AGREEMENT AND PLAN OF MERGER

 

 

 

 

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     This AGREEMENT AND PLAN OF MERGER (this " Agreement "), dated as of April 15, 2007, is entered into by and among GRAND PRIX HOLDINGS LLC, a Delaware limited liability company (" Purchaser "), GRAND PRIX ACQUISITION TRUST, a Maryland real estate investment trust and a wholly-owned Subsidiary (as defined below) of Purchaser (" Purchaser Acquisition Entity " and, together with Purchaser, the " Purchaser Parties "), INNKEEPERS USA TRUST, a Maryland real estate investment trust (" Innkeepers REIT "), INNKEEPERS USA LIMITED PARTNERSHIP, a Virginia limited partnership whose sole general partner is the General Partner (as defined below) (" Innkeepers LP "), and INNKEEPERS FINANCIAL CORPORATION, a Virginia corporation whose sole shareholder is Innkeepers REIT (the " General Partner " and, together with Innkeepers REIT and Innkeepers LP, the " Innkeepers Parties ").

     A.     It is proposed that Innkeepers REIT shall merge (the " Merger ") with and into Purchaser Acquisition Entity with Purchaser Acquisition Entity surviving in accordance with the terms, and subject to the conditions, of this Agreement and in accordance with the Maryland General Corporation Law, as amended (the " MGCL ") and Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland, as amended (the " Maryland REIT Law "), pursuant to which each of the issued and outstanding common shares of beneficial interest, par value $0.01 per share, of Innkeepers REIT (the " Innkeepers REIT Common Shares "), shall be converted into the right to receive the Merger Consideration (as defined below) upon the terms, and subject to the conditions, provided herein.

     B.     The Board of Trustees of Innkeepers REIT (the " Innkeepers REIT Board of Trustees ") has (i) determined that this Agreement, the Merger and the other transactions contemplated hereby, taken together, are fair to, advisable and in the best interests of Innkeepers REIT and the holders of the Innkeepers REIT Common Shares (the " Innkeepers REIT Common Shareholders "), (ii) voted to (A) approve this Agreement and the transactions contemplated hereby, including the Merger, and (B) recommend acceptance and approval by the Innkeepers REIT Common Shareholders of this Agreement, the Merger and the other transactions contemplated hereby and (iii) taken all actions necessary to render inapplicable to each of the transactions contemplated by this Agreement or exempt such transactions from the provisions of any "fair price," "moratorium," "control share" or other takeover defense or similar statute or regulation that would otherwise govern such transactions and the parties hereto, including Subtitles 6 and 7 of Title 3 of the MGCL, as applicable to a Maryland real estate investment trust.

     C.     At least two-thirds of the holders of the common units held by the Class A limited partners of Innkeepers LP and excluding such common units held by the General Partner (except for any such common units held by the General Partner, the " LP Units " and such holders the " Innkeepers LP Unitholders "), in their capacity as limited partners of Innkeepers LP, have irrevocably consented and agreed to Innkeepers REIT, the General Partner and Innkeepers LP entering into the Innkeepers LP Amendment and the Merger Agreement.

     D.      The manager of Purchaser and Purchaser in its capacity as the sole shareholder of Purchaser Acquisition Entity have approved this Agreement, the Merger and the other transactions contemplated hereby.

      E.     Purchaser, Purchaser Acquisition Entity and the Innkeepers Parties intend that, for U.S. federal income tax purposes, the Merger shall be treated as a taxable purchase of all of the assets of Innkeepers REIT directly by Purchaser Acquisition Entity.

     F.      Certain capitalized terms used in this Agreement are defined in Article IX.

AGREEMENT

     In consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties hereto hereby agree as follows:

ARTICLE I

THE MERGER

             Section 1.1      The Merger; General .

                        (a)     Upon the terms, and subject to the conditions, set forth in this Agreement, at the Merger Effective Time, Innkeepers REIT shall be merged with and into Purchaser Acquisition Entity in accordance with the Maryland REIT Law, the MGCL and the Articles of Merger, and the separate existence of Innkeepers REIT shall cease and Purchaser Acquisition Entity shall continue as the surviving entity (in such capacity, the " Surviving Entity "). The Merger shall have the effects set forth in the Maryland REIT Law and the MGCL. Accordingly, from and after the Merger Effective Time, the Surviving Entity shall have all the properties, rights, privileges, purposes and powers and debts, duties and Liabilities of Innkeepers REIT.

                        (b)     Subject to the terms and conditions of this Agreement, at the Merger Effective Time, Purchaser Acquisition Entity shall purchase one hundred (100) LP Units for a cash purchase price of one hundred dollars ($100.00) and Purchaser Acquisition Entity shall become a limited partner of Innkeepers LP.

             Section 1.2     Closing . Upon the terms, and subject to the conditions, of this Agreement, the closing of the Merger and the other transactions contemplated hereby (the " Closing ") shall take place at 10:00 a.m., local time, as promptly as practicable but in no event later than the third Business Day after the satisfaction or waiver (by the party hereto entitled to grant such waiver) of the conditions (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of such conditions) set forth in Article VI, or at such other time and on a date as agreed to by the parties hereto (such date, the " Closing Date ") at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP, 4 Times Square, New York, New York; provided , however , that notwithstanding the satisfaction or waiver of the conditions set forth in Article VI as of any date, the Purchaser Parties shall not be required to effect the Closing until June 29, 2007 (subject in each case to the satisfaction or waiver (by the party hereto entitled to grant such waiver) of all of the conditions (other than those conditions

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that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of such conditions) set forth in Article VI).

             Section 1.3     Effective Time .

                        (a)     On the Closing Date, Innkeepers REIT and Purchaser Acquisition Entity shall execute and file the Articles of Merger in accordance with, and shall make all other filings or recordings and take all such other action required with respect to the Merger, under the Maryland REIT Law and the MGCL. Unless Innkeepers REIT and Purchaser agree otherwise, the Merger shall become effective when the Articles of Merger have been accepted for record by the Maryland Department (the " Merger Effective Time ").

             Section 1.4     Merger Consideration .

                        (a)     At the Merger Effective Time, by virtue of the Merger and without any further action on the part of Purchaser Acquisition Entity, Innkeepers REIT or the Innkeepers REIT Common Shareholders, each Innkeepers REIT Common Share issued and outstanding immediately prior to the Merger Effective Time that is owned by any Innkeepers Party or by any wholly-owned Subsidiary of Innkeepers REIT (other than, in each case, shares in trust accounts, managed accounts, custodial accounts and the like that are beneficially owned by third parties) shall automatically be cancelled and retired and shall cease to exist, and no payment shall be made with respect thereto.

                        (b)     At the Merger Effective Time, by virtue of the Merger and without any further action on the part of Purchaser Acquisition Entity, Innkeepers REIT or the Innkeepers REIT Common Shareholders, each Innkeepers REIT Common Share issued and outstanding immediately prior to the Merger Effective Time, other than the Innkeepers REIT Common Shares cancelled pursuant to Section 1.4(a), shall automatically be converted into the right to receive an amount in cash equal to $17.75 per share, without interest (the " Merger Consideration "), upon surrender of the Common Share Certificate formerly evidencing such share. All such Innkeepers REIT Common Shares, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a Common Share Certificate evidencing any such shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration to be paid in consideration therefor upon the surrender of such Common Share Certificates in accordance with Section 2.1, without interest.

                        (c)     At the Merger Effective Time, by virtue of the Merger and without any further action on the part of Purchaser Acquisition Entity, Innkeepers REIT, the Innkeepers REIT Common Shareholders or holders of any shares of Purchaser Acquisition Entity, each common share of beneficial interest, par value $0.01 per share, of Purchaser Acquisition Entity issued and outstanding immediately prior to the Merger Effective Time shall remain outstanding as one (1) issued and outstanding common share of beneficial interest of the Surviving Entity.

                        (d)     At the Merger Effective Time, by virtue of the Merger and without any further action on the part of Purchaser Acquisition Entity, Innkeepers REIT, the Innkeepers REIT Common Shareholders or holders of any shares of the 8.0% Series C Cumulative Preferred

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shares of beneficial interest, par value $0.01 per share, of Innkeepers REIT (the " Series C Preferred Shares " and, together with the Innkeepers REIT Common Shares, the " Innkeepers REIT Capital Stock "), each Series C Preferred Share issued and outstanding immediately prior to the Merger Effective Time shall automatically be converted into one (1) share of 8.0% Series A Cumulative Preferred shares of beneficial interest, par value $0.01 per share, of the Surviving Entity (" Surviving Entity Preferred Stock "). Each certificate representing Series C Preferred Shares immediately prior to the Merger Effective Time shall, as of the Merger Effective Time, automatically represent an equivalent number of shares of Surviving Entity Preferred Stock.

             Section 1.5     Partnership Amendment .

                        (a)     At the Merger Effective Time, the Second Amended and Restated Agreement of Limited Partnership of Innkeepers LP, as amended (the " Innkeepers LP Agreement ") shall be amended and restated in its entirety to provide, inter alia , that each Innkeepers LP Unitholder (other than Purchaser Acquisition Entity) may, at such Innkeepers LP Unitholder's sole discretion, elect (each, an " Election ") to (A) continue as a limited partner of the Surviving Partnership on such terms and subject to such conditions as set forth in the Innkeepers LP Agreement, as amended, or (B) convert such Innkeepers LP Unitholder’s LP Units into the right to receive cash, without interest (the " Partnership Consideration "), in an amount equal to the product of (i) the Merger Consideration multiplied by (ii) the number of Innkeepers REIT Common Shares issuable upon exchange of each such LP Unit in accordance with the terms of the Innkeepers LP Agreement, as in effect on the date hereof, or (C) make an Election with respect to some, but not all, of such Innkeepers LP Unitholder's LP Units (with the effects set forth in the foregoing clause (B) with respect to, but only with respect to, the LP Units covered by such Election); provided , further , that any such Innkeepers LP Unitholder who (x) is entitled to receive an amount of Partnership Consideration equal to $250,000 or less, in the aggregate, (y) is not an "accredited investor" (as such term is defined in Rule 501(a) under the Securities Act) or (z) would not be eligible, in Purchaser's reasonable judgment (after being advised by outside counsel), based on Purchaser's (and such counsel's) review of such Innkeepers LP Unitholder's responses to a questionnaire sent to the Innkeepers LP Unitholders (which questionnaire shall be in form and substance reasonably acceptable to Purchaser and Innkeepers REIT) and such other customary matters as are reasonably taken into account by Purchaser and its counsel, to continue as a limited partner of the Surviving Partnership in accordance with this Agreement without registration of such Innkeepers LP Unitholder's LP Units under the Exchange Act, the Securities Act or state securities or "blue sky" Laws, shall, in each of cases (x), (y) and (z), shall have no right to make an Election hereunder and such Innkeepers LP Unitholders’ LP Units shall be converted into the right to receive the Partnership Consideration. Elections shall be made in a form designated by Purchaser for that purpose, which form shall be reasonably acceptable to Innkeepers REIT (an " Election Form "). The Election Form shall (a) state that, by making an Election, an Innkeepers LP Unitholder shall be deemed to have (i) consented to the Innkeepers LP Amendment and (ii) unconditionally and irrevocably waived any and all rights such Innkeepers LP Unitholder may have against the Innkeepers Parties or the Purchaser Parties or any of their respective Subsidiaries, Affiliates or Representatives under the Innkeepers LP Agreement or the Surviving Partnership LP Agreement, in connection with and with respect to the Merger and the other transactions contemplated by this Agreement or otherwise, (b) when completed, specify the number of LP Units, if less than all, with respect to which an Election is made (failing which, the holder thereof shall be deemed to have made an Election with respect to

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all of such holder's LP Units), (c) provide any other information or certification relating to Taxes that is reasonably required in connection with the transactions contemplated hereby and (d) include a Unitholder Letter of Transmittal. In order to be effective, an Election Form must be duly completed, signed and submitted to Purchaser, and must be received by Purchaser by a date mutually agreed by Purchaser and Innkeepers REIT but in any event no earlier than 20 days following the date on which such Election Form is mailed and no later than 2 days prior to the Closing Date (the " Election Deadline ") specified in the Election Form or in the Unitholder Letter of Transmittal. Any Innkeepers LP Unitholder who has the right to make, and has made, an Election pursuant to this Section 1.5(a) (each, an " Electing Holder ") may at any time prior to the Election Deadline revoke such Election by written notice to Purchaser received by Purchaser prior to the Election Deadline. Any Electing Holder who does not submit a properly completed Election Form which is received by Purchaser prior to the Election Deadline, or who has duly revoked such Election, shall be deemed not to have made an Election and shall be entitled to receive the Partnership Consideration. Purchaser shall, in its sole discretion, determine whether an Election Form has been timely and properly completed, signed and submitted or revoked and whether to disregard immaterial defects in such form. Such decision shall be conclusive and binding. The Purchaser Parties agree to reasonably cooperate with the Innkeepers Parties in preparing any disclosure statement or other disclosure information to accompany the Election Form, including information applicable to an offering of securities exempt from registration under the Securities Act.

                        (b)     From and after the adoption of the Innkeepers LP Amendment, (i) each LP Unit issued and outstanding and held by Purchaser Acquisition Entity immediately prior to the Merger Effective Time shall be held by the Surviving Entity and shall remain a common limited partnership interest of the Surviving Partnership, and (ii) each LP Unit issued and outstanding immediately prior to the Merger Effective Time with respect to which the holder thereof has the right to make, and has duly made, an Election in accordance with Section 1.5(a) shall remain a limited partnership interest of the Surviving Partnership, designated as a Series D Preferred Limited Partnership Unit of the Surviving Partnership (the " Surviving Partnership Series D Units ") pursuant to the Surviving Partnership LP Agreement, and, in each case, no payment shall be made pursuant to this Agreement with respect thereto. In addition, Purchaser shall contribute cash to the Surviving Partnership (directly or indirectly through depositing the same with the Exchange Agent in accordance with Section 2.1(a)) as needed to pay the Partnership Consideration to the non-Electing Holders, if any, and the Electing Holders who have elected to receive the Partnership Consideration, if any, and LP Units in the Surviving Partnership shall be issued to the Surviving Entity in an amount equal to the number of non-Electing Holders' LP Units in Innkeepers LP cancelled pursuant to Section 1.5(a) (which LP Units shall be treated as having been sold to the Surviving Entity by the non-Electing Holders for federal and applicable state income Tax purposes).

                        (c)     From and after the adoption of the Innkeepers LP Amendment, the general partnership interest of Innkeepers LP held by the General Partner, including each of the Series C Preferred Partnership Units (the " GP Units " and, together with the LP Units, collectively, the " Innkeepers LP Units "), issued and outstanding immediately prior to the Merger Effective Time, shall remain outstanding and held by the General Partner and shall constitute the only outstanding general partnership interest in the Surviving Partnership.

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             Section 1.6     Organizational Documents .

                        (a)     The Amended and Restated Declaration of Trust of Purchaser Acquisition Entity and the Articles Supplementary related to the Surviving Entity Preferred Stock which is a part thereof, as in effect immediately prior to the Merger Effective Time and in the forms provided by Purchaser and Purchaser Acquisition Entity to Innkeepers REIT no fewer than five (5) days prior to the Merger Effective Time (which forms shall provide, among other things, for Surviving Entity Preferred Stock having preferences, rights, voting powers and restrictions identical to the Series C Preferred Shares), shall continue in full force and effect after the Merger Effective Time as the Declaration of Trust and Articles Supplementary of the Surviving Entity, until further amended in accordance with the terms thereof and applicable Maryland Law. The Bylaws of Purchaser Acquisition Entity, as in effect immediately prior to the Merger Effective Time, shall continue in full force and effect after the Merger Effective Time as the Bylaws of the Surviving Entity, until further amended in accordance with the terms of such Bylaws and applicable Maryland Law. Such Declaration of Trust, Articles Supplementary and Bylaws shall not be inconsistent with Section 5.8.

                        (b)     The Innkeepers LP Agreement, as in effect immediately prior to the Merger Effective Time, as amended following the date hereof by the Innkeepers LP Amendment (as amended, the " Surviving Partnership LP Agreement "), shall continue in full force and effect after the Merger Effective Time as the Agreement of Limited Partnership of the Surviving Partnership, until further amended in accordance with the terms of the Surviving Partnership LP Agreement and applicable Virginia Law. The Certificate of Limited Partnership of Innkeepers LP, as in effect immediately prior to the Merger Effective Time, shall continue in full force and effect after the Merger Effective Time as the Certificate of Limited Partnership of the Surviving Partnership, until further amended in accordance with the terms of such Certificate of Limited Partnership and applicable Virginia Law.

             Section 1.7     Directors and Officers; General Partner and Limited Partners .

                        (a)     The trustees of Purchaser Acquisition Entity and the officers of Innkeepers REIT immediately prior to the Merger Effective Time shall be the trustees and officers of the Surviving Entity, and such trustee and officers shall serve until their successors have been duly elected or appointed, or until their death, resignation or removal from office in accordance with the Surviving Entity's Declaration of Trust and Bylaws.

                        (b)     The trustees of Purchaser Acquisition Entity and the officers of the General Partner immediately prior to the Merger Effective Time shall be the directors and officers of the General Partner, and such directors and officers shall serve until their successors have been duly elected or appointed, or until their death, resignation or removal from office in accordance with the General Partner's Articles of Incorporation and Bylaws.

                        (c)     The general partner of Innkeepers LP immediately after the adoption of the Innkeepers LP Amendment shall be the General Partner, and the limited partners of the Innkeepers LP immediately after the adoption of the Innkeepers LP Amendment shall be the Surviving Entity, the General Partner and the Electing Holders, if any, who have elected to remain limited partners.

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             Section 1.8     Innkeepers Common Share Options .

                        (a)     At the Merger Effective Time, except as otherwise agreed to by Purchaser and a holder of an option under an Innkeepers Option Plan, each outstanding option (collectively, the " Innkeepers Options ") to purchase the Innkeepers REIT Common Shares granted under the Innkeepers REIT 1994 Share Incentive Plan, the Non-Employee Trustee's Share Incentive Plan and the Innkeepers REIT Trustees' Share Incentive Plan (collectively, the " Innkeepers Option Plans "), whether or not then vested or exercisable, shall be cancelled and of no further force and effect and the holder of any such option shall be entitled to receive, from and after the Merger Effective Time, an amount in cash equal to the product of (i) the number of the Innkeepers REIT Common Shares such holder could have purchased under such Innkeepers Option (assuming full vesting) had such holder exercised such Innkeepers Option in full immediately prior to the Merger Effective Time and (ii) the excess, if any, of the Merger Consideration over the exercise price per share or unit of such Innkeepers Option, which cash payment shall be treated as compensation and shall be net of any applicable withholding Tax (the " Option Merger Consideration "). Notwithstanding the foregoing, if the exercise price per share provided for in any Innkeepers Option exceeds the Merger Consideration, no cash shall be paid with regard to such Innkeepers Option to the holder of such Innkeepers Option. Prior to the Merger Effective Time, Innkeepers REIT shall use reasonable best efforts to establish a procedure to effectuate this Section 1.8(a). In connection with the Merger, as of immediately prior to the Merger Effective Time, any restrictions with respect to outstanding restricted shares awarded under the Innkeepers Option Plans shall terminate or lapse. Upon the termination or lapse of such restrictions, such shares shall be automatically converted into the right to receive the Merger Consideration on the terms and conditions set forth in the applicable sections of this Article I. In connection with the Merger, as of immediately prior to the Merger Effective Time, any awards of Innkeepers REIT Common Shares or cash denominated in Innkeepers REIT Common Shares, the vesting of which is subject to the achievement of certain performance (" Stock Performance Awards " and " Cash Performance Awards ," respectively and together the " Performance Awards "), shall vest and (i) the Innkeepers REIT Common Shares underlying the Stock Performance Awards shall be automatically converted into the right to receive the Merger Consideration on the terms and conditions set forth in the applicable sections of this Agreement and (ii) the Cash Performance Awards shall be shall be converted into a right to receive a cash payment equal to the product of (A) the Merger Consideration and (B) the number of Innkeepers REIT Common Shares subject to such Performance Cash Award, in each case subject to any applicable withholding Tax.

                        (b)     Innkeepers REIT covenants that it shall use its reasonable best efforts to ensure that Innkeepers Option Plans shall terminate as of the Merger Effective Time and all awards, including the Innkeepers Options and the Performance Awards, shall be terminated and the provisions in any other plan, program, arrangement or agreement providing for the issuance or grant of any other interest in respect of the equity interests of Innkeepers REIT or any of Innkeepers Subsidiaries shall be of no further force or effect and shall be deemed to be terminated as of the Merger Effective Time and no holder of an Innkeepers Option or Performance Award or any participant in any Innkeepers Option Plans shall have any right thereunder to (i) acquire any securities of Innkeepers REIT, the Surviving Entity or any Subsidiary thereof or (ii) receive any payment or benefit with respect to any award previously granted under Innkeepers Option Plans except as provided in Section 1.8(a).

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             Section 1.9    Termination of DRIP . Innkeepers REIT shall take all actions necessary to terminate Innkeepers REIT's Dividend Reinvestment and Share Purchase Plan (the " DRIP "), effective no later than immediately prior to the Merger Effective Time, and ensure that no purchase or other rights under the DRIP enable the holder of such rights to acquire any interest in the Surviving Entity, Purchaser, any Purchaser Subsidiary, including Purchaser Acquisition Entity, any Innkeepers Party or any Innkeepers Subsidiary, as a result of such purchase or the exercise of such rights at or after the Merger Effective Time.

ARTICLE II

EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES

             Section 2.1     Payment for Securities.

                        (a)     Exchange Agent . At or before the Merger Effective Time, Purchaser shall appoint a bank or trust company reasonably satisfactory to Innkeepers REIT to act as Exchange Agent (the " Exchange Agent ") for the payment in accordance with this Article II of the Merger Consideration, the Option Merger Consideration and the Partnership Consideration (collectively, such cash constituting the Merger Consideration, the Option Merger Consideration and the Partnership Consideration, the " Exchange Fund "). On or before the Merger Effective Time, Purchaser shall deposit by wire transfer of cash immediately available funds in the amount of the Exchange Fund with the Exchange Agent for the benefit of the holders of the Innkeepers REIT Common Shares, the LP Units, the Innkeepers Options, and Performance Awards. The Exchange Agent shall make payments of the Merger Consideration, the Option Merger Consideration and the Partnership Consideration out of the Exchange Fund in accordance with this Agreement, the Articles of Merger and the Innkeepers LP Amendment. The Exchange Fund shall not be used for any other purpose. Any and all interest earned on cash deposited in the Exchange Fund shall be paid to the Surviving Entity.

                        (b)     Exchange Procedures .

                        (i)    As promptly as practicable following the Merger Effective Time (but in no event later than five (5) Business Days following the Merger Effective Date), Purchaser shall cause the Exchange Agent to mail (A) to each holder of record of a certificate or certificates (each, a " Common Share Certificate ") that immediately prior to the Merger Effective Time evidenced outstanding Innkeepers REIT Common Shares, whose shares were converted into the right to receive the Merger Consideration pursuant to Section 1.4(b), (x) a letter of transmittal (a " Letter of Transmittal "), which shall specify that delivery shall be effected and risk of loss and title to the Common Share Certificates shall pass only upon delivery of the Common Share Certificates to the Exchange Agent and shall be in such form and have such other provisions as Purchaser or the Surviving Entity may reasonably specify and (y) instructions for use in effecting the surrender of the Common Share Certificates in exchange for the Merger Consideration and (B) to each holder of (x) an Innkeepers Option entitled to receive Option Merger Consideration pursuant to Section 1.8(a) and (y) a Cash Performance Award entitled to receive Merger Consideration pursuant to Section 1.8(a), a check in an amount equal to the Option Merger Consideration or Merger Consideration, as applicable, due and payable to such

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holder pursuant to Section 1.8(a) in respect of such Innkeepers Option or Cash Performance Award.

                        (ii)    Upon surrender of a Common Share Certificate for cancellation to the Exchange Agent, together with a Letter of Transmittal, duly executed, and any other documents reasonably required by the Exchange Agent, Purchaser or the Surviving Entity, (A) the holder of such Common Share Certificate shall be entitled to receive in exchange therefor a check in the amount equal to the per share cash amount of the Merger Consideration, which such holder has the right to receive pursuant to the provisions of Section 1.4(b), and (B) the Common Share Certificate so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.1, each such Common Share Certificate shall be deemed at any time after the Merger Effective Time to represent only the right to receive upon such surrender the Merger Consideration.

                       (iii)    In the event of a transfer of ownership of Innkeepers REIT Common Shares which is not registered in the transfer records of Innkeepers REIT, the Merger Consideration shall be paid to a transferee if (A) the Common Share Certificate evidencing such Innkeepers REIT Common Shares is presented to the Exchange Agent properly endorsed or accompanied by appropriate stock powers and otherwise in proper form for transfer and accompanied by all documents reasonably required by the Exchange Agent to evidence and effect such transfer, and (B) such transferee shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the Common Share Certificate or establish to the satisfaction of the Exchange Agent, Purchaser and the Surviving Entity that such Tax has been paid or is not applicable.

                        (c)     Payment with respect to the LP Units; Effect on LP Units.

                        (i)    Purchaser Acquisition Entity shall purchase one hundred (100) Common Units of Innkeepers LP for a cash purchase price of one hundred dollars ($100.00) and Purchaser Acquisition Entity shall be a limited partner of Innkeepers LP.

                        (ii)    As promptly as practicable after the Merger Effective Time (but in no event later than five (5) Business Days following the Merger Effective Time), Purchaser shall cause the Exchange Agent to mail to each holder of LP Units listed on Schedule A of the Innkeepers LP Agreement immediately prior to the Merger Effective Time, who has not validly completed and properly delivered an Election Form prior to the Election Deadline, (A) a letter of transmittal (a " Unitholder Letter of Transmittal ") which shall certify to Purchaser and to the Exchange Agent the number of LP Units held by such holder and shall be in such form and have such other provisions as Purchaser or the Surviving Entity may reasonably specify, (B) instructions for use in effecting the delivery of the Unitholder Letter of Transmittal in order to receive the Partnership Consideration (if such Innkeepers LP Unitholder is not an Electing Holder) and (C) an Election Form.

                       (iii)    Upon delivery of a Unitholder Letter of Transmittal, duly executed, and any other documents reasonably required by the Exchange Agent,

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Purchaser or the Surviving Entity, Innkeepers LP Unitholder identified in such Unitholder Letter of Transmittal (except for any Electing Holder who elects to remain a limited partner) shall be entitled to a check in the amount equal to the per unit cash amount of the Partnership Consideration, which such holder has the right to receive pursuant to the provisions of Section 1.5(a).

                       (iv)    In the event of a transfer of ownership of LP Units which is not listed on Schedule A of the Innkeepers LP Agreement, the Partnership Consideration shall be paid to a transferee if (A) such transferee delivers a Unitholder Letter of Transmittal in accordance with Section 2.1(c)(i), and (B) such transferee shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the LP Unit or establish to the satisfaction of the Exchange Agent, Purchaser and the Surviving Partnership that such Tax has been paid or is not applicable.

                        (v)    Upon surrender to the Exchange Agent of a Unitholder Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required pursuant to such instructions, and subject to and conditioned upon the Merger, the Electing Holder party thereto shall be entitled to receive in exchange therefor (A) cash in respect of the Partnership Consideration which such holder has the right to receive pursuant to the provisions of Section 1.5(a) for any LP Units as to which such Electing Holder has not made an Election and (ii) Surviving Partnership Series D Units, which such Electing Holder has the right to receive pursuant to the provisions of Section 1.5(a), for any LP Units as to which such Electing Holder has made an Election.

                        (d)     Tax Characterizations . Purchaser and Innkeepers REIT intend that, for U.S. federal and state income tax purposes, the Merger shall be treated as a taxable sale by Innkeepers REIT of all of Innkeepers REIT's assets to Purchase Acquisition Entity in exchange for the Merger Consideration and the assumption of Innkeepers REIT's Liabilities, followed by a liquidating distribution of such Merger Consideration to the holders of the Innkeepers REIT Common Shares pursuant to Section 331 and Section 562 of the Code. This Agreement shall constitute a "plan of liquidation" of Innkeepers REIT for U.S. federal income tax purposes.

                        (e)     No Further Ownership Rights .

                        (i)    The Merger Consideration paid upon the surrender or exchange of the Common Share Certificates (if any) evidencing Innkeepers REIT Common Shares in accordance with the terms hereof shall be deemed to have been delivered and paid in full satisfaction of all rights and privileges pertaining to such Innkeepers REIT Common Shares and, after the Merger Effective Time, there shall be no further registration of transfers on the transfer books of the Surviving Entity of the Innkeepers REIT Common Shares. If, after the Merger Effective Time, Common Share Certificates are presented to the Surviving Entity, for any reason, they shall be cancelled and exchanged as provided in this Article II.

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                        (ii)    The Partnership Consideration paid with respect to LP Units in accordance with the terms hereof shall be deemed to have been delivered and paid in full satisfaction of all rights and privileges pertaining to such LP Units.

                       (iii)    The Option Merger Consideration paid with respect to the Innkeepers Options in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights and privileges pertaining to the cancelled Innkeepers Options, and on and after the Merger Effective Time the holder of an Innkeepers Option shall have no further rights with respect to any Innkeepers Option, other than the right to receive the Option Merger Consideration as provided in Section 1.8(a). 

                       (iv)    The Merger Consideration paid with respect to the Performance Awards in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights and privileges pertaining to such Performance Awards, and on and after the Merger Effective Time the holder of a Performance Award shall have no further rights with respect to any Performance Award, other than the right to receive the Merger Consideration as provided in Section 1.8(a).

                        (f)     Termination of Exchange Fund . Any portion of the Exchange Fund (including any interest and other income received with respect thereto) that remains undistributed to the former holders of Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards on the six (6) month anniversary of the Merger Effective Time shall be delivered to Purchaser, upon demand, and any former holders of the Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards who have not theretofore received any Merger Consideration, the Option Merger Consideration or Partnership Consideration, as applicable, to which they are entitled under this Article II, shall thereafter look only to the Surviving Entity or the Surviving Partnership, as applicable, for payment of their claims with respect thereto.

                        (g)     No Liability . None of the Purchaser Parties, the Surviving Entity or the Surviving Partnership, or any of their respective equity holders, partners, employees, consultants, officers, directors, agents, attorneys, accountants, financial advisors, debt and equity financing sources and other representatives (collectively, " Representatives ") or Affiliates, shall be liable to any holder of Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards for any part of the Merger Consideration, the Option Merger Consideration or Partnership Consideration, as applicable, delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any amounts remaining unclaimed by holders of any such Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards immediately prior to the time at which such amounts would otherwise escheat to, or become property of, any federal, state or local government or any court, regulatory or administrative agency or commission, governmental arbitrator or other governmental authority or instrumentality, domestic or foreign (a " Governmental Entity "), shall, to the extent permitted by applicable Law, become the property of the Surviving Entity or the Surviving Partnership, as applicable, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.

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                        (h)     Lost, Stolen or Destroyed Certificates . If any Common Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Common Share Certificate to be lost, stolen or destroyed and, if required by Purchaser or the Surviving Entity, the posting by such Person of a bond in such reasonable amount as Purchaser or the Surviving Entity may direct as indemnity against any claim that may be made against it with respect to such Common Share Certificate, the Exchange Agent shall pay in exchange for such lost, stolen or destroyed Common Share Certificate the appropriate amount of the Merger Consideration.

                        (i)     Withholding of Tax . Purchaser, the Surviving Entity, the Surviving Partnership or the Exchange Agent shall be entitled to deduct and withhold from the Merger Consideration, the Option Merger Consideration or the Partnership Consideration otherwise payable pursuant to this Agreement to any holder of Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards such amount as Purchaser, the Surviving Entity, the Surviving Partnership, any Affiliate of the Surviving Entity or the Surviving Partnership or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Law related to Taxes. To the extent that amounts are so withheld by the Surviving Entity, the Surviving Partnership or the Exchange Agent, such withheld amounts shall be (A) paid over to the applicable Governmental Entity in accordance with applicable Law and (B) treated for all purposes of this Agreement as having been paid to the former holder of Innkeepers REIT Common Shares, LP Units, Innkeepers Options or Performance Awards in respect of which such deduction and withholding was made by the Surviving Entity, the Surviving Partnership or the Exchange Agent.

                        (j)     No Dissenters' Rights . No dissenters' or appraisal rights shall be available with respect to the Merger or the other transactions contemplated hereby.

                        (k)     Additional Actions . If, at any time after the Merger Effective Time, Purchaser shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other documents, actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Entity or the Surviving Partnership its right, title or interest in, to or under any of the rights, properties or assets of any of the Purchaser Parties or the Innkeepers Parties, or otherwise to carry out this Agreement, the officers of the Surviving Entity and the Surviving Partnership shall be authorized to execute and deliver, in the name and on behalf of any of the Purchaser Parties or the Innkeepers Parties, all such deeds, bills of sale, assignments, assurances and other documents and to take and do, in the name and on behalf of any of the Purchaser Parties or the Innkeepers Parties, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Entity or the Surviving Partnership or otherwise to carry out this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

             Section 3.1     Representations and Warranties of the Innkeepers Parties . Except (i) as set forth in Innkeepers REIT's Form 10-K for the fiscal year ended December 31, 2006

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(except for the Management Discussion & Analysis, financial statements (and the notes thereto), the forward looking statements therein and the risk factors thereof), (ii) as expressly and specifically disclosed in any Innkeepers REIT SEC Documents filed since the date of the filing of such Form 10-K and prior to the date hereof (except, in each case, for the financial statements (and the notes thereto), the forward looking statements therein and the risk factors thereof, as applicable) and (iii) as set forth in the disclosure letter, dated as of the date hereof and delivered to Purchaser by the Innkeepers Parties in connection with the execution and delivery of this Agreement (the " Innkeepers Disclosure Letter "), each of the Innkeepers Parties hereby jointly and severally represents and warrants to the Purchaser Parties as follows, in each case, as of the date hereof and as of the Closing Date (or, in each case, if made as of a specific date, as of such date):

                        (a)     Organization, Standing and Trust Power of Innkeepers REIT . Innkeepers REIT is a real estate investment trust duly formed, validly existing and in good standing under the Laws of the State of Maryland and has all of the requisite power, authority and all necessary government approvals or licenses to own and lease its properties, and to conduct its business as now being conducted. Innkeepers REIT is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the ownership or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Innkeepers REIT has previously provided or made available to Purchaser (by public filing with the SEC or otherwise) complete and correct copies of Innkeepers REIT's Amended and Restated Declaration of Trust, the Articles Supplementary to the Declaration of Trust and the Amendments to the Amended and Restated Declaration of Trust, in each case, as in effect on the date hereof (collectively, the " Innkeepers REIT Charter "), and Innkeepers REIT's Amended and Restated Bylaws, as amended through, and as in effect on, the date hereof (the " Innkeepers REIT Bylaws "). The Innkeepers REIT Charter and the Innkeepers REIT Bylaws are each in full force and effect.

                        (b)     Innkeepers Subsidiaries; Interests in Other Persons .

                        (i)    Each Innkeepers Subsidiary is duly organized, validly existing and, as applicable, in good standing under the Laws of its jurisdiction of formation and has all of the requisite corporate, partnership, limited liability company or other organizational power and authority and all necessary government approvals and licenses to own and lease its properties and to conduct its business as now being conducted, except where the failure to have such approvals or licenses would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Each Innkeepers Subsidiary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Section 3.1(b)(i) of the Innkeepers Disclosure Letter sets forth (A) all of the Innkeepers Subsidiaries and their respective jurisdictions of formation, and (B) each owner and the respective amount of such owner's equity interest

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in each Innkeepers Subsidiary. All outstanding equity interests in each Innkeepers Subsidiary have been duly authorized and are validly issued, fully paid and (except for general partnership interests) non-assessable, and are not subject to any preemptive rights and are owned, directly or indirectly, by Innkeepers REIT and are so owned free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, " Liens "). There are no outstanding options, warrants or other rights to acquire ownership interests from any Innkeepers Subsidiary.

                        (ii)    Except for the stock of, or other equity interests in, the Innkeepers Subsidiaries disclosed in Section 3.1(b)(i) of the Innkeepers Disclosure Letter , and the other interests disclosed in Section 3.1(b)(ii) of the Innkeepers Disclosure Letter (the " Innkeepers Other Interests "), neither Innkeepers REIT nor any of the Innkeepers Subsidiaries owns any stock or other ownership or equity interest in any Person. Neither Innkeepers REIT nor any Innkeepers Subsidiary has violated any provision of any organizational documents governing or otherwise relating to its rights or interests in any Innkeepers REIT Other Interests that would, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

                        (c)     Capital Structure .

                        (i)    Shares

                              (A)    The authorized shares of Innkeepers REIT Capital Stock consist of (x) 100,000,000 Innkeepers REIT Common Shares and (y) 20,000,000 preferred shares, par value $0.01 per share, of which 5,800,000 preferred shares have been designated as Series C Preferred Shares.

                               (B)    As of the date of this Agreement, (x) 47,805,765 Innkeepers REIT Common Shares (including an aggregate of 279,173 restricted Innkeepers REIT Common Shares granted under the Innkeepers Option Plans) and (y) 5,800,000 Series C Preferred Shares are validly issued and outstanding, and no other series of shares of Innkeepers REIT Capital Stock are issued or outstanding.

                               (C)    As of the date of this Agreement, (w) 323,500 Innkeepers REIT Common Shares were reserved for issuance upon exercise of outstanding Innkeepers Options, (x) 665,981 Innkeepers REIT Common Shares were reserved for issuance upon exchange of LP Units for Innkeepers REIT Common Shares pursuant to the Innkeepers LP Agreement, (y) 237,500 Innkeepers REIT Common Shares were reserved for issuance upon exercise of outstanding Stock Performance Awards and (z) the cash equivalent of 225,000 Innkeepers REIT Common Shares were reserved for issuance upon exercise of outstanding Cash Performance Awards.

                               (D)    Except as set forth in this Section 3.1(c) or in Section 3.1(c)(i)(D) of the Innkeepers Disclosure Letter , there are issued and outstanding or reserved for issuance: (w) no shares or other equity securities of Innkeepers REIT; (x) no restricted Innkeepers REIT Common Shares or performance share awards relating to the equity interests of Innkeepers REIT; (y) no securities of Innkeepers REIT or any

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Innkeepers Subsidiary or securities or assets of any other entity convertible into or exchangeable for stock or other equity securities of Innkeepers REIT or any Innkeepers Subsidiary; and (z) no subscriptions, options, warrants, conversion rights, stock appreciation rights, "phantom" stock, stock units, calls, claims, rights of first refusal, rights (including preemptive rights), commitments, arrangements or agreements to which Innkeepers REIT or any Innkeepers Subsidiary is a party or by which it is bound in any case obligating Innkeepers REIT or any Innkeepers Subsidiary to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, shares of beneficial interest or other equity securities of Innkeepers REIT or of any Innkeepers Subsidiary, or obligating Innkeepers REIT or any Innkeepers Subsidiary to grant, extend or enter into any such subscription, option (including any Innkeepers Option), warrant, conversion right, stock appreciation right, call, right, commitment, arrangement or agreement. All outstanding shares of Innkeepers REIT are, and all shares reserved for issuance shall be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.

                              (E)    Except as set forth in Section 3.1(c)(i)(E) of the Innkeepers Disclosure Letter , all dividends or distributions on securities of Innkeepers REIT or any Innkeepers Subsidiary that have been declared or authorized prior to the date of this Agreement have been paid in full. 

                       (ii)    Innkeepers LP Units 

                              (A)    As of the date of this Agreement, (x) 47,987,029 LP Units (665,981 of which are held by the Class A limited partners of Innkeepers LP and 47,321,048 of which are held by the General Partner), (y) no Class B limited partnership interests in Innkeepers LP and (z) 5,800,000 GP Units are validly issued and outstanding, and no other series of limited or general partnership interests of Innkeepers LP are issued and outstanding. All such Innkeepers LP Units are duly authorized, validly issued and are not subject to preemptive rights, and any capital contributions required to be made by the holders thereof have been made. 

                              (B)    The General Partner is the sole general partner of Innkeepers LP and as of the date of this Agreement holds 484,717 GP Units, representing 100% of the outstanding GP Units. Section 3.1(c)(ii)(B) of the Innkeepers Disclosure Letter sets forth the name of, and the number and class of Innkeepers LP Units held by, each partner in Innkeepers LP. 

                              (C)    Each LP Unit held by a limited partner of Innkeepers LP may, under the circumstances and subject to the conditions set forth in the Innkeepers LP Agreement, be redeemed for cash or converted to Innkeepers REIT Common Shares on a one-for-one basis. As of the date of this Agreement, no notice has been received by any Innkeepers Party of the exercise of any of the rights set forth in this Section 3.1(c)(ii), which remain outstanding on the date hereof.

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                      (iii)    Miscellaneous 

                              (A)    Except for this Agreement and the Innkeepers LP Agreement or as set forth in Section 3.1(c)(iii)(A) of the Innkeepers Disclosure Letter , there are no (x) shareholder agreements, voting trusts, proxies or other agreements or understandings relating to the voting of any shares of Innkeepers REIT or partnership interests in Innkeepers LP or any ownership interests in any other Innkeepers Subsidiary to which Innkeepers REIT or any Innkeepers Subsidiary is a party or by which it is bound or (y) agreements or understandings relating to the sale or transfer (including agreements imposing transfer restrictions) of any shares of Innkeepers REIT or any Innkeepers Subsidiary to which Innkeepers REIT or any Innkeepers Subsidiary is a party or by which it is bound.

                              (B)    No holder of securities in Innkeepers REIT or any Innkeepers Subsidiary has any right to have the offering or sale of such securities registered by Innkeepers REIT or any Innkeepers Subsidiary, as the case may be. 

                              (C)    Except for LP Units, there are not any Innkeepers Subsidiaries in which any officer, trustee or director of Innkeepers REIT or any Innkeepers Subsidiary owns any share, stock or other securities. There are no agreements or understandings between Innkeepers REIT or any Innkeepers Subsidiary and any Person that could cause such Person to be treated as holding any stock or security in Innkeepers REIT or any Innkeepers Subsidiary as an agent for, or nominee of, Innkeepers REIT or any Innkeepers Subsidiary.

                        (d)      Authority; No Violations; Consents and Approval.

                        (i)    Except as set forth in Section 3.1(d)(i) of the Innkeepers Disclosure Letter , (A) the Innkeepers REIT Board of Trustees (x) determined that this Agreement, the Merger and the other transactions contemplated hereby, taken together, are fair to, advisable and in the best interests of Innkeepers REIT and the shareholders of Innkeepers REIT, (y) voted to (1) approve this Agreement and the transactions contemplated hereby, including the Merger, (2) recommended acceptance and approval by the Innkeepers REIT Common Shareholders of this Agreement, the Merger and the other transactions contemplated hereby (the " Innkeepers Board Recommendation ") and (3) directed that the Merger and the other transactions contemplated hereby be submitted for consideration at a special meeting of the Innkeepers REIT Common Shareholders (the " Innkeepers REIT Shareholder Meeting "), (B) the board of directors of the General Partner, as general partner of Innkeepers LP, has approved this Agreement and the transactions contemplated hereby and (C) at least two-thirds of the Innkeepers LP Unitholders, in their capacity as limited partners of Innkeepers LP, have irrevocably consented and agreed to Innkeepers REIT, the General Partner and Innkeepers LP entering into the Innkeepers LP Amendment and the Merger Agreement. Except as set forth in Section 3.1(d)(i) of the Innkeepers Disclosure Letter , Innkeepers REIT has all requisite trust power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject, solely with respect to the consummation of the Merger, to receipt of the Innkeepers Shareholder Approval and the acceptance for record

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of the Articles of Merger by the Maryland Department. Except as set forth in Section 3.1(d)(i) of the Innkeepers Disclosure Letter , each other Innkeepers Subsidiary, other than the General Partner, that is a party to this Agreement has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. Except as set forth in Section 3.1(d)(i) of the Innkeepers Disclosure Letter , the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, trust or other organizational action on the part of each applicable Innkeepers Party and each applicable Innkeepers Subsidiary, subject, solely with respect to the consummation of the Merger, to receipt of the Innkeepers Shareholder Approval. Except as set forth in Section 3.1(d)(i) of the Innkeepers Disclosure Letter , this Agreement has been duly executed and delivered by each Innkeepers Party and subject, solely with respect to the consummation of the Merger, to receipt of the Innkeepers Shareholder Approval and assuming due execution and delivery by each of the Purchaser Parties, constitutes a legal, valid and binding obligation of each Innkeepers Party, enforceable against each Innkeepers Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other Laws of general applicability relating to or affecting creditors' rights and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

                        (ii)    Subject to receipt of the Innkeepers Shareholder Approval, except as set forth in Section 3.1(d)(ii) of the Innkeepers Disclosure Letter , the execution and delivery of this Agreement by each Innkeepers Party, as applicable, does not, and the consummation of the transactions contemplated hereby, as applicable, and compliance with the provisions hereof, as applicable, shall not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, or the loss of a benefit under, or give rise to a right of purchase under, result in the creation of any Lien upon any of the properties or assets of Innkeepers REIT or any of the Innkeepers Subsidiaries under, require the Consent of any third party or otherwise result in a detriment or default to Innkeepers REIT or any of the Innkeepers Subsidiaries under, any provision of (A) the Innkeepers REIT Charter or the Innkeepers REIT Bylaws or any provision of the comparable charter or organizational documents of any of the Innkeepers Subsidiaries, (B) any Material Contract or loan or credit agreement or note, or any bond, mortgage, indenture, guarantee, lease, contract or other agreement, instrument, permit, concession, franchise or license applicable to Innkeepers REIT or any of the Innkeepers Subsidiaries, or to which their respective properties or assets are bound or any guarantee by Innkeepers REIT or any of the Innkeepers Subsidiaries of any of the foregoing, (C) any joint venture or other ownership arrangement or (D) assuming the Consents referred to in Section 3.1(d)(iii) are duly and timely obtained or made and the Innkeepers Shareholder Approval has been obtained, any Law or Order applicable to or binding upon Innkeepers REIT or any of the Innkeepers Subsidiaries, or any of their respective properties or assets, other than, in the case of clauses (B) and (C), any such conflicts, violations, defaults, rights, Liens or detriments that would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

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                       (iii)    No Consent from any Governmental Entity, is required by or on behalf of Innkeepers REIT or any of the Innkeepers Subsidiaries in connection with the execution and delivery of this Agreement by any of the Innkeepers Parties or the consummation by any of the Innkeepers Parties of the transactions contemplated hereby, except for: (A) the filing with the Securities and Exchange Commission (the " SEC ") of (1) (x) a proxy statement in preliminary and definitive form (the " Proxy Statement ") relating to the Innkeepers REIT Shareholder Meeting held in connection with the Merger and (y) other documents otherwise required in connection with the transactions contemplated hereby and (2) such reports under Section 13(a) of the Securities Exchange Act of 1934, as amended (the " Exchange Act "), and such other compliance with the Exchange Act and the rules and regulations thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby; (B) the filing of the Articles of Merger with, and the acceptance for record of the Articles of Merger by, the Maryland Department; (C) such filings and approvals as may be required by any applicable state securities or "blue sky" Laws; (D) such filings as may be required in connection with state or local transfer or sales Taxes; (E) compliance with the rules and regulations of the New York Stock Exchange (the " NYSE "); and (F) any such other consent, approval, order, authorization, registration, declaration, filing, permit or notification (collectively, the " Consents ") that the failure to obtain or make, would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

                        (e)     SEC Documents .

                        (i)    Innkeepers REIT has previously provided or made available to Purchaser (by public filing with the SEC or otherwise) a true and complete copy of each report, schedule, registration statement, other statement (including proxy statements) and information filed by Innkeepers REIT with the SEC since January 1, 2004 and prior to or on the Closing Date (the " Innkeepers REIT SEC Documents "), which are all the documents (other than preliminary material) that Innkeepers REIT was required to file with the SEC since January 1, 2004 through the date hereof pursuant to the federal securities Laws and the SEC rules and regulations thereunder. As of their respective dates, the Innkeepers REIT SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the " Securities Act "), or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Innkeepers REIT SEC Documents, in each case as in effect at such time, and none of the Innkeepers REIT SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later Innkeepers REIT SEC Documents filed and publicly available prior to the date of this Agreement. Innkeepers REIT does not have any outstanding and unresolved comments from the SEC with respect to any of the Innkeepers REIT SEC Documents. The consolidated financial statements of Innkeepers REIT (including the notes thereto) included in the Innkeepers REIT SEC Documents (including the audited consolidated balance sheet of Innkeepers REIT (the " Balance Sheet ") as at December 31, 2006 (the " Balance Sheet Date ") and the audited consolidated statements of income for the twelve (12) months ended December 31, 2006 and December 31, 2005 complied as to

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form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, were prepared in accordance with United States generally accepted accounting principles (" GAAP ") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC, in each case, as in effect at such time, the assets, Liabilities and the consolidated financial position of Innkeepers REIT and the Innkeepers Subsidiaries, taken as a whole, as of their respective dates and the consolidated results of operations and cash flows of Innkeepers REIT and the Innkeepers Subsidiaries taken as a whole, for the periods presented therein. The books of account and other financial records of Innkeepers REIT and the Innkeepers Subsidiaries are accurately reflected in all material respects in the financial statements included in the Innkeepers REIT SEC Documents. No Innkeepers Subsidiary is required to make any filing with the SEC.

                        (f)     Absence of Certain Changes or Events . Since the Balance Sheet Date, each of Innkeepers REIT and the Innkeepers Subsidiaries has conducted its business only in the ordinary course consistent with past practice, and there has not been, except as expressly and specifically disclosed in Innkeepers REIT's filings under the Exchange Act filed prior to the date hereof, as required under this Agreement or as set forth in Section 3.1(f) of the Innkeepers Disclosure Letter : (i) (A) individually or in the aggregate, an Innkeepers Material Adverse Effect; (B) any declaration, setting aside for payment or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Innkeepers REIT Common Shares, the Series C Preferred Shares or any LP Units; (C) any amendment of any term of any outstanding security of Innkeepers REIT or any Innkeepers Subsidiary; (D) any repurchase, redemption or other acquisition by Innkeepers REIT or any Innkeepers Subsidiary of any outstanding shares, stock or other securities of, or other ownership interests in, Innkeepers REIT or any Innkeepers Subsidiary; (E) any change in any method of accounting or accounting practice or any material change in any tax method or election by Innkeepers REIT or any Innkeepers Subsidiary; or (F) any material commitment, contractual obligation (including any management or franchise agreement, any lease (capital or otherwise) or any letter of intent), borrowing, guarantee, capital expenditure or transaction (each, a " Commitment ") entered into by Innkeepers REIT or by any Innkeepers Subsidiary other than in the ordinary course of business consistent with past practice and, with respect to capital expenditures, in accordance with the capital expenditure budgets that have been previously provided to the Purchaser Parties, except for Commitments for expenses of attorneys, accountants, investment bankers and other advisors incurred in connection with the Merger; or (ii) any split, combination or reclassification of any Innkeepers REIT Capital Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for, or giving the right to acquire by exchange or exercise, any capital stock, shares of beneficial interest or any issuance of an ownership interest in, any Innkeepers Subsidiary.

                        (g)     No Undisclosed Material Liabilities . Except as expressly and specifically disclosed in Innkeepers REIT SEC Documents filed prior to the date hereof, there are no Liabilities of Innkeepers REIT or any of the Innkeepers Subsidiaries of a nature required to be reflected in a balance sheet of Innkeepers REIT prepared in accordance with GAAP, whether accrued, contingent, absolute or determined, and there is no existing condition, situation

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or set of circumstances that could reasonably be expected to result in such a Liability, other than: (i) Liabilities adequately provided for on the Balance Sheet, (ii) Liabilities incurred in the ordinary course of business consistent with past practice subsequent to the Balance Sheet Date and (iii) such other Liabilities as would not, individually or in the aggregate, constitute an Innkeepers REIT Material Adverse Effect.

                        (h)     No Default . Neither Innkeepers REIT nor any of the Innkeepers Subsidiaries is or has been since the Balance Sheet Date in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of (i) any material term, condition or provision of the Innkeepers REIT Charter or the Innkeepers REIT Bylaws or the comparable charter or organizational documents of any of the material Innkeepers Subsidiaries; provided , that for purposes of this clause (i) any default or violation of a provision that would cause Innkeepers REIT to cease to be qualified as a real estate investment trust shall be deemed to be material, (ii) any term, condition or provision of any loan or credit agreement or any note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license to which Innkeepers REIT or any of the Innkeepers Subsidiaries is now a party or by which Innkeepers REIT or any of the Innkeepers Subsidiaries or any of their respective properties or assets is bound or (iii) any Law or Order applicable to or binding upon Innkeepers REIT or any of the Innkeepers Subsidiaries or any of their respective properties or assets, except, in the case of clauses (ii) and (iii), for defaults or violations which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

                        (i)     Compliance with Applicable Laws . Innkeepers REIT and the Innkeepers Subsidiaries hold all permits, licenses, certificates, registrations, variances, exemptions, orders, franchises and approvals of all Governmental Entities necessary or required by any applicable Law or Order for the lawful conduct of their respective businesses (including permits required by Environmental Laws, the " Innkeepers Permits "), except where the failure so to hold would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Except as set forth in Section 3.1(i) of the Innkeepers Disclosure Letter , each of Innkeepers REIT and the Innkeepers Subsidiaries are in compliance with the terms of Innkeepers Permits, except where the failure to so comply would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Except (i) as set forth in Section 3.1(i) of the Innkeepers Disclosure Letter or (ii) as would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect, the businesses of Innkeepers REIT and the Innkeepers Subsidiaries are not being and have not been conducted in violation of any Law or Order. No investigation or review by any Governmental Entity with respect to Innkeepers REIT or any of the Innkeepers Subsidiaries is pending or, to the Knowledge of the Innkeepers Parties, is threatened.

                        (j)     Litigation . Except as set forth in Section 3.1(j) of the Innkeepers Disclosure Letter , there is no litigation, arbitration, claim, investigation, suit, action or proceeding pending or, to the Knowledge of the Innkeepers Parties, threatened in writing against or affecting the Innkeepers Parties or any of their respective properties or assets or any director, officer or employee of any of the Innkeepers Parties or other Person, in each case, for whom any of the Innkeepers Parties may be liable, except as would not, individually or in the aggregate, (i) constitute an Innkeepers Material Adverse Effect or (ii) challenge or seek to prevent or enjoin, alter or materially delay the Merger. None of the Innkeepers Parties are subject to any order,

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judgment, writ, injunction or decree, except as would not, individually or in the aggregate, (i) constitute an Innkeepers Material Adverse Effect or (ii) as of the date hereof, challenge or seek to prevent or enjoin, alter or materially delay the Merger.

                        (k)     Taxes .

                        (i)    Each of Innkeepers REIT and each Innkeepers Subsidiary has timely filed or has had timely filed on its behalf all material Tax Returns required to be filed by it or on its behalf (after giving effect to any filing extension properly granted by a Governmental Entity having authority to do so or otherwise permitted by Law). Except as set forth in Section 3.1(k)(i) of the Innkeepers Disclosure Letter , each such Tax Return was, at the time filed, true, correct and complete in all material respects. Each of Innkeepers REIT and the Innkeepers Subsidiaries has timely paid (or Innkeepers REIT has paid on behalf of such Innkeepers Subsidiary) all material Taxes that are due and payable (other than those being contested in good faith through appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP). The most recent financial statements contained in the Innkeepers REIT SEC Documents filed with the SEC prior to the date of this Agreement reflect in accordance with GAAP an adequate reserve or accrued Liabilities or expenses for all Taxes due and payable by Innkeepers REIT and the Innkeepers Subsidiaries as a group (excluding any reserve for deferred Taxes established to reflect timing differences between book and tax income) for all taxable periods and portions thereof through the date of such financial statements. Innkeepers REIT and the Innkeepers Subsidiaries (as a group) have established on their books and records (which may, but are not required to, be reflected only on the books and records of the Innkeepers Parties) reserves or accrued Liabilities or expenses that are adequate for the payment of all material Taxes for which Innkeepers REIT or any Innkeepers Subsidiary is liable but are not yet due and payable. Innkeepers REIT has incurred no Liability for any Taxes under Sections 857(b), 860(c) or 4981 of the Code or Treasury Regulation Sections 1.337(d)-5, 1.337(d)-6 or 1.337(d)-7, including any Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code and the excise tax on redetermined rents, redetermined deductions, and excess interest under Section 857(b)(7) of the Code. No requests for waivers of the time to assess any material Taxes have been granted and remain in effect or are pending. No claim is pending or proposed in writing by any Governmental Entity in any jurisdiction where Innkeepers REIT or any Innkeepers Subsidiary does not file Tax Returns that Innkeepers REIT or any Innkeepers Subsidiary is or may be subject to taxation by such jurisdiction. Copies of all material Tax Returns with respect to taxable years commencing on or after the taxable year ending December 31, 2004 have been previously provided or made available to Representatives of Purchaser.

                        (ii)    Innkeepers REIT (A) for each taxable period beginning with its date of formation through its most recent taxable year ended on or before the date hereof, has been subject to taxation as a real estate investment trust within the meaning of the Code (a " REIT ") and has satisfied the requirements to qualify as a REIT for such years, (B) has operated consistent with the requirements for qualification and taxation as a REIT for the period from the end of its most recent taxable year ended before the date hereof through the date hereof, (C) has not taken any action or omitted to take any action

24

which would reasonably be expected to result in a successful challenge by the Internal Revenue Service to its status as a REIT, and no such challenge is pending, or to the Knowledge of the Innkeepers Parties, threatened and (D) intends to continue to operate in such a manner as to permit it to continue to qualify as a REIT for the taxable year or portion thereof that shall end with the Merger. Each Innkeepers Subsidiary which files Tax Returns as a partnership or is a disregarded entity for U.S. federal income tax purposes has since the later of its formation or its acquisition by Innkeepers been classified for U.S. federal income tax purposes as either a partnership or disregarded entity and not as an association taxable as a corporation, or a "publicly traded partnership" within the meaning of Section 7704(b) of the Code that is treated as a corporation for U.S. federal income tax purposes under Section 7704(a) of the Code. Except as set forth in Section 3.1(k)(ii) of the Innkeepers Disclosure Letter , each Innkeepers Subsidiary which is a corporation has been since the later of its formation or acquisition by Innkeepers classified as a "qualified REIT subsidiary" under Section 856(i) of the Code or a "taxable REIT subsidiary" under Section 856(l) of the Code. No Innkeepers Subsidiary is classified as or files Tax Returns as a REIT under Sections 856 through 860 of the Code. 

                       (iii)    All material Taxes which Innkeepers REIT or the Innkeepers Subsidiaries are required by Law to withhold or collect, including material Taxes required to have been withheld in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party and sales, gross receipts and use taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Entities. There are no Liens for material Taxes upon the assets of Innkeepers REIT or the Innkeepers Subsidiaries except for statutory Liens for Taxes not yet due. 

                       (iv)    Except as set forth in Section 3.1(k)(iv) of the Innkeepers Disclosure Letter , (A) there are no audits by or contests with any taxing authority currently being conducted with regard to material Taxes or Tax Returns of Innkeepers REIT or any Innkeepers Subsidiary; (B) there are no audits, examinations or other proceedings pending with or proposed in writing by any taxing authority with respect to any Taxes or Tax Returns; (C) all deficiencies asserted or assessments made with respect to Innkeepers REIT or Innkeepers Subsidiaries prior to the date hereof by the Internal Revenue Service of the United States (the " IRS ") or any other taxing authority have been fully paid; (D) neither Innkeepers REIT nor any Innkeepers Subsidiary is a party to any litigation or administrative proceeding relating to any Taxes; and (E) neither Innkeepers REIT nor any Innkeepers Subsidiary has requested, received or is subject to any written ruling of a taxing authority or has entered into any written agreement with a taxing authority with respect to any material Taxes.

                        (v)    Neither Innkeepers REIT nor any Innkeepers Subsidiary is a party to any Tax allocation or sharing agreement. 

                       (vi)    Innkeepers REIT and the Innkeepers Subsidiaries do not have any material Liability for the Taxes of any Person other than Innkeepers REIT and the

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Innkeepers Subsidiaries (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law) or (B) as a transferee or successor. 

                       (vii)    Innkeepers REIT and Innkeepers Subsidiaries do not hold any asset the disposition of which would be subject to rules similar to Section 1374 of the Code. 

                      (viii)    Except as set forth in Section 3.1(k)(viii) of the Innkeepers Disclosure Letter , neither Innkeepers REIT nor any Innkeepers Subsidiary has entered into or is subject, directly or indirectly, to any Tax Protection Agreement that has not expired. Innkeepers REIT and each Innkeepers Subsidiary has complied with all terms of any Tax Protection Agreement, and neither Innkeepers REIT nor any Innkeepers Subsidiary has any Liability under any Tax Protection Agreement. No Person has threatened a claim against Innkeepers REIT or any Innkeepers Subsidiary for any breach of any Tax Protection Agreement. 

                        (ix)    Innkeepers REIT and the Innkeepers Subsidiaries are not a party to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) of the Code or Treasury Regulations Section 1.6011-4(b) and are not "material advisors" (as defined in Section 6111(b) of the Code).

                        (x)    Innkeepers REIT and the Innkeepers Subsidiaries have not entered into any "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law).

                        (xi)    Section 3.1(k)(xi) of the Innkeepers Disclosure Letter sets forth each entity in which any Innkeepers Subsidiaries owns an equity interest and states whether such entity is classified as a partnership, disregarded entity, or a corporation for federal income tax purposes. In the case of an entity classified as a corporation for federal income tax purposes, such schedule states whether an effective election has been made to treat such entity as a "taxable REIT subsidiary" under Section 856(l) of the Code.

                        (l)     Pension and Benefit Plans; ERISA . 

                        (i)    Except with respect to the plans, agreements and arrangements listed in Section 3.1(l)(i) of the Innkeepers Disclosure Letter , neither Innkeepers REIT, any Innkeepers Subsidiary nor any of their respective ERISA Affiliates is a party to, sponsors, participates in or contributes to: 

                              (A)    any "employee welfare plan" or "employee pension benefit plan" (as those terms are respectively defined in Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA ")), other than a "multiemployer plan" (as defined in Section 3(37) of ERISA); 

                              (B)    any retirement or deferred compensation plan, incentive compensation plan, stock plan, profit-sharing, unemployment compensation plan, vacation pay, severance pay, post-employment, supplemental employment or unemployment benefit plan or arrangement, bonus or benefit arrangement, insurance

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(including any self-insurance) or hospitalization program or any other fringe or other benefit or compensation plans, programs or arrangements for any current or former employee, trustee, director, consultant or agent, whether pursuant to contract, arrangement or any other "employee benefit plan" (as defined in Section 3(3) of ERISA); or

                              (C)    any employment, severance, termination, consultancy or other similar agreement. 

                        (ii)    A true and correct copy of each of the material plans, programs, arrangements, and agreements listed in Section 3.1(l)(ii) of the Innkeepers Disclosure Letter (referred to hereinafter as " Innkeepers Employee Benefit Plans ") has been supplied to Purchaser. In the case of any Innkeepers Employee Benefit Plan which is not in written form, Purchaser has been supplied with an accurate description of the material provisions of such Innkeepers Employee Benefit Plan as in effect on the date hereof. A true and correct copy of the two (2) most recent annual reports, actuarial reports, accountant's opinions of the plan's financial statements, the summary plan description and Internal Revenue Service determination letter with respect to each Innkeepers Employee Benefit Plan, to the extent applicable, has been supplied to Purchaser, and there have been no material changes in the financial condition in the respective plans from that stated in the annual reports and actuarial reports supplied. Section 3.1(l)(ii) of the Innkeepers Disclosure Letter contains a true and complete list of each loan or extension of credit between Innkeepers REIT or any Innkeepers Subsidiary, on the one hand, and any of their respective trustees, directors, officers or employees, on the other, and the outstanding balances under each such loan or extension of credit as of the date hereof.

                      (iii)    As to all Innkeepers Employee Benefit Plans: 

                              (A)    All Innkeepers Employee Benefit Plans comply and have been administered in form and in operation in all material respects with all applicable requirements of Law, and no event has occurred which shall or would reasonably be expected to cause any such Innkeepers Employee Benefit Plan to fail to comply with such requirements and no notice has been issued by any governmental authority questioning or challenging such compliance. 

                              (B)    (w) All Innkeepers Employee Benefit Plans which are employee pension benefit plans comply in form and in operation in all material respects with all applicable requirements of Sections 401(a) and 501(a) of the Code; (x) each Innkeepers Employee Benefit Plan which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter, or has pending an application for such determination from the Internal Revenue Service with respect to those provisions for which the remedial amendment period under Section 401(b) of the Code has not expired, and Innkeepers REIT is not aware of any reason why any such determination letter should be revoked; (y) there have been no amendments to such plans which are not the subject of a favorable determination letter issued with respect thereto by the Internal Revenue Service (other than an amendment for which the remedial amendment period

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under Section 401(b) of the Code has not expired); and (z) no event has occurred which would reasonably be expected to give rise to disqualification of any such plan under such sections. 

                              (C)    Except as set forth in Section 3.1(l)(iii)(C) of the Innkeepers Disclosure Letter , None of the assets of any Innkeepers Employee Benefit Plan is invested in employer securities or employer real property.

                              (D)    Except as would not reasonably be expected to result in an Innkeepers Material Adverse Effect, there have been no "prohibited transactions" (as described in Section 406 of ERISA or Section 4975 of the Code) with respect to any Innkeepers Employee Benefit Plan. 

                              (E)    Except as set forth in Section 3.1(l)(iii)(E) of the Innkeepers Disclosure Letter , there have been no acts or omissions which have given rise to or which would reasonably be expected to give rise to fines, penalties, taxes or related charges under Section 502 of ERISA or Chapters 43, 47 or 100 of the Code for which Innkeepers REIT or any Innkeepers Subsidiary may be liable. 

                              (F)    None of the payments contemplated by Innkeepers Employee Benefit Plans would, in the aggregate, constitute excess parachute payments (as defined in Section 280G of the Code (without regard to subsection (b)(4) thereof)) in connection with the transactions contemplated by this Agreement.

                              (G)    There are no actions, suits or claims (other than routine claims for benefits) pending or, to the Knowledge of the Innkeepers Parties, threatened involving any Innkeepers Employee Benefit Plan or the assets thereof and, no facts exist which could give rise to any such actions, suits or claims (other than routine claims for benefits). 

                              (H)    Neither Innkeepers REIT, any Innkeepers Subsidiary nor any of their respective ERISA Affiliates sponsors, maintains or contributes to, or has in the past six (6) years sponsored, maintained or contributed to, any employee benefit plan subject to Title IV of ERISA. 

                               (I)    Neither Innkeepers REIT nor any Innkeepers Subsidiary has any Liability or contingent Liability for providing, under any Innkeepers Employee Benefit Plan or otherwise, any post-retirement medical or life insurance benefits, other than statutory liability for providing group health plan continuation coverage under Part 6 of Title I of ERISA and Section 4980B of the Code. 

                              (J)    To the Knowledge of the Innkeepers Parties, there has been no act or omission that would impair the ability of Innkeepers REIT and the Innkeepers Subsidiaries (or any successor thereto) to unilaterally amend or terminate any Innkeepers Employee Benefit Plan, other than to the extent not permitted by its terms. 

                              (K)    Except as set forth in Section 3.1(l)(iii)(K)(x) of the Innkeepers Disclosure Letter , the consummation of the transactions contemplated by this

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Agreement shall not (either alone or together with any other event) entitle any current or former employee, director, trustee or independent contractor of Innkeepers REIT or the Innkeepers Subsidiaries to any payment, bonus, retirement, severance, job security or similar benefit or enhance any such benefit, or accelerate the time of payment, vesting or exercisability or trigger any payment of funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other obligation pursuant to, any Innkeepers Employee Benefit Plan. Section 3.1(l)(iii)(K)(y) of the Innkeepers Disclosure Letter lists all the agreements, arrangements and other instruments which give rise to an obligation to make or set aside amounts payable to or on behalf of the officers or key employees of Innkeepers REIT or the Innkeepers Subsidiaries as a result of the transactions contemplated by this Agreement and/or any subsequent employment termination (whether by Innkeepers REIT or the employee), true and complete copies of which have been previously provided or made available (by public filing with the SEC or otherwise) to Purchaser prior to the date hereof. 

                              (L)    There has been no amendment to, written interpretation or announcement (whether or not written) by Innkeepers REIT or the Innkeepers Subsidiaries relating to, or change in employee participation or coverage under, any Innkeepers Employee Benefit Plan which would increase materially the expense of maintaining such employee plan above the level of the expense incurred in respect thereof as of the Balance Sheet Date. 

                       (iv)    Neither Innkeepers REIT, any Innkeepers Subsidiary nor any of their respective ERISA Affiliates, contributes to, has contributed to, or has any Liability or contingent Liability with respect to a "multiemployer plan" (as defined in Section 3(37) of ERISA). 

                        (v)    All Innkeepers Options have an exercise price per share that was not less than the "fair market value" of an Innkeepers REIT Common Share on the date of grant, as determined in accordance with the terms of the applicable Innkeepers Option Plan and, to the extent applicable, Sections 409A and 422 of the Code. To the Knowledge of the Innkeepers Parties, there is no pending or threatened audit, investigation or inquiry by any governmental agency or by the Innkeepers REIT with respect to the Innkeepers REIT's stock option granting practices or other equity compensation practices, except as would not reasonably be expected to result in an Innkeepers Material Adverse Effect.

                        (m)      Labor and Employment Matters .

                        (i)    Except as set forth in Section 3.1(m) of the Innkeepers Disclosure Letter , none of Innkeepers REIT, or any of the Innkeepers Subsidiaries or, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties is a party to any collective bargaining agreement or other labor agreement with any labor union or labor organization. To the Knowledge of the Innkeepers Parties, there are no representation or certification proceedings or petitions seeking current union representation of employees of Innkeepers REIT, or any of the Innkeepers Subsidiaries, or, to the Knowledge of the Innkeepers Parties, any third party

29

which manages or operates any of the Innkeepers Properties, nor is there any activity by any labor organization (or representative thereof) or employee group (or representative thereof) to organize any such employees. 

                        (ii)    Except as set forth in Section 3.1(m)(ii) of the Innkeepers Disclosure Letter , there is no complaint, lawsuit or proceeding in any forum by or on behalf of any present or former employee, any applicant for employment or any classes of the foregoing, alleging breach of any express or implied contract of employment, any Law or regulation governing employment or the termination thereof, or other discriminatory, wrongful or tortious conduct in connection with the employment relationship pending, or, to the Knowledge of the Innkeepers Parties, threatened against Innkeepers REIT, any of the Innkeepers Subsidiaries or, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties, except which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. Except as set forth in Section 3.1(m)(ii) of the Innkeepers Disclosure Letter , Innkeepers REIT and the Innkeepers Subsidiaries and, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties are in compliance with all applicable Laws relating to the employment of their employees, including those relating to wages, hours, collective bargaining, unemployment compensation, worker's compensation, equal employment opportunity, age and disability discrimination, immigration control, employee classification and the payment and withholding of Taxes, except as would not reasonably be expected to result in an Innkeepers Material Adverse Effect. 

                       (iii)    There is no strike, slowdown or work stoppage or lockout with respect to the employees of Innkeepers REIT or the Innkeepers Subsidiaries or, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties pending, or, to the Knowledge of the Innkeepers Parties, threatened, against Innkeepers REIT, any of the Innkeepers Subsidiaries or any third party which manages or operates any of the Innkeepers Properties. 

                       (iv)    There is no proceeding, claim, suit or action pending or, to the Knowledge of the Innkeepers Parties, threatened in writing, with respect to which any current or former trustee, director, officer, employee or agent of Innkeepers REIT or any of the Innkeepers Subsidiaries or, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties has a valid claim to indemnification from Innkeepers REIT, any of the Innkeepers Subsidiaries or, to the Knowledge of the Innkeepers Parties, any third party which manages or operates any of the Innkeepers Properties.

                        (n)     Intangible Property .

                        (i)    Except as would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect, there are no bona fide claims pending, or to the Knowledge of the Innkeepers Parties, threatened against Innkeepers REIT or any Innkeepers Subsidiary (A) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by Innkeepers

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REIT or any Innkeepers Subsidiary, infringes on any copyright, patent, trademark, trade name, service mark or trade secret of any third party; (B) against the use by Innkeepers REIT or any Innkeepers Subsidiary of any copyrights, patents, trademarks, trade names, service marks, trade secrets, technology, know-how or computer software programs and applications used in the business of Innkeepers REIT or any Innkeepers Subsidiary as currently conducted, (C) challenging the ownership, validity or effectiveness of any of Innkeepers REIT Intellectual Property Rights material to Innkeepers REIT and the Innkeepers Subsidiaries, taken as a whole, or (D) challenging the license or legally enforceable right to use of the Third-Party Intellectual Property Rights by Innkeepers REIT or any Innkeepers Subsidiary. Except as, individually or in the aggregate, would not constitute an Innkeepers Material Adverse Effect, Innkeepers REIT and each Innkeepers Subsidiary owns, or is licensed to use (in each case free and clear of any Encumbrances), all Intellectual Property currently used in its business as presently conducted. 

                        (ii)    As used in this Agreement, the term (A) " Intellectual Property " means all patents, trademarks, trade names, service marks, copyrights and any applications therefor, technology, know-how, computer software programs or applications, and other proprietary information or materials, (B) " Third-Party Intellectual Property Rights " means any rights to Intellectual Property owned by any third party, and (C) " Innkeepers REIT Intellectual Property Rights " means the Intellectual Property owned or used by Innkeepers REIT or any Innkeepers Subsidiary.

                        (o)     Environmental Matters .

                        (i)    Neither Innkeepers REIT nor any Innkeepers Subsidiary is in violation of or otherwise has Liability under any applicable Law or Order relating to pollution or protection of public health and safety, the environment (including indoor or ambient air, surface water, groundwater, land surface or subsurface) or natural resources, including Laws and regulations relating to the release or threatened release of any pollutant, contaminant, waste or toxic substance, including asbestos or any substance containing asbestos, polychlorinated biphenyls, lead paint, petroleum or petroleum products (including crude oil and any fraction thereof), radon, mold, fungus and other hazardous biological materials (collectively, " Hazardous Materials ") to underground storage tanks or to the manufacture, management, possession, presence, generation, processing, distribution, use, treatment, storage, disposal, transportation, abatement, removal, remediation or handling of, or exposure to, Hazardous Materials (collectively, " Environmental Laws "), except for any violation or Liability which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect; 

                        (ii)    In the last three (3) years, neither Innkeepers REIT nor any of the Innkeepers Subsidiaries have received any written notice of, and there are no pending or, to the Knowledge of the Innkeepers Parties threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to Hazardous Materials or any Environmental Law against or affecting Innkeepers REIT or any of the Innkeepers Subsidiaries or any of Innkeepers Properties or former properties held by any of them

31

except for any such actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings which, individually or in the aggregate, would not constitute an Innkeepers Material Adverse Effect; 

                       (iii)    Innkeepers REIT and the Innkeepers Subsidiaries have not used, and have not permitted the use of, any Innkeepers Property for activities or operations that involve the handling, use, processing, manufacturing, generating, producing, storing, refining, recycling, transporting, spilling, pumping, pouring, emitting, emptying, discharging, injecting, burying, leaching, dumping, disposing of or releasing into the environment or otherwise dealing with any Hazardous Material, except for Hazardous Materials utilized in the ordinary course of maintaining such real properties or utilized in the ordinary course of business of a tenant of such Innkeepers Properties; provided , that such use would not, in the ordinary course of business, reasonably be expected to violate applicable Environmental Laws and except for any such handling, use, processing, manufacturing, generating, producing, storing, refining, recycling, transporting, spilling, pumping, pouring, emitting, emptying, discharging, injecting, burying, leaching, dumping, disposing of or releasing which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect; and 

                       (iv)    There is no seepage, leaking, escaping, leaching, discharging, injection, release, emission, spill, pumping, pouring, emptying, dumping or other release or threatened release of Hazardous Materials into the environment (including structures) at, on, under, about or emanating from any Innkeepers Properties, former properties or off site locations to which Hazardous Materials were shipped for treatment, storage, disposal or handling, except in accordance with applicable Environmental Laws or as would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

                        (p)     Properties .

                        (i)    Section 3.1(p)(i) of the Innkeepers Disclosure Letter sets forth a true and complete list of each real property wholly-owned in fee simple title by Innkeepers LP or any Innkeepers Subsidiary or jointly owned in fee simple title by Innkeepers LP or an Innkeepers Subsidiary and a third party entity as of the date hereof (each property so owned, a " Innkeepers Property " and collectively, the " Innkeepers Properties "), which are all of the real estate properties owned by Innkeepers LP or any Innkeepers Subsidiary as of the date hereof, in each case (except as provided below) free and clear of Liens, mortgages or deeds of trust, claims against title, charges which are Liens, security interests or other encumbrances on title (" Encumbrances "). No other Person has any ownership interest in any of Innkeepers Properties. 

                        (ii)    The Innkeepers Properties are not subject to any rights of way, restrictive covenants (including deed restrictions or limitations issued pursuant to any Environmental Law), declarations, agreements, or Laws affecting building use or occupancy, or reservations of an interest in title (collectively, " Property Restrictions ") or Encumbrances, except for (A) Encumbrances and Property Restrictions set forth in Section 3.1(p)(ii) of the Innkeepers Disclosure Letter , (B) Property Restrictions imposed

32

or promulgated by Law or any Governmental Entity or included in any Innkeepers REIT space lease with respect to real property, including zoning regulations; provided , that they do not materially adversely affect the currently intended use of any Innkeepers Property, (C) Encumbrances and Property Restrictions disclosed on existing title policies or existing surveys and (D) mechanics', carriers', workmen's, repairmen's and materialmen's liens and other Encumbrances, Liens, Property Restrictions and other limitations of any kind, if any, which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. 

                       (iii)    (A) No certificate, permit or license from any Governmental Entity having jurisdiction over any of Innkeepers Properties or any agreement, easement or other right that is necessary to permit the lawful use and operation of the buildings and improvements on any of Innkeepers Properties or that is necessary to permit the lawful use and operation of all driveways, roads and other means of egress and ingress to and from any of Innkeepers Properties has not been obtained and is not in full force and effect, except for such failures to obtain and to have in full force and effect, which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect and (B) neither Innkeepers REIT nor any Innkeepers Subsidiary has received written notice of any violation of any federal, state or municipal Law affecting any of Innkeepers Properties issued by any Governmental Entity which have not been cured, contested in good faith or which violations would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect.

                       (iv)    Except as set forth in Section 3.1(p)(iv) of the Innkeepers Disclosure Letter , all work required to be performed, payments required to be made and actions required to be taken prior to the date hereof pursuant to any agreement entered into with a Governmental Entity in connection with a site approval, zoning reclassification or other similar action relating to any Innkeepers Properties (e.g., local improvement district, road improvement district, environmental mitigation) have been performed, paid or taken, as the case may be, other than those actions the failure of which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. 

                        (v)    Section 3.1(p)(v)(A) of the Innkeepers Disclosure Letter lists as of the date hereof each ground lease to which Innkeepers REIT or any Innkeepers Subsidiary is party, as lessee, and each master lease to which Innkeepers REIT or any Innkeepers Subsidiary is a lessor. Each such ground lease or master lease is in full force and effect and is valid, binding and enforceable, to the Knowledge of the Innkeepers Parties, in accordance with its terms against the lessor or lessee thereunder, as applicable, except as would not, individually or in the aggregate, constitute a material adverse effect on Innkeepers REIT's interest in the applicable Innkeepers Property. Except which would not, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect, neither Innkeepers REIT nor any Innkeepers Subsidiary, on the one hand, nor, to the Knowledge of the Innkeepers Parties, any other party, on the other hand, is in monetary default under any such ground lease or master lease. No option has been exercised under any of such ground leases or master leases, except options whose exercise has been evidenced by a written document as described in Section 3.1(p)(v)(B)

33

of the Innkeepers Disclosure Letter . The Innkeepers Parties have previously provided or made available to Purchaser (by public filing with the SEC or otherwise) a correct and complete copy of each such material ground lease and master lease and all material amendments thereto. 

                       (vi)    Except as set forth in Section 3.1(p)(vi) of the Innkeepers Disclosure Letter , to the Knowledge of the Innkeepers Parties, neither Innkeepers REIT nor any Innkeepers Subsidiary has granted any unexpired option agreements, rights of first offer, rights of first negotiation or rights of first refusal with respect to the purchase of an Innkeepers Property or any portion thereof or any other unexpired rights in favor of third Persons to purchase or otherwise acquire an Innkeepers Property or any portion thereof or entered into any contract for sale, ground lease or letter of intent to sell or ground lease any Innkeepers Property or any portion thereof. 

                      (vii)    There is no material renovation or construction project with aggregate projected costs in excess of $1,000,000 currently being performed at any of Innkeepers Properties, except for the projects set forth in Section 3.1(p)(vii)(A) of the Innkeepers Disclosure Letter (the " Construction Projects "). Section 3.1(p)(vii)(B) of the Innkeepers Disclosure Letter sets forth the budgeted cost and the estimated cost to complete for each Construction Project. Neither Innkeepers REIT nor any Innkeepers Subsidiary is in material default of any material obligation with respect to the Construction Projects and, to the Knowledge of the Innkeepers Parties, the contractors obligated to complete any of the Construction Projects are not in material default with respect to such obligations as of the date of this Agreement. 

                      (viii)    Except as set forth in Section 3.1(p)(viii) of the Innkeepers Disclosure Letter , there (A) are no material structural defects relating to any of Innkeepers Properties, (B) is no Innkeepers Property whose building systems are not in working order in any material respect, and (C) is no physical material damage to any Innkeepers Property for which there is no insurance in effect, which, in the case of any of (A), (B) or (C), would, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. 

                       (ix)    Section 3.1(p)(ix)(A) of the Innkeepers Disclosure Letter sets forth (A) a true and complete list of the real property in respect of which any Innkeepers Party or any Innkeepers Subsidiary has the right, pursuant to a franchise, license, satellite agreement, franchise development agreement, area development agreement, development incentive agreement or other Contract (together with any amendments, guarantees and any ancillary documents and agreements related thereto, collectively, the " Franchise Agreements ") to utilize a brand name or other rights of a hotel chain or system from any Person and (B) the applicable brand of such property. Each such Franchise Agreement has been previously provided or made available to Purchaser prior to the date hereof and, to the Knowledge of the Innkeepers Parties, is valid, binding and in full force and effect as against the Innkeepers Party or the Innkeepers Subsidiary, as applicable. To the Knowledge of the Innkeepers Parties, except as disclosed on Section 3.1(p)(ix)(B) of the Innkeepers Disclosure Letter , neither any Innkeepers Party nor any Innkeepers Subsidiary, as applicable, has received or delivered written notice under any of the Franchise

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Agreements of any material default under any Franchise Agreement, and no event has occurred which, with notice or lapse of time or both, would constitute a material default by any of Innkeepers REIT or any Innkeepers Subsidiary, as applicable under any such Franchise Agreement.

                        (q)     Insurance . The Innkeepers Parties maintain insurance coverage with reputable insurers, or maintain self-insurance practices, in such amounts and covering such risks which in their good faith judgment are reasonable for the business of the Innkeepers Parties and the Innkeepers Subsidiaries (taking into account the cost and availability of such insurance). Section 3.1(q) of the Innkeepers Disclosure Letter sets forth a list that is true and complete in all material respects of all material insurance policies in force naming Innkeepers REIT, any Innkeepers Subsidiary or any employees thereof as an insured or beneficiary or as a loss payable payee or for which Innkeepers REIT or any Innkeepers Subsidiary has paid or is obligated to pay all or part of the premiums. There is no claim by Innkeepers REIT or any Innkeepers Subsidiary pending under any such policies which (A) has been denied or disputed by the insurer and (B) would, individually or in the aggregate, constitute an Innkeepers Material Adverse Effect. To the Knowledge of the Innkeepers Parties, all such insurance policies are in full force and effect, all premiums due and payable thereon have been paid, and no written notice of cancellation or termination has been received by any of the Innkeepers Parties or the Innkeepers Subsidiaries with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation. To the Knowledge of the Innkeepers Parties, as of the date hereof no insurer on any such policy has been declared insolvent