Paul M. Basta Jennifer L. Marines KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, NY 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900
and
Anup Sathy, P.C. (pro hac vice pending) Marc J. Carmel (pro hac vice pending) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654-3406 Telephone: (312) 862-2000 Facsimile: (212) 446-2200
Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) INNKEEPERS USA TRUST, et al., 1 ) Case No. 10-__________(___) ) ) Debtors. ) Joint Administration Requested ) DEBTORS APPLICATION FOR THE ENTRY OF AN ORDER AUTHORIZING AND APPROVING THE RETENTION AND EMPLOYMENT OF AP SERVICES, LLC AND DESIGNATING NATHAN J. COOK AS INTERIM CHIEF FINANCIAL OFFICER TO THE DEBTORS NUNC PRO TUNC TO THE PETITION DATE 1
1 The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtors federal tax identification number, are: GP AC Sublessee LLC (5992); Grand Prix Addison (RI) LLC (3740); Grand Prix Addison (SS) LLC (3656); Grand Prix Albany LLC (3654); Grand Prix Altamonte LLC (3653); Grand Prix Anaheim Orange Lessee LLC (5925); Grand Prix Arlington LLC (3651); Grand Prix Atlanta (Peachtree Corners) LLC (3650); Grand Prix Atlanta LLC (3649); Grand Prix Atlantic City LLC (3648); Grand Prix Bellevue LLC (3645); Grand (continued on next page)
2 K&E 16966860 Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession (collectively, the Debtors), file this Application (the Application) for the entry of an order, substantially in the form attached hereto as Exhibit A, (a) authorizing the Debtors to retain and employ AP Services, LLC (APS) as crisis managers to the Debtors to provide interim management and restructuring services nunc pro tunc to the Petition Date (as defined herein), (b) designating Nathan Cook as interim Chief Financial Officer (CFO) to the Debtors nunc pro tunc to the Petition Date, and (c) granting such other relief as is just and proper. In support of this Application, the Debtors submit the Declaration of Nathan J. Cook, Managing Director of AlixPartners, LLP (AlixPartners) and an authorized representative of APS
Prix Belmont LLC (3643); Grand Prix Binghamton LLC (3642); Grand Prix Bothell LLC (3641); Grand Prix Bulfinch LLC (3639); Grand Prix Campbell / San Jose LLC (3638); Grand Prix Cherry Hill LLC (3634); Grand Prix Chicago LLC (3633); Grand Prix Columbia LLC (3631); Grand Prix Denver LLC (3630); Grand Prix East Lansing LLC (3741); Grand Prix El Segundo LLC (3707); Grand Prix Englewood / Denver South LLC (3701); Grand Prix Fixed Lessee LLC (9979); Grand Prix Floating Lessee LLC (4290); Grand Prix Fremont LLC (3703); Grand Prix Ft. Lauderdale LLC (3705); Grand Prix Ft. Wayne LLC (3704); Grand Prix Gaithersburg LLC (3709); Grand Prix General Lessee LLC (9182); Grand Prix Germantown LLC (3711); Grand Prix Grand Rapids LLC (3713); Grand Prix Harrisburg LLC (3716); Grand Prix Holdings LLC (9317); Grand Prix Horsham LLC (3728); Grand Prix IHM, Inc. (7254); Grand Prix Indianapolis LLC (3719); Grand Prix Islandia LLC (3720); Grand Prix Las Colinas LLC (3722); Grand Prix Lexington LLC (3725); Grand Prix Livonia LLC (3730); Grand Prix Lombard LLC (3696); Grand Prix Louisville (RI) LLC (3700); Grand Prix Lynnwood LLC (3702); Grand Prix Mezz Borrower Fixed, LLC (0252); Grand Prix Mezz Borrower Floating, LLC (5924); Grand Prix Mezz Borrower Floating 2, LLC (9972); Grand Prix Mezz Borrower Term LLC (4285); Grand Prix Montvale LLC (3706); Grand Prix Morristown LLC (3738); Grand Prix Mountain View LLC (3737); Grand Prix Mt. Laurel LLC (3735); Grand Prix Naples LLC (3734); Grand Prix Ontario Lessee LLC (9976); Grand Prix Ontario LLC (3733); Grand Prix Portland LLC (3732); Grand Prix Richmond (Northwest) LLC (3731); Grand Prix Richmond LLC (3729); Grand Prix RIGG Lessee LLC (4960); Grand Prix RIMV Lessee LLC (4287); Grand Prix Rockville LLC (2496); Grand Prix Saddle River LLC (3726); Grand Prix San Jose LLC (3724); Grand Prix San Mateo LLC (3723); Grand Prix Schaumburg LLC (3721); Grand Prix Shelton LLC (3718); Grand Prix Sili I LLC (3714); Grand Prix Sili II LLC (3712); Grand Prix Term Lessee LLC (9180); Grand Prix Troy (Central) LLC (9061); Grand Prix Troy (SE) LLC (9062); Grand Prix Tukwila LLC (9063); Grand Prix West Palm Beach LLC (9065); Grand Prix Westchester LLC (3694); Grand Prix Willow Grove LLC (3697); Grand Prix Windsor LLC (3698); Grand Prix Woburn LLC (3699); Innkeepers Financial Corporation (0715); Innkeepers USA Limited Partnership (3956); Innkeepers USA Trust (3554); KPA HI Ontario LLC (6939); KPA HS Anaheim, LLC (0302); KPA Leaseco Holding Inc. (2887); KPA Leaseco, Inc. (7426); KPA RIGG, LLC (6706); KPA RIMV, LLC (6804); KPA San Antonio, LLC (1251); KPA Tysons Corner RI, LLC (1327); KPA Washington DC, LLC (1164); KPA/GP Ft. Walton LLC (3743); KPA/GP Louisville (HI) LLC (3744); KPA/GP Valencia LLC (9816). 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.
3 K&E 16966860 (the Cook Declaration), which is attached as Exhibit B and incorporated by reference herein. In further support of this Application, the Debtors respectfully state as follows: 2
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 of 28 U.S.C. 157(b)(2). 2. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. 3. The statutory basis for the relief requested herein is section 363(b) of title 11 of the United States Code (the Bankruptcy Code). Relief Requested 4. By this Application, the Debtors seek the entry of an order (a) authorizing the retention and employment of APS nunc pro tunc to the Petition Date in accordance with the terms and conditions set forth in the conditions contained in that certain letter dated as of June 5, 2010, between APS and the Debtors (such letter, together with all related documents, are collectively referred to as the Engagement Letter), which is attached as Exhibit C and incorporated by reference herein, (b) designate Nathan J. Cook (Cook) as interim CFO for the Debtors in these Chapter 11 Cases upon the terms and conditions contained in the Engagement Letter, and (c) granting such other relief as is just and proper.
2 Information regarding the Debtors business, the background of these Chapter 11 Cases (as defined herein), and further facts and circumstances supporting this Application are set forth in the Declaration of Dennis Craven, Chief Financial Officer of Innkeepers USA Trust, in Support of First-Day Pleadings (the First Day Declaration), filed contemporaneously herewith.
4 K&E 16966860 Background 5. On the date hereof (the Petition Date), each of the Debtors filed a petition with the Court under chapter 11 of the Bankruptcy Code (collectively, the Chapter 11 Cases). 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. No request for the appointment of a trustee or examiner has been made in the Chapter 11 Cases, and no committees have been appointed or designated. Concurrently with the filing of this Motion, the Debtors have requested procedural consolidation and joint administration of the Chapter 11 Cases. APSs Retention 6. The Debtors are familiar with the professional standing and reputation of APS. The Debtors understand that APS has a wealth of experience in providing restructuring advisory services and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. I. APSs Qualifications 7. APSs professionals have assisted and advised, and provided strategic advice to, debtors, creditors, bondholders, investors, and other entities in numerous chapter 11 cases of similar size and complexity to the Debtors Chapter 11 Cases. APS and its subsidiary affiliates, including AlixPartners and its predecessor entities, have provided restructuring or crisis management services in numerous large cases, including most recently: In re Lyondell Chem. Co., Case No. 09-10023 (Bankr. S.D.N.Y. 2009); In re Motors Liquidation Co., Case No. 09-50026 (Bankr. S.D.N.Y. 2009); In re Charter Commcns, Case No. 09-11435 (Bankr. S.D.N.Y. 2009); In re General Growth Props., Case No. 09-11977 (Bankr. S.D.N.Y. 2009); In re ACG Holdings, Inc., Case No. 08-11467 (Bankr. D. Del. 2008); In re Bally Total Fitness of Greater New York, Case No. 08-14818 (Bankr. S.D.N.Y. 2008) and Case No. 07-12395 (Bankr.
5 K&E 16966860 S.D.N.Y. 2007); In re SemGroup, L.P., Case No. 08-11525 (Bankr. D. Del. 2008); In re Tropicana Casinos & Resorts, Case No. 08-10856 (Bankr. D. Del. 2008); In re VeraSun Energy Corp., Case No. 08-12606 (Bankr. D. Del. 2008); In re Levitt and Sons, LLC, Case No. 07-19845 (Bankr. S.D. Fla. 2007); In re New Century TRS Holdings, Inc., Case No. 07-10416 (Bankr. D. Del. 2007); In re Remy Worldwide Holdings, Inc., Case No. 07-11481 (Bankr. D. Del. 2007); In re Dana Corp., Case No. 06-10354 (Bankr. S.D.N.Y. 2006); In re Dura Auto. Sys., Inc., Case No. 06-11202 (Bankr. D. Del. 2006); In re Sea Containers Ltd., Case No. 06-11156 (Bankr. D. Del. 2006); and In re Calpine Corp., Case No. 05-60200 (Bankr. S.D.N.Y. 2005). 8. Cook, who will act as interim CFO for the Debtors, has worked as a restructuring and financial consultant for over 15 years serving various industries including, among others, Real Estate, Manufacturing, Energy and Utilities, Construction, Consumer Packaged Goods, and Retail. Cook has substantial knowledge and experience advising large companies and assisting troubled companies with stabilizing their financial condition, analyzing their options, and developing appropriate business plans to accomplish restructuring initiatives. His roles have included those as a financial advisor to distressed debtors and their creditors, as well as serving in interim management roles as a CFO, Treasurer, and Accounting Director. 9. The Debtors have selected APS as their restructuring advisor because of APSs experience and reputation for providing crisis management services in large, complex chapter 11 cases such as those listed above. Furthermore, as a result of the prepetition work performed on behalf of the Debtors, APS acquired significant knowledge of the Debtors and their businesses and is now familiar with the Debtors financial affairs, debt structure, operations, and related matters. Likewise, in providing prepetition services to the Debtors, APSs professionals have worked closely with the Debtors management and their other advisors. Accordingly, APS has
6 K&E 16966860 developed relevant experience and expertise regarding the Debtors that will assist it in providing effective and efficient services in these Chapter 11 Cases. II. Services To Be Provided 10. As provided in the Engagement Letter, APS has agreed that Cook will serve as the Debtors interim CFO. Working collaboratively with the Debtors senior management team and board of directors, as well as the Debtors other professionals, Cook will assist the Debtors in evaluating and implementing strategic and tactical options through the restructuring process. 11. In addition, APS has agreed to provide certain temporary staff to assist Cook and the Debtors in their restructuring efforts (collectively, the Temporary Staff). The initial list of Temporary Staff, their rates, and other related/relevant information is set forth in the Engagement Letter and in the section below entitled Professional Compensation. 12. The Debtors anticipate that during these Chapter 11 Cases, Cook and the Temporary Staff will perform a broad range of services, including, without limitation, the following: 3
Lead the Debtors financial and treasury functions. Develop and implement cash management strategies, tactics, and processes. Prepare and monitor financial reports for internal and external use, in consultation with the Debtors Chief Executive Officer, Chief Restructuring Officer, General Counsel, and other senior management. Assist the Debtors in preparing for a Chapter 11 bankruptcy filing.
3 The description of the services to be rendered pursuant to the Engagement Letter herein is a summary. To the extent that this Application and the terms of the Engagement Letter are inconsistent, the terms of the Engagement Letter shall control.
7 K&E 16966860 Assist in communication and/or negotiation with outside constituents including the banks and their advisors, as appropriate. Have primary responsibility for the preparation (and, to the extent required, certification/attestation) of regular reports and information required by the Court and to be provided to stakeholders, which are customarily issued by the Debtors CFO, as well as providing assistance in such areas as testimony before the Bankruptcy Court on matters that are within APSs expertise. Serve as officers of subsidiaries as deemed necessary or advisable by the Debtors. Assist with such other matters as may be required that fall within APSs expertise and that are mutually agreeable.
13. The Debtors and APS intend that all of the services that APS will provide to the Debtors will be (a) appropriately directed by the Debtors so as to avoid duplicative efforts among the other professionals retained in the case and (b) performed in accordance with applicable standards of the profession. 14. The Engagement Letter contains standard indemnification language with respect to APSs services including, without limitation, an agreement by the Debtors to indemnify APS, its affiliates, and its partners, directors, officers, owners, employees, and agents from and against all claims, liabilities, losses, expenses, and actual damages arising out of or in connection with the engagement of APS that is the subject of the Engagement Letter. Accordingly, as part of this Application, the Debtors request that this Court approve the indemnification provisions as set forth in the Engagement Letter. 15. If APS finds it desirable to augment its Temporary Staff with independent contractors (each, an Independent Contractor) in these Chapter 11 Cases, (a) APS will file, and require each Independent Contractor to file, declarations indicating that such Independent Contractor has reviewed the list of the interested parties in this case, disclosing the Independent
8 K&E 16966860 Contractors relationships, if any, with the interested parties, and indicating that the Independent Contractor is disinterested, (b) each Independent Contractor will remain disinterested during the time that APS is involved in providing services on behalf of the Debtors, and (c) such Independent Contractor will represent that he/she will not work for the Debtors or other parties in interest in these Chapter 11 Cases during the time APS is involved in providing services to the Debtors. APSs standard practice is to charge for an Independent Contractors services at the APS rate for a professional of comparable skill and experience, which rate typically exceeds the compensation provided by APS to such Independent Contractor. III. Professional Compensation 16. The rates, subject to periodic adjustments, as set forth in the Engagement Letter, charged by professionals anticipated to be assigned to this case are as follows: Individuals with Executive Officer Positions
Name Description Monthly Rate Commitment Full or Part Time Nathan J. Cook Interim Chief Financial Officer $100,000 Full Time
Temporary Staff
Name Description Hourly Rate Commitment Full or Part Time Todd Brents Bankruptcy Preparation Services $760 Available as Needed Raymond Adams Bankruptcy Preparation and Management Services $580 Full Time
Cook will charge $100,000 per month for his services. All other professionals will charge hourly rates as set forth above and in the Engagement Letter. APS will file monthly staffing reports to identify any additional Temporary Staff.
9 K&E 16966860 17. The Debtors shall reimburse APS, upon receipt of periodic billings, for all reasonable and necessary expenses incurred in connection with these Chapter 11 Cases, including transportation costs, lodging, food, telephone, copying, and messenger services. 18. APS will submit monthly invoices to the Debtors, and the Debtors request authority to pay, in the ordinary course of business, all reasonable amounts invoiced by APS for fees and expenses. 19. APS typically works for compensation that includes base fee and contingent incentive compensation earned upon achieving meaningful results. In the instant case, the Debtors and AlixPartners have agreed not to include a success fee as compensation. 20. The fee structure is consistent with and typical of compensation arrangements entered into by APS and other comparable firms in connection with the rendering of similar services under similar circumstances. The Debtors believe that the fee structure is in fact reasonable, market-based, and designed to fairly compensate APS for its work and to cover fixed and routine overhead expenses. 21. APSs strategic and financial expertise as well as its capital markets knowledge, financing skills, restructuring capabilities, and mergers and acquisitions expertise, some or all of which may be required by the Debtors during the term of APSs engagement, were all important factors in determining the fee structure. The Debtors believe that the ultimate benefit of APSs services hereunder cannot be measured by reference to the number of hours to be expended by APSs professionals in the performance of such services. Indeed, the Debtors and APS have agreed upon the Fee Structure in anticipation that a substantial commitment of professional time and effort will be required of APS and its professionals in connection with these Chapter 11 Cases and in light of the fact that (a) such commitment may foreclose other opportunities for
10 K&E 16966860 APS, and (b) the actual time and commitment required of APS and its professionals to perform its services under the Engagement Letter may vary substantially from week to week and month to month, creating peak load issues for APS. 22. Because APS is not being employed as a professional under section 327 of the Bankruptcy Code, it will not submit quarterly fee applications pursuant to Bankruptcy Code sections 330 and 331. APS will, however, file with the Court, and provide notice to the United States Trustee (U.S. Trustee) and all official committees, reports of compensation earned and expenses incurred on at least a quarterly basis. Such reports shall summarize the services provided, identify the compensation earned by each executive officer and staff employee provided, and itemize the expenses incurred. Such compensation and expenses wills be subject to Court review in the event an objection is filed. 23. APS received an initial retainer of $250,000 (the Retainer) on June 10, 2010 from the Debtors. Pursuant to the Engagement Letter, invoiced amounts have been recouped against the Retainer, and payments on the invoices have been used to replenish the Retainer. During the 90 days prior to the commencement of these Chapter 11 Cases, Debtors paid APS a total of $478,733 incurred in providing services to the Debtors in contemplation of, and in connection with, prepetition restructuring activities. 24. Due to the ordinary course and unavoidable reconciliation of fees and submission of expenses immediately prior to, and subsequent to, the Petition Date, APS has incurred but not billed fees and reimbursable expenses, which relate to the prepetition period. APS hereby seeks this Courts approval to apply the Retainer to these amounts and any further prepetition fees and expenses APS becomes aware of during its ordinary course billing review and reconciliation.
11 K&E 16966860 Upon the proposed applications of the Retainer, the Debtors would not owe APS any sums for prepetition services. IV. No Duplication of Services 25. The Debtors intend that the services of APS will complement, and not duplicate, the services being rendered by other professionals retained in the Chapter 11 Cases. APS understands that the Debtors have retained and may retain additional professionals during the term of the engagement and will work cooperatively with such professionals to integrate any respective work conducted by the professionals on behalf of the Debtors. V. APSs Disinterestedness 26. The Debtors do not believe that APS is a professional whose retention is subject to approval under section 327 of the Bankruptcy Code. Nonetheless, to the best of the Debtors knowledge, and as disclosed in the Cook Declaration, and exhibits thereto, APS (a) is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code, (b) does not hold or represent an interest adverse to the Debtors estates, and (c) has no connection to the Debtors, their creditors, or their related parties. 27. APS will periodically review its files during the pendency of these Chapter 11 Cases to ensure that no conflicts or other disqualifying circumstances exist or arise. To the extent that APS discovers any new relevant facts or relationships bearing on the matters described herein during the period of APSs retention, APS will use reasonable efforts to file promptly a supplemental declaration. Basis for Relief 28. The retention of interim corporate officers and other temporary employees is proper under section 363 of the Bankruptcy Code. Section 363(b) provides, in relevant part, that the trustee or debtor in possession, after notice and a hearing, may use, sell, or lease, other than in
12 K&E 16966860 the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). Section 363 provides that transactions not in the ordinary course of business must be approved by court order after notice and a hearing. Under applicable case law, in this and other jurisdictions, if a debtors proposed use of its assets pursuant to section 363(b) of the Bankruptcy Code represents a reasonable business judgment on the part of the debtor, such use should be approved. See, e.g., Myers v. Martin (In re Martin), 91 F.3d 389, 395 (3d Cir. 1996) (citing Fulton State Bank v. Schipper (In re Schipper), 933 F.2d 513, 515 (7th Cir. 1991)); Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983); In re Delaware & Hudson Ry. Co., 124 B.R. 169, 175-76 (D. Del. 1991) (courts have applied the sound business purpose test to evaluate motions brought pursuant to section 363(b)); Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtors conduct). 29. The retention of APS and its professionals is a sound exercise of the Debtors business judgment. Cook has extensive experience as a senior officer and as an advisor for many troubled companies. The Debtors believe that the CFO, in conjunction with the other APS professionals, will provide services that benefit the Debtors estates and creditors. In light of the foregoing, the Debtors believe that retention of APS and its professionals is appropriate and in the best interests of the Debtors and their estates and creditors. Motion Practice 30. This Application includes citations to the applicable rules and statutory authorities upon which the relief requested herein is predicated, and a discussion of their application to this
13 K&E 16966860 Application. Accordingly, the Debtors submit that this Application satisfies Local Bankruptcy Rule 9013-1(a). Waiver of Bankruptcy Rule 6004(a) and 6004(h) 31. To implement the foregoing successfully, the Debtors seek a waiver of the notice requirements under Rule 6004(a) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and the 14-day stay of an order authorizing the use, sale, or lease of a property under Bankruptcy Rule 6004(h). Notice 32. The Debtors have provided notice of this Motion to: (a) the Office of the United States Trustee for the Southern District of New York; (b) the entities listed on the Consolidated List of Creditors Holding the 50 Largest Unsecured Claims; (c) the Debtors prepetition secured lenders or, if known, their counsel; (d) counsel to the agent for the Debtors proposed postpetition secured lenders; (e) counsel to Apollo Investment Corporation; (f) the parties to the Debtors franchise agreements or, if known, their counsel; (g) the attorneys general for each of the States in which any of the Debtors conduct a substantial amount of its business operations; (h) the Internal Revenue Service; and (i) those parties who have formally filed a request for notice in the Chapter 11 Cases pursuant to Bankruptcy Rule 2002. No Prior Request 33. No prior request for the relief sought in this Application has been made to this or any other court. WHEREFORE, the Debtors respectfully request that the Court enter an order, substantially in the form attached hereto as Exhibit A, granting the relief requested herein and granting such other relief as is just and proper. New York, New York Dated: , 2010 J u l y
1 9
K&E 16966860 EXHIBIT A Proposed Order
K&E 16966860 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) INNKEEPERS USA TRUST, et al., 1 ) Case No. 10-__________(___) ) ) Debtors. ) Joint Administration Requested ) ORDER AUTHORIZING THE DEBTORS TO RETAIN AND EMPLOY AP SERVICES, LLC AND DESIGNATING NATHAN J. COOK AS INTERIM CHIEF FINANCIAL OFFICER NUNC PRO TUNC TO THE PETITION DATE 1
1 The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtors federal tax identification number, are: GP AC Sublessee LLC (5992); Grand Prix Addison (RI) LLC (3740); Grand Prix Addison (SS) LLC (3656); Grand Prix Albany LLC (3654); Grand Prix Altamonte LLC (3653); Grand Prix Anaheim Orange Lessee LLC (5925); Grand Prix Arlington LLC (3651); Grand Prix Atlanta (Peachtree Corners) LLC (3650); Grand Prix Atlanta LLC (3649); Grand Prix Atlantic City LLC (3648); Grand Prix Bellevue LLC (3645); Grand Prix Belmont LLC (3643); Grand Prix Binghamton LLC (3642); Grand Prix Bothell LLC (3641); Grand Prix Bulfinch LLC (3639); Grand Prix Campbell / San Jose LLC (3638); Grand Prix Cherry Hill LLC (3634); Grand Prix Chicago LLC (3633); Grand Prix Columbia LLC (3631); Grand Prix Denver LLC (3630); Grand Prix East Lansing LLC (3741); Grand Prix El Segundo LLC (3707); Grand Prix Englewood / Denver South LLC (3701); Grand Prix Fixed Lessee LLC (9979); Grand Prix Floating Lessee LLC (4290); Grand Prix Fremont LLC (3703); Grand Prix Ft. Lauderdale LLC (3705); Grand Prix Ft. Wayne LLC (3704); Grand Prix Gaithersburg LLC (3709); Grand Prix General Lessee LLC (9182); Grand Prix Germantown LLC (3711); Grand Prix Grand Rapids LLC (3713); Grand Prix Harrisburg LLC (3716); Grand Prix Holdings LLC (9317); Grand Prix Horsham LLC (3728); Grand Prix IHM, Inc. (7254); Grand Prix Indianapolis LLC (3719); Grand Prix Islandia LLC (3720); Grand Prix Las Colinas LLC (3722); Grand Prix Lexington LLC (3725); Grand Prix Livonia LLC (3730); Grand Prix Lombard LLC (3696); Grand Prix Louisville (RI) LLC (3700); Grand Prix Lynnwood LLC (3702); Grand Prix Mezz Borrower Fixed, LLC (0252); Grand Prix Mezz Borrower Floating, LLC (5924); Grand Prix Mezz Borrower Floating 2, LLC (9972); Grand Prix Mezz Borrower Term LLC (4285); Grand Prix Montvale LLC (3706); Grand Prix Morristown LLC (3738); Grand Prix Mountain View LLC (3737); Grand Prix Mt. Laurel LLC (3735); Grand Prix Naples LLC (3734); Grand Prix Ontario Lessee LLC (9976); Grand Prix Ontario LLC (3733); Grand Prix Portland LLC (3732); Grand Prix Richmond (Northwest) LLC (3731); Grand Prix Richmond LLC (3729); Grand Prix RIGG Lessee LLC (4960); Grand Prix RIMV Lessee LLC (4287); Grand Prix Rockville LLC (2496); Grand Prix Saddle River LLC (3726); Grand Prix San Jose LLC (3724); Grand Prix San Mateo LLC (3723); Grand Prix Schaumburg LLC (3721); Grand Prix Shelton LLC (3718); Grand Prix Sili I LLC (3714); Grand Prix Sili II LLC (3712); Grand Prix Term Lessee LLC (9180); Grand Prix Troy (Central) LLC (9061); Grand Prix Troy (SE) LLC (9062); Grand Prix Tukwila LLC (9063); Grand Prix West Palm Beach LLC (9065); Grand Prix Westchester LLC (3694); Grand Prix Willow Grove LLC (3697); Grand Prix Windsor LLC (3698); Grand Prix Woburn LLC (3699); Innkeepers Financial Corporation (0715); Innkeepers USA Limited Partnership (3956); Innkeepers USA Trust (3554); KPA HI Ontario LLC (6939); KPA HS Anaheim, LLC (0302); KPA Leaseco Holding Inc. (2887); KPA Leaseco, Inc. (7426); KPA RIGG, LLC (6706); KPA RIMV, LLC (6804); KPA San Antonio, LLC (1251); KPA Tysons Corner RI, LLC (1327); KPA Washington DC, LLC (1164); KPA/GP Ft. Walton LLC (3743); KPA/GP (continued on next page)
2 K&E 16966860 Upon the application (the Application) 2 of the Debtors, as debtors and debtors in possession (collectively, the Debtors), for the entry of an order (this Order) (a) authorizing the Debtors to retain and employ AP Services, LLC (APS) as crisis managers to the Debtors to provide interim management and restructuring services and (b) designating Nathan Cook as interim Chief Financial Officer (CFO) to the Debtors nunc pro tunc to the Petition Date, all as more fully set forth in the Application and the Engagement Letter; and upon the First Day Declaration and the Cook Declaration; and the Court having found that the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); and the Court having found that venue of this proceeding and the Application in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and the Court having found that the relief requested in the Application is in the best interests of the Debtors estates, their creditors, and other parties in interest; and the Debtors having provided appropriate notice of the Application and the opportunity for a hearing on the Application under the circumstances; and the Court having reviewed the Application and having heard the statements in support of the relief requested therein before the Court (the Hearing); and the Court having determined that the legal and factual bases set forth in the Application and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. The Application is granted to the extent provided herein.
Louisville (HI) LLC (3744); KPA/GP Valencia LLC (9816). The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480. 2 All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Application.
3 K&E 16966860 2. The Debtors are authorized, nunc pro tunc to the Petition Date, to (a) retain and employ APS on the terms set forth in the Engagement Letter as modified by this Order and (b) designate Cook as Interim Chief Financial Officer for the Debtors. 3. In a manner consistent with the Application, the Engagement Letter, and the Cook Declaration: a) Cook may serve as Debtors Interim Chief Financial Officer, as provided in the Engagement Letter; b) APS may render crisis management services to the Debtors; and c) APS may provide Temporary Employees to the Debtors to assist the Debtors in their restructuring efforts. d) Working collaboratively with the Debtors senior management team, Boards of Trustee, Directors, Managers and the Debtors other advisors, Cook and APS may assist the Debtors in evaluating and implementing strategic and tactical alternatives through the restructuring process
4. APS and its personnel shall be required to: (a) maintain contemporaneous time records in tenth of an hour increments; and (b) conform to any schedule of hourly rates contained in the Engagement Letter. 5. APS is not required to submit fee applications pursuant to sections 330 and 331 of the Bankruptcy Code, but will instead submit monthly invoices to the Debtors, and the Debtors are hereby authorized to pay, in the ordinary course of its business, all reasonable amounts invoiced by APS for fees and expenses. 6. APS shall submit to the Court, with copies to the U.S. Trustee and all official committees contemporaneously with such filing, quarterly reports of compensation earned, and parties-in-interest in these Chapter 11 Cases shall have the right to object to fees paid and expenses reimbursed to APS within 20 days after APS files such reports.
4 K&E 16966860 7. APS shall file with the Court (and serve copies to the U.S. Trustee and all official committees contemporaneously with such filing) a report on staffing on the engagement for the previous month. Such report shall include the names and functions filled of the individuals assigned. All staffing shall be subject to review by the Court in the event that an objection is filed. 8. Notwithstanding anything in the Application, the Cook Declaration, or the Engagement Letter, the Debtors shall only indemnify those APS employees serving as executive officers of the Debtors on the same terms as provided to the Debtors other officers and directors under the Debtors by-laws and applicable state law, along with insurance coverage under the Debtors directors and officers insurance policies, and the indemnification provisions of the Engagement Letter shall not apply to APS. 9. To the extent that there may be any inconsistency between the terms of the Application, the Engagement Letter, or this Order, the terms of this Order shall govern. 10. Notice of the Application as provided therein shall be deemed good and sufficient notice. 11. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 12. All time periods set forth in this Order shall be calculated in accordance with Bankruptcy Rule 9006(a). 13. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Application.
5 K&E 16966860 14. The Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order.
New York, New York Date: __________ 2010 United States Bankruptcy Judge
K&E 16966860 EXHIBIT B Declaration of Nathan Cook
1 K&E 16966860 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) INNKEEPERS USA TRUST, et al., 1 ) Case No. 10-__________(___) ) ) Debtors. ) Joint Administration Requested ) DECLARATION OF NATHAN J. COOK IN SUPPORT OF THE DEBTORS APPLICATION FOR THE ENTRY OF AN ORDER AUTHORIZING AND APPROVING THE RETENTION AND EMPLOYMENT OF AP SERVICES, LLC AND DESIGNATE NATHAN J. COOK AS INTERIM CHIEF FINANCIAL OFFICER TO THE DEBTORS NUNC PRO TUNC TO THE PETITION DATE 1
1 The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtors federal tax identification number, are: GP AC Sublessee LLC (5992); Grand Prix Addison (RI) LLC (3740); Grand Prix Addison (SS) LLC (3656); Grand Prix Albany LLC (3654); Grand Prix Altamonte LLC (3653); Grand Prix Anaheim Orange Lessee LLC (5925); Grand Prix Arlington LLC (3651); Grand Prix Atlanta (Peachtree Corners) LLC (3650); Grand Prix Atlanta LLC (3649); Grand Prix Atlantic City LLC (3648); Grand Prix Bellevue LLC (3645); Grand Prix Belmont LLC (3643); Grand Prix Binghamton LLC (3642); Grand Prix Bothell LLC (3641); Grand Prix Bulfinch LLC (3639); Grand Prix Campbell / San Jose LLC (3638); Grand Prix Cherry Hill LLC (3634); Grand Prix Chicago LLC (3633); Grand Prix Columbia LLC (3631); Grand Prix Denver LLC (3630); Grand Prix East Lansing LLC (3741); Grand Prix El Segundo LLC (3707); Grand Prix Englewood / Denver South LLC (3701); Grand Prix Fixed Lessee LLC (9979); Grand Prix Floating Lessee LLC (4290); Grand Prix Fremont LLC (3703); Grand Prix Ft. Lauderdale LLC (3705); Grand Prix Ft. Wayne LLC (3704); Grand Prix Gaithersburg LLC (3709); Grand Prix General Lessee LLC (9182); Grand Prix Germantown LLC (3711); Grand Prix Grand Rapids LLC (3713); Grand Prix Harrisburg LLC (3716); Grand Prix Holdings LLC (9317); Grand Prix Horsham LLC (3728); Grand Prix IHM, Inc. (7254); Grand Prix Indianapolis LLC (3719); Grand Prix Islandia LLC (3720); Grand Prix Las Colinas LLC (3722); Grand Prix Lexington LLC (3725); Grand Prix Livonia LLC (3730); Grand Prix Lombard LLC (3696); Grand Prix Louisville (RI) LLC (3700); Grand Prix Lynnwood LLC (3702); Grand Prix Mezz Borrower Fixed, LLC (0252); Grand Prix Mezz Borrower Floating, LLC (5924); Grand Prix Mezz Borrower Floating 2, LLC (9972); Grand Prix Mezz Borrower Term LLC (4285); Grand Prix Montvale LLC (3706); Grand Prix Morristown LLC (3738); Grand Prix Mountain View LLC (3737); Grand Prix Mt. Laurel LLC (3735); Grand Prix Naples LLC (3734); Grand Prix Ontario Lessee LLC (9976); Grand Prix Ontario LLC (3733); Grand Prix Portland LLC (3732); Grand Prix Richmond (Northwest) LLC (3731); Grand Prix Richmond LLC (3729); Grand Prix RIGG Lessee LLC (4960); Grand Prix RIMV Lessee LLC (4287); Grand Prix Rockville LLC (2496); Grand Prix Saddle River LLC (3726); Grand Prix San Jose LLC (3724); Grand Prix San Mateo LLC (3723); Grand Prix Schaumburg LLC (3721); Grand Prix Shelton LLC (3718); Grand Prix Sili I LLC (3714); Grand Prix Sili II LLC (3712); Grand Prix Term Lessee LLC (9180); Grand Prix Troy (Central) LLC (9061); Grand Prix Troy (SE) LLC (9062); Grand Prix Tukwila LLC (9063); Grand Prix West Palm Beach LLC (9065); Grand Prix Westchester LLC (3694); Grand Prix Willow Grove LLC (3697); Grand Prix Windsor LLC (3698); Grand Prix Woburn LLC (3699); Innkeepers Financial Corporation (0715); Innkeepers USA Limited Partnership (3956); Innkeepers USA Trust (3554); KPA HI (continued on next page)
2 K&E 16966860 Nathan Cook makes this Declaration pursuant to 28 U.S.C. 1746, and states: 1. I am a Managing Director of AlixPartners, LLP (AlixPartners) and I am associated with AP Services, LLC (APS), which maintains offices at 2000 Town Center, Suite 2400, Southfield, Michigan 48075. APS specializes in, among other things, supplying senior executives on an interim basis to financially troubled companies. APS and its subsidiary affiliates (herein, collectively, APS) are internationally recognized restructuring and turnaround advisory and consulting firms. I submit this declaration in support of the application (the Application), dated July 17, 2010, of Innkeepers USA Trust and certain of its subsidiaries and affiliates, as debtors and debtors in possession (the Debtors), pursuant to 11 U.S.C. 363 to employ APS as crisis managers to the Debtors, nunc pro tunc to the Petition Date. 2
2. Except as otherwise noted, I have personal knowledge of the matters set forth herein and, if called as a witness, I would testify competently thereto. 3
3. In connection with this proposed retention, APS searched its client database to determine whether they had any relationships with the entities listed on Schedule 1 hereto (collectively, the Potential Parties in Interest). In addition, APS sent a firm-wide e-mail to all of its professionals requesting information on potential relationships.
Ontario LLC (6939); KPA HS Anaheim, LLC (0302); KPA Leaseco Holding Inc. (2887); KPA Leaseco, Inc. (7426); KPA RIGG, LLC (6706); KPA RIMV, LLC (6804); KPA San Antonio, LLC (1251); KPA Tysons Corner RI, LLC (1327); KPA Washington DC, LLC (1164); KPA/GP Ft. Walton LLC (3743); KPA/GP Louisville (HI) LLC (3744); KPA/GP Valencia LLC (9816). The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480. 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Application. 3 Certain of the disclosures herein relate to matters within the knowledge of other professionals at AlixPartners and are based on information provided by them.
3 K&E 16966860 4. Based on that review, APS represents that to the best of its knowledge, APS knows of no fact or situation that would represent a conflict of interest for APS with regard to the Debtors. APS, however, wishes to disclose the connections to the Potential Parties in Interest as set forth below. H&F Astro LLC and Hellman & Friedman Capital Associates V, LLC (H&F Capital), two private equity investment vehicles managed by Hellman & Friedman LLC (H&F LLC, and collectively with H&F Astro LLC and H&F Capital, H&F) own a controlling stake in AlixPartners, LLP. No material nonpublic information about the Debtors has been furnished by AlixPartners to H&F. AlixPartners conflict checking system has searched the names of each managing director of H&F LLC and each portfolio company of H&F LLC (the H&F Conflict Parties) against the list of Potential Parties in Interest, and AlixPartners has determined to the best of its knowledge that there are no resulting disclosures other than as noted herein. The term portfolio company means any business in which H&F has a direct controlling or minority interest. The term portfolio company does not include indirect investments such as businesses owned or investments made by an H&F portfolio company. H&F invests primarily in equity-related investments. However, H&F, its members, affiliated fund entities or affiliates (collectively, the H&F Entities) may have had, currently have or may in the future have business relationships or connections with the Debtor or other Potential Parties in Interest in matters related to or unrelated to the Debtor or their affiliates or these chapter 11 cases. AlixPartners operates independently of the H&F Entities, and does not share common employees or officers, except that certain H&F LLC managing directors or employees are on the Board of Directors of AlixPartners. AlixPartners financial performance is not impacted by the success or failure of the H&F Entities. Accordingly, AlixPartners has not undertaken to determine the existence, nature and/or full scope of any business relationships or connections that the H&F Entities may have with the Potential Parties in Interest, the Debtor and their affiliates or these chapter 11 cases, other than with respect to the H&F Conflict Parties. AlixPartners believes it continues to be disinterested and does not hold or represent an interest adverse to the estate with respect to the engagement, regardless of any direct or indirect relationship to or connection any of the H&F Entities may have with the Debtors. ADP Inc., (ADP), a vendor to the Debtors, is a bondholder and vendor to current and former AlixPartners clients in matters unrelated to the Debtors. ADP is a vendor to AlixPartners in matters unrelated to the Debtors. Aetna Health Management LLC and Aetna - Middleton (collectively, Aetna), vendors to the Debtors, and affiliates, are lenders, executory contract counterparties and bondholders to current and former AlixPartners clients in
4 K&E 16966860 matters unrelated to the Debtors. Aetna is the previous employer of a current AlixPartners employee. AIG Casualty Co., and AIG Excess Liability Insurance Co. Ltd. (collectively, AIG), letter of credit providers to the Debtors, are affiliated with entities that are limited partners, litigation counterparties, adverse parties, lenders and bondholders to current and former AlixPartners clients in matters unrelated to the Debtors. AIG is a current and former AlixPartners client in matters unrelated to the Debtors. AIG has provided various types of insurance to AlixPartners in matters unrelated to the Debtors. American Express, a vendor to the Debtors, is a vendor to AlixPartners as well as a lender, bondholder, creditor and vendor to current and former AlixPartners clients in matters unrelated to the Debtors. American Express is a member of a creditors committee that was a former AlixPartners client in matters unrelated to the Debtors. American Express is a former AlixPartners client in matters unrelated to the Debtors. American Home Assurance Co., a letter of credit provider to the Debtors, is a limited partner to a current AlixPartners client in matters unrelated to the Debtors. In addition, American Home Assurance is a shareholder, insurance provider, co-plaintiff, executory contract counterparty, creditor and adverse party to current and former AlixPartners clients in matters unrelated to the Debtors. AON Risk Services Northeast (AON), a vendor to the Debtors, is affiliated with an entity that is a vendor to AlixPartners in matters unrelated to the Debtors. AON is a current and former AlixPartners client in matters unrelated to the Debtors. Apollo Investment Corp., (Apollo), a letter of credit and equityholder to the Debtors, and a Debtor affiliate, is a lender and bondholder to current AlixPartners clients in matters unrelated to the Debtors. Apollo is the parent of a current AlixPartners client in matters unrelated to the Debtors. AT&T Wi-Fi Services (AT&T), a vendor to the Debtors, is affiliated with entities that are creditors, executory contract counterparties, vendors, lenders and shareholders to current and former AlixPartners clients in matters unrelated to the Debtors. An affiliate of AT&T is a former AlixPartners client in matters unrelated to the Debtors. AT&T is a vendor to AlixPartners in matters unrelated to the Debtors. BellSouth Wireless Data LP, a contract counterparty to the Debtors, is affiliated with BellSouth, a former AlixPartners client in matters unrelated to the Debtors. Brunswick Corporation, a contract counterparty to the Debtors, is a professional in interest and customer to current and former AlixPartners clients in matters
5 K&E 16966860 unrelated to the Debtors. Brunswick Corporation is a former AlixPartners client in matters unrelated to the Debtors. Cigna Healthcare (Cigna), a vendor to the Debtors, and affiliated entities are adverse parties and bondholders to current and former AlixPartners clients in matters unrelated to the Debtors. Cigna is a former AlixPartners client and a vendor to AlixPartners, all in matters unrelated to the Debtors. Cintas Corp., a vendor to the Debtors, is the previous employer of a current AlixPartners employee. CIT Group / Commercial Services Inc., a contract counterparty to the Debtors, and affiliated entities are lenders, creditors, executory contract counterparties and lessors to current and former AlixPartners clients in matters unrelated to the Debtors. The CIT Group is the previous employer of a current AlixPartners employee. Citibank SAMP, (Citi), a vendor to the Debtors, and affiliated entities are creditors, lenders, bondholders, shareholders, adverse parties, professionals in interest and lessors to current and former AlixPartners clients in matters unrelated to the Debtors. In addition, an affiliate, Citigroup, is a related party to a current AlixPartners client in matters unrelated to the Debtors. Citi is a current and former AlixPartners clients in matters unrelated to the Debtors. City of Mountain View, CA, a utility and vendor to the Debtors, is a former AlixPartners client in matter unrelated to the Debtors. Disneyland Resort Ticket Services (Disney), a vendor to the Debtors, and affiliated entities are customers, vendors, adverse parties, co-plaintiffs and creditors to current and former AlixPartners clients in matters unrelated to the Debtors. Disney affiliated entities are current and former AlixPartners clients in matters unrelated to the Debtors. DTE Energy, (DTE), a utility provider to the Debtors, is the previous employer of a current AlixPartners employee. DTE is an executory contract counterparty to a former AlixPartners client in matters unrelated to the Debtors. Exel Transportation Services, a contract counterparty to the Debtors, is a former AlixPartners client in matters unrelated to the Debtors. Federal Express (FedEx), a vendor to the Debtors, is an adverse party, vendor and creditor to current and former AlixPartners clients in matters unrelated to the Debtors. FedEx is a vendor to AlixPartners. FedEx is a current AlixPartners client in matters unrelated to the Debtors. An affiliate of FedEx is a former AlixPartners client in matters unrelated to the Debtors. FPL, a utility provider to the Debtors, is affiliated with FPL Energy Pecos, a
6 K&E 16966860 co-defendant to a former AlixPartners client in matters unrelated to the Debtors. An affiliate, FPL Energy LLC, is an adverse party to a current AlixPartners client in matters unrelated to the Debtors. An affiliate, FPL Group, is a director affiliated company to a current AlixPartners client in matters unrelated to the Debtors. GMAC Commercial Mortgage Bank and GMAC Commercial Mortgage Corp., (collectively, GMAC), lenders to the Debtors, are former AlixPartners clients in matters unrelated to the Debtors. GMAC is an adverse party, creditor and lender to current and former AlixPartners clients in matters unrelated to the Debtors. GMAC is the previous employer of a current AlixPartners employee. Illinois National Insurance Co., (INI), a letter of credit provider to the Debtors, is affiliated with entities that are limited partners, litigation counterparties, adverse parties, lenders and bondholders to current and former AlixPartners clients in matters unrelated to the Debtors. INI is affiliated with entities that are current and former AlixPartners clients in matters unrelated to the Debtors. INI affiliated entities have provided various types of insurance to AlixPartners in matters unrelated to the Debtors. J.P. Morgan Chase Bank, N.A., (JPM), a letter of credit provider to the Debtors, is affiliated with entities that are lenders, shareholders, vendors, bondholders and creditors to current and former AlixPartners clients in matters unrelated to the Debtors. JPM is a current and former AlixPartners client in matters unrelated to the Debtors. JPM affiliated entities previously employed several current AlixPartners employees. Kaiser Foundation Health, a vendor to the Debtors, is a former AlixPartners client in matters unrelated to the Debtors. Kaiser Foundation Health is a creditor to a former AlixPartners client in matters unrelated to the Debtors. Kirkland & Ellis LLP, a vendor to the Debtors, is counsel, adverse counsel and professional in interest to current and former AlixPartners clients in matters unrelated to the Debtors. Kirkland & Ellis is a current and former AlixPartners client in matters unrelated to the Debtors. AlixPartners is a client of Kirkland & Ellis in matters unrelated to the Debtors. LaSalle Bank, N.A. (LaSalle Bank), a lender to the Debtors, is a member of a bank group for which AlixPartners performed services in matters unrelated to the Debtors. LaSalle Bank is a related party to a current AlixPartners client in matters unrelated to the Debtors. LaSalle Bank and affiliated entities are lenders, bondholders, executory contract counterparties, collateral agents for vendors, creditors and lessors to current and former AlixPartners clients in matters unrelated to the Debtors. AlixPartners is a customer of LaSalle Bank. The parent of LaSalle Bank, ABN Amro, provides banking services to AlixPartners and is a current and former AlixPartners client in matters unrelated to the Debtors.
7 K&E 16966860 Lehman ALI Inc., (Lehman), a lender and debtholder to the Debtors, is affiliated to entities that are bondholders, shareholders and lenders to current and former AlixPartners clients in matters unrelated to the Debtors. Lehman and affiliated entities are current and former AlixPartners clients in matters unrelated to the Debtors. An affiliate, Lehman Brothers, previously employed a current AlixPartners employee and provided investment banking services to AlixPartners and affiliated entities. LG Electronics USA Inc., (LG), a vendor to the Debtors, is a former AlixPartners client in matters unrelated to the Debtors. LG is a vendor and significant shareholder to current and former AlixPartners clients in matters unrelated to the Debtors. Marriott International, a vendor and contract counterparty to the Debtors, is affiliated with several entities which are vendors to AlixPartners as well as creditors, vendors and customers to former AlixPartners clients in matters unrelated to the Debtors. Merrill Lynch Mortgage Lending Inc., (Merrill Lynch), a lender to the Debtors, is affiliated with entities that are current and former clients of AlixPartners, as well as lenders, bondholders, shareholders, limited partners, adverse parties and professionals in interest to current and former AlixPartners clients in matters unrelated to the Debtors. Merrill Lynch is a current AlixPartners client in matters unrelated to the Debtors. Merrill Lynch is the previous employer of current AlixPartners employees. National Union Fire Insurance Company of Pittsburg, PA (NUFIC), a letter of credit provider to the Debtors, is affiliated with entities that are limited partners, litigation counterparties, adverse parties, lenders and bondholders to current and former AlixPartners clients in matters unrelated to the Debtors. Office Depot, a vendor to the Debtors, is a former AlixPartners client in matters unrelated to the Debtors. An affiliate, Office Depot Credit Plan, is a vendor to a former AlixPartners client in matters unrelated to the Debtors. Pacific Gas & Electric (PG&E), a utility provider to the Debtors, is an executory contract counterparty, adverse party and creditor to current and former AlixPartners clients in matters unrelated to the Debtors. In addition, PG&E was a member of the creditors committee to a former AlixPartners client in matters unrelated to the Debtors. Peco Energy, a utility provider to the Debtors, is a former AlixPartners client in matters unrelated to the Debtors. Peco Energy is a vendor to current and former AlixPartners clients in matters unrelated to the Debtors. PricewaterhouseCoopers LLP (PWC), a professional in interest and vendor in this bankruptcy matter, is a professional in interest, opposing counsel and creditor
8 K&E 16966860 to current and former AlixPartners clients in matters unrelated to the Debtors. PWC is the auditor for AlixPartners and provides audit, tax and related consulting services. PWC is a former AlixPartners client in matters unrelated to the Debtors. PWC is the previous employer of a number of current AlixPartners employees. AlixPartners provides services to PWC in the ordinary course in matters unrelated to the Debtors. Sempra Energy, a utility provider to the Debtors, is a vendor, joint venture party and executory contract counterparty to current and former AlixPartners clients in matters unrelated to the Debtors. Skadden, Arps, Slate, Meagher & Flom, a professional in interest and vendor in this bankruptcy matter, is a professional in interest and client counsel to current and former AlixPartners clients in matters unrelated to the Debtors. Skadden, Arps, Slate, Meagher & Flom, is a current and former AlixPartners client in matters unrelated to the Debtors. Southern California Edison, a utility provider to the Debtors, is a joint venture entity of a current AlixPartners client in matters unrelated to the Debtors. Southern California Edison is an insurance provider and creditor to former AlixPartners clients in matters unrelated to the Debtors. ThyssenKrupp Elevator Co. (ThyssenKrupp) a contract counterparty to the Debtors, is affiliated to an entity that is a former AlixPartners client in matters unrelated to the Debtors. ThyssenKrupp affiliated entities are executory contract counterparties, creditors and vendors to current and former AlixPartners clients in matters unrelated to the Debtors. U.S. Bank National Association (U.S. Bank), a lender to the Debtors, is a lender, creditor, indenture trustee and bondholder to current and former AlixPartners clients in matters unrelated to the Debtors. U.S. Bank is a client related party to a current AlixPartners client in matters unrelated to the Debtors. US Foodservice, US Foodservice - Altamonte Springs, US Foodservice - Atlanta Downtown, US Foodservice - Atlantic City, US Foodservice Belmont, US Foodservice - Cherry Hill, US Foodservice - El Segundo, US Foodservice Fremont, US Foodservice - Ft. Lauderdale, US Foodservice Gaithersburg, US Foodservice - Garden Grove, US Foodservice Harrisburg, US Foodservice Islandia, US Foodservice Manassas, US Foodservice Montvale, US Foodservice - Mount Laurel, US Foodservice - Mountain View, US Foodservice - Richmond NW, US Foodservice Rosemont, US Foodservice - Saddle River, US Foodservice - San Jose South, US Foodservice - San Mateo, US Foodservice - Sili I, US Foodservice - Sili II and US Foodservice - Tysons Corner (collectively, US Foodservice), vendors to the Debtors, are affiliated with an entity that was a former AlixPartners client in matters unrelated to the Debtors. US Foodservice is a vendor, related party and
9 K&E 16966860 creditor to current and former AlixPartners clients in matters unrelated to the Debtors. US Foodservice is the previous employer of a current AlixPartners employee. Wachovia Bank NA (Wachovia), a lender to the Debtors, and affiliated entities, are lenders, bondholders, creditors, adverse parties, co-defendants and professionals in interest to current and former AlixPartners clients in matters unrelated to the Debtors. Wachovia is a current and former AlixPartners client in matters unrelated to the Debtors. Wachovia is the previous employer of current AlixPartners employees. Waste Management, a vendor to the Debtors, is a creditor, adverse party and vendor to current and former AlixPartners clients in matters unrelated to the Debtors. Waste Management is a former AlixPartners client in matters unrelated to the Debtors. Wells Fargo Bank NA (Wells Fargo), a lender to the Debtors, is affiliated with entities that are lenders, creditors, lessors, bondholders, indenture trustees and vendors to current and former AlixPartners clients in matters unrelated to the Debtors. Wells Fargo is a related party to a current AlixPartners client and a vendor to AlixPartners, all in matters unrelated to the Debtors. Wells Fargo is a former AlixPartners client in matters unrelated to the Debtors. Zurich American Insurance Company (Zurich), a letter of credit provider to the Debtors, is a creditor, vendor, executory contract counterparty and adverse party to current and former AlixPartners clients in matters unrelated to the Debtors. Zurich is a former AlixPartners client and a vendor to AlixPartners in matters unrelated to the Debtors. 5. AlixPartners and APS are not employed by, and have not been employed by, any entity other than the Debtors in matters related to these Chapter 11 Cases. 6. From time to time, APS has provided services, and likely will continue to provide services, to certain creditors of the Debtors and various other parties adverse to the Debtors in matters wholly unrelated to these Chapter 11 Cases. As described herein, however, APS has undertaken a detailed search to determine, and to disclose, whether they are providing or have provided, services to any significant creditor, equity security holder, insider, or other party-in-interest in such unrelated matters. The conflicts check of the APS client database has
10 K&E 16966860 shown that APS has represented the entities described above in matters wholly unrelated to the Debtors. 7. APS received an initial retainer of $250,000 (the Retainer) on June 10, 2010 from the Debtors. Pursuant to the Engagement Letter, invoiced amounts have been recouped against the Retainer, and payments on the invoices have been used to replenish the Retainer. During the 90 days prior to the commencement of these Chapter 11 Cases, the Debtors paid APS a total of $478,733 incurred in providing services to the Debtors in contemplation of, and in connection with, prepetition restructuring activities. 8. Due to the ordinary course and unavoidable reconciliation of fees and submission of expenses immediately prior to, and subsequent to, the Petition Date, APS has incurred but not billed fees and reimbursable expenses totaling, which relate to the prepetition period. APS hereby seeks this Courts approval to apply the Retainer to these amounts and any further prepetition fees and expenses APS becomes aware of during its ordinary course billing review and reconciliation. Upon the proposed applications of the Retainer, the Debtors would not owe APS any sums for pre-petition services. 9. APS provides services in connection with numerous cases, proceedings, and transactions unrelated to these Chapter 11 Cases. These unrelated matters involve numerous attorneys, financial advisors, and creditors, some of which may be claimants or parties with actual or potential interests in these cases, or may represent such parties. 10. AlixPartners and/or APS personnel may have business associations with certain creditors of the Debtors unrelated to these Chapter 11 Cases. In addition, in the ordinary course of its business, AlixPartners and/or APS may engage counsel or other professionals in unrelated
11 K&E 16966860 matters who now represent, or who may in the future represent, creditors or other interested parties in these cases. 11. AlixPartners has approximately 800 employees. It is possible that certain employees of AlixPartners hold interests in mutual funds or other investment vehicles that may own the Debtors securities. AlixPartners policy prohibits employees from trading in the Debtors securities. 12. Certain individuals affiliated with APS may render crisis and interim management services to the Debtors on a part-time basis, while others have been and/or will continue to be engaged full-time. To the extent such individuals are employed on a part-time basis, APS submits that there are no simultaneous or prospective engagements existing which would constitute a conflict or adverse interest as to the matters for which it has been employed by the Debtors. 13. Despite the efforts described above to identify and disclose APSs connections with parties-in-interest in these Chatper 11 Cases, because the Debtors are a large enterprise with thousands of creditors and other relationships, APS is unable to state with certainty that every client relationship or other connection has been disclosed. In this regard, if APS discovers additional information that requires disclosure, APS will file a supplemental disclosure with the Court. 14. In accordance with section 504 of the Bankruptcy Code and Bankruptcy Rule 2016, neither I nor APS has entered into any agreements, express or implied, with any other party in interest, including the Debtors, any creditor, or any attorney for such party in interest in these Chapter 11 Cases.
12 K&E 16966860 15. APS reserves the right to supplement this Declaration in the event that APS discovers any facts bearing on matters described in this Declaration regarding APSs employment by the Debtors. Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true m d ~ Nathan J. Cook Executed this_ day of July, 2010 K&E 16966860 19
K&E 16966860 SCHEDULE 1 Potential Parties In Interest
K&E 16966860 DEBTORS AND AFFILIATES Apollo Investment Corp. Apollo Investment Corp. (Maryland BDC) Gencom Entity Genwood Raleigh Lessee LLC Genwood Raleigh LLC GP AC Sublessee LLC Grand Prix Acquisition Trust Grand Prix Addison (RI) LLC Grand Prix Addison (SS) LLC Grand Prix Albany LLC Grand Prix Altamonte LLC Grand Prix Anaheim Orange Lessee LLC Grand Prix Arlington LLC Grand Prix Atlanta (Peachtree Corners) LLC Grand Prix Atlanta LLC Grand Prix Atlantic City LLC Grand Prix Bellevue LLC Grand Prix Binghamton LLC Grand Prix Bothell LLC Grand Prix Bulfinch LLC Grand Prix Campbell / San Jose LLC Grand Prix Cherry Hill LLC Grand Prix Chicago LLC Grand Prix Columbia LLC Grand Prix Denver LLC Grand Prix East Lansing LLC Grand Prix El Segundo LLC Grand Prix Englewood Denver South LLC Grand Prix Fixed Lessee LLC Grand Prix Floating Lessee LLC Grand Prix Fremont LLC Grand Prix Ft. Lauderdale LLC Grand Prix Ft. Wayne LLC Grand Prix Gaithersburg LLC Grand Prix General Lessee LLC Grand Prix Germantown LLC Grand Prix Grand Rapids LLC Grand Prix Harrisburg LLC Grand Prix Holdings LLC Grand Prix Horsham LLC Grand Prix IHM Inc. Grand Prix Indianapolis LLC Grand Prix Islandia LLC Grand Prix Las Colinas LLC Grand Prix Lexington LLC
K&E 16966860 Grand Prix Livonia LLC Grand Prix Lombard LLC Grand Prix Louisville (RI) LLC Grand Prix Lynnwood LLC Grand Prix Mezz Borrower 2 Floating LLC Grand Prix Mezz Borrower Fixed LLC Grand Prix Mezz Borrower Floating 2 LLC Grand Prix Mezz Borrower Floating LLC Grand Prix Mezz Borrower Term LLC Grand Prix Montvale LLC Grand Prix Morristown LLC Grand Prix Mountain View LLC Grand Prix Mt. Laurel LLC Grand Prix Naples LLC Grand Prix Ontario Lessee LLC Grand Prix Ontario LLC Grand Prix Portland LLC Grand Prix Richmond (Northwest) LLC Grand Prix Richmond LLC Grand Prix RIGG Lessee LLC Grand Prix RIMV Lessee LLC Grand Prix Rockville LLC Grand Prix Saddle River LLC Grand Prix San Jose LLC Grand Prix San Mateo LLC Grand Prix Schaumburg LLC Grand Prix Shelton LLC Grand Prix Sili I LLC Grand Prix Sili II LLC Grand Prix Tallahasee LLC Grand Prix Term Lessee LLC Grand Prix Troy (Central) LLC Grand Prix Troy (SE) LLC Grand Prix Tukwila LLC Grand Prix West Palm Beach LLC Grand Prix Westchester LLC Grand Prix Wichita LLC Grand Prix Willow Grove LLC Grand Prix Windsor LLC Grand Prix Woburn LLC Innkeepers Financial Corp. (General Partner) Innkeepers Financial Corp. (Virginia Corp.) Innkeepers Hospitality Management Inc. Innkeepers USA LP Innkeepers USA Trust KPA HI Ontario LLC
K&E 16966860 KPA HS Anaheim LLC KPA Leaseco Holding Inc. KPA Leaseco Inc. KPA Raleigh Leaseco LLC KPA Raleigh LLC KPA RIGG LLC KPA RIMV LLC KPA San Antonio HS LLC KPA San Antonio LLC KPA Tysons Corner RI LLC KPA Washington DC DT LLC KPA Washington DC LLC KPA/GP Ft. Walton LLC KPA/GP Louisville (HI) LLC KPA/GP Valencia LLC
K&E 16966860 Current Officers
Craven, Dennis M. Fenton, Richard F. Martin, Bob Murphy, Mark A. Press, Rick Price, Linda K. Sack, Aaron Walker, Tim
K&E 16966860 LENDERS Capmark Bank Capmark Finance Inc. CWCapital Asset Management LLC GMAC Commercial Mortgage Bank GMAC Commercial Mortgage Corp. LaSalle Bank NA Merrill Lynch Mortgage Lending Inc. Lehman ALI Inc. LNR Partners Inc. Midland Loan Services Inc. National Consumer Cooperative Bank NCB FSB US Bank National Association Wachovia Bank NA Wells Fargo Bank NA
K&E 16966860 LETTERS OF CREDIT PARTIES AIG Casualty Co. AIG Excess Liability Insurance Co. Ltd. AIU Insurance Co. American Home Assurance Co. American International Pacific Insurance Co. American International South Insurance Co. American International Specialty Lines Insurance Co. Birmingham Fire Insurance Co. Commerce & Industry Insurance Co. Granite State Insurance Co. Illinois National Insurance Co. Insurance Company of The State of Pennsylvania, The Landmark Insurance Co. Lexington Insurance Co. National Union Fire Insurance Co. of Louisiana National Union Fire Insurance Co. of Pittsburgh PA New Hampshire Insurance Co. Apollo Investment Corp. JPMorgan Chase Bank NA Starr Excess Liability Insurance Co. Zurich American Insurance Co.
Apollo Investment Corp. Grand Prix Holdings LLC Walker, Timothy Murphy, Mark A. Craven, Dennis M.
K&E 16966860 CONTRACT COUNTERPARTIES
128 Motel Corp. A Action Plumbing A-1 Asphalt Care Inc. A-1 Fire Equipment Corp. Able Restoration Inc. Accurate Fire Protection Inc. ACQI Associates LP ACT Inc. Adrian Carr Caradine Design Inc. Advanced Asphalt Advantage Fitness Products AEF Hotel Furniture Finish AJ Monier & Co. Inc. Alexander's Mobility Services All American Waste LLC Anand Enterprises Inc. Arch Painting Inc. Art Horizons Framed Picture Enterprises Art Plumbing Co. Ashley Lighting Inc. Associated Builders Barker Construction Specialities Inc. Becht Given Service Experts Inc. Bell Plumbing & Heating Co. BellSouth Wireless Data LP Cingular Interactive LP RAM Mobile Data USA LP Berger Transfer & Storage Inc. Bernhardt Design Bernstein Group Inc. Best Western International Inc. Binswanger Glass Vitro America LLC Boudreau Plumbing & Heating Brintons Ltd. Brunswick Corp. Life Fitness California Industrial Case Handyman & Remodeing-Winter Park Cornerstone Restorations Inc. Castleman & Young Construction Inc. Chapel Valley Landscape Co. CIT Group/Commercial Services Inc.
K&E 16966860 Clayton Miller Hospitality Carpet Climacare Inc. Coast Sign Inc. CoCal Landscape Services Inc. Collective Design Associates LLC Contour Logistics Inc. Contract Purchasing & Design Inc. Corporate Furniture Service LLC Crews Landscape Management Inc. Cummings Development Corp. Cummings Inc., The International Sign Service Demartino Construction Co. DeMoss Painting Co. Depasquale Kelley & Co. Designtex Direct Service Co. DJ's Construction Inc. Down to Earth Communications Inc. D'style Inc. Eaton Irrigation Elite Heating & Air Conditioning Inc. Eric Ryan Corp. Exel Transportation Services Inc. Extreme Coatings Inc. Eykon Wallcovering Source FDR Construction Inc. Federal Heath Sign Co. LLC First Impressions Decorative Concrete Fisher, Jeffrey H. Flexsteel Industries Inc. Fortessa Inc. Friedrich Air Conditioning Co. FS Schardein & Sons Grand Prix Bullfinch Grand Rapids Chair Co. Granite Works 4U Inc. Graphic Systems Inc. Graybar Group 7 Design Inc. Harrington Bomanite Corp. HC Integrated Systems Inc. Hilton Ontario Airport Hospitality Sign Co. Intersign Corp. Howard D Johnson Co. I See Corp.
K&E 16966860 Indon International LLC Instrastructure Repair Service LLC Inter-Logic Design LLC Interstate Hotels & Resorts Island Hospitality Management Inc. Jean Enterprises JF Hotel III JMC Global John M Crawley LLC Joyce Enterprises of America Inc. Precise Interior Services International Inc. Precise Transportation Services Kaleidoscope Ltd. KE Braza Construction LLC Koala Inns Inc. KPA HI Ontario LLC KPA Leaseco Holding KPA/GP Valencia LLC KR Commercial Interiors Inc. Kraft Power Corp. Kustom Gifts L&L General Contractors Pool Man, The L&P Financial Services Landmark Art & Frame Inc. M Tucker Co. Inc. Magnus Construction Management Inc. Maharam Fabric Corp. Majestic Mirror & Frame Marina Pool Spa & Patio Marriott International Inc. Meritax LLC MR Smith & Co. National Wallcovering Inc. New York New Jersey Regional Joint Board, Local 96, Unite/Here NLP Furniture Industries Inc. Nuevo Sol Partners Inc. NYS Enterprises Inc. Omnipoint Holdings Inc. T-Mobile USA Inc. TMO CA/NV LLC Ontario Hotel Associates LLC Otis Elevator Co. Pacific Bell Wireless LLC Pacific Energy Service & Facilities Inc. Pacific Lamp & Supply Co.
K&E 16966860 Paradise Purchasing LLC Patel, Anand PhilMac Inc. Polk Mechanical Co. LLC Pool Man Inc. Precedence Inc. Quiltcraft Industries Inc. Radisson Plaza Hotel York Hannover (Greenwich) Inc. Raleigh-Durham MSA LP R-H Group Inc. Rising Signs Rockville Interiors & Fabrics Roof Consultants Inc. Salisbury & Moore Construction Inc. Schiller Hardware Scott Beck Construction Inc. Scott Lamp Co. Inc. Sealy Bedding Shaw Industries Inc. Shoreline Distributors South City Prime South City Prime Montvale LLC South West Texas Environmental Contractors Inc. Southern California Ventures Ltd. ST Electric Inc. Sta-Brite Services Ltd. Stan-Mar Building Maintenance Group LLC Steve Marks Contractors Studio 1200 LLC STX Inc. Surface Materials Inc. T Schiefer Contractors Inc. TBF Financial LLC TeleSpectrum Inc. TGI Office Automation LLC ThyssenKrupp Elevator Co. TMAD Taylor & Gaines Transworld Systems Inc. Total Audio-Visual Systems Inc. Triangle Renovations Unilight Ltd. United Food & Commercial Workers Union Local 371 Velocita Wireless LP Warner Construction Inc. Wells Industries
K&E 16966860 Western State Design Inc. Windy City Construction & Design
K&E 16966860 LIEN INSURER Platte River Insurance Co.
K&E 16966860 LIENS AND LITIGANTS
Ahern, Linda Alamo Crane Alcantara, Celeste Amalgamated National Health Fund, Trustees of the American HVAC Bautiza, Beatriz Brown, Kevin Bryan, Mary Commercial Floor Tech Inc. Copeland's of New Orleans Cortamilgia, Renee Costello, Diana Cristo, Kevin DaSilva, Domingo Denson, Jessica Devlin, Kathleen Dukes, Charlene Espiritu, Allan Garcia, Hilmer Garrettporter, Evelyn Global Restaurant Design Gonzalez-Vite, Jose Griffin, Remell ISS-TMC Services Inc. Keller, Margaret Koletowo, Kudi LaFollette, Delane F. Lakefront Supply Le Tel Communications Mayberry, Ronald Melgar, Maria Meserve, Rose Mobley, David Monroy, Alejandra Morales, Alejandro Morales, William NLP North Creek Maintenance District Association Nunez, Cecilia Oak Roofing Oak Roofing & Tuckpointing Inc. Oak Roofing Inc. O'Bannon, Patricia Onyx Sealcoating
K&E 16966860 Pacumio, Anthony PDI Pearson, Freya Perez, Maria Pineda, Natividad Powers, Bob Precise Richardson, Nita Ritchie, Bernie Rodriguez, Jacqueline Rodriquez, Jose Romero, Jhonathan J. Ron Aton Blacktop Inc Ross Court Plumbing Inc. Scheser, Michael Smalz, Eileen Summers, Linda Tobin & Sons Tyrczyn, Tom US Wall Dcor Williams, Fred Wing Millwork & Supply Wittman, Carol
K&E 16966860 UTILITIES
Addison, Town of (TX) Alameda County Water District (CA) Altamonte Springs, City of (FL) American Electric Power Amerigas Pompano Beach Aqua Pennsylvania Aquarion Water Co. of CT Arlington, City of (TX) Atlanta, City of (GA) Atlantic City Electric Pepco Atlantic City Municipal Utilities Authority (NJ) Atlantic City Sewerage Co., The Atmos Energy Bellevue, City of (WA) BGE Boston Water Bothell, City of (WA) Camden County Municipal Utilities Authority (NJ) Central Maine Power Co. New York State Electric & Gas Corp. Citizens Gas CL&P Columbia Gas of Kentucky Nipsco Consumers Energy CPS Energy DC Water & Sewer Authoritity Denver Water Dominion Virginia Power DTE Energy East Lansing, City of (MI) El Paso De Robles, City of (CA) El Segundo, City of (CA) Falls Church, City of (VA) Florida Public Utilities Co. Fort Lauderdale, City of (FL) Fort Wayne Utilities, City of (IN) Foster City, City of (CA) FPL Garden Grove, City of (CA) Gas Co., The SDG&E Sempra Energy
K&E 16966860 Gas South Georgia Power Co. Grand Rapids, City of (MI) Great Oaks Water Co. Gwinnett County Public Utilities (GA) Henrico, County of (VA) Horsham Water & Sewer Authority (PA) Howard County (MD) Indianapolis Power & Light Co. Indianapolis Water Irving Utility Billing, City of (TX) JCP&L Kentucky American Water New Jersey American Water Kentucky Utilities Company (KU) LG&E Lansing Board of Water & Light (MI) Latham Water District (NY) LIPA Livonia, City of (MI) Lombard, Village of (IL) Louisville Water Co. Lynnwood, City of (WA) Madison Heights, City of (MI) MDC - The Metropolitan District (CT) Mid Peninsula Water District (CA) MidAmerican Energy Co. Montvale, Borough of (NJ) Morristown, Town of (NJ) Mount Laurel Township Municipal Utilities Authority (NJ) Mountain View, City of (CA) Naples, City of (FL) National Grid Nicor Gas Nstar Electric Ontario, City of (CA) Orange, City of (CA) Peco Energy PG&E Portland Water District (ME) PPL Electric Utilities Corp. Progress Energy Florida Inc. Propane Gas Service Inc. PSE&G Co. Puget Sound Energy Reliant Energy
K&E 16966860 Richmond, City of (VA) Rockland Electric Co. Rosemont, Village of (IL) Rural Gas Co., The Saddle River, Borough of (NJ) San Antonio Water System (TX) San Diego City Treasurer, City of (CA) San Jose Water Co. Schaumburg, Village of (IL) Snohomish County Public Utility District (WA) South Jersey Gas Co. Southeast Morris County Municipal Utilities Authority (SMCMA) Southern California Edison Suburban Propane AR Center Suffolk County Water Authority (NY) Sunnyvale, City of (CA) Teco Peoples Gas Troy Water Department, City of (MI) Tukwila, City of (WA) UGI Utilities Inc. United Illuminating Co., The United Water New Jersey United Water Pennsylvania Unitil Upper Moreland Hatboro Joint Sewer Authority (PA) Valencia Water Co. Vestal, Town of (NY) Washington Gas Washington Suburban Sanitary Commission West Palm Beach, City of (FL) Westchester, Village of (IL) Woburn, City of (MA) Xcel Energy
K&E 16966860 VENDORS
Ace Parking Management Inc. Addison, Town of (TX) ADP Inc. Aetna - Middleton Aetna Health Management LLC AFCO Credit Corp. Alameda County Tax Collector (CA) Allen, Virginia E., as Town of Islip Tax Collector (NY) American Express American Hotel Register Co. Anaheim Transportation Network Aon Risk Services Northeast Inc. Arapahoe County Treasurer (CO) Archer & Greiner Arlington, City of (TX) Arthur J Gallagher of Texas Inc. Gallagher Bassett Services Inc. AS Hospitality Ashley Lighting Associated Builders At Your Service AT&T Wi-Fi Services Atlanta, City of (GA) Atlantic City, City of (NJ) Ayoub & Mansour LLC B&B Parking Inc. Baldor Specialty Foods Bankdirect Capital Finance LLC Bayscapes Beilinson, Marc Belmont, City of - Finance Division (CA) Ben E Keith Foods Benefactor Funding Corp. Tradavo Inc. Best Western International Inc. Bolton Construction LLC Boston, City of (MA) Brickman Group Ltd. Broome County Commissioner of Finance (NY) Broward County Revenue Collector (FL) Buffington, Lee, as San Mateo County Tax Collector (CA) Burkett's Pool Plastering Inc. Caler Donten & Levine PA California Franchise Tax Board
K&E 16966860 California Travel & Tourism Carson's Hospitality Cass Commercial Bank Castleman & Young Construction Inc. Cherry Hill Township (NJ) CIGNA Healthcare Cintas Corp. CitiBank SAMP Cohen Cooper Estep & Allen LLC Collier County Tax Collector (FL) Color Applications Inc. Comptroller of Public Accounts Contract Purchasing & Design Cook County Collector (IL) Cummings Development Dallas County (TX) Dallas County Tax Assessor-Collector (TX) Denver Manager of Revenue, City & County of (CO) Designer Tile & Stone LLC Dick, Robert F., as Dauphin County Treasurer (PA) Director of Finance Disneyland Resort Ticket Services DJ's Construction Drain Works Plumbing Service Du Page County Collector (IL) Ecolab Ecolab Pest Elimination El Segundo, City of (CA) Emax-Resource Technology Management Inc. Eric Ryan Corp. Fairfax, County of (VA) FDR Construction Inc. Featherstone Foods Inc. Federal Express Fibercare Fire & Oak Food Services of America Fort Lauderdale, City of (FL) Fremont, City of (CA) Fulton County Tax Commissioner Furniture Manufacturers Credit Association Gaithersburg, City of (MD) Galaxy Hotel Systems LLC Garden Grove, City of (CA) Global Restaurant Design Corp. Goldberg & Solovy Foods Inc.
K&E 16966860 Goodman &, Attorney Trust Account of Gordon Food Service - Troy Green Tree Packing Co. Inc. Greenwood Village, City of (CO) Guest Supply Inc. Gwinnett County Tax Commission Hamilton Meats & Provisions Inc. Hatboro-Horsham HD Supply Facilities Maintenance Henrico, County of (VA) Hilton Hotels Corp. Howard County Government (MD) iBAHN Imperial Premium Finance Inc. Indiana Department of Revenue Indon International Innkeepers USA Irving, City of (TX) Island Hospitality Management Jenkins Gales & Martinez JF Capital Advisors LLC JMC Global Johnson & Jordan Inc. Kaiser Foundation Health Kentucky State Treasurer Kentwood, City of (MI) King County Treasurer (WA) Kirkland & Ellis LLP Kleisner, Fred Klotz & McCann KPA San Antonio HS LLC KPA Tysons Corner RI LLC KPA Washington DC PT LLC KR Commercial Interiors Inc. LA Specialty Landmark Art & Frame Lane Associates Lanier Parking Solutions Lanier Valet Solutions Lexington Fayette County Government (KY) LG Electronics USA Inc. Life Fitness A Division of Brunswick Lina Livonia, City of (MI) Lodgenet Entertainment Corp. Lombard, Village of (IL)
K&E 16966860 LORLPC Los Angeles County Tax Collector (CA) Los Angeles, County of (CA) Louisville Jefferson County Me (KY) Madison Seafood Inc. Magnus Construction Management Inc. Maguire Properties-500 Orange Tower LLC Maines, Stanton Marion County Treasurer Marriott International Inc Marx Realty & Improvement Co. MDCVB-Assessment Meritax LLC Michigan Department of Treasury Michigan, State of Montgomery County (MD) Montvale Landscaping Inc. Montvale, Borough of (NJ) Morgan, Susan R., as Town of Vestal Receiver (NY) Morris, Township of (NJ) Morristown-TRS (NJ) Mount Laurel Township Municipal (NJ) Mountain View, City of (CA) MR Smith & Co. Multi-Systems Inc. New Jersey, State of - AC Tax NLP Furniture Industries Inc. Office Depot Office of The City Treasurer Okaloosa County Tax Collector (FL) Ontario,City of (CA) Orange, City of (CA) Orange, County of (CA) Otis Elevator Co. Otis Spunkmeyer Inc. Pacific Rim Mechanical PDQ Consulting Inc. Perot System Corp. Perrone Wine & Spirits Petty Cash - Hilton Ontario Petty Cash - Orange Grove Petty Cash - Rockville Philmac Inc. PHM Hospitality Presentation Services Price Meese Shulman
K&E 16966860 Price, Betsy, as Tarrant County Tax Assessor (TX) PricewaterhouseCoopers LLP Quiltcraft Quoizel Inc. R&R Marketing (Royal Division) Raeco Seasonal LLC Resource Technology Management Retzko's Landscaping Richard J Conte Attorney Trust Account Rockville, City of (MD) Romala Stone Inc. Ron Aton Blacktop Inc. Rosemont, Village of (IL) Royal Cup Dine-Mor RSA Realty Inc. Ruds Inc. Ruisi, Larry Saddle River, Borough of (NJ) Salisbury & Moore Construction LLC San Antonio, City of (TX) San Bernardino County Tax Collector (CA) San Diego County Treasurer Tax Collector (CA) San Jose Treasury, City of (CA) San Mateo, City of (CA) Santa Clara Tax Collector (CA) Santa Clarita, City of (CA) Schaumburg, Village of (IL) Schnitzer West LLC Scott Beck Construction Inc. Shamrock Foods Co. Shelton Tax Collector (CT) SimplexGrinnell LP Skadden Arps Slate Meagher & Flom LLP Springfield Corp. Studio 1200 LLC Sunnyvale Revenue, City of (CA) Sunset Parking Service Swank Audio Visuals LLC Swank Audio Visuals LLC Sysco Sysco - Baltimore Sysco - Louisville Sysco - San Antonio Sysco - San Diego Sysco - Valencia Sysco Food
K&E 16966860 Sysco Food Service Metro NY Sysco Food Services - Chicago Terminix Commercial Texas Sales Tax, State of Travel Click Inc. Triangle Renovations United Health Fund US Foodservice US Foodservice - Altamonte Springs US Foodservice - Atlanta Downtown US Foodservice - Atlantic City US Foodservice - Belmont US Foodservice - Cherry Hill US Foodservice - El Segundo US Foodservice - Fremont US Foodservice - Ft. Lauderdale US Foodservice - Gaithersburg US Foodservice - Garden Grove US Foodservice - Harrisburg US Foodservice - Islandia US Foodservice - Manassas US Foodservice - Montvale US Foodservice - Mount Laurel US Foodservice - Mountain View US Foodservice - Richmond Nw US Foodservice - Rosemont US Foodservice - Saddle River US Foodservice - San Jose South US Foodservice - San Mateo US Foodservice - Sili I US Foodservice - Sili II US Foodservice - Tysons Corner US Wall Decor USA Today Valdes, Ray, as Seminole County Tax Collector (FL) Van Dyke, Caleb Vestal Central School District Tax Collector (NY) Walter, Robert D., as Upper Moreland Township Tax Collector (PA) Warner Construction Inc. Washington Department, State of Waste Management West Central Produce Inc. Westchester, Village of (IL) Western State Design Inc. Windsor Industries Inc. Windsor, Town of (CT)
K&E 16966860 Worldwide Payment System SA Albany County Director of Finance (NY) LINA Life Insurance Co. of North America San Diego Office of The City Treasurer Texas Comptroller of Public Accounts
K&E 16966860 EXHIBIT C Engagement Letter APServiees u.c When it really n><Uters. June 5, 2010 Mark Murphy General Counsel Innkeepers USA Trust Chicago Dallas Detroit Los Angeles New York San Francisco Washington, DC 340 Royal Poinciana Way, Suite 306 Palm Beach, FL 33480-4094 Re: Agreement for the Provision of Interim Management Services Dear Mark: This letter, together with the attached Schedule(s), Exhibit and General Terms and Conditions, sets forth the agreement ("Agreement") between AP Services, LLC, a Michigan limited liability company ("APS"), and Innkeepers USA Trust ("Innkeepers" or the "Company") for the engagement of APS to provide certain temporary employees to the Company to assist it in its restructuring as described below. All defined terms shall have the meanings ascribed to them in this letter and in the attached Schedule(s), Exhibit and General Terms and Conditions. Generally, the engagement of APS, including any APS employees who serve in Executive Officer positions, shall be under the supervision of the Board of Trustees of the Company and the direct supervision of its Chief Executive Officer. OBJECTIVE AND TASKS APS will provide Nathan Cook to serve as the Company's Interim Chief Financial Officer ("CFO"), reporting to the Company's Chief Executive Officer. Working collaboratively with the senior management team, the Board of Trustees, other Company professionals and Island Hospitality (the Company's primary independent Hotel management company) personnel, Mr. Cook will assist the Company in evaluating and implementing strategic and tactical options through the restructuring process. In addition to the ordinary course duties of CFO, Mr. Cook's role will include working with the Company and its team to do the following: Lead the Company's financial and treasury functions. Develop and implement cash management strategies, tactics and processes. Prepare and monitor financial reports for internal and external use, in consultation with the Chief Executive Officer, Chief Restructuring Officer, General Counsel and other senior management. 2000 Town Center I Suite 2400 I Southfield, Ml 1 48075 I 248.358.4420 1 248.358.1969 fax 1 www.alixpartners.com APServiees LlC Wh<m it really nMtt!?r:s. Mark Murphy June 5, 20IO Page 2 of II Assist the Company in preparing for a Chapter II bankruptcy filing. Assist in communication and/or negotiation with outside constituents including the banks and their advisors, as appropriate. Have primary responsibility for the preparation (and, to the extent required, certification/attestation) of regular reports and information required by the Bankruptcy Court and to be provided to stakeholders, which are customarily issued by the Company's CFO, as well as providing assistance in such areas as testimony before the Bankruptcy Court on matters that are within APS' expertise. Serve as officers of subsidiaries as deemed necessary or advisable by the Company. Assist with such other matters as may be requested that fall within APS' expertise and that are mutually agreeable. STAFFING Nathan Cook will be the managing director responsible for the overall engagement. He may be assisted by Temporary Staff at various levels (as set forth on Exhibit A), subject to the terms and conditions of this Agreement, with the titles, pay rates and other descriptions set forth therein. The Temporary Staff may be assisted by or replaced by other professionals at various levels, as required, who shall also become Temporary Staff. APS will keep the Company informed as to APS' staffing and will not add additional Temporary Staff to the assignment without first consulting with the Company to obtain Company concurrence that such additional resource_s are required and do not duplicate the activities of other employees or professionals. APS will not replace Todd Brents without prior consultation with the Company. If APS finds it desirable to augment its professional staff with independent contractors (an "1/C") in this case, (i) APS will file, and require the 1/C to file, Bankruptcy Form 2014 affidavits indicating that the 1/C has reviewed the list of the interested parties in this case, disclosing the 1/C's relationships, if any, with the interested parties and indicating that the 1/C is disinterested; (ii) the 1/C must remain disinterested during the time that APS is involved in providing services on behalf of the Company; and (iii) the 1/C must represent that he/she will not work for the Company or other parties in interest in this case during the time APSis involved in providing services to the Company. APS' standard practice is to charge for an 1/C's services at the rate equal to the compensation provided by APS to such Independent Contractor.
. , >., --' . 't .I. __. ".tj LtC \'\>'hen it really I!Mitt:'r:s. Mark Murphy June 5, 2010 Page 3 of 11 TIMING, FEES AND RETAINER APS will commence this engagement on or about June 7, 2010 after receipt of a copy of the Agreement executed by the Company accompanied by the Retainer, as set forth on Schedule 1. Prior to accepting such officer role, AlixPartners also requires internal approval from its Risk Management Committee and confirmation that the Company has a Directors and Officers Liability insurance policy in effect for at least $5 million including coverage for the AlixPartners individual assuming the officer role. The Company shall compensate APS for its services, and reimburse APS for expenses, as set forth on Schedule 1. * * * In the event the Company seeks protection under the U.S. Bankruptcy Code, the Company will promptly apply to the Bankruptcy Court to obtain approval of APS' retention and Retainer nunc pro tunc to the date of filing. APS acknowledges that its retention and the terms thereof are subject to Court approval. If these terms meet with your approval, please sign and return the enclosed copy of the Agreement and wire transfer the amount to establish the Retainer. We look forward to working with you. Sincerely yours, AP SERVICES, LLC Nathan J. Cook APS('J'vieesLLC I'Vh<'n it rmlly n>alll'IS. Mark Murphy June 5, 2010 Page 4 of II Acknowledged and Agreed to: INNKEEPERS USA T ! ~ ~ ~ /l By: - - r v ~ ~ Its: v e Gc s s-{' Crl J.er- '1 I Dated: (p I ~ /1 0 AP Services, LLC Exhibit A Temporary Staff Individuals with Executive Officer Positions Name Description Monthly Commitment Rate Full or Part 1 Time Nathan J. Cook Interim Chief Financial Officer $100,000 Full Time Additional Temporary Staff Name Description Hourly Commitment Rate Full or Part 1 Time Todd Brents Bankruptcy Preparation Services $760 Available as Needed The parties agree that Exhibit A can be amended by APS from time to time to add or delete staff (other than Nathan Cook), and the Monthly Staffing Reports shall be treated by the parties as such amendments. 1 Part time is defined as approximately 2-3 days per week, with some weeks more or less depending on the needs and issues facing the Company at that time. Page 5 of II SCHEDULE 1 FEES AND EXPENSES 1. Fees: APS' fees will be based on the hours worked by APS personnel at APS' hourly rates, which are: Managing Directors $ 7I0-995 Directors $ 530-685 Vice Presidents $ 395-520 Associates $280-380 Analysts $245-270 Paraprofessionals $ I90-2IO APS reviews and revises its billing rates on January I of each year. 2. Success Fee: Typically AlixPartners is compensated for its efforts by the payment of base fees plus a success fee. AlixPartners and the Company have agreed not to have a success fee for this engagement. 3. Expenses: In addition to the fees set forth in this Schedule, the Company shall pay directly, or reimburse APS upon receipt of periodic billings, for all reasonable out- of-pocket expenses incurred in connection with this assignment, such as travel, lodging and meals, and an administrative fee of 2% of the fees to cover all other indirect administrative costs such as postage, courier, routine black and white copying, telephone, messenger and facsimile charges. The administrative fee will not be applicable in the event that the Company files for protection under Chapter II ofthe United States Bankruptcy Code. 4. Break Fee: APS does not seek a Break Fee in connection with this engagement. 5. Retainer: The Company shall pay APS a retainer of $250,000 to be applied against Fees and Expenses as set forth in this Schedule and in accordance with Section 2 of the attached General Terms and Conditions. Page 6 of II t \ ~ PS 1' ,.. .. k ( J \ lCCt; u.c Whtn it '"'11/y ma!tPt>. SCHEDULE2 DISCLOSURES APS has not completed a thorough check of the parties in interest with regard to the Company, as APS has not received the list of the parties in interest. However, as soon as practicable after beginning the engagement, APS will provide the Company with a listing of parties with which APS has current or prior relationships that may be related to the Company. APS will provide this so that the Company may assess the impact, if any, that the Company believes such relationships have. Page 7 of II AP SERVICES, LLC GENERAL TERMS AND CONDITIONS These General Terms and Conditions ("Terms") are incorporated into the Agreement between the Company and APS to which these Terms are attached. In case of conflict between the wording in the letter and/or schedule(s) and these Terms, the wording of the letter and/or schedule(s) shall prevail. Section I. Company Responsibilities. The Company will undertake responsibilities as set forth below: I. Provide reliable and accurate detailed information, materials, documentation and 2. Make decisions and take future actions, as the Company determines in its sole discretion, on any recommendations made by APS in connection with this Agreement. APS' delivery of the services and the fees charged are dependent on (i) the Company's timely and effective completion of its responsibilities; and (ii) timely decisions and approvals made by the Company's management. The Company shall be responsible for any delays, additional costs or other deficiencies caused by not completing its responsibilities. Section 2. Retainer, Billing and Payments. Retainer and Billing. APS will submit semi-monthly invoices for services rendered and expenses incurred and will offset such invoices against the Retainer. Unless explicitly stated in the invoice, all amounts invoiced are not contingent upon or in any way tied to the delivery of any reports or other work product in the future. Payment will be due upon receipt of the invoices to replenish the Retainer to the agreed-upon amount. Any unearned portion of the Retainer will be returned to the Company at the termination of the engagement. Payments. All payments to be made by the Company to APS shall be payable upon receipt of invoice via wire transfer to APS' bank account, as follows: Receiving Bank: Deutsche Bank ABA #021-001-033 Receiving Account: AP Services, LLC A/C #004-62643 Currency: USD Section 3. Relationship of the Parties. The parties intend that an independent contractor relationship will be created by the Agreement. As an independent contractor, APS will have complete and exclusive charge of the management and operation of its business, including hiring and paying the wages and other compensation of all its employees and agents, and paying all bills, expenses and other charges incurred or payable with respect to the operation of its business. Of course, neither the Temporary Staff nor APS will be entitled to receive from the Company any vacation pay, sick leave, retirement, pension or social security benefits, workers' compensation, disability, unemployment insurance benefits or any other employee benefits. APS will be responsible for all employment, withholding, income and other taxes incurred in connection with the operation and conduct ofits business. Nothing in this agreement is intended to create, nor shall be deemed or construed to create a fiduciary or agency relationship between APS and the Company or its Board of Trustees. Section 4. Confidentiality. APS shall use reasonable efforts to keep confidential all non- public confidential or proprietary information obtained from the Company during the performance of its services hereunder (the "Information"), and neither APS nor the Temporary Staff will disclose any Information to any other person or entity. "Information" includes non-public confidential and proprietary data, plans, reports, schedules, drawings, accounts, records, calculations, specifications, flow sheets, computer programs, source or object codes, results, models or any work product relating to the business of the Company, its subsidiaries, distributors, affiliates, vendors, customers, employees, contractors and consultants. The foregoing is not intended to prohibit, nor shall it be construed as prohibiting, APS from making such disclosures of Information that APS reasonably believes is required by law or any regulatory requirement or authority, or to clear client conflicts. APS may make reasonable disclosures of Information to third parties in connection with the performance of APS' obligations and assignments hereunder. In addition, APS will have the right to disclose to any person that it provided services to the Company or its affiliates and a general description of such services, but shall not provide any other information about its involvement with the Company. The obligations of APS under this Section 4 shall survive the end of any engagement between the parties for a period oftwo (2) years. The Company acknowledges that all information (written or oral), including advice and Work Product (as defined in Section 5), generated by APS and the Temporary Staff in connection with this engagement is intended solely for the benefit and use of the Company (limited to its management and its Board of Trustees) in connection with the transactions to which it relates. The Company agrees that no such information shall be used for any other purpose or reproduced, disseminated, quoted or referred to with attribution to APS at any time in any manner or for any purpose without APS' prior approval except as required by law. Because of the nature of the services provided by APS, from time to time, separate teams of APS professionals may concurrently represent clients that are adverse to each other, or which may be viewed by clients to be adverse. Despite any such concurrent representation, each APS team shall strictly preserve all client confidences, and not disseminate such information externally, except pursuant to the terms of this engagement letter, or to any APS professionals that are currently working for an entity Page 8 of II Rev. 1/1/2009 AP SERVICES, LLC GENERAL TERMS AND CONDITIONS adverse to the Company. The Company agrees that it does not consider such concurrent representation of the Company and any adversary by separate APS teams to be inappropriate. Section 5. Intellectual Property. All methodologies, processes, techniques, ideas, concepts, know-how, procedures, software, tools, writings and other intellectual property that APS has created, acquired or developed prior to the date of this Agreement are, and shall remain, the sole and exclusive property of APS, and the Company shall not acquire any interest therein. APS shall be free to use all methodologies, processes, techniques, ideas, concepts, know-how, procedures, software, tools, writings and other intellectual property that APS may create or develop in connection with this engagement, subject to its duty of confidentiality to the extent that the same contain information or materials furnished to APS by the Company that constitute Information referred to in Section 4 above. Except as provided above, all information, reports, materials, software and other work product that APS creates or develops specifically for the Company as part of this engagement (collectively known as "Work Product") shall be owned by the Company and shall constitute Information referred to in Section 4 above. APS may retain copies of the Work Product subject to its obligations under Section 4 above. Section 6. Framework of the Engagement. The Company acknowledges that it is retaining APS to provide the Temporary Staff solely to assist and advise the Company as described in the Agreement. This engagement shall not constitute an audit, review or compilation, or any other type of financial statement reporting engagement. Section 7. Indemnification and Other Matters. The Company shall indemnifY, hold harmless and defend APS and its affiliates and its and their partners, directors, officers, employees, Temporary Staff and agents (collectively, the "indemnitees") from and against all claims, liabilities, losses, expenses and damages to the extent of the most favorable indemnities provided by the Company to any of its trustees or officers, provided, however, that to the extent any matter for which indemnification is called for hereunder arises while the Company is under the protection of the Bankruptcy Code, indemnification of APS personnel who are not trustees or officers of the Company shall be subject to the approval of the Board of Trustees of the Company. The Company shall pay damages and expenses as incurred, including reasonable legal fees and disbursements of counsel. In addition, the Company shall pay the costs of APS' professional time (APS' professional time will be reimbursed at APS' rates in effect when such future time is required), relating to or arising out of the engagement, including any legal proceeding in which an indemnitee may be required or agree to participate but in which it is not a party. The indemnitees may, but are not required to, engage a single frrm of separate counsel of their choice in connection with any of the matters to which this indemnification agreement relates. The Company shall use its best efforts to specifically include and cover, as a benefit for their protection, Temporary Staff serving as trustees or officers of the Company or affiliates from time to time with direct coverage as named insureds under the Company's policy for directors' and officers' ("D&O") insurance. The Company will maintain such D&O insurance coverage for the period through which claims can be made against such persons. The Company disclaims a right to distribution from the D&O insurance coverage with respect to such persons. In the event that the Company is unable to include Temporary Staff under the Company's policy or does not have first dollar coverage acceptable to APS in effect for at least $5 million (e.g., such policy is not reserved based on actions that have been or are expected to be filed against officers and trustees alleging prior acts that may give rise to a claim), APS may, at its option, attempt to purchase a separate D&O policy that will cover the Temporary Staff only. The cost of same shall be invoiced to the Company as an out -of- pocket cash expense. If APS is unable to purchase such D&O insurance, then APS reserves the right to terminate the Agreement. APS is not responsible for any third-party products or services. The Company's sole and exclusive rights and remedies with respect to any third party products or services are against the third-party vendor and not against APS, whether or not APS is instrumental in procuring the third-party product or service. APS shall not be liable to the Company except for actual damages resulting from bad faith, self-dealing or intentional misconduct. Section 8. Governing Law and Arbitration. The Agreement is governed by and shall be construed in accordance with the laws of the State of New York with respect to contracts made and to be performed entirely therein and without regard to choice of law or principles thereof. Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration. Each party shall appoint one non-neutral arbitrator. The two party arbitrators shall select a third arbitrator. If within 30 days after their appointment the two party arbitrators do not select a third arbitrator, the third arbitrator shall be selected by the American Arbitration Association (AAA). The arbitration shall be conducted in Southfield, Michigan under the AAA's Commercial Arbitration Rules, and the arbitrators shall issue a reasoned award. The arbitrators may award costs and attorneys' fees to the prevailing party. on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event the Company files under Chapter II, the Company and APS agree that the Bankruptcy Court shall have jurisdiction over any and all matters arising under or in connection with this Agreement, including the indemnification provisions outlined in Section 7, above. Page 9 of II Rev. 1/l/2009 AP SERVICES, LLC GENERAL TERMS AND CONDITIONS Notwithstanding the foregoing, for any claim relating to the non-payment of fees or expenses due to APS under this Agreement APS may in its sole discretion proceed directly to a court of competent jurisdiction to enforce the terms of this Agreement. In any court proceeding arising out of this Agreement, the parties hereby waive any right to trial by jury. Section 9. Termination and Survival. The Agreement may be terminated at any time by written notice by one party to the other; provided, however, that notwithstanding such termination APS will be entitled to any fees and expenses due under the provisions of the Agreement, including Success Fee and Break Fee in accordance with Schedule I. Such payment obligation shall inure to the benefit of any successor or assignee of APS. Additionally, unless the Agreement is terminated by the Company for Cause (as defined below) or due to circumstances described in the Success Fee provision in the Agreement, APS shall remain entitled to the Success Fee(s) that otherwise would be payable for the greater of 12 months from the date of termination or the period of time that that has elapsed from the date of the Agreement to the date of termination. Cause shall mean: (a) a Temporary Staff member acting on behalf of the Company is convicted of a felony, or (b) it is determined in good faith by the Board of Trustees of the Company after 30 days notice and opportunity to cure, that either (i) a Temporary Staff member is engaging in misconduct injurious to the Company, or (ii) a Temporary Staff member is breaching any of his or her material obligations under this Agreement, or (iii) a Temporary Staff member is willfully disobeying a lawful direction of the Board of Trustees or senior management of the Company. Sections 2, 4, 5, 7, 8, 9, 10 and II of these Terms, the provisions of Schedule I and the obligation to pay accrued fees and expenses shall survive the expiration or termination of the Agreement. Section 10. Non-Solicitation of Employees. The Company acknowledges and agrees that APS has made a significant monetary investment recruiting, hiring and training its personnel. During the term of this Agreement and for a period of two years after the final invoice is rendered by APS with respect to this engagement (the "Restrictive Period"), the Company and its affiliates agree not to directly or indirectly hire, contract with, or solicit the employment of any of APS' Managing Directors, Directors, or other employees/contractors. If during the Restrictive Period the Company or its affiliates directly or indirectly hires or contracts with any of APS' Managing Directors, Directors, or other employees/contractors, the Company agrees to pay to APS as liquidated damages and not as a penalty the sum total of: (i) for a Managing Director, one million U.S. dollars ($1,000,000 USD); (ii) for a Director, five hundred thousand U.S. dollars ($500,000 USD); and (iii) for any other employee/contractor, two hundred fifty thousand U.S. dollars ($250,000 USD). The Company acknowledges and agrees that liquidated damages in such amounts are (x) fair, reasonable and necessary under the circumstances to reimburse APS for the costs of recruiting, hiring and training its employees as well as the lost profits and opportunity costs related to such personnel, and to protect the significant investment that APS has made in its Managing Directors, Directors, and other employees/ consultants; and (y) appropriate due to the difficulty of calculating the exact amount and value of that investment. The Company also acknowledges and agrees that money damages alone may not be an adequate remedy for a breach of this provision, and the Company agrees that APS shall have the right to seek a restraining order and/or an injunction for any breach of this non-solicitation provision. If any provision of this section is found to be invalid or unenforceable, then it shall be deemed modified or restricted to the extent and in the manner necessary to render the same valid and enforceable. Section I I. General. Severability. If any portion of the Agreement shall be determined to be invalid or unenforceable, the remainder shall be valid and enforceable to the maximum extent possible. Entire Agreement. These Terms, the letter agreement into which they are incorporated and the Schedule(s) and Exhibit to such letter agreement contain the entire understanding of the parties relating to the services to be rendered by APS and the Temporary Staff and may not be amended or modified in any respect except in a writing signed by the parties. APS is not responsible for performing any services not specifically described herein or in a subsequent writing signed by the parties Joint and Several. If more than one party signs this Agreement, the liability of each party shall be joint and several. Limit of Liability. APS shall not be liable for incidental or consequential damages under any circumstances, even if it has been advised of the possibility of such damages. APS' aggregate liability, whether in tort, contract, or otherwise, is limited to two times the amount of fees paid to APS for services on this engagement (the "Liability Cap"). The Liability Cap is the total limit of APS' aggregate liability for any and all claims or demands by anyone pursuant to this Agreement, including liability to the Company, to any other parties hereto, and to any others making claims relating to the work performed by APS pursuant to this Agreement. Any such claimants shall allocate any amounts payable by APS among themselves as appropriate, but if they cannot agree on the allocation it will not affect the enforceability of the Liability Cap. Under no circumstances shall the aggregate of all such allocations or other claims against APS pursuant to this Agreement exceed the Liability Cap. Page 10 of II Rev. 1/1/2009 AP SERVICES, LLC GENERAL TERMS AND CONDITIONS Notices. All notices required or permitted to be delivered under the Agreement shall be sent, if to APS, to: AP Services, LLC 2000 Town Center, Suite 2400 Southfield, MI 48075 Attention: General Counsel and if to the Company, to the address set forth in the Agreement, to the attention of the Company's General Counsel, or to such other name or address as may be given in writing to the other party. All notices under the Agreement shall be sufficient if delivered by facsimile or overnight mail. Any notice shall be deemed to be given only upon actual receipt. Page II of 11 Rev. 1/1/2009