the proceeds to be contributed to the
Company to fund property improvement plans ("PIPs") and cycle
renovation, and shares ofthe New Equity having a value of$[95]
million will be a secondary issuance of the Initial Lehman Shares (the
"Secondary Shares"), with the proceeds payable to Lehman.
The Equity Offering will be marketed by Innkeepers, in consultation
with Lehman and its advisors. Timing and mechanics of the
marketing process will be on terms to be mutually agreed.
Apollo Investment Corp. ("AIC") will provide a backstop to purchase
approximately [61.82]% ofthe New Equity in the Equity Offering at a
price of $[170] million, which consists of $[95] million for the
[34.55]% of Secondary Shares and $75 million for the [27.27]% of
Primary Shares.
As consideration for providing the backstop, if AIC is not the New
Owner, then AIC will be paid a break-up fee equal to [2.5]% of the
5
LEH-ALI 000045
Conditions
Precedent to
Lehman's
Obligations Under
PSA
15703581.6.BUSINESS
Subject to FRE 408
backstopped amount, or $[4.25] million (the "Break-Up Fee").
In the event Lehman selects Capitalization Option A
$[95] million to Lehman;
$[10] million to the [Company's management] [unsecured
creditors]; and
$[170] million to the New Owner.
Capitalization Option B: Lehman Equity Contribution
Lehman will retain all shares issued in exchange for the Fixed Rate
Debt. Additionally, prior to the Effective Date Lehman will
contribute $[75] million (the "Lehman Equity Contribution") in
exchange for additional shares ofNew Equity representing [27.27]%
of the issued and outstanding shares ofNew Equity on the Effective
Date. Lehman shall have the right to refinance the Lehman Equity
Contribution on or after the Effective Date, including through an exit
financing facility obtained by the reorganized Company.
In the event Lehman selects Capitalization Option B, the value of the
New Equity as of the Effective Date shall be allocated as follows:
$[190] million to Lehman in respect of the Fixed Rate Debt;
$[75] million to Lehman in exchange the Lehman Equity
Contribution; and
$[10] million to the [Company's management] [unsecured
creditors].
The Transaction will become binding on Lehman when Lehman, AIC
and the Company execute a plan support agreement (the "PSA") that
incorporates the Transaction as set forth herein
Receipt by Lehman of a Plan term sheet incorporating the
terms set forth herein and otherwise acceptable in form and
substance to Lehman;
Agreement reached with Marriott in form and substance
satisfactory to Lehman.
Agreement reached with AIC in form and substance
satisfactory to Lehman.
6
LEH-ALI 000046
Termination
Events Under
PSA, Floating Rate
DIP Facility and
Use of Cash
Collateral
15703581 .6.BUSlNESS
Subject to FRE 408
The PSA, Floating Rate DIP Facility and use ofLehman's cash
collateral shall tenninate automatically upon the occurrence of any of
the following events (each, a "Termination Evenf'):
Failure to meet any of the following milestones (the "Plan
Milestones"):
o Motion to assume the PSA filed on the Petition Date;
o Order entered authorizing the assumption of the PSA
no later than [30] days after the Petition Date;
o Final Orders entered authorizing the Fixed Rate DIP
Facility, Floating Rate DIP Facility and use of cash
collateral consistent with the terms hereof no later than
[30] days after the Petition Date;
o Disclosure Statement and Plan consistent with the
terms hereof filed no later than [20] days after petition
date;
o Disclosure Statement consistent with the terms hereof
approved by the Bankruptcy Court no later than [60]
days after petition date;
o Order confirming a Plan consistent with the terms
hereof entered no later than [180] days after petition
date;
o Effective Date of the Plan no later than the earlier of
(i) [240] days after the Petition Date and (ii) [March
15,2011].
The taking of any action by Marriott, including without
limitation the filing of a motion seeking relief from the
automatic stay or seeking to terminate any franchise agreement
with respect to any of the Company's hotel properties other
than those franchise agreements listed on Schedule A;
The entry of any order of the Bankruptcy Court granting relief
from the automatic stay, including (i) to permit any exercise of
remedies by the lenders or special servicer under the Fixed
Rate Debt other than limited relief solely to permit the delivery
of default notices under the terms of the Fixed Rate Debt and
(ii) to permit termination of any franchise agreement with
Marriott or any other hotel brand other than those franchise
7
LEH-ALI 000047
15703581.6.BUSINESS
agreements listed on Schedule A;
-:'
Subject to FRE 408
The filing by the Company or Marriott of any motion or other
request for relief seeking to (i) dismiss any ofthe Chapter 11
Cases, (ii) convert any of the Chapter 11 Cases to a case under
chapter 7 of the Bankruptcy Code or (iii) appoint a trustee or
an examiner with expanded powers pursuant to section 1104 of
the Bankruptcy Code in any of the Chapter 11 Cases;
The entry of an order by the Bankruptcy Court (i) dismissing
any ofthe chapter 11 cases, (ii) converting any ofthe Chapter
11 Cases to a case under chapter 7 ofthe Bankruptcy Code,
(iii) appointing a trustee or an examiner with expanded powers
pursuant to section 1104 ofthe Bankruptcy Code in any ofthe
Chapter 11 Cases or (iv) making a finding of fraud, dishonesty
or misconduct by any officer or director of the Company,
regarding or relating to the Company;
The withdrawal, amendment or modification by the Company
of, or the filing by the Company of a pleading seeking to
amend or modify, the Plan or PSA, which withdrawal,
amendment, modification or pleading is materially inconsistent
with the terms hereof or the Plan or is materially adverse to
Lehman, in each case in a manner not acceptable to Lehman,
or if the Company files any motion or pleading with the
Bankruptcy Court that is inconsistent in any material respect
with the terms hereof or the Plan (in each case with such
amendments and modifications as have been effected in
accordance with the terms hereof) and such motion or pleading
has not been withdrawn within (i) three (3) business days;
The granting by the Bankruptcy Court of relief that is
inconsistent with the terms hereof or the Plan in any material
respect (in each case with such amendments and modifications
as have been as have been effected in accordance with the
terms hereof);
The issuance by any governmental authority, including the
Bankruptcy Court or any other regulatory authority or court of
competent jurisdiction, of any ruling, determination or order
making illegal or otherwise restricting, preventing or enjoining
the consummation of a material portion of the Transaction,
including an order denying confirmation of either of the Plans
and such ruling, determination or order has not been vacated or
reversed within five (5) business days of issuance; and
8
LEH-ALI 000048
Remedies Upon
Termination
Bankruptcy Court
Approval ofPSA
Pro Forma Capital
Structure

Subject to FRE 408
The occurrence of a change that has a material adverse effect
on the use, value or condition of the Company, its assets or the
legal or fmancial status or business operations of the Company
or a material disruption or material adverse change in the
financial, real estate, banking or capital markets.
Upon the occurrence of a Termination Event, the Company will be
deemed to have consented to the modification of the automatic stay to
permit Lehman to take any or all of the following actions without
further order of or application to the Bankruptcy Court:
Terminate the Company's use of cash collateral and use of
proceeds under the Floating Rate DIP Facility;
Declare all adequate protection obligations owed to Lehman to
be immediately due and payable;
Require the Company to file a motion to conduct a sale of the
Floating Rate Collateral pursuant to 363 of the Bankruptcy
Code;
Require the Company to consent to the termination of
exclusivity to permit Lehman to file a Plan; or
Exercise rights and remedies as to all or such part of the
Floating Rate Collateral that Lehman shall elect in its sole
discretion, including, without limitation, foreclosing upon and
selling all or a portion of such collateral.
The Company shall, on or immediately after the commencement of
the Chapter 11 Cases, file an motion seeking authorization to assume
the PSA. The order approving the PSA shall include provisions that
the Company (i) shall not seek an extension of the Plan Milestones or
any alteration of the remedies upon termination set forth below
without the express written consent of Lehman in its sole discretion,
(ii) shall not support any motion from any other party to obtain such
extension or alteration; and (iii) will oppose any motion from any
other party to obtain such extension or alteration.
Following the consummation of the Transaction, the reorganized
Company will have at least $[75] million of cash on hand and be
capitalized as follows:
Fixed Rate Debt: less than or equal to $[550] million
Other Secured Debt: less than or equal to $[150] million
9
LEH-ALI 000049
Governance
Shareholders
Agreement
Management
Incentive Plan
Property Manager
Releases
Professional Fees
I 5703581.6.BUSINESS
Subject to FRE 408
New Equity: greater than or equal to $[275] million
Board ofDirectors to initially consist of[7] members. In the event
Lehman selects Capitalization Option A, 3 members will be
nominated by Lehman and 4 memberswill be nominated by New
Owner. In the event Lehman selects Capitalization Option B, Lehman
will nominate all 7 members.
A super-majority vote of 66 2/3% vote will be required for material
transactions, including, among others, a merger or consolidation,
equity issuances, debt issuances in excess of$L_J million in the
aggregate, sale or disposal of a property [discuss materiality
threshold], [others TBD].
The Plan shall provide that, in the event Lehman selects Capitalization
Option A, on the Effective Date, Lehman, the New Owner [and all
other holders ofNew Equity to be issued pursuant to the Plan] shall
enter into a shareholders agreement that provides, among other things,
for restrictions on the transfer of the New Equity on terms to be
mutually agreed.
The Plan shall provide for a management incentive plan in form and
substance acceptable to Lehman and the Company.
Prior to the Effective Date of the Plan, Lehman and the Company
shall designate a manager for the Company's properties. Iflsland
Hospitality Management, Inc. {"Island") is not selected as the
manager, the Plan shall provide that Island shall cooperate with the
Company and the replacement manager to effectuate an orderly
transition to the replacement manager.
The Plan shall include a full discharge and release of liability in favor
of(a) the Company and each of its subsidiaries, (b) Lehman, and
(c) each of their respective principals, employees, agents, officers,
directors, and professionals from: (i) any and all claims and causes of
action arising prior to the Effective Date and (ii) any and all claims
arising from the actions taken or not taken in good faith in connection
with the Transaction.
The Company shall pay the professional fees and expenses incurred
by Lehman in connection with the Transaction.
10
LEH-ALI 000050
EXHIBIT B-2
From:
Sent:
To:
Cc:
Subject:
Attach:
Jim,
Greer, Brian <brian.greer@dechert.com>
Thursday, June 17,2010 11:51 PM (GMT)
j zelter@apollolp. com
Sage, Michael <michael.sage@dechert.com>; Forti, David <david.forti@dechert.com>;
Gdula, Justin <justin.gdula@dechert.com>; Buck, Andrew
<andrew.buck@dechert.com>; Smith, Steven <steven.smith@dechert.com>; Herther-
Spiro, Nicole <nicole.herther-spiro@dechert.com>; 'Andrew.Domont@lazard.com';
'andrew.yearley@lazard.com'; 'Brandon.Aebersold@lazard.com';
'Adam.Preiss@lazard.com'; 'Jeffrey.Altman@Lazard.com';
'l\1Beilinson@BeilinsonPartners. com'; 'Lascher, Michael'
<michael.lascher@lamcollc.com>; 'Frey, Susanne' <susanne.frey@lamcollc.com>
Innkeepers- Restructuring Termsheet Alternative A.DOC
Attached is Lehman's proposal related to the Innkeepers transaction. Please call Michael Sage or me with any questions.
Brian
Brian E. Greer
Dechert LLP
New York, NY 1 0036-6797
(212) 698-3536 telephone
(212) 698-0456 facsimile
www.dechert.com
This e-mail is from Dechert LLP, a law firm, and may contain information that is confidential or privileged. If
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CONFIDENTIAL
LEH-ALI 004791
.. ::,.-
Term Sheet Alternative A
Subject to FRE 408
Dlustrative Terms of Proposed Restructuring
June 17,2010
1
The transaction
affiliates of the Company parties thereto (the "Floating Rate Debt") into significantly all
prepackaged or prearranged plan of reorganization (the "Plan") in chapter 11 bankruptcy
Court"). This term sheet has been prepared for discussion purposes only and is non-
binding, but shall serve as the basis for further negotiations regarding a definitive
agreement.
herein, and are subject to the terms and conditions hereof This term sheet is provided in
confidence and may be distributed only with the express written consent of Lehman.
This term sheet does not include a description of all of the terms, conditions and other
provisions that are to be contained in the definitive documentation governing such
matters, which remain subject to discussion and negotiation to the extent not inconsistent
to the protections ofRule 408 of the Federal Rules ofEvidence and any other applicable
the chapter 11 case ofLehman Brothers Holdings Inc.
This term sheet is not being provided on behalf of SASCO 2008-C2, LLC (the "Mezzanine
Lender") in com1ection wit11 t11e mezzanine loan wit11 respect to t11e collateral securing ilie
Floating Rate Debt or t11e mezzanine loan wit11 respect to t11e Anaheim property (ilie "Mezzanine
Debt"). Lehman does not make any representations wit11 respect to t11e Mezzanine Lender.
15703581.13.BUSINESS
CONFIDENTIAL LEH-ALI 004792
Subject to FRE 408
SOLICITATION SHALL COMPLY WITH ALL APPLICABLE SECURITIES
Terms:
Treatment of Claims and Eguitv Interests Under the Plan:z
mortgage claims in respect of the Floating Rate Debt, 97% of the
issued and outstanding New Equity (as defined below).
terms set herein.
notes in an aggregate face amount not to exceed $550 million, secured
by mortgages on the properties in the Fixed Rate Pool. The terms of
the new Fixed Rate Debt notes are subject to approval, in form and
substance, by Lehman and the Company.
If holders of the Fixed Rate Debt make a 1111 (b) election, the
present value of the new Fixed Rate Debt note reflecting such election
shall not exceed $550 million and the applicable discount rate and the
terms of such note shall be subject to approval, in form and substance,
by Lehman and the Company.
Other Secured Holders of mortgage debt secured by mortgages at the existing seven
Debt properties (the "Other Properties") outside the Floating Rate Pool
and the Fixed Rate Pool (the "Other Secured Debt") will receive, in
full and final satisfaction of their claims in respect of such debt, new
mortgage notes in an aggregate face amount not to exceed $150
million, secured by mortgages on the Other Properties. The terms of
the new Other Secured Debt notes are subject to approval, in form and
substance, by Lehman and the Company.
2
Rate Debt and the Other Secured Debt are based on the Moelis & Co presentation.
15703581.13.BUSINESS 2
CJeneral lJnsecured
Claims
Deficiency Claims
Administrative
Claims
Priority Claims
Existing Equity
CONFIDENTIAL
Subject to FRE 408
If any holders of Other Secured Debt make a 1111 (b) election, the
aggregate present value reflecting any such election together with the
face amount of any non-electing Other Secured Debt shall not exceed
$150 million and the applicable discount rate and the terms of such
notes shall be subject to approval, in form and substance, by Lehman
and the Company.
Debt allocation among the Other Properties and identification of any
Other Properties that should be removed from the Company's system
shall be agreed between Lehman and the Company.
have voted against the Plan. Lehman shall determine, in its sole
discretion, whether to provide a gift of cash or equity to any class of
general unsecured claims.
lJnsecured deficiency claims of holders afFixed Rate Debt and Other
Secured Debt shall not receive any recovery under the Plan without
the consent ofLehman and the Company, and shall be deemed to have
voted against the Plan.
effective date of the Plan (the "Effective Date"), unless the holders of
such Administrative Claims agree to different treatment.
Shall be paid in cash on the Effective Date; provided, that on the
Effective Date Lehman and the Company may determine to defer
priority tax claims in accordance with the Bankruptcy Code.
On the Effective Date, all prepetition common and preferred shares of
Innkeepers will be cancelled, and holders of such interests would not
retain any property on account of such interests under the Plan. To the
extent Lehman and the Company determine that the Company's
existing corporate structure would be the most tax efficient for
Lehman and the Company on the Effective Date, the prepetition
equity interests of each of Innkeepers' subsidiaries will be deemed
reissued in accordance with the Company's prepetition corporate
structure. IfLehman and the Company determine that a different
structure would be more beneficial to Lehman and the Company on
the Effective Date, the Plan shall provide for such structure, provided,
however, that the tax objectives of Lehman shall be prevailing.
3
LEH-ALI 004794
Subject to FRE 408
Bankruptcy
Pleadings
DIP Financing
Use of Cash
Collateral
CONFIDENTIAL
All material pleadings filed by the Company in connection with the
Chapter 11 Cases, including all first-day motions, shall be in form and
substance acceptable to Lehman.
(i) a DIP facility provided in an amount equal to $75 million, which is
necessary to complete certain Marriott PIP requirements, secured by
senior, priming liens on the Fixed Rate Collateral on terms to be
reasonably agreed by Lehman (the "Fixed Rate DIP Facility"). The
Fixed Rate DIP Facility shall have a maturity date at least 12 months
after the Petition Date and shall have no financial covenants or any
control features. On the Effective Date of the Plan which is consistent
with the terms hereof, all amounts outstanding under the Fixed Rate
DIP Facility shall be repaid from the proceeds of the New Debt and
the AIC Equity Contribution (each as defined below).
(ii) a DIP facility provided by Lehman in an amount equal to
approximately $18.9 million (funded by $12.5 million from the PIP
escrow and $6.4 million FF&E escrow), secured by senior, priming
liens on the Floating Rate Collateral on terms to be agreed between
the Company and Lehman (the "Floating Rate DIP Facility").
Immediately prior to the commencement of the Chapter 11 Cases,
Lehman will sweep all funds from various escrows/reserves and the
Company's blocked accounts that constitute its cash collateral, which
funds will be made available as loans under the Floating Rate DIP
Facility. The other terms of the Floating Rate DIP Facility are to be
determined. On the Effective Date of the Plan which is consistent
with the terms hereof, all amounts outstanding under the Floating Rate
DIP Facility shall convert to New Equity.

Current payment of Lehman's legal and financial
advisors' fees and expenses;
Current payment of interest during the pendency of the
Chapter 11 Cases at an interest rate equal to the non-
default contract rate under the Floating Rate Debt;
Company's use ofLehman's cash collateral shall be
4
LEH-ALI 004795
New Equity
AIC Purchase of
New Equity
CONFIDENTIAL
Subject to FRE 408
limited to use for the benefit of the Floating Rate
Collateral; and
Company's use ofLehman's cash collateral will terminate
immediately upon the occurrence of a Termination Event (as defined
below), including the failure of the Company to meet the Plan
Milestones (as defined below).
The Plan shall provide that Innkeepers will issue new shares of
common stock (the "New Equity"), which shall be initially allocated
as follows:

Shares of the New Equity representing 97% of the
issued and outstanding New Equity will be distributed
to Lehman pursuant to the Plan in full satisfaction of
the Floating Rate Debt and the Floating Rate DIP
Facility (the "Initial Lehman Shares"); and

to the Company's management and/or unsecured
creditors.
The Plan shall provide that the issuance of the New Equity will be
exempt from (i) securities laws in accordance with section 1145 of the
Bankruptcy Code and (ii) transfer taxes in accordance with section
1146 ofthe Bankruptcy Code.
After confirmation of the Plan and prior to the Effective Date, Lehman
will sell, without any representations or warranties, its right to receive
50% of the Initial Lehman Shares (the "Shares"), to Apollo
Investment Corp. ("AIC") in exchange for cash in an amount equal to
$117.5 million, with the proceeds payable to Lehman (the "Sale
Proceeds"). In the event the transfer tax exception under 1146(a) of
the Bankruptcy Code is determined by the Bankruptcy Court to be
inapplicable, AIC and Lehman will cooperate to structure the sale of
such rights in a manner that will not incur transfer taxes; provided,
however, that in the event such taxes are incurred as a result of the
sale, AIC shall be responsible for payment of such taxes in addition to
the Sale Proceeds. Thereafter, Innkeepers will incur senior secured
debt in an amount equal to $75 million less the amount of the AIC
Equity Contribution (the "New Debt"), provided by AIC, with the
proceeds to be contributed to the Company to fund property
improvement plans ("PIPs") and cycle renovation. The New Debt
shall be on terms mutually agreeable to Lehman and the Company.
5
LEH-ALI 004796
Conditions
Precedent to
Lehman's
Obligations Under
PSA
Termination
Events Under
PSA, Floating Rate
DIP Facility and
Use of Cash
Collateral
1570358!.13.BUSINESS
CONFIDENTIAL
Subject to FRE 408
AlC shall make an additional equity contribution in an amount equal
to$[_] million in respect of its guarantee ofthe Company's PIP
obligations with respect to the Fixed Rate Pool (the "AIC Equity
Contribution").
On the Effective Date, Innkeepers shall distribute the New Equity as
follows:
48.5% to Lehman;
48.5% to AIC; and
3% to the Company's management and/or unsecured
creditors.
The Transaction will become binding on Lehman when Lehman, AlC
incorporates the Transaction as set forth herein, including:
Receipt by Lehman of a Plan term sheet incorporating
the tenns set forth herein and otherwise acceptable in
form and substance to Lehman;
Agreement reached with Marriott in form and
substance satisfactory to Lehman;
Agreement reached with AlC in form and substance
satisfactory to Lehman; and
Innkeepers and each of its subsidiaries, including each
obligor under the Floating Rate Debt, shall be a
signatory to the PSA.
collateral shall terminate automatically upon the occurrence of any of
the following events (each, a "Termination Event"):
Failure to meet any ofthe following milestones (the
"Plan Milestones"):
no later than 30 days after the Petition Date;
6
LEH-ALI 004797
CONFIDENTIAL
Subject to FRE 408
Facility, Floating Rate DIP Facility, the use of
Lehman's cash collateral and the use ofthe cash
collateral securing the Fixed Rate Debt consistent with
the terms hereof no later than 30 days after the Petition
Date;
terms hereof filed no later than 20 days after petition
date;
o Disclosure Statement consistent with the terms hereof
approved by the Bankruptcy Court no later than 60
hereof entered no later than 180 days after petition
date; and
o Effective Date of the Plan no later than the earlier of
(i) 240 days after the Petition Date and (ii) April 15,
2011.
The failure by AIC to purchase the Shares by April 15,
2011;
automatic stay or seeking to terminate any franchise
agreement with respect to any of the Company's hotel
properties other than those franchise agreements listed
on Schedule A;
The entry of any order ofthe Bankruptcy Court
granting relief from the automatic stay, including (i) to
permit any exercise of remedies by the lenders or
special servicer under the Fixed Rate Debt other than
limited relief solely to permit the delivery of default
notices under the terms of the Fixed Rate Debt and

(ii) to permit termination of any franchise agreement
with Marriott or any other hotel brand other than those
franchise agreements listed on Schedule A;
The filing by the Company or Marriott of any motion
or other request for relief seeking to (i) dismiss any of
7
LEH-ALI 004798

CONFIDENTIAL
Subject to FRE 408
the Chapter 11 Cases, (ii) convert any ofthe
Chapter 11 Cases to a case under chapter 7 of the
Bankruptcy Code or (iii) appoint a trustee or an
examiner with expanded powers pursuant to
section 1104 ofthe Bankruptcy Code in any of the
Chapter 11 Cases;
(i) The filing by the Company of any motion or other
request for relief seeking an extension of the Plan
Milestones or any alteration of the remedies upon
termination set forth herein without the express written
consent of Lehman in its sole discretion; (ii) the filing
by the Company of any pleading supporting any
motion from any other party to obtain such extension
or alteration; or (iii) the failure of the Company to
oppose any motion from any other party to obtain such
extension or alteration;
The entry of an order by the Bankruptcy Court (i)
dismissing any ofthe chapter 11 cases, (ii) converting
any of the Chapter 11 Cases to a case under chapter 7
of the Bankruptcy Code, (iii) appointing a trustee or an
examiner with expanded powers pursuant to section
1104 of the Bankruptcy Code in any of the Chapter 11
Cases or (iv) making a finding of fraud, dishonesty or
misconduct by any officer or director of the Company,
The withdrawal, amendment or modification by the
Company of, or the filing by the Company of a
pleading seeking to amend or modify, the Plan or PSA,
which withdrawal, amendment, modification or
pleading is materially inconsistent with the terms
hereof or the Plan or is materially adverse to Lehman,
in each case in a manner not acceptable to Lehman, or
if the Company files any motion or pleading with the
Bankruptcy Court that is inconsistent in any material
respect with the terms hereof or the Plan (in each case
with such amendments and modifications as have been
effected in accordance with the terms hereof) and such
motion or pleading has not been withdrawn within
three (3) business days;
The filing of any motion to approve a disclosure
statement or Plan by the Company, AIC or Marriott, or
8
LEH-ALI 004799
!570358!.13.BUSINESS
CONFIDENTIAL
Subject to FRE 408
the approval by the Bankruptcy Court of any motion
filed by any other party, that incorporates a Pro Forma
Capital Structure or any other terms inconsistent with
the terms and conditions set forth herein;
inconsistent with the terms hereof or the Plan in any
material respect (in each case with such amendments
and modifications as have been as have been effected
in accordance with the terms hereof);
The issuance by any governmental authority, including
the Bankruptcy Court or any other regulatory authority
or court of competent jurisdiction, of any ruling,
determination or order making illegal or otherwise
restricting, preventing or enjoining the consummation
of a material portion of the Transaction, including an
order denying confirmation of either of the Plans and
such ruling, determination or order has not been
vacated or reversed within five ( 5) business days of
tssuance;

The occurrence of (i) a change that has a material
adverse effect on the use, value or condition of the
Company or AIC, their respective assets or the legal or
financial status or business operations of the Company
or AIC or (ii) a material disruption or material adverse
change in the financial, real estate, banking or capital
markets; and
Lehman determines, in its sole discretion, after
completion of its tax due diligence, that the anticipated
tax obligations of the Company on the Effective Date
are unacceptable to Lehman.
9
LEH-ALI 004800
Remedies Upon
Termination
Bankruptcy Court
Approval ofPSA
Pro Forma Capital
Structure
CONFIDENTIAL
Subject to FRE 408
Terminate the Company's use of cash collateral and
use of proceeds under the Floating Rate DIP Facility;
Declare all adequate protection obligations owed to
Lehman to be immediately due and payable;
Require the Company to file a motion to conduct a sale
of the Floating Rate Collateral pursuant to 363 of the
Bankruptcy Code;
Exercise rights and remedies as to all or such part of
the Floating Rate Collateral that Lehman shall elect in
its sole discretion, including, without limitation,
foreclosing upon and selling all or a portion of such
collateral.
the Chapter 11 Cases, file a motion seeking authorization to assume
any alteration of the remedies upon termination set forth herein
without the express written consent ofLehman in its sole discretion,
Following the consummation ofthe Transaction, the reorganized
Company will have at least $50 million in pre-funded Marriott capital
expenditures and brand standard work and $10 million of cash on
hand after repayment of the Fixed Rate DIP Facility and be capitalized
as follows:
Fixed Rate Debt: less than or equal to $550 million
Other Secured Debt: less than or equal to $150 million
10
LEH-ALI 004801
Governance
Shareholders
Agreement
Management
Incentive Plan
REIT Status
Property Manager
CONFIDENTIAL
Subject to FRE 408
New Debt: less than or equal to $75 million less the amount of the
AIC Equity Contribution
Except as set forth above, on the Effective Date, the Company shall
not have any debts or liens encumbering the Company's assets.
The Board ofDirectors will initially consist of7 members: 2 members
nominated by Lehman, 2 members nominated by AIC and 3 members
to be mutually agreed.
equity issuances, debt issuances in excess of $10 million in the
aggregate, sale or disposal of a property and such other events as
determined by Lehman and the Company.
Lehman and the Company shall agree on a future date by which the
Company shall engage an investment banker to market and sell the
Company; provided, that such date shall not be later than three years
after the Effective Date unless otherwise agreed by Lehman.
The Plan shall provide that, on the Effective Date, Lehman, AIC and
all other holders of New Equity to be issued pursuant to the Plan shall
for restrictions on the transfer of the New Equity and customary
protections, including, but not limited to, tag-along/drag-along rights,
all on terms to be mutually agreed.
substance acceptable to Lehman and the Company providing for a
reserve of up to 3% of the New Equity for options to be allocated to
management under the management incentive plan.
Lehman and the Company shall, after the Effective Date, determine
whether to maintain Innkeepers' status as a real estate investment
trust.
Prior to the Effective Date of the Plan, Lehman and the Company
shall designate a manager for the Company's properties. If Island
Hospitality Management, Inc. ("Island") is not selected as the
transition to the replacement manager. Any agreement to effectuate
such transition shall be in form and substance acceptable to Lehman.
11
LEH-ALI 004802
I,
Releases
Professional Fees
CONFIDENTIAL
Subject to FRE 408
of(a) the Company and each of its subsidiaries, (b) Lehman, and
(c) each of their respective principals, employees, agents, officers,
by Lehman in connection with the Transaction.
12
LEH-ALI 004803
EXHIBIT B-3
PW COMMENTS 6/22/10
Subject to FRE 408
IJlustrative Terms of Proposed Restructuring
June 17,2010
1
The transaction
agreement.
herein, and are subject to the terms and conditions hereof. This term sheet is provided in
.confidence and may be distributed only with the express written consent of the parties
hereto. This term sheet does not include a description of all of the terms, conditions and
other provisions that are to be contained in the definitive documentation governing such
to the protections ofRule 408 ofthe Federal Rules of Evidence and any other applicable
otherwise, are subject to approval of the United States Banlcruptcy Court administering
This tenn sheet is not being provided on behalf of SASCO 2008-C2, LLC (the "Mezzanine
Lender") in connection with the mezzanine loan with respect to the collateral securing the
Debf'). Lehman does not make any representations with respect to the Mezzanine Lender.
15743920.1
LEH-ALI 000230
Subject to FRE 408
SOLICITATION SHALL COMPLY Wim ALL APPLICABLE SECURITIES
Terms:
Treatment of Claims and Eguitv Interests Under the Plan::l
mortgage claims in respect of the Floating Rate Debt, 97% ofthe
issued and outstanding New Equity (as defined below).
terms set herein.
Rate Pool (the "Fixed Rate Debt,') will receive, in full and fmal
satisfaction of their claims in respect of such debt, new mortgll;ge
the new Fixed Rate Debt notes are subject to the reasonable approval,
in form and substance, by the parties hereto and the Company.
lfholders ofthe Fixed Rate Debt make a llll(b) election, the
terms of such note shall be subject to the reasonable approval, in form
and substance, by the parties hereto and the Company.
the new Other Secured Debt notes are subject to approval, in form and
substance, by the parties hereto and the Company.
2
15743920.1 2
LEH-ALI 000231
<JenerallJnsecured
Claims
Deficiency Claims
Administrative
Claims
Priority Claims
Existing Equity
15743920.1
Subject to FRE 408
$150 million and the applicable discount rate and the terms of such
notes shall be subject to the reasonable approval, in form and
substance, by the parties hereto and the Company.
shall be agreed between Lehman and the Company.
have voted against the Plan. Lehman shall determine, in its sole
general unsecured claims.
lJnsecured deficiency claims of holders of Floating Rate Debt, Fixed
Rate Debt and Other Secured Debt shall not receive any recovery
under the Plan and shall be deemed to have voted against the Plan.
-
Innkeepers will be cancelled, and holders of such interests would not
retain any property on account of such interests under the Plan. To the
extent Lehman and the Company determine that the Company's
existing corporate structure would be the most tax efficient for
Lehman and the Company on the Effective Date, the prepetition
equity interests of each oflnnk:eepers' subsidiaries will be deemed
reissued in accordance with the Company's prepetition corporate
structure. If Lehman and the Company determine that a different
structure would be more beneficial to Lehman and the Company on
the Effective Date, the Plan shall provide for such structure on terms
mutually acceptable to the parties.
3
LEH-ALI 000232
Subject to FRE 408
Means of Imnlementation:
Bankruptcy All material pleadings filed by the Company in connection with the
Pleadings Chapter II Cases, including all first-day motions, shall be in form and
substance reasonably acceptable to Lehman.
DIP Financing DIP financing to be provided in two separate facilities:
(i) a DIP facility provided in an amount equal to $50 million, which is
necessary to complete certain Marriott PIP requirements, secured by
senior, priming liens on the Fixed Rate Collateral on terms to be
reasonably agreed by Lehman (the "Fixed Rate DIP Facility"). The
Fixed Rate DIP Facility shall have a maturity date at least 12 months
after the Petition Date and other terms to be determined. On the
Effective Date of the Plan which is consistent with the terms hereof,
all amounts outstanding under the Fixed Rate DIP Facility shall be
repaid from the proceeds of the New Funding, the Equity Contribution
(each as defined below) or a combination thereof. All or a portion of
the Fixed Rate DIP Facility may be provided by Apollo Investment
Corp. ("AIC") in its sole discretion.
Facility. The other terms ofthe Floating Rate DIP Facility are to be
Use of Cash In addition to providing the Floating Rate DIP Facility, Lehman will
Collateral consent to the use of its cash collateral on terms acceptable to
Lehman; provided, however, that the Company's use of Lehman's
cash collateral shall be limited to use for the benefit of the Floating
Rate Collateral.
Company's use of Lehman's cash collateral will terminate
immediately upon the occurrence of a Termination Event (as defined
15743920.1 4
LEH-ALI 000233
New Equity
AIC Purchase of
New Equity
3
To be determined.
4
To be determined.
15743920.1
Subject to FRE 408
below), including the failure of the Company to meet the Plan
Milestones (as defined below).
3
as follows:
to Lehman pursuant to the Plan in full satisfaction of
the Floating Rate Debt and the Floating Rate DIP
Facility (the "Initial Lehman Shares"); and
Shares of the New Equity representing 3% ofthe
issued and outstanding New Equity will be available
for distribution to the Company's managetnent.
4
exempt from (i) securities laws in accordance with section 1145 ofthe-
1146 of the Bankruptcy Code.
After confirmation of the Plan and prior to the Effective Date, Lehman
will sell, without any representations or warranties, its right to receive
50% of the Initial Lehman Shares (the "Shares"), to AIC (or such
other parties as AIC may determine through a syndication process) in
exchange for cash in an amount equal to $85 million, with the
proceeds payable to Lehman (the "Sale Proceeds"). For the option to
acquire 50% of the Initial Lehman Shares, granted by Lehman to AIC
in connection with the transactions contemplated thereby, AIC shall
pay Lehman an option premium of$10 million at closing. AIC may
consider an additional capital commitment of up to $5 million to fund
property improvement plans ("PIPs"), in exchange for a complete
release of any liability for payment or performance of any PIP-related
obligations, if any, of AIC. In the event the transfer tax exception
under 1146(a) of the Bankruptcy Code is determined by the
Bankruptcy Court to be inapplicable, AIC and Lehman will cooperate
to structure the sale of such rights in a manner that will not incur
transfer taxes; provided, however, that in the event such taxes are
incurred as a result of the sale, AIC shall be responsible for payment
of such taxes in addition to the Sale Proceeds. Thereafter, Innkeepers
5
LEH-ALI 000234
Conditions
Precedent to
Lehman's
Obligations Under
PSA
Termination
Events Under
PSA, Floating Rate
DIP Facility and
UseofCash
Collateral
15743920.1
Subject to FRE 408
will secure additional funding in an amount at least equal to $50
million plus such additional amounts in form and substance as may be
determined by the parties with the proceeds to be contributed to the
Company to fund PIPs. The New Funding shall be on terms mutually
agreeable to the parties hereto and the Company.
On the Effective Date, Innkeepers shall distribute theN ew Equity as
follows:
48.5% to Lehman;
48.5% to AIC (or to one or more of its designees); and
3% available for distribution to the Company's
management and/or unsecured creditors.
The Transaction will become binding on Lehman when Lehman, AIC
incorporates the Transaction as set forth herein, including:
the terms set forth herein and otherwise reasonably
acceptable in form and substance to Lehman;
substance reasonably satisfactory to Lehman;
Agreement reached with AIC in form and substance
satisfactory to Lehman; and
collateral shall terminate automatically upon the occurrence of any of
the following events (each, a "Termination Event"):
Failure to meet any ofthe following milestones (the
"Plan Milestones"):
6
LEH-ALI 000235

15743920.1
Subject to FRE_408
Date;
date;
o Disclosure Statement consistent with the tenns hereof
approved by the Bankruptcy Court no later than 90
date; and
o Effective Date ofthe Plan no later than the earlier of
(i) 320 days after the Petition Date and (ii) L_j, 2011.
The failure by AIC to purchase the Shares by L_j,
2011;
on Schedule A;
The entry of any order of the Bankruptcy Court
granting relief from the automatic stay with respect to
any material property, including (i) to permit any
exercise of remedies by the lenders or special servicer
under the Fixed Rate Debt other than limited relief
solely to permit the delivery of default notices under
the terms of the Fixed Rate Debt and (ii) to permit
termination of any franchise agreement with Marriott
or any other hotel brand other than those franchise
agreements listed on Schedule A;
The filing by the ComQ_any or Marriott of any motion
7
LEH-ALI 000236

15743920.1
Subject to FRE 408
the Chapter 11 Cases, (ii) convert any of the
Chapter 11 Cases to a case under chapter 7 ofthe
Bankruptcy Code or (iii) appoint a trustee or an
examiner with expanded powers pursuant to
section 1104 ofthe Bankruptcy Code in any of the
Chapter 11 Cases;
request for relief seeking an extension ofthe Plan
or alteration; or (iii) the failure of the Company to
oppose any motion from any other party to obtain such
extension or alteration;
dismissing any ofthe chapter 11 cases, (ii) converting
any ofthe Chapter 11 Cases to a case under chapter 7
1104 ofthe Bankruptcy Code in any ofthe Chapter 11
misconduct by any officer or director ofthe Company,
pleading is material adverse to Lehman in the
aggregate;
Capital Structure or any other terms materially
inconsistent, in the aggregate, with the terms and
conditions set forth herein;
8
LEH-ALI 000237

15743920.1
Subject to FRE 408
and modifications as have been as have been effected
of a material portion of the Transaction, including an .
order denying confirmation of the Plan and such ruling,
determination or order has not been vacated or reversed
within five (5) business days of issuance; and
The occurrence of (i) a change that has a material
adverse effect (to be defined to include customary
exceptions for marketplace developments and adverse
effects on the Company that do not disproportionately
effect the Company relative to other industry
participants) on the Company and its subsidiaries taken
as a whole or (ii) a material disruption or material
adverse change in the financial, real estate, banking or
capital markets.
9
LEH-ALI 000238
Remedies Ufon
Termination
Bankruptcy Court
Approval ofPSA
Pro Forma Capital
Structure
5
To be determined.
15743920.1
Subject to FRE 408
and
Lehman to be immediatelydue and payable;
without the express written consent of the parties hereto, such consent
not to be unreasonably delayed, withheld or conditioned, (ii) shall not
support any motion from any other party to obtain such extension or
alteration; and (iii) will oppose any motion from any other party to
obtain such extension or alteration.
as follows:
New Funding: At least $50 million, plus such additional amounts in
form and substance as may be determined by the parties. Prior to any
New Funding, the Company shall deliver a comprehensive PIPs
budget, which budget shall be (i) prepared with the assistance of, and
validated by, a third party expert and (ii) acceptable in all respects to .
the parties hereto. Such PIPs budget shall be updated annually or
more frequently as may be requested by AIC and Lehman.
10
LEH-ALI 000239
Governance
Shareholders
Agreement
Management
Incentive Plan
REIT Status
Property Manager
Releases
15743920.1
Subject to FRE 408
The Board of Directors will initially consist of7 members: 2 members
nominated by Lehman, 2 members nominated by AIC and 3 members
to be mutually agreed.
equity issuances, debt issuances in excess of$10 million in the
aggregate, sale or disposal of a property and such other events as
determined by Lehman, AIC and the Company.
Lehman, AIC and the Company shall agree on a future date by which
the Company shall engage an investment banker to market and sell the
Company; provided, that such date shall not be later than three years
after the Effective Date unless otherwise agreed by Lehman and AIC.
The Plan shall provide that, on the Effective Date, Lehman, AIC and
all other holders of New Equity to be issued pursuant to the Plan shall
for restrictions on the transfer of the New Equity and customary
protections, including, but not limited to, tag-along/drag-along rights,
all on terms to be mutually agreed.
Lehman, AIC and the Company shall, after the Effective Date,
determine whether to maintain Innkeepers' status as a real estate
investment trust.
Prior to the Effective Date of the Plan, Lehman, AIC and the
Company shall a manager for the Company's properties. If
Island Hospitality Management, Inc. (''Island") is not selected as the
transition to the replacement manager. Any agreement to effectuate
such transition shall be in form and substance acceptable to Lehman
andAIC.
of(a) the Company and each of its subsidiaries, (b) Lehman, (c) AIC
and (d) each of their respective principals, employees, agents, officers,
11
LEH-ALJ 000240
Professional Fees
15743920.1
Subject to FRE 408
by Lehman and AIC in connection with the Transaction.
12
LEH-ALI 000241
EXHIBIT B-4
From:
Sent:
To:
Greer, Brian <brian.greer@dechert.com>
Wednesday, July 14,2010 4:55AM (GMT)
Joseph D. Glatt <JGlatt@ApolloCapital.com>
Cc: Sage, Michael <michael.sage@dechert.com>; Lascher, Michael
<michael.lascher@lamcollc.com>; Frey, Susanne <susanne.frey@lamcollc.com>; Marc
Beilinson <mbeilinson@beilinsonpartners.com>; Forti, David
<david.forti@dechert.com>; Brandon.Aebersold@lazard.com
Subject: Lehman Proposal -Rule 408
RULE408
Settlement Discussion
Joseph,
As requested, below are the terms on which Lehman will resolve the open issues with Apollo. The following remains subject to client
review and comment. This email is subject to Rule 408. All other caveats apply.
Brian
-Mutual termination event for 45 days from petition date.
- AIC will not be a signatory to the PSA.
- AIC or an affiliate of AIC shall be the purchaser of the New Equity. Lehman will not consent to a third party purchaser.
-Materiality thresholds for AIC in termination events and consent requirements
- AIC counsel fees to be paid by Innkeepers only if the Lehman- AIC deal closes
- Guaranty language below
"Lehman shall not object to Innkeepers' perfom1ance ofilie primary obligations underlying the Required Capital Improvements
Guaranty, dated as of June 29, 2007 (the "Guaranty"), regardless of whether such obligations are fulfilled during Innkeepers' chapter
11 cases or after emergence from chapter 11 so long as (a) during the chapter 11 cases, such obligations are exclusively limited to the
Marriott PIP obligations in the Fixed Rate Pool and such obligations are paid solely with funds available under the Fixed Rate DIP
Facility, (b) after the chapter 11 cases, any Maniott PIP obligations in the Fixed Rate Pool that were not paid during the chapter 11
cases are paid from the proceeds of the Exit Funding, (c) after the chapter 11 cases, discretionary capital expenditures agreed to by
Lehman and AIC are paid from the proceeds of the Exit Funding or excess cash flow, (d) the payment of the Marriott PIP obligations
and discretionary capital expenditures from the proceeds of the Exit Funding shall not result in any change to the pro forma capital
structure set forth in the plan term sheet between Lehman and Innkeepers, and (e) the funding of the obligations set forth above is
within the sound business judgment of the board of directors of Innkeepers and reorganized Innkeepers, as applicable. In addition,
Lehman shall not object to the settlement or termination of the Guaranty so long as such settlement or termination occurs at least 45
days after the Petition Date. In the event this Agreement is terminated in accordance with its terms, this provision shall not be binding
and shall be of no force or effect."
-----Original Message-----
From: Joseph D. Glatt [mailto:JG!att@ApolloCapital.com]
Sent: Tuesday, July 13,2010 8:33PM
To: Greer, Brian
Cc: Sage, Michael
Subject: Re:
I thought the ball was on both sides of the court. Can you lay out in an email Lel=an's proposal. Sorry, a lot of balls in the air (I think
I beat that proverbial dead horse) on many different fronts want to make sure we are on the same page. Also, my email was also
referring to next steps assuming a deal gets done. I am concerned about timing and want to ensure the document (in whatever form it
takes) is being drafted. To tl1at end I have asked PW to reach out to you. Thx.
----- Original Message -----
From: Greer, Brian <brian.greer@deche1i.com>
CONFIDENTIAL

EXHIBITN
LEH-ALI 005298
To: Joseph D. Glatt
Cc: Sage, Michael <michael.sage@dechert.com>
Sent: Tue Jul 13 20:23:25 2010
Subject: RE:
The ball is in your court. Has Apollo agreed to the key deal points we discussed?
-----Original Message-----
From: Joseph D. Glatt [mailto:JGlatt@ApolloCapital.com]
Sent: Tuesday, July 13,2010 8:07PM
To: Greer, Brian
Subject:
Hey there. Hope all is well. Do you have any update as to where we are at?
This email and any files transmitted with it are confidential and intended solely for the person or entity to whom they are addressed
and may contain confidential and/or privileged
material. Any review, retransmission, dissemination or
other use of, or taking of any action in reliance upon this information by persons or entities other than the intended
recipient is prohibited. If you have received this email in
error please contact the sender and delete the material from any computer.
Apollo Global Management, LLC
This e-mail is from Dechert LLP, a law firm, and may contain information that is confidential or privileged. If you are not the intended
recipient, do not read, copy or distribute the e-mail or any attachments. Instead, please notify the sender and delete the e-mail and any
attachments. Thank you.
This email and any files transmitted with it are confidential and intended solely for the person or entity to whom they are addressed
and may contain confidential and/or privileged
material. Any review, retransmission, dissemination or
other use of, or taking of any action in reliance upon this information by persons or entities other than the intended
recipient is prohibited. If you have received this email in
error please contact the sender and delete the material from any computer.
Apollo Global Management, LLC
EXHIBIT B-5
(Fixed Portfolio)
REQUIRED.CAPITAL IMPROVEMENTS GUARANTY
THIS REQUIRED CAPITAL IMPROVEMENTS GUARANTY (this
"Guaranty") is executed as of this 29th day of June, 2007 by APOLLO INVESTMENT
CORPORATION, having an address at 9 West 57th Street, New York, New York 10019
("Guarantor"), for the benefit of LEHMAN ALI INC., having an address at 399 Park Avenue,
New York, New York 10022 ("Lender").
WHEREAS, each of the Persons listed on Schedule I attached hereto (individually
and collectively, as the context may require, together with each Borrower's successors and
assigns, "Borrower") is indebted to Lender for the loan made to Borrower (the "Loan")
pursuant to a Loan Agreement dated as of the date hereof (as amended or modified from time to
time, the "Loan Agreement");
WHEREAS, pursuant to Section 7.4 of the Loan Agreement, Borrower is
obligated to perform certain Required Capital Improvements (as defined in the Loan Agreement)
at the Property and to fund to Lender certain reserve deposits in connection therewith, and may
deliver to Lender this Guaranty in lieu of making certain of such reserve deposits; and
WHEREAS, Guarantor is the owner of an indirect interest in Borrower, and
Guarantor has directly benefited from Lender's making the Loan to Borrowt5r and will directly
benefit from Borrower undertaking the Required Capital Improvements.
NOW, THEREFORE; for good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:
ARTICLE I.
NATURE AND SCOPE OF GUARANTY
1.1. Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the payment and
performance of the Guaranteed Obligations as and when the same shall be due and payable,
whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably
and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a
primary obligor.
1.2. Definition of Guaranteed Obligations. As used herein, the term
"Guaranteed Obligations" means all obligations and liabilities of Borrower to Lender (a) to
complete the Required Capital Improvements (other than the Immediate PIP Work) in a timely
manner in accordance with the terms and requirements of Section 7.4.1 ofthe Loan Agreement,
(b) to keep the applicable Individual Properties free from all Liens arising from or relating to the
construction of the Required Capital Improvements (other than the Immediate PIP Work), and
13663957.3
DEPOSITION_
.L
-3
:t='b 8/, <t It D
(c) to pay for all hard costs, soft costs and other costs and expenses incurred or required to be
incurred, and for all obligations and liabilities incurred or assumed, in connection with the
completion of the Required Capital Improvements (other than the Immediate PIP Work) in
accordance with the Loan Agreement.
1.3. Nature of Guaranty. 1bis Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty
may not be revoked by Guarantor and shall continue to be effective with respect to any
Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after
(if Guarantor is a natural person) Guarantor's death (in which event this Guaranty shall be
binding upon Guarantor's estate and Guarantor's legal representatives and heirs). The fact that
. at any time or from time to time the Guaranteed Obligations may be increased or reduced shall
not release or discharge the obligation of Guarantor to Lender with respect to the Guaranteed
Obligations. 1bis Guaranty may be enforced by Lender and any subsequent holder of the Note
and shall not be discharged by the assignment or negotiation of all or part of the Note.
1.4. Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be
reduced, discharged or released because or by reason of any existing or future offset, claim or
defense of Borrower or any other Person against Lender or against payment of the Guaranteed
Obligations, whether such offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating thv Guaranteed Obligations) or otherwise.
1.5. Payment By Guarantor. If all or any part ofthe Guaranteed Obligations
shall not be punctually paid and performed when due, whether at demand, maturity, acceleration
or otherwise, Guarantor shall, within five (5) Business Days of demand by Lender and without
presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate
the maturity, notice of acceleration of the maturity or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed Obligations to Lender
at Lender's address as set forth herein. Such demand( s) may -be made at any time coincident
with or after the time for payment and performance of all or part of the Guaranteed Obligations
and may be made from time to time with respect to the same or different items of Guaranteed
Obligations. Such demand shall be deemed made, given and received in accordance with the
notice provisions hereof.
1.6. No Duty To Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to
enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies
against Borrower or others liable. on the Loan or the Guaranteed Obligations or any other person,
(ii) enforce Lender's rights against any collateral which shall ever have been given to secure the
Loan, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations,
(iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to
enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which
shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining
-2-
payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take
any other action to reduce, collect or enforce the Guaranteed Obligations.
1.7. Waivers. Guarantor agrees to the provisions of the Loan Documents and
hereby waives notice of (i) any loans or advances made by Lender to Borrower, (ii) acceptance
of this Guaranty, (iii) any amendment or extension of the Note, the Security Instruments, the
Loan Agreement or of any other Loan Documents, (iv) the execution and delivery by Borrower
and Lender of any other loan or credit agreement or of Borrower's execution and delivery of any
promissory notes or other documents arising under the Loan Documents or in connection with
the Properties, (v) the occurrence of any breach by Borrower or an Event of Default, (vi)
Lender's transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or
foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed
Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action
at any time taken or omitted by Lender and, generally, all demands and notices of every kind in
connection with this Guaranty, the Loan Documents, any documents or agreements evidencing,
securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed.
1.8. Payment of Expenses. In the event that Guarantor should breach or fail to
timely perform any provisions of this Guaranty, Guarantor shall, within five (5) Business Days
of demand by Lender, pay Lender all costs and expenses (including court costs and reasonable
. attorneys' fees) actually incurred by Lender in the enforcement hereof or the preservation of
Lender's rights hereunder. The covenant contained in this Section shall survive the payment and
performance of the Guaranteed Obligations.
1.9. Effect of Bankruptcy. In the event that pursuant to any insolvency,
banlauptcy, reorganization, receivership or other debtor relief law or any judgment, order or
decision thereunder, Lender must rescind or restore any payment or any part thereof received by
Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or
discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect
and this Guaranty shall remain in full force and effect. It is the intention of Borrower and
Guarantor that Guarantor's obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such performance.
1.10. Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, until the Debt is paid in
full, Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and
all rights it may now or hereafter have under any agreement, at law or in equity (including,
without limitation, any law subrogating Guarantor to the rights of Lender), to assert any claim
against or seek contribution, indemnification or any other form of reimbursement from Borrower
or any other party liable for payment of any or all of the Guaranteed Obligations for any payment
made by Guarantor under or in connection with this Guaranty or otherwise.
1.11. Termination. This Guaranty and the obligations of Guarantor hereunder
shall terminate upon the payment in full of the Loan.
-3-
1.12. Completion of Work. Guarantor shall be in default of this Guaranty if, in
Lender's judgment, Guarantor (a) fails to pursue completion of the Required Capital
Improvements diligently or (b) fails to complete the Required Capital Improvements by the time
required by the Loan Documents. In any such event, Lender may (in addition to all other
remedies available to Lender), upon written notice to Guarantor, take any action Lender believes
necessary to complete the Required Capital Improvements (but Lender shall not be obligated to
do so and may suspend or terminate any such actions at any time, without completion). No such
actions by Lender shall release or limit the liability of Guarantor and Guarantor agrees to pay
Lender all sums expended by Lender in undertaking to complete such Required Capital
Improvements, whether or not such Required Capital Improvements are actually completed.
ARTICLE II.
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Guarantor hereby consents and agrees to each of the following and agrees that
Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced
or adversely affected by any of the following and waives any common law, equitable, statutory
or other rights (including without limitation rights to notice) relating to Guarantor's obligations
hereunder which Guarantor might have as a result of or in connection with any of the
following:
2.1. Modifications. Any renewal, extension, increase, modification, alteration
or rearrangement of all or any part of the Guaranteed Obligations, the Loan Agreement, the other
Loan Documents or any other document, instrument, contract or understanding between
Borrower and Lender or any other parties pertaining to the Guaranteed Obligations or any failure
of Lender to notify Guarantor of any such action.
2.2. Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or any Guarantor.
2.3. Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of
Borrower, Guarantor or any other party at any time liable for the payment of all or part of the
Guaranteed Obligations; or any dissolution of Borrower or . Guarantor or any sale, lease or
transfer of any or all of the assets of Borrower or Guarantor or any changes in the shareholders,
. partners or members of Borrower or Guarantor, or any reorganization of Borrower or Guarantor.
2.4. Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations or any document or agreement
executed in connection with the Guaranteed Obligations for any reason whatsoever, including
without limitation the fact that (i) the Guaranteed Obligations or any part thereof exceeds the
amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof
is ultra vires, (iii) the officers or representatives executing the Note, the Security Instrument, the
-4-
Loan Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations
acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws,
(v) Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement)
which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi)
the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery
and performance of any document or instrument representing part of the Guaranteed Obligations
or executed in connection with the Guaranteed Obligations or given to secure the repayment of
the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the
Security Instruments, the Loan Agreement or any of the other Loan Documents have been forged
or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain
liable hereon regardless of whether Borrower or any other person be found not liable on the
Guaranteed Obligations or any part thereof for any reason.
2.5. Release of Obligors. Any full or partial release of the liability of
Borrower on the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any
other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly
and severally, to pay, perform; guarantee or assure the payment of the Guaranteed Obligations,
or any part thereof (except for the express release in writing by Lender of any or all of
Guarantor's obligations under this Guaranty), it being recognized, aclmowledged and agreed by
Guarantor that Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or agreement that other parties
will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other
parties to pay or perform the Guaranteed Obligations.
2.6. Other Collateral. The taking or accepting of any other security, collateral
or guaranty, or other assurance of payment, fo.r all or any part of the Guaranteed Obligations.
2.7. Release of Collateral. Any release, surrender, exchange, subordination,.
deterioration, waste, loss or impairment (including without limitation negligent, willful, .
unreasonable or unjustifiable impairment) of any collateral, property or security at any time
existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed
Obligations.
2.8. Care and Diligence. The failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale or other handling
or treatment of all or any part of any collateral, property or security, including but not limited to
any neglect, delay, omission, failure or refusal of Lender (i) to take or, prosecute any action for
the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to
foreclose, or, once commenced, prosecute to completion any action to foreclose upon any
security therefor, or (iii) to take or prosecute any action in connection with any instrument or
agreement evidencing or securing all or any part ofthe Guaranteed Obligations.
2.9. Unenforceability. The fact that any collateral, security, security ipterest or
lien contemplated or intended to be given, created or granted as security for the repayment of the
-5-
Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall
prove to be unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance
on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of
any of the collateral for the Guaranteed Obligations.
2.10. Offset. The Note, the Guaranteed Obligations and the liabilities and
obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released
because of or by reason of any existing or future right of offset, claim or defense of Borrower
against Lender, or any other party, or against payment of the Guaranteed Obligations, whether
such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or
the transactions creating the Guaranteed Obligations) or otherwise.
2.11. Merger. The reorganization, merger or consolidation of Borrower into or
with any other Person.
2.12. Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws or for any reason Lender is required to refund such payment or
pay such amount to Borrower or someone else.
2.13. Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and
collateral therefor, whether or not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Guaranteed Obligations pursuant to the
terms hereof, it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall
be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated,
and whether or not otherwise or particularly described herein, which obligation shall be deemed
satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the Loan Documents and extend credit to
Borrower, Guarantor represents and warrants to Lender as follows:
3.1. Benefit. Guarantor is an Affiliate of Borrower, is the owner of a direct or
indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the
making of this Guaranty with respect to the Guaranteed Obligations.
3.2. Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of the Borrower
and is familiar with the value of any and all collateral intended to be created as security for the
-6-
payment of the Note or Guaranteed Obligations; however, Guarantor is not relying on such
financial condition or the collateral as an inducement to enter into this Guaranty.
3.3. No Representation By Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce Guarantor to
execute this Guaranty.
3.4. Guarantor's Financial Condition. AB of the date hereof, and after giving
effect to this Guaranty and the contingent obligation evidenced hereby, Guarantor is and will be
. solvent and has and will have assets which, fairly valued, exceed its obligations, liabilities
(including contingent liabilities) and debts, and has and will have property and assets sufficient
to satisfy and repay its obligations and liabilities.
35. Legality. The execution, delivery and performance by Guarantor of this
Guaranty and the consummation of the transactions contemplated hereunder do not and will not
contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is
subject or constitute a default (or an event which with notice or lapse of time or both would
constitute a default} under, or result in the breach of, any indenture, mortgage, charge, lien, or
any contract, agreement or other instrument to which Guarantor is a party or which may be
applicable to Guarantor. This Guaranty is a legal and binding obligation of Guarantor and is
enforceable i . . ~ accordance with its terms, excejJt as limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement ofcreditors' rights.
3.6. Survival. All representations and warranties made by Guarantor herein
shall survive the execution hereof
ARTICLE IV.
SUBORDINATION OF CERTAIN INDEBTEDNESS
4.1. Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantor, whether such
debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of
Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract,
open account, or otherwise, and irrespective of the person or persons in whose favor such debts
or liabilities may, at their inception, have been, or may hereafter be created, or the manner in
which they have been or may hereafter be acquired by Guarantor. The Guarantor Claims shall
include without limitation all rights and claims of Guarantor against Borrower (arising as a result
of subrogation or otherwise) as a result of Guarantor's payment of all or a portion of the
Guaranteed Obligations. After the occurrence of an Event of Default or the occurrence of an
event which would, with the giving of notice or the passage of time, or both, constitute an Event
of Default, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any
other party any amount upon the Guarantor Claims.
-7-
4.2. Claims in Bankruptcy. In the event of receivership, banlauptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings involving
Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as
to establish its rights hereunder and receive directly from the receiver, trustee or other court
custodian dividends and payments which would otherwise be payable upon Guarantor Claims.
Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for
application against the Guaranteed Obligations, any dividend or payment which is otherwise
payable to Guarantor and which, as between Borrower and Guarantor, shall constitute a credit
against the Guarantor Claims, then, upon payment to Lender in full of the Guaranteed
Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such
payments to Lender on the Guarantor Claims have contributed toward the liquidation of the
Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the
Guaranteed Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.
4.3. Payments Held in Trust. In the event that, notwithstanding anything to
the contrary in this Guaranty, Guarantor should receive any funds, payment, claim or distribution
which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount
equal to the amount. of all funds, payme:r:tts; claims or distributions so received, and agrees that it
shall have absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and Guarantor covenants
promptly to pay the sane to Lender.
4.4. Liens Subordinate. Guarantor agrees that any liens, security interests,
judgment liens, charges or other encumbrances upon Borrower's assets securing payment of the
Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon.Borrower's assets securing payment of the
Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or
Lender presently exist or are hereafter created or attach. Without the prior written consent of
Lender, Guarantor shall not (i) exercise or enforce any creditor's right it may have against
Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or
proceedings Gudicial or otherwise, including without limitation the commencement of, or joinder
in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to
enforce any liens, mortgage, deeds of trust, security interests, collateral rights, judgments or
other encumbrances on assets of Borrower held by Guarantor.
ARTICLEV.
MISCELLANEOUS
5.1. Waiver. No failure to exercise, and no delay in exercising, on the part of
Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right.
The rights of Lender hereunder shall be in addition to all other rights provided by law. No
-8-
modification or waiver of any provision of this Guaranty, nor consent to departure therefrom,
shall be effective unless in writing and no such consent or waiver shall extend beyond the
particular case and purpose involved. No notice or demand given in any case shall constitute a
waiver of the right to take other action in the same, similar or other instances without such notice
ordemand.
5.2. Notices. All notices, consents, approvals and requests required or
permitted hereunder shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back acknowledged),
addressed as follows (or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other parties hereto in the
manner provided for in this Section):
If to Guarantor:
With a copy to:
With a copy to:
With a copy to:
If to Lender:
Apollo Investment Corporation
9 West 57th Street
Attention: Aaron N. Sack
Facsimile No.: (212) 515-3443
Apollo Investment Corporation
9 West sih Street
Attention: Justin M. Korval
Facsimile No.: (212) 515-3442
Innkeepers USA
340 Royal Poinciana Way
Suite 306
Palm Beach, Florida 33480
Attention: Dennis Craven and Mark Murphy
Facsimile No.: (561) 650-0958
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
Attention: NeilL. Rock, Esq.
Facsimile No.: (917) 777-3787
Lehman ALI Inc.
399 Park Avenue
Attention: Michael E. Lascher
-9-
With a copy to:
Facsimile No.: (646) 758-2744
Lehman ALI Inc.
399 Park A venue
Attention: Charlene Thomas
Facsimile No.: (646) 758-4544
and
DechertLLP
Cira Centre
2929 Arch Street
. Philadelphia, Pennsylvania 19103
Attention: David Forti, Esq.
Facsimile No.: (215) 994-2222
5.3. Governing Law. THIS GUARANTY WAS NEGOTIATED IN THE
STATE OF NEW YORK, AND lVIADE BY GUARANTOR AND ACCEPTED BY
LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PART:!;ES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY ANi> PERFORMANCE,
THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS lVIADE AND PERFORMED
IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS)
AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE
FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY
UNCONDITIONALLY AND IRREVOCABLY W AlVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY,
AND TIDS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
. GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE
CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND GUARANTOR W AlVES
ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
-10-
PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
5.4. Invalid Provisions. If any provision of this Guaranty is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term of this Guaranty,
such provision shall be fully severable and this Guaranty shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and
the remaining provisions of this Guaranty shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty,
unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.
5.5. Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party against whom such
amendment is sought to be enforced.
5.6. Parties Bound; Assignment; Joint and Several. This Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their respective successors, assigns
and legal representatives; provided, however, that Guarantor may not, without the prior written
consent of Lender, assign any of its rights, powers, duties or obligations hereunder. If Guarantor
consists of more than one person or party, the obligations and. liabilities of each such person or
party shall bej oint and several.
5.7. Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Guaranty.
5.8. Recitals. The recital and introductory paragraphs hereof are a part hereof,
form a basis for this Guaranty and shall be considered prima facie evidence of the facts and
documents referred to therein.
5.9. Counterparts. To facilitate execution, this Guaranty may be executed in
as many counterparts as may be convenient or required. It shall not be necessary that the
signature of, or on behalf of, each party, or that the signature of all persons required to bind any
party, appear on each counterpart. All counterparts shall collectively constitute a single
instrument. It shall not be necessary in making proof of this Guaranty to produce or account for
more than a single counterpart containing the respective signatures of, or on behalf of, each of
the parties hereto. Any signature page to any counterpart may be detached from such counterpart
without impairing the legal effect of the signatures thereon and thereafter attached to another
counterpart identiCal thereto except having attached to it additional signature pages.
5.10. Rights and Remedies. If Guarantor becomes liable for any indebtedness
owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby and the rights of Lender
hereunder shall be cumulative of any and all other rights that Lender may ever have against
Guarantor. The exercise by Lender of any right or remedy hereunder or under any other
-11-
instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any
other right or remedy.
5.11. Other Dermed Terms. Any capitalized term utilized herein shall have the
meaning as specified in the Loan Agreement, unless such term is otherwise specifically defined
herein.
5.12. Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF GUARANTOR AND LENDER ~ T H RESPECT TO
GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED
BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF
THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN
GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS . OR
SUBSEQUENT ORAL .AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL. BE USED TO CONTRADICT, VARY,
SUPPLEMENT OR MODIFY ANY TERM OF TillS GU:ARANTY AGREEMENT.
THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.
5.13. Waiver of Right To Trial By Jury. GUARANTOR HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
. EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO TillS GUARANTY OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION H E R E ~ T H . TIDS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.
5.14. Reinstatement in Certain Circumstances. If at any time any payment of
the principal of or interest under the Note or any other amount payable by the Borrower under
the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency,
banlauptcy or reorganization of the Borrower or otherwise, Guarantor's obligations hereunder
with respect to such payment shall be reinstated as though such payment has been due but not
made at such time.
5.15. Financial Reports. If at any time Guarantor is not a public company,
Guarantor shall provide or cause to be provided to Lender the following:
-12-
(i) Updated audited annual financial statements of Guarantor in form and
content comparable to the financial statements provided to Lender by or on behalf
of Guarantor prior to date hereof, for each fiscal year of Guarantor, as soon as
reasonably practicable and in any event within ninety (90) calendar days after the
close of each such fiscal year;
(ii) Copies of Guarantor's federal and state income tax returns for each taxable
year, as filed with the appropriate governmental authority, within thirty (30) days
after filing of same;
(iii) Within thirty (30) days after the end of each of the first three quarters of
each fiscal year of Guarantor, Guarantor shall . deliver to Lender a copy of
Guarantor's unaudited balance sheet, income statement and statement of changes
in financial position for the period from the beginning of such fiscal year to the
end of such quarter in form and content comparable to the financial statements
provided to Lender by or on behalf of Guarantor prior to date hereof Each such
quarterly report shall be accompanied by a certification by Guarantor to Lender
that such report presents fairly the financial condition of Guarantor as of the
. respective dates thereof; and
(iv) From time to time promptly after Lender's reasonable request, such
additional information, reports and statements regarding the business operations
and financial condition Guarantor as Lender may reasonably request.
[NO FURTHER TEXT ON THIS PAGE]
-13-
EXECUTED as ofthe day and y ~ a r first. above written.
GUARANTOR:
APOLLO INVESTMENT CORPORATION:, a
Maryland Corporation
By: Apollo Investment Management, L.P ., a
Delaware limited partnership, its Investment
Advisor
By: ACC Management, LLC, a Delaware
limited liability company, its General Partner
[Signature Page to Fixed Portfolio Required Capital Improvements Guaranty]
13663957.3
Schedule I
Borrowers
Grand Prix Belmont LLC
Grand Prix Campbell/San Jose LLC
Grand Prix El Segundo LLC
Grand Prix Fremont LLC
Grand Prix Mountain View LLC
Grand Prix San Jose LLC
Grand Prix San Mateo LLC
Grand Prix Sili I LLC
Grand Prix Sili II LLC
Grand Prix Denver LLC
Grand Prix Englewood/Denver South LLC
Grand Prix Shelton LLC
Grand Prix Windsor LLC
Grand Prix Altamonte LLC
Grand Prix Ft. Lauderdale LLC
Grand Prix Naples LLC
Grand Prix Atlanta LLC
Grand Prix Atlanta (Peachtree Corners) LLC
Grand Prix Lombard LLC
Grand Prix Chicago LLC
Grand Prix Schaumburg LLC
Grand Prix Westchester LLC
Grand Prix Lexington LLC
Grand Prix Louisville (RJ) LLC
Grand Prix Columbia LLC
Grand Prix Gaithersburg LLC
Grand Prix Germantown LLC
Grand Prix Portland LLC
Grand Prix Livonia LLC
Grand Prix Cherry Hill LLC
. Grand Prix Mt. Laurel LLC
Grand Prix Saddle River LLC
Grand Prix Islandia LLC
Grand Prix Binghamton LLC
Grand Prix Horsham LLC
Grand Prix Willow Grove LLC
Grand Prix Addison (Rl) LLC
Grand Prix Arlington LLC
Grand Prix Las Colinas LLC
Grand Prix Richmond LLC
Grand Prix Richmond (Northwest) LLC
Grand Prix Bellevue LLC
Grand Prix Bothell LLC
Grand Prix Lynnwood LLC
Grand Prix Tukwila LLC
-16-
EXHIBIT B-6
From:
Sent:
To:
Subject:
mbeilinson@beilinsonpartners. com
Sunday, July 18, 2010 12:44 PM (GMT)
Lascher, Michael <michael.lascher@lamcollc.com>
Re: One More Decision
Not inclined. I understand its only a word but it gives midland a real hook and I'm filing the motion to assume on day one and already
reviewing the plan. I won't be amending our deal without your consent. I'm trusting that you won't terminate AIC in first 45
days .... please do the same vvith me on this issue for this short period oftime
Dinner was really fun last night
------Original Message------
From: Lascher, Michael
To: Marc
Subject: Fw: One More Decision
Sent: Jull8, 2010 7:55AM
Good morning. Did you think about this?
----- Original Message -----
From: Lascher, Michael
To: 'm beilinson@beilinsonpartners.com' <mbeilinson@beilinsonpartners. com>
Sent: SatJull717:50:252010
Subject: One More Decision
Can you live with giving me the ability to terminate cash collateral if you "breach your obligations to Lehman in connection with the
Restructuring"?
Just say yes and I promise I won't ask you for anything else. Until tomorrow ...
Confidentiality Notice: The contents of this email, all related responses and any files and/or attachments transmitted with it are
CONFIDENTIAL and are intended solely for the use of the individual or entity to whom they are addressed. This email may contain
legally privileged or confidential information and may not be disclosed or forwarded to anyone else without authorization from the
originator of this email. If you have received this email in error, please notify the sender immediately and delete all copies from your
system.
Sent via BlackBerry by AT&T
EXHIBIT C
1


---------------------------------*
In re: ) Chapter 11
INNKEEPERS USA TRUST, et al., ) CASE NO.
Debtors. ) 10-13800 (SCC)
---------------------------------*
Deposition of MARC A. BEILINSON, called as
a witness for examination, held at the offices of
Kirkland & Ellis LLP, 601 Lexington Avenue, New
York, New York, on Thursday the 12th day of August
2010, commencing at 9:05 a.m., before Josephine H.
Fassett, a Registered Professional Reporter,
Certified Livenote Reporter and Notary Public of the
State of New York.
JOB NO. 19763
2 (Pages 2 to 5)
2
1 o0o
3
5 Attorneys for Debtors and Debtors in Possession
7 Washington, DC 20005-5763
8 BY: DANIEL T. DONOVAN, ESQ.
9 daniel.donovan@kirkland.com
10 JEFFREY M. GOULD, ESQ.
11 jeffrey.gould@kirkland.com
12
13 - and -
14
16 Attorneys for Debtors and Debtors in Possession
17 300 North LaSalle Street
20 jeffrey.pawlitz@kirkland.com
21
22
23
24
25
3
1 o0o
3
5 Attorneys for Midland Loan Services, Inc.
6 1221 Avenue of the Americas, 26th Floor
8 BY: LENARD M. PARKINS, ESQ.
9 lenard.parkins@haynesboone.com
10 - and -
12 Attorneys for Midland Loan Services, Inc.
14 Dallas, Texas 75219
15 BY: MARK ELMORE, ESQ.
17 CHIP BROOKER, ESQ.
18 chip.brooker@haynesboone.com
19
20
21
22
23
24
25
4
1 o0o
3
4 KILPATRICK STOCKTON, LLP
5 Attorneys for Trimont Real Estate Advisors
6 1100 Peachtree Street, NE, Suite 2800
7 Atlanta, Georgia 30309
8 BY: TODD C. MEYERS, ESQ.
9 tmeyers@kilpatrickstockton.com
10 - and -
11 KILPATRICK STOCKTON, LLP
12 Attorneys for Trimont Real Estate Advisors
14 New York, New York 10019
15 BY: MICHAEL D. CRISP, ESQ.
16 mcrisp@kilparickstockton.com
17
18
19 BRYAN CAVE, LLP
24 lawrence.gottesman@bryancave.com
25
5
1 o0o
3
4 PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP
5 Attorneys for Apollo Investment Corporation
8 BY: ANDREW J. EHRLICH, ESQ.
10 AMY P. DIETERICH, ESQ.
11 adieterich@paulweiss.com
12
13
14 DECHERT, LLP
18 BY: BRIAN E. GREER, ESQ.
19 brian.greer@dechert.com
20 KEVIN J. O'BRIEN, ESQ.
21 kevin.obrien@dechert.com
22 NICOLE B. HERTHER-SPIRO, ESQ.
23 nicole.hertherspiro@dechert.com
24
25
3 (Pages 6 to 9)
6
1 o0o
3
4 MORRISON & FOERSTER, LLP
5 Attorneys for Unsecured Creditors Committee
8 BY: PAUL GALANTE, ESQ.
9 pgalante@mofo.com
10
11
13 Attorneys for Appaloosa Investment L.P. I
16 BY: BRIAN R. FAERSTEIN, ESQ.
18
19
20 KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP
22 1633 Broadway
25 dfliman@kasowitz.com
7
1 o0o
2 A L S O P R E S E N T :
3
4 MARK A. MURPHY, Innkeepers USA
5 TRAVIS SHELHORSE, Trimont Real Estate Advisors
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
8
1 o0o
2 I N D E X
3 WITNESS PAGE
4 MARC A. BEILINSON
5 By Mr. Parkins 12
6 By Mr. Meyers 163
7 By Mr. Gottesman 202
8 By Mr. Donovan 227
9
10
11 AFTERNOON SESSION - 142
12
13
14 E X H I B I T S
15 EXHIBIT DESCRIPTION PAGE
16 Exhibit 1 Amended Notice of Deposition of
17 Corporate Representatives of the
18 Debtors 17
19 Exhibit 2 Chart 18
20 Exhibit 3 Debtors' Motion for an Order (A)
21 Authorizing the Debtors to Assume
22 the Plan Support Agreement and (B)
23 Granting Related Relief 25
24 Exhibit 4 Plan Support Agreement 25
25 Exhibit 5 E-mail Exchange dated July 16, 2010 32
9
1 o0o
2 E X H I B I T S
4 Exhibit 6 Document titled Illustrative Terms
5 of Proposed Restructuring dated
6 May 25, 2010 40
9 June 2, 2010 47
12 June 2, 2010 54
15 June 2, 2010 81
18 June 4, 2010 82
19 Exhibit 11 Document titled Term Sheet
20 Alternative A, Illustrative
21 Terms of Proposed Restructuring
22 dated June 17, 2010 85
23
24
25
4 (Pages 10 to 13)
10
1 o0o
2 E X H I B I T S
5 Alternative A, Illustrative Terms
7 June 29, 2010 94
9 Alternative A, Illustrative Terms
11 June 22, 2010 101
12 Exhibit 14 E-mail Exchange dated July 7, 2010 103
13 Exhibit 15 Document titled Project Tavern -
14 Lehman Discussion Materials dated
15 April 22, 2010 114
16 Exhibit 16 Document titled Project Tavern -
17 Midland Discussion Materials dated
18 April 28, 2010 130
19 Exhibit 17 Amended Declaration of Dennis
20 Craven, Chief Financial Officer of
21 Innkeepers USA Trust, in Support of
22 First-Day Pleadings 142
23
24
25
11
1 o0o
2 (Whereupon, on the record.)
3 MR. DONOVAN: Dan Donovan, Kirkland &
4 Ellis, for the Debtors and the witness.
5 MR. MURPHY: Mark Murphy with
6 Innkeepers.
8 Ellis, for the Debtors.
9 MR. EHRLICH: Andrew Ehrlich, Paul,
10 Weiss, Rifkind, Wharton & Garrison, on behalf
11 of Apollo Investment Corporation.
12 MR. GALANTE: Paul Galante, Morrison &
13 Foerster, for the Unsecured Creditors
14 Committee.
16 Willkie Farr, for Appaloosa Investment LP I.
17 MR. PAWLITZ: Jeff Pawlitz, Kirkland &
18 Ellis, for the Debtors.
19 MR. MEYERS: Todd Meyers, Kilpatrick
20 Stockton, for Trimont.
21 MR. CRISP: Mike Crisp, Kilpatrick
22 Stockton, for Trimont.
24 Benson, Torres & Friedman, Five Mile Capital
25 Partners.
12
1 o0o
3 Bryan Cave, LNR Partners, LLC.
4 MR. BROOKER: Chip Brooker, Haynes and
5 Boone, Midland Loan Services, Inc.
6 MR. ELMORE: Mark Elmore, Haynes and
7 Boone, Midland Loan Services, Inc.
8 MR. PARKINS: Lenard Parkins, Haynes
9 and Boone, Midland Loan Services, Inc.
10
11 M A R C A. B E I L I N S O N, the witness,
12 having been duly sworn, was examined and
13 testified under oath as follows:
14
15 MR. PARKINS: Counsel, stipulations,
16 we're taking this pursuant to agreement and
17 the rules?
18 MR. DONOVAN: No stipulations. We can
19 just proceed.
20 MR. PARKINS: Fine.
21
22 EXAMINATION BY
23 MR. PARKINS:
24 Q Mr. Beilinson, would you state your
25 full name, please?
13
1 Marc A. Beilinson
2 A Marc A. Beilinson.
3 Q And, Mr. Beilinson, how are you
4 presently employed?
5 A I'm the chief restructuring officer of
6 Innkeepers USA.
7 Q Do you have any other job at the
8 present time?
9 A No.
10 Q You're an attorney by education,
11 correct?
12 A Yes, I am.
13 Q Okay. Have you been in a deposition
14 to understand how the deposition process works?
15 A I've been at a few.
16 Q I'll ask you questions, you need to
17 respond orally so that the court reporter can get
18 your answer.
19 If there's any questions, you have any
20 problems with any of my questions or any
21 clarifications, let me know if you don't understand.
22 And we'll try not to talk over each
23 other, one person talks the other person answers.
24 And there will be times, I'm sure,
25 that various counsel interpose objections which
5 (Pages 14 to 17)
14
1 Marc A. Beilinson
2 we'll have to hear as part of the deposition.
3 Are you familiar with that process?
4 A Yes.
5 Q Okay.
6 MR. PARKINS: Is there more lawyers on
7 the phone?
8 MR. DONOVAN: It's probably just
9 Kirkland.
10 MR. PARKINS: Okay.
11 MR. GOULD: We have one associate in
12 Chicago.
13 MR. PARKINS: Okay. Great.
14 BY MR. PARKINS:
15 Q How long have you held the position of
16 CRO of Innkeepers?
17 A Sometime in November of 2008.
18 Q And how much are you compensated as
19 CRO of the debtors?
20 A My base compensation is $900,000.
21 Q Is there any bonus component of your
22 compensation?
23 A Yes, there is.
24 Q What is that?
25 A I received a million-dollar bonus for
15
1 Marc A. Beilinson
2 signing on for another year, and I had a retention
3 bonus of a million dollars for that year.
4 Q So there was a one-time bonus for
5 signing on from 2008 after that one year till 2009,
6 there's not another $1 million bonus, it was just a
7 one-time bonus?
8 A No, that was a bonus for the
9 renegotiation of my contract after the first year.
10 Q Okay. Who hired you to be CRO for the
11 debtors?
12 A The Board.
13 Q The Board? Who on the Board of
14 Directors did you talk with to be hired?
15 A I talked to each of the members of the
16 Board, including those members who are affiliated
17 with Apollo Investment Corp. and the independent
18 members of the Board who are top-notch
19 professionals.
20 Q How did you come to learn about the
21 opportunity to be CRO for the debtors?
22 A I was an independent member of the
23 Board since the time of the transaction in 2007 when
24 Apollo Investment Corp. took the enterprise private.
25 Q And it's from that position as an
16
1 Marc A. Beilinson
2 independent member of the Board of Apollo Investment
3 Corporation that you came to know the individuals
4 who ultimately offered you a job with respect to
5 Innkeepers; is that correct?
6 A No, that's not correct.
7 Q Okay. How did you get to know these
8 individuals?
9 A I was an independent member of the
10 Board of Innkeepers USA.
11 Q Okay.
12 A And while I was an independent member
13 of the Board of Directors, management reached out to
14 me in advance of a board meeting and asked me to
15 come in and take a look at the company because they
16 knew of my past experiences as a restructuring
17 professional.
18 Q And how did you come to be an
19 independent member of the Board of Directors of
20 Innkeepers USA?
21 A I received a call from Rick Press who
22 is at Apollo asking if I had an interest in serving
23 as an independent member of the Board of Directors
24 of a company they were investing money in.
25 Q Prior to becoming CRO for Innkeepers,
17
1 Marc A. Beilinson
2 would you go through your employment history,
3 please?
4 A Sure.
5 In 1983 I was employed by Buchalter
6 Nemer Fields & Younger which is a regional law firm,
7 mostly based in California, but also with offices
8 outside of California including New York. I was
9 there as a partner.
10 I left there, went to Pachulski Stang
11 Ziehl & Jones where I was a partner for 15 years.
12 And I left the practice of law about three years
13 ago.
14 During that period of time I've also,
15 you know, owned some businesses and had my own
16 investment vehicles which I was chief executive of.
17 Q Is it fair to say your concentration
18 while practicing law was in bankruptcy and
19 restructuring?
20 A Absolutely.
21 (Amended Notice of Deposition of
22 Corporate Representatives of the Debtors
23 marked as Exhibit 1, as of this date.)
24 BY MR. PARKINS:
25 Q Mr. Beilinson, I've had marked
6 (Pages 18 to 21)
18
1 Marc A. Beilinson
2 Exhibit 1, which is before you, the Amended Notice
3 of Deposition of Corporate Representatives of the
4 Debtors attached to the Document Request, have you
5 seen this document before?
6 A Yes, I have.
7 Q Have you reviewed the document?
8 A Not recently, but I have.
9 Q I take it you are here as the
10 corporate representative of the debtors --
11 A That's correct.
12 Q -- in response to this notice; is that
13 correct?
15 MR. DONOVAN: And subject to our
16 objections which were provided.
17 (Chart marked as Exhibit 2, as of this
18 date.)
19 MR. PARKINS: I'm trying to wait for
20 everybody to get one before I ask questions.
21 MR. DONOVAN: Okay. No problem.
22 MR. PARKINS: There's a lot of people
23 here.
24 BY MR. PARKINS:
25 Q Mr. Beilinson, I've handed you what I
19
1 Marc A. Beilinson
2 had marked as Exhibit 2. It's a chart that was
3 prepared by the debtors and handed at the first day
4 hearings, do you recollect this document?
5 A I've seen this before.
6 Q Did you have any role in preparing
7 this document?
8 A No.
9 Q No. Do you recall it being offered
10 into evidence at the first day hearings --
11 A Yes.
12 Q -- in the Innkeepers case?
13 Looking at Exhibit 2, we see at
14 the top in the center here, I take it, the ownership
15 of the various debtors outlined in the context of
16 this chart as well as the various debt pools; is
17 that correct?
19 Q At the top of the chart we have Apollo
20 Investment Corporation. I might call it Apollo
21 during the deposition just to shorthand, is that
22 okay?
23 A No.
24 Q Okay. Then I'll call it Apollo
25 Investment Corporation, is that okay, or AIC, is
20
1 Marc A. Beilinson
2 that okay?
3 A That would be fine.
4 Q Okay. And Apollo Investment
5 Corporation is the 100 percent owner of the
6 ultimate -- of all these companies ultimately,
7 correct?
8 A Yes.
9 Q Okay. Grand Prix Holdings next in the
10 chart is a Delaware LLC; is that correct?
11 A I don't know.
12 Q Does it have a Board of Managers or
13 Board of Directors?
14 A I don't know if it's a corporation or
15 an LLC, so I'm not sure what.
16 Q Does it have a board?
17 A Yes.
18 Q Okay. Who is on the board?
19 A I don't think I know as I sit here.
20 Q Are you on the board?
21 A Uhm?
22 Q Are you on the board?
23 A As I sit here I don't know.
24 Q Okay. Do you know who its officers
25 are?
21
1 Marc A. Beilinson
2 A Off the top of my head there are a
3 hundred entities and off the top of my head, without
4 refreshing my memory, I couldn't tell you who was on
5 the board or who the officers were of any of the
6 entities.
7 Q Did you go back and sort of refresh
8 your recollection with respect to the topics to be
9 covered today in the deposition?
10 MR. DONOVAN: Well, let me object
11 here. I don't think membership on each board
12 was a topic, nor is it really one that one
13 should cover in a deposition, so.
14 BY MR. PARKINS:
15 Q My question, though, is: Did you go
16 back and refresh your recollection regarding in
17 order with respect to the topics to be covered in
18 the deposition as a 30(b)(6) representative of the
19 company?
20 MR. DONOVAN: Objection. You can
21 answer it.
22 A I reviewed what I thought was
23 appropriate for purposes of the deposition involving
24 the PSA and cash collateral.
25 Q The next in the line is Innkeepers USA
7 (Pages 22 to 25)
22
1 Marc A. Beilinson
2 Trust Maryland REIT, does it have a Board of
3 Trustees?
4 A Yes.
5 Q Do you know who's on the Board of
6 Trustees?
7 A Most of the members.
8 Q Can you tell me who they are?
9 A Sure. Fred Kleisner, who is the CEO
10 of Morgan Hotel Group, who was formerly the CEO of
11 Wyndham Hotels, which is one of the largest hotel
12 chains in the country.
13 Larry Ruisi, who is a CEO of Lowes
14 Cinemas and formerly a chief executive at Sony
15 Pictures and Trimark.
16 And Bernie Zuroff who is a chief
17 executive and general counsel to a number of
18 companies both who have gone through restructurings
19 in in-court and out-of-court process.
20 There are a number of Apollo
21 Investment Corp. people who are also on the board.
22 I believe those include Jim Zelter, Patrick Dalton,
23 Justin Korval, and Schuyler Hewes.
24 I believe there is an employee of ARI,
25 which is a public company, which is affiliated with
23
1 Marc A. Beilinson
2 some of the Apollo entities by the name of Ken
3 Picache who is an expert in CMBS financing.
4 Q You're not on the board, are you?
5 A I am on the board.
6 Q You're on the board, okay.
7 A I was an independent member starting
8 in 2007, and when I took the position as CRO, in my
9 view that made me no longer independent, but I did
10 remain as a member of the Board of Directors.
11 Q Going down the list here. Innkeepers
12 Financial Corporation, a Virginia Corporation, do
13 you know whose on the Board of Directors of that
14 corporation?
15 A I can't tell you off the top of my
16 head.
17 Q Same question for Innkeepers USA
18 Limited Partnership, do you know who the partners
19 are of that limited partnership?
20 A I think my testimony will be the same
21 with regard to every other entity on this chart.
22 Q Okay.
23 A I'm happy to go through each.
24 Q Your testimony -- I'm sorry, go ahead
25 and finish and I'll ask you a question.
24
1 Marc A. Beilinson
2 A My testimony is that, you know, as I
3 sit here today, I don't recall who the officers and
4 directors of each of the entities is. There's over
5 90 entities.
6 Q Looking at this Exhibit 2, we see
7 various, I'll call them lenders identified and
8 collateral identified with respect to those lenders
9 identified in green color in this chart; is that
10 correct?
11 A Yes.
12 Q Okay. More correctly, you see a
13 number of secured lenders in green and apparently
14 some mezz debt not in green in the context of this
15 chart; is that correct?
16 A I think that's what it's attempting to
17 demonstrate.
18 Q Okay. Now, going from the left side
19 of the chart we see there under Grand Prix Mezz
20 Borrower Fixed, LLC, you see they entered into a $25
21 million fixed rate CMBS pool with Midland as a
22 special servicer, correct?
23 A I see that.
24 Q Forty-five hotels stand as collateral
25 for that indebtedness, correct?
25
1 Marc A. Beilinson
2 A That is correct.
3 Q And the next column you have there in
4 green the 20 hotel Lehman collateral pool reflecting
5 a $238 million Floating Rate Lien and Senior
6 Mortgage Loan, correct?
7 A I see that reflected.
8 Q Okay. And we can go across here with
9 respect to each of the borrowers. Do these columns
10 where the green is noted and the debt and collateral
11 accurately, as far as you know, reflect the debt and
12 collateral holder of that debt for each of those
13 entities identified in green?
14 A It appears to, but I couldn't tell you
15 with certainty that those are the actual names of
16 the LLCs that hold those debt.
17 Q Okay.
18 (Debtors' Motion for an Order (A)
19 Authorizing the Debtors to Assume the Plan
20 Support Agreement and (B) Granting Related
21 Relief marked as Exhibit 3, as of this date.)
22 (Plan Support Agreement marked as
23 Exhibit 4, as of this date.)
24 MR. DONOVAN: Let me just state during
25 this time that we're designating this
8 (Pages 26 to 29)
26
1 Marc A. Beilinson
2 confidential until we have a chance to review
3 the transcript pursuant to the protective
4 order, which we will do after we receive it.
5 MR. PARKINS: And we will clearly
6 abide by the protective order. I don't think
7 it's been entered yet by the terms, but in
8 any event, if we need to use this document,
9 we'll reach agreement and report.
10 MR. DONOVAN: Sure.
11 MR. PARKINS: Absolutely.
12 BY MR. PARKINS:
13 Q Mr. Beilinson, I've handed you two
14 exhibits.
15 Exhibit 3 is the Debtors' Motion
16 for an Order Authorizing the Assumption of the Plan
17 Support Agreement. Do you have that in front of
18 you?
19 A Yes.
20 Q And I've handed you also Exhibit 4
21 which is the Plan Support Agreement itself.
22 A This isn't stamped by the court, I
23 mean, am I to assume that this is what was actually
24 filed with the court with regard to Exhibit 3?
25 Q You can assume that that was what was
27
1 Marc A. Beilinson
2 filed. I don't have files -- I don't get filed
3 stamped copies from the court, I just get service
4 copies. Okay?
5 A I'm happy to make that assumption,
6 though.
7 Q And Exhibit 4 is the Plan Support
8 Agreement which we'll call the PSA from time to
9 time, okay?
10 A And I'm supposed to assume that --
11 Q All exhibits are attached.
12 A And they're accurate as to what was
13 filed?
14 Q Yes.
15 A Okay.
16 Q The --
17 A You know, in fairness, there were
18 hundreds of drafts of each of these documents and I
19 want to make sure when I'm answering the questions
20 that I'm dealing with the final version which was
21 actually --
22 Q Mr. Beilinson, I want you to look at
23 it until you're satisfied or your counsel's
24 satisfied that it is a correct copy of what was
25 filed with the court.
28
1 Marc A. Beilinson
2 MR. DONOVAN: No, if you're
3 representing it's the execution copy, that's
4 all we were trying to get at.
5 THE WITNESS: Yeah.
7 BY MR. PARKINS:
8 Q Looking at Exhibit 3, please,
9 which is the Motion.
10 A Yeah.
11 Q Did you review this Motion before it
12 was filed?
13 A Yes.
14 Q Okay. This Motion was filed as part
15 of the first day filing, is that correct, when the
16 case was filed on the 19th; is that correct?
17 A I don't know.
18 Q Well, let's look at the date, at least
19 the date of when it was signed. Page 18.
20 A Uh-hum.
21 Q What date did the company file Chapter
22 11?
23 A I believe July 19th.
24 Q Okay. The document is at least dated
25 July 19; is that correct?
29
1 Marc A. Beilinson
2 A Yes. I just --
3 Q All right.
4 A -- don't know if it was filed on that
5 date.
6 Q And the debtors as of today are still
7 continuing to seek approval of the assumption of
8 this agreement, which hearing is set for September
9 1; is that correct?
11 Q Turn with me, if you would, to
12 Paragraph No. 6 on page 4 of the pleading, please.
13 A (Complies.)
14 Q Take a moment and read it because I
15 want to ask you about it, okay?
16 A (Complies.)
17 I've reviewed it.
18 Q Have you finished reading it?
19 A Yes.
20 Q Okay. Going to about the last 10
21 lines of Paragraph No. 6, the sentence that begins:
22 For the last several months, the Debtors have
23 engaged Lehman in numerous strategic discussions.
24 Do you see that sentence? Do you see that language
25 there?
9 (Pages 30 to 33)
30
1 Marc A. Beilinson
2 A Yes, I see the sentence.
3 Q Okay. It says: The Debtors have
4 engaged Lehman in numerous strategic discussions to
5 outline the potential restructuring of the Debtors'
6 enterprise that would maximize the value of their
7 estates for the benefit of all constituents.
8 It is true also that during that same
9 period of time, the months prior to the filing of
10 the bankruptcy, that the debtors were engaged in
11 dialogue with Apollo regarding the restructure, too;
12 is that correct?
13 A No.
14 Q Is it your testimony the debtors were
15 not engaged at all with respect to the Term Sheet
16 for the restructuring of this company where Apollo
17 at some time was to be considered a signatory to the
18 agreement?
19 A That's correct, no.
20 Q Is that your testimony with respect to
21 Apollo Investment Corporation?
22 A No.
23 Q That is not your testimony or --
25 Q Okay. Was Apollo Investment
31
1 Marc A. Beilinson
2 Corporation -- did you have dialogue with Apollo
3 Investment Corporation months before the filing with
4 respect to a restructuring?
5 A Yes. To the extent they had members
6 of the Board of Innkeepers USA, I was always keeping
7 the members of the Board of Innkeepers USA, and the
8 Board comprises of a number of independent members
9 and members who were affiliated with Apollo
10 Investment Corp. or other Apollo affiliated
11 entities.
12 Q Other than dialogue with the board
13 where Apollo had representatives on the board, the
14 debtor was engaged, was it not, in dialogue with
15 respect to Apollo becoming an owner of the equity of
16 the company as part of the restructuring negotiated
17 with Lehman; isn't that correct?
18 A No.
19 Q Isn't it true that within a few days
20 of the filing of the bankruptcy case you had direct
21 communications with representatives of Apollo with
22 respect to their potential acquisition of 50 percent
23 of the equity of this company coming out of
24 bankruptcy?
25 A I don't believe so.
32
1 Marc A. Beilinson
2 (E-mail Exchange dated July 16, 2010
4 BY MR. PARKINS:
5 Q I ask you to look at what's been
6 marked as Exhibit 5.
7 A (Reviews.)
8 Yes, I'm familiar with this.
9 Q Okay. Looking at the bottom part of
10 Exhibit 5, an e-mail from you to James Zelter.
11 Who is James Zelter, by the way?
12 A Jim Zelter is a CEO of Apollo
13 Investment Corp. and a member of Innkeepers USA
14 Board of Directors.
15 Q Looking at point number 3.
16 A Yes.
17 Q Would you read that, please?
18 A My understanding is that all issues
19 have been resolved between Lehman and Apollo except
20 the following single issue.
21 Q Now, do you know if Mr. Zelter was
22 involved in the negotiations between Lehman and
23 Apollo regarding Apollo's ownership of the
24 reorganized company?
25 A He was involved in discussions between
33
1 Marc A. Beilinson
2 Apollo Investment Corp., I was using this as a
3 shorthand, and Lehman with regard to purchasing an
4 interest that Lehman may receive through a plan of
5 reorganization post-confirmation.
6 Q Why were you contacting him if he was
7 personally involved with this, did you not think he
8 knew what was going on in any event?
9 MR. DONOVAN: Objection.
10 BY MR. PARKINS:
11 Q You can answer.
12 MR. DONOVAN: Yeah, you can still
13 answer.
14 A Could you ask the question again?
15 Q Yes. Why were you contacting him
16 three days before the filing with respect to the
17 status of Apollo Investment Corporation's
18 acquisition if he was involved in those negotiations
19 himself?
21 answer.
22 A Because one of the elements of the PSA
23 between Innkeepers USA and Lehman is that they are
24 capable of selling 50 percent of their
25 post-confirmation interest for an amount of $107
10 (Pages 34 to 37)
34
1 Marc A. Beilinson
2 million, so it was material to Innkeepers USA that a
3 secondary transaction was actually going to be
4 executed. It wasn't important to me whether that
5 was Lehman or Apollo, or Lehman and a third party,
6 and in that term I meant Apollo Investment
7 Corporation. So it was important to me that that be
8 executed because it was a condition to Lehman's
9 compliance with the PSA which was negotiated by
10 Innkeepers USA.
11 Q Did it have Apollo sign an agreement
12 to acquire 50 percent of the stock?
14 A I don't know --
15 Q Apollo Investment Corporation, I'm
16 sorry.
17 A I believe the terms of the PSA
18 provides that Lehman had to be able to sell 50
19 percent to a third party. It was immaterial to me
20 as to who that third party was in accordance with
21 the PSA.
22 Q Do you know if Lehman was negotiating
23 with anyone else other than AIC for the acquisition
24 of that stock at the time you sent this e-mail?
25 A I don't know.
35
1 Marc A. Beilinson
2 Q Okay. Are you aware that an agreement
3 was signed on this date dated July 16 between Lehman
4 and Apollo Investment Corporation with respect to
5 this acquisition?
6 A I was informed by both parties that it
7 was executed in whatever form.
8 Q And you knew that when, sir?
9 A I believe I knew that on, you know,
10 somewhere around the filing date.
11 Q Before the filing date?
12 A I believe so.
13 Q Look with me at Exhibit 3, the
14 Motion again. Paragraph No. 20.
15 I'd ask you to read it, please, I'm
16 going to ask you about it.
17 A (Complies.)
19 Q Now, Mr. Beilinson, if you knew that
20 Apollo had signed the agreement with Lehman, Apollo
21 Investment Corporation signed the agreement with
22 Lehman before the filing, why wasn't that disclosed
23 in this pleading here, Paragraph 20?
24 MR. DONOVAN: Objection. Foundation.
25
36
1 Marc A. Beilinson
2 BY MR. PARKINS:
3 Q You can answer.
4 A I know it was disclosed to the court
5 at the first day hearings, what pleading it was in
6 and what paragraph it is in isn't really material to
7 me at all.
8 Q But --
9 A So I'm not sure why anyone chose not
10 to put that in this particular paragraph or why you
11 would believe that this is the appropriate paragraph
12 to put it in.
13 Q Well, it is accurate that the debtor,
14 through you at least, knew that Apollo Investment
15 Corporation was the purchaser of the new equity as
16 of the date of filing, correct?
18 BY MR. PARKINS:
20 A I think I knew there was some
21 agreement that was executed between the two. I
22 hadn't seen the agreement and it's not material to
23 Innkeepers USA as to who the purchaser of the new
24 equity is, just that there is a purchaser of the new
25 equity.
37
1 Marc A. Beilinson
2 Q Okay. And you just don't know why it
3 isn't disclosed in this pleading here, right?
4 MR. DONOVAN: Objection. Misstates
5 the testimony.
6 BY MR. PARKINS:
7 Q Do you know why it's not disclosed?
8 A No. There's no reason why it wouldn't
9 be disclosed or that it would be disclosed in this
10 document.
11 Q Based on your experience, sir, is a
12 transaction resulting in the present equity owner of
13 a Chapter 11 debtor ending up with equity of that
14 Chapter 11 debtor something that ought to be
15 disclosed in a bankruptcy case?
16 MR. DONOVAN: Well, hold on, let's
17 keep this clear. You know it was disclosed,
18 so I think you need to be more precise, and I
19 think these are misleading. You know it was
20 disclosed. If you're asking about this
21 particular paragraph, you need to be more
22 precise.
23 MR. PARKINS: What I know was it said
24 that they think -- we'll get to that in a
25 minute, counsel.
11 (Pages 38 to 41)
38
1 Marc A. Beilinson
2 MR. DONOVAN: Okay.
3 MR. PARKINS: Where it says, we think
4 AIC might be the buyer, but the testimony is
5 now we knew they were the ones going to be
6 the buyer, and we're going to get into that
7 in a second.
8 MR. DONOVAN: Well, we still don't
9 know, but all I'm asking is to be precise if
10 you're asking about this paragraph.
11 MR. PARKINS: Could you read the last
12 question back?
13 (Whereupon, the requested portion was
14 read back by the Reporter:
15 "Question: Based on your experience,
16 sir, is a transaction resulting in the
17 present equity owner of a Chapter 11 debtor
18 ending up with equity of that Chapter 11
19 debtor something that ought to be disclosed
20 in a bankruptcy case?")
22 answer.
23 BY MR. PARKINS:
25 A I don't even understand the question.
39
1 Marc A. Beilinson
2 Apollo Investment Corp. is getting no distribution
3 on account of its prior equity in connection with
4 Innkeepers USA.
5 Q Mr. Beilinson, is it true that since
6 May of 2010 Apollo Investment Corporation has been
7 involved in negotiations with the Term Sheet for the
8 restructure of this company?
10 answer.
11 A In connection with a term sheet with
12 whom?
13 Q With the debtors and Lehman,
14 three-party negotiation.
15 A I never viewed Innkeepers as
16 responding to any term sheet from Apollo Investment
17 Corp. I believe that Innkeepers was negotiating
18 with Lehman with regard to the terms of a PSA, and I
19 believe that we only responded to term sheets that
20 were sent to us by Lehman, not by Apollo. Now that
21 we received term sheets from Apollo Investment
22 Corp., I believe we did. They were not, in my view,
23 any part of my negotiation, nor were they responded
24 to by Innkeepers or I.
25 MR. PARKINS: Give me a minute. Let
40
1 Marc A. Beilinson
2 me pull some exhibits.
3 MR. DONOVAN: Sure.
4 While we're here, if anyone has
5 arrived since we made initial appearances,
6 can you please make your appearance.
7 MS. DIETERICH: Amy Dieterich from
8 Paul Weiss.
9 MR. SHELHORSE: Travis Shelhorse from
10 Trimont.
11 (Document titled Illustrative Terms of
12 Proposed Restructuring dated May 25, 2010
14 BY MR. PARKINS:
15 Q Mr. Beilinson, I've had marked a
16 document as Exhibit 6. It has Bates stamp
17 numbers on the right-hand corner. LEH-ALI starting
18 with number 1 through 4. Do you have that document?
19 Do you see that?
20 A Yes.
21 Q Okay. I'll represent that these
22 documents were produced either from Lehman, AIC or
23 the debtors in the document production received in
24 the last couple of days including through last
25 night.
41
1 Marc A. Beilinson
2 MR. DONOVAN: And just if you could
3 tell him --
4 MR. PARKINS: Yes.
5 MR. DONOVAN: -- what LEH indicates.
6 BY MR. PARKINS:
7 Q LEH would represent from the Lehman
8 document response.
9 A Okay.
10 Q Have you ever seen this document
11 before, sir?
12 A I don't recall this particular
13 document.
14 Q With respect -- there were
15 negotiations, Mr. Beilinson, weren't there, with
16 respect to a term sheet development in the months of
17 May, June and July between the debtors Lehman and
18 Apollo, is that correct, Apollo Investment
19 Corporation; is that correct?
21 answer.
22 A Could you repeat the question, please?
25 "Question: There were negotiations,
12 (Pages 42 to 45)
42
1 Marc A. Beilinson
2 Mr. Beilinson, weren't there, with respect to
3 a term sheet development in the months of
4 May, June and July between the debtors Lehman
5 and Apollo, is that correct, Apollo
6 Investment Corporation; is that correct?")
7 A There were discussions that Innkeepers
8 and I had with Lehman that included Lehman's desire
9 to be able to sell the post-confirmation equity, at
10 least 50 percent of it, for the sum of $107 million
11 to a third party. To the extent that they were
12 negotiating with both Apollo Investment Corp. to be
13 the potential buyer, yes, I was involved to some
14 limited extent in connection with their
15 conversations with Apollo Investment Corp.
16 Q In the context of the negotiations
17 that took place with respect to proposed
18 restructuring for Innkeepers, who negotiated on
19 behalf of Innkeepers from the business side?
20 A I did.
21 Q Okay. Was there anyone else from
22 Innkeepers?
23 A No.
24 Q Okay. With respect --
25 A Not materially.
43
1 Marc A. Beilinson
2 Q I'm sorry, I didn't mean to interrupt.
3 MR. DONOVAN: I think he said "not
4 materially."
5 A I was primarily responsible.
6 Q Who was your counsel at the time?
7 A Kirkland & Ellis.
8 Q And with respect to the Lehman side of
9 the negotiations, from a business side who was
10 negotiating for Lehman?
11 A Nancy Shanik and Michael Lascher were
12 the primary contacts.
13 Q And did they have counsel involved?
14 A Yes, they did.
15 Q And who were their counsel?
16 A Dechert.
17 Q And with respect to AIC, to the extent
18 you know, okay, who was negotiating for AIC?
20 A At different points in time I think
21 there were different people.
22 Q Was Mr. Zelter involved?
23 A He was involved.
24 Q Who else was involved, to your
25 knowledge?
44
1 Marc A. Beilinson
2 A I think that Schuyler Hewes was
3 involved. Patrick Dalton was involved. I'm not
4 sure who else was involved from AIC, nor would I
5 have that information.
6 Q And did AIC have counsel involved?
7 A Yes, they did.
8 Q And who was their counsel?
9 A Paul Weiss.
10 Q The document Exhibit 6 that I gave
11 you is dated, has a date at the top May 25, 2010, do
12 you see that?
13 A I see the date.
14 Q Okay. Turn with me, if you would, to
15 page 2 of this exhibit.
16 A (Complies.)
17 Q And I'd ask you to look at the line
18 items marked Equity Offering and Backstop, and read
19 them if you would, please.
20 A (Complies.)
21 I've reviewed this.
22 Q Okay. The Equity Offering part of
23 this document, the two paragraphs referring to
24 equity offering, speaks to the fact that the
25 company, Innkeepers, will conduct an equity offering
45
1 Marc A. Beilinson
2 which the company will sell 62 percent of the equity
3 to a new holder, 27 percent of the equity will be
4 sold through a primary issuance, and 34.91 through a
5 secondary issuance of Lehman shares.
6 The Backstop provision shows that
7 Apollo Investment Corp. will provide a backstop to
8 purchase 62.18 percent of the equity in the equity
9 offering at a price of $171 million, in brackets,
10 which consists of 95 million for the 34.91 of
11 secondary shares and 75 million for the 27.27 of
12 primary shares. Did I read it correctly?
13 MR. DONOVAN: I'd object. I think you
14 were summarizing it.
16 MR. DONOVAN: For completeness.
17 You can answer.
18 A That's what the words on this page in
19 a document that I don't know who sent to who says.
20 Q My question is, sir: Have you seen
21 this provision before today in the context of your
22 negotiations for restructure with Lehman?
23 A I recall seeing this and I recall that
24 I told Lehman that I had absolutely no interest in
25 moving forward in restructuring the company in this
13 (Pages 46 to 49)
46
1 Marc A. Beilinson
2 manner. And, as I recall, I was pretty adamant that
3 I wasn't interested in moving forward with any type
4 of equity offering or backstop as part of any
5 transaction of an internal restructuring with -- in
6 my role as chief restructuring officer of Innkeepers
7 USA.
8 Q So you do recall receiving this and
9 you do recall responding to this language here,
10 correct?
11 A I now recall the document and I recall
12 my response to it being fairly strenuous.
13 Q So at least -- I'm sorry, I didn't
14 mean to interrupt, sir.
15 MR. DONOVAN: You can finish.
16 BY MR. PARKINS:
17 Q Do you want to finish your answer? I
18 didn't mean to interrupt, I thought you were done.
19 A That's okay.
20 Q Okay. So at least as of this document
21 with a date of May 25, 2010, AIC is certainly
22 mentioned as an integral part of a transaction in
23 this document?
24 A It was mentioned in a document that
25 was sent to me by Lehman.
47
1 Marc A. Beilinson
2 Q Okay.
4 Proposed Restructuring dated June 2, 2010
6 BY MR. PARKINS:
7 Q I've handed you what has been marked
8 as Exhibit 7. It is a document again produced
9 from Lehman in its production of documents. It
10 starts with Bates stamp number 14 and goes through
11 Bates stamp number 22.
12 Have you seen this document before?
13 A I don't know. We had hundreds of
14 drafts going back and forth and whether I've seen
15 this particular document or not, I just don't know.
16 Q In the give and take of documents
17 between Lehman and the debtors since you were the
18 only one negotiating for the debtors, would you have
19 seen a transmission from Lehman with respect to a
20 restructuring proposal?
21 A I think so.
22 Q Okay. Is it reasonable to believe
23 that this was, in fact, if it was transmitted to the
24 company, you would have seen it?
25 A That's reasonable.
48
1 Marc A. Beilinson
2 Q Okay. I ask you to look with me,
3 please, at page 4 and 5, starting with the topics
4 New Equity, Equity Offering, Equity Offering
5 Backstop, and Conditions Precedent to Lehman's
6 Obligations under PSA. I'm going to ask you about
7 those sections, so if you want to read them more
8 closely, please do.
9 A (Complies.)
11 Q Okay. So a week after Exhibit 6
12 is at least dated, which was May 25, this is about a
13 week later at June 2nd, okay, this document that's
14 dated June 2nd, 2010, provides again that Apollo
15 Investment Corp. is going to provide a backstop to
16 the equity offering that Lehman proposes for the
17 company as part of the restructuring; is that
18 correct?
19 A That is generally what's said in a
20 document I evidently received by Lehman that was not
21 acceptable to Innkeepers USA.
22 Q So despite your testimony that you
23 rejected this concept a week earlier, Lehman sent it
24 to you again; is that correct?
25 A I can't stop them from trying, but I
49
1 Marc A. Beilinson
2 can say no twice.
3 Q Did you respond to this document?
4 A I know I've had -- I had conversations
5 in response to the document, I doubt I would have
6 responded directly to this document.
7 Q This document under the Conditions
8 Precedent to Lehman's Obligations Under the PSA, the
9 third bullet point, if you look with me at the
10 bottom of page 5, it says: Agreement reached with
11 AIC in form and substance satisfactory to Lehman; is
12 that correct?
13 A That's what it says.
14 Q It specifically mentions AIC, not just
15 some third-party purchaser or backstop party; is
16 that true?
17 A That's what this document says.
18 Q Did you respond to Lehman about having
19 AIC involved in the transaction at all from your
20 perspective?
21 MR. DONOVAN: Objection. Vague.
22 You can answer to the extent --
23 A Okay, I -- can you ask it again,
24 please?
14 (Pages 50 to 53)
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1 Marc A. Beilinson
3 "Question: Did you respond to Lehman
4 about having AIC involved in the transaction
5 at all from your perspective?")
6 A Yes, I did.
7 Q What did you say?
8 A I told them that my intent was to do a
9 comprehensive integrated internal restructuring of
10 the company and that I thought it was best that we
11 negotiate directly with Lehman and the creditors of
12 this bankruptcy estate to come up with a plan that
13 could be confirmed by the Bankruptcy Court in a
14 rational period of time, and if as a condition to
15 that they had to have executed a term sheet with
16 regard to selling what they received out of this
17 chapter proceeding, I did understand that. I knew
18 they were talking to Apollo about that, and I
19 ensured that when I executed the final PSA, that the
20 condition was that it be a sell to a third party,
21 whether it was Apollo or somebody else was
22 immaterial to Innkeepers USA.
23 Q So --
24 A There would be a sell to a third
25 party, but I did know that they were discussing a
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1 Marc A. Beilinson
2 transaction of some type with Apollo Investment
3 Corp.
4 Q You did know?
5 A I did know.
6 Q Okay. So my question is: Did you
7 tell Lehman you didn't want Apollo involved?
8 A No. I told Lehman that I wanted to
9 negotiate a transaction for the equitization of
10 their security interest in exchange for equity. And
11 what they did post confirmation was important only
12 from the context of the PSA condition precedent
13 which necessitated that they sell to a third party
14 50 percent of the post-confirmation interest.
15 Q Going back to this provision here
16 regarding the Equity Offering Backstop in this
17 Exhibit 7, provides that if AIC is not the new
18 owner, then AIC will be paid a breakup fee equal to,
19 bracket, 2.5 percent of the backstop amount or 4.275
20 million defined as the breakup fee; do you see that
21 provision?
22 A I see that provision, but I didn't
23 agree to it.
24 Q Because the company was going to pay
25 the breakup fee under this proposal; is that
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1 Marc A. Beilinson
2 correct? Is that how you understood it?
3 A This proposal was not accepted by the
4 company and, hence, there was going to be no payment
5 to Apollo Investment Corp.
6 Q Did you understand this proposal to
7 include that the company would pay a breakup fee
8 under this proposal?
9 A A third party who made a proposal to
10 Innkeepers that was rejected that would have, if
11 accepted, caused a breakup fee.
12 Q And that breakup fee would go to AIC
13 under this proposal?
14 A I think we need to make clear that
15 this is not an Innkeepers' proposal, this was a
16 third-party proposal sent to Innkeepers USA and was
17 not acceptable.
18 Q It was sent to Innkeepers USA by
19 Lehman the exclusive party, as I understand, you
20 were negotiating with for a global restructuring
21 prefiling; is that correct?
22 A No, that's not correct.
24 BY MR. PARKINS:
25 Q You were negotiating with other
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1 Marc A. Beilinson
2 entities prefiling for global restructuring?
3 A I was negotiating with all parties to
4 determine their interest in being a participant
5 including Midland.
6 Q Are there any term sheets you can
7 recall where Innkeepers delivered proposed terms for
8 a global restructuring to other constituencies other
9 than Lehman?
10 A No. Because Midland showed no
11 interest in anything having to do with a
12 restructuring of this enterprise.
13 Q My question is: Did you send a term
14 sheet or deliver a term sheet proposal to other,
15 let's start with, creditors of the various
16 Innkeepers entities for global restructuring?
17 A No, but pieces within an integrated
18 global restructuring, yes, I did sign a term sheet
19 with Marriott, signed a term sheet with Lehman,
20 negotiated with every other creditor constituent
21 that I could.
22 Q So your answer is no?
23 A I only signed one Plan Support
24 Agreement with Lehman.
25 MR. DONOVAN: Do you want to take a
15 (Pages 54 to 57)
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1 Marc A. Beilinson
2 short break?
3 MR. PARKINS: Sure.
4 (Whereupon, off the record.)
8 (Whereupon, resumed.)
9 BY MR. PARKINS:
10 Q Mr. Beilinson, I've handed you a
11 document which I've marked as Exhibit 8. It's a
12 document which has a June 2nd, 2010 date at the top
13 of it, a Lehman ALI series of Bates stamp numbers 23
14 through 31. Do you have that in front of you?
15 MR. GOULD: Do you have extra copies?
16 MR. BROOKER: Yes.
17 MR. GOULD: Thank you.
18 BY MR. PARKINS:
19 Q I'd ask you to look at pages 4 and 5
20 of this document, the topics identified, New Equity,
21 Equity Offering, Equity Offering Backstop and
22 Conditions Precedent. Take a look at this, please,
23 I want to ask you about these sections.
24 A (Reviews.)
25 I've reviewed those provisions.
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1 Marc A. Beilinson
2 Q Would you consider those provisions
3 similar to the ones we looked at with respect to
4 Exhibit 7? It's right in front of you if you want
5 to look at it to compare.
6 A (Complies.)
7 It looks somewhat similar.
8 Q Going to the Conditions Precedent both
9 in Exhibit 7 and Exhibit 8, the introduction
10 to those paragraphs said: The Transaction will
11 become binding on Lehman when Lehman, AIC and the
12 Company execute a plan support agreement and
13 incorporates a transaction set forth herein,
14 correct?
15 A Which document are you referring to?
16 Q I'm in Exhibit 7 and Exhibit
17 8. I ask you to look at that, I think that language
18 is the same in both.
19 A That is what these two documents that
20 were sent to me by Lehman say.
21 Q Okay. Both documents require AIC to
22 be party to a plan, to a PSA agreement; is that
23 correct?
25 A That's what these documents said and
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1 Marc A. Beilinson
2 these documents, as you know, were not acceptable to
3 the debtor.
4 Q Look with me at the first page of each
5 Exhibit 7 and 8, if you would, please.
6 A (Complies.)
7 Q Specifically with respect to Exhibit
8 No. 7, I'm looking at Footnote No. 2.
9 Seven says: Values are based on
10 Moelis presentation and have been included for
11 illustrative purposes only. What Moelis
12 presentation does this footnote refer to?
14 A I don't know.
15 Q Did Innkeepers make a presentation to
16 Lehman?
17 A Yes, we made a presentation to Lehman.
18 Q Did Moelis -- was Moelis the
19 investment banker retained by the company at the
20 time that presentation was made?
21 A Yes.
22 Q Did Moelis author a presentation
23 document to Lehman?
24 A I recall that there was a presentation
25 made by Innkeepers that Moelis may have had some
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1 Marc A. Beilinson
2 input into, but I don't recall whether there was an
3 independent Moelis presentation.
4 Q Was there a meeting -- was there a
5 presentation made by Moelis that you were present
6 at?
7 Bad English, but I hope you get the
8 question.
9 MR. DONOVAN: I think you may want to
10 re-ask it, it's vague.
11 BY MR. PARKINS:
12 Q Were you present at a presentation or
13 meeting with Lehman where Moelis handed out
14 materials to Lehman?
15 A I don't recall if Moelis or the debtor
16 handed out materials to Lehman, I do recall there
17 was a meeting where materials were handed out.
18 Q Okay. And how many meetings were
19 there between the debtors and Lehman where materials
20 were handed out by the company or Moelis its
21 investment banker?
22 A I don't recall.
23 Q Okay. So it's your testimony that you
24 don't recall what this Footnote 2 is referring to?
16 (Pages 58 to 61)
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1 Marc A. Beilinson
2 A No, I don't know what first document
3 they were referring to.
4 Q Look with me then on Exhibit 8.
5 While these documents have a June 2nd
6 date on them, the Footnote 2's are different. Look
7 at Footnote 2 on Exhibit 8, it has an additional
8 sentence.
9 A Yes, it does.
10 Q All right. Lehman is completing its
11 own quantitative analysis of the value of the
12 company and will supplement this term sheet once
13 that analysis has been completed.
14 Do you recall receiving a Lehman
15 quantitative analysis as to the value of the
16 company?
17 A No.
18 Q Were you ever advised by Lehman that
19 they had done such work?
20 A I know they were analyzing a lot of
21 things and had retained Lazard to do so.
22 Q Had you authorized access by Lazard to
23 all the company's books and records to perform due
24 diligence?
25 A No.
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1 Marc A. Beilinson
2 Q You didn't give Lazard access to due
3 diligence?
4 A I did give access to due diligence.
5 Q Did you put a limit on access that
6 Lazard would have for due diligence?
7 A Yeah, it was not all.
8 Q Not all what, sir?
9 A It was not all documents of the
10 debtor, so there was a limitation.
11 Q Did it involve all the hotels of the
12 debtor?
13 A Did what involve all the hotels of the
14 debtor?
15 Q Lazard's access to due diligence, did
16 it involve due diligence as to all the hotels of the
17 various debtors?
18 A Some information with regard to all
19 the hotels, yes.
20 Q Looking with me at Exhibit 2 just
21 for reference, sir, did it involve access to the
22 various debt pools and hotels and collateral
23 reference there under the green coloration we talked
24 about earlier?
25 A Yes, there was some due diligence with
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1 Marc A. Beilinson
2 regard to each of those debt pools.
3 Q Can you tell me what other creditors
4 of the debtor had access with respect to all the
5 various debt pools of the debtors other than Lehman?
6 A None.
7 Q Thank you.
8 Were you ever advised, sir, that
9 Lehman had completed a quantitative analysis of the
10 value of the company?
11 A No.
12 Q Did you ever inquire as to whether
13 Lehman had, in fact, completed a quantitative
14 analysis of the value of the company?
15 A No.
16 Q Do you recall getting this document
17 marked as Exhibit 8 with this footnote in it?
18 A I don't recall reviewing the footnote.
19 Q Okay. In the context of negotiating
20 an overall restructuring, were you inquisitive as to
21 what the other party to the negotiations thought the
22 value of the company would be?
23 A What was important to me as chief
24 restructuring officer was that I had a view with
25 regard to what reasonable and fair value was in
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1 Marc A. Beilinson
2 determining a comprehensive restructuring which
3 included a plan support agreement with Lehman which
4 put limits on the amount of debt that this could --
5 this company should have on it in a recapitalized
6 structure.
7 Q My question --
8 A So what was important to me was what
9 our view as to appropriate value ranges were, not
10 what Lehman's view of appropriate value ranges were.
11 Q So the party you were -- you were
12 indifferent to what Lehman's perspective was as to
13 the value of the company then in the context of
14 these negotiations?
15 A I wasn't indifferent.
16 Q You just didn't care?
17 A It wasn't particularly meaningful to
18 me in making my business judgment determination as
19 to what was a good restructuring on behalf of the
20 debtor.
21 Q Did you tell Lehman that it wasn't
22 important to you what they concluded the value of
23 the company was in the context of your negotiations?
24 A No.
25 Q Never?
17 (Pages 62 to 65)
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1 Marc A. Beilinson
2 A I don't recall saying to them that I
3 didn't care what their views were. Of course I care
4 what everybody's views with regard to value are, and
5 to the extent that they wanted to discuss value, I
6 had an open mind with regard to listening to their
7 justifications with regard to value determinations
8 just like I would have an open mind with regard to
9 Midland and their views if they had any with regard
10 to what they believe their collateral pool was
11 worth.
12 Q What you just said, where you said the
13 term sheets that were being exchanged provided for
14 Lehman to get a hundred percent of the equity of the
15 reorganized company, that's correct, isn't it,
16 that's what they contemplated, right?
18 Q Then Lehman would be concerned with
19 respect to not only the value of its collateral but
20 the collateral across the board with respect to all
21 of Innkeepers' hotels; is that correct?
22 A I don't know what was, Lehman was
23 interested in.
24 Q Well, in your negotiations with
25 Lehman, did you discuss the value of hotels across
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1 Marc A. Beilinson
2 the board since Lehman was going to be the ultimate
3 equity owner of all these hotels?
4 A I primarily discussed the range of
5 values with regard to each pool of hotels. I mean,
6 my view was pretty simple. Maybe it was too simple.
7 It was that if I was providing what the court
8 determines to be the secured amount of the claim in
9 a note to each of the secured parties other than
10 Lehman, that when Lehman equitizes, the only equity
11 value of the enterprise came as a result of them
12 equitizing their collateral since by definition
13 everyone else is getting a hundred percent of their
14 secured claim in accordance with the Bankruptcy
15 Code.
16 Q When you were negotiating with Lehman,
17 were you representing the debtors that owned the
18 hotels that are in Chapter 11 in the Midland pool?
19 A Absolutely.
20 Q Do you think those debtors -- did you
21 ever discuss with Midland in the context of the
22 Lehman negotiations whether they shared your view
23 that the amount of recovery should be capped at a
24 value you determined?
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1 Marc A. Beilinson
2 Speculative.
3 A No, I have always maintained that
4 Midland should receive a note for the amount that
5 the court determines to be the value of their
6 collateral. I actually in negotiating with Lehman,
7 it was extremely important to me to consider the
8 interest and the flexibility of other parties within
9 this capital structure, and that it was my belief
10 that by equitizing Lehman in full it created about
11 $20 million of EBITDA that could go to service the
12 debt that the court determines is the fair value of
13 the collateral of every other secured creditor, and
14 that it would actually facilitate my ability to
15 reach an agreement with Midland and other secured
16 lenders in this bankruptcy estate. Of course, that
17 was based upon a number of assumptions, and with
18 regard to CMBS creditors, and it was based upon
19 knowledge I actually received from Midland
20 themselves with regard to their lack of ability to
21 take equity themselves and the fact that this was
22 the type of -- this transaction with Lehman allowed
23 me to give Midland the type of consideration that
24 they would prefer in restructuring.
25 Q So you think Midland would prefer
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1 Marc A. Beilinson
2 having more than $200 million of its debt eliminated
3 in the context of a restructuring, is that what you
4 think?
5 A What I said was that they would prefer
6 a note as a form of consideration equal to the value
7 of their collateral rather than equity or some other
8 type of consideration that the court may deem
9 appropriate under the new equivalent provisions of
10 the Bankruptcy Code.
11 Q Did you have these kinds of
12 negotiations on a restructure with Midland --
13 A Oh, I --
14 Q -- discussing these points with them?
15 A I absolutely attempted to and, you
16 know, their retort at the beginning very beginning
17 was, you know, phrases like "Give me back my
18 collateral, I will never accept an AB note." They
19 didn't show the type of flexibility that allowed to
20 result in a consensual restructuring. I think that
21 tone has changed substantially since this timeframe.
22 In fact, in a conversation I had with Midland just
23 last week, I believe that I'll be receiving some
24 type of proposal with regard to a note structure.
25 And, you know, they validated my initial view that
18 (Pages 66 to 69)
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1 Marc A. Beilinson
2 special services didn't want equity or other types
3 of consideration rather than a note.
4 So, you know, I actually thought about
5 Midland a lot, and come into this plan support
6 agreement, and still believe that I'll end up with a
7 consensual resolution of this bankruptcy estate.
8 Q Let me just be clear here because you
9 talk in the first day declaration by Mr. Craven, you
10 talk in this pleading about the consensus that
11 exists with respect to the PSA you're seeking to
12 approve. I see we have Lehman which has $238
13 million and 20 hotels. Identify for me what other
14 special services or other creditor constituencies
15 have joined with you in support of the PSA that you
16 know of today.
17 A Well, I'm in discussions with
18 everybody. I think that Chapter 11 is a
19 consensus-building paradigm, and I believe this PSA
20 created the framework to build consensus around it,
21 not just amongst lenders but amongst unsecured
22 creditors, amongst Marriott, amongst franchisors.
23 So, you know, is it my belief that this is the
24 beginning of a process that will resolve, you know,
25 a lot of consensus, yes, that's my belief.
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1 Marc A. Beilinson
2 Q So my question is, today, what other
3 lenders support the PSA as far as you know? Today.
4 A I don't know who's supporting and not,
5 except for you.
6 Q How about the mezz lenders. Do you
7 think mezz lenders is supporting getting wiped out
8 under your proposed plan of reorganization?
9 A I don't suppose that any party who is
10 receiving zero in this restructuring will be
11 supportive. I think that that would be the position
12 of holders of the Series C Preferred who I'm wiping
13 out. That would be AIC who's a holder of the Series
14 A which I'm wiping out. And also Apollo Investment
15 Corp. who owns the common equity who's receiving
16 nothing in this reorganization. I don't think
17 anybody who is losing a substantial amount of money
18 will be supportive of losing hundreds of millions of
19 dollars.
20 Q Have any other special services, any
21 special services or any other creditors joined in
22 the PSA by signing it?
23 A No.
24 Q Okay. So the consensus of the
25 creditor body is with a $238 million creditor, but
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1 Marc A. Beilinson
2 not the rest of the creditors as far as you know
3 today; is that correct?
4 A I believe this is a consensus-building
5 process.
6 Q I'm asking today, sir.
7 A I don't know if there's a lack of
8 consensus, that this is an appropriate manner of
9 moving forward.
10 Q You mentioned Marriott.
11 A I believe these people are
12 appreciative of the fact that I'm moving forward and
13 continuing to talk to each of the special servicers
14 in trying to reach resolution with them as much as I
15 can on a consensual basis.
16 Q But you can't talk about a different
17 transaction than the one you are proposing under the
18 PSA; is that correct?
19 A No.
20 Q You can't, correct? You cannot, I'm
21 correct?
22 A That's not correct.
23 Q You can talk about an alternative
24 transaction?
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1 Marc A. Beilinson
2 Q You believe you're free to talk about
3 a different plan of reorganization at this time than
4 the one proposed under the PSA?
5 A I believe I have a fiduciary duty to
6 this judge and to the court and to the process to be
7 open to people talking to me about any type of
8 transaction.
9 Q Have you allowed any third parties to
10 have access to due diligence information in order to
11 make such a proposal since the beginning of the
12 bankruptcy case?
13 MR. DONOVAN: I'm going to object to
14 the question.
15 A No.
16 Q Others have asked though, haven't
17 they?
18 A Yes, but they haven't presented
19 proposals which I thought had viability or import.
20 Q So you want a proposal before due
21 diligence is done in order to let them have due
22 diligence, is that what you're saying?
23 A I will look at anything that someone
24 puts in front of me and use my best business
25 judgment to determine how to respond once I have
19 (Pages 70 to 73)
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1 Marc A. Beilinson
2 something in front of me.
3 Q Do you believe that PSA is effective
4 as to the debtors today?
5 A Absolutely.
6 Q Okay. Do you believe that PSA permits
7 you to negotiate an alternative transaction today?
8 A Yes, I believe that --
9 Q We'll look at that in a little bit.
10 MR. DONOVAN: Hold on, let him finish,
11 please.
12 A I believe that if someone submits a
13 proposal that I believe has desirability and
14 viability that I can discuss that.
15 Q Have you gone out and submitted
16 alternative transactions to anybody?
17 A No.
18 Q Your PSA has yet to be approved
19 though, correct?
20 A That's correct. I actually and
21 fundamentally believe that this PSA is in the best
22 interest of the debtor in this bankruptcy estate.
23 It does more for all creditor constituencies than
24 any proposal that I personally could come up with.
25 It equitizes a hundred percent of $238
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1 Marc A. Beilinson
2 million.
3 It creates $20 million of EBITDA that
4 can be used to support the enterprise.
5 It allows us to do deals with Marriott
6 and other constituents because they believe that the
7 capital stock is sustainable and they want to do
8 business with us in the future.
9 It allows me to support whatever the
10 court determines is the fair value of the secured
11 claim of each of the secured creditors.
12 I think this is an extremely important
13 PSA. I believe that it is the benchmark of a
14 successful internal restructuring of the company for
15 the benefit of all.
16 Q Have you shopped this transaction with
17 other constituencies in this case, this exact
18 transaction to get a higher and better deal
19 pre-petition?
20 A I don't believe there is another
21 transaction which would provide a higher and better
22 deal.
23 Q So is your answer no?
24 MR. DONOVAN: I think his answer is
25 his answer.
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1 Marc A. Beilinson
2 BY MR. PARKINS:
3 Q Did you shop this transaction before
4 the filing to see if you could get a better deal for
5 the various constituencies reflected in this Exhibit
6 2?
7 A Yes, I talked to Midland and they said
8 they had absolutely no interest --
9 Q Did you show them --
10 A -- in the transaction.
11 Q Did you show them the Lehman
12 transaction?
13 A I did not.
14 Q You did not. Did you show it to
15 anybody?
16 A Oh, I showed it to Midland. I talked
17 to Midland about it prior to the time that it was
18 executed and prior to the time it was filed and I
19 got no reaction that they had an interest in
20 topping.
21 Q That was the day before the filing,
22 correct, a day or two before the filing?
23 A A couple days before the filing and
24 they showed -- well, you were at the meeting.
25 And --
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1 Marc A. Beilinson
2 Q That's right.
3 A -- as you know, you showed absolutely
4 no interest in getting involved or putting forth a
5 transaction, so no.
6 Q So in the months that this Lehman
7 transaction was being negotiated, you didn't advise
8 Midland, at least, about its existence until a day
9 or two before the filing; is that correct?
10 A Oh, that's correct.
11 Q Okay. You didn't advise any of the
12 creditor constituencies about its existence and its
13 negotiation before the filing, did you?
14 A I believe that Marriott was aware that
15 I was negotiating a transaction.
16 Q Who was?
17 A Marriott was involved.
18 Q Marriott.
19 A And not involved but informed that I
20 was negotiating a transaction with Lehman Brothers
21 to equitize.
22 Q But you didn't shop it anywhere,
23 correct?
25 A I'm not sure what the word, the
20 (Pages 74 to 77)
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1 Marc A. Beilinson
2 meaning of those words are.
3 Q You're not aware as a bankruptcy
4 lawyer what the word "shop a transaction" means?
5 A To whom? I really just -- if you're
6 asking me whether I talked to other people about
7 similar potential transactions, not, not exactly
8 like the one with Lehman Brothers, because there
9 wasn't anyone in a similar situation who had the
10 ability and desire potentially to equitize a
11 substantial amount of the debtors' secured claims.
12 Q How about with respect to a different
13 structure, did you talk to other creditor
14 constituencies about an alternative to the Lehman
15 transaction before the filing of the bankruptcy
16 case?
17 A Yes, I talked to, you know, Midland to
18 see what structures they might find acceptable.
19 Q That was two days before the
20 bankruptcy?
21 A Oh, no, that started months before.
22 Q When did you show them the Lehman
23 deal?
24 A I didn't show them the Lehman deal,
25 but I talked to them about what they would have an
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1 Marc A. Beilinson
2 interest in in connection with a plan of
3 reorganization, and I was completely stonewalled.
4 So no, I didn't show them the Lehman transaction,
5 but Midland showed absolutely no interest in being
6 involved in the internal restructuring, so.
7 Q Did you shop the deal to any outside
8 investors to come in and do a third-party
9 restructuring of the company not within the confines
10 of the creditor constituency?
11 A No, I did not.
12 Q Did you shop it since the filing of
13 the bankruptcy case?
14 A No, I have not.
15 Q When the Board of Directors of, or the
16 Board of Trustees met prior to the filing of the
17 bankruptcy case to approve the PSA and the Plan Term
18 Sheet, what options to that PSA did you discuss with
19 the board had been explored by the company prior to
20 the filing of the bankruptcy case?
21 MR. DONOVAN: Objection. You just
22 asked him the day before?
23 MR. PARKINS: Before the filing --
25 MR. PARKINS: -- of the PSA.
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1 Marc A. Beilinson
2 MR. DONOVAN: Let me give you -- let
3 me give you two instructions.
4 One is to the extent you were acting
5 on advice of counsel or you were discussing
6 transactions that were discussed with counsel
7 and not disclosed, you shouldn't answer that.
8 But to the extent you can explain the process
9 you went through with the board without
10 disclosing attorney-client privilege --
11 MR. PARKINS: That's not my question.
12 My question -- let me rephrase my question.
13 MR. DONOVAN: Okay, then please do.
14 BY MR. PARKINS:
15 Q My question is: What alternative
16 transactions did you discuss with the Board of
17 Directors relative to the Lehman one before it was
18 approved by the Board?
19 MR. DONOVAN: My instruction is the
20 same. To the extent you can answer that
21 without disclosing attorney-client
22 information process, you can answer.
23 A Well, listen, I talked to them about
24 the process of moving forward with an internal --
25 with a Chapter 11 without a plan support agreement
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1 Marc A. Beilinson
2 and an agreement with numerous constituents of the
3 debtor.
4 I discussed with them what a free-fall
5 bankruptcy looks like in comparison to a transaction
6 where you have $238 million of debt taken off your
7 balance sheet, the security interest go away having
8 free and clear assets that could be utilized with
9 regard to the entire company.
10 We talked about what a free-fall
11 bankruptcy would look like if we didn't have
12 Marriott's agreement with regard to fulfilling the
13 debtors' obligations with regard to the PIPs.
14 We talked about the value inherent in,
15 you know, freeing up $20 million of EBITDA.
16 Q Tell me about the alternative deals
17 you described to the board so we could make a
18 decision on this deal versus another deal.
19 A It was our view that this internal
20 restructuring was in the best interest of the estate
21 of the debtor and it was the best viable alternative
22 for the benefit of all constituencies and that in
23 our best business judgment that executing this PSA
24 with Lehman Brothers was a good result in comparison
25 to other transactions.
21 (Pages 78 to 81)
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1 Marc A. Beilinson
2 Q So you didn't present any alternative
3 transactions other than the Lehman one to the Board
4 before the filing; is that correct?
6 the testimony.
7 BY MR. PARKINS:
8 Q Let's talk about Moelis. Moelis is
9 your investment banker, right?
10 A Yes.
11 Q Was Moelis given the charge prefiling
12 to go out and find alternative transactions to the
13 Lehman transaction?
14 A They were given the charge to give me
15 their best advice so that I could utilize it in
16 fulfilling my fiduciary duty and exercising my
17 business judgment.
18 MR. PARKINS: Object. Not responsive.
19 BY MR. PARKINS:
20 Q My question, sir, was: Did Moelis go
21 out and seek alternative transactions to that
22 reflected by the Lehman transaction pre-petition?
24 A If you can explain what you're asking,
25 I'd be happy to respond.
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1 Marc A. Beilinson
2 Q Did you instruct Moelis to go out and
3 find alternative transaction to the Lehman
4 transaction for the months of April, May and June
5 through the filing to the Lehman transaction?
6 A I asked them to discuss with me all
7 potential alternative type transactions and look for
8 the one that creates the greatest viability for the
9 benefit of our constituencies which are the
10 creditors of Innkeepers USA.
11 Q Did Moelis go out --
12 A With no limitation on that.
13 Q On your instruction, did Moelis go out
14 and shop alternative transactions to the Lehman
15 transaction?
16 A To people external of our capital
17 structure?
18 Q Yes.
19 A No, they did not.
20 Q How about internal to your capital
21 structure, did Moelis go out and make presentations
22 with respect to alternative transactions to the
23 Lehman one to the various other creditor
24 constituencies?
25 A They --
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1 Marc A. Beilinson
3 You can answer.
4 A They were with me in trying to explore
5 what constituents were interested in alternative
6 transactions including Midland.
7 Q Did Moelis make presentations with
8 respect to alternative transactions with respect to
9 other creditor constituencies pre-petition?
10 A I believe they did. I believe that
11 was a point of our meetings with Midland in Kansas
12 City and subsequent to Kansas City was exploring
13 what alternative transactions they may have an
14 interest in pursuing, and the response was there
15 were none.
16 Q Take, for example, in April of this
17 year, not too long ago, did Moelis make a
18 presentation to Midland that include restructuring
19 alternatives?
20 A I know they made a presentation but I
21 don't know what it included.
22 Q Do you know whether it included taking
23 a look at the proposed Lehman transaction?
24 A No.
25 Q You don't know?
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1 Marc A. Beilinson
2 A No, it didn't. I don't think the
3 Lehman transaction occurred back in April.
4 Q Had you made a proposal to Lehman by
5 the time you met with Midland?
7 A I don't recall.
8 Q You don't. Well, we'll get into that
9 in a little bit.
10 A Good.
11 MR. DONOVAN: We're all looking
12 forward to it.
13 BY MR. PARKINS:
14 Q We'll get into that in a little bit.
15 A Well, why don't we just do that now?
19 BY MR. PARKINS:
20 Q I've handed you what's been marked
21 Exhibit 9, it's again a Lehman ALI production
22 with Bates stamp number 32 through 40.
23 A Okay.
24 Q I ask you to look again with respect
25 to the Equity Offering Backstop/Conditions Precedent
22 (Pages 82 to 85)
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1 Marc A. Beilinson
2 section of this document.
3 A I've reviewed it.
4 Q Okay. As I look at the Equity
5 Offering Backstop here, I see Apollo Investment
6 Corporation bought a backstop to purchase 61.82
7 percent of the equity. If you look with me at the
8 prior exhibit, there was a different number of
9 equity, amount of equity going to be purchased,
10 slightly less. Can you tell me why?
11 A No, this was another proposal by a
12 third party that was unacceptable to me and that I
13 let them know it was unacceptable.
14 Q Okay.
18 BY MR. PARKINS:
19 Q I've handed you what's been marked as
20 Exhibit 10, another Lehman production, numbers
21 41 through 50.
22 A Okay.
23 Q I ask you again to look at the
24 sections, I think beginning on page 5 of this
25 exhibit, New Equity, New Equity Capitalization
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1 Marc A. Beilinson
2 Options and Conditions Precedent.
3 A (Reviews.)
4 I'm sorry, what would you like me to
5 review?
6 Q The sections designated New Equity,
7 New Equity Capitalization Options and Conditions
8 Precedent, pages 5 and 6.
9 A (Reviews.)
11 Q Do you recall receiving this document?
12 A No.
13 Q If it was transmitted to the company,
14 it would have gone to you as the negotiator for the
15 company, though, correct?
16 A Yes.
17 Q Do you recall Capitalization Options A
18 and B becoming part of the negotiations between you,
19 Lehman and Apollo Investment Corporation?
20 A No. They were not part of my
21 negotiations with either Apollo or with Lehman. I
22 found it wholly unacceptable and consistent with, I
23 believe, Exhibits 7, 8 and 9, not acceptable to the
24 debtor, and I didn't engage in discussions with
25 regard to this as a meaningful alternative.
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1 Marc A. Beilinson
2 Q So there was a negotiation, you just
3 rejected it; is that correct?
4 A No, I received a document and I
5 rejected it.
6 Q I thought you said you didn't recall
7 receiving a document?
8 A Well --
9 MR. DONOVAN: This one.
10 BY MR. PARKINS:
11 Q This document.
12 A No, I said when I -- when it was -- if
13 it was transmitted to me, I would have received it
14 and I would have rejected it.
15 Q And what counteroffer did you give
16 Lehman at this time, if any?
17 A I don't recall this timeframe.
18 Q Do you recall whether the proposal
19 that the company wanted Lehman to accept was
20 embodied in what's called the Moelis Presentation
21 reflected in Footnote No. 2?
22 A I don't remember what was embodied in
23 the Moelis Presentation that was described in
24 Footnote 2. I mean, if you have it, I'd like to
25 take a look at it so I can --
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1 Marc A. Beilinson
2 Q We'll get there.
3 A -- comment on it.
4 Q We'll get there.
5 A Okay, I'm happy to wait.
6 Are we going to get to documents which
7 reflect anything that were acceptable to the debtor,
8 because so far you've been showing me offers made by
9 a third party that have been unacceptable.
10 Q Well, we started out with the PSA that
11 you signed, Mr. Beilinson, so I take it that was
12 acceptable?
13 A That was acceptable.
14 Q So we started there.
15 (Document titled Term Sheet
16 Alternative A, Illustrative Terms of Proposed
17 Restructuring dated June 17, 2010 marked as
19 BY MR. PARKINS:
20 Q Mr. Beilinson, I hand you a document
21 marked Exhibit 11. Before I ask you to read
22 some portion of it, do you recall who represented
23 Apollo Investment Corporation, what law firm?
24 A I didn't hear the question.
25 Q What law firm do you recall
23 (Pages 86 to 89)
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1 Marc A. Beilinson
2 represented Apollo Investment Corporation?
3 A I believe Paul Weiss.
4 Q This document again is a Lehman
5 production.
6 MR. DONOVAN: Sir, are you
7 representing all these went to the company,
8 or you don't know?
9 MR. PARKINS: Don't know.
11 MR. PARKINS: It's a production, I
12 don't know where they went.
13 MR. DONOVAN: No, I know, I didn't
14 know if you just took out, okay.
15 BY MR. PARKINS:
16 Q This document is marked 230, Bates
17 numbers 230 through 241. I will note that it has a
18 header: PW Comments dated 6/22/10.
19 A Okay.
20 Q I ask you to look at this document
21 beginning on page 5, and 6, and review the areas
22 designated New Equity, AIC Purchase of New Equity
23 and Conditions Precedent.
24 A (Complies.)
25 I've reviewed it. Well, you asked me
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1 Marc A. Beilinson
2 to review Conditions Precedent?
3 Q I'm sorry?
4 A Did you ask me to review Conditions
5 Precedent, too?
6 Q New Equity, AIC Purchase of New Equity
7 Purchased and Conditions Precedent, yes.
8 A Let me review that provision now.
9 (Reviews.)
11 Q Okay. Do you remember seeing this
13 A A document like this.
14 Q This document --
15 A Not --
16 Q I'm sorry, sir. This document --
17 finish up.
18 A I don't know if it was this particular
19 document.
20 Q But again, if the company received a
21 document with respect to the negotiations for
22 restructuring, you would have gotten it?
23 A If they had received one, yes, I would
24 have received it.
25 Q This document provides for AIC
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1 Marc A. Beilinson
2 purchase of new equity, does it not?
3 A What this document seems to do is
4 allow Apollo Investment Corp. to purchase equity
5 that Lehman receives from a restructuring.
6 Q Did you on behalf of the company ever
7 go out to try to find a different buyer for the
8 stock that Lehman wanted to sell?
9 A No.
10 Q I thought it was important to you that
11 there be a buyer.
12 A There was, and I was -- I was pleased
13 that Apollo Investment Corp. was there and in
14 discussions with Lehman.
15 Q By the way, you're on another board of
16 directors of an Apollo-related entity, aren't you?
17 A Yes.
18 Q What entity is that that you serve on
19 the board of directors on?
20 A Apollo Real Estate Commercial REIT,
21 it's called ARI on the New York Stock Exchange. I'm
22 an independent member of the board and I'm an
23 independent member of the audit committee of that
24 entity which is a public entity subject to SEC rules
25 and regulations.
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1 Marc A. Beilinson
2 Q Do you know if any disclosure has been
3 made that you are on a board of directors of an
4 affiliate of the ultimate parent of this debtor?
5 MR. DONOVAN: Objection to form.
6 A No, don't know.
7 Q Do you intend to make disclosure?
8 A Of course. It's in the public record,
9 I mean, I'm an independent director of a public
10 company that went public about nine months ago, so.
11 Q But you haven't made disclosure as of
12 now?
13 A I don't --
14 MR. DONOVAN: You mean other than the
15 SEC report, I mean, what are saying?
16 BY MR. PARKINS:
17 Q Have you made disclosure that you're
18 on the board of a public company to the Bankruptcy
19 Court affiliated with the parent company of this
20 debtor?
22 A I don't know.
23 Q The Conditions Precedent set out in
24 this document reflect again that AIC will execute a
25 PSA along with Lehman and the company, correct?
24 (Pages 90 to 93)
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1 Marc A. Beilinson
2 A You mean a document that was
3 unacceptable to me given to, potentially given to
4 the debtor, that is a provision.
5 Q Was the transaction unacceptable to
6 you as proposed?
7 A Uhm --
8 Q Reflected in this exhibit.
9 A I haven't read the entire exhibit, so.
10 Q So how do you know it was unacceptable
11 if you don't read it, sir? Read it, take your time.
12 A It wasn't important to me and I had no
13 interest in being part of a PSA with a third party.
14 My interest was to have a PSA with a substantial
15 creditor of Innkeepers, Hospitality and USA. And to
16 the extent that they had a prerequisite of selling
17 part of their post-confirmation equity to a third
18 party, it was important to me that they were talking
19 to a third party that had knowledge, interest, and
20 capability for fulfilling the transaction because
21 that was a condition precedent to effectiveness of
22 the PSA which I believe in my business judgment is
23 in the best interest of an internal restructuring of
24 this case.
25 Q Did you advise Apollo or its lawyers
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1 Marc A. Beilinson
2 to stop putting in Apollo Investment Corporation as
3 a signatory to a PSA?
4 A I didn't advise Apollo or their
5 lawyers of anything other than I had no interest in
6 negotiating a transaction with them.
7 Q With Apollo Investment Corporation?
8 A That's correct. I understood that
9 they were involved in negotiations with Lehman. It
10 was important to me that they had an interest since
11 they are a viable interested party in helping Lehman
12 fulfill its obligations under the PSA, and to that
13 extent I was pleased that AIC wanted to be involved,
14 I was pleased that they were involved, and I was
15 pleased that they reached a contractual relationship
16 with Lehman.
17 Q Looking earlier in this document on
18 page 4 with respect to DIP financing.
19 A Yes.
20 Q Romanette i looks to me like AIC was
21 considering doing the DIP financing for the fixed
22 rate facility; is that correct?
23 A Yes. I asked Apollo Investment Corp.
24 if they would have an interest in funding the
25 necessary DIP financings that were necessary --
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1 Marc A. Beilinson
2 necessitated by the Marriott termination notices. I
3 also was pleased that Midland brought a DIP
4 financing source to the debtors' attention. As I
5 told Midland and I've told everyone in connection
6 with this bankruptcy case, my goal was to get the
7 best possible tips on the best possible terms and,
8 in fact, have done so. I might note that Apollo
9 isn't doing either of the DIPs, Apollo Investment
10 Corp. or Apollo aren't doing either of the DIPS, but
11 I was pleased that they were supportive in at least
12 providing a DIP proposal.
13 Q Tell me how you communicated to AIC
14 that Innkeepers wasn't interested in doing a PSA
15 with AIC.
16 A Verbal.
17 Q And who did you tell?
18 A People who were at AIC.
19 Q Who did you tell?
20 A Well, I don't really make things a
21 secret, I mean people generally know how I feel and
22 what I intend to do.
23 Q Rather than osmotic transference, did
24 you tell someone verbally that that was
25 unacceptable?
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1 Marc A. Beilinson
2 A Sure.
3 Q Who?
4 A I don't recall.
5 Q Okay. Who were you negotiating with
6 from AIC at the time?
7 A At various points in time various
8 people who are on my board and also representatives
9 of AIC I would talk to.
10 Q Including the president of the
11 company?
12 A Excuse me?
13 Q The president of AIC? CEO of AIC?
14 A Who is the president?
15 Q The CEO of AIC.
16 A If that's Jim Zelter, yes.
17 Q Okay.
18 A I did talk to Jim Zelter on occasion.
19 Q And that was the person you had that
20 communication with a couple of days before the
21 filing we went through in an earlier exhibit,
22 correct?
23 A Jim Zelter is the person I wrote a
24 letter to a couple days before the filing.
25 Q You're referring to the e-mail, right?
25 (Pages 94 to 97)
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1 Marc A. Beilinson
2 A E-mail, yes.
3 Q Was there a letter?
4 A No.
5 Q Okay.
10 THE WITNESS: Could we take a break?
11 MR. DONOVAN: Do you want to do it now
12 or after this?
13 MR. PARKINS: What?
14 MR. DONOVAN: Do you want to do it
15 now?
16 MR. PARKINS: We can do it now.
19 BY MR. PARKINS:
20 Q Before you, sir, is an exhibit which
21 I've marked as Exhibit 12. It's a Term Sheet
22 Alternative A. Again, a Lehman production starting
23 at Bates number 254 to 264. It says Dechert Draft
24 6/29/10 in the right-hand corner.
25 I ask you again to look at pages 5 and
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1 Marc A. Beilinson
2 6. New Equity, Distribution of New Equity and
3 Conditions Precedent. Take a look at that.
4 A (Reviews.)
5 I've read those two provisions.
6 Q This document doesn't appear to have a
7 provision for AIC to sign a PSA, do you see that, in
8 the Conditions Precedent?
9 A I do see it in this document.
10 Q It does have a condition precedent
11 agreement reached with Apollo Investment Corp. in
12 form and substance satisfactory to Lehman. Do you
13 know what agreement that would be?
14 MR. DONOVAN: Maybe on the next page.
15 BY MR. PARKINS:
16 Q It's on page 6, I'm sorry, third
17 bullet point under Conditions Precedent.
18 MR. DONOVAN: Thank you.
19 A I assume it was the type of
20 transaction they ended up consummating where Lehman
21 was entering into some transaction with Apollo to
22 sell some of the interest that we'll receive in this
23 restructuring.
24 Q Did you respond to this term sheet? I
25 mean you received it on behalf of the company, do
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1 Marc A. Beilinson
2 you recall -- better question, strike that.
3 Do you recall receiving this document?
4 A I received, recall receiving a
5 document like this.
6 Q Okay. Did you respond to this
7 document?
8 A Yes, I believe I responded to the
9 document.
10 Q What was the response?
11 A I haven't reviewed this whole
12 document, so I can't tell you. I -- was your
13 question with regard to paragraphs --
14 Q Take a second to review it.
15 A -- Distribution of Equity or the whole
16 agreement?
17 Q Let's talk about the Equity provision.
18 Did you respond with respect to the equity portion
19 of this document?
20 A I believe I did have a response.
21 Q What was the response?
22 A That we were getting closer.
23 Q But not accepted, correct?
25 Q Okay. We went through a lot of term
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1 Marc A. Beilinson
2 sheets through the month, evidenced through the
3 month of June that were prepared by Lehman's counsel
4 that you said were summarily rejected, unacceptable.
5 A That sort of provisions were
6 unacceptable, yes.
7 Q Okay. Do you know why Lehman kept
8 making proposals repeatedly that you told them were
9 unacceptable?
10 A No.
11 Q Did you talk to them about the fact
12 that you continue to make proposals to me that are
13 facially unacceptable, stop doing it?
14 A Well, I try not to control things I
15 can't control like other parties, but, you know, I
16 would go through their proposals and I would orally
17 tell them what provisions were reasonable,
18 acceptable, or not acceptable. And if they keep
19 trying, I will keep having the same conversation, at
20 some point in time they stop trying.
21 Q Now, do you know whether or not Apollo
22 found the provisions in this proposal acceptable?
23 A I don't know.
24 Q Okay. Did you have any discussions
25 with respect to anyone from Apollo regarding this
26 (Pages 98 to 101)
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1 Marc A. Beilinson
2 proposal perfected in this Term Sheet Alternative A?
3 A I had many conversations with people
4 who are on my board who also are employees of Apollo
5 Investment Corp. with regard to the restructuring,
6 and the debtor, and its operations --
7 Q I'll ask a better question.
8 A -- frequently.
9 Q Better question.
10 Did you have discussions with anyone
11 from AIC regarding their acquisition of equity of
12 the debtor as part of a global restructuring in
13 response to this Term Sheet?
14 MR. ERHLICH: Objection to form.
15 A No, I had no discussion with them with
16 regard to acquisition of the equity of this debtor.
17 Q AIC clearly had different positions,
18 they were the equity owner of the debtor?
19 A Yes.
20 Q And they had been evidenced in these
21 various term sheets as potential acquirers of the
22 equity or a portion of the equity of the
23 restructured company, they were in both positions,
24 is that correct, during this entire timeframe?
25 A During this entire timeframe I had
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1 Marc A. Beilinson
2 made it clear to Midland, Lehman, Apollo, AIC, and
3 any Apollo affiliate that happened to be within
4 earshot, that they were going to receive no
5 distribution from this bankrupted debtor on account
6 of any preexisting equity interest that they had,
7 that they were going to be wiped out with regard to
8 the Preferred A, they were going to be wiped out
9 with regard to their common equity. I was going to
10 do a deal with, as it turns out, Lehman, who would
11 be a hundred percent owner who had a condition to
12 have an equity partner on a proposed confirmation
13 basis, and was a positive feature that Apollo, who
14 had lost essentially $250 million in this
15 enterprise, still has sufficient interest and faith
16 to talk to Lehman about purchasing 50 percent, yeah,
17 that was a positive feature.
18 Q Purchasing 50 percent of a company
19 that has --
20 A Fifty percent of the equity that they
21 receive in a restructuring.
22 Q Of the equity that they receive in a
23 restructure.
24 Now, is it your recollection in the
25 context of these negotiations that Apollo Investment
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1 Marc A. Beilinson
2 Corporation wanted protections under Section 1145
3 and 1146 of the Bankruptcy Code with respect to
4 transfer taxes and safe harbor with respect to
5 securities laws?
6 A I don't recall that. I believe that
7 Lehman wanted protections with regard to those, I
8 don't recall whether that discussion involved Apollo
9 Investment Corp. or not.
10 Q So you weren't, you didn't have any
11 discussions involving Apollo's -- Apollo Investment
12 Corp's desire to have the benefit of those
13 protections in the context of a restructuring?
14 A I do not believe I had any
15 conversations involving 1145 or 1146 with regard to
16 with Apollo.
17 Q All right. Have you had a chance to
18 look at the pleadings filed in the Lehman case where
19 Lehman sought approval of its transaction with AIC?
20 A Which pleadings?
21 Q Pleadings where Lehman sought approval
22 of the transaction to enter into the PSA.
23 A Yeah, I took a look at it.
24 Q Okay. And to enter and to sell
25 50 percent of its equity to be received in this
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1 Marc A. Beilinson
2 restructure to Apollo, do you recall that document?
3 A I recall seeing a pleading and
4 reviewing a pleading in which they filed it before
5 Judge Peck, yes.
6 Q All right.
7 A Can I clarify an answer, because I
8 realized that I was talking about 1146 in the
9 Bankruptcy Code and not talking to Apollo with
10 regard to that provision.
11 I don't really know what 1146 does, so
12 I might have overstated that. So could you let me
13 review 1146 so I'll what the substance is so --
14 Q If you don't recall it, you don't
15 recall it.
16 A Okay. I just want to amend my answer
17 to the extent that, you know, I don't really know
18 what the substance of 1146 is.
19 Q Sure.
24 BY MR. PARKINS:
27 (Pages 102 to 105)
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1 Marc A. Beilinson
2 Exhibit 13. It's a document again produced by
3 Lehman, Bates stamp number 141 to 152.
4 A Uh-hum.
5 Q It's identified as a Dechert Draft
6 dated 6/23/10 approximately -- well, six days
7 earlier than Exhibit 12.
8 A Okay.
9 Q Looking again at the pages 5 and 6 on
10 the New Equity, AIC Purchase of New Equity, and
11 Conditions Precedent to Lehman's obligations under
12 PSA, take a look at those, please.
13 A (Complies.)
14 I've reviewed those.
15 Q Okay. This document with a date of
16 June 22, 2010, Dechert Draft 6/23/10, still has AIC
17 as a condition precedent executing a plan support
18 agreement as one of the parties, correct?
19 A Yes, in this document from Dechert to
20 somebody that is a condition precedent.
21 Q Okay. Do you recall receiving this
22 document?
23 A I received many documents that were
24 similar to this.
25 Q Was this document acceptable, the
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1 Marc A. Beilinson
2 proposal embodied in this document acceptable with
3 respect to the equity ownership?
4 A No.
5 Q Okay. I take it then you communicated
6 the answer no to Lehman in response to this
7 document?
8 A Well, this was getting closer in
9 concept and I probably communicated that this was
10 getting closer in concept.
11 (E-mail Exchange dated July 7, 2010
13 A (Reviews.)
15 Exhibit 14.
16 A Okay.
17 Q The top of the first page appears to
18 be an e-mail from Mr. Joseph Glatt at Apollo Capital
19 sent Wednesday, July 7 to you.
20 A That's what it appears.
21 Q Do you recall receiving this e-mail
22 with the attachments?
23 A (Reviews.)
24 MR. DONOVAN: While you review that,
25 let me just state for the record these are
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1 Marc A. Beilinson
2 not consecutively numbered Bates pages, so
3 they may be the attachments, but they at
4 least appear to be an aggregation of
5 different pages and documents.
6 A (Continues review.)
7 Q I'd like you to look at this document,
8 we'll start with page 1. Have you looked at page 1?
9 A Okay, I'm looking at it.
10 Q Page 1, it has apparently two e-mail
11 chains, one from Joseph Glatt to you dated July 7,
12 and one from Mr. Alan Kornberg at Paul Weiss to a
13 group of recipients, including recipients at Dechert
14 and recipients at Kirkland, and to Mr. Glatt at
15 Apollo Capital.
16 A Okay.
17 Q Is Apollo Capital, first of all, the
18 same as Apollo Investment Corporation?
19 A I have no idea.
20 Q Do you know Mr. Glatt?
21 A I do know Mr. Glatt.
22 Q Is he an employee of AIC or some other
23 Apollo entity?
24 A I have no clue.
25 Q Okay. Do you recall receiving this
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1 Marc A. Beilinson
2 e-mail from Mr. Glatt?
3 A I recall receiving e-mails from
4 Mr. Glatt, sure, if this says I received it, I
5 received it.
6 Q With respect to the second e-mail
7 referenced here, the one from Mr. Kornberg, there's
8 a little message attached to it, it says: All, As
9 discussed last week, we are attaching two term
10 sheets: One relating to the proposed agreements
11 between Lehman and Innkeepers and the other relating
12 to those between Lehman and AIC. We think this
13 approach more accurately reflects the transactions
14 under discussion.
15 And it goes on: I hope that we can
16 continue the very constructive discussions the
17 parties have had to date.
18 Please note that the attached are
19 subject to further comments and revisions by AIC.
20 Best regards, Alan.
21 I want you to take a look at these
22 term sheets that are attached to this document and
23 tell me whether or not you agree with Mr. Kornberg's
24 statement that they reflect -- that they more
25 accurately reflect the transactions under discussion
28 (Pages 106 to 109)
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1 Marc A. Beilinson
2 at that time?
3 A Well, this refers to a discussion that
4 Alan Kornberg was having with Mr. Sage, Greer, Buck,
5 Basta, Sathy, and Glatt, I wasn't necessarily part
6 of those discussions.
7 Q Well --
8 A So it maybe reflects something amongst
9 them which isn't necessarily the CRO of --
10 Q Mr. Glatt sent this transmission to
11 you so --
12 A No, he sent, he sent a transmission so
13 I would know what was transpiring between them.
14 Q My question is, sir: Do these term
15 sheets, as Mr. Kornberg suggests, more accurately
16 reflect the transactions under discussion at that
17 time on July 7th?
18 MR. DONOVAN: I'm going to object.
19 This document appears to be somewhat
20 irregular in that it seems to be an
21 aggregation of documents, they aren't in
22 consistent Bates order, so I don't think it's
23 entirely clear or fair to ask him if these
24 are the e-mail's attachments that were
25 attached since we go from 127 to 110 and then
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1 Marc A. Beilinson
2 a few pages t0 148.
3 MR. PARKINS: That's how we got them.
4 MR. DONOVAN: You got them in 127 and
5 they then went to 110?
6 MR. PARKINS: This is how we got them,
7 right.
8 MR. DONOVAN: Okay. Well, I still
9 object.
10 MR. PARKINS: All right.
11 BY MR. PARKINS:
12 Q Well, let's take the first one to deal
13 with the objection.
14 Paul Weiss, a document Draft 7/6/10,
15 Term Sheet, Lehman/AIC, take a look at that.
16 A I'm going to have to read it all
17 because --
18 Q Please do.
19 A (Reads.)
20 Q It's only four pages.
21 A I've read the four pages.
22 Q Going with me to page 2 of this
23 document, Conditions to Execution of Stock Purchase
24 Agreement.
25 A I see the provision.
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1 Marc A. Beilinson
2 Q The first bullet point reads:
3 Approval of the Bankruptcy Court of a plan support
4 agreement executed by Lehman, AIC and the Company as
5 contemplated by the Lehman-Innkeepers' Term Sheet, I
6 read it correctly, didn't I?
7 A You read it correctly.
8 Q All right. Is that your understanding
9 of the current negotiations at this time on July
10 7th?
11 A I don't know what my thoughts were on
12 July 7th.
13 Q Okay. Do you have any dispute that
14 this reflects the current status of negotiations at
15 that time?
16 A I don't have a view with regard to the
17 current status on July 7th.
18 Q But it is clear, at least from this
19 document, which is a Paul Weiss document, okay, that
20 AIC was still intending to be a party to the PSA as
21 recited right here in this document?
22 A That's the way I would view this
23 document.
24 Q Okay. Then if I go on to the next
25 term sheet which is, starts on page number 148,
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1 Marc A. Beilinson
2 Paul Weiss document dated 7/6/10 beginning at 148.
3 Going to pages 5 and 6, looking at the
4 topics New Equity, AIC Purchase of New Equity, and
5 Conditions Precedent, would you take a look at
6 those, please?
7 A (Complies.)
8 I've reviewed it.
9 Q Looking at the Conditions Precedent,
10 the section on page 6 of this document, it reads:
11 The transaction become binding on Lehman when
12 Lehman, Apollo Investment Corp. ("AIC") and the
13 Company execute a plan support agreement ("the PSA")
14 that incorporates the Transaction as set forth
15 herein, including, and it goes on to have various
16 bullet points, correct?
17 A Yes, that's what it says.
18 Q Now did you accept this proposal?
19 A No. The only proposal I accepted was
20 the final one that was a PSA filed with the
21 Bankruptcy Court.
22 Q What response did you make to the
23 proposals embodied in both of these term sheets?
24 A Well, I was focused in on a number of
25 things around this timeframe. I was focused in on
29 (Pages 110 to 113)
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1 Marc A. Beilinson
2 coming to an agreement for which was an overall
3 agreement with Innkeepers -- I mean with Lehman,
4 which embodied a ton of elements. It involved
5 conditions, events of termination, events of
6 default, remedies, conversion of debt to equity,
7 what rights would be there, what conditions
8 subsequent there were. At this same time period, I
9 was focused in on getting a DIP with regard to Five
10 Mile, negotiating with Marriott, negotiating with
11 other franchisors, preparing for a bankruptcy case,
12 and running an operation the size of Innkeepers.
13 Q So what were your response to these
14 two term sheets?
15 A My response was I was giving people
16 overall comments with regard to each and every
17 element of these term sheets in an effort to move
18 the process along, but obviously there were elements
19 of each of these proposals which were not acceptable
20 as a cohesive unit which would result in a PSA that
21 I would finally execute in my business judgment.
22 So, you know, I wasn't looking at specific
23 provisions, I wasn't looking at how the overall
24 transaction would be structured, all the conditions
25 to it, whether they would be met and whether this
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1 Marc A. Beilinson
2 was a viable business transaction in the business
3 judgment of debtor to move forward with, at this
4 phase it wasn't.
5 Q As of this date did this accurately
6 reflect the transactions under discussion as
7 reflected by Mr. Kornberg or was it not accurate?
8 A With regard to these provisions?
9 Q With regard to the transactions
10 evidenced by the two term sheets sent to you by
11 AIC's lawyer.
12 A I don't know --
13 MR. DONOVAN: Objection. Objection to
14 form.
15 A -- what was sent to me by AIC's lawyer
16 and I wasn't focused in on any term sheet that AIC
17 sent to me.
18 Let me just be absolutely clear that
19 it was, had I received a term sheet from AIC, okay,
20 I was not focused in on it, it wasn't a type of
21 thing I would have responded to meaningfully because
22 my transaction was with Innkeepers. Those are the
23 term sheets that I reviewed, analyzed and responded
24 to to get to a final resolution. What Apollo's
25 views with regard, or Apollo Investment Corp's views
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1 Marc A. Beilinson
2 with regard to some of these provisions were
3 inconsequential to me.
4 Q But it was important that Apollo or
5 someone else buy the stock from Lehman?
6 A Yes, because that was ultimately a
7 condition precedent to Lehman's requirement of
8 moving forward with the PSA.
9 Q Now at this time, July 7, or so,
10 that's about 12 days before the filing of the
11 bankruptcy case, isn't it? Am I accurate?
12 A That's about right.
13 Q Okay. And these negotiations with AIC
14 were still ongoing with respect to the PSA as
15 evidenced by these communications; is that correct?
16 A Well, the negotiations really have to
17 have two parties, and what I'm telling you, Lenny,
18 is that I wasn't interested in responding to a term
19 sheet, assuming it was sent by AIC to the debtor.
20 My interest was negotiating the PSA and term sheet
21 between Innkeepers and Lehman. The fact that
22 Paul Weiss may have sent a term sheet indicating its
23 interest in the various provisions including events
24 of default and conditions precedent subsequent
25 really was not the focus of mine and was likely not
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1 Marc A. Beilinson
2 responded to by me.
3 Q Well, let's go to the second term
4 sheet.
5 A Sure.
6 Q Starting with Bates number 148, that's
7 a Term Sheet Alternative, it says Lehman/Innkeepers,
8 did you look at that term sheet and respond to that
9 one since that's the one you say you were focused
10 on?
11 A Would you like me to review it?
12 Q Absolutely.
13 A Okay. (Reviews.)
14 I scanned it.
15 Q My question is: Did you respond to
16 this term sheet with respect to the
17 Innkeepers/Lehman deal?
19 A I don't believe I responded directly
20 to this term sheet.
21 Q How about indirectly?
22 A I think I had some oral conversations
23 with Lehman as to what would be moving forward.
24 Q And who did you talk with at this
25 date?
30 (Pages 114 to 117)
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1 Marc A. Beilinson
2 A I talked to a number of people.
3 Q This is getting close to a filing
4 date, so do you recall who you talked to in the last
5 12 days before the filing trying to reach agreement
6 on a PSA?
7 A I talked to Suzanne Frey and Michael
8 Lascher and a bunch of lawyers in the room from
9 Dechert.
10 Q Did your --
11 A Talked to a lot of people.
12 Q Did your lawyers at Kirkland engage in
13 negotiations outside of your presence with respect
14 to substantive terms of the PSA or was that for you
15 to do only?
16 A I was probably the primary person
17 negotiating the terms of the PSA, but I'm sure that
18 my counsel under my direction had, you know,
19 substantive conversations with regard to various
20 provisions.
21 Q Okay.
22 (Document titled Project Tavern -
23 Lehman Discussion Materials dated April 22,
24 2010 marked as Exhibit 15, as of this date.)
25
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1 Marc A. Beilinson
2 BY MR. PARKINS:
4 Exhibit 15. It was produced last night by
5 Innkeepers, Kirkland & Ellis. We got it last night.
6 I'd ask you to take a look at it
7 because I want to ask you some questions about it.
8 A Sure.
9 Q Okay.
10 A (Complies.)
11 Yes, I reviewed this.
12 Q Do you recall whether there was a
13 meeting between Innkeepers and Lehman on or about
14 April 22nd this year?
15 A That wouldn't surprise me.
16 Q Other than being surprised, do you
17 recall attending such a meeting?
18 A I'm not good at timeframes but --
19 let's see. Four months ago sounds about right that
20 I had a meeting with Lehman --
21 Q Do you recall where that meeting was?
22 A -- where we discussed this type of
23 transaction.
24 Q Didn't mean to interrupt you.
25 Do you recall where that meeting was?
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1 Marc A. Beilinson
2 A Well, if it's the meeting I'm thinking
3 of, it was at Lehman Brothers.
4 Q Do you recall seeing this document
5 before?
6 A I do recall this document.
7 Q All right. Is this the document that
8 was referred to earlier in various footnotes as the
9 Moelis Presentation?
11 BY MR. PARKINS:
12 Q Do you know?
13 A I don't know.
14 Q Okay. Did you ask Moelis to make up,
15 to prepare this document as part of the presentation
16 you made to Lehman on this day?
17 A I think that I was with Moelis and it
18 was a joint effort between the debtor and Moelis in
19 preparing different aspects of this presentation.
20 Q And who from the debtor?
21 A That would be me.
22 Q You. Okay.
23 A And other officers and directors, but
24 primarily me.
25 Q As we go through this document, page
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1 Marc A. Beilinson
2 5, for example, that page is entitled Consolidated
3 Financial Overview. I take it that is for all of
4 the hotels for the years 2007, '8, '9, '10 and
5 projected for '11?
6 A Well, it would be projected for '10.
7 Q The remaining part of '10, and '11?
8 A I think that's accurate.
9 Q Okay. And the next page 6 is Fixed
10 Pool Financial Overview for the same period of time.
11 And these projections for 2010 and 2011 were the
12 company's projections or Moelis' projections?
13 A The company's projections.
14 Q Moelis made no changes or
15 modifications of the projections of the companies
16 with respect to 2010 and '11 for either page 5 or 6?
17 A I think they tested. We had day-long
18 meetings where we talked about projections and what
19 we thought. We had a discourse. We had views which
20 were mutually the same, and we had disagreements,
21 but, you know, essentially they're management's
22 estimates.
23 Q Page 7, Floating Rate -- Floating Pool
24 Financial Overview for the same periods of time.
25 Just going with me through 8. Other Pools Financial
31 (Pages 118 to 121)
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1 Marc A. Beilinson
2 Overview for the same periods of time. So we have
3 Fixed Pool which is Midland, Floating Pool which is
4 Lehman, correct, and then we have Other Pools which
5 are various special servicers; is that correct?
6 A That's correct.
7 Q Before this meeting on or about April
8 22, had you had any discussions with anyone from
9 Lehman about a global restructuring?
10 A Not that I recall.
11 Q Okay. Did you go to the Board of
12 Trustees for authority to prepare this presentation
13 and give it to Lehman?
14 A I don't think so.
15 Q Okay. Did you talk to anyone from AIC
16 regarding the preparation and presentation of this
17 document to Lehman?
18 A I talk to my board members all the
19 time.
20 Q Specifically with respect to this
21 document?
22 A I think I may have.
23 Q Did you seek board approval to make
24 this presentation?
25 A I don't believe I did.
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1 Marc A. Beilinson
2 Q Go with me to page 12 of this
3 document, Illustrative Valuation Ranges for Lehman
4 Hotels, Fixed Pool Hotels, and Other Hotels.
5 Illustrative Value. What does an illustrative value
6 mean to you?
7 A Well, it's a kind of a first
8 indication as to the range of potential values for
9 certain assets that are being discussed.
10 Q And how did these values come about as
11 written here were reflected to the Lehman Hotels,
12 for example, let's start with that?
13 A That was kind of the value that was
14 placed there after, you know, my financial advisors
15 and Moelis and management and I, you know, looked
16 at, you know, all of the elements of each of the
17 hotels within each of the pools. You know, we, you
18 know, did an asset-by-asset analysis with regard to
19 the quality of the assets, the competitive features,
20 what was going on with our clients in those
21 environments, and what we thought would happen in
22 the future.
23 We looked at the type of asset as to
24 whether it was a Marriott Hotel or a different type
25 of hotel to determine whether the GEN 1 quality
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1 Marc A. Beilinson
2 versus GEN 5, GEN 6 or the Hyatt properties were
3 going to do better or worse in this environment.
4 We looked at capital intensive natures
5 of certain assets versus others and how much CAPEX
6 would be put in.
7 We really looked at, you know,
8 comparable companies and what their multiples looked
9 like and how they are similar to ours and different
10 to ours.
11 And we looked at discounted cash flow,
12 you know, analysis and projections to come to a
13 feeling as to what range of values we believed each
14 of the tranches, you know, had at this part in time.
15 And, of course, that was back in April, and that's
16 obviously a continuing process and I continue to ask
17 Moelis to consider all of the assumptions. I
18 consider all of the assumptions to decide whether
19 the range should be moving up or if the range should
20 be moving down with what's going on in the
21 macroeconomic environment, a world that we live in.
22 So we looked at everything in coming to a range of
23 values.
24 Q That sounds like there was a --
25 A Not everything, but a lot.
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1 Marc A. Beilinson
2 Q Since there was a number of underlying
3 work product done that gave rise to these
4 illustrative value assumptions; is that correct?
5 A You know, I don't know, it was more
6 working sessions where we talked about all sorts of
7 elements and I'm sure, you know, we came up with
8 calculations.
9 MR. PARKINS: Counsel, if there are
10 underlying documents which support these, I
11 don't know if they've been produced, but
12 we'll look, but if they haven't been
13 produced, I'd like them.
14 MR. DONOVAN: Send me a letter, I'm
15 not sure, they may very well be responsive.
16 MR. PARKINS: I don't know, I didn't
17 look through everything last night.
18 MR. DONOVAN: Neither did I.
19 MR. PARKINS: All right.
20 BY MR. PARKINS:
21 Q Going with me to page 13, I see that
22 page is entitled Illustrative Pro Forma Structure.
23 And this page seems to describe a transaction very
24 similar to what is reflected in the PSA, correct?
25 A Yes, it does.
32 (Pages 122 to 125)
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1 Marc A. Beilinson
2 Q And this was presented to Lehman
3 without any anticipation of making, pre-advising
4 Lehman that you're going to make a proposal for
5 Lehman to be the equity owner of the company is what
6 you're telling me?
7 A That's what I'm telling you.
9 the testimony.
10 BY MR. PARKINS:
11 Q Now, what was Lehman's response at
12 this meeting to this Illustrative Pro Forma
13 Structure?
14 A They needed more information.
15 Q Looking at the Parent Equity box it
16 says Lehman/Investor. Who did you contemplate to be
17 the investor?
18 A Whoever Lehman chose.
19 Q Did you think Lehman would have to
20 choose someone? How would you know that as part of
21 a cold prof offer to them?
22 MR. DONOVAN: I'll object to the form.
23 Foundation.
24 Go ahead, you can answer.
25 A As I testified earlier, when I look at
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1 Marc A. Beilinson
2 each of the constituents in the beginning of a
3 restructuring process, I try to gain an insight
4 through my past experience as to what type of
5 consideration people would like to have versus not
6 like to have. What will motivate them to accept
7 equity versus debt, you know, what type of
8 enterprise they have, and I made an assumption early
9 on way back in April after taking everything into
10 consideration in a very hostile economic
11 environment, that Lehman in converting all of its
12 debt to equity may very well want the right to take
13 some of that equity risk off the table post
14 confirmation and realize on that value of the
15 equity. So I made that assumption way back in
16 April, I think it was, and it's proven to be a
17 fairly accurate assumption, because, as you know,
18 when people take a hundred percent equity, you can
19 do quite well or you can do quite poorly as Apollo
20 did in losing $250 million.
21 Q When --
22 A So I suggested to them that they could
23 take half their equity off the table after they --
24 after the transaction is consummated and that, you
25 know, I believe even in that meeting they said,
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1 Marc A. Beilinson
2 asked if Apollo may have an interest, and my
3 response was I didn't know but they've been
4 supportive and may have an interest.
5 Q You say Apollo had been supportive,
6 didn't they have an obligation to fund some PIP work
7 that they failed to do?
9 MR. ERHLICH: Objection to form.
10 MR. DONOVAN: Objection. It calls for
11 a legal conclusion and speculation by this
12 witness.
13 A Apollo has always been supportive of
14 Innkeepers.
15 Q Have you ever asked Apollo to fund PIP
16 work --
17 A Yes.
18 Q -- in the last four or five months
19 before the filing of the bankruptcy case?
20 A Yeah, I answered your first question,
21 now is there a second question?
22 Q Is the answer yes to that question?
23 A I answered yes to have I ever asked
24 Apollo to fund PIP work.
25 Q Within four to five months prior to
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1 Marc A. Beilinson
2 the filing of the bankruptcy case?
3 A The answer is no in that five-month
4 period.
5 Q Okay.
6 A Actually, that's unfair. I did have a
7 conversation with Apollo as to whether they might
8 contribute money into the bankruptcy estate for
9 purposes of fulfilling certain potential guarantee
10 obligations they had to a third party in exchange
11 for a release. That of course I couldn't grant but
12 the third party could grant, and did move forward.
13 As you probably know, back in 2008,
14 early 2009, I did seek to monetize a third-party
15 guarantee against Apollo for the benefit of the
16 bankruptcy estate and, in fact, they contributed
17 money into the bankruptcy estate for purposes of
18 funding PIP with regard to the Lehman pool in
19 exchange for a release by Lehman of that guarantee,
20 as I recall.
21 Q I believe in March of 2010 Marriott
22 sent notices of default and franchise termination
23 with respect to a number of hotels; is that correct?
25 Q As of that time, after that time, did
33 (Pages 126 to 129)
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1 Marc A. Beilinson
2 you approach Apollo for funding the PIP work which
3 was the subject of the Marriott notices?
4 A I talked to my board and I talked to
5 Apollo Investment Corp. with regard to how I was
6 going to consider Innkeepers' handling a problem
7 that the capital structure which existed was
8 unsustainable. There wasn't sufficient cash flow to
9 pay its lenders and fulfill the Marriott PIP
10 obligations that, quite frankly, I had paid lenders
11 for probably a year when those funds could have been
12 better utilized or potentially better utilized in
13 fulfilling the PIP obligations, and that I believe
14 the time that we needed to find a way to restructure
15 this company to make it sustainable with a capital
16 structure that was viable, fair and appropriate to
17 the parties and could be dealt with in a way that
18 Marriott wouldn't pull the flags which I thought was
19 a --
20 MR. PARKINS: Move to strike that as
21 nonresponsive.
22 BY MR. PARKINS:
23 Q My question was --
24 A -- value disruptive event in regard
25 to --
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1 Marc A. Beilinson
2 Q My question was --
3 MR. DONOVAN: Could you let him
4 finish?
5 A -- with regard to your properties.
6 Q My question was: Did you ask Apollo
7 Investment Corporation to fund the PIP work
8 necessary after Marriott gave the notice, yes or no?
9 MR. DONOVAN: Objection. Asked and
10 answered. And you can answer however you
11 feel you need to answer fully and fairly.
12 A I talked to members of my board with
13 regard to always to potentially handle this
14 situation.
15 Q And did Apollo Investment Corporation
16 fund the PIP work after the Marriott notices of
17 default came in?
18 A Not that I'm aware of.
19 Q You would be aware of it, though,
20 wouldn't you?
21 A I think so.
22 Q Okay. At the time you made this
23 presentation to Lehman, and I'm asking you to look
24 here on page 14.
25 A (Complies.)
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1 Marc A. Beilinson
2 Q Was it your position that you were
3 representing all the Innkeepers' entities including
4 those from the Midland pool?
6 A I was a fiduciary on behalf of the
7 integrated Innkeepers structure.
8 Q Did you go to Midland and suggest to
9 them that you were going to make a proposal to
10 somebody to eliminate $250 to $425 million of their
11 debt before you did that?
12 A No, because I didn't believe that it
13 had any negative impact on Midland. In fact, I
14 thought that making this proposal was substantially
15 in Midland's favor. It equitized another party of
16 the capital structure. It took 20 assets that were
17 securitized and it freed them up to give this
18 company flexibility to operate in a positive way
19 with its franchisors and other partners. It created
20 $20 million of EBITDA that could be utilized to
21 support whatever was negotiated with Midland with
22 regard to the fair value of its collateral which I
23 as a bankruptcy professional believe they're
24 entitled to in a plan of restructuring context. And
25 I thought this was actually, in my view, in the best
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1 Marc A. Beilinson
2 interest of the bankruptcy, the future bankruptcy
3 estate and in the best interest of other
4 participants.
5 MR. PARKINS: Nonresponsive.
6 BY MR. PARKINS:
7 Q My question is: Did you ask Midland
8 whether it was okay to make a proposal where it
9 wiped out 250 to 425 million of their debt before
10 you made it?
12 answered. You can answer.
13 BY MR. PARKINS:
14 Q Your answer was nonresponsive so I'm
15 asking you again.
16 Did you talk to Midland whether it was
17 okay to make this proposal with respect to its debt?
19 answered. You can answer again.
20 A I did not talk to Midland with regard
21 to --
22 Q This proposal?
23 A -- this proposal.
24 Q How about with respect to the other
25 pools, did you talk to anybody else in the other
34 (Pages 130 to 133)
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1 Marc A. Beilinson
2 pools with respect to whether it was okay to make
3 this proposal as their fiduciary?
4 A I don't believe I have an obligation
5 as a fiduciary to talk to other pools with regard to
6 this proposal in advance of making the proposal.
7 MR. DONOVAN: Is it a good time to
8 take a lunch break, it's 12:15.
9 MR. PARKINS: I've got one more
10 document I think would be good to go through
11 and then we can take a break. I think
12 they'll tie together.
14 (Document titled Project Tavern -
15 Midland Discussion Materials dated April 28,
16 2010 marked as Exhibit 16, as of this date.)
17 BY MR. PARKINS:
18 Q I'd ask you to look at Exhibit 16,
19 it's a document dated April 28, 2010, on Moelis
20 we'll call it letterhead, Project Tavern, Midland
21 Discussion Materials; do you see it?
22 A Yes.
23 Q Did you authorize Moelis to prepare
24 this document?
25 A Yes. And, in fact, I think I was
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1 Marc A. Beilinson
2 involved in the preparation of this document
3 together with management.
4 Q Was there a meeting with Midland on or
5 about April 28, 2010?
6 A I'm not good with dates, but I think
7 that was probably the time period.
8 Q And that was, it looks like, about six
9 days after the meeting that likely occurred with
10 respect to Exhibit 15.
11 A That's probably about right.
12 Q Okay. Now, as I go through this
13 document, I don't see any sheets in here which
14 reflect the proposal you made to Lehman of how
15 you're going to deal with Midland's debt, am I
16 missing something here?
17 A No. The purpose of this meeting was
18 to try to assess what Midland's views were with
19 regard to a restructuring of their debt.
20 Q But there's no -- the treatment that
21 you had proposed to Lehman in an offer to Lehman six
22 days ago with respect to Midland's debt is not in
23 here?
24 A It wasn't an offer to Lehman, it was a
25 discussion piece which laid out a structure that I'd
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1 Marc A. Beilinson
2 like them to consider. So on April 27 -- 22nd I put
3 out to Lehman a discussion piece so we could talk
4 through issues and discuss whether there was any
5 kind of mutuality to move forward in a relationship.
6 Q Did you tell anybody from Midland at
7 the meeting on or about April 28 that six days
8 earlier you had expressed some vision to Lehman
9 about how their indebtedness would be treated?
10 A No, because I didn't think it was
11 anything other than a discussion piece and really my
12 goal was, this was the first time that I could meet
13 with Midland because, as you know, there was a
14 general service rep until a few days before this, so
15 Wachovia was there. All of a sudden in the middle
16 of the debtors' crisis with value destructive events
17 occurring around me with regard to Marriott and
18 potential deflaggings and default notices, a
19 liquidity crisis in an environment with RevPAR
20 defining at a substantial rate, okay, I then have to
21 switch over and start talking to someone who has
22 never been involved with Innkeepers before, a
23 special servicer who has never heard of Innkeepers
24 before. So when I make that switchover in a
25 three-day period of time, it's important for me to
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1 Marc A. Beilinson
2 educate the special servicer as to what the
3 circumstances are with regard to their collateral,
4 what the circumstances are with regard to their
5 borrower, what the circumstances are with regard to
6 Innkeepers, and begin a dialogue as to how we're
7 going to handle this crisis together.
8 Q And you don't --
9 A Because that's the way I view it.
10 Q And you don't think that at the time
11 you met Midland that it was appropriate to advise it
12 six days earlier you had put together a suggestion
13 of a restructure which eliminated the 250 and 425
14 million dollars of their debt?
15 A No, because what I did with Lehman --
16 well, first of all, I was subject to I believe a
17 confidentiality agreement. It was a meeting to
18 discuss resolution of our claims, and if you'd
19 notice, those values were all bracketed.
20 Q You're a fiduciary for --
21 A Those were all bracketed numbers.
22 Q At that time you were the fiduciary
23 for the Lehman debtors and the Midland debtors at
24 the same time?
25 A I was a fiduciary for an integrated
35 (Pages 134 to 137)
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1 Marc A. Beilinson
2 enterprise which had a number of lenders, one of
3 which being Midland, one of them, you know, being a
4 number of different lenders. So it's an integrated
5 enterprise that I'm the fiduciary for for the
6 benefit of everyone. And my goal has always been to
7 ensure that Midland gets a note for the value of
8 their collateral, which is exactly what the
9 Bankruptcy Code tells a fiduciary in a bankruptcy
10 estate is the lender's right. So I want to protect
11 the lender's right to do it, and one of the ways I
12 was doing it was by creating the equitization of the
13 Lehman portfolio. So yes, I believe I was acting in
14 my fiduciary best interest on behalf of all
15 constituents of this estate.
16 Q So as a fiduciary for Midland, which
17 is the largest creditor of these estates; is that
18 correct?
19 A I am not a fiduciary for Midland.
20 Q Are you a fiduciary for --
21 A I'm a fiduciary --
22 MR. DONOVAN: Let him finish.
23 A -- for an integrated enterprise which
24 is Innkeepers USA, one lender of is Midland.
25 Q Are you a fiduciary for the creditors
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1 Marc A. Beilinson
2 of this estate?
3 A I'm a fiduciary for the entire corpus
4 including the creditors.
5 Q My question is: Are you including the
6 creditors?
7 A Yeah.
8 Q So Midland is the largest creditor?
9 A Yes, they are.
10 Q Okay. And as fiduciary for Midland,
11 the largest creditor, when you met with them six
12 days after your Lehman meeting in that capacity as
13 fiduciary, it was okay for you not to disclose you
14 were thinking of reducing their debt between 250 and
15 425 million dollars?
16 A Absolutely. At that meeting, we
17 actually discussed the reduction of their debt. In
18 that meeting they asked Bill Derrough of Moelis &
19 Company what he believed the value of their claim
20 would be, and I believe his response was somewhere
21 in the high 4's, maybe you could get to a low 5
22 number. Middle 4's I believe his was, and maybe the
23 low 5's. And the business participants on Midland
24 actually said at that meeting that they knew they
25 were substantially under water, they looked at other
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1 Marc A. Beilinson
2 transactions, and that everyone knew that a 2007
3 transaction in this marketplace was somewhere in the
4 range of 35 to 50 percent under water. So this
5 isn't a shocking revelation, this was a revelation
6 that was accepted by Midland and discussed --
7 Q And this is when --
8 MR. DONOVAN: Let him finish, please.
9 BY MR. PARKINS:
10 Q Are you done?
11 A It was discussed with Midland at our
12 first meeting.
13 Q Did you discuss when meeting the
14 honest fact that you met with Lehman six days
15 earlier and made this overture to Lehman, yes or no?
16 A I told them that I had met with Lehman
17 and we were discussing alternatives with them just
18 as I wanted to do with Midland.
19 Q Did you tell them you made this
20 restructuring proposal to Lehman, yes or no?
21 A No, I did not because this was a
22 thought process.
23 Q After you made this Lehman proposal,
24 or restructuring proposal to Lehman, did you go shop
25 this proposal with any other creditors of the debtor
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1 Marc A. Beilinson
2 to do a better deal?
3 A Well, the only other creditor in a
4 position that had a substantial amount of assets
5 that could be converted was Midland. And, as I said
6 earlier, I didn't believe that Midland had an
7 interest in converting their debt to equity, which
8 actually has proven to be accurate in the fact that
9 Kevin Simone told me even last week that they never
10 had an interest, nor could they take equity. So
11 there was only one party I could shop it within the
12 internal structure to and that party had no
13 interest.
14 Q Did you approach any creditor
15 constituency asking them to look at this Lehman
16 suggested proposal you made and come up with a
17 structure to address the issues you had and to
18 compete with the Lehman proposal?
19 A I talked to creditors about all sorts
20 of things.
21 Q Did you take these pages of the Lehman
22 presentation and show them to creditors and say:
23 This is the end result I want, can we do better than
24 that, can you come up with something better than
25 that?
36 (Pages 138 to 141)
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1 Marc A. Beilinson
2 A No, not at that time.
3 Q Have you shown this proposal to anyone
4 else other than the fact that it was filed with the
5 court prior to the filing of this stuff with the
6 court?
7 A No.
8 Q Did you since the bankruptcy filing,
9 okay, talk to third parties, not creditors, about
10 doing a better transaction or an alternative
11 transaction of this Lehman proposal?
12 A Yes.
13 Q And have you offered them due
14 diligence access in order to make a proposal?
15 A No, because none of the proposals were
16 in my business judgment better or viable or
17 accretive as a fiduciary to this bankruptcy estate.
18 Q You have experience as a bankruptcy
19 lawyer, how do I make proposal to acquire a company
20 unless I get due diligence first?
21 A You know, my obligation as a fiduciary
22 is to do an internal restructuring. The Bankruptcy
23 Code, as you know, was set up so that I have an
24 exclusive period of time to negotiate within the
25 capital structure to propose a plan that could be
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1 Marc A. Beilinson
2 accepted or rejected by creditors and they have to
3 meet the confirmation requirements set forth in
4 1129(a) or (b) of the Bankruptcy Code.
5 I believe that we have an internal
6 restructuring that meets all the requirements of
7 1129, is confirmable and in the best interest of
8 this bankruptcy estate in the exercise of my
9 fiduciary duty. And I tend to move forward unless a
10 transaction presents itself that I believe as a
11 fiduciary is better. I haven't --
12 Q Better for you or better for Lehman,
13 sir?
14 A Better for the bankruptcy estate.
15 Q Is that what your document says?
16 A Yes.
17 Q Again, have you created a due
18 diligence room for third-party non-creditor entities
19 to go do due diligence in order to make a proposal?
20 A No. I'm in my exclusive period where
21 I intend to fulfill my obligations under the PSA to
22 file an internal plan of reorganization for the
23 enterprise and will allow Midland and others to
24 object to confirmation and to vote to accept or
25 reject the plan. I, unlike others, don't believe
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1 Marc A. Beilinson
2 that this is going to end up being a non-consensual
3 resolution with Midland. I think this is part of
4 the process, including my deposition being taken by
5 you, and that we'll enter into negotiated
6 resolutions at some point in time, whether it's
7 today or two months from now.
8 Q So at the present time you reject the
9 concept of shopping this company to get a different
10 alternative transaction?
11 A I don't think that's a requirement
12 under the Bankruptcy Code or even during my
13 exclusive period of time and I don't think that's in
14 the best interest of this bankruptcy estate.
15 Q So the answer is yes, you reject that
16 proposition?
17 MR. DONOVAN: Asked and answered. His
18 answer stands.
19 BY MR. PARKINS:
20 Q That's how you view your fiduciary
21 duty, to just go with this deal and no other
22 alternative deal at this time?
23 MR. DONOVAN: Object. Objection to
24 form.
25 THE WITNESS: How about a lunch break?
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1 Marc A. Beilinson
2 MR. PARKINS: Yeah.
4 MR. DONOVAN: We're going to take
5 lunch now. We're taking a lunch break.
6 Off the record.
8 (Whereupon, lunch recess 12:29 p.m.)
9
10
11
12
13
14
15
16
17
18
19
20
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37 (Pages 142 to 145)
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1 Marc A. Beilinson
2 A F T E R N O O N S E S S I O N
3 (Whereupon, resumed 1:17 p.m.)
4 (Amended Declaration of Dennis Craven,
5 Chief Financial Officer of Innkeepers USA
6 Trust, in Support of First-Day Pleadings
8 BY MR. PARKINS:
9 Q Mr. Beilinson, I've handed you a
10 document marked as Exhibit 17. It's entitled
11 the Amended Declaration of Dennis Craven, Chief
12 Financial Officer of Innkeepers USA Trust, in
13 Support of First-Day Pleadings. I will tell you it
14 doesn't have the 12 inches of exhibits attached to
15 it, it is just the Declaration itself. It had all
16 the -- a lot of exhibits to it, about 12 inches
17 worth, but I'm not interested in the exhibits.
18 Have you looked at this Declaration?
19 A Not recently, but before it was filed.
20 Q Okay. I'd like you to look with me at
21 Paragraph 14.
22 A (Complies.)
23 Q I asked you to look at Paragraph 14
24 because I want to ask you about it, please.
25 A (Complies.)
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1 Marc A. Beilinson
2 I've reviewed it.
3 Q Okay. The first sentence of Paragraph
4 14 says: The Debtors' proposed restructuring is
5 supported by its significant stakeholders, including
6 Marriott and Lehman, and constitutes an integrated,
7 global resolution among the Debtors and these
8 parties.
9 A Yes.
10 Q Now I have read in recent days an
11 issue that has arisen with respect to Marriott with
12 respect to a franchise hotel in Troy, Michigan; is
13 that correct?
15 Q Okay. And, as I understand it, the
16 termination of a franchise by Marriott would be a
17 triggering of a termination event over these various
18 agreements before the court?
20 Q The termination of a franchise would
21 not be a triggering event, a termination event?
22 A With regard to all of these exhibits,
23 no, that's not correct.
24 Q I guess I'd ask you to look at
25 Exhibit 3.
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1 Marc A. Beilinson
2 MR. DONOVAN: Do you want the motion
3 or the actual agreement?
4 MR. PARKINS: The actual agreement.
5 MR. DONOVAN: That's 4.
6 MR. PARKINS: Sorry.
7 BY MR. PARKINS:
8 Q And I'd ask you to look at the Term
9 Sheet.
10 A Which Term Sheet?
11 Q Well, the Term Sheet for the PSA, the
12 Plan Term Sheet.
13 A Okay.
14 Q Illustrative Terms of Proposed
15 Restructuring July 17, 2010.
16 A Okay.
17 Q It's early on in the document. First
18 you have the PSA and then you have the Term Sheet
19 attached to it.
20 I'd ask you to look at page 8 of the
21 Term Sheet. It looks like this. You'll see the
22 Term Sheet. You're too deep in the document.
23 A Okay.
24 Q Under Termination Events Under PSA and
25 Use of Cash Collateral, in E there seems to say:
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1 Marc A. Beilinson
2 The entry of a Bankruptcy Court order granting
3 relief from the automatic stay, Romanette double ii,
4 to permit termination of any franchise agreement
5 with Marriott or any other hotel brand.
6 MR. DONOVAN: I object. I don't think
7 you're reading the whole thing correctly.
8 A Okay. So provision E on page 8 says:
9 The entry order of any order of the Bankruptcy Court
10 granting relief from automatic stay (ii) to permit
11 termination of any franchise agreement, yeah, that
12 is an accurate reading.
13 Q Uhm?
14 A That's accurate.
15 Q Okay.
16 MR. DONOVAN: And you only focused
17 on -- I'm sorry.
18 BY MR. PARKINS:
19 Q Now, in response to the motion for
20 relief from stay I see that the company has filed a
21 motion to assume that agreement.
22 A I believe that's correct.
23 Q Okay. Has there been dialogue with
24 respect to this issue between you and Marriott,
25 because obviously this is a triggering event and a
38 (Pages 146 to 149)
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1 Marc A. Beilinson
2 termination event of this agreement to try to
3 resolve or is it going to go to litigation?
4 A I always try to resolve all issues.
5 Q Have you had a dialogue with anybody
6 from Marriott?
7 A Of course.
8 Q And what's the status of that
9 dialogue?
10 A We've agreed to disagree with regard
11 to Marriott at this point in time and continue
12 trying to come up with a resolution which is
13 accretive to the bankruptcy estate and Marriott.
14 Q All right.
15 MR. DONOVAN: Mr. Parkins, just so
16 it's clear, were you suggesting that the
17 Troy, Michigan hotel was in the floating rate
18 pool?
19 MR. PARKINS: I'm sorry? This is a
20 floating rate pool.
21 MR. DONOVAN: That's what I was
22 confused by. This was my confusion and I
23 think the record might just be -- I think you
24 were asking about the floating rate pool and
25 I don't think he says floating rate pool.
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1 Marc A. Beilinson
2 MR. PARKINS: What I'm asking is:
3 Does he know whether this is a termination
4 event.
5 MR. DONOVAN: If you know.
6 A It's a termination event that could
7 actually be waived if Lehman so chooses.
8 Q It's also a termination event, as I
9 recall, under the Five Mile DIP that any franchise
10 is terminated, isn't it?
11 A I don't believe that's accurate that a
12 termination of a franchise in the floating rate pool
13 would not be a termination event with regards to the
14 Five Mile pool or with a Five Mile -- in connection
15 with a Five Mile DIP.
16 Q Okay. In Exhibit 4, which is the Plan
17 Support Agreement, I would like to look at, I think
18 it is Paragraph No. 11, Section 11, please.
19 A (Complies.) Okay.
20 Q Okay. Do you want to read it or are
21 you familiar with it?
22 A Sure. (Reads.)
24 Q Okay. As I understand it, looking at
25 the language right after the definition of Effective
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1 Marc A. Beilinson
2 Date in Paragraph 11, the proviso?
3 A Uh-hum.
4 Q That it says that this agreement shall
5 not be binding on Lehman unless and until a number
6 of events occur, one of them is that it be approved
7 by the Lehman Bankruptcy Court?
8 A That is correct.
9 Q Is that your understanding that it's
10 not binding on Lehman today?
12 A That's probably accurate.
13 Q Okay. With respect to these
14 companies, the debtors, you're seeking court
15 approval of this transaction also, correct?
17 Q Okay. Do you believe it's binding on
18 you today until court approval is obtained?
19 A It's an interesting issue. In other
20 words, my view is it's an executory contract that I
21 entered into and therefore until there's an
22 assumption of rejection, it is binding upon me.
23 It's an interesting issue as to whether I view it
24 the same way with regard to the binding nature upon
25 Lehman since this was made subject to their
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1 Marc A. Beilinson
2 Bankruptcy Court approval and their bankruptcy had
3 already been commenced, so it's an interesting
4 issue.
5 Q So you believe it's binding on the
6 debtors now?
7 A Yes, I do.
8 Q It is binding on the debtors if you
9 choose to make it binding on the debtors, correct?
10 A Well, I could seek to reject an
11 executory contract and thereby make it an unsecured
12 claim that would give them damages. But, as I know,
13 I'm seeking to assume it in the bankruptcy case.
14 Q Look with me at Section 4.
15 A Sure.
16 Q You need to keep your finger on
17 Section 11 to go back to the definition of Effective
18 Date because Section 4 speaks to the effective date.
19 A Section 4?
20 Q Section 4, Support of the Transaction;
21 Additional Covenants.
22 A Okay.
23 Q Take a look at it, please.
24 A (Complies.)
25 Do you want me to review 4(a) or 4(b)
39 (Pages 150 to 153)
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1 Marc A. Beilinson
2 and (c) also?
3 Q 4(a).
4 A Okay, I've reviewed it.
5 Q Okay. You already just testified that
6 you believe this agreement is effective and that the
7 debtor is bound by this agreement at this time,
8 correct?
9 A I said it's an interesting issue. I
10 think it's an executory contract that until
11 assumption and rejection gives me an option to go
12 either way, I think that's probably more accurate.
13 Q Are you treating this as an effective
14 agreement now where the debtor is performing under?
15 A I'm treating it as an effective
16 agreement.
17 Q So you agree you're bound by the
18 provisions of Section 4(a) double i and triple i
19 then?
21 A I guess I'm bound by it so long as I
22 don't exercise a fiduciary out.
23 Q And a fiduciary out --
24 A And, by the way, I want to make it
25 clear, I'm not sure if it's legal, I mean, I've got
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1 Marc A. Beilinson
2 lawyers around me that will tell me whether it's a
3 legal or a practical obligation, but I personally
4 feel bound whether that's an oral bound or a legal
5 bound.
6 Q Okay. The fiduciary out that's
7 contained in Section 25.
8 A I'm there.
9 Q Could you look at Section 25(a), (b)
10 and (c) because I want to ask you about them?
11 A I'll take a look at them.
12 Q Take a look at them, please.
13 A (Complies.)
15 Q What is in your mind a firm
16 alternative transaction?
17 A A transaction that in my business
18 judgment is a proposal that has a reasonably good
19 degree of likelihood that it's workable in every
20 respect.
21 Q In what? I'm sorry, I didn't hear
22 you.
23 A That's workable in every respect.
24 Q So a proposal where all unsecured
25 creditors get back their property is an alternative
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2 transaction that would work under the Bankruptcy
3 Code under 1129, you spoke about 1129 earlier.
4 A Yeah, I don't think that would fall
5 within my business judgment as what's in the benefit
6 of this bankruptcy estate.
7 Q Okay. But it's workable?
8 A That was only part of the test, after
9 I believed that the alternative transaction was one
10 that was in the best interest of the bankruptcy
11 estate. I also then have to make a determination
12 that the contingencies and viability of such a
13 proposal create a potential likelihood that it could
14 be successful, so it's a multi-test, multipart test.
15 Q Well, if 1.2 of the $1.4 billion of
16 the creditors of these estates wanted that to happen
17 in the context of an alternative plan of
18 reorganization, it can happen then, can it?
19 A It can happen during the exclusive
20 period if I don't believe it's in the best interest
21 of this business enterprise.
22 Q And the best interest of the business
23 enterprise ends up being in the best interest of the
24 person who owns that enterprise; isn't that true?
25 A No.
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1 Marc A. Beilinson
3 BY MR. PARKINS:
4 Q Okay. It's not the best interest of
5 the business enterprise doesn't inure to the equity
6 owners of that enterprise then?
7 A No.
8 Q Okay.
9 A I have made it very, very clear on
10 April 28th when I met with Midland the first time
11 that Apollo was going to be receiving in any of its
12 forms no consideration on account of any of its
13 pre-petition rights in connection with Innkeepers.
14 Q I'm talking about Lehman. Lehman will
15 inure to the upside as a result of this -- as a
16 result of the enterprise being restructured that you
17 suggest, isn't it the case?
18 A What's the question, I'm confused?
19 Q The benefit, the upside in the
20 business enterprise under the transaction you
21 propose inures to Lehman if the companies are
22 successful, correct?
23 A The economic results of the ownership
24 of a hundred percent of the stock will inure to the
25 benefit or the detriment of the holder of that
40 (Pages 154 to 157)
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1 Marc A. Beilinson
2 equity. It is certainly not just an upside
3 potential as evidenced by Apollo losing
4 $250 million.
5 Q And is it true, is it not, that in the
6 presentations you have made, whether to Lehman or to
7 Midland, that the company projects that it will take
8 three or four years for these hotels to turn around
9 and start performing in a more normalized fashion;
10 is that correct?
11 A I don't know what you mean by a more
12 normalized fashion after three or four years, if you
13 could be more specific, I'm happy to give a direct
14 response.
15 Q Well, do you think these hotels
16 performance will turn around significantly in the
17 next three or four years?
19 A I believe that there is upside
20 potential and I do believe that there will be an
21 increase in RevPAR, R-e-v-P-A-R, over time.
22 Q Look at Exhibit 16, if you would.
23 A Okay.
24 Q Look with me on page 12.
25 A Okay.
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1 Marc A. Beilinson
2 Q Okay. The first paragraph: In this
3 presentation we are running a scenario where
4 projections have been developed on a hotel-by-hotel
5 basis for the portfolio. Management estimates
6 financial performance will not return to 2007 levels
7 for at least four to six years. Describe what the
8 2007 levels performance were.
9 A They were -- they were certainly
10 actually better than they are today and I think that
11 this statement probably reflects my view, right,
12 which is, in five or six years they'll get back to
13 historic highs which was essentially in 2007.
14 Q So do you believe that the performance
15 of the hotels will gradually increase over the next
16 years?
17 A I hope so.
18 Q Okay. That's your estimate of
19 financial performance, do you think it will just be
20 a one-time shot or it will increase gradually?
21 A I think it will be extremely gradual.
22 Q Okay.
23 A There will be potentially some going
24 backwards before it goes forward again.
25 Q Are you aware that the Lehman-Apollo
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1 Marc A. Beilinson
2 transaction contemplates an IPO three years after
3 the effective date of the plan?
4 A No.
5 Q You haven't read that transaction
6 documents?
7 A I have not read the Apollo-Lehman
8 transaction document in full.
9 Q All right. In your judgment, how much
10 higher and better does an alternative transaction
11 have to be for Lehman before you will exercise your
12 rights under Section 25(c)?
14 A You're just referring to 25(c)?
15 Q Yes.
16 A Just higher better in my business
17 judgment, no quantitative amount.
18 Q What if it's better for all the other
19 creditors and not as good for Lehman, what will you
20 do?
21 A If it's better for the bankruptcy
22 estate, I'll exercise my fiduciary out.
23 Q And you think this document let's you
24 do that?
25 A Yes, I do.
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1 Marc A. Beilinson
2 Q Okay. Can you point me to the
3 provision that says you can do that, if it's worse
4 for Lehman, if it's worse for Lehman you think you
5 can exercise your fiduciary out?
6 A Yes.
7 MR. DONOVAN: Asked and answered.
8 BY MR. PARKINS:
9 Q Okay. If that's what you think this
10 document says, we'll proceed.
11 So if a transaction were better for
12 Midland than proposed under this transaction, and
13 worse for Lehman, you're going to look at this as an
14 enterprise or you're going to look at it by creditor
15 for whom you are fiduciary?
16 A I'm a fiduciary for the corporate
17 which is an integrated enterprise and will look at
18 what's in the best interest of the estate.
19 Q The estate, there are 70 estates.
20 A I understand that.
21 Q Okay? So for the estates of the
22 Midland debtors, are you going to look out for the
23 interest of the Midland debtors' estates or the
24 Apollo or the other Lehman debtors' estates, which
25 ones?
41 (Pages 158 to 161)
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1 Marc A. Beilinson
2 A All of them.
3 Q And if there's a conflict, how do you
4 resolve that?
5 A Use my best business judgment.
6 Q You resolve conflicts by business
7 judgment?
8 A Yeah. And if there's --
10 the form. I think --
11 MR. PARKINS: I'm sorry?
13 the form. I think it depends what you're
14 referring to as a conflict there.
15 BY MR. PARKINS:
16 Q Well, conflict, it's better for
17 Midland and worse for Lehman, for those debtors, the
18 Midland debtors and the Lehman tranche or Lehman
19 pool, how does that get worked out in your mind?
20 A If I'm faced with those issues, I'll
21 deal with them at the time that a particular issue
22 is faced, and I'll deal with it accordingly.
23 Q If a motion to determine exclusivity
24 were filed by someone who had a better proposal for
25 every pool of debt but Lehman, would you agree to
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1 Marc A. Beilinson
2 that --
3 MR. DONOVAN: Objection --
4 Q -- termination of exclusivity?
6 Form.
7 A I'm not going to prejudge what a
8 proposal looks like. If I happen to get one, I'll
9 look at it, and make a business judgment at the
10 time.
11 Q Does the proposal have to be the firm
12 alternative transaction you described earlier?
13 A No. I think I've made it clear that
14 Section 25 sub (a) is a fiduciary out that I can
15 exercise in my business judgment.
16 Q And, therefore, since you are not
17 saying you won't engage in the dialogue, will you
18 engage in a dialogue after people do due diligence?
19 A No. Right now I believe that this
20 integrated PSA that has Marriott on board, two DIP
21 lenders on board, to do an internal restructuring of
22 this enterprise is clearly in the best interest of
23 the bankruptcy estate. I intend to move forward and
24 file a plan in the next 30 days that all creditor
25 constituencies can then look at, consent to, object
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1 Marc A. Beilinson
2 to, negotiate with me and have their rights under
3 1129. So at this point in time I see no reason to
4 move forward with anything other than an internal
5 restructuring of this enterprise.
6 Q You say two DIP lenders in support of
7 the transaction, you include Five Mile in that; is
8 that correct?
9 A Well, they support doing the DIP for
10 purposes of protecting the value of the fixed pool
11 portfolios and two others.
12 Q In fact, in the context of the
13 negotiations with Five Mile for the DIP, you didn't
14 tell them until right before the filing that there
15 was a Lehman transaction in place, did you?
16 A No, I told them before the
17 transaction, before --
18 Q Just before?
19 A Before they executed the transaction.
20 Q Just before?
21 A What's your point?
22 Q My question is you told them just
23 before, not during the four months or the month
24 before the DIP was being negotiated, you didn't tell
25 them there was a Lehman transaction in play.
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2 A That was a few days before the
3 transaction.
4 Q Okay. You're not saying that Five
5 Mile is in support of this transaction?
6 A No, I think Five Mile is in support of
7 the DIP which eliminates a value disruptive event
8 with regard to the fixed rate pool and, you know,
9 they understand that's helping preserve their value
10 as a controlling class of that entity. I think
11 that's what they're supportive of.
12 Q So, as I understand your testimony,
13 with respect to the Five Mile DIP, they're putting
14 it in to fund the PIPs for the fixed rate pool
15 primarily --
16 A Primarily.
17 Q -- right?
18 Primarily. And to preserve value of
19 that --
20 A Yes.
21 Q -- right?
22 Value which you say over time will
23 increase, correct?
24 You said the hotel performance will
25 increase over time, right?
42 (Pages 162 to 165)
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1 Marc A. Beilinson
2 A I hope so.
3 Q And that increase in value is not
4 going to go to the creditors of the fixed rate pool
5 under your plan, it's going to Lehman, isn't it?
6 A No. I think we have to look at this
7 at the time of plan confirmation, and I have an
8 obligation to provide you with a value of your
9 secured claim, at that time. So you will be getting
10 a hundred percent of the value of your collateral,
11 which is what the Bankruptcy Code tells me how I'm
12 supposed to treat you, and I'm giving it to you in
13 the best form of consideration possible, which is a
14 fully secured note in a company that has free cash
15 to support that note. That's much better than most
16 fiduciary or CRO's would do, they'd be looking at
17 giving you lesser quality types of consideration.
18 Q Doesn't the Bankruptcy Code as you
19 understand it, since you're talking about it with
20 me, also provide that for the deficiency claim a
21 secured creditor gets other consideration like the
22 equity upside if it chooses to get that in the
23 ownership of those assets?
24 A No.
25 Q That equity upside should go to
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2 someone else in this transaction that you're
3 proposing here?
4 A I think when that party is averting to
5 it 200 million plus of debt to equity, they deserve,
6 with the additional risk that they're taking,
7 potentially an upside, but potentially a downside,
8 and it always surprises me in this uncertain economy
9 that people still only look at upside possibilities
10 versus downside risk.
11 MR. PARKINS: Give me a second.
12 Pass the witness.
13 MR. DONOVAN: Who's next?
14 MR. MEYERS: I'm going to ask
15 questions but let's take five minutes before
16 we start.
17 MR. DONOVAN: All right.
20 EXAMINATION BY
21 MR. MEYERS:
22 Q Mr. Beilinson, my name is Todd Meyers
23 with Kilpatrick Stockton and I represent Trimont
24 Real Estate Advisors. Trimont is one of the secured
25 lenders in this case.
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1 Marc A. Beilinson
2 Let me remind you, you're still under
3 oath. The same rules that applied when you were
4 being questioned by Mr. Parkins would apply here,
5 okay?
6 A Sure.
7 Q Now, you are here today testifying on
8 behalf of all of the debtors; is that correct?
9 A Sure.
10 Q Okay. I believe your Exhibit 1, your
11 Notice of Deposition, said that you would be here as
12 the 30(b)(6) witness for the debtors, which would be
13 all of the debtors, do you understand that?
14 A I don't really understand what a
15 30(b)(6) deposition is but I think I'm here on
16 behalf of the integrated estate.
17 Q Okay. I know you testified to be the
18 CRO for the debtors; is that correct?
20 Q Are you the CRO for each and every
21 debtor in this case?
22 A I think I testified I'm not sure who
23 the officers or directors are of each and every
24 entity but I consider myself the CRO of all entries.
25 Q And you consider yourself acting in
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1 Marc A. Beilinson
2 the best interests of all of the entries?
3 A Yes.
4 Q Would you pull Exhibit 2, which is the
5 color chart?
6 A I have it.
7 Q I'm primarily interested in the two
8 branches on this chart which have a yellow box,
9 okay?
10 A I see that.
11 Q I am, because Trimont is involved in
12 those two branches, if you will. I'm going to try
13 not to repeat the questions Mr. Parkins asked you, I
14 couldn't hear all the answers but --
15 A That's okay.
16 Q -- hopefully I'll avoid duplication
17 because I'm primarily focused here.
18 If you start with the third branch
19 over from the left, which has the yellow box Grand
20 Prix Mezz Borrower Term LLC, do you see that?
21 A Yes.
22 Q Let's talk about that for a minute.
23 Do you understand that KPA HS Anaheim,
24 LLC is one of the debtors in this case, correct?
25 It's below that in the green box.
43 (Pages 166 to 169)
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1 Marc A. Beilinson
2 A Yes.
3 Q Okay. And that entity owns a Hilton
4 hotel in Anaheim, correct?
5 A I believe that's accurate.
6 Q Okay. And the mortgage debt on that
7 property is approximately 13.7 million, correct?
8 A That's correct.
9 Q And it says here that CW Capital is
10 the special servicer for that property level loan,
11 is that your understanding?
12 A Yes.
13 Q Now, above KPA HS Anaheim, LLC is a
14 yellow box with an entity Grand Prix Mezz Borrower
15 Term LLC, do you see that?
16 A Yes.
17 Q And Grand Priz Mezz Borrower Term LLC
18 owns a hundred percent of the membership interest of
19 KPA HS Anaheim, LLC, correct?
20 A Yes.
21 Q Okay. And it is correct, isn't it,
22 that Grand Prix Mezz Borrower Term LLC is the
23 borrower under a $21.3 million loan which is
24 referred to on this chart as the Anaheim Lehman
25 Mezzanine Loan, correct?
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1 Marc A. Beilinson
2 A I think that's the right entity.
3 Q Okay. Now, it lists here CW Capital
4 as the special servicer. Isn't it true that Trimont
5 is actually the special servicer for that loan, or
6 do you not know?
7 A I think that's the case, but I would
8 have to take your representation.
9 Q Okay. For today's purposes I'll
10 represent that Trimont is the special servicer for
11 that particular loan.
12 A Thank you.
13 Q Now, with respect to the -- I'll refer
14 to the $21.3 million loan as the Anaheim Mezz Loan.
15 A Okay.
16 Q I think that's generally what it's
17 referred to in the debtors' papers, okay?
18 A Okay.
19 Q Now, do you understand that the --
20 that Lehman was the -- was originally and remains
21 nominally the lender on the Anaheim Mezz Loan?
22 A I don't know if I have an
23 understanding as to whether they're a lender or a
24 nominal lender or owns the lender or is a borrower
25 or whatever.
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1 Marc A. Beilinson
2 Q Okay. Are you aware that a hundred
3 percent of the beneficial interests in that loan
4 have been sold into a CDO?
5 A No.
6 Q As you sit here today, do you know
7 whether Lehman has the consent rights with respect
8 to the treatment of that loan?
9 A No.
10 Q All right. Look at the -- immediately
11 to the left of that, there's another branch. You'll
12 see at the bottom it says Fee Owners/Ground Lessees
13 (20 LLCs). Now that is to represent 20 debtors each
14 of which owns a particular hotel, correct?
15 A I think that's accurate.
16 Q And generally that's referred to,
17 those are referred to as the floating rate debtors?
19 Q Okay. And each of those debtors is
20 jointly obligated on a loan to Lehman in the
21 approximate amount originally of $238 million,
22 correct?
24 Q Okay. Can you explain why that's not
25 correct?
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1 Marc A. Beilinson
2 A I think that the obligation is now
3 $238 million, I think originally it was 250.
4 Q So the 238 represents your
5 understanding of the current unpaid principal
6 balance of that loan?
7 A Yes.
8 Q Now, and the collateral for that loan
9 are each of the hotels within that that are owned by
10 each of those 20 entities, correct?
11 A There are 20 hotels which
12 collateralize the $238 million obligation.
13 Q Okay. And that is the loan we've been
14 talking about at length today that Lehman is going
15 to convert to equity under the plan that's
16 contemplated in the Plan Support Agreement, correct?
18 Q Now, above this, the green box we just
19 discussed is Grand Prix Mezz Borrower Floating 2,
20 LLC, do you see that?
21 A Yes.
22 Q And is your understanding that Grand
23 Prix Mezz Borrower Floating 2, LLC owns 100 percent
24 of the membership interests in each of the 20
25 property owning LLCs in the floating rate pool?
44 (Pages 170 to 173)
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1 Marc A. Beilinson
3 Q And do you understand that Grand Prix
4 Mezz Borrower Floating 2, LLC is the borrower under
5 a 121 million dollar loan that's referred to here as
6 the Floating Rate Lehman Mezzanine Loan?
7 A Yes, I believe that Innkeepers has
8 borrowed $121 million which it's collateralized by
9 an equity and trust in those 20 hotels.
10 Q So you've taken me one step further
11 which is the collateral for that loan. But just
12 before we get there. You said Innkeepers.
13 Technically speaking, Grand Prix Mezz Borrower
14 Floating 2, LLC is the borrower under that $121
15 million loan, correct?
16 A According to this chart, but, and I
17 assume that's accurate.
18 Q And, as you just alluded to, the
19 collateral for that loan is a pledge by Grand Prix
20 Mezz Borrower Floating 2, LLC of the membership
21 interest in the 20 property owning debtors, correct?
23 Q Okay. Now it lists here
24 Administrative Agent - Trimont. Do you understand
25 that Trimont is the special servicer for that
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1 Marc A. Beilinson
2 mezzanine loan, the $121 million loan?
3 A That's my understanding.
4 Q And since -- well, let me ask you
5 this: Are you aware of whether Lehman is the lender
6 under that $121 million loan either nominally or
7 actually?
8 A No.
9 Q Are you aware whether that loan has
10 been sold, the beneficial interest in that loan had
11 been sold into a CDO?
12 A I believe it was sold and now Lehman
13 retains various interests or its affiliates retain
14 various interests but don't really know what the
15 actual reality is.
16 Q Okay. Do you know one way or another
17 whether Lehman has consent rights with respect to
18 the treatment of that $121 million Floating Rate
19 Mezz Loan in this case?
20 A I don't believe, I think they told me
21 that they don't, but I don't have any independent
22 knowledge.
23 Q When I asked you that same question
24 with respect to Anaheim, you didn't know one way or
25 another, correct?
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1 Marc A. Beilinson
2 A That's correct.
3 Q But with respect to the Floating Rate
4 Mezzanine Loan you do have an understanding, based
5 at least on what Lehman has told you, which is that
6 they do not have consent rights?
7 A That's also correct.
8 Q Okay. When did Lehman tell you that
9 they don't have consent rights with respect to the
10 Floating Rate Mezzanine Loan?
11 A Sometime between April 22nd and July
12 19.
13 Q You can't be any more specific than
14 that?
15 A No.
16 Q We'll look at a couple documents in a
17 minute and try to see if we can narrow it down.
18 A Okay.
19 Q You said between April 22nd and the
20 filing date?
21 A Yes.
22 Q Actually, let's do it real quickly
23 now. Look at Exhibit 15, if you will.
25 Q All right. Now this is the Moelis
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1 Marc A. Beilinson
2 presentation materials from April 22nd that were
3 discussed earlier today, do you recall that?
4 A Yes.
5 Q Do you know whether there's any
6 mention in here of whether Lehman controls or has
7 the consent rights with respect to the Floating Rate
8 Mezzanine Loan?
9 A I don't believe there's anything in
10 this document that highlights whether they do or
11 don't have consent rights.
12 Q Okay. You don't know whether
13 there's -- I'm sorry, could you repeat your answer?
14 MR. MEYERS: Or can you repeat his
15 answer?
16 A I'm happy to.
17 I don't think there's anything in the
18 document that reflects whether I knew or didn't know
19 if Lehman had consent rights, at this time I believe
20 that I thought they did. At this time I believe
21 they did.
22 Q You believe that at this time they did
23 have consent rights?
24 A Yes.
25 Q Okay.
45 (Pages 174 to 177)
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1 Marc A. Beilinson
2 MR. DONOVAN: I think you misstated
3 his answer, I think he said at this time he
4 thought they did.
5 MR. MEYERS: Right.
6 BY MR. MEYERS:
7 Q Is that accurate what counsel just
8 stated? At this time --
9 MR. DONOVAN: Why don't you re-ask the
10 question?
11 BY MR. MEYERS:
12 Q We don't want to trick you.
13 A At the time in April 22nd I believe
14 that they had consent rights.
15 Q Okay. So when this model was prepared
16 for a meeting with Lehman to discuss this internal
17 restructuring, your understanding at that time was
18 that with respect to the floating rate mezz Lehman
19 controlled that, so it would sort of be part of the
20 global resolution with Lehman anyway?
21 A The answer is yes, but it wasn't
22 terribly material to me since I had a view with
23 regard to valuation that was well below the $238
24 million first, so I considered the mezz piece at all
25 times to be no different than the Apollo equity that
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1 Marc A. Beilinson
2 AIC owned or the Series A or Series C Preferred
3 stock. I viewed people who were out of the money as
4 out of the money. And when I was talking to Lehman,
5 I always told them that the mezz was out of the
6 money. So it wasn't really material to me whether
7 they had consent rights or not.
8 Q When you said you always told Lehman
9 the mezz was out of the money, do you mean the
10 Floating Rate Mezz or the Anaheim Mezz or both?
11 A Well, the Floating Rate Mezz. I
12 actually think the Anaheim Mezz actually has some
13 value which is over and above the value of the first
14 lien with regard to that property.
15 Q Okay. How much?
16 A Don't know. I mean, I haven't done a
17 final analysis of it, but it's not immaterial.
18 Q It could be more than 10 million?
20 Q Did you have that belief about the
21 Anaheim Mezz being in the money when this deal with
22 Lehman was negotiated?
23 A Yes.
24 Q Okay. But yet you understand that the
25 Term Sheet and the plan contemplated by the Term
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1 Marc A. Beilinson
2 Sheet says that the mezzanine debt will receive
3 nothing with respect to Anaheim?
4 A Well -- I don't think that's what I
5 contemplated. I'm not sure if that's what the Term
6 Sheet says.
7 Q So when you say that's not sure what
8 you contemplated, does that mean you're not sure
9 that's what you understand -- strike that.
10 A That isn't my understanding of the
11 Term Sheet without looking at it right now.
12 Q Without looking at it right now, your
13 understanding as the CRO of the debtors is that
14 there will be some value provided with respect to
15 the mezzanine loan on Anaheim?
16 A Why don't I go ahead and look at the
17 Term Sheet instead of guessing?
18 Q Okay.
19 A Can anyone tell me --
20 MR. DONOVAN: Exhibit 4.
21 THE WITNESS: Four?
22 A (Reviews.) It's a lot of paper.
23 Okay, I've refreshed my memory.
24 Q Okay. Based on refreshing your
25 recollection, do you believe that under the Term
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1 Marc A. Beilinson
2 Sheet and the plan contemplated thereby that the
3 Anaheim mezzanine lender will receive anything under
4 the plan?
5 A Yes.
6 Q Okay. Can you explain to me where you
7 see that?
8 A I believe the mezzanine debt that is
9 defined in the treatment of claims and equity and
10 trusts under the plan was intended to mean the
11 mezzanine lender debt, which is dealt with under
12 Footnote 1 of the Term Sheet, which involves the
13 Grand Prix Mezz Borrower Floating 2, which has a
14 security interest in the equity of the 20 hotels.
15 It was not intended to include the Anaheim Mezz debt
16 which would be included under other secured debt
17 since I view it as partially secured by virtue of
18 the fact that the property has a security interest,
19 the property's value is in excess of 13.3 million.
20 Q Okay. And when you made that
21 statement you talked about what was intended, does
22 that mean that there's a mistake in here or am I
23 misreading this?
24 MR. DONOVAN: Let me make an
25 alternative, too. I don't think you
46 (Pages 178 to 181)
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1 Marc A. Beilinson
2 necessarily mistake or misread, so objection
3 to form.
4 A I'm telling you that I believe this
5 document by virtue of Footnote 1 says exactly what I
6 intended it to say.
7 Q Okay. Look at page 2, look at where
8 you've got -- do you see the different boxes and
9 you've got one that's Mezzanine Debt? And it says:
10 The mezzanine debt defined term will be deemed
11 cancelled and the mezzanine lender will not retain
12 any property or interest on account of such debt
13 under the plan, do you see that?
14 A Hold on, give me one second. (Reads.)
15 Yeah, you know what, I think there
16 probably needs to be some clarification here, in my
17 view.
18 Q And why do you now come to that
19 conclusion?
20 A Well, since you think there's an
21 ambiguity, and I think there's no ambiguity, there
22 seems to be a need for clarification. So if there's
23 a need for clarification, let me go and do my job
24 and clarify it.
25 Q And we're all for that, we're all for
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1 Marc A. Beilinson
2 hearing how or what it was intended by this document
3 and correcting it. I'm just simply looking at
4 Footnote 1 which defines mezzanine lender to be the
5 lender in connection with the mezzanine loan with
6 respect to the collateral security in the floating
7 rate debt or the mezzanine loan with respect to the
8 Anaheim property, and that's collectively defined as
9 the mezzanine debt. Then you go to this page 2,
10 mezzanine debt gets nothing, that's how we read the
11 document. If that was not intended, we're all for
12 having that corrected.
13 A I appreciate the fact you pointed it
14 out to me, and as I will always do, if that's not
15 what I intended, I'll try to discuss it with my
16 partner to the PSA and have it revised to reflect
17 what I believe is a fair intention.
18 Q Okay. And that goes to my next
19 question: Do you know what Lehman understands to be
20 the treatment of the Anaheim Mezz debt under this
21 document?
22 A Lehman has to speak for themselves,
23 but I would be surprised if it wasn't some within
24 the realm of what I believe.
25 Q Well, were there any -- were there
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1 Marc A. Beilinson
2 ever any discussions in connection with the
3 negotiations that the Anaheim Mezz was, in fact, in
4 the money and needed to be dealt with under this
5 restructuring?
6 A I've always thought it was one of the
7 seven assets that would be dealt with with regard to
8 other secured claims. I think that was the
9 understanding of the parties. I'm sitting here in a
10 deposition and my partner to the PSA isn't here, but
11 I think that would be my belief as to our collective
12 understanding.
13 Q Okay. But you don't, sitting here
14 today, have any specific recollection of discussions
15 with Lehman in connection with the negotiations of
16 the Plan Support Agreement and Term Sheet that the
17 Anaheim Mezz was in the money and we had to deal
18 with that as another secured debt or something like
19 that?
20 A I had discussions with regard to every
21 topic, I'm sure I had discussions with regard to
22 that, too.
23 Q Okay. But it's possible that Lehman
24 has a different view which is the view that was what
25 we read this to say?
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1 Marc A. Beilinson
2 MR. DONOVAN: Objection. Objection to
3 form. You're speculating or asking him to
4 speculate.
5 BY MR. MEYERS:
6 Q You don't know what Lehman understands
7 to be the treatment of Anaheim Mezz as you sit here
8 today?
9 A I answered the question the best I
10 could 14 times.
11 Q Okay. Now -- all right. Back to the
12 floating rate mezz. You testified that you believe
13 that to be out of the money, correct?
14 A Absolutely.
15 Q And under this deal there's no
16 mistake, it's your understanding is that the
17 floating rate mezz will receive nothing under the
18 plan, correct?
20 Q The specific terminology, by the way,
21 on page 2 is that the mezzanine debt will be deemed
22 cancelled. Now, you were a bankruptcy lawyer in a
23 past life, right?
24 A Yes.
25 Q You understand the concept of
47 (Pages 182 to 185)
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1 Marc A. Beilinson
2 cancellation of debt as a treatment in a plan?
3 A I don't know.
4 Q Does it mean anything more than just
5 no consideration will be given on a respective debt?
7 Q All right. Now, back to the floating
8 rate mezzanine debt.
9 In the Moelis model, that April 22nd
10 document that we just referred to, Exhibit 5, I
11 believe, you said you didn't believe there was any
12 mention in there of whether -- there was no mention
13 in this document you believe of whether Lehman
14 controlled the floating rate mezzanine debt,
15 correct?
17 A Which mezzanine debt?
18 Q We were talking about the floating
19 rate mezz debt and we were exploring a few minutes
20 ago when you might have come to an understanding
21 that Lehman did not control or have consent rights
22 with respect to the mezzanine debt, and I believe
23 you testified it was sometime between April 22nd and
24 the filing date; is that accurate?
25 A That's accurate.
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1 Marc A. Beilinson
2 Q And then we looked at the April 22nd
3 document, Exhibit 15, and you did not see any
4 mention in this document that Lehman did not control
5 the floating rate mezzanine debt?
6 A And as I testified, it wasn't material
7 to me.
8 Q Now, look at Exhibit 6, which was the
9 May 25th draft of the Term Sheet with Lehman.
10 A Okay.
11 Q Do you know whether any mention was
12 made in this document that Lehman did not control or
13 have consent rights with respect to the floating
14 rate mezzanine debt?
15 A I don't know.
16 MR. DONOVAN: Do you want him to
17 review this or --
18 MR. MEYERS: Sure.
19 A (Reviews.)
20 I don't see anywhere in here that it
21 says either way.
22 Q Okay. Now look at Exhibit 7, and in
23 particular Footnote 1.
24 A I've read the footnote.
25 Q Okay. Now, it seems that now there's
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1 Marc A. Beilinson
2 a specific mention in this document that it's not,
3 while it's being provided on behalf of Lehman ALI,
4 not in their capacity as the floating rate mezz
5 lender, correct?
6 A That's what it says.
7 Q Okay. Does that refresh your
8 recollection as to when you may have first become
9 aware that Lehman did not have control or consent
10 rights with respect to the floating rate mezzanine
11 loan?
12 A No.
13 Q Okay. Do you have any understanding
14 of what footnote meant, what Footnote 1 meant?
15 A Yeah, I understood the footnote when I
16 read it, but, as I've stated, it's not material to
17 how I viewed my interaction with Lehman in
18 connection with the PSA since I thought the mezz was
19 always substantially out of the money.
20 Q The floating rate mezz?
21 A The floating rate mezz.
22 Q Okay. Take a look at Exhibit 17, if
23 you would, which is the Craven Affidavit.
24 A (Complies.)
25 Q Okay. I apologize if Mr. Parkins
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1 Marc A. Beilinson
2 asked you this, but, did you read this affidavit
3 before it was filed with the court?
4 A Yes.
5 Q Did you, at the time it was filed, did
6 you agree with all of the statements made in this
7 affidavit?
8 A Anything that was material, yes.
9 Q Were you aware of any inaccuracies in
10 this affidavit at the time it was filed?
11 A I'm sure if there were inaccuracies, I
12 would have pointed them out.
13 Q Okay. Now, take a look at Paragraph
14 31 and read that, if you would.
15 A (Complies.)
16 Yeah, I've read that paragraph.
17 Q Okay. At the time this affidavit was
18 filed, did you understand Paragraph 31 to be an
19 accurate statement of the matters being addressed?
20 A I don't understand Paragraph 31 as I
21 sit here today.
22 Q You don't understand it?
23 A No.
24 Q Okay. Did you understand it when you
25 read it before it was filed?
48 (Pages 186 to 189)
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1 Marc A. Beilinson
2 A I probably did, but I'd have to read
3 everything to put this paragraph into context. Just
4 reading this alone doesn't jog my memory.
5 Q Okay. Are you aware as you sit here
6 today of whether Paragraph 31 is accurate?
7 A I have no context to put it into to
8 that context.
9 Q Well, what it says -- I'm
10 paraphrasing, but if you disagree, you tell me.
11 But what it says is that the Anaheim
12 Mezz Loan is subordinate to not only the Anaheim,
13 the obligations under the Anaheim Mortgage Loan
14 Agreement but also the obligations under the
15 Floating Rate Mortgage Loan Agreement. Do you
16 understand that to be accurate?
17 MR. DONOVAN: Objection. Form. Go
18 ahead, you can answer.
19 A I don't know. I mean, I'd like to
20 look at the documents. Could you -- I'm sure you
21 have the documents. If you give them to me, I'll
22 review them now and I'll give you what my belief is
23 today.
24 Q Okay. Well, just to be clear. What
25 this says, okay, is that the Anaheim Mezz Loan is
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1 Marc A. Beilinson
2 subordinate not only to the $13.7 million loan but
3 also the 237 million -- $238 million loan, do you
4 have a belief one way or another as to whether
5 that's true?
6 MR. DONOVAN: I object. I think he
7 said he can't answer unless he sees the
8 documents. So if you can't provide the
9 documents, I don't want him speculate.
10 MR. MEYERS: But he should have a
11 belief as the lead negotiator for the debtor
12 as to whether or not on behalf of the debtor
13 that has a loan out on an Anaheim Mezz
14 whether that loan was subordinate to 13
15 million in debt or 250 million.
16 MR. DONOVAN: I don't disagree with
17 you, but I think it's fair that he's
18 overseeing a big operation her and he asked
19 to see the documents.
20 MR. MEYERS: Okay.
21 MR. DONOVAN: If you don't want him to
22 look at the documents and just guess, then I
23 think it's worthless testimony.
24 THE WITNESS: I think I should just
25 make a clarifying statement, is that okay?
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1 Marc A. Beilinson
2 MR. DONOVAN: Yeah, sure.
3 A Reading this paragraph and hearing
4 your comments with regard to this paragraph, I think
5 if this is accurate in what your assumption is, then
6 my comments that, earlier, that Anaheim Mezz lender
7 were in the money would be different. So let me
8 just be clear. I'm happy to sit down with you,
9 review the documents, get a better understanding on
10 a current basis so that I can decide after reviewing
11 of the documents as to whether my comment earlier
12 that a mezz was in the money laying a high mezz may
13 very well be out of the money if this is accurate
14 and your assumption is accurate.
15 Q Okay. And I'm not trying to trick
16 you, sir.
17 MR. MEYERS: Counsel, let me just
18 state that your law firm has confirmed to us
19 that that's inaccurate, okay? And I'm not
20 trying to trick you, I'm just trying to
21 figure out what was understood when the deal
22 was being negotiated, is this a drafting
23 error or was this an impression that the
24 debtors were under that was mistaken. So, we
25 can probably skip over reading the loan
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1 Marc A. Beilinson
2 documents, Kirkland & Ellis has confirmed
3 that the Anaheim Mezzanine Loan is only
4 subordinate to the Anaheim property loan?
5 MR. DONOVAN: Well, that's kind of
6 irrelevant here for this witness. He asked
7 to see the documents. If you want his
8 belief, I mean, you can make whatever
9 statements you want. But you're here, he's
10 under oath, he's asked to see the documents,
11 I don't think it's fair when he said he wants
12 to look at it to ask him questions.
13 BY MR. MEYERS:
14 Q It's fair to say that you don't recall
15 what the Anaheim Mezz is subordinate to? You don't
16 know off the top of your head what it's subordinate
17 to?
18 A I have now heard a number of things
19 come out of your mouth as to whether my counsel
20 believes that Paragraph 31 is inaccurate or not. It
21 says there's a subordination agreement which says
22 you are or your client isn't subordinate to the mezz
23 piece on the 20 hotel properties, and all I'm going
24 to say to you in this deposition is, I'd like to
25 review the documents. If my belief is that the
49 (Pages 190 to 193)
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1 Marc A. Beilinson
2 Anaheim mezz piece is not subordinate to the
3 Floating Rate Loan, then I think you're in the
4 money, and I'll treat you as such. If it turns out
5 that you are subordinate to that loan, too, I will
6 treat you like you're out of the money. So I'm just
7 looking for confirmation as to what these documents
8 say and then I'll act appropriately and accordingly.
9 Q Okay. If we -- and I'll move on.
10 If we assume that 31 is a mistake and
11 the Anaheim Mezz Loan is only subordinate to the
12 Anaheim Property Loan such that in your view the
13 Anaheim Mezz Loan's in the money, then is it fair to
14 say that the plan for the Anaheim property level
15 debtor is going to treat the property level lender
16 as fully secured?
17 A Is that the $13.3 million loan that
18 you're referring to?
19 Q I think it's 13.7, yes.
20 A Okay. Yes, that would be fully
21 secured.
22 Q Okay. The amount of the Lehman loan
23 under the floating rate, the Floating Rate Lehman
24 Loan, you understand that at confirmation the amount
25 of that loan will be roughly $238 million?
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1 Marc A. Beilinson
2 A No.
3 Q You believe it will be higher?
4 A No.
5 Q Lower?
6 A Substantially.
7 Q Okay. Let me back it up.
8 Before reduction under the Bankruptcy
9 Code, I'm just talking about the unpaid balance of
10 the Lehman loan, is it $238 million or is it
11 something substantially more or less?
12 A I think it's probably around there.
13 Q And you believe the collateral that
14 secures that loan is worth substantially less than
15 $238 million?
16 A Yes.
17 Q Okay. The two mezzanine debtors --
18 I'll try to do this collectively, okay?
19 The Grand Prix Mezz Borrower Floating
20 2, LLC and Grand Prix Mezz Borrower Term, LLC -- and
21 I'm asking the same question with respect to each --
22 do they have any other creditors besides Trimont the
23 special servicer for the secured debt?
24 A I believe they do.
25 Q What are those other creditors?
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1 Marc A. Beilinson
2 A Sitting here I couldn't tell you.
3 Q Are they secured creditors?
4 A Sitting here I can't tell you.
5 Q Do you have any idea of the dollar
6 amount of the claims of those creditors?
7 A Not as I sit here.
8 Q Do you know a single creditor that
9 either one might have?
10 A I'm just not going to speculate,
11 there's 90 entities, I didn't come prepared today to
12 talk about each creditor of each entity, so I'm just
13 not capable of speculating on that.
14 Q Okay. The two mezzanine borrowers are
15 parties to the Plan Support Agreement, correct?
17 Q Okay. Take a look at the Plan Support
18 Agreement, it's Exhibit 4.
19 A (Complies.)
20 Q Look at the signature pages. They're
21 not numbered. But the last signature page is Grand
22 Prix Holdings LLC on behalf of all the debtor
23 entities listed on Exhibit A. I'm sorry. On Annex
24 A, and then Annex A follows. Do you see the
25 mezzanine debtors on Annex A?
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1 Marc A. Beilinson
2 A I'm sorry, I thought your question was
3 that the mezzanine lenders were signatories.
4 Q If I said that, I apologize.
5 A That was my understanding. Could you
6 read this back?
7 Q Well -- let me restate the question
8 because if I said that, that was incorrect.
9 Do you understand the two mezzanine
10 borrowers that are debtors in this bankruptcy to be
11 parties to the Plan Support Agreement?
12 A Yes.
13 Q So they support the Plan Support
14 Agreement, correct?
15 A Yes.
16 Q Now since we're a little bit in flux
17 on Anaheim as to exactly what the treatment provided
18 for the mezz is, let's focus on the floating rate,
19 debtor floating rate mezz borrower for a minute.
20 That entity is a party to the Plan
21 Support Agreement and it supports the Plan Support
22 Agreement. Yet its primary assets are the
23 membership interests in the 20 property owning
24 floating rate debtors, correct?
25 A I don't know.
50 (Pages 194 to 197)
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1 Marc A. Beilinson
2 Q The principal assets of Grand Prix
3 Mezz Borrower Floating 2, LLC are its membership
4 interests in the 20 floating rate debtors, correct?
5 A I don't know.
6 Q Do you know that that is among the
7 assets of Grand Prix Mezz Borrower Floating 2, LLC?
8 A I believe it is.
9 Q But you don't know whether there are
10 any other assets of Grand Prix Mezz Borrower 2, LLC?
12 Q Are you aware of any assets in
13 particular or you just have no idea?
14 A Not as I sit here today, I didn't know
15 it was a topic for this deposition.
16 MR. DONOVAN: It wasn't, so.
17 MR. MEYERS: But I think it's
18 reasonable to expect that the CRO of the
19 debtors would know the principal assets of
20 the debtor.
21 MR. DONOVAN: When you think of every
22 entity, I don't think that's a fair
23 interpretation.
24 MR. MEYERS: I'm just asking about
25 Grand Prix Mezz Borrower Floating 2, LLC?
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1 Marc A. Beilinson
2 MR. DONOVAN: If you want to send us a
3 letter, we can get you board members, we're
4 happy to give you information, but this isn't
5 a memory test. So if you guys have
6 questions, we'll answer it, but let's do it
7 in an efficient way.
8 BY MR. MEYERS:
9 Q Why is the Plan Support Agreement and
10 the plan that's contemplated thereby in the best
11 interests of Grand Prix Mezz Borrower Floating 2,
12 LLC?
13 A My obligation is to do an integrated
14 restructuring of the entire enterprise. If a party
15 doesn't have any value on account of its
16 pre-petition situation, and they're not getting any
17 value, it means that they're being treated as the
18 absolute priority rule would require them to be
19 treated under the Bankruptcy Code. So, so long as I
20 am treating people in accordance with the Bankruptcy
21 Code, and giving them rights to which they are
22 entitled, and no greater rights, then I think it is
23 fine for the debtors to be as a fiduciary
24 signatories to this PSA.
25 Q So we can agree, and we've already
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1 Marc A. Beilinson
2 agreed, that the -- that membership interests in the
3 20 property level debtors in the floating rate pool
4 are being extinguished under the plan, correct?
5 A That's correct.
6 Q And those are among the assets of
7 Grand Prix Mezz Borrower 2, LLC, correct?
8 A That's correct.
9 Q So Grand Prix Mezz Borrower Floating
10 2, LLC is getting nothing under this plan, correct?
12 Q Okay. But your view as CRO of that
13 entity is that that's acceptable treatment under the
14 Bankruptcy Code because there's no value to those
15 membership interests?
16 A That is correct, and that would be my
17 same analysis with regard to Innkeepers USA Limited
18 Partnership, Innkeepers Financial Corporation,
19 Innkeepers USA Trust and Grand Prix Holdings.
20 Q Do you have an understanding of the
21 corporate structure of the enterprise postemergence?
22 A Not specifically as we sit here today.
23 Q Okay. With respect to Grand Prix Mezz
24 Borrower Floating 2, LLC, do you know whether that
25 entity will continue to exist postemergence?
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1 Marc A. Beilinson
2 A I doubt it.
3 Q Now, does the plan that is -- does the
4 plan that you're envisioning filing within the next
5 30 days contemplate substantive consolidation of any
6 of the debtors?
7 MR. DONOVAN: Objection. I'm going to
8 instruct --
9 A I'm considering all sorts of issues in
10 connection with the preparation of a plan and
11 disclosure statement including that issue.
12 Q Okay. I just got a few more
13 questions.
14 Take a look at Exhibit 15. And
15 specifically page 14.
16 A Exhibit 14, page 14?
17 Q Exhibit 15, page 14. The Project
18 Tavern?
19 A What page?
20 Q Fourteen.
21 A Okay.
22 Q With respect to the floating pool, the
23 column Pro Forma Debt states zero to 50 million, do
24 you see that?
25 A Not on page 14.
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1 Marc A. Beilinson
2 Q Well, look on the -- it does on mine,
3 so. I'm looking on the top up here across 0-50.
4 A Okay.
5 Q All right. So when this document was
6 done by Moelis, the floating rate pool, they were
7 anticipating that the emergence debt would be
8 between zero and 50 million with respect to the
9 floating rate debtors, correct?
10 A I really didn't have any part of
11 preparing this page, but that appears to be
12 accurate.
13 Q You reviewed this document before it
14 was submitted to Lehman, correct?
15 A I testified that I reviewed it, not
16 that I understood every piece of it.
17 Q Okay. So you saw that Moelis at least
18 was illustrating a scenario in which the floating
19 rate pool could have as much as 50 million in debt
20 post deal, correct?
21 A I don't believe I had an understanding
22 as to this page at the time it was presented in
23 April 22nd. This wasn't something that was
24 meaningful to me.
25 Q If you had focused on this, would you
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1 Marc A. Beilinson
2 have changed that to just say zero because of your
3 view at that time that the value of the properties
4 in the floating rate pool were less than the
5 property level debt?
6 A I don't know if that's accurate,
7 because this was beginning phases in negotiation
8 which could include all sorts of potential
9 variations. You know, you could talk about fully
10 equitizing, you can talk about partially equitizing,
11 you can talk about different types of debt, so I
12 would probably create the flexibility which is
13 embedded in these numbers, so I actually don't have
14 a problem with the way this was presented.
15 Q But would it have been your
16 understanding that the 50 million would have been
17 for Lehman as the property level debtor as opposed
18 to for the mezz lender?
19 A Well, I've already stated that I think
20 the mezz lender is substantially out of the money,
21 and that there would be absolutely no recovery on
22 account of any pre-petition claim that I viewed was
23 out of the money which is unfortunately one of your
24 clients as well as AIC and public shareholders.
25 Q Okay. And you're right, this could
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1 Marc A. Beilinson
2 have been a number of things. I was trying to
3 figure out whether this was representing that. I
4 mean, because this does talk about Lehman getting a
5 hundred percent of the equity or 95 percent of the
6 equity, but it may have been leaving 50 million in
7 for them as opposed to for the mezz lender?
8 A Yeah. There was never any
9 consideration on my part that the mezz lender was in
10 the money and therefore it was always contemplated
11 by me that they'd be receiving no consideration in
12 an internal plan of reorganization, so this would
13 have been flexibility to deal with Lehman as in
14 their senior debt in connection with the company.
15 Q Hopefully last question.
16 Is the Anaheim hotel, is that
17 necessary to the enterprise?
18 A I believe every hotel is necessary to
19 the enterprise, and I'm going to be negotiating with
20 all lenders to maintain the existing entity as an
21 integrated whole.
22 Q Okay. If you received an offer to buy
23 Anaheim for a price that you thought was equal or in
24 excess of its value, could it be sold or does it
25 need to stay in to make the rest of the parts of the
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1 Marc A. Beilinson
2 enterprise work?
3 A I'm happy to make --
4 MR. DONOVAN: Objection. Calls for
5 speculation.
6 A As facts get presented to me and
7 offers, I take them all under consideration and
8 determine what's in the best interest of the
9 enterprise as a whole.
10 Q But not of that debtor specifically?
11 A I have to take that into
12 consideration, too.
13 Q So you look at what's in the best
14 interest of each debtor specifically and the
15 enterprise as a whole?
16 A I believe that my fiduciary duty is
17 fairly broad and has to take into consideration the
18 interests of the entire enterprise and all the
19 creditors within that enterprise.
20 MR. MEYERS: I have no further
21 questions.
23 MR. MEYERS: Thank you very much.
24 MR. GOTTESMAN: Why don't we take five
25 minutes and then I'll push on.
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1 Marc A. Beilinson
2 MR. DONOVAN: Very good.
5 EXAMINATION BY
6 MR. GOTTESMAN:
7 Q Good afternoon.
8 A Hi.
9 Q My name is Lawrence Gottesman with
10 Bryan Cave on behalf of LNR Partners LLC. LNR is
11 the special servicer with respect to two
12 securitization trusts, one CSFB 2007-C1 and MLCFC
13 2006-4. It might be easier, sir, if we just go back
14 for one minute to Exhibit 2 and we can point out
15 which entities are at issue just to put it in
16 context, if we could.
17 A Okay.
18 Q In the middle of page are a bunch of
19 green boxes or boxes with green at the top?
20 A Yes.
21 Q Do you see that? And then the five, I
22 guess to the right, starting with KPA RIGG, LLC and
23 ending at KPA San Antonio, LLC, do you see that?
24 A Yes.
25 Q Okay. Those are the hotels with
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1 Marc A. Beilinson
2 respect to which loans LNR is a special servicer.
3 Are you familiar generally with those loans?
4 A Let's go back over it just to make
5 sure I got it right.
6 Q Sure.
7 A Go ahead.
8 Q Okay. Let's start at the beginning.
9 Do you see the box that has KPA RIGG,
10 LLC in green at the top?
11 A The Residence Inn in Garden Grove?
12 Q Correct.
13 A Okay.
14 Q And are you familiar with that
15 property?
16 A Yes, I am.
17 Q And are you familiar with the secured
18 debt with respect to that property?
19 A Yes, I am.
20 Q Okay. Next is KPA RIMV, LLC, do you
21 see that?
22 A With regard to the Residence Inn, San
23 Diego, yes, I'm familiar with the property and the
24 loan.
25 Q Okay. And then next to it is KPA
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1 Marc A. Beilinson
2 Washington, DC, LLC, same question.
3 A Yes, I understand. I know the
4 property and the loan.
5 Q You're familiar with both?
6 A Yes.
7 Q Okay. Good.
8 And next to that is KPA Tysons Corner
9 RI, LLC, do you see that?
10 A I'm familiar with the property and the
11 loan.
12 Q Okay. Good.
13 And then KPA San Antonio, LLC, are you
14 familiar with the loan and property with respect to
15 that?
16 A Yes, I am.
17 Q Okay. Good.
18 At any point during the process prior
19 to the petition date that started in approximately
20 April and then ended with the petition date, were
21 there internal discussions at Innkeepers with
22 respect to these hotels and their loans as to how
23 they should be treated?
24 A Yes.
25 Q Okay. Could you describe those for
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1 Marc A. Beilinson
2 me, please?
3 A I don't think we talked about how to
4 deal with each of the entities and all the
5 properties in connection with an overall
6 restructuring. We reached out to the special
7 servicer with regard to each of these properties and
8 entered into a dialogue with them which included the
9 provision to them of pretty much all due diligence
10 materials that they requested with regard to these
11 five assets. And we began discussing with the
12 special servicer the DIP facility in connection with
13 Tysons in San Diego, and the cash collateral
14 agreement with regard to all five of them.
15 Q The special servicer that you're
16 referring to is who?
17 A I can't remember the person
18 responsible at LNR.
19 Q But it was LNR as opposed to Midland
20 or someone else?
21 A No, it was LNR.
22 Q Okay. And did you make a
23 restructuring proposal with LNR with respect to any
24 of these loans?
25 A No. I started off by providing them
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1 Marc A. Beilinson
2 with substantial amounts of due diligence
3 information that they had requested.
4 I then started talking to them about
5 Marriott with regard to Tysons, which is one of the
6 potentially deflagged hotels and the San Diego
7 Residence Inn.
8 I sent them draft DIP proposals with
9 regard to Tranche B and C of the fixed rate
10 facility, and started talking to them about why it
11 makes sense both for the benefit of the estate and
12 for their own benefit to enter into a fair financing
13 on a priming basis with regard to those properties.
14 I informed them that we were going to
15 be filing a chapter proceeding with regard to the --
16 each of the entities in the enterprise and I sent
17 them a cash collateral stipulation a couple weeks
18 before we filed so we could start talking about it.
19 Q Okay. And, to be clear, there was no
20 restructuring proposal communicated with respect to
21 any of these properties, you communicated with
22 respect to the potential DIP but not a proposal to
23 restructure any of the loans?
24 A Not at that time, no.
25 Q At any time?
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1 Marc A. Beilinson
2 A I've started talking to them about
3 what proposals we could talk about and it became
4 clear to me that LNR's view was that they needed to
5 get appraisals with regard to the property before
6 they could enter into meaningful discussion with me
7 and we of course have given them full and complete
8 access to the properties and general managers for
9 purposes of valuing their properties so that they
10 can enter into discussions with me, and I look
11 forward to doing that as soon as possible.
12 Q Okay. And have you had any
13 discussions, as Innkeepers more broadly had any
14 discussions with Lehman with respect to these
15 particular hotels and their respective debt?
16 A Well, the only agreement that I'm
17 aware of is embodied in the PSA which says that the
18 balance of the debt after the fixed and floating
19 rate pool cannot exceed 150 million dollars or
20 Lehman has the right but not the obligation to
21 terminate the PSA.
22 Q I understand, and perhaps my question
23 wasn't sufficiently clear. I guess the question I
24 had is: Were there any specific discussions with
25 Lehman or its representatives with regard to any of
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1 Marc A. Beilinson
2 the hotels that we've now identified in Exhibit 2 as
3 to the --
4 A No, I think --
5 Q -- their performance and their status
6 and their proper treatment as opposed to the more
7 generic Plan Support Agreement provision that you
8 just described?
9 MR. DONOVAN: Objection to form. You
10 can answer.
11 A No, we did talk about each of the
12 assets and their condition, the attributes of each.
13 They had budget information with regard to all of
14 them, but with regard to the right amount of the
15 secured claim with regard to each, any one of them,
16 no there was no specific conversation.
17 Q So there was a specific discussion
18 generally regarding both that specific claim amount,
19 for example, with respect to the KPA RIGG loan
20 that's the second green box in from the right in the
21 center? From the left, excuse me.
22 A I think we talked about, you know,
23 condition of the property. Economic factors
24 affecting it. I don't think we talked about the
25 loan amount itself except to the extent that we all
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1 Marc A. Beilinson
2 acknowledged it was under secured.
3 Q Specific to that property or generally
4 with respect to the hotels in the Innkeepers'
5 portfolio?
6 A I actually remember a conversation
7 with regard to a number of the properties which were
8 specially serviced by LNR.
9 Q With whom was that conversation?
10 A That conversation was with members of
11 Lehman or Alvarez or Lazard, I don't remember
12 specifically.
13 Q Someone?
14 A It was somebody in that group.
15 Q And at what point in time was that?
16 A It was in the April to July timeframe.
17 Q Somewhere within that broad period of
18 time but you couldn't nail it down further?
19 A I could not nail it down.
20 Q Was anyone else in attendance from
21 your side?
22 A I don't remember when I had the
23 conversation or whether it was by phone or in
24 person. It could be that Mark Murphy was there, if
25 it was in person, I don't recall.
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1 Marc A. Beilinson
2 Q Was there any correspondence that
3 related to it that either set it up or followed up?
5 Q So it was just an oral conversation
6 that may have been over the phone or may have been
7 in person?
8 A More than likely on something like
9 this over the phone but I don't recall specifically.
10 Q And then with respect for the next
11 property, if I ask you the same question, the answer
12 would be the same or do you have a specific
13 recollection beyond that?
14 A I actually have specific recollection
15 with regard to the Garden Grove property, San Diego
16 and Tysons, and remember talking about with regards
17 to San Antonio improvements that were done over the
18 course of the last year and a half.
19 Q Can you describe those recollections?
20 A Yeah. They were more geared to
21 condition of the property and what needed to be done
22 to bring them up to speed.
23 With regard to San Antonio, I
24 specifically was talking about the driveway that I
25 think needs some work done. That I think that
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1 Marc A. Beilinson
2 improvements that we did in the last two years are
3 sustainable for at least until the next cycle in six
4 years.
5 With regard to San Diego and Tysons, I
6 talked to them about what I thought the costs were
7 with regard to the PIPing obligations in connection
8 with Marriott and what I thought needed to be done
9 and what could potentially be delayed.
10 With regard to the Residence Inn in
11 Garden Grove, there were issues with regard to the
12 pool area and some tiling there, there was some
13 granite broken off that I wanted to get replaced.
14 So there was a lot of details with regard to the
15 property that I wanted to let them know what the
16 general condition was.
17 Q So you discussed over what period of
18 time the PIP needed to be performed?
19 A We discussed, no, what the condition
20 of the properties were, you know, were they
21 sustainable till the next cycle of renovations.
22 When the PIPs needed to be done, how much needed to
23 be done. Whether there was deferred maintenance,
24 what the deferred maintenance might be and whether
25 it was material or not, so it was really kind of
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1 Marc A. Beilinson
2 more of a business discussion with regard to
3 property conditions and characteristics.
4 Q Some sort of general business
5 discussion?
6 A Absolutely.
7 Q Okay. And going back to your
8 conversation from LNR. During any of those
9 conversations, did you mention that you were in
10 discussions with Lehman with respect to what
11 ultimately culminated in the Plan Support Agreement
12 and the related Term Sheet?
13 A I told them that I was talking to
14 Lehman with regard to an overall restructuring, I
15 don't believe I got into the details. I talked to
16 them about Marriott, and the overall Marriott
17 transaction and how it interrelated with the
18 properties involved, which is Tysons in San Diego
19 which he specially serviced. I talked to them at
20 length with regard to potential DIP financing
21 proposals and why I thought they were beneficial and
22 fair value to them. I also --
23 Q But it's fair to say you never
24 communicated that the Lehman Plan Support Agreement
25 and the related term sheet contemplated substantial
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1 Marc A. Beilinson
2 writedown in the secured debt service by LNR; is
3 that correct?
4 A I'm not sure that that's accurate.
5 Q Substantial writedown from the current
6 outstanding principal balance. When you say it's
7 not accurate, what do you mean by that?
8 A Well, I think the Lehman PSA says that
9 with regard to the other properties in connection in
10 the enterprise, which is essentially seven
11 properties, can't have in excess of 150 million
12 dollars worth of debt. It doesn't suggest what the
13 amount of the debt is with regard to each of those
14 individual properties.
15 Q But the aggregate is obviously more
16 than 150; is that correct?
17 A Well, the aggregate, if you keep all
18 seven properties, would be on a loan basis in excess
19 of 150 million dollars, but on a value basis may be
20 substantially less than that.
21 Q Does the Lehman Term Sheet permit you
22 to return back any of the properties to their
23 respective lenders?
24 A I believe that it does.
25 Q And that would not be a termination
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1 Marc A. Beilinson
2 event?
3 A That's correct.
4 Q If the lender took back the property
5 pursuant to a lift stay, would that be a termination
6 event?
8 You can answer to the extent you know.
9 A I'd have to review the PSA.
10 Q It happens to be marked as an exhibit,
11 so let's go back.
12 A Exhibit 4?
13 Q Yes.
14 A Can you point me to the provision,
15 please?
16 Q I will momentarily.
17 Yes. Let me direct your attention to
18 paragraph E at the bottom of page 8 of the Plan
19 Support Agreement. I think you were looking at the
20 Term Sheet and I'm looking at the Plan Support
21 Agreement, sir.
22 A Okay. So what page of the Plan
23 Support Agreement?
24 Q It looks like page 8.
25 A I have reviewed the provision.
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1 Marc A. Beilinson
2 Q And does that refresh your
3 recollection as to what the Plan Support Agreement
4 says would be the consequence of stay relief with
5 respect to any of these property secured lenders?
6 A The relief, the stay relief would give
7 Lehman the right but not the obligation to terminate
8 the PSA if relief from stay was granted.
9 Q But it's your understanding that if
10 the debtor voluntarily surrendered the property
11 pursuant to a plan or otherwise that would not
12 constitute a termination right that would give
13 Lehman the right but not the obligation to
14 terminate?
16 Q Okay. By the way, the discussions
17 with LNR that you referred to a little while ago, do
18 you recall when those took place?
19 A They've taken place over the course of
20 a few months. As you probably know -- is it Chris
21 Brown?
22 Q Yes, Chris Brown.
23 A Chris Brown is the individual at LNR.
24 Well into the process after he was special servicer
25 with regard to two of the properties, he and I
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1 Marc A. Beilinson
2 worked together to get three other properties
3 released from the general servicer to the special
4 servicer, so those conversations obviously took
5 place, you know, later because we really had to work
6 together for a period of time to get him in charge
7 of those properties.
8 Q Okay. So you would say that those
9 commenced a couple months ago in your recollection
10 or am I missing --
11 A They commenced at least a couple of
12 months ago with two other properties a little bit
13 less far ago with regard to.
14 Q A little bit later?
15 A A little bit later with regard to.
16 Q Okay, so we can just chronologically
17 be in the same field.
18 A Okay, that's fine.
19 Q Okay. Did you have any discussions
20 with Apollo or I guess Apollo Investment Corporation
21 with respect to any of these properties, the five
22 that we've been referring to?
23 A Only to the extent that I discussed
24 these properties and the fixed rate and the floating
25 rate pool with members of the board of Innkeepers
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1 Marc A. Beilinson
2 which included people who were employees of Apollo.
3 Q But it was in your capacity as members
4 of the board or as opposed to their capacity of
5 Apollo the buyer of equity?
6 A No, it was in their capacity as
7 members of the board.
8 Q And no other capacity?
9 A I believe that's correct.
10 Q Okay. By the way, did you have any
11 discussions with the master servicer for these
12 securitizations with respect to these properties?
13 A Yes, I did.
14 Q Okay. Do you recall when those were?
15 A Probably going back maybe four months
16 ago.
17 Q And what was the substance of those
18 discussions?
19 A The fact that I was going to be a
20 restructurer. That I told them in advance of
21 defaulting with regard to the financial obligations
22 of the loan that I was going to do so. It was a
23 conversation saying that I'd like to start entering
24 into restructuring discussions and that this is
25 probably more appropriately moved from the general
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1 Marc A. Beilinson
2 servicer to the special servicer. I was trying to
3 move the process along.
4 Q Do you recall whom you had those
5 discussions at the master servicer?
6 A Not off the top of my head.
7 Q Were those memorialized in writing or
8 by e-mail or otherwise?
9 A I don't recall.
10 Q And do you recall if any of the
11 conversations with respect to LNR whether they were
12 memorialized in writing at all? And that would
13 include e-mails.
14 A Some of them might have been
15 memorialized. I mean, their request for information
16 or providing them due diligence information, they
17 needed access to property. There's communications
18 in e-mail form that have gone back and forth between
19 myself, Mark Murphy and Chris Brown and other people
20 at LNR.
21 Q Okay. And then just to close the loop
22 with regard to the master, it's safe to say you
23 never made a particular restructuring proposal; is
24 that correct?
25 A I tried to enter into discussions with
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1 Marc A. Beilinson
2 them but unfortunately in the CMBS community the
3 general servicers have very little ability to enter
4 into those discussions.
5 Q By general servicer you're referring
6 to the master servicer?
7 A I was talking about the master
8 servicer.
9 Q Okay. I just want to make sure we got
10 our parties straight.
11 In connection with this whole process,
12 did you or the company conduct any independent
13 assessment of the burdens for these particular
14 debtors as opposed to the integrated whole? And I
15 did hear your earlier testimony with respect to your
16 views regarding integrated all, but did you also
17 look at it at all on a particularized basis?
18 A Well, you know, I look at it and I say
19 what's a fair value of somebody's security interest
20 and I have to treat it appropriately in connection
21 with the plan of reorganization, so long as I'm
22 doing that I feel I'm fulfilling my obligations as a
23 fiduciary.
24 Q That is not exactly responsive because
25 that's not what I asked. I guess the question is:
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1 Marc A. Beilinson
2 For example, taking the first one, did you look at
3 whether or not KPA RIGG, LLC would benefit in this
4 overall restructuring or suffer detriments, and did
5 you analyze it on a property basis with respect to
6 that or did you put this simply in the context of
7 what was good for the overall whole? Putting aside
8 your interpretation of your fiduciary duty for a
9 second.
11 A I think I look at each area and I say
12 am I treating them fairly. And if I'm treating them
13 fairly and I'm doing what's in the best interest of
14 the integrated whole, I think I'm fulfilling my
15 fiduciary duty.
16 Q But once again, it's not the question
17 I asked. Ultimately the court can figure out what
18 your fiduciary duty was and whether or not you met
19 it, and that's for anyone in this room to decide.
20 The question is just specifically what you did or
21 didn't do.
22 So, did you determine that, for
23 example, KPA RIGG would benefit in terms of its cash
24 flow from the proposed plan as a result of the
25 transaction contemplated by the Plan Support
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1 Marc A. Beilinson
2 Agreement and the annexed Term Sheet, or did you
3 not? And whether or not that was your fiduciary
4 duty and your interpretation is a different issue.
5 A I think I looked at a lot of these
6 entities in that way. For example, I knew I needed
7 to do an integrated relationship, integrated
8 agreement with Marriott by virtue of the fact there
9 were 23 hotels that were in default. Some of these
10 hotels were San Diego and Tysons which I believe
11 benefited from my ability to negotiate with them
12 with regard to properties that were in the floating
13 rate and fixed rate pool. I believe that other
14 entities have benefited in the past because of cash
15 flow that was generated from the enterprise that
16 went into properties to improve them to the benefit
17 of the whole. So yes, I did look at, you know, how
18 all the pieces fit together to benefit the entire
19 corporation, but also the pieces of the corporation,
20 and that's just one example of how I take it into
21 consideration.
22 Q Well, with respect to this particular
23 entity, did you perform that analysis, in other
24 words, did it benefit in terms of financing a PIP?
25 Is a PIP required with respect to that entity KPA
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1 Marc A. Beilinson
2 RIGG, LLC?
3 A No.
4 Q Okay.
5 A I don't believe so at this time.
6 Q And do you know if it generates
7 sufficient cash to service its debt?
8 A I've looked at all the issues with
9 regard to that entity and others and I can't tell
10 you today because I didn't know that was the purpose
11 of, you know, this deposition, but.
12 Q Sitting here today, you don't know the
13 answer to that question?
14 A Which question?
15 Q Whether it generates sufficient cash
16 to service its own debt.
17 A With regard to that hotel, no, I can't
18 answer the question.
19 Q Okay.
20 A I also can't answer the question as to
21 whether it's always been able to satisfy the debt or
22 how much money went into the capital improvements
23 from other sources with regard which benefited that
24 property.
25 Q Well, did you perform that historical
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1 Marc A. Beilinson
2 analysis with respect to each of these entities?
3 A No.
4 Q Okay. And if I were to ask you the
5 same question about the ability to service debt with
6 respect to the other hotels serviced by LNR, would
7 your answer be the same that you don't know sitting
8 here today?
9 A I believe that if you're asking
10 service the debt without making capital
11 improvements, which are required under PIPs, or are
12 you asking without doing deferred CAPEX and future
13 CAPEX.
14 Q Let's just say on a current cash
15 basis. Let's take it one step at a time.
16 I'm just simply asking -- once again,
17 it's not memory test, if the answer is you don't
18 know, you don't know.
19 A I looked at those kinds of issues and
20 with most properties they didn't have sufficient
21 cash flow to service debt and their capital needs.
22 Q I understand, except I'm not really
23 asking about most properties, I'm asking about this
24 group of properties.
25 A I'm talking about this group of
224
1 Marc A. Beilinson
2 properties. I believe with regard to San Antonio
3 the answer would be, no, they could not have done
4 their historic CAPEX with regard to that property
5 and fulfilled its obligations under the loan. I
6 believe I can say that with regard to San Diego with
7 regard to the upcoming PIP. I believe I can say
8 that with regard to Tysons. I believe I can also
9 say that with regard to the double thing.
10 Q Okay.
11 A I think there were benefits that they
12 received by virtue of being part of the cohesive
13 enterprise, that or historic which are current.
14 Q Historic as in pre-petition?
15 A Yes.
16 Q Okay. And have you tried to quantify
17 those historic pre-petition benefits?
18 A Not totally.
19 Q Partially?
20 A I thought about it.
21 Q Okay. Did you write down any slots?
22 A No.
23 Q So they're just still somewhere in the
24 ether?
25 A Yes.
225
1 Marc A. Beilinson
2 Q Good. Okay.
3 And when I say you, I probably should
4 make it broader in terms of Moelis or, you know, any
5 of the folks that you've hired to help you with this
6 process.
7 A Yes.
8 Q The answer is still sort of
9 collectively in that ether?
10 A Yes.
11 Q Okay. By the way, do any of these
12 borrowers, do they have independent managers or
13 directors?
14 A I don't recall.
15 Q Okay. Do you know who approved the
16 Chapter 11 files for each of these five entities
17 that we've been discussing?
18 A No.
19 Q Do you know if resolutions were signed
20 authorizing the Chapter 11 filing?
21 A I've been told that they were.
22 Q Do you know if you signed any
23 resolutions?
24 A Yes.
25 Q Okay. Did you sign resolutions with
58 (Pages 226 to 229)
226
1 Marc A. Beilinson
2 respect to any of these entities?
3 A No.
4 Q Okay. When you say you don't know if
5 there are any independent managers with respect to
6 this, I think it would probably follow, but I want
7 to confirm that you don't recall any discussions
8 with any independent managers about whether or not
9 to file these entities; is that correct?
11 Q Okay. And it would also presumably
12 follow that you didn't discuss the Plan Support
13 Agreement and the related Term Sheet with any
14 independent managers relating to these entities?
15 A I believe I testified I didn't talk to
16 the independent managers with regard to this filing.
17 Q Okay. Or the Plan Support Agreement
18 which was signed prior to the filing?
20 Q And during the negotiations with
21 respect to that?
23 Q Okay.
24 MR. GOTTESMAN: I don't think I have
25 any further questions. Thank you very much.
227
1 Marc A. Beilinson
4 Let me ask you some questions, Mr.
5 Beilinson.
6 EXAMINATION BY
7 MR. DONOVAN:
8 Q You were asked questions about the
9 drafts of the Plan Support Agreement today. I'd
10 like to ask you some questions about the Plan
11 Support Agreement you're actually trying to get
12 confirmed with the court. That's Exhibit 4 if you
13 need to look at it.
14 Does the Plan Support Agreement you're
15 seeking to have confirmed, is AIC a signatory to the
16 Plan Support Agreement?
17 A No, it is not.
18 Q Okay. Does the Plan Support Agreement
19 you are seeking approval from the Bankruptcy Court
20 have any type of backstop provision?
21 A No, it does not.
22 Q Does the Plan Support Agreement you
23 are seeking approval have any type of breakup fee in
24 it?
25 A No, it does not.
228
1 Marc A. Beilinson
2 Q If you could turn to Exhibit 17, the
3 Amended Declaration.
4 A (Complies.)
5 Q I direct your attention to page 33.
6 A Okay.
7 Q You were asked today whether there's
8 been any disclosure of your board membership with
9 respect to Apollo Commercial Real Estate Finance,
10 Inc., do you remember those questions?
11 A Yes, I do.
12 Q Okay. Has it been disclosed to the
13 Bankruptcy Court that you are a member of the board
14 of Apollo Commercial Real Estate Financial, Inc.?
15 A Yes, it has been.
16 Q Where?
17 A It's in Footnote 7 on page 33 of
18 Dennis Craven's Declaration in amended form.
19 Q If you'd turn to page 8 of Exhibit 17,
20 the Craven Declaration.
22 Q Directing you to Paragraph 13, in the
23 middle it reads: It is the Debtors' understanding
24 that subject to certain terms and conditions, AIC
25 may become the purchaser. Do you see that?
229
1 Marc A. Beilinson
2 A Yes.
3 Q So it's fair to say it was disclosed
4 to the Bankruptcy Court that AIC may become the
5 purchaser of the equity, at least a portion, that
6 Lehman may receive as a part of this plan; is that
7 correct?
8 A Absolutely.
9 MR. DONOVAN: Nothing further. Thank
10 you.
11 THE WITNESS: Thank you, guys.
13 Off the record.
15 (Whereupon, deposition adjourned 3:22
16 p.m.)
17
18
19
20
21
22
23
24
25
59 (Pages 230 to 233)
230
1 o0o
2
4
5 I, JOSEPHINE H. FASSETT, a Registered
6 Professional Reporter and Notary Public within and
7 for the State of New York, do hereby certify that
8 the witness, whose deposition is hereinbefore set
9 forth, was first duly sworn by me on the date
10 indicated, and that the foregoing videotaped
11 deposition is a true and accurate record of the
12 testimony given by such witness.
13
14 I FURTHER CERTIFY that I am not employed
15 by nor related to any of the parties to this action
18
19
__________________________________
20 JOSEPHINE H. FASSETT, RPR, CLR
New York Notary Public
21
22
23
24
25
231
1 o0o
2 UNITED STATES BANKRUPTCY COURT
3 SOUTHERN DISTRICT OF NEW YORK
4 CASE NO. 10-13800 (SCC)
5 ---------------------------------*
6 In re: ) Chapter 11
7 INNKEEPERS USA TRUST, et al., )
8 Debtors. )
9 ---------------------------------*
10
11 I, MARC A. BEILINSON, hereby certify that
12 I have read the transcript of my testimony taken
13 under oath in my deposition of August 12, 2010, and
14 that the transcript is a true, complete and accurate
15 record of my testimony, and that the answers on the
16 record as given by me are true and correct.
17
18 _______________________________
MARC A. BEILINSON
19
20
21 Subscribed and sworn to before me this_______ day
22 of_______________, 2010.
23
24 _______________________________
Notary Public
25
232
2
8 and date it.
17
18
19
20
21
22
23
24
25
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1 E R R A T A
2
3
4
7
8 PAGE LINE
9 ___ ___ CHANGE:__________________________
10 REASON:___________________________________
11 ___ ___ CHANGE:__________________________
12 REASON:___________________________________
13 ___ ___ CHANGE:___________________________
14 REASON:___________________________________
15 ___ ___ CHANGE: __________________________
16 REASON:___________________________________
17 ___ ___ CHANGE: __________________________
18 REASON:___________________________________
19 ___ ___ CHANGE: __________________________
20 REASON:___________________________________
21
22 _________________________ _____________
24
25
234
A
AB65:18
abide 26:6
ability 64:14,20
74:10 219:3
221:11 223:5
able 34:18 42:9
222:21
absolute 195:18
absolutely 17:20
26:11 45:24
63:19 65:15
70:5 72:8 73:3
75:5 111:18
113:12 135:16
181:14 199:21
212:6 229:8
accept 65:18
84:19 109:18
123:6 139:24
acceptable 48:21
52:17 56:2
74:18 83:23
85:7,12,13
97:18,18,22
102:25 103:2
110:19 196:13
accepted 52:3,11
96:23 109:19
136:6 139:2
access 58:22
59:2,4,5,15,21
60:4 69:10
138:14 207:8
218:17
account 39:3
99:5 153:12
178:12 195:15
199:22
accretive 138:17
146:13
accurate 27:12
36:13 111:7
112:11 117:8
123:17 137:8
145:12,14
147:11 148:12
150:12 166:5
168:15 170:2
170:17,22
174:7 182:24
182:25 185:19
186:6,16 188:5
188:13,14
198:12 199:6
213:4,7 215:15
230:11 231:14
232:16
accurately 25:11
105:13,25
106:15 111:5
acknowledged
209:2
acquire 34:12
138:19
acquirers 98:21
acquisition
31:22 33:18
34:23 35:5
98:11,16
act 190:8
acting 76:4
134:13 164:25
action 230:15
actual 25:15
144:3,4 171:15
adamant 46:2
additional 58:7
149:21 163:6
address 137:17
addressed
185:19
adieterich@p...
5:11
adjourned
229:15
Administrative
170:24
advance 16:14
130:6 217:20
advice 76:5
78:15
advise 73:7,11
90:25 91:4
133:11
advised 58:18
60:8
advisors 4:5,12
7:5 119:14
163:24
aehrlich@pau...
5:9
affidavit 184:23
185:2,7,10,17
affiliate 89:4
99:3
affiliated 15:16
22:25 31:9,10
89:19
affiliates 171:13
afternoon 8:11
202:7
Agent 170:24
aggregate
213:15,17
aggregation
104:4 106:21
ago 17:13 80:17
89:10 115:19
131:22 182:20
215:17 216:9
216:12,13
217:16
agree 51:23
105:23 150:17
158:25 185:6
195:25
agreed 146:10
196:2
agreement 8:22
8:24 12:16
25:20,22 26:9
26:17,21 27:8
29:8 30:18
34:11 35:2,20
35:21 36:21,22
49:10 53:24
55:12,22 61:3
64:15 66:6
76:25 77:2,12
95:11,13 96:16
102:18 107:24
108:4 109:13
110:2,3 114:5
133:17 144:3,4
145:4,11,21
146:2 147:17
148:4 150:6,7
150:14,16
169:16 180:16
186:14,15
189:21 192:15
192:18 193:11
193:14,21,22
195:9 205:14
207:16 208:7
212:11,24
214:19,21,23
215:3 221:2,8
226:13,17
227:9,11,14,16
227:18,22
agreements
105:10 143:18
ahead 23:24
122:24 176:16
186:18 203:7
AIC19:25 34:23
38:4 40:22
43:17,18 44:4
44:6 46:21
49:11,14,19
50:4 51:17,18
52:12 55:11,21
67:13 86:22
87:6,25 89:24
91:13,20 92:13
92:15,18 93:6
93:9,13,13,15
95:7 98:11,17
99:2 100:19
102:10,16
104:22 105:12
105:19 108:4
108:20 109:4
109:12 111:16
111:19 112:13
112:19 118:15
175:2 199:24
227:15 228:24
229:4
AIC's 111:11,15
al 1:7 231:7
Alan 104:12
105:20 106:4
ALI 5:15 54:13
81:21 184:3
allow88:4
139:23
allowed 64:22
65:19 69:9
allows 71:5,9
alluded 170:18
alternative 9:20
10:5,9 68:23
70:7,16 74:14
76:15 77:16,21
78:2,12,21
79:3,7,14,22
80:5,8,13
83:25 85:16
94:7,22 98:2
101:21 113:7
138:10 140:10
140:22 151:16
151:25 152:9
152:17 156:10
159:12 177:25
alternatives
80:19 136:17
Alvarez 209:11
ambiguity
178:21,21
amend 101:16
amended 8:16
10:19 17:21
18:2 142:4,11
228:3,18
Americas 3:6
4:21 5:6,16 6:6
amount 33:25
51:19 61:4
63:8,23 64:4
67:17 74:11
82:9 137:4
156:17 168:21
190:22,24
192:6 208:14
208:18,25
213:13
235
amounts 206:2
Amy 5:10 40:7
Anaheim165:23
166:4,13,19,24
167:14,21
171:24 175:10
175:12,21
176:3,15 177:3
177:15 179:8
179:20 180:3
180:17 181:7
186:11,12,13
186:25 187:13
188:6 189:3,4
189:15 190:2
190:11,12,13
190:14 193:17
200:16,23
analysis 58:11
58:13,15 60:9
60:14 119:18
120:12 175:17
196:17 221:23
223:2
analyze 220:5
analyzed 111:23
analyzing 58:20
Andrew5:8 11:9
Annex 192:23,24
192:25
annexed 221:2
answer 13:18
21:21 33:11,13
33:21 36:3,19
38:22,24 39:10
41:21 45:17
46:17 49:22
53:22 71:23,24
71:25 76:7,20
76:22 80:3
101:7,16 103:6
122:24 124:22
125:3 127:10
127:11 129:12
129:14,19
140:15,18
173:13,15
174:3,21
186:18 187:7
195:6 208:10
210:11 214:8
222:13,18,20
223:7,17 224:3
225:8
answered
124:20,23
127:10 129:12
129:19 140:17
157:7 181:9
answering 27:19
answers 13:23
165:14 231:15
anticipating
198:7
anticipation
122:3
Antonio 202:23
204:13 210:17
210:23 224:2
anybody 67:17
70:16 72:15
129:25 132:6
146:5
anyway 174:20
Apollo 5:5 11:11
15:17,24 16:2
16:22 19:19,20
19:24 20:4
22:20 23:2
30:11,16,21,25
31:2,9,10,13
31:15,21 32:12
32:19,23 33:2
33:17 34:5,6
34:11,15 35:4
35:20,20 36:14
39:2,6,16,20
39:21 41:18,18
42:5,5,12,15
45:7 48:14
50:18,21 51:2
51:7 52:5
67:14 82:5
83:19,21 85:23
86:2 88:4,13
88:20 90:25
91:2,4,7,23
92:8,9,10
95:11,21 97:21
97:25 98:4
99:2,3,13,25
100:8,11,16
101:2,9 103:18
104:15,17,18
104:23 109:12
111:25 112:4
123:19 124:2,5
124:13,15,24
125:7,15 126:2
126:5 127:6,15
153:11 154:3
157:24 174:25
216:20,20
217:2,5 228:9
228:14
Apollo's 32:23
100:11 111:24
Apollo-Lehman
156:7
Apollo-related
88:16
apologize 184:25
193:4
Appaloosa 6:13
11:16
apparently
24:13 104:10
appear 95:6
104:4
appearance 40:6
appearances
40:5
appears 25:14
103:17,20
106:19 198:11
applied 164:3
apply 164:4
appraisals 207:5
appreciate
179:13
appreciative
68:12
approach
105:13 126:2
137:14
appropriate
21:23 36:11
61:9,10 65:9
68:8 126:16
133:11 232:5
appropriately
190:8 217:25
219:20
approval 29:7
100:19,21
108:3 118:23
148:15,18
149:2 227:19
227:23
approve 66:12
75:17
approved 70:18
76:18 148:6
225:15
approximate
168:21
approximately
102:6 166:7
204:19
April 10:15,18
79:4 80:16
81:3 114:23
115:14 118:7
120:15 123:9
123:16 130:15
130:19 131:5
132:2,7 153:10
172:11,19
173:2 174:13
182:9,23 183:2
198:23 204:20
209:16
area 211:12
220:11
areas 86:21
ARI 22:24 88:21
arisen 143:11
arrived 40:5
aside 220:7
asked 16:14
69:16 75:22
79:6 86:25
91:23 124:2,15
124:23 127:9
129:11,18
135:18 140:17
142:23 157:7
165:13 171:23
185:2 187:18
189:6,10
219:25 220:17
227:8 228:7
asking 16:22
37:20 38:9,10
68:6 74:6
78:24 127:23
129:15 137:15
146:24 147:2
181:3 191:21
194:24 223:9
223:12,16,23
223:23
aspects 116:19
assess 131:18
assessment
219:13
asset 119:23
assets 77:8 119:9
119:19 120:5
128:16 137:4
162:23 180:7
193:22 194:2,7
194:10,12,19
196:6 205:11
208:12
asset-by-asset
119:18
associate 14:11
assume 8:21
25:19 26:23,25
27:10 95:19
145:21 149:13
170:17 190:10
assuming 112:19
assumption
26:16 27:5
29:7 123:8,15
123:17 148:22
150:11 188:5
188:14
236
assumptions
64:17 120:17
120:18 121:4
Atlanta 4:7
attached 18:4
27:11 105:8,18
105:22 106:25
142:14 144:19
232:11
attaching 105:9
attachments
103:22 104:3
106:24
attempted 65:15
attempting
24:16
attendance
209:20
attending
115:17
attention 92:4
214:17 228:5
attorney 13:10
232:13
Attorneys 2:5,16
3:5,12 4:5,12
4:20 5:5,15 6:5
6:13,21
attorney-client
76:10,21
attributes
208:12
audit 88:23
August 1:14
231:13
author 56:22
authority 118:12
authorize
130:23
authorized
58:22
authorizing 8:21
25:19 26:16
225:20
automatic 145:3
145:10
Avenue 1:13 3:6
3:13 4:21 5:6
5:16 6:6,14
averting 163:4
avoid 165:16
aware 35:2
73:14 74:3
127:18,19
155:25 168:2
171:5,9 184:9
185:9 186:5
194:12 207:17
a.m1:15
B
b 5:22 8:14,22
9:2 10:2 12:11
25:20 83:18
139:4 151:9
206:9
back 21:7,16
38:12,14 41:24
47:14 50:2
51:15 65:17
81:3 120:15
123:9,15
125:13 149:17
151:25 155:12
181:11 182:7
191:7 193:6
202:13 203:4
212:7 213:22
214:4,11
217:15 218:18
backstop 44:18
45:6,7 46:4
48:5,15 49:15
51:16,19 54:21
82:5,6 227:20
Backstop/Con...
81:25
backwards
155:24
Bad 57:7
balance 77:7
169:6 191:9
207:18 213:6
banker 56:19
57:21 78:9
bankruptcy 1:2
17:18 30:10
31:20,24 37:15
38:20 50:12,13
63:14 64:16
65:10 66:7
69:12 70:22
74:3,15,20
75:13,17,20
77:5,11 89:18
92:6 100:3
101:9 108:3
109:21 110:11
112:11 124:19
125:2,8,16,17
128:23 129:2,2
134:9,9 138:8
138:17,18,22
139:4,8,14
140:12,14
145:2,9 146:13
148:7 149:2,2
149:13 152:2,6
152:10 156:21
159:23 162:11
162:18 181:22
191:8 193:10
195:19,20
196:14 227:19
228:13 229:4
231:2
bankrupted
99:5
base 14:20
based 17:7 37:11
38:15 56:9
64:17,18 172:4
176:24
basis 68:15
99:13 155:5
188:10 206:13
213:18,19
219:17 220:5
223:15
Basta 106:5
Bates 40:16
47:10,11 54:13
81:22 86:16
94:23 102:3
104:2 106:22
113:6
becoming 16:25
31:15 83:18
began 205:11
beginning 65:16
65:16 66:24
69:11 82:24
86:21 109:2
123:2 199:7
203:8
begins 29:21
behalf 11:10
42:19 61:19
88:6 95:25
128:6 134:14
164:8,16 184:3
187:12 192:22
202:10
Beilinson 1:11
8:4 12:24 13:1
13:2,3 14:1
15:1 16:1 17:1
17:25 18:1,25
19:1 20:1 21:1
22:1 23:1 24:1
25:1 26:1,13
27:1,22 28:1
29:1 30:1 31:1
32:1 33:1 34:1
35:1,19 36:1
37:1 38:1 39:1
39:5 40:1,15
41:1,15 42:1,2
43:1 44:1 45:1
46:1 47:1 48:1
49:1 50:1 51:1
52:1 53:1 54:1
54:10 55:1
56:1 57:1 58:1
59:1 60:1 61:1
62:1 63:1 64:1
65:1 66:1 67:1
68:1 69:1 70:1
71:1 72:1 73:1
74:1 75:1 76:1
77:1 78:1 79:1
80:1 81:1 82:1
83:1 84:1 85:1
85:11,20 86:1
87:1 88:1 89:1
90:1 91:1 92:1
93:1 94:1 95:1
96:1 97:1 98:1
99:1 100:1
101:1 102:1
103:1 104:1
105:1 106:1
107:1 108:1
109:1 110:1
111:1 112:1
113:1 114:1
115:1 116:1
117:1 118:1
119:1 120:1
121:1 122:1
123:1 124:1
125:1 126:1
127:1 128:1
129:1 130:1
131:1 132:1
133:1 134:1
135:1 136:1
137:1 138:1
139:1 140:1
141:1 142:1,9
143:1 144:1
145:1 146:1
147:1 148:1
149:1 150:1
151:1 152:1
153:1 154:1
155:1 156:1
157:1 158:1
159:1 160:1
161:1 162:1
163:1,22 164:1
165:1 166:1
167:1 168:1
169:1 170:1
171:1 172:1
173:1 174:1
175:1 176:1
177:1 178:1
179:1 180:1
181:1 182:1
237
183:1 184:1
185:1 186:1
187:1 188:1
189:1 190:1
191:1 192:1
193:1 194:1
195:1 196:1
197:1 198:1
199:1 200:1
201:1 202:1
203:1 204:1
205:1 206:1
207:1 208:1
209:1 210:1
211:1 212:1
213:1 214:1
215:1 216:1
217:1 218:1
219:1 220:1
221:1 222:1
223:1 224:1
225:1 226:1
227:1,5 228:1
229:1 231:11
231:18
belief 64:9 66:23
66:25 175:20
180:11 186:22
187:4,11 189:8
189:25
believe 22:22,24
28:23 31:25
34:17 35:9,12
36:11 39:17,19
39:22 47:22
62:10 65:23
66:6,19 68:4
68:11 69:2,5
70:3,6,8,12,13
70:21 71:6,13
71:20 73:14
80:10,10 83:23
86:3 90:22
96:8,20 100:6
100:14 113:19
118:25 123:25
125:21 126:13
128:12,23
130:4 133:16
134:13 135:20
135:22 137:6
139:5,10,25
145:22 147:11
148:17 149:5
150:6 152:20
154:19,20
155:14 159:19
164:10 166:5
170:2,7,22
171:12,20
173:9,19,20,22
174:13 175:19
176:25 177:8
178:4 179:17
179:24 181:12
182:11,11,13
182:22 191:3
191:13,24
192:16 194:8
198:21 200:18
201:16 212:15
213:24 215:15
217:9 221:10
221:13 222:5
223:9 224:2,6
224:7,8 226:15
believed 120:13
135:19 152:9
believes 189:20
benchmark
71:13
beneficial 168:3
171:10 212:21
benefit 30:7
71:15 77:22
79:9 100:12
125:15 134:6
152:5 153:19
153:25 206:11
206:12 220:3
220:23 221:16
221:18,24
benefited 221:11
221:14 222:23
benefits 224:11
224:17
Benson 6:20
11:24
Bernie 22:16
best 50:10 69:24
70:21 77:20,21
77:23 78:15
90:23 92:7,7
105:20 128:25
129:3 134:14
139:7 140:14
152:10,20,22
152:23 153:4
157:18 158:5
159:22 162:13
165:2 181:9
195:10 201:8
201:13 220:13
better 71:18,21
72:4 96:2 98:7
98:9 120:3
126:12,12
137:2,23,24
138:10,16
139:11,12,12
139:14 155:10
156:10,16,18
156:21 157:11
158:16,24
162:15 188:9
beyond 210:13
bfaerstein@wi...
6:17
big 187:18
Bill 135:18
billion 152:15
binding 55:11
109:11 148:5
148:10,17,22
148:24 149:5,8
149:9
bit 70:9 81:9,14
193:16 216:12
216:14,15
blood 230:16
board 15:12,13
15:13,16,18,23
16:2,10,13,14
16:19,23 20:12
20:13,16,18,20
20:22 21:5,11
22:2,5,21 23:4
23:5,6,10,13
31:6,7,8,12,13
32:14 62:20
63:2 75:15,16
75:19 76:9,16
76:18 77:17
78:3 88:15,19
88:22 89:3,18
93:8 98:4
118:11,18,23
126:4 127:12
159:20,21
195:3 216:25
217:4,7 228:8
228:13
body 67:25
bonus 14:21,25
15:3,4,6,7,8
books 58:23
Boone 3:4,11
12:5,7,9
borrowed 170:8
borrower 24:20
133:5 165:20
166:14,17,22
166:23 167:24
169:19,23
170:4,4,13,14
170:20 177:13
191:19,20
193:19 194:3,7
194:10,25
195:11 196:7,9
196:24
borrowers 25:9
192:14 193:10
225:12
bottom32:9
49:10 168:12
214:18
bought 82:6
bound 150:7,17
150:21 151:4,4
151:5
box 122:15
165:8,19,25
166:14 169:18
203:9 208:20
boxes 178:8
202:19,19
bracket 51:19
bracketed
133:19,21
brackets 45:9
branch 165:18
168:11
branches 165:8
165:12
brand 145:5
break 54:2 94:10
130:8,11
140:25 141:5
breakup 51:18
51:20,25 52:7
52:11,12
227:23
Brian 5:18 6:16
11:15
brian.greer@...
5:19
bring 210:22
broad 201:17
209:17
broader 225:4
broadly 207:13
Broadway 6:22
broken 211:13
Brooker 3:17
12:4,4 54:16
Brothers 73:20
74:8 77:24
116:3
brought 92:3
Brown 215:21
215:22,23
218:19
Bryan 4:19 12:3
202:10
Buchalter 17:5
Buck 106:4
budget 208:13
build 66:20
bullet 49:9 95:17
238
108:2 109:16
bunch 114:8
202:18
burdens 219:13
business 42:19
43:9 61:18
69:24 71:8
77:23 78:17
90:22 110:21
111:2,2 135:23
138:16 151:17
152:5,21,22
153:5,20
156:16 158:5,6
159:9,15 212:2
212:4
businesses 17:15
buy 112:5
200:22
buyer 38:4,6
42:13 88:7,11
217:5
C
c 2:2 3:2 4:2,8
5:2 6:2 12:11
67:12 150:2
151:10 175:2
206:9 230:3,3
calculations
121:8
California 17:7
17:8
call 16:21 19:20
19:24 24:7
27:8 130:20
called 1:11 84:20
88:21
calls 124:10
201:4
cancellation
182:2
cancelled 178:11
181:22
capability 90:20
capable 33:24
192:13
capacity 135:12
184:4 217:3,4
217:6,8
CAPEX120:5
223:12,13
224:4
capital 6:21
11:24 64:9
71:7 79:16,20
103:18 104:15
104:17 120:4
126:7,15
128:16 138:25
166:9 167:3
222:22 223:10
223:21
Capitalization
82:25 83:7,17
capped 63:23
care 61:16 62:3
62:3
carefully 232:3
case 1:7 19:12
28:16 31:20
37:15 38:20
69:12 71:17
74:16 75:13,17
75:20 90:24
92:6 100:18
110:11 112:11
124:19 125:2
149:13 153:17
163:25 164:21
165:24 167:7
171:19 231:4
cash 21:24
120:11 126:8
144:25 162:14
205:13 206:17
220:23 221:14
222:7,15
223:14,21
caused 52:11
Cave 4:19 12:3
202:10
CDO168:4
171:11
center 19:14
208:21
CEO22:9,10,13
32:12 93:13,15
certain 119:9
120:5 125:9
228:24
certainly 46:21
154:2 155:9
certainty 25:15
Certified 1:17
certify 230:7,14
231:11
chains 22:12
104:11
chance 26:2
100:17
CHANGE233:9
233:11,13,15
233:17,19
changed 65:21
199:2
changes 117:14
232:9 233:5
chapter 1:6
28:21 37:13,14
38:17,18 50:17
63:18 66:18
76:25 206:15
225:16,20
231:6
characteristics
212:3
charge 78:11,14
216:6
chart 8:19 18:17
19:2,16,19
20:10 23:21
24:9,15,19
165:5,8 166:24
170:16
Chicago 2:18
14:12
chief 10:20 13:5
17:16 22:14,16
46:6 60:23
142:5,11
Chip 3:17 12:4
chip.brooker...
3:18
choose 122:20
149:9
chooses 147:7
162:22
chose 36:9
122:18
Chris 215:20,22
215:23 218:19
chronologically
216:16
Cinemas 22:14
circumstances
133:3,4,5
City 80:12,12
claim63:8,14
71:11 135:19
149:12 162:9
162:20 199:22
208:15,18
claims 74:11
133:18 177:9
180:8 192:6
clarification
178:16,22,23
clarifications
13:21
clarify 101:7
178:24
clarifying
187:25
class 161:10
clear 37:17
52:14 66:8
77:8 99:2
106:23 108:18
111:18 146:16
150:25 153:9
159:13 186:24
188:8 206:19
207:4,23
clearly 26:5
98:17 159:22
client 189:22
clients 119:20
199:24
close 114:3
218:21
closely 48:8
closer 96:22
103:8,10
CLR230:20
clue 104:24
CMBS 23:3
24:21 64:18
219:2
Code 63:15
65:10 100:3
101:9 134:9
138:23 139:4
140:12 152:3
162:11,18
191:9 195:19
195:21 196:14
cohesive 110:20
224:12
cold 122:21
collateral 21:24
24:8,24 25:4
25:10,12 59:22
62:10,19,20
63:12 64:6,13
65:7,18 128:22
133:3 134:8
144:25 162:10
169:8 170:11
170:19 179:6
191:13 205:13
206:17
collateralize
169:12
collateralized
170:8
collective 180:11
collectively
179:8 191:18
225:9
color 24:9 165:5
coloration 59:23
column 25:3
197:23
columns 25:9
come 15:20
16:15,18 50:12
66:5 70:24
75:8 119:10
120:12 137:16
239
137:24 146:12
178:18 182:20
189:19 192:11
coming 31:23
110:2 120:22
commenced
149:3 216:9,11
commencing
1:15
comment 85:3
188:11
comments 86:18
105:19 110:16
188:4,6
Commercial
88:20 228:9,14
committee 6:5
11:14 88:23
common 67:15
99:9
communicated
92:13 103:5,9
206:20,21
212:24
communication
93:20
communicatio...
31:21 112:15
218:17
community
219:2
companies 20:6
22:18 117:15
120:8 148:14
153:21
company 16:15
16:24 21:19
22:25 28:21
30:16 31:16,23
32:24 39:8
44:25 45:2,25
47:24 48:17
50:10 51:24
52:4,7 55:12
56:19 57:20
58:12,16 60:10
60:14,22 61:5
61:13,23 62:15
71:14 75:9,19
77:9 83:13,15
84:19 86:7
87:20 88:6
89:10,18,19,25
93:11 95:25
98:23 99:18
108:4 109:13
122:5 126:15
128:18 135:19
138:19 140:9
145:20 154:7
162:14 200:14
219:12
company's
58:23 117:12
117:13
comparable
120:8
compare 55:5
comparison 77:5
77:24
compensated
14:18
compensation
14:20,22
compete 137:18
competitive
119:19
complete 207:7
231:14
completed 58:13
60:9,13
completely 75:3
completeness
45:16
completing
58:10
compliance 34:9
Complies 29:13
29:16 35:17
44:16,20 48:9
55:6 56:6
86:24 102:13
109:7 115:10
127:25 142:22
142:25 147:19
149:24 151:13
172:24 184:24
185:15 192:19
228:4,21
component
14:21
comprehensive
50:9 61:2
comprises 31:8
concentration
17:17
concept 48:23
103:9,10 140:9
181:25
concerned 62:18
concluded 61:22
conclusion
124:11 178:19
condition 34:8
50:14,20 51:12
90:21 95:10
99:11 102:17
102:20 112:7
208:12,23
210:21 211:16
211:19
conditions 48:5
49:7 54:22
55:8 83:2,7
86:23 87:2,4,7
89:23 95:3,8
95:17 102:11
107:23 109:5,9
110:5,7,24
112:24 212:3
228:24
conduct 44:25
219:12
confidential
26:2
confidentiality
133:17
confines 75:9
confirm226:7
confirmable
139:7
confirmation
51:11 99:12
123:14 139:3
139:24 162:7
190:7,24
confirmed 50:13
188:18 189:2
227:12,15
conflict 158:3,14
158:16
conflicts 158:6
confused 146:22
153:18
confusion
146:22
connection 39:3
39:11 42:14
75:2 92:5
147:14 153:13
179:5 180:2,15
184:18 197:10
200:14 205:5
205:12 211:7
213:9 219:11
219:20
consecutively
104:2
consensual
65:20 66:7
68:15
consensus 66:10
66:20,25 67:24
68:8
consensus-buil...
66:19 68:4
consent 159:25
168:7 171:17
172:6,9 173:7
173:11,19,23
174:14 175:7
182:21 183:13
184:9
consequence
215:4
consider 55:2
64:7 120:17,18
126:6 132:2
164:24,25
consideration
64:23 65:6,8
66:3 123:5,10
153:12 162:13
162:17,21
182:5 200:9,11
201:7,12,17
221:21
considered
30:17 174:24
considering
91:21 197:9
consistent 83:22
106:22
consists 45:10
Consolidated
117:2
consolidation
197:5
constituencies
53:8 66:14
70:23 71:17
72:5 73:12
74:14 77:22
79:9,24 80:9
159:25
constituency
75:10 137:15
constituent
53:20
constituents
30:7 71:6 77:2
80:5 123:2
134:15
constitute
215:12
constitutes
143:6
constructive
105:16
consummated
123:24
consummating
95:20
contacting 33:6
33:15
contacts 43:12
contained 151:7
contemplate
122:16 197:5
contemplated
240
62:16 108:5
169:16 175:25
176:5,8 177:2
195:10 200:10
212:25 220:25
contemplates
156:2
context 19:15
24:14 42:16
45:21 51:12
60:19 61:13,23
63:21 65:3
99:25 100:13
128:24 152:17
160:12 186:3,7
186:8 202:16
220:6
contingencies
152:12
continue 97:12
105:16 120:16
146:11 196:25
Continues 104:6
continuing 29:7
68:13 120:16
contract 15:9
148:20 149:11
150:10
contractual
91:15
contribute 125:8
contributed
125:16
control 97:14,15
182:21 183:4
183:12 184:9
controlled
174:19 182:14
controlling
161:10
controls 173:6
cont'd 3:2 4:2
5:2 6:2
conversation
65:22 97:19
125:7 208:16
209:6,9,10,23
210:5 212:8
217:23
conversations
42:15 49:4
98:3 100:15
113:22 114:19
212:9 216:4
218:11
conversion
110:6
convert 169:15
converted 137:5
converting
123:11 137:7
copies 27:3,4
54:15
copy 27:24 28:3
corner 40:17
94:24 204:8
Corp 15:17,24
22:21 31:10
32:13 33:2
39:2,17,22
42:12,15 45:7
48:15 51:3
52:5 67:15
88:4,13 91:23
92:10 95:11
98:5 100:9
109:12 126:5
corporate 8:17
17:22 18:3,10
157:16 196:21
corporation 5:5
11:11 16:3
19:20,25 20:5
20:14 23:12,12
23:14 30:21
31:2,3 34:7,15
35:4,21 36:15
39:6 41:19
42:6 82:6
83:19 85:23
86:2 91:2,7
100:2 104:18
127:7,15
196:18 216:20
221:19,19
Corporation's
33:17
corpus 135:3
Corp's 100:12
111:25
correct 13:11
16:5,6 18:11
18:13,14 19:17
19:18 20:7,10
24:10,15,22,25
25:2,6 27:24
28:15,16,25
29:9,10 30:12
30:19,24 31:17
36:16 41:18,19
42:5,6 46:10
48:18,24 49:12
52:2,21,22
55:14,23 62:15
62:17,21 68:3
68:18,20,21,22
68:25 70:19,20
72:22 73:9,10
73:23 78:4
83:15 84:3
89:25 91:8,22
93:22 96:23,24
98:24 102:18
109:16 112:15
118:4,5,6
121:4,24
125:23,24
134:18 143:13
143:14,19,23
145:22 148:8
148:15,16
149:9 150:8
153:22 154:10
160:8 161:23
164:8,18,19
165:24 166:4,7
166:8,19,21,25
168:14,18,22
168:23,25
169:10,16,17
170:15,21
171:25 172:2,7
181:13,18,19
182:15 184:5
192:15 193:14
193:24 194:4
194:11 196:4,5
196:7,8,10,11
196:16 198:9
198:14,20
203:12 213:3
213:16 214:3
217:9 218:24
226:9,10,19,22
229:7 231:16
corrected
179:12
correcting 179:3
corrections
232:4,6
correctly 24:12
45:12 108:6,7
145:7
correspondence
210:2
costs 211:6
counsel 12:15
13:25 22:17
37:25 43:6,13
43:15 44:6,8
76:5,6 97:3
114:18 121:9
174:7 188:17
189:19
counsel's 27:23
counteroffer
84:15
country 22:12
couple 40:24
72:23 93:20,24
172:16 206:17
216:9,11
course 62:3
64:16 89:8
120:15 125:11
146:7 207:7
210:18 215:19
court 1:2 13:17
26:22,24 27:3
27:25 36:4
50:13 63:7
64:5,12 65:8
69:6 71:10
89:19 108:3
109:21 138:5,6
143:18 145:2,9
148:7,14,18
149:2 185:3
220:17 227:12
227:19 228:13
229:4 231:2
232:16
Covenants
149:21
cover 21:13
covered 21:9,17
Craven 10:20
66:9 142:4,11
184:23 228:20
Craven's 228:18
create 152:13
199:12
created 64:10
66:20 128:19
139:17
creates 71:3 79:8
creating 134:12
creditor 53:20
64:13 66:14
67:25,25 70:23
73:12 74:13
75:10 79:23
80:9 90:15
134:17 135:8
135:11 137:3
137:14 157:14
159:24 162:21
192:8,12
creditors 6:5
11:13 50:11
53:15 60:3
64:18 66:22
67:21 68:2
71:11 79:10
134:25 135:4,6
136:25 137:19
137:22 138:9
139:2 151:25
152:16 156:19
162:4 191:22
241
201:19
crisis 132:16,19
133:7
Crisp 4:15 11:21
11:21
CRO14:16,19
15:10,21 16:25
23:8 106:9
164:18,20,24
176:13 194:18
196:12
CRO's 162:16
CSFB202:12
culminated
212:11
current 108:9,14
108:17 169:5
188:10 213:5
223:14 224:13
CW166:9 167:3
cycle 211:3,21
D
D2:19 4:15 8:2
Dallas 3:14
Dalton 22:22
44:3
damages 149:12
Dan 11:3,23
DANIEL2:8
6:24
daniel.donova...
2:9
date 17:23 18:18
25:21,23 28:18
28:19,21 29:5
32:3 35:3,10
35:11 36:16
40:13 44:11,13
46:21 47:5
54:7,12 58:6
81:18 82:17
85:18 94:9
101:23 102:15
103:12 105:17
111:5 113:25
114:4,24
130:16 142:7
148:2 149:18
149:18 156:3
172:20 182:24
204:19,20
230:9 232:8
233:23
dated 8:25 9:5,8
9:11,14,17,22
10:6,10,12,14
10:17 28:24
32:2 35:3
40:12 44:11
47:4 48:12,14
54:6 81:17
82:16 85:17
86:18 94:8
101:22 102:6
103:11 104:11
109:2 114:23
130:15,19
dates 131:6
day 1:14 19:3,10
28:15 36:5
66:9 72:21,22
73:8 75:22
116:16 231:21
days 31:19 33:16
40:24 72:23
74:19 93:20,24
102:6 112:10
114:5 131:9,22
132:7,14
133:12 135:12
136:14 143:10
159:24 161:2
197:5 232:14
day-long 117:17
DC2:7 204:2
deal 71:18,22
72:4 74:23,24
75:7 77:18,18
99:10 107:12
113:17 131:15
137:2 140:21
140:22 158:21
158:22 175:21
180:17 181:15
188:21 198:20
200:13 205:4
dealing 27:20
deals 71:5 77:16
dealt 126:17
177:11 180:4,7
debt 19:16 24:14
25:10,11,12,16
59:22 60:2,5
61:4 64:12
65:2 77:6
110:6 123:7,12
128:11 129:9
129:17 131:15
131:19,22
133:14 135:14
135:17 137:7
158:25 163:5
166:6 176:2
177:8,11,15,16
178:9,10,12
179:7,9,10,20
180:18 181:21
182:2,5,8,14
182:17,19,22
183:5,14
187:15 191:23
197:23 198:7
198:19 199:5
199:11 200:14
203:18 207:15
207:18 213:2
213:12,13
222:7,16,21
223:5,10,21
debtor 31:14
36:13 37:13,14
38:17,19 56:3
57:15 59:10,12
59:14 60:4
61:20 70:22
77:3,21 83:24
85:7 89:4,20
90:4 98:6,12
98:16,18 99:5
111:3 112:19
116:18,20
136:25 150:7
150:14 164:21
187:11,12
190:15 192:22
193:19 194:20
199:17 201:10
201:14 215:10
debtors 1:8 2:5,5
2:16,16 8:18
8:20,21 11:4,8
11:18 14:19
15:11,21 17:22
18:4,10 19:3
19:15 25:18,19
26:15 29:6,22
30:3,5,10,14
39:13 40:23
41:17 42:4
47:17,18 57:19
59:17 60:5
63:17,20 70:4
74:11 77:13
92:4 132:16
133:23,23
143:4,7 148:14
149:6,8,9
157:22,23,24
158:17,18
164:8,12,13,18
165:24 167:17
168:13,17,19
170:21 176:13
188:24 191:17
192:25 193:10
193:24 194:4
194:19 195:23
196:3 197:6
198:9 219:14
228:23 231:8
Dechert 5:14
43:16 94:23
102:5,16,19
104:13 114:9
decide 120:18
188:10 220:19
decision 77:18
declaration
10:19 66:9
142:4,11,15,18
228:3,18,20
deem65:8
deemed 178:10
181:21 232:16
deep 144:22
default 110:6
112:24 125:22
127:17 132:18
221:9
defaulting
217:21
deferred 211:23
211:24 223:12
deficiency
162:20
defined 51:20
177:9 178:10
179:8
defines 179:4
defining 132:20
definition 63:12
147:25 149:17
deflagged 206:6
deflaggings
132:18
degree 151:19
Delaware 20:10
delayed 211:9
deliver 53:14
delivered 53:7
demonstrate
24:17
Dennis 10:19
142:4,11
228:18
depends 158:13
deposing 232:13
deposition 1:11
8:16 13:13,14
14:2 17:21
18:3 19:21
21:9,13,18,23
140:4 164:11
164:15 180:10
189:24 194:15
222:11 229:15
230:8,11
231:13 232:3
232:11,14,15
242
Derrough
135:18
describe 121:23
155:7 204:25
210:19
described 77:17
84:23 159:12
208:8
DESCRIPTION
8:15 9:3 10:3
deserve 163:5
designated 83:6
86:22
designating
25:25
desirability
70:13
desire 42:8
74:10 100:12
despite 48:22
destructive
132:16
details 211:14
212:15
determination
61:18 152:11
determinations
62:7
determine 53:4
69:25 119:25
158:23 201:8
220:22
determined
63:24
determines 63:8
64:5,12 71:10
determining
61:2
detriment
153:25
detriments
220:4
developed 155:4
development
41:16 42:3
dfliman@kaso...
6:25
dialogue 30:11
31:2,12,14
133:6 145:23
146:5,9 159:17
159:18 205:8
Diego 203:23
205:13 206:6
210:15 211:5
212:18 221:10
224:6
Dieterich 5:10
40:7,7
different 43:20
43:21 58:6
68:16 69:3
74:12 82:8
88:7 98:17
104:5 116:19
119:24 120:9
134:4 140:9
174:25 178:8
180:24 188:7
199:11 221:4
diligence 58:24
59:3,4,6,15,16
59:25 69:10,21
69:22 138:14
138:20 139:18
139:19 159:18
205:9 206:2
218:16
DIP91:18,21,25
92:3,12 110:9
147:9,15
159:20 160:6,9
160:13,24
161:7,13
205:12 206:8
206:22 212:20
DIPs 92:9,10
direct 31:20
154:13 214:17
228:5
Directing 228:22
direction 114:18
directly 49:6
50:11 113:19
director 89:9
directors 15:14
16:13,19,23
20:13 23:10,13
24:4 32:14
75:15 76:17
88:16,19 89:3
116:23 164:23
225:13
disagree 146:10
186:10 187:16
disagreements
117:20
disclose 135:13
disclosed 35:22
36:4 37:3,7,9,9
37:15,17,20
38:19 76:7
228:12 229:3
disclosing 76:10
76:21
disclosure 89:2,7
89:11,17
197:11 228:8
discounted
120:11
discourse 117:19
discuss 62:5,25
63:21 70:14
75:18 76:16
79:6 132:4
133:18 136:13
174:16 179:15
226:12
discussed 63:4
76:6 77:4
105:9 115:22
119:9 135:17
136:6,11
169:19 173:3
211:17,19
216:23
discussing 50:25
65:14 76:5
136:17 205:11
225:17
discussion 10:14
10:17 98:15
100:8 105:14
105:25 106:3
106:16 111:6
114:23 130:15
130:21 131:25
132:3,11 207:6
208:17 212:2,5
discussions
29:23 30:4
32:25 42:7
66:17 83:24
88:14 97:24
98:10 100:11
105:16 106:6
118:8 180:2,14
180:20,21
204:21 207:10
207:13,14,24
212:10 215:16
216:19 217:11
217:18,24
218:5,25 219:4
226:7
dispute 108:13
disruptive
126:24 161:7
distribution
39:2 95:2
96:15 99:5
DISTRICT1:3
231:3
document 9:4,7
9:10,13,16,19
10:4,8,13,16
18:4,5,7 19:4,7
26:8 28:24
37:10 40:11,16
40:18,23 41:8
41:10,13 44:10
44:23 45:19
46:11,20,23,24
47:3,8,12,15
48:13,20 49:3
49:5,6,7,17
54:5,11,12,20
55:15 56:23
58:2 60:16
81:16 82:2,15
83:11 84:4,7
84:11 85:15,20
86:4,16,20
87:12,13,14,16
87:19,21,25
88:3 89:24
90:2 91:17
94:6 95:6,9
96:3,5,7,9,12
96:19 101:2,20
102:2,15,19,22
102:25 103:2,7
104:7 105:22
106:19 107:14
107:23 108:19
108:19,21,23
109:2,10
114:22 116:4,6
116:7,15,25
118:17,21
119:3 130:10
130:14,19,24
131:2,13
139:15 142:10
144:17,22
156:8,23
157:10 173:10
173:18 178:5
179:2,11,21
182:10,13
183:3,4,12
184:2 198:5,13
documents
27:18 40:22
47:9,16 55:19
55:21,25 56:2
58:5 59:9 85:6
102:23 104:5
106:21 121:10
156:6 172:16
186:20,21
187:8,9,19,22
188:9,11 189:2
189:7,10,25
190:7
doing 91:21 92:9
92:10,14 97:13
134:12 138:10
160:9 207:11
219:22 220:13
243
223:12 232:7
dollar 170:5
192:5
dollars 15:3
67:19 133:14
135:15 207:19
213:12,19
Donovan 2:8 8:8
11:3,3 12:18
14:8 18:15,21
21:10,20 25:24
26:10 28:2
33:9,12,20
34:13 35:24
36:17 37:4,16
38:2,8,21 39:9
40:3 41:2,5,20
43:3,19 45:13
45:16 46:15
49:21 52:23
53:25 55:24
56:13 57:9,25
63:25 69:13
70:10 71:24
73:24 75:21,24
76:2,13,19
78:5,23 80:2
81:6,11 84:9
86:6,10,13
89:5,14,21
94:11,14 95:14
95:18 103:24
106:18 107:4,8
111:13 113:18
116:10 121:14
121:18 122:8
122:22 124:8
124:10 127:3,9
128:5 129:11
129:18 130:7
130:13 134:22
136:8 140:17
140:23 141:4
144:2,5 145:6
145:16 146:15
146:21 147:5
148:11 150:20
153:2 154:18
156:13 157:7
158:9,12 159:3
159:5 163:13
163:17 174:2,9
176:20 177:24
181:2 182:16
183:16 186:17
187:6,16,21
188:2 189:5
194:16,21
195:2 197:7
201:4 202:2
208:9 214:7
220:10 227:3,7
229:9,12
double 145:3
150:18 224:9
doubt 49:5 197:2
downside 163:7
163:10
draft 94:23
102:5,16
107:14 183:9
206:8
drafting 188:22
drafts 27:18
47:14 227:9
driveway 210:24
due 58:23 59:2,4
59:6,15,16,25
69:10,20,21
138:13,20
139:17,19
159:18 205:9
206:2 218:16
duly 12:12 230:9
duplication
165:16
duty 69:5 78:16
139:9 140:21
201:16 220:8
220:15,18
221:4
E
E2:2,2 3:2,2 4:2
4:2 5:2,2,18
6:2,2 7:2,2 8:2
8:14 9:2 10:2
12:11 142:2,2
144:25 145:8
214:18 230:3,3
233:1
earlier 48:23
59:24 91:17
93:21 102:7
116:8 122:25
132:8 133:12
136:15 137:6
152:3 159:12
173:3 188:6,11
219:15
early 123:8
125:14 144:17
earshot 99:4
easier 202:13
EBITDA64:11
71:3 77:15
128:20
economic 123:10
153:23 208:23
economy 163:8
educate 133:2
education 13:10
effective 70:3
147:25 149:17
149:18 150:6
150:13,15
156:3
effectiveness
90:21
efficient 195:7
effort 110:17
116:18
Ehrlich 5:8 11:9
11:9
either 40:22
83:21 92:9,10
117:16 150:12
171:6 183:21
192:9 210:3
element 110:17
elements 33:22
110:4,18
119:16 121:7
eliminate 128:10
eliminated 65:2
133:13
eliminates 161:7
Ellis 1:13 2:4,15
11:4,8,18 43:7
115:5 189:2
Elmore 3:15
12:6,6
embedded
199:13
embodied 84:20
84:22 103:2
109:23 110:4
207:17
emergence
198:7
employed 13:4
17:5 230:14
employee 22:24
104:22
employees 98:4
217:2
employment
17:2
ended 95:20
204:20
ends 152:23
engage 83:24
114:12 159:17
159:18
engaged 29:23
30:4,10,15
31:14
English 57:7
ensure 134:7
ensured 50:19
enter 100:22,24
140:5 206:12
207:6,10
218:25 219:3
entered 24:20
26:7 148:21
205:8
entering 95:21
217:23
enterprise 15:24
30:6 53:12
63:11 71:4
99:15 123:8
134:2,5,23
139:23 152:21
152:23,24
153:5,6,16,20
157:14,17
159:22 160:5
195:14 196:21
200:17,19
201:2,9,15,18
201:19 206:16
213:10 221:15
224:13
entire 77:9 90:9
98:24,25 135:3
195:14 201:18
221:18
entirely 106:23
entities 21:3,6
23:2 24:4,5
25:13 31:11
53:2,16 128:3
139:18 169:10
192:11,23
202:15 205:4
206:16 221:6
221:14 223:2
225:16 226:2,9
226:14
entitled 117:2
121:22 128:24
142:10 195:22
entity 23:21
88:16,18,24,24
104:23 161:10
164:24 166:3
166:14 167:2
192:12 193:20
194:22 196:13
196:25 200:20
221:23,25
222:9
entries 164:24
165:2
entry 145:2,9
environment
120:3,21
123:11 132:19
244
environments
119:21
envisioning
197:4
equal 51:18 65:6
200:23
equitization
51:9 134:12
equitize 73:21
74:10
equitized 128:15
equitizes 63:10
70:25
equitizing 63:12
64:10 199:10
199:10
equity 31:15,23
36:15,24,25
37:12,13 38:17
38:18 39:3
42:9 44:18,22
44:24,25 45:2
45:3,8,8 46:4
48:4,4,4,16
51:10,16 54:20
54:21,21 62:14
63:3,10 64:21
65:7 66:2
67:15 81:25
82:4,7,9,9,25
82:25 83:6,7
86:22,22 87:6
87:6 88:2,4
90:17 95:2,2
96:15,17,18
98:11,16,18,22
98:22 99:6,9
99:12,20,22
100:25 102:10
102:10 103:3
109:4,4 110:6
122:5,15 123:7
123:12,13,15
123:18,23
137:7,10 153:5
154:2 162:22
162:25 163:5
169:15 170:9
174:25 177:9
177:14 200:5,6
217:5 229:5
equivalent 65:9
ERHLICH
98:14 124:9
errata 232:5,7
232:10,13
error 188:23
ESQ2:8,10,19
3:8,15,17 4:8
4:15,23 5:8,10
5:18,20,22 6:8
6:16,24
essentially 99:14
117:21 155:13
213:10
estate 4:5,12 7:5
50:12 64:16
66:7 70:22
77:20 88:20
125:8,16,17
129:3 134:10
134:15 135:2
138:17 139:8
139:14 140:14
146:13 152:6
152:11 156:22
157:18,19
159:23 163:24
164:16 206:11
228:9,14
estates 30:7
134:17 152:16
157:19,21,23
157:24
estimate 155:18
estimates 117:22
155:5
et 1:7 231:7
ether 224:24
225:9
event 26:8 33:8
126:24 143:17
143:21,21
145:25 146:2
147:4,6,8,13
161:7 214:2,6
events 110:5,5
112:23 132:16
144:24 148:6
everybody 18:20
66:18
everybody's
62:4
evidence 19:10
evidenced 97:2
98:20 111:10
112:15 154:3
evidently 48:20
exact 71:17
exactly 74:7
134:8 178:5
193:17 219:24
examination
1:12 12:22
163:20 202:5
227:6
examined 12:12
example 80:16
117:2 119:12
208:19 220:2
220:23 221:6
221:20
exceed 207:19
excess 177:19
200:24 213:11
213:18
exchange 8:25
10:12 32:2
51:10 88:21
103:11 125:10
125:19
exchanged 62:13
exclusive 52:19
138:24 139:20
140:13 152:19
exclusivity
158:23 159:4
excuse 93:12
208:21
execute 55:12
89:24 109:13
110:21
executed 34:4,8
35:7 36:21
50:15,19 72:18
108:4 160:19
executing 77:23
102:17
execution 28:3
107:23
executive 17:16
22:14,17
executory
148:20 149:11
150:10
exercise 139:8
150:22 156:11
156:22 157:5
159:15
exercising 78:16
exhibit 8:15,16
8:19,20,24,25
9:3,4,7,10,13
9:16,19 10:3,4
10:8,12,13,16
10:19 17:23
18:2,17 19:2
19:13 24:6
25:21,23 26:15
26:20,24 27:7
28:8 32:3,6,10
35:13 40:13,16
44:10,15 47:5
47:8 48:11
51:17 54:7,11
55:4,9,9,16,16
56:5,7 58:4,7
59:20 60:17
72:5 81:18,21
82:8,17,20,25
85:18,21 90:8
90:9 93:21
94:9,20,21
101:23 102:2,7
103:12,15
114:24 115:4
130:16,18
131:10 142:7
142:10 143:25
147:16 154:22
164:10 165:4
172:23 176:20
182:10 183:3,8
183:22 184:22
192:18,23
197:14,16,17
202:14 208:2
214:10,12
227:12 228:2
228:19
exhibits 26:14
27:11 40:2
83:23 142:14
142:16,17
143:22
exist 196:25
existed 126:7
existence 73:8
73:12
existing 200:20
exists 66:11
expect 194:18
experience
37:11 38:15
123:4 138:18
experiences
16:16
expert 23:3
explain 76:8
78:24 168:24
177:6
explore 80:4
explored 75:19
exploring 80:12
182:19
expressed 132:8
extent 31:5
42:11,14 43:17
49:22 62:5
76:4,8,20
90:16 91:13
101:17 208:25
214:8 216:23
external 79:16
extinguished
196:4
extra 54:15
extremely 64:7
71:12 155:21
e-mail 8:25
245
10:12 32:2,10
34:24 93:25
94:2 103:11,18
103:21 104:10
105:2,6 218:8
218:18
e-mails 105:3
218:13
e-mail's 106:24
F
F 142:2 230:3
faced 158:20,22
facially 97:13
facilitate 64:14
facility 91:22
205:12 206:10
fact 44:24 47:23
60:13 64:21
65:22 68:12
92:8 97:11
112:21 125:16
128:13 130:25
136:14 137:8
138:4 160:12
177:18 179:13
180:3 217:19
221:8
factors 208:23
facts 201:6
Faerstein 6:16
11:15,15
fail 232:15
failed 124:7
fair 17:17 60:25
64:12 71:10
106:23 126:16
128:22 179:17
187:17 189:11
189:14 190:13
194:22 206:12
212:22,23
219:19 229:3
fairly 46:12
123:17 127:11
201:17 220:12
220:13
fairness 27:17
faith 99:15
fall 152:4
familiar 14:3
32:8 147:21
203:3,14,17,23
204:5,10,14
far 25:11 67:3
68:2 85:8
216:13
Farr 6:12 11:16
fashion 154:9,12
Fassett 1:16
230:5,20
favor 128:15
feature 99:13,17
features 119:19
fee 51:18,20,25
52:7,11,12
168:12 227:23
feel 92:21 127:11
151:4 219:22
feeling 120:13
fiduciary 69:5
78:16 128:6
130:3,5 133:20
133:22,25
134:5,9,14,16
134:19,20,21
134:25 135:3
135:10,13
138:17,21
139:9,11
140:20 150:22
150:23 151:6
156:22 157:5
157:15,16
159:14 162:16
195:23 201:16
219:23 220:8
220:15,18
221:3
field 216:17
Fields 17:6
Fifteenth 2:6
Fifty 99:20
figure 188:21
200:3 220:17
file 28:21 139:22
159:24 226:9
filed 26:24 27:2
27:2,13,25
28:12,14,16
29:4 72:18
100:18 101:4
109:20 138:4
142:19 145:20
158:24 185:3,5
185:10,18,25
206:18
files 27:2 225:16
filing 28:15 30:9
31:3,20 33:16
35:10,11,22
36:16 72:4,21
72:22,23 73:9
73:13 74:15
75:12,16,20,23
78:4 79:5
93:21,24
112:10 114:3,5
124:19 125:2
138:5,8 160:14
172:20 182:24
197:4 206:15
225:20 226:16
226:18
final 27:20 50:19
109:20 111:24
175:17
finally 110:21
Finance 228:9
financial 10:20
23:12 117:3,10
117:24,25
119:14 142:5
142:12 155:6
155:19 196:18
217:21 228:14
financing 23:3
91:18,21 92:4
206:12 212:20
221:24
financings 91:25
find 74:18 78:12
79:3 88:7
126:14
fine 12:20 20:3
195:23 216:18
finger 149:16
finish 23:25
46:15,17 70:10
87:17 127:4
134:22 136:8
finished 29:18
firm17:6 85:23
85:25 151:15
159:11 188:18
first 15:9 19:3
19:10 28:15
36:5 56:4 58:2
66:9 103:17
104:17 107:12
108:2 119:7
124:20 132:12
133:16 136:12
138:20 143:3
144:17 153:10
155:2 174:24
175:13 184:8
220:2 230:9
First-Day 10:22
142:6,13
fit 221:18
five 6:21 11:24
110:9 124:18
124:25 147:9
147:14,14,15
155:12 160:7
160:13 161:4,6
161:13 163:15
201:24 202:21
205:11,14
216:21 225:16
five-month
125:3
fixed 24:20,21
91:21 117:9
118:3 119:4
160:10 161:8
161:14 162:4
206:9 207:18
216:24 221:13
flags 126:18
flexibility 64:8
65:19 128:18
199:12 200:13
Fliman 6:24
11:23,23
floating 25:5
117:23,23
118:3 146:17
146:20,24,25
147:12 168:17
169:19,23,25
170:4,6,14,20
171:18 172:3
172:10 173:7
174:18 175:10
175:11 177:13
179:6 181:12
181:17 182:7
182:14,18
183:5,13 184:4
184:10,20,21
186:15 190:3
190:23,23
191:19 193:18
193:19,24
194:3,4,7,25
195:11 196:3,9
196:24 197:22
198:6,9,18
199:4 207:18
216:24 221:12
Floor 3:6 4:13
flow120:11
126:8 220:24
221:15 223:21
flux 193:16
focus 112:25
193:18
focused 109:24
109:25 110:9
111:16,20
113:9 145:16
165:17 198:25
Foerster 6:4
11:13
folks 225:5
follow226:6,12
followed 210:3
following 32:20
246
233:5,6
follows 12:13
192:24
footnote 56:8,12
57:24 58:6,7
60:17,18 84:21
84:24 177:12
178:5 179:4
183:23,24
184:14,14,15
228:17
footnotes 116:8
foregoing
230:10
form35:7 49:11
65:6 89:5,21
95:12 98:14
111:14 113:18
122:22 124:9
128:5 140:24
148:11 150:20
153:2 154:18
156:13 158:10
158:13 159:6
162:13 178:3
181:3 182:16
186:17 208:9
214:7 218:18
220:10 228:18
Forma 121:22
122:12 197:23
formerly 22:10
22:14
forms 153:12
forth 47:14
55:13 73:4
109:14 139:3
218:18 230:9
Forty-five 24:24
forward 45:25
46:3 68:9,12
76:24 81:12
111:3 112:8
113:23 125:12
132:5 139:9
155:24 159:23
160:4 207:11
found 83:22
97:22
Foundation
35:24 56:13
57:25 78:23
80:2 116:10
122:23
four 107:20,21
115:19 124:18
124:25 154:8
154:12,17
155:7 160:23
176:21 217:15
Fourteen 197:20
framework
66:20
franchise 125:22
143:12,16,20
145:4,11 147:9
147:12
franchisors
66:22 110:11
128:19
frankly 126:10
Fred 22:9
free 69:2 77:8
162:14
freed 128:17
freeing 77:15
free-fall 77:4,10
frequently 98:8
Frey 114:7
Friedman 6:20
11:24
front 26:17
54:14 55:4
69:24 70:2
fulfill 91:12
126:9 139:21
fulfilled 224:5
fulfilling 77:12
78:16 90:20
125:9 126:13
219:22 220:14
full 12:25 64:10
156:8 207:7
fully 127:11
162:14 190:16
190:20 199:9
fund 124:6,15,24
127:7,16
161:14
fundamentally
70:21
funding 91:24
125:18 126:2
funds 126:11
further 105:19
170:10 201:20
209:18 226:25
229:9 230:14
future 71:8
119:22 129:2
223:12
G
gain 123:3
Galante 6:8
11:12,12
GALLAGHER
6:12
Garden 203:11
210:15 211:11
Garrison 5:4
11:10
geared 210:20
GEN119:25
120:2,2
general 22:17
132:14 207:8
211:16 212:4
216:3 217:25
219:3,5
generally 48:19
92:21 167:16
168:16 203:3
208:18 209:3
generated
221:15
generates 222:6
222:15
generic 208:7
Georgia 4:7
getting 39:2
60:16 63:13
67:7 73:4
96:22 103:8,10
110:9 114:3
162:9 195:16
196:10 200:4
give 39:25 47:16
59:2,4 64:23
65:17 76:2,3
78:14 84:15
118:13 128:17
149:12 154:13
163:11 178:14
186:21,22
195:4 215:6,12
given 78:11,14
90:3,3 182:5
207:7 230:12
231:16
gives 150:11
giving 110:15
162:12,17
195:21
Glatt 103:18
104:11,14,20
104:21 105:2,4
106:5,10
global 52:20
53:2,8,16,18
98:12 118:9
143:7 174:20
go 17:2 21:7,15
23:23,24 25:8
52:12 64:11
77:7 78:12,20
79:2,11,13,21
88:7 97:16
106:25 108:24
113:3 116:25
118:11 119:2
122:24 128:8
130:10 131:12
136:24 139:19
140:21 146:3
149:17 150:11
162:4,25
176:16 178:23
179:9 186:17
202:13 203:4,7
214:11
goal 92:6 132:12
134:6
goes 47:10
105:15 109:15
155:24 179:18
going 23:11
24:18 29:20
33:8 34:3
35:16 38:5,6
47:14 48:6,15
51:15,24 52:4
55:8 63:2
69:13 82:9
85:6 99:4,7,8,9
106:18 107:16
107:22 109:3
117:25 119:20
120:3,20
121:21 122:4
126:6 128:9
131:15 133:7
140:2 141:4
146:3 153:11
155:23 157:13
157:14,22
158:9,12 159:7
162:4,5 163:14
165:12 169:14
189:23 190:15
192:10 197:7
200:19 206:14
212:7 217:15
217:19,22
good 61:19
77:24 81:10
115:18 130:7
130:10 131:6
151:18 156:19
202:2,7 204:7
204:12,17
220:7 225:2
gotten 87:22
Gottesman 4:23
8:7 12:2,2
201:24 202:6,9
226:24
Gould 2:10 11:7
11:7 14:11
54:15,17
247
gradual 155:21
gradually
155:15,20
Grand 20:9
24:19 165:19
166:14,17,22
169:19,22
170:3,13,19
177:13 191:19
191:20 192:21
194:2,7,10,25
195:11 196:7,9
196:19,23
granite 211:13
grant 125:11,12
granted 215:8
granting 8:23
25:20 145:2,10
Great 14:13
greater 195:22
greatest 79:8
green 24:9,13,14
25:4,10,13
59:23 165:25
169:18 202:19
202:19 203:10
208:20
Greer 5:18
106:4
group 22:10
104:13 209:14
223:24,25
Grove 203:11
210:15 211:11
guarantee 125:9
125:15,19
guess 143:24
150:21 187:22
202:22 207:23
216:20 219:25
guessing 176:17
guys 195:5
229:11
H
H1:15 8:14 9:2
10:2 230:5,20
half 123:23
210:18
hand 85:20
handed 18:25
19:3 26:13,20
47:7 54:10
57:13,16,17,20
81:20 82:19
101:25 103:14
115:3 142:9
handle 127:13
133:7
handling 126:6
happen 119:21
152:16,18,19
159:8
happened 99:3
happens 214:10
happy 23:23
27:5 78:25
85:5 154:13
173:16 188:8
195:4 201:3
harbor 100:4
Haynes 3:4,11
12:4,6,8
head 21:2,3
23:16 189:16
218:6
header 86:18
hear 14:2 85:24
151:21 165:14
219:15
heard 132:23
189:18
hearing 29:8
179:2 188:3
hearings 19:4,10
36:5
held 1:12 14:15
help 225:5
helping 91:11
161:9
hereinbefore
230:8
HERTHER-S...
5:22
Hewes 22:23
44:2
Hi 202:8
high 135:21
188:12
higher 71:18,21
156:10,16
191:3
highlights
173:10
highs 155:13
Hilton 166:3
hired 15:10,14
225:5
historic 155:13
224:4,13,14,17
historical 222:25
history 17:2
hold 25:16 37:16
70:10 178:14
holder 25:12
45:3 67:13
153:25
holders 67:12
Holdings 20:9
192:22 196:19
honest 136:14
hope 57:7
105:15 155:17
162:2
hopefully 165:16
200:15
Hospitality
90:15
hostile 123:10
hotel 22:10,11
25:4 119:24,25
143:12 145:5
146:17 161:24
166:4 168:14
189:23 200:16
200:18 222:17
hotels 22:11
24:24 59:11,13
59:16,19,22
62:21,25 63:3
63:5,18 66:13
117:4 119:4,4
119:4,11,17
125:23 154:8
154:15 155:15
169:9,11 170:9
177:14 202:25
204:22 206:6
207:15 208:2
209:4 221:9,10
223:6
hotel-by-hotel
155:4
HS 165:23
166:13,19
hundred 21:3
62:14 63:13
70:25 99:11
123:18 153:24
162:10 166:18
168:2 200:5
hundreds 27:18
47:13 67:18
Hyatt 120:2
I
idea 104:19
192:5 194:13
identified 24:7,8
24:9 25:13
54:20 102:5
208:2
Identify 66:13
ii 145:3,10
Illinois 2:18
illustrating
198:18
illustrative 9:4,7
9:10,13,16,20
10:5,9 40:11
47:3 54:5
56:11 81:16
82:15 85:16
94:7 101:21
119:3,5,5
121:4,22
122:12 144:14
immaterial
34:19 50:22
175:17
immediately
168:10
impact 128:13
imperative
232:12
import 69:19
important 34:4
34:7 51:11
60:23 61:8,22
64:7 71:12
88:10 90:12,18
91:10 112:4
132:25
impression
188:23
improve 221:16
improvements
210:17 211:2
222:22 223:11
inaccuracies
185:9,11
inaccurate
188:19 189:20
inches 142:14,16
include 22:22
52:7 80:18
160:7 177:15
199:8 218:13
included 42:8
56:10 61:3
80:21,22
177:16 205:8
217:2
including 15:16
17:8 40:24
53:5 80:6
93:10 104:13
109:15 112:23
128:3 135:4,5
140:4 143:5
197:11
inconsequential
112:3
incorporates
55:13 109:14
incorrect 193:8
increase 154:21
155:15,20
161:23,25
162:3
248
indebtedness
24:25 132:9
independent
15:17,22 16:2
16:9,12,19,23
23:7,9 31:8
57:3 88:22,23
89:9 171:21
219:12 225:12
226:5,8,14,16
indicated 230:10
indicates 41:5
indicating
112:22
indication 119:8
indifferent
61:12,15
indirectly
113:21
individual
213:14 215:23
individuals 16:3
16:8
information
44:5 59:18
69:10 76:22
122:14 195:4
206:3 208:13
218:15,16
informed 35:6
73:19 206:14
inherent 77:14
initial 40:5
65:25
Inn 203:11,22
206:7 211:10
Innkeepers 1:7
7:4 10:21 11:6
13:6 14:16
16:5,10,20,25
19:12 21:25
23:11,17 31:6
31:7 32:13
33:23 34:2,10
36:23 39:4,15
39:17,24 42:7
42:18,19,22
44:25 46:6
48:21 50:22
52:10,15,16,18
53:7,16 56:15
56:25 62:21
79:10 90:15
92:14 105:11
110:3,12
111:22 112:21
115:5,13
124:14 126:6
128:3,7 132:22
132:23 133:6
134:24 142:5
142:12 153:13
170:7,12
196:17,18,19
204:21 207:13
209:4 216:25
231:7
Innkeepers/Le...
113:17
input 57:2
inquire 60:12
inquisitive 60:20
insight 123:3
instruct 79:2
197:8
instruction
76:19 79:13
instructions
76:3 232:1
integral 46:22
integrated 50:9
53:17 128:7
133:25 134:4
134:23 143:6
157:17 159:20
164:16 195:13
200:21 219:14
219:16 220:14
221:7,7
intend 89:7
92:22 139:21
159:23
intended 177:10
177:15,21
178:6 179:2,11
179:15
intending
108:20
intensive 120:4
intent 50:8
intention 179:17
interaction
184:17
interest 16:22
33:4,25 45:24
51:10,14 53:4
53:11 64:8
70:22 72:8,19
73:4 75:2,5
77:7,20 80:14
90:13,14,19,23
91:5,10,24
95:22 99:6,15
112:20,23
124:2,4 129:2
129:3 134:14
137:7,10,13
139:7 140:14
152:10,20,22
152:23 153:4
157:18,23
159:22 166:18
170:21 171:10
177:14,18
178:12 201:8
201:14 219:19
220:13
interested 46:3
62:23 80:5
91:11 92:14
112:18 142:17
165:7 230:17
interesting
148:19,23
149:3 150:9
interests 165:2
168:3 169:24
171:13,14
193:23 194:4
195:11 196:2
196:15 201:18
internal 46:5
50:9 71:14
75:6 76:24
77:19 79:20
90:23 137:12
138:22 139:5
139:22 159:21
160:4 174:16
200:12 204:21
interpose 13:25
interpretation
194:23 220:8
221:4
interrelated
212:17
interrupt 43:2
46:14,18
115:24
introduction
55:9
inure 153:5,15
153:24
inures 153:21
investing 16:24
investment 5:5
6:13 11:11,16
15:17,24 16:2
17:16 19:20,25
20:4 22:21
30:21,25 31:3
31:10 32:13
33:2,17 34:6
34:15 35:4,21
36:14 39:2,6
39:16,21 41:18
42:6,12,15
45:7 48:15
51:2 52:5
56:19 57:21
67:14 78:9
82:5 83:19
85:23 86:2
88:4,13 91:2,7
91:23 92:9
95:11 98:5
99:25 100:9,11
104:18 109:12
111:25 126:5
127:7,15
216:20
investor 122:17
investors 75:8
involve 59:11,13
59:16,21
involved 32:22
32:25 33:7,18
39:7 42:13
43:13,22,23,24
44:3,3,4,6
49:19 50:4
51:7 73:4,17
73:19 75:6
91:9,13,14
100:8 110:4
131:2 132:22
165:11 212:18
involves 177:12
involving 21:23
100:11,15
in-court 22:19
IPO156:2
irregular 106:20
irrelevant 189:6
issuance 45:4,5
issue 32:20
143:11 145:24
148:19,23
149:4 150:9
158:21 197:11
202:15 221:4
issues 32:18
132:4 137:17
146:4 158:20
197:9 211:11
222:8 223:19
items 44:18
J
J 5:8,20
James 32:10,11
Jeff 11:7,17
JEFFREY2:10
2:19
jeffrey.gould...
2:11
jeffrey.pawlitz...
2:20
Jim22:22 32:12
93:16,18,23
249
job 1:21 13:7
16:4 178:23
jog 186:4
joined 66:15
67:21
joint 116:18
jointly 168:20
Jones 17:11
Joseph 103:18
104:11
Josephine 1:15
230:5,20
judge 69:6 101:5
judgment 61:18
69:25 77:23
78:17 90:22
110:21 111:3
138:16 151:18
152:5 156:9,17
158:5,7 159:9
159:15
July 8:25 10:12
28:23,25 32:2
35:3 41:17
42:4 103:11,19
104:11 106:17
108:9,12,17
112:9 144:15
172:11 209:16
June 9:9,12,15
9:18,22 10:7
10:11 41:17
42:4 47:4
48:13,14 54:6
54:12 58:5
79:4 81:17
82:16 85:17
94:8 97:3
101:22 102:16
justifications
62:7
Justin 22:23
K
Kansas 80:11,12
Kasowitz 6:20
11:23
keep 37:17 97:18
97:19 149:16
213:17
keeping 31:6
Ken 23:2
kept 97:7
Kevin 5:20
137:9
kevin.obrien...
5:21
Kilpatrick 4:4
4:11 11:19,21
163:23
kind 119:7,13
132:5 189:5
211:25
kinds 65:11
223:19
Kirkland 1:13
2:4,15 11:3,7
11:17 14:9
43:7 104:14
114:12 115:5
189:2
Kleisner 22:9
knew16:16 33:8
35:8,9,19
36:14,20 38:5
50:17 135:24
136:2 173:18
221:6
know13:21 16:3
16:7 17:15
20:11,14,19,23
20:24 22:5
23:13,18 24:2
25:11 27:17
28:17 29:4
32:21 34:14,22
34:25 35:9
36:4 37:2,7,17
37:19,23 38:9
43:18 45:19
47:13,15 49:4
50:25 51:4,5
56:2,14 58:2
58:20 62:22
65:16,17,25
66:4,16,23,24
67:3,4 68:2,7
73:3 74:17
77:15 80:20,21
80:22,25 82:13
86:8,9,12,13
86:14 87:18
89:2,6,22
90:10 92:21
95:13 97:7,15
97:21,23
101:11,17,17
104:20,21
106:13 108:11
110:22 111:12
114:18 116:12
116:13 117:21
119:14,15,16
119:17,18
120:7,12,14
121:5,5,7,11
121:16 122:20
123:7,17,25
124:3 125:13
132:13 134:3
138:21,23
147:3,5 149:12
154:11 161:8
164:17 167:6
167:22 168:6
171:14,16,24
173:5,12,18
175:16 178:15
179:19 181:6
182:3 183:11
183:15 186:19
189:16 192:8
193:25 194:5,6
194:9,14,19
196:24 199:6,9
204:3 208:22
211:15,20
214:8 215:20
216:5 219:18
221:17 222:6
222:10,11,12
223:7,18,18
225:4,15,19,22
226:4
knowledge
43:25 64:19
90:19 171:22
Kornberg
104:12 105:7
106:4,15 111:7
Kornberg's
105:23
Korval 22:23
KPA165:23
166:13,19
202:22,23
203:9,20,25
204:8,13
208:19 220:3
220:23 221:25
L
L7:2 12:11
lack 64:20 68:7
laid 131:25
language 29:24
46:9 55:17
147:25
largest 22:11
134:17 135:8
135:11
Larry 22:13
LaSalle 2:17
Lascher 43:11
114:8
law17:6,12,18
85:23,25
188:18
Lawrence 4:23
12:2 202:9
lawrence.gotte...
4:24
laws 100:5
lawyer 74:4
111:11,15
138:19 181:22
lawyers 14:6
90:25 91:5
114:8,12 151:2
laying 188:12
Lazard 58:21,22
59:2,6 209:11
Lazard's 59:15
lead 187:11
learn 15:20
leaving 200:6
left 17:10,12
24:18 165:19
168:11 208:21
legal 124:11
150:25 151:3,4
LEH41:5,7
Lehman 5:15
10:14 25:4
29:23 30:4
31:17 32:19,22
33:3,4,23 34:5
34:5,18,22
35:3,20,22
39:13,18,20
40:22 41:7,17
42:4,8 43:8,10
45:5,22,24
46:25 47:9,17
47:19 48:16,20
48:23 49:11,18
50:3,11 51:7,8
52:19 53:9,19
53:24 54:13
55:11,11,20
56:16,17,23
57:13,14,16,19
58:10,14,18
60:5,9,13 61:3
61:21 62:14,18
62:22,25 63:2
63:10,10,16,22
64:6,10,22
66:12 72:11
73:6,20 74:8
74:14,22,24
75:4 76:17
77:24 78:3,13
78:22 79:3,5
79:14,23 80:23
81:3,4,21
82:20 83:19,21
84:16,19 86:4
88:5,8,14
89:25 91:9,11
250
91:16 94:22
95:12,20 97:7
99:2,10,16
100:7,18,19,21
102:3 103:6
105:11,12
108:4 109:11
109:12 110:3
112:5,21
113:23 114:23
115:13,20
116:3,16 118:4
118:9,13,17
119:3,11 122:2
122:4,5,18,19
123:11 125:18
125:19 127:23
131:14,21,21
131:24 132:3,8
133:15,23
134:13 135:12
136:14,15,16
136:20,23,24
137:15,18,21
138:11 139:12
143:6 147:7
148:5,7,10,25
153:14,14,21
154:6 156:11
156:19 157:4,4
157:13,24
158:17,18,18
158:25 160:15
160:25 162:5
166:24 167:20
168:7,20
169:14 170:6
171:5,12,17
172:5,8 173:6
173:19 174:16
174:18,20
175:4,8,22
179:19,22
180:15,23
181:6 182:13
182:21 183:4,9
183:12 184:3,9
184:17 190:22
190:23 191:10
198:14 199:17
200:4,13
207:14,20,25
209:11 212:10
212:14,24
213:8,21 215:7
215:13 229:6
Lehman's 34:8
42:8 48:5 49:8
61:10,12 97:3
102:11 112:7
122:11
Lehman-Apollo
155:25
Lehman-Innk...
108:5
Lehman/AIC
107:15
Lehman/Innk...
113:7
Lehman/Inves...
122:16
LEH-ALI 40:17
Lenard 3:8 12:8
lenard.parkin...
3:9
lender 134:24
167:21,23,24
167:24 171:5
177:3,11
178:11 179:4,5
184:5 188:6
190:15 199:18
199:20 200:7,9
214:4
lenders 24:7,8
24:13 64:16
66:21 67:3,6,7
126:9,10 134:2
134:4 159:21
160:6 163:25
193:3 200:20
213:23 215:5
lender's 134:10
134:11
length 169:14
212:20
Lenny 112:17
Lessees 168:12
lesser 162:17
letter 93:24 94:3
121:14 195:3
letterhead
130:20
let's 28:18 37:16
53:15 78:8
96:17 107:12
113:3 115:19
119:12 156:23
163:15 165:22
172:22 193:18
195:6 203:4,8
214:11 223:14
223:15
level 166:10
190:14,15
196:3 199:5,17
levels 155:6,8
Lexington 1:13
lien 25:5 175:14
life 181:23
lift 214:5
likelihood
151:19 152:13
limit 59:5
limitation 59:10
79:12
limited 23:18,19
42:14 196:17
limits 61:4
line 21:25 44:17
233:8
lines 29:21
liquidity 132:19
list 23:11
listed 192:23
listen 76:23
listening 62:6
lists 167:3
170:23
litigation 146:3
little 70:9 81:9
81:14 105:8
193:16 215:17
216:12,14,15
219:3
live 120:21
Livenote 1:17
LLC4:20 12:3
20:10,15 24:20
165:20,24
166:13,15,17
166:19,22
169:20,23
170:4,14,20
191:20,20
192:22 194:3,7
194:10,25
195:12 196:7
196:10,24
202:10,22,23
203:10,20
204:2,9,13
220:3 222:2
LLCs 25:16
168:13 169:25
LLP1:13 2:4,15
3:4,11 4:4,11
4:19 5:4,14 6:4
6:12,20
LNR4:20 12:3
202:10,10
203:2 205:18
205:19,21,23
209:8 212:8
213:2 215:17
215:23 218:11
218:20 223:6
LNR's 207:4
loan 3:5,12 12:5
12:7,9 25:6
166:10,23,25
167:5,11,14,14
167:21 168:3,8
168:20 169:6,8
169:13 170:5,6
170:11,15,19
171:2,2,6,9,10
171:19 172:4
172:10 173:8
176:15 179:5,7
184:11 186:12
186:13,15,25
187:2,3,13,14
188:25 189:3,4
190:3,5,11,12
190:17,22,24
190:25 191:10
191:14 203:24
204:4,11,14
208:19,25
213:18 217:22
224:5
loans 203:2,3
204:22 205:24
206:23
Loan's 190:13
long 14:15 80:17
150:21 195:19
219:21
longer 23:9
look 16:15 27:22
28:18 32:5
35:13 44:17
48:2 49:9
54:19,22 55:5
55:17 56:4
58:4,6 69:23
70:9 77:11
79:7 80:23
81:24 82:4,7
82:23 84:25
86:20 94:25
95:3 100:18,23
102:12 104:7
105:21 107:15
109:5 113:8
115:6 121:12
121:17 122:25
127:23 130:18
137:15 142:20
142:23 143:24
144:8,20
147:17 149:14
149:23 151:9
151:11,12
154:22,24
157:13,14,17
157:22 159:9
159:25 162:6
163:9 168:10
251
172:16,23
176:16 178:7,7
183:8,22
184:22 185:13
186:20 187:22
189:12 192:17
192:20 197:14
198:2 201:13
207:10 219:17
219:18 220:2
220:11 221:17
227:13
looked 55:3
104:8 119:15
119:23 120:4,7
120:8,11,22
135:25 142:18
183:2 221:5
222:8 223:19
looking 19:13
24:6 28:8 32:9
32:15 56:8
59:20 81:11
91:17 102:9
104:9 109:3,9
110:22,23
122:15 147:24
162:16 176:11
176:12 179:3
190:7 198:3
214:19,20
looks 55:7 77:5
91:20 131:8
144:21 159:8
214:24
loop 218:21
losing 67:17,18
123:20 154:3
lost 99:14
lot 18:22 58:20
66:5,25 96:25
114:11 120:25
142:16 176:22
211:14 221:5
low135:21,23
Lower 191:5
Lowes 22:13
LP11:16
lunch 130:8
140:25 141:5,5
141:8
L.P6:13
M
M2:10 3:8 12:11
macroeconomic
120:21
maintain 200:20
maintained 64:3
maintenance
211:23,24
making 61:18
97:8 122:3
128:14 130:6
223:10
management
16:13 119:15
131:3 155:5
management's
117:21
managers 20:12
207:8 225:12
226:5,8,14,16
manner 46:2
68:8
Marc 1:11 8:4
13:1,2 14:1
15:1 16:1 17:1
18:1 19:1 20:1
21:1 22:1 23:1
24:1 25:1 26:1
27:1 28:1 29:1
30:1 31:1 32:1
33:1 34:1 35:1
36:1 37:1 38:1
39:1 40:1 41:1
42:1 43:1 44:1
45:1 46:1 47:1
48:1 49:1 50:1
51:1 52:1 53:1
54:1 55:1 56:1
57:1 58:1 59:1
60:1 61:1 62:1
63:1 64:1 65:1
66:1 67:1 68:1
69:1 70:1 71:1
72:1 73:1 74:1
75:1 76:1 77:1
78:1 79:1 80:1
81:1 82:1 83:1
84:1 85:1 86:1
87:1 88:1 89:1
90:1 91:1 92:1
93:1 94:1 95:1
96:1 97:1 98:1
99:1 100:1
101:1 102:1
103:1 104:1
105:1 106:1
107:1 108:1
109:1 110:1
111:1 112:1
113:1 114:1
115:1 116:1
117:1 118:1
119:1 120:1
121:1 122:1
123:1 124:1
125:1 126:1
127:1 128:1
129:1 130:1
131:1 132:1
133:1 134:1
135:1 136:1
137:1 138:1
139:1 140:1
141:1 142:1
143:1 144:1
145:1 146:1
147:1 148:1
149:1 150:1
151:1 152:1
153:1 154:1
155:1 156:1
157:1 158:1
159:1 160:1
161:1 162:1
163:1 164:1
165:1 166:1
167:1 168:1
169:1 170:1
171:1 172:1
173:1 174:1
175:1 176:1
177:1 178:1
179:1 180:1
181:1 182:1
183:1 184:1
185:1 186:1
187:1 188:1
189:1 190:1
191:1 192:1
193:1 194:1
195:1 196:1
197:1 198:1
199:1 200:1
201:1 202:1
203:1 204:1
205:1 206:1
207:1 208:1
209:1 210:1
211:1 212:1
213:1 214:1
215:1 216:1
217:1 218:1
219:1 220:1
221:1 222:1
223:1 224:1
225:1 226:1
227:1 228:1
229:1 231:11
231:18
March 125:21
Mark 3:15 7:4
11:5 12:6
209:24 218:19
marked 17:23
17:25 18:17
19:2 25:21,22
32:3,6 40:13
40:15 44:18
47:5,7 54:7,11
60:17 81:18,20
82:17,19 85:17
85:21 86:16
94:8,21 101:22
101:25 103:12
103:14 114:24
115:3 130:16
142:7,10
214:10
marketplace
136:3
mark.elmore...
3:16
marriage 230:16
Marriott 53:19
66:22 68:10
71:5 73:14,17
73:18 92:2
110:10 119:24
125:21 126:3,9
126:18 127:8
127:16 132:17
143:6,11,16
145:5,24 146:6
146:11,13
159:20 206:5
211:8 212:16
212:16 221:8
Marriott's 77:12
Maryland 22:2
master 217:11
218:5,22 219:6
219:7
material 34:2
36:6,22 174:22
175:6 183:6
184:16 185:8
211:25
materially 42:25
43:4
materials 10:14
10:17 57:14,16
57:17,19
114:23 130:15
130:21 173:2
205:10
matter 230:17
matters 185:19
maximize 30:6
mcrisp@kilpa...
4:16
mean 26:23 43:2
46:14,18 63:5
84:24 89:9,14
89:15 90:2
92:21 95:25
110:3 115:24
119:6 150:25
252
154:11 175:9
175:16 176:8
177:10,22
182:4 186:19
189:8 200:4
213:7 218:15
meaning 74:2
meaningful
61:17 83:25
198:24 207:6
meaningfully
111:21
means 74:4
195:17
meant 34:6
184:14,14
meet 132:12
139:3
meeting 16:14
57:4,13,17
72:24 115:13
115:17,20,21
115:25 116:2
118:7 122:12
123:25 131:4,9
131:17 132:7
133:17 135:12
135:16,18,24
136:12,13
174:16
meetings 57:18
80:11 117:18
meets 139:6
member 15:22
16:2,9,12,19
16:23 23:7,10
32:13 88:22,23
228:13
members 15:15
15:16,18 22:7
31:5,7,8,9
118:18 127:12
195:3 209:10
216:25 217:3,7
membership
21:11 166:18
169:24 170:20
193:23 194:3
196:2,15 228:8
memorialized
218:7,12,15
memory 21:4
176:23 186:4
195:5 223:17
mention 173:6
182:12,12
183:4,11 184:2
212:9
mentioned 46:22
46:24 68:10
mentions 49:14
message 105:8
met 75:16 81:5
110:25 133:11
135:11 136:14
136:16 153:10
220:18
Meyers 4:8 8:6
11:19,19
163:14,21,22
173:14 174:5,6
174:11 181:5
183:18 187:10
187:20 188:17
189:13 194:17
194:24 195:8
201:20,23
mezz 24:14,19
67:6,7 165:20
166:14,17,22
167:14,21
169:19,23
170:4,13,20
171:19 174:18
174:24 175:5,9
175:10,10,11
175:12,21
177:13,15
179:20 180:3
180:17 181:7
181:12,17
182:19 184:4
184:18,20,21
186:12,25
187:13 188:6
188:12,12
189:15,22
190:2,11,13
191:19,20
193:18,19
194:3,7,10,25
195:11 196:7,9
196:23 199:18
199:20 200:7,9
mezzanine
166:25 170:6
171:2 172:4,10
173:8 176:2,15
177:3,8,11
178:9,10,11
179:4,5,7,9,10
181:21 182:8
182:14,17,22
183:5,14
184:10 189:3
191:17 192:14
192:25 193:3,9
Michael 4:15
43:11 114:7
Michigan
143:12 146:17
middle 132:15
135:22 202:18
228:23
Midland 3:5,12
10:17 12:5,7,9
24:21 53:5,10
62:9 63:18,21
64:4,15,19,23
64:25 65:12,22
66:5 72:7,16
72:17 73:8
74:17 75:5
80:6,11,18
81:5 92:3,5
99:2 118:3
128:4,8,13,21
129:7,16,20
130:15,20
131:4 132:6,13
133:11,23
134:3,7,16,19
134:24 135:8
135:10,23
136:6,11,18
137:5,6 139:23
140:3 153:10
154:7 157:12
157:22,23
158:17,18
205:19
Midland's
128:15 131:15
131:18,22
Mike 11:21
Mile 6:21 11:24
110:10 147:9
147:14,14,15
160:7,13 161:5
161:6,13
million 15:3,6
24:21 25:5
34:2 42:10
45:9,10,11
51:20 64:11
65:2 66:13
67:25 71:2,3
77:6,15 99:14
123:20 128:10
128:20 129:9
133:14 135:15
154:4 163:5
166:7,23
167:14 168:21
169:3,12 170:5
170:8,15 171:2
171:6,18
174:24 175:18
177:19 187:2,3
187:3,15,15
190:17,25
191:10,15
197:23 198:8
198:19 199:16
200:6 207:19
213:11,19
millions 67:18
million-dollar
14:25
mind 62:6,8
151:15 158:19
mine 112:25
198:2
minute 37:25
39:25 165:22
172:17 193:19
202:14
minutes 163:15
182:19 201:25
misleading
37:19
misread 178:2
misreading
177:23
missing 131:16
216:10
misstated 174:2
Misstates 37:4
78:5 122:8
mistake 177:22
178:2 181:16
190:10
mistaken 188:24
MLCFC202:12
model 174:15
182:9
modifications
117:15
Moelis 56:10,11
56:18,18,22,25
57:3,5,13,15
57:20 78:8,8
78:11,20 79:2
79:11,13,21
80:7,17 84:20
84:23 116:9,14
116:17,18
117:12,14
119:15 120:17
130:19,23
135:18 172:25
182:9 198:6,17
225:4
moment 29:14
momentarily
214:16
monetize 125:14
money 16:24
67:17 125:8,17
175:3,4,6,9,21
253
180:4,17
181:13 184:19
188:7,12,13
190:4,6,13
199:20,23
200:10 222:22
month 97:2,3
160:23
months 29:22
30:9 31:3
41:16 42:3
73:6 74:21
79:4 89:10
115:19 124:18
124:25 140:7
160:23 215:20
216:9,12
217:15
Morgan 22:10
Morrison 6:4
11:12
mortgage 25:6
166:6 186:13
186:15
motion 8:20
25:18 26:15
28:9,11,14
35:14 144:2
145:19,21
158:23
motivate 123:6
mouth 189:19
move 110:17
111:3 125:12
126:20 132:5
139:9 159:23
160:4 190:9
218:3
moved 217:25
moving 45:25
46:3 68:9,12
76:24 112:8
113:23 120:19
120:20
multipart
152:14
multiples 120:8
multi-test
152:14
Murphy 7:4
11:5,5 209:24
218:19
mutuality 132:5
mutually 117:20
N
N2:2 3:2 4:2 5:2
6:2 7:2 8:2
12:11,11 142:2
142:2,2
nail 209:18,19
name 12:25 23:2
163:22 202:9
names 25:15
Nancy 43:11
narrow172:17
nature 148:24
natures 120:4
NE4:6
necessarily
106:5,9 178:2
necessary 91:25
91:25 127:8
200:17,18
232:4
necessitated
51:13 92:2
need 13:16 26:8
37:18,21 52:14
127:11 149:16
178:22,23
200:25 227:13
needed 122:14
126:14 180:4
207:4 210:21
211:8,18,22,22
218:17 221:6
needs 178:16
210:25 223:21
negative 128:13
negotiate 50:11
51:9 70:7
138:24 160:2
221:11
negotiated 31:16
34:9 42:18
53:20 73:7
128:21 140:5
160:24 175:22
188:22
negotiating
34:22 39:17
42:12 43:10,18
47:18 52:20,25
53:3 60:19
63:16 64:6
73:15,20 91:6
93:5 110:10,10
112:20 114:17
200:19
negotiation
39:14,23 73:13
84:2 199:7
negotiations
32:22 33:18
39:7 41:15,25
42:16 43:9
45:22 60:21
61:14,23 62:24
63:22 65:12
83:18,21 87:21
91:9 99:25
108:9,14
112:13,16
114:13 160:13
180:3,15
226:20
negotiator 83:14
187:11
Neither 121:18
Nemer 17:6
never 39:15
61:25 65:18
132:22,23
137:9 200:8
212:23 218:23
new1:3,13,14,18
3:7,7 4:14,14
4:22,22 5:7,7
5:17,17 6:7,7
6:15,15,23,23
17:8 36:15,23
36:24 45:3
48:4 51:17
54:20 65:9
82:25,25 83:6
83:7 86:22,22
87:6,6 88:2,21
95:2,2 102:10
102:10 109:4,4
230:7,20 231:3
NICOLE5:22
nicole.herther...
5:23
night 40:25
115:4,5 121:17
nine 89:10
nominal 167:24
nominally
167:21 171:6
nonresponsive
126:21 129:5
129:14
non-consensual
140:2
non-creditor
139:18
normalized
154:9,12
North 2:17
Notary 1:17
230:6,20
231:24
note 63:9 64:4
65:6,18,24
66:3 86:17
92:8 105:18
134:7 162:14
162:15
noted 25:10
232:10
notice 8:16
17:21 18:2,12
127:8 133:19
164:11
notices 92:2
125:22 126:3
127:16 132:18
November 14:17
number 22:17
22:20 24:13
31:8 32:15
40:18 47:10,11
64:17 81:22
82:8 94:23
102:3 108:25
109:24 113:6
114:2 121:2
125:23 134:2,4
135:22 148:5
189:18 200:2
209:7
numbered 104:2
192:21
numbers 40:17
54:13 82:20
86:17 133:21
199:13
numerous 29:23
30:4 77:2
N.W2:6
O
O7:2 12:11
142:2,2,2
oath 12:13 164:3
189:10 231:13
object 21:10
45:13 69:13
78:18 106:18
107:9 122:22
139:24 140:23
145:6 158:9,12
159:25 187:6
objection 21:20
33:9,20 34:13
35:24 36:17
37:4 38:21
39:9 41:20
43:19 49:21
52:23 55:24
56:13 57:25
63:25 73:24
75:21 78:5,23
80:2 81:6 89:5
89:21 98:14
107:13 111:13
111:13 113:18
116:10 122:8
124:8,9,10
254
127:9 128:5
129:11,18
140:23 148:11
150:20 153:2
154:18 156:13
159:3,5 178:2
181:2,2 182:16
186:17 197:7
201:4 208:9
214:7 220:10
objections 13:25
18:16
obligated 168:20
obligation 124:6
130:4 138:21
151:3 162:8
169:2,12
195:13 207:20
215:7,13
obligations 48:6
49:8 77:13
91:12 102:11
125:10 126:10
126:13 139:21
186:13,14
211:7 217:21
219:22 224:5
obtained 148:18
obviously
110:18 120:16
145:25 213:15
216:4
occasion 93:18
occur 148:6
occurred 81:3
131:9
occurring
132:17
offer 122:21
131:21,24
200:22
offered 16:4
19:9 138:13
offering 44:18
44:22,24,25
45:9 46:4 48:4
48:4,16 51:16
54:21,21 81:25
82:5
offers 85:8 201:7
officer 10:20
13:5 46:6
60:24 142:5,12
officers 20:24
21:5 24:3
116:23 164:23
offices 1:12 17:7
Oh 65:13 72:16
73:10 74:21
okay 13:13 14:5
14:10,13 15:10
16:7,11 18:21
19:22,24,25
20:2,4,9,18,24
23:6,22 24:12
24:18 25:8,17
27:4,9,15 28:6
28:14,24 29:15
29:20 30:3,25
32:9 35:2 37:2
38:2 40:21
41:9 42:21,24
43:18 44:14,22
45:15 46:19,20
47:2,22 48:2
48:11,13 49:23
51:6 55:21
57:18,23 60:19
67:24 70:6
73:11 75:24
76:13 81:23
82:4,14,22
85:5 86:10,14
86:19 87:11
93:5,17 94:5
96:6,25 97:7
97:24 100:24
101:16 102:8
102:15,21
103:5,16 104:9
104:16,25
107:8 108:13
108:19,24
111:19 112:13
113:13 114:21
115:9 116:14
116:22 117:9
118:11,15
125:5 127:22
129:8,17 130:2
130:13 131:12
132:20 135:10
135:13 138:9
142:20 143:3
143:15 144:13
144:16,23
145:8,15,23
147:16,19,20
147:24 148:13
148:17 149:22
150:4,5 151:6
152:7 153:4,8
154:23,25
155:2,18,22
157:2,9,21
161:4 164:5,10
164:17 165:9
165:15 166:3,6
166:21 167:3,9
167:15,17,18
168:2,19,24
169:13 170:23
171:16 172:8
172:18,24
173:12,25
174:15 175:15
175:24 176:18
176:23,24
177:6,20 178:7
179:18 180:13
180:23 181:11
183:10,22,25
184:7,13,22,25
185:13,17,24
186:5,24,25
187:20,25
188:15,19
190:9,20,22
191:7,17,18
192:14,17
196:12,23
197:12,21
198:4,17
199:25 200:22
202:17,25
203:8,13,20,25
204:7,12,17,25
205:22 206:19
207:12 212:7
214:22 215:16
216:8,16,18,19
217:10,14
218:21 219:9
222:4,19 223:4
224:10,16,21
225:2,11,15,25
226:4,11,17,23
227:18 228:6
228:12,21
once 58:12 69:25
220:16 223:16
ones 38:5 55:3
157:25
one-time 15:4,7
155:20
ongoing 112:14
open 62:6,8 69:7
operate 128:18
operation
110:12 187:18
operations 98:6
opportunity
15:21
opposed 199:17
200:7 205:19
208:6 217:4
219:14
option 150:11
options 75:18
83:2,7,17
oral 113:22
151:4 210:5
orally 13:17
97:16
order 8:20 21:17
25:18 26:4,6
26:16 69:10,21
106:22 138:14
139:19 145:2,9
145:9
original 232:12
originally
167:20 168:21
169:3
osmotic 92:23
ought 37:14
38:19
outcome 230:17
outline 30:5
outlined 19:15
outside 17:8
75:7 114:13
outstanding
213:6
out-of-court
22:19
overall 60:20
110:2,16,23
205:5 212:14
212:16 220:4,7
overseeing
187:18
overstated
101:12
overture 136:15
Overview117:3
117:10,24
118:2
owned 17:15
63:17 169:9
175:2
owner 20:5
31:15 37:12
38:17 51:18
63:3 98:18
99:11 122:5
owners 153:6
ownership 19:14
32:23 103:3
153:23 162:23
Owners/Ground
168:12
owning 169:25
170:21 193:23
owns 67:15
152:24 166:3
166:18 167:24
168:14 169:23
O'BRIEN5:20
o0o 2:1 3:1 4:1
255
5:1 6:1 7:1 8:1
9:1 10:1 11:1
12:1 230:1
231:1
P
P 2:2,2 3:2,2 4:2
4:2,23 5:2,2,10
6:2,2 7:2
Pachulski 17:10
page 8:3,15 9:3
10:3 28:19
29:12 44:15
45:18 48:3
49:10 56:4
82:24 86:21
91:18 95:14,16
103:17 104:8,8
104:10 107:22
108:25 109:10
116:25 117:2,9
117:16,23
119:2 121:21
121:22,23
127:24 144:20
145:8 154:24
178:7 179:9
181:21 192:21
197:15,16,17
197:19,25
198:11,22
202:18 214:18
214:22,24
228:5,17,19
233:8
pages 54:19 83:8
94:25 102:9
104:2,5 107:2
107:20,21
109:3 137:21
192:20
paid 51:18
126:10
paper 176:22
papers 167:17
paradigm66:19
paragraph
29:12,21 35:14
35:23 36:6,10
36:11 37:21
38:10 142:21
142:23 143:3
147:18 148:2
155:2 185:13
185:16,18,20
186:3,6 188:3
188:4 189:20
214:18 228:22
paragraphs
44:23 55:10
96:13
paraphrasing
186:10
parent 89:4,19
122:15
Parkins 3:8 8:5
12:8,8,15,20
12:23 14:6,10
14:13,14 17:24
18:19,22,24
21:14 26:5,11
26:12 28:6,7
32:4 33:10
36:2,18 37:6
37:23 38:3,11
38:23 39:25
40:14 41:4,6
45:15 46:16
47:6 52:24
54:3,9,18
57:11 72:2
75:23,25 76:11
76:14 78:7,18
78:19 81:13,19
82:18 84:10
85:19 86:9,11
86:15 89:16
94:13,16,19
95:15 101:24
107:3,6,10,11
115:2 116:11
121:9,16,19,20
122:10 126:20
126:22 129:5,6
129:13 130:9
130:17 136:9
140:19 141:2
142:8 144:4,6
144:7 145:18
146:15,19
147:2 153:3
157:8 158:11
158:15 163:11
164:4 165:13
184:25
part 14:2 28:14
31:16 32:9
39:23 44:22
46:4,22 48:17
83:18,20 90:13
90:17 98:12
106:5 116:15
117:7 120:14
122:20 140:3
152:8 174:19
198:10 200:9
224:12 229:6
partially 177:17
199:10 224:19
participant 53:4
participants
129:4 135:23
particular 36:10
37:21 41:12
47:15 87:18
158:21 167:11
168:14 183:23
194:13 207:15
218:23 219:13
221:22
particularized
219:17
particularly
61:17
parties 35:6 53:3
63:9 64:8 69:9
97:15 102:18
105:17 112:17
126:17 138:9
143:8 180:9
192:15 193:11
219:10 230:15
partner 17:9,11
99:12 179:16
180:10
partners 4:20
6:21 11:25
12:3 23:18
128:19 202:10
partnership
23:18,19
196:18
parts 200:25
party 34:5,19,20
42:11 49:15
50:20,25 51:13
52:9,19 55:22
60:21 61:11
67:9 82:12
85:9 90:13,18
90:19 91:11
108:20 125:10
125:12 128:15
137:11,12
163:4 193:20
195:14
Pass 163:12
Patrick 22:22
44:3
Paul 5:4 6:8 11:9
11:12 40:8
44:9 86:3
104:12 107:14
108:19 109:2
112:22
Pawlitz 2:19
11:17,17
pay 51:24 52:7
126:9
payment 52:4
Peachtree 4:6
Peck 101:5
people 18:22
22:21 43:21
68:11 69:7
74:6 79:16
92:18,21 93:8
98:3 110:15
114:2,11 123:5
123:18 159:18
163:9 175:3
195:20 217:2
218:19
percent 20:5
31:22 33:24
34:12,19 42:10
45:2,3,8 51:14
51:19 62:14
63:13 70:25
82:7 99:11,16
99:18,20
100:25 123:18
136:4 153:24
162:10 166:18
168:3 169:23
200:5,5
perfected 98:2
perform58:23
221:23 222:25
performance
154:16 155:6,8
155:14,19
161:24 208:5
performed
211:18
performing
150:14 154:9
period 17:14
30:9 50:14
110:8 117:10
125:4 131:7
132:25 138:24
139:20 140:13
152:20 209:17
211:17 216:6
periods 117:24
118:2
permit 145:4,10
213:21
permits 70:6
person 13:23,23
93:19,23
114:16 152:24
205:17 209:24
209:25 210:7
personally 33:7
70:24 151:3
perspective
49:20 50:5
61:12
256
petition 204:19
204:20
pgalante@mo...
6:9
phase 111:4
phases 199:7
phone 14:7
209:23 210:6,9
phrases 65:17
Picache 23:3
Pictures 22:15
piece 131:25
132:3,11
174:24 189:23
190:2 198:16
pieces 53:17
221:18,19
PIP 124:6,15,24
125:18 126:2,9
126:13 127:7
127:16 211:18
221:24,25
224:7
PIPing 211:7
PIPs 77:13
161:14 211:22
223:11
place 42:17
160:15 215:18
215:19 216:5
placed 119:14
plan 8:22,24
25:19,22 26:16
26:21 27:7
33:4 50:12
53:23 55:12,22
61:3 66:5 67:8
69:3 75:2,17
76:25 102:17
108:3 109:13
128:24 138:25
139:22,25
144:12 147:16
152:17 156:3
159:24 162:5,7
169:15,16
175:25 177:2,4
177:10 178:13
180:16 181:18
182:2 190:14
192:15,17
193:11,13,20
193:21 195:9
195:10 196:4
196:10 197:3,4
197:10 200:12
208:7 212:11
212:24 214:18
214:20,22
215:3,11
219:21 220:24
220:25 226:12
226:17 227:9
227:10,14,16
227:18,22
229:6
play 160:25
pleading 29:12
35:23 36:5
37:3 66:10
101:3,4
pleadings 10:22
100:18,20,21
142:6,13
please 12:25
17:3 28:8
29:12 32:17
35:15 40:6
41:22 44:19
48:3,8 49:24
54:22 56:5
70:11 76:13
102:12 105:18
107:18 109:6
136:8 142:24
147:18 149:23
151:12 205:2
214:15 232:3,7
pleased 88:12
91:13,14,15
92:3,11
pledge 170:19
plus 163:5
point 32:15 49:9
80:11 95:17
97:20 108:2
140:6 146:11
157:2 160:3,21
202:14 204:18
209:15 214:14
pointed 179:13
185:12
points 43:20
65:14 93:7
109:16
pool 24:21 25:4
62:10 63:5,18
117:10,23
118:3,3 119:4
125:18 128:4
146:18,20,24
146:25 147:12
147:14 158:19
158:25 160:10
161:8,14 162:4
169:25 196:3
197:22 198:6
198:19 199:4
207:19 211:12
216:25 221:13
pools 19:16
59:22 60:2,5
117:25 118:4
119:17 129:25
130:2,5
poorly 123:19
portfolio 134:13
155:5 209:5
portfolios
160:11
portion 38:13
41:23 49:25
85:22 96:18
98:22 229:5
position 14:15
15:25 23:8
67:11 128:2
137:4
positions 98:17
98:23
positive 99:13,17
128:18
Possession 2:5
2:16
possibilities
163:9
possible 92:7,7
162:13 180:23
207:11
post 51:11
123:13 198:20
postemergence
196:21,25
post-confirma...
33:5,25 42:9
51:14 90:17
potential 30:5
31:22 42:13
74:7 79:7
98:21 119:8
125:9 132:18
152:13 154:3
154:20 199:8
206:22 212:20
potentially
74:10 90:3
126:12 127:13
155:23 163:7,7
206:6 211:9
practical 151:3
practice 17:12
practicing 17:18
precedent 48:5
49:8 51:12
54:22 55:8
81:25 83:2,8
86:23 87:2,5,7
89:23 90:21
95:3,8,10,17
102:11,17,20
109:5,9 112:7
112:24
precise 37:18,22
38:9
preexisting 99:6
prefer 64:24,25
65:5
Preferred 67:12
99:8 175:2
prefiling 52:21
53:2 78:11
prejudge 159:7
preparation
118:16 131:2
197:10
prepare 116:15
118:12 130:23
prepared 19:3
97:3 174:15
192:11
preparing 19:6
110:11 116:19
198:11
prerequisite
90:16
presence 114:13
present 13:8
37:12 38:17
57:5,12 78:2
140:8
presentation
56:10,12,15,17
56:20,22,24
57:3,5,12
80:18,20 84:20
84:23 116:9,15
116:19 118:12
118:16,24
127:23 137:22
155:3 173:2
presentations
79:21 80:7
154:6
presented 69:18
122:2 198:22
199:14 201:6
presently 13:4
presents 139:10
preserve 161:9
161:18
president 93:10
93:13,14
Press 16:21
presumably
226:11
pretty 46:2 63:6
205:9
pre-advising
122:3
pre-petition
257
71:19 78:22
80:9 153:13
195:16 199:22
224:14,17
price 45:9
200:23
primarily 43:5
63:4 116:24
161:15,16,18
165:7,17
primary 43:12
45:4,12 114:16
193:22
priming 206:13
principal 169:5
194:2,19 213:6
prior 16:25 30:9
39:3 72:17,18
75:16,19 82:8
124:25 138:5
204:18 226:18
priority 195:18
private 15:24
privilege 76:10
Prix 20:9 24:19
165:20 166:14
166:22 169:19
169:23 170:3
170:13,19
177:13 191:19
191:20 192:22
194:2,7,10,25
195:11 196:7,9
196:19,23
Priz 166:17
Pro 121:22
122:12 197:23
probably 14:8
103:9 114:16
125:13 126:11
131:7,11
148:12 150:12
155:11 178:16
186:2 188:25
191:12 199:12
215:20 217:15
217:25 225:3
226:6
problem18:21
126:6 199:14
problems 13:20
proceed 12:19
157:10
proceeding
50:17 206:15
process 13:14
14:3 22:19
66:24 68:5
69:6 76:8,22
76:24 110:18
120:16 123:3
136:22 140:4
204:18 215:24
218:3 219:11
225:6
produced 40:22
47:8 102:2
115:4 121:11
121:13
product 121:3
production
40:23 47:9
81:21 82:20
86:5,11 94:22
prof 122:21
professional
1:16 16:17
128:23 230:6
professionals
15:19
Project 10:13,16
114:22 130:14
130:20 197:17
projected 117:5
117:6
projections
117:11,12,12
117:13,15,18
120:12 155:4
projects 154:7
proper 208:6
properties 120:2
127:5 189:23
199:3 205:5,7
206:13,21
207:8,9 209:7
211:20 212:18
213:9,11,14,18
213:22 215:25
216:2,7,12,21
216:24 217:12
221:12,16
223:20,23,24
224:2
property 151:25
166:7,10
169:25 170:21
175:14 177:18
178:12 179:8
189:4 190:12
190:14,15
193:23 196:3
199:5,17
203:15,18,23
204:4,10,14
207:5 208:23
209:3 210:11
210:15,21
211:15 212:3
214:4 215:5,10
218:17 220:5
222:24 224:4
property's
177:19
proposal 47:20
51:25 52:3,6,8
52:9,13,15,16
53:14 65:24
69:11,20 70:13
70:24 81:4
82:11 84:18
92:12 97:22
98:2 103:2
109:18,19
122:4 128:9,14
129:8,17,22,23
130:3,6,6
131:14 136:20
136:23,24,25
137:16,18
138:3,11,14,19
139:19 151:18
151:24 152:13
158:24 159:8
159:11 205:23
206:20,22
218:23
proposals 69:19
97:8,12,16
109:23 110:19
138:15 206:8
207:3 212:21
propose 138:25
153:21
proposed 9:5,8
9:11,14,17,21
10:6,10 40:12
42:17 47:4
53:7 54:6 67:8
69:4 80:23
81:17 82:16
85:16 90:6
94:7 99:12
101:21 105:10
131:21 143:4
144:14 157:12
220:24
proposes 48:16
proposing 68:17
163:3
proposition
140:16
protect 134:10
protecting
160:10
protections
100:2,7,13
protective 26:3,6
proven 123:16
137:8
provide 45:7
48:15 71:21
162:8,20 187:8
provided 18:16
62:13 176:14
184:3 193:17
provides 34:18
48:14 51:17
87:25
providing 63:7
92:12 205:25
218:16
provision 45:6
45:21 51:15,21
51:22 87:8
90:4 95:7
96:17 101:10
107:25 145:8
157:3 205:9
208:7 214:14
214:25 227:20
provisions 54:25
55:2 65:9 95:5
97:5,17,22
110:23 111:8
112:2,23
114:20 150:18
proviso 148:2
PSA21:24 27:8
33:22 34:9,17
34:21 39:18
48:6 49:8
50:19 51:12
55:22 66:11,15
66:19 67:3,22
68:18 69:4
70:3,6,18,21
71:13 75:17,18
75:25 77:23
85:10 89:25
90:13,14,22
91:3,12 92:14
95:7 100:22
102:12 108:20
109:13,20
110:20 112:8
112:14,20
114:6,14,17
121:24 139:21
144:11,18,24
159:20 179:16
180:10 184:18
195:24 207:17
207:21 213:8
214:9 215:8
public 1:17
22:25 88:24
89:8,9,10,18
199:24 230:6
230:20 231:24
258
165:4
purchase 45:8
82:6 86:22
87:6 88:2,4
102:10 107:23
109:4
purchased 82:9
87:7
purchaser 36:15
36:23,24 49:15
228:25 229:5
purchasing 33:3
99:16,18
purpose 131:17
222:10
purposes 21:23
56:11 125:9,17
160:10 167:9
207:9
pursuant 12:16
26:3 214:5
215:11
pursuing 80:14
push 201:25
put 36:10,12
59:5 61:4
120:6 132:2
133:12 186:3,7
202:15 220:6
puts 69:24
putting 73:4
91:2 161:13
220:7
PW86:18
p.m141:8 142:3
229:16
Q
quality 119:19
119:25 162:17
quantify 224:16
quantitative
58:11,15 60:9
60:13 156:17
question 21:15
23:17,25 33:14
38:12,15,25
41:22,25 45:20
50:3 51:6
53:13 57:8
61:7 67:2
69:14 76:11,12
76:12,15 78:20
85:24 96:2,13
98:7,9 106:14
113:15 124:20
124:21,22
126:23 127:2,6
129:7 135:5
153:18 160:22
171:23 174:10
179:19 181:9
191:21 193:2,7
200:15 204:2
207:22,23
210:11 219:25
220:16,20
222:13,14,18
222:20 223:5
questioned
164:4
questions 13:16
13:19,20 18:20
27:19 115:7
163:15 165:13
189:12 195:6
197:13 201:21
226:25 227:4,8
227:10 228:10
quickly 172:22
quite 123:19,19
126:10
R
R2:2 3:2 4:2 5:2
6:2,16 7:2
12:11 142:2
230:3 233:1,1
range 63:4 119:8
120:13,19,19
120:22 136:4
ranges 61:9,10
119:3
rate 24:21 25:5
91:22 117:23
132:20 146:17
146:20,24,25
147:12 161:8
161:14 162:4
168:17 169:25
170:6 171:18
172:3,10 173:7
174:18 175:10
175:11 179:7
181:12,17
182:8,14,19
183:5,14 184:4
184:10,20,21
186:15 190:3
190:23,23
193:18,19,24
194:4 196:3
198:6,9,19
199:4 206:9
207:19 216:24
216:25 221:13
221:13
rational 50:14
reach 26:9 64:15
68:14 114:5
reached 16:13
49:10 91:15
95:11 205:6
reaction 72:19
read 29:14 32:17
35:15 38:11,14
41:24 44:18
45:12 48:7
50:2 85:21
90:9,11,11
95:5 107:16,21
108:6,7 143:10
147:20 156:5,7
179:10 180:25
183:24 184:16
185:2,14,16,25
186:2 193:6
231:12 232:3
reading 29:18
145:7,12 186:4
188:3,25
reads 107:19
108:2 109:10
147:22 178:14
228:23
real 4:5,12 7:5
88:20 163:24
172:22 228:9
228:14
reality 171:15
realize 123:14
realized 101:8
really 21:12 36:6
74:5 92:20
101:11,17
112:16,25
120:7 132:11
164:14 171:14
175:6 198:10
211:25 216:5
223:22
realm179:24
reason 37:8
160:3 232:5
233:10,12,14
233:16,18,20
reasonable
47:22,25 60:25
97:17 194:18
reasonably
151:18
reasons 233:6
recall 19:9 24:3
41:12 45:23,23
46:2,8,9,11,11
53:7 56:24
57:2,15,16,22
57:24 58:14
60:16,18 62:2
81:7 83:11,17
84:6,17,18
85:22,25 93:4
96:2,3,4 100:6
100:8 101:2,3
101:14,15
102:21 103:21
104:25 105:3
114:4 115:12
115:17,21,25
116:4,6 118:10
125:20 147:9
173:3 189:14
209:25 210:9
215:18 217:14
218:4,9,10
225:14 226:7
recapitalized
61:5
receipt 232:14
receive 26:4 33:4
64:4 95:22
99:4,21,22
176:2 177:3
181:17 229:6
received 14:25
16:21 39:21
40:23 48:20
50:16 64:19
84:4,13 87:20
87:23,24 95:25
96:4 100:25
102:23 105:4,5
111:19 200:22
224:12
receives 88:5
receiving 46:8
58:14 65:23
67:10,15 83:11
84:7 96:3,4
102:21 103:21
104:25 105:3
153:11 200:11
recess 141:8
recipients
104:13,13,14
recited 108:21
recollect 19:4
recollection 21:8
21:16 99:24
176:25 180:14
184:8 210:13
210:14 215:3
216:9
recollections
210:19
record 11:2 54:4
89:8 94:17
103:25 141:6,7
146:23 163:18
202:3 229:13
259
229:14 230:11
231:15,16
records 58:23
recovery 63:23
199:21
reducing 135:14
reduction
135:17 191:8
refer 56:12
167:13
reference 59:21
59:23
referenced
105:7
referred 116:8
166:24 167:17
168:16,17
170:5 182:10
215:17
referring 44:23
55:15 57:24
58:3 93:25
156:14 158:14
190:18 205:16
216:22 219:5
refers 106:3
reflect 25:11
85:7 89:24
105:24,25
106:16 111:6
131:14 179:16
reflected 25:7
72:5 78:22
84:21 90:8
111:7 119:11
121:24
reflecting 25:4
reflects 105:13
106:8 108:14
155:11 173:18
refresh 21:7,16
184:7 215:2
refreshed
176:23
refreshing 21:4
176:24
regard 23:21
26:24 33:3
39:18 50:16
59:18 60:2,25
62:4,6,7,8,9
63:5 64:18,20
65:24 77:9,12
77:13 83:25
96:13 98:5,16
99:7,9 100:7
100:15 101:10
108:16 110:9
110:16 111:8,9
111:25 112:2
114:19 119:18
125:18 126:5
126:24 127:5
127:13 128:22
129:20 130:5
131:19 132:17
133:3,4,5
143:22 146:10
148:24 161:8
174:23 175:14
180:7,20,21
188:4 196:17
203:22 205:7
205:10,14
206:5,9,13,15
207:5,25
208:13,14,15
209:7 210:15
210:23 211:5,7
211:10,11,14
212:2,14,20
213:9,13
215:25 216:13
216:15 217:21
218:22 221:12
222:9,17,23
224:2,4,6,7,8,9
226:16
regarding 21:16
30:11 32:23
51:16 97:25
98:11 118:16
208:18 219:16
regards 105:20
147:13 210:16
regional 17:6
Registered 1:16
230:5
regulations
88:25
REIT22:2 88:20
reject 139:25
140:8,15
149:10
rejected 48:23
52:10 84:3,5
84:14 97:4
139:2
rejection 148:22
150:11
related 8:23
25:20 210:3
212:12,25
226:13 230:15
relating 105:10
105:11 226:14
relationship
91:15 132:5
221:7
relative 76:17
release 125:11
125:19
released 216:3
relief 8:23 25:21
145:3,10,20
215:4,6,6,8
remain 23:10
remaining 117:7
remains 167:20
remedies 110:6
remember 84:22
87:11 205:17
209:6,11,22
210:16 228:10
remind 164:2
renegotiation
15:9
renovations
211:21
reorganization
33:5 67:8,16
69:3 75:3
139:22 152:18
200:12 219:21
reorganized
32:24 62:15
rep 132:14
repeat 41:22
165:13 173:13
173:14
repeatedly 97:8
rephrase 76:12
replaced 211:13
report 26:9
89:15
reporter 1:16,17
13:17 38:14
41:24 50:2
230:6
represent 40:21
41:7 163:23
167:10 168:13
representation
167:8
representative
18:10 21:18
representatives
8:17 17:22
18:3 31:13,21
93:8 207:25
represented
85:22 86:2
representing
28:3 63:17
86:7 128:3
200:3
represents 169:4
request 18:4
218:15
requested 38:13
41:23 49:25
205:10 206:3
require 55:21
195:18
required 221:25
223:11
requirement
112:7 140:11
requirements
139:3,6
Residence
203:11,22
206:7 211:10
resolution 66:7
68:14 111:24
133:18 140:3
143:7 146:12
174:20
resolutions
140:6 225:19
225:23,25
resolve 66:24
146:3,4 158:4
158:6
resolved 32:19
respect 16:4
21:8,17 24:8
25:9 30:15,20
31:4,15,22
33:16 35:4
41:14,16 42:2
42:17,24 43:8
43:17 47:19
55:3 56:7 60:4
62:19,20 66:11
74:12 79:22
80:8,8 81:24
87:21 91:18
96:18 97:25
100:3,4 103:3
105:6 112:14
113:16 114:13
117:16 118:20
125:23 129:17
129:24 130:2
131:10,22
143:11,12
145:24 148:13
151:20,23
161:13 167:13
168:7 171:17
171:24 172:3,9
173:7 174:18
176:3,14 179:6
179:7 182:22
183:13 184:10
191:21 196:23
197:22 198:8
202:11 203:2
203:18 204:14
260
204:22 205:23
206:20,22
207:14 208:19
209:4 210:10
212:10 215:5
216:21 217:12
218:11 219:15
220:5 221:22
221:25 223:2,6
226:2,5,21
228:9
respective 182:5
207:15 213:23
respond 13:17
49:3,18 50:3
69:25 78:25
95:24 96:6,18
113:8,15
responded 39:19
39:23 49:6
96:8 111:21,23
113:2,19
responding
39:16 46:9
112:18
response 18:12
41:8 46:12
49:5 80:14
96:10,20,21
98:13 103:6
109:22 110:13
110:15 122:11
124:3 135:20
145:19 154:14
responsible 43:5
205:18
responsive 78:18
121:15 219:24
rest 68:2 200:25
restate 193:7
restructure
30:11 39:8
45:22 65:12
99:23 101:2
126:14 133:13
206:23
restructured
98:23 153:16
restructurer
217:20
restructuring
9:5,8,11,14,17
9:21 10:6,10
13:5 16:16
17:19 30:5,16
31:4,16 40:12
42:18 45:25
46:5,6 47:4,20
48:17 50:9
52:20 53:2,8
53:12,16,18
54:6 60:20,24
61:2,19 64:24
65:3,20 67:10
71:14 75:6,9
77:20 80:18
81:17 82:16
85:17 87:22
88:5 90:23
94:8 95:23
98:5,12 99:21
100:13 101:22
118:9 123:3
128:24 131:19
136:20,24
138:22 139:6
143:4 144:15
159:21 160:5
174:17 180:5
195:14 205:6
205:23 206:20
212:14 217:24
218:23 220:4
restructurings
22:18
result 63:11
65:20 77:24
110:20 137:23
153:15,16
220:24
resulting 37:12
38:16
results 153:23
resumed 54:8
94:18 142:3
163:19 202:4
retain 171:13
178:11
retained 56:19
58:21
retains 171:13
retention 15:2
retort 65:16
return 155:6
213:22 232:12
revelation 136:5
136:5
review26:2
28:11 83:5
86:21 87:2,4,8
96:14 101:13
103:24 104:6
113:11 149:25
183:17 186:22
188:9 189:25
214:9
reviewed 18:7
21:22 29:17
35:18 44:21
48:10 54:25
82:3 83:10
86:25 87:10
96:11 102:14
109:8 111:23
115:11 143:2
147:23 150:4
151:14 198:13
198:15 214:25
reviewing 60:18
101:4 188:10
Reviews 32:7
54:24 83:3,9
87:9 95:4
103:13,23
113:13 176:22
183:19
revised 179:16
revisions 105:19
RevPAR132:19
154:21
re-ask 57:10
174:9
RI 204:9
Rick 16:21
Rifkind 5:4
11:10
RIGG202:22
203:9 208:19
220:3,23 222:2
right 29:3 37:3
55:4 58:10
62:16 73:2
78:9 93:25
100:17 101:6
107:7,10 108:8
108:21 112:12
115:19 116:7
121:19 123:12
131:11 134:10
134:11 146:14
147:25 155:11
156:9 159:19
160:14 161:17
161:21,25
163:17 167:2
168:10 172:25
174:5 176:11
176:12 181:11
181:23 182:7
198:5 199:25
202:22 203:5
207:20 208:14
208:20 215:7
215:12,13
rights 110:7
153:13 156:12
160:2 168:7
171:17 172:6,9
173:7,11,19,23
174:14 175:7
182:21 183:13
184:10 195:21
195:22
right-hand
40:17 94:24
RIMV203:20
rise 121:3
risk 123:13
163:6,10
role 19:6 46:6
Romanette
91:20 145:3
room114:8
139:18 220:19
roughly 190:25
RPR230:20
Ruisi 22:13
rule 195:18
rules 12:17
88:24 164:3
running 110:12
155:3
R-e-v-P-A-R
154:21
S
S 2:2 3:2 4:2 5:2
6:2 7:2,2 8:14
9:2 10:2 12:11
142:2,2,2
safe 100:4
218:22
Sage 106:4
San 202:23
203:22 204:13
205:13 206:6
210:15,17,23
211:5 212:18
221:10 224:2,6
Sathy 106:5
satisfactory
49:11 95:12
satisfied 27:23
27:24
satisfy 222:21
saw198:17
saying 62:2
69:22 89:15
159:17 161:4
217:23
says 30:3 38:3
45:19 49:10,13
49:17 56:9
94:23 105:4,8
109:17 113:7
122:16 139:15
143:4 145:8
146:25 148:4
157:3,10 166:9
168:12 176:2,6
261
178:5,9 183:21
184:6 186:9,11
186:25 189:21
189:21 207:17
213:8 215:4
scanned 113:14
SCC1:8 231:4
scenario 155:3
198:18
Schuyler 22:23
44:2
SEC88:24 89:15
second 38:7
96:14 105:6
113:3 124:21
163:11 178:14
208:20 220:9
secondary 34:3
45:5,11
secret 92:21
section 82:2
100:2 109:10
147:18 149:14
149:17,18,19
149:20 150:18
151:7,9 156:12
159:14
sections 48:7
54:23 82:24
83:6
secured 24:13
63:8,9,14
64:13,15 71:10
71:11 74:11
162:9,14,21
163:24 177:16
177:17 180:8
180:18 190:16
190:21 191:23
192:3 203:17
208:15 209:2
213:2 215:5
secures 191:14
securities 100:5
securitization
202:12
securitizations
217:12
securitized
128:17
security 51:10
77:7 177:14,18
179:6 219:19
see 19:13 24:6
24:12,19,20,23
25:7 29:24,24
30:2 40:19
44:12,13 51:20
51:22 66:12
72:4 74:18
82:5 95:7,9
107:25 115:19
121:21 130:21
131:13 144:21
145:20 160:3
165:10,20
166:15 168:12
169:20 172:17
177:7 178:8,13
183:3,20
187:19 189:7
189:10 192:24
197:24 202:21
202:23 203:9
203:21 204:9
228:25
seeing 45:23
87:11 101:3
116:4
seek 29:7 78:21
118:23 125:14
149:10
seeking 66:11
148:14 149:13
227:15,19,23
seen 18:5 19:5
36:22 41:10
45:20 47:12,14
47:19,24
sees 187:7
sell 34:18 42:9
45:2 50:20,24
51:13 88:8
95:22 100:24
selling 33:24
50:16 90:16
send 53:13
121:14 195:2
senior 25:5
200:14
sense 206:11
sent 34:24 39:20
45:19 46:25
48:23 52:16,18
55:20 103:19
106:10,12,12
111:10,15,17
112:19,22
125:22 206:8
206:16
sentence 29:21
29:24 30:2
58:8 143:3
September 29:8
series 54:13
67:12,13 175:2
175:2
serve 88:18
service 27:3
64:11 132:14
213:2 222:7,16
223:5,10,21
serviced 209:8
212:19 223:6
servicer 24:22
132:23 133:2
166:10 167:4,5
167:10 170:25
191:23 202:11
203:2 205:7,12
205:15 215:24
216:3,4 217:11
218:2,2,5
219:5,6,8
servicers 68:13
118:5 219:3
services 3:5,12
12:5,7,9 66:2
66:14 67:20,21
serving 16:22
SESSION8:11
sessions 121:6
set 29:8 55:13
89:23 109:14
138:23 139:3
210:3 230:8
seven 56:9 180:7
213:10,18
Seventh 6:14
Shanik 43:11
shared 63:22
shareholders
199:24
shares 45:5,11
45:12
sheet 9:19 10:4,8
30:15 39:7,11
39:16 41:16
42:3 50:15
53:14,14,18,19
58:12 75:18
77:7 85:15
94:6,21 95:24
98:2,13 101:20
107:15 108:5
108:25 111:16
111:19 112:19
112:20,22
113:4,7,8,16
113:20 144:9
144:10,11,12
144:18,21,22
175:25 176:2,6
176:11,17
177:2,12
180:16 183:9
212:12,25
213:21 214:20
221:2 226:13
232:6,7,10,13
sheets 39:19,21
53:6 62:13
97:2 98:21
105:10,22
106:15 109:23
110:14,17
111:10,23
131:13
Shelhorse 7:5
40:9,9
shocking 136:5
shop 72:3 73:22
74:4 75:7,12
79:14 136:24
137:11
shopped 71:16
shopping 140:9
short 54:2
shorthand 19:21
33:3
shot 155:20
show65:19 72:9
72:11,14 74:22
74:24 75:4
137:22
showed 53:10
72:16,24 73:3
75:5
showing 85:8
shown 138:3
shows 45:6
side 24:18 42:19
43:8,9 209:21
sign 34:11 53:18
95:7 225:25
232:7
signatories
193:3 195:24
signatory 30:17
91:3 227:15
signature 192:20
192:21 233:23
signed 28:19
35:3,20,21
53:19,23 85:11
225:19,22
226:18
significant 143:5
significantly
154:16
signing 15:2,5
67:22 232:9
similar 55:3,7
74:7,9 102:24
120:9 121:24
Simone 137:9
simple 63:6,6
simply 179:3
220:6 223:16
single 32:20
262
192:8
sir 35:8 37:11
38:16 41:11
45:20 46:14
59:8,21 60:8
68:6 78:20
86:6 87:16
90:11 94:20
106:14 139:13
188:16 202:13
214:21
sit 20:19,23 24:3
168:6 181:7
185:21 186:5
188:8 192:7
194:14 196:22
sitting 180:9,13
192:2,4 222:12
223:7
situation 74:9
127:14 195:16
six 102:6 131:8
131:21 132:7
133:12 135:11
136:14 155:7
155:12 211:3
size 110:12
skip 188:25
slightly 82:10
slots 224:21
sold 45:4 168:4
171:10,11,12
200:24
somebody 50:21
102:20 128:10
209:14
somebody's
219:19
somewhat 55:7
106:19
Sony 22:14
soon 207:11
sorry 23:24
34:16 43:2
46:13 83:4
87:3,16 95:16
144:6 145:17
146:19 151:21
158:11 173:13
192:23 193:2
sort 21:7 97:5
174:19 212:4
225:8
sorts 121:6
137:19 197:9
199:8
sought 100:19
100:21
sounds 115:19
120:24
source 92:4
sources 222:23
SOUTHERN
1:3 231:3
space 232:5
speak 179:22
speaking 170:13
speaks 44:24
149:18
special 24:22
66:2,14 67:20
67:21 68:13
118:5 132:23
133:2 166:10
167:4,5,10
170:25 191:23
202:11 203:2
205:6,12,15
215:24 216:3
218:2
specially 209:8
212:19
specific 110:22
154:13 172:13
180:14 181:20
184:2 207:24
208:16,17,18
209:3 210:12
210:14
specifically
49:14 56:7
118:20 196:22
197:15 201:10
201:14 209:12
210:9,24
220:20
speculate 181:4
187:9 192:10
speculating
181:3 192:13
speculation
124:11 201:5
Speculative 64:2
speed 210:22
spoke 152:3
stakeholders
143:5
stamp 40:16
47:10,11 54:13
81:22 102:3
stamped 26:22
27:3
stand 24:24
stands 140:18
Stang 17:10
start 53:15 104:8
119:12 132:21
154:9 163:16
165:18 203:8
206:18 217:23
started 74:21
85:10,14
204:19 205:25
206:4,10 207:2
starting 23:7
40:17 48:3
94:22 113:6
202:22
starts 47:10
108:25
state 1:18 12:24
25:24 103:25
188:18 230:7
232:4
stated 174:8
184:16 199:19
statement
105:24 155:11
177:21 185:19
187:25 197:11
statements
185:6 189:9
states 1:2 197:23
231:2
status 33:17
108:14,17
146:8 208:5
stay 145:3,10,20
200:25 214:5
215:4,6,8
step 170:10
223:15
stipulation
206:17
stipulations
12:15,18
stock 34:12,24
71:7 88:8,21
107:23 112:5
153:24 175:3
Stockton 4:4,11
11:20,22
163:23
stonewalled 75:3
stop 48:25 91:2
97:13,20
straight 219:10
strategic 29:23
30:4
Street 2:6,17 4:6
4:13
strenuous 46:12
strike 96:2
126:20 176:9
structure 61:6
64:9 65:24
74:13 79:17,21
121:22 122:13
126:7,16 128:7
128:16 131:25
137:12,17
138:25 196:21
structured
110:24
structures 74:18
stuff 138:5
sub 159:14
subject 18:15
88:24 105:19
126:3 133:16
148:25 228:24
232:9
submits 70:12
submitted 70:15
198:14
subordinate
186:12 187:2
187:14 189:4
189:15,16,22
190:2,5,11
subordination
189:21
Subscribed
231:21
subsequent
80:12 110:8
112:24
substance 49:11
95:12 101:13
101:18 217:17
substantial
67:17 74:11
90:14 132:20
137:4 206:2
212:25 213:5
substantially
65:21 128:14
135:25 184:19
191:6,11,14
199:20 213:20
substantive
114:14,19
197:5
successful 71:14
152:14 153:22
sudden 132:15
suffer 220:4
sufficient 99:15
126:8 222:7,15
223:20
sufficiently
207:23
suggest 128:8
153:17 213:12
suggested
123:22 137:16
suggesting
146:16
suggestion
133:12
263
suggests 106:15
Suite 3:13 4:6
sum42:10
summarily 97:4
summarizing
45:14
supplement
58:12
support 8:22,24
10:21 25:20,22
26:17,21 27:7
53:23 55:12
61:3 66:5,15
67:3 71:4,9
76:25 102:17
108:3 109:13
121:10 128:21
142:6,13
147:17 149:20
160:6,9 161:5
161:6 162:15
169:16 180:16
192:15,17
193:11,13,13
193:21,21
195:9 208:7
212:11,24
214:19,20,23
215:3 220:25
226:12,17
227:9,11,14,16
227:18,22
supported 143:5
supporting 67:4
67:7
supportive
67:11,18 92:11
124:4,5,13
161:11
supports 193:21
suppose 67:9
supposed 27:10
162:12
sure 13:24 17:4
20:15 22:9
26:10 27:19
36:9 40:3 44:4
54:3 73:25
93:2 101:19
105:4 113:5
114:17 115:8
121:7,15
147:22 149:15
150:25 164:6,9
164:22 176:5,7
176:8 180:21
183:18 185:11
186:20 188:2
203:5,6 213:4
219:9
surprise 115:15
surprised
115:16 179:23
surprises 163:8
surrendered
215:10
sustainable 71:7
126:15 211:3
211:21
Suzanne 114:7
switch 132:21
switchover
132:24
sworn 12:12
230:9 231:21
T
T2:8 7:2 8:14
9:2 10:2 142:2
230:3,3 233:1
table 123:13,23
take 16:15 18:9
19:14 29:14
47:16 53:25
54:22 64:21
80:16 84:25
85:11 90:11
94:10 95:3
96:14 102:12
103:5 105:21
107:12,15
109:5 115:6
117:3 123:12
123:18,23
130:8,11
137:10,21
141:4 149:23
151:11,12
154:7 163:15
167:8 184:22
185:13 192:17
197:14 201:7
201:11,17,24
221:20 223:15
taken 77:6 140:4
170:10 215:19
231:12
talk 13:22 15:14
66:9,10 68:13
68:16,23 69:2
74:13 78:8
93:9,18 96:17
97:11 99:16
113:24 118:15
118:18 129:16
129:20,25
130:5 132:3
138:9 165:22
192:12 199:9
199:10,11
200:4 207:3
208:11 226:15
talked 15:15
59:23 72:7,16
74:6,17,25
76:23 77:10,14
114:2,4,7,11
117:18 121:6
126:4,4 127:12
137:19 177:21
205:3 208:22
208:24 211:6
212:15,19
talking 50:18
69:7 90:18
101:8,9 132:21
153:14 162:19
169:14 175:4
182:18 191:9
206:4,10,18
207:2 210:16
210:24 212:13
219:7 223:25
talks 13:23
Tavern 10:13,16
114:22 130:14
130:20 197:18
taxes 100:4
Technically
170:13
tell 21:4 22:8
23:15 25:14
41:3 51:7 60:3
61:21 77:16
82:10 92:13,17
92:19,24 96:12
97:17 105:23
132:6 136:19
142:13 151:2
160:14,24
172:8 176:19
186:10 192:2,4
222:9
telling 112:17
122:6,7 178:4
tells 134:9
162:11
tend 139:9
term9:19 10:4,8
30:15 34:6
39:7,11,16,19
39:21 41:16
42:3 50:15
53:6,13,14,18
53:19 58:12
62:13 75:17
85:15 94:6,21
95:24 96:25
98:2,13,21
101:20 105:9
105:22 106:14
107:15 108:5
108:25 109:23
110:14,17
111:10,16,19
111:23 112:18
112:20,22
113:3,7,8,16
113:20 144:8
144:10,11,12
144:18,21,22
165:20 166:15
166:17,22
175:25,25
176:5,11,17,25
177:12 178:10
180:16 183:9
191:20 212:12
212:25 213:21
214:20 221:2
226:13
terminate
207:21 215:7
215:14
terminated
147:10
termination
92:2 110:5
125:22 143:16
143:17,20,21
144:24 145:4
145:11 146:2
147:3,6,8,12
147:13 159:4
213:25 214:5
215:12
terminology
181:20
terms 9:4,7,10
9:13,16,21
10:5,9 26:7
34:17 39:18
40:11 47:3
53:7 54:5
81:16 82:15
85:16 92:7
94:7 101:21
114:14,17
144:14 220:23
221:24 225:4
228:24
terribly 174:22
test 152:8,14
195:5 223:17
tested 117:17
testified 12:13
122:25 150:5
164:17,22
181:12 182:23
183:6 198:15
264
226:15
testifying 164:7
testimony 23:20
23:24 24:2
30:14,20,23
37:5 38:4
48:22 57:23
78:6 122:9
161:12 187:23
219:15 230:12
231:12,15
Texas 3:14
Thank 54:17
60:7 95:18
141:3 167:12
201:22,23
226:25 227:2,3
229:9,11,12
they'd 162:16
200:11
thing 111:21
145:7 224:9
things 58:21
92:20 97:14
109:25 137:20
189:18 200:2
think 20:19
21:11 23:20
24:16 26:6
33:7 36:20
37:18,19,24
38:3 43:3,20
44:2 45:13
47:21 52:14
55:17 57:9
63:20 64:25
65:4,20 66:18
67:7,11,16
71:12,24 81:2
82:24 105:12
106:22 113:22
116:17 117:8
117:17 118:14
118:22 122:19
123:16 127:21
130:10,11,25
131:6 132:10
133:10 140:3
140:11,13
145:6 146:23
146:23,25
147:17 150:10
150:12 152:4
154:15 155:10
155:19,21
156:23 157:4,9
158:10,13
159:13 161:6
161:10 162:6
163:4 164:15
164:22 167:2,7
167:16 168:15
169:2,3 171:20
173:17 174:2,3
175:12 176:4
177:25 178:15
178:20,21
180:8,11 182:6
187:6,17,23,24
188:4 189:11
190:3,19
191:12 194:17
194:21,22
195:22 199:19
205:3 208:4,22
208:24 210:4
210:25,25
213:8 214:19
220:11,14
221:5 224:11
226:6,24
thinking 116:2
135:14
third 34:5,19,20
42:11 49:9
50:20,24 51:13
52:9 69:9
82:12 85:9
90:13,17,19
95:16 125:10
125:12 138:9
165:18
third-party
49:15 52:16
75:8 125:14
139:18
thirty 232:13
thought 21:22
46:18 50:10
60:21 66:4
69:19 84:6
88:10 117:19
119:21 126:18
128:14,25
136:22 173:20
174:4 180:6
184:18 193:2
200:23 211:6,8
212:21 224:20
thoughts 108:11
three 17:12
33:16 154:8,12
154:17 156:2
216:2
three-day
132:25
three-party
39:14
Thursday 1:14
tie 130:12
tiling 211:12
till 15:5 211:21
time 13:8 15:23
17:14 25:25
27:8,9 30:9,17
34:24 43:6,20
50:14 56:20
69:3 72:17,18
81:5 84:16
90:11 93:6,7
97:20 106:2,17
108:9,15 110:8
112:9 117:10
117:24 118:2
118:19 120:14
125:25,25
126:14 127:22
130:7 131:7
132:12,25
133:10,22,24
138:2,24 140:6
140:8,13,22
146:11 150:7
153:10 154:21
158:21 159:10
160:3 161:22
161:25 162:7,9
173:19,20,22
174:3,8,13,17
185:5,10,17
198:22 199:3
206:24,25
209:15,18
211:18 216:6
222:5 223:15
timeframe 65:21
84:17 98:24,25
109:25 209:16
timeframes
115:18
times 13:24
174:25 181:10
tips 92:7
titled 9:4,7,10,13
9:16,19 10:4,8
10:13,16 40:11
47:3 54:5
81:16 82:15
85:15 94:6
101:20 114:22
130:14
tmeyers@kilp...
4:9
today 21:9 24:3
29:6 45:21
66:16 67:2,3
68:3,6 70:4,7
87:12 140:7
148:10,18
155:10 164:7
168:6 169:14
173:3 180:14
181:8 185:21
186:6,23
192:11 194:14
196:22 222:10
222:12 223:8
227:9 228:7
today's 167:9
Todd 4:8 11:19
163:22
told 45:24 50:8
51:8 92:5,5
97:8 136:16
137:9 160:16
160:22 171:20
172:5 175:5,8
212:13 217:20
225:21
ton 110:4
tone 65:21
top 19:14,19
21:2,3 23:15
44:11 54:12
103:17 189:16
198:3 202:19
203:10 218:6
topic 21:12
180:21 194:15
topics 21:8,17
48:3 54:20
109:4
topping 72:20
top-notch 15:18
Torres 6:20
11:24
totally 224:18
tranche 158:18
206:9
tranches 120:14
transaction
15:23 34:3
37:12 38:16
46:5,22 49:19
50:4 51:2,9
55:10,13 64:22
68:17,24 69:8
70:7 71:16,18
71:21 72:3,10
72:12 73:5,7
73:15,20 74:4
74:15 75:4
77:5 78:13,22
79:3,4,5,15
80:23 81:3
90:5,20 91:6
95:20,21
100:19,22
109:11,14
110:24 111:2
265
111:22 115:23
121:23 123:24
136:3 138:10
138:11 139:10
140:10 148:15
149:20 151:16
151:17 152:2,9
153:20 156:2,5
156:8,10
157:11,12
159:12 160:7
160:15,17,19
160:25 161:3,5
163:2 212:17
220:25
transactions
70:16 74:7
76:6,16 77:25
78:3,12,21
79:7,14,22
80:6,8,13
105:13,25
106:16 111:6,9
136:2
transcript 26:3
231:12,14
232:14,15
transfer 100:4
transference
92:23
transmission
47:19 106:10
106:12
transmitted
47:23 83:13
84:13
transpiring
106:13
Travis 7:5 40:9
treat 162:12
190:4,6,15
219:20
treated 132:9
195:17,19
204:23
treating 150:13
150:15 195:20
220:12,12
treatment
131:20 168:8
171:18 177:9
179:20 181:7
182:2 193:17
196:13 208:6
trick 174:12
188:15,20
tried 218:25
224:16
triggering
143:17,21
145:25
Trimark 22:15
Trimont 4:5,12
7:5 11:20,22
40:10 163:23
163:24 165:11
167:4,10
170:24,25
191:22
triple 150:18
Troy 143:12
146:17
true 30:8 31:19
39:5 49:16
152:24 154:5
167:4 187:5
230:11 231:14
231:16
trust 1:7 10:21
22:2 142:6,12
170:9 196:19
231:7
Trustees 22:3,6
75:16 118:12
trusts 177:10
202:12
try 13:22 88:7
97:14 123:3
131:18 146:2,4
165:12 172:17
179:15 191:18
trying 18:19
28:4 48:25
68:14 80:4
97:19,20 114:5
146:12 188:15
188:20,20
200:2 218:2
227:11
turn 29:11 44:14
154:8,16 228:2
228:19
turns 99:10
190:4
twice 49:2
two 26:13 36:21
44:23 55:19
72:22 73:9
74:19 76:3
95:5 104:10
105:9 110:14
111:10 112:17
140:7 159:20
160:6,11 165:7
165:12 191:17
192:14 193:9
202:11 211:2
215:25 216:12
type 46:3 51:2
64:22,23 65:8
65:19,24 69:7
79:7 95:19
111:20 115:22
119:23,24
123:4,7 227:20
227:23
types 66:2
162:17 199:11
Tysons 204:8
205:13 206:5
210:16 211:5
212:18 221:10
224:8
t0 107:2
U
Uhm20:21 90:7
145:13
Uh-hum28:20
102:4 148:3
ultimate 20:6
63:2 89:4
ultimately 16:4
20:6 112:6
212:11 220:17
unacceptable
82:12,13 83:22
85:9 90:3,5,10
92:25 97:4,6,9
97:13
uncertain 163:8
underlying
121:2,10
understand
13:14,21 38:25
50:17 52:6,19
143:15 147:24
157:20 161:9
161:12 162:19
164:13,14
165:23 167:19
170:3,24
175:24 176:9
181:25 185:18
185:20,22,24
186:16 190:24
193:9 204:3
207:22 223:22
understanding
32:18 108:8
148:9 166:11
167:23 169:5
169:22 171:3
172:4 174:17
176:10,13
180:9,12
181:16 182:20
184:13 188:9
193:5 196:20
198:21 199:16
215:9 228:23
understands
179:19 181:6
understood 52:2
91:8 184:15
188:21 198:16
unfair 125:6
unfortunately
199:23 219:2
unit 110:20
UNITED1:2
231:2
unpaid 169:5
191:9
unsecured 6:5
11:13 66:21
149:11 151:24
unsustainable
126:8
upcoming 224:7
upside 153:15,19
154:2,19
162:22,25
163:7,9
USA1:7 7:4
10:21 13:6
16:10,20 21:25
23:17 31:6,7
32:13 33:23
34:2,10 36:23
39:4 46:7
48:21 50:22
52:16,18 79:10
90:15 134:24
142:5,12
196:17,19
231:7
use 26:8 69:24
144:25 158:5
utilize 78:15
utilized 77:8
126:12,12
128:20
V
vague 49:21
57:10 63:25
159:5
validated 65:25
valuation 119:3
174:23
value 30:6 58:11
58:15 60:10,14
60:22,25 61:9
61:10,13,22
62:4,5,7,19,25
63:11,24 64:5
64:12 65:6
71:10 77:14
119:5,5,13
266
121:4 123:14
126:24 128:22
132:16 134:7
135:19 160:10
161:7,9,18,22
162:3,8,10
175:13,13
176:14 177:19
195:15,17
196:14 199:3
200:24 212:22
213:19 219:19
values 56:9 63:5
119:8,10
120:13,23
133:19
valuing 207:9
variations 199:9
various 13:25
19:15,16 24:7
53:15 59:17,22
60:5 72:5
79:23 93:7,7
98:21 109:15
112:23 114:19
116:8 118:5
143:17 171:13
171:14
vehicles 17:16
Verbal 92:16
verbally 92:24
version 27:20
versus 77:18
120:2,5 123:5
123:7 163:10
viability 69:19
70:14 79:8
152:12
viable 77:21
91:11 111:2
126:16 138:16
Victory 3:13
videotaped
230:10
view23:9 39:22
60:24 61:9,10
63:6,22 65:25
77:19 108:16
108:22 128:25
133:9 140:20
148:20,23
155:11 174:22
177:17 178:17
180:24,24
190:12 196:12
199:3 207:4
viewed 39:15
175:3 184:17
199:22
views 62:3,4,9
111:25,25
117:19 131:18
219:16
Virginia 23:12
virtue 177:17
178:5 221:8
224:12
vision 132:8
voluntarily
215:10
vote 139:24
W
Wachovia
132:15
wait 18:19 85:5
waived 147:7
want 27:19,22
29:15 46:17
48:7 51:7
53:25 54:23
55:4 57:9 66:2
69:20 71:7
94:11,14
101:16 105:21
115:7 123:12
134:10 137:23
142:24 144:2
147:20 149:25
150:24 151:10
174:12 183:16
187:9,21 189:7
189:9 195:2
219:9 226:6
wanted 51:8
62:5 84:19
88:8 91:13
100:2,7 136:18
152:16 211:13
211:15
wants 189:11
Washington 2:7
204:2
wasn't 34:4
35:22 46:3
61:15,17,21
74:9 90:12
92:14 106:5
110:22,23
111:4,16,20
112:18 126:8
131:24 174:21
175:6 179:23
183:6 194:16
198:23 207:23
water 135:25
136:4
way 32:11 88:15
108:22 123:9
123:15 126:14
126:17 128:18
133:9 148:24
150:12,24
171:16,24
181:20 183:21
187:4 195:7
199:14 215:16
217:10 221:6
225:11 230:16
ways 134:11
Wednesday
103:19
week 48:11,13
48:23 65:23
105:9 137:9
weeks 206:17
Weiss 5:4 11:10
40:8 44:9 86:3
104:12 107:14
108:19 109:2
112:22
went 17:10 76:9
86:7,12 89:10
93:21 96:25
107:5 221:16
222:22
weren't 41:15
42:2 100:10
West 4:13
we'll 13:22 14:2
26:9 27:8
37:24 70:9
81:8,14 85:2,4
95:22 104:8
121:12 130:20
140:5 157:10
172:16 195:6
we're 12:16
25:25 38:6
40:4 81:11
133:6 141:4,5
178:25,25
179:11 193:16
195:3
we've 146:10
169:13 195:25
208:2 216:22
225:17
Wharton 5:4
11:10
wholly 83:22
Willkie 6:12
11:16
wiped 67:7 99:7
99:8 129:9
wiping 67:12,14
wish 233:5
witness 1:12 8:3
11:4 12:11
28:5 94:10
124:12 140:25
141:3 163:12
164:12 176:21
187:24 189:6
201:22 227:2
229:11 230:8
230:12 232:1
233:23
word 73:25 74:4
words 45:18
74:2 148:20
221:24
work 58:19
121:3 124:6,16
124:24 126:2
127:7,16 152:2
201:2 210:25
216:5
workable 151:19
151:23 152:7
worked 158:19
216:2
working 121:6
works 13:14
world 120:21
worse 120:3
157:3,4,13
158:17
worth 62:11
142:17 191:14
213:12
worthless
187:23
wouldn't 37:8
115:15 126:18
127:20
write 224:21
writedown
213:2,5
writing 218:7,12
written 119:11
wrote 93:23
Wyndham22:11
X
X8:2,14 9:2 10:2
Y
yeah 28:5,10
33:12 59:7
99:16 100:23
124:20 135:7
141:2 145:11
152:4 158:8
178:15 184:15
185:16 188:2
200:8 210:20
year 15:2,3,5,9
80:17 115:14
126:11 210:18
267
years 17:11,12
117:4 154:8,12
154:17 155:7
155:12,16
156:2 211:2,4
yellow165:8,19
166:14
York 1:3,14,14
1:18 3:7,7 4:14
4:14,22,22 5:7
5:7,17,17 6:7,7
6:15,15,23,23
17:8 88:21
230:7,20 231:3
Younger 17:6
Z
Zelter 22:22
32:10,11,12,21
43:22 93:16,18
93:23
zero 67:10
197:23 198:8
199:2
Ziehl 17:11
Zuroff 22:16
$
$1 15:6
$1.4 152:15
$107 33:25 42:10
$121 170:8,14
171:2,6,18
$13.3 190:17
$13.7 187:2
$171 45:9
$20 64:11 71:3
77:15 128:20
$200 65:2
$21.3 166:23
167:14
$238 25:5 66:12
67:25 70:25
77:6 168:21
169:3,12
174:23 187:3
190:25 191:10
191:15
$25 24:20
$250 99:14
123:20 128:10
154:4
$425 128:10
$900,000 14:20
0
0-50 198:3
1
1 8:16 17:23
18:2 29:9
40:18 104:8,8
104:10 119:25
164:10 177:12
178:5 179:4
183:23 184:14
1.2 152:15
1:17 142:3
10 9:16 29:20
82:17,20 117:4
117:6,7 175:18
10-13800 1:8
231:4
100 20:5 169:23
10019 4:14
10019-6064 5:7
10019-6099 6:15
10019-6799 6:23
10020-1007 3:7
10036-6797 5:17
101 10:11
10104-0050 6:7
10104-3300 4:22
103 10:12
1095 5:16
11 1:6 9:19
28:22 37:13,14
38:17,18 63:18
66:18 76:25
85:18,21 117:5
117:7,16
147:18,18
148:2 149:17
225:16,20
231:6
110 106:25 107:5
1100 4:6
1129 139:7 152:3
152:3 160:3
1129(a) 139:4
114 10:15
1145 100:2,15
1146 100:3,15
101:8,11,13,18
12 8:5 10:4 94:9
94:21 102:7
112:10 114:5
119:2 142:14
142:16 154:24
231:13
12th 1:14
12:15 130:8
12:29 141:8
121 170:5
1221 3:6
127 106:25 107:4
1285 5:6
1290 4:21 6:6
13 10:8 101:23
102:2 121:21
187:14 228:22
13.3 177:19
13.7 166:7
190:19
130 10:18
14 10:12 47:10
103:12,15
127:24 142:21
142:23 143:4
181:10 197:15
197:16,16,17
197:25
14th 4:13
141 102:3
142 8:11 10:22
148 107:2 108:25
109:2 113:6
15 10:13 17:11
114:24 115:4
131:10 172:23
183:3 197:14
197:17
150 207:19
213:11,16,19
152 102:3
16 8:25 10:16
32:2 35:3
130:16,18
154:22
163 8:6
1633 6:22
17 8:18 9:22
10:19 85:17
142:7,10
144:15 184:22
228:2,19
18 8:19 28:19
19 28:25 172:12
19th 28:16,23
19763 1:21
1983 17:5
2
2 8:19 9:9,12,15
18:17 19:2,13
24:6 44:15
47:4 54:6 56:8
57:24 58:7
59:20 72:6
81:17 84:21,24
107:22 165:4
169:19,23
170:4,14,20
177:13 178:7
179:9 181:21
191:20 194:3,7
194:10,25
195:11 196:7
196:10,24
202:14 208:2
2nd 48:13,14
54:12 58:5
2's 58:6
2.5 51:19
20 25:4 35:14,23
66:13 128:16
168:13,13
169:10,11,24
170:9,21
177:14 189:23
193:23 194:4
196:3
200 163:5
20005-5763 2:7
2006-4 202:13
2007 15:23 23:8
117:4 136:2
155:6,8,13
2007-C1 202:12
2008 14:17 15:5
125:13
2009 15:5 125:14
2010 1:15 8:25
9:6,9,12,15,18
9:22 10:7,11
10:12,15,18
32:2 39:6
40:12 44:11
46:21 47:4
48:14 54:6,12
81:17 82:16
85:17 94:8
101:22 102:16
103:11 114:24
117:11,16
125:21 130:16
130:19 131:5
144:15 231:13
231:22
2011 117:11
202 8:7
22 10:11,15
47:11 101:22
102:16 114:23
118:8
22nd 115:14
132:2 172:11
172:19 173:2
174:13 182:9
182:23 183:2
198:23
227 8:8
23 54:13 221:9
230 86:16,17
2323 3:13
237 187:3
238 169:4
241 86:17
25 8:23,24 9:6
40:12 44:11
268
46:21 48:12
151:7 159:14
25th 183:9
25(a) 151:9
25(c) 156:12,14
250 129:9 133:13
135:14 169:3
187:15
254 94:23
26th 3:6
264 94:23
27 45:3 132:2
27.27 45:11
28 10:18 130:15
130:19 131:5
132:7
28th 153:10
2800 4:6
29 10:7 94:8
3
3 8:20 25:21
26:15,24 28:8
32:15 35:13
143:25
3:22 229:15
30 159:24 197:5
232:14
30(b)(6) 21:18
164:12,15
300 2:17
30309 4:7
31 4:13 54:14
185:14,18,20
186:6 189:20
190:10
32 8:25 81:22
33 228:5,17
34.91 45:4,10
35 136:4
4
4 8:24 9:18
25:23 26:20
27:7 29:12
40:18 48:3
54:19 82:16
91:18 144:5
147:16 149:14
149:18,19,20
176:20 192:18
214:12 227:12
4's 135:21,22
4(a) 149:25
150:3,18
4(b) 149:25
4.275 51:19
40 9:6 81:22
41 82:21
425 129:9 133:13
135:15
47 9:9
5
5 8:25 32:3,6,10
48:3 49:10
54:19 82:24
83:8 86:21
94:25 102:9
109:3 117:2,16
120:2 135:21
182:10
5's 135:23
50 31:22 33:24
34:12,18 42:10
51:14 82:21
99:16,18
100:25 136:4
197:23 198:8
198:19 199:16
200:6
52nd 4:13
54 9:12
6
6 9:4 29:12,21
40:13,16 44:10
48:11 83:8
86:21 95:2,16
102:9 109:3,10
117:9,16 120:2
183:8
6/22/10 86:18
6/23/10 102:6,16
6/29/10 94:24
601 1:13
60654 2:18
61.82 82:6
62 45:2
62.18 45:8
655 2:6
7
7 9:7 10:12 47:5
47:8 51:17
55:4,9,16 56:5
56:8 83:23
103:11,19
104:11 112:9
117:23 183:22
228:17
7th 106:17
108:10,12,17
7/6/10 107:14
109:2
70 157:19
700 3:13
75 45:11
75219 3:14
787 6:14
8
8 9:10 54:7,11
55:9,17 56:5
58:4,7 60:17
83:23 117:4,25
144:20 145:8
214:18,24
228:19
81 9:15
82 9:18
85 9:22
9
9 9:13 81:18,21
83:23 117:4
9:05 1:15
90 24:5 192:11
94 10:7
95 45:10 200:5
EXHIBIT C-1
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Project Tavern
Lehman Discussion Materials
April22, 2010
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS &__COMPANY
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Legal Disclaimer
SUBJECT TO FRE 408
MOELI5 &.__COMPANY
Moelis & Company prepared this presentation based on information received from third parties. Moelis
has not and does not intend to verify independently any of such information, all of which Moelis
assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of
its date and Moelis assumes no duty to update it or to advise any person that its conclusions or advice
has changed.
This presentation is solely for your information purposes only. Consider it along with all other facts,
advice and its own insights before making your own independent decisions. Do not provide a copy of
this presentation to any person without Moelis' prior consent. No other person should rely on it for any
purpose. Moelis does not offer tax, accounting or legal advice.
Moelis & Company provides mergers and acquisitions, restructuring and other advisory services to
clients and its affiliates manage private investment partnerships. Its personnel may make statements or
provide advice that is contrary to information contained in this material. Our proprietary interests may
conflict with your interests. Moelis may from time to time have positions in or effect transactions in
securities described in this presentation. Moelis & Company may have advised, may seek to advise and
may in the future advise or invest in companies mentioned in this presentation.
[ 2]
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Current Capital Structure by Financing Pool
Bitt:
:::: _.,
SeC.ur\li7-'l tion

K
;:J:r.iM on t

::.: .

: . -
SUBJECT TO FRE 408
MOELIS &.._COMPANY
:, . ..... :: .. : . .,::.o .
... . '. $120mn\
CMBS
l':;i'/i
: .. : :-i ;; .
':'<Securitb.ation
. $2.7/$:1.4 billio1l':.;j;j:.:r

.
Hriteis: . .

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.

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Scenario Projection Assumptions
SUBJECT TO FRE 408
MOELIS &.._COMPANY
In this presentation we are running a scenario where projections have been developed on a hotel-by-hotel
basis for the portfolio
- Management estimates financial performance will not return to 2007 levels for at least four to six years
- 2010 reflects management budget, with actual data for January and February
- Management anticipates 5-10 properties to be deflagged by 2015, regardless of PIPs
FISCAL YEAR 2010 - SCENARIO ASSUMPTIONS
ADR level assumptions range o f ~ $107-$113
- Slightly down from FY2009
- Downward estimates mainly due to price
pressure as a result of continued effects of
economic environment
Occupancy levels o f ~ 63% -67%, slightly down from
FY2009
RevPAR o f ~ $70-$75, down approximately 2%-4%
from FY2009 levels
Expenses in line with FY2007-FY2009 average
margins
Estimates take into consideration adjustments due
to cycle renovations
FISCAL YEAR 2011 - SCENARIO ASSUMPTIONS
ADR levels o f ~ $110-$116
Occupancy levels o f ~ 65%-70%, up from FY2010
and back at FY2009 levels
RevPAR o f ~ $74-$79, up approximately 4%-7%
from FY2010 levels
margins
[ 4]
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(.o.)
-....!
Consolidated Financial Overview
($in millions)
Consolidated
Filtancial
Key Operating Statistics:
ADR ($)
Growth
Occupancy(%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Department Expenses
Gross Operating Income
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Corporate Expenses
Corporate EBIIDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
% ofRevenue
i:.\;,
$123
-
74.2%
-
$92
$337
83
$254
75.4%
110
$145
42.9%
17
$127
-
37.7%
11
$116
-
34.5%
$19
0
$19
5.5%
. :::2009A
$126
2.3%
72.8%
(141) bps
$92
0.4%
$352
4.3%
84
$268
76.2%
112
$156
44.3%
20
$136
6.9%
38.7%
12
$125
7.0%
35.4%
$19
0
$19
5.5%
$111
(11.8%)
67.2%
(565) bps
$75
(18.6%)
$290
(17.5%)
74
$216
74.6%
101
$115
39.6%
19
$96
(29.5%)
33.1%
12
$84
(32.2%)
29.1%
$16
0
$16
5.5%
SUBJECT TO FRE 408
MOELIS &.._COMPANY
$110
(0.8%)
65.5%
(168) bps
$72
(3.3%)
$282
(2.8%)
74
$209
73.9%
100
$109
38.5%
17
$91
(5.0%)
32.3%
9
$82
(2.7%)
29.1%
$21
24
$45
15.9%
_;:_,.;;:;:.;:i:-.:;:[i::;:ii:i:

20i1EC ::;':;,t:':
$113
2.6%
67.4%
195 bps
$76
5.7%
$288
2.1%
75
$213
73.8%
106
$107
37.1%
17
$90
(1.7%)
31.1%
9
$80
(2.1%)
27.9%
$29
21
$51
17.7%
[5]
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(X)
Fixed Pool Financial Overview
($ in millions)
Fixed Pool'.
Financial Overview.
ADR ($)
Growth
Occupancy (%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Department Expenses
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
% ofRevenue
$120
76.0%
$92
$195
41
$154
45.7%
63
$91
26.9%
10
$81
24.1%
$11
0
$11
3.2%
' : : : ~ Q O ~ ~ : :':::, ..i!
1
![
1
f!lt:H:;.;: .. Mo9A
$124
3.1%
74.1%
(191) bps
$92
0.6%
$197
0.8%
40
$157
44.6%
63
$94
26.7%
11
$83
2.3%
23.6%
$11
0
$11
3.1%
$109
(12.0%)
69.2%
(491) bps
$76
(17.8%)
$161
(18.1%)
35
$126
43.4%
56
$70
24.0%
10
$60
(28.1%)
20.6%
$9
0
$9
3.0%
SUBJECT TO FRE 408
MOELIS &.__COMl"ANY
$109
(0.7%)
68.2%
(101) bps
$74
(2.2%)
$158
(2.1%)
35
$123
43.6%
56
$67
23.8%
10
$58
(3.4%)
20.5%
$12
6
$18
6.3%
$111
2.2%
69.5%
129 bps
$77
4.1%
$164
4.1%
36
$128
44.3%
61
$67
23.1%
9
$57
(1.2%)
19.8%
$18
21
$39
13.6%
[ 6]
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Floating Pool Financial Overview
($in millions)
Floating Pool
. Financial Overview
ADR ($)
Growth
Occupancy(%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Departn1entExpenses
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
% ofRevenue
$118
66.7%
$78
$79
25
$54
16.0%
27
$26
7.8%
4
$22
6.6%
$4
0
$4
1.3%
$121
2.5%
67.7%
95 bps
$82
3.9%
$93
18.3%
28
$65
18.5%
31
$34
9.7%
5
$29
30.3%
8.3%
$5
0
$5
1.5%
$108
(10.1%)
61.2%
(650) bps
$66
(18.7%)
$80
(14.1%)
26
$54
18.7%
29
$25
8.7%
5
$20
(31.1%)
6.9%
$4
0
$4
1.5%
SUBJECT TO FRE 408
M:OELIS &.._COMPANY
$107
(1.0%)
57.9%
(331) bps
$62
(6.4%)
$76
(4.9%)
26
$50
17.7%
28
$22
7.8%
5
$17
(13.2%)
6.2%
$6
14
$20
7.1%
$112
4.5%
60.0%
211 bps
$67
8.3%
$73
(3.8%)
25
$48
16.8%
28
$21
7.2%
4
$16
(5.4%)
5.7%
$7
0
$7
2.5%
[7]
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Other Pools Financial Overview
($in millions)
Other Pools
Financial Overview
ADR ($)
Growth
Occupancy (%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Department Expenses
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total Cap Ex
% oJRevenue
!;:::::::;:::
$144
79.7%
$115
$64
17
$46
13.7%
19
$27
8.1%
4
$24
7.0%
$4
0
$4
1.0%
$145
0.5%
77.6%
(209) bps
$112
(2.1 %)
$62
(2.6%)
16
$46
13.1%
18
$28
7.9%
4
$24
0.4%
6.8%
$3
0
$3
1.0%
$125
(13.3%)
71.2%
(646) bps
$89
(20.5%)
$49
(20.3%)
13
$36
12.4%
16
$20
6.9%
4
$16
(32.3%)
5.6%
$3
0
$3
0.9%
SUBJECT TO FRE 408
MOE LIS &.._COMPANY
$124
(1.0%)
69.8%
(137) bps
$87
(2.9%)
$49
(1.4%)
13
$35
12.6%
16
$19
6.8%
3
$16
(0.5%)
5.7%
$4
4
$7
2.5%
$126
1.0%
72.5%
274 bps
$91
5.0%
$51
5.1%
14
$37
12.8%
17
$20
6.8%
4
$16
0.7%
5.6%
$4
0
$4
1.5%
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......
Fixed Pool Properties Overview
SUBJECT TO FRE 408
MOELIS &.._COMl"ANY
.Fraflcbise : .. : .. __ ,-' ,.:::
Prop<.rly FJ.,g 4t Keys Gener,,tion Risk Unfund.;a ($nlirij
AddisonRI
Atlanta Peachtree

Belmont

Bothell

Columbia

Fort Lauderdale

Horsham

Las Colinas
KY
Livonia
Li>II1bard
Louisville RI
Lyr,>f!WO.Q.d.,
Mount Lautel

Naples
N'rt!and}1E
Richmond

San Jose
J<Jse.Squlh
San Mateo
$ci:uiumbtiii <
Shelton

Silicon Valley ll
i'uiG-.'u;. ....,;:,::,

Marriott Residence Inn 150 6
' "ilf H . '
5,686
14
15
24
24
22
':'}9
24
19
0.0
0.0
.o.o: ; :.:;::;::
0.0
Yes 1.1
Yes 0.0
[ 9]
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Fixed Pool Terminal Properties
HIGHLY CONFIDENTIAL DRAFr
SUBJECT TO FRE 408
M 0 E L 1 S &..__0 0 M l" AN Y
Property Flag # I<eys Fran,hise Life 2009A EBITDA 2010E EBITDA
Altamonte Springs Marriott Residence Inn 128 1 12/31/2021 $0.7 $0.8

Cherry Hill Marriott Residence Inn 96 1 12/31/2021 1.1 1.0

Denver Tech Marriott Residence Inn 128 1 12/31/2021 1.0 1.0
Lexington KY Marriott Residence Inn 80 1 12/31/2021 1.0 1.0

.;:; i ... . . ..
Louisville RI Marriott Residence Inn 96 1 12/31/2021 0.8 0.6
-.
'C!O'.'
San Jose Marriott Residence Inn 80 1 12/31/2021 1.0 1.0

Shelton Marriott Residence Inn 96 12/31/2021 Q8 Q7

!' ; 1nn ; -
Total 1,447 $11.4 $1M
[10]
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Fixed Pool Ongoing/ Terminal Properties Financial Overview
($in millions)
Fixed Pool Ongoing Properties
Financial Overview
Revenue
Growth
Hotel EBIIDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total Cap Ex
% ofRevenue
Fixed PoolTernrlnal Properties
Financial Overview
Revenue
Growth
Hotel EBIIDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
% ofRevenue
$150
$64
19.1%
$8
0
$8
2.4%
li!Hliii
$45
$17
5.0%
$2
0
$2
0.7%
$151
0.5%
$65
1.1%
18.5%
$8
0
$8
2.4%
$125
(17.3%)
$48
(25.6%)
16.7%
$7
0
$7
2.4%
.
$46
1.9%
$18
7.1%
5.1%
$3
0
$3
0.7%
$36
(21.0%)
$11
(36.9%)
3.9%
$2
0
$2
0.7%
SUBJECT TO FRE 408
MOELIS &.._COMPANY
:' :nzo:l,tE,,, .,.
$123
(1.7%)
$47
(2.4%)
16.8%
$9
3
$12
4.4%
$128
4.7%
$47
(0.6%)
16.3%
$13
11
$25
8.7%
. .. . :;2011E
$35
(3.6%)
$10
(8.0%)
3.7%
$3
3
$5
1.9%
$36
2.1%
$10
(3.8%)
3.5%
$4
10
$14
5.0%
[ 11]
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Illustrative Valuation Ranges
($ in millions)
Illustrative Value I$150 - $1901
Multiples
2010E EBITDA 8.6x-10.9x
2011E EBITDA 9.1x -11.5x
Cap Rates
2010E NOI 6.2% -7.8%
2011ENOI 4.8%-6.1%
[$400 - $5251
8.5x-11.1x
8.5x -11.2x
7.3%-9.5%
6.4%- 8.4%
SUBJECT TO FRE 408
MOELlS &.__GOMl"ANY
m
.. ;:. : : :: ::
[$25- $501 $125- $1751
2.4x- 4.8x 8.0x -11.1x
2.5x- 5.0x 7.7x -10.8x
15.7%-31.4% 6.9%-9.6%
11.5%-23.1% 6.7%-9.4%
fllustrative Value Assuming PIPs Fully Funded [$700]mm- $940]mm
(1) Lehman hotels consists of all core and terminal hotels in the floating pool
(12]
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Illustrative Pro Forma Structure
Debt Amount [$400 - $575]
Maturity
Coupon
Hotels
2017-2019
..
"
" ..

"
"
0-10 Hotels
to CMBS Pool
[6%]
35-45
Lehman I Investor
Others
Debt Amount
Maturity
Coupon
Hotels
[95%]
[5%]
[$0- $50]
2017
[6%]
20
SUBJECT TO FRE 408
MOELIS &.__COMI"ANY
J

2010E EBITDA $82 j
J
PF Debt I 2010E EBITDA [6.4x- 8.8x]
-------.... ..-. .. .......,...,_..._, __ ........,..,., .....
Debt Amount [$125 - $175]
Maturity 2016-2018
Coupon [6%]
Hotels 6-7
[ 13]
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Illustrative Deal Structure Scenario
Pro Forma
($in millious) Current Debt Adjustments Pro Forma Debt Interest Rate
Fixed Pool
Floating Pool
Other Pools
Total
Equity Value
Fixed Pool
Floating Pool
Other Pools
Total
$825 [$250 - $425] [$400- $575]
351 [301- 351] [0- 50]
238 [63 -113] [125 -175)
$1,414 [$689 - $889] [$525 - $725]
[$150- $190]
Current , Pro Fonna
Debt/Cap Debt/Cap
[144% - 206%] [100%]
[185% -234%] [0%-26%]
[136% -190%] [100%]
[155% - 209%] [73%-83%]
[6%]
[6%]
[6%]
[6%]
SUBJECT TO FRE 408
MOEL15 &.._COMPANY
(14]
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Illustrative Debt Structure Scenario
Fixed Pool 2009A
NOI $51
Interest [24- 35]
DSCR [1.5x- 2.1x]
Floating Pool 2009A
NOI $16
Interest [0- 3]
"DSCR [5.2x- NM]
Other Pools 2009A
NOI $13
Interest [8 -11]
DSCR [1.3x -1.8x]
Consolidated 2009A
NOI $68
Interest [32- 44]
DSCR [1.6x - 2.2x]
2010E
$46
[24- 35]
[1.3x -1.9x]
2010E
$12
[0- 3]
[3.9x- NM]
2010E
$12
[8 -11]
[l.lx -1.6x]
2010E
$61
[32- 44]
[1.4x -1.9x]
2011E
$39
[24- 35]
SUBJECT TO FRE 408
MOELIS &.__COMPANY
[l.lx -1.6x]
2011E
$9
[0- 3]
[3.1x- NM]
2011E
$12
[8 -11]
[l.lx -1.6x]
2011E
$51
[32- 44]
[1.2x -1.6x]
(15]
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r
z
z
I
s:
0
0
0
0
0
(;.)
CJ1
~
(X)
Proposed Governance Structure
Lehman and Investor to share control of the Trust
[2] board members selected by Lehman
[2] board members selected by Investor
SUBJECT TO FRE 408
MOELIS 8i..__COMl"ANY
[3] independent board members mutually acceptable to Lehman and Investor
[16)
EXHIBIT C-2
From: Joseph D. Glatt [JGlatt@ApolloCapital.com]
Sent: Wednesday, July 07, 2010 12:45 PM
To: 'mbeilinson@beilinsonpartners.com'
Subject: Fw: InnKeepers--CONFIDENTIAL
Attachments: Term Sheet Alternative A (Lehman- Innkeepers).doc; Term Sheet (Lehman - AIC).doc
Fyi
From: Alan W Kornberg <akornberg@paulweiss.com>
To: Sage, Michael <michael.sage@dechert.com>; brian.greer@dechert.com <brian.greer@dechert.com>;
andrew .buck@dechert.com <andrew. buck@dechert.com >
Cc: Basta, Paul <pbasta@kirkland.com>; anup.sathy@kirkland.com <anup.sathy@kirkland.com>; Joseph D. Glatt
Sent: Wed Jul 07 12:35:07 2010
Subject: InnKeepers--CONFIDENTIAL
All,
As discussed last week, we are attaching two termsheets: (i) one relating to the proposed agreements between Lehman
and InnKeepers and (ii) the other relating to those between Lehman and AIC. We think this approach more accurately
reflects the transactions under discussion.
I hope that we can continue the very constructive discussions the parties have had to date.
Please note that the attached are subject to further comments and revisions by AI C.
Best regards,
Alan
IRS Circular 230 disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in
this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party
any transaction or matter addressed herein.
Click_Mere for More Information
Alan W. Kornberg 1 Partner
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas 1 New York, NY 10019-6064
(212) 373-3209 (Direct Phone) 1 (212) 373-2053 (Cluster Fax)
I
This message is intended only for the use of the Addressee and may
contain information that is privileged and confidential. If you are not the
intended recipient, you are hereby notified that any dissemination of this
communication is strictly prohibited. If you have received this communication
in error, please erase all copies of the message and its attachments and
notify us immediately.
Confidential
l,. , .. ,.,_,.
I ./:.r:
I; . . .
AIC 00000127
Confidential
PWRW&G DRAFT 7/6/10
Subject to FRE 408
FOR DISCUSSION PURPOSES ONLY
TERMSHEET
1
(Lehman/ AI C)
July U,2010
This term sheet ("Term Sheet") contains indicative terms and conditions for discussion purposes
only. It does not constitute an offer, is not intended to be complete and is qualified in its entirety by
the terms of the final definitive agreements that may be entered into by the parties, and is not
intended to create any legal obligations with respect to the parties hereto. The parties hereto will
only be bound upon execution and delivery qf the agreements referred to herein. This Term Sheet is
prqffered in the nature of a settlement proposal in furtherance of settlement discussions, and is
intended to be entitled to the protection of Rule 408 for the Federal Rules of Evidence and any other
applicable statutes or doctrines protecting the use or disclosure of confidential information and
information exchanged in the context of settlement discussions, and shall not be treated as an
admission regarding the truth, accuracy or completeness of any fact or the applicability or strength
of any legal theory. The entry into any definitive transaction on the terms set forth in this Term
Sheet, or otherwise, is subject to approval of the United States Bankruptcy Court administering the
Chapter II case of Lehman Brothers Holdings Inc.
THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO
ANY SECURITIES OF INNKEEPERS USA TRUST OR A SOLICITATION OF
ACCEPTANCES OF A CHAPTER 11 PLAN. ANY SUCH OFFER OR SOLICITATION
SHALL COMPLY WITH ALL APPLICABLE SECURITIES LAWS, IF ANY, AND/OR
PROVISIONS OF THE BANKRUPTCY CODE.
Seller:
Acquirer:
Description of Transaction:
Lehman ALI Inc. ("Lehman").
Apollo Investment Corporation or its designees ("AIC").
Following the confirmation by the Bankruptcy Court for the
Southern District ofNew York (the "Bankruptcy Court") ofthe
prepackaged or prearranged plan (the "Plan") of reorganization of
Innkeepers USA Trust ("Innkeepers" or the "Company") as
described in the term sheet, dated as of July [_j, 2010, by and
between Lehman and the Company, and attached hereto as
Exhibit A (the "Lehman-Innkeepers Term Sheet") and prior to the
effective date of the Plan (the "Effective Date"), Lehman and AIC
will enter into an agreement (the "Stock Purchase Agreement")
whereby Lehman will agree to sell to AIC the right to receive
50% of the equity in the Company that Lehman receives in
Note to Draft: Discuss additional sections such as operating and tax distributions, employment agreements,
restrictive covenants, registration rights and information/inspection rights.
Doc#: USl :6466247v8
AIC 00000110
Confidential
Distribution ofinnkeepers
Equity:
Conditions to Execution of
Stock Purchase Agreement:
Doc#: USJ:6466247v8
connection with consummation of the Plan (such 50%, the
"Transferred Equity") in exchange for cash in an amount equal to
$107.5 million (the "Sale Proceeds"). In the event the transfer tax
exception under 1146(a) oftheBankruptcy Code is determined
by the Bankruptcy Court to be inapplicable, AIC and Lehman will
cooperate to structure the sale of the Transferred Equity in a
manner that will not incur transfer taxes; provided, however, that
in the event such taxes are incurred as a result of the sale, AIC
shall be responsible for payment of such taxes in addition to the
Sale Proceeds.
After giving effect to the sale of Transferred Equity described
above, the equity in the reorganized Company (the "New
Equity") will be held as follows:
At least 48.5% by Lehman;
At least 48.5% by AIC; and
Up to 3% available for distribution to the
Company's managernent and/or unsecured
creditors.
The execution of the Stock Purchase Agreement will be subject to
the satisfaction or waiver by Lehman or AIC, as applicable, ofthe
following conditions:
approval of the Bankruptcy Court of a plan
support agreement executed by Lehman, AIC
and the Company as contemplated by the
Lehman-Innkeepers Term Sheet;
receipt by AIC and Lehman of all necessary
internal approvals to consummate the
transaction (which may be withheld (for any
reason or no reason) in their sole discretion),
including, without limitation, final approval by
AIC's Investment Committee; and
the negotiation, execution and delivery of
definitive documents reflecting the terms set
forth in this Term Sheet and containing other
terms and conditions mutually acceptable to
AIC and Lehman, including, but not limited to,
terms customary for transactions ofthis type.
2
AIC 00000111
Conditions to Closing:
Termination Events:
Governance:
Doc#: US I :6466247v8
Confidential
The consummation of a transaction on the terms described herein
will be subject to the satisfaction or waiver by Lehman or AIC, as
applicable, of customary closing conditions including, without
limitation, the following:
the consummation ofthe proposed restructuring
transaction between Lehman and Innkeepers on
the terms and as contemplated by the Lehman-
Innkeepers Term Sheet;
the reorganized Company will have the pro
forma capitalization structure contemplated by
the Lehman-Innkeepers Term Sheet;
termination of the Required Capital
Improvements Guaranty, dated as of June 29,
2007, by AIC for the benefit of Lehman and
release of all liabilities thereunder; and
completion of third party and regulatory notices
and receipt of all necessary consents and
waivers.
Each party's obligations pursuant to the Stock Purchase
Agreement shall be terminable by either Lehman or AIC upon the
earliest to occur of (i) the occurrence of any Termination Event
described in the Lehman-Innkeepers Term Sheet other than the
transactions contemplated by this Term Sheet or (ii) [ ],
2011.
AIC may terminate its obligations pursuant to the Stock Purchase
Agreement (i) upon the waiver, modification or amendment of
any term, condition or provision of the Lehman-Innkeepers Term
Sheet, or the definitive documents (including the Plan)
implementing the same, in a manner not acceptable to AIC, (ii)
any extension of the period of time to achieve the Plan Milestones
set forth in the Lehman-Innkeepers Terms Sheet or (iii) if AIC
seeks but does not obtain the approval of its Investment
Committee within 60 days of approval of the Plan Support
Agreement by the Bankruptcy Court.
The board of directors of the Company will initially consist of
7 members: 2 members nominated by Lehman, 2 members
nominated by AIC and 3 members to be mutually agreed.
A super-majority vote of66 2/3% will be required for material
transactions, including, among others, a merger or
consolidation, equity issuances, debt issuances in excess of $10
3
AIC 00000112
Shareholders Agreement:
REIT Status:
Property Manager:
Professional Fees:
Governing Law:
Doc#: US! :6466247v8
Confidential
million in the aggregate, sale or disposal of a property and such
other events as determined by Lehman, AIC and the Company.
Lehman, AIC and the Company shall agree on a future date by
which the Company shall engage an investment banker to market
and sell the Company; provided, that such date shall not be later
than three years after the Effective Date unless otherwise agreed
by Lehman and AIC.
The Plan shall provide that, on the Effective Date, Lehman, AIC
and all other holders ofNew Equity to be issued pursuant to the
Plan shall enter into a shareholders agreement that provides,
among other things, for restrictions on the transfer of the New
Equity and customary protections, including, but not limited to,
tag-along/drag-along rights, all on terms to be mutually agreed.
Lehman, AIC and the Company shall, after the Effective Date,
determine whether to maintain Innkeepers' status as a real estate
investment trust.
Prior to the Effective Date of the Plan, Lehman, AIC and the
Company shall designate a manager for the Company's
properties. Iflsland Hospitality Management, Inc. ("Island") is
not selected as the manager, the Plan shall provide that Island
shall cooperate with the Company and the replacement manager
to effectuate an orderly transition to the replacement manager.
Any agreement to effectuate such transition shall be in form and
substance acceptable to Lehman and AIC.
The Company shall pay the professional fees and expenses
incurred by Lehman and AIC in connection with the transaction
contemplated by this Term Sheet.
This Term Sheet and all agreements entered into pursuant thereto
shall be governed by New York law with jurisdiction in the courts
in New York.
4
AIC 00000113
Confidential
ACKNOWLEDGED AND AGREED:
APOLLO INVESTMENT CORP.
By: ____________ _
Name:
Title:
LEHMAN ALI INC.
By:
-------------
Name:
Title:
[Signature Page to Term Sheet]
AIC 00000114
Exhibit A
LEHMAN-INNKEEPERS TERM SHEET
A-1
Doc#: USl :6466247v8
Confidential
AIC 00000115
Confidential
LLP DRAFT 7/6/10
Subject to FRE 408
(Lehmanflnnkeepers)
Illustrative Terms of Proposed Restructuring
[Jn-ne-2.:2-;].Iuly r J. 2010
1
The transaction
agreement
herein, and are subject to the terms and conditions hereof This term sheet is provided in
confidence and may be distributed only with the express written consent of the parties
hereto. This term sheet does not include a description of all of the terms, conditions and
other provisions that are to be contained in the definitive documentation governing such
with the specific matters set forth herein. This term sheet remains subject to the
completion ofLehman's tax due diligence. This term sheet is proffered in the nature of a
to the protections of Rule 408 of the Federal Rules ofEvidence and any other applicable
Tllis tenn sheet is not being provided on behalf of SASCO 2008-C2, LLC (the "Mezzanine
Lender") in cmmection with the mezzanine loan with respect to the collateral securing the
Debt"). Lehman does not make any representations with respect to the Mezzanine Lender.
[: )Doc# JJS16466527y7
AIC 00000148
Confidential
LLP DRAFT 7/6/10
Subject to FRE 408
SOLICITATION SHALL COMPLY WITH ALL APPLICABLE SECURITIES
Terms:
Treatment of Claims and Eguitv Interests Under the Plan:
2
mortgage claims in respect of the Floating Rate Debt, at least 97% of
the issued and outstanding New Equity (as defined below).
terms set herein.
the new Fixed Rate Debt notes are subject to the reasonable approval,
in form and substance, by the parties hereto.
If holders of the Fixed Rate Debt make a llll(b) election, the
terms of such note shall be subject to the reasonable approval, in form
and substance, by the parties hereto.
2
l11e descriptions herein of the expected treatment of holders of the Mezzanine Debt, the Fixed
['.57W581 .15]Doc# !TSJ6466527v7 2
AIC 00000149
Confidential
General Unsecured
Claims
Deficiency Claims
Administrative
Claims
Priority Claims
Existing Equity
[lkcirer-1:-Dffif-<4/-Y]PWRW&G IJ :P DRAFT 7/6/10
Subject to FRE 408
the new Other Secured Debt notes are subject to the reasonable
approval, in form and substance, by the parties hereto.
$150 m i l l i o n ~ and the applicable discount rate and the terms of such
notes shall be subject to the reasonable approval, in form and
substance, by the parties hereto.
shall be agreed among the parties hereto.
have voted against the Plan:. Lehman shall determine, in its sole
general unsecured claims. [Discuss impaired accepting class and
REIT issues]
Unsecured deficiency claims of holders of Floating Rate Debt, Fixed
Rate Debt and Other Secured Debt shall not receive any recovery
under the Plan or otherwise without the consent of Lehman and the
Company, and shall be deemed to have voted against the Plan.
Shall be paid in cash in the ordinary course ofbusiness or upon the
Innkeepers will be cancelled, and holders of such interests [ welliff]will
not retain any property on account of such interests under the Plan.
To the extent Lehman and the Company determine that the
Company's existing corporate structure would be the most tax
efficient for Lehman and the Company on the Effective Date, the
prepetition equity interests of each of Innkeepers' subsidiaries will be
deemed reissued in accordance with the Company's prepetition
corporate structure. If Lehman and the Company determine that a
different structure would be more beneficial to Lehman and the
Company on the Effective Date, the Plan shall provide for such
structure, on terms mutually acceptable to the parties hereto.
('.5703_5gj .l5]Dnc# FS!6466527y7 3
AIC 00000150
Confidential
[Deehert LLP DRAFT 7/6/10
Subject to FRE 408
Bankruptcy
Pleadings
DIP Financing
Use of Cash
Collateral
All material pleadings filed by the Company in connection with the
Chapter 11 Cases, including all first-day motions, shall be in form and
substance reasonably acceptable to Lehman.
(i) a DIP facility provided in an amount equal to $[51-55] million,
which is necessary to complete certain Marriott PIP requirements,
secured by senior, priming liens on the Fixed Rate Collateral on terms
[te--00--]reasonably [agreed by]acceptable to Lehman (the "Fixed Rate
DIP Facility"). The Fixed Rate DIP Facility shall have a maturity
date at least 12 months after the Petition Date and shall have no
financial covenants or any control features. On the Effective Date of
the Plan which is consistent with the terms hereof, all amounts
outstanding under the Fixed Rate DIP Facility shall be repaid from the
proceeds of the New Funding (as defined below)[--or-a-eomb-inat:i-e-n
t:heroof----AJ.l--ora-portioH-of:J:.he-TixedRat:e--DIP.-FaBilit:y'lnay--he
provided by Apollo Investment Corp. (".:UC") in its sole discretion,
pr-e:vided-thaHhe-tennsof--sueh-.fa.;;ility--s-h-aU-be--in-fi:xm-a-nd-suhstarwe
reasonably to Ldt.m:afr.]!,
Facility. The other terms of the Floating Rate DIP Facility are to be

Current payment of Lehman's legal and financial
advisors' fees and expenses;
Current adequate protection payments during the
('.5703.38l.J5)Dot:#l'SJ6466527y7 4
AIC 00000151
Confidential
New Equity
.Pt>rrhase ef

LLP DRAFT 7/6/10
Subject to FRE 408
pendency ofthe Chapter 11 Cases in an amount equal
to interest at the non-default contract rate under the
Floating Rate Debt;
Company's use ofLehman's cash collateral shall be
limited to use for the benefit of the Floating Rate
Collateral;
Company shall not take any action, and shall not
solicit, encourage or support any action by a third
party, seeking to amend, modify or extend the Plan
Milestones (as defined below) (the foregoing provision
is hereinafter referred to as the "Milestones
Covenant"); and
Company's use ofLehman's cash collateral will
terminate immediately upon the occurrence of a
Termination Event (as defined below), including the
failure of the Company to meet the Plan Milestones.
as follows:

Shares of the New Equity representing at least 97% of
the issued and outstanding New Equity will be
distributed to Lehman pursuant to the Plan in full
satisfaction of the Floating Rate Debt and the Floating
Rate DIP Facility (the "Initial Lehman Shares"); and

Shares of the New Equity representing up to 3% of the
issued and outstanding New Equity will be available
for distribution to the Company's management and/or
unsecured creditors.
exempt from (i) securities laws in accordance with section 1145 ofthe
1146 of the Bankruptcy Code.
[:\Her f8BJimut:ieH ofthe ana }'Jfi8f &ate,

(or such other AlC aftlliates as AlC may determine, subject to
b-e-h-m-a-n-:-&--app-mva:l)--i-n--exehange--f-or-e--as-h--i-H--an--am-ount-equ-at-te--$-1-0!-0
FS16466527y7 5
AIC 00000152
Confidential
LLP DRAFT 7/6/10
Subject to FRE 408
vii-th the pa.)'ul:"lle to LehFHnfl ff;he "ale

the--B-a-nkn.tpt:ey-Cooe-ts--cletenn+ned--l'}y-i:he--B-mlkn.tpte:y-C-o:mt-tf}--he
inapplicable, J\lC and Lehman '>Vill cooperate to structure the sale of
su-eh--ri-ghts--i-n--u-'m-anneF-that--w-i-l-1--ne:t--ineur--tmnster--ta*es-;-pre-vide-d;
ihat in the a.fe as a fOJtilt
sale, t\lC ::hall be FCsponsible for payment of suc.h taxes in addition to
the--Sal-e--:Pree-eed&.----:-rhel'eafter-;--I-n-nkeepeF-s-vv'i-l.J.-inBuf--E-entef--se;;n.tred-
debt in an amount equal to $[75J million (the with

shall be on tcnm mutually agreeable to the parties hereto.]
(QH the effeftive Qate, shall the Ne\v li?.EJaity as
fu.l.l.-6'\vs-:-]
&-at le<H;t 4 g S% to Lt.lflman; '!'
&---at-+e-as-t--4g-_.%--to-/\-JG-{-eJ=-i=.o--eH.e-or-mme-of--i-ts
designees); and '?
&-Hf) te :.'%available ier te the
managemeffi ana/er unseffi:lref:l 'J'
Conditions The Transaction will become binding on Lehman when Lehman,
Precedent to Apollo Investment Corp. ("AIC,d, and the Company execute a plan
Lehman's support agreement (the "PSA") that incorporates the Transaction as
Obligations Under set forth herein, including:
PSA

the terms set forth herein and otherwise reasonably
acceptable in form and substance to Lehman;

substance reasonably satisfactory to Lehman;

[A.gfeement 'Nith AJC in fen=n ami Stlbslanee
sat=i-sfaet-ory-io--Leh-man ]Execution of the definitive
agreements contemJllated h:; the term sheet
1
dated
as of .Inl:; I J, 2010, b:; and between Lehman and
AIC (the "Lehman-AIC Term Sheet"); and

-
[!.Y7035gJ .l5]no,-# FS16466527v7 6
AIC 00000153
Confidential
Termination
Events Under
PSA, Floating Rate
DIP Facility and
Use ofCash
Collateral

LLP DRAFT 7/6/10
Subject to FRE 408
The PSA, Floating Rate DIP Facility and use of Lehman's cash
collateral shall [w-nniR-ate]be terminable automatically upon the
occurrence of any of the following events (each, a "Termination
Event"); pr.Qr.id.ed! that the (!art seeking to terminate must
(!roYide 10 business dl!XS written notice of its intent to terminate:

Failure to meet any of the following milestones (the
"Plan Milestones"):
0 Motion to assume the PSA filed on the Petition Date;
0 Order entered authorizing the assumption ofthe PSA
0 Final Orders entered authorizing the Fixed Rate DIP
Date;
0 Disclosure Statement and Plan consistent with the
date;
0 Disclosure Statement consistent with the terms hereof
approved by the Bankruptcy Court no later than 7 5
0 Order confirming a Plan consistent with the terms
date; and
0 Effective Date of the Plan no later than the earlier of (i)
270 days after the Petition Date and (ii) ___ ,
2011.

[The-fili-lu-J:e--by--i\J.C-t:OpH.rehase--the--ShfH'es--hy:::::::==;
:'W+t-;-]Material breach AIC of tbe Stock
[!.5703581.] 5]Dodi PS!6466527y7 7
AIC 00000154

(!.570358l.l5)Do,:# PS16466527y7
Confidential
~ ] P W R W & G LLP DRAFT 7/6/10
Subject to FRE 408
Purchase Agreement or other definitive documents
contemplated by the Lehrnan-AIC Term Sheet or
any termination of the Stock Purchase Agreement
in accordance with its terms;
on Schedule A which motion. if filed by Marriott. is
not withdrawn or denied within [ J davs of the filing
thereof;
The entry of any order ofthe Bankruptcy Court
granting relief from the automatic stay, including (i) to
permit any exercise of remedies by the lenders or
special servicer under the Fixed Rate Debt other than
limited relief solely to permit the delivery of default
notices under the terms of the Fixed Rate Debt and (ii)
to permit termination of any franchise agreement with
Marriott or any other hotel brand other than those
franchise agreements listed on Schedule A;
The filing by the Company or Marriott of any motion
the Chapter 11 Cases, (ii) convert any of the Chapter
11 Cases to a case under chapter 7 of the Bankruptcy
Code or (iii) appoint a trustee or an examiner with
expanded powers pursuant to section 1104 of the
Bankruptcy Code in any of the Chapter 11 Cases
which motion. if filed by Marriott. is not withdrawn
or denied within [ ] days of the filing thereof;
request for relief seeking an extension of the Plan
or alteration; (iii) the failure ofthe Company to oppose
any motion from any other party to obtain such
extension; or (iv) the violation by the Company of the
8
AIC 00000155
(1.Y'i1).Jill.l 5]Dor# l'S16466527y7
Confidential
[Deellert LLP DRAFT 7/6/10
Subject to FRE 408
Milestones Covenant;
dismissing any of the chapter 11 cases, (ii) converting
any of the Chapter 11 Cases to a case under chapter 7
1104 of the Bankruptcy Code in any ofthe Chapter 11
misconduct by any officer or director of the Company,
pleading is materially inconsistent with the terms
hereof or the Plan or is materially adverse to Lehman,
in each case in a manner not reasonably acceptable to
Lehman, or if the Company files any motion or
pleading with the Bankruptcy Court that is inconsistent
in any material respect with the terms hereof or the
Plan (in each case with such amendments and
modifications as have been effected in accordance with
the terms hereof) and such motion or pleading has not
been withdrawn within three (3) business days;

Capital Structure or any other terms inconsistent with
the terms and conditions set forth herein;
The granting by the Bankruptcy Court ofreliefthat is
and modifications[ as have be;m] as have been effected
9
AIC 00000156
[!.57fB.')g].J5]Doril FS!6466527y7
Confidential
LLP DRAFT 7/6/10
Subject to FRE 408
of a material portion of the Transaction, including an
order denying confirmation of the Plan and such ruling,
determination or order has not been vacated or reversed
within five ( 5) business days of issuance; and
The occurrence after execution of psA of a
change that has a material adverse effect on the use,
value or condition ofthe Company[--t=lf-AlG;--t-h{l1i'
assets or the legal or financial status or
business operations ofthe Company [eF-AlG-m=
{i-i-]provided. however. that changes relating to or
resulting from the following shall be excluded from
such determination: (i) any change. effect or
circumstance in the industries or markets in which
the Company operates; (ii) any change in any law or
GAAP (or the intemretation thereoQ applicable to
the Company; (iii) the filing and pendem;v of the
Chapter 1 1 Cases and the status of the Company as
a debtor in possessioDj or (iv) a material disruption or
material adverse change in the financial, real estate,
banking or capital markets.
10
AIC 00000157
Confidential
Remedies Upon
Termination
Bankruptcy Court
Approval ofPSA
Pro Forma Capital
Structure
LLP DRAFT 7/6/10
Subject to FRE 408
Lehman to be immediately due and payable;
Require the Company to file a motion to conduct a sale
of the Floating Rate Collateral pursuant to 3 63 of the
Bankruptcy Code;
Exercise rights and remedies as to all or such part of
the Floating Rate Collateral that Lehman shall elect in
its sole discretion, including, without limitation,
foreclosing upon and selling all or a portion of such
collateral.
without the express written consent of Lehman in its sole discretion,
as follows:
[!.57fB58J .l5)Dodl FS!6466527v7 11
AIC 00000158
Confidential
[ Gevenl:anee]
[Shareholders
,Agreement:]
Management
Incentive Plan

New Funding:
[Deellert LLP DRAFT 7/6/10
Subject to FRE 408
At least $[75] million, plus such additional amounts in
form and substance as may be determined by the
parties. Prior to any New Funding, the reorganized
Company shall deliver a comprehensive PIPs budget,
which budget shall be (i) prepared with the assistance
of, and validated by, a third party expert and (ii)
acceptable in all respects to the parties hereto. Such
PIPs budget shall be updated annually or more
frequently as may be requested by [AIC and ]Lehman
or an;x other holder of more than 15)% oftbe total
issued and outstanding New Equity.
[Ihe Be;.m:l effhreetofs w!H eemist ef7 2
mern-be-rsHflmi-aateti--1=ry--behmm1;2--members-neminat:e-cl-b-y--AJC.-and-3
memben; to be mutually agreed.]
[
transactiens, including, among

aggregat:e,--s-a+et=Yfdispo-sa-1--ef-a--pmpen.y--a-nd--sue-h--et-hefeven-t-s--a-s
determined by Lehman, AIC aml the Compafly'.]
[Lelm-1an, aBIA the CempaJlY shaH agree en a ea1e ey ,,.,t!id1
the Company shall an investment banker to market and sell the

' (' .._ : . q ) . r r t (' ' _...:...._
H;ffi . :.>-Da-te ill Rl; . ]
. . .. ' . . . . .6-S--Ett . :P.Vt-Se acKee .. _; . . . . . r. _ .
[Ihe Plafl shaH pmvidc that efl the Effeeti.'e :9ate Lehn1an AG aRf:l
. ' ' '
a.J.l--et.her--h-el-d-ers--e.f-New--Equi-t.y+o--he--i-ssued--pumuant-io--t-he--Phn--s-haJl
enter into a shareholders that proYides, among ether things,
fer--re-st:ri-e-t.kms--f.ln--t;he-tmnster--Gf--the--Ne'-YEql.:r}ty--aRcl--eustomary
pt=ot.eGtton-s;i-ndl-ding-,---hutflt=rt-limi-t.et:!--to,--t=a-g-a-k.mgMr-ag-akmg--ri-ghts;
all en terms to l:!e ffil::ltl:laHy agreed.]
[Leh-ma-n-,---At:G-<H1-cl-the--<-:-\Hn}'lany--shaJl;--a'ner-+he--EJI:eti-ve-Date;
detem1ine whether to maintain Innkeepers' sta-tus as u real estate
inves-t-ment--tru-st]
[!_57[)3.Jgj_J5]Doc# FS!6466527v7 12
AIC 00000159
Confidential
[Property
I\1anagcr]
Releases
Professional Fees
Dr-aft 6/2J]PWRW&G LLP DRAFT 7/6/10
Subject to FRE 408
[Prior tfJ the Date ef the Plafl, L3hHHm,

aHa
Company shaH designate a manager for the Company's properties. If

manager, the Plafl shall pro\ido that Island shall cooperate v;ith the
C-om-p-any-ancl--the-reptaen=tent---n=uu!ager-to--ef.feetuate-an-orclerly
:t:.mns-i=t=.ton-to-t;he-rep-l-a--ement-ma.na:ger:----Any--agreemenH.fJ-effeetuate
5-tl44HI:flstllim-shal-b-e-ia-furm-aacl-sub st<:nce acceptable to Lehman
ancl--AIG-_-]
The Plan shall include a full discharge and release of liability, other
than a release of the obligations [-set--fHr-th]described herein, in favor
of(a) the Company and each of its subsidiaries, (b) Lehman, [iH'lf4-](c)
AIC[;] and (d) each oftheir respective principals, employees, agents,
officers, directors, and professionals from: (i) any and all claims and
causes of action arising prior to the Effective Date and (ii) any and all
claims arising from the actions taken or not taken in good faith in
connection with the Transaction.
by Lehman [-and--AH-;-]in connection with the Transaction.
.J 5]Doc# JlSJ-64665'7v7 13
AIC 00000160
Confidential
Document comparison by Workshare Professional on Wednesday, July 07, 2010
1:05:02 PM
AIC 00000161
EXHIBIT C-3
;1,
Project Tavern
Midland Discussion Materials
April 28, 2010
j HIGHLY CONFIDENTIAL DRAFT j)
FOR SElTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOE LIS &.._COMPANY
Legal Disclaimer
FOR SElTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS <'\._COMPANY
Moelis & Company prepared this presentation based on information received from third parties. Moelis
has not and does not intend to verify independently any of such information, all of which Moelis
assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of
its date and Moelis assumes no duty to update it or to advise any person that its conclusions or advice
has changed.
This presentation is solely for your information purposes only. Consider it along with all other facts,
advice and its own insights before making your own independent decisions. Do not provide a copy of
this presentation to any person without Moelis' prior consent. No other person should rely on it for any
purpose. Moelis does not offer tax, accounting or legal advice.
Moelis & Company provides mergers and acquisitions, restructuring and other advisory services to
clients and its affiliates manage private investment partnerships. Its personnel may make statements or
provide advice that is contrary to information contained in this material. Our proprietary interests may
conflict with your interests. Moelis may from time to time have positions in or effect transactions in
securities described in this presentation. Moelis & Company may have advised, may seek to advise and
may in the future advise or invest in companies mentioned in this presentation.
121
Tavern Situation Overview
COMPANY COMMENTARY
2010 budgeted EBITDA of $82 million
-Total leverage of 17x
-Debt service requirements consume substantially all
the cash flow
On March 16, 2010, Tavern received a default notice
from Marriott on 23 hotels
-Franchise termination date of June 14-15,2010
-Implies capital need of $50 million
Retained Kirkland & Ellis and Moelis to assist in
evaluating recapitalization alternatives
Did not make April debt service payment on fixed rate
CMBSpool .
Have engaged with Lehman and Marriott
Capital needs, given the current asset base, cannot be
solved within current capital structure
Total debt level unsustainable in context of a
recapitalization
Source: Industry data taken from: SNL Financial, Capital!Q and company filings
FOR SETILEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS <\..COMPANY
INDUSTRY OPERATING STATISTICS
RevPAR
2007 2008 2009
ADR
2007 2008 2009
Industry Tavern
REIT SECTOR PRICE PERFORMANCE
140 -
l100
gj

g: 60
.o
"'
40
0 --- -
...
2007 2008 2009
Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10
Note: REIT Sector includes Host Hotels & Resorts Inc., Hospitality Properties Trust, Ashford Hospitality Trust Inc., LaSalle Hotel Properties, FelCor Lodging Trust Inc., Suns tone Hotel
Investors Inc., Strategic Hotels & Resorts, Inc., Diamondrock Hospitality Co., Hersha Hospitality Trust, Supertel Hospitality, Inc., MHI Hospitality Corp.
I 31
Current Capital Structure by Financing Pool
I
$82Smm Rate
CMBS P()(Jl_
. LIJ-UBs2007<6 .

-- : _- ..
Debt/ l<ey:l145,i)9S . .
Maturity: 2017
Coupon: 6.71%
.-,
Note: 1. Borrowers under $33mm CSE mortgage loan
2. Each hotel has a separate uncrossed loan
Parent
I
Holdings

_ $t4siiiiit'Pulilic .
. . . . ' .
I
I
acating Jlate
. . . p.IIJ.S Pool .
. ($238 Silri$121 Mezz).

$%Cashf15%PIK

.
. 2009 HotclEBITDA: ..
ml1ef::;; 11.1Jx -.. --
Debt ;1. Key:
I
. . _
_.
(Seni0i/Me2:%>

.:. - . . ,. . .
.. .. : .
2009 Hcitel'EIJn'DA: '
.-- ------ summ : : ---
- 2009 .-_
, ,Debt I ...
HIGHLY CONFIDENTIAL DRAFf
SUBJECT TO FRE 408
MOELIS&._GOMPANY
.
$700kCominon .
and Preferred -
I
. . $120nim: Ctpm;Uk

..
. _ $27./$3.4'brilion
_.

. ;;, .. -:' :'.-' ...

1,, .... ' .. .
... . ..
_;: .
. :aJeM ift. from):
:s:=:
JV(49%)
Genwood
Raleigh(ll
I
l
_$75uim Merrill
. qdBSFmancing
.
- $4.5billion . .
. Maturity: 2016 .
. Coupon: 6.03%
Wel1s Fargo
sp. Servicet: LNR:
.. .. Co11atml . .
3-Rotel,af3?2Keys.'
. .. 200IJ:HOtel. EBITDA:
-:$6.8mm
200}-I,:eVerage: p.Ox.
[)ebt /Key: $201,612
. ... ' _, . .
. :.-.:... "!':
Hows(2) <Debt m &tall=
. .1\ntOOjO ($24> . . .

__\Vashingfrir\DC($26).
141
:/,,
Challenges
As a result of the current situation, the Company has to address a number of challenges
Too much debt
-Leverage of -17x
- Debt service requirements unsustainable
- Industry metrics suggest blended leverage of:
60 - 75% debt I capitalization
l.Sx - 2.0x debt service coverage<
1
>
7x - 9x debt I EBITDA
Possible new money requirement to fund PIPs and provide liquidity
Nature of capital stack adds complexity
-Multiple CMBS pools with separate collateral
- Pool asset mix not homogenous
Differing new money requirements
Certain hotels will lose flags
SUBJECT TO FRE 408
MOE LIS &_COMPANY
Based on experience, deflagging results in significant value erosion that is more pronounced in older assets
- Structure of vehicles may constrain creditor flexibility
Substantial timing constraints
- Marriott default letter dated March 16 requires cure or filing by mid June
- Drawn out restructuring process will not maximize value to constituents
Operating performance is not expected to materially improve until2012
Note: 1. Debt Service Coverage Ratio calculated as Net Operating Income I (Interest Expense) 151
Company Objectives
SUBJECT TO FRE 408
MOE LIS ,'\._COMPANY
Significant PIP requirements to maintain flag relationships and preserve asset value
Existing capital structure cannot be supported - new money investment is required
Leverage levels too high
Interest consuming all cash flow
Pro forma debt to capitalization under [75%] appears appropriate
Develop solutions that provide optimal form of consideration to each stakeholder
Minimize time of transaction to enable near-term PIP funding
Moving quickly is critical to minimizing friction, preserving value and maximizing risk-adjusted recoveries
161
Portfolio Summary
SUBJECT TO FRE 408
MOE LIS <'\.._COMPANY
Fixed Pool Hotels
Lehman Hotels
($ in millions) Core Terminal
i 1 ~ j ! l f ~ f l f
Hotels 20 31 14 7
Total Keys 2,778 4,239 1,447 1,303
-
2009A Hotel EBITDA $20 $48 $11 $16
2010P Hotel EBITDA 17 47 10 16
2011E Hotel EBITDA 16 47 10 16
Debt Outstanding $362 $654 $172 $229
Debt I 2010P EBITDA 20.8x 13.8x 16.4x 14.6x
PIPs Required $17 $15 $15 $4
Notes: Terminal hotels are hotels that are expected to lose their flags over the next 12 years and primarily include Generation 1 Residence Inn facilities
Assumes PIPs are fully funded on Non-Terminal hotels
Total
72
9,767
$96
91
90
$1,417
15.6x
$50
171
Fixed Pool Properties Overview
HIGHLY CONFIDENTIAL DRAFI'
SUBJECT TO FRE 408
MOELIS
l'rand1ise Non-
Property Flag # Keys Generation Age (Opening) Extension Risk Unfunded PIPs ($mm)
Addison RI Marriott Residence Inn 150 6 14 $0.0
Altamonte Springs Marriott Residence Inn 128 1 25 Yes 0.0
Arlington Marriott Residence Inn 114 4 15 0.0
Atlanta Downtown Marriott Residence Inn 160 Custom 14 0.0
Atlanta Peachtree Marriott Residence Inn 120 6 12 0.0
Bellevue Marriott Residence Inn 120 1 26 0.0
Belmont Summerfield Suites 132 14 0.0
Binghamton Marriott Residence Inn 72 1 22 Yes 1.3
Bothell Marriott Residence Inn 120 4 19 0.0
Cherry Hill Marriott Residence Inn 96 1 21 Yes 0.0
Columbia Hampton Inn 83 9 0.0
Denver Downtown Marriott Residence Inn 159 1 28 Yes 25
Denver Tech Marriott Residence Inn 128 1 29 Yes 2.1
E!Segundo Summerfield Suites 122 15 0.0
Fort Lauderdale Marriott Courtyard 136 11 0.0
Fremont Marriott Residence Inn 80 1 25 Yes 1.4
Gaithersburg Marriott Residence Inn 132 6 12 0.0
Germantown Hampton Inn 178 14 0.0
Horsham Marriott Towneplace Suites 95 11 0.0
Islandia Hampton Inn 120 22 0.0
LasColinas Summerfield Suites 148 14 0.0
Lexington KY Marriott Residence Inn 80 1 24 Yes 1.1
Livonia Marriott Residence Inn 112 6 11 0.0
Lombard Hampton Inn 128 22 Yes 0.0
Louisville Rl Marriott Residence Inn 96 1 26 Yes 1.7
Lynnwood Marriott Residence Inn 120 1 23 0.0
Mount Laurel Summerfield Suites 116 14 0.0
Mountain View Marriott Residence Inn 112 1 24 1.9
Naples Hampton Inn 107 19 0.0
Portland ME Marriott Residence Inn 78 5 14 1.3
Richmond Marriott Residence Inn 80 1 24 Yes 1.1
RichmondNW Marriott Residence Inn 104 6 12 0.0
Rosemont Marriott Residence Inn 192 6 12 0.0
Saddle River Marriott Residence Inn 174 6 7 0.0
San Jose Marriott Residence Inn 80 1 24 Yes 0.0
San Jose South Marriott Residence Inn 150 6 12 0.0
San Mateo Marriott Residence Inn 160 1 25 2.9
Schaumburg Hampton Inn 128 23 Yes o.o
Shelton Marriott Residence Inn 96 1 22 Yes 1.7
Silicon Valley I Marriott Residence Inn 231 1 26 4.1
Silicon Valley II Marriott Residence Inn 247 1 25 4.4
Tukwila Marriott Residence Inn 144 1 25 0.0
Westchester Hampton Inn 112 22 0.0
Willow Grove Hampton Inn 150 19 0.0
Windsor Marriott Residence Inn 96 1 24 Yes 1.7
Total/ Average 5,686 19 $29.3
!Ill
PROJECfiONS SUBJECT TO CHANGE
SUBJECf TO FRE 408
MOELIS<'\._COMPANY
Property Flag # Keys Generation Franchise Life 2009A EBITDA 2010E EBITDA
Altamonte Springs Marriott Residence Inn 128 1 12/31/2021 $0.7 $0.8
Binghamton Marriott Residence Inn 72 1 12/31/2021 0.9 0.8
Cherry Hill Marriott Residence Inn 96 1 12/31/2021 1.1 1.0
Denver Downtown Marriott Residence Inn 159 1 12/31/2021 1.7 1.8
Denver Tech Marriott Residence Inn 128 1 12/31/2021 1.0 1.0
Fremont Marriott Residence Inn 80 1 12/31/2021 0.4 0.4
Lexington KY Marriott Residence Inn 80 1 12/31/2021 1.0 1.0
Louisville RI Marriott Residence Inn 96 1 12/31/2021 0.8 0.6
Richmond Marriott Residence Inn 80 1 12/31/2021 0.4 0.3
San Jose Marriott Residence Inn 80 1 12/31/2021 1.0 1.0
Shelton Marriott Residence Inn 96 1 12/31/2021 0.8 0.7
Windsor Marriott Residence Inn 96 1 12/31/2021 0.5 0.4
Lombard Hampton Inn 128 6/30/2013 0.6 0.5
Schaumburg Hampton Inn 128 6/30/2013 0.4 0.3
Total Marriott Residence Inn 1,191 $10.3 $9.7
Total Hampton lnn 256 1.1 0.8
Total 1,447 $11.4 $10.4
19 I
Floating and Other Pools Properties Overview
Floating Pool
FOR SETfLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOE LIS
Franchise Non-
Property Flag # Keys Generation Age (Opening) Extension Risk Unfunded PIPs (5mm)
AddisonSS Hyatt 132 14 ($0.8)
Albany Hampton Inn 126 19 Yes 0.0
Atlantic City Marriott Courtyard 206 2 0.0
Bulfinch Bulfinch 79 5 0.0
East Lansing Gatehouse Inn 60 1 25 Yes 0.0
Fort Walton Beach Sheraton 216 24 0.2
Fort Wayne Marriott Residence Inn 80 1 24 Yes 0.0
Grand Rapids Marriott Residence Inn 96 1 26 Yes 0.0
Harrisburg Marriott Residence Inn 122 1 15 0.3
Indianapolis Gatehouse Inn 88 1 26 Yes 0.0
Louisville HI Hampton Inn 173 5 0.0
Montvale Marriott Courtyard 184 3 0.0
Morristown Westin 224 6 1.4
Ontario Marriott Residence Inn 200 1 24 Yes 3.2
Rockville Sheraton 154 3 0.0
Troy Central Marriott Residence Inn 152 1 24 Yes (0.5)
Troy Southeast Marriott Residence Inn % 1 24 Yes (0.1)
Valencia Hilton Embassy Suites 156 2 0.0
West Palm Beach Best Western 135 24 0.0
Woburn Hamtonlnn 99 13 (0.1)
Other Pools
Franchise Non-
Property Hag # Keys Generation Age (Opening) Extension Risk Unfunded PIPs ($mm)
Anaheim Hilton Hilton Suites 230 21 $0.0
AnaheimRI Marriott Residence Inn 200 7 0.0
Mission Valley Marriott Residence Inn 192 7 0.0
Ontario Hilton Hilton 309 24 0.0
San Antonio Hilton Homewood Suites 146 14 0.0
Tysons Comer Marriott Residence Inn 121 Cust 9 2.2
Washin!Z!on DC Doubletree 105 40 0.0
110 I
Scenario Projections
HIGHLY CONFIDENTIAL DRAFI'
SUBJECT TO FRE 408
MOE LIS &.._COMPANY
:;_,
Scenario Projection Assumptions
SUBJECT TO FRE 408
MOE LIS (\_COMPANY
In this presentation we are rwming a scenario where projections have been developed on a hotel-by-hotel
basis for the portfolio
- Management estimates financial performance will not return to 2007 levels for at least four to six years
- 2010 reflects management budget, with actual data for January and February
-Management anticipates 5-10 properties to be deflagged by 2015, regardless of PIPs
FISCAL YEAR 2010- SCENARIO ASSUMPTIONS
ADR level assumptions range of- $107-$113
- Slightly down from FY2009
- Downward estimates mainly due to price
pressure as a result of continued effects of
economic environment
Occupancy levels of - 63%-67%, slightly down from
FY2009
RevPAR of- $70-$75, down approximately 2%-4%
from FY2009 levels
margins
Estimates take into consideration revenue
displacements due to PIPs and cycle renovations
FISCAL YEAR 2011- SCENARIO ASSUMPTIONS
ADR levels of- $110-$116
Occupancy levels of- 65%-70%, up from FY2010
and back at FY2009 levels
RevPAR of- $74-$79, up approximately 4%-7%
from FY2010 levels
margins
Assumes certain non-recurring expense savings are
not sustainable
1121
Consolidated Financial Overview
($in millions)
Consolidated
Financial Overview
ADR($)
Growth
Occupancy(%)
Growth (bps)
RevPAR($)
Growth
Revenue
Growth
Department Expenses
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Expenses
Corporate EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
%of Revenue
2007A
$123
74.2%
$92
$337
83
$254
75.4%
110
$145
42.9%
17
$127
37.7%
11
$116
34.5%
$19
0
$19
5.5%
2008A
$126
2.3%
72.8%
(141) bps
$92
0.4%
$352
4.3%
84
$268
76.2%
112
$156
44.3%
20
$136
6.9%
38.7%
12
$125
7.0%
35.4%
$19
0
$19
5.5%
Yearly
2009A
$111
(11.8%)
67.2%
(565) bps
$75
(18.6%)
$290
(17.5%)
74
$216
74.6%
101
$115
39.6%
19
$96
(29.5%)
33.1%
12
$84
(32.2%)
29.1%
$16
0
$16
5.5%
PROJECTIONS SUBJECI' TO CHANGE
SUBJECI' TO FRE 408
MOELIS<"\._COMPANY
2010E 2011E
$110 $113
(0.8%) 2.6%
65.5% 67.4%
(168) bps 195 bps
$72 $76
(3.3%) 5.7%
$282 $288
(2.8%) 2.1%
74 75
$209 $213
73.9% 73.8%
100 106
$109 $107
38.5% 37.1%
17 17
$91 $90
(5.0%) (1.7%)
32.3% 31.1%
9 9
$82 $80
(2.7%) (2.1%)
29.1% 27.9%
$21 $29
24 21
$45 $51
15.9% 17.7%
1131
Fixed Pool Financial Overview
($in millions)
Fixed Pool
Financial Overview
ADR($)
Growth
Occupancy(%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Deeartment ExEenses
Margin
Operating Exeenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
%of Revenue
.. - .
2007A 2008A
$120 $124
- 3.1%
76.0% 74.1%
- (191) bps
$92 $92
-- 0.6%
$195 $197
- 0.8%
41 40
$154 $157
45.7% 44.6%
63 63
$91 $94
26.9% 26.7%
10 11
$81 $83
-- 2.3%
24.1% 23.6%
$11 $11
0 0
$11 $11
5.5% 5.5%
Yearly
2009A
$109
(12.0%)
69.2%
(491) bps
$76
(17.8%)
$161
(18.1%)
35
$126
43.4%
56
$70
24.0%
10
$60
(28.1%)
20.6%
$9
0
$9
5.5%
SUBJECT TO FRE 408
MOELIS "'-._COMPANY
2010E 2011E
$109 $111
(0.7%) 2.2%
68.2% 69.5%
(101) bps 129 bps
$74 $77
(2.2%) 4.1%
$158 $164
(2.1%) 4.1%
35 36
$123 $128
43.6% 44.3%
56 61
$67 $67
23.8% 23.1%
10 9
$58 $57
(3.4%) (1.2%)
20.5% 19.8%
$12 $18
6 21
$18 $39
11.3% 23.9%
1141
Fixed Pool Ongoing I Terminal Properties Financial Overview
($in millions)
Fixed Pool Ongoing Properties
Financial Overview
Revenue
Growth
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
%of Revenue
Financial Overview
Revenue
Growth
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
%of Revenue
2007A
$150
$64
19.1%
$8
0
$8
5.5%
2007A
$45
$17
5.0%
$2
0
$2
5.5%
2008A
$151
0.5%
$65
1.1%
18.5%
$8
0
$8
5.5%
2008A
$46
1.9%
$18
7.1%
5.1%
$3
0
$3
5.5%
Yearly
2009A
$125
(17.3%)
$48
(25.6%)
16.7%
$7
0
$7
5.5%
Yearly
2009A
$36
(21.0%)
$11
(36.9%)
3.9%
$2
0
$2
5.5%
SUBJECT TO FRE 408
2010E
$123
(1.7%)
$47
(2.4%)
16.8%
$9
3
$12
10.1%
2010E
$35
(3.6%)
$10
(8.0%)
3.7%
$3
3
$5
15.4%

2011E
$128
4.7%
$47
(0.6%)
16.3%
$13
11
$25
19.4%
2011E
$36
2.1%
$10
(3.8%)
3.5%
$4
10
$14
40.2%
1151
EXHIBIT D
Confidential

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

50% by AIC;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5

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

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

Lehman and AIC shall agree on a future date by which the
Company shall engage an investment banker to market and sell
the Company; provided, that such date shall not be later than
three years after the Effective Date unless otherwise agreed by
Lehman and AIC.
Other usual and customary terms, subject to mutual agreement
between Lehman and AIC.
Shareholders Agreement: The Plan shall provide that, on the Effective Date, Lehman,
AIC and all other holders of New Equity to be issued pursuant
to the Plan shall enter into a shareholders agreement that
provides, among other things, for restrictions on the transfer of
the New Equity and customary protections, including, but not
limited to, tag-along/drag-along rights, all on terms to be
mutually agreed between Lehman and AIC.
REIT Status: Lehman and AIC shall, prior to the Effective Date, determine
whether to maintain Innkeepers status as a real estate
investment trust.
Property Manager: Prior to the Effective Date, Lehman and AIC shall designate a
manager for the Companys properties.
Professional Fees: The Company shall reimburse AIC for fees and expenses of
one counsel; provided that the transactions contemplated by the
Stock Purchase Agreement are consummated.
Governing Law: This Term Sheet and all agreements entered into pursuant
thereto shall be governed by New York law with jurisdiction in
the courts in New York.
EXHIBIT E
1
2 UNITED STATES BANKRUPTCY COURT
3 SOUTHERN DISTRICT OF NEW YORK
4 Case No. 08-13555 (JMP)
5 Case No. 08-01420 (JMP) (SIPA)
6 - - - - - - - - - - - - - - - - - - - - -x
7 In the Matter of:
8 LEHMAN BROTHERS HOLDINGS INC., et al.,
9 Debtors.
10 - - - - - - - - - - - - - - - - - - - - -x
11 In the Matter of:
12 LEHMAN BROTHERS INC.,
13 Debtor.
14 - - - - - - - - - - - - - - - - - - - - -x
15
16 U.S. Bankruptcy Court
17 One Bowling Green
18 New York, New York
19
20 August 18, 2010
21 10:01 AM
22
23 B E F O R E:
24 HON. JAMES M. PECK
25 U.S. BANKRUPTCY JUDGE
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1 asked to see whether a proof of claim had been filed. There
2 was no proof of claim filed. So I sent Ms. Strickland an
3 e-mail saying 'Look, I haven't seen a proof of claim,' and she
4 indicated that she -- that they had bought a piece of the
5 Bankhaus position and that she was on vacation, so we couldn't
6 speak. So I said 'Okay, fine.' I went on the docket to look
7 for the -- to see who had bought the Bankhaus position, and
8 there is a transfer to Deutsche Bank, which I think was filed
9 on July 15th.
10 Now, it's very possible, and probably likely, that
11 Deutsche Bank didn't hold that. So they could be one of the
12 people who purchased it. I have no independent knowledge of
13 that. It's not on the docket.
14 THE COURT: Okay.
15 MR. PEREZ: As I said, Mr. Lascher is here. I have a
16 short proffer with the business judgment --
17 THE COURT: Well, maybe just to do this in the right
18 order, we should deal with the proffer and then deal with the
19 objections and any parties who support the motion.
20 MR. PEREZ: Okay, Your Honor, thank you. If called to
21 testify, Michael Lascher would indicate that he has worked at
22 Lehman since 2004, specializing in commercial real estate,
23 finance and capital markets. While at Lehman, he originated,
24 structured and closed complex loan transactions for
25 securitization and syndications, and assisted in the marketing
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1 of whole loans, B notes, mezzanine loans to secondary market
2 participants.
3 Prior to joining Lehman, he practiced for five years
4 in the real estate group of Cadwalader. He has a bachelor's
5 degree from the University of Pennsylvania, and JD from Cardozo
6 Law School.
7 Mr. Lascher is currently an employee of Lamco and is
8 responsible for the oversight of Lehman's hospitality
9 investments. And, Your Honor, the other co-head of the real
10 estate group is Ms. Nancy Shanik, who is here also in the
11 courtroom. She's the A&M managing director responsible for
12 that, co-head with Mr. Fitts who oversees the other things. So
13 just so the Court recognize her.
14 In his capacity, he's either actively involved or
15 overseeing the Lehman employees who have been actively involved
16 in finalizing the terms of the transaction described in the
17 motion, because LCPI has the economic interest in the mortgage
18 loan. And I don't want to take up the Court's time, but
19 because of the MetLife transaction, LCPI actually has the
20 economic interest. I don't know whether that's an issue, but I
21 don't think it is. Nobody's raised it, but it's really --
22 we'll refer to LCPI instead of LCPI and ALI.
23 Mr. Lascher would testify that, beginning in April of
24 2010, Innkeepers and LCPI and engaged in numerous negotiations
25 to outline a potential restructuring of Innkeepers that would
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1 maximize LCPI's return on the mortgage loan, and that in
2 connection with these discussions the debtors have worked
3 closely with their legal and financial advisors to determine
4 which alternatives the debtors should pursue, including, among
5 others, seeking to foreclose on the collateral securing the
6 mortgage loan, seeking the appointment of one or more
7 receivers, or seeking relief to the extent that the debtors had
8 filed bankruptcy.
9 Mr. Lascher would testify that, in considering these
10 alternatives, the debtors' analysis included economic and
11 noneconomic factors, including the expected recovery, the cost
12 to pursue each of the alternatives, the timing of the potential
13 recoveries, and the likelihood of being able to achieve value
14 through each alternative. Additionally, he would testify that
15 the debtors considered the potential impact on the hotel
16 properties serving as collateral and the hotel franchise
17 agreement that support the value. After extensive negotiations
18 with Innkeepers and their legal and financial advisors, the
19 Court determined that the transactions described in the motion
20 are the best alternative to maximize recovery on the mortgage
21 loan.
22 Mr. Lascher would testify that on July 19 Innkeepers
23 filed for bankruptcy, and he would also testify that the
24 balance of the mortgage loan on the petition date was 220.2
25 million dollars, plus late fees and other charges pursuant to
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1 the documents, and that the loan is secured by approx -- by
2 twenty of the seventy-two hotels, going by Innkeepers and its
3 affiliates.
4 Mr. Lascher would testify that LCPI and Innkeepers
5 agreed to the terms of the restructuring embodied in the plan
6 term sheet, and that the restructuring contemplates the
7 debtors' agreement to convert a hundred percent of their debt
8 to equity, subject to dilution for management incentive, and a
9 provision of a debtor-in-possession financing to address
10 certain property improvement plans, work and certain other
11 necessary capital expenditures for the hotels that secure the
12 mortgage loan.
13 Mr. Lascher would further testify that LCPI's
14 willingness to enter into the plan support agreement is
15 conditioned on its ability to mitigate its risk by being able
16 to monetize a portion of the equity it receives in the Chapter
17 11 case, and that to that end, LCPI entered into a separate
18 agreement with Apollo to sell 50 percent of the equity, when
19 issued, for a price of 107.5 million dollars. Mr. Lascher
20 would testify that this amount is considered by both the
21 debtors, their financial advisors, to be adequate
22 consideration.
23 Mr. Lascher would further testify that although the
24 agreement with Apollo can be terminated by either Apollo or
25 LCPI under certain circumstances, the debtor further negotiated
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1 a provision in the plan that provides that if the debtors are
2 unable to find a buyer for 50 percent of the equity they
3 received, for at least a 107.5 million dollars, they can
4 terminate the plan support agreement.
5 Mr. Lascher would further testify that a formal
6 auction at this stage would be both detrimental to both LCPI,
7 as LCPI currently has a purchaser for a hundred percent of the
8 equity for a significant cash payment, and there is no
9 assurance at this time that a transaction that provided LCPI
10 such similar value or better value could be structured,
11 following Innkeepers' plan process.
12 Mr. Lascher would testify that prior to LCPI's entry
13 into the agreement with Apollo, Lehman, through its financial
14 advisor, formally marketed the loans, and during this marketing
15 process, Lehman received expressions of interest from
16 approximately ten parties; signed confidentiality agreements
17 with five of these parties, which were allowed access to a data
18 room.
19 Mr. Lascher would testify that because of the mortgage
20 loan that was in default, and it was evident that Innkeepers
21 would likely seek Chapter 11 protection, Lehman was unable to
22 find a purchaser for the mortgage loan for adequate
23 consideration. Mr. Lascher would testify that Lehman has
24 received inquiries from other entities about purchasing the
25 mortgage loan -- about purchasing the equity received in
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1 exchange for the mortgage loan, but that none of the inquiries
2 has resulted in a formal offer.
3 Mr. Lascher would further testify that Appaloosa
4 itself contacted Lehman regarding the purchase of the equity
5 received on account of the mortgage loan, however, Appaloosa
6 did not submit a written offer, despite the request to do so.
7 Mr. Lascher would testify that prior to September 1st,
8 they can walk away from this transaction -- from the sale of
9 the equity, and that LCPI can always sell the mortgage loan, if
10 it determines that it can maximize value by doing that, at
11 which time, Innkeepers could terminate the plan support
12 agreement.
13 Additionally, Mr. Lascher would testify that the term
14 sheet and the plan support agreement provide that if this
15 direction is not finalized within the period set forth in the
16 plan support agreement, approximately 240 days, at Innkeepers'
17 option, either the collateral can be sold to a third party,
18 transferred to LCPI or allowed to fore -- LCIP will be allowed
19 to foreclose on the collateral.
20 Mr. Lascher would testify that the plan term sheet and
21 the plan support agreement is a result of extensive good-faith
22 negotiations between LCPI and Innkeepers, and their respective
23 counsels and financial advisors, and he believes that the
24 transaction set forth in the plan term sheet will maximize
25 LCPI's recovery. He would also testify that the provision of
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1 believe, Your Honor, that waiting to support this is going to
2 cast a doubt. I frankly believe, unfortunately, that if we
3 wait it's almost tantamount to not having had it approved
4 because at that point we'll be in a situation where we'll have,
5 you know, courts that are going to need the approval, one who
6 will need the approval of the other. Judge Chapman is going to
7 have to decide whether she approves the assumption, whether she
8 appoints an examiner, all of the things that she's going to
9 have to do. And all we want to be able to do is be there to
10 say to the extent that the Court approves this we can go
11 forward. And that's really all we're asking. And it's
12 actually the horse. I mean, we're -- this is the horse, it's
13 not the cart, Your Honor.
14 THE COURT: Okay. Well, enough imagery on that, but
15 it's clear that approval of the plan support agreement here is
16 simply one of the puzzle pieces that isn't even the most
17 important puzzle piece because the plan support agreement is
18 tied to what happens before Judge Chapman later.
19 MR. PEREZ: What happens before Judge Chapman, whether
20 the plan -- whether the plan support agreement is assumed, what
21 happens before Judge Chapman when she determines value of the
22 assets, and what happens before Judge Chapman when there is a
23 hearing on confirmation.
24 THE COURT: What I'd like to hear some more about are
25 the flexibilities available to Lehman Commercial Paper,
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1 assuming this is approved. Ms. Strickland argues strenuously
2 that the 363 standards are not met here, in part because for
3 all practical purposes Lehman is locking into a transaction
4 that's a black box, it's blind, because we can't really tell
5 what this asset would be worth in a free market environment,
6 one in which, say, Appaloosa or others like Appaloosa might be
7 a bidder, or there's an opportunity down the road in an
8 unlocked up bankruptcy case for valuation to be tested in what
9 may be an improving market for hotel properties. I'm putting
10 those words out as my own words. Those aren't words that she
11 said, but that's the concept.
12 And I don't have a 363 problem if Lehman has
13 flexibility, but if Lehman is in fact boxed by this trustee I
14 might. And to the extent that she has raised record questions
15 as to the adequacy of the record to support this, we may need
16 to further develop that record.
17 MR. PEREZ: Right, Your Honor. And I believe that the
18 two pieces of evidence which are in the record are that between
19 now and September 1st we can totally walk the deal with Apollo,
20 and that at any time we can always sell our mortgage loan to
21 the extent that there's a higher bidder for it. So --
22 THE COURT: But you have -- to what extent has this
23 transaction determined equity value in respect of a plan of
24 reorganization that hasn't yet been filed with respect to a
25 confirmation hearing that hasn't yet been scheduled?
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EXHIBIT F
NOTASOLICITATIONOFVOTESONAPLAN

August 20, 2010

Midland Loan Services, Inc.
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
Vice President, Special Servicing Manager

Binding Commitment for the
Acquisition of Innkeepers USA Trust

Five Mile Capital II Pooling REIT LLC, through its investment advisor Five Mile Capital Partners
LLC (collectively, Five Mile), is pleased to submit this letter (this Commitment Letter) to
Midland Loan Services, Inc. (Midland), which sets forth, among other things, our binding
commitment (the Commitment) to provide equity capital for the restructuring of the debt and
equity of Innkeepers USA Trust (Innkeepers) and its subsidiaries (collectively with Innkeepers, the
Company), resulting in Five Mile directly or indirectly owning 100% of the equity interests in the
reorganized Company (the Transaction). The funding from our Commitment will be used to
finance and otherwise implement a confirmed plan of reorganization to be filed by Midland (the
Plan) acceptable to us in our reasonable discretion, which will provide for the treatment of claims
and other terms outlined below and will otherwise contain terms and treatment of claims consistent
with the applicable provisions of the Bankruptcy Code.

Five Mile is uniquely qualified to consummate the Transaction, given our substantial investment and
the rights we have in certain indebtedness in Innkeepers. As you know, we have made available,
subject to Court approval, debtor-in-possession financing to the Company in excess of $50 million.
As a result, we are familiar with the Companys assets and operating performance, gleaned from our
review of public filings and our own unassisted due diligence. We also have general expertise in the
hospitality market and the extended stay lodging sector.

I. Value & Proposed Capital Structure

Innkeepers is a leading owner of upscale and extended stay hotel properties throughout the United
States with interests in 73 hotels and approximately 10,000 rooms across 19 states. As with many
other lodging assets, the Company experienced adverse asset performance as a result of the
economic downturn and became unable to perform under its existing debt obligations leading to the
Companys bankruptcy filing on July 19, 2010.

2

Given the economic environments adverse impact on operating performance, reduced valuations
within the lodging sector, required capital investments, and pending or existing franchise expirations,
we believe the Company must resize its existing capital structure.

Our Commitment is based on a valuation of the Company of $1.04 billion and results in a final
capital structure of $803.4 million in aggregate indebtedness and $236.6 million in new equity capital
to be invested by us. The details of the reorganized capital structure for the Company are provided
in Section IV below.

II. Capital Commitments

Subject to the conditions set forth above, we hereby submit this binding and irrevocable offer to
provide $236.6 million of cash to fund the Transaction to be effectuated in accordance with the
terms of this Commitment Letter on the effective date of the Plan. Five Miles investment will be
used to recapitalize the Company, and more specifically, will be used to pay down existing debt and
provide funds for future property improvement work (PIP), furniture, fixtures, and equipment
investments (FF&E), cash reserves and potential growth opportunities. We will provide the cash
investment required to consummate the Transactions from our existing investment vehicles. In
connection therewith, we hereby confirm that we have available, and will have available at all times
prior to consummation of the Transaction or the termination of the Commitment, investor
commitments that exceed, in the aggregate, $240 million.

III. Plan Subject to Higher and Better Offers; Five Mile Free to Pursue
Other Transactions

Subject to Court approval of the bid protections for Five Mile described in Section VI herein, Five
Mile acknowledges that the Plan will be subject to higher and better offers for creditor treatment as
may be reflected in competing reorganization plans filed with the Court. For avoidance of doubt,
our providing this Commitment does not preclude us in any way from discussing alternate
transactions, including competing plans of reorganization, or engaging in any discussions regarding
providing financing or participating in any such alternate transactions (each, an Alternate
Transaction); provided however, that we will not enter into a binding commitment with respect to,
or otherwise consummate, any Alternate Transaction prior to the occurrence of a Termination
Event (as defined in Section IX hereof).

IV. Restructuring of Debt and Equity of the Company New Equity, Debt Forgiveness,
& Cash Pay Downs

Based on our analysis of the Companys filings we believe that as of July 2010, the Company has
approximately $1.47 billion in outstanding debt obligations of which approximately $1.055 billion is
pre-petition obligations not related to Lehman ALI, Inc. (Lehman) (i.e., exclusive of Lehmans
Floating Rate Mortgage Loan & Floating Rate Mezzanine Loan). Our Commitment contemplates a
restructuring whereby the current debt is reduced through debt forgiveness and cash pay downs to
approximately $803.42 million allowing non-Lehman pre-petition creditors to realize value for
72.4% of their outstanding obligations ($764.24 million of value realization on $1.055 billion of
current indebtedness), calculated after giving consideration to the present value of B-Notes to be

3

purchased by us as proposed in this Commitment Letter.
1
This recovery is materially better than the
66.3% maximum of value recovery for those same creditors described in the Plan Support
Agreement advanced by Lehman (the Lehman Plan), with the potential for less (there is a ceiling
but no floor on the creditor recovery and the Lehman Plan sponsor(s) benefits dollar-for-dollar to
the extent recovery by the secured creditors is reduced). We believe that the amount realized on the
Lehmans Floating Rate Mortgage Loan under our Commitment better reflects the value of the
collateral supporting that obligation versus the premium value contemplated in the Lehman Plan
which provides for a 90% recovery on Lehmans secured claim and appropriates the entirety of any
residual value of the enterprise to Lehman. The higher value going to Lehman under its plan is
realizable by Lehman only because there is a transfer of value from the non-Lehman prepetition
creditors to Lehman (and Apollo Investment Corporation (Apollo)) under the Lehman Plan.

An illustration and an explanation of the debt restructuring portion of our Commitment are detailed
below:

($ in millions)
Today
Debt
Forgiveness
Adjusted
Balance Pay Down
Final
Balance
Five Mile DIP $50.8 $0.0 $50.8 -$50.8 $0.0
Lehman DIP $17.0 $0.0 $17.0 -$17.0 $0.0
Fixed Rate CMBS Mortgage Loan $825.4 -$225.4 $600.0 -$66.4 $533.6
Floating Rate Mortgage Loan $238.5 -$86.8 $151.7 -$16.8 $134.9
Floating Rate Mezzanine Loan $121.0 -$121.0 $0.0 -$2.6 $0.0
Anaheim Mortgage Loan $13.7 -$3.7 $10.0 -$1.1 $8.9
Anaheim Mezzanine Loan $21.3 -$21.3 $0.0 -$0.4 $0.0
Capmark Mission Valley CMBS Mortgage Loan $47.4 -$12.9 $34.5 -$3.8 $30.6
Capmark Garden Grove CMBS Mortgage Loan $37.6 -$10.3 $27.3 -$3.0 $24.3
Capmark Ontario CMBS Mortgage Loan $35.0 -$9.6 $25.4 -$2.8 $22.6
Merrill Lynch Washington D.C. CMBS Mortgage Loan $25.6 -$7.0 $18.6 -$2.1 $16.5
Merrill Lynch Tysons Corner CMBS Mortgage Loan $25.2 -$6.9 $18.3 -$2.0 $16.3
Merrill Lynch San Antonio CMBS Mortgage Loan $24.2 -$6.6 $17.6 -$1.9 $15.6
Present Value of B-Notes
(1)
$0.0 $0.0 $16.4 -$16.4 $0.0
Total Debt $1,482.6 -$511.4 $987.5 -$187.1 $803.4
DIP Retirement $67.8 $67.8
Pre-Petition Creditor Pay downs $103.0 $103.0
Fixed Rate CMBS Mortgage Special Servicer Fee $3.3 $3.3
Funding of FF&E Reserve $13.8 $13.8
Pre-funding of Future PIP Work $15.0 $15.0
Additional Cash on Balance Sheet
(2)
$17.3 $17.3
Purchase of B-Notes at Present Value $16.4 $16.4
New Cash Equity $0.0 $0.0 $46.1 $190.5 $236.6
Total Capital Structure $1,482.6 -$511.4 $1,033.6 $3.3 $1,040.0
(2)
Includes amount allocated to pay unsecured creditors (other than holders of deficiency claims) their pro rata share of $500,000.
(1)
B-Notes represent an interest in the equity waterfall of the new capital structure that is subordinate to a 2.0x multiple on the Investors'
Investment. The note face value is set at 20% of the deficiency claim. Present Value established based upon 5 to 7 year period and no interest
accrual.

1
Any recovered [net] proceeds from Midlands lawsuit against Apollo, which alleges among other things that Apollo is
required to pay for certain property improvement projects that Apollo guaranteed and Innkeepers failed to timely
complete, will go to the B-Note holders of the Fixed Rate CMBS Mortgage Loan as additional consideration.

4

Cash Proceeds & Uses

Our Commitment contemplates that the cash investment of $236.6 million will be used as follows:

o Repayment of the Five Mile and Lehman DIP in the amount of $67.75 million
o Pay down of Pre-Petition Mortgage lenders, after debt forgiveness, by $100 million
o Funding of $28.8 million of FF&E and PIP reserves to cover 2011 FF&E and future
PIP work
o Funding of $17.3 million of additional cash on the post-confirmation balance sheet.
o $16.4 million for us to purchase the B-Notes issued to holders of deficiency claims
based upon the present value of $73.8 million in B-Notes (20% of the deficiency
claim amount) subordinate to a 2.0x multiple on our investment
o Payment on non-deficiency unsecured claims in the amounts of: $2,550,949 to
Floating Rate Mezzanine Loan lenders; $449,051 to Anaheim Mezzanine Loan
lenders; and $500,000 to trade unsecured creditors
o Payment of fees to the Special Servicer of the Fixed Rate CMBS Mortgage equal to
0.625% of the Final Balance of the Fixed Rate CMBS Mortgage as complete
consideration for effecting the restructuring transactions

Debt Forgiveness & Pay Downs

Fixed Rate CMBS Mortgage Loan: Reduction to $600.0 million and a cash pay down of
$66.4 million to reduce the outstanding balance to $533.6 million. Companys issuance of B-
Notes to lender, which notes we agree to purchase immediately for $10.0 million in cash.
Floating Rate Mortgage Loan: Reduction to $151.7 million and a cash pay down of $16.8
million to reduce the outstanding balance to $134.9 million. Companys issuance of B-Notes
to lender, which notes we agree to purchase immediately for $6,350,949 in cash, of which
$2,550,949 shall be subordinated and paid over to the Floating Rate Mezzanine Loan.Please
note our estimates for this mortgage pool are based on de minimis information as compared
with some of the other properties and therefore will require extra diligence
Floating Rate Mezzanine Loan: Payment of $2,550,949 as described above. Debt cancelled.
Anaheim Mortgage Loan: Reduction to $10.0 million and a cash pay down of $1.1 million to
reduce the outstanding balance to $8.9 million. Companys issuance of B-Notes to lender,
which notes we agree to purchase immediately for $619,050 in cash, of which $500,000 shall
be subordinated and paid over to the Anaheim Mezzanine Loan.
Anaheim Mezzanine Loan: Payment of $449,051 as described above. Debt cancelled.
Capmark Mission Valley CMBS Mortgage Loan: Reduction to $34.5 million and a cash pay
down of $3.8 million to reduce the outstanding balance to $30.6 million. Companys issuance
of B-Notes to lender, which notes we agree to purchase immediately for $0.6 million in cash.
Capmark Garden Grove CMBS Mortgage Loan: Reduction to $27.3 million and a cash pay
down of $3.0 million to reduce the outstanding balance to $24.3 million. Companys issuance
of B-Notes to lender, which notes we agree to purchase immediately for $0.5 million in cash.
Capmark Ontario CMBS Mortgage Loan: Reduction to $25.4 million and a cash pay down
of $2.8 million to reduce the outstanding balance to $22.6 million. Companys issuance of B-
Notes to lender, which notes we agree to purchase immediately for $0.4 million in cash.

5

Merrill Lynch Washington D.C. CMBS Mortgage Loan: Reduction to $18.6 million and a
cash pay down of $2.1 million to reduce the outstanding balance to $16.5 million.
Companys issuance of B-Notes to lender, which notes we agree to purchase immediately for
$0.3 million in cash.
Merrill Lynch Tysons Corner CMBS Mortgage Loan: Reduction to $18.3 million and a cash
pay down of $2.0 million to reduce the outstanding balance to $16.3 million. Companys
issuance of B-Notes to lender, which notes we agree to purchase immediately for $0.3
million in cash.
Merrill Lynch San Antonio CMBS Mortgage Loan: Reduction to $17.6 million and a cash
pay down of $1.9 million to reduce the outstanding balance to $15.6 million. Companys
issuance of B-Notes to lender, which notes we agree to purchase immediately for $0.3
million in cash.
Unsecured trade creditors (not including holders of deficiency claims) that are not otherwise
paid pursuant to a first day order, will receive a share of a cash allocation of $500,000.
All equity interests in the Company, including common and preferred stock, will be
cancelled, and no distributions will be made on account of such interests. The Plan will
provide for an equity incentive program for management of the reorganized Company.

V. Proposed Debt Rates, Maturities, Extensions, Amortization, & Release Prices

The Commitment includes the following terms for the restructured debt:

Fixed Rate CMBS Mortgage Loan: A proposed interest rate of 6.71% and no change to the
existing maturity date of July 9, 2017. Amortization will begin 48 months after the
confirmation of the Plan and will be based on a 30 year amortization schedule. Release
prices will be established and properties can be released at 115% of the allocated loan
amount. The loan is subject to prepayment at par without penalty. Allocated FF&E of
$7,840,067.
Floating Rate CMBS Mortgage Loan: A proposed interest rate of Libor + 2.05%, with an
initial maturity date of July 9, 2015, two one-year extension options, at the borrowers
option, and not subject to any financial covenants. Release prices will be established and
properties can be released at 115% of the allocated loan amount. The loan is subject to
prepayment at par without penalty. Allocated FF&E of $3,510,782.
Anaheim Mortgage Loan: A proposed interest rate of 5.41% and a maturity date of July 9,
2017. Amortization will begin 48 months after the confirmation of the Plan and will be
based on a 30 year amortization schedule. The loan is subject to prepayment at par without
penalty. Allocated FF&E of $407,400.
Capmark Mission Valley CMBS Mortgage Loan: A proposed interest rate of 5.98% and a
maturity date of July 9, 2017 as compared to the original maturity date of November 11,
2016. The loan is subject to prepayment at par without penalty. Allocated FF&E of
$446,681.
Capmark Garden Grove CMBS Mortgage Loan: A proposed interest rate of 5.98% and a
maturity date of July 9, 2017 as compared to the original maturity date of November 11,
$357,674.

6

Capmark Ontario CMBS Mortgage Loan: A proposed interest rate of 5.98% and a maturity
date of July 9, 2017 as compared to the original maturity date of November 11, 2016. The
loan is subject to prepayment at par without penalty. Allocated FF&E of $456,855.
Merrill Lynch Washington D.C. CMBS Mortgage Loan: A proposed interest rate of 6.03%
and a maturity date of July 9, 2017 as compared to the original maturity date of October 1,
$266,428.
Merrill Lynch Tysons Corner CMBS Mortgage Loan: A proposed interest rate of 5.98% and
a maturity date of July 9, 2017 as compared to the original maturity date of October 1, 2016.
The loan is subject to prepayment at par without penalty. Allocated FF&E of $235,718.
Merrill Lynch San Antonio CMBS Mortgage Loan: A proposed interest rate of 6.03% and a
maturity date of July 9, 2017 as compared to the original maturity date of October 1, 2016.
The loan is subject to prepayment at par without penalty. Allocated FF&E of $278,395.

VI. Offer Structure and Protections

As stated, the Transaction will be implemented by a recapitalization of the Company through the
Plan. Since the Company has rejected our request to perform due diligence and has expressed no
real interest in engaging us in meaningful discussions regarding a potential transaction in lieu of
continuing on with the Lehman Plan, it will be necessary for Midland or another party in interest to
seek and obtain a bankruptcy court order terminating the Companys plan exclusivity period in order
for Midland to file the Plan. Assuming exclusivity is so terminated, we require that stalking horse
protection be immediately sought by Midland from the Court, including the following: (i) a break-
up fee of $10 million in favor of Five Mile (the Break-Up Fee) if an alternative Chapter 11 plan
financed by a different party is confirmed by the Court and consummated; (ii) a first over-bid in the
competing plan in the form of additional capital into the Company in the minimum amount of $25
million cash (inclusive of amount allocable to pay the Break-Up Fee, which shall only be payable
from the cash realized from the first overbid), with subsequent over-bids in the form of additional
capital into the Company in minimum $10 million increments of additional cash (or additional debt
on identical terms as described in our Commitment), and (iii) a reimbursement of all of our legal fees
and expenses incurred in connection with this offer and its confirmation and consummation
(including due diligence fees and expenses) in an amount not to exceed $2,000,000. Midland
confirms its agreement with such terms.

Midland confirms that, other than the sale of equity interests in the reorganized Company, the Plan
will not contemplate or provide for a sale of the Company or any of its assets pursuant to section
1129(b)(2)(a)(ii) or (iii) or section 363 of the Bankruptcy Code. As such, no holder of a lien on any
asset of the Company shall be permitted to credit bid its claim as part of the Plan. The confirmation
of the best plan of reorganization providing for the highest and best return to creditors is
contemplated, subject to the protections being granted to Five Mile as set forth above in this Section
VI. In lieu of participating in the recapitalization provided in the Plan, the Plan should provide that
each secured creditor shall have the option to take ownership of its collateral in full satisfaction,
settlement, release and exchange for its claim(s) against the Company, in which case there shall be an
attendant adjustment to the consideration hereunder.

VII. Strength of the Plan

7

We believe the Plan (consistent with the terms of this Commitment Letter) is (i) superior to the
Lehman Plan, (ii) beneficial to all creditors, not just Lehman, and (iii) in the best interests of the
Company and its bankruptcy estates. The Plan values the Company at $1.04 billion, which is higher
than the valuation of $915 million in the Lehman Plan. The Plan provides for approximately $67.24
million in additional recovery value for the Non-Lehman Pre-Petition creditors (or 9% more) and
$184.1 million in cash pay downs of indebtedness, including retirement of $67.75 million of DIP
financing and the purchase of the B-Notes for $16.4 million. Further, there is substantially higher
certainty and less execution risk with the Plan, financed by our Commitment, as it will provide for
the exit financing component critical to the success and emergence of Innkeepers from bankruptcy.
The Lehman Plan does not include a commitment for $75 million of exit financing, which is
required for Innkeepers to successfully emerge from bankruptcy.

We believe the Plan also provides additional stability for the Company as compared to the Lehman
Plan by providing approximately $28.8 million in cash reserves to fund future FF&E and PIP
investments and an additional $17.3 million in general cash liquidity (includes amount allocated to
pay the unsecured creditors other than holders of deficiency claims) to manage seasonality within
the business, cover operating or interest shortfalls should they occur, and provide funds to pay
administrative and priority expenses upon emergence. Our Commitments suggested amortization of
the Fixed Rate and Anaheim Mortgage Loans, after a 48 month period will allow the Company to
reach a more normalized level of operating performance. We are ready to move forward and have
all the resources, including available funds, to conclude the transactions outlined in this
Commitment Letter.

VIII. Midland Covenants

In consideration for our Commitment, Midland hereby covenants and agrees to
(a) perform its undertakings set forth in the second paragraph of Section VI above, (b) use its best
efforts to seek a bankruptcy court order to terminate the Companys plan exclusivity period, and (c)
upon termination of the Companys plan exclusivity period, to (i) immediately thereafter file a
motion seeking approval of the bid protections identified above and file the Plan consistent with the
terms of this Commitment Letter, (ii) take all necessary steps to obtain an order approving a
disclosure statement in respect of the Plan, (iii) thereafter solicit votes for the Plan, and (iv)
thereafter take all necessary steps to seek confirmation and effectiveness of the Plan. All orders and
filings by Midland relating to the Plan shall be subject to our prior review and approval, which
approval shall not be unreasonably withheld or delayed.

IX. Termination of Commitment

This Commitment Letter outlines only some of the essential terms regarding the proposed
Transaction, is not all-inclusive and does not purport to summarize or contain all of the conditions,
covenants, representations, warranties and other provisions which would be contained in definitive
documentation for the Transaction.

In addition, this Commitment Letter shall terminate and be of no further force or effect, and we
and you shall no longer be obligated with respect to our Commitment (and, in such event, we shall
not be entitled to any of the bid protections in favor of us, including, without limitation, those set
forth in Section VI herein) and other agreements set forth herein (including, without limitation, our

8

agreement with respect to Alternate Transactions set forth in Section III hereof), upon the earliest to
occur of the following (each, a Termination Event):

the occurrence of any material adverse condition, change in or material disruption of
conditions in the financial, banking, capital or hospitality markets and extended stay lodging
sector that, in our reasonable judgment, would impair the viability or success of the
Transaction;
the occurrence of any condition, change or development that could reasonably be expected
to have a material adverse effect on the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the Company;
the Company fails to provides us with unfettered and reasonable access to its properties,
books and records, subject to a non-disclosure agreement for a period of thirty (30) days
(Due Diligence Access Period), such period to commence by September 15, 2010;
our determination, on or prior to the last day of the Due Diligence Access Period, that the
results of our due diligence investigation with respect to mortgage pools (and underlying
properties) are not satisfactory to us in our sole discretion;
our inability to negotiate and execute all related documents (including customary
representations, warranties, covenants, conditions, and indemnities) necessary to effectuate
the Transaction, in each case in form and substance satisfactory to us in our reasonable
discretion;
any breach by you of, or non-compliance with, the covenants set forth in Section VIII
herein;
your failure, by October 15, 2010 (or such later date to which we shall agree in writing), to
(a) obtain a bankruptcy court order terminating the Companys plan exclusivity period, (b)
file a motion to approve bid protections in favor of us (including, without limitation, those
set forth in Section VI herein) with respect to the Plan, or (c) file the Disclosure Statement
and Plan;
the Courts failure to (a) approve your motion to approve protections in favor of us
(including, without limitation, those set forth in Section VI herein) before October 27, 2010
(or such later date to which we shall agree in writing), (b) approve the Disclosure Statement
for the Plan on or before November 15, 2010 (or such later date to which we shall agree in
writing), or (c) enter a final order approving the Plan (acceptable to us in our reasonable
discretion) by December 31, 2010 (or such later date to which we shall agree in writing);
the Courts confirmation of the Lehman Plan; or
mutual agreement of Midland and Five Mile.

Time is of the essence with respect to the Termination Events.

X. Miscellaneous

All notices, requests, claims, demands and other communications hereunder shall be given (and shall
be deemed to have been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
if to Five Mile:

9

Three Stamford Plaza
301 Tresser Boulevard, Ninth Floor
Stamford, CT 06901
Attention: James G. Glasgow, Jr.
Email: jglasgow@fivemilecapital.com
Facsimile: (203) 905-0954

if to Midland:

10851 Mastin, 6th Floor
Overland Park, KS 66210
Attention: Kevin S. Semon
Email: kevin.semon@midlandls.com
Facsimile: (913) 253-9723

This Commitment Letter, the rights of the parties, and all actions arising in whole or part under or in
connection herewith will be governed by and construed in accordance with the laws of the State of
New York.
This Commitment Letter constitutes the entire agreement between the parties and supersedes any
and all prior discussions, negotiations, proposals, undertakings, understandings and agreements,
whether written or oral, between you (or the Company), on the one hand, and us, on the other hand.
No modification or waiver of any provision hereof shall be enforceable unless approved by you and
us in writing. Neither you, on the one hand, nor us, on the other hand, is relying upon any
statement or representation made by or on behalf of the other, except as expressly provided in the
Commitment Letter.
We are prepared to enter into a transaction on the terms set forth herein. Upon receipt of a fully
executed counterpart to this Commitment Letter, both parties agree to negotiate in good faith
regarding the implementation of the Transaction contemplated in this Commitment Letter,
including engaging in the preparation and negotiation of definitive documents, and Midland agrees
to move forward with its undertakings described in Section VIII herein.
This Commitment Letter shall be considered withdrawn and can no longer be accepted if we have
not received from you, in accordance with the notice provisions herein, a fully-executed counterpart
to this Commitment Letter on or before August 25, 2010, at 5:00 PM (Eastern time), unless we
extend such deadline in writing.

FIVE MILE CAPITAl PARTNERS LLC

Should you have any questions regarding this Commitment Letter, please do not hesitate to contact
James Glasgow Qglasgow@fmcp.com) orAl Nickerson (anickerson@fmcp.com) at (203) 905-0950.
Sincerely yours,
Five Mile Capital II Pooling REIT LLC,
By: Five Mile Capital Partners LLC,
Acknowledged and Agreed:
Midland Loan Services, Inc.
By:
Name:
Title:

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