UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al., Debtors.

) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

STIPULATION AND AGREED ORDER RESOLVING (A) DEBTORS THIRD OMNIBUS OBJECTION TO CLAIMS (CHARTIS CLAIMS), (B) CHARTIS OBJECTION TO DEBTORS PLANS OF REORGANIZATION, AND (C) ISSUES RELATING TO THE CHARTIS CURE 1 Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession (collectively, the Debtors), Cerberus Capital Management, L.P. by and through its subsidiary Cerberus Series Four Holdings, LLC (collectively, Cerberus), Chatham Lodging Trust (Chatham and, together with Cerberus, the Fixed/Floating Plan Sponsors), and American Home Assurance Company, Chartis Specialty Lines Insurance Company, Illinois National Insurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., New Hampshire Insurance Company, The Insurance Company of the State of Pennsylvania, and certain other entities related to Chartis Inc. (collectively, Chartis and, together with the Debtors and the Fixed/Floating Plan Sponsors, the Parties), through their undersigned counsel, hereby stipulate and agree as follows (the Stipulation).2
1

The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax identification number can be found by visiting the Debtors restructuring website at www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Confirmation Order (as defined herein).

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RECITALS WHEREAS, before the Petition Date (as defined herein), Chartis issued certain insurance policies to the Debtors listed on Schedules 1-2 attached hereto (collectively, with all related documents, including, without limitation, certain payment agreements, addenda, and schedules, the Chartis Agreements). The Chartis Agreements listed in Schedules 1 are secured by certain cash, letters of credit, or proceeds totaling $3,108,000.00 (collectively, the Chartis Security); WHEREAS, on July 19, 2010 (the Petition Date), the Debtors commenced these voluntary cases under title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) and are continuing to operate their business and manage their properties as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, on October 29, 2010, Chartis filed 94 proofs of claim, each in the amount of $3,108,000.00, against certain of the Debtors (the Chartis Claims);3 WHEREAS, on April 19, 2011, the Debtors filed the Debtors Third Omnibus Objection to Claims (Chartis Claims) [Docket No. 1127] (the Third Omnibus Objection). Among other things, the Third Omnibus Objection objected to the Chartis Claims on the basis that the Debtors books and records indicated the Debtors owed no liability on account of the Chartis Claims;
3

The Debtors represent and hereby advise Chartis that the claim numbers assigned to the Chartis Claims are proof of claims numbers 1148, 1149, 1150, 1155, 1160, 1165, 1171, 1177, 1188, 1198, 1217, 1218, 1220, 1223, 1226, 1229, 1233, 1253, 1260, 1265, 1278, 1282, 1284, 1285, 1287, 1289, 1290, 1293, 1294, 1296, 1297, 1298, 1299, 1300, 1301, 1303, 1304, 1305, 1307, 1308, 1310, 1311, 1312, 1313, 1314, 1316, 1317, 1318, 1319, 1321, 1322, 1323, 1325, 1326, 1327, 1328, 1329, 1330, 1332, 1333, 1334, 1336, 1337, 1338, 1340, 1342, 1344, 1345, 1346, 1348, 1349, 1351, 1353, 1355, 1356, 1358, 1359, 1360, 1362, 1364, 1366, 1367, 1368, 1369, 1371, 1372, 1374, 1375, 1376, 1378, 1380, 1381, 1383, and 1384.

WHEREAS, on May 19, 2011, the Debtors filed the Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 1445] (the Plan).4 The Plan embodies four separate joint plans of reorganizationincluding a Fixed/Floating Plan sponsored by the Fixed/Floating Plan Sponsorsthat together provide for the resolution of all claims against, and interests in, each of the 92 Debtors in these chapter 11 cases; WHEREAS, on June 17, 2011, Chartis filed the Objection to Debtors Plans of Reorganization [Docket No. 1739] (the Chartis Plan Objection) to generally preserve its rights as they relate to the Plan, the Chartis Claims, and the Chartis Cure (as defined herein); WHEREAS, on June 29, 2011, the Bankruptcy Court entered an order confirming the Plan (the Confirmation Order). Paragraph 245 of the Confirmation Order provides, inter alia, that the Debtors and Chartis agreed to adjourn all issues relating to the Chartis Agreements, the Chartis Claims, and the Chartis Security until the omnibus hearing scheduled for July 21, 2011, at 3 p.m. prevailing Eastern Time, which hearing was subsequently adjourned to August 2, 2011, at 2 p.m. prevailing Eastern Time and adjourned again to a date to be determined, as necessary; WHEREAS, the Confirmation Order contemplates (a) the creation of a Liquidation Trust (the Liquidation Trust) and the creation of the beneficial interests in the Liquidation Trust solely for the benefit of Holders of Allowed Claims against the Trust Debtors,5 and (b) that on
4 5

The Debtors filed the final version of the Plan on July 1, 2011 [Docket No. 1772]. Trust Debtors is defined as Grand Prix General Lessee LLC, Grand Prix Holdings LLC, Grand Prix IHM, Inc., Grand Prix Mezz Borrower Term LLC, Grand Prix RIGG Lessee LLC, Grand Prix RIMV Lessee, LLC, Grand Prix Term Lessee LLC, Innkeepers Financial Corporation, Innkeepers USA Limited Partnership, Innkeepers USA Trust, KPA Leaseco Holding, Inc., KPA Leaseco, Inc., KPA RIGG, LLC, KPA RIMV, LLC, KPA San Antonio, LLC, KPA Tysons Corner RI, LLC, KPA Washington DC, LLC, Grand Prix Ontario Lessee, LLC, and KPA HI Ontario in their capacities as reorganized debtors on behalf of themselves and their respective chapter 11 estates.

the Effective Date of the Plan as it applies to each of the Trust Debtors, the applicable Trust Debtors shall grant, assign, transfer, convey, and deliver to the Liquidation Trust all of their right, title, and interest in Cash and all other assets remaining in the Trust Debtors estates, including, without limitation, the right to prosecute, settle, withdraw, or resolve in any manner approved by the Bankruptcy Court the Trust Debtors Causes of Action; WHEREAS, the Confirmation Order provides for the assumption of certain executory contracts by the Fixed/Floating Debtors under Bankruptcy Code 365 and 1123(b); WHEREAS, the Parties entered into negotiations and have reached an agreement in respect of, among other things, the Chartis Claims, the Chartis Plan Objection, and the Chartis Cure. STIPULATION IT IS THEREFORE AGREED, AND UPON COURT APPROVAL HEREOF, IT SHALL BE ORDERED AS FOLLOWS: 1. The Chartis Agreements listed in Schedule 1 are hereby assumed by Innkeepers

USA Trust pursuant to the Plan and shall vest in the Liquidation Trust on the Effective Date of the Plan as it applies to Innkeepers USA Trust. 2. The Chartis Agreements listed in Schedule 2 are hereby assumed by Innkeepers

USA Trust (as applicable)6 pursuant to the Plan and such assumption shall become effective on the Effective Date of the Fixed/Floating Plan. Ink Acquisition LLC, Ink Acquisition II LLC, and/or such other entities, as designated by the Fixed/Floating Plan Sponsors (the Designees), shall be named as additional insureds on the Chartis Agreements listed in Schedule 2, and
6

The (as applicable) does not apply to policy no. 00013573279, policy no. 00004883814, and policy no. 00084191656 .

Chartis agrees to so name such parties as additional insureds and to issue written evidence to the Fixed/Floating Plan Sponsors of the same. All rights, duties, and obligations of Chartis and the Fixed/Floating Plan Sponsors (including the additional named insureds) with respect to the Chartis Agreements listed in Schedule 2 are preserved and shall be satisfied and resolved in the ordinary course of business without further order of this Court; provided, however that Chartis acknowledges and agrees that, except for $20.00, all amounts presently billed (and, to the best of Chartis knowledge, all amounts presently owed) under the Chartis Agreements listed in Schedule 2 have been paid; provided further, however that all obligations arising in the ordinary course of business under the Chartis Agreements listed in Schedule 2, including as a result of any audit, evaluation, or investigation, shall be owed, if at all, and paid by the Designees and not by Innkeepers USA Trust or the Liquidation Trust (excluding with respect to policy no. 00013573279, policy no. 00004883814, and policy no. 00084191656). 3. Chartis shall have the option to waive its rights, if any, to seek cure payments

with respect to the Chartis Agreements listed in Schedule 1 from the Debtors and the Liquidation Trust, in which case Chartis shall only be entitled to seek further payments (beyond the Chartis Security now held) with respect to such agreements from Island Hospitality Management, Inc. (Island), to the extent of the obligations of Island. In the event Chartis elects to seek any cure payment or any additional security with respect to the Chartis Agreements listed in Schedule 1 from the Debtors or from the Liquidation Trust, Chartis shall use best efforts to present, within sixty (60) days of the Effective Date of the Plan as it applies to Innkeepers USA Trust, an audit, evaluation, or investigation (the Chartis Audit) with respect to the amounts necessary to cure any defaults and/or to fully secure any and all obligations in accordance with their terms under the Chartis Agreements listed in Schedule 1 (the

Chartis Cure); provided, however that Chartis shall in any event complete the Chartis Audit within 75 days of the Effective Date of the Plan as it applies to Innkeepers USA Trust; provided further, however that the Debtors reserve all rights to challenge the findings or results of the Chartis Audit and, if necessary, conduct their own audit, evaluation, or investigation with respect to the amount of the Chartis Cure (a Debtor Audit). To the extent the Debtors opt to conduct a Debtor Audit, Chartis shall make available on request all non-privileged documents or information considered by Chartis in conducting the Chartis Audit and any other reasonably necessary documentation and related information within twenty (20) days of the Debtors request for such documentation and related information; provided, however that if the Debtors seek medical information about any individual, the Debtors shall first provide a written confidentiality agreement satisfactory to Chartis assuring that all medical privacy rights of such individual are fully preserved and protected. Except as specifically set forth in this Stipulation and Agreed Order, the Chartis Security can only be used in accordance with the Chartis Agreements (including payment agreements). 4. Any dispute regarding the amount of the Chartis Cure shall be subject to all rights

of arbitration set forth in the Chartis Agreements. 5. In the event Chartis elects to seek the Chartis Cure, Chartis shall seek recourse for

the Chartis Cure primarily against the Chartis Security. In the event it is determined, in a manner consistent with paragraph 4 herein, that the amount of the Chartis Cure exceeds the amount of the Chartis Security, Chartis shall be allowed an Administrative Claim against the Liquidation Trust for the remainder of the Chartis Cure unless the Debtors or their successor serves a Demand for Arbitration within eighty (80) days after receipt of the Chartis Audit.

6.

In the event it is determined, in a manner consistent with paragraph 4 herein, that

Chartis holds Chartis Security in excess of the total amount necessary to satisfy the Chartis Cure, Chartis shall, as and when provided for by the Chartis Agreements, remit such excess Chartis Security to the Liquidation Trust; provided, however that Chartis shall remit such excess Chartis Security, if any, to the Liquidation Trust within 30 days of such determination. In the event Chartis waive its rights, if any, to seek cure payments with respect to the Chartis Agreements listed in Schedule 1 from the Debtors and the Liquidation Trust, and it is otherwise determinedon a final basis, in the ordinary course of business, and in accordance with the Chartis Agreementsthat Chartis holds excess Chartis Security, Chartis shall, as and when provided for by the Chartis Agreements, remit such excess Chartis Security to the Liquidation Trust. 7. Policy no. 00084191656, currently listed in Schedule 1, may be transferred from

Schedule 1 to Schedule 2 at a later date without further Court approval, subject to the Fixed/Floating Plan Sponsors consent to such transfer. Upon such transfer, if any, policy no. 00084191656 shall be excluded from the last proviso of paragraph 2 and footnote 6 herein. 8. Upon entry and approval of this Stipulation and Agreed Order, the Chartis Plan

Objection shall be deemed withdrawn with prejudice. 9. Upon entry and approval of this Stipulation, the Chartis Claims shall hereby be

deemed disallowed and satisfied in their entirety for all purposes, and except as provided for herein, Chartis shall not be entitled to receive and shall be precluded from asserting any claim to any further distributions from the Liquidation Trust, the Fixed/Floating Plan Sponsors, Ink Acquisition LLC, Ink Acquisition II LLC, or the Debtors, their estates, or their successors in their chapter 11 cases under the Plan or otherwise on behalf of the Chartis Claims.

10.

No provision of the Plan, the Plan Supplement, the Confirmation Order, or this

Stipulation shall prejudice or impair the rights and defenses (as such rights and defenses relate to insurance coverage) of the Debtors, the Liquidation Trust, the Fixed/Floating Plan Sponsors, Ink Acquisition LLC, or Ink Acquisition II LLC to any and all claims arising under the Chartis Agreements. For the avoidance of doubt, nothing herein shall be interpreted to release, reduce, enlarge, or alter in any way any insurance coverage previously provided by Chartis to the Debtors. Except for requirements that the Debtor pay the Chartis Cure, if any, all conditions, terms, provisions and exclusions of any kind under the Chartis Agreements remain in full force and effect, including without limitation, those relating to dates of coverage, the provision of coverage, exclusions, limitations, and cooperation. In addition, all defenses, subrogation rights, and claims against third parties arising from the Chartis Agreements are preserved and the Debtors and/or their successors, as applicable, shall be obligated to cooperate with Chartis to the extent required by such agreements. 11. No provision of this Stipulation, the Plan, the Plan Supplement, or the

Confirmation Order shall prejudice, impair, or otherwise affect any rights the Debtors or Chartis may have against Island as related to any of the Chartis Agreements. 12. Notwithstanding paragraph 245 of the Confirmation Order, the Plan, Plan

Supplement, the Confirmation Order (together, the Plan Documents), and all related documents shall be fully applicable to Chartis to the extent consistent herewith, and in the event of any inconsistency between this Stipulation and the Plan Documents, this Stipulation shall govern. 13. Paragraph 245 of the Confirmation Order shall govern the relationship of Chartis

and the Debtors until this Stipulation is approved by entry of this Stipulation and Agreed Order;

provided, however that, if this Stipulation and Agreed Order is reversed, remanded, amended, or superseded by a subsequent order of a Court of competent jurisdiction, Chartis and the Debtors or the Debtors successors, as applicable, shall each have the option of reinforcing paragraph 245 of the Confirmation Order. 14. The Parties acknowledge that no promise, inducement, or agreement not stated

herein has been made to them in connection with this Stipulation, and that this Stipulation constitutes the entire agreement between them. This Stipulation shall not be modified, altered, amended, or vacated without written consent of all parties hereto. Any such modification, alteration, amendment, or vacation, in whole or in part, shall be subject to the approval of the Bankruptcy Court. 15. Chartis reserves all of its rights to include in the Chartis Cure calculation its legal

fees incurred and expenses accrued in connection herewith, and the Debtors reserve all of their rights to dispute such amounts. 16. This Stipulation may be executed in multiple counterparts, any of which may be

transmitted by facsimile or electronic mail, and each of which shall be deemed an original, but all of which together shall constitute one instrument. 17. Omni Management Group, LLC, the Debtors notice and claims agent, is hereby

authorized to update the claims register to reflect the relief granted in this Stipulation. 18. The Bankruptcy Court retains jurisdiction with respect to all matters arising from

or related to the implementation of this Stipulation; provided, however, that, as set forth herein, any dispute regarding the amount of the Chartis Cure shall be subject to arbitration consistent with the terms of the Chartis Agreements.

19.

Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), 7062,

9014 or otherwise, the terms and conditions of the Order shall be immediately effective and enforceable upon its entry.

SO ORDERED this 4th day of August, 2011 /s/ Shelley C. Chapman The Honorable Shelley C. Chapman United States Bankruptcy Judge

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Dated: August 4, 2011 New York, New York /s/ Michael S. Davis Michael S. Davis Mary G. McCarthy ZEICHNER ELLMAN & KRAUSE LLP 575 Lexington Avenue New York, New York 10022 Telephone: (212) 223-0400 Counsel to Chartis /s/ Brian S. Lennon James H.M. Sprayregen, P.C. Paul M. Basta Stephen E. Hessler Brian S. Lennon KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 and Anup Sathy, P.C. KIRKLAND & ELLIS LLP 300 North LaSalle Street Chicago, Illinois 60654-3406 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Counsel to the Debtors and Debtors in Possession

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/s/ Adam C. Harris__________________________ Adam C. Harris Stuart D. Freedman SCHULTE ROTH & ZABEL LLP 919 Third Avenue New York, New York 10022 Telephone: (212) 756-2000 Facsimile: (312) 593-5955 Counsel to Cerberus Capital Management, L.P. /s/ Scott K. Charles_________________________ Scott K. Charles Scott W. Golenbock WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (312) 403-2000 Counsel to Chatham Lodging Trust

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SCHEDULE 1

Policy # 00008188582 00001052706 00001321623 00001324194 00001324781 00007411851 00007448242 00001469886 00001469887 00001469888 00004572280 00005734585 00005734586 00005734587 00005734878 00005734879 00005734880 00004271515 00004572777 00004572778 00004576371 00004883814 00004883815 00004883816 00004883817 00004883819 00004883820 00013573279 00069862383 00069862384 00004883818 00004572279 00004576369 00009909044 00084191656

Writing Company CHARTIS SPECIALTY INS CO. LEXINGTON INSURANCE COMPANY LEXINGTON INSURANCE COMPANY LEXINGTON INSURANCE COMPANY LEXINGTON INSURANCE COMPANY LEXINGTON INSURANCE COMPANY LEXINGTON INSURANCE COMPANY AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO AMERICAN HOME ASSURANCE CO LEXINGTON INSURANCE COMPANY NEW HAMPSHIRE INSURANCE CO NEW HAMPSHIRE INSURANCE CO NEW HAMPSHIRE INSURANCE CO COMMERCE & INDUSTRY INS CO INS CO OF THE STATE OF PENN ILLINOIS NATIONAL INS CO INS CO OF THE STATE OF PENN COMMERCE & INDUSTRY INS CO. INS CO OF THE STATE OF PENN NATIONAL UNION FIRE INS CO INS CO OF THE STATE OF PENN NATIONAL UNION FIRE INS CO INS CO OF THE STATE OF PENN AMERICAN HOME ASSURANCE CO NEW HAMPSHIRE INSURANCE CO AMERICAN HOME ASSURANCE CO COMMERCE & INDUSTRY INS CO

Effective 1996-10-06 2001-12-06 2002-12-06 2003-12-06 2004-12-06 2005-09-30 2006-09-30 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2006-11-01 2008-06-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2009-11-01 2009-11-01 2009-11-01 2008-11-01 2006-11-01 2008-11-01 2007-11-01 2010-11-15

Expiration 1997-10-06 2002-12-06 2003-12-06 2004-12-06 2005-09-30 2006-09-30 2007-09-30 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2008-11-01 2009-12-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2009-11-01 2008-11-01 2010-11-01 2008-11-01 2011-11-15

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SCHEDULE 2

Policy # 00004572777 00004572778 00004576371 00004883814 00004883815 00004883816 00004883817 00004883819 00004883820 00013573279 00069862383 00069862384 00025031377 00004576369

Writing Company NEW HAMPSHIRE INSURANCE CO NEW HAMPSHIRE INSURANCE CO NEW HAMPSHIRE INSURANCE CO COMMERCE & INDUSTRY INS CO INS CO OF THE STATE OF PENN ILLINOIS NATIONAL INS CO INS CO OF THE STATE OF PENN COMMERCE & INDUSTRY INS CO INS CO OF THE STATE OF PENN NATIONAL UNION FIRE INS CO INS CO OF THE STATE OF PENN NATIONAL UNION FIRE INS CO LEXINGTON INSURANCE COMPANY NEW HAMPSHIRE INSURANCE CO

Effective 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2011-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2010-11-01 2009-12-01 2010-11-01

Expiration 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-11-01 2011-12-01 2011-11-01

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