SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 30 Rockefeller Plaza, Suite 2400 New York, NY 10112 Telephone: 212-653-8700

Facsimile: 212-653-8701 Carren B. Shulman Alan M. Feld Attorneys for Marriott International, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al., Jointly Administered Debtors. Chapter 11 Case No. 10-13800-scc

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 PREPETITION TERMINATION OF THE FRANCHISE AGREEMENT WHICH IS EFFECTIVE ON AUGUST 30, 2010 I, Karl Grover, declare as follows: 1. I am Vice President, Franchising, The Americas for Residence Inn and

TownePlace Suites at Marriott International, Inc. ("Marriott"). I have been an employee of Marriott in various capacities for 26 years, including as Vice President, Owner & Franchise Services for Residence Inn and as General Manager at the Greenbelt Marriott hotel in Greenbelt, Maryland and Resident Manager at the Chicago OHare Marriott hotel. I have a Bachelor of Science in Hotel, Restaurant and Travel Administration from the University of Massachusetts at Amherst. I have personal knowledge of the facts stated herein and if called as a witness, I could testify competently to the following facts.

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2.

Marriott, its predecessors and its affiliates own and operate resorts, inns, suites,

clubs, apartments, and housing under proprietary trademarks that include, among others, the names "Marriott", "Residence Inn by Marriott", "Courtyard by Marriott", and "TownePlace Suites Marriott" (collectively, the "Marks"). 3. Marriott and/or its affiliates own the Marks, and each of the Marks have been

registered in the United States Patent and Trademark Office. The rights of Marriott in and to use the Marks, and in each of them individually, have become incontestable pursuant to Section 15 of the Lanham Act, 15 U.S.C. 1065. 4. Since the registration of the Marks in the United States Patent and Trademark

Office, Marriott and/or its affiliates have given notice that each of the Marks is registered by displaying with the mark either the letter R enclosed within a circle ("") or the words "Registered in U.S. Patent and Trademark Office" or "Reg. U.S. Pat. & Tm. Off.", pursuant to Section 29 of the Lanham Act, 15 U.S.C. 1111. 5. The products and services of Marriott, through Marriotts operations and those of

its authorized licensees as well as other means and methods, have been extensively advertised, marketed and offered throughout the United States and the world. Marriotts products and services have enjoyed massive commercial success, favorable recognition and acceptance by the public as a result of the expenditure of vast amounts of money, time, corporate energy and hard work. In connection with the operation of the business and all activities associated with its business, Marriott has utilized the Marks throughout the United States and the world to identify its products and services for the purpose of distinguishing them from the products and services of others.

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6.

The Marks and the goodwill of the businesses associated with them are of great

and inestimable value, are highly distinctive, and have become universally associated in the public mind with products and services of a certain quality and reputation. 7. Hotels associated with the Marks include hotels owned and operated by Marriott,

hotels owned by third parties and managed by Marriott pursuant to operating agreements, and franchised hotels owned and managed by third parties who have been licensed by Marriott to use the Marks in compliance with strict standards. 8. Marriott relies on its franchisees to maintain the value and reputation of the Marks

under the Marriott flag in accordance with a certain standard, as guests have come to expect from the name Marriott and Marriotts affiliated flags. Poor guest satisfaction and conditions at hotels under the Marriott flags reflect poorly on Marriott and the entire Marriott hotel system, including hotels owned by Marriott and other third parties. 9. The use of Marriotts Marks is governed by franchise agreements which set forth

strict operating standards requiring, among other things, regular renovations to maintain a certain level of quality in the appearance of the Marriott-branded hotels to meet guest expectations and protect the goodwill associated with the Marks. 10. On June 29, 2007, debtor Grand Prix Floating Lessee LLC ("Franchisee") and

Marriott entered into that certain Residence Inn by Marriott Relicensing Franchise Agreement dated as of June 29, 2007 (the "Franchise Agreement") with respect to the Residence Inn located

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at 2600 Livernois Road, Troy, Michigan 48083-1234 (the "Troy Central Hotel"). A true and correct copy of the Franchise Agreement is attached as Exhibit A hereto.1 11. I have been and currently am responsible for the Franchise Agreement, including

maintenance of the franchise relationship and monitoring of Franchisee's performance. 12. On August 22, 2008, Marriott notified Franchisee that the Troy Central Hotel had

been in the Red Zone for the July 2007 to December 2007 and January 2008 to June 2008 6month tracking periods (the "August 22 Notice"). The "Red Zone" is the worst performance classification for a hotel in the Marriott system pursuant to the Marriott quality assurance program. A true and correct copy of the August 22 Notice of Troy Central Hotel's Red Zone status is attached as Exhibit B hereto. 13. As a result of the Troy Central Hotel's failure to exit the Red Zone during the July

2008 to December 2008 tracking period, on February 20, 2009, Marriott delivered to Franchisee a notice of default (the "February 20 Notice"), providing notice to Franchisee that if the Troy Central Hotel remained in the Red Zone for any 6-month tracking period that it may be subject to termination by Marriott. A true and correct copy of the February 20 Notice is attached as Exhibit C hereto. 14. The Troy Central Hotel failed to exit the Red Zone for the January 2009 to June

2009 6-month tracking period. 15. On September 15, 2009, Marriott and the Franchisee entered into a forbearance

agreement (the "September Forbearance Agreement") pursuant to which, among other things, Franchisee acknowledged that the Franchise Agreement was in default and agreed that if the
1

The exhibits referenced herein are confidential business documents, and will be delivered to Debtors under separate cover. A motion to file the exhibits under seal shall be submitted to the Court.

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Troy Central Hotel failed to exit the Red Zone by the end of the January 2010 through June 2010 6-month tracking period, Marriott would terminate the Franchise Agreement in its sole discretion, the Franchisee would voluntarily enter into a termination agreement, causing the Troy Central Hotel to voluntarily leave the system and de-identify the Troy Central Hotel within sixty days after receiving notice. Franchisee further agreed that if it failed to voluntarily leave the system, Marriott could unilaterally terminate the Franchise Agreement and Marriott would be entitled to injunctive relief to cause the de-identification and payment of liquidated damages. A true and correct copy of the September Forbearance Agreement is attached as Exhibit D hereto. 16. On June 21, 2010, Marriott sent Franchisee a notice of continuing default and

termination (the "June Termination Notice "), enclosing a copy of Marriott's then-current form of Voluntary Termination Agreement which Franchisee had agreed to execute if the Troy Central Hotel failed to exit the Red Zone by the end of the January 2010 to June 2010 6-month tracking period. A copy of the June Termination Notice is attached as Exhibit E hereto. 17. The Troy Central Hotel failed to exit the Red Zone by June 30, 2010 and

continues to be in the Red Zone as of the date hereof. 18. After receipt of the June Termination Notice, however, Franchisee failed to

execute a voluntary termination agreement in accordance with the terms of the September Forbearance Agreement. 19. Additionally, pursuant to the Franchise Agreement, Franchisee was required to

complete the property improvement plan (the "PIP Renovation") for the Troy Central Hotel by December 31, 2008. Franchisee's failure to do so is a default under the Franchise Agreement and provides Marriott with the ability to immediately terminate the Franchise Agreement.

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20.

On December 31, 2008, Franchisee had failed to complete the PIP Renovation.

During 2009 Marriott and Debtors were in discussions relating to the completion of the property the PIP Renovation for 23 of the Debtors' hotels that were required to be completed in 2007 and 2008, and agreed to temporarily forbear from taking any action under the franchise agreements with respect to each of the hotels. The Debtors asserted that they would provide Marriott with a viable plan by March 1, 2010 to complete the PIP Renovation for all the hotels, but failed to do so. Consequently, on March 16, 2010, Marriott served a notice of default upon Franchisee with respect to Franchisee's failure to complete the PIP Renovation for the Troy Central Hotel (the "March Default Notice"). Simultaneously, Marriott served identical default notices for the 22 other Marriott-branded hotels upon Franchisee. A true and correct copy of the March Default Notice is attached as Exhibit F hereto. 21. Although no cure period for failure to complete the PIP Renovation is required by

the franchise agreements, including the Franchise Agreement with respect to the Troy Central Hotel, Marriott gave Debtors, including Franchisee, 90 days to complete the PIP Renovation, with the franchise agreements terminating as of June 14, 2010 without further notice or opportunity to cure if the PIP Renovation for the hotels had not been completed by such date. In the March Default Notice, Marriott expressly reserved its rights with respect to any defaults other than the PIP defaults. With no progress being seen, Marriott requested a meeting with representatives from Apollo Investment Corporation and the Debtors' lenders to clearly articulate the need for action, the deficiencies in the hotels and the performance gap of the defaulted hotels versus the rest of the brands. 22. On May 25, 2010, Marriott served amended notices terminating the 23 franchise

agreements, including the Franchise Agreement, on the June 14, 2010 termination date without

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an opportunity to cure and eliminating the remainder of the previously offered cure period. A true and correct copy of the May 25, 2010 notice with respect to the Troy Central Hotel (the "May 25 Notice") to the Franchisee is attached as Exhibit G hereto. 23. In response, Debtors approached Marriott with a plan for completing the PIP

Renovation during bankruptcy with debtor-in-possession financing. Because the parties were close to finalizing that deal, Marriott and Debtors' entered into a letter agreement dated June 11, 2010 (the "June 11 Forbearance Letter") providing for a brief forbearance period until June 28, 2010 in order to finalize the adequate assurance agreement and to allow Debtors to finalize financing for the completion of the PIP Renovation and to agree upon a schedule by which the PIP Renovation for 23 of Debtors' hotels would be completed. A true and correct copy of the June 11 Forbearance Letter is attached as Exhibit H hereto. On June 25, 2010, Marriott agreed to an additional forbearance period through July 18, 2010, except with respect to defaults under the Troy Central Hotel (the "June 25 Forbearance Extension"). A true and correct copy of the June 25 Forbearance Extension is attached as Exhibit I hereto. 24. Marriott and Debtors finalized the adequate assurance agreement on June 25, A true and correct copy of the Adequate

2010 (the "Adequate Assurance Agreement").

Assurance Agreement is attached as Exhibit J hereto. The Adequate Assurance Agreement provides for, among other things, the completion of the PIP Renovation on the 23 hotels listed on Exhibit A thereto and the assumption of the 20 hotels listed on Exhibit B thereto. The Troy Central Hotel is absent from the Adequate Assurance Agreement. 25. On July 15, 2010, to make clear that the Franchise Agreement was terminated and

to provide notice to the Franchisee of the closure of the reservation system and the deidentification process that the Franchisee was required to perform prior to August 30, 2010,

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Marriott delivered a notice to Franchisee (the "July Notice and Termination"). A true and correct copy of the July Notice and Termination is attached as Exhibit K hereto.

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EXHIBIT A Franchise Agreement [FILED UNDER SEAL] EXHIBIT B August 22 Notice [FILED UNDER SEAL] EXHIBIT C February 20 Notice [FILED UNDER SEAL] EXHIBIT D September Forbearance Agreement [FILED UNDER SEAL] EXHIBIT E June Termination Notice [FILED UNDER SEAL] EXHIBIT F March Default Notice [FILED UNDER SEAL] EXHIBIT G May 25 Notice [FILED UNDER SEAL] EXHIBIT H June 11 Forbearance Letter [FILED UNDER SEAL]

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EXHIBIT I June 25 Forbearance Extension [FILED UNDER SEAL] EXHIBIT J Adequate Assurance Agreement [FILED UNDER SEAL] EXHIBIT K July 15 Notice [FILED UNDER SEAL]

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