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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
---------------------------------* In re: INNKEEPERS USA TRUST, et al., Debtors. ---------------------------------* Chapter 11 CASE NO. 10-13800 (SCC)
Deposition of MARC A. BEILINSON, called as a witness for examination, held at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New
York, New York, on Thursday the 12th day of August 2010, commencing at 9:05 a.m., before Josephine H. Fassett, a Registered Professional Reporter, Certified Livenote Reporter and Notary Public of the State of New York.
JOB NO. 19763
EXHIBIT 6
APP-00312
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oOo APPEARANCES: KIRKLAND & ELLIS, LLP Attorneys for Debtors and Debtors in Possession 655 Fifteenth Street, N.W. Washington, DC 20005-5763 BY: DANIEL T. DONOVAN, ESQ. daniel.donovan@kirkland.com JEFFREY M. GOULD, ESQ. jeffrey .gould@kirkland.com -and-
oOo A P P E A RAN C E S (cont'd) : KILPATRICK STOCKTON, LLP Attorneys for Trimont Real Estate Advisors 1100 Peachtree Street, NE, Suite 2800 Atlanta, Georgia 30309 BY: TODD C. MEYERS, ESQ. tmeyers@kilpatrickstockton.com -andKILPATRICK STOCKTON, LLP Attorneys for Trimont Real Estate Advisors 31 West 52nd Street, 14th Floor New York, New York 10019 BY: MICHAEL D. CRISP, ESQ. mcrisp@kilparickstockton.com
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KIRKLAND & ELLIS, LLP Attorneys for Debtors and Debtors in Possession 6 300 North LaSalle Street 7 Chicago, Illinois 60654 8 BY: JEFFREYD.PAWLITZ,ESQ. 9 /Q jeffrey .pawlitz@kirkland.com 71 72 73 4 5
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BRYAN CAVE, LLP Attorneys for LNR Partners, LLC 1290 Avenue of the Americas New York, New York 10104-3300 BY: LAWRENCE P. GOTTESMAN, ESQ. lawrence.gottesman@bryancave.com
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oOo A P P E A RAN C E S (cont'd) : HAYNES and BOONE, LLP Attorneys for Midland Loan Services, Inc. 1221 Avenue of the Americas, 26th Floor New York, New York 10020-1007 BY: LENARD M. PARKINS, ESQ. lenard. parkins@haynesboone.com -andHAYNES and BOONE, LLP Attorneys for Midland Loan Services, Inc. 2323 Victory Avenue, Suite 700 Dallas, Texas 75219 BY: MARK ELMORE, ESQ. mark.elmore@haynesboone.com CHIP BROOKER, ESQ. chip. brooker@haynesboone. com
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oOo A P P E A RAN C E S (cont'd) : PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP Attorneys for Apollo Investment Corporation 1285 Avenue of the Americas New York, New York 10019-6064 BY: ANDREW J. EHRLICH, ESQ. aehrlich@paulweiss.com AMY P. DIETERICH, ESQ. adieterich@paulweiss.com
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DECHERT, LLP Attorneys for Lehman ALI Inc. 1095 Avenue of the Americas New York, New York 10036-6797 BY: BRIAN E. GREER, ESQ. brian.greer@dechert.com KEVIN J. O'BRIEN, ESQ. kevin.obrien@dechert.com NICOLE B. HERTHER-SPIRO, ESQ. nicole.hertherspiro@dechert.com
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DAVID FELDMAN WORLDWIDE, INC.

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585
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oOo APPEARANCES (cont'd): MORRISON & FOERSTER, LLP Attorneys for Unsecured Creditors Committee 1290 A venue of the Americas New York, New York 10104-0050 BY: PAUL GALANTE, ESQ. pgalante@mofo.com
oOo INDEX WITNESS MARC A. BEILINSON By Mr. Parkins By Mr. Meyers By Mr. Gottesman By Mr. Donovan PAGE 12 163 202 227
AFTERNOON SESSION- 142
WILLKIE FARR & GALLAGHER, LLP Attorneys for Appaloosa Investment L.P. I 787 Seventh A venue New York, New York 10019-6099 BY: BRIAN R. FAERSTEIN, ESQ. bfaerstein@willkie.com
18 19 KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP 20 Attorneys for Five Mile Capital Partners 21 22 1633 Broadway 23 New York, New York 10019-6799 BY: DANIEL A. FLIMAN, ESQ. 24 dfliman@kasowitz.com 25 7
EXHIBITS EXHIBIT DESCRIPTION PAGE Exhibit 1 Amended Notice of Deposition of Corporate Representatives of the Debtors 17 Exhibit 2 Chart 18 Exhibit 3 Debtors' Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief 25 Exhibit 4 Plan Support Agreement 25 Exhibit 5 E-mail Exchange dated July 16, 2010 32 9
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oOo PRESENT:
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MARK A. MURPHY, Innkeepers USA

IRAVIS SHELHORSE, Trimont Real Estate Advisors
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oOo EXHIBITS EXHIBIT DESCRIPTION PAGE Exhibit 6 Document titled Illustrative Terms of Proposed Restructuring dated May 25, 2010 40 Exhibit 7 Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 47 Exhibit 8 Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 54 Exhibit 9 Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 81 Exhibit 10 Document titled Illustrative Terms of Proposed Restructuring dated June 4, 2010 82 Exhibit 11 Document titled Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring dated June 17,2010 85
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oOo EXHIBITS EXHIBIT DESCRIPTION PAGE Exhibit 12 Document titled Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring dated June 29, 2010 94 Exhibit 13 Document titled Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring dated June 22, 2010 101 Exhibit 14 E-mail Exchange dated July 7, 2010 103 Exhibit 15 Document titled Project TavernLehman Discussion Materials dated April22, 2010 114 Exhibit 16 Document titled Project TavernMidland Discussion Materials dated 130 April28, 2010 Exhibit 17 Amended Declaration of Dennis Craven, Chief Financial Officer of Innkeepers USA Trust, in Support of First-Day Pleadings 142
oOo MR. GOTTESMAN: Lawrence Gottesman, Bryan Cave, LNR Partners, LLC. MR. BROOKER: Chip Brooker, Haynes and Boone, Midland Loan Services, Inc. MR. ELMORE: Mark Elmore, Haynes and Boone, Midland Loan Services, Inc. MR. PARKINS: Lenard Parkins, Haynes and Boone, Midland Loan Services, Inc. M A R C A. B E I L I N S 0 N, the witness, having been duly sworn, was examined and testified under oath as follows: MR. PARKINS: Counsel, stipulations, we're taking this pursuant to agreement and the rules? MR. DONOVAN: No stipulations. We can just proceed. MR. PARKINS: Fine. EXAMINATION BY MR. PARKINS: Q Mr. Beilinson, would you state your full name, please? 13
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oOo (Whereupon, on the record.) MR. DONOVAN: Dan Donovan, Kirkland & Ellis, for the Debtors and the witness. MR. MURPHY: Mark Murphy with Innkeepers. MR. GOULD: Jeff Gould, Kirkland & Ellis, for the Debtors. MR. EHRLICH: Andrew Ehrlich, Paul, Weiss, Rifkind, Wharton & Garrison, on behalf of Apollo Investment Corporation. MR. GALANTE: Paul Galante, Morrison & Foerster, for the Unsecured Creditors Committee. MR. FAERSTEIN: Brian Faerstein, Willkie Farr, for Appaloosa Investment LP I. MR. PAWLITZ: JeffPawlitz, Kirkland & Ellis, for the Debtors. MR. MEYERS: Todd Meyers, Kilpatrick Stockton, for Trimont. MR. CRISP: Mike Crisp, Kilpatrick Stockton, for Trimont. MR. FLIMAN: Dan Fliman, Kasowitz, Benson, Torres & Friedman, Five Mile Capital Partners.
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Marc A. Beilinson A Marc A. Beilinson. Q And, Mr. Beilinson, how are you presently employed? A I'm the chief restructuring officer of Innkeepers USA. Q Do you have any other job at the present time? A No. Q You're an attorney by education, correct? A Yes, I am. Q Okay. Have you been in a deposition to understand how the deposition process works? A I've been at a few. Q I'll ask you questions, you need to respond orally so that the court reporter can get your answer. If there's any questions, you have any problems with any of my questions or any clarifications, let me know if you don't understand. And we'll try not to talk over each other, one person talks the other person answers. And there will be times, I'm sure, that various counsel interpose objections which
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DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585
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Marc A. Beilinson we'll have to hear as part of the deposition. Are you familiar with that process? A Yes. Q Okay. MR. PARKINS: Is there more lawyers on the phone? MR. DONOVAN: It's probably just Kirkland. MR. PARKINS: Okay. MR. GOULD: We have one associate in Chicago. MR. PARKINS: Okay. Great. BYMR. PARKINS: Q How long have you held the position of CRO of Innkeepers? A Sometime in November of 2008. Q And how much are you compensated as CRO of the debtors? A My base compensation is $900,000. Q Is there any bonus component of your compensation? A Yes, there is. Q What is that? I received a million-dollar bonus for A 15
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Marc A. Beilinson independent member of the Board of Apollo Investment Corporation that you came to know the individuals who ultimately offered you a job with respect to Innkeepers; is that correct? A No, that's not correct. Okay. How did you get to know these Q individuals? A I was an independent member ofthe Board oflnnkeepers USA. Okay. Q And while I was an independent member A of the Board of Directors, management reached out to me in advance of a board meeting and asked me to come in and take a look at the company because they knew of my past experiences as a restructuring professional. And how did you come to be an Q independent member of the Board of Directors of Innkeepers USA? A I received a call from Rick Press who is at Apollo asking ifl had an interest in serving as an independent member of the Board of Directors of a company they were investing money in. Prior to becoming CRO for Innkeepers, Q 17
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Marc A Beilinson signing on for another year, and I had a retention bonus of a million dollars for that year. Q So there was a one-time bonus for signing on from 2008 after that one year till 2009, there's not another $1 million bonus, it was just a one-time bonus? A No, that was a bonus for the renegotiation of my contract after the first year. Q Okay. Who hired you to be CRO for the debtors? A The Board. Q The Board? Who on the Board of Directors did you talk with to be hired? A I talked to each of the members of the Board, including those members who are affiliated with Apollo Investment Corp. and the independent members of the Board who are top-notch professionals. Q How did you come to learn about the opportunity to be CRO for the debtors? A I was an independent member of the Board since the time of the transaction in 2007 when Apollo Investment Corp. took the enterprise private. Q And it's from that position as an
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Marc A. Beilin son would you go through your employment history, please? A Sure. In 1983 I was employed by Buchalter Nemer Fields & Younger which is a regional law firm, mostly based in California, but also with offices outside of California including New York. I was there as a partner. I left there, went to Pachulski Stang Ziehl & Jones where I was a partner for 15 years. And I left the practice of law about three years ago. During that period of time I've also, you know, owned some businesses and had my own investment vehicles which I was chief executive of. Q Is it fair to say your concentration while practicing law was in bankruptcy and restructuring? A Absolutely. (Amended Notice of Deposition of Corporate Representatives of the Debtors marked as Exhibit I, as of this date.) BYMR. PARKINS: Q Mr. Beilinson, I've had marked
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Marc A. Beilinson Exhibit 1, which is before you, the Amended Notice of Deposition of Corporate Representatives of the Debtors attached to the Document Request, have you seen this document before? A Yes, I have. Q Have you reviewed the document? A Not recently, but I have. Q I take it you are here as the corporate representative of the debtors -A That's correct. Q --in response to this notice; is that correct? A That's correct. MR. DONOVAN: And subject to our objections which were provided. (Chart marked as Exhibit 2, as ofthis date.) MR. PARKINS: I'm trying to wait for everybody to get one before I ask questions. MR. DONOVAN: Okay. No problem. MR. PARKINS: There's a lot of people here. BYMR. PARKINS: Q Mr. Beilinson, I've handed you what I 19
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Marc A. Beilinson that okay? A That would be fine. Q Okay. And Apollo Investment Corporation is the 100 percent owner of the ultimate-- of all these companies ultimately, correct? A Yes. Q Okay. Grand Prix Holdings next in the chart is a Delaware LLC; is that correct? A I don't know. Q Does it have a Board of Managers or Board of Directors? A I don't know if it's a corporation or an LLC, so I'm not sure what. Q Does it have a board? A Yes. Q Okay. Who is on the board? A I don't think I know as I sit here. Q Are you on the board? A Uhm? Q Are you on the board? A As I sit here I don't know. Q Okay. Do you know who its officers are? 21
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Marc A. Beilinson had marked as Exhibit 2. It's a chart that was prepared by the debtors and handed at the first day hearings, do you recollect this document? A I've seen this before. Q Did you have any role in preparing this document? A ~Q No. Do you recall it being offered into evidence at the first day hearings -A Yes. Q --in the Innkeepers case? Looking at Exhibit 2, we see at the top in the center here, I take it, the ownership of the various debtors outlined in the context of this chart as well as the various debt pools; is that correct? A That's correct. Q At the top of the chart we have Apollo Investment Corporation. I might call it Apollo during the deposition just to shorthand, is that okay? A No. Q Okay. Then I'll call it Apollo Investment Corporation, is that okay, or AIC, is
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Marc A. Beilinson A Off the top of my head there are a hundred entities and off the top of my head, without refreshing my memory, I couldn't tell you who was on the board or who the officers were of any of the entities. Q Did you go back and sort of refresh your recollection with respect to the topics to be covered today in the deposition? MR. DONOVAN: Well, let me object here. I don't think membership on each board was a topic, nor is it really one that one should cover in a deposition, so. BY MR. PARKINS: Q My question, though, is: Did you go back and refresh your recollection regarding in order with respect to the topics to be covered in the deposition as a 30(b)(6) representative of the company? MR. DONOVAN: Objection. You can answer it. A I reviewed what I thought was appropriate for purposes of the deposition involving the PSA and cash collateral. Q The next in the line is Innkeepers USA
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Marc A. Beilinson Trust Maryland REIT, does it have a Board of Trustees? A Yes. Q Do you know who's on the Board of Trustees? A Most of the members. Q Can you tell me who they are? A Sure. Fred Kleisner, who is the CEO of Morgan Hotel Group, who was formerly the CEO of Wyndham Hotels, which is one of the largest hotel chains in the country. Larry Ruisi, who is a CEO of Lowes Cinemas and formerly a chief executive at Sony Pictures and Trimark. And Bernie Zuroffwho is a chief executive and general counsel to a number of companies both who have gone through restructurings in in-court and out-of-court process. There are a number of Apollo Investment Corp. people who are also on the board. I believe those include Jim Zeiter, Patrick Dalton, Justin Karval, and Schuyler Hewes. I believe there is an employee of ARI, which is a public company, which is affiliated with
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Marc A. Beilinson My testimony is that, you know, as I A sit here today, I don't recall who the officers and directors of each of the entities is. There's over 90 entities. Q Looking at this Exhibit 2, we see various, I'll call them lenders identified and collateral identified with respect to those lenders identified in green color in this chart; is that correct? A Yes. Q Okay. More correctly, you see a number of secured lenders in green and apparently some mezz debt not in green in the context of this chart; is that correct? I think that's what it's attempting to A demonstrate. Q Okay. Now, going from the left side of the chart we see there under Grand Prix Mezz Borrower Fixed, LLC, you see they entered into a $25 million fixed rate CMBS pool with Midland as a special servicer, correct? A I see that. Q Forty-five hotels stand as collateral for that indebtedness, correct?
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Marc A. Beilinson some of the Apollo entities by the name of Ken Picache who is an expert in CMBS financing. Q You're not on the board, are you? A I am on the board. Q You're on the board, okay. A I was an independent member starting in 2007, and when I took the position as CRO, in my view that made me no longer independent, but I did remain as a member of the Board of Directors. Q Going down the list here. Innkeepers Financial Corporation, a Virginia Corporation, do you know whose on the Board of Directors of that corporation? A I can't tell you off the top of my head. Q Same question for Innkeepers USA Limited Partnership, do you know who the partners are of that limited partnership? A I think my testimony will be the same with regard to every other entity on this chart. Q Okay. A I'm happy to go through each. Your testimony --I'm sorry, go ahead Q and finish and I'll ask you a question.
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Marc A. Beilinson A That is correct. Q And the next column you have there in green the 20 hotel Lehman collateral pool reflecting a $238 million Floating Rate Lien and Senior Mortgage Loan, correct? A I see that reflected. Okay. And we can go across here with Q respect to each of the borrowers. Do these columns where the green is noted and the debt and collateral accurately, as far as you know, reflect the debt and collateral holder of that debt for each of those entities identified in green? It appears to, but I couldn't tell you A with certainty that those are the actual names of the LLCs that hold those debt. Q Okay. (Debtors' Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief marked as Exhibit 3, as of this date.) (Plan Support Agreement marked as Exhibit 4, as of this date.) MR. DONOVAN: Let me just state during this time that we're designating this
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Marc A. Beilinson confidential until we have a chance to review the transcript pursuant to the protective order, which we will do after we receive it. MR. PARKINS: And we will clearly abide by the protective order. I don't think it's been entered yet by the terms, but in any event, if we need to use this document, we'll reach agreement and report. MR. DONOVAN: Sure. MR. PARKINS: Absolutely. BYMR. PARKINS: Q Mr. Beilinson, I've handed you two exhibits. Exhibit 3 is the Debtors' Motion for an Order Authorizing the Assumption of the Plan Support Agreement. Do you have that in front of you? A Yes. Q And I've handed you also Exhibit 4 which is the Plan Support Agreement itself. This isn't stamped by the court, I A mean, am I to assume that this is what was actually filed with the court with regard to Exhibit 3? Q You can assume that that was what was
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Marc A. Beilinson MR. DONOVAN: No, ifyou're representing it's the execution copy, that's all we were trying to get at. THE WITNESS: Yeah. MR. PARKINS: Okay. BYMR. PARKINS: Looking at Exhibit 3, please, Q which is the Motion. A Yeah. Q Did you review this Motion before it was filed? A Yes. Q Okay. This Motion was filed as part of the first day filing, is that correct, when the case was filed on the 19th; is that correct? A I don't know. Q Well, let's look at the date, at least the date of when it was signed. Page 18. Uh-hum. A Q What date did the company file Chapter 11? A I believe July 19th. Q Okay. The document is at least dated July 19; is that correct?
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Marc A. Beilinson filed. I don't have files-- I don't get filed stamped copies from the court, I just get service copies. Okay? I'm happy to make that assumption, A though. Q And Exhibit 4 is the Plan Support Agreement which we'll call the PSA from time to time, okay? And I'm supposed to assume that -A Q All exhibits are attached. And they're accurate as to what was A filed? Q Yes. A Okay. Q The-A You know, in fairness, there were hundreds of drafts of each of these documents and I want to make sure when I'm answering the questions that I'm dealing with the final version which was actually-Q Mr. Beilinson, I want you to look at it until you're satisfied or your counsel's satisfied that it is a correct copy of what was filed with the court.
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Marc A. Beilinson A Yes. I just -Q All right. A -- don't know if it was filed on that date. Q And the debtors as of today are still continuing to seek approval of the assumption of this agreement, which hearing is set for September 1; is that correct? A That's correct. Turn with me, if you would, to Q Paragraph No.6 on page 4 of the pleading, please. A (Complies.) Q Take a moment and read it because I want to ask you about it, okay? A (Complies.) I've reviewed it. Q Have you finished reading it? A Yes. Q Okay. Going to about the last 10 lines of Paragraph No. 6, the sentence that begins: For the last several months, the Debtors have engaged Lehman in numerous strategic discussions. Do you see that sentence? Do you see that language there?
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Marc A. Beilinson Yes, I see the sentence. Q Okay. It says: The Debtors have engaged Lehman in numerous strategic discussions to outline the potential restructuring of the Debtors' enterprise that would maximize the value of their estates for the benefit of all constituents. It is true also that during that same period of time, the months prior to the filing of the bankruptcy, that the debtors were engaged in dialogue with Apollo regarding the restructure, too; is that correct? A No. Q Is it your testimony the debtors were not engaged at all with respect to the Term Sheet for the restructuring of this company where Apollo at some time was to be considered a signatory to the agreement? That's correct, no. A Q Is that your testimony with respect to Apollo Investment Corporation? A No. Q That is not your testimony or -That's correct. A A
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Marc A. Beilinson (E-mail Exchange dated July 16,2010 marked as Exhibit 5, as of this date.) BYMR. PARKINS: Q I ask you to look at what's been marked as Exhibit 5. A (Reviews.) Yes, I'm familiar with this. Q Okay. Looking at the bottom part of Exhibit 5, an e-mail from you to James Zeiter. Who is James Zeiter, by the way? A Jim Zeiter is a CEO of Apollo Investment Corp. and a member oflnnkeepers USA Board of Directors. Q Looking at point number 3. A Yes. Would you read that, please? Q A My understanding is that all issues have been resolved between Lehman and Apollo except the following single issue. Q Now, do you know if Mr. Zeiter was involved in the negotiations between Lehman and Apollo regarding Apollo's ownership of the reorganized company? A He was involved in discussions between 33
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Marc A. Beilinson Corporation -- did you have dialogue with Apollo Investment Corporation months before the filing with respect to a restructuring? A Yes. To the extent they had members of the Board oflnnkeepers USA, I was always keeping the members of the Board oflnnkeepers USA, and the Board comprises of a number of independent members and members who were affiliated with Apollo Investment Corp. or other Apollo affiliated entities. Q Other than dialogue with the board where Apollo had representatives on the board, the debtor was engaged, was it not, in dialogue with respect to Apollo becoming an owner of the equity of the company as part of the restructuring negotiated with Lehman; isn't that correct? A No. Q Isn't it true that within a few days of the filing of the bankruptcy case you had direct communications with representatives of Apollo with respect to their potential acquisition of 50 percent of the equity of this company coming out of bankruptcy? A I don't believe so.
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Marc A. Beilinson Apollo Investment Corp., I was using this as a shorthand, and Lehman with regard to purchasing an interest that Lehman may receive through a plan of reorganization post-confirmation. Q Why were you contacting him if he was personally involved with this, did you not think he knew what was going on in any event? MR. DONOVAN: Objection. BY MR. PARKINS: Q You can answer. MR. DONOVAN: Yeah, you can still answer. A Could you ask the question again? Q Yes. Why were you contacting him three days before the filing with respect to the status of Apollo Investment Corporation's acquisition if he was involved in those negotiations himself? MR. DONOVAN: Objection. You can answer. A Because one of the elements of the PSA between Innkeepers USA and Lehman is that they are capable of selling 50 percent of their post-confirmation interest for an amount of $107
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Marc A. Beilinson million, so it was material to Innkeepers USA that a secondary transaction was actually going to be executed. It wasn't important to me whether that was Lehman or Apollo, or Lehman and a third party, and in that term I meant Apollo Investment Corporation. So it was important to me that that be executed because it was a condition to Lehman's compliance with the PSA which was negotiated by Innkeepers USA. Q Did it have Apollo sign an agreement to acquire 50 percent of the stock? MR. DONOVAN: Objection. I don't know-A Q Apollo Investment Corporation, I'm sorry. A I believe the terms of the PSA provides that Lehman had to be able to sell 50 percent to a third party. It was immaterial to me as to who that third party was in accordance with the PSA. Q Do you know if Lehman was negotiating with anyone else other than AIC for the acquisition of that stock at the time you sent this e-mail? I don't know. A
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Marc A. Beilinson BY MR. PARKINS: Q You can answer. A I know it was disclosed to the court at the first day hearings, what pleading it was in and what paragraph it is in isn't really material to me at all. Q But-A So I'm not sure why anyone chose not to put that in this particular paragraph or why you would believe that this is the appropriate paragraph to put it in. Q Well, it is accurate that the debtor, through you at least, knew that Apollo Investment Corporation was the purchaser of the new equity as of the date of filing, correct? MR. DONOVAN: Objection. BY MR. PARKINS: Q You can answer. A I think I knew there was some agreement that was executed between the two. I hadn't seen the agreement and it's not material to Innkeepers USA as to who the purchaser of the new equity is, just that there is a purchaser of the new equity.
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Marc A. Beilin son Okay. Are you aware that an agreement was signed on this date dated July 16 between Lehman and Apollo Investment Corporation with respect to this acquisition? A I was informed by both parties that it was executed in whatever form. Q And you knew that when, sir? I believe I knew that on, you know, A somewhere around the filing date. Q Before the filing date? A I believe so. Q Look with me at Exhibit 3, the Motion again. Paragraph No. 20. I'd ask you to read it, please, I'm going to ask you about it. (Complies.) A I've reviewed it. Q Now, Mr. Beilinson, if you knew that Apollo had signed the agreement with Lehman, Apollo Investment Corporation signed the agreement with Lehman before the filing, why wasn't that disclosed in this pleading here, Paragraph 20? MR. DONOVAN: Objection. Foundation.
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Marc A. Beilinson Q Okay. And you just don't know why it isn't disclosed in this pleading here, right? MR. DONOVAN: Objection. Misstates the testimony. BY MR. PARKINS: Q Do you know why it's not disclosed? A No. There's no reason why it wouldn't be disclosed or that it would be disclosed in this document. Q Based on your experience, sir, is a transaction resulting in the present equity owner of a Chapter 11 debtor ending up with equity of that Chapter 11 debtor something that ought to be disclosed in a bankruptcy case? MR. DONOVAN: Well, hold on, let's keep this clear. You know it was disclosed, so I think you need to be more precise, and I think these are misleading. You know it was disclosed. If you're asking about this particular paragraph, you need to be more prec1se. MR. PARKINS: What I know was it said that they think -- we'll get to that in a minute, counsel.
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Marc A. Beilinson MR. DONOVAN: Okay. MR. PARKINS: Where it says, we think AIC might be the buyer, but the testimony is now we knew they were the ones going to be the buyer, and we're going to get into that in a second. MR. DONOVAN: Well, we still don't know, but all I'm asking is to be precise if you're asking about this paragraph. MR. PARKINS: Could you read the last question back? (Whereupon, the requested portion was read back by the Reporter: "Question: Based on your experience, sir, is a transaction resulting in the present equity owner of a Chapter 11 debtor ending up with equity of that Chapter 11 debtor something that ought to be disclosed in a bankruptcy case?") MR. DONOVAN: Objection. You can answer. BY MR. PARKINS:
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Marc A. Beilinson me pull some exhibits. MR. DONOVAN: Sure. While we're here, if anyone has arrived since we made initial appearances, can you please make your appearance. MS. DIETERICH: Amy Dieterich from Paul Weiss. MR. SHELHORSE: Travis Shelhorse from Trimont. (Document titled Illustrative Terms of Proposed Restructuring dated May 25,2010 marked as Exhibit 6, as of this date.) BY MR. PARKINS: Q Mr. Beilinson, I've had marked a
document as Exhibit 6. It has Bates stamp numbers on the right-hand corner. LEH-ALI starting with number 1 through 4. Do you have that document? Do you see that?
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Marc A. Beilinson Apollo Investment Corp. is getting no distribution on account of its prior equity in connection with Innkeepers USA.
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May of 2010 Apollo Investment Corporation has been involved in negotiations with the Term Sheet for the restructure of this company?
MR. DONOVAN: And just if you could tell him-MR. PARKINS: Yes. MR. DONOVAN: --what LEH indicates. BYMR. PARKINS:
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Q With respect -- there were negotiations, Mr. Beilinson, weren't there, with respect to a term sheet development in the months of May, June and July between the debtors Lehman and Apollo, is that correct, Apollo Investment Corporation; is that correct?
three-party negotiation.
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A I never viewed Innkeepers as responding to any term sheet from Apollo Investment Corp. I believe that Innkeepers was negotiating with Lehman with regard to the terms of a PSA, and I believe that we only responded to term sheets that were sent to us by Lehman, not by Apollo. Now that we received term sheets from Apollo Investment Corp., I believe we did. They were not, in my view, any part of my negotiation, nor were they responded to by Innkeepers or I. MR. PARKINS: Give me a minute. Let
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MR. DONOVAN: Objection. You can answer. A Could you repeat the question, please? (Whereupon, the requested portion was read back by the Reporter: "Question: There were negotiations,
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Marc A Beilinson Mr. Beilinson, weren't there, with respect to a term sheet development in the months of May, Jnne and July between the debtors Lehman and Apollo, is that correct, Apollo Investment Corporation; is that correct?") A There were discussions that Innkeepers and I had with Lehman that included Lehman's desire to be able to sell the post-confirmation equity, at least 50 percent of it, for the sum of $107 million to a third party. To the extent that they were negotiating with both Apollo Investment Corp. to be the potential buyer, yes, I was involved to some limited extent in connection with their conversations with Apollo Investment Corp. Q In the context of the negotiations that took place with respect to proposed restructuring for Innkeepers, who negotiated on behalf of Innkeepers from the business side? A I did. Q Okay. Was there anyone else from Innkeepers? A No. Q Okay. With respect -A Not materially.
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Marc A. Beilinson A I think that Schuyler Hewes was involved. Patrick Dalton was involved. I'm not sure who else was involved from AIC, nor would I have that information. Q And did AIC have counsel involved? Yes, they did. A Q And who was their counsel? A Paul Weiss. Q The document Exhibit 6 that I gave you is dated, has a date at the top May 25, 2010, do you see that? A I see the date. Q Okay. Turn with me, if you would, to page 2 of this exhibit. (Complies.) A Q And I'd ask you to look at the line items marked Equity Offering and Backstop, and read them if you would, please. (Complies.) A I've reviewed this. Q Okay. The Equity Offering part of this document, the two paragraphs referring to equity offering, speaks to the fact that the company, Innkeepers, will conduct an equity offering
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Marc A Beilinson Q I'm sorry, I didn't mean to interrupt. MR. DONOVAN: I think he said "not materially." A I was primarily responsible. Q Who was your counsel at the time? A Kirkland & Ellis. Q And with respect to the Lehman side of the negotiations, from a business side who was negotiating for Lehman? A Nancy Shanik and Michael Lascher were the primary contacts. Q And did they have counsel involved? A Yes, they did. Q And who were their counsel? A Dechert. Q And with respect to AIC, to the extent you know, okay, who was negotiating for AIC? MR. DONOVAN: Objection. A At different points in time I think there were different people. Q Was Mr. Zeiter involved? A He was involved. Q Who else was involved, to your knowledge?
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Marc A. Beilinson which the company will sell62 percent of the equity to a new holder, 27 percent of the equity will be sold through a primary issuance, and 34.91 through a secondary issuance of Lehman shares. The Backstop provision shows that Apollo Investment Corp. will provide a backstop to purchase 62.18 percent of the equity in the equity offering at a price of $171 million, in brackets, which consists of95 million for the 34.91 of secondary shares and 75 million for the 27.27 of primary shares. Did I read it correctly? MR. DONOVAN: I'd object. I think you were summarizing it. MR. PARKINS: Okay. MR. DONOVAN: For completeness. You can answer. That's what the words on this page in A a document that I don't know who sent to who says. Q My question is, sir: Have you seen this provision before today in the context of your negotiations for restructure with Lehman? A I recall seeing this and I recall that I told Lehman that I had absolutely no interest in moving forward in restructuring the company in this
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Marc A Beilinson manner. And, as I recall, I was pretty adamant that I wasn't interested in moving forward with any type of equity offering or backstop as part of any transaction of an internal restructuring with -- in my role as chief restructuring officer of Innkeepers USA Q So you do recall receiving this and you do recall responding to this language here, correct? A I now recall the document and I recall my response to it being fairly strenuous. So at least-- I'm sorry, I didn't Q mean to interrupt, sir. MR. DONOVAN: You can finish. BYMR. PARKINS: Q Do you want to finish your answer? I didn't mean to interrupt, I thought you were done. A That's okay. Q Okay. So at least as ofthis document with a date of May 25, 2010, AIC is certainly mentioned as an integral part of a transaction in this document? A It was mentioned in a document that was sent to me by Lehman.
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Marc A Beilinson Q Okay. I ask you to look with me, please, at page 4 and 5, starting with the topics New Equity, Equity Offering, Equity Offering Backstop, and Conditions Precedent to Lehman's Obligations under PSA. I'm going to ask you about those sections, so if you want to read them more closely, please do. A (Complies.) I've reviewed it. Q Okay. So a week after Exhibit 6 is at least dated, which was May 25, this is about a week later at June 2nd, okay, this document that's dated June 2nd, 2010, provides again that Apollo Investment Corp. is going to provide a backstop to the equity offering that Lehman proposes for the company as part of the restructuring; is that correct? A That is generally what's said in a document I evidently received by Lehman that was not acceptable to Innkeepers USA Q So despite your testimony that you rejected this concept a week earlier, Lehman sent it to you again; is that correct? A I can't stop them from trying, but I 49
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Marc A Beilinson Okay. (Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 marked as Exhibit 7, as of this date.) BYMR. PARKINS: Q I've handed you what has been marked as Exhibit 7. It is a document again produced from Lehman in its production of documents. It starts with Bates stamp number 14 and goes through Bates stamp number 22. Have you seen this document before? A I don't know. We had hundreds of drafts going back and forth and whether I've seen this particular document or not, I just don't know. Q In the give and take of documents between Lehman and the debtors since you were the only one negotiating for the debtors, would you have seen a transmission from Lehman with respect to a restructuring proposal? A I think so. Q Okay. Is it reasonable to believe that this was, in fact, if it was transmitted to the company, you would have seen it? A That's reasonable.
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Marc A. Beilinson can say no twice. Q Did you respond to this document? A I know I've had -- I had conversations in response to the document, I doubt I would have responded directly to this document. Q This document under the Conditions Precedent to Lehman's Obligations Under the PSA, the third bullet point, if you look with me at the bottom of page 5, it says: Agreement reached with AIC in form and substance satisfactory to Lehman; is that correct? A That's what it says. Q It specifically mentions AIC, not just some third-party purchaser or backstop party; is that true? A That's what this document says. Q Did you respond to Lehman about having AIC involved in the transaction at all from your perspective? MR. DONOVAN: Objection. Vague. You can answer to the extent -A Okay, I -- can you ask it again, please? (Whereupon, the requested portion was
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Marc A. Beilinson correct? Is that how you understood it? A This proposal was not accepted by the company and, hence, there was going to be no payment to Apollo Investment Corp. Q Did you understand this proposal to include that the company would pay a breakup fee under this proposal? A A third party who made a proposal to Innkeepers that was rejected that would have, if accepted, caused a breakup fee. Q And that breakup fee would go to AIC under this proposal? A I think we need to make clear that this is not an Innkeepers' proposal, this was a
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Marc A Beilinson read back by the Reporter: "Question: Did you respond to Lehman about having AIC involved in the transaction at all from your perspective?") A Yes, I did. Q What did you say? A I told them that my intent was to do a comprehensive integrated internal restructuring of the company and that I thought it was best that we negotiate directly with Lehman and the creditors of this bankruptcy estate to come up with a plan that could be confirmed by the Bankruptcy Court in a rational period of time, and if as a condition to that they had to have executed a term sheet with regard to selling what they received out of this chapter proceeding, I did understand that. I knew they were talking to Apollo about that, and I ensured that when I executed the final PSA, that the condition was that it be a sell to a third party, whether it was Apollo or somebody else was immaterial to Innkeepers USA Q So-A There would be a sell to a third party, but I did know that they were discussing a 51
third-party proposal sent to Innkeepers USA and was not acceptable. Q It was sent to Innkeepers USA by Lehman the exclusive party, as I understand, you were negotiating with for a global restructuring prefiling; is that correct? A No, that's not correct. MR. DONOVAN: Objection. BY MR. PARKINS: Q You were negotiating with other
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Marc A. Beilinson transaction of some type with Apollo Investment Corp. Q You did know? A I did know. Q Okay. So my question is: Did you tell Lehman you didn't want Apollo involved? A No. I told Lehman that I wanted to negotiate a transaction for the equitization of their security interest in exchange for equity. And what they did post confirmation was important only from the context of the PSA condition precedent which necessitated that they sell to a third party 50 percent of the post-confirmation interest. Q Going back to this provision here regarding the Equity Offering Backstop in this Exhibit 7, provides that if AIC is not the new owner, then AI C will be paid a breakup fee equal to, bracket, 2.5 percent of the backstop amount or 4.275 million defined as the breakup fee; do you see that provision? A I see that provision, but I didn't agree to it. Q Because the company was going to pay the breakup fee under this proposal; is that
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Marc A. Beilinson entities pre filing for global restructuring? A I was negotiating with all parties to determine their interest in being a participant including Midland. Q Are there any term sheets you can recall where Innkeepers delivered proposed terms for a global restructuring to other constituencies other than Lehman? A No. Because Midland showed no interest in anything having to do with a restructuring of this enterprise.
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Q My question is: Did you send a term sheet or deliver a term sheet proposal to other, let's start with, creditors of the various Innkeepers entities for global restructuring? A No, but pieces within an integrated global restructuring, yes, I did sign a term sheet with Marriott, signed a term sheet with Lehman, negotiated with every other creditor constituent that I could. Q So your answer is no? A I only signed one Plan Support Agreement with Lehman. MR. DONOVAN: Do you want to take a
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1 Marc A. Beilinson these documents, as you know, were not acceptable to the debtor.
Marc A. Beilin son short break? MR. PARKINS: Sure. (Whereupon, off the record.) (Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 marked as Exhibit 8, as of this date.) (Whereupon, resumed.) BYMR. PARKINS: Q Mr. Beilinson, I've handed you a document which I've marked as Exhibit 8. It's a document which has a June 2nd, 2010 date at the top of it, a Lehman ALI series of Bates stamp numbers 23 through 31. Do you have that in front of you? MR. GOULD: Do you have extra copies? MR. BROOKER: Yes. MR. GOULD: Thank you. BYMR. PARKINS: Q I'd ask you to look at pages 4 and 5 of this document, the topics identified, New Equity, Equity Offering, Equity Offering Backstop and Conditions Precedent. Take a look at this, please, I want to ask you about these sections. A (Reviews.) I've reviewed those provisions.
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No. 7, I'm looking at Footnote No.2. Moelis presentation and have been included for illustrative purposes only. What Moelis presentation does this footnote refer to? MR. DONOVAN: Objection. Foundation. A I don't know. Did Innkeepers make a presentation to Yes, we made a presentation to Lehman. Did Moelis -- was Moelis the
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Marc A. Beilinson input into, but I don't recall whether there was an independent Moelis presentation. Q at? Bad English, but I hope you get the question. MR. DONOVAN: I think you may want to re-ask it, it's vague. BY MR. PARKINS: Q Were you present at a presentation or meeting with Lehman where Moelis handed out materials to Lehman? A I don't recall if Moelis or the debtor handed out materials to Lehman, I do recall there was a meeting where materials were handed out. Q Okay. And how many meetings were there between the debtors and Lehman where materials were handed out by the company or Moelis its investment banker? A I don't recall. Q Okay. So it's your testimony that you MR. DONOVAN: Objection. Foundation. don't recall what this Footnote 2 is referring to? Was there a meeting-- was there a presentation made by Moelis that you were present
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Marc A. Beilinson No, I don't know what first docrunent they were referring to. Q Look with me then on Exhibit 8. While these documents have a June 2nd date on them, the Footnote 2's are different. Look at Footnote 2 on Exhibit 8, it has an additional sentence. A Yes, it does. Q All right. Lehman is completing its own quantitative analysis of the value of the company and will supplement this term sheet once that analysis has been completed. Do you recall receiving a Lehman quantitative analysis as to the value of the company? A No. Q Were you ever advised by Lehman that they had done such work? A I know they were analyzing a lot of things and had retained Lazard to do so. Q Had you authorized access by Lazard to all the company's books and records to perform due diligence? A No.
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Marc A. Beilin son regard to each of those debt pools. Q Can you tell me what other creditors of the debtor had access with respect to all the various debt pools of the debtors other than Lehman? None. A Q Thank you. Were you ever advised, sir, that Lehman had completed a quantitative analysis of the value of the company? A No. Q Did you ever inquire as to whether Lehman had, in fact, completed a quantitative analysis of the value of the company? A No. Q Do you recall getting this document marked as Exhibit 8 with this footnote in it? A I don't recall reviewing the footnote. Q Okay. In the context of negotiating an overall restructuring, were you inquisitive as to what the other party to the negotiations thought the value of the company would be? What was important to me as chief A restructuring officer was that I had a view with regard to what reasonable and fair value was in
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Marc A. Beilinson You didn't give Lazard access to due Q diligence? A I did give access to due diligence. Q Did you put a limit on access that Lazard would have for due diligence? A Yeah, it was not all. Q Not all what, sir? A It was not all documents of the debtor, so there was a limitation. Q Did it involve all the hotels of the debtor? A Did what involve all the hotels ofthe debtor? Q Lazard's access to due diligence, did it involve due diligence as to all the hotels of the various debtors? A Some information with regard to all the hotels, yes. Q Looking with me at Exhibit 2 just for reference, sir, did it involve access to the various debt pools and hotels and collateral reference there under the green coloration we talked about earlier? A Yes, there was some due diligence with
Marc A. Beilinson determining a comprehensive restructuring which included a plan support agreement with Lehman which put limits on the amount of debt that this could -this company should have on it in a recapitalized structure. Q My question -A So what was important to me was what our view as to appropriate value ranges were, not what Lehman's view of appropriate value ranges were. Q So the party you were -- you were indifferent to what Lehman's perspective was as to the value of the company then in the context of these negotiations? I wasn't indifferent. A
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Marc A. Beilinson I don't recall saying to them that I A didn't care what their views were. Of course I care what everybody's views with regard to value are, and to the extent that they wanted to discuss value, I had an open mind with regard to listening to their justifications with regard to value determinations just like I would have an open mind with regard to Midland and their views if they had any with regard to what they believe their collateral pool was worth. Q What you just said, where you said the term sheets that were being exchanged provided for Lehman to get a hundred percent of the equity of the reorganized company, that's correct, isn't it, that's what they contemplated, right? That's correct. A Q Then Lehman would be concerned with respect to not only the value of its collateral but the collateral across the board with respect to all of Innkeepers' hotels; is that correct? I don't know what was, Lehman was A interested in. Q Well, in your negotiations with Lehman, did you discuss the value of hotels across
Marc A Beilinson Speculative. A No, I have always maintained that Midland should receive a note for the amount that the court determines to be the value of their collateral. I actually in negotiating with Lehman, it was extremely important to me to consider the interest and the flexibility of other parties within this capital structure, and that it was my belief that by equitizing Lehman in full it created about $20 million ofEBITDA that could go to service the debt that the court determines is the fair value of the collateral of every other secured creditor, and that it would actually facilitate my ability to reach an agreement with Midland and other secured lenders in this bankruptcy estate. Of course, that was based upon a number of assumptions, and with regard to CMBS creditors, and it was based upon knowledge I actually received from Midland themselves with regard to their lack of ability to take equity themselves and the fact that this was the type of-- this transaction with Lehman allowed me to give Midland the type of consideration that they would prefer in restructuring. Q So you think Midland would prefer
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Marc A. Beilinson the board since Lehman was going to be the ultimate equity owner of all these hotels? A I primarily discussed the range of values with regard to each pool of hotels. I mean, my view was pretty simple. Maybe it was too simple. It was that ifi was providing what the court determines to be the secured amount of the claim in a note to each of the secured parties other than Lehman, that when Lehman equitizes, the only equity value of the enterprise came as a result of them equitizing their collateral since by definition everyone else is getting a hundred percent of their secured claim in accordance with the Bankruptcy Code. Q When you were negotiating with Lehman, were you representing the debtors that owned the hotels that are in Chapter 11 in the Midland pool? A Absolutely. Q Do you think those debtors-- did you ever discuss with Midland in the context of the Lehman negotiations whether they shared your view that the amount of recovery should be capped at a value you determined? MR. DONOVAN: Objection. Vague.
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Marc A. Beilinson having more than $200 million of its debt eliminated in the context of a restructuring, is that what you think? A What I said was that they would prefer a note as a form of consideration equal to the value of their collateral rather than equity or some other type of consideration that the court may deem appropriate under the new equivalent provisions of the Bankruptcy Code. Q Did you have these kinds of negotiations on a restructure with Midland -A Oh, I-Q --discussing these points with them? A I absolutely attempted to and, you know, their retort at the beginning very beginning was, you know, phrases like "Give me back my collateral, I will never accept an AB note." They didn't show the type of flexibility that allowed to result in a consensual restructuring. I think that tone has changed substantially since this timeframe. In fact, in a conversation I had with Midland just last week, I believe that I'll be receiving some type of proposal with regard to a note structure. And, you know, they validated my initial view that
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Marc A. Beilinson special services didn't want equity or other types of consideration rather than a note. So, you know, I actually thought about Midland a lot, and come into this plan support agreement, and still believe that I'll end up with a consensual resolution of this bankruptcy estate. Q Let me just be clear here because you talk in the first day declaration by Mr. Craven, you talk in this pleading about the consensus that exists with respect to the PSA you're seeking to approve. I see we have Lehman which has $238 million and 20 hotels. Identify for me what other special services or other creditor constituencies have joined with you in support of the PSA that you know of today. A Well, I'm in discussions with everybody. I think that Chapter 11 is a consensus-building paradigm, and I believe this PSA created the framework to build consensus around it, not just amongst lenders but amongst unsecured creditors, amongst Marriott, amongst franchisors. So, you know, is it my belief that this is the beginning of a process that will resolve, you know, a lot of consensus, yes, that's my belief.
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Marc A. Beilinson not the rest of the creditors as far as you know today; is that correct? A I believe this is a consensus-building process. Q I'm asking today, sir. A I don't know ifthere's a lack of consensus, that this is an appropriate manner of moving forward. Q You mentioned Marriott. A I believe these people are appreciative of the fact that I'm moving forward and continuing to talk to each of the special servicers in trying to reach resolution with them as much as I can on a consensual basis. Q But you can't talk about a different transaction than the one you are proposing under the PSA; is that correct? A No. Q You can't, correct? You cannot, I'm correct? A That's not correct.
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Marc A. Beilinson So my question is, today, what other lenders support the PSA as far as you know? Today. A I don't know who's supporting and not, except for you.
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Q How about the mezz lenders. Do you think mezz lenders is supporting getting wiped out under your proposed plan of reorganization? A I don't suppose that any party who is receiving zero in this restructuring will be supportive. I think that that would be the position of holders of the Series C Preferred who I'm wiping out. That would be AIC who's a holder of the Series A which I'm wiping out. And also Apollo Investment Corp. who owns the common equity who's receiving nothing in this reorganization. I don't think
anybody who is losing a substantial amount of money will be supportive oflosing hundreds of millions of dollars. Q Have any other special services, any special services or any other creditors joined in the PSA by signing it? A No. Q Okay. So the consensus of the creditor body is with a $238 million creditor, but
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Marc A. Beilinson Q You believe you're free to talk about a different plan of reorganization at this time than the one proposed under the PSA? A I believe I have a fiduciary duty to this judge and to the court and to the process to be open to people talking to me about any type of transaction. Q Have you allowed any third parties to have access to due diligence information in order to make such a proposal since the beginning of the bankruptcy case? MR. DONOVAN: I'm going to object to the question. A No. Q Others have asked though, haven't they? A Yes, but they haven't presented proposals which I thought had viability or import. Q So you want a proposal before due diligence is done in order to let them have due diligence, is that what you're saying? A I will look at anything that someone puts in front of me and use my best business judgment to determine how to respond once I have
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Marc A Beilinson something in front of me. Do you believe that PSA is effective Q as to the debtors today? A Absolutely. Okay. Do you believe that PSA permits Q you to negotiate an alternative transaction today? A Yes, I believe that -We'll look at that in a little bit. Q MR. DONOVAN: Hold on, let him finish, please. A I believe that if someone submits a proposal that I believe has desirability and viability that I can discuss that. Q Have you gone out and submitted alternative transactions to anybody? A No. Q Your PSA has yet to be approved though, correct? A That's correct. I actually and fundamentally believe that this PSA is in the best interest of the debtor in this bankruptcy estate. It does more for all creditor constituencies than any proposal that I personally could come up with. It equitizes a hundred percent of $238
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Marc A Beilinson BYMR. PARKINS: Did you shop this transaction before Q the filing to see if you could get a better deal for the various constituencies reflected in this Exhibit 2? A Yes, I talked to Midland and they said they had absolutely no interest -Did you show them -Q A -- in the transaction. Q Did you show them the Lehman transaction? A I did not. Q You did not. Did you show it to anybody? A Oh, I showed it to Midland. I talked to Midland about it prior to the time that it was executed and prior to the time it was filed and I got no reaction that they had an interest in topping. Q That was the day before the filing, correct, a day or two before the filing? A A couple days before the filing and they showed -- well, you were at the meeting. And-73
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Marc A Beilinson million.

It creates $20 million of EBITDA that can be used to support the enterprise. It allows us to do deals with Marriott and other constituents because they believe that the capital stock is sustainable and they want to do business with us in the future. It allows me to support whatever the court determines is the fair value of the secured claim of each of the secured creditors. I think this is an extremely important PSA I believe that it is the benchmark of a successful internal restructuring of the company for the benefit of all. Q Have you shopped this transaction with other constituencies in this case, this exact transaction to get a higher and better deal pre-petition? I don't believe there is another A transaction which would provide a higher and better deal. Q So is your answer no? MR. DONOVAN: I think his answer is his answer.
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Marc A Beilinson That's right. Q A -- as you know, you showed absolutely no interest in getting involved or putting forth a transaction, so no. So in the months that this Lehman Q transaction was being negotiated, you didn't advise Midland, at least, about its existence until a day or two before the filing; is that correct? A Oh, that's correct. Q Okay. You didn't advise any of the creditor constituencies about its existence and its negotiation before the filing, did you? A I believe that Marriott was aware that I was negotiating a transaction. Q Who was? A Marriott was involved. Marriott. Q A And not involved but informed that I was negotiating a transaction with Lehman Brothers to equitize. But you didn't shop it anywhere, Q correct? MR. DONOVAN: Objection. A I'm not sure what the word, the
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Marc A. Beilinson meaning of those words are. Q You're not aware as a bankruptcy lawyer what the word "shop a transaction" means? To whom? I really just-- if you're A asking me whether I talked to other people about similar potential transactions, not, not exactly like the one with Lehman Brothers, because there wasn't anyone in a similar situation who had the ability and desire potentially to equitize a substantial amount of the debtors' secured claims. Q How about with respect to a different structure, did you talk to other creditor constituencies about an alternative to the Lehman transaction before the filing of the bankruptcy case? A Yes, I talked to, you know, Midland to see what structures they might find acceptable. Q That was two days before the bankruptcy? A Oh, no, that started months before. Q When did you show them the Lehman deal? I didn't show them the Lehman deal, A but I talked to them about what they would have an
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Marc A. Beilinson MR. DONOVAN: Let me give you-- let me give you two instructions. One is to the extent you were acting on advice of counsel or you were discussing transactions that were discussed with counsel and not disclosed, you shouldn't answer that. But to the extent you can explain the process you went through with the board without disclosing attorney-client privilege-MR. PARKINS: That's not my question. My question -- let me rephrase my question. MR. DONOVAN: Okay, then please do. BYMR. PARKINS: Q My question is: What alternative transactions did you discuss with the Board of Directors relative to the Lehman one before it was approved by the Board? MR. DONOVAN: My instruction is the same. To the extent you can answer that without disclosing attorney-client information process, you can answer. A Well, listen, I talked to them about the process of moving forward with an internal -with a Chapter 11 without a plan support agreement
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Marc A. Beilinson interest in in connection with a plan of reorganization, and I was completely stonewalled. So no, I didn't show them the Lehman transaction, but Midland showed absolutely no interest in being involved in the internal restructuring, so. Did you shop the deal to any outside Q investors to come in and do a third-party restructuring of the company not within the confmes of the creditor constituency? A No, I did not. Did you shop it since the filing of Q the bankruptcy case? A No, I have not. When the Board of Directors of, or the Q Board of Trustees met prior to the filing of the bankruptcy case to approve the PSA and the Plan Term Sheet, what options to that PSA did you discuss with the board had been explored by the company prior to the filing of the bankruptcy case? MR. DONOVAN: Objection. Youjust asked him the day before? MR. PARKINS: Before the filing-MR. DONOVAN: Okay. MR. PARKINS: --of the PSA.
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Marc A. Beilinson and an agreement with numerous constituents of the debtor. I discussed with them what a free-fall bankruptcy looks like in comparison to a transaction where you have $238 million of debt taken off your balance sheet, the security interest go away having free and clear assets that could be utilized with regard to the entire company. We talked about what a free-fall bankruptcy would look like if we didn't have Marriott's agreement with regard to fulfilling the debtors' obligations with regard to the PIPs. We talked about the value inherent in, you know, freeing up $20 million ofEBITDA. Q Tell me about the alternative deals you described to the board so we could make a decision on this deal versus another deal. A It was our view that this internal restructuring was in the best interest of the estate of the debtor and it was the best viable alternative for the benefit of all constituencies and that in our best business judgment that executing this PSA with Lehman Brothers was a good result in comparison to other transactions.
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Marc A. Beilinson So you didn't present any alternative transactions other than the Lehman one to the Board before the filing; is that correct? MR. DONOVAN: Objection. Misstates the testimony. BYMR. PARKINS:
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Q Let's talk about Moelis. Moelis is your investment banker, right? A Yes. Q Was Moelis given the charge prefiling to go out and find alternative transactions to the Lehman transaction? A They were given the charge to give me their best advice so that I could utilize it in fulfilling my fiduciary duty and exercising my business judgment. MR. PARKINS: Object. Not responsive. BYMR. PARKINS: Q My question, sir, was: Did Moelis go out and seek alternative transactions to that reflected by the Lehman transaction pre-petition? MR. DONOVAN: Objection. Foundation. A If you can explain what you're asking, I'd be happy to respond.
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Marc A. Beilinson MR. DONOVAN: Objection. Foundation. You can answer. A They were with me in trying to explore what constituents were interested in alternative transactions including Midland. Q Did Moelis make presentations with respect to alternative transactions with respect to other creditor constituencies pre-petition? A I believe they did. I believe that was a point of our meetings with Midland in Kansas City and subsequent to Kansas City was exploring what alternative transactions they may have an interest in pursuing, and the response was there were none. Q Take, for example, in April ofthis year, not too long ago, did Moelis make a presentation to Midland that include restructuring alternatives? A I know they made a presentation but I don't know what it included.
Q Do you know whether it included taking a look at the proposed Lehman transaction? A No. Q You don't know?
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Marc A. Beilinson Q Did you instruct Moelis to go out and find alternative transaction to the Lehman transaction for the months of April, May and June through the filing to the Lehman transaction? A I asked them to discuss with me all potential alternative type transactions and look for the one that creates the greatest viability for the benefit of our constituencies which are the creditors oflnnkeepers USA. Q Did Moelis go out -A With no limitation on that. Q On your instruction, did Moelis go out and shop alternative transactions to the Lehman transaction? A To people external of our capital structure? Q Yes. A No, they did not. Q How about internal to your capital structure, did Moelis go out and make presentations with respect to alternative transactions to the Lehman one to the various other creditor constituencies? A They--
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Marc A. Beilinson A No, it didn't. I don't think the Lehman transaction occurred back in April. Q Had you made a proposal to Lehman by the time you met with Midland? MR. DONOVAN: Objection. A I don't recall. Q You don't. Well, we'll get into that in a little bit. A Good. MR. DONOVAN: We're all looking forward to it. BYMR. PARKINS: Q We'll get into that in a little bit. A Well, why don't we just do that now? (Document titled Illustrative Terms of Proposed Restructuring dated June 2, 2010 marked as Exhibit 9, as of this date.) BYMR. PARKINS: Q I've handed you what's been marked Exhibit 9, it's again a Lehman ALI production with Bates stamp number 32 through 40. A Okay. Q I ask you to look again with respect to the Equity Offering Backstop/Conditions Precedent
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Marc A. Beilinson section of this document. I've reviewed it. A Q Okay. As I look at the Equity Offering Backstop here, I see Apollo Investment Corporation bought a backstop to purchase 61.82 percent of the equity. If you look with me at the prior exhibit, there was a different number of equity, amount of equity going to be purchased, slightly less. Can you tell me why? A No, this was another proposal by a third party that was unacceptable to me and that I let them know it was unacceptable. Q Okay. (Document titled Illustrative Terms of Proposed Restructuring dated June 4, 2010 marked as Exhibit 10, as of this date.) BYMR. PARKINS: Q I've handed you what's been marked as Exhibit 10, another Lehman production, numbers 41 through 50. A Okay. Q I ask you again to look at the sections, I think beginning on page 5 of this exhibit, New Equity, New Equity Capitalization
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Marc A Beilinson So there was a negotiation, you just Q rejected it; is that correct? A No, I received a document and I rejected it. Q I thought you said you didn't recall receiving a document? A Well-MR. DONOVAN: This one. BYMR. PARKINS: Q This document. A No, I said when I-- when it was-- if it was transmitted to me, I would have received it and I would have rejected it. Q And what counteroffer did you give Lehman at this time, if any? I don't recall this time frame. A Q Do you recall whether the proposal that the company wanted Lehman to accept was embodied in what's called the Moelis Presentation reflected in Footnote No. 2? I don't remember what was embodied in A the Moelis Presentation that was described in Footnote 2. I mean, if you have it, I'd like to take a look at it so I can -85
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Marc A. Beilinson Options and Conditions Precedent. (Reviews.) A I'm sorry, what would you like me to review? Q The sections designated New Equity, New Equity Capitalization Options and Conditions Precedent, pages 5 and 6. (Reviews.) A I've reviewed it. Q Do you recall receiving this document? A No. Q If it was transmitted to the company, it would have gone to you as the negotiator for the company, though, correct? A Yes. Q Do you recall Capitalization Options A and B becoming part of the negotiations between you, Lehman and Apollo Investment Corporation? A No. They were not part of my negotiations with either Apollo or with Lehman. I found it wholly unacceptable and consistent with, I believe, Exhibits 7, 8 and 9, not acceptable to the debtor, and I didn't engage in discussions with regard to this as a meaningful alternative.
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Marc A Beilinson We'll get there. Q A -- comment on it. Q We'll get there. Okay, I'm happy to wait. A Are we going to get to documents which reflect anything that were acceptable to the debtor, because so far you've been showing me offers made by a third party that have been unacceptable. Q Well, we started out with the PSA that you signed, Mr. Beilinson, so I take it that was acceptable? A That was acceptable. Q So we started there. (Document titled Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring dated June 17, 2010 marked as Exhibit 11, as of this date.) BY MR. PARKINS: Q Mr. Beilinson, I hand you a document marked Exhibit 11. Before I ask you to read some portion of it, do you recall who represented Apollo Investment Corporation, what law firm? I didn't hear the question. A Q What law firm do you recall
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Marc A. Beilinson represented Apollo Investment Corporation? A I believe Paul Weiss. Q This document again is a Lehman production. MR. DONOVAN: Sir, are you representing all these went to the company, or you don't know? MR. PARKINS: Don't know. MR. DONOVAN: Okay. MR. PARKINS: It's a production, I don't know where they went. MR. DONOVAN: No, I know, I didn't know if you just took out, okay. BYMR. PARKINS: Q This document is marked 230, Bates numbers 230 through 241. I will note that it has a header: PW Comments dated 6/22/10. A Okay. Q I ask you to look at this document beginning on page 5, and 6, and review the areas designated New Equity, AIC Purchase of New Equity and Conditions Precedent. (Complies.) A I've reviewed it. Well, you asked me 87
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Marc A. Beilinson purchase of new equity, does it not? A What this document seems to do is allow Apollo Investment Corp. to purchase equity that Lehman receives from a restructuring. Q Did you on behalf of the company ever go out to try to find a different buyer for the stock that Lehman wanted to sell? A No. Q I thought it was important to you that there be a buyer. A There was, and I was -- I was pleased that Apollo Investment Corp. was there and in discussions with Lehman. Q By the way, you're on another board of directors of an Apollo-related entity, aren't you? A Yes. Q What entity is that that you serve on the board of directors on? A Apollo Real Estate Commercial REIT, it's called ARIon the New York Stock Exchange. I'm an independent member of the board and I'm an independent member of the audit committee of that entity which is a public entity subject to SEC rules and regulations. 89
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Marc A. Beilinson to review Conditions Precedent? Q I'm sorry? A Did you ask me to review Conditions Precedent, too? Q New Equity, AIC Purchase of New Equity Purchased and Conditions Precedent, yes. A Let me review that provision now. (Reviews.) I've reviewed it. Q Okay. Do you remember seeing this document before today? A A document like this. Q This document -A Not-Q I'm sorry, sir. This document-finish up. I don't know if it was this particular A document. Q But again, if the company received a document with respect to the negotiations for restructuring, you would have gotten it? A If they had received one, yes, I would have received it. Q This document provides for AIC
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Marc A. Beilinson Do you know if any disclosure has been Q made that you are on a board of directors of an affiliate of the ultimate parent of this debtor? MR. DONOVAN: Objection to form. No, don't know. A Q Do you intend to make disclosure? Of course. It's in the public record, A I mean, I'm an independent director of a public company that went public about nine months ago, so. Q But you haven't made disclosure as of now? I don't-A MR. DONOVAN: You mean other than the SEC report, I mean, what are saying? BYMR. PARKINS: Q Have you made disclosure that you're on the board of a public company to the Bankruptcy Court affiliated with the parent company of this debtor? MR. DONOVAN: Objection to form. I don't know. A Q The Conditions Precedent set out in this document reflect again that AIC will execute a PSA along with Lehman and the company, correct?
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Marc A. Beilinson A You mean a document that was unacceptable to me given to, potentially given to the debtor, that is a provision. Q Was the transaction unacceptable to you as proposed? A illnn -Q Reflected in this exhibit. A I haven't read the entire exhibit, so. Q So how do you know it was unacceptable if you don't read it, sir? Read it, take your time. It wasn't important to me and I had no A interest in being part of a PSA with a third party. My interest was to have a PSA with a substantial creditor of Innkeepers, Hospitality and USA And to the extent that they had a prerequisite of selling part of their post-confirmation equity to a third party, it was important to me that they were talking to a third party that had knowledge, interest, and capability for fulfilling the transaction because that was a condition precedent to effectiveness of the PSA which I believe in my business judgment is in the best interest of an internal restructuring of this case. Q Did you advise Apollo or its lawyers
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Marc A Beilinson necessitated by the Marriott termination notices. I also was pleased that Midland brought a DIP financing source to the debtors' attention. As I told Midland and I've told everyone in connection with this bankruptcy case, my goal was to get the best possible tips on the best possible terms and, in fact, have done so. I might note that Apollo isn't doing either of the DIPs, Apollo Investment Corp. or Apollo aren't doing either of the DIPS, but I was pleased that they were supportive in at least providing a DIP proposal. Q Tell me how you communicated to AIC that Innkeepers wasn't interested in doing a PSA with AIC. A Verbal. Q And who did you tell? A People who were at AIC. Q Who did you tell? A Well, I don't really make things a secret, I mean people generally know how I feel and what I intend to do. Q Rather than osmotic transference, did you tell someone verbally that that was unacceptable?
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Marc A. Beilinson to stop putting in Apollo Investment Corporation as a signatory to a PSA? A I didn't advise Apollo or their lawyers of anything other than I had no interest in negotiating a transaction with them. Q With Apollo Investment Corporation? A That's correct. I understood that they were involved in negotiations with Lehman. It was important to me that they had an interest since they are a viable interested party in helping Lehman fulfill its obligations under the PSA, and to that extent I was pleased that AIC wanted to be involved, I was pleased that they were involved, and I was pleased that they reached a contractual relationship with Lehman. Q Looking earlier in this document on page 4 with respect to DIP financing. A Yes. Q Romanette i looks to me like AIC was considering doing the DIP financing for the fixed rate facility; is that correct? A Yes. I asked Apollo Investment Corp. if they would have an interest in funding the necessary DIP financings that were necessary --
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Marc A. Beilinson Sure. Q Who? A I don't recall. Q Okay. Who were you negotiating with from AIC at the time? A At various points in time various people who are on my board and also representatives of AIC I would talk to. Q Including the president of the company? A Excuse me? Q The president of AIC? CEO of AIC? A Who is the president? Q The CEO of AIC. If that's Jim Zelter, yes. A Q Okay. A I did talk to Jim Zelter on occasion. Q And that was the person you had that communication with a couple of days before the filing we went through in an earlier exhibit, correct? A Jim Zelter is the person I wrote a letter to a couple days before the filing. Q You're referring to the e-mail, right? A
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Marc A. Beilinson you recall --better question, strike that. Do you recall receiving this document? A I received, recall receiving a document like this. Q Okay. Did you respond to this document? A Yes, I believe I responded to the document. Q What was the response? A I haven't reviewed this whole document, so I can't tell you. I -- was your question with regard to paragraphs -Q Take a second to review it. A -- Distribution of Equity or the whole agreement? Q Let's talk about the Equity provision. Did you respond with respect to the equity portion of this document? A I believe I did have a response. Q What was the response? A That we were getting closer. Q But not accepted, correct? A That's correct.
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THE WITNESS: Could we take a break? MR. DONOVAN: Do you want to do it now or after this? MR. PARKINS: What? MR. DONOVAN: Do you want to do it now? MR. PARKINS: We can do it now. (Whereupon, off the record.) (Whereupon, resumed.) BYMR. PARKINS: Q Before you, sir, is an exhibit which I've marked as Exhibit 12. It's a Term Sheet Alternative A. Again, a Lehman production starting at Bates number 254 to 264. It says Dechert Draft 6/29/10 in the right-hand corner. I ask you again to look at pages 5 and
Okay. We went through a lot of term
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Marc A. Beilinson 6. New Equity, Distribution of New Equity and Conditions Precedent. Take a look at that. A (Reviews.)
Marc A. Beilinson sheets through the month, evidenced through the month of June that were prepared by Lehman's counsel that you said were summarily rejected, unacceptable.
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I've read those two provisions. Q This document doesn't appear to have a provision for AIC to sign a PSA, do you see that, in the Conditions Precedent? A I do see it in this document. Q It does have a condition precedent agreement reached with Apollo Investment Corp. in form and substance satisfactory to Lehman. Do you know what agreement that would be? MR. DONOVAN: Maybe on the next page. BYMR. PARKINS:
It's on page 6, I'm sorry, third bullet point under Conditions Precedent.
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can't control like other parties, but, you know, I would go through their proposals and I would orally tell them what provisions were reasonable, acceptable, or not acceptable. And if they keep trying, I will keep having the same conversation, at some point in time they stop trying. Q Now, do you know whether or not Apollo found the provisions in this proposal acceptable? A I don't know. Q Okay. Did you have any discussions with respect to anyone from Apollo regarding this
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MR. DONOVAN: Thank you. 18 19 A I assume it was the type of transaction they ended up consummating where Lehman 2 0 was entering into some transaction with Apollo to sell some of the interest that we'll receive in this restructuring. Q Did you respond to this term sheet? I mean you received it on behalf of the company, do
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Marc A. Beilinson proposal perfected in this Tenn Sheet Alternative A? A I had many conversations with people who are on my board who also are employees of Apollo
Marc A. Beilinson Corporation wanted protections under Section 1145 and 1146 of the Bankruptcy Code with respect to transfer taxes and safe harbor with respect to securities laws? A I don't recall that. I believe that Lehman wanted protections with regard to those, I
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Investment Corp. with regard to the restructuring, and the debtor, and its operations -Q I'll ask a better question. A -- frequently. Q Better question. Did you have discussions with anyone from AIC regarding their acquisition of equity of the debtor as part of a global restructuring in response to this Term Sheet? MR. ERHLICH: Objection to form. A No, I had no discussion with them with regard to acquisition ofthe equity of this debtor. Q AIC clearly had different positions, they were the equity owner of the debtor? A Yes. Q And they had been evidenced in these various tenn sheets as potential acquirers of the equity or a portion of the equity of the restructured company, they were in both positions, is that correct, during this entire timeframe? A During this entire timeframe I had
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don't recall whether that discussion involved Apollo Investment Corp. or not. Q So you weren't, you didn't have any discussions involving Apollo's --Apollo Investment Corp's desire to have the benefit of those protections in the context of a restructuring? A I do not believe I had any conversations involving 1145 or 1146 with regard to with Apollo. Q All right. Have you had a chance to look at the pleadings filed in the Lehman case where Lehman sought approval of its transaction with AIC? A Which pleadings? Q Pleadings where Lehman sought approval of the transaction to enter into the PSA. A Yeah, I took a look at it.
Q Okay. And to enter and to sell 50 percent of its equity to be received in this
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Marc A. Beilinson made it clear to Midland, Lehman, Apollo, AIC, and any Apollo affiliate that happened to be within earshot, that they were going to receive no distribution from this bankrupted debtor on account of any preexisting equity interest that they had, that they were going to be wiped out with regard to the Preferred A, they were going to be wiped out with regard to their common equity. I was going to do a deal with, as it tums out, Lehman, who would be a hundred percent owner who had a condition to have an equity partner on a proposed confirmation basis, and was a positive feature that Apollo, who had lost essentially $250 million in this enterprise, still has sufficient interest and faith to talk to Lehman about purchasing 50 percent, yeah, that was a positive feature. Q Purchasing 50 percent of a company that has-A Fifty percent of the equity that they receive in a restructuring. Q Of the equity that they receive in a restructure. Now, is it your recollection in the context of these negotiations that Apollo Investment
Marc A. Beilinson restructure to Apollo, do you recall that document? A I recall seeing a pleading and
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reviewing a pleading in which they filed it before Judge Peck, yes. Q All right. A Can I clarify an answer, because I realized that I was talking about 1146 in the Bankruptcy Code and not talking to Apollo with regard to that provision. I don't really know what 1146 does, so I might have overstated that. So could you let me review 1146 so I'll what the substance is so -Q If you don't recall it, you don't recall it. A Okay. I just want to amend my answer to the extent that, you know, I don't really know what the substance of 1146 is. Q Sure. (Document titled Tenn Sheet Alternative A, lllustrative Terms of Proposed Restructuring dated June 22, 2010 marked as Exhibit 13, as of this date.) BY MR. PARKINS: Q I've handed you what's been marked as
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APP-00337
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Marc A. Beilinson Exhibit 13. It's a document again produced by Lehman, Bates stamp number 141 to 152. A Uh-hum.
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It's identified as a Dechert Draft
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dated 6/23/10 approximately-- well, six days earlier than Exhibit 12. A Okay.
Looking again at the pages 5 and 6 on
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10 the New Equity, AIC Purchase of New Equity, and Conditions Precedent to Lehman's obligations under 11 12 PSA, take a look at those, please. 13 A (Complies.) 14 I've reviewed those.
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Q Okay. This document with a date of June 22, 2010, Dechert Draft 6/23/10, still has AIC as a condition precedent executing a plan support
agreement as one of the parties, correct? A Yes, in this document from Dechert to somebody that is a condition precedent.
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Okay. Do you recall receiving this
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document? A I received many documents that were similar to this.
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Was this document acceptable, the
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Marc A. Beilinson not consecutively numbered Bates pages, so they may be the attachments, but they at least appear to be an aggregation of different pages and documents. A (Continues review.) Q I'd like you to look at this document, we'll start with page 1. Have you looked at page 1? A Okay, I'm looking at it. Q Page 1, it has apparently two e-mail chains, one from Joseph Glatt to you dated July 7, and one from Mr. Alan Kornberg at Paul Weiss to a group of recipients, including recipients at Dechert and recipients at Kirkland, and to Mr. Glatt at Apollo Capital. A Okay. Q Is Apollo Capital, first of all, the same as Apollo Investment Corporation? A I have no idea. Q Do you know Mr. Glatt? A I do know Mr. Glatt. Q Is he an employee of AIC or some other Apollo entity? A I have no clue. Q Okay. Do you recall receiving this 105
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Marc A. Beilinson proposal embodied in this document acceptable with respect to the equity ownership? A No.
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Marc A. Beilinson e-mail from Mr. Glatt? A I recall receiving e-mails from
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Q Okay. I take it then you communicated the answer no to Lehman in response to this
document? A Well, this was getting closer in concept and I probably communicated that this was
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getting closer in concept. (E-mail Exchange dated July 7, 2010 marked as Exhibit 14, as ofthis date.) A (Reviews.) Q I've handed you what's been marked as Exhibit 14. A Okay. Q The top of the first page appears to be an e-mail from Mr. Joseph Glatt at Apollo Capital
sent Wednesday, July 7 to you. A That's what it appears. Do you recall receiving this e-mail with the attachments? A (Reviews.) MR. DONOVAN: While you review that, 1 me just state for the record these are et
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Mr. Glatt, sure, if this says I received it, I received it. Q With respect to the second e-mail referenced here, the one from Mr. Kornberg, there's a little message attached to it, it says: All, As discussed last week, we are attaching two term sheets: One relating to the proposed agreements between Lehman and Innkeepers and the other relating to those between Lehman and AI C. We think this approach more accurately reflects the transactions under discussion. And it goes on: I hope that we can continue the very constructive discussions the parties have had to date. Please note that the attached are subject to further comments and revisions by AI C. Best regards, Alan. I want you to take a look at these term sheets that are attached to this document and tell me whether or not you agree with Mr. Kornberg's statement that they reflect-- that they more accurately reflect the transactions under discussion
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(Pages 102 to 105)
APP-00338
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Marc A. Beilinson at that time? A Well, this refers to a discussion that
Marc A. Beilinson
Q
The first bullet point reads:
Approval of the Bankruptcy Court of a plan support agreement executed by Lehman, AIC and the Company as contemplated by the Lehman-Innkeepers' Term Sheet, I read it correctly, didn't I?
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Alan Kornberg was having with Mr. Sage, Greer, Buck, Basta, Sathy, and Glatt, I wasn't necessarily part of those discussions.
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Well--
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You read it correctly.

All right. Is that your understanding
A So it maybe reflects something amongst them which isn't necessarily the CRO of--
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of the current negotiations at this time on July 7th?
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you so--
Mr. Glatt sent this transmission to
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A July 7th.
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I don't know what my thoughts were on

Okay. Do you have any dispute that
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No, he sent, he sent a transmission so

My question is, sir: Do these term
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I would know what was transpiring between them.
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this reflects the current status of negotiations at that time?
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sheets, as Mr. Kornberg suggests, more accurately reflect the transactions under discussion at that time on July 7th?
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A I don't have a view with regard to the current status on July 7th.
Q
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MR. DONOVAN: I'm going to object. This document appears to be somewhat irregular in that it seems to be an aggregation of documents, they aren't in consistent Bates order, so I don't think it's entirely clear or fair to ask him ifthese are the e-mail's attachments that were attached since we go from 127 to II 0 and then
But it is clear, at least from this
document, which is a Paul Weiss document, okay, that AIC was still intending to be a party to the PSA as recited right here in this document?
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A That's the way I would view this document.

Q
Okay. Then if I go on to the next
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term sheet which is, starts on page number 148,
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Marc A. Beilinson a few pages tO 148. MR. PARKINS: That's how we got them. MR. DONOVAN: You got them in 127 and they then went to 11 0? MR. PARKINS: This is how we got them, right. MR. DONOVAN: Okay. Well, I still object. MR. PARKINS: All right. BYMR. PARKINS:
Marc A. Beilinson Paul Weiss document dated 7/6/10 beginning at 148. Going to pages 5 and 6, looking at the topics New Equity, AIC Purchase of New Equity, and Conditions Precedent, would you take a look at those, please?
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(Complies.) I've reviewed it.

Looking at the Conditions Precedent,
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the section on page 6 of this document, it reads: The transaction become binding on Lehman when Lehman, Apollo Investment Corp. (" AIC") and the Company execute a plan support agreement ("the PSA") that incorporates the Transaction as set forth herein, including, and it goes on to have various bullet points, correct? A Yes, that's what it says.
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Well, let's take the first one to deal Paul Weiss, a document Draft 7/6/10,
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with the objection. Term Sheet, Lehman/AIC, take a look at that.
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A I'm going to have to read it all because--
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Q
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Please do.
Now did you accept this proposal?
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(Reads.)
It's only four pages.
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Q
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I've read the four pages.

Going with me to page 2 of this
A No. The only proposal I accepted was the final one that was a PSA filed with the Bankruptcy Court.
Q
What response did you make to the proposals embodied in both of these term sheets? A Well, I was focused in on a number of
document, Conditions to Execution of Stock Purchase 2 3 Agreement.

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things around this timeframe. I was focused in on
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(Pages 106 to 109)
APP-00339
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Marc A Beilinson coming to an agreement for which was an overall agreement with Innkeepers -- I mean with Lehman, which embodied a ton of elements. It involved conditions, events of termination, events of default, remedies, conversion of debt to equity, what rights would be there, what conditions subsequent there were. At this same time period, I was focused in on getting a DIP with regard to Five Mile, negotiating with Marriott, negotiating with other franchisors, preparing for a bankruptcy case, and running an operation the size oflnnkeepers. Q So what were your response to these
two term sheets?
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Marc A Beilinson with regard to some of these provisions were inconsequential to me.
But it was important that Apollo or
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someone else buy the stock from Lehman?
A Yes, because that was ultimately a condition precedent to Lehman's requirement of moving forward with the PSA
Now at this time, July 7, or so,
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that's about 12 days before the filing of the bankruptcy case, isn't it? Am I accurate?
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That's about right.

Okay. And these negotiations with AIC
were still ongoing with respect to the PSA as evidenced by these communications; is that correct?
A My response was I was giving people overall comments with regard to each and every element of these term sheets in an effort to move the process along, but obviously there were elements of each of these proposals which were not acceptable as a cohesive unit which would result in a PSA that I would finally execute in my business judgment. So, you know, I wasn't looking at specific provisions, I wasn't looking at how the overall transaction would be structured, all the conditions to it, whether they would be met and whether this
A Well, the negotiations really have to have two parties, and what I'm telling you, Lenny, is that I wasn't interested in responding to a term sheet, assuming it was sent by AIC to the debtor. My interest was negotiating the PSA and term sheet between Innkeepers and Lehman. The fact that Paul Weiss may have sent a term sheet indicating its interest in the various provisions including events of default and conditions precedent subsequent really was not the focus of mine and was likely not
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Marc A Beilinson was a viable business transaction in the business judgment of debtor to move forward with, at this phase it wasn't. Q As of this date did this accurately
reflect the transactions under discussion as reflected by Mr. Kornberg or was it not accurate?
Marc A Beilin son responded to by me.

Q
Well, let's go to the second term
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sheet.
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Sure.
Starting with Bates number 148, that's
a Term Sheet Alternative, it says Lehman/Innkeepers, did you look at that term sheet and respond to that one since that's the one you say you were focused on?
A Q
With regard to these provisions?

With regard to the transactions
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evidenced by the two term sheets sent to you by AIC's lawyer.
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Would you like me to review it?

Absolutely.
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I don't know-MR. DONOVAN: Objection. Objection to form. A --what was sent to me by AIC's lawyer and I wasn't focused in on any term sheet that AIC sent to me. Let me just be absolutely clear that it was, had I received a term sheet from AIC, okay, I was not focused in on it, it wasn't a type of thing I would have responded to meaningfully because my transaction was with Innkeepers. Those are the term sheets that I reviewed, analyzed and responded to to get to a final resolution. What Apollo's views with regard, or Apollo Investment Corp's views
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Okay. (Reviews.) I scanned it.

My question is: Did you respond to
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this term sheet with respect to the Innkeepers/Lehman deal?
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MR. DONOVAN: Objection to form. A I don't believe I responded directly to this term sheet.
Q
How about indirectly?
A I think I had some oral conversations with Lehman as to what would be moving forward.
Q
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And who did you talk with at this
date?
29 (Pages 110 to 113)

APP-00340
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Marc A. Beilinson A I talked to a number of people. This is getting close to a filing Q date, so do you recall who you talked to in the last 12 days before the filing trying to reach agreement on aPSA? A I talked to Suzanne Frey and Michael Lascher and a bunch oflawyers in the room from Dechert. Did your-Q A Talked to a lot of people. Q Did your lawyers at Kirkland engage in negotiations outside of your presence with respect to substantive terms of the PSA or was that for you to do only? A I was probably the primary person negotiating the terms of the PSA, but I'm sure that my counsel under my direction had, you know, substantive conversations with regard to various prOVlSlOnS. Q Okay. (Document titled Project Tavern Lehman Discussion Materials dated April22, 2010 marked as Exhibit 15, as of this date.)
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Marc A. Beilinson A Well, if it's the meeting I'm thinking of, it was at Lehman Brothers. Q Do you recall seeing this document before? A I do recall this document. Q All right. Is this the document that was referred to earlier in various footnotes as the Moelis Presentation? MR. DONOVAN: Objection. Foundation. BY MR. PARKINS: Q Do you know? I don't know. A Q Okay. Did you ask Moelis to make up, to prepare this document as part of the presentation you made to Lehman on this day? A I think that I was with Moelis and it was a joint effort between the debtor and Moe! is in preparing different aspects of this presentation. Q And who from the debtor? A That would be me. Q You. Okay. A And other officers and directors, but primarily me. Q As we go through this document, page
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Marc A. Beilin son BYMR. PARKINS: Q I've handed you what's been marked as Exhibit 15. It was produced last night by Innkeepers, Kirkland & Ellis. We got it last night. I'd ask you to take a look at it because I want to ask you some questions about it. A Sure. Q Okay. A (Complies.) Yes, I reviewed this.
Q Do you recall whether there was a meeting between Innkeepers and Lehman on or about April 22nd this year? A That wouldn't surprise me. Q Other than being surprised, do you recall attending such a meeting? A I'm not good at timeframes but -let's see. Four months ago sounds about right that I had a meeting with Lehman -Q Do you recall where that meeting was? A -- where we discussed this type of transaction. Q Didn't mean to interrupt you. Do you recall where that meeting was?
Marc A. Beilinson 5, for example, that page is entitled Consolidated Financial Overview. I take it that is for all of the hotels for the years 2007, '8, '9, '10 and projected for '11? A Well, it would be projected for '10. Q The remaining part of'10, and '11? I think that's accurate. A Q Okay. And the next page 6 is Fixed Pool Financial Overview for the same period of time. And these projections for 2010 and 2011 were the company's projections or Moelis' projections? A The company's projections. Q Moelis made no changes or modifications of the projections of the companies with respect to 2010 and '11 for either page 5 or 6? A I think they tested. We had day-long meetings where we talked about projections and what we thought. We had a discourse. We had views which were mutually the same, and we had disagreements, but, you know, essentially they're management's estimates. Q Page 7, Floating Rate -- Floating Pool Financial Overview for the same periods of time. Just going with me through 8. Other Pools Financial
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(Pages 114 to 117)
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Marc A. Beilinson Overview for the same periods of time. So we have Fixed Pool which is Midland, Floating Pool which is Lehman, correct, and then we have Other Pools which are various special servicers; is that correct? A That's correct. Q Before this meeting on or about April 22, had you had any discussions with anyone from Lehman about a global restructuring? A Not that I recall. Q Okay. Did you go to the Board of Trustees for authority to prepare this presentation and give it to Lehman? A I don't think so. Q Okay. Did you talk to anyone from AIC regarding the preparation and presentation of this document to Lehman? A I talk to my board members all the time. Q Specifically with respect to this document? A I think I may have. Q Did you seek board approval to make this presentation? A I don't believe I did.
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Marc A. Beilinson versus GEN 5, GEN 6 or the Hyatt properties were going to do better or worse in this environment. We looked at capital intensive natures of certain assets versus others and how much CAPEX would be put in. We really looked at, you know, comparable companies and what their multiples looked like and how they are similar to ours and different to ours. And we looked at discounted cash flow, you know, analysis and projections to come to a feeling as to what range of values we believed each of the tranches, you know, had at this part in time. And, of course, that was back in April, and that's obviously a continuing process and I continue to ask Moelis to consider all of the assumptions. I consider all of the assumptions to decide whether the range should be moving up or if the range should be moving down with what's going on in the macroeconomic environment, a world that we live in. So we looked at everything in coming to a range of values. Q That sounds like there was a -A Not everything, but a lot.
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Marc A. Beilinson Go with me to page 12 of this Q document, Illustrative Valuation Ranges for Lehman Hotels, Fixed Pool Hotels, and Other Hotels. Illustrative Value. What does an illustrative value mean to you? Well, it's a kind of a first A indication as to the range of potential values for certain assets that are being discussed. Q And how did these values come about as written here were reflected to the Lehman Hotels, for example, let's start with that? A That was kind of the value that was placed there after, you know, my financial advisors and Moelis and management and I, you know, looked at, you know, all ofthe elements of each of the hotels within each ofthe pools. You know, we, you know, did an asset-by-asset analysis with regard to the quality ofthe assets, the competitive features, what was going on with our clients in those environments, and what we thought would happen in the future. We looked at the type of asset as to whether it was a Marriott Hotel or a different type of hotel to determine whether the GEN 1 quality
Marc A. Beilinson Q Since there was a number of underlying work product done that gave rise to these illustrative value assumptions; is that correct? A You know, I don't know, it was more working sessions where we talked about all sorts of elements and I'm sure, you know, we came up with calculations. MR. PARKINS: Counsel, ifthere are underlying documents which support these, I don't know if they've been produced, but we'll look, but if they haven't been produced, I'd like them. MR. DONOVAN: Send me a letter, I'm not sure, they may very well be responsive. MR. PARKINS: I don't know, I didn't look through everything last night. MR. DONOVAN: Neither did I. MR. PARKINS: All right. BYMR. PARKINS: Q Going with me to page 13, I see that page is entitled Illustrative Pro Forma Structure. And this page seems to describe a transaction very similar to what is reflected in the PSA, correct? A Yes, it does.
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(Pages 118 to 121)
APP-00342
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Marc A. Beilin son

Q
Marc A. Beilinson asked if Apollo may have an interest, and my response was I didn't know but they've been supportive and may have an interest.
And this was presented to Lehman
without any anticipation of making, pre-advising Lehman that you're going to make a proposal for Lehman to be the equity owner of the company is what you're telling me?
A That's what I'm telling you. MR. DONOVAN: Objection. Misstates the testimony. BYMR. PARKINS:
Q
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You say Apollo had been supportive,
didn't they have an obligation to fund some PIP work that they failed to do? MR. DONOVAN: Objection.
MR. ERHLICH: Objection to form. MR. DONOVAN: Objection. It calls for
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Now, what was Lehman's response at
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a legal conclusion and speculation by this witness. A Apollo has always been supportive of Innkeepers.
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this meeting to this Illustrative Pro Forma Structure?

A They needed more information.
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work-A
Have you ever asked Apollo to fund PIP

Yes.
the investor?
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Whoever Lehman chose.
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Did you think Lehman would have to
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choose someone? How would you know that as part of 2 0 a cold prof offer to them?
MR. DONOVAN: I'll object to the form. Foundation. A Go ahead, you can answer. As I testified earlier, when I look at
before the filing of the bankruptcy case? A Yeah, I answered your first question,
now is there a second question?
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Q
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Is the answer yes to that question? I answered yes to have I ever asked Within four to five months prior to
Apollo to fund PIP work.
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Marc A. Beilinson each of the constituents in the beginning of a restructuring process, I try to gain an insight through my past experience as to what type of consideration people would like to have versus not like to have. What will motivate them to accept equity versus debt, you know, what type of enterprise they have, and I made an assumption early on way back in April after taking everything into consideration in a very hostile economic environment, that Lehman in converting all of its debt to equity may very well want the right to take some of that equity risk off the table post confirmation and realize on that value of the equity. So I made that assumption way back in April, I think it was, and it's proven to be a fairly accurate assumption, because, as you know, when people take a hundred percent equity, you can do quite well or you can do quite poorly as Apollo did in losing $250 million. Q When-A So I suggested to them that they could take half their equity off the table after they-after the transaction is consummated and that, you know, I believe even in that meeting they said,
A The answer is no in that five-month period. Q Okay. A Actually, that's unfair. I did have a conversation with Apollo as to whether they might contribute money into the bankruptcy estate for purposes of fulfilling certain potential guarantee obligations they had to a third party in exchange for a release. That of course I couldn't grant but the third party could grant, and did move forward. As you probably know, back in 2008, early 2009, I did seek to monetize a third-party guarantee against Apollo for the benefit of the bankruptcy estate and, in fact, they contributed money into the bankruptcy estate for purposes of funding PIP with regard to the Lehman pool in exchange for a release by Lehman of that guarantee, as I recall. Q I believe in March of 2010 Marriott
sent notices of default and franchise termination with respect to a number of hotels; is that correct?
A Q
That's correct.
As of that time, after that time, did
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APP-00343
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Marc A. Beilinson you approach Apollo for funding the PIP work which was the subject of the Marriott notices? A I talked to my board and I talked to Apollo Investment Corp. with regard to how I was going to consider Innkeepers' handling a problem that the capital structure which existed was unsustainable. There wasn't sufficient cash flow to pay its lenders and fulfill the Marriott PIP obligations that, quite frankly, I had paid lenders for probably a year when those funds could have been better utilized or potentially better utilized in fulfilling the PIP obligations, and that I believe the time that we needed to find a way to restructure this company to make it sustainable with a capital structure that was viable, fair and appropriate to the parties and could be dealt with in a way that Marriott wouldn't pull the flags which I thought was a-MR. PARKINS: Move to strike that as nonresponsive. BYMR. PARKINS: Q My question was -A -- value disruptive event in regard to--
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Marc A. Beilinson Q Was it your position that you were representing all the Innkeepers' entities including those from the Midland pool? MR. DONOVAN: Objection to form. A I was a fiduciary on behalf of the integrated Innkeepers structure. Q Did you go to Midland and suggest to them that you were going to make a proposal to somebody to eliminate $250 to $425 million of their debt before you did that? A No, because I didn't believe that it had any negative impact on Midland. In fact, I thought that making this proposal was substantially in Midland's favor. It equitized another party of the capital structure. It took 20 assets that were securitized and it freed them up to give this company flexibility to operate in a positive way with its franchisors and other partners. It created $20 million ofEBITDA that could be utilized to support whatever was negotiated with Midland with regard to the fair value of its collateral which I as a bankruptcy professional believe they're entitled to in a plan of restructuring context. And I thought this was actually, in my view, in the best
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Marc A. Beilinson My question was -Q MR. DONOVAN: Could you let him finish? -- with regard to your properties. A Q My question was: Did you ask Apollo Investment Corporation to fund the PIP work necessary after Marriott gave the notice, yes or no? MR. DONOVAN: Objection. Asked and answered. And you can answer however you feel you need to answer fully and fairly. A I talked to members of my board with regard to always to potentially handle this situation. Q And did Apollo Investment Corporation fund the PIP work after the Marriott notices of default came in? Not that I'm aware of. A Q You would be aware of it, though, wouldn't you? A I think SO. Q Okay. At the time you made this presentation to Lehman, and I'm asking you to look here on page 14. A (Complies.)
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Marc A. Beilinson interest of the bankruptcy, the future bankruptcy estate and in the best interest of other participants. MR. PARKINS: Nonresponsive. BY MR. PARKINS: Q My question is: Did you ask Midland whether it was okay to make a proposal where it wiped out 250 to 425 million of their debt before you made it? MR. DONOVAN: Objection. Asked and answered. You can answer. BY MR. PARKINS: Q Your answer was nonresponsive so I'm asking you again. Did you talk to Midland whether it was okay to make this proposal with respect to its debt? MR. DONOVAN: Objection. Asked and answered. You can answer again. A I did not talk to Midland with regard to-Q This proposal? A -- this proposal. Q How about with respect to the other pools, did you talk to anybody else in the other
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Marc A. Beilinson pools with respect to whether it was okay to make this proposal as their fiduciary? I don't believe I have an obligation A as a fiduciary to talk to other pools with regard to this proposal in advance of making the proposal. MR. DONOVAN: Is it a good time to take a lunch break, it's 12:15. MR. PARKINS: I've got one more document I think would be good to go through and then we can take a break. I think they'll tie together. MR. DONOVAN: Okay. (Document titled Project TavernMidland Discussion Materials dated April 28, 2010 marked as Exhibit 16, as of this date.) BYMR. PARKINS: Q I'd ask you to look at Exhibit 16, it's a document dated April28, 2010, on Moelis we'll call it letterhead, Project Tavern, Midland Discussion Materials; do you see it? A Yes. Q Did you authorize Moelis to prepare this document? A Yes. And, in fact, I think I was 131
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Marc A Beilinson like them to consider. So on April 27 -- 22nd I put out to Lehman a discussion piece so we could talk through issues and discuss whether there was any kind of mutuality to move forward in a relationship. Q Did you tell anybody from Midland at the meeting on or about April 28 that six days earlier you had expressed some vision to Lehman about how their indebtedness would be treated? No, because I didn't think it was A anything other than a discussion piece and really my goal was, this was the first time that I could meet with Midland because, as you know, there was a general service rep until a few days before this, so Wachovia was there. All of a sudden in the middle of the debtors' crisis with value destructive events occurring around me with regard to Marriott and potential deflaggings and default notices, a liquidity crisis in an environment with RevPAR defining at a substantial rate, okay, I then have to switch over and start talking to someone who has never been involved with Innkeepers before, a special servicer who has never heard of Innkeepers before. So when I make that switchover in a three-day period of time, it's important for me to 133
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Marc A. Beilin son involved in the preparation of this document together with management. Q Was there a meeting with Midland on or about April 28, 2010? I'm not good with dates, but I think A that was probably the time period. Q And that was, it looks like, about six days after the meeting that likely occurred with respect to Exhibit 15. A That's probably about right. Q Okay. Now, as I go through this document, I don't see any sheets in here which reflect the proposal you made to Lehman of how you're going to deal with Midland's debt, am I missing something here? A No. The purpose of this meeting was to try to assess what Midland's views were with regard to a restructuring of their debt. Q But there's no-- the treatment that you had proposed to Lehman in an offer to Lehman six days ago with respect to Midland's debt is not in here? A It wasn't an offer to Lehman, it was a discussion piece which laid out a structure that I'd
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Marc A. Beilinson educate the special servicer as to what the circumstances are with regard to their collateral, what the circumstances are with regard to their borrower, what the circumstances are with regard to Innkeepers, and begin a dialogue as to how we're going to handle this crisis together. Q And you don't-Because that's the way I view it. A Q And you don't think that at the time you met Midland that it was appropriate to advise it six days earlier you had put together a suggestion of a restructure which eliminated the 250 and 425 million dollars of their debt? A No, because what I did with Lehman-well, first of all, I was subject to I believe a confidentiality agreement. It was a meeting to discuss resolution of our claims, and if you'd notice, those values were all bracketed. Q You're a fiduciary for-A Those were all bracketed numbers. Q At that time you were the fiduciary for the Lehman debtors and the Midland debtors at the same time? A I was a fiduciary for an integrated
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Marc A. Beilinson enterprise which had a number of lenders, one of which being Midland, one of them, you know, being a number of different lenders. So it's an integrated enterprise that I'm the fiduciary for for the benefit of everyone. And my goal has always been to ensure that Midland gets a note for the value of their collateral, which is exactly what the Bankruptcy Code tells a fiduciary in a bankruptcy estate is the lender's right. So I want to protect the lender's right to do it, and one of the ways I was doing it was by creating the equitization of the Lehman portfolio. So yes, I believe I was acting in my fiduciary best interest on behalf of all constituents of this estate. Q So as a fiduciary for Midland, which is the largest creditor of these estates; is that correct? A I am not a fiduciary for Midland. Q Are you a fiduciary for-A I'm a fiduciary -MR. DONOVAN: Let him finish. A -- for an integrated enterprise which is Innkeepers USA, one lender of is Midland. Q Are you a fiduciary for the creditors
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Marc A. Beilin son transactions, and that everyone knew that a 2007 transaction in this marketplace was somewhere in the range of 35 to 50 percent under water. So this isn't a shocking revelation, this was a revelation that was accepted by Midland and discussed -Q And this is when -MR. DONOVAN: Let him finish, please. BYMR. PARKINS: Q Are you done? It was discussed with Midland at our A first meeting. Q Did you discuss when meeting the honest fact that you met with Lehman six days earlier and made this overture to Lehman, yes or no? A I told them that I had met with Lehman and we were discussing alternatives with them just as I wanted to do with Midland. Q Did you tell them you made this restructuring proposal to Lehman, yes or no? A No, I did not because this was a thought process. Q After you made this Lehman proposal, or restructuring proposal to Lehman, did you go shop this proposal with any other creditors of the debtor
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Marc A. Beilinson of this estate? A I'm a fiduciary for the entire corpus including the creditors. Q My question is: Are you including the creditors? A Yeah. Q So Midland is the largest creditor? A Yes, they are. Q Okay. And as fiduciary for Midland, the largest creditor, when you met with them six days after your Lehman meeting in that capacity as fiduciary, it was okay for you not to disclose you were thinking of reducing their debt between 250 and 425 million dollars? A Absolutely. At that meeting, we actually discussed the reduction oftheir debt. In that meeting they asked Bill Derrough ofMoelis & Company what he believed the value oftheir claim would be, and I believe his response was somewhere in the high 4's, maybe you could get to a low 5 number. Middle 4's I believe his was, and maybe the low 5's. And the business participants on Midland actually said at that meeting that they knew they were substantially under water, they looked at other
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Marc A. Beilinson to do a better deal? A Well, the only other creditor in a position that had a substantial amount of assets that could be converted was Midland. And, as I said earlier, I didn't believe that Midland had an interest in converting their debt to equity, which actually has proven to be accurate in the fact that Kevin Simone told me even last week that they never had an interest, nor could they take equity. So there was only one party I could shop it within the internal structure to and that party had no interest. Q Did you approach any creditor constituency asking them to look at this Lehman suggested proposal you made and come up with a structure to address the issues you had and to compete with the Lehman proposal? A I talked to creditors about all sorts of things. Q Did you take these pages of the Lehman presentation and show them to creditors and say: This is the end result I want, can we do better than that, can you come up with something better than that?
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Marc A. Beilinson No, not at that time. Q Have you shown this proposal to anyone else other than the fact that it was filed with the court prior to the filing of this stuff with the court? A No. Q Did you since the bankruptcy filing, okay, talk to third parties, not creditors, about doing a better transaction or an alternative transaction of this Lehman proposal? A Yes. Q And have you offered them due diligence access in order to make a proposal? A No, because none of the proposals were in my business judgment better or viable or accretive as a fiduciary to this bankruptcy estate. Q You have experience as a bankruptcy lawyer, how do I make proposal to acquire a company unless I get due diligence first? You know, my obligation as a fiduciary A is to do an internal restructuring. The Bankruptcy Code, as you know, was set up so that I have an exclusive period of time to negotiate within the capital structure to propose a plan that could be A
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Marc A. Beilinson that this is going to end up being a non-consensual resolution with Midland. I think this is part of the process, including my deposition being taken by you, and that we'll enter into negotiated resolutions at some point in time, whether it's today or two months from now. Q So at the present time you reject the concept of shopping this company to get a different alternative transaction? I don't think that's a requirement A under the Bankruptcy Code or even during my exclusive period of time and I don't think that's in the best interest of this bankruptcy estate. Q So the answer is yes, you reject that proposition? MR. DONOVAN: Asked and answered. His answer stands. BY MR. PARKINS: Q That's how you view your fiduciary duty, to just go with this deal and no other alternative deal at this time? MR. DONOVAN: Object. Objection to form. THE WITNESS: How about a lunch break?
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Marc A. Beilinson accepted or rejected by creditors and they have to meet the confirmation requirements set forth in 1129(a) or (b) of the Bankruptcy Code. I believe that we have an internal restructuring that meets all the requirements of 1129, is confirmable and in the best interest of this bankruptcy estate in the exercise of my fiduciary duty. And I tend to move forward unless a transaction presents itself that I believe as a fiduciary is better. I haven't -Q Better for you or better for Lehman, sir? A Better for the bankruptcy estate. Q Is that what your document says? A Yes. Q Again, have you created a due diligence room for third-party non-creditor entities to go do due diligence in order to make a proposal? No. I'm in my exclusive period where A I intend to fulfill my obligations under the PSA to file an internal plan of reorganization for the enterprise and will allow Midland and others to object to confirmation and to vote to accept or reject the plan. I, unlike others, don't believe
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Marc A Beilinson AFTERNOON SESSION (Whereupon, resumed 1:17 p.m.) (Amended Declaration of Dennis Craven, Chief Financial OtTicer of Innkeepers USA Trust, in Support of First-Day Pleadings marked as Exhibit 17, as of this date.) BYMR. PARKINS: Q Mr. Beilinson, I've handed you a document marked as Exhibit 17. It's entitled the Amended Declaration of Dennis Craven, Chief Financial Officer of Innkeepers USA Trust, in Support of First-Day Pleadings. I will tell you it doesn't have the 12 inches of exhibits attached to it, it is just the Declaration itself. It had all the -- a lot of exhibits to it, about 12 inches worth, but I'm not interested in the exhibits. Have you looked at this Declaration? A Not recently, but before it was filed. Q Okay. I'd like you to look with me at Paragraph 14. A (Complies.) Q I asked you to look at Paragraph 14 because I want to ask you about it, please. A (Complies.)
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Marc A. Beilinson MR. DONOVAN: Do you want the motion or the actual agreement? MR. PARKINS: The actual agreement. MR. DONOVAN: That's 4. MR. PARKINS: Sorry. BYMR. PARKINS: Q And I'd ask you to look at the Term Sheet. A Which Term Sheet? Q Well, the Term Sheet for the PSA, the Plan Term Sheet. A Okay. Q Illustrative Terms of Proposed Restructuring July 17,2010. A Okay. Q It's early on in the document. First you have the PSA and then you have the Term Sheet attached to it. I'd ask you to look at page 8 of the Term Sheet. It looks like this. You'll see the Term Sheet. You're too deep in the document. A Okay. Q Under Termination Events Under PSA and Use of Cash Collateral, in E there seems to say:
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Q Okay. And, as I understand it, the termination of a franchise by Marriott would be a triggering of a termination event over these various agreements before the court? A That's not correct. Q The termination of a franchise would not be a triggering event, a termination event? A With regard to all of these exhibits, no, that's not correct. Q I guess I'd ask you to look at Exhibit 3.
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Marc A. Beilinson The entry of a Bankruptcy Court order granting relief from the automatic stay, Romanette double ii, to permit termination of any franchise agreement with Marriott or any other hotel brand. MR. DONOVAN: I object. I don't think you're reading the whole thing correctly. A Okay. So provision Eon page 8 says: The entry order of any order of the Bankruptcy Court granting relief from automatic stay ( ii) to permit termination of any franchise agreement, yeah, that is an accurate reading. Q Uhm? A That's accurate. Q Okay. MR. DONOVAN: And you only focused on-- I'm sorry. BY MR. PARKINS: Q Now, in response to the motion for relief from stay I see that the company has filed a motion to assume that agreement. A I believe that's correct. Q Okay. Has there been dialogue with respect to this issue between you and Marriott, because obviously this is a triggering event and a
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Marc A. Beilinson termination event ofthis agreement to try to resolve or is it going to go to litigation? A I always try to resolve all issues. Q Have you had a dialogue with anybody from Marriott? A Of course. Q And what's the status of that dialogue? A We've agreed to disagree with regard to Marriott at this point in time and continue trying to come up with a resolution which is accretive to the bankruptcy estate and Marriott. Q All right. MR. DONOVAN: Mr. Parkins, just so it's clear, were you suggesting that the Troy, Michigan hotel was in the floating rate pool? MR. PARKINS: I'm sorry? This is a floating rate pool. MR. DONOVAN: That's what I was confused by. This was my confusion and I think the record might just be -- I think you were asking about the floating rate pool and I don't think he says floating rate pool. 147
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Marc A. Beilinson Date in Paragraph 11, the proviso? A Uh-hum. Q That it says that this agreement shall not be binding on Lehman unless and until a number of events occur, one of them is that it be approved by the Lehman Bankruptcy Court? A That is correct. Q Is that your understanding that it's not binding on Lehman today? MR. DONOVAN: Objection to form. That's probably accurate. A Q Okay. With respect to these companies, the debtors, you're seeking court approval of this transaction also, correct? That's correct. A Q Okay. Do you believe it's binding on you today until court approval is obtained? It's an interesting issue. In other A words, my view is it's an executory contract that I entered into and therefore until there's an assumption of rejection, it is binding upon me. It's an interesting issue as to whether I view it the same way with regard to the binding nature upon Lehman since this was made subject to their 149
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Marc A. Beilinson MR. PARKINS: What I'm asking is: Does he know whether this is a termination event. MR. DONOVAN: Ifyouknow. It's a termination event that could A actually be waived if Lehman so chooses. Q It's also a termination event, as I recall, under the Five Mile DIP that any franchise is terminated, isn't it? I don't believe that's accurate that a A termination of a franchise in the floating rate pool would not be a termination event with regards to the Five Mile pool or with a Five Mile -- in connection with a Five Mile DIP. Q Okay. In Exhibit 4, which is the Plan Support Agreement, I would like to look at, I think it is Paragraph No. 11, Section 11, please. A (Complies.) Okay. Q Okay. Do you want to read it or are you familiar with it? A Sure. (Reads.) I've reviewed it. Q Okay. As I understand it, looking at the language right after the definition of Effective
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Marc A. Beilinson Bankruptcy Court approval and their bankruptcy had already been commenced, so it's an interesting lSSUe. Q So you believe it's binding on the debtors now? A Yes, I do. Q It is binding on the debtors if you choose to make it binding on the debtors, correct? A Well, I could seek to reject an executory contract and thereby make it an unsecured claim that would give them damages. But, as I know, I'm seeking to assume it in the bankruptcy case. Q Look with me at Section 4. A Sure. Q You need to keep your finger on Section 11 to go back to the definition of Effective Date because Section 4 speaks to the effective date. A Section 4? Q Section 4, Support of the Transaction; Additional Covenants. A Okay. Q Take a look at it, please. A (Complies.) Do you want me to review 4( a) or 4(b)
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Marc A. Beilin son and (c) also? 4(a). Q A Okay, I've reviewed it. Q Okay. You already just testified that you believe this agreement is effective and that the debtor is bound by this agreement at this time, correct? A I said it's an interesting issue. I think it's an executory contract that until assumption and rejection gives me an option to go either way, I think that's probably more accurate. Q Are you treating this as an effective agreement now where the debtor is performing under? A I'm treating it as an effective agreement. Q So you agree you're bound by the provisions of Section 4(a) double i and triple i then? MR. DONOVAN: Objection to form. A I guess I'm bound by it so long as I don't exercise a fiduciary out. Q And a fiduciary out -A And, by the way, I want to make it clear, I'm not sure if it's legal, I mean, I've got
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Marc A. Beilinson transaction that would work under the Bankruptcy Code under 1129, you spoke about 1129 earlier. Yeah, I don't think that would fall A within my business judgment as what's in the benefit of this bankruptcy estate. Q Okay. But it's workable? A That was only part of the test, after I believed that the alternative transaction was one that was in the best interest of the bankruptcy estate. I also then have to make a determination that the contingencies and viability of such a proposal create a potential likelihood that it could be successful, so it's a multi-test, multipart test. Q Well, if 1.2 of the $1.4 billion of the creditors of these estates wanted that to happen in the context of an alternative plan of reorganization, it can happen then, can it? A It can happen during the exclusive period ifi don't believe it's in the best interest of this business enterprise. Q And the best interest of the business enterprise ends up being in the best interest of the person who owns that enterprise; isn't that true? A No.
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Marc A Beilinson lawyers around me that will tell me whether it's a legal or a practical obligation, but I personally feel bound whether that's an oral bound or a legal bound. Q Okay. The fiduciary out that's contained in Section 25. A I'm there. Q Could you look at Section 25(a), (b) and (c) because I want to ask you about them? A I'll take a look at them. Q Take a look at them, please. A (Complies.) I've reviewed it. Q What is in your mind a firm alternative transaction? A A transaction that in my business judgment is a proposal that has a reasonably good degree of likelihood that it's workable in every respect. Q In what? I'm sorry, I didn't hear you. A That's workable in every respect. Q So a proposal where all unsecured creditors get back their property is an alternative
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Marc A Beilinson MR. DONOVAN: Objection to form. BY MR. PARKINS: Q Okay. It's not the best interest of the business enterprise doesn't inure to the equity owners of that enterprise then? A No. Q Okay. A I have made it very, very clear on April 28th when I met with Midland the first time that Apollo was going to be receiving in any of its forms no consideration on account of any of its pre-petition rights in connection with Innkeepers. Q I'm talking about Lehman. Lehman will inure to the upside as a result of this-- as a result of the enterprise being restructured that you suggest, isn't it the case? What's the question, I'm confused? A Q The benefit, the upside in the business enterprise under the transaction you propose inures to Lehman if the companies are successful, correct? A The economic results of the ownership of a hundred percent of the stock will inure to the benefit or the detriment of the holder of that
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Marc A. Beilin son equity. It is certainly not just an upside potential as evidenced by Apollo losing $250 million. Q And is it true, is it not, that in the presentations you have made, whether to Lehman or to Midland, that the company projects that it will take three or four years for these hotels to turn around and start performing in a more normalized fashion; is that correct? A I don't know what you mean by a more normalized fashion after three or four years, if you could be more specific, I'm happy to give a direct response. Well, do you think these hotels performance will turn around significantly in the next three or four years? MR. DONOVAN: Objection to form. A I believe that there is upside potential and I do believe that there will be an increase in Rev PAR, R-e-v-P-A-R, over time.
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Marc A. Beilinson Q Okay. The first paragraph: In this presentation we are running a scenario where projections have been developed on a hotel-by-hotel basis for the portfolio. Management estimates financial performance will not return to 2007 levels for at least four to six years. Describe what the 2007 levels performance were. A They were -- they were certainly actually better than they are today and I think that this statement probably reflects my view, right, which is, in five or six years they'll get back to historic highs which was essentially in 2007. Q So do you believe that the performance of the hotels will gradually increase over the next yean? A I hope so. Q Okay. That's your estimate of financial performance, do you think it will just be a one-time shot or it will increase gradually? A I think it will be extremely gradual. Q Okay. A There will be potentially some going backwards before it goes forward again. Q Are you aware that the Lehman-Apollo
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Marc A. Beilinson Q Okay. Can you point me to the provision that says you can do that, if it's worse for Lehman, if it's worse for Lehman you think you can exercise your fiduciary out? A Yes. MR. DONOVAN: Asked and answered. BY MR. PARKINS: Q Okay. If that's what you think this document says, we'll proceed. So if a transaction were better for Midland than proposed under this transaction, and worse for Lehman, you're going to look at this as an enterprise or you're going to look at it by creditor for whom you are fiduciary? A I'm a fiduciary for the corporate which is an integrated enterprise and will look at what's in the best interest of the estate. Q The estate, there are 70 estates. A I understand that. Q Okay? So for the estates of the Midland debtors, are you going to look out for the interest of the Midland debtors' estates or the Apollo or the other Lehman debtors' estates, which ones?
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Marc A. Beilinson All of them. Q And if there's a conflict, how do you resolve that? A Use my best business judgment. Q You resolve conflicts by business judgment? A Yeah. And if there's-MR. DONOVAN: I'm going to object to the form. I think -MR. PARKINS: I'm sorry? MR. DONOVAN: I'm going to object to the form. I think it depends what you're referring to as a conflict there. BYMR. PARKINS: Q Well, conflict, it's better for Midland and worse for Lehman, for those debtors, the Midland debtors and the Lehman tranche or Lehman pool, how does that get worked out in your mind? If I'm faced with those issues, I'll A deal with them at the time that a particular issue is faced, and I'll deal with it accordingly. Q If a motion to determine exclusivity were filed by someone who had a better proposal for every pool of debt but Lehman, would you agree to A
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Marc A. Beilinson to, negotiate with me and have their rights under 1129. So at this point in time I see no reason to move forward with anything other than an internal restructuring of this enterprise. Q You say two DIP lenders in support of the transaction, you include Five Mile in that; is that correct? A Well, they support doing the DIP for purposes of protecting the value of the fixed pool portfolios and two others. In fact, in the context of the Q negotiations with Five Mile for the DIP, you didn't tell them until right before the filing that there was a Lehman transaction in place, did you? A No, I told them before the transaction, before -Q Just before? A Before they executed the transaction. Q Just before? A What's your point? My question is you told them just Q before, not during the four months or the month before the DIP was being negotiated, you didn't tell them there was a Lehman transaction in play.
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Marc A. Beilinson A I hope so. Q And that increase in value is not going to go to the creditors of the fixed rate pool under your plan, it's going to Lehman, isn't it? A No. I think we have to look at this at the time of plan confirmation, and I have an obligation to provide you with a value of your secured claim, at that time. So you will be getting a hundred percent of the value of your collateral, which is what the Bankruptcy Code tells me how I'm supposed to treat you, and I'm giving it to you in the best form of consideration possible, which is a fully secured note in a company that has free cash to support that note. That's much better than most fiduciary or CRO's would do, they'd be looking at giving you lesser quality types of consideration. Q Doesn't the Bankruptcy Code as you understand it, since you're talking about it with me, also provide that for the deficiency claim a secured creditor gets other consideration like the equity upside if it chooses to get that in the ownership of those assets? A No. Q That equity upside should go to
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Marc A. Beilinson Let me remind you, you're still under oath. The same rules that applied when you were being questioned by Mr. Parkins would apply here, okay? A Sure. Q Now, you are here today testifying on behalf of all of the debtors; is that correct? A Sure. Q Okay. I believe your Exhibit 1, your Notice of Deposition, said that you would be here as the 30(b)(6) witness for the debtors, which would be all of the debtors, do you understand that? A I don't really understand what a 30(b )(6) deposition is but I think I'm here on behalf of the integrated estate. Q Okay. I know you testified to be the CRO for the debtors; is that correct? A That's correct. Q Are you the CRO for each and every debtor in this case? A I think I testified I'm not sure who the officers or directors are of each and every entity but I consider myself the CRO of all entries. Q And you consider yourself acting in
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Marc A. Beilinson someone else in this transaction that you're proposing here? A I think when that party is averting to it 200 million plus of debt to equity, they deserve, with the additional risk that they're taking, potentially an upside, but potentially a downside, and it always surprises me in this uncertain economy that people still only look at upside possibilities versus downside risk. MR. PARKINS: Give me a second. Pass the witness. MR. DONOVAN: Who's next? MR. MEYERS: I'm going to ask questions but let's take five minutes before we start. MR. DONOVAN: All right. (Whereupon, off the record.) (Whereupon, resumed.) EXAMINATION BY MR. MEYERS: Q Mr. Beilinson, my name is Todd Meyers with Kilpatrick Stockton and I represent Trimont Real Estate Advisors. Trimont is one of the secured lenders in this case.
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Marc A. Beilinson the best interests of all of the entries? A Yes. Q Would you pull Exhibit 2, which is the color chart? A I have it. Q I'm primarily interested in the two branches on this chart which have a yellow box, okay? A I see that. Q I am, because Trimont is involved in those two branches, if you will. I'm going to try not to repeat the questions Mr. Parkins asked you, I couldn't hear all the answers but-A That's okay. Q --hopefully I'll avoid duplication because I'm primarily focused here. If you start with the third branch over from the left, which has the yellow box Grand Prix Mezz Borrower Term LLC, do you see that? A Yes. Q Let's talk about that for a minute. Do you understand that KPA HS Anaheim, LLC is one of the debtors in this case, correct? It's below that in the green box.
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Marc A. Beilinson Yes.
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Okay. Are you aware that a hundred
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Q Okay. And that entity owns a Hilton hotel in Anaheim, correct?
percent of the beneficial interests in that loan have been sold into a CDO?
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I believe that's accurate.

Okay. And the mortgage debt on that
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No.
As you sit here today, do you know
property is approximately 13.7 million, correct? A That's correct.

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whether Lehman has the consent rights with respect to the treatment of that loan?
And it says here that CW Capital is
No.
All right. Look at the-- immediately
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the special servicer for that property level loan, is that your understanding? A Yes.
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to the left of that, there's another branch. You'll see at the bottom it says Fee Owners/Ground Lessees (20 LLCs). Now that is to represent 20 debtors each of which owns a particular hotel, correct? A I think that's accurate.
Now, above KP A HS Anaheim, LLC is a
yellow box with an entity Grand Prix Mezz Borrower Term LLC, do you see that? A Yes.
Q
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And generally that's referred to,
And Grand Priz Mezz Borrower Term LLC
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owns a hundred percent of the membership interest of 18 19 KPA HS Anaheim, LLC, correct?
those are referred to as the floating rate debtors? A That's correct.
Okay. And each of those debtors is
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Yes.
Okay. And it is correct, isn't it,
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jointly obligated on a loan to Lehman in the approximate amount originally of $238 million, correct? A That's not correct.
that Grand Prix Mezz Borrower Term LLC is the borrower under a $21.3 million loan which is referred to on this chart as the Anaheim Lehman Mezzanine Loan, correct?
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correct?
Okay. Can you explain why that's not
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Marc A. Beilinson I think that's the right entity. Okay. Now, it lists here CW Capital
Marc A. Beilinson A I think that the obligation is now $238 million, I think originally it was 250.
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as the special servicer. Isn't it true that Trimont is actually the special servicer for that loan, or do you not know? A I think that's the case, but I would
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So the 238 represents your
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understanding of the current unpaid principal balance of that loan? A Yes.

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have to take your representation. Q Okay. For today's purposes I'll represent that Trimont is the special servicer for that particular loan. A Thank you. Q Now, with respect to the --I'll refer
Now, and the collateral for that loan
are each of the hotels within that that are owned by each of those 20 entities, correct? A There are 20 hotels which
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collateralize the $238 million obligation.

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Okay. And that is the loan we've been
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to the $21.3 million loan as the Anaheim Mezz Loan. 14 A Okay. 15
talking about at length today that Lehman is going to convert to equity under the plan that's contemplated in the Plan Support Agreement, correct? A That's correct.
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Q
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I think that's generally what it's
referred to in the debtors' papers, okay?
Okay.
Now, do you understand that the--
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Now, above this, the green box we just
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discussed is Grand Prix Mezz Borrower Floating 2, LLC, do you see that? A Yes.
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that Lehman was the --was originally and remains nominally the lender on the Anaheim Mezz Loan?
A I don't know ifi have an understanding as to whether they're a lender or a nominal lender or owns the lender or is a borrower or whatever.
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And is your understanding that Grand
Prix Mezz Borrower Floating 2, LLC owns 100 percent of the membership interests in each of the 20 property owning LLCs in the floating rate pool?
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Marc A. Beilinson I believe that's accurate.
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Marc A. Beilinson That's correct.
And do you understand that Grand Prix Mezz Borrower Floating 2, LLC is the borrower under a 121 million dollar loan that's referred to here as the Floating Rate Lehman Mezzanine Loan? A Yes, I believe that Innkeepers has borrowed $121 million which it's collateralized by an equity and trust in those 20 hotels.
Q
But with respect to the Floating Rate Mezzanine Loan you do have an understanding, based at least on what Lehman has told you, which is that they do not have consent rights? A That's also correct.
Q Okay. When did Lehman tell you that they don't have consent rights with respect to the
So you've taken me one step further
which is the collateral for that loan. But just before we get there. You said Innkeepers. Technically speaking, Grand Prix Mezz Borrower Floating 2, LLC is the borrower under that $121 million loan, correct? According to this chart, but, and I A assume that's accurate.
Q
Floating Rate Mezzanine Loan? A Sometime between April 22nd and July 19.
Q
You can't be any more specific than No.
that? A
Q
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And, as you just alluded to, the
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We'll look at a couple documents in a minute and try to see if we can narrow it down. A Okay.
Q You said between April 22nd and the filing date? A Yes. Q Actually, let's do it real quickly now. Look at Exhibit 15, if you will. A (Complies.) Okay. Q
collateral for that loan is a pledge by Grand Prix Mezz Borrower Floating 2, LLC of the membership interest in the 20 property owning debtors, correct? A I believe that's accurate. Okay. Now it lists here Administrative Agent - Trimont. Do you understand that Trimont is the special servicer for that
Q
All right. Now this is the Moelis
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Marc A. Beilinson mezzanine loan, the $121 million loan? A That's my understanding. And since -- well, let me ask you Q this: Are you aware of whether Lehman is the lender under that $121 million loan either nominally or actually? A No. Are you aware whether that loan has Q been sold, the beneficial interest in that loan had been sold into a CDO? I believe it was sold and now Lehman A retains various interests or its affiliates retain various interests but don't really know what the actual reality is. Okay. Do you know one way or another whether Lehman has consent rights with respect to the treatment of that $121 million Floating Rate
Q
Marc A. Beilinson presentation materials from April22nd that were discussed earlier today, do you recall that? A Yes.
Q Do you know whether there's any mention in here of whether Lehman controls or has the consent rights with respect to the Floating Rate Mezzanine Loan? A I don't believe there's anything in this docrunent that highlights whether they do or don't have consent rights. Q
Okay. You don't know whether there's --I'm sorry, could you repeat your answer? MR. MEYERS: Or can you repeat his answer? A I'm happy to.
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Mezz Loan in this case? I don't believe, I think they told me A that they don't, but I don't have any independent knowledge.
Q
I don't think there's anything in the docrunent that reflects whether I knew or didn't know if Lehman had consent rights, at this time I believe that I thought they did. At this time I believe
they did.
23 When I asked you that same question with respect to Anaheim, you didn't know one way or 24 25 another, correct?
Q You believe that at this time they did have consent rights? A Yes. Q
Okay.
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APP-00355
174 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Marc A. Beilinson MR. DONOVAN: I think you misstated his answer, I think he said at this time he thought they did. MR. MEYERS: Right. BY MR. MEYERS: Q Is that accurate what counsel just stated? At this time -MR. DONOVAN: Why don't you re-ask the question? BY MR. MEYERS: Q We don't want to trick you. A At the time in April22nd I believe that they had consent rights. Q Okay. So when this model was prepared for a meeting with Lehman to discuss this internal restructuring, your understanding at that time was that with respect to the floating rate mezz Lehman controlled that, so it would sort of be part of the global resolution with Lehman anyway? A The answer is yes, but it wasn't terribly material to me since I had a view with regard to valuation that was well below the $238 million first, so I considered the mezz piece at all times to be no different than the Apollo equity that 175
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176 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Marc A. Beilinson Sheet says that the mezzanine debt will receive nothing with respect to Anaheim? A Well-- I don't think that's what I contemplated. I'm not sure if that's what the Term Sheet says. Q So when you say that's not sure what you contemplated, does that mean you're not sure that's what you understand-- strike that. A That isn't my understanding of the Term Sheet without looking at it right now. Q Without looking at it right now, your understanding as the CRO of the debtors is that there will be some value provided with respect to the mezzanine loan on Anaheim? A Why don't I go ahead and look at the Term Sheet instead of guessing? Q Okay. A Can anyone tell me -MR. DONOVAN: Exhibit 4. THE WITNESS: Four? A (Reviews.) It's a lot of paper. Okay, I've refreshed my memory. Q Okay. Based on refreshing your recollection, do you believe that under the Term 177
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Marc A. Beilin son AIC owned or the Series A or Series C Preferred stock. I viewed people who were out of the money as out of the money. And when I was talking to Lehman, I always told them that the mezz was out of the money. So it wasn't really material to me whether they had consent rights or not. Q When you said you always told Lehman the mezz was out of the money, do you mean the Floating Rate Mezz or the Anaheim Mezz or both? A Well, the Floating Rate Mezz. I actually think the Anaheim Mezz actually has some value which is over and above the value of the first lien with regard to that property. Q Okay. How much? Don't know. I mean, I haven't done a A final analysis of it, but it's not immaterial. Q It could be more than 10 million? A I don't believe so. Q Did you have that belief about the Anaheim Mezz being in the money when this deal with Lehman was negotiated? A Yes. Q Okay. But yet you understand that the Term Sheet and the plan contemplated by the Term
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Marc A. Beilinson Sheet and the plan contemplated thereby that the Anaheim mezzanine lender will receive anything under the plan? A Yes. Q Okay. Can you explain to me where you see that? A I believe the mezzanine debt that is defined in the treatment of claims and equity and trusts under the plan was intended to mean the mezzanine lender debt, which is dealt with under Footnote I of the Term Sheet, which involves the Grand Prix Mezz Borrower Floating 2, which has a security interest in the equity of the 20 hotels. It was not intended to include the Anaheim Mezz debt which would be included under other secured debt since I view it as partially secured by virtue of the fact that the property has a security interest, the property's value is in excess of 13.3 million. Q Okay. And when you made that statement you talked about what was intended, does that mean that there's a mistake in here or am I misreading this? MR. DONOVAN: Let me make an alternative, too. I don't think you
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Marc A. Beilinson necessarily mistake or misread, so objection to form. A I'm telling you that I believe this document by virtue of Footnote 1 says exactly what I intended it to say. Q Okay. Look at page 2, look at where you've got-- do you see the different boxes and you've got one that's Mezzanine Debt? And it says: The mezzanine debt defined term will be deemed cancelled and the mezzanine lender will not retain any property or interest on account of such debt under the plan, do you see that? A Hold on, give me one second. (Reads.) Yeah, you know what, I think there probably needs to be some clarification here, in my VleW. Q And why do you now come to that conclusion? A Well, since you think there's an ambiguity, and I think there's no ambiguity, there seems to be a need for clarification. So if there's a need for clarification, let me go and do my job and clarify it. Q And we're all for that, we're all for
Marc A. Beilinson ever any discussions in connection with the negotiations that the Anaheim Mezz was, in fact, in the money and needed to be dealt with under this restructuring? A I've always thought it was one ofthe seven assets that would be dealt with with regard to other secured claims. I think that was the understanding ofthe parties. I'm sitting here in a deposition and my partner to the PSA isn't here, but I think that would be my belief as to our collective understanding.
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Q Okay. But you don't, sitting here today, have any specific recollection of discussions with Lehman in connection with the negotiations of the Plan Support Agreement and Term Sheet that the Anaheim Mezz was in the money and we had to deal with that as another secured debt or something like that? A I had discussions with regard to every topic, I'm sure I had discussions with regard to that, too. Q Okay. But it's possible that Lehman has a different view which is the view that was what we read this to say? 181
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Marc A. Beilinson hearing how or what it was intended by this document and correcting it. I'm just simply looking at Footnote 1 which defines mezzanine lender to be the lender in connection with the mezzanine loan with respect to the collateral security in the floating rate debt or the mezzanine loan with respect to the Anaheim property, and that's collectively defined as the mezzanine debt. Then you go to this page 2, mezzanine debt gets nothing, that's how we read the document. If that was not intended, we're all for having that corrected. A I appreciate the fact you pointed it out to me, and as I will always do, if that's not what I intended, I'll try to discuss it with my partner to the PSA and have it revised to reflect what I believe is a fair intention.
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Marc A. Beilinson
MR. DONOVAN: Objection. Objection to
18 Okay. And that goes to my next Q question: Do you know what Lehman understands to be 19 20 the treatment of the Anaheim Mezz debt under this
form. You're speculating or asking him to speculate. BY MR. MEYERS: Q You don't know what Lehman understands to be the treatment of Anaheim Mezz as you sit here today? A I answered the question the best I could 14 times. Q Okay. Now -- all right. Back to the floating rate mezz. You testified that you believe that to be out of the money, correct? A Absolutely. Q And under this deal there's no mistake, it's your understanding is that the floating rate mezz will receive nothing under the plan, correct? A That's correct.
document? A Lehman has to speak for themselves, but I would be surprised if it wasn't some within the realm of what I believe. Q Well, were there any -- were there
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Q The specific terminology, by the way, on page 2 is that the mezzanine debt will be deemed cancelled. Now, you were a bankruptcy lawyer in a past life, right? A Yes. Q You understand the concept of
46 (Pages 178 to 181)

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Marc A. Beilinson cancellation of debt as a treatment in a plan? A I don't know. Q Does it mean anything more than just no consideration will be given on a respective debt? A I don't think so. Q All right. Now, back to the floating rate mezzanine debt. In the Moelis model, that April 22nd document that we just referred to, Exhibit 5, I believe, you said you didn't believe there was any mention in there of whether-- there was no mention in this document you believe of whether Lehman controlled the floating rate mezzanine debt, correct? MR. DONOVAN: Objection to form. A Which mezzanine debt? Q We were talking about the floating rate mezz debt and we were exploring a few minutes ago when you might have come to an understanding that Lehman did not control or have consent rights with respect to the mezzanine debt, and I believe you testified it was sometime between April22nd and the filing date; is that accurate? A That's accurate.
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Marc A. Beilinson a specific mention in this document that it's not, while it's being provided on behalf of Lehman ALI, not in their capacity as the floating rate mezz lender, correct? A That's what it says. Q Okay. Does that refresh your recollection as to when you may have first become aware that Lehman did not have control or consent rights with respect to the floating rate mezzanine loan? A No. Q Okay. Do you have any understanding of what footnote meant, what Footnote 1 meant? A Yeah, I understood the footnote when I read it, but, as I've stated, it's not material to how I viewed my interaction with Lehman in connection with the PSA since I thought the mezz was always substantially out of the money. Q The floating rate mezz? A The floating rate mezz. Q Okay. Take a look at Exhibit 17, if you would, which is the Craven Affidavit. A (Complies.) Q Okay. I apologize if Mr. Parkins
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Marc A. Beilin son And then we looked at the April 22nd document, Exhibit 15, and you did not see any mention in this document that Lehman did not control the floating rate mezzanine debt? A And as I testified, it wasn't material to me. Q Now, look at Exhibit 6, which was the May 25th draft of the Term Sheet with Lehman. Okay. A Q Do you know whether any mention was made in this document that Lehman did not control or have consent rights with respect to the floating rate mezzanine debt? A I don't know. MR. DONOVAN: Do you want him to review this or -MR. MEYERS: Sure. A (Reviews.) I don't see anywhere in here that it says either way. Q Okay. Now look at Exhibit 7, and in particular Footnote 1. A I've read the footnote. Q Okay. Now, it seems that now there's
Q
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Marc A. Beilinson asked you this, but, did you read this affidavit before it was filed with the court? A Yes. Q Did you, at the time it was filed, did you agree with all of the statements made in this affidavit? A Anything that was material, yes. Q Were you aware of any inaccuracies in this affidavit at the time it was filed? A I'm sure if there were inaccuracies, I would have pointed them out. Q Okay. Now, take a look at Paragraph 31 and read that, if you would. A (Complies.) Yeah, I've read that paragraph. Q Okay. At the time this affidavit was filed, did you understand Paragraph 31 to be an accurate statement of the matters being addressed? A I don't understand Paragraph 31 as I sit here today. Q You don't understand it? A No. Q Okay. Did you understand it when you read it before it was filed?
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Marc A. Beilinson I probably did, but I'd have to read A everything to put this paragraph into context. Just reading this alone doesn't jog my memory. Q Okay. Are you aware as you sit here today of whether Paragraph 31 is accurate? A I have no context to put it into to that context. Q Well, what it says-- I'm paraphrasing, but if you disagree, you tell me. But what it says is that the Anaheim Mezz Loan is subordinate to not only the Anaheim, the obligations under the Anaheim Mortgage Loan Agreement but also the obligations under the Floating Rate Mortgage Loan Agreement. Do you understand that to be accurate? MR. DONOVAN: Objection. Form. Go ahead, you can answer. I don't know. I mean, I'd like to A look at the documents. Could you -- I'm sure you have the documents. If you give them to me, I'll review them now and I'll give you what my belief is today. Q Okay. Well, just to be clear. What this says, okay, is that the Anaheim Mezz Loan is
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Marc A. Beilinson MR. DONOVAN: Yeah, sure. A Reading this paragraph and hearing your comments with regard to this paragraph, I think ifthis is accurate in what your assumption is, then my comments that, earlier, that Anaheim Mezz lender were in the money would be different. So let me just be clear. I'm happy to sit down with you, review the documents, get a better understanding on a current basis so that I can decide after reviewing of the documents as to whether my comment earlier that a mezz was in the money laying a high mezz may very well be out of the money ifthis is accurate and your assumption is accurate. Q Okay. And I'm not trying to trick you, sir. MR. MEYERS: Counsel, let me just state that your law firm has confirmed to us that that's inaccurate, okay? And I'm not trying to trick you, I'm just trying to figure out what was understood when the deal was being negotiated, is this a drafting error or was this an impression that the debtors were under that was mistaken. So, we can probably skip over reading the loan
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Marc A. Beilinson subordinate not only to the $13.7 million loan but also the 237 million -- $238 million loan, do you have a belief one way or another as to whether that's true? MR. DONOVAN: I object. I think he said he can't answer unless he sees the documents. So if you can't provide the documents, I don't want him speculate. MR. MEYERS: But he should have a belief as the lead negotiator for the debtor as to whether or not on behalf of the debtor that has a loan out on an Anaheim Mezz whether that loan was subordinate to 13 million in debt or 250 million. MR. DONOVAN: I don't disagree with you, but I think it's fair that he's overseeing a big operation her and he asked to see the documents. MR. MEYERS: Okay. MR. DONOVAN: Ifyoudon'twanthim to look at the documents and just guess, then I think it's worthless testimony. THE WITNESS: I think I should just make a clarifying statement, is that okay?
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Marc A Beilin son documents, Kirkland & Ellis has contlrmed that the Anaheim Mezzanine Loan is only subordinate to the Anaheim property loan? MR. DONOVAN: Well, that's kind of irrelevant here for this witness. He asked to see the documents. If you want his belief, I mean, you can make whatever statements you want But you're here, he's under oath, he's asked to see the documents, I don't think it's fair when he said he wants to look at it to ask him questions. BY MR. MEYERS: Q It's fair to say that you don't recall what the Anaheim Mezz is subordinate to? You don't know off the top of your head what it's subordinate to? A I have now heard a number of things come out of your mouth as to whether my counsel believes that Paragraph 31 is inaccurate or not It says there's a subordination agreement which says you are or your client isn't subordinate to the mezz piece on the 20 hotel properties, and all I'm going to say to you in this deposition is, I'd like to review the documents. If my belief is that the
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Marc A. Beilin son Anaheim mezz piece is not subordinate to the Floating Rate Loan, then I think you're in the money, and I'll treat you as such. If it turns out that you are subordinate to that loan, too, I will treat you like you're out of the money. So I'm just looking for confirmation as to what these documents say and then I'll act appropriately and accordingly.
Q
Marc A. Beilinson A Sitting here I couldn't tell you. Are they secured creditors? Sitting here I can't tell you. Do you have any idea of the dollar Not as I sit here. Do you know a single creditor that I'm just not going to speculate,
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amount of the claims of those creditors?
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Okay. If we -- and I'll move on.

If we assume that 31 is a mistake and
either one might have? there's 90 entities, I didn't come prepared today to talk about each creditor of each entity, so I'm just not capable of speculating on that.
the Anaheim Mezz Loan is only subordinate to the Anaheim Property Loan such that in your view the Anaheim Mezz Loan's in the money, then is it fair to say that the plan for the Anaheim property level debtor is going to treat the property level lender as fully secured? A
Q
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Q
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Okay. The two mezzanine borrowers are I don't believe so. Okay. Take a look at the Plan Support (Complies.) Look at the signature pages. They're
parties to the Plan Support Agreement, correct?
Is that the $13.3 million loan that I think it's 13.7, yes. Okay. Yes, that would be fully Okay. The amount of the Lehman loan
Q
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you're referring to? A secured.

Q
Agreement, it's Exhibit 4.
not numbered. But the last signature page is Grand Prix Holdings LLC on behalf of all the debtor entities listed on Exhibit A. I'm sorry. On Annex A, and then Annex A follows. Do you see the mezzanine debtors on Annex A? 193
under the floating rate, the Floating Rate Lehman of that loan will be roughly $238 million? 191
Loan, you understand that at confirmation the amount 24
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No. You believe it will be higher? No. Lower? Substantially. Okay. Let me back it up. Before reduction under the Bankruptcy
I'm sorry, I thought your question was

If I said that, I apologize.
that the mezzanine lenders were signatories. A

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That was my understanding. Could you Well--let me restate the question Do you understand the two mezzanine
read this back? because if I said that, that was incorrect. borrowers that are debtors in this bankruptcy to be parties to the Plan Support Agreement? A
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Code, I'm just talking about the unpaid balance of the Lehman loan, is it $238 million or is it something substantially more or less? A I think it's probably around there. And you believe the collateral that Q secures that loan is worth substantially less than $238 million? A Yes. Okay. The two mezzanine debtors-Q I'll try to do this collectively, okay?
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Yes. So they support the Plan Support Yes. Now since we're a little bit in flux
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Agreement, correct? A
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on Anaheim as to exactly what the treatment provided for the mezz is, let's focus on the floating rate, debtor floating rate mezz borrower for a minute. That entity is a party to the Plan Support Agreement and it supports the Plan Support Agreement. Yet its primary assets are the membership interests in the 20 property owning floating rate debtors, correct? A I don't know.
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The Grand Prix Mezz Borrower Floating I'm asking the same question with respect to each-do they have any other creditors besides Trimont the special servicer for the secured debt? A
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2, LLC and Grand Prix Mezz Borrower Term, LLC --and 20
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Marc A. Beilinson The principal assets of Grand Prix Q Mezz Borrower Floating 2, LLC are its membership interests in the 20 floating rate debtors, correct? A I don't know. Do you know that that is among the Q assets of Grand Prix Mezz Borrower Floating 2, LLC? A
Marc A. Beilinson agreed, that the-- that membership interests in the 20 property level debtors in the floating rate pool are being extinguished under the plan, correct? A That's correct.
Q And those are among the assets of Grand Prix Mezz Borrower 2, LLC, correct? A That's correct. Q
8 I believe it is. 9 But you don't know whether there are Q any other assets of Grand Prix Mezz Borrower 2, LLC? 10 11 A That's correct. 12 Are you aware of any assets in Q
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2, LLC is getting nothing under this plan, correct? A That's correct.

Q Okay. But your view as CRO of that entity is that that's acceptable treatment under the
particular or you just have no idea? A Not as I sit here today, I didn't know it was a topic for this deposition. MR. DONOVAN: It wasn't, so. MR. MEYERS: But I think it's reasonable to expect that the CRO of the debtors would know the principal assets of the debtor. MR. DONOVAN: When you think of every entity, I don't think that's a fair interpretation. MR. MEYERS: I'm just asking about Grand Prix Mezz Borrower Floating 2, LLC?
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Bankruptcy Code because there's no value to those membership interests? A That is correct, and that would be my same analysis with regard to Innkeepers USA Limited Partnership, Innkeepers Financial Corporation, Innkeepers USA Trust and Grand Prix Holdings.
Q Do you have an understanding of the corporate structure of the enterprise postemergence? A Not specifically as we sit here today. Q Okay. With respect to Grand Prix Mezz Borrower Floating 2, LLC, do you know whether that entity will continue to exist postemergence?
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Marc A. Beilinson MR. DONOVAN: Ifyou want to send us a letter, we can get you board members, we're happy to give you information, but this isn't a memory test. So if you guys have questions, we'll answer it, but let's do it in an efficient way. BYMR. MEYERS:
Marc A. Beilinson I doubt it.
Q Now, does the plan that is-- does the plan that you're envisioning filing within the next 30 days contemplate substantive consolidation of any
of the debtors? MR. DONOVAN: Objection. I'm going to instruct-A I'm considering all sorts of issues in connection with the preparation of a plan and disclosure statement including that issue.
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Q Why is the Plan Support Agreement and the plan that's contemplated thereby in the best interests of Grand Prix Mezz Borrower Floating 2, LLC? A My obligation is to do an integrated restructuring of the entire enterprise. If a party doesn't have any value on account of its pre-petition situation, and they're not getting any value, it means that they're being treated as the absolute priority rule would require them to be treated under the Bankruptcy Code. So, so long as I am treating people in accordance with the Bankruptcy Code, and giving them rights to which they are entitled, and no greater rights, then I think it is fine for the debtors to be as a fiduciary signatories to this PSA. Q So we can agree, and we've already
Q Okay. I just got a few more questions.

Take a look at Exhibit 15. And specifically page 14. A Exhibit 14, page 14?
Exhibit 15, page 14. The Project
Tavern? A Whatpage?
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Fourteen. Okay.
Q With respect to the floating pool, the column Pro Forma Debt states zero to 50 million, do you see that? A Not on page 14.
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Marc A Beilinson Q Well, look on the-- it does on mine, so. I'm looking on the top up here across 0-50. A Okay. Q All right. So when this document was done by Moelis, the floating rate pool, they were anticipating that the emergence debt would be between zero and 50 million with respect to the floating rate debtors, correct? A I really didn't have any part of preparing this page, but that appears to be accurate. Q You reviewed this document before it was submitted to Lehman, correct? A I testified that I reviewed it, not that I understood every piece of it. Q Okay. So you saw that Moelis at least was illustrating a scenario in which the floating rate pool could have as much as 50 million in debt post deal, correct? A I don't believe I had an understanding as to this page at the time it was presented in April 22nd. This wasn't something that was meaningful to me. Q If you had focused on this, would you
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Marc A. Beilinson have been a number of things. I was trying to figure out whether this was representing that. I mean, because this does talk about Lehman getting a hundred percent of the equity or 95 percent of the equity, but it may have been leaving 50 million in for them as opposed to for the mezz lender? A Yeah. There was never any consideration on my part that the mezz lender was in the money and therefore it was always contemplated by me that they'd be receiving no consideration in an internal plan of reorganization, so this would have been flexibility to deal with Lehman as in their senior debt in connection with the company. Q Hopefully last question. Is the Anaheim hotel, is that necessary to the enterprise? A I believe every hotel is necessary to the enterprise, and I'm going to be negotiating with all lenders to maintain the existing entity as an integrated whole. Q Okay. If you received an offer to buy Anaheim for a price that you thought was equal or in excess of its value, could it be sold or does it need to stay in to make the rest of the parts of the 201
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Marc A. Beilinson have changed that to just say zero because of your view at that time that the value of the properties in the floating rate pool were less than the property level debt? A I don't know if that's accurate, because this was begirming phases in negotiation which could include all sorts of potential variations. You know, you could talk about fully equitizing, you can talk about partially equitizing, you can talk about different types of debt, so I would probably create the flexibility which is embedded in these numbers, so I actually don't have a problem with the way this was presented. Q But would it have been your understanding that the 50 million would have been for Lehman as the property level debtor as opposed to for the mezz lender? A Well, I've already stated that I think the mezz lender is substantially out of the money, and that there would be absolutely no recovery on account of any pre-petition claim that I viewed was out of the money which is unfortunately one of your clients as well as AIC and public shareholders. Q Okay. And you're right, this could
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Marc A. Beilinson enterprise work? A I'm happy to make -MR. DONOVAN: Objection. Calls for speculation. A As facts get presented to me and offers, I take them all under consideration and determine what's in the best interest of the enterprise as a whole. Q But not of that debtor specifically? A I have to take that into consideration, too. Q So you look at what's in the best interest of each debtor specifically and the enterprise as a whole? A I believe that my fiduciary duty is fairly broad and has to take into consideration the interests of the entire enterprise and all the creditors within that enterprise. MR. MEYERS: I have no further questions. THE WITNESS: Thank you. MR. MEYERS: Thank you very much. MR. GOTTESMAN: Why don't we take five minutes and then I'll push on.
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Marc A. Beilin son MR. DONOVAN: Very good. (Whereupon, off the record.) (Whereupon, resumed.) EXAMINATION BY MR. GOTTESMAN: Q Good afternoon. Hi. A Q My name is Lawrence Gottesman with Bryan Cave on behalf of LNR Partners LLC. LNR is the special servicer with respect to two securitization trusts, one CSFB 2007-Cl and MLCFC 2006-4. It might be easier, sir, if we just go back for one minute to Exhibit 2 and we can point out which entities are at issue just to put it in context, if we could. A Okay. Q In the middle of page are a bunch of green boxes or boxes with green at the top? A Yes. Q Do you see that? And then the five, I guess to the right, starting with KPA RIGG, LLC and ending at KPA San Antonio, LLC, do you see that? A Yes. Q Okay. Those are the hotels with
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Marc A. Beilinson Washington, DC, LLC, same question. A Yes, I understand. I know the property and the loan. Q You're familiar with both? A Yes. Q Okay. Good. And next to that is KPA Tysons Corner RI, LLC, do you see that? A I'm familiar with the property and the loan. Q Okay. Good. And then KPA San Antonio, LLC, are you familiar with the loan and property with respect to that? A Yes, I am. Q Okay. Good. At any point during the process prior to the petition date that started in approximately April and then ended with the petition date, were there internal discussions at Innkeepers with respect to these hotels and their loans as to how they should be treated? A Yes. Q Okay. Could you describe those for
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Marc A. Beilinson respect to which loans LNR is a special servicer. Are you familiar generally with those loans? Let's go back over it just to make A sure I got it right. Q Sure. A Go ahead. Q Okay. Let's start at the beginning. Do you see the box that has KPA RIGG, LLC in green at the top? A The Residence Inn in Garden Grove? Q Correct. A Okay. Q And are you familiar with that property? A Yes, I am. Q And are you familiar with the secured debt with respect to that property? A Yes, I am. Q Okay. Next is KPA RIMY, LLC, do you see that? A With regard to the Residence Inn, San Diego, yes, I'm familiar with the property and the loan. Q Okay. And then next to it is KPA
Marc A. Beilinson me, please? I don't think we talked about how to A deal with each of the entities and all the properties in connection with an overall restructuring. We reached out to the special servicer with regard to each of these properties and entered into a dialogue with them which included the provision to them of pretty much all due diligence materials that they requested with regard to these five assets. And we began discussing with the special servicer the DIP facility in connection with Tysons in San Diego, and the cash collateral agreement with regard to all five of them. Q The special servicer that you're referring to is who? A I can't remember the person responsible at LNR. Q But it was LNR as opposed to Midland or someone else? A No, it was LNR. Q Okay. And did you make a restructuring proposal with LNR with respect to any of these loans? A No. I started off by providing them
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Marc A. Beilinson with substantial amounts of due diligence information that they had requested. I then started talking to them about Marriott with regard to Tysons, which is one ofthe potentially deflagged hotels and the San Diego Residence Inn. I sent them draft DIP proposals with regard to Tranche Band C of the fixed rate facility, and started talking to them about why it makes sense both for the benefit of the estate and for their own benefit to enter into a fair financing on a priming basis with regard to those properties. I informed them that we were going to be filing a chapter proceeding with regard to the -each of the entities in the enterprise and I sent them a cash collateral stipulation a couple weeks before we filed so we could start talking about it. Q Okay. And, to be clear, there was no restructuring proposal communicated with respect to any of these properties, you communicated with respect to the potential DIP but not a proposal to restructure any of the loans? A Not at that time, no. Q At any time? 207
Marc A. Beilinson the hotels that we've now identified in Exhibit 2 as to the-A No, I think-Q -- their performance and their status and their proper treatment as opposed to the more generic Plan Support Agreement provision that you just described? MR. DONOVAN: Objection to form. You can answer. A No, we did talk about each of the assets and their condition, the attributes of each. They had budget information with regard to all of them, but with regard to the right amount of the secured claim with regard to each, any one of them, no there was no specific conversation. Q So there was a specific discussion generally regarding both that specific claim amount, for example, with respect to the KPA RIGG loan that's the second green box in from the right in the center? From the left, excuse me. A I think we talked about, you know, condition of the property. Economic factors affecting it. I don't think we talked about the loan amount itself except to the extent that we all 209
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Marc A. Beilinson A I've started talking to them about what proposals we could talk about and it became clear to me that LNR's view was that they needed to get appraisals with regard to the property before they could enter into meaningful discussion with me and we of course have given them full and complete access to the properties and general managers for purposes of valuing their properties so that they can enter into discussions with me, and I look forward to doing that as soon as possible. Q Okay. And have you had any discussions, as Innkeepers more broadly had any discussions with Lehman with respect to these particular hotels and their respective debt? Well, the only agreement that I'm A aware of is embodied in the PSA which says that the balance of the debt after the fixed and floating rate pool cannot exceed 150 million dollars or Lehman has the right but not the obligation to terminate the PSA. Q I understand, and perhaps my question wasn't sufficiently clear. I guess the question I had is: Were there any specific discussions with Lehman or its representatives with regard to any of
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Marc A. Beilinson acknowledged it was nnder secured. Q Specific to that property or generally with respect to the hotels in the Innkeepers' portfolio? A I actually remember a conversation with regard to a number of the properties which were specially serviced by LNR. Q With whom was that conversation? A That conversation was with members of Lehman or Alvarez or Lazard, I don't remember specifically. Someone? Q It was somebody in that group. A Q And at what point in time was that? A It was in the April to July timeframe. Q Somewhere within that broad period of time but you couldn't nail it down further? A I could not nail it down. Q Was anyone else in attendance from your side? A I don't remember when I had the conversation or whether it was by phone or in person. It could be that Mark Murphy was there, if it was in person, I don't recall.
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Marc A. Beilinson Q Was there any correspondence that related to it that either set it up or followed up? I don't think so. A Q So it was just an oral conversation that may have been over the phone or may have been in person? A More than likely on something like this over the phone but I don't recall specifically. Q And then with respect for the next property, if I ask you the same question, the answer would be the same or do you have a specific recollection beyond that? A I actually have specific recollection with regard to the Garden Grove property, San Diego and Tysons, and remember talking about with regards to San Antonio improvements that were done over the course of the last year and a half. Q Can you describe those recollections? A Yeah. They were more geared to condition of the property and what needed to be done to bring them up to speed. With regard to San Antonio, I specifically was talking about the driveway that I think needs some work done. That I think that 211
Marc A. Beilinson more of a business discussion with regard to property conditions and characteristics. Some sort of general business discussion? A Absolutely.
Q Q
Okay. And going back to your
conversation from LNR. During any of those conversations, did you mention that you were in discussions with Lehman with respect to what ultimately culminated in the Plan Support Agreement and the related Term Sheet? A I told them that I was talking to Lehman with regard to an overall restructuring, I don't believe I got into the details. I talked to them about Marriott, and the overall Marriott transaction and how it interrelated with the properties involved, which is Tysons in San Diego which he specially serviced. I talked to them at length with regard to potential DIP financing proposals and why I thought they were beneficial and fair value to them. I also-Q
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But it's fair to say you never
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Marc A. Beilinson improvements that we did in the last two years are sustainable for at least until the next cycle in six years. With regard to San Diego and Tysons, I talked to them about what I thought the costs were with regard to the PIPing obligations in connection with Marriott and what I thought needed to be done and what could potentially be delayed. With regard to the Residence Inn in Garden Grove, there were issues with regard to the pool area and some tiling there, there was some granite broken off that I wanted to get replaced. So there was a lot of details with regard to the property that I wanted to let them know what the general condition was. Q So you discussed over what period of time the PIP needed to be performed? A We discussed, no, what the condition
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outstanding principal balance. When you say it's not accurate, what do you mean by that? A Well, I think the Lehman PSA says that with regard to the other properties in connection in the enterprise, which is essentially seven properties, can't have in excess of 150 million dollars worth of debt. It doesn't suggest what the amount of the debt is with regard to each of those individual properties.
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Q But the aggregate is obviously more than 150; is that correct? A Well, the aggregate, if you keep all seven properties, would be on a loan basis in excess of 150 million dollars, but on a value basis may be substantially less than that. Q
Does the Lehman Term Sheet permit you to return back any of the properties to their respective lenders? A I believe that it does.
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Marc A. Beilinson That's correct. Q If the lender took back the property pursuant to a lift stay, would that be a termination event? MR. DONOVAN: Objection to form. You can answer to the extent you know. A I'd have to review the PSA. Q It happens to be marked as an exhibit, so let's go back. A Exhibit 4? Q Yes. A Can you point me to the provision, please? Q I will momentarily. Yes. Let me direct your attention to paragraph E at the bottom of page 8 of the Plan Support Agreement. I think you were looking at the Term Sheet and I'm looking at the Plan Support Agreement, sir. A Okay. So what page of the Plan Support Agreement? Q It looks like page 8. A I have reviewed the provision. event? A
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Marc A. Beilin son worked together to get three other properties released from the general servicer to the special servicer, so those conversations obviously took place, you know, later because we really had to work together for a period of time to get him in charge of those properties. Okay. So you would say that those Q commenced a couple months ago in your recollection or am I missing -A They commenced at least a couple of months ago with two other properties a little bit less far ago with regard to. Q A little bit later? A A little bit later with regard to. Q Okay, so we can just chronologically be in the same field. Okay, that's fine. A Q Okay. Did you have any discussions with Apollo or I guess Apollo Investment Corporation with respect to any of these properties, the five that we've been referring to? A Only to the extent that I discussed these properties and the fixed rate and the floating rate pool with members of the board of Innkeepers
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Marc A. Beilinson And does that refresh your Q recollection as to what the Plan Support Agreement says would be the consequence of stay relief with respect to any of these property secured lenders? A The relief, the stay relief would give Lehman the right but not the obligation to terminate the PSA if relief from stay was granted. Q But it's your understanding that if the debtor voluntarily surrendered the property pursuant to a plan or otherwise that would not constitute a termination right that would give Lehman the right but not the obligation to terminate? I believe that's accurate. A Q Okay. By the way, the discussions with LNR that you referred to a little while ago, do you recall when those took place? They've taken place over the course of A a few months. As you probably know-- is it Chris Brown? Q Yes, Chris Brown. A Chris Brown is the individual at LNR. Well into the process at1er he was special servicer with regard to two of the properties, he and I
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Marc A. Beilinson which included people who were employees of Apollo. Q But it was in your capacity as members of the board or as opposed to their capacity of Apollo the buyer of equity? A No, it was in their capacity as members of the board. Q And no other capacity? I believe that's correct. A Q Okay. By the way, did you have any discussions with the master servicer for these securitizations with respect to these properties? A Yes, I did. Q Okay. Do you recall when those were? A Probably going back maybe four months ago. Q And what was the substance of those discussions? A The fact that I was going to be a restructurer. That I told them in advance of defaulting with regard to the financial obligations of the loan that I was going to do so. It was a conversation saying that I'd like to start entering into restructuring discussions and that this is probably more appropriately moved from the general
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Marc A. Beilinson For example, taking the first one, did you look at whether or not KPA RIGG, LLC would benefit in this overall restructuring or suffer detriments, and did you analyze it on a property basis with respect to that or did you put this simply in the context of what was good for the overall whole? Putting aside your interpretation of your fiduciary duty for a second. MR. DONOVAN: Objection to form. A I think I look at each area and I say am I treating them fairly. And ifl'm treating them fairly and I'm doing what's in the best interest of the integrated whole, I think I'm fulfilling my fiduciary duty. Q But once again, it's not the question I asked. Ultimately the court can figure out what your fiduciary duty was and whether or not you met it, and that's for anyone in this room to decide. The question is just specifically what you did or didn't do. So, did you determine that, for example, KPA RIGG would benefit in terms of its cash flow from the proposed plan as a result of the transaction contemplated by the Plan Support
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Marc A. Beilinson them but unfortunately in the CMBS community the general servicers have very little ability to enter into those discussions. Q By general servicer you're referring to the master servicer? A I was talking about the master serv1cer. Q Okay. I just want to make sure we got our parties straight. In connection with this whole process, did you or the company conduct any independent assessment of the burdens for these particular debtors as opposed to the integrated whole? And I did hear your earlier testimony with respect to your views regarding integrated all, but did you also look at it at all on a particularized basis? A Well, you know, I look at it and I say what's a fair value of somebody's security interest and I have to treat it appropriately in connection with the plan of reorganization, so long as I'm doing that I feel I'm fulfilling my obligations as a fiduciary. Q That is not exactly responsive because that's not what I asked. I guess the question is:
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Marc A. Beilinson Agreement and the annexed Term Sheet, or did you not? And whether or not that was your fiduciary duty and your interpretation is a different issue. A I think I looked at a lot of these entities in that way. For example, I knew I needed to do an integrated relationship, integrated agreement with Marriott by virtue of the fact there were 23 hotels that were in default. Some of these hotels were San Diego and Tysons which I believe benefited from my ability to negotiate with them with regard to properties that were in the floating rate and fixed rate pool. I believe that other entities have benefited in the past because of cash flow that was generated from the enterprise that went into properties to improve them to the benefit of the whole. So yes, I did look at, you know, how all the pieces fit together to benefit the entire corporation, but also the pieces of the corporation, and that's just one example of how I take it into consideration. Q Well, with respect to this particular entity, did you perform that analysis, in other words, did it benefit in terms of financing a PIP? Is a PIP required with respect to that entity KPA
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Marc A. Beilinson RIGG,LLC? A No. Q Okay. I don't believe so at this time. A Q And do you know if it generates sufficient cash to service its debt? I've looked at all the issues with A regard to that entity and others and I can't tell you today because I didn't know that was the purpose of, you know, this deposition, but. Q Sitting here today, you don't know the answer to that question? A Which question? Q Whether it generates sufficient cash to service its own debt. With regard to that hotel, no, I can't A answer the question. Q Okay. I also can't answer the question as to A whether it's always been able to satisfy the debt or how much money went into the capital improvements from other sources with regard which benefited that property. Q Well, did you perform that historical
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Marc A Beilinson properties. I believe with regard to San Antonio the answer would be, no, they could not have done their historic CAPEX with regard to that property and fulfilled its obligations under the loan. I believe I can say that with regard to San Diego with regard to the upcoming PIP. I believe I can say that with regard to Tysons. I believe I can also say that with regard to the double thing. Q Okay. A I think there were benefits that they received by virtue of being part of the cohesive enterprise, that or historic which are current. Q Historic as in pre-petition? A Yes. Q Okay. And have you tried to quantify those historic pre-petition benefits? A Not totally. Q Partially? A I thought about it. Q Okay. Did you write down any slots? A No. Q So they're just still somewhere in the ether? A Yes.
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Marc A. Beilinson analysis with respect to each of these entities? A No. Q Okay. And if I were to ask you the same question about the ability to service debt with respect to the other hotels serviced by LNR, would your answer be the same that you don't know sitting here today? I believe that if you're asking A service the debt without making capital improvements, which are required under PIPs, or are you asking without doing deferred CAPEX and future CAPEX. Q Let's just say on a current cash basis. Let's take it one step at a time. I'm just simply asking-- once again, it's not memory test, if the answer is you don't know, you don't know. A I looked at those kinds of issues and with most properties they didn't have sufficient cash flow to service debt and their capital needs. Q I understand, except I'm not really asking about most properties, I'm asking about this group of properties. A I'm talking about this group of
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Marc A. Beilinson Good. Okay. Q And when I say you, I probably should make it broader in terms of Moelis or, you know, any of the folks that you've hired to help you with this process. A Yes. Q The answer is still sort of collectively in that ether? A Yes. Q Okay. By the way, do any of these borrowers, do they have independent managers or directors? I don't recall. A Q Okay. Do you know who approved the Chapter 11 files for each of these five entities that we've been discussing? A No. Q Do you know if resolutions were signed authorizing the Chapter 11 filing? A I've been told that they were. Q Do you know if you signed any resolutions? A Yes. Q Okay. Did you sign resolutions with
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Marc A. Beilinson respect to any of these entities? A No.

Q
Marc A. Beilin son

Q
If you could turn to Exhibit 17, the
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Okay. When you say you don't know if
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Amended Declaration. A (Complies.)

Q A Q
there are any independent managers with respect to this, I think it would probably follow, but I want to confirm that you don't recall any discussions with any independent managers about whether or not to file these entities; is that correct?
I direct your attention to page 33. Okay. You were asked today whether there's
been any disclosure of your board membership with respect to Apollo Commercial Real Estate Finance, Inc., do you remember those questions? A Yes, I do.
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That's correct.
Okay. And it would also presumably
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follow that you didn't discuss the Plan Support Agreement and the related Term Sheet with any independent managers relating to these entities? A I believe I testified I didn't talk to
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Okay. Has it been disclosed to the
Bankruptcy Court that you are a member of the board of Apollo Commercial Real Estate Financial, Inc.? A Yes, it has been.
Q A Q
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the independent managers with regard to this filing.

Q
Okay. Or the Plan Support Agreement
Where? It's in Footnote 7 on page 33 of

If you'd turn to page 8 of Exhibit 17,
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which was signed prior to the filing? A That's correct.

Q
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Dennis Craven's Declaration in amended form.

the Craven Declaration. A (Complies.) Okay.
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And during the negotiations with
respect to that?
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That's correct.
Okay. MR. GOTTESMAN: I don't think I have
Directing you to Paragraph 13, in the
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middle it reads: It is the Debtors' understanding that subject to certain terms and conditions, AIC may become the purchaser. Do you see that?
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any further questions. Thank you very much.
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1 Marc A. Beilinson Yes. So it's fair to say it was disclosed
Marc A. Beilinson THE WITNESS: Thank you. MR. DONOVAN: Thank you. Let me ask you some questions, Mr. Beilinson. EXAMINATION BY MR. DONOVAN:
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to the Bankruptcy Court that AIC may become the purchaser of the equity, at least a portion, that Lehman may receive as a part of this plan; is that correct? A Absolutely.
You were asked questions about the
drafts of the Plan Support Agreement today. I'd like to ask you some questions about the Plan Support Agreement you're actually trying to get confirmed with the court. That's Exhibit 4 if you need to look at it. Does the Plan Support Agreement you're seeking to have confirmed, is AIC a signatory to the Plan Support Agreement?
MR. DONOVAN: Nothing further. Thank you. THE WITNESS: Thank you, guys. MR. DONOVAN: Thank you. Off the record. (Whereupon, off the record.) (Whereupon, deposition adjourned 3:22 p.m.)
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No, it is not.
Okay. Does the Plan Support Agreement
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you are seeking approval from the Bankruptcy Court 19 have any type of backstop provision? A No, it does not. 21
Does the Plan Support Agreement you
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are seeking approval have any type of breakup fee in 2 3 it? 24
No, it does not.
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oOo CERTIFICATE I, JOSEPHINE H. FASSETT, a Registered Professional Reporter and Notary Public within and for the State ofNew York, do hereby certify that the witness, whose deposition is hereinbefore set forth, was first duly sworn by me on the date indicated, and that the foregoing videotaped deposition is a true and accurate record of the testimony given by such witness. I FURTHER CERTIFY that I am not employed by nor related to any of the parties to this action by blood or marriage, and that I am in no way interested in the outcome of this matter.
INSTRUCTIONS TO WITNESS Please read your deposition over carefully and make any necessary corrections. You should state the reason in the appropriate space on the errata sheet for any corrections that are made. After doing so, please sign the errata sheet and date it. You are signing same subject to the changes you have noted on the errata sheet, which will be attached to your deposition. It is imperative that you return the original errata sheet to the deposing attorney within thirty (30) days of receipt of the deposition transcript by you. In you fail to do so, the deposition transcript may be deemed to be accurate and may be used in court.
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JOSEPHINE H. FASSETT, RPR, CLR New York Notary Public
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oOo UNITEDSTATESBANKRUPTCYCOURT SOUTHERN DISTRICT OF NEW YORK CASE NO. 10-13800 (SCC)
ERRATA
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In re: ) Chapter 11 INNKEEPERS USA TRUST, et al., Debtors. ) )
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I wish to make the following changes, for the following reasons: PAGE LINE _ _ CHANGE: _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ ___ _ _ CHANGE: _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ ___ _ _ CHANGE: _ _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ CHANGE: _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ CHANGE: _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ CHANGE: _ _ _ _ _ _ _ _ __ REASON: _ _ _ _ _ _ _ _ _ _ _ _ __
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I, MARC A BEILINSON, hereby certify that I have read the transcript of my testimony taken under oath in my deposition of August 12, 2010, and that the transcript is a true, complete and accurate record of my testimony, and that the answers on the record as given by me are true and correct.
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MARC A BEILINSON
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Subscribed and sworn to before me this _ _ _ day of ,2010.
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WITNESS' SIGNATURE
DATE
Notary Public
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168:15 170:2 A 170:17,22 AB65:18 174:7 182:24 abide 26:6 182:25 185:19 ability 64: 14,20 186:6,16 188:5 74:10 219:3 188:13,14 221 : 11 223 :5 198:12 199:6 able34:18 42:9 213:4,7 215:15 222:21 230:11231:14 absolute 195:18 232:16 absolutely 17:20 accurately 25: 11 26:11 45:24 105:13,25 63:19 65:15 106:15 Ill :5 70:5 72:8 73:3 acknowledged 75:5111:18 209:2 113:12 135:16 acquire 34:12 181:14 199:21 138:19 212:6 229:8 acquirers 98:21 accept 65: 18 acquisition 84: 19 109: 18 31:22 33:18 123:6 139:24 34:23 35:5 acceptable 48:21 98:11,16 52:17 56:2 act 190:8 74:18 83:23 acting 76:4 85:7,12,13 134:13 164:25 97:18,18,22 action230:15 102:25 103:2 110:19 196:13 actual25: 15 144: 3'4 171 : 15 accepted 52:3,11 adamant 46:2 96:23 109:19 additional58:7 136:6 139:2 149:21 163:6 access 58:22 address 137:17 59:2,4,5, 15,21 addressed 60:4 69:10 185:19 138:14 207:8 adieterich@p ... 218:17 5:11 account 39:3 adjourned 99:5 153:12 229:15 178:12 195:15 Administrative 199:22 170:24 accretive 13 8: 17 advance 16:14 146:13 130:6 217:20 accurate 27:12 advice 76:5 36:13 Ill :7 78:15 112:11 117:8 advise 73:7,11 123:17 137:8 90:25 91:4 145:12,14 133:11 147:11 148:12 advised 58: 18 150:12 166:5 60:8 advisors 4:5,12 7:5 119:14 163:24 aehrlich@pau ... 5:9 affidavit 184:23 185:2,7,10,17 affiliate 89:4 99:3 affiliated 15: 16 22:25 31:9,10 89:19 affiliates 171: 13 afternoon 8: 11 202:7 Agent 170:24 aggregate 213:15,17 aggregation 104:4 106:21 ago 17:13 80:17 89:10 115:19 131:22 182:20 215:17 216:9 216:12,13 217:16 agree 51:23 105:23 150:17 158:25 185:6 195:25 agreed 146:10 196:2 agreement 8:22 8:24 12:16 25:20,22 26:9 26:17,21 27:8 29:8 30:18 34:11 35:2,20 35:21 36:21,22 49:10 53:24 55:12,22 61:3 64:15 66:6 76:25 77:2,12 95:11,13 96:16 102:18 107:24 108:4 109:13 110:2,3 114:5 13 3 :17 144:3 '4 145:4,11,21 146:2 147:17 148:4 150:6,7 150:14,16 169:16 180:16 186:14,15 189:21 192:15 192: 18 193 : 11 193:14,21,22 195:9 205:14 207:16 208:7 212:11,24 214:19,21,23 215:3 221:2,8 226:13,17 227:9,11,14,16 227:18,22 agreements 105:10 143:18 ahead23:24 122:24 176:16 186:18 203:7 AIC 19:25 34:23 38:4 40:22 4 3 :17' 18 44:4 44:6 46:21 49:11,14,19 50:4 51:17,18 52:12 55:11,21 67:13 86:22 87:6,25 89:24 91:13,20 92:13 92:15,18 93:6 93:9,13,13,15 95:7 98:11,17 99:2 100:19 102:10,16 104:22 105:12 105:19 108:4 108:20 109:4 109:12111:16 111:19112:13 112:19 118:15 175:2 199:24 227:15 228:24 229:4 AIC's 111:11,15 all:7 231:7 Alan 104:12 105:20 106:4 ALI 5:15 54:13 81:21 184:3 allow 88:4 139:23 allowed 64:22 65:19 69:9 allows 71:5,9 alluded 170:18 alternative 9:20 10:5,9 68:23 70:7,16 74:14 76:15 77:16,21 78:2,12,21 79:3,7,14,22 80:5,8,13 83:2585:16 94:7,22 98:2 101:21 113:7 138:10 140:10 140:22 151:16 151:25 152:9 152:17 156:10 159:12 177:25 alternatives 80:19 136:17 Alvarez 209:11 ambiguity 178:21,21 amend 101:16 amended 8:16 10:19 17:21 18:2 142:4,11 228:3,18 Americas 3:6 4:21 5:6,16 6:6 amount 33:25 51:19 61:4 63:8,23 64:4 67:17 74:11 82:9 137:4 156:17 168:21 190:22,24 192:6 208:14 208:18,25 213:13
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amounts 206:2 Amy 5:10 40:7 Anaheim 165 :23 166:4,13,19,24 167:14,21 171 :24 17 5 :10 175:12,21 176:3,15 177:3 177:15 179:8 179:20 180:3 180:17 181:7 186:11,12,13 186:25 187:13 188:6 189:3,4 189:15 190:2 190:11,12,13 190: 14 193 :17 200:16,23 analysis 58:11 58:13,15 60:9 60:14 119:18 120:12 175:17 196:17 221:23 223:2 analyze 220:5 analyzed Ill :23 analyzing 58:20 Andrew 5:8 11:9 Annex 192:23,24 192:25 annexed 221 :2 answer 13:18 21:21 33:11,13 33:21 36:3,19 38:22,24 39:10 41:21 45:17 46:17 49:22 53:22 71:23,24 71:25 76:7,20 76:22 80:3 101:7,16 103:6 122:24 124:22 125:3 127:10 127:11 129:12 129:14,19 140:15,18 173:13,15 174:3,21 186:18 187:7 195:6 208:10 210:11 214:8 222:13,18,20 223:7,17 224:3 225:8 answered 124:20,23 127:10 129:12 129:19 140:17 157:7 181:9 answering 27:19 answers 13 :23 165:14 231:15 anticipating 198:7 anticipation 122:3 Antonio 202:23 204:13 210:17 210:23 224:2 anybody 67:17 70:16 72:15 129:25 132:6 146:5 anyway 174:20 Apollo 5:5 11:11 15:17,24 16:2 16:22 19:19,20 19:24 20:4 22:20 23:2 30:11,16,21,25 31:2,9,10,13 31:15,21 32:12 32:19,23 33:2 33:17 34:5,6 34:11,15 35:4 35:20,20 36:14 39:2,6,16,20 39:21 41:18,18 42:5,5,12,15 45:7 48:14 50:18,21 51:2 51:752:5 67:14 82:5 83:19,21 85:23 86:2 88:4,13 88:20 90:25 91:2,4,7,23 92:8,9,10 95:11,21 97:21 97:25 98:4 99:2,3,13,25 100:8,11,16 101:2,9 103:18 104: 15' 17' 18 104:23 109:12 Ill :25 112:4 123:19 124:2,5 124:13,15,24 125:7,15 126:2 126:5 127:6,15 153:11 154:3 157:24 174:25 216:20,20 217:2,5 228:9 228:14 Apollo's 32:23 100:11111:24 Apollo-Lehman 156:7 Apollo-related 88:16 apologize 184:25 193:4 Appaloosa 6:13 11:16 apparently 24: 13 104: 10 appear95:6 104:4 appearance 40:6 appearances 40:5 appears 25: 14 103:17,20 106:19 198:11 applied 164:3 apply 164:4 appraisals 207:5 appreciate 179:13 appreciative 68:12 approach 105:13 126:2 137:14 appropriate 21:23 36:11 61:9,10 65:9 68:8 126:16 133:11 232:5 appropriately 190:8 217:25 219:20 approval29:7 100:19,21 108:3 118:23 148:15,18 149:2 227:19 227:23 approve 66:12 75:17 approved 70:18 76:18 148:6 225:15 approximate 168:21 approximately 102:6 166:7 204:19 Aprill0:15,18 79:4 80:16 81:3 114:23 115:14 118:7 120:15 123:9 123:16 130:15 130:19 131:5 132:2,7 153:10 172:11,19 173:2 174:13 182:9,23 183:2 198:23 204:20 209:16 area 211:12 220:11 areas 86:21 ARI22:24 88:21 arisen 143:11 arrived 40:5 aside 220:7 asked 16:14 69:16 75:22 79:6 86:25 91:23 124:2,15 124:23 127:9 129:11,18 13 5: 18 140: 17 142:23 157:7 165:13 171:23 185:2 187:18 189:6,10 219:25 220:17 227:8 228:7 asking 16:22 37:20 38:9,10 68:6 74:6 78:24 127:23 129:15 137:15 146:24 147:2 181:3 191:21 194:24 223:9 223:12,16,23 223:23 aspects 116: 19 assess 131: 18 assessment 219:13 asset 119:23 assets 77:8 119:9 119:19 120:5 128:16 137:4 162:23 180:7 193:22 194:2,7 194:10,12,19 196:6 205:11 208:12 asset-by-asset 119:18 associate 14: 11 assume 8:21 25:19 26:23,25 27:10 95:19 145:21 149:13 170:17 190:10 assuming 112:19 assumption 26:16 27:5 29:7 123:8,15 123:17 148:22 150:11 188:5 188:14
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assumptions 64:17 120:17 120:18 121:4 Atlanta 4:7 attached 18:4 27:11 105:8,18 105:22 106:25 142:14 144:19 232:11 attaching 105:9 attachments 103:22 104:3 106:24 attempted 65:15 attempting 24:16 attendance 209:20 attending 115:17 attention 92:4 214:17 228:5 attorney 13: 10 232:13 Attorneys 2:5,16 3:5,12 4:5,12 4:20 5:5,15 6:5 6:13,21 attorney-client 76:10,21 attributes 208:12 audit 88:23 August 1:14 231:13 author 56:22 authority 118: 12 authorize 130:23 authorized 58:22 authorizing 8:21 25:19 26:16 225:20 automatic 145:3 145:10 Avenue 1:13 3:6 3:13 4:21 5:6
5:16 6:6,14 averting 163 :4 avoid 165:16 aware35:2 73:14 74:3 127:18,19 155:25 168:2 171:5,9 184:9 185:9 186:5 194:12 207:17 a.m 1:15
B b 5:22 8:14,22 9:2 10:2 12:11 25:2083:18 139:4 151:9 206:9 back 21:7,16 38:12,14 41:24 47:14 50:2 51:15 65:17 81:3 120:15 123:9,15 125:13 149:17 151:25 155:12 181:11 182:7 191:7 193:6 202:13 203:4 212:7 213:22 214:4,11 217:15 218:18 backstop 44: 18 45:6,7 46:4 48:5,15 49:15 51:16,19 54:21 82:5,6 227:20 Backstop/Con ... 81:25 backwards 155:24 Bad 57:7 balance 77:7 169:6 191:9 207:18 213:6 banker 56:19 57:21 78:9 bankruptcy 1:2
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APP-00374
238
184:4 217:3,4 217:6,8 CAPEX 120:5 223:12,13 224:4 capital6:21 11:24 64:9 71:7 79:16,20 103:18 104:15 104:17 120:4 126:7,15 128:16 138:25 166:9 167:3 222:22 223:10 223:21 Capitalization 82:25 83:7,17 capped 63:23 care 61:16 62:3 62:3 carefully 232:3 case 1:7 19:12 28:16 31:20 c 37:15 38:20 c2:2 3:2 4:2,8 69:12 71:17 5:2 6:2 12:11 74:16 75:13,17 67:12 150:2 75:20 90:24 151:10 175:2 92:6 100:18 206:9 230:3,3 110:11 112:11 calculations 124:19 125:2 121:8 149:13 153:17 California 17:7 163:25 164:21 17:8 165:24 167:7 calll6:21 19:20 171 :19 23 1:4 19:24 24:7 cash 21:24 27:8 130:20 120:11 126:8 called 1:11 84:20 144:25 162:14 88:21 205:13 206:17 calls 124:10 220:23 221:14 201:4 222:7,15 cancellation 223:14,21 182:2 caused 52:11 cancelled 178: 11 Cave4:19 12:3 181:22 202:10 capability 90:20 CDO 168:4 capable 33:24 171:11 192:13 center 19:14 capacity 13 5: 12 208:21
108:2 109:16 bunch 114:8 202:18 burdens 219: 13 business 42:19 43:9 61:18 69:24 71:8 77:23 78:17 90:22 110:21 111:2,2135:23 138:16 151:17 152:5,21,22 153:5,20 156:16 158:5,6 159:9,15 212:2 212:4 businesses 17: 15 buy 112:5 200:22 buyer 38:4,6 42:13 88:7,11 217:5
CE022:9,10,13 32:12 93:13,15 certain 119:9 120:5 125:9 228:24 certainly 46:21 154:2 155:9 certainty 25: 15 Certified 1: 17 certify 230:7,14 231:11 chains 22: 12 104:11 chance26:2 100:17 CHANGE 233:9 233:11,13,15 233:17,19 changed 65:21 199:2 changes 117: 14 232:9 233:5 chapter 1:6 28:21 37:13,14 38:17,18 50:17 63:18 66:18 76:25 206:15 225:16,20 231:6 characteristics 212:3 charge 78:11,14 216:6 chart 8: 19 18: 17 19:2,16,19 20:10 23:21 24:9,15,19 165:5,8 166:24 170:16 Chicago 2: 18 14:12 chiefl0:20 13:5 17: 16 22: 14,16 46:6 60:23 142:5,11 Chip 3:17 12:4 chip. brooker ... 3:18
choose 122:20 149:9 chooses 147:7 162:22 chose 36:9 122:18 Chris 215:20,22 215:23 218:19 chronologically 216:16 Cinemas22:14 circumstances 133:3,4,5 City 80:12,12 claim 63:8,14 71:11 135:19 149:12 162:9 162:20 199:22 208:15,18 claims 74:11 133:18 177:9 180:8 192:6 clarification 178: 16,22,23 clarifications 13:21 clarify 101:7 178:24 clarifying 187:25 class 161:10 clear 37:17 52:14 66:8 77:8 99:2 106:23 108:18 Ill: 18 146: 16 150:25 153:9 159:13 186:24 188:8 206:19 207:4,23 clearly 26:5 98:17 159:22 client 189:22 clients 119:20 199:24 close 114:3 218:21 closely 48:8
closer 96:22 103:8,10 CLR230:20 clue 104:24 CMBS23:3 24:21 64:18 219:2 Code 63:15 65:10 100:3 101:9 134:9 138:23 139:4 140:12 152:3 162:11,18 191:9 195:19 195:21 196:14 cohesive 110:20 224:12 cold 122:21 collateral 21 :24 24:8,24 25:4 25:10,12 59:22 62:10,19,20 63:12 64:6,13 65:7,18 128:22 133:3 134:8 144:25 162:10 169:8 170:11 170:19 179:6 191:13 205:13 206:17 collateralize 169:12 collateralized 170:8 collective 180:11 collectively 179:8 191:18 225:9 color 24:9 165:5 coloration 59:23 column 25:3 197:23 columns 25:9 come 15:20 16:15,18 50:12 66:5 70:24 75:8 119:10 120:12 137:16
APP-00375
239
137:24 146:12 178:18 182:20 189:19 192:11 coming 31 :23 110:2 120:22 commenced 149:3 216:9,11 commencing 1:15 comment 85:3 188:11 comments 86: 18 105:19 110:16 188:4,6 Commercial 88:20 228:9,14 committee 6:5 11:14 88:23 common 67:15 99:9 communicated 92:13 103:5,9 206:20,21 212:24 communication 93:20 communicatio ... 31:21 112:15 218:17 community 219:2 companies 20:6 22:18 117:15 120:8 148:14 153:21 company 16:15 16:24 21:19 22:25 28:21 30:16 31:16,23 32:24 39:8 44:25 45:2,25 47:24 48:17 50:10 51:24 52:4,7 55:12 56:19 57:20 58:12,16 60:10 60:14,22 61:5 61:13,23 62:15
71:14 75:9,19 77:9 83:13,15 84:19 86:7 87:20 88:6 89:10,18,19,25 93:1195:25 98:23 99:18 108:4 109:13 122:5 126:15 128:18 135:19 138:19 140:9 145:20 154:7 162:14 200:14 219:12 company's 58:23 117:12 117:13 comparable 120:8 compare 55:5 comparison 77:5 77:24 compensated 14:18 compensation 14:20,22 compete 137:18 competitive 119:19 complete 207:7 231:14 completed 58:13 60:9,13 completely 75:3 completeness 45:16 completing 58:10 compliance 34:9 Complies 29:13 29:16 35:17 44:16,20 48:9 55:6 56:6 86:24 102:13 109:7 115:10 127:25 142:22 142:25 147:19 149:24 151:13
172:24 184:24 185:15 192:19 228:4,21 component 14:21 comprehensive 50:9 61:2 comprises 31:8 concentration 17:17 concept 48:23 103:9,10 140:9 181:25 concerned 62:18 concluded 61 :22 conclusion 124:11 178:19 condition 34:8 50:14,20 51:12 90:21 95:10 99:11102:17 102:20 112:7 208:12,23 210:21 211:16 211:19 conditions 48:5 49:7 54:22 55:8 83:2,7 86:23 87:2,4,7 89:23 95:3,8 95:17 102:11 107:23 109:5,9 110:5,7,24 112:24 212:3 228:24 conduct 44:25 219:12 confidential 26:2 confidentiality 133:17 confines 75:9 confirm 226:7 confirmable 139:7 confirmation 51:11 99:12 123:14 139:3
139:24 162:7 190:7,24 confirmed 50:13 188:18 189:2 227:12,15 conflict 158:3,14 158:16 conflicts 158:6 confused 146:22 153:18 confusion 146:22 connection 39:3 39:1142:14 75:2 92:5 147:14 153:13 179:5 180:2,15 184: 18 197: 10 200:14 205:5 205:12 211:7 213:9 219:11 219:20 consecutively 104:2 consensual 65:20 66:7 68:15 consensus 66: 10 66:20,25 67:24 68:8 consensus-boil ... 66:19 68:4 consent 159:25 168:7 171:17 172:6,9 173:7 173:11,19,23 174:14 175:7 182:21 183:13 184:9 consequence 215:4 consider 55:2 64:7 120:17,18 126:6 132:2 164:24,25 consideration 64:23 65:6,8 66:3 123:5,10
153:12 162:13 162:17,21 182:5 200:9,11 201:7,12,17 221:21 considered 30:17 174:24 considering 91:21 197:9 consistent 83 :22 106:22 consists 45:10 Consolidated 117:2 consolidation 197:5 constituencies 53:8 66:14 70:23 71:17 72:573:12 74:14 77:22 79:9,24 80:9 159:25 constituency 75:10 137:15 constituent 53:20 constituents 30:7 71:6 77:2 80:5 123:2 134:15 constitute 215:12 constitutes 143:6 constructive 105:16 consummated 123:24 consummating 95:20 contacting 33:6 33:15 contacts 43:12 contained 151 :7 contemplate 122:16 197:5 contemplated
APP-00376
240
62:16 108:5 169:16 175:25 176:5,8 177:2 195:10 200:10 212:25 220:25 contemplates 156:2 context 19:15 24:14 42:16 45:21 51:12 60: 19 61 :13,23 63:21 65:3 99:25 100:13 128:24 152:17 160:12 186:3,7 186:8 202:16 220:6 contingencies 152:12 continue 97:12 105:16 120:16 146:11 196:25 Continues 104:6 continuing 29:7 68:13 120:16 contract 15:9 148:20 149:11 150:10 contractual 91:15 contribute 125:8 contributed 125:16 control97:14,15 182:21 183:4 183:12 184:9 controlled 174:19 182:14 controlling 161:10 controls 173:6 cont'd 3:2 4:2 5:2 6:2 conversation 65:22 97:19 125:7 208:16 209:6,9,10,23 210:5 212:8
217:23 conversations 42:15 49:4 98:3 100:15 113:22 114:19 212:9 216:4 218:11 conversion 110:6 convert 169:15 converted 13 7:5 converting 123:11 137:7 copies 27:3,4 54:15 copy 27:24 28:3 corner 40:17 94:24 204:8 Corp 15:17,24 22:21 31:10 32:13 33:2 39:2,17,22 42:12,15 45:7 48:15 51:3 52:5 67:15 88:4,13 91:23 92:10 95:11 98:5 100:9 109:12 126:5 corporate 8: 17 17:22 18:3,10 157:16 196:21 corporation 5:5 11:11 16:3 19:20,25 20:5 20:14 23:12,12 23:14 30:21 31:2,3 34:7,15 35:4,21 36:15 39:6 41:19 42:6 82:6 83:1985:23 86:2 91:2,7 100:2 104:18 127:7,15 196:18 216:20 221:19,19 Corporation's
33:17 corpus 135:3 Corp's 100:12 Ill :25 correct 13:11 16:5,6 18:11 18:13,14 19:17 19:18 20:7,10 24:10,15,22,25 25:2,6 27:24 28:15,16,25 29:9,10 30:12 30:19,24 31:17 36:16 41:18,19 42:5,6 46:10 48:18,24 49:12 52:2,21,22 55:14,23 62:15 62:17,21 68:3 68:18,20,21,22 68:25 70:19,20 72:22 73:9,10 73:23 78:4 83:15 84:3 89:25 91:8,22 93:22 96:23,24 98:24 102:18 109:16 112:15 118:4,5,6 121:4,24 125:23,24 134:18 143:13 143:14,19,23 145:22 148:8 148:15,16 149:9 150:8 153:22 154:10 160:8 161:23 164:8,18,19 165:24 166:4,7 166:8,19,21,25 168:14,18,22 168:23,25 169:10,16,17 170:15,21 171:25 172:2,7 181:13,18,19 182:15 184:5
192: 15 193 :14 193:24 194:4 194:11 196:4,5 196:7,8,10,11 196:16 198:9 198:14,20 203:12 213:3 213:16 214:3 217:9 218:24 226:9,10,19,22 229:7 231:16 corrected 179:12 correcting 179:3 corrections 232:4,6 correctly 24:12 45:12 108:6,7 145:7 correspondence 210:2 costs 211:6 counsell2:15 13:25 22:17 37:25 43:6,13 43:15 44:6,8 76:5,6 97:3 114:18 121:9 174:7 188:17 189:19 counsel's 27:23 counteroffer 84:15 country 22:12 couple 40:24 72:23 93:20,24 172:16 206:17 216:9,11 course 62:3 64:16 89:8 120:15 125:11 146:7 207:7 210:18 215:19 court 1:2 13: 17 26:22,24 27:3 27:25 36:4 50:13 63:7 64:5,12 65:8
69:6 71:10 89:19 108:3 109:21 138:5,6 143:18 145:2,9 148:7,14,18 149:2 185:3 220:17 227:12 227:19 228:13 229:4 231:2 232:16 Covenants 149:21 cover 21:13 covered 21:9,17 Craven 10:20 66:9 142:4,11 184:23 228:20 Craven's 228:18 create 152:13 199:12 created 64: 10 66:20 128:19 139:17 creates 71:3 79:8 creating 134:12 creditor 53:20 64:13 66:14 67:25,25 70:23 73:12 74:13 75:10 79:23 80:9 90:15 134:17 135:8 135:11 137:3 137:14 157:14 159:24 162:21 192:8,12 creditors 6:5 11:13 50:11 53:1560:3 64:18 66:22 67:21 68:2 71:1179:10 134:25 135:4,6 136:25 137:19 137:22 138:9 139:2 151:25 152:16 156:19 162:4 191:22
APP-00377
241
201:19 148:2 149:18 crisis 132:16,19 149:18 156:3 133:7 172:20 182:24 Crisp4:15 11:21 204:19,20 11:21 230:9 232:8 CRO 14:16,19 233:23 15:10,21 16:25 dated 8:25 9:5,8 23:8 106:9 9:11,14,17,22 10:6,10,12,14 164:18,20,24 176:13 194:18 10:17 28:24 196:12 32:2 35:3 CRO's 162:16 40:12 44:11 CSFB202:12 47:4 48:12,14 culminated 54:6 81:17 212:11 82:16 85:17 current 108:9,14 86:18 94:8 101:22 102:6 108:17 169:5 188:10 213:5 103:11 104:11 109:2 114:23 223:14 224:13 cw 166:9 167:3 130:15,19 cycle 211:3,21 dates 131:6 day 1:14 19:3,10 D 28:15 36:5 D2:19 4:15 8:2 66:9 72:21,22 Dallas 3:14 73:8 75:22 Dalton 22:22 116:16 231:21 44:3 days 3 1:19 33 :16 damages 149: 12 40:24 72:23 Dan 11:3,23 74:19 93:20,24 DANIEL2:8 102:6 112:10 6:24 114:5 131:9,22 daniel.donova ... 132:7,14 2:9 133:12 135:12 date 17:23 18:18 136:14 143:10 25:21,23 28:18 159:24 161:2 28:19,21 29:5 197:5 232:14 32:3 35:3,10 day-long 117:17 35:11 36:16 DC 2:7 204:2 40:13 44:11,13 deal71:18,22 46:21 47:5 72:4 74:23,24 54:7,12 58:6 75:7 77:18,18 81:18 82:17 99:10 107:12 85:18 94:9 113:17 131:15 101:23 102:15 137:2 140:21 103:12 105:17 140:22 158:21 Ill :5 113:25 158:22 175:21 114:4,24 180:17 181:15 130:16 142:7 188:21 198:20 200:13 205:4 187:11,12 dealing 27:20 190:15 192:22 deals 71:5 77:16 193:19 194:20 dealt 126:17 199:17 201:10 177:11 180:4,7 201:14 215:10 debt 19:16 24:14 debtors 1:8 2:5,5 25:10,11,12,16 2:16,16 8:18 59:22 60:2,5 8:20,21 11:4,8 61:4 64:12 11:18 14:19 65:2 77:6 15:11,21 17:22 110:6 123:7,12 18:4,10 19:3 128:11 129:9 19:15 25:18,19 129:17 131:15 26:15 29:6,22 131:19,22 30:3,5,1 0,14 133:14 135:14 39:13 40:23 135:17 137:7 41:17 42:4 158:25 163:5 47:17,18 57:19 166:6 176:2 59:17 60:5 177:8,11,15,16 63:17,20 70:4 178:9,10,12 74:1177:13 179:7,9,10,20 92:4 132:16 180:18 181:21 133:23,23 182:2,5,8,14 143:4,7 148:14 182:17,19,22 149:6,8,9 183:5,14 157:22,23,24 187:15 191:23 158:17,18 197:23 198:7 164:8,12,13,18 198:19 199:5 165:24 167:17 199:11 200:14 168:13,17,19 203:18 207:15 170:21 176:13 207:18 213:2 188:24 191:17 213:12,13 192:25 193:10 222:7,16,21 193:24 194:4 223:5,10,21 194:19 195:23 debtor 31:14 196:3 197:6 36:13 37:13,14 198:9 219:14 38:17,19 56:3 228:23 231:8 57:15 59:10,12 Dechert 5: 14 59:14 60:4 43:16 94:23 61:20 70:22 102:5,16,19 77:3,21 83:24 104: 13 114:9 85:7 89:4,20 decide 120:18 90:4 98:6,12 188:10 220:19 98:16,18 99:5 decision 77: 18 111:3 112:19 declaration 116:18,20 10:19 66:9 136:25 150:7 142:4,11,15,18 150:14 164:21 228:3,18,20 deem 65:8 deemed 178:10 181:21 232:16 deep 144:22 default 110:6 112:24 125:22 127:17 132:18 221:9 defaulting 217:21 deferred 211 :23 211:24 223:12 deficiency 162:20 defined 51 :20 177:9 178:10 179:8 defines 179:4 defining 132:20 definition 63:12 147:25 149:17 deflagged 206:6 deflaggings 132:18 degree 151:19 Delaware 20: 10 delayed 211:9 deliver 53:14 delivered 53:7 demonstrate 24:17 Dennis 10:19 142:4,11 228:18 depends 158:13 deposing 232:13 deposition 1: 11 8:16 13:13,14 14:2 17:21 18:3 19:21 21:9,13,18,23 140:4 164:11 164:15 180:10 189:24 194:15 222:11 229:15 230:8,11 231:13 232:3 232:11,14,15
APP-00378
242
Derrough 135:18 describe 121:23 155:7 204:25 210:19 described 77: 17 84:23 159:12 208:8 DESCRIPTION 8:15 9:3 10:3 deserve 163:5 designated 83:6 86:22 designating 25:25 desirability 70:13 desire 42:8 74:10 100:12 despite 48:22 destructive 132:16 details 211:14 212:15 determination 61:18 152:11 determinations 62:7 determine 53:4 69:25 119:25 158:23 201:8 220:22 determined 63:24 determines 63:8 64: 5' 12 71 : 10 determining 61:2 detriment 153:25 detriments 220:4 developed 155:4 development 41:16 42:3 dfliman@kaso ... 6:25 dialogue 30:11
31:2,12,14 133:6 145:23 146:5,9 159:17 159:18 205:8 Diego 203:23 205:13 206:6 210:15 211:5 212:18 221:10 224:6 Dieterich 5: 10 40:7,7 different 43:20 43:21 58:6 68:16 69:3 74:12 82:8 88:7 98:17 104: 5 116: 19 119:24 120:9 134:4 140:9 174:25 178:8 180:24 188:7 199: 11 221 :4 diligence 58:24 59:3,4,6, 15,16 59:25 69:10,21 69:22 138:14 138:20 139:18 139:19 159:18 205:9 206:2 218:16 DIP 91:18,21,25 92:3,12 110:9 147:9,15 159:20 160:6,9 160:13,24 161:7,13 205:12 206:8 206:22 212:20 DIPs 92:9,10 direct 31 :20 154:13 214:17 228:5 Directing 228:22 direction 114:18 directly 49:6 50:11 113:19 director 89:9 directors 15: 14
16:13,19,23 20:13 23:10,13 24:4 32:14 75:15 76:17 88:16,19 89:3 116:23 164:23 225:13 disagree 146: 10 186:10 187:16 disagreements 117:20 disclose 13 5: 13 disclosed 35:22 36:4 37:3,7,9,9 37:15,17,20 38:19 76:7 228:12 229:3 disclosing 76:10 76:21 disclosure 89:2,7 89:11,17 197:11 228:8 discounted 120:11 discourse 117: 19 discuss 62:5,25 63:21 70:14 75:18 76:16 79:6 132:4 133:18 136:13 174:16 179:15 226:12 discussed 63 :4 76:6 77:4 105:9 115:22 119:9 135:17 136:6,11 169:19 173:3 211:17,19 216:23 discussing 50:25 65:14 76:5 136:17 205:11 225:17 discussion 10: 14 10:17 98:15 100:8 105:14 105:25 106:3
106:16 Ill :6 114:23 130:15 130:21 131:25 132:3,11 207:6 208:17 212:2,5 discussions 29:23 30:4 32:25 42:7 66:17 83:24 88:14 97:24 98:10 100:11 105:16 106:6 118:8 180:2,14 180:20,21 204:21 207:10 207:13,14,24 212:10 215:16 216:19 217:11 217:18,24 218:5,25 219:4 226:7 dispute 108: 13 disruptive 126:24 161:7 distribution 39:2 95:2 96:15 99:5 DISTRICT 1:3 231:3 document 9:4,7 9:10,13,16,19 10:4,8,13,16 18:4,5,7 19:4,7 26:8 28:24 37:10 40:11,16 40:18,23 41:8 41:10,13 44:10 44:23 45:19 46:11,20,23,24 47:3,8,12,15 48:13,20 49:3 49:5,6,7,17 54:5,11,12,20 55:15 56:23 58:2 60:16 81:16 82:2,15 83:11 84:4,7 84:11 85:15,20
86:4,16,20 87:12,13,14,16 87:19,21,25 88:3 89:24 90:2 91:17 94:6 95:6,9 96:3' 5'7' 9' 12 96:19 101:2,20 102:2,15,19,22 102:25 103:2,7 104:7 105:22 106:19 107:14 107:23 108:19 108:19,21,23 109:2,10 114:22 116:4,6 116:7,15,25 118:17,21 119:3 130:10 130:14,19,24 131:2,13 139:15 142:10 144:17,22 156:8,23 15 7: 10 173: 10 173:18 178:5 179:2,11,21 182:10,13 183:3,4,12 184:2 198:5,13 documents 27:18 40:22 47:9,16 55:19 55:21,25 56:2 58:5 59:9 85:6 102:23 104:5 106:21 121:10 156:6 172:16 186:20,21 187:8,9,19,22 188:9,11 189:2 189:7,10,25 190:7 doing91:2192:9 92:10,14 97:13 134:12 138:10 160:9 207:11 219:22 220:13
APP-00379
243
223:12 232:7 dollar 170:5 192:5 dollars 15:3 67:19 133:14 135:15 207:19 213:12,19 Donovan 2:8 8:8 11:3,3 12:18 14:8 18:15,21 21:10,20 25:24 26:10 28:2 33:9,12,20 34:13 35:24 36:17 37:4,16 38:2,8,21 39:9 40:3 41:2,5,20 43:3,19 45:13 45:16 46:15 49:21 52:23 53:25 55:24 56:13 57:9,25 63:25 69:13 70:10 71:24 73:24 75:21,24 76:2,13,19 78:5,23 80:2 81:6,11 84:9 86:6,10,13 89:5,14,21 94:11,14 95:14 95:18 103:24 106:18 107:4,8 111:13 113:18 116:10 121:14 121:18 122:8 122:22 124:8 124:10 127:3,9 128:5 129:11 129:18 130:7 130:13 134:22 136:8 140:17 140:23 141:4 144:2,5 145:6 145:16 146:15 146:21 147:5 148:11 150:20 153:2 154:18 156:13 157:7 158:9,12 159:3 159:5 163:13 163:17 174:2,9 176:20 177:24 181:2 182:16 183:16 186:17 187:6,16,21 188:2 189:5 194:16,21 195:2 197:7 201:4 202:2 208:9 214:7 220:10 227:3,7 229:9,12 double 145:3 150:18 224:9 doubt 49:5 197:2 downside 163:7 163:10 draft 94:23 102:5,16 107:14 183:9 206:8 drafting 188:22 drafts 27:18 47:14 227:9 driveway 210:24 due 58:23 59:2,4 59:6,15,16,25 69:10,20,21 138:13,20 139:17,19 159:18 205:9 206:2 218:16 duly 12:12 230:9 duplication 165:16 duty 69:5 78:16 139:9 140:21 201:16 220:8 220:15,18 221:4 8:14 9:2 10:2 12:11 142:2,2 144:25 145:8 214:18 230:3,3 233:1 earlier 48:23 59:24 91:17 93:21 102:7 116:8 122:25 132:8 133:12 136:15 137:6 152:3 159:12 173:3 188:6,11 219:15 early 123:8 125:14 144:17 earshot 99:4 easier 202:13 EBITDA 64:11 71:3 77:15 128:20 economic 123: 10 153:23 208:23 economy 163:8 educate 133:2 education 13:10 effective 70:3 147:25 149:17 149:18 150:6 150:13,15 156:3 effectiveness 90:21 efficient 195:7 effort 110:17 116:18 Ehrlich 5:8 11:9 11:9 either 40:22 83:21 92:9,10 117:16 150:12 171:6 183:21 192:9 210:3 element 110:17 elements 33:22 110:4,18 119:16 121:7 eliminate 128:10
E E 2:2,2 3:2,2 4:2 4:2 5:2,2,18 6:2,2 7:2,2 8:2
eliminated 65:2 133:13 eliminates 161:7 Ellis 1:13 2:4,15 11:4,8,18 43:7 115:5 189:2 Elmore 3:15 12:6,6 embedded 199:13 embodied 84:20 84:22 103:2 109:23 110:4 207:17 emergence 198:7 employed 13:4 17:5 230:14 employee 22:24 104:22 employees 98:4 217:2 employment 17:2 ended 95:20 204:20 ends 152:23 engage 83:24 114:12 159:17 159:18 engaged 29:23 30:4,10,15 31:14 English 57:7 ensure 134:7 ensured 50:19 enter 100:22,24 140:5 206:12 207:6,10 218:25 219:3 entered 24:20 26:7 148:21 205:8 entering 95:21 217:23 enterprise 15 :24 30:6 53:12 63:11 71:4
99:15 123:8 134:2,5,23 139:23 152:21 152:23,24 153:5,6,16,20 157:14,17 159:22 160:5 195:14 196:21 200:17,19 201:2,9,15,18 201:19 206:16 213: 10 221 : 15 224:13 entire 77:9 90:9 98:24,25 135:3 195:14 201:18 221:18 entirely 106:23 entities 21:3,6 23:2 24:4,5 25:13 31:11 53:2,16 128:3 139:18 169:10 192:11,23 202:15 205:4 206:16 221:6 221:14 223:2 225:16 226:2,9 226:14 entitled 117:2 121:22 128:24 142:10 195:22 entity 23 :21 88:16,18,24,24 104:23 161:10 164:24 166:3 166:14 167:2 192:12 193:20 194:22 196:13 196:25 200:20 221:23,25 222:9 entries 164:24 165:2 entry 145:2,9 environment 120:3,21 123:11 132:19
APP-00380
244
environments 119:21 envisioning 197:4 equal51:18 65:6 200:23 equitization 51:9 134:12 equitize 73:21 74:10 equitized 128:15 equitizes 63:10 70:25 equitizing 63:12 64:10 199:10 199:10 equity 31:15,23 36:15,24,25 37:12,13 38:17 38:18 39:3 42:9 44:18,22 44:24,25 45:2 45:3,8,8 46:4 48:4,4,4,16 51:10,16 54:20 54:21,21 62:14 63:3,10 64:21 65:7 66:2 67:15 81:25 82:4, 7,9,9,25 82:25 83:6,7 86:22,22 87:6 87:6 88:2,4 90:17 95:2,2 96:15,17,18 98:11,16,18,22 98:22 99:6,9 99:12,20,22 100:25 102:10 102:10 103:3 109:4,4 110:6 122:5,15 123:7 123:12,13,15 123:18,23 137:7,10 153:5 154:2 162:22 162:25 163:5 169:15 170:9 174:25 177:9 177:14 200:5,6 217:5 229:5 equivalent 65:9 ERHLICH 98:14 124:9 errata 232:5,7 232:10,13 error 188:23 ESQ2:8,10,19 3:8,15,17 4:8 4:15,23 5:8,10 5:18,20,22 6:8 6:16,24 essentially 99: 14 117:21 155:13 213:10 estate 4:5,12 7:5 50:12 64:16 66:7 70:22 77:20 88:20 125:8,16,17 129:3 134:10 134:15 135:2 138:17 139:8 139:14 140:14 146:13 152:6 152:11 156:22 157:18,19 159:23 163:24 164:16 206:11 228:9,14 estates 30:7 134:17 152:16 157:19,21,23 157:24 estimate 155:18 estimates 117:22 155:5 et 1:7 231:7 ether 224:24 225:9 event 26:8 33:8 126:24 143:17 143:21,21 145:25 146:2 147:4,6,8,13 161:7 214:2,6 events 110:5,5 112:23 132:16 144:24 148:6 everybody 18:20 66:18 everybody's 62:4 evidence 19:10 evidenced 97:2 98:20 Ill: 10 112:15 154:3 evidently 48:20 exact 71:17 exactly 74:7 134:8 178:5 193:17 219:24 examination 1:12 12:22 163:20 202:5 227:6 examined 12:12 example 80:16 117:2 119:12 208:19 220:2 220:23 221:6 221:20 exceed 207: 19 excess 177:19 200:24 213:11 213:18 exchange 8:25 10:12 32:2 51:10 88:21 103:11 125:10 125:19 exchanged 62:13 exclusive 52:19 138:24 139:20 140:13 152:19 exclusivity 158:23 159:4 excuse 93 :12 208:21 execute 55:12 89:24 109:13 110:21 executed 34:4,8 35:7 36:21 50:15,19 72:18 108:4 160:19 executing 77:23 102:17 execution 28:3 107:23 executive 17: 16 22:14,17 executory 148:20 149:11 150:10 exercise 13 9: 8 150:22 156:11 156:22 157:5 159:15 exercising 78: 16 exhibit8:15,16 8:19,20,24,25 9:3,4, 7,1 0,13 9:16,19 10:3,4 10:8,12,13,16 10:19 17:23 18:2,17 19:2 19:13 24:6 25:21,23 26:15 26:20,24 27:7 28:8 32:3,6,10 35:13 40:13,16 44:10,15 47:5 47:8 48:11 51:17 54:7,11 55 :4,9,9, 16,16 56:5,7 58:4,7 59:20 60:17 72:5 81:18,21 82:8,17,20,25 85:18,21 90:8 90:9 93:21 94:9,20,21 101:23 102:2,7 103:12,15 114:24 115:4 130:16,18 131:10 142:7 142:10 143:25 147:16 154:22 164:10 165:4 172:23 176:20 182:10 183:3,8 183:22 184:22 192:18,23 197:14,16,17 202:14 208:2 214:10,12 227:12 228:2 228:19 exhibits 26: 14 27:11 40:2 83:23 142:14 142:16,17 143:22 exist 196:25 existed 126:7 existence 73:8 73:12 existing 200:20 exists 66: 11 expect 194:18 experience 37:11 38:15 123:4 138:18 experiences 16:16 expert23:3 explain 76:8 78:24 168:24 177:6 explore 80:4 explored 75:19 exploring 80:12 182:19 expressed 132:8 extent 31:5 42:11,1443:17 49:22 62:5 76:4,8,20 90:16 91:13 101:17 208:25 214:8 216:23 external 79: 16 extinguished 196:4 extra 54:15 extremely 64:7 71:12 155:21 e-mail8:25
APP-00381
245
10:12 32:2,10 34:24 93:25 94:2 103:11,18 103:21 104:10 105:2,6 218:8 218:18 e-mails 105:3 218:13 e-mail's 106:24 F F 142:2 230:3 faced 158:20,22 facially 97: 13 facilitate 64: 14 facility 91:22 205:12 206:10 fact 44:24 47:23 60:13 64:21 65:22 68:12 92:8 97:11 112:21 125:16 128:13 130:25 136:14 137:8 138:4 160:12 177:18 179:13 180:3 217:19 221:8 factors 208:23 facts 201:6 Faerstein 6: 16 11:15,15 fail232:15 failed 124:7 fair 17:17 60:25 64:12 71:10 106:23 126:16 128:22 179:17 187:17 189:11 189:14 190:13 194:22 206:12 212:22,23 219:19 229:3 fairly 46:12 123:17 127:11 201:17 220:12 220:13 fairness 27:17 faith 99:15 falll52:4 familiar 14:3 32:8 147:21 203:3,14,17,23 204:5,10,14 far25:1167:3 68:2 85:8 216:13 F arr 6: 12 11 :16 fashion 154:9,12 Fassett 1:16 230:5,20 favor 128:15 feature 99:13,17 features 119:19 fee 51: 18,20,25 52:7,11,12 168:12 227:23 feel92:21 127:11 151:4 219:22 feeling 120:13 fiduciary 69:5 78:16 128:6 130:3,5 133:20 133:22,25 134:5,9,14,16 134:19,20,21 134:25 135:3 135:10,13 138:17,21 139:9,11 140:20 150:22 150:23 151:6 156:22 157:5 157:15,16 159:14 162:16 195:23 201:16 219:23 220:8 220:15,18 221:3 field 216:17 Fields 17:6 Fifteenth 2:6 Fifty 99:20 figure 188:21 200:3 220:17 file 28:21 139:22 159:24 226:9 filed 26:24 27:2 27:2,13,25 28:12,14,16 29:4 72:18 100:18 101:4 109:20 138:4 142:19 145:20 158:24 185:3,5 185:10,18,25 206:18 files 27:2 225:16 filing28:15 30:9 31:3,20 33:16 35:10,11,22 36:16 72:4,21 72:22,23 73:9 73:13 74:15 75:12,16,20,23 78:4 79:5 93:21,24 112:10 114:3,5 124:19 125:2 138:5,8 160:14 172:20 182:24 197:4 206:15 225:20 226:16 226:18 final27 :20 50: 19 109:20111:24 175:17 finally 110:21 Finance 228:9 financiall0:20 23:12 117:3,10 117:24,25 119:14 142:5 142:12 155:6 155:19 196:18 217:21 228:14 financing 23:3 91:18,21 92:4 206:12 212:20 221:24 financings 91:25 find 74:18 78:12 79:3 88:7 126:14 fine 12:20 20:3 195:23 216:18 finger 149:16 finish 23:25 46:15,17 70:10 87:17 127:4 134:22 136:8 finished 29:18 firm 17:6 85:23 85:25 151:15 159:11 188:18 first 15:9 19:3 19:10 28:15 36:5 56:4 58:2 66:9 103:17 104:17 107:12 108:2 119:7 124:20 132:12 133:16 136:12 138:20 143:3 144: 17 153: 10 155:2 174:24 175:13 184:8 220:2 230:9 First-Day 10:22 142:6,13 fit 221:18 five6:2111:24 11 0:9 124: 18 124:25 147:9 147:14,14,15 155:12 160:7 160:13 161:4,6 161:13 163:15 201:24 202:21 205:11,14 216:21 225:16 five-month 125:3 fixed 24:20,21 91:21 117:9 118:3 119:4 160:10 161:8 161:14 162:4 206:9 207:18 216:24 221:13 flags 126:18 flexibility 64:8 65:19 128:18 199:12 200:13 Fliman 6:24 11:23,23 floating 25:5 117:23,23 118:3 146:17 146:20,24,25 147:12 168:17 169:19,23,25 170:4,6,14,20 171:18 172:3 172:10 173:7 174:18 175:10 175:11 177:13 179:6 181:12 181:17 182:7 182:14,18 183:5,13 184:4 184:10,20,21 186:15 190:3 190:23,23 191: 19 193 :18 193:19,24 194:3,4,7,25 195:11 196:3,9 196:24 197:22 198:6,9,18 199:4 207:18 216:24 221:12 Floor 3:6 4:13 flow 120:11 126:8 220:24 221:15 223:21 flux 193:16 focus 112:25 193:18 focused 109:24 109:25 110:9 111:16,20 113:9 145:16 165:17 198:25 Foerster 6:4 11:13 folks 225:5 follow 226:6,12 followed 210:3 following 32:20

APP-00382
246
233:5,6 follows 12:13 192:24 footnote 56:8,12 57:24 58:6,7 60:17,18 84:21 84:24 177:12 178:5 179:4 183:23,24 184: 14' 14' 15 228:17 footnotes 116:8 foregoing 230:10 form 35:7 49:11 65:6 89:5,21 95:12 98:14 111:14113:18 122:22 124:9 128:5 140:24 148:11 150:20 153:2 154:18 156:13 158:10 158:13 159:6 162:13 178:3 181:3 182:16 186:17 208:9 214:7 218:18 220:10 228:18 Forma 121:22 122:12 197:23 formerly 22: 10 22:14 forms 153:12 forth 47:14 55:13 73:4 109:14 139:3 218:18 230:9 Forty-five 24:24 forward 45:25 46:3 68:9,12 76:24 81:12 Ill :3 112:8 113:23 125:12 132:5 139:9 155:24 159:23 160:4 207:11 found 83:22
97:22 Foundation 35:24 56:13 57:25 78:23 80:2 116:10 122:23 four 107:20,21 115 :19 124: 18 124:25 154:8 154:12,17 155:7 160:23 176:21 217:15 Fourteen 197:20 framework 66:20 franchise 125:22 143:12,16,20 145:4,11 147:9 147:12 franchisors 66:22 110:11 128:19 frankly 126: 10 Fred22:9 free 69:2 77:8 162:14 freed 128:17 freeing 77: 15 free-fall77:4, 10 frequently 98:8 Frey 114:7 Friedman 6:20 11:24 front26:17 54:14 55:4 69:24 70:2 fulfill91: 12 126:9 139:21 fulfilled 224:5 fulfilling 77: 12 78:16 90:20 125:9 126:13 219:22 220:14 fulll2:25 64:10 156:8 207:7 fully 127:11 162:14 190:16 190:20 199:9
fund 124:6,15,24 110:9 114:3 127:7,16 162:9 195:16 161:14 196:10 200:4 fundamentally give 39:25 47:16 70:21 59:2,4 64:23 funding 91:24 65:17 76:2,3 125:18 126:2 78:14 84:15 funds 126:11 118:13 128:17 further 105: 19 149:12 154:13 170:10 201:20 163:11 178:14 209:18 226:25 186:21,22 229:9 230:14 195:4 215:6,12 future 71:8 given 78:11,14 119:22 129:2 90:3,3 182:5 223:12 207:7 230:12 231:16 G gives 150:11 gain 123:3 giving 110:15 Galante 6:8 162:12,17 11:12,12 195:21 GALLAGHER Glatt 103:18 6:12 104:11,14,20 Garden 203: 11 104:21 105:2,4 210:15 211:11 106:5,10 Garrison 5 :4 global52:20 11:10 53:2,8,16,18 geared 210:20 98:12 118:9 GEN 119:25 143:7 174:20 120:2,2 go 17:2 21:7,15 general22: 17 23:23,24 25:8 132:14 207:8 52:12 64:11 211:16 212:4 77:7 78:12,20 216:3 217:25 79:2,11,13,21 219:3,5 88:7 97:16 generally 48: 19 106:25 108:24 92:21 167:16 113:3 116:25 168:16 203:3 118:11 119:2 208:18 209:3 122:24 128:8 generated 130:10 131:12 221:15 136:24 139:19 generates 222:6 140:21 146:3 222:15 149:17 150:11 generic 208:7 162:4,25 Georgia4:7 176:16 178:23 getting 39:2 179:9 186:17 60:16 63:13 202:13 203:4,7 67:773:4 214:11 96:22 103:8,10 goal 92:6 132:12
134:6 goes 47:10 105:15 109:15 155:24 179:18 going 23:11 24:18 29:20 33:8 34:3 35:16 38:5,6 47:14 48:6,15 51:15,24 52:4 55:8 63:2 69:13 82:9 85:6 99:4,7,8,9 106:18 107:16 107:22 109:3 117:25 119:20 120:3,20 121:21 122:4 126:6 128:9 131:15 133:7 140:2 141:4 146:3 153:11 155:23 157:13 157:14,22 158:9,12 159:7 162:4,5 163:14 165:12 169:14 189:23 190:15 192:10 197:7 200:19 206:14 212:7 217:15 217:19,22 good 61:19 77:24 81:10 115:18 130:7 130:10 131:6 151:18 156:19 202:2,7 204:7 204:12,17 220:7 225:2 gotten 87:22 Gottesman 4:23 8:7 12:2,2 201:24 202:6,9 226:24 Gould2:10 11:7 11:7 14:11 54:15,17
APP-00383
247
gradual155:21 gradually 155:15,20 Grand20:9 24:19 165:19 166:14,17,22 169:19,22 170:3,13,19 177:13 191:19 191:20 192:21 194:2,7,10,25 195:11 196:7,9 196:19,23 granite 211 : 13 grant 125:11,12 granted 215:8 granting 8:23 25:20 145:2,10 Great 14:13 greater 195:22 greatest 79:8 green 24:9,13,14 25:4,10,13 59:23 165:25 169:18 202:19 202:19 203:10 208:20 Greer 5:18 106:4 group22:10 104:13 209:14 223:24,25 Grove 203: 11 210:15 211:11 guarantee 125:9 125:15,19 guess 143:24 150:21 187:22 202:22 207:23 216:20 219:25 guessing 176:17 guys 195:5 229:11 H H 1:15 8:14 9:2 10:2 230:5,20 half 123:23
210:18 hand 85:20 handed 18:25 19:3 26:13,20 47:7 54:10 57:13,16,17,20 81:20 82:19 101:25 103:14 115:3 142:9 handle 127:13 133:7 handling 126:6 happen 119:21 152:16,18,19 159:8 happened 99:3 happens 214:10 happy23:23 27:5 78:25 85:5 154:13 173:16 188:8 195:4 201:3 harbor 100:4 Haynes 3:4,11 12:4,6,8 head 21:2,3 23:16 189:16 218:6 header 86: 18 hear 14:2 85:24 151:21 165:14 219:15 heard 132:23 189:18 hearing 29:8 179:2 188:3 hearings 19:4,10 36:5 held 1:12 14:15 help 225:5 helping 91:11 161:9 hereinbefore 230:8 HERTHER-S ... 5:22 Hewes22:23 44:2
Hi202:8 high 135:21 188:12 higher 71:18,21 156:10,16 191:3 highlights 173:10 highs 155:13 Hilton 166:3 hired 15:10,14 225:5 historic 155:13 224:4,13,14,17 historical222:25 history 17:2 hold 25:16 37:16 70:10 178:14 holder 25: 12 45:3 67:13 153:25 holders 67:12 Holdings 20:9 192:22 196:19 honest 136:14 hope 57:7 105:15 155:17 162:2 hopefully 165:16 200:15 Hospitality 90:15 hostile 123: 10 hotel22: 10,11 25:4 119:24,25 143:12 145:5 146:17 161:24 166:4 168:14 189:23 200:16 200:18 222:17 hotels 22:11 24:24 59:11,13 59:16,19,22 62:21,25 63:3 63:5,18 66:13 117:4119:4,4 119:4,11,17 125:23 154:8
154:15 155:15 169:9,11 170:9 177:14 202:25 204:22 206:6 207:15 208:2 209:4 221:9,10 223:6 hotel-by-hotel 155:4 HS 165:23 166:13,19 hundred21:3 62:14 63:13 70:25 99:11 123:18 153:24 162:10 166:18 168:2 200:5 hundreds 27:18 47:13 67:18 Hyatt 120:2 I idea 104:19 192: 5 194: 13 identified 24:7,8 24:9 25:13 54:20 102:5 208:2 Identify 66:13 ii 145:3,10 Illinois2:18 illustrating 198:18 illustrative 9:4,7 9:10,13,16,20 10:5,9 40:11 47:3 54:5 56:11 81:16 82:15 85:16 94:7 101:21 119:3,5,5 121:4,22 122:12 144:14 immaterial 34:19 50:22 175:17 immediately 168:10
impact 128:13 imperative 232:12 import 69:19 important 34:4 34:7 51:11 60:23 61:8,22 64:7 71:12 88:10 90:12,18 91:10 112:4 132:25 impression 188:23 improve 221:16 improvements 210:17 211:2 222:22 223:11 inaccuracies 185:9,11 inaccurate 188:19 189:20 inches 142:14,16 include 22:22 52:7 80:18 160:7 177:15 199:8 218:13 included 42:8 56:10 61:3 80:21,22 177:16 205:8 217:2 including 15: 16 17:8 40:24 53:5 80:6 93 :10 104: 13 109:15 112:23 128:3 135:4,5 140:4 143:5 197:11 inconsequential 112:3 incorporates 55:13 109:14 incorrect 193:8 increase 154:21 155:15,20 161:23,25 162:3
APP-00384
248
indebtedness 24:25 132:9 independent 15:17,22 16:2 16:9,12,19,23 23:7,9 31:8 57:3 88:22,23 89:9 171:21 219:12 225:12 226:5,8,14,16 indicated 23 0: 10 indicates 41:5 indicating 112:22 indication 119:8 indifferent 61:12,15 indirectly 113:21 individual 213:14 215:23 individuals 16:3 16:8 information 44:5 59:18 69:10 76:22 122:14 195:4 206:3 208:13 218:15,16 informed 35:6 73:19 206:14 inherent 77: 14 initial 40:5 65:25 Inn 203:11,22 206:7 211:10 Innkeepers 1:7 7:4 10:21 11:6 13:6 14:16 16:5,10,20,25 19:12 21:25 23:11,17 31:6 31:7 32:13 33:23 34:2,10 36:23 39:4,15 39:17,24 42:7 42:18,19,22 44:25 46:6
48:21 50:22 52:10,15,16,18 53:7,16 56:15 56:25 62:21 79:10 90:15 92:14 105:11 110:3,12 111:22112:21 115:5,13 124:14 126:6 128:3,7 132:22 132:23 133:6 134:24 142:5 142:12 153:13 170:7,12 196:17,18,19 204:21 207:13 209:4 216:25 231:7 Innkeepers/Le ... 113:17 input 57:2 inquire 60:12 inquisitive 60:20 insight 123:3 instruct 79:2 197:8 instruction 76:19 79:13 instructions 76:3 232:1 integral46:22 integrated 50:9 53:17 128:7 133:25 134:4 134:23 143:6 157:17 159:20 164:16 195:13 200:21 219:14 219:16 220:14 221:7,7 intend 89:7 92:22 139:21 159:23 intended 177: 10 177:15,21 178:6 179:2,11 179:15
intending 108:20 intensive 120:4 intent 50:8 intention 179:17 interaction 184:17 interest 16:22 33:4,25 45:24 51:10,14 53:4 53:11 64:8 70:22 72:8,19 73:4 75:2,5 77:7,20 80:14 90:13,14,19,23 91:5,10,24 95:22 99:6,15 112:20,23 124:2,4 129:2 129:3 134:14 137:7,10,13 139:7 140:14 152:10,20,22 152:23 153:4 157:18,23 159:22 166:18 170:21 171:10 177:14,18 178:12 201:8 201:14 219:19 220:13 interested 46:3 62:23 80:5 91:11 92:14 112:18 142:17 165:7230:17 interesting 148:19,23 149:3 150:9 interests 165:2 168:3 169:24 171:13,14 193:23 194:4 195:11 196:2 196:15 201:18 internal 46: 5 50:9 71:14 75:6 76:24
77:19 79:20 90:23 137:12 138:22 139:5 139:22 159:21 160:4 174: 16 200:12 204:21 interpose 13:25 interpretation 194:23 220:8 221:4 interrelated 212:17 interrupt 43:2 46:14,18 115:24 introduction 55:9 inure 153:5,15 153:24 inures 153:21 investing 16:24 investment 5:5 6:13 11:11,16 15:17,24 16:2 17:16 19:20,25 20:4 22:21 30:21,25 31:3 31:10 32:13 33:2,17 34:6 34:15 35:4,21 36:14 39:2,6 39:16,21 41:18 42:6,12,15 45:7 48:15 51:252:5 56:19 57:21 67:14 78:9 82:583:19 85:23 86:2 88:4,13 91:2,7 91:23 92:9 95:11 98:5 99:25 100:9,11 104:18 109:12 Ill :25 126:5 127:7,15 216:20 investor 122:17
investors 75:8 involve 59:11,13 59:16,21 involved 32:22 32:25 33:7,18 39:7 42:13 43:13,22,23,24 44:3,3,4,6 49:19 50:4 51:7 73:4,17 73:19 75:6 91:9,13,14 100:8 110:4 131:2 132:22 165:11 212:18 involves 177: 12 involving 21 :23 100:11,15 in-court 22: 19 IPO 156:2 irregular 106:20 irrelevant 189:6 issuance 45:4,5 issue 32:20 143:11 145:24 148:19,23 149:4 150:9 158:21 197:11 202:15 221:4 issues 32:18 132:4 137:17 146:4 158:20 197:9 211:11 222:8 223:19 items 44:18 J J 5:8,20 James 32:10,11 Jeff 11:7,17 JEFFREY2:10 2:19 jeffrey.gould ... 2:11 jeffrey.pawlitz ... 2:20 Jim 22:22 32:12 93:16,18,23
APP-00385
249
jobl:2113:7 16:4 178:23 jog 186:4 joined 66:15 67:21 joint 116:18 jointly 168:20 Jones 17:11 Joseph 103:18 104:11 Josephine 1: 15 230:5,20 judge 69:6 101:5 judgment 61:18 69:25 77:23 78:17 90:22 110:21111:3 138:16 151:18 152:5 156:9,17 158:5,7 159:9 159:15 July 8:25 10:12 28:23,25 32:2 35:3 41:17 42:4 103:11,19 104:11 106:17 108:9,12,17 112:9 144: 15 172:11 209:16 June 9:9,12,15 9:18,22 10:7 10:11 41:17 42:4 47:4 48:13,14 54:6 54:12 58:5 79:4 81:17 82:16 85:17 94:8 97:3 101:22 102:16 justifications 62:7 Justin 22:23
97:19 149:16 213:17 keeping 31 :6 Ken23:2 kept 97:7 Kevin 5:20 137:9 kevin.obrien ... 5:21 Kilpatrick 4:4 4:11 11:19,21 163:23 kind 119:7,13 132:5 189:5 211:25 kinds 65:11 223:19 Kirkland 1: 13 2:4,15 11:3,7 11:17 14:9 43:7 104:14 114:12 115:5 189:2 Kleisner 22:9 knew 16:16 33:8 35:8,9,19 36:14,20 38:5 50:17 135:24 136:2 173:18 221:6 know 13:21 16:3 16:7 17:15 20:11,14,19,23 20:24 22:5 23:13,18 24:2 25:1127:17 28:17 29:4 32:21 34:14,22 34:25 35:9 36:4 37:2,7,17 37:19,23 38:9 43:18 45:19 47:13,15 49:4 K 50:25 51:4,5 Kansas 80:11,12 56:2,14 58:2 Kasowitz 6:20 58:20 62:22 11:23 65:16,17,25 keep 37: 17 97: 18 66:4,16,23,24
67:3,4 68:2,7 73:3 74:17 77:15 80:20,21 80:22,25 82:13 86:8,9, 12,13 86:14 87:18 89:2,6,22 90:10 92:21 95:13 97:7,15 97:21,23 101:11,17,17 104:20,21 106:13 108:11 110:22111:12 114:18 116:12 116:13 117:21 119:14,15,16 119:17,18 120:7,12,14 121 :5,5,7, 11 121:16 122:20 123:7,17,25 124:3 125:13 132:13 134:3 138:21,23 147:3,5 149:12 154:11 161:8 164:17 167:6 167:22 168:6 171:14,16,24 173:5' 12, 18 175:16 178:15 179:19 181:6 182:3 183:11 183:15 186:19 189:16 192:8 193:25 194:5,6 194:9,14,19 196:24 199:6,9 204:3 208:22 211:15,20 214:8 215:20 216:5 219:18 221 :17 222:6 222:10,11,12 223:7,18,18 225:4,15,19,22 226:4
Lazard's 59:15 lead 187:11 learn 15:20 leaving 200:6 left 17:10,12 24:18 165:19 168:11 208:21 legall24: 11 150:25 151:3,4 LEH41:5,7 Lehman 5:15 10:14 25:4 29:23 30:4 31:17 32:19,22 33:3,4,23 34:5 34:5,18,22 35:3,20,22 L 39:13,18,20 L 7:2 12:11 40:22 41:7,17 lack 64:20 68:7 42:4,8 43:8,10 laid 131:25 45:5,22,24 language 29:24 46:25 47:9,17 46:9 55:17 47:19 48:16,20 147:25 48:23 49:11,18 largest 22: 11 50:3,11 51:7,8 134:17 135:8 52:19 53:9,19 135:11 53:24 54:13 Larry22:13 55:11,11,20 LaSalle 2:17 56:16,17,23 Lascher 43: 11 57:13,14,16,19 114:8 58:10,14,18 law 17:6,12,18 60:5,9,13 61:3 85:23,25 61:21 62:14,18 188:18 62:22,25 63:2 Lawrence 4:23 63:10,10,16,22 12:2 202:9 64:6,10,22 lawrence.gotte... 66:12 72:11 4:24 73:6,20 74:8 laws 100:5 74:14,22,24 lawyer 74:4 75:4 76:17 111:11,15 77:24 78:3,13 138:19 181:22 78:22 79:3,5 lawyers 14:6 79:14,23 80:23 90:25 91:5 81:3,4,21 114:8,12 151:2 82:20 83:19,21 laying 188:12 84:16,19 86:4 Lazard 58:21,22 88:5,8,14 59:2,6 209:11 89:25 91:9,11
knowledge 43:25 64:19 90:19 171:22 Kornberg 104:12 105:7 106:4,15 Ill :7 Kornberg's 105:23 Korval22:23 KPA 165:23 166:13,19 202:22,23 203:9,20,25 204:8,13 208:19 220:3 220:23 221:25
APP-00386
250
91:16 94:22 95:12,20 97:7 99:2,10,16 100:7,18,19,21 102:3 103:6 105:11,12 108:4 109:11 109:12 110:3 112:5,21 113:23 114:23 115:13,20 116:3,16 118:4 118:9,13,17 119:3,11 122:2 122:4,5,18,19 123:11 125:18 125:19 127:23 131:14,21,21 131:24 132:3,8 133:15,23 134:13 135:12 136:14,15,16 136:20,23,24 137:15,18,21 138:11139:12 143:6 147:7 148:5,7,10,25 153:14,14,21 154:6 156:11 156:19 157:4,4 157:13,24 158:17,18,18 158:25 160:15 160:25 162:5 166:24 167:20 168:7,20 169:14 170:6 171:5,12,17 172:5,8 173:6 173 :19 174: 16 174:18,20 175:4,8,22 179:19,22 180:15,23 181:6 182:13 182:21 183:4,9 183:12 184:3,9 184:17 190:22 190:23 191:10 198:14 199:17 200:4,13 207:14,20,25 209:11212:10 212:14,24 213:8,21 215:7 215:13 229:6 Lehman's 34:8 42:8 48:5 49:8 61:10,12 97:3 102:11 112:7 122:11 Lehman-Apollo 155:25 Lehman-Innk... 108:5 Lehman/AIC 107:15 Lehman!Innk... 113:7 Lehman/loves ... 122:16 LEH-ALI40:17 Lenard 3:8 12:8 lenard.parkin ... 3:9 lender 134:24 167:21,23,24 167:24 171:5 177:3,11 178:11 179:4,5 184:5 188:6 190:15 199:18 199:20 200:7,9 214:4 lenders 24:7,8 24:13 64:16 66:21 67:3,6,7 126:9,10 134:2 134:4 159:21 160:6 163:25 193:3 200:20 213:23 215:5 lender's 134:10 134:11 length 169:14 212:20 Lenny 112:17 Lessees 168:12 lesser 162:17 letter 93:24 94:3 121:14 195:3 letterhead 130:20 let's 28:18 37:16 53:15 78:8 96:17 107:12 113:3 115:19 119:12 156:23 163:15 165:22 172:22 193:18 195:6 203:4,8 214: 11 223 :14 223:15 level166:10 190:14,15 196:3 199:5,17 levels 155:6,8 Lexington 1:13 lien 25:5 175:14 life181:23 lift 214:5 likelihood 151:19 152:13 limit 59:5 limitation 59:10 79:12 limited 23: 18, 19 42:14196:17 limits 61:4 line 21:25 44:17 233:8 lines 29:21 liquidity 13 2: 19 list 23:11 listed 192:23 listen 76:23 listening 62:6 lists 167:3 170:23 litigation 146:3 little 70:9 81:9 81:14 105:8 193 :16 215: 17 216: 12, 14' 15 219:3 live 120:21 Livenote 1: 17 LLC 4:20 12:3 20:10,15 24:20 165:20,24 166:13,15,17 166:19,22 169:20,23 170:4,14,20 191:20,20 192:22 194:3,7 194:10,25 195:12 196:7 196:10,24 202:10,22,23 203:10,20 204:2,9,13 220:3 222:2 LLCs 25:16 168:13 169:25 LLP 1:13 2:4,15 3:4,11 4:4,11 4:19 5:4,14 6:4 6:12,20 LNR4:20 12:3 202:10,10 203:2 205:18 205:19,21,23 209:8 212:8 213:2 215:17 215:23 218:11 218:20 223:6 LNR's207:4 loan 3:5,12 12:5 12:7,9 25:6 166:10,23,25 167:5,11,14,14 167:21 168:3,8 168:20 169:6,8 169:13 170:5,6 170:11,15,19 171 :2,2,6,9, 10 171:19 172:4 172:10 173:8 176:15 179:5,7 184:11 186:12 186:13,15,25 187:2,3,13,14 188:25 189:3,4 190:3,5,11,12 190:17,22,24 190:25 191:10 191:14 203:24 204:4,11,14 208:19,25 213:18 217:22 224:5 loans 203:2,3 204:22 205:24 206:23 Loan's 190:13 long 14:15 80:17 150:21 195:19 219:21 longer 23:9 look 16:15 27:22 28:18 32:5 35:13 44:17 48:2 49:9 54:19,22 55:5 55:17 56:4 58:4,6 69:23 70:9 77:11 79:7 80:23 81:24 82:4,7 82:23 84:25 86:20 94:25 95:3 100:18,23 102:12 104:7 105:21 107:15 109:5 113:8 115:6 121:12 121:17 122:25 127:23 130:18 137:15 142:20 142:23 143:24 144:8,20 147:17 149:14 149:23 151:9 151:11,12 154:22,24 157:13,14,17 157:22 159:9 159:25 162:6 163:9 168:10
APP-00387
251
172:16,23 176:16 178:7,7 183:8,22 184:22 185:13 186:20 187:22 189:12 192:17 192:20 197:14 198:2 201:13 207:10 219:17 219:18 220:2 220:11 221:17 227:13 looked 55:3 104: 8 119: 15 119:23 120:4,7 120:8,11,22 135:25 142:18 183:2 221:5 222:8 223:19 looking 19: 13 24:6 28:8 32:9 32:15 56:8 59:20 81:11 91:17 102:9 104:9 109:3,9 110:22,23 122:15 147:24 162:16 176:11 176:12 179:3 190:7 198:3 214:19,20 looks 55:7 77:5 91:20 131:8 144:21 159:8 214:24 loop 218:21 losing 67:17,18 123:20 154:3 lost 99:14 lot 18:22 58:20 66:5,25 96:25 114:11 120:25 142:16 176:22 211 : 14 221 :5 low 135:21,23 Lower 191:5 Lowes 22:13 LP 11:16 lunch 130:8 140:25 141:5,5 141:8 L.P6:13 M M2:10 3:8 12:11 macroeconomic 120:21 maintain 200:20 maintained 64:3 maintenance 211:23,24 making 61:18 97:8 122:3 128:14 130:6 223:10 management 16:13 119:15 131:3 155:5 management's 117:21 managers 20:12 207:8 225:12 226:5,8,14,16 manner46:2 68:8 Marc 1:11 8:4 13:1,2 14:1 15:1 16:1 17:1 18:1 19:1 20:1 21 :1 22: 1 23 :1 24:1 25:1 26:1 27:128:1 29:1 30:1 31:1 32:1 33:1 34:1 35:1 36:1 37:1 38:1 39:140:1 41:1 42:1 43:1 44:1 45:146:1 47:1 48:149:1 50:1 51:1 52:1 53:1 54:1 55:1 56:1 57:1 58:1 59:1 60:1 61:1 62:1 63:1 64:1 65:1 66:1 67:1 68:1 69:1 70:1 71:1 72:1 73:1 74:1 75:1 76:1 77:1 78:1 79:1 80:1 81:1 82:1 83:1 84:1 85:1 86:1 87:1 88:1 89:1 90:1 91:1 92:1 93:1 94:1 95:1 96:1 97:1 98:1 99:1 100:1 101:1 102:1 103:1 104:1 105:1 106:1 107:1 108:1 109:1 110:1 111:1112:1 113:1 114:1 115:1 116:1 117:1 118:1 119:1 120:1 121:1 122:1 123:1 124:1 125:1 126:1 127:1 128:1 129:1 130:1 131:1 132:1 133:1 134:1 135:1 136:1 137:1 138:1 139:1 140:1 141:1 142:1 143:1 144:1 145:1 146:1 147:1 148:1 149:1 150:1 151:1 152:1 153:1 154:1 155:1 156:1 157:1 158:1 159:1 160:1 161:1 162:1 163:1 164:1 165:1 166:1 167:1 168:1 169:1 170:1 171:1 172:1 173:1 174:1 175:1 176:1 177:1 178:1 179:1 180:1 181:1 182:1 183:1 184:1 185:1 186:1 187:1 188:1 189:1 190:1 191:1 192:1 193:1 194:1 195:1 196:1 197:1 198:1 199:1200:1 201:1 202:1 203:1 204:1 205:1206:1 207:1 208:1 209:1210:1 211:1212:1 213:1 214:1 215:1 216:1 217:1218:1 219:1220:1 221:1 222:1 223:1 224:1 225:1 226:1 227:1 228:1 229:1231:11 231:18 March 125:21 Mark 3:15 7:4 11:5 12:6 209:24 218:19 marked 17:23 17:25 18:17 19:2 25:21,22 32:3,6 40:13 40:15 44:18 47:5,7 54:7,11 60:17 81:18,20 82:17,19 85:17 85:21 86:16 94:8,21 101:22 101:25 103:12 103:14 114:24 115:3 130:16 142:7,10 214:10 marketplace 136:3 mark.elmore ... 3:16 marriage 23 0: 16 Marriott 53:19 66:22 68:10 71:5 73: 14' 17 73:18 92:2 110:10 119:24 125:21 126:3,9 126:18 127:8 127:16 132:17 143:6,11,16 145:5,24 146:6 146:11,13 159:20 206:5 211:8 212:16 212:16 221:8 Marriott's 77:12 Maryland 22:2 master 217: 11 218:5,22 219:6 219:7 material34:2 36:6,22 174:22 175:6 183:6 184:16 185:8 211:25 materially 42:25 43:4 materials 10: 14 10:17 57:14,16 57:17,19 114:23 130:15 130:21 173:2 205:10 matter 230:17 matters 185:19 maximize 30:6 mcrisp@kilpa ... 4:16 mean 26:23 43:2 46:14,18 63:5 84:24 89:9,14 89:1590:2 92:21 95:25 110:3 115:24 119:6 150:25
APP-00388
252
154:11 175:9 175:16 176:8 177:10,22 182:4 186:19 189:8 200:4 213:7 218:15 meaning 74:2 meaningful 61:17 83:25 198:24 207:6 meaningfully Ill :21 means 74:4 195:17 meant 34:6 184:14,14 meet 132:12 139:3 meeting 16:14 57:4,13,17 72:24 115:13 115:17,20,21 115:25 116:2 118:7 122:12 123:25 131:4,9 131:17 132:7 133:17 135:12 135:16,18,24 136:12,13 174:16 meetings 57:18 80:11 117:18 meets 139:6 member 15:22 16:2,9,12,19 16:23 23:7,10 32:13 88:22,23 228:13 members 15:15 15:16,18 22:7 31:5,7,8,9 118:18 127:12 195:3 209:10 216:25 217:3,7 membership 21:11 166:18 169:24 170:20 193:23 194:3 196:2,15 228:8 memorialized 218:7,12,15 memory 21:4 176:23 186:4 195:5 223:17 mention 173:6 182:12,12 183:4,11 184:2 212:9 mentioned 46:22 46:24 68:10 mentions 49:14 message 105:8 met 7 5: 16 81 :5 110:25 133:11 135:11 136:14 136:16 153:10 220:18 Meyers 4:8 8:6 11:19,19 163:14,21,22 173: 14 174:5' 6 174:11 181:5 183:18 187:10 187:20 188:17 189:13 194:17 194:24 195:8 201:20,23 m ezz 24: 14, 19 67:6,7 165:20 166:14,17,22 167:14,21 169:19,23 170:4,13,20 171:19 174:18 174:24 175:5,9 175:10,10,11 175:12,21 177:13,15 179:20 180:3 180:17 181:7 181:12,17 182:19 184:4 184:18,20,21 186:12,25 187:13 188:6 188:12,12 189:15,22 190:2,11,13 191:19,20 193:18,19 194:3,7,10,25 195:11 196:7,9 196:23 199:18 199:20 200:7,9 mezzanine 166:25 170:6 171:2 172:4,10 173:8 176:2,15 177:3,8,11 178:9,10,11 179:4,5,7,9,10 181:21 182:8 182:14,17,22 183:5,14 184:10 189:3 191: 17 192: 14 192:25 193:3,9 Michael 4: 15 43:11 114:7 Michigan 143:12 146:17 middle 132:15 135:22 202:18 228:23 Midland 3:5,12 10:17 12:5,7,9 24:21 53:5,10 62:9 63:18,21 64:4,15,19,23 64:25 65:12,22 66:5 72:7,16 72:17 73:8 74:17 75:5 80:6,11,18 81:5 92:3,5 99:2 118:3 128:4,8,13,21 129:7,16,20 130:15,20 131:4 132:6,13 133:11,23 134:3,7,16,19 134:24 135:8 135:10,23 136:6,11,18 137:5,6 139:23 140:3 153:10 154:7 157:12 157:22,23 158:17,18 205:19 Midland's 128:15 131:15 131:18,22 Mike 11:21 Mile 6:21 11:24 110:10 147:9 147:14,14,15 160:7,13 161:5 161:6,13 million 15:3,6 24:21 25:5 34:2 42:10 45:9,10,11 51:20 64:11 65:2 66:13 67:25 71:2,3 77:6,15 99:14 123:20 128:10 128:20 129:9 133:14 135:15 154:4 163:5 166:7,23 167:14 168:21 169:3,12 170:5 170:8,15 171:2 171:6,18 174:24 175:18 177:19 187:2,3 187:3,15,15 190:17,25 191:10,15 197:23 198:8 198:19 199:16 200:6 207:19 213:11,19 millions 67:18 million-dollar 14:25 mind 62:6,8 151:15 158:19 mine 112:25 198:2 minute 37:25 39:25 165:22 172:17 193:19 202:14 minutes 163:15 182:19 201:25 misleading 37:19 misread 178:2 misreading 177:23 missing 131: 16 216:10 misstated 174:2 Misstates 37:4 78:5 122:8 mistake 177:22 178:2 181:16 190:10 mistaken 188:24 MLCFC 202:12 modell74: 15 182:9 modifications 117:15 Moelis 56:10,11 56:18,18,22,25 57:3,5, 13,15 57:20 78:8,8 78:11,20 79:2 79:11,13,21 80:7,17 84:20 84:23 116:9,14 116:17,18 117:12,14 119:15 120:17 130:19,23 135:18 172:25 182:9 198:6,17 225:4 moment29:14 momentarily 214:16 monetize 125: 14 money 16:24 67:17 125:8,17 175:3,4,6,9,21
APP-00389
253
180:4,17 181 : 13 184: 19 188:7,12,13 190:4,6,13 199:20,23 200:10 222:22 month 97:2,3 160:23 months 29:22 30:9 31:3 41:16 42:3 73:6 74:21 79:4 89:10 115 :19 124: 18 124:25 140:7 160:23 215:20 216:9,12 217:15 Morgan 22:10 Morrison 6:4 11:12 mortgage 25:6 166:6 186:13 186:15 motion 8:20 25:18 26:15 28:9,11,14 35:14 144:2 145:19,21 158:23 motivate 123:6 mouth 189:19 move 110:17 111:3 125:12 126:20 132:5 139:9 159:23 160:4 190:9 218:3 moved 217:25 moving 45:25 46:3 68:9,12 76:24 112:8 113:23 120:19 120:20 multipart 152:14 multiples 120:8 multi-test 152:14 Murphy7:4 11:5,5 209:24 218:19 mutuality 132:5 mutually 117:20 53:20 73:7 128:21 140:5 160:24 175:22 188:22 negotiating 34:22 39:17 42:12 43:10,18 N 47:18 52:20,25 N 2:2 3:2 4:2 5:2 53:3 60:19 6:2 7:2 8:2 63:1664:6 12:11,11 142:2 73:15,20 91:6 142:2,2 93:5 110:10,10 nail209: 18,19 112:20 114:17 name 12:25 23:2 200:19 163:22 202:9 negotiation names25:15 39:14,23 73:13 Nancy43:11 84:2 199:7 narrow 172:17 negotiations nature 148:24 32:22 33:18 natures 120:4 39:7 41:15,25 NE4:6 42:1643:9 necessarily 45:22 60:21 106:5,9 178:2 61:14,23 62:24 necessary 91:25 63:22 65:12 91:25 127:8 83:18,21 87:21 200:17,18 91:9 99:25 232:4 108:9,14 necessitated 112:13,16 51:13 92:2 114:13 160:13 need 13:16 26:8 180:3,15 37:18,21 52:14 226:20 127:11 149:16 negotiator 83: 14 178:22,23 187:11 200:25 227:13 Neither 121:18 needed 122:14 Nemer 17:6 126:14 180:4 never 39:15 207:4 210:21 61:25 65:18 211:8,18,22,22 132:22,23 218:17 221:6 137:9 200:8 needs 178:16 212:23 218:23 210:25 223:21 new 1:3,13,14,18 negative 128:13 3:7,7 4:14,14 negotiate 50:11 4:22,22 5:7,7 51:9 70:7 5:17,17 6:7,7 138:24 160:2 6:15,15,23,23 221:11 17:8 36:15,23 negotiated 31: 16 36:24 45:3 34:9 42:18 48:4 51:17 54:20 65:9 82:25,25 83:6 83:7 86:22,22 87:6,6 88:2,21 95:2,2 102:10 102:10 109:4,4 230:7,20 231:3 NICOLE 5:22 nicole.herther ... 5:23 night40:25 115:4,5 121:17 nine89:10 nominal167:24 nominally 167:21 171:6 nonresponsive 126:21 129:5 129:14 non-consensual 140:2 non-creditor 139:18 normalized 154:9,12 North2:17 Notary 1:17 230:6,20 231:24 note63:9 64:4 65:6,18,24 66:3 86:17 92:8 105:18 134:7 162:14 162:15 noted 25:10 232:10 notice 8:16 17:21 18:2,12 127:8 133:19 164:11 notices 92:2 125:22 126:3 127:16 132:18 November 14:17 number 22:17 22:20 24:13 31:8 32:15 40:18 47:10,11 64:17 81:22 82:8 94:23 102:3 108:25 109:24 113:6 114:2 121:2 125:23 134:2,4 135:22 148:5 189:18 200:2 209:7 numbered 104:2 192:21 numbers 40:17 54:13 82:20 86:17 133:21 199:13 numerous 29:23 30:4 77:2 N.W2:6 0 07:212:11 142:2,2,2 oath 12:13 164:3 189:10 231:13 object 21:10 45:13 69:13 78:18 106:18 107:9 122:22 139:24 140:23 145:6 158:9,12 159:25 187:6 objection 21 :20 33:9,20 34:13 35:24 36:17 37:4 38:21 39:9 41:20 43:19 49:21 52:23 55:24 56:13 57:25 63:25 73:24 75:21 78:5,23 80:2 81:6 89:5 89:21 98:14 107:13 111:13 111:13 113:18 116:10 122:8 124:8,9,10
APP-00390
254
127:9 128:5 129:11,18 140:23 148:11 150:20 153:2 154:18 156:13 159:3,5 178:2 181:2,2 182:16 186:17 197:7 201:4 208:9 214:7 220:10 objections 13:25 18:16 obligated 168:20 obligation 124:6 130:4 138:21 151:3 162:8 169:2,12 195:13 207:20 215:7,13 obligations 48:6 49:8 77:13 91:12 102:11 125:10 126:10 126:13 139:21 186:13,14 211:7 217:21 219:22 224:5 obtained 148:18 obviously 110:18 120:16 145:25 213:15 216:4 occasion 93: 18 occur 148:6 occurred 81 :3 131:9 occurring 132:17 offer 122:21 131:21,24 200:22 offered 16:4 19:9 138:13 offering 44:18 44:22,24,25 45:9 46:4 48:4 48:4,16 51:16 54:21,21 81:25 82:5 offers 85:8 201:7 officer 10:20 13:5 46:6 60:24 142:5,12 officers 20:24 21:5 24:3 116:23 164:23 offices 1:12 17:7 Oh65:13 72:16 73:10 74:21 okay 13:13 14:5 14:10,13 15:10 16:7,11 18:21 19:22,24,25 20:2,4,9,18,24 23:6,22 24:12 24:18 25:8,17 27:4,9,15 28:6 28:14,24 29:15 29:20 30:3,25 32:9 35:2 37:2 38:2 40:21 41:9 42:21,24 43:18 44:14,22 45:15 46:19,20 47:2,22 48:2 48:11,13 49:23 51:655:21 57:18,23 60:19 67:24 70:6 73:11 75:24 76:13 81:23 82:4,14,22 85:5 86:10,14 86:19 87:11 93:5,17 94:5 96:6,25 97:7 97:24 100:24 101:16 102:8 102:15,21 103:5,16 104:9 104:16,25 107:8 108:13 108:19,24 111:19112:13 113:13 114:21 115:9 116:14 116:22 117:9 118:11,15 125:5 127:22 129:8,17 130:2 130:13 131:12 132:20 135:10 135:13 138:9 142:20 143:3 143:15 144:13 144:16,23 145:8,15,23 147:16,19,20 147:24 148:13 148:17 149:22 150:4,5 151:6 152:7 153:4,8 154:23,25 155:2,18,22 157:2,9,21 161 :4 164: 5,1 0 164:17 165:9 165:15 166:3,6 166:21 167:3,9 167:15,17,18 168:2,19,24 169:13 170:23 171:16 172:8 172:18,24 173:12,25 174:15 175:15 17 5:24 176: 18 176:23,24 177:6,20 178:7 179:18 180:13 180:23 181:11 183:10,22,25 184:7,13,22,25 185:13,17,24 186:5,24,25 187:20,25 188:15,19 190:9,20,22 191:7,17,18 192:14,17 196:12,23 197:12,21 198:4,17 199:25 200:22 202:17,25 203:8,13,20,25 204:7,12,17,25 205:22 206:19 207:12 212:7 214:22 215:16 216:8,16,18,19 217:10,14 218:21 219:9 222:4,19 223:4 224:10,16,21 225:2,11,15,25 226:4,11,17,23 227:18 228:6 228:12,21 once 58:12 69:25 220:16 223:16 ones 38:5 55:3 157:25 one-time 15:4,7 155:20 ongoing 112: 14 open 62:6,8 69:7 operate 128:18 operation 110:12 187:18 operations 98:6 opportunity 15:21 opposed 199: 17 200:7 205:19 208:6 217:4 219:14 option 150:11 options 75:18 83:2,7,17 oral113:22 151:4 210:5 orally 13: 17 97:16 order 8:20 21:17 25:18 26:4,6 26:16 69:10,21 106:22 138:14 139:19 145:2,9 145:9 original232: 12 originally 167:20 168:21 169:3 osmotic 92:23 ought 37:14 38:19 outcome 230:17 outline 30:5 outlined 19:15 outside 17:8 75:7 114:13 outstanding 213:6 out-of-court 22:19 overall60:20 110:2,16,23 205:5 212:14 212:16 220:4,7 overseeing 187:18 overstated 101:12 overture 136:15 Overview 117:3 117:10,24 118:2 owned 17:15 63:17 169:9 175:2 owner 20:5 31:15 37:12 38:17 51:18 63:3 98:18 99:11 122:5 owners 153:6 ownership 19:14 32:23 103:3 153:23 162:23 Owners/Ground 168:12 owning 169:25 170:21 193:23 owns67:15 152:24 166:3 166:18 167:24 168:14 169:23 O'BRIEN 5:20 oOo 2: 1 3 :1 4: 1
APP-00391
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5:1 6:1 7:1 8:1 9:110:111:1 12:1 230:1 231:1
p
P2:2,2 3:2,2 4:2 4:2,23 5:2,2,10 6:2,2 7:2 Pachulski 17: 10 page 8:3,15 9:3 10:3 28:19 29:12 44:15 45:18 48:3 49:10 56:4 82:24 86:21 91:18 95:14,16 103:17 104:8,8 104:10 107:22 108:25 109:10 116:25 117:2,9 117:16,23 119:2 121:21 121:22,23 127:24 144:20 145:8 154:24 178:7 179:9 181:21 192:21 197:15,16,17 197:19,25 198:11,22 202:18 214:18 214:22,24 228:5,17,19 233:8 pages 54:19 83:8 94:25 102:9 104:2,5 107:2 107:20,21 109:3 137:21 192:20 paid 51:18 126:10 paper 176:22 papers 167:17 paradigm 66: 19 paragraph 29:12,21 35:14
35:23 36:6,10 36:11 37:21 38:10 142:21 142:23 143:3 147:18 148:2 155:2 185:13 185:16,18,20 186:3,6 188:3 188:4 189:20 214:18 228:22 paragraphs 44:23 55:10 96:13 paraphrasing 186:10 parent 89:4,19 122:15 Parkins 3:8 8:5 12:8,8,15,20 12:23 14:6,10 14:13,14 17:24 18:19,22,24 21:14 26:5,11 26:12 28:6,7 32:433:10 36:2,18 37:6 37:23 38:3,11 38:23 39:25 40:14 41:4,6 45:15 46:16 47:6 52:24 54:3,9,18 57:11 72:2 75:23,25 76:11 76:14 78:7,18 78:19 81:13,19 82:18 84:10 85:19 86:9,11 86:15 89:16 94:13,16,19 95:15 101:24 107:3,6,10,11 115:2 116:11 121:9,16,19,20 122:10 126:20 126:22 129:5,6 129:13 130:9 130:17 136:9
140:19 141:2 142:8 144:4,6 144:7 145:18 146:15,19 147:2 153:3 157:8 158:11 158:15 163:11 164:4 165:13 184:25 part 14:2 28:14 31:16 32:9 39:23 44:22 46:4,22 48:17 83:18,20 90:13 90:17 98:12 106:5 116:15 117:7 120:14 122:20 140:3 152:8 174:19 198:10 200:9 224:12 229:6 partially 177: 17 199: 10 224: 19 participant 53:4 participants 129:4 135:23 particular 36:10 37:21 41:12 47:15 87:18 158:21 167:11 168:14 183:23 194:13 207:15 218:23 219:13 221:22 particularized 219:17 particularly 61:17 parties 35:6 53:3 63:9 64:8 69:9 97: 15 102: 18 105:17 112:17 126:17 138:9 143:8 180:9 192: 15 193 :11 219:10 230:15 partner 17:9,11 99:12 179:16
180:10 partners 4:20 6:21 11:25 12:323:18 128:19 202:10 partnership 23:18,19 196:18 parts 200:25 party 34:5,19,20 42:1149:15 50:20,25 51:13 52:9,19 55:22 60:21 61:11 67:9 82:12 85:9 90:13,18 90:19 91:11 108:20 125:10 125:12 128:15 137:11,12 163:4 193:20 195:14 Pass 163:12 Patrick 22:22 44:3 Paul5:4 6:8 11:9 11:12 40:8 44:9 86:3 104:12 107:14 108:19 109:2 112:22 Pawlitz 2: 19 11:17,17 pay 51:24 52:7 126:9 payment 52:4 Peachtree 4:6 Peck 101:5 people 18:22 22:21 43:21 68:11 69:7 74:6 79:16 92:18,21 93:8 98:3 110:15 114:2,11 123:5 123:18 159:18 163:9175:3 195:20 217:2
218:19 percent 20:5 31:22 33:24 34:12,19 42:10 45:2,3,8 51:14 51:19 62:14 63:13 70:25 82:7 99:11,16 99:18,20 100:25 123:18 136:4 153:24 162:10 166:18 168:3 169:23 200:5,5 perfected 98:2 perform 58:23 221:23 222:25 performance 154:16 155:6,8 155:14,19 161:24 208:5 performed 211:18 performing 150:14 154:9 period 17:14 30:9 50:14 110:8 117:10 125:4 131:7 132:25 138:24 139:20 140:13 152:20 209:17 211:17216:6 periods 117:24 118:2 permit 145:4,10 213:21 permits 70:6 person 13:23,23 93:19,23 114:16 152:24 205:17 209:24 209:25 210:7 personally 33:7 70:24 151:3 perspective 49:20 50:5 61:12
APP-00392
256 petition 204: 19 204:20 pgalante@mo ... 6:9 phase Ill :4 phases 199:7 phone 14:7 209:23 210:6,9 phrases 65: 17 Picache 23 :3 Pictures 22: 15 piece 131 :25 132:3,11 174:24 189:23 190:2 198:16 pieces 53:17 221:18,19 PIP 124:6,15,24 125:18 126:2,9 126:13 127:7 127:16 211:18 221:24,25 224:7 PIPing 211:7 PIPs 77:13 161:14 211:22 223:11 place42:17 160:15 215:18 215:19 216:5 placed 119:14 plan 8:22,24 25:19,22 26:16 26:21 27:7 33:4 50:12 53:23 55:12,22 61:3 66:5 67:8 69:3 75:2,17 76:25 102:17 108:3 109:13 128:24 138:25 139:22,25 144: 12 14 7: 16 152:17 156:3 159:24 162:5,7 169:15,16 175:25 177:2,4 177:10 178:13
180:16 181:18 182:2 190:14 192:15,17 193:11,13,20 193:21 195:9 195:10 196:4 196:10 197:3,4 197:10 200:12 208:7 212:11 212:24 214:18 214:20,22 215:3,11 219:21 220:24 220:25 226:12 226:17 227:9 227:10,14,16 227:18,22 229:6 play 160:25 pleading 29:12 35:23 36:5 37:3 66:10 101:3,4 pleadings 10:22 100:18,20,21 142:6,13 please 12:25 17:3 28:8 29:12 32:17 35:15 40:6 41:22 44:19 48:3,8 49:24 54:22 56:5 70:11 76:13 102:12 105:18 107:18 109:6 136:8 142:24 147:18 149:23 151:12 205:2 214:15 232:3,7 pleased 88:12 91:13,14,15 92:3,11 pledge 170:19 plus 163:5 point 32:15 49:9 80:11 95:17 97:20 108:2 140:6 146:11 157:2 160:3,21 202:14 204:18 209:15 214:14 pointed 179:13 185:12 points 43:20 65:1493:7 109:16 pool24:21 25:4 62:10 63:5,18 117:10,23 118:3,3 119:4 125:18 128:4 146:18,20,24 146:25 147:12 147:14 158:19 158:25 160:10 161:8,14 162:4 169:25 196:3 197:22 198:6 198:19 199:4 207:19 211:12 216:25 221:13 pools 19:16 59:22 60:2,5 117:25 118:4 119:17 129:25 130:2,5 poorly 123:19 portfolio 134:13 155:5 209:5 portfolios 160:11 portion 3 8: 13 41:23 49:25 85:22 96:18 98:22 229:5 position 14: 15 15:25 23:8 67:11 128:2 137:4 positions 98: 17 98:23 positive 99:13,17 128:18 Possession 2:5 2:16
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preparation 118:16 131:2 197:10 prepare 116:15 118:12 130:23 prepared 19:3 97:3 174:15 192:11 preparing 19:6 110:11 116:19 198:11 prerequisite 90:16 presence 114:13 present 13:8 37:12 38:17 57:5,12 78:2 140:8 presentation 56:10,12,15,17 56:20,22,24 57:3,5,12 80:18,20 84:20 84:23 116:9,15 116:19 118:12 118:16,24 127:23 137:22 155:3 173:2 presentations 79:21 80:7 154:6 presented 69: 18 122:2 198:22 199:14 201:6 presently 13 :4 presents 139:10 preserve 161:9 161:18 president 93: 10 93:13,14 Press 16:21 presumably 226:11 pretty 46:2 63:6 205:9 pre-advising 122:3 pre-petition
APP-00393
257
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problem 18:21 126:6 199:14 problems 13:20 proceed 12:19 157:10 proceeding 50:17 206:15 process 13: 14 14:3 22:19 66:24 68:5 69:6 76:8,22 76:24 110:18 120:16 123:3 136:22 140:4 204:18 215:24 218:3 219:11 225:6 produced 40:22 47:8 102:2 115:4 121:11 121:13 product 121:3 production 40:23 47:9 81:21 82:20 86:5,11 94:22 prof 122:21 professional 1:16 16:17 128:23 230:6 professionals 15:19 Project 10:13,16 114:22 130:14 130:20 197:17 projected 117:5 117:6 projections 117:11,12,12 117:13,15,18 120:12 155:4 projects 154:7 proper 208:6 properties 120:2 127:5 189:23 199:3 205:5,7 206:13,21 207:8,9 209:7
211:20 212:18 213:9,11,14,18 213:22 215:25 216:2,7,12,21 216:24 217:12 221:12,16 223:20,23,24 224:2 property 151 :25 166:7,10 169:25 170:21 175:14 177:18 178:12 179:8 189:4 190:12 190:14,15 193:23 196:3 199:5,17 203:15,18,23 204:4,10,14 207:5 208:23 209:3 210:11 210:15,21 211:15 212:3 214:4 215:5,10 218:17 220:5 222:24 224:4 property's 177:19 proposal47:20 51:25 52:3,6,8 52:9,13,15,16 53:1465:24 69:11,20 70:13 70:24 81:4 82:11 84:18 92:12 97:22 98:2 103:2 109:18,19 122:4 128:9,14 129:8,17,22,23 130:3,6,6 131:14 136:20 136:23,24,25 137:16,18 138:3,11,14,19 139:19 151:18 151:24 152:13 158:24 159:8
159:11 205:23 206:20,22 218:23 proposals 69: 19 97:8,12,16 109:23 110:19 138:15 206:8 207:3 212:21 propose 138:25 153:21 proposed 9:5,8 9:11,14,17,21 10:6,10 40:12 42:17 47:4 53:7 54:6 67:8 69:4 80:23 81:17 82:16 85:16 90:6 94:7 99:12 101:21 105:10 131:21 143:4 144: 14 15 7: 12 220:24 proposes 48: 16 proposing 68: 17 163:3 proposition 140:16 protect 134:10 protecting 160:10 protections 100:2,7,13 protective 26:3,6 proven 123:16 137:8 provide 45:7 48:15 71:21 162:8,20 187:8 provided 18:16 62:13 176:14 184:3 193 :17 provides 34:18 48:14 51:17 87:25 providing 63:7 92:12 205:25 218:16
provision 45:6 45:21 51:15,21 51:22 87:8 90:4 95:7 96: 17 101: 10 107:25 145:8 157:3 205:9 208:7 214:14 214:25 227:20 provisions 54:25 55:2 65:9 95:5 97:5,17,22 110:23 111:8 112:2,23 114:20 150:18 proviso 148:2 PSA21:24 27:8 33:22 34:9,17 34:21 39:18 48:6 49:8 50:19 51:12 55:22 66:11,15 66:19 67:3,22 68:18 69:4 70:3,6,18,21 71:13 75:17,18 75:25 77:23 85:10 89:25 90:13,14,22 91:3,12 92:14 95:7 100:22 102:12 108:20 109:13,20 110:20 112:8 112:14,20 114:6,14,17 121:24 139:21 144:11,18,24 159:20 179:16 180:10 184:18 195:24 207:17 207:21 213:8 214:9 215:8 public 1:17 22:25 88:24 89:8,9,10,18 199:24 230:6 230:20 231:24
APP-00394
258
165:4 purchase 45:8 82:6 86:22 87:6 88:2,4 102:10 107:23 109:4 purchased 82:9 87:7 purchaser 36: 15 36:23,24 49:15 228:25 229:5 purchasing 33:3 99:16,18 purpose 131: 17 222:10 purposes 21:23 56:11 125:9,17 160:10 167:9 207:9 pursuant 12:16 26:3 214:5 215:11 pursuing 80: 14 push 201:25 put36:10,12 59:5 61:4 120:6 132:2 133:12 186:3,7 202:15 220:6 puts 69:24 putting 73 :4 91:2 161:13 220:7 PW 86:18 p.m 141:8 142:3 229:16 50:3 51:6 53:13 57:8 61:7 67:2 69:14 76:11,12 76:12,15 78:20 85:24 96:2,13 98:7,9 106:14 113:15 124:20 124:21,22 126:23 127:2,6 129:7 135:5 153:18 160:22 171:23 174:10 179:19 181:9 191:21 193:2,7 200:15 204:2 207:22,23 210:11 219:25 220:16,20 222:13,14,18 222:20 223:5 questioned 164:4 questions 13: 16 13:19,20 18:20 27:19 115:7 163:15 165:13 189:12 195:6 197:13 201:21 226:25 227:4,8 227:10 228:10 quickly 172:22 quite 123:19,19 126:10 R R2:2 3:2 4:2 5:2 6:2,16 7:2 12:11 142:2 230:3 233:1,1 range63:4119:8 120:13,19,19 120:22 136:4 ranges 61:9,10 119:3 rate 24:21 25:5 91:22 117:23 132:20 146:17 146:20,24,25 147:12 161:8 161:14 162:4 168:17 169:25 170:6 171:18 172:3,10 173:7 174:18 175:10 175:11 179:7 181:12,17 182:8,14,19 183:5,14 184:4 184:10,20,21 186:15 190:3 190:23,23 193:18,19,24 194:4 196:3 198:6,9,19 199:4 206:9 207:19 216:24 216:25 221:13 221:13 rational50:14 reach 26:9 64:15 68:14 114:5 reached 16:13 49:10 91:15 95:11 205:6 reaction 72: 19 read29:14 32:17 35:15 38:11,14 41:24 44:18 45:12 48:7 50:2 85:21 90:9,11,11 95:5 107:16,21 108:6,7 143:10 147:20 156:5,7 179:10 180:25 183:24 184:16 185:2,14,16,25 186:2 193:6 231:12 232:3 reading 29:18 145:7,12 186:4 188:3,25 reads 107: 19 108:2 109:10 147:22 178:14 228:23 real4:5, 12 7:5 88:20 163:24 172:22 228:9 228:14 reality 171 : 15 realize 123: 14 realized 101:8 really21:12 36:6 74:5 92:20 101:11,17 112:16,25 120:7 132:11 164: 14 171 :14 175:6 198:10 211:25 216:5 223:22 realm 179:24 reason 37:8 160:3 232:5 233:10,12,14 233:16,18,20 reasonable 47:22,25 60:25 97: 17 194: 18 reasonably 151:18 reasons 233:6 recall19:9 24:3 41:12 45:23,23 46:2,8,9, 11,11 53:7 56:24 57:2,15,16,22 57:24 58:14 60:16,18 62:2 81:7 83:11,17 84:6,17,18 85:22,25 93:4 96:2,3,4 100:6 100:8 101:2,3 101:14,15 102:21 103:21 104:25 105:3 114:4 115:12 115:17,21,25 116:4,6 118:10 125:20 147:9 173:3 189:14 209:25 210:9 215:18 217:14 218:4,9,10 225:14 226:7 recapitalized 61:5 receipt 23 2: 14 receive 26:4 33:4 64:4 95:22 99:4,21,22 176:2 177:3 181:17 229:6 received 14:25 16:21 39:21 40:23 48:20 50:16 64:19 84:4,13 87:20 87:23,24 95:25 96:4 100:25 102:23 105:4,5 111:19 200:22 224:12 receives 88:5 receiving 46:8 58:14 65:23 67:10,15 83:11 84:7 96:3,4 102:21 103:21 104:25 105:3 153:11 200:11 recess 141:8 recipients 104: 13' 13' 14 recited 108:21 recollect 19:4 recollection 21:8 21:16 99:24 176:25 180:14 184:8 210:13 210:14 215:3 216:9 recollections 210:19 record 11:2 54:4 89:8 94:17 103:25 141:6,7 146:23 163:18 202:3 229:13
0
quality 119:19 119:25 162:17 quantify 224:16 quantitative 58:11,15 60:9 60:13 156:17 question 21:15 23:17,25 33:14 38:12,15,25 41 :22,25 45:20
APP-00395
259
229:14 230:11 231:15,16 records 58:23 recovery 63:23 199:21 reducing 135:14 reduction 135:17 191:8 refer 56:12 167:13 reference 59:21 59:23 referenced 105:7 referred 116:8 166:24 167:17 168:16,17 170:5 182:10 215:17 referring 44:23 55:15 57:24 58:3 93:25 156:14 158:14 190:18 205:16 216:22 219:5 refers 106:3 reflect 25:11 85:7 89:24 105:24,25 106:16 Ill :6 131:14 179:16 reflected 25:7 72:5 78:22 84:21 90:8 111:7119:11 121:24 reflecting 25:4 reflects 105:13 106:8 108:14 15 5: 11 173: 18 refresh 21:7,16 184:7 215:2 refreshed 176:23 refreshing 21:4 176:24 regard 23 :21 26:24 33:3 39:18 50:16 59:18 60:2,25 62:4,6, 7,8,9 63:5 64:18,20 65:24 77:9,12 77:13 83:25 96:13 98:5,16 99:7,9 100:7 100:15 101:10 108:16 110:9 110:16111:8,9 Ill :25 112:2 114:19 119:18 125:18 126:5 126:24 127:5 127:13 128:22 129:20 130:5 131:19 132:17 133:3,4,5 143:22 146:10 148:24 161:8 174:23 175:14 180:7,20,21 188:4 196:17 203:22 205:7 205:10,14 206:5,9,13,15 207:5,25 208:13,14,15 209:7 210:15 210:23 211:5,7 211:10,11,14 212:2,14,20 213:9,13 215:25 216:13 216:15 217:21 218:22 221:12 222:9,17,23 224:2,4,6,7,8,9 226:16 regarding 21 :16 30:11 32:23 51:16 97:25 98:11 118:16 208:18 219:16 regards 105:20 147:13 210:16 regionall7:6 Registered 1:16 230:5 regulations 88:25 REIT 22:2 88:20 reject 139:25 140:8,15 149:10 rejected 48:23 52:10 84:3,5 84:14 97:4 139:2 rejection 148:22 150:11 related 8:23 25:20 210:3 212:12,25 226:13230:15 relating 105:10 105:11 226:14 relationship 91:15 132:5 221:7 relative 76:17 release 125:11 125:19 released 216:3 relief8:23 25:21 145:3,10,20 215:4,6,6,8 remain 23: 10 remaining 117:7 remains 167:20 remedies 110:6 remember 84:22 87:11 205:17 209:6,11,22 210:16 228:10 remind 164:2 renegotiation 15:9 renovations 211:21 reorganization 33:5 67:8,16 69:3 75:3 139:22 152:18 200:12 219:21 reorganized 32:24 62:15 rep 132:14 repeat 41:22 165:13 173:13 173:14 repeatedly 97:8 rephrase 76:12 replaced 211:13 report26:9 89:15 reporter 1: 16, 17 13:17 38:14 41:24 50:2 230:6 represent 40:21 41:7 163:23 167:10 168:13 representation 167:8 representative 18:10 21:18 representatives 8:17 17:22 18:3 31:13,21 93:8 207:25 represented 85:22 86:2 representing 28:3 63:17 86:7 128:3 200:3 represents 169:4 request 18:4 218:15 requested 3 8: 13 41:23 49:25 205:10 206:3 require 55:21 195:18 required 221 :25 223:11 requirement 112:7 140:11 requirements 139:3,6 Residence 203:11,22 206:7 211:10 resolution 66:7 68:14111:24 133:18 140:3 143:7 146:12 174:20 resolutions 140:6 225:19 225:23,25 resolve 66:24 146:3,4 158:4 158:6 resolved 32:19 respect 16 :4 21:8,17 24:8 25:9 30:15,20 31:4,15,22 33:16 35:4 41:14,16 42:2 42:17,24 43:8 43:17 47:19 55:3 56:7 60:4 62:19,20 66:11 74:12 79:22 80:8,8 81:24 87:21 91:18 96:18 97:25 100:3,4 103:3 105:6 112:14 113:16 114:13 117:16 118:20 125:23 129:17 129:24 130:2 131:10,22 143:11,12 145:24 148:13 151:20,23 161:13 167:13 168:7 171:17 171:24 172:3,9 173:7 174: 18 176:3,14 179:6 179:7 182:22 183:13 184:10 191:21 196:23 197:22 198:8 202: 11 203:2 203:18 204:14
APP-00396
2 60 204:22 205:23 206:20,22 207:14 208:19 209:4 210:10 212:10 215:5 216:21 217:12 218:11 219:15 220:5 221:22 221 :25 223:2,6 226:2,5,21 228:9 respective 182:5 207:15 213:23 respond 13: 17 49:3,18 50:3 69:25 78:25 95:24 96:6,18 113:8,15 responded 39:19 39:23 49:6 96:8 111:21,23 113:2,19 responding 39:16 46:9 112:18 response 18:12 41:8 46:12 49:5 80:14 96:10,20,21 98:13 103:6 109:22 110:13 110:15 122:11 124:3 135:20 145:19 154:14 responsible 43:5 205:18 responsive 78: 18 121:15 219:24 rest 68:2 200:25 restate 193:7 restructure 30:11 39:8 45:22 65:12 99:23 101:2 126:14 133:13 206:23 restructured 98:23 153:16 restructurer 217:20 restructuring 9:5,8,11,14,17 9:21 10:6,10 13:5 16:16 17:19 30:5,16 31:4,16 40:12 42:18 45:25 46:5,6 47:4,20 48:17 50:9 52:20 53:2,8 53:12,16,18 54:6 60:20,24 61:2,19 64:24 65:3,20 67:10 71:14 75:6,9 77:20 80:18 81:17 82:16 85:17 87:22 88:5 90:23 94:8 95:23 98:5,12 99:21 100:13 101:22 118:9 123:3 128:24 131:19 136:20,24 138:22 139:6 143:4 144:15 159:21 160:5 174:17 180:5 195:14 205:6 205:23 206:20 212:14 217:24 218:23 220:4 restructurings 22:18 result 63: 11 65:20 77:24 110:20 137:23 153:15,16 220:24 resulting 37:12 38:16 results 153:23 resumed 54:8 94:18 142:3 163:19 202:4 retain 171:13 178:11 retained 56:19 58:21 retains 171 :13 retention 15:2 retort 65:16 return 155:6 213:22 232:12 revelation 136:5 136:5 review 26:2 28:11 83:5 86:21 87:2,4,8 96:14 101:13 103:24 104:6 113:11 149:25 183:17 186:22 188:9 189:25 214:9 reviewed 18:7 21:22 29:17 35:18 44:21 48:10 54:25 82:3 83:10 86:25 87:10 96:11 102:14 109:8 111:23 115:11 143:2 147:23 150:4 151:14 198:13 198:15 214:25 reviewing 60: 18 101:4 188:10 Reviews 32:7 54:24 83:3,9 87:9 95:4 103:13,23 113:13 176:22 183:19 revised 179:16 revisions 105:19 RevPAR 132:19 154:21 re-ask 57: 10 174:9 Rl204:9 Rick 16:21 Rifkind 5:4 11:10 RIGG202:22 203:9 208:19 220:3,23 222:2 right 29:3 37:3 55:4 58:10 62:1673:2 78:9 93:25 100: 17 101:6 107:7,10 108:8 108:21 112:12 115:19 116:7 121:19 123:12 131:11 134:10 134:11 146:14 147:25 155:11 156:9 159:19 160: 14 161: 17 161:21,25 163:17 167:2 168:10 172:25 174:5 176:11 176:12 181:11 181:23 182:7 198:5 199:25 202:22 203:5 207:20 208:14 208:20 215:7 215:12,13 rights 110:7 153:13 156:12 160:2 168:7 171:17 172:6,9 173:7,11,19,23 174:14 175:7 182:21 183:13 184:10 195:21 195:22 right-hand 40:17 94:24 RIMV203:20 rise 121:3 risk 123:13 163:6,10 role 19:6 46:6 Romanette 91:20 145:3 room 114:8 139:18 220:19 roughly 190:25 RPR230:20 Ruisi22:13 rule 195:18 rules 12:17 88:24 164:3 running 110:12 155:3 R-e-v-P-A-R 154:21
s
S2:2 3:2 4:2 5:2 6:2 7:2,2 8:14 9:2 10:2 12:11 142:2,2,2 safe 100:4 218:22 Sage 106:4 San202:23 203:22 204:13 205:13 206:6 210:15,17,23 211:5 212:18 221:10 224:2,6 Sathy 106:5 satisfactory 49:1195:12 satisfied 27:23 27:24 satisfy 222:21 saw 198:17 saying 62:2 69:22 89:15 159:17 161:4 217:23 says 30:3 38:3 45:19 49:10,13 49:17 56:9 94:23 105:4,8 109:17 113:7 122:16 139:15 143:4 145:8 146:25 148:4 157:3,10 166:9 168:12 176:2,6
APP-00397
2 61
178:5,9 183:21 184:6 186:9,11 186:25 189:21 189:21 207:17 213:8 215:4 scanned 113: 14 sec 1:8 23 1:4 scenario 155:3 198:18 Schuyler 22:23 44:2 SEC 88:24 89:15 second 38:7 96:14 105:6 113:3 124:21 163:11 178:14 208:20 220:9 secondary 34:3 45:5,11 secret 92:21 section 82:2 100:2 109:10 147:18 149:14 149:17,18,19 149:20 150:18 151:7,9 156:12 159:14 sections 48:7 54:23 82:24 83:6 secured 24: 13 63:8,9,14 64: 13' 15 71 :10 71:11 74:11 162:9,14,21 163:24 177:16 177:17 180:8 180:18 190:16 190:21 191:23 192:3 203:17 208:15 209:2 213:2 215:5 secures 191:14 securities 100:5 securitization 202:12 securitizations 217:12
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send 53:13 121:14 195:2 senior 25:5 200:14 sense 206:11 sent 34:24 39:20 45:19 46:25 48:23 52:16,18 55:20 103:19 106:10,12,12 111:10,15,17 112:19,22 125:22 206:8 206:16 sentence 29:21 29:24 30:2 58:8 143:3 September 29:8 series 54: 13 67:12,13 175:2 175:2 serve88:18 service 27:3 64: 11 13 2: 14 213:2 222:7,16 223:5,10,21 serviced 209:8 212:19 223:6 servicer 24:22 132:23 133:2 166:10 167:4,5 167:10 170:25 191:23 202:11 203:2 205:7,12 205:15 215:24 216:3,4 217:11 218:2,2,5 219:5,6,8 servicers 68: 13 118:5 219:3 services 3:5,12 12:5,7,9 66:2 66:14 67:20,21 serving 16:22 SESSION 8:11 sessions 121:6 set29:8 55:13 89:23 109:14
138:23 139:3 210:3 230:8 seven 56:9 180:7 213:10,18 Seventh6:14 Shanik 43:11 shared 63:22 shareholders 199:24 shares 45:5,11 45:12 sheet9:19 10:4,8 30:15 39:7,11 39:16 41:16 42:3 50:15 53:14,14,18,19 58:12 75:18 77:7 85:15 94:6,21 95:24 98:2,13 101:20 107:15 108:5 108:25111:16 111:19112:19 112:20,22 113:4,7,8,16 113:20144:9 144:10,11,12 144:18,21,22 175:25 176:2,6 176:11,17 177:2,12 180:16 183:9 212:12,25 213:21 214:20 221:2 226:13 232:6,7,10,13 sheets 39:19,21 53:6 62:13 97:2 98:21 105:10,22 106:15 109:23 110:14,17 111:10,23 131:13 Shelhorse 7:5 40:9,9 shocking 136:5 shop 72:3 73:22
74:4 75:7,12 79:14 136:24 137:11 shopped 71:16 shopping 140:9 short 54:2 shorthand 19:21 33:3 shot 155:20 show65:19 72:9 72:11,14 74:22 74:24 75:4 137:22 showed 53: 10 72:16,24 73:3 75:5 showing 85:8 shown 138:3 shows 45:6 side24:18 42:19 43:8,9 209:21 sign34:11 53:18 95:7 225:25 232:7 signatories 193:3 195:24 signatory 30:17 91:3 227:15 signature 192:20 192:21 233:23 signed 28:19 35:3,20,21 53:19,23 85:11 225:19,22 226:18 significant 14 3 :5 significantly 154:16 signing 15:2,5 67:22 232:9 similar 55:3,7 74:7,9 102:24 120:9 121:24 Simone 137:9 simple 63:6,6 simply 179:3 220:6 223:16 single 32:20
APP-00398
2 62
192:8 sir 3 5: 8 37: 11 38:16 41:11 45:20 46:14 59:8,21 60:8 68:6 78:20 86:6 87:16 90:11 94:20 106:14 139:13 188:16 202:13 214:21 sit20:19,23 24:3 168:6 181:7 185:21 186:5 188:8 192:7 194:14 196:22 sitting 180:9,13 192:2,4 222:12 223:7 situation 74:9 127:14 195:16 six 102:6 131:8 131:21 132:7 133:12 135:11 136:14 155:7 155:12 211:3 size 110:12 skip 188:25 slightly 82: 10 slots 224:21 sold 45:4 168:4 171:10,11,12 200:24 somebody 50:21 102:20 128:10 209:14 somebody's 219:19 somewhat 55:7 106:19 Sony 22:14 soon 207:11 sorry 23:24 34:1643:2 46:13 83:4 87:3,16 95:16 144:6 145:17 146:19 151:21
15 8: 11 173: 13 192:23 193:2 sort21:7 97:5 174:19 212:4 225:8 sorts121:6 137:19 197:9 199:8 sought 100:19 100:21 sounds 115:19 120:24 source 92:4 sources 222:23 SOUTHERN 1:3 231:3 space232:5 speak 179:22 speaking 170:13 speaks 44:24 149:18 special24:22 66:2,14 67:20 67:21 68:13 118:5 132:23 133:2 166:10 167:4,5,10 170:25 191:23 202:11 203:2 205:6,12,15 215:24 216:3 218:2 specially 209:8 212:19 specific 110:22 154:13 172:13 180:14 181:20 184:2 207:24 208:16,17,18 209:3 210:12 210:14 specifically 49:14 56:7 118:20 196:22 197:15 201:10 201:14 209:12 210:9,24 220:20
speculate 181 :4 187:9 192:10 speculating 181:3 192:13 speculation 124:11 201:5 Speculative 64:2 speed 210:22 spoke 152:3 stakeholders 143:5 stamp40:16 47:10,11 54:13 81:22 102:3 stamped 26:22 27:3 stand 24:24 stands 140:18 Stang 17:10 start53:15104:8 119:12 132:21 154:9 163:16 165:18 203:8 206:18 217:23 started 74:21 85:10,14 204:19 205:25 206:4,10 207:2 starting 23 :7 40:17 48:3 94:22 113:6 202:22 starts 47:10 108:25 state 1:18 12:24 25:24 103:25 188:18 230:7 232:4 stated 174:8 184: 16 199: 19 statement 105:24 155:11 177:21 185:19 187:25 197:11 statements 185:6 189:9 states 1:2 197:23 231:2
status 33:17 108:14,17 146:8 208:5 stay 145:3,10,20 200:25 214:5 215:4,6,8 step 170:10 223:15 stipulation 206:17 stipulations 12:15,18 stock 34:12,24 71:7 88:8,21 107:23 112:5 153:24 175:3 Stockton 4:4,11 11:20,22 163:23 stonewalled 75:3 stop 48:25 91:2 97:13,20 straight 219:10 strategic 29:23 30:4 Street 2:6,17 4:6 4:13 strenuous 46:12 strike 96:2 126:20 176:9 structure 61:6 64:9 65:24 74:13 79:17,21 121:22 122:13 126:7,16 128:7 128:16 131:25 137:12,17 138:25 196:21 structured 110:24 structures 74: 18 stuff 138:5 sub 159:14 subject 18:15 88:24 105:19 126:3 133:16 148:25 228:24 232:9
submits 70:12 submitted 70:15 198:14 subordinate 186:12 187:2 187:14 189:4 189:15,16,22 190:2,5,11 subordination 189:21 Subscribed 231:21 subsequent 80:12 110:8 112:24 substance 49:11 95:12 101:13 101:18 217:17 substantial 67:17 74:11 90:14 132:20 137:4 206:2 212:25 213:5 substantially 65:21 128:14 135:25 184:19 191:6,11,14 199:20 213:20 substantive 114:14,19 197:5 successful 71: 14 152:14 153:22 sudden 132:15 suffer 220:4 sufficient 99: 15 126:8 222:7,15 223:20 sufficiently 207:23 suggest 128:8 153:17 213:12 suggested 123:22 137:16 suggesting 146:16 suggestion 133:12
APP-00399
2 63
suggests 106:15 Suite 3:13 4:6 sum42:10 summarily 97:4 summarizing 45:14 supplement 58:12 support 8:22,24 10:21 25:20,22 26:17,2127:7 53:23 55:12 61:3 66:5,15 67:3 71:4,9 76:25 102:17 108:3 109:13 121:10 128:21 142:6,13 147:17 149:20 160:6,9 161:5 161:6 162:15 169:16 180:16 192:15,17 193:11,13,13 193:21,21 195:9 208:7 212:11,24 214:19,20,23 215:3 220:25 226:12,17 227:9,11,14,16 227:18,22 supported 143:5 supporting 67:4 67:7 supportive 67:11,18 92:11 124:4,5,13 161:11 supports 193:21 suppose 67:9 supposed 27:10 162:12 sure 13:24 17:4 20:15 22:9 26:10 27:19 36:9 40:3 44:4 54:3 73:25
93:2 101:19 105:4113:5 114:17 115:8 121:7,15 147:22 149:15 150:25 164:6,9 164:22 176:5,7 176:8 180:21 183:18 185:11 186:20 188:2 203:5,6 213:4 219:9 surprise 115:15 surprised 115:16 179:23 surprises 163:8 surrendered 215:10 sustainable 71:7 126:15 211:3 211:21 Suzanne 114:7 switch 132:21 switch over 132:24 sworn 12:12 230:9 231:21 T T 2:8 7:2 8:14 9:2 10:2 142:2 230:3,3 233:1 table 123:13,23 take 16:15 18:9 19:14 29:14 47:16 53:25 54:22 64:21 80:16 84:25 85:11 90:11 94:10 95:3 96:14 102:12 103:5 105:21 107:12,15 109:5 115:6 117:3 123:12 123:18,23 130:8,11 137:10,21
141:4 149:23 151:11,12 154:7 163:15 167:8 184:22 185:13 192:17 197:14 201:7 201:11,17,24 221:20 223:15 taken 77:6 140:4 170:10 215:19 231:12 talk 13:22 15:14 66:9,10 68:13 68:16,23 69:2 74:13 78:8 93:9,18 96:17 97:11 99:16 113:24 118:15 118:18 129:16 129:20,25 130:5 132:3 138:9 165:22 192:12 199:9 199:10,11 200:4 207:3 208:11 226:15 talked 15: 15 59:23 72:7,16 74:6,17,25 76:23 77:10,14 114:2,4,7,11 117:18 121:6 126:4,4 127:12 137:19 177:21 205:3 208:22 208:24 211:6 212:15,19 talking 50:18 69:7 90:18 101:8,9 132:21 153:14 162:19 169: 14 17 5 :4 182:18 191:9 206:4,10,18 207:2 210:16 210:24 212:13 219:7 223:25 talks 13:23
Tavern 10:13,16 114:22 130:14 130:20 197:18 taxes 100:4 Technically 170:13 tell 21 :4 22: 8 23:15 25:14 41:351:760:3 61:21 77:16 82:10 92:13,17 92:19,24 96:12 97:17 105:23 132:6 136:19 142:13 151:2 160:14,24 172:8 176:19 186:10 192:2,4 222:9 telling 112:17 122:6,7 178:4 tells 134:9 162:11 tend 139:9 term 9:19 10:4,8 30:15 34:6 39:7,11,16,19 39:21 41:16 42:3 50:15 53:6,13,14,18 53:19 58:12 62:13 75:17 85:15 94:6,21 95:24 96:25 98:2,13,21 101:20 105:9 105:22 106:14 107:15 108:5 108:25 109:23 110:14,17 111:10,16,19 111:23112:18 112:20,22 113 :3,7,8, 16 113:20 144:8 144:10,11,12 144:18,21,22 165:20 166:15
166:17,22 175:25,25 176:5,11,17,25 177:12 178:10 180:16 183:9 191:20 212:12 212:25 213:21 214:20 221:2 226:13 terminate 207:21 215:7 215:14 terminated 147:10 termination 92:2 110:5 125:22 143:16 143:17,20,21 144:24 145:4 145:11 146:2 147:3,6,8,12 147:13 159:4 213:25 214:5 215:12 terminology 181:20 terms 9:4, 7,10 9:13,16,21 10:5,9 26:7 34:17 39:18 40:11 47:3 53:7 54:5 81:16 82:15 85:16 92:7 94:7 101:21 114:14,17 144:14 220:23 221:24 225:4 228:24 terribly 174:22 test 152:8,14 195:5 223:17 tested 117:17 testified 12: 13 122:25 150:5 164:17,22 181:12 182:23 183:6 198:15
APP-00400
2 64
226:15 testifying 164:7 testimony 23:20 23:24 24:2 30:14,20,23 37:5 38:4 48:22 57:23 78:6 122:9 161:12 187:23 219:15 230:12 231:12,15 Texas 3:14 Thank54:17 60:7 95:18 141:3 167:12 201:22,23 226:25 227:2,3 229:9,11,12 they'd 162:16 200:11 thing Ill :21 145:7 224:9 things 58:21 92:20 97:14 109:25 137:20 189:18 200:2 think20:19 21:11 23:20 24:16 26:6 33:7 36:20 37:18,19,24 38:3 43:3,20 44:2 45:13 47:21 52:14 55:17 57:9 63:20 64:25 65:4,20 66:18 67:7,11,16 71:12,24 81:2 82:24 105:12 106:22 113:22 116:17 117:8 117:17 118:14 118:22 122:19 123:16 127:21 130:10,11,25 131:6 132:10 133:10 140:3
140:11,13 145:6 146:23 146:23,25 147:17 150:10 150:12 152:4 154:15 155:10 155:19,21 156:23 157:4,9 158:10,13 159:13 161:6 161:10 162:6 163:4 164:15 164:22 167:2,7 167:16 168:15 169:2,3 171:20 173:17 174:2,3 175:12 176:4 177:25 178:15 178:20,21 180:8,11 182:6 187:6,17,23,24 188:4 189:11 190:3,19 191: 12 194: 17 194:21,22 195:22 199:19 205:3 208:4,22 208:24 210:4 210:25,25 213:8 214:19 220:11,14 221 :5 224: 11 226:6,24 thinking 116:2 135:14 third 34:5,19,20 42:11 49:9 50:20,24 51:13 52:9 69:9 82:12 85:9 90:13,17,19 95:16 125:10 125:12 138:9 165:18 third-party 49:15 52:16 75:8 125:14 139:18
thirty 232:13 thought 21 :22 46:18 50:10 60:21 66:4 69:19 84:6 88:10 117:19 119:21 126:18 128:14,25 136:22 173:20 174:4 180:6 184:18 193:2 200:23 211:6,8 212:21 224:20 thoughts 108: 11 three 17:12 33:16 154:8,12 154:17 156:2 216:2 three-day 132:25 three-party 39:14 Thursday 1: 14 tie 130:12 tiling211:12 tilll5:5 211:21 time 13:8 15:23 17:14 25:25 27:8,9 30:9,17 34:24 43:6,20 50:14 56:20 69:3 72:17,18 81:5 84:16 90:11 93:6,7 97:20 106:2,17 108:9,15 110:8 112:9 117:10 117:24 118:2 118:19 120:14 125:25,25 126:14 127:22 130:7 131:7 132:12,25 133:10,22,24 138:2,24 140:6 140:8,13,22 146:11 150:7 153:10 154:21
158:21 159:10 160:3 161:22 161:25 162:7,9 173:19,20,22 174:3,8,13,17 185:5,10,17 198:22 199:3 206:24,25 209:15,18 211:18 216:6 222: 5 223 :15 timeframe 65:21 84:17 98:24,25 109:25 209:16 timeframes 115:18 times 13:24 174:25 181:10 tips 92:7 titled 9:4,7,1 0,13 9:16,19 10:4,8 10:13,16 40:11 47:3 54:5 81:16 82:15 85:15 94:6 101:20 114:22 130:14 tmeyers@kilp ... 4:9 today 21:9 24:3 29:6 45:21 66:16 67:2,3 68:3,6 70:4,7 87:12 140:7 148:10,18 15 5 :10 164: 7 168:6 169:14 173:3 180:14 181:8 185:21 186:6,23 192: 11 194: 14 196:22 222:10 222:12 223:8 227:9 228:7 today's 167:9 Todd4:8 11:19 163:22 told 45:24 50:8
51:8 92:5,5 97:8 136:16 137:9 160:16 160:22 171:20 172:5 175:5,8 212:13 217:20 225:21 ton 110:4 tone 65:21 top 19:14,19 21:2,3 23:15 44:1154:12 103:17 189:16 198:3 202:19 203:10 218:6 topic 21:12 180:21 194:15 topics 21:8, 17 48:3 54:20 109:4 topping 72:20 top-notch 15:18 Torres 6:20 11:24 totally 224: 18 tranche 158:18 206:9 tranches 120:14 transaction 15:23 34:3 37:12 38:16 46:5,22 49:19 50:4 51:2,9 55:10,13 64:22 68:17,24 69:8 70:7 71:16,18 71:21 72:3,10 72:12 73:5,7 73:15,20 74:4 74:15 75:4 77:5 78:13,22 79:3,4,5,15 80:23 81:3 90:5,20 91:6 95:20,21 100:19,22 109:11,14 110:24 Ill :2
APP-00401
265
111:22115:23 121:23 123:24 136:3 138:10 138:11 139:10 140:10 148:15 149:20 151:16 151:17 152:2,9 153:20 156:2,5 156:8,10 157:11,12 159:12 160:7 160:15,17,19 160:25 161:3,5 163:2 212:17 220:25 transactions 70:16 74:7 76:6,16 77:25 78:3,12,21 79:7,14,22 80:6,8,13 105:13,25 106:16111:6,9 136:2 transcript 26:3 231:12,14 232:14,15 transfer 100:4 transference 92:23 transmission 47:19 106:10 106:12 transmitted 47:23 83:13 84:13 transpiring 106:13 Travis 7:5 40:9 treat 162:12 190:4,6,15 219:20 treated 132:9 195:17,19 204:23 treating 150:13 150:15 195:20 220:12,12 treatment 131:20 168:8 171:18 177:9 179:20 181:7 182:2 193:17 196:13 208:6 trick 174:12 188:15,20 tried 218:25 224:16 triggering 143:17,21 145:25 Trimark 22:15 Trimont 4:5,12 7:5 11:20,22 40:10 163:23 163:24 165:11 167:4,10 170:24,25 191:22 triple 150:18 Troy 143:12 146:17 true30:8 31:19 39:5 49:16 152:24 154:5 167:4 187:5 230:11231:14 231:16 trust 1:7 10:21 22:2 142:6,12 170:9 196:19 231:7 Trustees 22:3,6 75:16 118:12 trusts 177: 10 202:12 try 13:22 88:7 97:14 123:3 131:18 146:2,4 165:12 172:17 179:15 191:18 trying 18:19 28:4 48:25 68:14 80:4 97:19,20 114:5 146:12 188:15 188:20,20 200:2 218:2 227:11 turn 29:11 44:14 154:8,16 228:2 228:19 turns 99:10 190:4 twice 49:2 two26:13 36:21 44:23 55:19 72:22 73:9 74:19 76:3 95:5 104:10 105:9 110:14 111:10112:17 140:7 159:20 160:6,11 165:7 165:12 191:17 192:14 193:9 202:11 211:2 215:25 216:12 type 46:3 51:2 64:22,23 65:8 65:19,24 69:7 79:7 95:19 111:20115:22 119:23,24 123:4,7 227:20 227:23 types 66:2 162:17 199:11 Tysons 204:8 205:13 206:5 210:16 211:5 212:18 221:10 224:8 tO 107:2 212:11220:17 unacceptable 82:12,13 83:22 85:9 90:3,5,10 92:25 97:4,6,9 97:13 uncertain 163:8 underlying 121:2,10 understand 13:14,21 38:25 50:17 52:6,19 143:15 147:24 157:20 161:9 161:12 162:19 164:13,14 165:23 167:19 170:3,24 175:24 176:9 181:25 185:18 185:20,22,24 186:16 190:24 193:9 204:3 207:22 223:22 understanding 32:18 108:8 148:9 166:11 167:23 169:5 169:22 171:3 172:4 174:17 176:10,13 180:9,12 181:16 182:20 184:13 188:9 193:5 196:20 198:21 199:16 215:9 228:23 understands 179:19 181:6 understood 52:2 91:8 184:15 188:21 198:16 unfair 125:6 unfortunately 199:23 219:2 unit 110:20 UNITED 1:2 231:2 unpaid 169:5 191:9 unsecured 6:5 11:13 66:21 149:11 151:24 unsustainable 126:8 upcoming 224:7 upside 153:15,19 154:2,19 162:22,25 163:7,9 USA 1:7 7:4 10:21 13:6 16:10,20 21:25 23:17 31:6,7 32:13 33:23 34:2,10 36:23 39:4 46:7 48:21 50:22 52:16,18 79:10 90:15 134:24 142:5,12 196:17,19 231:7 use 26:8 69:24 144:25 158:5 utilize 78:15 utilized 77:8 126:12,12 128:20
v
vague49:21 57:10 63:25 159:5 validated 65 :25 valuation 119:3 174:23 value 30:6 58:11 58:15 60:10,14 60:22,25 61:9 61:10,13,22 62:4,5,7, 19,25 63:11,24 64:5 64:12 65:6 71:10 77:14 119:5,5,13
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Uhm 20:21 90:7 145:13 Uh-hum 28:20 102:4 148:3 ultimate 20:6 63:2 89:4 ultimately 16:4 20:6 112:6
APP-00402
266
121:4 123:14 126:24 128:22 132:16 134:7 135:19 160:10 161:7,9,18,22 162:3,8,10 175:13,13 176:14 177:19 195:15,17 196:14 199:3 200:24 212:22 213:19 219:19 values 56:9 63:5 119:8,10 120:13,23 133:19 valuing 207:9 variations 199:9 various 13 :25 19: 15' 16 24:7 53:15 59:17,22 60:5 72:5 79:23 93:7,7 98:21 109:15 112:23 114:19 116:8 118:5 143:17 171:13 171:14 vehicles 17: 16 Verbal92:16 verbally 92:24 version 27:20 versus 77:18 120:2,5 123:5 123:7 163:10 viability 69: 19 70:14 79:8 152:12 viable 77:21 91:11111:2 126:16 138:16 Victory 3: 13 videotaped 230:10 view 23:9 39:22 60:24 61:9,10 63:6,22 65:25 77:19 108:16
108:22 128:25 133:9 140:20 148:20,23 155:11 174:22 177:17 178:17 180:24,24 190:12 196:12 199:3 207:4 viewed 39:15 17 5:3 184: 17 199:22 views 62:3,4,9 Ill :25,25 117:19 131:18 219:16 Virginia 23 :12 virtue 177:17 178:5 221:8 224:12 vision 132:8 voluntarily 215:10 vote 139:24
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Wachovia 132:15 wait 18:19 85:5 waived 147:7 want 27:19,22 29:15 46:17 48:751:7 53:25 54:23 55:4 57:9 66:2 69:20 71:7 94:11,14 101:16 105:21 115:7 123:12 134:10 137:23 142:24 144:2 147:20 149:25 150:24 151:10 174:12 183:16 187:9,21 189:7 189:9 195:2 219:9 226:6 wanted 51:8 62:5 84:19
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107: 5 221 :16 222:22 weren't 41:15 42:2 100:10 West4:13 we'll13:22 14:2 26:9 27:8 37:24 70:9 81:8,14 85:2,4 95:22 104:8 121:12 130:20 140:5 157:10 172:16 195:6 we're 12:16 25:25 38:6 40:4 81:11 133:6 141:4,5 178:25,25 179:11 193:16 195:3 we've 146:10 169:13 195:25 208:2 216:22 225:17 Wharton 5:4 11:10 wholly 83:22 Willkie 6:12 11:16 wiped 67:7 99:7 99:8 129:9 wiping67:12,14 wish233:5 witness 1:12 8:3 11:4 12:11 28:5 94:10 124:12 140:25 141:3 163:12 164:12 176:21 187:24 189:6 201:22 227:2 229:11 230:8 230:12 232:1 233:23 word 73:25 74:4 words45:18 74:2 148:20 221:24
work58:19 121:3 124:6,16 124:24 126:2 127:7,16 152:2 201:2 210:25 216:5 workable 151:19 151:23 152:7 worked 158:19 216:2 working 121:6 works 13:14 world 120:21 worse 120:3 157:3,4,13 158:17 worth 62:11 142:17 191:14 213:12 worthless 187:23 wouldn't 37:8 115:15 126:18 127:20 write 224:21 writedown 213:2,5 writing 218:7,12 written 119:11 wrote 93:23 Wyndham 22:11 X X 8:2,14 9:2 10:2
y
yeah28:5,10 33:12 59:7 99:16 100:23 124:20 135:7 141:2 145:11 152:4 158:8 178:15 184:15 185:16 188:2 200:8 210:20 year 15:2,3,5,9 80:17 115:14 126:11 210:18
APP-00403
2 67
11004:6 1129 139:7 152:3 152:3 160:3 1129(a) 139:4 114 10:15 1145100:2,15 1146 100:3,15 0 101:8,11,13,18 0-50 198:3 12 8:5 10:4 94:9 94:21 102:7 1 112:10 114:5 18:16 17:23 119:2 142:14 18:2 29:9 142:16 154:24 40:18 104:8,8 231:13 104:10 119:25 12th 1:14 164:10 177:12 12:15 130:8 178:5 179:4 z 12:29 141:8 183:23 184:14 121 170:5 Zeiter 22:22 32:10,11,12,21 1.2152:15 12213:6 43:22 93:16,18 1:17142:3 127 106:25 107:4 10 9:16 29:20 93:23 1285 5:6 82:17,20 117:4 1290 4:21 6:6 zero67:10 117:6,7 175:18 13 10:8 101:23 197:23 198:8 10-13800 1:8 199:2 102:2 121:21 231:4 Ziehl17: 11 187:14 228:22 100 20:5 169:23 13.3177:19 Zuroff22:16 10019 4:14 13.7 166:7 $ 10019-6064 5:7 190:19 $115:6 10019-6099 6:15 130 10:18 10019-6799 6:23 1410:12 47:10 $1.4 152:15 $107 33:25 42:10 10020-1007 3:7 103:12,15 $121170:8,14 10036-6797 5: 17 127:24 142:21 10110:11 171:2,6,18 142:23 143:4 10104-0050 6:7 $13.3190:17 181 : 10 197: 15 10104-3300 4:22 $13.7 187:2 197:16,16,17 $17145:9 103 10:12 197:25 $20 64:11 71:3 1095 5:16 14th 4:13 77:15 128:20 111:69:19 141102:3 $200 65:2 28:22 37:13,14 142 8:11 10:22 $21.3 166:23 38:17,18 63:18 148 107:2 108:25 167:14 66:18 76:25 109:2 113:6 $23825:5 66:12 85:18,21 117:5 1510:13 17:11 67:25 70:25 117:7,16 114:24 115:4 77:6 168:21 147:18,18 131:10 172:23 169:3,12 148:2 149:17 183:3 197:14 174:23 187:3 225:16,20 197:17 190:25 191:10 231:6 150 207:19 191:15 110 106:25 107:5 213:11,16,19
years 17:11,12 117:4 154:8,12 154:17 155:7 155:12,16 156:2 211:2,4 yellow 165:8,19 166:14 York 1:3,14,14 1:18 3:7,7 4:14 4:14,22,22 5:7 5:7,17,17 6:7,7 6:15,15,23,23 17:8 88:21 230:7,20 231:3 Younger 17:6
$25 24:20 $250 99:14 123:20 128:10 154:4 $425 128:10 $900,000 14:20
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200 163:5 20005-5763 2:7 2006-4 202:13 200715:23 23:8 117:4 136:2 155:6,8,13 2007-C1202: 12 2008 14: 17 15:5 125:13 200915:5 125:14 2010 1:15 8:25 9:6,9, 12, 15,18 9:22 10:7,11 10:12,15,18 32:2 39:6 40:12 44:11 46:21 47:4 48:14 54:6,12 81:17 82:16 85:17 94:8 101:22 102:16 103:11 114:24 117:11,16 125:21 130:16 130:19 131:5 144:15 231:13 231:22 2011117:11 202 8:7 2210:11,15 47:11 101:22 102:16 114:23 118:8 22nd 115:14 132:2 172:11 172:19 173:2 174:13 182:9 182:23 183:2 198:23 227 8:8 23 54:13 221:9 23086:16,17 2323 3:13 237 187:3 238 169:4 24186:17 25 8:23,24 9:6 40:12 44:11
APP-00404
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3 3 8:20 25:21 26:15,24 28:8 32:15 35:13 143:25 3:22229:15 30 159:24 197:5 232:14 30(b )(6) 21 : 18 164:12,15 300 2:17 303094:7 314:13 54:14 185:14,18,20 186:6 189:20 190:10 32 8:25 81:22 33228:5,17 34.9145:4,10 35136:4
4 4 8:24 9:18 25:23 26:20 27:7 29:12 40:18 48:3 54:19 82:16 91:18 144:5
147:16 149:14 149:18,19,20 176:20 192:18 214:12 227:12 4's 135:21,22 4(a) 149:25 150:3,18 4(b) 149:25 4.275 51:19 409:681:22 4182:21 425 129:9 133:13 135:15 479:9
60654 2:18 61.82 82:6 6245:2 62.18 45:8 6552:6 7 7 9:7 10:12 47:5 47:8 51:17 55:4,9,16 56:5 56:8 83:23 103:11,19 104: 11 112:9 117:23 183:22 228:17 7th 106:17 108:10,12,17 7/6/10107:14 109:2 70 157:19 7003:13 7545:11 752193:14 7876:14
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APP-00405
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------* In re: INNKEEPERS USA TRUST, et al., Debtors. -----------------------------* Chapter 11 CASE NO. 10-13800 (SCC)
Deposition of MICHAEL LASCHER, called as a witness for examination, held at the offices of Dechert LLP, 1095 Avenue of the Americas, New York, New York, on Thursday, the 19th day of August 2010, commencing at 12:18 p.m., before Jennifer Ocampo-Guzman, a Certified Livenote Reporter and Notary Public of the State of New York.
JOB NO. 19803
EXHIBIT 7
APP-00406
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BY: PAUL GALANTE, ESQ. pgalante@mofo.com WILLKIE F ARR & GALLAGHER, LLP Attorneys for Appaloosa Investment L.P. I 787 Seventh Avenue New York, New York 100 19-6099 BY: BRIAN R. FAERSTEIN, ESQ. bfaerstein@willkie.com KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP Attorneys for Five Mile Capital Partners 1633 Broadway New York, New York 10019-6799 BY: DANIEL A. FLIMAN, ESQ. dfliman@kasowitz.com A P P E A RAN C E S ( cont'd) : MORRISON & FOERSTER, LLP Attorneys for Unsecured Creditors Committee 1290 Avenue of the Americas New York, New York 10104-0050
APPEARANCES: KIRKLAND & ELLIS, LLP Attorneys for Debtors and Debtors-in-Possession 655 Fifteenth Street, N. W. Washington, DC 20005-5763 BY: JEFFREY M. GOULD, ESQ. jgould@kirkland.corn -andKIRKLAND & ELLIS, LLP Attorneys for Debtors and Debtors-in-Possession 300 North LaSalle Street Chicago, Illinois 60654 BY: JEFFREY D. PAWLITZ, ESQ. jeffrey. pawli tz@kirkland. corn
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HAYNES and BOONE, LLP Attorneys for Midland Loan Services, Inc. 1221 Avenue of the Americas New York, New York 10020-1007 BY: LENARD M. PARKINS, ESQ. Lenard.parkins@haynesboone.corn -andHAYNES and BOONE, LLP Attorneys for Midland Loan Services, Inc. 2323 Victory Avenue, Suite 700 Dallas, Texas 75219 BY: MARK ELMORE, ESQ. rnark.elrnore@haynesboone.corn
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APPEARANCES (cont'd) KILPATRICK STOCKTON, LLP Attorneys for Trimont Real Estate
Advisors
31 West 52nd Street, 14th Floor New York, New York 10019 BY MICHAEL D. CRISP, ESQ. mcrisp@KilpatrickStockton.com BRYAN CAVE, LLP Attorneys for LNR Partners, LLC 1290 Avenue of the Americas New York, New York 10104-3300 BY LAWRENCE P GOTTESMAN, ESQ.
lawrence.gottesrnan@bryancave.corn
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PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP Attorneys for Apollo Investment
Corporation
1285 Avenue of the Americas New York, New York 10019-6064 BY ANDREW J EHRLICH, ESQ. aehrlich@paulweiss.com -andBY AMY P DIETERICH, ESQ.
adieterich@paulweiss.corn
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DECHERT, LLP Attorneys for Lehman ALI Inc. 1095 Avenue of the Americas New York, New York 10036-6797 BY KEVIN J O'BRIEN, ESQ. kevin.obrien@dechert.com -andBY BRIAN E GREER, ESQ. Brian.greer@dechert.com
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MICHAEL L A S C H E R, having been duly sworn, was examined and testified as follows: EXAMINATION BY MR. PARKINS: Q. Would you state your name, please. A Michael Lascher. Q. And, Mr. Lascher, how have you presently employed? A I'm an employee of Lamco. Q. Lam co is an affiliate of Lehman Brothers? A Yes. Q. Before we get further in the deposition I think we will go around the table and make appearances for your deposition. MR. PARKINS: My name is Lenard Parkins. I'm with the law fiml of Haynes and Boone and next to me is Mark Elmore, and we represent Midland Loan Services, Inc. MR. GOTTESMAN: Lawrence Gottesman, Bryan Cave, LLP on behalf of the LNR
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APP-00407
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Lascher Partners, LLC. MR. GOULD: Jeff Gould, Kirkland & Ellis on behalf of the debtors. MR. PAWLITZ: JeffPawlitz, Kirkland & Ellis on behalf of the debtors. MR. GALANTE: Paul Galante, Morrison & Foerster for the Unsecured Creditors Committee. MR. CRISP: Mike Crisp from Kilpatrick Stockton for Trimont as the special servicer on the mezz loans. MR. F AERSTEIN: Brian Faerstein, Willkie Farr & Gallagher for Appaloosa Investment L.P. I. MR. FLIMAN: Dan Fliman, Kasowitz, Benson, Torres & Friedman on behalf of Five Mile Capital. MS. DIETERICH: Amy Dieterich on behalf of Paul Weiss for Apollo. MR. EHRLICH: Andrew Ehrlich, also Paul Weiss, on behalf of Apollo Investment Corporation. MR. GREER: Brian Greer of Dechert
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Lascher it sometimes happens okay? A Okay. Q. Lastly, there will be times when your counsel or other may interject objections and those have to be put on the record and handled here as we go along. But we will deal with those as it's happening. Is that acceptable? A Yes. MR. EHRLICH: Len, let me just state for the record before we start that Mr. Lascher is appearing today subject to all of the objections, I this we filed two sets in response to different notices of deposition, two objections, two sets of objections in this matter. MR. PARKINS: We got them both. Would you mark this Exhibit 1. (Exhibit Lascher-1, Amended Notice of Deposition of Corporate Representative of Lehman ALI, Inc. and subpoena duces tecum, marked for identification, this date.)
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Lascher for Lehman ALI. MR. O'BRIEN: Hopefully you know me by now. Kevin O'Brien of Dechert. BY MR. PARKINS: Q. Mr. Lascher, I'm going to be asking some questions and other lawyers are going to be asking you some questions this afternoon and my first question is, have you ever been deposed before? A Yes. Q. So you understand that when people ask you questions you need to respond verbally so that the court reporter can take down your answers? A Yes. Q. If there's any issues of not understanding my questions or I'm sure other counsel's questions, let us know, we will try to clarify the questions for you. Do you understand that? A Yes. Q. And we will attempt, all of us, try to not to talk over each other. In the enthusiasm in asking and answering questions
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Lascher Q. Mr. Lascher, I've handed you what I've marked as Exhibit 1. It's entitled Amended Notice of Deposition of Corporate Representative of Lehman ALI, Inc. and subpoena duces tecum. Are you here today as the representative of Lehman ALI, Inc.? A Yes. Q. What did you do to prepare for today's deposition? A Spoke with my attorneys. Q. Did you review documents of Lehman ALI, Inc.? A Some of them, yes. Q. Did you talk to other employees of Lehman ALI, Inc.? A Yes. Q. Did you review documents that were produced to Midland in response to its document requests? A Yes. Q. For ease of getting through this, I'm going to use Lehman ALI, Inc. as Lehman for the purposes of this deposition only,
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APP-00408
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Lascher okay, so I don't get tied up. A Okay. Q. Is that acceptable? A Yes. Q. If it changes in the context of our questioning other than in the context of Lehman ALI, Inc., we will try to clear that up as we go, okay? A Okay. Q. Thank you. Lehman and Innkeepers, sometimes I'll refer to them as the debtors, have signed a plan support agreement which we will call a PSA; is that correct? A Yes. Q. And I believe yesterday in Lehman's bankruptcy case, the Lehman bankruptcy court approved Lehman's authority to enter into the PSA; is that correct? A Yes. Q. Among other relief requested with respect to that transaction? A Yes. Q. It approved Lehman's authority to enter into a transaction with Apollo
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Lascher A Yes. Q. Describe for me your involvement. A I was involved in most, if not all, of the discussions about the PSA Q. Were you the person most responsible for those negotiations from the Lehman side? A Yes. Q. So you were in charge of those negotiations? A Yes. Q. When did you first become involved in negotiations with the debtors with respect to the PSA? A We started having conversations with Innkeepers about their filing and potentially entering into a plan support agreement in April of this year. Q. And when did you first have discussions with Apollo or I'll call them AIC -- I'm going to use Apollo to be AIC for the purposes of this deposition -- with respect to aPSA? A Around the same time. 13
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Lascher Inveshnent Corporation, correct? A Correct. Q. Were you present in court yesterday? A Yes. Q. You also submitted a declaration in support of those motions, didn't you? A Yes. MR. PARKINS: Mark this as Exhibit 2, please. (Exhibit Lascher-2, E-mails, Bates Nos. LEH-ALI 005298 and LEH-ALI 005299, marked for identification, this date.) Q. Mr. Lascher, I've handed you what I've marked as Exhibit 2. It is a two-page document with Bates stamp numbers from Lehman ALI 5298 and 5299. Would you take a moment to review that, please. A. Yes. Q. Just let me know when you are done. A. Okay. Q. Mr. Lascher, were you involved in the negotiation of the PSA from the Lehman side?
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Lascher Q. Was your law-- was Dechert your law firm during the entirety of the representation? A Yes. MR. EHRLICH: When you say his law firm, you mean Lehman's law firm? MR. PARKINS: Lehman's law firm. A Yes, they were. Q. In the context of the negotiations if a proposal was made on behalf of Lehman through your law firm Dechert, do you know whether that it would have been blessed by you or at least discussed with you before such an offer was made? MR. EHRLICH: Object to the form. A It depended on the circumstance. In some -- in many cases, yes. In certain cases, no. Q. Well, let's go back to Exhibit 2. A Okay. Q. This is an e-mail from, at the top of the page from Brian Greer at Dechert to Joseph Glatt with a cc to a number of people, including you.
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APP-00409
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Lascher The letter -- the e-mail reads, Joseph has requested below are the terms on which Lehman will resolve the open issues with Apollo. The following remains subject to client review and comment and this e-mail is subject to Rule 408. All over caveats apply. And then there's a number of bullet points under that. Do you see that? A. Yes. Q. Was this e-mail authorized to be sent? A. I don't remember. Q. Did you ever see this e-mail before today? A. In that I'm copied on it, but I don't remember it. Q. This e-mail was dated 4 or 5 days before the filing of the Innkeepers bankruptcy; is that correct? A. Yes. Q. And during this period of time there were ongoing regular negotiations between Lehman and Innkeepers and Apollo with respect to the PSA; is that correct?
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Q. Did you instruct them to put this bullet point in here? A. I don't recall. Q. Do you view this bullet point as significant in your mind with respect to the negotiations of the PSA? MR. O'BRIEN: Object to the form. A. No. Q. Do you view whether AIC was a signatory to the PSA significant or not? MR. O'BRIEN: Object. A. Isn't that what you just asked me? Q. I'm asking it again. Do you view it as significant? A. Do I view it -- do I view whether-Q. Whether they were signatory to the PSA significant or not? MR. O'BRIEN: Same objection. A. No. Q. The next line, AIC or an affiliate of AIC shall be the purchaser of the new
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Lascher A. We were having negotiations with Innkeepers on the PSA and we were having negotiations with Apollo on our sale transaction, yes. Q. Well, let's look at this e-mail here. First bullet point, mutual termination of after 45 days from petition date. I take it that's the Innkeepers petition date? A. That is. Q. AIC will not be signatory to the PSA. Do you see that? A. Yes. Q. But it was contemplated in earlier documentation exchanged by the parties that Apollo would be a signatory to the PSA. Do you recall that? MR. O'BRIEN: Objection. You can answer. Q. Do you recall that? A. Yes, I do. Q. Do you know why Lehman through its counsel put this bullet point in here on this
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Lascher equity. Do you see that? A. Yes. Q. Lehman will not consent to a third-party purchaser? A. Correct. Q. Was that Lehman's position on the day this was sent out? A. It was our position generally. Whether it was on that specific day, I don't know. Q. So this is an accurate statement of Lehman's position? A. Correct. Q. As of this date, are the rest of the bullet points an accurate statement of Lehman's position? MR. O'BRIEN: You're asking just about the bullet points. MR. PARKINS: Yes. A. The bullet points below that one, right? Q. All the bullet points, mutual, from all the bullet points -A. Oh, okay. So mutual termination,
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APP-00410
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Lascher yes. AIC not being a signatory, yes. Yes, on AIC being the purchaser of the equity. Materiality thresholds, I don't remember where we came out on that point. Yes, on AIC's counsel fees. On the -- on the language regarding the guaranty, this was a proposal at some point. Q. With respect to the guaranty issue, this involved a guaranty that had been executed by Apollo in 2007 as part of the acquisition transaction. Are you aware of that? A Correct, yes. Q. And part of the negotiations that was going on with Apollo, which was copied on the company also, was a method to release Apollo from liability under that guaranty; is that correct? A No. Q. No? Okay. Well, let's look at this
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Lascher to the guaranty, it says, Lehman shall not object to Innkeepers' performance of the primary obligations underlying the required capital improvements guaranty dated as of June 29,2007. Do you see that? A Yes. Q. Did you review that guaranty that's referred to here? A I haven't looked at it in years. Q. Did you know how much obligation at least the company thought Apollo had as of this date with respect to that guaranty? A You mean a dollar amount or -Q. Yes. A They -- they did -- they had an idea, yeah. Q. Do you recall what that number is? A No. Q. Did you ever have discussions with anyone from the company regarding what that number of exposure of Apollo was? A Yes. Q. In the context of these
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lascher negotiations with the debtors and Apollo, with respect to the -- related to the PSA, who else negotiated on behalf of Lehman? A Say that again, please. Q. In the context of these negotiations with Innkeepers and Apollo, who else was negotiating this on the Lehman side, other than you? A It was Susanne Frey and Nancy Shanik, who is an A & M employee. Q. But you had ultimate responsibility and authority with respect to those negotiations; is that correct? A I mean I was in the middle of those negotiations. I mean in terms of our technical chain of command, Nancy Shanik, who works for A & M is my boss. So -Q. And A & M stands for Alvarez & Marsal? A Correct. Q. And what role does Alvarez & Marsal have with respect to being your boss? A They are members of-- they are employees of Alvarez & Marsal who work within
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Lascher document and see what it says, this e-mail from your counsel. A Okay. Q. Especially starting three lines from the bottom of that, four lines really, in addition Lehman shall not object to the settlement or termination of the guaranty so long as such settlement or termination occurs at least 45 days after the petition date. Do you see that sentence? A Yes,Ido. Q. What settlement or termination of the guaranty was in your mind on this date that this refers to? A If Apollo was to come to terms with Midland on the settlement of the guaranty, that I would --that Lehman wouldn't object to that. Q. And why would Lehman believe it had a reason to object? A I didn't necessarily think we did. Q. Well, let's go earlier on in this document. In this paragraph here with respect
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Lascher the commercial real estate area at Lehman and oversee what we did. Q. Did you report to this person with respect to these negotiations concerning the PSA? A. Yes. Q. And before this e-mail was sent out by counsel for Lehman, was that discussed with Alvarez & Marsal? Did you have discussions with Alvarez & Marsal? MR. O'BRIEN: You mean the top e-mail in Exhibit 2? MR. SOLOMON: Yes, the top e-mail. A. ~Q. What did you --when did you have discussions with Alvarez & Marsal in the context of seeking approval to enter into the PSA? A. Well, Nancy Shanik works within our real estate group and is, you know, day -to-day a part of what we do, so she was aware of the ongoing discussions. She just wasn't on every phone call or e-mail, so, you know, in terms of specific terms it was
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Lascher PIPs. You understand what a PIP is? A. Yes. Q. The PIPs, that Lehman would view that as satisfying the guaranty that Apollo had entered into. Is that basically what was being discussed? A. No. Q. Okay. Well, tell me what was being discussed in the context of this paragraph? A. What was being discussed is that if Apollo was able to come to some agreement with its lender, meaning Midland, on the guaranty, that I wouldn't get in the way. Meaning Lehman wouldn't stand in their way or object to that happening, and that as long as there were funds available, whether it be from a DIP or cash flow, in order to do the PIP work, we wouldn't stand in the way of their doing that either. Q. Now, in your recollection during the various iterations of documents that were exchanged by the various parties, and we will look at them in particular in a while-A. Uh-huh.
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Lascher fluid, you know, a fluid discussion with her. Q. So it's your testimony, let me clear it up before we move on, that you didn't authorize this e-mail to be sent by Dechert before it was sent, did you? A. I think I told you I don't -- I don't really remember. I don't think so. Q. I'm sorry. I didn't mean to talk over you. It's my fault. A. It's okay. Q. But you agree that this represented, at least on this date, Lehman's position with respect to the transaction on these points, correct? A. Yeah, I would say it's likely he did. MR. O'BRIEN: I think he testified he wasn't sure about one or more bullet points to be accurate. Q. Now, this guaranty language, generally the concept, as I understand it, and tell me if I'm correct, was that if the DIP financing being provided by Five Mile paid for the project improvement plan or the
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form. A. I remember that it came up, yes. Q. And were you involved in those discussions of that point with Apollo in the context of negotiations that led up to the signing of the PSA and the Apollo Lehman term sheets? A. I'm sorry, say that again. Q. Were you involved personally in the discussions regarding that point? A. The point of?
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APP-00412
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Lascher their guaranty, yes. Q. And this was since the commencement of the negotiations regarding this PSA which you said started sometime in April of2010; is that correct? A I mean there's two --there's two separate documents here and our document with Apollo is, you know, represents the sale transaction. It's all part of the PSA so on some level I'm just getting confused when you are asking me about this because really our discussions with Apollo were about this sale transaction. Q. And you say they weren't involved in the negotiations that Innkeepers was involved in? MR. O'BRIEN: Object to the form. A No, I'm not saying they weren't involved in any of those discussions but in terms of my discussions with them about a guaranty, they were my discussions with them about their guaranty. Q. Are you testifying that those discussions with Apollo with respect to this
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Lascher any more questions. Q. I've handed you what's been marked as Exhibit 3. It's a document entitled Required Capital Improvements Guaranty. Do you see that? A Yes. Q. Look back with me at Exhibit 2. A Okay. Q. And the first two lines under the guaranty language it refers to required capital improvements guaranty dated as of June 29, 2007? A Yes. Q. As you look now at Exhibit 3, that's the date of this document, marked as Exhibit 3, correct? A Yes. Q. As far as you know, is this the guaranty referred to in this Exhibit 2? A Yes. (Exhibit Lascher-4, Handwritten notes, Bates Nos. LEH-ALI 004721 through LEH-ALI 004731, marked for identification, this date.)
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Lascher guaranty weren't part of an integrated single document for such of the negotiating period before the PSA was signed? MR. O'BRIEN: Object to the form. A It was all one document at one point. Q. Almost up to the time it was signed it remained one document, isn't that your recollection? A It changed at some point and I don't remember. Q. About a week before the filing, is that your recollection? MR. O'BRIEN: Objection. A I don't remember. MR. PARKINS: Mark this. (Exhibit Lascher-3, Required Capital Improvements Guaranty, marked for identification, this date.) MR. O'BRIEN: Do you have any more of those, Len? MR. PARKINS: They're coming around. I will wait a second before asking
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Lascher MR. PARKINS: Off the record. (Discussion off the record.) Q. Mr. Lascher, I've handed you what has been marked as Exhibit 4. A Yes. Q. It is a series of documents with a Lehman production Bates stamp numbers 4721 through 4731. Do you see that? A Yes. Q. Would you take a moment and review these, please. I want to ask you some questions about them. MR. O'BRIEN: You want him to look at every single page? MR. PARKINS: Yes. A Okay. Q. Mr. Lascher, you're an attorney by education; is that correct? A Yes. Q. And you worked as an attorney for 5 years, I believe, at Cadwalader here? A Yes. Q. And did you have an area of specialization?
8 (Pages 26 to 29)
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Lascher A. Real estate. Q. And since leaving Cadwalader you work for Lehman; is that correct? A. Correct. Q. In your experience, either at Cadwalader or Lehman, have you been involved in bankruptcy cases before? A. No. Q. Have you ever been involved in out-of-court restructurings? A. Yes. Q. And is that at Cadwalader or Lehman or both? A. Lehman. Q. And describe your job responsibility at Lehman in the context of restructurings? MR. O'BRIEN: Currently? MR. PARKINS: Currently. A. I oversee our hotel investments and a lot of those hotel investments are in various stages of workout and foreclosure. So depending on the exact deal, I'm, you know, involved more day-to-day or just in an
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Lascher deal role that I had from prior to the bankruptcy. Q. In the context of restructurings, with respect to hospitality, that responsibility has really started since you took on this most recent position at Lehman; is that correct? A. Correct. Q. Looking at Exhibit 4 -A. Yep. Q. -- are any of these handwritten notes on any of these pages yours? A. Yes. Do you want me to give you the numbers? Q. Yes. A. Just the last two numbers okay? Q. Yes. A. 24, 25, 26, 27. Q. Do you recognize the handwriting from other people? A. Yes. Q. Okay. Can you tell me who they are?
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Lascher oversight capacity. Q. And how long have you been in that responsibility with respect to Lehman's hotel investments? A. About, since the beginning of this year. Q. Beginning of 2010? A. Correct. Q. Prior to that time what was your job responsibility at Lehman? A. Starting with? When I started at Lehman? Q. Yes. A. So in mid 2004 I started Lehman in a group called large loan origination, which basically originated, structured and closed large commercial real estate loans, many of which were securitized and, you know, and/or syndicated. And so I worked in that area through the bankruptcy, and then after the bankruptcy I was an in-house attorney from September of '08 until just before, you know, until the end of last year essentially. And in certain instances, you know, maintained my
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Lascher Susan Frey. Q. And identify them by number, please. So it's easier-A On 21, 22, 23. Those look like Susanne Frey's notes. And 28, 29, 30,31 I believe are from Sam Gleason. Q. Who? A Sam Gleason who is a junior -- who is an associate in our group who is supporting us on the deal. Q. Go with me to the page that has Bates stamp number 4726 on it. A Okay. Q. The top of that page says "Innkeepers Meeting 5/20"? A Correct. Q. I take it, it was 5/20 of this year, correct? A Yes. Q. Do you recall where this meeting was? A No. Q. Do you recall who was there from
9 (Pages 30 to 33)
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Lascher Lehman? A No. Q. Well, you were there from Lehman? A I would imagine I was. Q. You don't recall -- you don't recall if you were alone in that meeting from Lehman? A I just don't remember which meeting it was. Q. Do you recall whether your lawyers from Dechert were at this meeting with you? A I don't remember. Q. Who was there from Innkeepers? A I don't remember. Q. Well, was Marc Beilinson there from Innkeepers? A Based on there's a reference to MB on this page I would -- I would guess that he was. Q. Well, without guessing from the Innkeepers side who else would you have written down initials for MB for? A He would have been it. Q. So was there anyone else from the
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Lascher MR. O'BRIEN: Object. Object. Q. You can answer. A I don't really remember. Q. The second is "impaired accepting class"? A Yes. Q. Do you know what "impaired accepting class" meant in the context of your notes here? A Not exactly. Q. Well, tell me what you understood it to be at the time, as best you can recall. A I think it's having a class who's not recovering at par vote in favor of a plan. Q. And who told you that at this meeting, Mr. Beilinson? A Based on the notes it looks like that, yes. Q. Going back to number 1, what is Apollo and Lehman need to agree to a capitalization, what is your understanding of what that meant? A What the debt and equity in the new
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Lascher Innkeepers side at this meeting on 5/20? A I don't remember. Q. So we know at least you were there and Mr. Beilinson was there, correct? A Yes. Q. Let's look at some of the line items here, 1, 2, 3 and 4. Under risks it says per MB, per Mr. Beilinson, correct? A Yes. Q. LB and Apollo need to agree to a capitalization? A Yes. Q. Now, Mr. Beilinson identified that as a risk? MR. O'BRIEN: Is that right, Michael? What do you remember? A Yes. Q. Or is this your interpretation of what Mr. Beilinson said? A It's what I wrote down. Q. So did Mr. Beilinson say, Mr. Lascher, these are the risks I see? Do you recall? A I don't--
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Lascher company would look like, in a reorganized company would look like. Q. Why is Apollo on this line? MR. O'BRIEN: Objection. A Because our plan was to sell them half of the equity. Q. Thank you. Number 3, sub rosa new value plan, Mr. Beilinson mentioned that to you? A Based on the notes it looks like it. Q. Is that a phrase that you use commonly? A No. Q. Do you know what sub rosa new value plan means? A I have a good idea of what it means. Q. Tell me what it means in your own words. A That it's due value plan, that what we were trying to do would be -- could be construed adds a new value plan even though it was presented as one.
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(Pages 34 to 37)
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Lascher 1 Q. And that's because-- that's 2 because Apollo is going to end up with 3 50 percent of the equity in the restructured 4 company, correct? 5 MR. O'BRIEN: Objection. 6 Q. Is that your understanding? 7 A. Yes. 8 Q. What does sub rosa mean in the 9 context of this line item here? 0 A. That I thought was the part where I 1 said even though it's not presented as a new 2 value plan, it is one. 3 Q. Okay. 4 A. Or it could be construed as one. 5 Q. Well, it is true that under the 6 transaction you were negotiating, Apollo was 7 going to end up with 50 percent of the 8 equity, correct? 9 MR. O'BRIEN: Objection. ?o A. That's our plan. ?1 Q. And it is true that at this time ?2 and at the time of these meetings Apollo 23 owned 100 percent of the equity, ultimate 24 equity on it, correct? 25
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Lascher A. Have plan support agreement in place, Midland is the only major impediment. Q. Per MB, I take it that's Mr. Beilinson, plan is to ask for valuation hearing early on? A. Correct. Q. I take it this is what he told you and you took notes on that, correct? A. That's likely, yes. Q. And it goes down a couple of spaces, Midland's attorneys will argue and it has dash valuation, right, and it has dash question mark? A. Yeah, I didn't understand whatever it was he said next. Q. And the next one says, I take it, subcon? A. Correct. Q. Do you know what subcon stands for? A. Substantive consolidation. Q. Do you have any idea what that means? A. Yes. Q. What is that?
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Lascher A. That's correct. Q. So they were going to go from 100 percent equity owner to after this transaction closed 50 percent equity owner, correct? MR. EHRLICH: Objection to form. A. At the end -- at the end of all the different pieces, yes. Q. And you are talking about pieces of the entire deal that was being put together, correct? A. All the different pieces of the transaction, yeah. Q. Thank you. Go to the next page, please, the number 4727. A. Okay. Q. Could you tell me what the -- read the first line to me, because I could not make out what some of these words. If LB and -- I couldn't make out who that is. A. Marriott. Q. Marriott.
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Lascher A. That all the entities would be collapsed into one case. Q. And did you come to learn that in the context of these negotiations or in your experience in other restructurings? A. I knew about it from, you know, we get a these nonconsolidation opinions in real estate loan transactions and at Cadwalader I learned a little bit about it. Q. Did you learn of the phrase sub rosa a new value plan in the context of these negotiations or elsewhere? A. These negotiations. Q. This is where you heard of that phrase, correct? A. Correct. Q. And Mr. Beilinson told you that, correct? A. I don't know if he was the first person to tell me that or if-- or my lawyer -- I don't know. Q. Well, it was certainly in your notes from your meeting with Mr. Beilinson here, right, we just read them?
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(Pages 38 to 41)
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Lascher A Correct. Q. Okay. Artificial; is that right? A Uh-huh. Q. Artificial and it has a comma. What does artificial mean? A I think it says artificial impairment. Q. Artificial impairment? A I don't really know what that means. Q. So you just wrote down what Mr. Beilinson said? A What somebody was saying. I don't know if-Q. Who else was there if it wasn't Mr. Beilinson? A I told you, I don't remember who else was there. Q. Then it's sub rosa new val plan, right? A Correct. Q. So let me ask you, was the issue of a sub rosa new value plan the subject of discussions several times during this
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Lascher Does it look like 6/25 to you or
A It looks like it could say 6/25.
Q. Okay. The first line says, "DIP cash collateral, consistent across lenders." First phrase underlined. Do you see that? A I see it. I mean this is all hard to read but. MR. O'BRIEN: I object on that basis. Q. Were you at a meeting on June 25 -A. I don't remember. Q. -- regarding Innkeepers? A. I don't remember. Q. Do you have a calendar? A. Do I have a calendar? Q. Do you keep a calendar? A. I have a calendar, yes. Q. Did you produce your calendar? A. I don't think so. MR. PARKINS: I would like to see the calendar so we can see who's at-MR. O'BRIEN: We will take it under advisement. It frankly falls way
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Lascher meeting? A. It looks like it was. Q. Go with me to the first page of this exhibit, if you would, 4721. A. Okay. Q. This says 6/25, Innkeepers meeting? MR. O'BRIEN: Objection. MR. PARKINS: Sorry. MR. O'BRIEN: It's not clear it says that. Q. Sorry. Can you read the top of-the left-hand corner of this page, what do you read it to say? MR. O'BRIEN: I object. It's not his handwriting, you're asking him to speculate. MR. PARKINS: I'm asking him to read what he thinks it says. MR. O'BRIEN: What's your guess? A. I'm not 100 percent sure. Q. So you can't read that. Does it say -- can you read Innkeepers in that first line? A. Yes.
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Lascher outside the scope of what the judge articulated at our discovery conference. MR. PARKINS: I want to know the dates he was meeting on the PSA, Counsel. MR. O'BRIEN: I know you want to know. I'm just saying it falls outside the scope of what the judge ordered for this case. But we'll take it under advisement. MR. PARKINS: We will send you a letter to that effect so it's on the record. Q. Do you recall a meeting where the issue of Innkeepers' exposure for breach of fiduciary duty ever came up, did you ever hear of that phrase? A. This is a discussion about a fiduciary out, is that what you're talking about? Q. My first question is about Innkeepers' exposure for breach of fiduciary duty. A. No.
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(Pages 42 to 45)
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Lascher Q. Did you ever have discussions regarding Innkeepers' fiduciary duty with anyone from Innkeepers? A No. Q. Did you have discussions with anyone from Innkeepers with what's been called a fiduciary out? A Yes. Q. In your practice oflaw, do you know what a fiduciary out is? A Not from my practice of law. This is the first time I've heard of it. Q. In the context of-A Ofthis. Q. -- these negotiations for the PSA? A Correct. Q. And when was the first time the issue of fiduciary out came to your knowledge in the context of these negotiations? A I don't remember. Q. Go with me to the page marked -numbered 4724, please, to 4725. A Okay. Q. These are your notes, right?
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Lascher a general description of what was going on with the company and we talked about working together to, you know, possibly enter into some plan support agreement. Q. Do you recall where that was meeting was, sir? A I would say -- I don't remember exactly but I would say it was somewhere within a week or 10 days before. Q. Prior to this meeting? A Yeah. (Exhibit Lascher-5, Plan Support Agreement, marked for identification, this date.) Q. Mr. Lascher, I've handed you what I've marked as Exhibit 5 and I would like you to agree with me that it is a complete copy of the executed PSA with all attachments for the purposes of this deposition without having you go through every page of it? A And it looks like it. Q. Okay. This document seems to be signed by Lehman, by Nancy Shanik; is that right?
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Lascher A Correct. Q. At the top of this page says Innkeepers meeting 4/22? A Uh-huh. Q. Do you recall being at a meeting regarding Innkeepers on April 22nd of this year? A I don't remember the exact date but if-- if that's what's in the notebook, I'm sure there was a meeting. Q. Was this a meeting at which financial advisors for Innkeepers, Moelis, was present? A Yes. Q. And you received a handout from Moelis and Innkeepers during that meeting, correct? A. Yes. Q. Prior to this meeting on April 22, 2010, had you personally been involved with discussions with anyone from Innkeepers regarding a restructuring of Innkeepers? A We had one meeting with them prior to this one where we got just a general, just
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Lascher Correct. MR. O'BRIEN: Can you give us a page? MR. PARKINS: Sure. It doesn't have a page number, but looks like 19. MR. O'BRIEN: Right. Q. And then the next page appears to be signed by Mr. Beilinson and Mr. Murphy on the next page for several entities, correct? A Correct. Q. Did you negotiate this PSA on behalf of Lehman? A Yes. Q. What was Lehman's goal in negotiating this PSA? A The goal was to convert our, our debt, into, you know, essentially 100 percent ownership in the company subject to certain requirements and milestones being met. Q. Was it your goal that, in fact, upon execution of this PSA that the parties would pursue what is defined in here as the plan and no other plan? A Yes.
A
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(Pages 46 to 49)
APP-00418
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Lascher Q. And that was important to Lehman? Was it important to Lehman, that the company, the debtors pursue the plan as defined in this agreement and no other plan? A I never really thought about it that way. I mean this was the plan that we were pursumg. Q. But I take it, you, Lehman, wanted the company to pursue that plan exclusively, correct? MR. O'BRIEN: Asked and answered. A I never -- I never thought that they would do otherwise. Q. Okay. MR. PARKINS: Give me one second. We're looking for an exhibit. MR. O'BRIEN: Sure. (Exhibit Lascher-6, E-mails, Bates No. LEH-ALI 005676, marked for identification, this date.) Q. I've handed you what's been marked Exhibit 6. A Yes. Q. It is a single piece of piece with 51
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Lascher July 17, and I see here a reply from Mr. Beilinson on Sunday, July 18? A Correct. Q. And the e-mail was sent back to you. Do you recall receiving this e-mail? A Yes. Q. Mr. Beilinson's e-mail says not inclined. I understand it's only a word, but it gives Midland a real hook and I'm filing the motion to assume on day one and already reviewing the plan. Did you understand that to mean he's already reviewing the plan of reorganization? A I didn't really -MR. O'BRIEN: Objection. A I didn't really understand what he meant. Q. I won't be amending our deal without your consent. I am trusting that you won't terminate AIC in first 45 days. Four dots. Please do the same with me on this issue for this short period of time. Do you see that? 53
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Lascher a Lehman Bates stamp number 5676, which has two e-m ails on it. Do you see that there? A Yes, I do. Q. Let's start with the bottom part of the page, looks like an e-mail from you to Mr. Beilinson. Do you see that? A Yes, I do. Q. Subject one more decision? A Uh-huh. Q. The e-mail states, can you live with giving me the ability to terminate cash collateral if you, quote, breach your obligations to Lehman in connection with the restructuring, quote. A Right. Q. Question mark. A Uh-huh. Q. What did you mean by the word "restructuring" when you sent this? A Basically the PSA Q. I'm sorry, I didn't hear you. A Basically what we were doing under the PSA Q. Okay. And this was sent Saturday,
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Lascher Yes. Q. Did you have discussions with Mr. Beilinson regarding his reply e-mail? A Yes, I did. Q. Did the discussions take place on Sunday, July 18th? A Yeah, they must have. Q. The filing occurred on Monday, July 19th, correct? A Right. Q. So the discussions took place before the filing in any event? A Yes. Q. Sometime after this e-mail and the filing, correct? A Yes. Q. Did you call Mr. Beilinson to respond to his e-mail? A I don't remember but I know we ended up talking about it. Q. And what did -- and what did you talk to him about? A That we were letting them use cash collateral on an interim basis assuming that
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(Pages 50 to 53)
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Lascher they were, you know, moving ahead with trying to get our plan done and that if they did something that was contrary to that, I wanted to be able to terminate the interim cash collateral. Q. The e-mail from Mr. Beilinson says not inclined. Do you see that? A Yes. Q. In fact, Innkeepers agreed to that provision, dido 't they? A I believe that's right. Q. Look with me at Exhibit 5, the PSA-A Okay. Q. -- I handed you before. A Uh-huh. Q. I take it you're pretty familiar with this document, correct? A I'm very familiar with the terms included in the document. I'm more familiar with the term sheet than the -- but yeah. Q. Look with me at, it's Section 6, which is called "Termination of this Agreement"?
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Lascher you, section 4. A All of section 4? Q. Yes. A Okay. Well, I've read (a), do you want me to read (b) and (c) too? Q. Sorry? A I've read 4(a). Do you want me to read (b) and (c) as well? Q. No, (a) is rme. A Okay. Q. Now, this provision embodies certainly -- I think your testimony was a few minutes ago that you wanted the company to perform under this agreement or you wanted the right to terminate cash collateral from Lehman's side, correct? A Yes. MR. O'BRIEN: Objection. Q. So going back to your e-mail we've referenced on Exhibit 6, please, the bottom part of that? A Yes. Q. The company agreed with you because it's embodied in the PSA that you would have
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Lascher A Okay. Q. Were you involved in negotiating this section as well as other sections of this agreement? A Yes. Q. Look with me then on page 10 of this document, I think it's section 6(r). A Okay. Q. (r) reads: "The material breach by any Party of any of their undertakings, representations, warranties or covenants set forth this Agreement." Did I read it correctly? A Yes. Q. Go with me to section 4 on page 5 of this document, if you would. A Section 4 you said? Q. Section 4, yes, on page 5, and it carries over to page 6. A Okay. Q. Section 4 is entitled "Support of the Transaction; Additional Covenants"? A Yes. Q. Take a moment to read that, would
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Lascher that right if they breached their obligation in connection with the restructuring then, correct? MR. O'BRIEN: Objection. A I don't think this is about cash collateral, that the e-mail is about cash collateral and this is about the plan support agreement. MR. O'BRIEN: Len, to the extent you are asking him for a legal opinion, it's an inappropriate question. I mean you want to ask him about a specific discussion -MR. PARKINS: I'm asking whether he believes this satisfied the request he made of Mr. Beilinson in his e-mail. MR. O'BRIEN: I object. It calls for a legal opinion from this witness. Q. Were you satisfied that this document satisfied your request from Mr. Beilinson? MR. O'BRIEN: Same objection. A. I'm not really -- I'm not really sure. I think this is about cash-- the
15 (Pages 54 to 57)
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Lascher e-mail is about cash collateral. Q. All right. Well, let's look at section 8 of this agreement, please. A Section 8? Q. Yes. A Okay. Q. Now, section 6 we looked at a few minutes ago is called "Termination of This Agreement" and it defmes termination events, correct, section 6? A Yeah. Q. Section 8 says "Effect of Termination." Read 8 through 8(a). A Okay. Q. So going back to your testimony a few minutes ago, your e-mail of July 17 related to the ability of Lehman to terminate the use of cash collateral, correct? A Say that again. Q. Your e-mail -A Yes. Q. -- Exhibit 6 -A Yes. Q. --okay, related-- I think your
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Lascher Midland a real hook meant? A No, I don't -- I don't really know what he meant. Q. Did you have discussion with Mr. Beilinson about his e-mail? A I told you I did, but I had discussions with him about wanting to get what I wanted to get out of this, which was the ability to terminate cash collateral. Q. And he said in this e-mail he was not inclined to do so, right? A Right. Q. So in your discussions did he give you any particulars as to why he was not inclined to do so? MR. O'BRIEN: Asked and answered. A I don't remember. Q. The last -- well, not the last, in the second line of Mr. Beilinson's e-mail-A Yes. Q. -- it starts, "I'm trusting that you won't terminate AIC in first 45 days." A Right. Q. "Please do the same with me on this
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Lascher testimony was Lehman wanted the desire to terminate cash collateral if the company breached, correct? A That's right. Q. And 8(a) appears to say that, does it not? MR. O'BRIEN: Objection. A I mean, look, it says if there's a termination event, we can terminate the use of our cash collateral. Q. Now, termination event, we just read, includes breach of any covenant by any party, correct? That's 6(r). MR. O'BRIEN: Same objection. A Yeah. Q. And section 4 says support of transaction additional covenants, correct? A 4 is the additional covenants, yeah. Q. Now, going with me to Exhibit 6 here. Mr. Beilinson's response. The second sentence, I understand it's only a word but it gives Midland a real hook. Did you discuss with Mr. Beilinson what giving
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Lascher issue for this short period of time." Did you discuss that part of his response with Mr. Beilinson? A I kind of remember having a conversation about it. Q. Well, this is one day before the filing of bankruptcy for Innkeepers. Fairly close to a fairly significant day for Innkeepers and Lehman with respect to the PSA, correct? A Yes. Q. So as you remember that transaction -- that discussion, I'm sorry, tell me what you remember. MR. O'BRIEN: We're talking now about the discussion that was a follow-up to this e-mail? MR. PARKINS: Correct, Counsel. That's correct. MR. O'BRIEN: Generally or some specific -Q. I'm trusting you won't terminate AIC in the first 45 days. Please do the same with me on this issue for this short period
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Lascher of time, yes. A. There is a 45 day out for both us and Apollo in our sale -- I just can't remember the name of that document -- but in our sale transaction with them that he didn't want me to terminate but there was no, you know, there was no-- it was just a 45-day termination right, he would have no control over whether I exercised that or not. Q. Did you respond to him with respect to his statement that I'm trusting you won't terminate AIC? A. Well, I mean just to finish answering your other question. Q. Okay. A. He was saying he was trusting me not to terminate my sale agreement with Apollo and so I should just trust him not to do any -- not to --what does it say breach his obligations to us under the PSA. Q. Okay. But you wanted it in writing, I take it, because you got the PSA? MR. O'BRIEN: Objection. A. I mean I wanted it in writing,
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Lascher with that. MR. GOULD: Just a clarification. (Discussion off the record.) MR. GOULD: I just wanted to clarify whether Appaloosa had executed the protective order in this case. And he said yes. MR. FAERSTEIN: Yes, we sent it to Kirkland & Ellis last week. (Exhibit Lascher-7, Document entitled, "Project Tavern, Lehman Discussion Materials, April22, 2010, by Moelis," Bates Nos. INN_MID00003533 through INN_MID00003 548, marked for identification, this date.) Q. Mr. Lascher, I've handed you what I've had marked as I think is Exhibit number 7. It's a document with Innkeepers Bates stamp numbers 3533 through 3548. A Okay. Q. And it's entitled, "Project Tavern"-A Yes. Q. -- "Lehman Discussions Materials
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Q. And you did not terminate AIC from this date through at least -A I have not. Q. --today, correct? A I have not. Q. Is it your present intention to terminate AIC? A.
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(A brief recess was taken.) MR. PARKINS: Back on the record. Q. Mr. Lascher, before I ask you any more questions, I just want to state I'm getting notes from people to state that we're going to treat exhibits and testimony about the exhibits pursuant to the agreed-upon protective order that we have in this case. I'm putting it on the record. Every counsel, I think, is nodding acquiescence. MR. O'BRIEN: We're in agreement
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Lascher dated April22, 2010," by Moelis. Correct? A. Yes. Q. Do you recall receiving a copy of this document? A. Yes. Q. Going back to Exhibit number 4, Bates stamp number 4724, is this the April 22nd meeting? A. Yes. Q. Okay. To which your notes on Exhibit 4 refresh your recollection about? A. Yes. Q. If you would go with me to page 13 of Exhibit number 7. A. Okay. Q. Do you recall seeing this page as part of presentation? A. Yes. Q. It's entitled, "Illustrative Pro Forma Structure." A. Yes. Q. It shows at the top center, "Parent Equity Lehman Deal/Investor 95 percent, Others 5 percent."
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Lascher Do you see that? A Yes. Q. Was the transaction reflected by the illustrative pro forma structure on page 13 that we see here, was April 22nd the first time you had seen a document reflecting the structure of that transaction? A Yes. Q. Was it the first time you had discussed the structure of the transaction, albeit without a document, memorializing it in a picture? A Yes, there was that one other meeting that was a week or 10 days before this one. Q. Okay. Now in the, we will call it the prior meeting-A Okay. Q. --in the prior meeting-A Uh-huh. Q. -- this structure reflected in this document was, in fact, discussed then, right? A The idea of reducing the amount of debt outstanding on the other collateral
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Lascher Do you know Mr. Hewes? Q. A Yes. Q. Have you had discussions with Mr. Hewes regarding the transaction relating to thePSA? A I mean most of my discussions with him have really been about Apollo buying half of our equity and what the company would look like. You know, it's probably a little bit on the PSA, but not, you know, more informative. Q. Between the time period -- and I'm sorry, but going back to the prior meeting, Mr. Beilinson was there for the company; is that correct? A Correct. Q. Do you recall who else was there from the company? A Mark Murphy, Dennis Craven. Q. Were there lawyers at this meeting? A Yes. Q. Were your lawyers from Dechert at that meeting? A Yes.
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Lascher pools was discussed. But I don't think the specifics of -- I don't think we had any numbers that we talked about then. Q. Was Lehman being the 100 percent equity owner as a result of that restructuring discussed in the prior meeting? A I'm -- I think we, you know what, I'm not 100 percent sure. Q. Do you recall who was at the prior meeting from Lehman other than yourself? A Susanne Frey, Sam Gleason, Nancy Shanik from Alvarez & Marsale, as well as Jeff Fitts from Alvarez & Marsale. Q. Do you recall where that meeting was? A The prior meeting was at Lehman's office. Q. And there was a representative from Apollo there too, wasn't there? A Yes. Q. Do you recall who it was? A I can't remember if it was Schuyler Hewes or Justin -- I can't remember his last name.
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Lascher Q. Was Kirkland & Ellis at the meeting? A Yes. Q. Was Paul Weiss at the meeting? A I don't think so. Q. Did Apollo have an in-house lawyer at the meeting? A I don't think so. Q. Mr. Glatt, do you know Mr. Glatt? A I've spoken to him, but I've never met him in person. Q. So as far as you recall no one identified themselves as in-house counsel for Apollo at that meeting, correct? A Correct. Q. Between the prior meeting and the April22nd meeting, did you have discussions with anyone from Apollo regarding what had been discussed at the prior meeting? A I don't think so. Q. Between the prior meeting and the April22nd meeting, did you have discussions with anyone from the company? A With Mark Beilinson.
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Lascher And how often did you have Q. discussions between the prior meeting and the April22nd meeting? A I talked to him pretty regularly, but I don't --but, you know, how many times in that week or so period, I don't really remember. Q. Did you begin talking to him pretty regularly because-- after the prior meeting or was it before the prior meeting? A I had spoken to him -- I mean the conversations became much more regular again after the prior meeting. Q. Saved me a question. Okay. And did you discuss the anticipated presentation that was provided to you on April22nd with Mr. Beilinson prior to the actual date of the meeting? A We talked about the fact that there was going to be a presentation at this April 22nd meeting and about the fact that I thought at the prior meeting there would have been, you know, some kind of presentation but that there wasn't.
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Lascher Yes. Q. Did you ever go to a meeting with Innkeepers regarding this structure -A Uh-huh. Q. -- where someone other than Apollo was intended to be the investor? A No. Q. So it is correct that from the beginning of these negotiations, Apollo was to be the investor? MR. O'BRIEN: Objection. A Yes. Q. Look with me on page 12, if you would, sir. A Okay. Q. Page 12 is entitled, "Illustrative Valuation Ranges." Do you see that? A Yes. Q. Did you have discussions with Innkeepers or anyone from Moelis regarding these numbers that were handed out to you on the 22nd at that meeting? A I mean they talked us through the
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Lascher Q. There wasn't a handout? A Right. Q. And he assured you there would be a handout at the April22nd meeting? A Yes. Q. Now at the April22nd meeting, where did that take place? A That was at Kirkland's office. Q. And from Lehman, other than you, who else was there for that meeting? A Susanne Frey, Sam Gleason, and I believe Nancy Shanik had to dial in. Q. And from Innkeepers? A Mark Beilinson, definitely Mark Murphy, I think Dennis Craven as well. Q. And from Apollo? A I think both Schuyler and Justin were there. Q. As we look at page 13 here -A Uh-huh. Q. --it says, "Parent Equity, Lehman/Investor," Apollo was intended to be the investor; isn't that correct, in your understanding?
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Lascher whole book. Q. Did they explain to you the genesis of the various numbers that appear on page 12? A What do you mean by that? Q. Did they tell you where the numbers came from, how they got to these numbers? A Yes. Q. And who did that part ofthe presentation? A I don't really remember. Q. Well, what-- did the Innkeepers side of the presentation tell you how they got to these numbers? A How they got to these -Q. Illustrative value numbers, let's take the first line, the illustrative value numbers for the Lehman hotels and the other colunms that are there? A I mean I don't remember the exact conversation, but they took us through, you know, cash flow projections for 2010, 2011, assumptions they were making on, you know, PIP work and other cap ex that needed to be
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Lascher done, assets that, you know, were running out of time on their franchise agreements and would be losing their flag and how they accounted for a loss in revenue from those assets and plans to sell those assets within certain periods of time following the de flagging. Q. Okay. Following the deflagging? A Yes, so when the franchise agreement ran out. Q. At the time of the April22nd meeting, at least as to the Lehman hotels, did Lehman have any ideas as to what the value of its hotels were relative to the illustrative value presented by the company? A And why did that matter? Q. Well, I'm asking-- it will be the judge to decide whether it matters. My question is: Did you have any values in mind for your hotels as compared to the illustrative values presented by Moelis? A Yeah. Q. Did you have any values in mind with respect to the other pools of collateral
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Lascher proceedings. The judge was very clear that the emphasis -- let me just finish so it's on the record since you've raised it. The focus of these discovery proceedings should be on the business judgment of the debtor, not Lehman. That subject was raised in the conference with the judge, your partner was there, I was there and she couldn't have been clearer so on those grounds we declined to produce anything along those lines. MR. PARKINS: Okay. We will deal with that issue, but certainly to the extent you're claiming privilege as work product, I'll acknowledge and accept that. As to the other we'll see what happens. MR. O'BRIEN: Okay. And that's all a prologue, I guess, to my instruction to this witness not to answer any questions about the substance of what Lazard may or may not have done as far
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Lascher other than yours at the time of this meeting? A At this point the -- no. Q. Okay. Now, Lazard Freres, I will call them Lazard for the deposition, okay, has been retained as the investment banker for Lehman. A Correct. Q. And Lazard, was Lazard at this meeting? A No. Q. Lazard was charged by Lehman to go do some work, due diligence work with respect to this presentation; is that correct? A Yes. Q. And they did do work, didn't they? A Yes. Q. Do you know if that work has been presented to us in document production? A I don't know. MR. O'BRIEN: Len, it has not and the reason is, number 1, it's protected by the attorney-client privilege as well as work product. And number 2, it's well outside the scope of these
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Lascher as valuation. MR. PARKINS: Counsel, if you're claiming work product privilege and attorney -client privilege certainly, that's what the rule says you're entitled to do and I will honor that for purposes of the deposition. MR. O'BRIEN: I appreciate it. MR. PARKINS: If we have a problem with that, that's what the judge is for. Q. So particular meeting -MR. O'BRIEN: Sorry. Q. At this April22nd meeting, were there any next steps discussed with respect to going forward with the proposal embodied in this document? A Yes, they were, I think Moelis was going to send us detailed cash flows that we could look at. Q. And I take it that Lehman was going to think on the proposal that was made, I take it, is that accurate? A Yes. Q. And what was said, if anything, by
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Lascher the Apollo representatives at the meeting? A Nothing. Q. And what was said by Innkeepers at the meeting as sort of the next steps from their point of view? A I don't really remember. Q. Was a timing issue discussed at this meeting with respect to a need to file Chapter 11 from Innkeepers' point of view by a certain date? A Yes. Q. And do you recall what the nature of that discussion was regarding the timing of filing? A Yeah, they needed to file in advance of Marriott having the ability to terminate the franchise agreements on a number of their hotels. Q. Was it discussed at that meeting by Innkeepers a desire that an agreement, call it a PSA or other similar agreement, be entered into by the parties at that meeting prior to the filing of a bankruptcy case? A You mean with Lehman or with
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Lascher identification, this date.) Q. I've handed you what's been marked as Exhibit number 8, it is a Lehman production document marked Bates stamped numbers 1 through 4, do you have it in front of you, sir? A Exhibit 8, yes. Q. Do you recall whether this document was prepared by Lehman or its counsel Dechert? A This was not prepared by Lehman. Q. Was it prepared by Lehman's counsel, Dechert? A No. Q. Who prepared this document? A Lazard. (Exhibit Lascher-9, Document entitled, "Illustrative Terms of Proposed Restructuring, June 2, 1010," Bates Nos. LEH-ALI 000014 through LEH-ALI 000022, marked for identification, this date.) Q. I've handed you what's been marked Exhibit number 9. It's also a Lehman
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Lascher Marriott? Q. I'm asking with the parties at that meeting. You didn't mention Marriott being at the meeting. A Right, they weren't there. Q. Let me ask the question again. Was-- did Innkeepers raise a desire to have an agreement reached among the parties at that meeting prior to the filing of their bankruptcy case? A I mean the goal was for Lehman to enter into some agreement with Innkeepers, yeah. Q. Was the goal mentioned that Apollo would also enter into some agreement? A Yeah. Q. The structure of that agreement was discussed, was it to be one agreement, multiple agreements at that meeting? A Didn't discuss that. (Exhibit Lascher-8, Illustrative Terms of Proposed Structuring, May 25, 2010, Bates Nos. LEH-ALI 000001 through LEH-ALI 000004, marked for
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Lascher production document. Bates stamped numbers 14 through 22. Do you have it? A Yes. Q. I'd ask you, this document on the right-hand top of the page says, "Dechert draft 6/1110 Preliminary and Confidential Subject to FRE 408." Do you see that? A Yes. Q. I would ask you to go down to the left-hand corner of this page where it has some numbers. A Right. Q. 15703581.3 Business; do you see that? A Yes. Q. Now go with me to Exhibit number 8. A Okay. Q. And look at the numbers on the left-hand corner of this page and they are 15703581.1 Business, correct? A Yes. Q. Does this refresh your recollection
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Lascher as to whether Dechert prepared Exhibit number 8? A My recollection is still that this is something Lazard prepared. Q. Okay. We will go with your recollection. A That is number 8, that's Exhibit number 8 we're talking about. Q. Yes, correct. Do you recall reviewing this document before today? A Yes. Q. Go with me to the first page. A We're on 8? Q. Yes, on Exhibit 8. A Okay. Q. The second paragraph speaks to the transaction structure outlined herein assumes an enterprise value for their organized company, it has bracketed, 975 million with a footnote, and a value of the floating rate collateral of bracket, 200 million, correct? A Yes. Q. And the footnote 1 without reading
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Lascher So there was to be, as I see, a Q. primary and secondary offering of shares, if you understand it correctly; is that correct? A Yeah, that's right. Q. The backstop portion provided that Apollo would provide a backstop to purchase the 62.18 percent of the equity in the equity offering at a price of $171 million, in brackets, which consists of 95 million, in brackets, for the 34.91 percent of the secondary shares and 75 million for the 27.27 percent of the primary shares. Do you see that? A Yes. Q. Do you know what a backstop is? A Yes. Q. What is a backstop? A That they would commit to buy at a price with the intention of an auction being conducted. Q. Okay. And the auction being conducted leads us to the next paragraph of a break-up fee discussion, correct? A Right, yes.
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Lascher the whole thing says, "Values are based on the Moelis presentation" -A Right. Q. -- "and have been included for illustrative purposes only." A Yes. Q. Is the Moelis presentation, as you understand, the one we looked at before? A Yes. Q. Go with me to page number 2 of this Exhibit number 8. A Okay. Q. In the area identified as "Equity Offering," there it appears that Lehman will receive, the company will conduct an equity offering in which the company will sell a total of 62.18 percent, in brackets, of its equity to a new holder, new owner. 27.27 percent of the equity will be sold through a primary issuance by the company, the primary shares. And the rest I won't go through each reading here, okay? A Yes.
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Lascher Do you recall having discussions with Apollo regarding a backstop and a break-up fee? A I don't remember having discussions this early on with them about that, but at some point, yes. Q. And at what point do you recall having discussions about Apollo being a backstop, let's take that point first, as a backstop? MR. O'BRIEN: For the first time? MR. PARKINS: For the first time. A I don't remember exactly. Q. Was it after this date? A Yes. Q. After May 25? A Yes. Q. At the same time would there have been a first discussion regarding Apollo getting a break-up fee? A For-- for providing the backstop you're saying? Q. Yes. A Yes.
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Lascher Q. So those discussions would have been in tandem? A Yes. Q. Backstop, break-up fee; is that correct? A Yes. Q. How many discussions with Apollo did you have regarding a structure where Apollo would be a backstop? A Very few. Q. Very few. And who did you have discussions with from Apollo? A Jim Zelter, from Apollo at the early stage it was mostly him. Q. And do you know the position that Mr. Zeiter held at Apollo at that time? A I don't remember his title but he runs Apollo Investment Corporation. Q. Okay. Look with me at Exhibit number9. A Okay. Q. This is a document that on the right-hand part of the page top says, "Dechert Draft 6/1/10 Preliminary and
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Lascher Q. Did you have discussions with Innkeepers during this period of time with respect to the transactions reflected in these documents? A. Probably. Q. Okay. And with who would you have had discussions at Innkeepers? A. Mark Beilinson. Q. On behalf of Innkeepers did you talk to anybody else but Mr. Beilinson, businessperson to businessperson? A. For the most part it was really with Mark. We had some conversations about specific items with Dennis or with Mark Murphy. Q. Okay. If you look with me in the first paragraph of Exhibit 9 -A. Yes. Q. -- six lines from the bottom, the sentence that starts, "As a condition... " Do you see that? A. Yes. Q. Just read that for a second. I want to ask you a question or two about it.
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Lascher Confidential Subject to FRE 408." Do you see that? A. Yes. Q. Do you recall whether or not you authorized this document to be prepared by your counsel? A. To be prepared? Q. Yes. A. Yes. Q. Did you authorize to prepare this document? A. Yes. Q. Was this document prepared in response to Exhibit number 8? A. I believe they took number 8 and expanded on it. Q. Okay. Between the preparation -between the date of Exhibit number 8, which is May 25, 2010, and June 2nd, or June 1, 2010, when this Dechert draft notes it was prepared, did you have discussions with Apollo with respect to the transactions reflected in these documents? A. I don't remember.
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Lascher A. Okay. Q. The reference there that is part of the offering Lehman will sell a portion of its equity; do you see that? A. Yes. Q. Was it Lehman's intention to sell a portion of its equity to Apollo as of this date? A. Yes. Q. Okay. A. Well, actually, it was to Apollo, but I think we may have had something in here about an auction, so if we ended up doing an auction, I don't know. Q. Then we will go to the document. Go with me to page 5 of Exhibit 9, please. A. Okay. Q. This again speaks to equity offering, an equity offering backstop; is that correct? A. Yes. Q. And this still has Apollo providing a backstop and Apollo getting a break-up
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1 2 3 Yes. 4 Q. --correct? 5 Now after this document was 6 prepared, did you have discussion with Apollo 7 with respect to the structure of this 8 transaction as reflected in this Exhibit 9 number9? 10 My question is the structure. 11 A Of the backstop you're saying? 12 Q. Correct. 13 A I don't know if we had discussions 14 with them or once we showed this to Mark 15 Beilinson he showed it to them and they told 16 him that they didn't want to do that. 17 Q. Did you have direct input from 18 Apollo with respect to this document? 19 MR. O'BRIEN: Objection. 20 A Not this draft but, you know, the 21 document at certain points, we did, yeah. Q. This document under the "Conditions 22 23 Precedent" section there? 24 A Yes. 25 Q. Provides from your counsel that,
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Lascher that the transaction will become binding on Lehman when Lehman, AIC and the company execute a plan support agreement that incorporates the transaction set forth herein, correct? A Yes. Q. So approximately 45 days from the filing of the bankruptcy case it was Lehman's proposal that contemplated a single document with Apollo, Lehman and the company signing, correct? A That's what it says here. Q. Right. The third bullet point under "Conditions Precedent" on page 5? Do you see that? A Yes. Q. "Agreement reached with AIC in form and substance satisfactory to Lehman." A Yes. Q. Is there anywhere in this document I can see that-- find where an alternative to AIC is discussed or contemplated by Lehman; do you know? A An alternative to what?
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Lascher Well, when this proposal was-- was Q. this proposal authorized by you to be sent out by your counsel? A I don't know that it was ever sent out. Q. Was it sent, it was clearly sent to the debtor because you said the debtor and you discussed it, correct? A Yeah. Q. So was it your instruction that, was it your instruction that this, or intention, I'm sorry, at the time that Lehman would be paying the backstop fee? A Yeah, we were selling the equity. I mean that would make sense. Q. Before we leave Exhibit number 9, I want you to look at footnote number 2 again, and provides here that "values are based on Moelis presentation and have been included for illustrative purposes only"? A Yes. Q. So you're still using the Moelis numbers from the presentation we talked about earlier?
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Lascher A. Yes. MR. PARKINS: Exhibit 10. (Exhibit Lascher-10, Document entitled, "Illustrative Terms of Proposed Restructuring, June 2, 1010," Bates Nos. LEH-ALI 000023 through LEH-ALI 000031, marked for identification, this date.) Q. I've handed you what's been marked as Exhibit number 10. It has, it's a Lehman production Bates stamp numbers 23 through 31. You have that in front of you, sir? A. Yes. Q. It's also marked a "Dechert Draft 6/1110 Preliminary and Confidential Subject to FRE 408." A. Right. Q. Now, let's start with footnote number 2 in this document. Footnote number 2 now has an added sentence that "Lehman is completing its own quantitative analysis of the value of the company and will supplemental this term sheet once that analysis has been completed." Do you see
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Lascher Q. Like the prior exhibit, this document contemplates an equity offering, an equity backstop by Apollo and a break-up fee, correct? A. Yes. Q. And this draft also in "Conditions Precedent" provides that Lehman, Apollo and the company will execute the PSA, correct? A. Yeah. Q. Go with me to page 8 of this document, please. A. Okay. Q. Specifically the pro forma capital structure. A. Uh-huh. Q. These numbers here appear to be the ones from the Moelis presentations; am I correct? A. Yes. Q. The governance provisions here, board of directors to initially consist of seven members, seven in brackets, I want to read it for the record correctly, which three to be nominated by Lehman and four to be
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Lascher nominated by new owner? A. Right. Q. New owner was to be Apollo, correct? A. Or whoever was the highest bidder at the auction. Q. Tell me about this auction that occurred. Was there ever an auction? A. No. (Exhibit Lascher-11, Document entitled, "Illustrative Terms of Proposed Restructuring, June 2, 1010," Bates Nos. LEH-ALI 000032 through LEH-ALI 000040, marked for identification, this date.) Q. I've handed you what's been marked as Exhibit number 11. It has, again, Lehman production Bates stamped numbers 32 through
MR. FLIMAN: Do you have any more
copies?
MR. PARKINS: Is it going around? MR. ELMORE: We must have run out.
(Discussion off the record.)
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Lascher MR. PARKINS: Back on the record. Q. What has been marked as Exhibit number 11, sir? A ~s. Q. It's a Dechert draft dated 6/2/10, Illustrative Terms of Proposed Restructuring with a date of June 2, 2010. Do you see
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A Yes. Q. The second paragraph on page 1 reflects an assumption of enterprise value for the reorganized company of975 million and a value of the floating rate collateral of 200 million, correct? A Correct. Q. Floating rate collateral was a Lehman collateral, correct? A Correct. Q. These numbers again were Moelis numbers, correct? A Correct. Q. Now, before this June 2nd draft document was prepared did you have discussions with Apollo regarding, again, the
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Lascher A Yeah. I mean they were our counsel on the deal. Q. This document, likewise, ifyou look at the equity offering, equity offering backstop and conditions precedent seem to be identical as in the prior draft. MR. O'BRIEN: Is that a question? Q. Do you agree with that? MR. PARKINS: That's the question. A I'll tell you in a second. They look a little bit different, the equity offering section has dollar amounts instead of percentages. Q. But the structure is the same, correct? A It's pretty similar, yeah. Q. And, again, and this document prepared by your counsel, the conditions precedent the transaction contemplates being binding on Lehman, on Lehman, Apollo and the company, execute a plan support agreement, correct? A This is in 11 you're asking me about?
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Lascher structure of the transaction embodied in the term sheets here? A I don't believe so. Q. Did you have discussions with Mr. Beilinson regarding the structure? A You mean between the first and the second? Q. Yes, and the date between the first and the second? A I don't remember. I don't remember. Q. Do you recall whether Mr. Beilinson in response to the term sheet dated June 1 said, I'm not going to agree to that structure? A I don't know which, if any, of these went out. Q. Okay. Were the exhibits we've looked at so far that reflect Dechert drafts, were they authorized to be prepared by you on behalfofLehman? MR. O'BRIEN: You mean did he authorize them? MR. PARKINS: Yes.
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MR. O'BRIEN: Top of6. A. The conditions precedent was, which one were you asking about?
Q. The first, the introduction to "Conditions Precedent," if you look at the bottom of page 5, "The transaction will become binding on Lehman when Lehman, AIC and the company execute a plan support agreement."
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A. That's correct, it says that. (Exhibit Lascher-12, Document entitled, "Illustrative Terms of Proposed Restructuring, June 2, 1010," Bates Nos. LEH-ALI 000041 through LEH-ALI 000050, marked for identification, this date.)
Q. The document I've handed you, sir, is marked Exhibit number 12. It's a document titled "Dechert Draft Designation 6/4/10," and it's entitled, "Illustrative Terms of Proposed Restructuring," dated June 4, 2010; do you see that? A. Yes.
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Lascher Q. On the first page, second paragraph, the same numbers for the enterprise value of 975 and the value of the floating rate collateral is at 200 still, correct? A Yes. Q. Go with me, however, to pages 5 and 6, under "New Equity, New Equity Capitalization Options." A Uh-huh. Q. Which continues on to page 6 as well as "Conditions Precedent." Do you want to take a moment to read them? A Wait. I'm sorry, just tell me again, which sections did you want me to look at? Q. "New Equity Capitalization Options" and "Conditions Precedent." A Okay. Okay. Q. Under the provisions of the "New Equity Capitalization Options," okay, it provides that "Lehman, in its sole
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Lascher will become binding on Lehman when Lehman, AIC and the Company execute a plan support agreement." A Right. Q. The third bullet point there under that says, "Agreement reached with AIC in form and substance satisfactory to Lehman." What agreement would that have been, sir? A Again, it's, you know, sort of same as the last one. It could have been an agreement on the backstop. Q. Was it an agreement to sell shares? A I don't know. Q. Who would know if you don't know for Lehman's side? MR. O'BRIEN: Are you finished answering his first question? THE WITNESS: What's the first question? MR. O'BRIEN: What agreement was contemplated by that provision? The agreement with AIC in form and substance satisfactory to Lehman.
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Lascher discretion, shall select one of the following post effective date new equity capitalization options." A Yes. Q. "Capitalization Option A," and then on the next page is "Capitalization Option B." A Right. Q. A, involves an equity offering with Apollo being a backstop with a break-up fee again, correct? A Correct. Q. B, involves Lehman retaining all the shares no backstop by Apollo and no break-up fee, correct? A Right. Q. Did B still contemplate Lehman selling a portion of the equity it was going to get? A It doesn't look like it does. Q. Well, if I look at the "Conditions Precedent" next section. A Uh-huh. Q. It says, again, "The transaction
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Lascher THE WITNESS: Yeah, I mean, yeah, I'm done answering. Q. Could that agreement be the agreement to sell shares to Apollo? A Under this construct it looks like there's one scenario where they would provide a backstop and we would auction the equity. In another scenario where we would just hold all the equity ourselves. Q. So is it, in the contemplation of Lehman that it would, it would be prepared to assume the risk of owning all this stock of the reorganized company? A I mean this is really just a negotiation. Q. Well, do you know if this went out to anybody? A I don't. Q. So I'm asking you at this point in time was it your contemplation that Lehman would agree to own all the stock of the company? A We didn't want to own the whole company.
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Lascher Q. In fact, I think in the court filings in the Lehman case it was the company's position that they wanted to lay off some of the risk, 50 percent of the risk, correct? A. It was Lehman's position?
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A. Yes. Q. Was that the position of Lehman at this time? A. Yes. Q. Did Lehman have anybody else that was intending to sell to but Apollo at this time? A. The equity at -~ ~
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A. -- at emerging from bankruptcy? A. No. MR. PARKINS: Give me a moment, please. MR. O'BRIEN: Sure. (Exhibit Lascher-13, E-mail dated 6/17/10 with attachment, "Illustrative 107
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Lascher 2010, approximately 30 days before the filing of the Innkeepers bankruptcy, correct? A. No. Innkeepers filed in July. Q. I said 30 days before Innkeepers filed bankruptcy. A. Yes. Q. About 30 days. A. Yes. Q. Look with me on page 4 of this document. A. Okay. Q. "Use of Cash Collateral." A. Yes. Q. The third bullet of page 4 that flows over to the next page. A. Right. Q. "Company's use of Lehman's cash collateral shall be limited to use for the benefit of the floating rate collateral. " A. Correct. Q. That's Lehman's collateral, correct? A. Yes. Q. That was the proposal that Lehman
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Lascher Terms of Proposed Restructuring, June 17, 1010," Bates Nos. LEH-ALI 004791 through LEH-ALI 004803, marked for identification, this date.) Q. I'm handing you what's been marked as Exhibit 13. A ~s. Q. This is a document with Lehman Bates stamp numbers 4791 through 4803.
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Lascher made? A Yes. Q. Going on to the -- down on page 5 the "AIC Purchase of New Equity." A Uh-huh. Q. This provides that Apollo will acquire for cash an amount equal to $117 million of equity, which is 50 percent of the Lehman shares, correct? A That's right. Q. It also provides later on in that box that there shall be a $70 million senior secured debt made available by Apollo as an equity contribution. Do you see that? A (Witness reading document.) Q. I'm sorry, I read that wrong. There will be $75 million of new debt less the amount of the AIC equity contribution defined as the new debt. A Right, I see that. Q. And that's to be provided by Apollo, correct? A Yes. Q. And if we turn the page to page 6,
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Q. The first page of this exhibit is an e-mail from Mr. Brian Greer at Dechert -A ~s. Q. -- to Mr. Zeiter at Apollo and a number of other people cc'd, correct? A ~s. Q. And you received this document, didn't you? A Yes. Q. Okay. Do you remember receiving this document? A No. I don't remember specifically receiving it. Q. This document is dated June 17,
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Lascher we see that AIC shall make an additional equity contribution in an amount equal to blank million in respect of its guaranty of the company's PIP obligations with respect to the fixed rate pool; do you see that? A Yes. Q. That's defined as AIC's equity contribution? A Right. Q. Prior to this document being prepared by your law firm, Lehman's law firm, and it's dated 6/17/10, did you have discussions with Apollo regarding the change in the structure from this document to the prior term sheets prepared? A I believe this term sheet probably represents the term sheet, you know, the first time we really shared a draft of it with Apollo. Q. My question again, sir, and I appreciate your answer. Between the prior term sheets dated earlier than June 17 and June 17, did you have discussion with Apollo with respect to what was going to be in the 111
Lascher THE WITNESS: You know what, I remember. A. There were two proposals that were sent to Innkeepers and only one was sent to Apollo. Whether we had a conversation with Mark to highlight that, I don't remember. Q. The reason I ask, sir, because the first page of the term sheet says, "Term Sheet Alternative A"? A. Right. Q. There was a different alternative I take it considered? A. Yeah, and I think it was similar to what was in the previous exhibit which stated that Lehman would own all of the equity. Q. So look with me again on page 6. A. Okay. MR. O'BRIEN: Exhibit 13? MR. PARKINS: Yes. A. Okay. Q. Exhibit 6 shows in the top box, after the definition of" AIC equity contribution," it says, "on the effective date Innkeepers shall distribute the new 113
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Lascher substance of this document? MR. O'BRIEN: By that earlier date, do you mean June 4th? MR. PARKINS: Yes. MR. O'BRIEN: 20107 A I don't remember. Q. Did you have discussions with Mr. Beilinson on behalf of the company with respect to what was going to come out on this document? A Yes. Q. And when did you have those discussions? A I don't remember. Q. Did you tell him there was going to be two different proposals prepared by Lehman? A What do you mean? Q. Well, my question is: Did you tell Mr. Beilinson there were going to be tough different proposals prepared? A I don't remember. I believe only one proposal went to Apollo.
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Lascher equity as follows:" 48 and a half percent to Lehman, same to AIC and 3 percent to company's management and/or unsecured creditors. Do you see that? A Yes. Q. The "Conditions Precedent" which is the next box? A Yep. Q. Reflects that the PSA is a condition precedent would be binding on Lehman when Lehman, AIC and the company executed a PSA. Do you see that? A Yes, I do. Q. You see here in the third bullet point in that box "Conditions Precedent," the language we saw earlier, "Agreement reached with AIC in form and substance satisfactory to Lehman"? A Right. Q. Do you understand what that meant at this time? A It would have meant a sale of the, of half the equity to Apollo.
29 (Pages 110 to 113)

APP-00434
114 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 12o 121 122 123 124 125 Lase her Q. And if we tum to page 7 of this document, the proposal embodied in this document, if you go down to the first dark bullet point on page 7? A. Yes. Q. It says, "The failure by AIC to purchase the shares by April15, 2011." Correct? A. Yes. Q. Now as I go to page 9 of this document. A. Okay. Q. The last two bullet points on that page provide, next to the last one is the occurrence of, one, a change that has material adverse effect on the use, value or condition of the company or Apollo. A. Right. Q. Their respective assets or the legal or financial status or business operation of the company or Apollo or, two, material disruption or material adverse change in the financial real estate, banking or capital markets? 115 1 2 3 4 5 6 7 8 9 10
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Lascher LEH-ALI 000241, marked for identification, this date.) (Discussion off the record.) Q. I've handed you an exhibit marked number 14 that says on the first page, "PW Comments." Do you know what PW stands for? A. Paul Weiss. Q. 6/22/10. As presented to us, this document, if you go to the next page, has Dechert draft 6/17, 18, do you have any reason why it reads like that? A. I would imagine they were working off a Dechert document and didn't change the header. Q. But you don't know? A. No. Q. Me neither. Okay. I see that on this document, Exhibit 14, the language with respect to Lehman conducting its own analysis in footnote 2 is gone, in fact, there is no footnote 2 any more, correct? A. There's a footnote 2 on the second 117 Lascher page. Q. But it's not footnote 2 with respect to Lehman conducting its own analysis any more, correct? A. It's not --the one that had been there in some of the previous versions isn't there. Q. Do you know whether Lehman had completed its analysis by June 17th? A. I don't remember. Q. How about by June 22nd? A. I don't remember. Q. Go with me to page 4 of this exhibit, please. "Use of Cash Collateral." A. Okay. Q. In the first paragraph under "Use of Cash Collateral." "In addition to providing the Floating Rate DIP Facility, Lehman will consent to the use of its cash collateral in terms acceptable to Lehman provided however the company's use of Lehman's cash collateral shall be limited to use for the benefit of floating rate collateral."
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1 2 3 4 Lehman determined to the sole discretion 5 after completion of its tax due diligence 6 that the anticipated tax obligations of the 7 company on the effective date are 8 unacceptable to Lehman? 9 A. Yes. 10 Q. Now this bullet point has embodied 11 similar language in the PSA? 12 A. The last bullet you're talking? 13 Q. Yes. 14 A. Yes. 15 Q. And there's a 45-day deadline by which Lehman has to make that determination, 16 17 correct? 18 A. Correct. 19 Q. Has Lehman made that determination 20 yet? 21 A. No. 22 (Exhibit Lascher-14, Document 23 entitled, "Illustrative Terms of 24 Proposed Restructuring, June 17, 1010," 25 Bates Nos. LEH-ALI 000230 through Lascher
A. Right. Q. And then the last one is when the
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120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lascher A No, to buy the 50 percent we were selling. Q. Okay. Then it says in here -A Without us auctioning. Q. I'm sorry, okay. "AIC may consider an additional capital commitment of up to five million to fund property improvement plans in exchange for a complete release of any liability for payment or performance of any PIP related obligations, if any, of AIC"; do you see that? A Yes. Q. Now, did you have discussions regarding Apollo's desire to get a complete release on any guaranty to do PIP work on or about the date of this document? A I mean this definitely came up in the context of what they wrote here. But I have no ability to release them from a guaranty that's not for my benefit. Q. But it was something that Apollo asked for? A That's what it says here. 121 1 2 3 4 5
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Lascher A I see that. Q. That's similar to the language in the prior term sheet that was created, correct? A Yes. Q. Reading on, on the "Use of Cash Collateral" provides, "Company's use of Lehman's cash collateral will terminate immediately upon the occurrence of a termination event, as defined below, including the failure of the company to meet the plan milestones as defined below." Do you see that? A Yes. Q. Then as we get into the "AIC Purchase of New Equity" provision of this document, I see that the price has changed from the prior term sheet. Take a moment and take a look. A Yes, I see that. Q. The price went down? A Yeah. Q. The price went down still for a 50 percent of the stock, though, correct?
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Lascher A Yes. Q. Explain to me why you made an offer with the price going down? A I didn't make an offer. This is their counteroffer to me. Q. Okay. Good. Now it also provides in here for AIC making, paying Lehman an option premium of $10 million at closing. A Uh-huh. Q. Do you know what that option premium was for? A I mean -- the truth -- I didn't care about any of this. I wanted money. I wanted the most money that I could get from them in selling the equity. Whatever all this means is irrelevant to me. Q. And my question is, do you know what is meant by the option premium on what, is what I'm asking, do you know what that meant? A To buy the equity. Q. To buy the rest of the equity, the other 50 percent?
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Lascher MR. EHRLICH: Object to fonn. Q. Going to the next page, page 6 of this document, likewise, it has in the top box that the equity ownership would be 48.5 to Lehman, 48.5 to AIC or to one of more of its designees? A Right. Q. That's a new add from the prior draft, correct? A Right. Q. And then "Conditions Precedent" still provide that there will be transactions binding on Lehman when Lehman, again, Apollo and the company execute a plan support agreement, correct? A Yes, I see that. Q. So at least whichever date you pick, June 17 or June 22nd, okay, as a proposal from Apollo everybody sign-everyone, AIC, Lehman and the company are still signing a single PSA for this to be binding on Lehman, correct? A That's what it says in the term sheet.
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Lascher Q. Going to page 7, you have the first dark box bullet point again a failure by AIC to purchase the shares by blank date in 2011? A Right. MR. PARKINS: Take a break. MR. O'BRIEN: How long? MR. PARKINS: How long you want, 10 minutes, is that good for you? MR. O'BRIEN: Sure. MR. EHRLICH: Could we say 15? MR. PARKINS: You want to pick up at ten before the hour? Is that good? MR. O'BRIEN: Sure. (A brief recess was taken.) (Exhibit Lascher-15, Dechert Draft 6/29110, Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring, June 29, 2010, Bates Nos. LEH-ALI 000254 through LEH-ALI 000264, marked for identification, this date.) Q. I've handed you a document marked Exhibit 15. A Yes. Q. Again, it's a Lehman production, 123
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Lascher authorizing the preparation of this term sheet? A. Specifically this term sheet? Q. Yes. A. No. Q. Do you remember discussing this term sheet with Mr. Beilinson? A. I remember discussing all, you know, a lot of the term sheets with Marc, but whether it was this specific one, I don't really know. Q. Okay. Go with me to page 5 of this document, please. A. Okay. Q. Under "Distribution of New Equity" it provides that Lehman will get 97 percent, correct? A. Yes. Q. And "Conditions Precedent to Lehman's Obligations Under PSA"? A. Yes. Q. This document provides it will be binding on Lehman when Lehman and the company execute a plan. It doesn't have Apollo in 125
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Lascher Bates stamp numbers 254 through 264. A Yes. Q. On the right-hand top of the first page it says "Dechert Draft 6/29/10, Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring, June 29, 2010." A Yes. Q. Go with me to page 3 of this document. Looking at the "General Unsecured Claim" box? A Yes. Q. It says "Shall not receive any recovery under the Plan and shall be deemed and voted against the Plan. Lehman shall determine, in its sole discretion, whether to provide a gift of cash or equity to any class of general unsecured claims. [Discuss impaired accepting class and REIT issues]." A Yes. Q. Do you know if this document, Exhibit 15, this term sheet, was distributed to Innkeepers and Apollo? A I don't know. Q. Do you remember discussing and
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Lascher here, this draft, does it? A That's right. Q. It does have in the third bullet point "Agreement reached with Apollo Investment Corp. ('AIC') in form and substance satisfactory to Lehman." Is that the purchase of equity -A Yes. Q. --It's referring to here? Yes? A Yeah, I would imagine. Q. Was there any other agreement you were contemplating with Apollo Investment Corporation at this time other than the purchase of equity? A I can't remember if at this point we were still talking about Apollo providing a backstop for a sale of the equity. Q. Well, you don't see any backstop in this document, do you? Take a look if you need to. A That's right, but I also don't see anything about a sale. Q. Well, were you intending to sell
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Lascher 50 percent of your stock, Lehman stock, if it got it all, still at this time to Apollo? A Yes. We were still planning on selling half of it whether we were settled on at that point selling it to Apollo or not? Q. Weren't you about to sign a term sheet with Apollo on or about this date to sell the stock to Apollo, contemplate a sale of stock to Apollo? A I'm just saying in terms of the time continuum I can't remember where we were in our thinking on June 23rd -- or 29th or 23rd, whatever. Q. You were negotiating at this time, though, a term sheet with Apollo to sell this 50 percent of the stock to Apollo, correct? MR. O'BRIEN: Do you mean at or around June 29th? MR. PARKINS: Yes. A I'm just telling you, I can't remember in terms of the time continuum when we started doing that, but yes, at some point we settled on we were going to sell it to Apollo.
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Lascher Mr. Glatt at Apollo to Mr. Beilinson. Do you see that? A Yes. Q. Did you ever see they e-mail before? A I don't remember seeing it. Q. Go with me to the documents behind the e-mail. A Okay. Q. If you look with me at pages 128, the Bates stamp numbers 128 through 133 -A Yep. Q. -- I see there a document marked Term Sheet, Lehman/AIC. Do you see that? A Right. Q. Have you ever seen this term sheet before? A I think SO. Q. Okay. This term sheet has at the top right, doesn't it, the initials of Paul Weiss law firm, draft 7/6/10, correct? A Yes. Q. And this document from the Paul Weiss firm who represents Apollo, provides-129
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Lascher Q. Okay. Did you ever have discussions with anybody else about a specific term sheet where Lehman would sell 50 percent of the stock to anybody else other than to Apollo? A No. Q. Okay. (Exhibit Lascher-16, E-mail dated 7/7/10 with attachment, Bates Nos. AIC 00000127 through AIC 00000144, marked for identification, this date.) Q. Mr. Lascher, I've handed you what has been marked as Exhibit 16. A Yes. Q. These documents were produced by Apollo. They have AIC numbers, Bates stamp numbers 127 through 144. A Yes. Q. The first page of this document has two e-mails on it. The earlier-- the earlier dated e-mail and time is an e-mail from Mr. Alan Kornberg at Paul Weiss to a group of people, lawyers, both at Dechert and at Kirkland and the second was an e-mail from
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Lascher if you look with me on Bates stamp number 128, this is the first page of that. Do you have it? A Yes. Q. -- the seller of stock is going to be Lehman and the acquirer is going to be Apollo, correct? MR. O'BRIEN: Under this term sheet. MR. PARKINS: Under the term sheet, correct, that's what the term sheet provides. A It says after confirmation Lehman will agree to sell AIC the right to receive half the equity in the company. Q. Right. Going on to the next page, Bates stamp number 129, "Distribution of Innkeepers Equity" provides 48.5 percent to Lehman, 48.5 to Apollo, correct? A Right. Q. Conditions precedent -- I'm sorry-- "Conditions to Execution of Stock Purchase Agreement," that paragraph starts out, the execution of the Stock Purchase
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Lascher Agreement will be subject to the satisfaction or waiver by Lehman or Apollo, as applicable, to the following conditions. So pursuant to this term sheet, there was going to be a stock purchase agreement? A Right. Q. Ifl go to the next page, which is 130, "Conditions to Closing," that section starts out, "The consummation of a transaction on the terms described herein will be" the subject-- "will be subject to the satisfaction or waiver by Lehman or AIC, as applicable, of customary closing conditions including, without limitation, the following." And it lists there as a customary closing condition the third bullet point, the termination of the guaranty we talked about earlier, correct? A Yes, that's what it says. Q. Moving on, sir, to the Bates stamp number page 134 -- 134, that's a Paul Weiss draft document dated the same day, 7/6/10,
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Lascher and between Lehman and AIC (the 'Lehman-AIC Term Sheet')." A. Yes. Q. Does this refresh your recollection that on or about or prior to July 6th there, in fact, did exist a term sheet reflecting an agreement to sell the shares to AIC? A. Wasn't that the term sheet that we just went through? Q. I'm asking you whether or not you recall there being a definitive term sheet, if there is such a thing, a term sheet. A. There is a draft term sheet that was attached-Q. A term sheet reflecting the terms under which Lehman would sell 50 percent of the stock to Apollo. A. The term sheet that we just went through that was attached to this e-mail was the term sheet to sell half of what we got to Apollo. Q. Did you have discussions with Apollo regarding their proposal reflected in, as attached to this cover e-mail, the two
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1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 20 21 22 23 24 25 Lascher proposals? MR. O'BRIEN: Wait a minute. You're asking ifhe had discussions with Apollo-MR. PARKINS: With Apollo. MR. O'BRIEN: -- about this specific term sheet? MR. PARKINS: Both of them. Both of them that are attached to this cover e-mail. MR. O'BRIEN: Well, one is a term sheet with Apollo, the other is an agreement with Innkeepers. MR. PARKINS: Right, but both involve Apollo participating to some extent. Q. My question is did you have discussions with the Apollo regarding both of these term sheets? MR. EHRLICH: Objection to form. A I don't remember. Q. Were you having discussions with Apollo at this time regarding the acquisition of stock that Lehman was going to get as part
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Lascher "Term Sheet Alternative A (Lehman Innkeepers)." Do you see that? Have you seen this document before? A. Yes, I believe so. Q. Now, if you go with me to page 5 of this document, Bates stamp number 138 -A. Okay. Q. --under the "New Equity" box 97 percent of the new equity is going to go to Lehman under this proposal. A. Right. Q. Okay. And a condition precedent to this term sheet proposal is the transaction, again, becoming binding on Lehman with Lehman --when Lehman, Apollo Investment Corp. (AI C) and the company execute a Plan Support Agreement, correct? A. That's what it says. Q. And if you go to the next page, this document, at the top box, the second bullet point says "Execution of the definitive agreements contemplated by the term sheet, dated as of July [ ], 2010, by
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Lascher of the PSA? A Yes. Q. So you don't remember specifically talking about these term sheets; is that your answer? A Yes. These versions of the term sheets. Q. I'm sorry? A These versions of the term sheets. Q. Okay. MR. PARKINS: Give me a second. (Discussion off the record.) (Exhibit Lascher-17, E-mail dated 7/17/10 with attachment, Bates Nos. INN_MID000033ll andiNN_MID00003312, marked for identification, this date.) Q. I've handed you what's been marked as Exhibit 17. A Yes. Q. It's a document that is an Innkeepers production. It's Bates stamp number 3311 to 3312. A Right. Q. Contains on the first page of it 135
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Lascher Q. Okay. If you look at the schedule here, when you look at the right-hand column, the very right column, it says $13,665,381 (sic), right? A 13,665,581. Q. Right. Is that the number you understand to be the company's position on what Apollo's exposure is on a guaranty? MR. EHRLICH: Objection to form. Please note my objection. This is a totally improper question, beyond the scope of this notice and improper discovery in a state court litigation that Midland has brought. MR. PARKINS: Okay. You can answer. THE WITNESS: Can I answer it? MR. O'BRIEN: I join in the objection. It is outside the scope, but I'm not going to instruct the witness not to answer the question. A I don't really know what they think is there -- actually, can you just ask me the question again.
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Lascher two e-mails. The first is an e-mail from -- on the lower part of the document -- the first an e-mail from Mr. Marc Beilinson to Joseph Glatt and Schuyler Hewes, subject Guaranty Analysis Based Upon Reading of Schedule 11 Only. And the second top part of this document is an e-mail from Mr. Hewes to Mr. Beilinson and Mark Murphy and other individuals at Apollo. Do you see that? A Yes. Q. The second page of this document has a bunch of numbers on it. It's entitled "Innkeepers USA Trust Summary of Schedule
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Right. Have you seen this document before? I've seen something like this. And when you say this, are you referring to the second page or both the entire document I've handed you? A I never saw the e-mail. But I've seen something like this schedule.
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Lascher Q. This $13 million odd number is that a number you had discussed with Innkeepers as their view of the exposure of Apollo on the guaranty we've been talking about? MR. O'BRIEN: Well, you make it sound like his numbers. MR. PARKINS: No, I'm asking if this is what Innkeepers -MR. O'BRIEN: All my client said was that he had seen a schedule like this before. Q. And my question is, did Innkeepers discuss this number in the context of developing the PSA as dealing with the Apollo guaranty problem with this magnitude of dollars? MR. EHRLICH: Objection. A I don't remember the number. We looked at this schedule, we looked at a schedule similar to this in agreeing to what scope of work we would commit to having the company do as long as there were funds available post emergence from bankruptcy, assuming that we own the company together.
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negotiations for the PSA, correct? A. It was in the context of our negotiations over the sale of the equity to Apollo. Q. Bu you didn't just mention what the company would do, you are going to end up owning the company pursuant to the PSA if it's implemented, right? A. Yes, yes. MR. EHRLICH: Objection to form. A. But in terms of what their perspective, on whether, you know, this was the number that they were liable for under the guaranty, no. Q. I understand. I just want to know if this was discussed between Innkeepers and you. MR. PARKINS: I pass the witness. I think there is other counsel who have questions here. MR. O'BRIEN: Next. EXAMINATION BY MR. GOTTESMAN:
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Lascher there's about $150 million of debt that would remain on those assets and one other in the restructured company. Q. And were there discussions between Lehman on the one hand and Innkeepers on the other with respect to those hotels? A About the debt on those hotels. Q. And let me-- probably it's just easier if we go back to what was marked earlier today as Exhibit 5, which is the Plan Support Agreement. A Okay. Q. And I would direct your attention to, it's the one that's bound, to the term sheet that's annexed to the Plan Support Agreement. I guess page 2 of that, if you could get there, please. A Okay. Q. And your answer a moment or two ago, you were referring to what's called other secured debt in the term sheet; is that correct? A Yes. Q. And were there discussions between
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Lascher Q. Good afternoon. My name is Lawrence Gottesman of Bryan Cave. We represent LNR Partners, LLC, which is the special servicer group to securitization trust. Just for the record one of those is CSFB 2007-Cl which services two loans, one of which relates to the Residence Inn Mission Valley in San Diego and the other of which relates to the Residence Inn Garden Grove. The other trust is called ML-CFC 2006-4 and that trust has three Innkeepers' loans, one of which is the Doubletree Guest Suites in Washington, D.C., another of which is a Residence Inn Tyson's Corner, Vienna, Virginia, and the third is the Homewood Suites in San Antonio. Are you familiar with any of those loans as part of the planned negotiation and plan support process that you described in your prior testimony? A Yes. Q. Can you tell me what your familiarity is? A As part of our PSA, we -- you know,
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Lascher Lehman on the one hand and Innkeepers on the other with respect to that other secured debt? A Yes. Q. Can you tell me when the discussions with respect to the other secured debt started in the process that you described earlier today? A I mean they would have started at our first meeting back in April, I think it was the April22nd meeting. They were part of the, you know, the organizational chart that's attached to the Moelis presentation and there was always an amount of debt that was allocated to assets other than the fixed rate and floating rate pools. Q. What I would like to know is in this process who allocated that debt? I mean there was a certain amount outstanding; is that correct? A Yes. Q. And what's that amount approximately, if you know? A I don't remember offhand.
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Lascher Q. Okay. And there was a certain amount allocated in terms of treatment; is that correct? A That's right. Q. Do you know who initially made that allocation? A We started with the Moelis presentation. Q. Okay. And was there a bid and ask in terms of what Innkeepers wanted as opposed to what Lehman wanted with respect to that, or was there immediate agreement as to how that allocation would proceed or be made? A I mean there wasn't immediate agreement, because we wanted to do our own investigation into, you know, what we thought the value of the assets were. Q. Well, let me state it different. Was there a deal point for Lehman that there be a particular number attached to that bucket? A To the bucket other than fixed and floating rate pool assets, yes. Q. And did Lehman ever make a proposal 143
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Lascher proceed with the deal if it were a different number? MR. O'BRIEN: On this subject? MR. GOTTESMAN: With respect to the treatment of the other -MR. O'BRIEN: Yes. MR. GOTTESMAN: --what is called the other secured debt in the term sheet. MR. O'BRIEN: Exactly. A I don't think we were ever that far apart on what the number should be, but the interim discussions I really don't remember specifically. Q. Did Lehman have an internal analysis as to what number it would accept as part of this process in order to go forward with the transaction contemplated by the plan term sheet and the Plan Support Agreement? A I mean it was part of what we -- it was part of what Lazard was engaged to help us with. Q. Let me state it differently. The basic economic deal from
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lascher Lehman's perspective is that it was willing to convert its debt to equity; is that correct? A Yes. Q. And was it a condition of that that the other debt of the company somehow be addressed? A Yes. Q. Okay. Who, who stated at the outset as to what that treatment had to be? A Well, if you go back to the Moelis presentation, you can see what's proposed in terms of-- and then we had discussion about it. I mean I don't -- we had discussions about the debt and where we thought the outstanding debt should be when the company emerged from bankruptcy. Q. Let me state it differently. If the debt were reinstated, was Lehman willing to proceed with the Plan Support Agreement? A Reinstated in full you're saying? Q. Correct. A I mean the Plan Support Agreement says $150 million of debt, that those are the
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Lascher as to what that number should be? A I mean we ended up with $150 million. I don't remember -- I don't remember-Q. I have the term sheet. I'm trying to understand where you started as opposed to where you ended up. A I don't remember. We started with the Moelis number and we ended up with what's in the term sheet. Q. Let me see ifl can try and get to this a different way. Was there negotiation, sort of the normal back and forth with respect to the number between Lehman and Innkeepers? A It wasn't really a negotiation. I mean we had a conversation about whether -we had conversations about whether we agreed with their number or not. It wasn't -- I mean, I don't know if I would characterize it as negotiations. There were discussions about it. Q. Well, was there ever a point where Lehman indicated that it was unwilling to
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Lascher 1 terms under which we're willing to proceed. 2 Q. No, I understand. I asked the 3 question in terms of what Lehman's goal was 4 in the negotiations, which went on for some 5 period of time, right? 6 A. Right. 7 Q. Was Lehman willing to live with an 8 outcome in which that debt was reinstated? 9 A. And when you say reinstated, you 10 ~m~~? 11 Q. Correct. Unimpaired. 12 A. No, that's why we have $150 million 13 as where we want to see the debt on the other 14 15 asset. Q. So Lehman's position as part of the 16 negotiation was that in order for it to 17 convert its debt to equity it needed to reach 18 agreement or at least dictate the terms of 19 how other creditors would be treated in the 20 context of an overall reorganization; is that 21 correct? 22 MR. O'BRIEN: Object to the form. 23 A. No -- I mean we had a discussion 24 with our borrower and this is where we agreed 25 147
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Lascher would be an appropriate debt level on those assets. Q. Does Lehman have claims against the borrowers with respect to the other secured debt? A. No. Q. So in the context of Lehman deciding its own treatment or negotiating its own treatment, more accurately, there were discussions as a condition to that as to how other creditors would be treated; is that correct? A. I mean that's what's laid out in the PSA, right? Q. I understand. I'm asking about the discussions as opposed to what's in the document itself. A. I mean, yeah, we would never -- it would have never gotten into the document if we didn't have a discussion about it. Q. Was Lehman willing to simply do a deal where it converted its debt to equity and then left the company off to figure out how to deal with its other issues?
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Lascher party to any discussions with anyone other than Innkeepers and Apollo as to the transactions that are ultimately memorialized in the Plan Support Agreement and in the term sheet annexed to that? A. We had conversations with Marriott and we had conversations with -- we had a conversation or two with Trimont. Q. Anyone else? A. I mean who else? I don't know who else there is. Q. Did you have a conversation with any of the special servicers for the other secured debt? A. I don't remember having conversations. Q. Okay. MR. GOTTESMAN: I have no further questions. MR. CRISP: Can we take a two-minute break so I can move down there a little closer? MR. O'BRIEN: Sure. (A brief recess was taken.)
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Lascher EXAMINATION BY MR. CRISP: Q. Mr. Lascher, my name is Mike Crisp. I'm with the firm of Kilpatrick Stockton and we represent Trimont Real Estate Advisors, which is a special servicer on the floating rate mezz loan and also on the Anaheim mezz loan. Are you familiar with those two loans generally? A Yes. Q. And I remind you, you are still under oath even though the interrogator has changed. A Okay. Q. When did you first get involved with the workout of the Innkeepers debt, Lehman's Innkeepers debt? A The workout that's going on right =wmQ. Right. A I mean we started having detailed conversations about it in April of this year. Q. When was the default on the Lehman loan by Innkeepers?
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Lascher Q. Okay. And when you went to that meeting, was it your view that -- let me back up one step. The Lehman loan is an asset that Lehman, is it Lehman-ALI that holds that asset or is it some other Lehman entity? A I think Lehman-ALI is the named lender on it. There's -- I think Lehman commercial paper has the economic interest in the loan but Lehman-ALI is the lender of record. Q. Okay. And when you went to the prior meeting, was it your view that the Lehman loan was fully secured? A When I went to the prior meeting did I think that that senior -- the senior debt was fully secured? Q. Right. A No. Q. No, you did not think that? A No, I did not think that. Q. Okay. Has any Lehman entity, either ALI or Lehman commercial paper, ever taken any impairment or reserve against loan
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A I think they officially went into default, I can't remember the exact date, but it was -- there was a default if a certain number of days had passed after they lost a flas Q. Was it a default that led to your involvement? A No, I had been involved for quite some time. Q. Did Innkeepers at any point stop paying on the Lehman debt? A I don't think so. Q. When did you learn from Innkeepers that the company was going to be unable to continue the services debt? A Its debts generally you're saying? Q. Uh-huh. A In April. Q. That's what we referred to earlier as the prior meeting? A Yes. Q. Which was the meeting a week or 10 days prior to the April22nd meeting? A Yes.
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Lascher any other mechanism, have you indicated there is an impairment of that asset? A I don't know. Q. Let's talk for a minute about the-- the original face amount of the Lehman loan was $250 million? A 238 million. Q. That that was the original? A Oh, no. 250, you're right, and there were some paydowns with asset sales. Q. Is 238 roughly the current outstanding balance on the loan? A 220.2. Q. And that loan is secured by the 20 hotels that are in that pool? A Yes. Q. Now, I don't want to ask you what the Lazard analysis was, but was a valuation of those 20 hotels part of what Lazard did for Lehman? A Yes. Q. And then you understand there's a borrower on a junior mezzanine loan where the collateral is the equity interest in the 20 155
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Lascher suites in Anaheim, California. Are you familiar with that loan? A Yes. Q. And then there's also a $21.3 million junior mezzanine loan on the same property. Are you familiar with that? A Yes. Q. And what is the treatment, we'll call that the Anaheim mezzanine loan, if that's okay with you? A Okay. Q. What, under the PSA in the term sheet, is the treatment of the Anaheim mezz loan? A There's $150 million of debt available for seven assets and so however that plays out. I think there is something that's contradictory in the term sheet that says it would be wiped out but from our perspective whatever, whatever happens with that -- the $150 million is available for the seven assets. Q. So sitting here today, your view is that the Anaheim mezzanine loan would be not 157
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Lascher entities that own the 20 properties that secured the Lehman loan? A Yes. Q. And do you have an understanding about the treatment --let's just call that the floating rate mezz, if that's okay with you? A That's fine. Q. Do you have an understanding about what the treatment is of the floating rate mezz under the PSA in the term sheet? A Yeah, they would get wiped out. Q. And is Lehman supportive of that treatment? A Yes. Q. Why? A Because we don't think there is any value in the position. Q. Based on what? A Based on our -- the work that we did or that Lazard did to understand the value of the assets. Q. Let's talk about the Anaheim one. There's a $13.7 million loan on the Hilton
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Lascher treated the way the mezzanine loans are indicated to be in the PSA in the term sheet but it would be moved over into the $150 million available to fund the secured loans on not just the six hotels for which LNR is the servicer but also for the Anaheim property? A That could be. Q. Is that your understanding today? A I mean that's my view. I don't-I'm not sure that that's entirely, that's accurately reflected in the PSA Q. There's a disconnect between the PSA and what you currently understand today; is that correct? A Yes. Q. Has Lehman undertaken any efforts to test the market's appetite for equity in the post reorganization company? A No. Q. Is it Lehman's intention post reorganization to at some point in the future market its 50 percent of the-- of the distribution equity that it's retaining?
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Lascher A. Not in the near term. Q. Well, there's a provision in the term sheet, isn't there, that indicates that Lehman and AIC within 3 years would undertake to retain the services of a banker to market and sell the stock in Innkeepers, sell the company? A. There's something to that effect in there, yes. Q. Other than the reorganization transaction that's reflected in the PSA in the term sheet with Innkeepers, and the various iterations going back of the term sheets that went back and forth, did Lehman ever consider any other form of restructuring other than the general scope, general character of the transaction that's reflected in those documents? A. I mean we -- another restructuring with -- with the company or the borrower you're saying? Q. Yes, something other than that a debt for equity swap and the general structure that we see pretty much from mid
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Lascher perhaps, you know, forgive some of the principal balance in exchange for some piece of equity in the company but we never got to terms that we were comfortable with. MR. CRISP: That's all I've got. Thank you, Mr. Lascher. MR. O'BRIEN: Anyone? MR. GOULD: I have just a couple of questions. EXAMINATION BY MR. GOULD: Q. Mr. Lascher, I'm Jeff Gould with Kirkland & Ellis on behalf of the debtors. I just wanted to circle back to a couple points you were asked about earlier. A. Okay. Q. This morning you were asked if you had knowledge of whether Innkeepers was considering any other plan other than that anticipated by the PSA, and if I got my notes right, your answer was that you never thought they would do otherwise? A. Right. Q. Now, I just want to go back and ask
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Lascher April through the documents that were filed with the court. A. We weren't-MR. O'BRIEN: Object to the form. A. We weren't willing to enter into another restructuring. I mean we would have taken the assets back but we weren't -- we didn't want to restructure the loan. Q. Was there ever any discussion between you and Innkeepers about simply modifying the terms of the Lehman loan? A. Isn't that the same -Q. In other words, push out the maturity, reduce the interest rate, was there any discussion between Lehman and Innkeepers about that in April of 2010? A. Previously, there were other discussions with Innkeepers about that. Q. Prior to April2010? A. Yeah. Q. And tell me generally about those discussions. A. We talked about, you know, we were asked if we would restructure the debt
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Lascher you about that particular question, Your knowledge of whether the debtor, whether Innkeepers was considering any other plans. So do you have any knowledge one way or another? A. No. MR. O'BRIEN: Why don't you listen to that? Were you-- Mr. Gould, did you complete your question? I just wanted to make sure. MR. GOULD: I did, but for the sake of the record, let's clarify. Q. Do you have knowledge one way or the other whether Innkeepers was considering any other plan other than that anticipated by thePSA? A. No. Q. On another point I thought you said a bit earlier this afternoon that Apollo -that AIC would be getting equity pursuant to the PSA and I just want to clarify that point as well. The PSA does not provide for AIC to
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INSTRUCTIONS TO WITNESS Please read your deposition over carefully and make any necessary corrections. You should state the reason in the appropriate space on the errata sheet for any corrections that are made. After doing so, please sign the errata sheet and date it. You are signing same subject to the changes you have noted on the errata sheet, which will be attached to your deposition. It is imperative that you return the original errata sheet to the deposing attorney within thirty (30) days of receipt of the deposition transcript by you. In you fail to do so, the deposition transcript may be deemed to be accurate and may be used in court.
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ERRATA
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JURAT I, MICHAEL LASCHER, the witness herein, the foregoing testimony of the pages of this deposition, do hereby certifY it to be a true and correct transcript, subject to the corrections, if any, shown on the attached page. MICHAEL LASCHER Subscribed and sworn to before me this _day of '2010.
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COUNTY OF NEW YORK ) I, JENNIFER OCAMPO-GUZMAN, a Shorthand Reporter and Notary Public within and for the State of New York, do hereby certify: That MICHAEL LASCHER, the witness whose deposition is hereinbefore set forth, was duly sworn and that such deposition is a true record of the testimony of such witness. I further certify that I am not related to any of the parties to this action by blood or marriage, and that I am in no way interested in the outcome of this matter. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of August 2010.
Exhibit Lascher-9, Docwnent entitled, "Illustrative Terms of Proposed Restructuring, Jrme 2, 1010," Bates Nos. LEH-ALI 000014through LEH-ALI 000022 ..... 80 Exhibit Lascher-1 0, Doclllllent entitled, "Illustrative Terms of Proposed Restructuring, Jrme 2, 1010," Bates Nos. LEH-ALI 000023 through LEH-ALI 000031 ..... 94 Exhibit Lascher-11, Doclllllent entitled, "Illustrative Terms of Proposed Restructuring, Jrme 2, 1010," Bates Nos. LEH-ALI 000032through LEH-ALI 000040 ..... 97 Exhibit Lascher-12, Doclllllent entitled, "Illustrative Terms of Proposed Restructuring, Jrme 2, 1010," Bates Nos. LEH-ALI 000041throughLEH-ALI 000050 .... 101
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Exhibit Lascher-13. E-mail dated 6117110 with attachment, "Illustrative Terms of Proposed Restructuring, Jrme 17, 101 0," Bates Nos. LEH-ALI 004791 through LEH-ALI 004803 ............................ 106
Exhibit Lascher-14, Doclllllent entitled, "Illustrative Terms of Proposed Restructuring, Jrme 17, 1010," Bates Nos. LEH-ALI 000230 through LEH-ALI 000241 .... 115 Exhibit Lascher-15. Dechert Draft 6/2911 0. Term Sheet Alternative A, Illustrative Terms of Proposed Restructuring, Jrme 29, 2010. Bates Nos. LEH-ALI 000254through LEH-ALI 000264 ............................ 122 Exhibit Lascher-16. E-mail dated 717110 with attachinent. Bates Nos. AIC 00000127 throughAIC 00000144 ...................... 127
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JENNIFER OCAMPO-GUZMAN
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INDEX WITNESS MICHAEL LA SCHER BY MR PARKINS BY MR GOTTESMAN BYMR CRISP BYMR GOULD EXHIBITS DESCRIPTION PAGE PAGE 5 138 150 160
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(Continued): EXHIBITS DESCRIPTION
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Exhibit Lascher-17, E-mail dated 7117110 with attachment, Bates Nos. INN MID00003311 and INN MID00003312 ....... 134 DOCUMENT REQUEST Page Line 44 22
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Exhibit Lascher-1. Amended Notice of Deposition of Corporate Representative of Lehman ALI. Inc. and subpoena duces tecum ................................ 8 Exhibit Lascher-2. E-mails. Bates Nos. LEH-ALI 005298 and LEH-ALI 005299 ......... 11 Exhibit Lascher-3. Required Capital Improvements Guaranty ..................... 27 Exhibit Lascher -4. Handwritten notes. Bates Nos. LEH-ALI 004721 through LEH-ALI00473L ......................... 28 Exhibit Lascher-5. Plan Support Agreement... ............................. .48 Exhibit Lascher-6. E-mails. Bates No. LEH-ALI 005676 ............................ 50 Exhibit Lascher-7. Document entitled. "Project Tavern, Lehman Discussion Materials. April22. 2010. by Moelis." Bates Nos. INN_MID00003533 through INN MID00003548 ............................ 64 Exhibit Lascher-8. Illustrative Terms of Proposed Structuring. May 25. 2010. Bates Nos. LEH-ALI 000001 through LEH-ALI 000004 ............................ 79
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APP-00448
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A ability 51:12 58:18 60:10 78:17 120:21 able 24:12 54:5 accept 76:18 144:17 acceptable 8:9 10:4 117:21 accepting 36:5,9 123:19 accounted 74:5 accounting 153:17 accurate 17: 12 17:16 23:20 77:23 164:16 accurately 147:10 157:13 acknowledge 76:18 acquiescence 63:24 acquire 109:8 acquirer 129:7 acquisition 18:15 133:24 action 166:15 actual70:19 add 121:9 added 94:21 addition 19:7 117:18 additional55:23 59:18,19 110:2 120:7 addressed 145:8 adds 37:24 adieterich@p ... 3:18 advance 78: 17 adverse 114: 17 114:23 advisement 44:25 45:11 advisors 3 :4 47:13 150:6 aehrlich@pau ... 3:17 affiliate 5: 12 16:24 afternoon 7:8 139:2 161:21 ago 56:14 58:9 58:17 140:21 153:6 agree23:12 35:11 36:22 48:18 95:15 99:15 100:9 105:22 129:15 agreed 54: 10 56:24 143:19 146:25 agreed-upon 63:21 agreeing 137:21 agreement 10:13 12:19 24:12 40:2 48:5,14 50:5 54:25 55:5,13 56:15 57:9 58:4,10 62:18 63:25 74:11 78:21,22 79:9,13,16,18 79:19 91:4,18 92:11,15 100:22 101:11 104:4,7,9,13 104:14,22,24 105:4,5 113:18 121:16 125:5 125:13 129:24 130:2,7 131:19 132:8 133:14 140:12,17 142:13,16 144:20 145:21 145:24 146:19 149:5 162:4 167:17 agreements 74:3 78:18 79:20 131:24 ahead 54:2 AIC 12:21,22 15:13 16:12,24 16:25 18:3,4 52:22 60:23 61:24 62:13 63:3,9 91:3,18 91:23 92:2,11 92:13,14 101:9 104:3,7,24 109:5,19 110:2 112:23 113:3 113:13,19 114:7 118:16 119:9 120:7,12 121:6,21 122:3 125:6 127:10 127:11,17 129:15 130:14 131:17 132:2,8 158:5 161:22 161:25 162:5 168:23,24 AIC's 18:8 110:8 all :5 Alan 127:23 albeit 66:12 ALI 3:21 7:2 8:23 9:5,8,14 9:17,24 10:8 11:18 152:24 167:10 allocated 141:16 141:19 142:3 allocation 142:7 142:14 alternative 91:22,25 92:13 112:10,12 122:17 123:6 131:2 168:20 Alvarez 21 :19 21:22,25 22:10 22:11,17 67:13 67:14 Amended 8:21 9:4 167:9 amending 52:20 Americas 1:11 2:16 3:9,15,21 4:5 amount20:15 66:24 109:8,19 110:3 141:15 141:20,23 142:3 154:6 amounts 100:14 Amy3:18 6:20 Anaheim 150:8 155:24 156:2 156:10,14,25 157:7 analysis 94:22 94:25 95:5,11 116:22 117:4 117:10 135:7 144:17 154:19 Andrew3:16 6:22 and/or 31:19 113:4 annexed 140: 16 149:6 answer 15:21 36:3 76:23 110:22 134:6 136:17,18,22 140:20 153:9 160:22 answered 50:12 60:17 answering 7:25 62:15 104:19 105:3 answers 7: 15 anticipated 70:16 115:6 160:21 161:17 Antonio 139:17 anybody 88:11 105:18 106:13 127:3,5 apart 144:13 Apollo3:14 6:21 6:23 10:25 12:21,22 14:5 14:24 15:4,18 18:14,19,21 19:16 20:13,23 21:2,7 24:5,12 25:3,12,14,21 26:9,13,25 35:1136:22 37:4 38:3,17 38:23 62:4,19 67:20 68:8 69:7,15,19 71:17,23 72:6 72:10 78:2 79:15 84:7 85:3,9,20 86:8 86:10,13,14,17 86:19 87:23 89:8,12,24,25 90:6,18 91:11 95:14 96:4,8 97:4 98:25 100:21 103:11 103:15 105:5 106:14 107:15 109:7,14,23 110:14,20,24 111:25 112:6 113:25 114:18 114:22 120:23 121:14,20 123:23 124:25 125:5,14,18 126:3,6,8,9, 10 126:16,17,25 127:6,17 128:2 128:25 129:8 129:20 130:3 131:17 132:18 132:22,24 133:5,6,13,16 133:19,24 135:12 137:4 137:15 138:6 149:3 161:21 162:5 Apollo's 120:16 136:9 Appaloosa 4:9 6:15 64:6
APP-00449
171 appear 73:4 96:17 appearances 5:17 appearing 8: 13 appears 49:8 59:6 83:15 appetite 157:19 applicable 130:3 130:15 apply 14:8 appreciate 77:9 110:22 appropriate 147:2 164:5 approval22: 18 approved 10:18 10:24 approximately 91:8 108:2 141:24 Aprill2: 19 26:5 47:7,20 64:13 65:2,9 66:6 69:18,23 70:4 70:18,22 71:5 71:7 74:12 77:14 114:8 141:11,12 150:23 151:19 151:24 159:2 159:17,20 167:21 area 22:2 29:24 31:20 83:14 argue 40:12 articulated 45:3 artificial42:3,5 42:6,7,9 asked 16:15 50:12 60:17 120:24 146:3 159:25 160:16 160:18 asking 7:6,8,25 16:16 17:18 26:12 27:25 43:16,18 57:11 57:15 74:18 79:3 100:24 101:5 105:20 119:21 132:11 133:4 137:8 147:16 148:22 asset 146:15 152:5,7 153:12 153:14,16,22 154:3,11 assets 74:2,6,6 114:20 140:3 141:16 142:18 142:24 147:3 153:8 155:23 156:17,23 159:8 associate 33:11 assume 52:11 92:20,25 105:13 assumes 82:19 92:24 assuming 53:25 137:25 assumption 98:12 assumptions 73:24 assured 71 :4 attached 132:15 132:20,25 133:10 141:14 142:21 163:9 164:11 attachment 106:25 127:10 134:15 168:15 168:23 169:5 attachments 48:19 attempt 7:23 attention 140: 14 attorney 29: 18 29:21 31:22 164:13 attorneys 2:4,9 2:15,20 3:4,9 3:14,214:4,9 4:14 9:12 40:12 attorney-client 75:23 77:5 auction 84:20,22 89:14,15 92:5 97:7,8,9 105:8 auctioning 120:5 August 1:12 166:19 authority 10: 18 10:24 21:13 authorize 23:5 87:11 99:24 authorized 14:11 87:6 93:3 99:21 authorizing 124:2 available 24: 17 109:14 137:24 156:17,22 157:5 Avenue 1:11 2:16,21 3:9,15 3:21 4:5,10 aware 18:15 22:23 B b56:6,9103:8 103:14,18 167:7 168:2 169:2 back 13:20 28:8 36:21 52:5 56:20 58:16 63:1665:7 68:14 98:2 140:10 141:11 143:15 145:12 152:3 158:14 158:15 159:8 160:15,25 backstop 84:6,7 84:16,18 85:3 85:10,11,22 86:5,10 89:21 89:25 90:11 92:7,16,17,21 93:14 96:4 100:6 103:11 103:15 104:13 105:8 125:19 125:20 backup 92:7 balance 154:13 160:3 banker 75:6 158:6 banking 114:24 bankrupt 153:4 bankruptcy 1:2 10:17,17 14:20 30:8 31:21,22 32:3 61:8 78:24 79:11 91:9 106:18 108:3,6 137:24 145:18 153:10 based34:18 36:19 37:11 83:293:19 135:7 155:20 155:21 basic 144:25 basically 24:6 31:17 51:21,23 basis 44:11 53:25 Bates 11:12,17 28:23 29:8 33:14 50:19 51:2 64:14,19 65:8 79:24 80:5,21 81:2 94:7,12 97:14 97: 19 10 1:16 107:3,10 115:25 122:19 123:2 127:10 127:17 128:12 129:2,18 130:23 131:8 134:15,22 167:12,15,18 167:21,24 168:5,8,10,13 168:16,18,21 168:23 169:5 becoming 131:16 beginning 31:6,8 72:10 behalf5:25 6:4,6 6:18,21,23 13:1121:4 49:13 88:10 99:22 Ill :9 160:14 Beilinson 34:16 35:5,9,14,20 35:22 36:18 37:10 40:5 41:18,24 42:13 42:17 49:9 51:7 52:3 53:4 53:1854:7 57:17,22 59:25 60:6 61:4 68:15 69:25 70:18 71:15 88:9,11 90:15 99:6,13 Ill :9 111:21 124:8 128:2 135:5,11 Beilinson's 52:8 59:22 60:20 believe 10:16 19:20 29:22 33:754:12 71:13 87:16 99:4 110:17 111:24 131:6 believes 57: 16 benefit 108:20 117:24 120:22 Benson4:13 6:18 best 36:13 beyond 136:12 bfaerstein@wi... 4:12
APP-00450
172 bid 142:10 bidder 97:6 binding 91:2 100:21 101:9 104:2 113:12 121:14,23 124:24 13 1:16 bit 41:10 68:10 100:12 161:21 blank 110:4 122:4 blessed 13:13 blood 166:16 board 96:22 book 73:2 Boone 2:14,20 5:21 borrower 146:25 154:24 158:21 borrowers 14 7:5 boss 21:18,23 bottom 19:6 51:556:21 88:20 101:2,8 bound 140:15 box 109:13 112:22 113:9 113:17 121:5 122:3 123:11 131:10,22 bracket 82:23 bracketed 82:21 brackets 83: 18 84:10,11 96:23 breach 45:16,23 51:13 55:10 59:13 62:20 breached 57:2 59:4 break63:12 122:6 149:22 break-up 84:24 85:4,21 86:5 89:25 92:6 96:4 103:11,16 Brian 3:24 4: 11 6:14,25 13:23 107:13 Brian.greer@... 3:25 brief63:15 122:15 149:25 Broadway 4: 14 Brothers 5: 13 brought 13 6: 15 Bryan 3:8 5:25 139:3 Bu 138:7 bucket 142:22 142:23 bullet 14:8 15:8 15:25 16:5,7 17:16,19,21,23 17:24 23:19 91:14 104:6 108:15 113:16 114:5,14 115:10,12 122:3 125:4 130:19 131:23 bunch 135:15 business 76:7 81:16,23 114:21 businessperson 88:12,12 buy 84:19 119:23,24 120:2 buying 68:8 95:14 66:17 75:5 78:21 155:6 156:10 called 1:10 31:16 46:8 54:24 58:9 139:11 140:21 144:8 148:17 calls 57:18 cap 73:25 capacity 31 :2 capital4:14 6:19 20:5 27:19 28:5,12 96:14 114:25 120:8 148:3 167:13 capitalization 35:12 36:23 102:10,19,24 103:3,6,7 care 119:15 carefully 164:3 carries 55:20 case 1:5 10: 17 41:3 45:10 63:22 64:7 78:24 79:11 91:9 106:3 cases 13: 18, 19 30:8 cash 24:18 44:6 51:12 53:24 54:5 56:16 57:6,7,25 58:2 58:19 59:3,11 60:10 73:23 77:19 108:13 108:18 109:8 117:15,18,20 117:23 118:7,9 123:17 Cave3:8 5:25 139:3 caveats 14:7 cc 13:24 cc'd 107:16 center 65 :23 certain 13 :18 31:25 49:19 74:7 78:11 90:21 141:20 142:2 151:4 certainly 41 :23 56:13 76:16 77:5 Certified 1: 13 certify 163:7 166:9,14 chain 21:17 change 110:14 114:16,24 116:15 165:9 165:11,13,15 165:17,19 changed 27:11 118:18 150:14 changes 10:6 164:9 165:5 Chapter 1:4 78:10 character 158:18 characterize 143:21 charge 12:10 charged 75:12 chart 141 :13 Chicago 2: 11 circle 160:15 circumstance 13:17 Claim 123:11 claiming 76:17 77:4 claims 123:18 147:4 clarification 64:3 clarify 7:20 64:6 161:14,23 class 36:6,9,14 123:17,19 clear 10:8 23:4 43:1076:3 clearer 76:12 clearly 93:7 client 14:6 137:10 148:20 close61:9 closed 31: 17 39:5 closer 149:23 closing 119:10 130:10,15,19 collapsed 41 :3 collateral44:6 51:13 53:25 54:6 56:16 57:7,8 58:2,19 59:3,11 60:10 66:25 74:25 82:23 98:14,17 98:18 102:5 108:13,19,20 108:22 117:15 117:18,21,23 117:25 118:8,9 154:25 column 136:3,4 columns 73:20 come 19:16 24:12 25:4 41:4111:10 comfortable 148:3 160:5 coming25:3 27:23 comma42:5 command 21:17 commencement 26:3 commencing 1:12 comment 14:6 Comments 116:7 commercial22:2 31:18 152:10 152:24 commit 84: 19 137:22 commitment 120:8 Committee 4:4
c
c2:2 3:2 4:2 5:2 5:2 56:6,9 166:2,2 Cadwalader 29:22 30:3,7 30:13 41:9 calendar 44: 16 44:17,18,19,20 44:23 California 156:2 call10:14 12:21 22:24 53:18
APP-00451
173 6:10 commonly 37: 14 company 18:20 20:13,22 37:2 37:3 38:5 48:3 49:19 50:3,10 56:14,24 59:3 68:9,15,19 69:24 74:16 82:21 83:16,17 83:21 91:3,11 92:18 94:23 95:16 96:9 98:13 100:22 10 1:10 104: 3 105:14,23,25 111:9113:13 114:18,22 115:7 118:12 121:15,21 124:24 129:16 131:18 137:23 137:25 138:8,9 140:4 145:7,17 147:24 148:2,4 148:8 151:15 157:20 158:8 158:21 160:4 company's 106:4 108:18 110:5 113:4 117:22 118:8 136:8 compared 74:21 complete 48:18 120:10,16 161:11 completed 94:25 117:10 completing 94:22 completion 115:5 concept 23:22 concerning 22:5 condition 88:21 92:9 113:12 114:18 130:19 131:14 145:6 147:11 conditions 90:22 91:15 96:7 100:6,19 101:4 101:7 102:13 102:20 103:22 113:8,17 121:12 124:20 129:22,23 130:4,10,16 conduct 83: 16 conducted 84:21 84:23 conducting 116:22 117:4 conference 45:3 76:10 Confidential 81:887:2 94:16 confirmation 129:14 confused 26:11 connection 51:14 57:3 consent 17:4 52:21 117:20 consequences 95:11 consider 120:7 158:16 considered 112:13 considering 160:20 161:4 161:16 consist 96:22 consistent 44:6 consists 84: 10 consolidation 40:21 construct 105:6 construed 37:24 38:15 consummation 130:11 Contains 134:25 contemplate 103:18 126:9 contemplated 15:16 91:10,23 104:23 131:24 144:19 contemplates 96:3 100:20 contemplating 125:14 contemplation 105:11,21 context 10:6,7 13:10 20:25 21:6 22:18 24:10 25:13 30:17 32:4 36:9 38:10 41:5,12 46:14 46:20 120:20 137:14 138:2,4 146:21 147:8 continue 151:16 Continued 168:2 169:2 continues 102:12 continuum 126:12,22 contradictory 156:19 contrary 54:4 contribution 109:15,19 110:3,9 112:24 control62:9 cont'd 3:2 4:2 conversation 61:6 73:22 112:6 143:18 149:9,13 conversations 12:16 70:13 88:14 143:19 149:7,8,17 150:23 conversion 148:5 convert 49:17 145:3 146:18 converted 147:23 copied 14:16 18:19 copies 97:22 copy48:18 65:4 corner 43: 13 81:13,22 139:15 Corp 125:6 131:17 Corporate 8:22 9:4 167:10 Corporation 3:14 6:24 11:2 86:19 125:15 correct 10:14,19 11:2,3 14:20 14:25 17:6,14 18: 17,22 21 :14 21:2123:15,23 26:6 28:17 29:19 30:4,5 31:9 32:8,9 33:18,20 35:5 35:9 38:5,19 38:25 39:2,6 39:12 40:7,9 40:19 41:16,17 41:19 42:2,22 46:17 47:2,18 49:2,10,11 50:11 52:4 53:10,16 54:19 56:17 57:4 58:11,19 59:4 59:14,18 61:11 61:19,20 63:6 65:2 68:16,17 69:15,16 71:24 72:9 75:8,14 81:23 82:10,23 84:4,24 86:6 89:22 90:4,12 91:6,12 93:9 95:21 96:5,9 96:19 97:5 98:15,16,18,19 98:21,22 100:16,23 101:12 102:6 103:12,13,16 106:6 107:16 108:3,21,23 109:10,23 114:9 115:17 115:18 116:24 117:5 118:5,25 121:10,16,23 124:18 126:17 128:22 129:8 129:12,20 130:21 131:19 138:3 140:23 141:21 142:4 145:4,23 146:12,22 147:13 157:16 162:3,7,8 163:7 corrections 163:8 164:4,6 correctly 55: 14 84:4 96:24 counsel8:5 15:25 18:8 19:3 22:9 45:6 61:19 63:23 69:14 77:3 80:10,14 87:7 90:25 93:4 100:2,19 138:21 counsel's 7:19 counteroffer 119:6 COUNTY 166:4 couple 40:11 160:9,15 court 1:2 7:14 10:17 11:4 106:2 136:14 159:3 164:16 covenant 59:13

APP-00452
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covenants 55:12 55:23 59:18,19 cover 132:25 133:10 Craven 68:20 71:16 created 118:4 creditors 4:4 6:10 113:5 146:20 147:12 Crisp 3:6 6:11 6:11 149:21 150:3,4 160:6 167:5 CSFB 139:7 current 153:8 154:12 currently 30: 19 30:20 157:15 customary 130:15,18 D D2:12 3:6 167:2 Dallas 2:21 Dan6:17 DANIEL4:16 dark 114:4 122:3 dash 40:13,13 date 8:25 11:14 15:10,11 16:2 17:15 19:10,14 20:14 23:13 27:20 28:16,25 47:9 48:15 50:21 63:4 64:16 70:19 78:11 80:2,23 85:15 87:19 89:9 94:9 97:16 98:8 99:9 101:18 103:3 107:5 Ill :3 112:25 115:7 116:3 120:18 121:18 122:4,21 126:8 127:12 134:17 151:3 164:8 165:23 dated 14:18 20:5 28:12 65:2 98:6 99:14 101:23 106:24 107:25 110:13 110:23 127:9 127:22 130:25 131:25 134:14 168:14,23 169:4 dates 45:5 day 1: 11 17:8, 10 52:11 61:7,9 62:3 130:25 163:14 166:19 days 14: 18 15:9 19:10 48:10 52:22 60:23 61:24 66:15 91:8 108:2,5,8 151:5,24 164:14 day-to-day 22:22 30:25 DC2:5 deadline 115:15 deal8:8 30:24 32:2 33:12 39:11 52:20 76:15 100:3 142:20 144:2 144:25 147:23 147:25 dealing 137:15 Deal/Investor 65:24 debt36:25 49:18 66:25 95:16,17 109:14,18,20 140:2,8,22 141:4,8,15,19 144:9 145:3,7 145:16,17,20 145:25 146:9 146:14,18 147:2,6,23 148:6,11,18 149:15 150:17 150:18 151:12 151:16 152:18 156:16 158:24 159:25 debtor 76:8 93:8 93:8 148:10 161:3 debtors 1:6 2:4,9 6:4,7 10:12 12:14 21:2 50:4 160:14 Debtors-in-Po ... 2:4,10 debts 151: 17 Dechert 1: 10 3:20 6:25 7:4 13:2,12,23 23:634:12 68:23 80:11,14 81:782:2 86:25 87:21 94:15 98:6 99:20 101:21 107:13 116:11 116:15 122:16 123:5 127:24 168:20 decide 74:19 deciding 147:9 decision 51 :9 declaration 11:7 declined 76:13 deemed 123:14 164:16 default 150:24 151:3,4,7 defined 49:23 50:4 109:20 110:8 118:11 118:13 defines 58:10 definitely 71: 15 120:19 definition 112:23 definitive 131 :24 132:12 deflagging 74:8 74:9 Dennis 68:20 71:16 88:15 depended 13: 17 depending 30:24 deposed 7: 10 deposing 164: 13 deposition 1:9 5:16,18 8:16 8:22 9:4,11,25 12:23 48:20 75:5 77:8 163:6 164:3,11 164:14,15 166:11,12 167:10 describe 12:3 30:16 described 130:12 139:20 141:9 148:25 description 48:2 167:8 168:3 169:3 Designation 101:21 designees 121:7 desire 59:2 78:21 79:9 120:16 detailed 77: 19 150:22 determination 115:16,19 determine 123:16 determined 115:4 developing 137:15 dfliman@kaso ... 4:16 dial71: 13 dictate 146: 19 Diego 139:9 Dieterich 3 :18 6:20,20 different 8:16 39:9,13 100:12 111:17,22 112:12 142:19 143:13 144:2 differently 144:24 145:19 diligence 7 5: 13 115:5 DIP 23:24 24:18 44:5 117:19 direct 90: 17 140:14 directors 96:22 disconnect 157:14 discovery 45:3 76:6 136:14 discretion 103 :2 115:4 123:16 discuss 59:25 61:3 70:16 79:21 123:18 137:14 discussed 13: 14 22:9 24:7,10 24:11 66:11,23 67:2,7 69:20 77:15 78:8,20 79:19 91:23 93:9 137:3 138:18 discussing 123:25 124:7,9 discussion 23:2 29:3 45:19 57:14 60:5 61 :14' 17 64 :4 64:13 78:14 84:24 85:20 90:6 97:25 110:24 116:4 134:13 145:14 146:24 147:21 159:10,16 167:20
APP-00453
175
discussions 12:5 12:21 20:21 22:11,17,23 25:12,18,25 26:13,20,21,22 26:25 42:25 46:2,6 47:22 53:3,6,12 60:8 60:14 64:25 68:4,7 69:18 69:23 70:3 72:21 85:2,5,9 86:2,8,13 87:22 88:2,8 90:13 98:25 99:5 110:14 111:8,14 120:15 127:3 132:23 133:4 133:19,23 140:5,25 141:7 143:22 144:14 145:15 147:11 147:17 148:9 148:12 149:2 159:19,23 disruption 114:23 distribute 112:25 distributed 123:22 distribution 124:16 129:18 157:25 162:6 DISTRICT 1:2 document 9:21 11:17 19:2,24 26:8 27:3,6,9 28:4,16 48:23 54:19,21 55:8 55:17 57:21 62:5 64:11,19 65:5 66:7,12 66:23 75:19 77:17 80:5,9 80:16,18 81:2 81:6 82:12 86:23 87:6,12 87:14 89:16 90:5,18,21,22 91:10,21 94:4 94:20 95:24 96:3,12 97:11 98:24 100:4,18 101:13,19,20 107:9,18,22,25 108:11 109:16 110:11,15 111:2,11114:3 114:4,12 115:22 116:10 116:15,20 118:18 120:18 121:4 122:22 123:10,21 124:14,23 125:21 127:20 128:14,24 130:25 131:5,8 131:22 134:21 135:4,10,14,19 135:23 147:18 147:20 167:20 168:4,7,9,12 168:17 169:7 documentation 15:17 documents 9:13 9:19 24:22 25:6 26:8 29:7 87:24 88:5 127:16 128:8 158:19 159:2 doing 24:20 51:23 89:14 126:23 164:7 dollar 20:15 100:13 dollars 13 7: 17 dots 52:23 Doubletree 139:13 draft 81:8 86:25 87:21 90:20 94:15 96:7 98:6,23 100:7 101:21 110:19 116:11 121:10 122:16 123:5 125:2 128:22 130:25 132:14 168:20 drafts 99:20 duces 8:24 9:6 167:11 due 37:22 75:13 115:5 duly 5:3 166:12 duty45:17,24 46:3 D.C 139:14 E E 2:2,2 3:2,2,24 4:2,2 5:2,2 165:1 166:2,2 167:2,7 168:2 169:2 earlier 15: 16 19:23 93:25 110:23 111:3 113:18 127:21 127:22 130:21 140:11 141:9 151:20 160:16 161:21 early 40:6 85:6 86:15 ease 9:23 easier 33:4 140:10 economic 95: 19 144:25 152:10 education 29:19 effect 45:13 58:13 114:17 158:9 effective 103:3 112:24 115:7 efforts 157:18 Ehrlich 3: 16 6:22,22 8:11 13:6,16 25:8 25:23 39:7 121:2 122:11 133:21 136:10 137:18 138:12 either 24:20 30:6 152:24 153:10 Ellis 2:3,9 6:4,6 64:10 69:2 160:14 Elmore2:22 5:22 97:24 embodied 56:25 77:16 99:2 114:3 115:10 embodies 56:12 emerged 145: 18 emergence 137:24 emerging 106:18 emphasis 76:4 employed 5:10 employee 5:11 21:11 employees 9:16 21:25 ended 53:21 89:14 143:3,8 143:10 engaged 144:22 enter 10:18,25 22:18 48:4 79:13,16 159:6 entered 24:6 78:23 entering 12:18 enterprise 82:20 98:12 102:4 enthusiasm 7:25 entire 39:11 135:23 entirely 157:12 entirety 13:3 entities 41 :2 49:10 155:2 entitled 9:3 28:4 55:22 64:12,22 65:20 72:17 77:7 80:19 94:5 97:12 101:14,22 115:23 135:15 167:20 168:4,7 168:9,12,17 entity 152:7,23 153:17 equal109:8 110:3 equity 17:2 18:5 36:25 37:7 38:4,19,24,25 39:4,5 65:24 67:6 68:9 71:22 83:14,16 83:19,20 84:8 84:8 89:5,8,20 89:21 92:20 93:15 95:15 96:3,4 100:5,5 100:13 102:9,9 102:19,24 103:3,10,19 105:8,10 106:16 109:5,9 109:15,19 110:3,8 112:16 112:23 113:2 113:25 118:17 119:17,23,24 121:5 123:17 124:16 125:8 125:16,19 129:16,19 131:10,11 138:5 145:3 146:18 147:23 148:6 154:25 157:19,25 158:24 160:4 161:22 162:2,6 errata 164:5,7 164:10,13 Especially 19:5 ESQ2:6,12,17 2:22 3:6,11,16 3:18,23,24 4:6 4:11,16
APP-00454
176
essentially 31 :24 49:18 estate 3:4 22:2 22:21 30:2 31:18 41:9 114:24 150:6 et 1:5 event 53:13 59:10,12 118:11 162:6 events 58:10 everybody 121:20 ex 73:25 exact 30:24 47:9 73:21 151:3 exactly 36:11 48:9 85:14 144:11 examination 1:10 5:5 138:24 150:2 160:11 examined 5:3 exchange 120:9 160:3 exchanged 15: 17 24:23 exclusively 50:10 execute 91 :4 96:9 100:22 10 1:10 104: 3 121:15 124:25 131:18 executed 18: 14 48:19 64:6 113:14 execution 49:22 129:23,25 131:23 exercised 62:10 exhibit 8:20,21 9:3 11:11,12 11:16 13:20 22:13 27:18 28:4,8,15,17 28:20,22 29:5 32:10 43:5 48:13,17 50:17 50:19,23 54:13 56:21 58:23 59:21 64:11,18 65:7,12,15 79:22 80:4,8 80:18,25 81:19 82:2,8,16 83:12 86:20 87:15,19 88:18 89:17 90:8 93:17 94:3,4 94:11 95:24 96:2 97:11,18 98:3 101:13,20 106:24 107:7 107:12 112:15 112:19,22 115:22 116:5 116:21 117:15 122:16,23 123:22 127:9 127:14 134:14 134:19 140:11 167:9,12,13,15 167:17,18,20 167:23 168:4,7 168:9,12,14,17 168:20,23 169:4 exhibits 63 :20 63:21 99:19 exist 132:7 existing 148:6 expanded 87:17 experience 30:6 41:6 explain 73:3 119:3 exposure 20:23 45:16,23 136:9 137:4 extent57:10 76:17 133:17 e-mail 13:22 14:2,6,11,14 14:18 15:6 19:2 22:8,13 22:14,24 23:5 51:6,11 52:5,6 52:8 53:4,15 53:19 54:7 56:20 57:7,17 58:2,17,21 60:6,11,20 61:18 106:24 107:13 127:9 127:22,22,25 128:5,9 132:20 132:25 133:11 134:14 135:3,5 135:10,24 168:14,23 169:4 e-mails 11:12 50:19 51:3 127:21 135:2 167:12,18 F F 166:2 face 154:6 Facility 117:19 fact49:21 54:10 66:23 70:20,22 95:4 106:2 116:23 132:7 Faerstein 4: 11 6: 14' 14 64:9 fail164:15 failure 114:7 118:12 122:3 fairly61:8,9 falls 44:25 45:8 familiar 54: 18 54:20,21 139:18 150:9 156:3,7 familiarity 139:24 far28:19 69:13 76:25 99:20 144:12 Farr4:9 6:15 fault 23:10 favor 36:15 fee 84:24 85:4,21 86:5 90:2 92:6 92:18,22 93:14 96:4 103:11,16 fees 18:8 fiduciary 45: 17 45:20,23 46:3 46:8,11,19 Fifteenth 2:5 figure 14 7:24 148:22 file78:9,16 filed 8:15 108:4 108:6 159:2 filing 12:17 14:19 27:13 52:10 53:9,13 53:16 61:8 78:15,24 79:10 91:9 108:2 filings 106:3 financial 4 7: 13 114:21,24 financing 23:24 find 91:22 148:24 fine 56:10 155:9 finish 62:14 76:4 finished 104: 18 firm 5:20 13:3,7 13:7,8,12 110:12,12 128:22,25 150:5 first 7:9 12:13 12:20 15:8 28:10 39:20 41:20 43:4,23 44:5,7 45:22 46:13,18 52:22 60:23 61:24 66:6,10 73:18 82:14 85:10,12 85:13,20 88:18 99:7,9 101:6 102:2 104:19 104:20 107:12 110:19 112:9 114:4 116:6 117:17 122:2 123:4 127:20 129:3 134:25 135:3,4 141:11 150:16 Fitts 67:14 five4:14 6:19 23:24 120:8 five-minute 63:11 fixed 110:6 141:16 142:23 flag 74:4 151:6 Fliman 4:16 6:17,17 97:21 floating 82:22 98:14,17 102:5 108:20 117:19 11 7:24 141 :17 142:24 150:7 155:7,11 Floor 3:5 flow 24:18 73:23 flows77:19 108:16 fluid 23:2,2 focus 76:6 Foerster 4:3 6:9 following 14:5 74:7,9 103:2 130:4,17 165:5 165:6 follows 5 :4 113 :2 follow-up 61:18 footnote 82:22 82:25 93:18 94:19,20 116:23,24,25 117:3 foreclosure 30:23 foregoing 163:5 forgive 160:2 form 13:16 16:10 25:9,24 26:18 27:5
APP-00455
177
39:7 91:18 104:8,24 113:19 121:2 125:6 133:21 136:10 138:12 146:23 158:16 159:5 forma 65:21 66:5 96:14 forth 55:13 91:5 143:15 158:15 166:11 forward 77: 16 144:18 four 19:6 52:22 96:25 franchise 74:3 74:10 78:18 frankly 44:25 FRE 81:9 87:2 94:17 Freres 75:4 Frey21:10 33:2 67:12 71:12 Frey's 33:6 Friedman 4: 13 6:18 front 80:6 94:13 fulll45:22 146:11 fully 152:15,18 153:24 fund 120:9 157:5 funds 24:17 137:23 further 5: 15 149:19 166:14 future 157:23 G Galante 4:6 6:8 6:8 Gallagher 4:9 6:15 Garden 139:10 GARRISON 3:13 general 4 7:25 48:2 123:10,18 158:17,17,24 generally 17:9 23:2261:21 150:10 151:17 159:22 genesis 73:3 getting 9:23 25:21 26:11 63:19 85:21 89:25 161:22 gift 123:17 give 32:15 49:3 50:16 60:14 106:21 134:12 gives 52:10 59:24 giving 51:12 59:25 Glatt 13:24 69:10,10 128:2 135:6 Gleason 33:8,10 67:12 71:12 go 5:16 8:7 10:9 13:20 19:23 33:13 39:3,16 43:4 46:22 48:21 55:16 65:14 72:3 75:12 81:12,19 82:6,14 83:11 83:23 89:16,17 95:14 96:11 102:8 114:4,11 116:11 117:14 123:9 124:13 128:8 130:9 131:7,11,21 140:10 144:18 145:12 160:25 goal49: 15,17,21 79:12,15 146:4 goes 40:11 going7:6,7 9:24 12:22 18:19 36:21 38:3,18 39:3 48:2 56:20 58:16 59:21 63:20 65:7 68:14 70:21 77:16,19 77:21 92:17 97:23 99:15 103:19 109:4 110:25 111:10 Ill: 16,21 119:4 121:3 122:2 126:24 129:6,7,17 130:6 131:11 133:25 136:21 138:8 150:19 151:15 158:14 good 37:18 119:7 122:9,13 139:2 gotten 14 7:20 Gottesman 3: 11 5:24,24 138:25 139:3 144:5,8 149:19 167:5 Gould 2:6 6:3,3 64:3,5 160:9 160:12,13 161:10,13 162:9 167:6 governance 96:21 great 63:14 Greer 3:24 6:25 6:25 13:23 107:13 grounds 76:12 group22:21 31:16 33:11 127:24 139:5 Grove 139:10 guaranty 18: 10 18:12,13,21 19:8,14,17 20:2,5,9,14 23:21 24:5,14 25:3,22 26:2 26:22,23 27:2 27:19 28:5,11 28:12,20 110:4 120:17,22 130:20 135:6 136:9 137:5,16 138:16 167:14 guess 34:19 43:20 76:22 140:17 guessing 34:21 Guest 139:13 H H 5:2,2 167:7 168:2 169:2 half37:7 68:8 113:2,25 126:5 129:16 132:21 hand 140:6 141:2 166:19 handed 9:2 11:15 28:3 29:4 48:16 50:22 54:16 64:17 72:23 80:3,24 94:10 97: 17 10 1:19 116:5 122:22 127:13 134:18 135:23 handing 107:6 handled 8:7 handout 47:16 71:2,5 handwriting 32:21 43:16 handwritten 28:22 32:12 167:15 happening 8:8 24:16 happens 8:2 76:20 156:21 hard44:8 Haynes 2:14,20 5:21 header 116:16 hear 45:18 51:22 heard 41:15 46:13 hearing 40:6 held 1:10 86:17 help 144:22 hereinbefore 166:11 hereunto 166: 18 Hewes 67:24 68:2,5 135:6 135:10 highest 97:6 highlight 112:7 Hilton 155:25 hired 95:7 hold 105:9 153:4 holder 83: 19 holders 148: 11 holds 152:6 Homewood 139:16 honor 77:7 hook52:10 59:24 60:2 Hopefully 7:3 hospitality 32:5 hotel30:21,22 31:4 hotels 73: 19 74:13,15,21 78:19 140:7,8 154:16,20 157:6 hour 122:13
I
idea20:18 37:18 40:22 66:24 ideas 74:14 identical 100:7 identification 8:25 11:14 27:20 28:25 48:14 50:21 64:16 80:2,23 94:9 97:16 10 1: 18 107: 5 116:3 122:21 127:12 134:17
APP-00456
178 identified 3 5: 14 69:14 83:14 identify 33 :3 Illinois 2:11 illustrative 65:20 66:5 72:17 73:17,18 74:16,22 79:22 80:19 83:6 93:21 94:5 97:12 98:7 101:14,22 106:25 115:23 122:18 123:6 167:23 168:5,7 168:10,12,15 168:18,20 imagine 34:5 116:14 125:12 immediate 142:13,15 immediately 118:10 impaired 36:5,8 123:19 impairment 42:8,9 152:25 153:11,15 154:3 impediment 40:3 imperative 164:12 implemented 138:10 important 50:2 50:3 improper 136:12,13 improvement 23:25 120:9 improvements 20:5 27:19 28:5,12 167:14 inappropriate 57:12 inclined 52:9 54:8 60:12,16 included 54:21 83:5 93:20 includes 59:13 including 13:25 118:12 130:16 incorporates 91:5 indicated 143:25 154:2 157:3 indicates 158:4 individuals 135:12 informative 68:12 initially 96:22 142:6 initials 34:23 128:21 Inn 139:8,10,15 Innkeepers 1:5 10:11 12:17 14:19,24 15:3 15:10 20:3 21:7 26:16 33:17 34:14,17 34:22 35:2 43:7,23 44:14 45:16,23 46:3 46:4,7 47:4,7 47:13,17,22,23 54:10 61:8,10 64:19 71:14 72:4,22 73:13 78:4,10,21 79:8,13 88:3,8 88:10 108:3,4 108:5 112:5,25 123:23 129:19 131:3 133:14 134:22 135:16 137:3,9,13 138:18 139:12 140:6 141:2 142:11 143:16 149:3 150:17 150:18,25 151:11,14 153:2 158:7,13 159:11,16,19 160:19 161:4 161:16 INN MIDOOO ... 134:16 169:5 INN MIDOOO ... 134:16 169:5 INN MIDOOO ... 64:14 167:21 INN MIDOOO ... 64:15 167:22 input 90:17 instances 31 :25 instruct 16:4 136:21 instruction 76:22 93:11,12 INSTRUCT!... 164:1 integrated 27:2 intended 71:23 72:7 intending 106:14 125:25 intention 63:8 84:20 89:7 93:13 157:22 interest 15 2: 10 154:25 159:15 interested 166:17 interim 53:25 54:5 144:14 interject 8:5 internal 144: 16 153:16 internally 153:25 interpretation 35:19 interrogator 150:13 introduction 101:6 invest 148:2 investigation 142:17 investment 3: 14 4:9 6:16,24 11:2 75:6 86:19 125:6,14 131:17 148:6 investments 30:21,22 31:5 investor 71:24 72:7,11 involve 133:16 involved 11 :23 12:4,13 18:13 25:11,17,25 26:15,17,20 30:7,10,25 47:21 55:3 150:16 151:9 involvement 12:3 151:8 involves 103: 10 103:14 in-house 31 :22 69:7,14 irrelevant 119:18 issuance 83 :21 issue 18:12 42:23 45:16 46:19 52:24 61:2,25 76:16 78:8 issues 7:17 14:4 123:19 147:25 item 38:10 items 35:8 88:15 iterations 24:22 158:14 iterative 95:18 J J3:16,23 163:2 Jeff6:3,5 67:14 160:13 JEFFREY2:6 2:12 jeffrey. pawlitz ... 2:12 Jennifer 1:12 162:11 166:6 166:22 jgould@kirkl... 2:7 Jim 86:14 job 1:15 30:16 31:11 join 136:19 Joseph 13:24 14:3 135:5 judge 45:2,9 74:19 76:3,10 77:11 judgment 76:8 July 52:2,3 53:7 53:10 58:17 108:4 131:25 132:6 June 20:6 28:13 44:12 80:20 87:20,20 94:6 97:13 98:8,23 99:14 101:15 101:23 107:2 107:25 110:23 110:24 Ill :4 115:24 117:10 117:12 121:19 121:19 122:19 123:7 126:13 126:19 168:5,8 168:10,13,15 168:18,21 junior 33:10 154:24 156:6 Justin 67:24 71:18 K Kasowitz 4: 13 6:17 keep 44:18 Kevin 3:23 7:4 kevin.obrien ... 3:23 Kilpatrick 3:3 6:12 150:5 kind 61:5 70:24 Kirkland 2:3,9
APP-00457
179
6:3,6 64:10 69:2 127:25 160:14 Kirkland's 71:9 knew41:7 know7:3,19 11:21 13:12 15:24 17:11 20:12 22:21,25 23:2 26:9 28:19 30:25 31:19,23,25 35:4 36:8 37:16 40:20 41:7,20,22 42:10,15 45:4 45:7,8 46:11 48:4 49:18 53:20 54:2 60:3 62:8 67:8 68:2,10,11 69:10 70:6,24 73:23,24 74:2 75:18,20 84:16 86:16 89:15 90:13,20 91:24 93:5 95:12,13 99:17 104:11 104:15,16,16 105:17 110:18 112:2 116:7,17 117:9 119:12 119:19,21 123:21,24 124:10,12 136:23 138:14 138:17 139:25 141:13,18,24 142:6,17 143:21 149:11 154:4 159:24 160:2 knowledge 46:19 153:18 160:19 161:3,5 161:15 Kornberg 127:23 L L5:2,2 laid 147:14 Lamco 5:11,12 language 18:9 23:2128:11 113:18 115:11 116:21 118:3 large 31: 16, 18 LaSalle 2:10 Lascher 1:9 5:8 5:9 6:1 7:1,6 8:1,13 9:1,2 10:1 11:1,15 11:23 12:1 13:1 14:1 15:1 16:1 17:1 18:1 19:120:1 21:1 22: 1 23 :1 24: 1 25:126:1 27:1 28:129:1,4,18 30:1 31:1 32:1 33:1 34:1 35:1 35:23 36:1 37:1 38:1 39:1 40:141:1 42:1 43:1 44:1 45:1 46:147:1 48:1 48:16 49:1 50:1 51:1 52:1 53:1 54:1 55:1 56:1 57:1 58:1 59:1 60:1 61:1 62:1 63:1,17 64:1,17 65:1 66:1 67:1 68:1 69:1 70:1 71:1 72:1 73:1 74:1 75:1 76:1 77:1 78:1 79:1 80:1 81:1 82:1 83:1 84:1 85:1 86:1 87:1 88:1 89:1 90:1 91:1 92:1 93:1 94:1 95:1 96:1 97:1 98:1 99:1 100:1 101:1 102:1 103:1 104:1 105:1 106:1 107:1 108:1 109:1 110:1 111:1112:1 113:1 114:1 115:1 116:1 117:1 118:1 119:1 120:1 121:1 122:1 123:1 124:1 125:1 126:1 127:1,13 128:1 129:1 130:1 131:1 132:1 133:1 134:1 135:1 136:1 137:1 138:1 139:1 140:1 141:1 142:1 143:1 144:1 145:1 146:1 147:1 148:1 149:1 150:1,4 151:1 152:1 153:1 154:1 155:1 156:1 157:1 158:1 159:1 160:1,7 160:13 161:1 162:1 163:4,11 166:10 167:4 Lascher-18:21 167:9 Lascher-10 94:4 168:7 Lascher-11 97:11 168:9 Lascher-12 101:13 168:12 Lascher-13 106:24 168:14 Lascher-14 115:22 168:17 Lascher-15 122:16 168:20 Lascher-16 127:9 168:23 Lascher-17 134:14 169:4 Lascher-2 11:12 167:12 Lascher-3 27:18 167:13 Lascher-4 28:22 167:15 Lascher-5 48: 13 167:17 Lascher-6 50:19 167:18 Lascher-7 64: 11 167:20 Lascher-8 79:22 167:23 Lascher-9 80: 18 168:4 Lastly 8:4 law 5:20 13:2,3,6 13:7,8,12 46:10,12 110:12,12 128:22 Lawrence 3: 11 5:24 139:3 lawrence.gotte... 3:11 lawyer 41 :21 69:7 lawyers 7:7 34:11 68:21,23 127:24 lay 106:4 Lazard 75:4,5,9 75:9,12 76:25 80:17 82:5 95:7 144:22 154:19,20 155:22 LB35:11 39:22 leads 84:23 learn41:4,11 151:14 learned 41:10 leave 93:17 leaving 30:3 led 25:13 95:20 151:7 left 147:24 left-hand 43: 13 81:13,22 legal57:11,19 114:21 Lehman3:21 5:12 7:2 8:23 9:5,8, 13,17,24 9:24 10:8,11 10:17 11:17,24 12:8 13:11 14:4,24 15:24 17:4 19:7,18 19:20 20:2 21:4,8 22:2,9 24:4,15 25:14 29:8 30:4,7,13 30:15,17 31:11 31:13,15 32:7 34:2,4,8 36:22 48:24 49:13 50:2,3,9 51:2 51:14 58:18 59:2 61:10 64:12,25 65:24 67:5,11 71:10 73:19 74:13,14 75:7,12 76:8 77:21 78:25 79:12 80:4,10 80:12,25 83:15 89:4 91:3,3,11 91:19,24 92:18 92:19,20,21 93 : 13 94: 11 ,21 95:4,9 96:8,25 97:18 98:18 99:22 100:21 100:21 101:9,9 102:25 103:14 103:18 104:2,2 104:8,25 105:12,21 106:3,10,13 107:9 108:25 109:10111:18 112:16 113:3
APP-00458
180
113:13,13,20 115:4,8,16,19 116:22 117:4,9 117:20,21 119:9 121:6,14 121:14,21,23 122:25 123:15 124:17,24,24 125:7 126:2 127:4 129:7,14 129:20 130:3 130:14 131:2 131:12,16,16 131:17 132:2 132:17 133:25 140:6 141:2 142:12,20,25 143:16,25 144:16 145:20 146:8 147:4,8 147:22 148:5 148:25 150:24 151:12 152:5,6 152:7,9,15,23 152:24 153:17 154:6,21 155:3 155:14 157:18 158:5,15 159:12,16 167:10,20 Lehman's 10:16 10:18,24 13:7 13:8 17:7,13 17:17 23:13 31:4 49:15 56:17 67:17 80:13 89:7 91:9 92:10 104:17 106:7 108:18,22 110:12 117:23 118:9 124:21 145:2 146:4,16 150:18 157:22 Lehman-AIC 132:2 Lehman-ALI 152:6,8,11
162:5 Lehman/AIC 128:15 Lehman/loves ... 71:23 LEH-ALI 11:13 11:13 28:23,24 50:20 79:24,25 80:21,22 94:7 94: 8 97: 14' 15 101:16,17 107:3,4 115:25 116:2 122:20 122:20 167:12 167:12,15,16 167:19,24,24 168:6,6,8,8, 11 168:11,13,13 168:16,16,19 168:19,21,22 Len 8:11 27:22 57:10 75:21 Lenard2:17 5:19 Lenard.parki... 2:18 lender 24: 13 152:9,11 lenders 44:6 letter 14:2 45: 13 letting 53:24 let's 13:20 15:6 18:25 19:23 35:7 51:5 58:3 73:17 85:10 94:19 154:5 155:6,24 161:14 level26: 11 147:2 levels 95:16 liability 18:21 25:22 120:10 liable 138:15 likewise 100:4 121:4 limitation 130:16 limited 108: 19
117:23 limiting 25:3 line 16:24 35:7 37:4 38:10 39:20 43:24 44:5 60:20 73:18 165:8 169:7 lines 19:5,6 28:10 76:14 88:20 listen 161:8 lists130:18 litigation 136:14 little 41:10 68:10 100:12 149:23 live51:11 146:8 Livenote 1: 13 LLC3:9 6:2 139:4 LLP 1:10 2:3,9 2:14,20 3:3,8 3:13,20 4:3,9 4:13 5:25 LNR3:9 5:25 139:4 157:6 loan2:15,20 5:22 31:16 41:9 150:8,9 150:25 152:5 152:11,15,25 153:2,11,22 154:7,13,15,24 155:3,25 156:3 156:6,10,15,25 159:9,12 loans6:13 31:18 139:7,12,19 148:16,21 150:9 157:2,5 long 19:9 24:16 31:3 122:7,8 137:23 look 15:6 18:25 24:24 28:8,15 29:1433:5 35:7 37:2,3 44:2 54:13,23
55:7 58:3 59:9 68:9 71:20 72:14 77:20 81:21 86:20 88:17 93:18 95:23 100:5,12 101:7 102: 17 103:21,22 108:10 112:17 118:20 125:21 128:11 129:2 136:2,3 looked 20:11 58:8 83:9 99:20 137:20 137:20 looking32:10 50:17 123:10 looks 36:19 37:1143:3 44:4 48:22 49:6 51:6 105:6 losing 74:4 loss 74:5 153:12 153:22 losses 153:2 lost 151:5 lot30:22 124:10 lower 135:4 L.P4:9 6:16 M M2:6,17 5:2 21:11,18,19 magnitude 137:16 maintained 31:25 major40:3 making 73:24 119:9 management 113:4 Marc34:16 124: 10 13 5: 5 mark2:22 5:21 8:20 11:10
27:17 40:14 51:17 68:20 69:25 71:15,15 88:9,14,15 90:14 112:7 135:11 marked 8:24 9:3 11:14,16 27:19 28:3,16,24 29:5 46:22 48:14,17 50:20 50:22 64:15,18 79:25 80:3,5 80:22,24 94:8 94:10,15 97:15 97:17 98:3 101:17,20 107:4,6 116:2 116:5 122:21 122:22 127:11 127:14 128:14 134:17,18 140:10 market 157:24 158:6 markets 114:25 market's 157:19 mark.elmore ... 2:23 marriage 166: 16 Marriott 39:24 39:25 78:17 79:2,4 149:7 Marsal21 :20,22 21:25 22:10,11 22:17 Marsale 67:13 67:14 material55:10 114:17,23,23 Materiality 18:6 Materials 64: 13 64:25 167:21 matter 8:18 74:17 166:17 matters 74:19 maturity 159:15 MB34:18,23

APP-00459
181 35:9 40:4 mcrisp@Kilp ... 3:7 mean 13:7 20:15 21:15,16 22:12 23:9 26:7 38:9 42:6 44:8 50:7 51:19 52:13 57:12 59:9 62:14,25 68:7 70:12 72:25 73:6,21 78:25 79:12 92:19,25 93:16 99:7,23 100:2 105:2,15 111:4,19 119:14 120:19 126:18 141:10 141:19 142:15 143:3,18,21 144:21 145:15 145:24 146:11 146:24 147:14 147:19 148:7 149:11 150:22 153:3,20,23 157:11 158:20 159:7 meaning 24: 13 24:15 means 37:17,19 37:20 40:23 42:11 119:18 meant 36:9,24 52:19 60:2,4 95:12 113:22 113:24 119:20 119:22 mechanism 154:2 meet 118:12 meeting 33:17 33:22 34:7,9 34:12 35:2 36:18 41:24 43:2,7 44:12 45:5,15 47:4,6 47:11,12,17,20 47:24 48:7,11 65:9 66:15,18 66:20 67:7,11 67:15,17 68:14 68:21,24 69:3 69:5,8,15,17 69:18,20,22,23 70:3,4,1 0,11 70:14,19,22,23 71:5,7,11 72:3 72:24 74:13 75:2,10 77:12 77:14 78:2,5,9 78:20,23 79:4 79:5,10,20 141:11,12 151:21,23,24 152:3,14,16 meetings 38:23 members21:24 96:23 memorialized 149:4 memorializing 66:12 mention 79:4 138:7 mentioned 37:10 79:15 met 49:20 69:12 method 18:20 mezz 6:13 150:8 150:8 155:7,12 156:14 mezzanine 154:24 156:6 156:10,25 157:2 Michael I :9 3:6 5:8 35:17 163:4,11 166:10 167:4 mid31:15 158:25 middle 21:15 Midland 2:15,20 5:22 9:20 19:17 24:13 40:3 52:10 59:24 60:2 136:15 Midland's 40:12 Mike6:11150:4 Mile4:14 6:19 23:24 milestones 49:20 118:13 million 82:21,23 84:9,10,12 98:13,15 109:9 109:13,18 110:4 119:10 120:8 137:2 140:2 143:4 145:25 146:13 154:7,8 155:25 156:6,16,22 157:5 mind 16:8 19:14 74:21,24 minute 133:3 154:5 minutes 56:14 58:9,17 122:9 Mission 139:8 ML-CFC 139:11 modifying 159:12 Moelis 4 7: 13, 17 64:14 65:2 72:22 74:22 77:18 83:3,8 93:20,23 96:18 98:20 141:14 142:8 143:10 145:12 167:21 moment 11:18 29:11 55:25 102:14 106:21 118:19 140:20 Monday 53:9 money 119:15 119:16 months 153:6 morning 160:18 Morrison 4:3 6:9 motion 52:11 motions 11:8 move23:4 149:22 moved 157:4 moving 54:2 130:23 multiple 79:20 Murphy49:9 68:20 71:16 88:16 135:11 mutuall5:8 17:23,25 N N2:2 3:2 4:2 167:2 name5:7,19 62:5 67:25 139:2 150:4 named 152:8 Nancy 21:10,17 22:20 48:24 67:12 71:13 nature 78: 13 near 158:2 necessarily 19:22 necessary 164:4 need 7:13 35:11 36:22 78:9 125:22 needed 73 :25 78:16 146:18 negotiate 49:12 negotiated 21 :4 negotiating 21:8 27:3 38:17 49:16 55:3 126:15 147:9 negotiation 11:24 105:16 139:19 143:14 143:17 146:17 negotiations 12:7,11,14 13:10 14:23 15:2,4 16:9 18:18 21:2,7 21:14,16 22:5 25:5,13 26:4 26:16 41:5,13 41:14 46:16,20 72:10 138:3,5 143:22 146:5 neither 116:19 never 50:6,13,13 69:11135:24 147:19,20 160:4,22 new 1:2,11,11,13 2:16,16 3:5,5 3:10,10,15,15 3:22,22 4:5,5 4:10,10,15,15 16:25 36:25 37:9,16,24 38:12 41:12 42:20,24 83:19 83:1992:7 97:2,4 102:9,9 102:19,23 103:3 109:5,18 109:20 112:25 118:17 121:9 124: 16 13 1:10 131:11 166:3,4 166:8 nodding 63:24 nominated 96:25 97:2 nonconsolidati ... 41:8 normall43:15 North2:10 Nos 11:13 28:23 64:14 79:24 80:21 94:7 97: 14 10 1:16 107:3 115:25 122:19 127:10 134:15 167:12 167:15,21,24 168:5,8,10,13 168:16,18,21
APP-00460
182
168:23 169:5 Notary 1:13 163:17 166:7 note 136:11 notebook 4 7: 10 noted 162:12 164:10 notes 28:23 32:13 33:6 36:10,19 37:11 40:9 41:24 46:25 63:19 65:11 87:21 160:21 167:15 notice 8:21 9:4 136:13 167:9 notices 8: 16 number 13:24 14:8 20:19,23 33:3,14 36:21 37:9 39:17 49:651:2 64:18 65:7,8 65:15 75:22,24 78:19 80:4,25 81:19 82:2,8,9 83:11,12 86:21 87:15,16,19 90:9 93:17,18 94:11,20,20 97:18 98:4 101:20 107:16 116:6 129:2,18 130:24 131:8 134:23 136:7 137:2,3,14,19 138:15 142:21 143:2,10,16,20 144:3' 13' 17 151:5 numbered 46:23 numbers 11:17 29:8 32:16,18 64:20 67:4 72:23 73:4,7,8 73: 15' 17' 19 80:6 81:2,14 81:21 93:24 94:12 95:16 96:17 97:19 98:20,21 102:3 107:10 123:2 127:17,18 128:12 135:15 137:7 N.W2:5
0 oath 150:13 object 13:16 16:10,14 19:7 19:18,21 20:3 24:16 26:18 27:5 36:2,2 43:15 44:10 57:18 121:2 146:23 159:5 objection 15:20 16:22 25:8,23 27:15 37:5 38:6,20 39:7 43:8 52:17 56:19 57:5,23 59:8,15 62:24 72:12 90:19 133:21 136:10 136:11,20 137:18 138:12 objections 8:6 8:14,17,17 obligation 20:12 57:2 92:10 obligations 20:4 51:14 62:21 110:5 115:6 120:12 124:21 Ocam po-Guz ... 1:12 166:6,22 occurred 53:9 97:9 occurrence 114:16 118:10 occurs 19:9 162:7 odd 137:2 offer 13:15
119:3,5 offering 83:15 83:17 84:3,9 89:4,21,21 96:3 100:5,5 100:13 103:10 offhand 141:25 153:7 office67:18 71:9 offices 1:10 officially 151 :2 Oh 17:25 154:10 okay 8:2,3 10:2 10:3,9,10 11:22 13:21 17:25 18:25 19:4 23:11 24:9 28:9 29:17 32:18,24 33:15 38:14 39:18 42:3 43:6 44:5 46:24 48:23 50:15 51:25 54:15 55:2,9 55:21 56:5,11 58:7,15,25 62:16,22 64:21 65:11,16 66:17 66:19 70:15 72:16 74:9 75:4,5 76:15 76:21 81:20 82:6,17 83:13 83:24 84:22 86:20,22 87:18 88:7,17 89:2 89:11,19 95:8 95:25 96:13 99:19 102:21 102:22,24 107:21 108:12 112:18,21 114:13 116:20 117:16 119:7 120:4,6 121:19 124:13,15 127:2,8 128:10
128:20 131:9 131:14 134:11 136:2,16 140:13,19 142:2,10 145:10 149:18 150:15 152:2 152:13,23 155:7 156:11 156:12 160:17 once 90:14 94:24 ones96:18 ongoing 14:23 22:23 open 14:4 operation 114:22 opinion57:11,19 opinions 41:8 opposed 142:11 143:7 147:17 option 103:6,7 119:9,12,20 options 102:10 102:19,24 103:4 order24:18 63:22 64:7 144: 18 146: 17 ordered 45:9 organizational 141:13 organized 82:20 original154:6,9 164:12 originated 31: 17 origination 31:16 outcome 146:9 166:17 outlined 82: 19 outset 145:11 outside 45:2,8 75:25 136:20 outstanding 66:25 141:20 145:17 154:13 out-of-court
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APP-00461
183
129:24 Parent 65:23 p 71:22 P2:2,2 3:2,2,11 Parkins2:17 5:6 3:18 4:2,2 5:19,20 7:5 page 13:23 29:15 8:19 11:10 33:13,16 34:19 13:817:20 39:16 43:4,13 27:17,23 29:2 46:22 47:3 29:16 30:20 48:21 49:4,6,8 43:9,18 44:22 49:10 51:6 45:4,12 49:5 55:7,16,19,20 50:16 57:15 65:14,17 66:5 61:19 63:11,16 71:20 72:14,17 76:15 77:3,10 73:4 81:7,13 85:13 94:3 81:22 82:14 97:23 98:2 83:11 86:24 99:25 100:10 89:17 91:15 106:21111:5 96:11 98:11 112:20 122:6,8 101:2,8 102:2 122:12 126:20 102:12 103:7 129:11 133:6,9 107:12 108:10 133:15 134:12 108:15,16 136:16 137:8 109:4,25,25 138:20 167:4 112:9,17 114:2 part 18:14,18 114:5,11,15 22:22 26:10 116:6,11 117:2 27:2 38:11 117:14 121:3,3 51:556:22 122:2 123:5,9 61:3 65:18 124:13 127:20 73:10 86:24 129:3,17 130:9 88:13 89:3 130:24 131:7 95:6,18 133:25 131:21 134:25 135:4,9 139:19 135:14,22 139:25 141:12 140:17 163:9 144:18,21,22 165:8 167:3,8 146:16 148:7 168:3 169:3,7 148:11 154:20 pages 32:13 participating 95:23 102:8 133:16 128:11 163:6 particular 24:24 paid23:25 92:21 77:12 142:21 paper 152:10,24 161:2 par36:15 particulars paragraph 60:15 19:25 24:10 parties 15: 17 82:18 84:23 24:23 49:22 88:18 98:11 78:23 79:3,10 102:3 117:17 166:15
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APP-00462
184 136:8 146:16 155:19 positions 153:5 possibly 48:4 post 103:3 137:24 157:20 157:22 potentially 12:18 practice 46: 10 46:12 precedent 90:23 91:15 92:10 96:8 100:6,20 101 :4' 7 102: 13 102:20 103:23 113:8,12,17 121:12 124:20 129:22 131:14 Preliminary 81:886:25 94:16 premium 119:9 119:13,20 preparation 87:18 124:2 prepare 9:10 87:11 prepared 80:10 80:12,13,16 82:2,5 87:6,8 87:14,22 90:6 98:24 99:21 100:19 105:12 110:12,16 111:17,22 present 11 :4 47:14 63:8 presentation 65:18 70:17,21 70:24 73:11,14 75:14 83:3,8 93:20,24 141:14 142:9 145:13 presentations 96:18 presented 37:25 38:12 74:16,22 75:19 116:10 presently 5: 10 pretty 54: 18 70:5,9 100:17 158:25 previous 112:15 117:7 Previously 159:18 price 84:9,20 95:14 118:18 118:22,24 119:4 primary 20:4 83:21,22 84:3 84:13 principall60:3 prior31:10 32:2 47:20,24 48:11 66:18,20 67:7 67:10,17 68:14 69:17,20,22 70:3,10,11,14 70:18,23 78:24 79:10 96:2 100:7 110:11 110:16,22 118:4,19 121:9 132:6 139:21 151:21,24 152:14,16 159:20 privilege 75:23 76:17 77:4,5 pro 65:20 66:5 96:14 probably 68:10 88:6 110:17 140:9 problem 77:10 137:16 proceed 142:14 144:2 145:21 146:2 proceedings 76:2,7 process 95: 19 139:20 141:8 161:25 141 :19 144: 18 provided 23:24 148:25 70:17 84:6 produce 44:20 109:22 117:22 76:13 provides 90:25 produced 9:20 93:19 96:8 127:16 102:25 109:7 product 75:24 109:12 118:8 76:18 77:4 119: 8 124: 17 production 29:8 124:23 128:25 75:19 80:5 129:13,19 81:2 94:12 providing 85:22 97:19 122:25 89:24 117:19 134:22 125:18 project 23:25 provision 54: 11 64:12,22 56:12 104:23 167:20 118:17 158:3 projections provisions 96:21 73:23 102:23 prologue 76:22 PSA 10:14,19 properties 155:2 11:24 12:5,15 property 120:9 12:24 14:25 156:7 157:8 15:3,14,18 proposal 13: 11 16:9,13,21 18:10 77:16,22 21:3 22:6,19 91:10 93:2,3 25:14 26:4,10 108:25 111:24 27:4 45:5 114:3 121:20 46:16 48:19 131:12,15 49:12,16,22 132:24 142:25 51:21,24 54:14 proposals 56:25 61:11 111:17,22 62:21,23 68:6 112:4 133:2 68:11 78:22 proposed 79:23 92:11 95:20 80:20 94:6 96:9 113:11,14 97:13 98:7 115:11 121:22 101:15,23 124:21 134:2 107:2 115:24 137:15 138:3,9 122:18 123:7 139:25 147:15 145:13 167:23 155:12 156:13 168:5,7,10,12 157:3,13,15 168:15,18,21 158:12 160:21 protected 75:22 161:18,23,25 protective 63:22 Public 1:13 64:7 163:17 166:7 provide 84:7 purchase 84:7 105:7 114:15 95:14 109:5 121:13 123:17 114:8 118:17 122:4 125:8,16 129:24,25 130:6 162:6 purchaser 16:25 17:5 18:4 92:2 purposes 9:25 12:23 48:20 77:8 83:6 93:21 pursuant 63 :21 130:5 138:9 161:22 pursue 49:23 50:4,10 pursuing 50:8 push 159:14 put 8:6 15:25 16:4 39:11 putting 63:23 PW 116:6,7 p.m 1:12 162:12
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APP-00463
185
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APP-00464
186
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123:13 129:14 130:22 131:20 131:23 136:4 145:25 156:20 sec 1:6 scenario 105:7,9 schedule 135:7 135:16,25 136:2 137:11 137:20,21 Schuyler 67:23 71:18 135:6 scope45:2,9 75:25 136:13 136:20 137:22 158:17 second 27:25 36:5 50:16 59:22 60:20 82:18 88:24 98:11 99:8,10 100:11 102:2 116:25 127:25 131:22 134:12 135:9,14,22 secondary 84:3 84:12 section 54:23 55:4,8,16,18 55:19,22 56:2 56:3 58:4,5,8 58:11,13 59:17 90:23 100:13 103:23 130:10 sections 55:4 102:17 secured 109: 14 140:22 141:3,7 144:9 147:5 148:18 149:15 152:15,18 153:24 154:15 155:3 157:5 securitization 139:5 148:14 securitized 31:19 see 14:9,14
15:14 17:2 19:2,11 20:7 28:6 29:9 35:23 44:7,8 44:22,23 51:3 51:7 52:2,25 54:8 66:2,6 72:19 76:19 81:10,16 84:2 84:14 87:3 88:22 89:5 91:16,22 94:25 98:8 101:24 109:15,21 110:2,6 113:6 113:14,16 116:20 118:2 118:14,18,21 120:12 121:17 125:20,23 128:3,5,14,15 131:4 135:12 143:12 145:13 146:14 158:25 seeing 65: 17 128:7 seeking 22: 18 seen 66:7 128:17 131:4 135:19 135:20,25 137:11 select 103:2 sell37:6 74:6 83:17 89:4,7 104:14 105:5 106:14 125:25 126:9,16,24 127:4 129:15 132:8,17,21 158:7,7 seller 129:6 selling 92:20 93:15 103:19 119:17 120:3 126:5,6 send45:12 77:19 senior 109: 13 152:17,17
APP-00465
187 sense 93:16 153:16 sent 14:12 17:8 22:8 23:5,6 51:20,25 52:5 64:9 93:3,5, 7,7 112:5,5 sentence 19:11 59:23 88:21 94:21 separate 26:8 162:4 September 31:23 series 29:7 servicer 6: 13 139:5 148:19 148:20 150:7 157:7 servicers 149: 14 services 2: 15,20 5:23 139:7 148:15 151:16 158:6 set 55: 12 91:5 166:11,19 sets 8: 15, 17 settled 126:5,24 settlement 19:8 19:9,13,17 seven 96:23,23 156:17,23 Seventh 4:10 Shanik 21: 11, 17 22:20 48:24 67:13 71:13 shared 110:19 shares 83:22 84:3,12,13 103:15 104:14 105:5 109:10 114:8 122:4 132:8 sheet 54:22 94:24 95:9,20 99:14 110:17 110:18 112:9 112:10 118:4 118:19 121:25 122:17 123:6 123:22 124:3,4 124:8 126:8,16 127:4 128:15 128:17,20 129:10,11,12 130:5 131:2,15 131:25 132:3,7 132:9,12,13,14 132:16,19,21 133:8,13 140:16,22 143:6,11 144:10,20 148:18 149:6 155:12 156:14 156:19 157:3 158:4,13 164:6 164:7,10,13 168:20 sheets 25: 15 99:3 110:16,23 124:10 133:20 134:5,8,10 158:15 short 52:24 61:2 61:25 Shorthand 166:7 showed 90:14,15 shown 163:9 shows 65:23 112:22 sic 136:5 side 11:25 12:8 21:8 34:22 35:2 56:17 73 :14 104: 17 sign 121:20 126:7 164:7 signatory 15: 13 15:18 16:13,20 18:3 SIGNATURE 165:23 signed 10: 13 27:4,8 48:24 49:9 significant 16: 8 16:13,17,21 61:9 signing 25: 14 91:11 121:22 164:9 silos 95:17 similar 78:22 100:17 112:14 115:11 118:3 137:21 simply 147:22 159:11 single 27:2 29:15 50:25 91:10 121:22 sir48:7 72:15 80:7 94:13 98:4 101:19 104:10 110:21 112:8 130:23 sitting 156:24 six 88:20 157:6 sold 83:20 sole 102:25 115:4 123:16 SOLOMON 22:14 somebody42:14 sorry23:9 25:16 43:9,12 51:22 56:7 61:14 68:14 77:13 93 : 13 102: 16 109:17 120:6 129:23 134:9 sort 78:5 104:11 143:14 sound 137:7 SOUTHERN 1:2 space 164:5 spaces 40:12 speaks 82:18 89:20 special6: 13 139:5 149:14 150:7 specialization 29:25 specific 17: 10 22:25 57:13 61:22 88:15 124:11 127:4 133:8 specifically 96:14 107:23 124:4 134:4 144:15 specifics 67:3 speculate 43: 17 Spoke9:12 spoken 69:11 70:12 ss 166:4 stage 86:15 stages 30:23 stamp 11:17 29:833:14 51:264:20 65:8 94:12 107:10 123:2 127:17 128:12 129:2,18 130:23 131:8 134:22 stamped 80:5 81:2 97:19 stand 24:15,19 standpoint 153:17 stands 21:19 40:20 116:7 start 8:12 51:5 94:19 started 12:16 26:5 31:12,15 32:6 126:23 141:8,10 142:8 143:7,9 150:22 starting 19:5 31:12 starts 60:22 88:21 129:24 130:11 state 1:13 5:7 8:12 63:18,19 136:14 142:19 144:24 145:19 164:4 166:3,8 stated 112:15 145:10 statement 17:12 17:16 62:12 states 1:2 51:11 status 114:21 step 152:4 steps 77:15 78:5 stock 105:13,22 118:25 126:2,2 126:9,10,17 127:5 129:6,23 129:25 130:6 132:18 133:25 158:7 Stockton 3:3 6:12 150:5 stop 151:11 Street2:5,10 3:5 structure 65 :21 66:5,8,11,22 72:4 79:18 82:19 86:9 90:7,10 96:15 99:2,6,16 100:15 110:15 148:4 158:25 structured 31: 17 Structuring 79:23 167:23 sub 37:9,16 38:9 41:11 42:20,24 subcon 40:18,20 subject 8: 14 14:5,7 42:24 49:19 51:9 76:9 81:9 87:2 94:16 130:2,13 130:13 135:6 144:4 163:8 164:9 submitted 11:7 subpoena 8:24
APP-00466
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33:667:12 71:12 swap 158:24 sworn 5:3 163:13 166:12 syndicated 31:20 T T 163:2 165:1 166:2,2 167:7 168:2 169:2 table 5:17 take 7: 14 11 :18 15:10 29:11 33:19 40:4,8 40:17 44:24 45:10 50:9 53:654:18 55:25 62:23 63:11 71:8 73:18 77:21,23 85:10 102:14 112:13 118:19 118:20 122:6 125:21 149:21 taken 63:15 122:15 149:25 152:25 159:8 talk 7:24 9:16 23:9 53:23 88:11 92:4 154:5 155:24 talked 48:3 67:4 70:5,20 72:25 93:24 130:20 148:23 159:24 talking39:10 45:20 53:21 61:16 70:9 82:9 115:12 125:18 134:5 137:5 tandem 86:3 Tavern 64:12,23 167:20 tax 115:5,6 technical 21 :17
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APP-00467
189
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APP-00468
190
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APP-00469
191
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APP-00470
10-Q
Page 1
APOLLO INVESTMENT CORP

Form 10-Q filed on Aug 04, 2010 16:10:25
Header Information Exhibits
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2010
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 814-00646
APOLLO INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
52-2439556
(I.R.S. Employer Identification No.)
9 West 57th Street 37th Floor New York, N.Y.

(Address of principal executive office)
10019
(Zip Code)
(212) 515-3450
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No .. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
www.bloomberglaw.com (c) 2010 Bloomberg Finance L.P. All rights reserved. For Terms Of Service see http://www.bloomberglaw.com
EXHIBIT 8
APP-00471
10-Q
Page 2
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a nonaccelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer xAccelerated filer Non-accelerated filer Smaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of August 4, 2010 was 194,460,328.
APP-00472
10-Q
Page 3
Table of Contents APOLLO INVESTMENT CORPORATION FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010 TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS Statements of Assets and Liabilities as of June 30, 2010 and March 31, 2010 Statements of Operations for the three months ended June 30, 2010 and June 30, 2009 Statements of Changes in Net Assets for the three months ended June 30, 2010 and the year ended March 31, 2010 Statements of Cash Flows for the three months ended June 30, 2010 and June 30, 2009 Schedule of Investments as of June 30, 2010 Schedule of Investments as of March 31, 2010 Notes to Financial Statements Report of Independent Registered Public Accounting Firm
3
3 4 5
6
7 17 27
41
Item 2. Item 3. Item 4.

PART II.
Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Controls and Procedures
OTHER INFORMATION
42 52 52 53 53 53 53 53
54
Item 1. Item 1A. Item 2. Item 3. Item 5. Item 6.
Legal Proceedings Risk Factors Unregistered Sales of Equity Securities and Use of Proceeds Defaults upon Senior Securities Other Information Exhibits Signatures
55
APP-00473
10-Q
Page 4
Table of Contents PART I. FINANCIAL INFORMATION In this Quarterly Report, "Apollo Investment", "Company", "AIC", "Fund", ''we", "us" and "our" refer to Apollo Investment Corporation unless the context otherwise states. Item 1. Financial Statements APOLLO INVESTMENT CORPORATION STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts)
June 30, 2010 (unaudited) March 31, 2010
Assets Non-controlled/non-affiliated investments, at value (cost-$2,913,402 and $2,782,880, respectively) Non-controlled/affiliated investments, at value (cost-$1 02,648 and $102,135, respectively) Controlled investments, at value (cost-$359,290 and $357,590, respectively) Cash equivalents, at value (cost-$199,929 and $449,852, respectively) Cash Foreign currency (cost-$3,742 and $30,705, respectively) Receivable for investments sold Interest receivable Dividends receivable Miscellaneous income receivable Receivable from investment adviser Prepaid expenses and other assets Total assets Liabilities Credit facility payable (see note 7 & 12) Payable for investments and cash equivalents purchased Dividends payable Management and performance-based incentive fees payable (see note 3) Interest payable Accrued administrative expenses Other liabilities and accrued expenses Total liabilities Net Assets Common stock, par value $.001 per share, 400,000 and 400,000 common shares authorized, respectively, and 193,845 and 176,214 issued and outstanding, respectively Paid-in capital in excess of par (see note 2f) Undistributed net investment income (see note 2f) Accumulated net realized loss (see note 2f) Net unrealized depreciation
$2,677,725 96,764 73,807 199,923 15,340 3,685 1,935 44,041 11
$2,677,893 83,136 92,551 449,828 7,040 30,717 49,643 43,139 5,700 788 611 24,070 $ 3,465,116 $1,060,616 549,009 49,340 26,363 2,132 1,722 3,128 $1,692,310
21,792 $3,135,023 $ 993,034 213,551 54,276 24,761 2,436 2,094 1,969 $1,292,121
194 2,854,352 91,428 (579,403) (523,669)
176 2,645,687 104,878 (583,270) (394,665)
APP-00474
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Page 5
Total net assets Total liabilities and net assets Net Asset Value Per Share See notes to financial statements.
$1,842,902 $3,135,023 9.51 $
$ 1,772,806 $ 3,465,116 10.06 $
APP-00475
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Page 6
Table of Contents APOLLO INVESTMENT CORPORATION STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts)
Three months ended June 30, June 30, 2010 2009
INVESTMENT INCOME: From non-controlled/non-affiliated investments: Interest Dividends Other income From non-controlled/affiliated investments: Interest From controlled investments: Dividends Total Investment Income EXPENSES: Management fees (see note 3) Performance-based incentive fees (see note 3) Interest and other credit facility expenses Administrative services expense Other general and administrative expenses Total expenses Net investment income REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH EQUIVALENTS AND FOREIGN CURRENCIES: Net realized gain (loss): Investments and cash equivalents Foreign currencies Net realized gain (loss) Net change in unrealized gain (loss): Investments and cash equivalents Foreign currencies Net change in unrealized gain (loss) Net realized and unrealized gain (loss) from investments, cash equivalents and foreign currencies NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS EARNINGS (LOSS) PER SHARE (see note 5)
$ 72,505
920 1,669 3,154
$ 75,297
3,236 1,269
78,248
2,759 82,561
$ 14,554
10,207 9,894 1,396 1,370 37,421
$ 12,722
12,332 5,068 1,309 1,800 33,231
$ 40,827
$ 49,330
780 3,087 3,867 (137,959) 8,955 (129,004) (125,137)
$ (98,078)
(157) (98,235) 151,835 (18,455) 133,380 35,145
$ (84,31 0) (0.45) $
$ 84,475 0.59 $
See notes to financial statements. 4

APP-00476
10-Q
Page 7
Table of Contents APOLLO INVESTMENT CORPORATION STATEMENTS OF CHANGES IN NET ASSETS (in thousands, except shares)
Three months ended June 30,2010 (unaudited)
Year ended March 31, 2010
Increase (Decrease) in net assets from operations: Net investment income Net realized gain (loss) Net change in unrealized gain (loss) Net increase (decrease) in net assets resulting from operations Dividends and distributions to stockholders: Capital share transactions: Net proceeds from shares sold Less offering costs Reinvestment of dividends Net increase in net assets from capital share transactions Total increase in net assets: Net assets at beginning of period Net assets at end of period Capital share activity: Shares sold Shares issued from reinvestment of dividends Net increase in capital share activity
40,827 3,867 (129,004) (84,31 0) (54,277) 204,275 (427) 4,835 208,683 70,096 1,772,806 1,842,902 17,250,000 380,709 17,630,709
199,410 (473,027) 536,907 263,290 (181 ,356) 280,823 (618) 14,529
294,734 376,668 1,396,138 $ 1,772,806 32,200,000 1,792,583 33,992,583
See notes to financial statements.
5
APP-00477
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Page 8
Table of Contents APOLLO INVESTMENT CORPORATION STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
Three months ended June 30 2010 2009
Cash Flows from Operating Activities: Net Increase (Decrease) in Net Assets Resulting from Operations Adjustments to reconcile net increase (decrease): Purchase of investments (including net amortization and capitalized PI K) Proceeds from disposition of investment securities and cash equivalents Increase from foreign currency transactions Decrease in interest and dividends receivable Decrease in prepaid expenses and other assets Decrease in management and performance-based incentive fees payable Increase (decrease) in interest payable Decrease in accrued expenses Decrease in payable for investments and cash equivalents purchased Decrease in receivables for investments sold Net change in unrealized depreciation (appreciation) on investments, cash equivalents, foreign currencies and other assets and liabilities Net realized loss (gain) on investments and cash equivalents
$ (84,31 0)
$ 84,475
(244,531) 112,637 3,040 4,787 3,677 (1 ,602) 304 (787) (335,458) 47,708
(93,835) 78,291 39 6,891 1,472 (260) (208) (725) (1 '155)
Net Cash Provided (Used) by Operating Activities Cash Flows from Financing Activities: Net proceeds from the issuance of common stock Offering costs from the issuance of common stock Dividends paid in cash Borrowings under credit facility Payments under credit facility Net Cash Provided (Used) by Financing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS Effect of exchange rates on cash balances CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD
129,004 (3,867) $(369,398) $204,275 (427) (44,505) 465,211 (523,723) $ 100,831 $(268,567) (70) $487,585 $ 218,948
(133,380) 98,235 $ 39,840 $ (36,978) 151,145 (155,500) $ (41 ,333) $ (1 ,493) 2 $ 6,607 $ 5,116
Non-cash financing activities consist of the reinvestment of dividends totaling $4,835 and $0, respectively (in thousands).

APP-00478
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Page 9
APP-00479
10-Q
Page 10
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) June 30, 2010 (in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -145.3% lndust!:Y Par Amount* Cost Fair Value(1)
CORPORATE DEBT -132.5% BANK DEBT/SENIOR SECURED LOANS46.0%(2) 1st Lien Bank Debt/Senior Secured Loans1.6% ATI Acquisition Company, 12/30/14 Fox Acquisition Sub LLC, 7/14/15 Playpower, Inc., 6/30/12 Total 1st Lien Bank Debt/Senior Secured Loans 2nd Lien Bank Debt/Senior Secured Loans 44.4% AB Acquisitions UK Topco 2 Limited (Alliance Boots), 7/9/16 t AB Acquisitions UK Topco 2 Limited (Alliance Boots), 7/9/16 t Advantage Sales & Marketing, Inc., 5/5/17 Asurion Corporation, 7/3/15 BNY ConvergEx Group, LLC, 4/2/14 Clean Earth, Inc., 13.00%, 8/1/14 Datatel, Inc., 12/9/16 Dresser, Inc., 5/4/15 Educate, Inc., 6/14/14 Garden Fresh Restaurant Corp., 12/11/13 Generics International, Inc., 4/30/15 lnfor Enterprise Solutions Holdings, Inc., Tranche B-1, 3/2/14 t Infor Enterprise Solutions Holdings, Inc., 3/2/14 t lnfor Global Solutions European Finance S.a.R.L., 3/2/14 IPC Systems, Inc., 6/1/15 Kronos, Inc., 6/11/15 Ozburn-Hessey Holding Company LLC, 10/8/16 Ranpak Corp., 12/27/14(3) t Ranpak Corp., 12/27/14(4) t
Education Broadcasting & Entertainment Leisure Equipment
$ 18,408 $ 17,729 $ 18,131

1,879 10,890 1,690 9,913 1,820 9,801
$ 29,332 $ 29,752
Retail Retail Grocery Insurance Business Services Environmental Education Industrial Education Retail Health care Business Services Business Services
11,400 $ 20,032 $ 14,753 3,961 $ 50,000

148,300 83,229 25,000 20,000 62,938 9,968 46,600 20,000 5,000 15,000 5,514 49,508 147,066 80,852 25,000 19,925 62,667 9,968 46,600 19,934 5,000 14,890 8,263 41,278 60,000 37,963 37,793 27,232 4,197 49,500 144,870 81,731 24,875 20,250 58,414 9,146 47,485 19,600 3,625 11 '175 5,363 36,838 56,200 37,525 42,244 26,104
Business Services 6,210 Telecommunications $ 44,250 Electronics 60,000 Logistics 38,000 Packaging 43,550 Packaging 21,970
APP-00480
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Page 11
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued) June 30, 2010 (in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -145.3% Par _ _ _l:.:..:.nd=u=stry::..L,__ _ Amount* Fair
Cost
Value(1)
2nd Lien Bank Debt/Senior Secured Loans (continued) RSA Holdings Corp. of Delaware (American Safety Razor), 1/30/14 Sedgwick Holdings, Inc., 5/26/17 Sheridan Holdings, Inc., 6/15/15 TransFirst Holdings, Inc., 6/15/15 Total 2nd Lien Bank Debt/Senior Secured Loans TOTAL BANK DEBT/SENIOR SECURED LOANS Subordinated Debt/Corporate Notes- 86.5% AB Acquisitions UK Topco 2 Limited (Alliance Boots), GBP L+650, 7/9/17 Allied Security Holdings LLC, 13.75%, 8/21/15 Altegrity Inc., 11.75%, 5/1/16 "t Altegrity Inc., 10.50%, 11/1/15 "t American Tire Distributors, Inc., 11.50%, 6/1/18 "t American Tire Distributors, Inc., 9.75%, 6/1/17 "t Angelica Corporation, 15.00%, 2/4/14 ATI Acquisition Company, L+1100, 12/30/15 BNY ConvergEx Group, LLC, 14.00%, 10/2/14 Booz Allen Hamilton Inc., 13.00%, 7/31/16 Catalina Marketing Corporation, 11.625%, 10/1/17 "t Catalina Marketing Corporation, 10.50%, 10/1/15 "t Ceridian Corp., 12.25%, 11/15/15 t Ceridian Corp., 11.25%,11/15/15 t Cidron Healthcare C S.a.R.L. (Convatec) E+950, 8/1/17 Delta Educational Systems, Inc., 14.20%, 5/12/13 Dura-Line Merger Sub, Inc., 14.00%, 9/22/14 European Directories (DH5) B.V., 15.735%, 7/1/16 *** t European Directories (DH7) B.V., E+950, 7/1/15 *** t First Data Corporation, 11.25%, 3/31/16 t First Data Corporation, 9.875%, 9/24/15 t FleetPride Corporation, 11.50%, 10/1/14 "t
Consumer Products $ 1,000 $ 786 $ 125 Business Services 25,000 24,627 24,844 Healthcare 67,847 66,982 65,608 Financial Services 37,291 36,378 33,898 $848,258 $818,370 $877,590 $848,122
Retail Business Services Diversified Service Diversified Service Distribution Distribution Healthcare Education Business Services Consulting Services Grocery Grocery Diversified Service Diversified Service Healthcare Education Telecommunications Publishing Publishing Financial Services Financial Services Transportation
41 ,295 $ 79,913 $ 50,970 $20,000 19,672 20,200 14,639 9,879 13,600 13,475 11 ,916 12,532 25,000 25,000 25,000 10,000 9,877 10,100 60,000 60,000 64,500 38,500 37,772 38,115 42,943 36,348 44,361 23,435 23,119 23,962 42,175 41,344 44,284 5,000 5,097 5,125 53,250 53,250 48,458 36,000 35,273 32,580 8,136 12,681 9,691 $19,575 19,203 20,064 42,654 42,106 42,654 3,726 4,475 17,871 21,846 $40,000 33,964 29,800 45,500 40,301 34,864 47,500 47,500 46,075
APP-00481
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Page 12
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -145.3% lndust!Y Par Amount* Cost Fair Value(1)
Subordinated Debt/Corporate Notes(continued) Fox Acquisition Sub LLC, 13.375%, 7/15/16" FPC Holdings, Inc. (FieetPride Corporation), 14.00%, 6/30/15 "t General Nutrition Centers, Inc., 10.75%, 3/15/15 t General Nutrition Centers, Inc., L+450, 3/15/14 t Goodman Global Inc., 13.50%, 2/15/16 Hub International Holdings, 10.25%, 6/15/15 ..
Broadcasting & Entertainment Transportation Retail Retail Manufacturing Insurance Broadcasting & Entertainment Education Environmental Manufacturing Consumer Finance Consumer Services Market Research
$ 26,125 $ 37,846 24,500 12,275 25,000 36,232 90,000 53,540 53,263 61,645 22,630 40,000 61,000 52,074 104,716 70,095 59,308 32,500 53,000 52,173 72,500 22,000 81,543 20,030 22,204
25,908 $ 37,734 24,890 12,157 25,590 34,830 91,951 51,400 53,263 60,871 19,109 40,000 56,101 36,825 104,716 70,095 55,479 31,925 52,101 49,692 72,261 20,746
25,733 35,575 24,500 11,232 27,563 33,175 91,350 54,745 5,000 62,877 21,725 39,175 58,179 885 79,584 70,095
lntelsat Bermuda Ltd., 11.25%, 2/4/17 Laureate Education, Inc., 11.75%, 8/15/17 .. LVI Services, Inc., 17.25%, 11/16/12*** MW Industries, Inc., 14.50%, 5/1/14 NCO Group Inc., 11.875%,11/15/14 N.E.W. Holdings I, LLC, L+750, 3/23/17 Nielsen Finance LLC, 0% I 12.50%, 8/1/16 Pacific Crane Maintenance Company, L.P., 15.00%, 2/15/14*** Machinery Playpower Holdings Inc., 15.50%, 12/31/12 .. Leisure Equipment Ranpak Holdings, Inc., 15.00%, 12/27/15 Packaging RSA Holdings Corp. of Delaware (American Safety Razor), 13.50%, 1/30/15*** Consumer Products Sorenson Communications, Inc., 10.50%, 2/1/15 .. Consumer Services SquareTwo Financial Corp. (Collect America, Ltd.), 11.625%, 4/1/17 .. Consumer Finance The Servicemaster Company, 10.75%, 7/15/15 .. Diversified Service TL Acquisitions, Inc. (Thomson Learning), Education 13.25%, 7/15/15"t TL Acquisitions, Inc. (Thomson Learning), 10.50%, 1/15/15"t Education Beverage, Food & US Foodservice, 10.75%, 6/30/15 .. Tobacco U.S. Renal Care, Inc., 13.25%,5/24/17 Healthcare Varietal Distribution, 10.75%, 6/30/17 Distribution Total Subordinated Debt/Corporate Notes TOTAL CORPORATE DEBT See notes to financial statements. 9
20,963 50,350 54,292 68,150 20,460
63,770 80,523 20,030 19,930 21,676 20,872 $1 ,803,656 $1 ,593,868 $2,681,246 $2,441,990
APP-00482
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Page 13
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued) June 30, 2010 (in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -145.3% lndust!1 Par Amount* Cost Fair Value(1)
COLLATERALIZED LOAN OBLIGATIONS1.3% Babson CLO Ltd., Series 2008-2A Class E, L+975, 7/15/18 .. Babson CLO Ltd., Series 2008-1A Class E, L+550, 7/20/18 .. Westbrook CLO Ltd., Series 2006-1A, L+370, 12/20/20 .. TOTAL COLLATERALIZED LOAN OBLIGATIONS
Asset Management Asset Management Asset Management
11,000 $10,111 10,150 11,000 7,559 6,730 $24,400

Shares
$10,285 7,651 6,911 $24,847
PREFERRED EQUITY -1.7% AHC Mezzanine LLC (Advanstar) ** CA Holding, Inc. (Collect America, Ltd.) Series A** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 13.50%, 5/12/14 Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 12.50% (Convertible) Varietal Distribution Holdings, LLC, 8.00% TOTAL PREFERRED EQUITY EQUITY- 9.8% Common Equity/Interests- 9.4% AB Capital Holdings LLC (Allied Security) ** Accelerate Parent Corp. (American Tire) A-D Conduit Holdings, LLC (Duraline) ** CA Holding, Inc. (Collect America, Ltd.) Series A** CA Holding, Inc. (Collect America, Ltd.) Series AA ** Clothesline Holdings, Inc. (Angelica)** Explorer Coinvest LLC (Booz Allen) FSC Holdings Inc. (Hanley Wood LLC) ** Garden Fresh Restaurant Holding, LLC ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.)** GS Prysmian Co-Invest L.P. (Prysmian Cables & Systems )(5,6) LVI Acquisition Corp. (LVI Services, Inc.)** MEG Energy Corp.(?)
Media Consumer Finance Education Education Distri buti on
1 $ 1,063 $ 7,961 12,360 332,500 3,097 788 20,010 5,531 3,929 $31,321
298 1,592
20,766 5,531 2,233 $30,420
Business Services Distri buti on Telecommunications Consumer Finance Consumer Finance Healthcare Consulting Services Media Retail Education Industrial Environmental Oil & Gas
2,000,000 312,500 2,778 25,000 4,294 6,000 430 10,000 50,000 17,500 1 6,250 2,176,722
$ 2,000 3,125 2,778 2,500 429 6,000 4,300 10,000 5,000 175
$ 2,812 3,110 3,412 1,056 859 8,569 9,033 10,586 3,699 255
2,500 55,006
92,300
APP-00483
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Page 14
APP-00484
10-Q
Page 15
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued) June 30, 2010 (in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -145.3% lndust!:Y Shares Cost Fair Value(1)
Common Equity/Interests- (continued) New Omaha Holdings Co-Invest LP (First Data) ** PCMC Holdings, LLC (Pacific Crane)** Penton Business Media Holdings, LLC Pro Mach Co-Investment, LLC ** RC Coinvestment, LLC (Ranpak Corp.) ** Sorenson Communications Holdings, LLC Class A Varietal Distribution Holdings, LLC Class A** Total Common Equity/Interests
Financial Services 13,000,000 $ Machinery 50,000 Media 124 150,000 Machinery Packaging 50,000 Consumer Services Distribution 454,828 28,028
65,000 $ 4,000 4,950 1,500 5,000
20,814 4,950 3,631 5,689
45 2,340 28 $ 174,336 $ 173,115
Warrants
Warrants- 0.4% CA Holding, Inc. (Collect America, Ltd.), Common** Fidji Luxco (BC) S.C.A., Common (FCI) (5) ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Common** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class A-1 Preferred ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class B-1 Preferred ** Total Warrants TOTAL EQUITY Total Investments in Non-Controlled/ NonAffiliated Portfolio Companies
Consumer Finance Electronics Education
7,961 $ 48,769 9,820
8 491 $ 98
2,932 1,923
Education
45,947
459
764
Education
104,314
1,043 1,734 $ 2,099 $ 7,353 $ 176,435 $ 180,468 $2,913,402 $2,677,725
APP-00485
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Page 16
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued) June 30, 2010 (in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/AFFILIATED PORTFOLIO COMPANIES- 5.3%{8} Par lndust!:Y: Amount Cost Fair Value{1}
CORPORATE DEBT- 4.4% BANK DEBT/SENIOR SECURED LOANS- 3.8%(2) 1st Lien Bank Debt/Senior Secured Loans- 0.1% Gray Wireline Service, Inc., 10/22/12 2nd Lien Bank Debt/Senior Secured Loans - 3. 7% Gray Wireline Service, Inc., 14.00%, 10/22/12 TOTAL BANK DEBT/SENIOR SECURED LOANS Subordinated Debt/Corporate Notes- 0.6% DSI Renal Inc., 17.00%, 4/7/14 TOTAL CORPORATE DEBT
Oil & Gas Oil & Gas
$ $
1,000 $
1,000 $ 1,000
77,796 $ 77,796 $68,383 $ 78,796 $69,383
Healthcare $
10,131
$ 10,131 $10,516 $ 88,927 $79,899
Shares
EQUITY- 0.9% Common Equity/Interests- 0.7% CDSI I Holding Company, Inc. (DSI Renal Inc.) Gray Energy Services, LLC Class H (Gray Wireline) ** Total Common Equity/Interests
Healthcare Oil & Gas
9,303 $ 9,300 $13,269 2,000 1,081 $ 11,300 $13,269

Warrants
Warrants - 0.2% CDSI I Holding Company, Inc. Series A (DSI Renal Inc.) CDSI I Holding Company, Inc. Series B (DSI Renal Inc.) CDSI I Holding Company, Inc. (DSI Renal Inc.) Gray Holdco, Inc. (Gray Wireline) Total Warrants TOTAL EQUITY Total Investments in Non-Controlled/Affiliated Portfolio Companies
Health care Healthcare Health care Oil & Gas
2,031 $ 2,031 6,093,750 3,559
773 $ 1,186 987 645 1,423 1,003 $ 3,596 $16,865
$ 2,421 $ 13,721
$102,648 $96,764
APP-00486
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Page 17
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued) June 30, 2010 (in thousands, except shares)
INVESTMENTS IN CONTROLLED PORTFOLIO COMPANIES- 4.0%(9} Fair In dust!}: Shares Cost Value(1}
Preferred Equity - 0.0% Grand Prix Holdings, LLC Series A, 12.00% (Innkeepers USA)*** EQUITY Common Equity/Interests - 4.0% AIC Credit Opportunity Fund LLC (1 0) Generation Brands Holdings, Inc. (Quality Home Brands) Generation Brands Holdings, Inc. Series H (Quality Home Brands) Generation Brands Holdings, Inc. Series 2L (Quality Home Brands) Grand Prix Holdings, LLC (Innkeepers USA) ** Total Common Equity/Interests TOTAL EQUITY Total Investments in Controlled Portfolio Companies Total Investments- 154.6%(11)
Hotels, Motels, Inns & Gaming
2,989,431
$ 101,346
Asset Management Consumer Products Consumer Products Consumer Products Hotels, Motels, Inns & Gaming
$
750 7,500 36,700 17,335,834
71,741
60,038 230
2,297 11,242 172,664 $ 257,944 $ 257,944 $ 359,290 $3,375,340
2,297 11,242
$ $
73,807 73,807
$ 73,807 $2,848,296
Par Amount
CASH EQUIVALENTS -10.8% U.S. Treasury Bill, 0.14%, 9/30/10 Total Investments and Cash Equivalents -165.4% Liabilities in Excess of Other Assets(65.4%) Net Assets - 100.0%
Government
200,000
$ 199,929 $3,575,269
199,923
$3,048,219 (1 ,205,317) $ 1,842,902
APP-00487
10-Q
Page 18
(1) Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see note 2). (2) Includes floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the LIBOR (London Interbank Offered Rate), EURIBOR (Euro Inter-bank Offered Rate), GBP LIBOR (London Inter-bank Offered Rate for British Pounds), or the prime rate. At June 30, 2010, the range of interest rates on floating rate bank debt was 4.66% to 12.00%. (3) Position is held across five US Dollar-denominated !ranches with varying yields. (4) Position is held across three Euro-denominated !ranches with varying yields. (5) Denominated in Euro (). (6) The Company is the sole Limited Partner in GS Prysmian Co-Invest L.P. (7) Denominated in Canadian dollars. (8) Denotes investments in which we are an "Affiliated Person", as defined in the 1940 Act, due to owning, controlling, or holding the power to vote, 5% or more of the outstanding voting securities of the investment. Transactions during the three months ended June 30, 2010 in these Affiliated investments are as follows: Fair Value at March 31, 2010 1,000 $ 59,251 10,057 10,206 Gross Additions $ 242 271 Gross Reductions $ lnteresUDividend Income 20 $ 2,715 419 Fair Value at June 30, 2010 1,000 $ 68,383 10,516 13,269
Name of Issuer Gray Wireline Service, Inc. 1st Out Gray Wireline Service, Inc. 2nd Out DSI Renal, Inc., 17.00% CDSI I Holding Company, Inc. Common Equity Gray Energy Services, LLC Class H Common Equity CDSI I Holding Company, Inc. Series A Warrant CDSI I Holding Company, Inc. Series B Warrant CDSI I Holding Company, Inc. Contingent Payment Agreement Gray Holdco, Inc. Warrant
854 693 1,075
1 '186 987 1,423
83,136 513 3,154 96,764 $ $ $ $ $ (9) Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the three months ended June 30, 2010 in these Controlled investments are as follows: Fair Value at March 31, 2010 Gross Additions Gross Reductions lnteresUDividend Income Fair Value at June 30, 2010
Name of Issuer Grand Prix Holdings, LLC Series A Preferred AIC Credit Opportunity Fund LLC Common Equity (10) Generation Brands Holdings, Inc. Common Equity Generation Brands Holdings, Inc. Series H Common Equity Generation Brands Holdings, Inc. Series 2L Common Equity Grand Prix Holdings, LLC Common Equity
5,268 73,514 230 2,297 11 ,242
$
1,700
$
60,038 230 2,297 11,242
92,551
1,700
73,807

APP-00488
10-Q
Page 19
The Company has a 99%, 100%, and 27% equity ownership interest in Grand Prix Holdings LLC, AIC Credit Opportunity Fund LLC, and Generation Brands Holdings, Inc., respectively. (10)See note 6. (11 )Aggregate gross unrealized appreciation for federal income tax purposes is $138,475; aggregate gross unrealized depreciation for federal income tax purposes is $635,974. Net unrealized depreciation is $497,499 based on a tax cost of $3,545,718. These securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. Denominated in USD unless otherwise noted. Non-income producing security Non-accrual status (see note 2m) t Denote securities where the Company owns multiple !ranches of the same broad asset type but whose security characteristics differ. Such differences may include level of subordination, call protection and pricing, differing interest rate characteristics, among other factors. Such factors are usually considered in the determination of fair values. Position reflects a contingent payment agreement.
APP-00489
10-Q
Page 20
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (unaudited) (continued)

Percentage of Total Investments (at fair value) as of June 30, 2010
Industry Classification
Education Healthcare Business Services Insurance Retail Oil & Gas Diversified Service Packaging Financial Services Broadcasting & Entertainment Grocery Manufacturing Leisure Equipment Asset Management Telecommunications Transportation Beverage, Food & Tobacco Consumer Finance Consumer Services Distribution Electronics Industrial Market Research Logistics Consulting Services Environmental Consumer Products Media Machinery Hotels, Motels, Inns & Gaming Publishing Total Investments
9.9% 7.5% 6.8% 6.2% 5.7% 5.7% 5.7% 5.1% 4.2% 4.2% 3.5% 3.2% 3.1% 3.0% 2.9% 2.9% 2.8% 2.6% 2.2% 2.2% 2.1% 2.1% 2.0% 1.3% 1.2% 1.0% 0.5% 0.2% 0.2% 0.0% 0.0% 100.0%
APP-00490
10-Q
Page 21
16
APP-00491
10-Q
Page 22
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS March 31,2010 (in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -151.1% lndust!:Y Par Amount* Cost Fair Value(1)
CORPORATE DEBT- 137.2% BANK DEBT/SENIOR SECURED LOANS(2)44.2% 1st Lien Bank Debt/Senior Secured Loans1.2% ATI Acquisition Company, 12/30/14 FoxCo Acquisition Sub LLC, 7/14/15 Total 1st Lien Bank Debt/Senior Secured Loans 2nd Lien Bank Debt/Senior Secured Loans 43.0% AB Acquisitions UK Topco 2 Limited (Alliance Boots), 7/9/16 t AB Acquisitions UK Topco 2 Limited (Alliance Boots), 7/9/16 t American Safety Razor Company, LLC, 1/30/14 Asurion Corporation, 7/3/15 BNY ConvergEx Group, LLC, 4/2/14 C.H.I. Overhead Doors, Inc., 13.00%, 10/22/11 Clean Earth, Inc., 13.00%, 8/1/14 Datatel, Inc., 12/9/16 Dresser, Inc., 5/4/15 Educate, Inc., 6/14/14 Garden Fresh Restaurant Corp., 12/22/11 Generics International, Inc., 4/30/15 lnfor Enterprise Solutions Holdings, Inc., Tranche B-1, 3/2/14 t Infor Enterprise Solutions Holdings, Inc., 3/2/14 t lnfor Global Solutions European Finance S.a.R.L., 3/2/14 IPC Systems, Inc., 6/1/15 Kronos, Inc., 6/11/15 Ozburn-Hessey Holding Company LLC, 10/8/16 Ranpak Corp., 12/27/14(3) t
Education Broadcasting & Entertainment
$ 18,454 $ 17,743 $ 18,038

3,905 3,493 3,788
$ 21,236 $ 21,826
Retail Retail Consumer Products Insurance Business Services Building Products Environmental Education Industrial Education Retail Health care Business Services Business Services
11,400 $ 19,983 $ 15,321 $

3,961 1,000 148,300 83,229 15,000 25,000 20,000 62,938 10,000 33,600 20,000 5,000 15,000 5,499 774 147,019 80,722 15,012 25,000 19,923 62,656 10,000 32,880 19,931 5,000 14,883 8,263 41 '165 60,000 35,000 37,564 4,749 625 147,605 83,229 15,000 24,875 20,350 60,289 9,400 33,600 20,000 3,925 12,581 6,722 37,613 56,820 35,000 43,165
Business Services 6,210 Telecommunications $ 44,250 Electronics 60,000 Logistics 35,000 43,550 Packaging
APP-00492
10-Q
Page 23
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (continued) March 31,2010 (in thousands)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -151.1%
lndust~
Par Amount*
Cost
Fair Value(1)
2nd Lien Bank Debt/Senior Secured Loans (continued) Ranpak Corp., 12/27/14(4) t Sheridan Holdings, Inc., 6/15/15 TransFirst Holdings, Inc., 6/15/15 Total 2nd Lien Bank Debt/Senior Secured Loans TOTAL BANK DEBT/SENIOR SECURED LOANS Subordinated Debt/Corporate Notes- 93.0% AB Acquisitions UK Topco 2 Limited (Alliance Boots), GBP L+650, 7/9/17 Advantage Sales & Marketing, Inc., 12.00%, 3/29/14 Allied Security Holdings LLC, 13.75%, 8/21/15 Altegrity Inc., 11.75%, 5/1/16 "t Altegrity Inc., 10.50%, 11/1/15 "t Angelica Corporation, 15.00%, 2/4/14 ATI Acquisition Company, L+1100, 12/30/15 BNY ConvergEx Group, LLC, 14.00%, 10/2/14 Booz Allen Hamilton Inc., 13.00%, 7/31/16 Catalina Marketing Corporation, 11.625%, 10/1/17"t Catalina Marketing Corporation, 10.50%, 10/1/15"t Ceridian Corp., 13.00%, 11/15/15 t Ceridian Corp., 11.25%,11/15/15 t Cidron Healthcare C S.a.R.L. (Convatec) E+950, 8/1/17 Delta Educational Systems, Inc., 14.20%, 5/12/13 Dura-Line Merger Sub, Inc., 14.00%, 9/22/14 European Directories (DH5) B.V., 15.735%, 7/1/16 t*** European Directories (DH7) B.V., E+950, 7/1/15 t*** First Data Corporation, 11.25%, 3/31/16 t First Data Corporation, 9.875%, 9/24/15 t FleetPride Corporation, 11.50%, 10/1/14 "t
Packaging Healthcare Financial Services
21,970 $ 27,074 $ 29,464 $67,847 66,948 67,169 36,632 35,687 33,519 $770,983 $761,021 $792,219 $782,847
Retail Grocery Business Services Diversified Service Diversified Service Healthcare Education Business Services Consulting Services Grocery Grocery Diversified Service Diversified Service
40,847 $ 79,172 $ 56,817 $32,535 20,000 14,639 13,475 60,000 38,500 42,730 23,435 42,175 5,000 53,250 36,000 32,164 19,661 9,716 11,852 60,000 37,750 35,913 23,109 40,997 5,094 53,250 35,246 12,547 19,120 41,792 4,475 21,846 33,801 40,129 47,500 5,810 33,500 39,244 46,075 32,860 20,500 13,644 12,693 64,260 38,115 44,140 24,197 45,549 5,300 52,185 34,740 10,923 19,713 42,787
Healthcare 8,033 Education $19,517 Telecommunications 42,363 Publishing Publishing Financial Services Financial Services Transportation 3,452 17,454 $40,000 45,500 47,500

APP-00493
10-Q
Page 24
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -151.1% In dust~ Par Amount* Cost Fair Value(1)
Subordinated Debt/Corporate Notes(continued) FoxCo Acquisition Sub LLC, 13.375%, 7/15/16 .. FPC Holdings, Inc. (FieetPride Corporation), 14.00%, 6/30/15 "t General Nutrition Centers, Inc., L+450, 3/15/14 t General Nutrition Centers, Inc., 10.75%, 3/15/15 Broadcasting & Entertainment Transportation Retail Retail Manufacturing Insurance Broadcasting & Entertainment Education Environmental Manufacturing Consumer Finance Consumer Services Market Research Machinery Beverage, Food & Tobacco Leisure Equipment Packaging $25,250 $ 37,846 12,275 24,500 25,000 33,732 75,000 53,540 51,061 61 '186 22,630 40,000 61,000 50,172 17,723 97,184 67,643 57,351 32,500 55,000 52,173 72,500 22,000 81,543 22,204 25,034 $ 37,429 12,149 24,906 25,518 32,498 77,335 51' 133 51,061 60,375 18,974 40,000 54,275 36,825 17,723 97,184 67,643 55,479 31,901 54,046 49,286 72,253 20,681 25,250 35,575 11,630 25,113 28,000 32,214 79,469 56,217 15,000 62,471 21,758 39,600 58,255 1,505 18,210 82,325 68,557 6,882 31,444 54,046 55,580 70,748 21,065
t
Goodman Global Inc., 13.50%, 2/15/16 Hub International Holdings, 10.25%, 6/15/15 .. lntelsat Bermuda Ltd., 11.25%, 2/4/17 Laureate Education, Inc., 11.75%, 8/15/17 .. LVI Services, Inc., 17.25%, 11/16/12 MW Industries, Inc., 14.50%, 5/1/14 NCO Group Inc., 11.875%,11/15/14 N.E.W. Holdings I, LLC, L+750, 3/23/17 Nielsen Finance LLC, 0% I 12.50%, 8/1/16 Pacific Crane Maintenance Company, L.P., 15.00%, 2/15/14 ***
PBM Holdings, Inc., 13.50%, 9/29/13 Playpower Holdings Inc., 15.50%, 12/31/12 .. Ranpak Holdings, Inc., 15.00%, 12/27/15 RSA Holdings Corp. of Delaware (American Safety Razor), 13.50%, 1/30/15 *** Consumer Products Sorenson Communications, Inc., 10.50%, 2/1/15 .. Consumer Services SquareTwo Financial Corp. (Collect America, Ltd.), 11.625%, 4/1/17 .. Consumer Finance The Servicemaster Company, 10.75%, 7/15/15 .. Diversified Service TL Acquisitions, Inc. (Cengage Learning), 13.25%, 7/15/15 "t Education TL Acquisitions, Inc. (Cengage Learning), 10.50%, 1/15/15 "t Education Beverage, Food & US Foodservice, 10.25%, 6/30/15 .. Tobacco Varietal Distribution, 10.75%, 6/30/17 Distribution Total Subordinated Debt/Corporate Notes TOTAL CORPORATE DEBT See notes to financial statements.
84,498 62,034 21,664 20,983 $1,762,540 $1,649,447 $2,554,759 $2,432,294
APP-00494
10-Q
Page 25
19
APP-00495
10-Q
Page 26
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (continued) March 31,2010 (in thousands, except shares)
INVESTMENTS IN NON-CONTROLLED/NON-AFFILIATED PORTFOLIO COMPANIES -151.1% lndust!1 Par Amount* Cost Fair Value(1)
COLLATERALIZED LOAN OBLIGATIONS1.5% Babson CLO Ltd., Series 2008-2A Class E, L+975, 7/15/18 .. Babson CLO Ltd., Series 2008-1A Class E, L+550, 7/20/18 .. Westbrook CLO Ltd., Series 2006-1A, L+370, 12/20/20 .. TOTAL COLLATERALIZED LOAN OBLIGATIONS
Asset Management Asset Management Asset Management
11,000 $10,097 10,366 11,000 7,676 6,684 $24,457

Shares
$10,690 8,420 6,756 $25,866
PREFERRED EQUITY- 1.6% AHC Mezzanine LLC (Advanstar) ** CA Holding, Inc. (Collect America, Ltd.) Series A Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 13.50%, 5/12/14 Gryphon Colleges Corporation (Delta Educational Systems, Inc.), 12.50% (Convertible) Varietal Distribution Holdings, LLC, 8.00% TOTAL PREFERRED EQUITY EQUITY -10.8% Common Equity/Interests -10.4% AB Capital Holdings LLC (Allied Security) ** A-D Conduit Holdings, LLC (Duraline) ** CA Holding, Inc. (Collect America, Ltd.) Series A** CA Holding, Inc. (Collect America, Ltd.) Series AA ** Clothesline Holdings, Inc. (Angelica)** Explorer Coinvest LLC (Booz Allen) FSC Holdings Inc. (Hanley Wood LLC) ** Garden Fresh Restaurant Holding, LLC ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.)** GS Prysmian Co-Invest L.P. (Prysmian Cables & Systems )(5,6) LVI Acquisition Corp. (LVI Services, Inc.)** MEG Energy Corp.(?)
Media Consumer Finance Education Education Distri buti on
1 $ 1,063 $ 298 7,961 788 1,592 12,360 332,500 3,097 19,286 5,364 3,852 $30,353 19,443 5,360 1,907 $28,600
Business Services Telecommunications Consumer Finance Consumer Finance Healthcare Consulting Services Media Retail Education Industrial Environmental Oil & Gas
2,000,000 2,778 25,000 4,294 6,000 430 10,000 50,000 17,500 1 6,250 2,176,722
$ 2,000 2,778 2,500 429 6,000 4,300 10,000 5,000 175
$ 2,628 4,381 1,771 859 8,901 8,849 167 11,455 4,014 385
2,500 55,006
88,202

APP-00496
10-Q
Page 27
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (continued) March 31,2010 (in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/NONAFFILIATED PORTFOLIO COMPANIES -151.1% lndust!:Y Shares Cost Fair Value(1)
Common Equity/Interests- (continued) New Omaha Holdings Co-Invest LP (First Data) ** PCMC Holdings, LLC (Pacific Crane)** Penton Business Media Holdings, LLC Pro Mach Co-Investment, LLC ** RC Coinvestment, LLC (Ranpak Corp.) ** Sorenson Communications Holdings, LLC Class A Varietal Distribution Holdings, LLC Class A** Total Common Equity/Interests
Financial Services Machinery Media Machinery Packaging Consumer Services Distribution
13,000,000 $ 50,000 124 150,000 50,000 454,828 28,028
65,000 $ 4,000 4,950 1,500 5,000
31,590 4,950 4,200 5,088
45 6,080 28 $ 171,211 $ 183,520
Warrants
Warrants- 0.4% CA Holding, Inc. (Collect America, Ltd.), Common Fidji Luxco (BC) S.C.A., Common (FCI)(5) ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Common** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class A-1 Preferred ** Gryphon Colleges Corporation (Delta Educational Systems, Inc.), Class B-1 Preferred ** Total Warrants TOTAL EQUITY Total Investments in Non-Controlled/ NonAffiliated Portfolio Companies
Consumer Finance Electronics Education
7,961 $ 48,769 9,820
8 491 $ 98
2,939 2,252
Education
45,947
460
741
Education
104,314
1,043 1,681 $ 2,100 $ 7,613 $ 173,311 $ 191,133 $2,782,880 $2,677,893
APP-00497
10-Q
Page 28
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (continued) March 31,2010 (in thousands, except shares and warrants)
INVESTMENTS IN NON-CONTROLLED/AFFILIATED PORTFOLIO COMPANIES- 4.7%{8}
lndust~
Par Amount*
Cost
Fair Value(1)
CORPORATE DEBT- 4.0% BANK DEBT/SENIOR SECURED LOANS (2)- 3.4% 1st Lien Bank Debt/Senior Secured Loans- 0.1% Gray Wireline Service, Inc., 10/22/12 2nd Lien Bank Debt/Senior Secured Loans - 3.3% Gray Wireline Service, Inc., 14.00%, 10/22/12 TOTAL BANK DEBT/SENIOR SECURED LOANS Subordinated Debt/Corporate Notes- 0.6% DSI Renal Inc., 17.00%, 4/7/14 TOTAL CORPORATE DEBT
Oil & Gas Oil & Gas
$ $
1,000 77,554
1,000
$ 1,000 $59,251 $60,251 $10,057 $70,308
$ 77,554 $ 78,554
Healthcare
9,860
$ 9,860 $ 88,414
Shares
EQUITY-0.7% Common Equity/Interests - 0.6% CDSI I Holding Company, Inc. (DSI Renal Inc.) Gray Energy Services, LLC Class H (Gray Wireline) ** Total Common Equity/Interests
Healthcare Oil & Gas
9,303 1,081
9,300 2,000 $ 11,300 $
$10,206 $10,206
Warrants
Warrants - 0.1% CDSI I Holding Company, Inc. Series A (DSI Renal Inc.) CDSI I Holding Company, Inc. Series B (DSI Renal Inc.) CDSI I Holding Company, Inc. (DSI Renal Inc.) Gray Holdco, Inc. Total Warrants TOTAL EQUITY Total Investments in Non-Controlled/Affiliated Portfolio Companies
Healthcare Healthcare Healthcare Oil & Gas
2,031 2,031 6,093,750 3,559
773 645 1,003
854 693 1,075
$ 2,421 $ 13,721 $102,135
$ 2,622 $12,828 $83,136
APP-00498
10-Q
Page 29
Table of Contents APOLLO INVESTMENT CORPORATION SCHEDULE OF INVESTMENTS (continued) March 31,2010 (in thousands, except shares)
INVESTMENTS IN CONTROLLED PORTFOLIO COMPANIES- 5.2%{9} lndust!Y Shares Cost Fair Value(1}
Preferred Equity - 0.3% Grand Prix Holdings, LLC Series A, 12.00% (Innkeepers USA)*** EQUITY Common Equity/Interests - 4.9% AIC Credit Opportunity Fund LLC (1 0) Generation Brands Holdings, Inc. (Quality Home Brands) Generation Brands Holdings, Inc. Series H (Quality Home Brands) Generation Brands Holdings, Inc. Series 2L (Quality Home Brands) Grand Prix Holdings, LLC (Innkeepers USA) ** Total Common Equity/Interests TOTAL EQUITY Total Investments in Controlled Portfolio Companies Total Investments- 161.0%(11)
Hotels, Motels, Inns & Gaming
2,989,431
$ 101,346
5,268
Asset Management Consumer Products Consumer Products Consumer Products Hotels, Motels, Inns & Gaming
$ 750 7,500 36,700 17,335,834
70,041
73,514 230
2,297 11,242 172,664 $ 256,244 $ 256,244 $ 357,590 $3,242,605 $ $
2,297 11,242
87,283 87,283
$ 92,551 $2,853,580
Par Amount
CASH EQUIVALENTS- 25.3% U.S. Treasury Bill, 0.13%, 7/1/10 Total Investments and Cash Equivalents - 186.3% Liabilities in Excess of Other Assets(86.3%) Net Assets - 100.0%
Government
450,000
$ 449,852 $3,692,457
449,828
$3,303,408 (1 ,530,602) $ 1,772,806
APP-00499
10-Q
Page 30
(1) Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see note 2). (2) Includes floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the LIBOR (London Interbank Offered Rate), EURIBOR (Euro Inter-bank Offered Rate), GBP LIBOR (London Inter-bank Offered Rate for British Pounds), or the prime rate. At March 31, 2010, the range of interest rates on floating rate bank debt was 4.59% to 10.50%. (3) Position is held across five US Dollar-denominated !ranches with varying yields. (4) Position is held across three Euro-denominated !ranches with varying yields. (5) Denominated in Euro (). (6) The Company is the sole Limited Partner in GS Prysmian Co-Invest L.P. (7) Denominated in Canadian dollars. (8) Denotes investments in which we are an "Affiliated Person", as defined in the 1940 Act, due to owning, controlling, or holding the power to vote, 5% or more of the outstanding voting securities of the investment. Transactions during the fiscal year ended March 31, 2010 in these Affiliated investments are as follows: Fair Value at March 31, 2009 $ Gross Additions $ 1,000 77,554 9,860 9,300 3,590 773 645 1,003 $ 3,590 $100,135 $ $ 1,002 $ 854 693 1,075 83,136 Gross Reductions $ Interest/Dividend Income $ 5 633 364 Fair Value at March 31, 2010 $ 1,000 59,251 10,057 10,206
Name of Issuer Gray Wireline Service, Inc. 1st Out Gray Wireline Service, Inc. 2nd Out DSI Renal, Inc., 17.00% CDSI I Holding Company, Inc. Common Equity Gray Energy Services, LLC Class H Common Equity CDSI I Holding Company, Inc. Series A Warrant CDSI I Holding Company, Inc. Series B Warrant CDSI I Holding Company, Inc. Contingent Payment Agreement Gray Holdco, Inc. Warrant
(9) Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the fiscal year ended March 31, 2010 in these Controlled investments are as follows: Fair Value at March 31, 2009 $ 76,557 57,294 Gross Additions $ 11,272 11,854 Gross Reductions $ 21 '190 Interest/Dividend Income $ 9,351 11 ,309 Fair Value at March 31, 2010 $ 5,268 73,514 230 2,297 11,242 7,570 $ 141,421 $ 36,665 $ 21 '190 $ 20,660 $ 92,551 2,297 11,242
Name of Issuer Grand Prix Holdings, LLC Series A Preferred AIC Credit Opportunity Fund LLC Common Equity (10) Generation Brands Holdings, Inc. Common Equity Generation Brands Holdings, Inc. Series H Common Equity Generation Brands Holdings, Inc. Series 2L Common Equity Grand Prix Holdings, LLC Common Equity
24
APP-00500

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1

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

JOB NO. 19763

DAVID FELDMAN WORLDWIDE, INC.

AFTERNOON SESSION- 142

MARK A. MURPHY, Innkeepers USA

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

Okay. Was Apollo Investment 31

You can answer.

Mr. Beilinson, is it true that since

With the debtors and Lehman,

A I don't recall this particular document.

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

Exhibit 7 and 8, if you would, please.

become binding on Lehman when Lehman, AIC and the 11

You just didn't care?

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

Q You can talk about an alternative transaction? That's correct. A

Marc A Beilinson million.

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585

Okay. We went through a lot of term

A That sort of provisions were unacceptable, yes.

Okay. Do you know why Lehman kept

Did you talk to them about the fact

It's identified as a Dechert Draft

Looking again at the pages 5 and 6 on

Okay. Do you recall receiving this

document? A I received many documents that were similar to this.

Was this document acceptable, the

(Pages 102 to 105)

Marc A. Beilinson at that time? A Well, this refers to a discussion that

The first bullet point reads:

You read it correctly.

of the current negotiations at this time on July 7th?

Mr. Glatt sent this transmission to

I don't know what my thoughts were on

No, he sent, he sent a transmission so

I would know what was transpiring between them.

this reflects the current status of negotiations at that time?

But it is clear, at least from this

A That's the way I would view this document.

Okay. Then if I go on to the next

term sheet which is, starts on page number 148,

(Complies.) I've reviewed it.

with the objection. Term Sheet, Lehman/AIC, take a look at that.

A I'm going to have to read it all because--

Now did you accept this proposal?

I've read the four pages.

document, Conditions to Execution of Stock Purchase 2 3 Agreement.

I see the provision.

things around this timeframe. I was focused in on

(Pages 106 to 109)

But it was important that Apollo or

someone else buy the stock from Lehman?

Now at this time, July 7, or so,

That's about right.

Marc A Beilin son responded to by me.

Well, let's go to the second term

With regard to these provisions?