--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

EXHIBITI 10.1

 
 

 
 

 
 

 
 
UNSECURED REVOLVING CREDIT AGREEMENT
 
 

 
 
DATED AS OF SEPTEMBER 21, 2006
 
 

 
 
AMONG
 
 

 
 
EQUITY INNS PARTNERSHIP, L.P.,
 
 
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.,
 
 
EQI ORLANDO 2, L.L.C.,
 
 
AND
 
 
EQI FINANCING PARTNERSHIP I, L.P.,
 
 
AS BORROWER
 
 

 
 
AND
 
 

 
 
JPMORGAN CHASE BANK, N.A.,
 
 
AS ADMINISTRATIVE AGENT,
 
 

 
 
J.P. MORGAN SECURITIES INC.,
 
 
AS CO-LEAD ARRANGER/SOLE BOOK MANAGER,
 
 

 
 
AND
 
 

 
 
CALYON NEW YORK BRANCH,
 
 
AS SYNDICATION AGENT AND CO-LEAD ARRANGER
 
 

 
 
AMSOUTH BANK
 
 
BANK OF AMERICA, N.A.
 
 
AND
 
 
KEYBANK NATIONAL ASSOCIATION
 
 
EACH AS DOCUMENTATION AGENT
 
 

 
 
AND
 
 

 
 
THE SEVERAL OTHER LENDERS
 
 
FROM TIME TO TIME PARTIES HERETO
 
 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 
                                                                                Page
 
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
2
Section 1.1.
Definitions
2
Section 1.2.
Financial Standards
18
     
ARTICLE II.
THE FACILITY
18
Section 2.1.
The Facility; Limitations on Borrowing
18
Section 2.2.
Maturity Date
19
Section 2.3.
Requests for Advances; Responsibility for Advances
19
Section 2.4.
Evidence of Credit Extensions
19
Section 2.5.
Ratable and Non Ratable Loans
19
Section 2.6.
Applicable Margins and Fees
19
Section 2.7.
Commitment Fee
20
Section 2.8.
Other Fees
20
Section 2.9.
Minimum Amount of Each Advance
20
Section 2.10.
Interest
20
Section 2.11.
Selection of Rate Options and LIBOR Interest Periods
21
Section 2.12.
Method of Payment
23
Section 2.13.
Default
24
Section 2.14.
Lending Installations
24
Section 2.15.
Non Receipt of Funds by Administrative Agent
24
Section 2.16.
Swingline Loans
24
Section 2.17.
Voluntary Reduction of Aggregate Commitment Amount
25
Section 2.18.
Increase in Aggregate Commitment
26
Section 2.19.
Optional Prepayments; Mandatory Prepayments
26
Section 2.20.
Application of Moneys Received
27
Section 2.21.
Extension of Maturity Date
27
     
ARTICLE III.
THE LETTER OF CREDIT SUBFACILITY
28
Section 3.1.
Obligation to Issue
28
Section 3.2.
Types and Amounts
28
Section 3.3.
Conditions
28
Section 3.4.
Procedure for Issuance of Facility Letters of Credit
29
Section 3.5.
Reimbursement Obligations; Duties of Issuing Bank
30
Section 3.6.
Participation
31
Section 3.7.
Payment of Reimbursement Obligations
32
Section 3.8.
Compensation for Facility Letters of Credit
33
Section 3.9.
Letters of Credit Collateral Account
33
     
ARTICLE IV.
CHANGE IN CIRCUMSTANCES
34
Section 4.1.
Yield Protection
34
Section 4.2.
Changes in Capital Adequacy Regulations
34
Section 4.3.
Availability of LIBOR Advances
35
Section 4.4.
Funding Indemnification
35
Section 4.5.
Lender Statements; Survival of Indemnity
35
     
ARTICLE V.
CONDITIONS PRECEDENT
36
Section 5.1.
Conditions Precedent to Closing
36
Section 5.2.
Conditions Precedent to Subsequent Advances and Issuance
38
     
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
39
Section 6.1.
Existence
39
Section 6.2.
Corporate/Partnership Powers
39
Section 6.3.
Power of Officers
39
Section 6.4.
Government and Other Approvals
39
Section 6.5.
Solvency
39
Section 6.6.
Compliance with Laws
40
Section 6.7.
Enforceability of Agreement
40
Section 6.8.
Title to Property
40
Section 6.9.
Litigation
41
Section 6.10.
Events of Default
41
Section 6.11.
Investment Company Act of 1940
41
Section 6.12.
[Intentionally Omitted]
41
Section 6.13.
Regulation U
41
Section 6.14.
No Material Adverse Financial Change
41
Section 6.15.
Financial Information
41
Section 6.16.
[Intentionally Omitted]
41
Section 6.17.
ERISA
41
Section 6.18.
Taxes
42
Section 6.19.
Environmental Matters
42
Section 6.20.
Insurance
42
Section 6.21.
No Brokers
43
Section 6.22.
No Violation of Usury Laws
43
Section 6.23.
Not a Foreign Person
43
Section 6.24.
No Trade Name
43
Section 6.25.
Subsidiaries
43
Section 6.26.
Unencumbered Assets
44
Section 6.27.
Borrowing Base Assets
44
     
ARTICLE VII.
ADDITIONAL REPRESENTATIONS AND WARRANTIES
44
Section 7.1.
Existence
44
Section 7.2.
Corporate or Trust Powers
44
Section 7.3.
Power of Officers
44
Section 7.4.
Government and Other Approvals
44
Section 7.5.
Compliance with Laws
45
Section 7.6.
Enforceability of Guaranty
45
Section 7.7.
Liens; Consents
45
Section 7.8.
Litigation
45
Section 7.9.
Investment Company Act of 1940
45
Section 7.10.
[Intentionally Omitted]
45
Section 7.11.
No Material Adverse Financial Change
45
Section 7.12.
Financial Information
45
Section 7.13.
[Intentionally Omitted]
46
Section 7.14.
ERISA
46
Section 7.15.
Taxes
46
Section 7.16.
Subsidiaries
46
Section 7.17.
Status
46
     
ARTICLE VIII.
AFFIRMATIVE COVENANTS
46
Section 8.1.
Notices
46
Section 8.2.
Financial Statements, Reports, Etc.
47
Section 8.3.
Existence and Conduct of Operations; Limitations on Investments
49
Section 8.4.
Maintenance of Properties
49
Section 8.5.
Insurance
50
Section 8.6.
Payment of Obligations
50
Section 8.7.
Compliance with Laws
50
Section 8.8.
Adequate Books
50
Section 8.9.
ERISA
50
Section 8.10.
Maintenance of Status
50
Section 8.11.
Use of Proceeds
50
Section 8.12.
Pre Acquisition Environmental Investigations
50
Section 8.13.
Unencumbered Assets
50
Section 8.14.
Management Agreements and Permitted Operating Leases
51
     
ARTICLE IX.
NEGATIVE COVENANTS
52
Section 9.1.
Change of Borrower Ownership
52
Section 9.2.
Use of Proceeds
52
Section 9.3.
Leverage; Additional Recourse Indebtedness
52
Section 9.4.
Dividends
52
Section 9.5.
Floating Rate Debt
52
Section 9.6.
Liens
53
Section 9.7
FF&E Expenditures
53
Section 9.8
Indebtedness, Coverage and Net Worth Covenants
54
Section 9.9
Qualifying Trust Preferred Securities
54
     
ARTICLE X.
DEFAULTS
54
Section 10.1.
Nonpayment of Principal
54
Section 10.2.
Certain Covenants
55
Section 10.3.
Nonpayment of Interest and Other Obligations
55
Section 10.4.
Cross Default
55
Section 10.5.
Loan Documents
55
Section 10.6.
Representations or Warranty
55
Section 10.7.
Covenants, Agreements and Other Conditions
55
Section 10.8.
No Longer General Partner
56
Section 10.9.
Material Adverse Financial Change
56
Section 10.10.
Bankruptcy
56
Section 10.11.
Legal Proceedings
56
Section 10.12.
ERISA
56
Section 10.13.
Failure to Satisfy Judgments
57
Section 10.14.
Environmental Remediation
57
Section 10.15.
REIT Status; Stock Exchange Listing
57
     
ARTICLE XI.
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
57
Section 11.1.
Acceleration
57
Section 11.2.
Preservation of Rights; Amendments
58
     
ARTICLE XII.
THE ADMINISTRATIVE AGENT
58
Section 12.1.
Appointment
58
Section 12.2.
Powers
58
Section 12.3.
General Immunity
58
Section 12.4.
No Responsibility for Loans, Recitals, Etc.
58
Section 12.5.
Action on Instructions of Lenders
59
Section 12.6.
Employment of Administrative Agents and Counsel
59
Section 12.7.
Reliance on Documents; Counsel
59
Section 12.8.
Administrative Agent’s Reimbursement and Indemnification
59
Section 12.9.
Rights as a Lender
60
Section 12.10.
Lender Credit Decision
60
Section 12.11.
Successor Administrative Agent
60
Section 12.12.
Notice of Defaults
61
Section 12.13.
Requests for Approval
61
Section 12.14.
Copies of Documents
61
Section 12.15.
Defaulting Lenders
61
Section 12.16.
Co-Agents; Lead Managers
62
     
ARTICLE XIII.
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
62
Section 13.1.
Successors and Assigns
62
Section 13.2.
Participations
62
Section 13.3.
Assignments
63
Section 13.4.
Dissemination of Information
64
Section 13.5.
Tax Treatment
64
Section 13.6.
USA Patriot Act
64
     
ARTICLE XIV.
GENERAL PROVISIONS
65
Section 14.1.
Survival of Representations
65
Section 14.2.
Governmental Regulation
65
Section 14.3.
Taxes
65
Section 14.4.
Headings
65
Section 14.5.
No Third Party Beneficiaries
65
Section 14.6.
Expenses; Indemnification
65
Section 14.7.
Severability of Provisions
66
Section 14.8.
Nonliability of the Lenders
66
Section 14.9.
Choice of Law
66
Section 14.10.
Consent to Jurisdiction
66
Section 14.11.
Waiver of Jury Trial
66
Section 14.12.
Entire Agreement; Modification of Agreement
67
Section 14.13.
Dealings with the Borrower
67
Section 14.14.
Set-Off
68
Section 14.15.
Counterparts
68
Section 14.16.
Limitation on Liability of EIP/WV
68
     
ARTICLE XV.
NOTICES
69
Section 15.1.
Giving Notice
69
Section 15.2.
Change of Address
70

--------------------------------------------------------------------------------

EXHIBITS AND SCHEDULES
 
Exhibit A Intentionally Deleted
 
Exhibit B Form of Note
 
Exhibit C Intentionally Deleted
 
Exhibit D Form of Guaranty
 
Exhibit E Intentionally Deleted
 
Exhibit F Intentionally Deleted
 
Exhibit G Intentionally Deleted
 
Exhibit H Wiring Instructions
 
Exhibit I Form of Compliance Certificate
 
Schedule I  Calculation of Covenants
 
Exhibit J Intentionally Deleted
 
Exhibit K Assignment and Assumption Agreement
 
Exhibit L Amendment to Unsecured Revolving Credit Agreement
 
SCHEDULE 1.1 Schedule of Existing Letters of Credit
 
SCHEDULE 6.19 Environmental Compliance
 
SCHEDULE 6.24 Trade Names
 
SCHEDULE 6.25 Subsidiaries (Borrowers) Owning Unencumbered Assets
 
SCHEDULE 7.16 Subsidiaries (Guarantors) Owning Unencumbered Assets
 

 

 

 
 

--------------------------------------------------------------------------------

UNSECURED REVOLVING CREDIT AGREEMENT
 
THIS UNSECURED REVOLVING CREDIT AGREEMENT is entered into as of September 21,
2006 by and among the following:
 
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership having its
principal place of business at c/o Equity Inns, Inc., 7700 Wolf River Boulevard,
Germantown, Tennessee 38138 (“Operating Partnership”), the sole general partner
of which is Equity Inns Trust;
 
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P., a Tennessee limited partnership
having its principal place of business c/o Equity Inns, Inc., 7700 Wolf River
Boulevard, Germantown, Tennessee 38138 (“EIP/WV”), the sole general partner of
which is Equity Inns Services, L.L.C.., a Tennessee limited liability company
which is wholly owned by Equity Inns, Inc.;
 
 
EQI ORLANDO 2, L.L.C., a Delaware limited liability company having its principal
place of business c/o Equity Inns, Inc., 7700 Wolf River Boulevard, Germantown,
Tennessee 38138 (“EQI2);
 
EQI FINANCING PARTNERSHIP I, L.P., a Tennessee limited partnership having its
principal place of business c/o Equity Inns, Inc., 7700 Wolf River Boulevard,
Germantown, Tennessee 38138 (“EQI Financing), the sole general partner of which
is EQI Financing Corporation, a Tennessee corporation (the Operating
Partnership, EIP/WV, EQI2, and EQI Financing being referred to herein
collectively as the “Borrower”);
 
JPMORGAN CHASE BANK, N.A. (“JPMorgan”), (successor by merger to Bank One, NA
(main office New York, New York)) a national bank organized under the laws of
the United States of America having an office at 277 Park Avenue, Third Floor,
New York, New York 10172; as Co-Lead Arranger and Administrative Agent
("Administrative Agent") for the Lenders (as defined below);
 
J.P. MORGAN SECURITIES INC. ("JPMS"), as Sole Book Manager;
 
CALYON NEW YORK BRANCH (“Calyon”), the New York branch of a French banking
corporation, having an office at 1301 Avenue of the Americas, New York, New York
10019, as Co-Lead Arranger and Syndication Agent (“Syndication Agent”);
 
BANK OF AMERICA, N.A. (“B of A”) having an office at 901 Main Street, 64th
floor, Dallas, Texas 75202, as Documentation Agent ("Documentation Agent");
 
KEYBANK NATIONAL ASSOCIATION (“KeyBank”) having an office at 1200 Abernathy
Road, NE, Suite 1550, Atlanta, Georgia 30328, as Documentation Agent;

AMSOUTH BANK (“AmSouth”), a state banking corporation, having an office at 1900
Fifth Avenue North, AmSouth Sonat Tower, 9th Floor, Birmingham, Alabama 35203,
as Documentation Agent;
 

 
U.S. BANK NATIONAL ASSOCIATION ("USBank") having an office at 209 South LaSalle
Street, Suite 410, Chicago, Illinois 60604; and
 
BRANCH BANKING AND TRUST COMPANY ("BB&T") having an office at 200 West 2nd
Street; 16th floor, Winston-Salem, NC 27101;
 
REGIONS BANK (“Regions”), having an office at 417 20th Street North, Birmingham,
Alabama, 35203.
 
RECITALS
 
A. The Borrower is primarily engaged in the business of acquiring, developing
and owning premium limited service, premium extended stay and all suite and full
service hotel properties.
 
B. The Borrower, the Administrative Agent, and certain other lenders have
previously entered into a Second Amended and Restated Secured Revolving Credit
Agreement dated as of June 20, 2005 with respect to a secured credit facility in
the amount of $125,000,000 (the “Existing Facility”).
 
C. The Borrower has requested that the Lenders extend unsecured loans to the
Borrower in the aggregate amount of $150,000,000 (with possible future increases
to an amount up to $250,000,000) pursuant to the terms of this Agreement (the
“Facility”), and that the Administrative Agent act as administrative agent for
the Lenders and that the Existing Facility be terminated. The Administrative
Agent and the Lenders have agreed to do so.
 
D. J.P. Morgan Securities Inc. has acted as co-lead arranger/sole book manager
and Calyon New York Branch has acted as co-lead arranger and have arranged the
Facility between the Lenders and Borrower and coordinated the closing of the
Facility.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
 
Article I.  
 

 
DEFINITIONS AND ACCOUNTING TERMS
 
Section 1.1.  Definitions
 
. As used in this Agreement, the following terms have the meanings set forth
below:
 
“ABR Applicable Margin” means, as of any date with respect to any Adjusted
Alternate Base Rate Advance, the Applicable Margin in effect for such Adjusted
Alternate Base Rate Advance as determined in accordance with Section 2.6 hereof.
 
“Adjusted Alternate Base Rate” means a floating interest rate equal to the
Alternate Base Rate plus the ABR Applicable Margin changing when and as the
Alternate Base Rate and ABR Applicable Margin changes.
 
“Adjusted Alternate Base Rate Advance” means an Advance that bears interest at
the Adjusted Alternate Base Rate.
 
“Adjusted EBITDA” means, for any period, EBITDA adjusted to deduct from EBITDA
the sum of (a) the Agreed FF&E Reserve for all Properties of the Consolidated
Group during such period plus (b) the Consolidated Group Pro Rata Share of four
percent (4%) of gross room revenue for all Properties of Investment Affiliates
during such period.
 
“Adjusted LIBOR Rate” means, with respect to a LIBOR Advance for any day during
the relevant LIBOR Interest Period, the sum of (i) the quotient of (a) the Base
LIBOR Rate applicable to such LIBOR Interest Period, divided by (b) one minus
the Reserve Requirement (expressed as a decimal) applicable to such LIBOR
Interest Period, plus the LIBOR Applicable Margin in effect on such day.
 
“Adjusted Net Operating Income” means, with respect to any Property, Net
Operating Income for such Property less four percent (4%) of gross room revenues
for such Property.
 
“Administrative Agent” means JPMorgan, acting as agent for the Lenders in
connection with the transactions contemplated by this Agreement, and its
successors in such capacity.
 
“Advance” means a loan to the Borrower hereunder by one or more of the Lenders
pursuant to Section 2.1 hereof, whether such Advances are from time to time,
Adjusted Alternate Base Rate Advances, LIBOR Advances or Swingline Loans.
 
“Affiliate” means any Person directly or indirectly controlling, controlled by
or under direct or indirect common control with any other Person. A Person shall
be deemed to control another Person if the controlling Person owns ten percent
(10%) or more of any class of voting securities of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.
 
“Aggregate Commitment” means, as of any date, the sum of all of the Lenders’
then current Commitments, which on the Agreement Effective Date shall be
$150,000,000 subject to Borrower’s right to reduce the Aggregate Commitment
pursuant to Section 2.17 or to increase the Aggregate Commitment pursuant to
Section 2.18.
 
“Agreed FF&E Reserve” means, with respect to any period and Property, 4% of
gross room revenues for the Consolidated Group during such period.
 
“Agreement” means this Unsecured Revolving Credit Agreement and all amendments,
modifications and supplements hereto.
 
“Agreement Effective Date” shall mean September ____, 2006.
 
“Allocated Facility Amount” means, at any time, the sum of all then outstanding
Advances (including all Swingline Loans) and the then Facility Letter of Credit
Obligations.
 
“Alternate Base Rate” means, for any day, a rate of interest per annum equal to
the higher of (i) the Prime Rate for such day and (ii) the sum of Federal Funds
Effective Rate for such day plus 1/2% per annum.
 
“Applicable Commitment Fee Percentage” means, as of any date, the percentage
then in effect pursuant to the chart shown in Section 2.7.
 
“Applicable Margin” means the applicable margins set forth in the table in
Section 2.6 used to calculate the interest rate applicable to the various types
of Advances, which may vary from time to time in the manner set forth in Section
2.6.
 
“Approved Management Agreement” means a management agreement that contains
substantially market standard terms.
 
“Arrangers” means JPMS and Calyon, collectively.
 
“Base LIBOR Rate” means, with respect to a LIBOR Advance for the relevant
Interest Period, the applicable British Bankers’ Association LIBOR rate for
deposits in U.S. dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers’ Association LIBOR
rate is available to the Agent, the applicable Base LIBOR Rate for the relevant
Interest Period shall instead be the rate determined by the Agent to be the rate
at which JPMorgan or one of its Affiliate banks offers to place deposits in U.S.
dollars with first class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of JPMorgan’s relevant LIBOR Advance
and having a maturity equal to such Interest Period.
 
“Borrower” is defined in the Preambles.
 
“Borrowing Base” means, as of any date, 60% of Total Asset Value derived from
Borrowing Base Assets, provided that the maximum value of any one Borrowing Base
Asset will not exceed 20% of Total Asset Value derived from Borrowing Base
Assets.
 
“Borrowing Base Assets” means Unencumbered Assets which (i) are wholly-owned in
fee simple by Borrower or a Guarantor, except that up to 15% of the Borrowing
Base may be comprised of Borrowing Base Assets owned by Qualifying Investment
Affiliates in which the Borrower and/or Guarantors have an ownership percentage
of at least 74.9%, and (ii) have been in service for at least 24 months.
 
“Borrowing Date” means a Business Day on which an Advance is made to the
Borrower.
 
“Borrowing Notice” is defined in Section 2.11(a) hereof.
 
“Business Day” means a day, other than a Saturday, Sunday or holiday, on which
banks are open for business in New York, New York and, where such term is used
in reference to the selection or determination of the Adjusted LIBOR Rate, in
London, England.
 
“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person which is not a corporation and any
and all warrants or options to purchase any of the foregoing.
 
“Cash Equivalents” shall mean (i) short term obligations of, or fully guaranteed
by, the United States of America, (ii) commercial paper rated A 1 or better by
Standard and Poor’s Corporation or P 1 or better by Moody’s Investors Service,
Inc., or (iii) certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and surplus in
excess of $100,000,000.
 
“Code” means the Internal Revenue Code of 1986 as amended from time to time, or
any replacement or successor statute, and the regulations promulgated thereunder
from time to time.
 
“Commitment” means the obligation of each Lender, subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties herein, to make Advances not exceeding in the aggregate the amount
set forth opposite its signature below, or the amount stated in any subsequent
amendment hereto.
 
“Commitment Fee” is defined in Section 2.7.
 
“Compliance Certificate” is defined in Section 8.2(v).
 
“Consolidated Group” means the Borrower, the Guarantors and any other subsidiary
partnerships or entities of any of them which are required under GAAP to be
consolidated with the Borrower and the Guarantors for financial reporting
purposes and does not include Investment Affiliates.
 
“Consolidated Group Pro Rata Share” means, with respect to any Investment
Affiliate, the percentage of the total equity ownership interests held by the
Consolidated Group in the aggregate, in such Investment Affiliate, determined by
calculating the greater of (i) the percentage of the issued and outstanding
stock, partnership interests or membership interests in such Investment
Affiliate held by the Consolidated Group in the aggregate and (ii) the
percentage of the total book value of such Investment Affiliate that would be
received by the Consolidated Group in the aggregate, upon liquidation of such
Investment Affiliate after repayment in full of all Indebtedness of such
Investment Affiliate.
 
“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with all or any of the entities in the Consolidated Group, are
treated as a single employer under Sections 414(b) or 414(c) of the Code.
 
“Debt Service” means for any period, (a) Interest Expense for such period plus
(b) the aggregate amount of regularly scheduled principal payments of
Indebtedness (excluding optional prepayments and balloon principal payments due
on maturity in respect of any Indebtedness) required to be made during such
period by the Consolidated Group plus (c) the Consolidated Group Pro Rata Share
of all such regularly scheduled principal payments required to be made during
such period by any Investment Affiliate (other than Excluded Investment
Affiliates) on Indebtedness (excluding optional prepayments and balloon
principal payments due on maturity in respect of any Indebtedness) taken into
account in calculating Interest Expense, without duplication.
 
“Default” means an event which, with notice or lapse of time or both, would
become an Event of Default.
 
“Default Rate” means with respect to any Advance, a rate equal to the interest
rate applicable to such Advance plus three percent (3%) per annum.
 
“Defaulting Lender” means any Lender which fails or refuses to perform its
obligations under this Agreement within the time period specified for
performance of such obligation, or, if no time frame is specified, if such
failure or refusal continues for a period of five Business Days after written
notice from the Administrative Agent; provided that if such Lender cures such
failure or refusal, such Lender shall cease to be a Defaulting Lender.
 
“Dollars” and “$” mean United States Dollars.
 
“EBITDA” means (a) net income applicable to common shareholders as reported by
the Consolidated Group in accordance with GAAP (reduced to eliminate any income
from Investment Affiliates), for the most recent four full fiscal quarters
unless otherwise specified, as adjusted by (i) excluding Preferred Stock
Expense, (ii) excluding gains and losses from property sales, property
write-downs, debt or equity restructurings and adjusting for the non-cash effect
of straight-lining of rents, (iii) excluding the effect of discontinued
operations, (iv) excluding the effect of income taxes, (v) excluding the effect
of minority interests, (vi) adding back Interest Expense, (vii) straight-lining
various ordinary operating expenses which are payable less frequently than
monthly (e.g. real estate taxes and Ground Lease Expense) (viii) adding back
depreciation, amortization and all non-cash items, and plus (b) the Consolidated
Group Pro Rata Share of such income (adjusted as described above) of any
Investment Affiliate (other than Excluded Investment Affiliates), provided that
no item of income or expense shall be included more than once in such
calculation even if it falls within more than one of the foregoing categories.
If a Property has been acquired during the period for which EBITDA is being
determined (the “Measurement Period”), then EBITDA will be adjusted to reflect
an annualized EBITDA for such Property based on the applicable period of the
time during the Measurement Period the Property was owned by the Consolidated
Group and up to twelve months pre-acquisition (so that the total Measurement
Period is twelve months). If a Property has been sold during such Measurement
Period, EBITDA shall be adjusted to exclude any Net Operating Income from such
Property from the calculation of EBITDA.
 
“Effective Date” means each Borrowing Date and, if no Borrowing Date has
occurred in the preceding calendar month, the first Business Day of each
calendar month.
 
“EIP/WV” means Equity Inns/West Virginia Partnership, L.P., a Tennessee limited
partnership.
 
“Environmental Laws” means any and all Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements
of any Governmental Authority having jurisdiction over any member of the
Consolidated Group or any Investment Affiliate, or their respective assets, and
regulating or imposing liability or standards of conduct concerning protection
of human health or the environment, as now or may at any time hereafter be in
effect, in each case to the extent the foregoing are applicable to the
operations of such member of the Consolidated Group or Investment Affiliate, or
any of their respective assets or Properties.
 
“EQI Financing” means EQI Financing Partnership I, L.P., a Tennessee limited
partnership.
 
 
“EQI2” means EQI Orlando 2, L.L.C., A Tennessee limited liability company.
 
“Equity Inns” means Equity Inns, Inc., a Tennessee corporation.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and regulations promulgated thereunder from time to time.
 
“Event of Default” means any event set forth in Article X hereof.
 
“Excluded Investment Affiliate” means Investment Affiliates whose assets and
liabilities shall be excluded from the calculations of the Consolidated Group’s
compliance with the financial covenants of this Agreement so long as the
following conditions are met: (i) the Consolidated Group Pro Rata Share of any
such Investment Affiliate is less than 20%; (ii) the Consolidated Group does not
have voting control of, or the ability to otherwise direct the actions of, such
Investment Affiliate; (iii) no Indebtedness of such Investment Affiliate is
recourse to, or guaranteed by, any member of the Consolidated Group; and (iv)
the aggregate book value in accordance with GAAP of the Consolidated Group’s
investment in all Excluded Investment Affiliates does not exceed the difference
between $35,000,000 and the amount of the Borrowing Base attributable to
Properties Under Development.
 
“Excluded Property” means a Property that has been completed but has been in
operation for less than 24 months.
 
“Existing Agreement” means that certain Second Amended and Restated Secured
Revolving Credit Agreement dated as of June 20, 2005 by and between the
Borrower, the Administrative Agent and certain of the other Lenders.
 
“Existing Trust Preferred Securities” means the fixed/floating preferred
securities in an aggregate principal amount of $50,000,000 issued on or about
June 17, 2005 by Equity Inns Statutory Trust, a wholly-owned subsidiary of
Equity Inns Partnership, L.P., which mature on June 30, 2035.
 
“Facility” means the unsecured revolving credit facility as defined in Recital C
and described in Section 2.1.
 
“Facility Letter of Credit” means a Letter of Credit issued pursuant to Article
III of this Agreement, including any Letter of Credit issued pursuant to Article
III of the Existing Agreement which remains outstanding at the Agreement
Execution Date as shown on Schedule 1.1 hereto.
 
“Facility Letter of Credit Fee” is defined in Section 3.8.
 
“Facility Letter of Credit Obligations” means, as at the time of determination
thereof, all liabilities, whether actual or contingent, of the Borrower with
respect to Facility Letters of Credit, including the sum of (a) the
Reimbursement Obligations and (b) the aggregate undrawn face amount of the then
outstanding Facility Letters of Credit.
 
“Facility Letter of Credit Sublimit” means $25,000,000.
 
“Federal Funds Effective Rate” means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (New York
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
 
“FF&E” means fixtures, furniture and equipment located at the Properties.
 
“FF&E Deficiency” means the amount, if any, by which 4% of the gross room
revenues of the Consolidated Group during the preceding four fiscal quarters, on
a rolling basis, exceeds the actual expenditures by the Consolidated Group for
FF&E replacements or capital items at the Consolidated Group’s Properties during
the same period.
 
“Fixed Charges” means, for any period, the sum of (i) Debt Service for such
period plus (ii) Preferred Stock Expense of the Guarantors for such period plus
(iii) Ground Lease Expense for such period.
 
“Funds From Operations” means for any period, net income applicable to common
shareholders as reported by the Consolidated Group in accordance with GAAP
(reduced to eliminate any income from Investment Affiliates), as adjusted by (i)
excluding gains and losses from property sales, property write-downs, debt or
equity restructurings and adjusting for the non-cash effect of straight-lining
of rents, (ii) excluding the effect of income taxes, (iii) excluding the effect
of minority interests, (iv) straight-lining various ordinary operating expenses
which are payable less frequently than monthly (e.g. real estate taxes and
Ground Lease Expense, (v) adding back real estate-related depreciation and
amortization, and (vi) excluding the effect of all non-cash items. Annualized
Funds from Operations for such Person will be calculated for the four most
recent fiscal quarters for which financial results are available.
 
“GAAP” means generally accepted accounting principles in the United States of
America consistent with those utilized in preparing the audited financial
statements of the Consolidated Group required hereunder, without adjustment
under FASB SAB 101.
 
“Ground Lease Expense” means, for any period, all payments due from any member
of the Consolidated Group under a lease of land underlying a Property for such
period.
 
“Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any
obligation (determined without duplication) of (a) the guaranteeing person or
(b) another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counter indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the maximum stated amount of the primary obligation
relating to such Guarantee Obligation (or, if less, the maximum stated liability
set forth in the instrument embodying such Guarantee Obligation), provided, that
in the absence of any such stated amount or stated liability, the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.
 
“Guarantors” means collectively, Equity Inns Trust, a Maryland real estate
investment trust and Equity Inns, Inc., a Tennessee corporation.
 
“Guaranty” means the Guaranty executed by the Guarantors in the form attached
hereto as Exhibit D.
 
“Indebtedness” of any Person at any date means without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade liabilities and other accounts payable, and accrued expenses
incurred in the ordinary course of business and payable in accordance with
customary practices), to the extent such obligations constitute indebtedness for
the purposes of GAAP, (c) any other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument, (d) all obligations
of such Person under financing leases and capital leases, (e) all obligations of
such Person in respect of acceptances issued or created for the account of such
Person, (f) all Guarantee Obligations of such Person (excluding in any
calculation of consolidated indebtedness of such Person, Guarantee Obligations
of such Person in respect of primary obligations of any of its Subsidiaries),
(g) all reimbursement obligations of such Person for letters of credit and other
contingent liabilities, (h) all liabilities secured by any Lien (other than
Liens for taxes not yet due and payable) on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof, (i) any repurchase obligation or liability of such Person or
any of its Subsidiaries with respect to accounts or notes receivable sold by
such Person or any of its Subsidiaries, and (j) such Person’s pro rata share of
debt in Investment Affiliates (other than Excluded Investment Affiliates) and
any loans where such Person is liable as a general partner.
 
“Insolvency” means insolvency as defined in the United States Bankruptcy Code,
as amended. “Insolvent” when used with respect to a Person, shall refer to a
Person who satisfies the definition of Insolvency.
 
“Interest Expense” all interest expense of the Consolidated Group determined in
accordance with GAAP plus (i) capitalized interest not covered by an interest
reserve from a loan facility, plus (ii) the allocable portion (based on
liability) of any accrued or paid interest incurred on any obligation for which
any member of the Consolidated Group is wholly or partially liable under
repayment, interest carry, or performance guarantees, or other relevant
liabilities, plus (iii) the Consolidated Group Pro Rata Share of any accrued or
paid interest incurred on any Indebtedness of any Investment Affiliate (other
than Excluded Investment Affiliates), whether recourse or non recourse, provided
that no expense shall be included more than once in such calculation even if it
falls within more than one of the foregoing categories.
 
“Interest Period” means a LIBOR Interest Period.
 
“Investment Affiliate” means any Person in which any member of the Consolidated
Group, directly or indirectly, has an ownership interest, whose financial
results are not consolidated under GAAP with the financial results of the
Consolidated Group on the consolidated financial statements of the Consolidated
Group.
 
“Issuance Date” is defined in Section 3.4(a)(2).
 
“Issuance Notice” is defined in Section 3.4(c).
 
“Issuing Bank” means, with respect to each Facility Letter of Credit, the Lender
which issues such Facility Letter of Credit. JPMorgan shall be the sole Issuing
Bank.
 
“JPMorgan” means JPMorgan Chase Bank, N.A.
 
“Lenders” means JPMorgan and the other Persons executing this Agreement in such
capacity, or any Person which subsequently executes and delivers any amendment
hereto in such capacity and each of their respective permitted successors and
assigns. Where reference is made to “the Lenders” in any Loan Document it shall
be read to mean “all of the Lenders” unless the context requires otherwise.
 
“Lending Installation” means any U.S. office of any Lender authorized to make
loans similar to the Advances described herein.
 
“Letter of Credit” of a Person means a letter of credit or similar instrument
which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.
 
“Letter of Credit Collateral Account” is defined in Section 3.9.
 
“Letter of Credit Request” is defined in Section 3.4(a).
 
“LIBOR Advance” means an Advance that bears interest at the Adjusted LIBOR Rate.
 
“LIBOR Applicable Margin” means, as of any date with respect to any LIBOR
Advance, the Applicable Margin in effect for such LIBOR Advance as determined in
accordance with Section 2.6 hereof.
 
“LIBOR Interest Period” means, with respect to a LIBOR Advance, a period of one,
two, three or six months, or any other period as approved by all Lenders, as
selected in advance by the Borrower.
 
“Lien” means any mortgage, pledge, security interest, encumbrance, lien, charge
or easement of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code on any property leased to any Person under a lease which is not in the
nature of a conditional sale or title retention agreement, or any subordination
agreement in favor of another Person).
 
“Loan” means, with respect to a Lender, such Lender’s portion of any Advance.
 
“Loan Documents” means this Agreement, the Notes, the Guaranty, and any and all
other agreements or instruments required and/or provided to Lenders hereunder or
thereunder, as any of the foregoing may be amended from time to time.
 
“Loan Parties” the Borrower, the Guarantors and each other Affiliate of the
Borrower which is a party to a Loan Document.
 
“Margin Stock” has the meaning ascribed to it in Regulation U of the Board of
Governors of the Federal Reserve System.
 
“Material Adverse Effect” means, with respect to any matter, that such matter in
the Required Lenders’ good faith judgment may (x) materially and adversely
affect the business, properties, condition or results of operations of the
Consolidated Group taken as a whole, or (y) constitute a non-frivolous challenge
to the validity or enforceability of any material provision of any Loan Document
against any obligor party thereto.
 
“Material Adverse Financial Change” shall be deemed to have occurred if the
Required Lenders, in their good faith judgment, determine that a material
adverse financial change has occurred which could prevent timely repayment of
any Advance hereunder or materially impair Borrower’s ability to perform its
obligations under any of the Loan Documents.
 
“Materials of Environmental Concern” means any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Law, including, without limitation, asbestos, radon,
polychlorinated biphenyls and urea formaldehyde insulation.
 
“Maturity Date” means September _____, 2010 (subject to extension in accordance
with Section 2.21) or such earlier date on which the principal balance of the
Facility and all other sums due in connection with the Facility shall be due as
a result of the acceleration of the Facility.
 
“Monetary Default” means any Default involving Borrower’s failure to pay any of
the Obligations when due.
 
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
 
“Net Operating Income” means, with respect to any Property, for any period, all
income attributable to such Property less all expenses directly related to such
Property (except for any expenditures for FF&E replacement and capital
improvements), such as real estate taxes, ground lease payments, base management
fees and franchise fees, adding back depreciation, amortization and interest
expense with respect to such Property for such period, and, if such period is
less than a year, adjusted by straight lining various expenses which are payable
less frequently than monthly during every such period (e.g. real estate taxes,
ground lease payments and insurance).
 
“Newly Acquired Properties” means each Property acquired after the closing of
the Facility for an effective cap rate greater than nine percent (9%) until such
time as the purchase price for such Property divided by the Adjusted Net
Operating Income for such Property for the trailing twelve month period, is
equal to or less than 9.0.
 
“Note” means the promissory note (or amended and restated promissory note)
payable to the order of each Lender in the amount of such Lender’s maximum
Commitment in the form attached hereto as Exhibit B (collectively, the “Notes”).
 
“Obligations” means the Advances, the Facility Letter of Credit Obligations and
all accrued and unpaid fees and all other obligations of Borrower to the
Administrative Agent or any or all of the Lenders arising under this Agreement
or any of the other Loan Documents.
 
“Operating Partnership” means Equity Inns Partnership, L.P., a Tennessee limited
partnership.
 
“Owner” means, as of any date, each of the Wholly-Owned Subsidiaries and
entities comprising the Borrower that own a Property.
 
“Participants” is defined in Section 13.2.1 hereof.
 
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
 
“Percentage” means, with respect to each Lender, the applicable percentage of
the then-current Aggregate Commitment represented by such Lender’s then-current
Commitment.
 
“Permitted Liens” are defined in Section 9.6 hereof.
 
“Permitted Operating Lease” means a lease between one of the Borrowers or a
Wholly-Owned Subsidiary and a taxable Wholly-Owned Subsidiary (provided such
taxable Wholly-Owned Subsidiary has entered into an Approved Management
Agreement for the management of the hotel covered by such Permitted Operating
Lease) on substantially the same lease form as currently being used by Borrower.
 
“Person” means an individual, a corporation, a limited or general partnership,
an association, a joint venture or any other entity or organization, including a
governmental or political subdivision or an agent or instrumentality thereof.
 
“Plan” means an employee benefit plan as defined in Section 3(3) of ERISA,
whether or not terminated, as to which the Borrower or any member of the
Controlled Group may have any liability.
 
“Preferred Stock” means, for any Person, any preferred stock issued by such
Person.
 
“Preferred Stock Expense” means, for any period for any Person, the aggregate
dividend payments due to the holders of Preferred Stock of such Person, whether
payable in cash or in kind, and whether or not actually paid during such period.
 
“Prime Rate” means a rate per annum equal to the prime rate of interest
announced by JPMorgan or its parent from time to time (which is not necessarily
the lowest rate charged to any customer), changing when and as such prime rate
changes.
 
“Property” means any real estate asset owned by a member of the Consolidated
Group or an Investment Affiliate and operated as a premium limited service,
premium extended stay or premium all suite or full service hotel property.
 
“Property Under Development” means a Property under development (in accordance
with GAAP) on which construction of the hotel has commenced but which has not
been substantially completed and occupied and which is subject to a Permitted
Operating Lease and an Approved Management Agreement that will be effective upon
opening.
 
“Purchasers” is defined in Section 13.3.1 hereof.
 
“Qualified Officer” means, with respect to any entity, the president, the vice
president, the treasurer, the chief financial officer, the chief accounting
officer or the controller of such entity if it is a corporation or of such
entity’s general partner if it is a partnership.
 
“Qualifying Investment Affiliate” means any Subsidiary or Investment Affiliate
with respect to which (i) the Borrower or one of its Wholly-Owned Subsidiaries
has management control of the Subsidiary or Investment Affiliate and each of its
assets and (ii) the Borrower or such Wholly-Owned Subsidiary, as the case may
be, is not subject to restrictions contained in the organizational documents of
any of such entities (or any such restrictions have expired) on its ability to
sell or finance the real property owned by such Subsidiary or Investment
Affiliate or its interest in the Subsidiary or Investment Affiliate. In no event
shall a Subsidiary or Investment Affiliate be a Qualifying Investment Affiliate
if it has Indebtedness that is recourse to the Subsidiary or Investment
Affiliate (excluding Indebtedness that is recourse to the Subsidiary or
Investment Affiliate only for customary non-recourse carve-outs).
 
“Qualifying Trust Preferred Securities” means (i) the Existing Trust Preferred
Securities, (ii) up to $50,000,000 of preferred securities issued to refinance
the Existing Trust Preferred Securities and (iii) up to $50,000,000 of
additional trust preferred securities, provided that the securities issued in
accordance with clauses (ii) and (iii) must be subordinate to all senior debt of
the Borrower, including the Facility, and be otherwise structured in
substantially the same way as the Existing Trust Preferred Securities.
 
“Rate Option” means the Adjusted Alternate Base Rate or the Adjusted LIBOR Rate.
The Rate Option in effect on any date shall always be the Adjusted Alternate
Base Rate unless the Borrower has properly selected the Adjusted LIBOR Rate
pursuant to Section 2.11 hereof.
 
“Recourse Indebtedness” means, with respect to any Person, Indebtedness for
borrowed money, whether as a maker or a guarantor, other than non-recourse
secured Indebtedness which limits the liability of the maker thereof to its
interest in the Properties given for such indebtedness, subject only to those
customary “carve-outs” to non-recourse status required by institutional mortgage
lenders.
 
“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
 
“Reimbursement Obligations” means at any time, the aggregate liabilities of the
Borrower to the Lenders, the Issuing Bank and the Administrative Agent in
respect of all payments or disbursements made by the Lenders, the Issuing Bank
and the Administrative Agent under or in respect of the Facility Letters of
Credit, and which have not been repaid by Borrower.
 
“REMIC Loan” means that certain $88,000,000 issuance of mortgage bonds by the
REMIC Partnership pursuant to the terms of an Indenture dated as of February 6,
1997.
 
“REMIC Partnership” means EQI Financing Partnership I, L.P., the borrower under
the REMIC Loan which has as its sole limited partner, holding 99% of the
partnership interests therein, the Operating Partnership and as its sole general
partner, holding 1% of the partnership interests therein, EQI Financing
Corporation which is wholly owned by Equity Inns Trust.
 
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA
and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
 
“Required Lenders” means, as of any date, those Lenders holding, in the
aggregate, more than sixty percent (60%) of the then current Aggregate
Commitment or, if the Aggregate Commitment has been terminated, Lenders holding,
in the aggregate, more than sixty percent (60%) of the aggregate unpaid
principal amount of the outstanding Advances.
 
“Reserve Requirement” means, with respect to a LIBOR Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
 
“S&P” means Standard & Poor’s Ratings Group and its successors.
 
“Subsidiary” means as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person, and
provided such corporation, partnership or other entity is consolidated with such
Person for financial reporting purposes under GAAP.
 
“Supermajority Lenders” means, as of any date, those Lenders holding, in the
aggregate, more than eighty percent (80%) of the then current Aggregate
Commitment or, if the Aggregate Commitment has been terminated, Lenders holding,
in the aggregate, more than eighty percent (80%) of the aggregate unpaid
principal amount of the outstanding Advances.
 
“Swingline Advances” means, as of any date, collectively, all Swingline Loans
then outstanding under this Facility.
 
“Swingline Commitment” means the obligation of the Swingline Lender to make
Swingline Loans not exceeding $20,000,000, which is included in, and is not in
addition to, the Swingline Lender’s total Commitment hereunder.
 
“Swingline Lender” shall mean JPMorgan, in its capacity as a Lender.
 
“Swingline Loan” means a loan made by the Swingline Lender pursuant to Section
2.16 hereof.
 
“Tangible Net Worth” means “net worth”, as determined in accordance with GAAP,
less intangible assets included in such net worth, less equity investment in
Excluded Investment Affiliates, plus accumulated depreciation.
 
“Total Asset Value” means (a) Adjusted Net Operating Income from all Properties
owned by the Consolidated Group (other than Excluded Properties and Newly
Acquired Properties) for the trailing twelve month period divided by .09, plus
(b) Consolidated Group Pro Rata Share of the Adjusted Net Operating Income from
all Properties owned by Investment Affiliates (other than Excluded Properties
and Newly Acquired Properties) for the trailing twelve month period divided by
.09, plus (c) the amount by which Unrestricted Cash and Cash Equivalents exceeds
$10,000,000, plus (d) the Total Cost for Properties Under Development, Excluded
Properties, and Newly Acquired Properties.
 
“Total Cost” means, as of any date, (a) if the Property is owned by the
Consolidated Group, the sum of (i) the book value under GAAP of such Property
plus (ii) all accumulated depreciation on such Property previously reflected on
the Consolidated Group’s financial statements, in accordance with GAAP, or (b)
if such Property is owned by an Investment Affiliate, the sum of (i) the
Consolidated Group Pro Rata Share of the book value under GAAP of such Property
plus (ii) the Consolidated Group Pro Rata Share of all depreciation on such
Property previously reflected on the Investment Affiliate’s financial
statements, in accordance with GAAP.
 
“Total Indebtedness” means, as of any date, the sum of (i) all Indebtedness of
the Consolidated Group in existence on such date plus (ii) the Consolidated
Group Pro Rata Share of all Indebtedness of any Investment Affiliate (other than
Excluded Investment Affiliates), to the extent not included in the Indebtedness
described in clause (i), without duplication.
 
“Transferee” is defined in Section 13.4 hereof.
 
“Total Secured Indebtedness” means as of any date, the aggregate principal
amount of that portion of Total Indebtedness that is secured by a Lien on the
Property of any member of the Consolidated Group or any Investment Affiliate.
 
“Total Unsecured Indebtedness” means as of any date, the aggregate principal
amount of that portion of Total Indebtedness that is not secured by a Lien on
the Property of any member of the Consolidated Group or any Investment
Affiliate.
 
“Unencumbered Asset” means, with respect to any Property located in the United
States and wholly owned by Borrower, any Guarantor or a Qualifying Investment
Affiliate, which is in service or is a Property Under Development, at any date
of determination, the circumstance that such asset on such date (a) is not
subject to any Liens or claims (including restrictions on transferability or
assignability) of any kind, (b) is not subject to any agreement (including any
agreement governing Indebtedness incurred in order to finance or refinance the
acquisition of such asset which prohibits or limits the ability of the Borrower
or any Guarantor, as the case may be, to create, incur, assume or suffer to
exist any Lien upon any assets or Capital Stock of the Borrower or Guarantor
(c) is not subject to any agreement (including any agreement governing
Indebtedness incurred in order to finance or refinance the acquisition of such
asset) which entitles any Person to the benefit of any Lien on any assets or
Capital Stock of the Borrower or any Guarantor or would entitle any Person to
the benefit of any Lien (but excluding liens in favor of Lenders and other
Permitted Liens identified in Section 9.6 (i) - (iv) and (vii)) on such assets
or Capital Stock upon the occurrence of any contingency (including, without
limitation, pursuant to an “equal and ratable” clause), and (d) is compliant
with the criteria set forth in Section 8.13 hereof. For the purposes of the
foregoing, any Property owned by a Qualifying Investment Affiliate shall not be
deemed to be an “Unencumbered Asset” unless (i) both such Property and all
Capital Stock of such Qualifying Investment Affiliate, and of each entity in the
chain of ownership between the Borrower and such Qualifying Investment Affiliate
is unencumbered and (ii) such Qualifying Investment Affiliate and each
intervening entity between the Borrower and such Qualifying Investment Affiliate
does not have any Indebtedness for borrowed money or any Guarantee Obligations.
 
“Unencumbered Asset Value” means, subject to the limitations hereinafter set
forth, as of the end of a quarter, (a) the value of all Unencumbered Assets
determined by dividing the Adjusted Net Operating Income from Unencumbered
Assets owned by the Consolidated Group and the Consolidated Group Pro Rata Share
of Adjusted Net Operating Income from Unencumbered Assets owned by Qualifying
Investment Affiliates, each for the trailing twelve month period (other than
Excluded Properties and Newly Acquired Properties) by .09, plus (b) the amount
by which Unrestricted Cash and Cash Equivalents exceeds $10,000,000, plus (c)
the Total Cost for Unencumbered Assets which are Properties Under Development,
Excluded Properties and Newly Acquired Properties. The inclusion of Unencumbered
Assets in the calculation of Unencumbered Asset Value shall be subject to the
following limitations:
 

·  
85% of the Unencumbered Asset Value shall be from assets that are wholly-owned
and controlled by the Borrower and the remaining amount shall be from assets
owned by Qualifying Investment Affiliates (or Borrower or a Guarantor);

·  
90% of the Unencumbered Asset Value shall be from assets that are, directly or
indirectly, held in fee simple by Borrower or a Wholly-Owned Subsidiary;

·  
The maximum aggregate value of Properties Under Development and Excluded
Properties included in the Unencumbered Asset Value will not exceed 20% of the
Unencumbered Asset Value; and

·  
No more than 30% of the total Unencumbered Asset Value may be derived from
assets that are (i) not wholly-owned and controlled by the Borrower (ii) not
directly or indirectly, held in fee simple by Borrower or a Wholly-Owned
Subsidiary, (iii) Properties Under Development, and (iv) Excluded Properties.

“Unrestricted Cash and Cash Equivalents” means, in the aggregate, all cash,
deposits with commercial banks or short term debt instruments issued by the U.S.
Treasury or other highly creditworthy institutions described herein which are
not pledged or otherwise restricted for the benefit of any creditor and which
are owned by members of the Consolidated Group, to be valued for purposes of
this Facility at 100% of their then-current book value, as determined under
GAAP.
 
“Wholly-Owned Subsidiary” means a Subsidiary which is 100% owned, directly or
indirectly, by one or more of the entities comprising the Borrower.
 
The foregoing definitions shall be equally applicable to both the singular and
the plural forms of the defined terms.
 
Section 1.2.  Financial Standards
 
. All financial computations required of a Person under this Agreement shall be
made, and all financial information required under this Agreement shall be
prepared, in accordance with GAAP, except that if any Person’s financial
statements are not audited, such Person’s financial statements shall be prepared
in accordance with the same sound accounting principles utilized in connection
with the financial information submitted to Lenders with respect to such Person
or the Properties of such Person in connection with this Agreement and shall be
certified by an authorized representative of such Person.
 
Article II.  
 

 
THE FACILITY
 
Section 2.1.  The Facility; Limitations on Borrowing
 
. Subject to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of the Borrower and the Guarantors contained
herein, Lenders agree (x) to make Advances through the Administrative Agent to
Borrower from time to time prior to the Maturity Date and (y) to issue Facility
Letters of Credit under Article III of this Agreement, provided that the making
of any such Advance or the issuance of such Facility Letter of Credit will not:
 
(i)  cause the then current Allocated Facility Amount to exceed the then-current
Aggregate Commitment; or
 
(ii)  cause the then current Allocated Facility Amount to exceed the
then-current Borrowing Base; or
 
(iii)  cause the then current outstanding Swingline Advances to exceed the
Swingline Commitment; or
 
(iv)  cause the then outstanding Facility Letters of Credit Obligations to
exceed the Facility Letter of Credit Sublimit.
 
The Advances may be ratable Adjusted Alternate Base Rate Advances, ratable LIBOR
Advances or non pro rata Swingline Loans. Except as provided in Sections 2.16
and 2.18 hereof, each Lender shall fund its Percentage of each such Advance and
no Lender will be required to fund any amounts which when aggregated with such
Lender’s Percentage of (i) all other Advances then outstanding, (ii) all
Swingline Advances and (iii) all Facility Letter of Credit Obligations would
exceed such Lender’s then current Commitment. This Facility is a revolving
credit facility and, subject to the provisions of this Agreement, the Borrower
may request Advances hereunder, repay such Advances and reborrow Advances at any
time prior to the Maturity Date. Unless and until the Administrative Agent is
otherwise advised in writing to the contrary by all of the entities comprising
the Borrower, all Loans shall be deemed to be requested by the Operating
Partnership and shall be funded directly to the Operating Partnership, EIP/WV,
EQI Financing and EQI2 each irrevocably authorizes the Administrative Agent to
honor requests for Advances made by the Operating Partnership and to fund such
Loans directly to the Operating Partnership.
 
Section 2.2.  Maturity Date
 
. The Facility created by this Agreement, and the Commitment of each Lender to
lend hereunder, shall terminate on the Maturity Date, unless sooner terminated
in accordance with the terms of this Agreement. Any outstanding Advances not
previously repaid and all other unpaid Obligations shall be paid in full by the
Borrower on the Maturity Date.
 
Section 2.3.  Requests for Advances; Responsibility for Advances
 
. Ratable Advances shall be made available to Borrower by Administrative Agent
in accordance with Section 2.1 and Section 2.11(a) hereof. The obligation of
each Lender to fund its Percentage of each ratable Advance shall be several and
not joint.
 
Section 2.4.  Evidence of Credit Extensions
 
. The Advances of each Lender outstanding at any time shall be evidenced by the
Notes. Each Note executed by the Borrower shall be in a maximum principal amount
equal to each Lender’s Percentage of the current Aggregate Commitment. Each
Lender shall record Advances and principal payments thereof on the schedule
attached to its Note or, at its option, in its records, and each Lender’s record
thereof shall be conclusive absent Borrower furnishing to such Lender conclusive
and irrefutable evidence of an error made by such Lender with respect to that
Lender’s records. Notwithstanding the foregoing, the failure to make, or an
error in making, a notation with respect to any Advance shall not limit or
otherwise affect the obligations of Borrower hereunder or under the Notes to pay
the amount actually owed by Borrower to Lenders.
 
Section 2.5.  Ratable and Non Ratable Loans
 
. Each Advance hereunder shall consist of Loans made from the several Lenders
ratably in proportion to their Percentages, except for Swingline Loans which
shall be made by the Swingline Lender in accordance with Section 2.16. The
ratable Advances may be Adjusted Alternate Base Rate Advances, LIBOR Advances or
a combination thereof, selected by the Borrower in accordance with Sections 2.10
and 2.11.
 
Section 2.6.  Applicable Margins
 
. The ABR Applicable Margin and the LIBOR Applicable Margin to be used in
calculating the interest rate applicable to different types of Advances shall
vary from time to time in accordance with the ratio of Total Indebtedness to
EBITDA:
 
Ratio of Total Indebtedness to EBITDA
 
LIBOR Applicable Margin
 
ABR Applicable Margin
 
Less than 4.5x
 
1.25%
 
0.25%
 
4.5x or over, but less than 5.00x
 
1.375%
 
0.375%
 
5.00x or over, but less than 5.50x
 
1.50%
 
0.50%
 
5.50x or over, but less than 6.0x
 
1.875%
 
0.875%
 

 
The Applicable Margins will change quarterly upon delivery of a compliance
certificate in the form of attached hereto, reflecting the ratio of Total
Indebtedness to EBITDA as of the last day of the preceding fiscal quarter as
disclosed on the financial statements for such fiscal quarter delivered to the
Lenders.
 
Section 2.7.  Commitment Fee
 
. The Borrower agrees to pay to the Administrative Agent for the account of each
Lender a commitment fee (the “Commitment Fee”) from the Agreement Effective Date
to and including the Maturity Date, calculated at the then current per annum
Applicable Commitment Fee Percentage (calculated for actual days elapsed on the
basis of a 360 day year) on the daily unborrowed portion of such Lender’s
Commitment (which is equal to the difference between (a) such Lender’s
Commitment on such day and (b) the then outstanding Loans owed to such Lender
plus the Lender’s Percentage of any outstanding and undrawn Facility Letters of
Credit (“Unused Facility Amount”)) payable quarterly in arrears on the last day
of each calendar quarter hereafter beginning December 31, 2006 and ending on the
Maturity Date. The Applicable Commitment Fee Percentage shall be equal to 0.15%
for any period during which the average daily Unused Facility Amount for all
Lenders is less than fifty percent (50%) of the Aggregate Commitment and 0.25%
in all other cases. Notwithstanding the foregoing, all accrued Commitment Fees
shall be payable on the effective date of any termination of the obligations of
the Lenders to make Loans hereunder. The Swingline Commitment shall be treated
in the same fashion as the other Commitments for purposes of calculating the
Commitment Fees and only the actual Swingline Loans outstanding on any day shall
be included in the aggregate amount of outstanding Loans owed to the Swingline
Lender on such day.
 
Section 2.8.  Other Fees.
 
(a)  The Borrower agrees to pay all fees payable to the Administrative Agent and
JPMorgan Securities, Inc. pursuant to the Borrower’s prior letter agreement with
them.
 
(b)  The Borrower also agrees to pay the fees described in Section 3.8 below
with respect to any Facility Letters of Credit.
 
Section 2.9.  Minimum Amount of Each Advance
 
. Each LIBOR Advance shall be in the minimum amount of $2,000,000 (and in
multiples of $100,000 if in excess thereof), each Adjusted Alternate Base Rate
Advance shall be in the minimum amount of $1,000,000 (and in multiples of
$100,000 if in excess thereof) and each Swingline Advance shall be in the
minimum amount of $50,000 (and in multiples of $25,000 if in excess thereof),
provided, however, that any Adjusted Alternate Base Rate Advance may be in the
amount of the unused Aggregate Commitment.
 
Section 2.10.  Interest.
 
(a)  The outstanding principal balance under the Notes shall bear interest from
time to time at a rate per annum equal to:
 
(i)  the Adjusted Alternate Base Rate; or
 
(ii)  at the election of Borrower with respect to all or portions of the
Obligations, the Adjusted LIBOR Rate.
 
(b)  All interest shall be calculated for actual days elapsed on the basis of a
360-day year. Interest accrued on each Adjusted Alternate Base Rate Advance,
LIBOR Advance and Swingline Loan shall be payable in arrears from time to time
on each of (i) the first day of each calendar month, commencing with the first
such date to occur after the date hereof, (ii) the Maturity Date, and (iii) the
effective date of any termination of the Aggregate Commitment in full pursuant
to Section 2.17. Interest shall not be payable for the day of any payment on the
amount paid if payment is received by Administrative Agent prior to noon (New
York time). If any payment of principal or interest under the Notes shall become
due on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a payment of principal, such
extension of time shall be included in computing interest due in connection with
such payment; provided that for purposes of Section 10.1 hereof, any payments of
principal described in this sentence shall be considered to be “due” on such
next succeeding Business Day.
 
Section 2.11.  Selection of Rate Options and LIBOR Interest Periods.
 
(a) Borrower, from time to time, may select the Rate Option and, in the case of
each LIBOR Advance, the commencement date (which shall be a Business Day) and
the length of the LIBOR Interest Period applicable to each LIBOR Advance.
Borrower shall give Administrative Agent irrevocable notice (a “Borrowing
Notice”) not later than 11:00 a.m. (New York time) (i) at least one Business Day
prior to an Adjusted Alternate Base Rate Advance, (ii) at least three (3)
Business Days prior to a ratable LIBOR Advance, and (iii) not later than 11:00
a.m. (New York time) on the Borrowing Date for each Swingline Loan, specifying:
 
(i)  the Borrowing Date, which shall be a Business Day, of such Advance,
 
(ii)  the aggregate amount of such Advance,
 
(iii)  the type of Advance selected, and
 
(iv)  in the case of each LIBOR Advance, the LIBOR Interest Period applicable
thereto.
 
The Borrower shall also deliver together with each Borrowing Notice the
compliance certificate required in Section 5.2 and otherwise comply with the
conditions set forth in Section 5.2 for Advances, provided, however, that with
regard to delivering a compliance certificate with each Borrowing Notice, so
long as all Borrowing Base Assets, as of the time of the last compliance
certificate, continue to qualify as Borrowing Base Assets, a compliance
certificate will not be required provided that Borrower’s request for an Advance
or the issuance of a Facility Letter of Credit shall constitute its
representation and warranty that it is in compliance with the covenants herein,
including that the requested Advance or issuance of a Facility Letter of Credit
will not result in a violation of any of the limitations set forth in
Section 2.1 hereof. Administrative Agent shall provide each Lender by facsimile
with a copy of each Borrowing Notice and compliance certificate by 3:00 p.m. on
the same Business Day it is received.
 
Not later than noon (New York time) on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in New York to
the Administrative Agent. Administrative Agent will promptly make the funds so
received from the Lenders available to the Borrower.
 
(b)  Administrative Agent shall, as soon as practicable after receipt of a
Borrowing Notice, determine the Adjusted LIBOR Rate applicable to the requested
ratable LIBOR Advance and inform Borrower and Lenders of the same. Each
determination of the Adjusted LIBOR Rate by Administrative Agent shall be
conclusive and binding upon Borrower in the absence of manifest error.
 
(c)  If Borrower shall prepay a LIBOR Advance other than on the last day of the
LIBOR Interest Period applicable thereto, Borrower shall be responsible to pay
all amounts due to Lenders as required by Section 4.4 hereof.
 
(d)  As of the end of each LIBOR Interest Period selected for a ratable LIBOR
Advance, the interest rate on the LIBOR Advance will become the Adjusted
Alternate Base Rate, unless Borrower has once again selected a LIBOR Interest
Period in accordance with the timing and procedures set forth in Section
2.11(g).
 
(e)  The right of Borrower to select the Adjusted LIBOR Rate for an Advance
pursuant to this Agreement is subject to the availability to Lenders of a
similar option. If Administrative Agent determines that (i) deposits of Dollars
in an amount approximately equal to the LIBOR Advance for which the Borrower
wishes to select the Adjusted LIBOR Rate are not generally available at such
time in the London interbank eurodollar market, or (ii) the rate at which the
deposits described in subsection (i) herein are being offered will not
adequately and fairly reflect the costs to Lenders of maintaining an Adjusted
LIBOR Rate on an Advance or of funding the same in such market for such LIBOR
Interest Period, or (iii) reasonable means do not exist for determining an
Adjusted LIBOR Rate, or (iv) the Adjusted LIBOR Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then in any of such events,
Administrative Agent shall so notify Borrower and Lenders and such Advance shall
bear interest at the Adjusted Alternate Base Rate. Notwithstanding the
foregoing, the Lenders shall not be obligated to match fund their LIBOR
Advances.
 
(f)  In no event may Borrower elect a LIBOR Interest Period which would extend
beyond the Maturity Date. Unless Lenders agree thereto, in no event may Borrower
have more than ten (10) different LIBOR Interest Periods for LIBOR Advances
outstanding at any one time.
 
(g)  Conversion and Continuation.
 
(i)  Borrower may elect from time to time, subject to the other provisions of
this Section 2.11, to convert all or any part of a ratable Advance into any
other type of Advance; provided that any conversion of a ratable LIBOR Advance
shall be made on, and only on, the last day of the LIBOR Interest Period
applicable thereto.
 
(ii)  Adjusted Alternate Base Rate Advances shall continue as Adjusted Alternate
Base Rate Advances unless and until such Adjusted Alternate Base Rate Advances
are converted into ratable LIBOR Advances pursuant to a Conversion/Continuation
Notice from Borrower in accordance with Section 2.11(g)(iv). Ratable LIBOR
Advances shall continue until the end of the then applicable LIBOR Interest
Period therefor, at which time each such Advance shall be automatically
converted into an Adjusted Alternate Base Rate Advance unless the Borrower shall
have given the Administrative Agent a Conversion/Continuation Notice in
accordance with Section 2.11(g)(iv) requesting that, at the end of such LIBOR
Interest Period, such Advance either continue as an Advance of such type for the
same or another LIBOR Interest Period.
 
(iii)  Notwithstanding anything to the contrary contained in Sections 2.11(g)(i)
or (g)(ii), no Advance may be converted into a LIBOR Advance or continued as a
LIBOR Advance (except with the consent of the Required Lenders) when any
Monetary Default or Event of Default has occurred and is continuing.
 
(iv)  The Borrower shall give the Administrative Agent irrevocable notice (a
“Conversion/Continuation Notice”) of each conversion of an Advance or
continuation of a LIBOR Advance not later than 11:00 a.m. (New York time) on the
Business Day immediately preceding the date of the requested conversion, in the
case of a conversion into an Adjusted Alternate Base Rate Advance, or 11:00 a.m.
(New York time) at least three (3) Business Days prior to the date of the
requested conversion or continuation, in the case of a conversion into or
continuation of a ratable LIBOR Advance, specifying: (1) the requested date
(which shall be a Business Day) of such conversion or continuation; (2) the
amount and type of the Advance to be converted or continued; and (3) the amounts
and type(s) of Advance(s) into which such Advance is to be converted or
continued and, in the case of a conversion into or continuation of a ratable
LIBOR Advance, the duration of the LIBOR Interest Period applicable thereto.
 
Section 2.12.  Method of Payment
 
. All payments of the Obligations hereunder shall be made, without set off,
deduction, or counterclaim, in immediately available funds to Administrative
Agent at Administrative Agent’s address specified herein, or at any other
Lending Installation of Administrative Agent specified in writing by
Administrative Agent to Borrower, by noon (local time) on the date when due and
shall be applied ratably by Administrative Agent among Lenders. Each payment
delivered to Administrative Agent for the account of any Lender shall be
delivered promptly by Administrative Agent to such Lender in the same type of
funds that Administrative Agent received at its address specified herein or at
any Lending Installation specified in a notice received by Administrative Agent
from such Lender. Administrative Agent is hereby authorized to charge the
account of Borrower maintained with JPMorgan for each payment of principal,
interest and fees as it becomes due hereunder. Amounts paid to or held by the
Administrative Agent for the payment of Loans shall not be deemed paid to a
Lender until the Business Day that such amounts are received by such Lender. If
amounts are received by the Administrative Agent from the Borrower prior to the
applicable times stated herein and the Administrative Agent fails to make a
Lender’s portion of such amount available to such Lender by close of business on
such Business Day, the Borrower shall have no obligation to pay any further
interest on such payment and the Administrative Agent shall pay to such Lender
interest on such payment to the date paid to such Lender by the Administrative
Agent at a rate per annum equal to the then current Federal Funds Effective
Rate.
 
Section 2.13.  Default
 
. Notwithstanding the foregoing, during the continuance of a Monetary Default or
an Event of Default, Borrower shall not have the right to request a LIBOR
Advance, select a new LIBOR Interest Period for an existing ratable LIBOR
Advance or convert any Adjusted Alternate Base Rate Advance to a ratable LIBOR
Advance. During the continuance of a Monetary Default or an Event of Default, at
the election of the Required Lenders, by notice to Borrower, outstanding
Advances shall bear interest at the applicable Default Rates until such Monetary
Default or Event of Default ceases to exist or the Obligations are paid in full.
 
Section 2.14.  Lending Installations
 
. Each Lender may book its Advances at any Lending Installation selected by such
Lender and may change its Lending Installation from time to time. All terms of
this Agreement shall apply to any such Lending Installation and the Notes shall
be deemed held by each Lender for the benefit of such Lending Installation. Each
Lender may, by written or telex notice to the Administrative Agent and Borrower,
designate a Lending Installation through which Advances will be made by it and
for whose account payments are to be made.
 
Section 2.15.  Non Receipt of Funds by Administrative Agent
 
. Unless Borrower or a Lender, as the case may be, notifies Administrative Agent
prior to the date on which it is scheduled to make payment to Administrative
Agent of (i) in the case of a Lender, an Advance, or (ii) in the case of
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
Administrative Agent may assume that such payment has been made. Administrative
Agent may, but shall not be obligated to, make the amount of such payment
available to the intended recipient in reliance upon such assumption. If such
Lender or Borrower, as the case may be, has not in fact made such payment to
Administrative Agent, the recipient of such payment shall, on demand by
Administrative Agent, repay to Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount at a rate per annum
equal to (i) in the case of payment by a Lender, the Federal Funds Effective
Rate (as determined by Administrative Agent) for such day or (ii) in the case of
payment by Borrower, the interest rate applicable to the relevant Advance.
 
Section 2.16.  Swingline Loans
 
. In addition to the other options available to Borrower hereunder, up to
$20,000,000 of the Swingline Commitment shall be available for Swingline Loans
subject to the following terms and conditions. Swingline Loans shall be made
available for same day borrowings provided that notice is given in accordance
with Section 2.11 hereof. All Swingline Loans shall bear interest at the
Adjusted Alternate Base Rate and shall be deemed to be Adjusted Alternate Base
Rate Advances. In no event shall the Swingline Lender be required to fund a
Swingline Loan if it would increase the total aggregate outstanding Loans by
Swingline Lender hereunder plus its Percentage of Facility Letter of Credit
Obligations to an amount in excess of such Lender’s Commitment. No Swingline
Loan may be made to repay a Swingline Loan, but Borrower may repay Swingline
Loans from subsequent pro rata Advances hereunder. If any Swingline Loan is not
so repaid, upon request of the Swingline Lender made to all the Lenders, which
request must be given not later than the fifth (5th) Business Day after such a
Swingline Loan was made, each Lender irrevocably agrees to purchase its
Percentage of any Swingline Loan made by the Swingline Lender regardless of
whether the conditions for disbursement are satisfied at the time of such
purchase, including the existence of an Event of Default hereunder provided that
Swingline Lender did not have knowledge of such Event of Default at the time the
Swingline Loan was made and provided further that no Lender shall be required to
have total outstanding Loans plus its Percentage of Facility Letters of Credit
exceed its Commitment. Such purchase shall take place on the date of the request
by Swingline Lender so long as such request is made by noon (New York time),
otherwise on the Business Day following such request. All requests for purchase
shall be in writing. From and after the date it is so purchased, each such
Swingline Loan shall, to the extent purchased, (i) be treated as a Loan made by
the purchasing Lenders and not by the selling Lender for all purposes under this
Agreement and the payment of the purchase price by a Lender shall be deemed to
be the making of a Loan by such Lender and shall constitute outstanding
principal under such Lender’s Note, and (ii) shall no longer be considered a
Swingline Loan except that all interest accruing on or attributable to such
Swingline Loan for the period prior to the date of such purchase shall be paid
when due by the Borrower to the Administrative Agent for the benefit of the
Swingline Lender and all such amounts accruing on or attributable to such Loans
for the period from and after the date of such purchase shall be paid when due
by the Borrower to the Administrative Agent for the benefit of the purchasing
Lenders. If prior to purchasing its Percentage of a Swingline Loan one of the
events described in Section 10.10 shall have occurred and such event prevents
the consummation of the purchase contemplated by preceding provisions, each
Lender will purchase an undivided participating interest in the outstanding
Swingline Loan in an amount equal to its Percentage of such Swingline Loan. From
and after the date of each Lender’s purchase of its participating interest in a
Swingline Loan, if the Swingline Lender receives any payment on account thereof,
the Swingline Lender will distribute to such Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s participating interest was
outstanding and funded); provided, however, that in the event that such payment
was received by the Swingline Lender and is required to be returned to the
Borrower, each Lender will return to the Swingline Lender any portion thereof
previously distributed by the Swingline Lender to it. If any Lender fails to so
purchase its Percentage of any Swingline Loan, such Lender shall be deemed to be
a Defaulting Lender hereunder.
 
Section 2.17.  Voluntary Reduction of Aggregate Commitment Amount
 
. Upon at least five (5) days prior irrevocable written notice (or telephonic
notice promptly confirmed in writing) to the Administrative Agent, Borrower
shall have the right, without premium or penalty, to terminate the Aggregate
Commitment in whole or in part provided that (a) Borrower may not reduce the
Aggregate Commitment below the Allocated Facility Amount at the time of such
requested reduction, and (b) any such partial termination shall be in the
minimum aggregate amount of Two Million Dollars (U.S. $2,000,000) or any
integral multiple of Two Million Dollars (U.S. $2,000,000) in excess thereof.
Any partial termination of the Aggregate Commitment shall be applied pro rata to
reduce each Lender’s Commitment, including, unless otherwise agreed in writing
by the Swingline Lender, to reduce the Swingline Commitment by a percentage
equal to the percentage reduction in the Aggregate Commitment.
 
Section 2.18.  Increase in Aggregate Commitment
 
. The Borrower shall also have the right from time to time to increase the
Aggregate Commitment up to a maximum of $250,000,000 by either adding new
entities as Lenders (subject to the Administrative Agent’s prior written
approval of the identity of such new entities) or obtaining the agreement, which
shall be at such Lender’s or Lenders’ sole discretion, of one or more of the
then current Lenders to increase its or their Commitments. Such increases shall
be evidenced by the execution and delivery of an Amendment Regarding Increase in
the form of Exhibit L attached hereto by the Borrower, the Administrative Agent
and the new bank or existing Lender providing such additional Commitment, a copy
of which shall be forwarded to each Lender by the Administrative Agent promptly
after execution thereof. On the effective date of each such increase in the
Aggregate Commitment, the Borrower and the Administrative Agent shall cause the
new or existing Lenders providing such increase, by either funding more than its
or their Percentage of new ratable Advances made on such date or purchasing
shares of outstanding ratable Loans held by the other Lenders or a combination
thereof, to hold its or their Percentage of all ratable Advances outstanding at
the close of business on such day. The Lenders agree to cooperate in any
required sale and purchase of outstanding ratable Advances to achieve such
result. In no event shall the Aggregate Commitment exceed $250,000,000 without
the approval of all of the Lenders.
 
Section 2.19.  Optional Prepayments; Mandatory Prepayments
 
(a)  The Borrower may, upon at least one (1) Business Day’s notice to the
Administrative Agent, prepay the Advances, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Adjusted Alternate
Base Rate Advances, LIBOR Advances, Swingline Loans or a combination thereof,
and if a combination thereof, the amount allocable to each; provided, however,
that (i) any partial prepayment under this Subsection shall be in an amount not
less than $1,000,000 or a whole multiple of $100,000 in excess thereof; (ii) any
LIBOR Advance prepaid on any day other than the last day of the applicable LIBOR
Interest Period must be accompanied by any amounts payable pursuant to Section
4.4; and (iii) each prepayment under this subsection shall include all interest
accrued on the amount of principal prepaid through the date of prepayment. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with any
amounts payable pursuant to Section 4.4.
 
(b)  If on any Business Day the Allocated Facility Amount exceeds the
then-current Borrowing Base or the then current Aggregate Commitment, then,
without notice or demand, the Borrower shall make a mandatory prepayment of the
Loans in an amount equal to such excess no later than thirty (30) days following
such Business Day. The failure of the Borrower make any prepayment as required
under this subsection shall constitute an Event of Default under this Agreement.
Each prepayment required to be made under this subsection shall include all
interest accrued on the amount of principal prepaid through the date of
prepayment and any amounts payable pursuant to Section 4.4. Provided no Default
or Event of Default has occurred and is continuing on the date that the Borrower
shall make a mandatory prepayment pursuant to this subsection, the Borrower
shall have the right to direct whether such prepayment shall be of Adjusted
Alternate Base Rate Advances, LIBOR Advances, Swingline Loans or a combination
thereof, and, if a combination thereof, the amount allocable to each.
 
Section 2.20.  Application of Moneys Received
 
. All moneys collected or received by the Administrative Agent on account of the
Facility directly or indirectly, shall be applied in the following order of
priority:
 
(i)  to the payment of all reasonable costs incurred in the collection of such
moneys of which the Administrative Agent shall have given notice to the
Borrower;
 
(ii)  to the reimbursement of any yield protection due to any of the Lenders in
accordance with Section 4.1;
 
(iii)  to the payment of any fee due pursuant to Section 3.8(b) in connection
with the issuance of a Facility Letter of Credit to the Issuing Bank, to the
payment of the Commitment Fee and Facility Letter of Credit Fee to the Lenders,
if then due, and to the payment of all fees to the Administrative Agent;
 
(iv)  to payment of the full amount of interest and principal on the Swingline
Loans (provided that if Swingline Lender has not requested the other Lenders to
purchase their applicable Percentages of the any outstanding Swingline Loans
within twenty (20) Business Days following a Default, then principal and
interest due on such Swingline Loans shall be of equal priority with principal
and interest due in connection with other Loans);
 
(v)  first to interest until paid in full and then to principal for all Lenders
(other than Defaulting Lenders) in accordance with the respective Percentages of
the Lenders;
 
(vi)  any other sums due to the Administrative Agent or any Lender under any of
the Loan Documents; and
 
(vii)  to the payment of any sums due to each Defaulting Lender as their
respective Percentages appear (provided that Administrative Agent shall have the
right to set-off against such sums any amounts due from such Defaulting Lender).
 
Section 2.21.  Extension of Maturity Date
 
. Borrower shall have one (1) option to extend the Maturity Date for a period of
one (1) year, upon satisfaction of the following conditions precedent:
 
(a)  Borrower shall provide Administrative Agent with written notice of
Borrower’s intent to exercise such extension option not more than ninety (90)
and not less than thirty (30) days prior to the existing Maturity Date;
 
(b)  As of the date of Borrower’s delivery of notice of its intent to exercise
the extension option, and as of the Maturity Date, no Default or Event of
Default shall have occurred and be continuing, and Borrower shall so certify in
writing; and
 
(c)  On or before the original Maturity Date, Borrower shall pay to
Administrative Agent for the benefit of the Lenders an extension fee in an
amount equal to 0.20% of the Aggregate Commitment.
 
Article III.  
 

 
THE LETTER OF CREDIT SUBFACILITY
 
Section 3.1.  Obligation to Issue
 
. Subject to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of the Borrower herein set forth, the Issuing
Bank hereby agrees to issue for the account of either of the entities comprising
the Borrower, one or more Facility Letters of Credit in accordance with this
Article III, from time to time during the period commencing on the Agreement
Effective Date and ending on a date one Business Day prior to the Maturity Date.
 
Section 3.2.  Types and Amounts
 
. The Issuing Bank shall not have any obligation to:
 
(i)  issue any Facility Letter of Credit if the aggregate maximum amount then
available for drawing under Letters of Credit issued by such Issuing Bank, after
giving effect to the Facility Letter of Credit requested hereunder, shall exceed
any limit imposed by law or regulation upon such Issuing Bank;
 
(ii)  issue any Facility Letter of Credit if, after giving effect thereto, (1)
the then applicable Allocated Facility Amount would exceed the then current
Aggregate Commitment, (2) the then applicable Allocated Facility Amount would
exceed the then current Borrowing Base, or (3) the Facility Letter of Credit
Obligations would exceed the Facility Letter of Credit Sublimit; or
 
(iii)  issue any Facility Letter of Credit having an expiration date, or
containing automatic extension provision to extend such date, to a date which is
a Business Day immediately preceding the Maturity Date.
 
Section 3.3.  Conditions
 
. In addition to being subject to the satisfaction of the conditions contained
in Article V hereof, the obligation of the Issuing Bank to issue any Facility
Letter of Credit is subject to the satisfaction in full of the following
conditions:
 
(i)  the Borrower shall have delivered to the Issuing Bank at such times and in
such manner as the Issuing Bank may reasonably prescribe such documents and
materials as may be reasonably required pursuant to the terms of the proposed
Facility Letter of Credit (it being understood that if any inconsistency exists
between such documents and the Loan Documents, the terms of the Loan Documents
shall control) and the proposed Facility Letter of Credit shall be reasonably
satisfactory to the Issuing Bank as to form and content;
 
(ii)  as of the date of issuance, no order, judgment or decree of any court,
arbitrator or governmental authority shall purport by its terms to enjoin or
restrain the Issuing Bank from issuing the requested Facility Letter of Credit
and no law, rule or regulation applicable to the Issuing Bank and no request or
directive (whether or not having the force of law) from any governmental
authority with jurisdiction over the Issuing Bank shall prohibit or request that
the Issuing Bank refrain from the issuance of Letters of Credit generally or the
issuance of the requested Facility Letter or Credit in particular; and
 
(iii)  there shall not exist any Default or Event of Default.
 
Section 3.4.  Procedure for Issuance of Facility Letters of Credit.
 
(a)  Borrower shall give the Issuing Bank and the Administrative Agent at least
three (3) Business Days’ prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (a “Letter of Credit Request”), a
copy of which shall be sent immediately to all Lenders (except that, in lieu of
such written notice, the Borrower may give the Issuing Bank and the
Administrative Agent telephonic notice of such request if confirmed in writing
by delivery to the Issuing Bank and the Administrative Agent (i) immediately (A)
of a telecopy of the written notice required hereunder which has been signed by
an authorized officer, or (B) of a telex containing all information required to
be contained in such written notice and (ii) promptly (but in no event later
than the requested date of issuance) of the written notice required hereunder
containing the original signature of an authorized officer); such notice shall
be irrevocable and shall specify:
 

 
(1)
the stated amount of the Facility Letter of Credit requested (which stated
amount shall not be less than $50,000);

 

 
(2)
the effective date (which day shall be a Business Day) of issuance of such
requested Facility Letter of Credit (the “Issuance Date”);

 

 
(3)
the date on which such requested Facility Letter of Credit is to expire;

 

 
(4)
the purpose for which such Facility Letter of Credit is to be issued;

 

 
(5)
the Person for whose benefit the requested Facility Letter of Credit is to be
issued; and

 

 
(6)
any special language required to be included in the Facility Letter of Credit.

 
At the time such request is made, the Borrower shall also provide the
Administrative Agent and the Issuing Bank with a copy of the form of the
Facility Letter of Credit that the Borrower is requesting be issued. Such
notice, to be effective, must be received by such Issuing Bank and the
Administrative Agent not later than 2:00 p.m. (New York time) on the last
Business Day on which notice can be given under this Section 3.4(a).
 
(b)  Subject to the terms and conditions of this Article III and provided that
the applicable conditions set forth in Article V hereof have been satisfied, the
Issuing Bank shall, on the Issuance Date, issue a Facility Letter of Credit on
behalf of the Borrower in accordance with the Letter of Credit Request and the
Issuing Bank’s usual and customary business practices unless the Issuing Bank
has actually received (i) written notice from the Borrower specifically revoking
the Letter of Credit Request with respect to such Facility Letter of Credit,
(ii) written notice from a Lender, which complies with the provisions of Section
3.6(a), or (iii) written or telephonic notice from the Administrative Agent
stating that the issuance of such Facility Letter of Credit would violate
Section 3.2.
 
(c)  The Issuing Bank shall give the Administrative Agent (who shall promptly
notify Lenders) and the Borrower written or telex notice, or telephonic notice
confirmed promptly thereafter in writing, of the issuance of a Facility Letter
of Credit (the “Issuance Notice”).
 
(d)  The Issuing Bank shall not extend or amend any Facility Letter of Credit
unless the requirements of this Section 3.4 are met as though a new Facility
Letter of Credit was being requested and issued.
 
Section 3.5.  Reimbursement Obligations; Duties of Issuing Bank.
 
(a)  The Issuing Bank shall promptly notify the Borrower and the Administrative
Agent (who shall promptly notify Lenders) of any draw under a Facility Letter of
Credit. Any such draw shall not be deemed to be a default hereunder but shall
constitute an Advance of the Facility in the amount of the Reimbursement
Obligation with respect to such Facility Letter of Credit and shall bear
interest from the date of the relevant drawing(s) under the pertinent Facility
Letter of Credit at a rate selected by Borrower in accordance with Section 2.11
hereof; provided that if a Monetary Default or an Event of Default exists at the
time of any such drawing(s), then the Borrower shall reimburse the Issuing Bank
for drawings under a Facility Letter of Credit issued by the Issuing Bank no
later than the next succeeding Business Day after the payment by the Issuing
Bank and until repaid such Reimbursement Obligation shall bear interest at the
Default Rate.
 
(b)  Any action taken or omitted to be taken by the Issuing Bank under or in
connection with any Facility Letter of Credit, if taken or omitted in the
absence of willful misconduct or gross negligence, shall not put the Issuing
Bank under any resulting liability to any Lender or, provided that such Issuing
Bank has complied with the procedures specified in Section 3.4 and such Lender
has not given a notice contemplated by Section 3.6(a) that continues in full
force and effect, relieve that Lender of its obligations hereunder to the
Issuing Bank. In determining whether to pay under any Facility Letter of Credit,
the Issuing Bank shall have no obligation relative to the Lenders other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered in compliance, and that they appear to comply on
their face, with the requirements of such Letter of Credit.
 
Section 3.6.  Participation.
 
(a)  Immediately upon issuance by the Issuing Bank of any Facility Letter of
Credit in accordance with the procedures set forth in Section 3.4, each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from the Issuing Bank, without recourse, representation or warranty, an
undivided interest and participation equal to such Lender’s Percentage in such
Facility Letter of Credit (including, without limitation, all obligations of the
Borrower with respect thereto) and all related rights hereunder and under the
Guaranty and other Loan Documents; provided that a Letter of Credit issued by
the Issuing Bank shall not be deemed to be a Facility Letter of Credit for
purposes of this Section 3.6 if the Issuing Bank shall have received written
notice from any Lender on or before the Business Day prior to the date of its
issuance of such Letter of Credit that one or more of the conditions contained
in Section 5.2 is not then satisfied, and in the event the Issuing Bank receives
such a notice it shall have no further obligation to issue any Facility Letter
of Credit until such notice is withdrawn by that Lender or the Issuing Bank
receives a notice from the Administrative Agent that such condition has been
effectively waived in accordance with the provisions of this Agreement. Each
Lender’s obligation to make further Loans to Borrower (other than any payments
such Lender is required to make under subparagraph (b) below) or to purchase an
interest from the Issuing Bank in any subsequent letters of credit issued by the
Issuing Bank on behalf of Borrower shall be reduced by such Lender’s Percentage
of the undrawn portion of each Facility Letter of Credit outstanding.
 
(b)  In the event that the Issuing Bank makes any payment under any Facility
Letter of Credit and the Borrower shall not have repaid such amount to the
Issuing Bank pursuant to Section 3.7 hereof, the Issuing Bank shall promptly
notify the Administrative Agent, which shall promptly notify each Lender of such
failure, and each Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of the Issuing Bank the amount of such
Lender’s Percentage of the unreimbursed amount of such payment, and the
Administrative Agent shall promptly pay such amount to the Issuing Bank.
Lender’s payments of its Percentage of such Reimbursement Obligation as
aforesaid shall be deemed to be a Loan by such Lender and shall constitute
outstanding principal under such Lender’s Note. The failure of any Lender to
make available to the Administrative Agent for the account of the Issuing Bank
its Percentage of the unreimbursed amount of any such payment shall not relieve
any other Lender of its obligation hereunder to make available to the
Administrative Agent for the account of such Issuing Bank its Percentage of the
unreimbursed amount of any payment on the date such payment is to be made, but
no Lender shall be responsible for the failure of any other Lender to make
available to the Administrative Agent its Percentage of the unreimbursed amount
of any payment on the date such payment is to be made. Any Lender which fails to
make any payment required pursuant to this Section 3.6(b) shall be deemed to be
a Defaulting Lender hereunder.
 
(c)  Whenever the Issuing Bank receives a payment on account of a Reimbursement
Obligation, including any interest thereon, the Issuing Bank shall promptly pay
to the Administrative Agent and the Administrative Agent shall promptly pay to
each Lender which has funded its participating interest therein, in immediately
available funds, an amount equal to such Lender’s Percentage thereof.
 
(d)  Upon the request of the Administrative Agent or any Lender, the Issuing
Bank shall furnish to such Administrative Agent or Lender copies of any Facility
Letter of Credit to which the Issuing Bank is party and such other documentation
as may reasonably be requested by the Administrative Agent or Lender.
 
(e)  The obligations of a Lender to make payments to the Administrative Agent
for the account of the Issuing Bank with respect to a Facility Letter of Credit
shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, set off, qualification or exception whatsoever other than a
failure of any such Issuing Bank to comply with the terms of this Agreement
relating to the issuance of such Facility Letter of Credit, and such payments
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances.
 
Section 3.7.  Payment of Reimbursement Obligations.
 
(a)  The Borrower agrees to pay to the Administrative Agent for the account of
the Issuing Bank the amount of all Advances for Reimbursement Obligations,
interest and other amounts payable to the Issuing Bank under or in connection
with any Facility Letter of Credit when due, irrespective of any claim, set off,
defense or other right which the Borrower may have at any time against any
Issuing Bank or any other Person, under all circumstances, including without
limitation any of the following circumstances:
 
(i)  any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
 
(ii)  the existence of any claim, setoff, defense or other right which the
Borrower may have at any time against a beneficiary named in a Facility Letter
of Credit or any transferee of any Facility Letter of Credit (or any Person for
whom any such transferee may be acting), the Administrative Agent, the Issuing
Bank, any Lender, or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions between the
Borrower and the beneficiary named in any Facility Letter of Credit);
 
(iii)  any draft, certificate or any other document presented under the Facility
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect of any statement therein being untrue or inaccurate in any respect;
 
(iv)  the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; or
 
(v)  the occurrence of any Default or Event of Default.
 
(b)  In the event any payment by the Borrower received by the Issuing Bank or
the Administrative Agent with respect to a Facility Letter of Credit and
distributed by the Administrative Agent to the Lenders on account of their
participations is thereafter set aside, avoided or recovered from the
Administrative Agent or Issuing Bank in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding, each Lender which received
such distribution shall, upon demand by the Administrative Agent, contribute
such Lender’s Percentage of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by the Issuing Bank or the
Administrative Agent upon the amount required to be repaid by the Issuing Bank
or the Administrative Agent.
 
Section 3.8.  Compensation for Facility Letters of Credit.
 
(a)  The Borrower shall pay to the Administrative Agent, for the ratable account
of the Lenders (including the Issuing Bank), based upon the Lenders’ respective
Percentages, a per annum fee (the “Facility Letter of Credit Fee”) as a
percentage of the face amount of each Facility Letter of Credit equal to the
LIBOR Applicable Margin in effect from time to time while such Facility Letter
of Credit is outstanding. The Facility Letter of Credit Fee relating to any
Facility Letter of Credit shall be due and payable in arrears in equal
installments on the first Business Day of each month following the issuance of
such Facility Letter of Credit and, to the extent any such fees are then due and
unpaid, on the Maturity Date or any other earlier date that the Obligations are
due and payable in full. The Administrative Agent shall promptly remit such
Facility Letter of Credit Fees, when paid, to the other Lenders in accordance
with their Percentages thereof. The Borrower shall not have any liability to any
Lender for the failure of the Administrative Agent to promptly deliver funds to
any such Lender and shall be deemed to have made all such payments on the date
the respective payment is made by the Borrower to the Administrative Agent,
provided such payment is received by the time specified in Section 2.12 hereof.
 
(b)  The Issuing Bank also shall have the right to receive solely for its own
account an issuance fee of one eighth of one percent (0.125%) of the face amount
of each Facility Letter of Credit, payable by the Borrower on the Issuance Date
for each such Facility Letter of Credit. The Issuing Bank shall also be entitled
to receive its reasonable out of pocket costs and the Issuing Bank’s standard
charges of issuing, amending and servicing Facility Letters of Credit and
processing draws thereunder.
 
Section 3.9.  Letter of Credit Collateral Account
 
. The Borrower hereby agrees that it will, until the Maturity Date, maintain a
special collateral account (the “Letter of Credit Collateral Account”) at the
Administrative Agent’s office at the address specified pursuant to Article XV,
in the name of the Borrower but under the sole dominion and control of the
Administrative Agent, for the benefit of the Lenders, and in which the Borrower
shall have no interest other than as set forth in Section 11.1. The Letter of
Credit Collateral Account shall hold the deposits the Borrower is required to
make after an Event of Default on account of any outstanding Facility Letters of
Credit as described in Section 11.1. In addition to the foregoing, the Borrower
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in and to the Letter of Credit Collateral Account and any
funds that may hereafter be on deposit in such account, including income earned
thereon. The Lenders acknowledge and agree that the Borrower has no obligation
to fund the Letter of Credit Collateral Account unless and until so required
under Section 11.1 hereof.
 
Article IV.  
 

 
CHANGE IN CIRCUMSTANCES
 
Section 4.1.  Yield Protection
 
. If, on or after the date of this Agreement, the adoption of or change in any
law or any governmental or quasi governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of any Lender therewith,
 
(i)  subjects any Lender or any applicable Lending Installation to any tax,
duty, charge or withholding on or from payments due from Borrower (excluding
federal and state taxation of the overall net income of any Lender or applicable
Lending Installation), or changes the basis of such taxation of payments to any
Lender in respect of its Advances, its interest in the Facility Letters of
Credit or other amounts due it hereunder, or
 
(ii)  imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to LIBOR Advances), or
 
(iii)  imposes any other condition, and the result is to increase the cost of
any Lender or any applicable Lending Installation of making, funding or
maintaining the Loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with the Loans, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of the Loans held, Letters of Credit issued or
participated in or interest received by it, by an amount deemed material by such
Lender,
 
then, within fifteen (15) days of demand by such Lender, Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Advances and its Commitment.
 
Section 4.2.  Changes in Capital Adequacy Regulations
 
. If a Lender determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or any
corporate entity controlling such Lender with respect to this Facility is
increased as a result of a Change (as defined below), then, within fifteen (15)
days of demand by such Lender, Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is attributable to this
Agreement, its Advances, its interest in the Facility Letters of Credit, or its
obligation to make Advances hereunder or participate in or issue Facility
Letters of Credit hereunder (after taking into account such Lender’s policies as
to capital adequacy). “Change” means (i) any change after the date of this
Agreement in the Risk Based Capital Guidelines (as defined below) or (ii) any
adoption of or change in any other law, governmental or quasi governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. “Risk Based
Capital Guidelines” means (i) the risk based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
“International Convergence of Capital Measurements and Capital Standards”,
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
 
Section 4.3.  Availability of LIBOR Advances
 
. If any Lender determines that maintenance of any of its LIBOR Loans at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive of any Governmental Authority having jurisdiction, the
Administrative Agent shall suspend by written notice to Borrower the
availability of LIBOR Advances from such Lender and require any LIBOR Advances
to be converted to Adjusted Alternate Base Rate Advances, or if the Required
Lenders determine that (i) deposits of a type or maturity appropriate to match
fund LIBOR Advances are not available, the Administrative Agent shall suspend by
written notice to Borrower the availability of LIBOR Advances with respect to
any LIBOR Advances made after the date of any such determination, or (ii) an
interest rate applicable to a LIBOR Advance does not accurately reflect the cost
of making a LIBOR Advance, and, if for any reason whatsoever the provisions of
Section 4.1 are inapplicable, the Administrative Agent shall suspend by written
notice to Borrower the availability of LIBOR Advances with respect to any LIBOR
Advances made after the date of any such determination.
 
Section 4.4.  Funding Indemnification
 
. If any payment to Lenders of a ratable LIBOR Advance occurs on a date which is
not the last day of the applicable Interest Period, whether because of
acceleration, prepayment or otherwise, or a ratable LIBOR Advance is not made on
the date specified by Borrower for any reason other than default by one or more
of the Lenders, Borrower will indemnify each Lender for any loss or cost
incurred by such Lender resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the ratable LIBOR Advance.
 
Section 4.5.  Lender Statements; Survival of Indemnity
 
. To the extent reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its LIBOR Advances to reduce any liability
of Borrower to such Lender under Sections 4.1 and 4.2 or to avoid the
unavailability of a LIBOR Advance, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written statement of
such Lender as to the amount due, if any, under Sections 4.1, 4.2 or 4.4 hereof.
Such written statement shall set forth in reasonable detail the calculations
upon which such Lender determined such amount and shall be final, conclusive and
binding on Borrower in the absence of manifest error. Determination of amounts
payable under such Sections in connection with a LIBOR Advance shall be
calculated as though each Lender funded its LIBOR Advance through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Adjusted LIBOR Rate applicable to such Advance,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement shall be payable within ten (10) days
after receipt by Borrower of the written statement. The obligations of Borrower
under Sections 4.1, 4.2 and 4.4 hereof shall survive payment of the Obligations
and termination of this Agreement. Without in any way affecting the Borrower’s
obligation to pay compensation actually claimed by a Lender under this Article
IV or the restrictions on the availability of LIBOR Advances under Section 4.3,
the Borrower shall have the right to replace any Lender which has demanded such
compensation or restricted such availability provided that Borrower notifies
such Lender that it has elected to replace such Lender and notifies such Lender
and the Administrative Agent of the identity of the proposed replacement Lender
not more than six (6) months after the date of such Lender’s most recent demand
for compensation under this Article IV or most recent determination under
Section 4.3. The Lender being replaced shall assign its Percentage of the
Aggregate Commitment and its rights and obligations under this Facility to the
replacement Lender in accordance with the requirements of Section 13.3 hereof
and the replacement Lender shall assume such Percentage of the Aggregate
Commitment and the related obligations under this Facility prior to the Maturity
Date to be extended, all pursuant to an assignment agreement substantially in
the form of Exhibit K hereto. The purchase by the replacement Lender shall be at
par (plus all accrued and unpaid interest and any other sums owed to such Lender
being replaced hereunder) which shall be paid to the Lender being replaced upon
the execution and delivery of the assignment.
 
Article V.  
 

 
CONDITIONS PRECEDENT
 
Section 5.1.  Conditions Precedent to Closing
 
. The Lenders shall not be required to make the initial Advance hereunder, nor
shall the Issuing Bank be required to issue the initial Facility Letter of
Credit hereunder, unless (i) the Borrower shall have repaid the Existing
Agreement in full, (ii) the Borrower shall have paid all fees then due and
payable to the Lenders, and the Administrative Agent hereunder, (iii) all of the
conditions set forth in Section 5.2 are satisfied, and (iv) the Borrower shall
have furnished to the Administrative Agent, in form and substance satisfactory
to the Administrative Agent and their counsel and with sufficient copies for the
Lenders, the following:
 
(a)  Certificates of Limited Partnership/Incorporation. A copy of the
Certificate of Limited Partnership for each entity comprising the Borrower and a
copy of the articles of incorporation of Equity Inns and the trust documents of
Equity Inns Trust, each certified by the appropriate Secretary of State or
equivalent state official.
 
(b)  Agreements of Limited Partnership/Bylaws. A copy of the Agreement of
Limited Partnership for each entity comprising the Borrower and a copy of the
bylaws of each of the Guarantors, including all amendments thereto, each
certified by the Secretary or an Assistant Secretary of such entity as being in
full force and effect on the Agreement Effective Date.
 
(c)  Good Standing and Foreign Qualification Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of the
states where each entity comprising the Borrower and the Guarantors are
organized, dated as of the most recent practicable date, showing the good
standing or partnership qualification (if issued) of (i) each entity comprising
Borrower, and (ii) the Guarantors.
 
(d)  Resolutions. A copy of a resolution or resolutions and adopted by the Board
of Directors of the general partner of each entity comprising the Borrower,
certified by the Secretary or an Assistant Secretary thereof as being in full
force and effect on the Agreement Effective Date, authorizing the Advances
provided for herein and the execution, delivery and performance of the Loan
Documents by such general partner to be executed and delivered by it hereunder
on behalf of itself and Borrower, together with a similar resolution for each of
the Guarantors.
 
(e)  Incumbency Certificate. A certificate, signed by the Secretary or an
Assistant Secretary of the general partner of each entity comprising the
Borrower and dated the Agreement Effective Date, as to the incumbency, and
containing the specimen signature or signatures, of the Persons authorized to
execute and deliver the Loan Documents to be executed and delivered by it and
Borrower hereunder, together with a similar resolution for each of the
Guarantors.
 
(f)  Loan Documents. Originals of the Loan Documents (in such quantities as the
Lenders may reasonably request).
 
(g)  Opinion of Tennessee Counsel. A written opinion, from Tennessee outside
counsel for the Borrower and the Guarantors which counsel is reasonably
satisfactory to Administrative Agent, in form and substance acceptable to the
Administrative Agent.
 
(h)  Opinion of New York Counsel. A written opinion, from New York outside
counsel for the Borrower and the Guarantors in form and substance satisfactory
to Administrative Agent.
 
(i)  Financial and Related Information. The following information:
 
(i)  A certificate, signed by an officer of the general partners of each entity
comprising the Borrower, stating that on the Agreement Effective Date no Default
or Event of Default has occurred and is continuing and that all representations
and warranties of the Borrower contained herein are true and correct in all
material respects as of the Agreement Effective Date as and to the extent set
forth herein;
 
(ii)  The most recent financial statements of the Consolidated Group and a
certificate from a Qualified Officer of Equity Inns that no change in the
Consolidated Group’s financial condition that would have a Material Adverse
Effect has occurred since December 31, 2005;
 
(iii)  A compliance certificate in the form attached hereto as Exhibit I
calculating the applicable status of Borrower’s financial covenants hereunder as
of the Agreement Effective Date.
 
(iv)  Written money transfer instructions, in substantially the form of Exhibit
H hereto, addressed to the Administrative Agent and signed by a Qualified
Officer, together with such other related money transfer authorizations as the
Administrative Agent may have reasonably requested; and
 
(j)  Other Evidence as any Lender May Require. Such other evidence as any Lender
may reasonably request to establish the compliance with the financial covenants
under this Agreement, the consummation of the transactions contemplated hereby,
the taking of all necessary actions in any proceedings in connection herewith
and compliance with the other conditions set forth in this Agreement.
 
(k)  Lien Searches. The Administrative Agent shall have received the results of
a recent search by a Person satisfactory to the Administrative Agent, of the
Uniform Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of the Borrower, any other Loan Party and the
results of such search shall be satisfactory to the Administrative Agent.
 
(l)  Borrowing Notice. The Administrative Agent shall have received a Borrowing
Notice in accordance with Section 2.11 hereunder.
 
Section 5.2.  Conditions Precedent to Subsequent Advances and Issuance
 
. Advances after the initial Advance and issuances of Facility Letters of Credit
shall be made from time to time as requested by Borrower, and the obligation of
each Lender to make any Advance (including Swingline Loans) and of the Issuing
Bank to issue Facility Letters of Credit is subject to the following terms and
conditions:
 
(a)  prior to each such Advance or issuance no Default or Event of Default shall
have occurred and be continuing under this Agreement or any of the Loan
Documents and, if required by Administrative Agent, Borrower shall deliver a
certificate of Borrower to such effect; and
 
(b)  The representations and warranties contained in Article VI and VII are true
and correct as of such borrowing date, Issuance Date, or date of conversion
and/or continuation as and to the extent set forth therein, except to the extent
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and correct on
and as of such earlier date.
 
Subject to the last grammatical paragraphs of Article VI and VII hereof, each
Borrowing Notice, Letter of Credit Request, and Conversion/Continuation Notice
shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 5.2(a) and (b) have been satisfied.
 
Article VI.  
 

 
REPRESENTATIONS AND WARRANTIES
 
Each of the entities comprising the Borrower hereby represents and warrants
that:
 
Section 6.1.  Existence
 
. Operating Partnership is a limited partnership duly organized and existing
under the laws of the State of Tennessee, with its principal place of business
in the State of Tennessee, EIP/WV is a limited partnership duly organized and
existing under the laws of the State of Tennessee, with its principal place of
business in the State of Tennessee, EQI2 is a limited liability company duly
organized and existing under the laws of the State of Delaware, with its
principal place of business in the State of Tennessee and EQI Financing is a
Tennessee limited partnership duly organized and existing under the laws of the
State of Tennessee, with its principal place of business in the State of
Tennessee and each of the Operating Partnership, EIP/WV, EQI2 and EQI Financing
is duly qualified as a foreign limited partnership or a foreign limited
liability company as applicable, properly licensed (if required), in good
standing and has all requisite authority to conduct its business in each
jurisdiction in which it owns Properties and, except where the failure to be so
qualified or to obtain such authority would not have a Material Adverse Effect,
in each other jurisdiction in which its business is conducted. Each of the
Subsidiaries of the entities comprising the Borrower is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has all requisite authority to conduct its business in each jurisdiction in
which it owns Property, and except where the failure to be so qualified or to
obtain such authority would not have a Material Adverse Effect, in each other
jurisdiction in which it conducts business.
 
Section 6.2.  Corporate/Partnership Powers
 
. The execution, delivery and performance of the Loan Documents required to be
delivered by Borrower hereunder are within the partnership or limited liability
company authority of such entities and the corporate or trust powers of the
general partners or managers of such entities, have been duly authorized by all
requisite action, and are not in conflict with the terms of any organizational
instruments of such entity, or any instrument or agreement to which any of the
entities comprising the Borrower is a party or by which any of the entities
comprising the Borrower or any of their respective assets may be bound or
affected.
 
Section 6.3.  Power of Officers
 
. The officers of the general partner or the manager of each of the entities
comprising the Borrower executing the Loan Documents required to be delivered by
such entities hereunder have been duly elected or appointed and were fully
authorized to execute the same at the time each such agreement, certificate or
instrument was executed.
 
Section 6.4.  Government and Other Approvals
 
. No approval, consent, exemption or other action by, or notice to or filing
with, any governmental authority is necessary in connection with the execution,
delivery or performance of the Loan Documents required hereunder.
 
Section 6.5.  Solvency.
 
(i)  Immediately after the Agreement Effective Date and immediately following
the making of each Loan and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of each entity
comprising the Borrower and its Subsidiaries on a consolidated basis, at a fair
valuation, will exceed the debts and liabilities, subordinated, contingent or
otherwise, of the such entity and its Subsidiaries on a consolidated basis; (b)
the present fair saleable value of the Properties of each entity comprising the
Borrower and its Subsidiaries on a consolidated basis will be greater than the
amount that will be required to pay the probable liability of such entity and
its Subsidiaries on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each entity comprising the Borrower and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each entity comprising the
Borrower and its Subsidiaries on a consolidated basis will not have unreasonably
small capital with which to conduct the businesses in which they are engaged as
such businesses are now conducted and are proposed to be conducted after the
date hereof.
 
(ii)  None of the entities comprising the Borrower intends to, or to permit any
of its Subsidiaries to, incur debts beyond its ability to pay such debts as they
mature, taking into account the timing of and amounts of cash to be received by
it or any such Subsidiary and the timing of the amounts of cash to be payable on
or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.
 
Section 6.6.  Compliance With Laws
 
. There is no judgment, decree or order or any law, rule or regulation of any
court or governmental authority binding on the entities comprising the Borrower
or any of their Subsidiaries which would be contravened by the execution,
delivery or performance of the Loan Documents required hereunder.
 
Section 6.7.  Enforceability of Agreement
 
. This Agreement is the legal, valid and binding agreement of each of the
entities comprising the Borrower, and the Notes when executed and delivered will
be the legal, valid and binding obligations of such entities, enforceable
against such entities in accordance with their respective terms, and the Loan
Documents required hereunder, when executed and delivered, will be similarly
legal, valid, binding and enforceable except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the rights of creditors generally.
 
Section 6.8.  Title to Property
 
. To the best of Borrower’s knowledge after due inquiry, the Consolidated Group
and the Investment Affiliates have good and marketable title to their Properties
and assets reflected in the financial statements as owned by them free and clear
of Liens except for the Permitted Liens. The execution, delivery or performance
of the Loan Documents required to be delivered by the Borrower hereunder will
not result in the creation of any Lien on the Properties. No consent to the
transactions contemplated hereunder is required from any ground lessor or
mortgagee or beneficiary under a deed of trust or any other party except as has
been delivered to the Lenders.
 
Section 6.9.  Litigation
 
. There are no suits, arbitrations, claims, disputes or other proceedings
(including, without limitation, any civil, criminal, administrative or
environmental proceedings), pending or, to the best of Borrower’s knowledge,
threatened against or affecting the Borrower or any of their Properties, the
adverse determination of which individually or in the aggregate would have a
Material Adverse Effect on the Borrower and/or any of their Properties and/or
would cause a Material Adverse Financial Change of Borrower or materially impair
the Borrower’s ability to perform its obligations hereunder or under any
instrument or agreement required hereunder, except as disclosed on Schedule 6.9
hereto, or otherwise disclosed to Lenders in accordance with the terms hereof.
 
Section 6.10.  Events of Default
 
. No Default or Event of Default has occurred and is continuing or would result
from the incurring of obligations by the Borrower under any of the Loan
Documents or any other document to which Borrower is a party.
 
Section 6.11.  Investment Company Act of 1940
 
. Borrower is not and will by such acts as may be necessary continue not to be,
an investment company within the meaning of the Investment Company Act of 1940.
 
Section 6.12.   
 
[Intentionally Omitted].
 
Section 6.13.  Regulation U
 
. The proceeds of the Advances will not be used, directly or indirectly, to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock.
 
Section 6.14.  No Material Adverse Financial Change
 
. To the best knowledge of Borrower, there has been no Material Adverse
Financial Change in the condition of Borrower since the date of the financial
and/or operating statements most recently submitted to the Lenders.
 
Section 6.15.  Financial Information
 
. All financial statements furnished to the Lenders by or at the direction of
the Borrower and all other financial information and data furnished by the
Borrower to the Lenders are complete and correct in all material respects as of
the date thereof, and such financial statements have been prepared in accordance
with GAAP and fairly present the consolidated financial condition and results of
operations of the Borrower as of such date. The Borrower has no contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate, except as disclosed in such statements,
information and data.
 
Section 6.16.  [Intentionally Omitted].
 
Section 6.17.  ERISA
 
. (i) Borrower is not an entity deemed to hold “plan assets” within the meaning
of ERISA or any regulations promulgated thereunder of an employee benefit plan
(as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or
any plan within the meaning of Section 4975 of the Code, and (ii) the execution
of this Agreement and the transactions contemplated hereunder do not give rise
to a prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code.
 
Section 6.18.  Taxes
 
. All required tax returns have been filed by Borrower with the appropriate
authorities except to the extent that extensions of time to file have been
requested, granted and have not expired or except to the extent such taxes are
being contested in good faith and for which adequate reserves, in accordance
with GAAP, are being maintained.
 
Section 6.19.  Environmental Matters
 
. Except as disclosed in Schedule 6.19, each of the following representations
and warranties is true and correct in all material respects except to the extent
that the facts and circumstances giving rise to any such failure to be so true
and correct, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:
 
(i)  To the knowledge of the Borrower, the Properties of Borrower, its
Subsidiaries, and Investment Affiliates do not contain any Materials of
Environmental Concern in amounts or concentrations which constitute a violation
of, or could reasonably give rise to liability under, Environmental Laws.
 
(ii)  Borrower has not received any written notice alleging that any or all of
the Properties of Borrower and its Subsidiaries and Investment Affiliates and
all operations at the Properties are not in compliance with all applicable
Environmental Laws. Further, Borrower has not received any written notice
alleging the existence of any contamination at or under such Properties in
amounts or concentrations which constitute a violation of any Environmental Law,
or any violation of any Environmental Law with respect to such Properties for
which Borrower, its Subsidiaries or Investment Affiliates is or could be liable.
 
(iii)  Neither Borrower nor any of its Subsidiaries or Investment Affiliates has
received any written notice of non-compliance, liability or potential liability
regarding Environmental Laws with regard to any of the Properties, nor does it
have knowledge that any such notice will be received or is being threatened.
 
(iv)  To the knowledge of Borrower during the ownership of the Properties by any
or all of Borrower, its Subsidiaries and Investment Affiliates, Materials of
Environmental Concern have not been transported or disposed of from the
Properties of Borrower and its Subsidiaries and Investment Affiliates in
violation of, or in a manner or to a location which could reasonably give rise
to liability of Borrower, any Subsidiary, or any Investment Affiliate under,
Environmental Laws, nor during the ownership of the Properties by any or all of
Borrower, its Subsidiaries and Investment Affiliates have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on or
under any of such Properties in violation of, or in a manner that could give
rise to liability of Borrower, any Subsidiary or any Investment Affiliate under,
any applicable Environmental Laws.
 
(v)  No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of Borrower, threatened, under any Environmental
Law to which Borrower, any of its Subsidiaries, or any Investment Affiliate, is
named as a party with respect to the Properties of such entity, nor are there
any consent decrees or other decrees, consent orders, administrative order or
other orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to such Properties for which Borrower, its
Subsidiaries, or any Investment Affiliate is or could be liable.
 
(vi)  To the knowledge of Borrower during the ownership of the Properties by any
or all of Borrower, its Subsidiaries and Investment Affiliates, there has been
no release or threat of release of Materials of Environmental Concern at or from
the Properties of Borrower and its Subsidiaries and Investment Affiliates, or
arising from or related to the operations of such entity in connection with the
Properties in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
 
Section 6.20.   
 
Insurance
 
(i)  . Borrower shall, and shall cause each of its Subsidiaries to maintain with
financially sound and reputable insurance companies, insurance in the amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations.
 
Section 6.21.  No Brokers
 
. Borrower has dealt with no brokers in connection with this Facility, and no
brokerage fees or commissions are payable by or to any Person in connection with
this Agreement or the Advances. Lenders shall not be responsible for the payment
of any fees or commissions to any broker and Borrower shall indemnify, defend
and hold Lenders harmless from and against any claims, liabilities, obligations,
damages, costs and expenses (including reasonable attorneys’ fees and
disbursements) made against or incurred by Lenders as a result of claims made or
actions instituted by any broker or Person claiming by, through or under
Borrower in connection with the Facility.
 
Section 6.22.  No Violation of Usury Laws
 
. No aspect of any of the transactions contemplated herein violate or will
violate any usury laws or laws regarding the validity of agreements to pay
interest in effect on the date hereof.
 
Section 6.23.  Not a Foreign Person
 
. Borrower is not a “foreign person” within the meaning of Section 1445 or 7701
of the Internal Revenue Code.
 
Section 6.24.  No Trade Name
 
. Except as otherwise set forth on Schedule 6.24 attached hereto, Borrower does
not use any trade name and has not and does not do business under any name other
than their actual names set forth herein. The principal place of business of
Borrower is as stated in the recitals hereto.
 
Section 6.25.  Subsidiaries
 
. Schedule 6.25 hereto contains an accurate list of all of the presently
existing Subsidiaries of Borrower that own Unencumbered Assets, setting forth
their respective jurisdictions of formation, the percentage of their respective
Capital Stock owned by Borrower or its Subsidiaries and the Properties owned by
them. All of the issued and outstanding shares of Capital Stock of such
Subsidiaries have been duly authorized and issued and are fully paid and non
assessable.
 
Section 6.26.  Unencumbered Assets 
 
Each of the assets included as an Unencumbered Asset for purposes of the
covenants contained herein, satisfies each of the requirements for an
Unencumbered Asset set forth in the definition thereof.
 
Section 6.27.  Borrowing Base Assets. 
 
Each of the assets included as a Borrowing Base Asset for purposes of
determining the Borrowing Base satisfies each requirement for a Borrowing Base
Asset set forth in the definition thereof.
 
Borrower agrees that all of its representations and warranties set forth in
Article VI of this Agreement and elsewhere in this Agreement are true on the
Agreement Effective Date, and will be true on each Effective Date in all
material respects (except with respect to matters which have been disclosed in
writing to and approved by the Required Lenders), and will be true in all
material respects (except with respect to matters which have been disclosed in
writing to and approved by the Required Lenders) upon each request for
disbursement of an Advance. Each request for disbursement or issuance of a
Facility Letter of Credit hereunder shall constitute a reaffirmation of such
representations and warranties as deemed modified in accordance with the
disclosures made and approved, as aforesaid, as of the date of such request and
disbursement.
 
Article VII.  
 

 
ADDITIONAL REPRESENTATIONS AND WARRANTIES
 
Each of the Guarantors hereby represents and warrants that:
 
Section 7.1.  Existence
 
. Equity Inns is a corporation duly organized and existing under the laws of the
State of Tennessee, with its principal place of business in the State of
Tennessee and Equity Inns Trust is a real estate investment trust duly organized
and existing under the laws of the State of Maryland, with its principal place
of business in the State of Tennessee and each Guarantor is duly qualified as a
foreign corporation and properly licensed (if required) and in good standing in
each jurisdiction where the failure to qualify or be licensed (if required)
would constitute a Material Adverse Financial Change with respect to such
Guarantor or have a Material Adverse Effect on the business or properties of
such Guarantor.
 
Section 7.2.  Corporate or Trust Powers
 
. The execution, delivery and performance of the Loan Documents required to be
delivered by the Guarantors hereunder are within the corporate powers of the
Guarantors, have been duly authorized by all requisite corporate action, and are
not in conflict with the terms of any organizational instruments of the
Guarantors, or any instrument or agreement to which the either of the Guarantors
is a party or by which either of the Guarantors or any of its assets is bound or
affected.
 
Section 7.3.  Power of Officers
 
. The officers of the Guarantors executing the Loan Documents required to be
delivered by the Guarantors hereunder have been duly elected or appointed and
were fully authorized to execute the same at the time each such agreement,
certificate or instrument was executed.
 
Section 7.4.  Government and Other Approvals
 
. No approval, consent, exemption or other action by, or notice to or filing
with, any governmental authority is necessary in connection with the execution,
delivery or performance of the Loan Documents required hereunder.
 
Section 7.5.  Compliance With Laws
 
. There is no judgment, decree or order or any law, rule or regulation of any
court or governmental authority binding on the Guarantors which would be
contravened by the execution, delivery or performance of the Loan Documents
required hereunder.
 
Section 7.6.  Enforceability of Guaranty
 
. The Guaranty is the legal, valid and binding agreement of the Guarantors,
enforceable against the Guarantors in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the rights of
creditors generally.
 
Section 7.7.  Liens; Consents
 
. The execution, delivery or performance of the Loan Documents required to be
delivered by the Guarantors hereunder will not result in the creation of any
Lien on the Properties. No consent to the transactions hereunder is required
from any ground lessor or mortgagee or beneficiary under a deed of trust or any
other party except as has been delivered to the Lenders.
 
Section 7.8.  Litigation
 
. There are no suits, arbitrations, claims, disputes or other proceedings
(including, without limitation, any civil, criminal, administrative or
environmental proceedings), pending or, to the best of the Guarantors’
knowledge, threatened against or affecting either of the Guarantors or any of
their Properties, the adverse determination of which individually or in the
aggregate would have a Material Adverse Effect on the Guarantors or would cause
a Material Adverse Financial Change with respect to the Guarantors or materially
impair the Guarantors’ ability to perform their obligations under the Guaranty,
except as disclosed on Schedule 7.8 hereto, or otherwise disclosed to the
Lenders in accordance with the terms hereof.
 
Section 7.9.  Investment Company Act of 1940
 
. Either of the Guarantors is, and the Guarantors will by such acts as may be
necessary continue not to be, an investment company within the meaning of the
Investment Company Act of 1940.
 
Section 7.10.   [
 
Intentionally Omitted].
 
Section 7.11.  No Material Adverse Financial Change
 
. There has been no Material Adverse Financial Change in the condition of the
Guarantors since the last date on which the financial and/or operating
statements were submitted to the Lenders.
 
Section 7.12.  Financial Information
 
. All financial statements furnished to the Lenders by or on behalf of the
Guarantors and all other financial information and data furnished by or on
behalf of the Guarantors to the Lenders are complete and correct in all material
respects as of the date thereof, and such financial statements have been
prepared in accordance with GAAP and fairly present the consolidated financial
condition and results of operations of the Guarantors as of such date. The
Guarantors have no contingent obligations, liabilities for taxes or other
outstanding financial obligations which are material in the aggregate, except as
disclosed in such statements, information and data.
 
Section 7.13.  [Intentionally Omitted].
 
Section 7.14.  ERISA
 
. (i) Neither Guarantor is an entity deemed to hold “plan assets” within the
meaning of ERISA or any regulations promulgated thereunder of an employee
benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA or any plan within the meaning of Section 4975 of the Code, and (ii)
the execution of this Agreement and the transactions contemplated hereunder do
not give rise to a prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code.
 
Section 7.15.  Taxes
 
. All required tax returns have been filed by the Guarantors with the
appropriate authorities except to the extent that extensions of time to file
have been requested, granted and have not expired or except to the extent such
taxes are being contested in good faith and for which adequate reserves, in
accordance with GAAP, are being maintained.
 
Section 7.16.  Subsidiaries
 
. Schedule 7.16 hereto contains an accurate list of all of the presently
existing Subsidiaries of Guarantors that own Unencumbered Assets, setting forth
their respective jurisdictions of formation, the percentage of their respective
Capital Stock owned by Guarantor or its Subsidiaries and the Properties owned by
them. All of the issued and outstanding shares of Capital Stock of such
Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
 
Section 7.17.  Status
 
. Equity Inns is a corporation listed and in good standing on the New York Stock
Exchange (“NYSE”), the American Stock Exchange, or NASDAQ.
 
Each Guarantor agrees that all of its representations and warranties set forth
in Article VII of this Agreement are true on the Agreement Effective Date, and
will be true on each Effective Date in all material respects (except with
respect to matters which have been disclosed in writing to and approved by the
Required Lenders), and will be true in all material respects (except with
respect to matters which have been disclosed in writing to and approved by the
Required Lenders) upon each request for disbursement of an Advance or issuance
of a Facility Letter of Credit. Each such request hereunder shall constitute a
reaffirmation of such representations and warranties as deemed modified in
accordance with the disclosures made and approved, as aforesaid, as of the date
of such request and disbursement.
 
Article VIII.  
 

 
AFFIRMATIVE COVENANTS
 
The Borrower and each of the Guarantors covenant and agree that so long as the
Commitment of any Lender shall remain available and until the full and final
payment of all Obligations incurred under the Loan Documents they will:
 
Section 8.1.  Notices
 
. Promptly give written notice to Administrative Agent (who will promptly send
such notice to Lenders) of:
 
(a)  all litigation or arbitration proceedings affecting any member of the
Consolidated Group where the amount claimed is $5,000,000 or more;
 
(b)  any Default or Event of Default, specifying the nature and the period of
existence thereof and what action has been taken or been proposed to be taken
with respect thereto;
 
(c)  all claims filed against any Property owned by any member of the
Consolidated Group which, if adversely determined, could have a Material Adverse
Effect on the ability of the Borrower or the Guarantors to meet any of their
obligations under the Loan Documents;
 
(d)  the occurrence of any other event which might have a Material Adverse
Effect or cause a Material Adverse Financial Change on or with respect to the
Borrower or the Guarantors;
 
(e)  any Reportable Event or any “prohibited transaction” (as such term is
defined in Section 4975 of the Code) in connection with any Plan or any trust
created thereunder, which may, singly or in the aggregate materially impair the
ability of the Borrower or the Guarantors to repay any of the Obligations under
the Loan Documents, describing the nature of each such event and the action, if
any, the Borrower or the Guarantors, as the case may be, proposes to take with
respect thereto;
 
(f)  any notice from any federal, state, local or foreign authority regarding
any Hazardous Material, asbestos, or other environmental condition, proceeding,
order, claim or violation affecting any of the Properties of the Consolidated
Group.
 
Section 8.2.  Financial Statements, Reports, Etc.
 
The Borrower and the Guarantors will maintain, for the Consolidated Group, a
system of accounting established and administered in accordance with GAAP, and
furnish to the Lenders:
 
(i)  As soon as available, but in any event not later than 60 days after the
close of each fiscal quarter, for the Consolidated Group an unaudited quarterly
financial statement (including a balance sheet and income statement) for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, all certified by Equity Inns’ chief financial officer and chief executive
officer;
 
(ii)  As soon as available, but in any event not later than 60 days after the
close of each fiscal quarter, for the Consolidated Group, related reports in
form and substance satisfactory to the Lenders, all certified by Equity Inns’
chief financial officer or chief accounting officer, including a statement of
Funds From Operations, calculation of the financial covenants described below, a
report listing and describing all newly acquired Properties, summary property
information for all Properties, and such other information as may be requested
to evaluate any other certificates delivered hereunder;
 
(iii)  As soon as publicly available but in no event later than the date such
reports are to be filed with the Securities Exchange Commission, copies of all
Form 10Ks, 10Qs, 8Ks, and any other annual, quarterly, monthly or other reports,
copies of all registration statements and any other public information filed
with the Securities Exchange Commission along with all other materials
distributed to shareholders and limited partners by the Borrower or the
Guarantors, including a copy of the Equity Inns annual report containing audited
annual financial statements. All such annual and quarterly reports shall be
certified by the chief executive officer and chief financial officer;
notwithstanding the foregoing, Borrowers and Guarantors shall not be required to
provide copies of Form 10Ks and 10Qs to the extent same are available at no cost
on the internet;
 
(iv)  As soon as available, but in any event not later than sixty (60) days
after the end of each of the first three fiscal quarters, and not later than
ninety (90) days after the close of each fiscal year, reports in form and
substance satisfactory to the Lenders, certified by a Qualified Officer,
containing a recap of Net Operating Income, less (i) Agreed FF&E Reserves, (ii)
real estate taxes and (iii) Ground Lease Expense, as applicable, for each
individual Property owned by the Borrower or a Wholly-Owned Subsidiary and
included in the Borrowing Base;
 
(v)  Not later than sixty (60) days after the end of each of the first three
fiscal quarters, and not later than ninety (90) days after the end of the fiscal
year, a compliance certificate in substantially the form of Exhibit I hereto
(“Compliance Certificate”) signed by the Operating Partnership and by a
Qualified Officer, confirming that the Borrower and the Guarantors are in
compliance with all of the covenants of the Loan Documents, showing the
calculations and computations necessary to determine compliance with the
financial covenants contained in this Agreement (including such schedules and
backup information as may be necessary to demonstrate such compliance) and
stating that to such officer’s best knowledge, there is no other Default or
Event of Default exists, or if any Default or Event of Default exists, stating
the nature and status thereof;
 
(vi)  As soon as possible and in any event within 10 Business Days after any
member of the Consolidated Group knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by the chief financial officer of
Equity Inns, describing said Reportable Event and within 20 days after such
Reportable Event, a statement signed by such chief financial officer describing
the action which the Consolidated Group proposes to take with respect thereto;
and (b) within 10 Business Days of receipt, any notice from the Internal Revenue
Service, PBGC or Department of Labor with respect to a Plan regarding any excise
tax, proposed termination of a Plan, prohibited transaction or fiduciary
violation under ERISA or the Code which could result in any liability to the
Consolidated Group in excess of $100,000; and (c) within 10 Business Days of
filing, any Form 5500 filed with respect to a Plan by any member of the
Consolidated Group which includes a qualified accountant’s opinion.
 
(vii)  As soon as possible and in any event within 30 days after receipt, a copy
of (a) any notice or claim to the effect that any member of the Consolidated
Group is or may be liable to any Person as a result of the release by such
entity or any other Person of any toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any violation of any federal, state or
local environmental, health or safety law or regulation by any member of the
Consolidated Group, which, in either case, could be reasonably likely to have a
Material Adverse Effect;
 
(viii)  Promptly upon the distribution thereof to the press or the public,
copies of all press releases;
 
(ix)  As soon as possible, and in any event within 10 days after the Borrower
knows of any fire or other casualty or any pending or threatened condemnation or
eminent domain proceeding with respect to all or any material portion of any
Borrowing Base Asset, a statement describing such fire, casualty or condemnation
and the action Borrower intends to take with respect thereto;
 
(x)  Such other information (including, without limitation, non financial
information) as the Administrative Agent or any Lender may from time to time
reasonably request; and
 
(xi)  Within ten (10) Business Days after the request of the Administrative
Agent, a financial statement showing Adjusted EBITDA, Ground Lease Expense,
Fixed Charges, and Interest Expense for the period of twelve (12) full months
ending immediately prior to the date of such request.
 
Section 8.3.  Existence and Conduct of Operations; Limitations on Investments
 
. Except as permitted herein, maintain and preserve its existence and all
rights, privileges and franchises now enjoyed and necessary for the operation of
its business, including remaining in good standing in each jurisdiction in which
business is currently operated. The Borrower and the Guarantors shall carry on
and conduct their respective businesses in substantially the same manner and in
substantially the same fields of enterprise as presently conducted. The Borrower
and the Guarantors will do, and will cause each of their Subsidiaries to do, all
things necessary to remain duly incorporated and/or duly qualified, validly
existing and in good standing as a real estate investment trust, corporation,
general partnership, limited liability company or limited partnership, as the
case may be, in its jurisdiction of incorporation/formation. The Borrower and
the Guarantors will maintain all requisite authority to conduct their businesses
in each jurisdiction in which the Properties are located and, except where the
failure to be so qualified would not have a Material Adverse Effect, in each
jurisdiction required to carry on and conduct its businesses in substantially
the same manner as it is presently conducted, and, specifically, neither the
Borrower, the Guarantors nor any of their Subsidiaries will undertake any
business other than the acquisition, development, ownership, management and
operation of hotel properties (excluding economy and budget hotels) which are
located in the United States, provided that the Total Cost of all Properties
Under Development and Excluded Properties shall not exceed 10% of the Total Cost
of all Properties owned by the Consolidated Group.
 
Section 8.4.  Maintenance of Properties
 
. Maintain, preserve, protect and keep the Properties in good repair, working
order and condition, and make all necessary and proper repairs, renewals and
replacements, normal wear and tear excepted.
 
Section 8.5.  Insurance
 
. The Borrower will, and will cause each of its Subsidiaries to, maintain
insurance which is consistent with the representation contained in Section 6.20
on all their Property and the Borrower will furnish to any Lender upon
reasonable request full information as to the insurance carried.
 
Section 8.6.  Payment of Obligations
 
. Pay all taxes, assessments, governmental charges and other obligations when
due, except such as may be contested in good faith or as to which a bona fide
dispute may exist, and for which adequate reserves have been provided in
accordance with sound accounting principles used by the Consolidated Group on
the date hereof.
 
Section 8.7.  Compliance with Laws
 
. Comply in all material respects with all applicable laws, rules, regulations,
orders and directions of any governmental authority having jurisdiction over
Borrower, the Guarantors, or any of their respective businesses, subject to the
right to contest such compliance obligations in good faith so long as adequate
reserves are established for possible liabilities arising therefrom and an
adverse resolution of such noncompliance would not have a Material Adverse
Effect.
 
Section 8.8.  Adequate Books
 
. Maintain adequate books, accounts and records in order to provide financial
statements in accordance with GAAP and, if requested by any Lender, permit
employees or representatives of such Lender at any reasonable time and upon
reasonable notice to inspect and audit the properties of Borrower and of the
Consolidated Group, and to examine or audit the inventory, books, accounts and
records of each of them and make copies and memoranda thereof.
 
Section 8.9.  ERISA
 
. Comply in all material respects with all requirements of ERISA applicable to
it with respect to each Plan.
 
Section 8.10.  Maintenance of Status
 
. Equity Inns shall at all times (i) remain as a corporation listed and in good
standing on the New York Stock Exchange (NYSE), American Stock Exchange, or
NASDAQ, and (ii) take all steps maintain its status as a real estate investment
trust in compliance with all applicable provisions of the Code (unless otherwise
consented to by the Required Lenders).
 
Section 8.11.  Use of Proceeds
 
. Use the proceeds of the Facility for the general business purposes of the
Borrower, including without limitation repayment in full of the Existing
Agreement, acquisition by the Borrower of premium limited service, premium
extended stay and premium all suite and full service hotel properties,
developments, expansions and renovations of the Borrower’s existing hotel
properties and other general corporate and working capital needs.
 
Section 8.12.  Pre Acquisition Environmental Investigations
 
. Cause to be prepared prior to the acquisition of each Property that it intends
to acquire an environmental report pursuant to a standard scope of work
consistent with that used by institutional purchasers of similar type
properties.
 
Section 8.13.  Unencumbered Assets
 
. Cause the Unencumbered Assets to at all times meet the following requirements
(in addition to the other requirements set forth in the definition of
Unencumbered Assets):
 
(i) such Property is located in the continental United States,
 
(ii) a certificate of occupancy or similar evidence of governmental approval, if
available, has been issued with respect to all occupied portions of such
Property,
 
(iii) there exist no material title flaws affecting the marketability of the
Property,
 
(iv) there exist no material structural flaws with respect to such Property as
determined by a structural inspection by an architect or engineer engaged by (or
acceptable to) the Administrative Agent on behalf of the Lenders, provided that
any such inspection shall either be addressed to and for the benefit of the
Administrative Agent and the Lenders or provide that the Administrative Agent
and the Lenders may rely on such inspection,
 
(v) such Property is free of any material contamination or other material
violation of Environmental Laws as determined by a phase I environmental report
acceptable to the Administrative Agent,
 
(vi) there exist no third party Liens on such Property,
 
(vii) such Property is operated as one of the following: a Hampton Inn, a
Holiday Inn, a Homewood Suites, a Hyatt, a Residence Inn, an AmeriSuites, or a
hotel, resort or inn in the Marriott, Hilton, Global Hyatt Corporation, Choice
Hotels, Intercontinental Hotel Group or Starwood line or any other nationally
recognized franchise approved in writing by the Required Lenders,
 
(viii) the franchise agreement with the franchisor identified by Borrower for
such Property in compliance with clause (vii) above shall be in full force and
effect and no default by either party shall have occurred and be continuing
thereunder, and
 
(ix) such Property meets all of Administrative Agent’s customary due diligence
requirements for hotel properties provided that Borrower shall not have any
obligation to provide copies of any due diligence documentation unless
specifically requested by Administrative Agent.
 
Section 8.14.  Management Agreements and Permitted Operating Leases
 
. Cause each Property to at all times be leased pursuant to a Permitted
Operating Lease and managed pursuant to the terms of an Approved Management
Agreement with the tenant under such Permitted Operating Lease. Borrower and
such tenant may terminate a management agreement provided that there is a new
Approved Management Agreement in effect immediately following such termination,
and Borrower may cause the tenant under a Permitted Operating Lease to assign
its interest under a Permitted Operating Lease to another taxable Wholly-Owned
Subsidiary. In both cases, Borrower shall cause the new tenant and/or new
management company to execute documentation satisfactory to the Administrative
Agent with regard to the obligations of such parties to the Lenders.
 
Article IX.  
 

 
NEGATIVE COVENANTS
 
The Borrower covenants and agrees that, so long as the Commitment shall remain
available and until full and final payment of all obligations incurred under the
Loan Documents, without the prior written consent of the Required Lenders (or
the Administrative Agent or a greater Percentage of the Lenders, if so expressly
provided), the Borrower, the Guarantors and the Consolidated Group will not:
 
Section 9.1.  Change of Borrower Ownership
 
. Allow (i) Equity Inns Trust to own less than one hundred percent (100%) of the
general partnership interests in the Operating Partnership, EQI Financing and
EQI2, (ii) Equity Inns Services, L.L.C. to own less than one hundred percent
(100%) of the general partnership interests in EIP/WV, (iii) Equity Inns to own
less than 100% of the beneficial interests in Equity Inns Trust or 100% of
Equity Inns Services, L.L.C., (iv) any pledge of, other encumbrance on,
assignment of membership interest of or conversion to limited partnership
interests of, any of the general partnership interests or membership interest in
the Borrower, or (v) any pledge, hypothecation, encumbrance, transfer or other
change in the ownership or the partnership interests in the REMIC Partnership
(except for the pledge of such partnership interests to the lender under the
REMIC Loan).
 
Section 9.2.  Use of Proceeds
 
. Apply or permit to be applied any proceeds of any Advance directly or
indirectly, to the funding of any purchase of, or offer for, any Margin Stock or
any share of capital stock of any publicly held corporation unless the board of
directors of such corporation has consented to such offer prior to any public
announcements relating thereto and the Lenders have consented to such use of the
proceeds of the Facility.
 
Section 9.3.   Leverage; Additional Recourse Indebtedness
 
. Permit or suffer:
 
(a)  From and after the Agreement Effective Date, the ratio of Total
Indebtedness to EBITDA to exceed 6.00x;
 
(b)  At any time, the aggregate amount of the secured Recourse Indebtedness of
the Consolidated Group to exceed $50,000,000.
 
Section 9.4.  Dividends
 
. Permit or suffer, for each fiscal quarter, the aggregate amount of dividends
paid by Equity Inns (excluding Preferred Stock Expense) for the most recent four
fiscal quarters for which financial reports are available, to exceed 95% of the
Funds From Operations of Equity Inns for such fiscal quarter as determined on a
consistent basis with the prior financial statements of Equity Inns, as approved
by the Administrative Agent, provided that Equity Inns may, so long as an Event
of Default does not exist, pay the minimum amount of dividends required to
maintain its tax status as a real estate investment trust under the Code.
 
Section 9.5.  Floating Rate Debt
 
. Permit the Consolidated Group to have outstanding Indebtedness for borrowed
money that bears interest at a floating rate (excluding this Facility) in excess
of 25% of Total Indebtedness at all times during any six (6) month period,
unless such excess shall thereafter be covered by a swap, interest rate cap or
other interest rate protection product reasonably satisfactory to the
Administrative Agent.
 
Section 9.6.  Liens
 
. Create, incur, or suffer to exist (or permit any of the Consolidated Group to
create, incur, or suffer to exist) any Lien in, of or on the Properties of the
Consolidated Group except:
 
(i)  Liens for taxes, assessments or governmental charges or levies on their
Property if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves shall have been set aside on their
books;
 
(ii)  Liens which arise by operation of law, such as carriers’, warehousemen’s,
landlords’, materialmen and mechanics’ liens and other similar liens arising in
the ordinary course of business which secure payment of obligations not more
than 30 days past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on its
books;
 
(iii)  Liens arising out of pledges or deposits under worker’s compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation;
 
(iv)  Utility easements and such other encumbrances or charges against real
property as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way affect the marketability
of the same or interfere with the use thereof in the business of the Borrower or
its Subsidiaries;
 
(v)  Liens of any member of the Consolidated Group in favor of the Borrower or
the Guarantors which are junior to any Lien for the benefit of Lenders;
 
(vi)  Liens arising in connection with any Indebtedness permitted hereunder to
the extent such Liens will not result in a violation of any of the provisions of
this Agreement; and
 
(vii)  Liens which are Permitted Operating Leases.
 
Liens permitted pursuant to this Section 9.6 shall be deemed to be “Permitted
Liens”.
 
Section 9.7.  FF&E Expenditures
 
. Permit, as of the last day of any fiscal quarter, the sum of (i) the actual
expenditures of the Consolidated Group for FF&E replacement and capital
improvements (of the types approved by the Administrative Agent) at the
Properties during the immediately preceding four (4) consecutive full fiscal
quarters plus (ii) the difference between the amount of reserves maintained by
the Consolidated Group for FF&E replacement and capital improvements as of the
last day of such fiscal quarter as shown on the Consolidated Group’s financial
statements for such quarter and the amount of such reserves maintained on the
first day of such quarter, to be less than four percent (4%) of the gross room
revenues from such Properties for such four (4) full fiscal quarters.
 
Section 9.8.  Indebtedness, Coverage and Net Worth Covenants
 
. Permit or suffer:
 
(a)  as of any day, the Consolidated Group’s Tangible Net Worth, plus
accumulated depreciation, to be less than the sum of (i) eighty percent (80%) of
the Consolidated Group’s Tangible Net Worth, plus accumulated depreciation, as
of December 31, 2005 plus (ii) seventy-five percent (75%) of the aggregate
proceeds received (net of customary related fees and expenses) in connection
with any offering or sale after December 31, 2005 of equity interests in the
Borrower or the Guarantors, whether common stock, preferred stock, limited
partnership units or other forms of equity ownership;
 
(b)  as of the last day of any fiscal quarter, Total Secured Indebtedness to
exceed fifty percent (50%) of Total Asset Value, provided that such percentage
may be up to fifty-five percent (55%) for up to two consecutive quarters once
during the term of the Facility;
 
(c)  as of the last day of any fiscal quarter, Total Unsecured Indebtedness to
exceed sixty percent (60%) of Unencumbered Asset Value, provided that for
purposes of this Section 9.8 (c) only, Total Unsecured Indebtedness shall not
include Indebtedness resulting from the issuance of Qualifying Trust Preferred
Securities;
 
(d)  as of any day, Adjusted EBITDA derived from Unencumbered Assets to be less
than 2.0 times Interest Expense associated with Total Unsecured Indebtedness;
and
 
(e)  as of any day, the ratio of (A) the sum of (i) Adjusted EBITDA for the most
recent four quarters plus (ii) Ground Lease Expense for such period to (B) Fixed
Charges for such period to be less than 1.50 to 1.
 
Section 9.9.  Qualifying Trust Preferred Securities
 
. Permit, as of any day in which a Event of Default exists, or a notice of a
monetary default has been given and not cured, any payments to be made on
subordinated notes issued in connection with the sale of Qualifying Trust
Preferred Securities, or the redemption of the Qualifying Trust Preferred
Securities.
 
Section 9.10.  Mergers
 
. Enter into any merger, consolidation, reorganization or liquidation or
transfer or otherwise dispose of all or a substantial portion of the
Consolidated Group’s Properties, except for such transactions that occur between
members of the Consolidated Group or as otherwise approved in advance by the
Supermajority Lenders.
 
Article X.  
 

 
DEFAULTS
 
The occurrence of any one or more of the following events shall constitute an
Event of Default:
 
Section 10.1.  Nonpayment of Principal
 
. The Borrower fails to pay any principal portion of the Obligations when due,
whether on the Maturity Date or otherwise.
 
Section 10.2.  Certain Covenants
 
. Any one or more of the Borrower, the Guarantors and the Consolidated Group, as
the case may be, is not in compliance with any one or more of Sections 8.3 or
8.10 or any Section of Article IX hereof.
 
Section 10.3.  Nonpayment of Interest and Other Obligations
 
. The Borrower fails to pay any interest or other portion of the Obligations,
other than payments of principal, and such failure continues for a period of
five (5) days after the date such payment is due, provided that the first
occurrence of any such non payment during any calendar year shall not constitute
an Event of Default unless such failure continues for one (1) Business Day after
written notice to the Borrower from the Administrative Agent of such failure.
 
Section 10.4.  Cross Default
 
. Any monetary default occurs (after giving effect to any applicable cure
period) under any other Indebtedness (which includes Guarantee Obligations) of
any members of the Consolidated Group, singly or in the aggregate, in excess of
Ten Million Dollars ($10,000,000).
 
Section 10.5.  Loan Documents
 
. Any Loan Document is not in full force and effect or a default has occurred
and is continuing thereunder after giving effect to any cure or grace period in
any such document.
 
Section 10.6.  Representation or Warranty
 
. At any time or times hereafter any representation or warranty set forth in
Articles VI or VII of this Agreement or in any other Loan Document or in any
statement, report or certificate now or hereafter made by the Borrower or the
Guarantors to the Lenders or the Administrative Agent is not true and correct in
any material respect and such noncompliance is not cured within thirty (30) days
after the Borrower receives written notice thereof, provided, however, that if
such Default is susceptible of cure but cannot by the use of reasonable efforts
be cured within such thirty (30) day period, such Default shall not constitute
an Event of Default under this Section 10.6 so long as (i) the Borrower or the
Guarantors, as the case may be, have commenced a cure within such thirty day
period and (ii) thereafter, Borrower or Guarantors, as the case may be, are
proceeding to cure such default continuously and diligently and in a manner
reasonably satisfactory to Lenders and (iii) such default is cured not later
than sixty (60) days after the expiration of such thirty (30) day period.
 
Section 10.7.  Covenants, Agreements and Other Conditions
 
. The Borrower fails to perform or observe any of the other covenants,
agreements and conditions contained in Article VIII (except for Sections 8.3 or
8.10) and elsewhere in this Agreement or any of the other Loan Documents in
accordance with the terms hereof or thereof, not specifically referred to
herein, and such Default continues unremedied for a period of thirty (30) days
after written notice from Administrative Agent, provided, however, that if such
Default is susceptible of cure but cannot by the use of reasonable efforts be
cured within such thirty (30) day period, such Default shall not constitute an
Event of Default under this Section 10.7 so long as (i) the Borrower or the
General Partner, as the case may be, has commenced a cure within such thirty day
period and (ii) thereafter, Borrower or General Partner, as the case may be, is
proceeding to cure such default continuously and diligently and in a manner
reasonably satisfactory to Lenders and (iii) such default is cured not later
than sixty (60) days after the expiration of such thirty (30) day period.
 
Section 10.8.  No Longer General Partner
 
. Equity Inns shall no longer, directly or indirectly, hold 100% of the general
partnership interests in the four entities constituting the Borrower.
 
Section 10.9.  Material Adverse Financial Change
 
. Any one of the Operating Partnership, EIP/WV, EQI2, EQI Financing, Equity Inns
or Equity Inns Trust has suffered a Material Adverse Financial Change or is
Insolvent.
 
Section 10.10.  Bankruptcy.
 
(a)  Any member of the Consolidated Group shall (i) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (ii) make an assignment for the benefit of creditors, (iii) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it as a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this Section 10.10(a), (vi) fail to contest in good faith any
appointment or proceeding described in Section 10.10(b) or (vii) not pay, or
admit in writing its inability to pay, its debts generally as they become due;
 
(b)  A receiver, trustee, examiner, liquidator or similar official shall be
appointed for any member of the Consolidated Group or any substantial portion of
any of their Properties, or a proceeding described in Section 10.10(a)(iv) shall
be instituted against any member of the Consolidated Group and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for
a period of sixty (60) consecutive days.
 
Section 10.11.  Legal Proceedings
 
. Any member of the Consolidated Group is enjoined, restrained or in any way
prevented by any court order or judgment or if a notice of lien, levy, or
assessment is filed of record with respect to all or any part of the Properties
by any governmental department, office or agency, which could materially
adversely affect the performance of the obligations of such parties hereunder or
under the Loan Documents, as the case may be, or if any proceeding is filed or
commenced seeking to enjoin, restrain or in any way prevent the foregoing
parties from conducting all or a substantial part of their respective business
affairs and failure to vacate, stay, dismiss, set aside or remedy the same
within sixty (60) days after the occurrence thereof.
 
Section 10.12.  ERISA
 
. Any member of the Consolidated Group is deemed to hold “plan assets” within
the meaning of ERISA or any regulations promulgated thereunder of an employee
benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA or any plan (within the meaning of Section 4975 of the Code).
 
Section 10.13.  Failure to Satisfy Judgments
 
. Any member of the Consolidated Group shall fail within sixty (60) days to pay,
bond or otherwise discharge any judgments or orders for the payment of money in
an amount which, when added to all other judgments or orders outstanding against
such member of the Consolidated Group would exceed $2,000,000 in the aggregate,
which have not been stayed on appeal or otherwise appropriately contested in
good faith, unless the liability is insured against and the insurer has not
challenged coverage of such liability.
 
Section 10.14.  Environmental Remediation
 
. Failure to remediate within the time period required by law or governmental
order, (or within a reasonable time in light of the nature of the problem if no
specific time period is so established), environmental problems in violation of
applicable law related to Properties of any member of the Consolidated Group
where the estimated cost of remediation is in the aggregate in excess of
$2,000,000, in each case after all administrative hearings and appeals have been
concluded.
 
Section 10.15.  REIT Status; Stock Exchange Listing
 
. Failure of either Equity Inns or Equity Inns Trust to maintain (i) its status
as a real estate investment trust under the Code and (ii) Equity Inns’ listing
on the New York Stock Exchange, American Stock Exchange, or NASDAQ.
 

 
Article XI.  
 

 
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
 
Section 11.1.  Acceleration
 
. If any Event of Default described in Section 10.10 hereof occurs, the
obligation of the Lenders to make Advances and of the Issuing Bank to issue
Facility Letters of Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable. If any other Event of
Default described in Article X hereof occurs, such obligation to make Advances
and to issue Facility Letters of Credit shall be terminated and at the election
of the Required Lenders, the Obligations may be declared to be due and payable.
 
In addition to the foregoing, following the occurrence of an Event of Default
and so long as any Facility Letter of Credit has not been fully drawn and has
not been cancelled or expired by its terms, upon demand by the Required Lenders
the Borrower shall deposit in the Letter of Credit Collateral Account cash in an
amount equal to the aggregate undrawn face amount of all outstanding Facility
Letters of Credit and all fees and other amounts due or which may become due
with respect thereto. The Borrower shall have no control over funds in the
Letter of Credit Collateral Account, which funds shall be invested by the
Administrative Agent from time to time in its discretion in certificates of
deposit of JPMorgan having a maturity not exceeding thirty (30) days. Such funds
shall be promptly applied by the Administrative Agent to reimburse the Issuing
Bank for drafts drawn from time to time under the Facility Letters of Credit.
Such funds, if any, remaining in the Letter of Credit Collateral Account
following the payment of all Obligations in full shall, unless the
Administrative Agent is otherwise directed by a court of competent jurisdiction,
be promptly paid over to the Borrower.
 
Section 11.2.  Preservation of Rights; Amendments
 
. No delay or omission of the Lenders in exercising any right under the Loan
Documents shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of an Advance notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Advance shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Administrative Agent and the number of Lenders required hereunder
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Lenders until the Obligations have been paid in full.
 
Article XII.  
 

 
THE ADMINISTRATIVE AGENT
 
Section 12.1.  Appointment
 
. JPMorgan is hereby appointed Administrative Agent hereunder and under each
other Loan Document, and each of the Lenders authorizes the Administrative Agent
to act as the agent of such Lender. The Administrative Agent agrees to act as
such upon the express conditions contained in this Article XII. The
Administrative Agent shall not have a fiduciary relationship in respect of any
Lender by reason of this Agreement, except to the extent the Administrative
Agent acts as an agent with respect to the receipt or payment of funds
hereunder.
 
Section 12.2.  Powers
 
. The Administrative Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Administrative Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Administrative Agent shall have no implied duties to the Lenders,
or any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Administrative
Agent.
 
Section 12.3.  General Immunity
 
. Neither the Administrative Agent (in its capacity as Administrative Agent) nor
any of its directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, except for its or their own gross negligence or willful
misconduct.
 
Section 12.4.  No Responsibility for Loans, Recitals, etc.
 
Neither the Administrative Agent (in its capacity as Administrative Agent) nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of any
condition specified in Article V, except receipt of items required to be
delivered to the Administrative Agent; or (iv) the validity, effectiveness or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith.
 
Section 12.5.  Action on Instructions of Lenders
 
. The Administrative Agent shall exercise its rights on behalf of the Lenders
hereunder at the direction of the Required Lenders or all of the Lenders, as the
case may be, and shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders or all
Lenders, as the case may be, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes. The Administrative Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its reasonable satisfaction by
the Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
 
Section 12.6.  Employment of Administrative Agents and Counsel
 
. The Administrative Agent may execute any of its duties as Administrative Agent
hereunder and under any other Loan Document by or through employees, agents, and
attorneys in fact and shall not be answerable to the Lenders, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys in fact selected by it with
reasonable care. The Administrative Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agency hereby created and its duties
hereunder and under any other Loan Document.
 
Section 12.7.  Reliance on Documents; Counsel
 
. The Administrative Agent shall be entitled to rely upon any Note, notice,
consent, certificate, affidavit, letter, telegram, statement, paper or document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and, in respect to legal matters, upon the
opinion of outside counsel selected by the Administrative Agent.
 
Section 12.8.  Administrative Agent’s Reimbursement and Indemnification
 
. The Lenders agree to reimburse and indemnify the Administrative Agent ratably
in accordance with their respective Percentages (i) for any amounts not
reimbursed by the Borrower for which the Administrative Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for any other
reasonable out of pocket expenses incurred by the Administrative Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents, if not paid by Borrower,
and (iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent (in its capacity as Administrative Agent and not as a
Lender) in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby, or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Administrative Agent.
 
Section 12.9.  Rights as a Lender
 
. With respect to the Commitment, Advances made by it and the Note issued to it,
the Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Document as any Lender and may exercise the same as though
it were not the Administrative Agent, and the term “Lender” or “Lenders” shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent, in its individual capacity, may
accept deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.
 
Section 12.10.  Lender Credit Decision
 
. Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
 
Section 12.11.  Successor Administrative Agent
 
. Each Lender agrees that JPMorgan shall serve as Administrative Agent at all
times during the term of this Facility, except that JPMorgan may resign as
Administrative Agent in the event (x) JPMorgan and Borrower shall mutually agree
in writing or (y) an Event of Default shall occur under the Loan Documents
(irrespective of whether such Event of Default subsequently is waived), or (z)
JPMorgan shall determine, in its sole reasonable discretion, that because of its
other banking relationships with the Consolidated Group at the time of such
decision JPMorgan’s resignation as Administrative Agent would be necessary in
order to avoid creating an appearance of impropriety on the part of JPMorgan.
JPMorgan (or any successor Administrative Agent) may be removed as
Administrative Agent by written notice received by Administrative Agent from the
Required Lenders at any time with cause (e.g., a breach by JPMorgan (or any
successor Administrative Agent) of its duties as Administrative Agent
hereunder). Upon any such resignation or removal, the Required Lenders shall
appoint, on behalf of the Borrower and the Lenders, a successor Administrative
Agent with the consent of the Borrower, which consent shall not be unreasonably
withheld or delayed and shall not be required if an Event of Default has
occurred. If no successor Administrative Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within thirty days
after the retiring Administrative Agent’s giving notice of resignation, then the
retiring Administrative Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Administrative Agent. Such successor Administrative Agent
shall be a commercial bank having capital and retained earnings of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent (including the right
to receive any fees for performing such duties which accrue thereafter), and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents. After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article XII shall continue in effect for its benefit and that
of the other Lenders in respect of any actions taken or omitted to be taken by
it while it was acting as the Administrative Agent hereunder and under the other
Loan Documents.
 
Section 12.12.  Notice of Defaults
 
. If a Lender becomes aware of a Default or Event of Default, such Lender shall
notify the Administrative Agent of such fact. Upon receipt of such notice that a
Default or Event of Default has occurred, the Administrative Agent shall notify
each of the Lenders of such fact.
 
Section 12.13.  Requests for Approval
 
. Unless a specific time period for approval is set forth elsewhere in this
Agreement, if the Administrative Agent requests in writing the consent or
approval of a Lender, such Lender shall respond and either approve or disapprove
definitively in writing to the Administrative Agent within ten (10) Business
Days (or sooner if such notice specifies a shorter period, but in no event less
than five Business Days for responses based on Administrative Agent’s good faith
determination that circumstances exist warranting its request for an earlier
response) after such written request from the Administrative Agent. If the
Lender does not so respond, that Lender shall be deemed to have approved the
request. Upon request, the Administrative Agent shall notify the Lenders which
Lenders, if any, failed to respond to a request for approval.
 
Section 12.14.  Copies of Documents
 
. Administrative Agent shall promptly deliver to each of the Lenders copies of
all notices of default and other formal notices sent or received and according
to Section 15.1 of this Agreement. Administrative Agent shall deliver to Lenders
within fifteen (15) Business Days following receipt, copies of all financial
statements, certificates and notices received regarding the Operating
Partnership’s or Equity Inns’ ratings except to the extent such items are
required to be furnished directly to the Lenders by Borrower hereunder. Within
fifteen (15) Business Days after a request by a Lender to the Administrative
Agent for other documents furnished to the Administrative Agent by the Borrower,
the Administrative Agent shall provide copies of such documents to such Lender
except where this Agreement obligates Administrative Agent to provide copies in
a shorter period of time.
 
Section 12.15.  Defaulting Lenders
 
. At such time as a Lender becomes a Defaulting Lender, such Defaulting Lender’s
right to vote on matters which are subject to the consent or approval of the
Required Lenders, such Defaulting Lender or all Lenders shall be immediately
suspended until such time as the Lender is no longer a Defaulting Lender. If a
Defaulting Lender has failed to fund its Percentage of any Advance and until
such time as such Defaulting Lender subsequently funds its Percentage of such
Advance, all Obligations owing to such Defaulting Lender hereunder shall be
subordinated in right of payment, as provided in the following sentence, to the
prior payment in full of all principal of, interest on and fees relating to the
Loans funded by the other Lenders in connection with any such Advance in which
the Defaulting Lender has not funded its Percentage (such principal, interest
and fees being referred to as “Senior Loans” for the purposes of this section).
All amounts paid by the Borrower and otherwise due to be applied to the
Obligations owing to such Defaulting Lender pursuant to the terms hereof shall
be distributed by the Administrative Agent to the other Lenders in accordance
with their respective Percentages (recalculated for the purposes hereof to
exclude the Defaulting Lender) until all Senior Loans have been paid in full. At
that point, the “Defaulting Lender” shall no longer be deemed a Defaulting
Lender. After the Senior Loans have been paid in full equitable adjustments will
be made in connection with future payments by the Borrower to the extent a
portion of the Senior Loans had been repaid with amounts that otherwise would
have been distributed to a Defaulting Lender but for the operation of this
Section 12.15. This provision governs only the relationship among the
Administrative Agent, each Defaulting Lender and the other Lenders; nothing
hereunder shall limit the obligation of the Borrower to repay all Loans in
accordance with the terms of this Agreement. The provisions of this Section
12.15 shall apply and be effective regardless of whether a Default occurs and is
continuing, and notwithstanding (i) any other provision of this Agreement to the
contrary, (ii) any instruction of the Borrower as to its desired application of
payments or (iii) the suspension of such Defaulting Lender’s right to vote on
matters as provided above.
 
Section 12.16.  Co-Agents: Lead Managers
 
. None of the Lenders identified on the facing page or signature pages of this
Agreement as a “documentation agent,” “syndication agent’ or “co-lead
arranger/book manager” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of Lenders so identified
as a “documentation agent,” “syndication agent” or “co-lead arranger/book
manager” shall have or be deemed to have any fiduciary relationship with any
Lenders. Each Lender acknowledges that it has not relied, and will not rely, on
any of Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
 
Article XIII.  
 

 
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
 
Section 13.1.  Successors and Assigns
 
. The terms and provisions of the Loan Documents shall be binding upon and inure
to the benefit of Borrower and the Lenders and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
or obligations under the Loan Documents without the consent of all the Lenders
and any assignment by any Lender must be made in compliance with Section 13.3.
The Administrative Agent and Borrower may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 13.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent and Borrower. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
 
Section 13.2.  Participations.
 
(a)  Permitted Participants; Effect. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time sell to one or
more banks or other entities (“Participants”) participating interests in any
Advance owing to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by Borrower under this Agreement shall be determined as if such Lender
had not sold such participating interests, and Borrower and the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under the Loan
Documents. The Borrower shall not be obligated to pay any fees and expenses
incurred by any Lender in connection with the sale of a participation pursuant
to this Section.
 
(b)  Voting Rights. Each Lender shall retain the sole right to vote its
Percentage of the Aggregate Commitment, without the consent of any Participant,
for the approval or disapproval of any amendment, modification or waiver of any
provision of the Loan Documents, provided that such Lender may grant such
Participant the right to approve any amendment, modification or waiver which
forgives principal, interest or fees or reduces the interest rate or fees
payable hereunder, postpones any date fixed for any regularly scheduled payment
of principal of or interest on the Obligations, or extends the Maturity Date.
 
Section 13.3.  Assignments.
 
(a)  Permitted Assignments. Any Lender may, with the prior written consent of
Administrative Agent and Borrower (which consents shall not be unreasonably
withheld or delayed), in accordance with applicable law, at any time assign to
one or more banks or other entities (collectively, “Purchasers”) all or any part
of its rights and obligations under the Loan Documents, except that no consent
of Borrower shall be required if an Event of Default has occurred and is
continuing and that no consent of Borrower shall ever be required for (i) any
assignment to a Person directly or indirectly controlling, controlled by or
under direct or indirect common control with the assigning Lender or (ii) the
pledge or assignment by a Lender of such Lender’s Note and other rights under
the Loan Documents to any Federal Reserve Bank in accordance with applicable
law. No assignment to a Purchaser shall be for less than $10,000,000 of the
Aggregate Commitment. Such assignments and assumptions shall be substantially in
the form of Exhibit K hereto. The Borrower shall execute any and all documents
which are customarily required by such Lender (including, without limitation, a
replacement promissory note or notes in the forms provided hereunder (upon
receipt of the original note that is being replaced)), but Borrower shall not be
obligated to pay any fees and expenses incurred by any Lender in connection with
any assignment pursuant to this Section. Any Lender selling all or any part of
its rights and obligation hereunder in a transaction requiring the consent of
the Administrative Agent shall pay to the Administrative Agent a fee of
$3,500.00 per assignee to reimburse Administrative Agent for its involvement in
such assignment.
 
(b)  Effect; Effective Date of Assignment. Upon delivery to the Administrative
Agent and Borrower of a notice of assignment executed by the assigning Lender
and the Purchaser, such assignment shall become effective on the effective date
specified in such notice of assignment. The notice of assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment and the Loan under the applicable
assignment agreement are “plan assets” as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be “plan assets” under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by Borrower, the Lenders or the Administrative Agent shall be required to
release the transferor Lender for matters arising after such sale with respect
to the percentage of the Commitment and Advances assigned to such Purchaser.
Upon the consummation of any assignment to a Purchaser pursuant to this Section
13.3.(b), subject to 13.3.(a), the transferor Lender, the Administrative Agent
and Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
 
(c)  Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
 
Section 13.4.  Dissemination of Information
 
. Borrower authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of law
(each a “Transferee”) and any prospective Transferee any and all information in
such Lender’s possession concerning the creditworthiness of Borrower and
Guarantors. Each Transferee shall agree in writing to keep confidential any such
information which is not publicly available. The Lenders agree not to make any
transfers to a transferee if such transfer would constitute a public offering
which would impose any obligation on the Borrower to incur liabilities and make
disclosures, representations or undertakings beyond those expressly provided for
herein, unless the Borrower has consented in writing thereto.
 
Section 13.5.  Tax Treatment
 
. If any interest in any Loan Document is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or any
State thereof, the transferor Lender shall cause such Transferee, concurrently
with the effectiveness of such transfer, to comply with all applicable
provisions of the Code with respect to withholding and other tax matters.
 
Section 13.6.  USA Patriot Act
 
. Each Lender hereby notifies the Borrower that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Act. Any Lender may request additional
information with respect to any Borrower in connection with such Lender’s “know
your customer” procedures.
 
Article XIV.  
 

 
GENERAL PROVISIONS
 
Section 14.1.  Survival of Representations
 
. All representations and warranties contained in this Agreement shall survive
delivery of the Notes and the making of the Advances herein contemplated.
 
Section 14.2.  Governmental Regulation
 
. Anything contained in this Agreement to the contrary notwithstanding, no
Lender shall be obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or regulation.
 
Section 14.3.  Taxes
 
. Any recording and other taxes (excluding franchise, income or similar taxes)
or other similar assessments or charges payable or ruled payable by any
governmental authority incurred in connection with the consummation of the
transactions contemplated by this Agreement shall be paid by the Borrower,
together with interest and penalties, if any.
 
Section 14.4.  Headings
 
. Section headings in the Loan Documents are for convenience of reference only,
and shall not govern the interpretation of any of the provisions of the Loan
Documents.
 
Section 14.5.  No Third Party Beneficiaries
 
. This Agreement shall not be construed so as to confer any right or benefit
upon any Person other than the parties to this Agreement and their respective
successors and assigns.
 
Section 14.6.  Expenses; Indemnification
 
. Subject to the provisions of this Agreement, Borrower will pay (a) all out of
pocket costs and expenses incurred by the Administrative Agent (including the
reasonable fees, out of pocket expenses and other reasonable expenses of
counsel, which counsel may be employees of Administrative Agent) in connection
with the preparation, execution and delivery of this Agreement, the Notes, the
Loan Documents and any other agreements or documents referred to herein or
therein and any amendments thereto, (b) all out of pocket costs and expenses
incurred by the Administrative Agent and the Lenders (including the reasonable
fees, out of pocket expenses and other reasonable expenses of counsel to the
Administrative Agent and the Lenders, which counsel may be employees of
Administrative Agent or the Lenders) in connection with the enforcement and
protection of the rights of the Lenders under this Agreement, the Notes, the
Loan Documents or any other agreement or document referred to herein or therein,
and (c) all reasonable and customary costs and expenses of periodic audits by
the Administrative Agent’s personnel of the Borrower’s books and records
provided that prior to an Event of Default, Borrower shall be required to pay
for only one such audit during any year. The Borrower further agrees to
indemnify the Lenders, their directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and reasonable
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Lenders are a party thereto) which any
of them may pay or incur arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Advance hereunder,
except that the foregoing indemnity shall not apply to a Lender to the extent
that any losses, claims, etc. are the result of such Lender’s gross negligence
or willful misconduct. The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
 
Section 14.7.  Severability of Provisions
 
. Any provision in any Loan Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
 
Section 14.8.  Nonliability of the Lenders
 
. The relationship between the Borrower and the Lenders shall be solely that of
borrower and lender. The Lenders shall not have any fiduciary responsibilities
to the Borrower. The Lenders undertake no responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any phase of the
Borrower’s business or operations.
 
Section 14.9.  Choice of Law
 
. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF
LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT
THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
 
Section 14.10.  Consent to Jurisdiction
 
. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY,
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDERS TO
BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE LENDERS OR ANY AFFILIATE OF
THE LENDERS INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK.
 
Section 14.11.  Waiver of Jury Trial
 
. THE BORROWER, THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
 
Section 14.12.  Entire Agreement; Modification of Agreement
 
. The Loan Documents embody the entire agreement among the Borrower, Guarantors,
Administrative Agent, and Lenders and supersede all prior conversations,
agreements, understandings, commitments and term sheets among any or all of such
parties with respect to the subject matter hereof. Any provisions of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower, and Administrative Agent if the rights
or duties of Administrative Agent are affected thereby, and
 
(a)  each of the Lenders if such amendment or waiver
 
(i)  reduces or forgives any payment of principal or interest on the Obligations
or any fees payable by Borrower to such Lender hereunder, or modifies the
provisions of Section 2.6 regarding the calculation of such interest and fees;
or
 
(ii)  postpones the date fixed for any payment of principal of or interest on
the Obligations or any fees payable by Borrower to such Lender hereunder; or
 
(iii)  changes the amount of such Lender’s Commitment (other than pursuant to a
voluntary reduction of the Aggregate Commitment under Section 2.17 or an
assignment permitted under Section 13.3) or the unpaid principal amount of such
Lender’s Note; or
 
(iv)  extends the Maturity Date; or
 
(v)  releases or limits the liability of any Borrower or Guarantor under the
Loan Documents; or
 
(vi)  changes the definition of Required Lenders or Supermajority Lenders or
modifies any requirement for consent by each of the Lenders; or
 
(vii)  modifies the definition of “Borrowing Base”; or
 
(viii)  modifies this Section 14.12(a); or
 
(b)  the Supermajority Lenders, if such amendment or waiver modifies or waives
the covenant in Section 9.10; or
 
(c)  the Required Lenders, to the extent expressly provided for herein and in
the case of all other waivers or amendments if no percentage of Lenders is
specified herein.
 
Section 14.13.  Dealings with the Borrower
 
. The Lenders and their affiliates may accept deposits from, extend credit to
and generally engage in any kind of banking, trust or other business with the
Borrower or the Guarantors or any other member of the Consolidated Group
regardless of the capacity of the Lenders hereunder.
 
Section 14.14.  Set-Off.
 
(a)  If an Event of Default shall have occurred, with the consent of all the
Lenders, each Lender (and with the consent of all the Lenders, if permitted,
pursuant to a participation agreement, each such participant) shall have the
right, at any time and from time to time without notice to the Borrower, any
such notice being hereby expressly waived, to set off and to appropriate or
apply any and all deposits of money or property or any other indebtedness at any
time held or owing by such Lender to or for the credit or the account of the
Borrower against and on account of all outstanding Obligations and all
Obligations which from time to time may become due hereunder and all other
obligations and liabilities of the Borrower under this Agreement, irrespective
of whether or not such Lender shall have made any demand hereunder and whether
or not said obligations and liabilities shall have matured.
 
(b)  Each Lender agrees that if it shall, by exercising any right of set off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal, interest or fees due with respect to any Note held by it
which is greater than the proportion received by any other Lender in respect of
the aggregate amount of principal, interest or fees due with respect to any Note
held by such other Lender, the Lender receiving such proportionately greater
payment shall purchase such participations in the Notes held by the other
Lenders and such other adjustments shall be made as may be required so that all
such payments of principal, interest or Fees with respect to the Notes held by
the Lenders shall be shared by the Lenders pro rata according to their
respective Commitments.
 
Section 14.15.  Counterparts
 
. This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower and each of the Lenders
shown on the signature pages hereof.
 
Section 14.16.  Limitation on Liability of EIP/WV
 
. The liability of each entity comprising the Borrower under this Agreement for
the Obligations shall be joint and several. However, notwithstanding the
foregoing, the Lenders agree that, the liability of EIP/WV under this Agreement
shall not exceed the amount by which (A) the portion of the then current fair
market value of the Properties owned by EIP/WV exceeds (B) the then current
outstanding principal balance of all Indebtedness (other than the Obligations)
of EIP/WV permitted under this Agreement, calculated in each case as of the
Maturity Date or the date of any earlier acceleration of the Obligations, as
applicable. Such maximum liability of EIP/WV shall be allocated on a pro rata
basis among the Notes in accordance with the Lenders’ respective Percentages.
 
Article XV.  
 

 
NOTICES
 
Section 15.1.  Giving Notice
 
. All notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing or by telex or by
facsimile and addressed or delivered to such party at its address set forth
below or at such other address as may be designated by such party in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
telex or facsimile, shall be deemed given when transmitted (answerback confirmed
in the case of telexes). Notice may be given as follows:
 
To the Borrower:
 
Equity Inns, Inc.
7700 Wolf River Boulevard
Germantown, Tennessee 38138
Attention: J. Mitchell Collins
Telecopy: (901) 754-2374
 
To Guarantors:
 
Equity Inns, Inc.
7700 Wolf River Boulevard
Germantown, Tennessee 38138
Attention: J. Mitchell Collins
Telecopy: (901) 754-2374
 
To each Lender:

As shown below the Lenders’ signatures.
 
To the Administrative Agent:
 
JPMorgan Chase Bank, N.A.
Real Estate Investment Banking
277 Park Avenue, 3rd Floor
New York, NY 10172
Attention: Donald Shokrian
Telecopy: (646) 534-0574

With a copy to:
 
Sonnenschein Nath & Rosenthal LLP
7800 Sears Tower
Chicago, Illinois 60606
Attention: Steven R. Davidson, Esq.
Telecopy: (312) 876-7934
 
Section 15.2.  Change of Address
 
. Each party may change the address for service of notice upon it by a notice in
writing to the other parties hereto.
 

 

 

--------------------------------------------------------------------------------

[remainder of this page intentionally blank]
 

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
 
BORROWER:    EQUITY INNS PARTNERSHIP, L.P.
 
By: Equity Inns Trust, its General Partner
 
By: ________________________________
Name: J. Mitchell Collins
Title: Executive VP
 
EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.
 
By: Equity Inns Services, L.L.C., its  General Partner
 
By: ________________________________
Name: J. Mitchell Collins
Title: __________________________
 

EQI ORLANDO 2, L.L.C.
 
By: ________________________________
Name: J. Mitchell Collins
Its: ____________________________

EQI FINANCING PARTNERSHIP I, L.P.
 

 
By:
EQI Financing Corporation, its General Partner

 
By: ________________________________
Name: J. Mitchell Collins
Title: Executive VP

--------------------------------------------------------------------------------

LENDERS: JPMORGAN CHASE BANK, N.A. 
Individually and as Administrative Agent

By: ________________________________
Name:  Donald Shokrian
Title: Managing Director

Commitment: $25,000,000

 
Address for Notices:

Real Estate Investment Banking
277 Park Avenue, 3rd Floor
New York, NY 10172
Attention: Donald Shokrian
Telephone: 212/622-2166
Telecopy: 646/534-0574

--------------------------------------------------------------------------------

CALYON NEW YORK BRANCH
Co-Lead Arranger and as Syndication Agent
 
By: ________________________________
Name:      
Title:     

By: ________________________________
Name:      
Title:     

Commitment: $25,000,000

 
Address for Notices:

Calyon New York Branch
Lodging Group
1301 Avenue of the Americas, 18th Floor
New York, New York 10019
Attention: David Bowers
Telephone: 212/261-7831
Telecopy: 212/261-7532

--------------------------------------------------------------------------------

BANK OF AMERICA, N.A.
Individually and as Documentation Agent
 
By: ________________________________
Name:  Roger C. Davis
Title: Senior Vice President

Commitment: $22,000,000

Address for Notices:

Bank of America, N.A.
901 Main St. 64th Floor
Dallas, TX 75202
Attention: Roger C. Davis
Telephone: 214/209-9505
Telecopy: 214/209-0085

--------------------------------------------------------------------------------

KEYBANK NATIONAL ASSOCIATION
Individually and as Documentation Agent
 
By: ________________________________
Name:  ________________________________
Title: ________________________________

Commitment: $22,000,000

 
Address for Notices:

KeyBank National Association
1200 Abernathy Road NE, Suite 1550
Atlanta, Georgia 30328
Phone: 770/510-2102
Telephone: 770/510-2195
Telecopy: Daniel Stegemoeller

--------------------------------------------------------------------------------

AMSOUTH BANK
Individually and as Documentation Agent
 
By: ________________________________
Name:  ________________________________
Title: ________________________________

Commitment: $15,000,000

 
Address for Notices:

AmSouth Bank
1900 5th Avenue North, BAC-15
Birmingham, AL 35203
Attention: Ryan Presley
Telephone: 205/326-4783
Telecopy: 205/326-4075

--------------------------------------------------------------------------------

U.S. BANK NATIONAL ASSOCIATION

 
By: ________________________________
Name:  Dennis J. Redpath
Title: Senior Vice President

Commitment: $19,000,000

 
Address for Notices:

U.S. Bank National Association
209 S. LaSalle Street, Suite 410
Chicago, IL 60604
Attention: Dennis J. Redpath
Telephone: 312/325-8875
Telecopy: 312/325-8852

--------------------------------------------------------------------------------

BRANCH BANKING AND TRUST COMPANY

 
By: ________________________________
Name:  Robert Searson
Title: Senior Vice President

Commitment: $15,000,000

Address for Notices:

Branch Banking and Trust Company
200 West 2nd Street; 16th Floor
Winston-Salem, NC 27101
Attention: Robert Searson
Telephone: 336/733-2771
Telecopy: 336/733-2740

--------------------------------------------------------------------------------

REGIONS BANK

 
By: ________________________________
Name:  ________________________________
Title: ________________________________

Commitment: $7,000,000

 
Address for Notices:

Regions Bank
6200 Poplar Avenue
Memphis, Tennessee 38119
Attention: James Gummel
Telephone: 901/580-5437
Telecopy: 901/580-5451

--------------------------------------------------------------------------------

The undersigned, Equity Inns, Inc. and Equity Inns Trust, join in this Agreement
for purposes of making the representations and warranties contained in Article
VII hereof and agreeing to perform certain of the covenants described in Article
VIII hereof.
 
EQUITY INNS, INC.
 
By: ___________________________
Name: J. Mitchell Collins
Title: Executive VP
 
EQUITY INNS TRUST
 
By: _____________________________
Name: J. Mitchell Collins
Title: Executive VP

EXHIBIT A
 
 
INTENTIONALLY DELETED
 

 

 

Exhibit A - Page

 

--------------------------------------------------------------------------------

EXHIBIT B
 
FORM OF NOTE
 

 
_________, 2006
 
On or before the Maturity Date, as defined in that certain Unsecured Revolving
Credit Agreement dated as of ___________, 2006 (the “Agreement”) among EQUITY
INNS PARTNERSHIP, L.P., a Tennessee limited partnership, EQUITY INNS/WEST
VIRGINIA PARTNERSHIP, L.P., a Tennessee limited partnership, EQI ORLANDO 2,
L.L.C., a Delaware limited liability company, and EQI FINANCING PARTNERSHIP I,
L.P., a Tennessee limited partnership (collectively, “Borrower”), CALYON NEW
YORK BRANCH, individually and as _____________ Agent , JPMORGAN CHASE BANK,
N.A., a national bank organized under the laws of the United States of America,
individually and as Administrative Agent for the Lenders (as such terms are
defined in the Agreement), and the other Lenders listed on the signature pages
of the Agreement, Borrower promises to pay to the order of
_________________________ (the “Lender”), or its successors and assigns, the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Section 2.1 of the Agreement, in immediately available
funds at the office of the Administrative Agent in New York, New York, together
with interest on the unpaid principal amount hereof at the rates and on the
dates set forth in the Agreement. The Borrower shall pay this Promissory Note
(“Note”) in full on or before the Maturity Date in accordance with the terms of
the Agreement.
 
The Lender shall, and is hereby authorized to, record on the schedule attached
hereto, or to otherwise record in accordance with its usual practice, the date
and amount of each Advance and the date and amount of each principal payment
hereunder.
 
This Note is issued pursuant to, and is entitled to the security under and
benefits of, the Agreement and the other Loan Documents, to which Agreement and
Loan Documents, as they may be amended from time to time, reference is hereby
made for, inter alia, a statement of the terms and conditions under which this
Note may be prepaid or its maturity date accelerated. Capitalized terms used
herein and not otherwise defined herein are used with the meanings attributed to
them in the Agreement. This Note is not negotiable.
 
If there is an Event of Default or Default under the Agreement or any other Loan
Document and Lender exercises its remedies provided under the Agreement and/or
any of the Loan Documents, then in addition to all amounts recoverable by the
Lender under such documents, Lender shall be entitled to receive reasonable
attorneys fees and expenses incurred by Lender in exercising such remedies.
 
Borrower and all endorsers severally waive presentment, protest and demand,
notice of protest, demand and of dishonor and nonpayment of this Note (except as
otherwise expressly provided for in the Agreement), and any and all lack of
diligence or delays in collection or enforcement of this Note, and expressly
agree that this Note, or any payment hereunder, may be extended from time to
time, and expressly consent to the release of any party liable for the
obligation secured by this Note, the release of any of the security of this
Note, the acceptance of any other security therefor, or any other indulgence or
forbearance whatsoever, all without notice to any party and without affecting
the liability of the Borrower and any endorsers hereof.
 
This Note shall be governed and construed under the internal laws of the State
of New York.
 
All liability of the entities comprising the Borrower hereunder shall be joint
and several. However, the liability of Equity Inns/West Virginia Partnership,
L.P. under this Note is limited as described in Section 14.16 of the Agreement.
 
BORROWER AND LENDER, BY ITS ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER
THIS PROMISSORY NOTE OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING
FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS NOTE AND AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
 
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership
 
By: Equity Inns Trust, its general partner
 
By:     
Name:     
Title: _________________________

EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P., a Tennessee limited partnership
 
By: Equity Inns Services, L.L.C., its general  partner
 
By:     
Name: ________________________
Its:     
 

--------------------------------------------------------------------------------

EQI ORLANDO 2, L.L.C.
 
By: ________________________________
Name: J. Mitchell Collins
Its: ______________________________

EQI FINANCING PARTNERSHIP I, L.P.
 

 
By:
EQI Financing Corporation, its General Partner

 
By: ________________________________
Name: J. Mitchell Collins
Title: ______________________________

--------------------------------------------------------------------------------

 
Date
 
Unpaid
 
Principal
 
Balance
 
Notation
 
Made by
 
                                                                               
                     

 

 

Exhibit B - Page

 

--------------------------------------------------------------------------------

EXHIBIT C
 
Intentionally Deleted
 

 

Exhibit C - Page

 

--------------------------------------------------------------------------------

EXHIBIT D
 
FORM OF GUARANTY
 
See Guaranty of even date.
 

 

Exhibit D - Page

 

--------------------------------------------------------------------------------

EXHIBIT E
 
Intentionally Deleted
 

 

Exhibit E - Page

 

--------------------------------------------------------------------------------

EXHIBIT F
 
Intentionally Deleted
 

 

Exhibit F - Page

 

--------------------------------------------------------------------------------

EXHIBIT G
 
Intentionally Deleted
 

 

Exhibit G - Page

 

--------------------------------------------------------------------------------

EXHIBIT H
 
WIRING INSTRUCTIONS
 
To:
 
JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”) under the
Credit Agreement Described Below
 
Re:
 
Unsecured Revolving Credit Agreement, dated as of _________, 2006 (as amended,
modified, renewed or extended from time to time, the “Agreement”), among Equity
Inns Partnership, L.P., Equity Inns/West Virginia Partnership, L.P., EQI Orlando
2, L.L.C. and EQI Financing Partnership I, L.P. (collectively, the “Borrower”),
JPMorgan Chase Bank, N.A., individually and as Administrative Agent, Calyon New
York Branch, as Co-Lead Arranger, and the Lenders named therein. Terms used
herein and not otherwise defined shall have the meanings assigned thereto in the
Credit Agreement.
 

The Administrative Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Advances or other extensions of credit from time to time until receipt by the
Administrative Agent of a specific written revocation of such instructions by
the Borrower, provided, however, that the Administrative Agent may otherwise
transfer funds as hereafter directed in writing by the Borrower in accordance
with Section 15.1 of the Agreement or based on any telephonic notice made in
accordance with the Agreement.
 
Facility Identification Number(s)         
 
Customer/Account Name: Equity Inns Partnership, L.P., Equity Inns/West Virginia
Partnership, L.P. EQI Orlando 2, L.L.C. and EQI Financing Partnership I, L.P.
 
Transfer Funds To: JPMorgan Chase Bank, N.A.
 

 
For Account No.           
 
Reference/Attention To          
 
Authorized Officer (Customer Representative) Date
 
 
(Please Print)      Signature

Bank Officer Name     Date
 
 
(Please Print)      Signature

(Deliver Completed Form to Credit Support Staff For Immediate Processing)
 

 

Exhibit H - Page

 

--------------------------------------------------------------------------------

EXHIBIT I
 
FORM OF COMPLIANCE CERTIFICATE
 
Under that certain Unsecured Revolving Credit Agreement dated as of _________
2006, (the “Credit Agreement”), between Equity Inns Partnership, L.P., Equity
Inns / West Virginia Partnership, L.P., EQI Orlando 2, L.L.C. and EQI Financing
Partnership I, L.P., as Borrower and JPMorgan Chase Bank, N.A. (“JPMorgan”) as
Administrative agent, Calyon New York Branch as Co-Lead Arranger and the Lenders
defined therein (the “Credit Agreement”).
 
The undersigned, as _________________ of Equity Inns Partnership L.P., as
_________________ of Equity Inn / West Virginia Partnership L.P., as
______________ of EQI Orlando 2, L.L.C. and as _________________ of EQI
Financing Partnership I, L.P., pursuant to Section 8.2 of the Credit Agreement,
hereby certify to JPMorgan as Administrative Agent as follows:
 

1.  
A review of the activities of Borrower during the most recent ended fiscal
quarter (which quarter ended _______) of the Borrower has been made under my
supervision.

 

2.  
As of the date hereof, all of the representations and warranties of Borrower
contained in the Credit Agreement and each of the Loan Documents (as defined in
the Credit Agreement) are true and correct in all material respects (except to
the extent that they speak to a specific date or are based on facts which have
changed by transactions expressly contemplated or permitted by the Credit
Agreement).

 

3.  
No event has occurred and is continuing which constitutes an Event of Default or
a potential Event of Default.

 

4.  
The following Borrowing Base computation as of ______________, 20__, together
with the supporting schedule attached hereto is true and correct:

 
A. Total Asset Value derived from Borrowing Base Assets  
(See Attached Schedule of Borrowing Base Assets)     $   

B. 60.0% of A              $   
 

C. Value of Asset which makes up greatest percentage of the Borrowing Base
 
$   

D. C divided by A is less than 20%        %

E. Allocated Facility Amount     $   

F. B is equal to or more than E ____ Yes ____ No

5.  
The following covenant computations, for the most recent ended fiscal quarter,
together with the supporting schedule attached hereto, are true and correct:

 
8.3
Limitations on Properties Under Development
 
A. Total Cost of all Properties Under Development and Excluded Properties
 
 
$  
 
B. 10% of Total Cost of all Properties
$  
 
A must be less than or equal to B
     
Unencumbered
Asset Value
Definition
Limitations on Unencumbered Asset Value
 
Wholly-Owned Assets
 
A. Unencumbered Asset Value (See Attached Schedule)
 
B. Total Values of Properties which are, directly or indirectly, wholly owned
and controlled by Borrower
 
C. B divided by A
 
 
 
Fee Simple Assets
 
D. Total Asset Value attributed to Properties which are, directly or indirectly,
held in fee simple by Borrower or a Wholly-Owned Subsidiary
 
E. D divided by A
 
Properties Under Development and Excluded Properties
 
F. Total Asset Value attributable to Properties Under Development and Excluded
Properties
 
G. F divided by A
 
H. Total Amount of Unencumbered Asset Value derived from Collateral Pool Asset
that are:
(i) not directly or indirectly, wholly owned and controlled by the Borrower;
(ITEM B) plus
(ii) not directly or indirectly, held in fee simple by the Borrower or a
Wholly-Owned Subsidiary (ITEM D) plus
(iii) Properties Under Development and Excluded Properties (Item F)
 
 
 
 
$  
 
 
$  
 
%
C must be greater than or equal to 85%
 
 
 
 
$  
 
%
E must be greater than or equal to 90%
 
 
$  
 
%
G must be less than or equal to 20%
 
 
 
 
 
$  
 
 
I. H divided by A
 
%
I must be less than 30%
9.3
Leverage.
 
A. Total Indebtedness
B. EBITDA
C. A divided by B
D. 6.00
 
 
$  
$  
 
C must be less than or equal to D
 
9.3
 
Secured Recourse Indebtedness
 
A. Recourse Secured Indebtedness of the Consolidated Group
B. $50,000,000
 
 
 
$  
$  
 
A must be less than or equal to B
9.4
Dividends
 
9.4
A. Total dividends for the past four quarters (excluding Preferred Stock
Expense)
B. 95% of the Funds From Operations for the past four quarters
 
$  
$  
A must be less than or equal to B
     
9.5
Floating Rate Debt
 
A. 25% of Total Indebtedness
B.  Floating Rate Debt, excluding the Facility
 
 
$  
$  
B must be less than A
9.7
FF&E Expenditures.
 
A. Total actual expenditures of the Consolidated Group for FF&E replacement and
approved capital improvements for the Properties for the past four quarters.
 
B. Amount of reserves maintained on the balance sheet on the last day of the
period by the Consolidated Group for FF&E replacement and approved capital
improvements less the amount of such reserves maintained as of the first day of
the period.
 
C. Sum of A plus B
 
D. 4% of gross room revenues for the past four quarters  for the Properties
 
 
 
 
$  
 
 
 
 
$  
 
$  
 
$  
C must be greater than or equal to D
9.8(a)
9.8(a)Minimum Tangible Net Worth.
 
A. Tangible Net Worth of the Consolidated Group
 
B. 80% of Tangible Net Worth at 12/31/05
 
C. 75% of equity interest issued after 12/31/05
 
D. Sum of B and C
 
 
$  
 
$  
 
$  
 
$  
A must be greater than or equal to D
9.8(b)
9.8(b)Maximum Total Secured Indebtedness.
 
A. Total Secured Indebtedness at last day of most recent fiscal quarter
 
B. Total Asset Value at last day of most recent fiscal quarter
 
C. A divided by B
 
 
 
$  
 
$  
 
%
 
C must be less than or equal to 50% (or 55% for up two consecutive quarters)
9.8(c)
9.8(c) Maximum Total Unsecured Indebtedness.
 
A. Total Unsecured Indebtedness at last day of most recent fiscal quarter
 
B. Indebtedness resulting from the issuance of Qualifying Trust Preferred
Securities
 
C. A minus B
 
D. Total Unencumbered Asset Value at last day of most recent fiscal quarter
 
E. C divided by D
 
 
 
$  
 
 
$  
 
$  
 
 
$  
 
%
 
E must be less than or equal to 60%
9.8(d)
Maximum Interest Expense for Unsecured Debt
 
A. EBITDA derived from Unencumbered Assets for the most recent 12 calendar
months
 
B. Agreed FF&E Reserve for Unencumbered Assets for the most recent 12 calendar
months
 
C. A minus B (Adjusted EBITDA derived from Unencumbered Assets)
 
D. Interest Expense associated with Total Unsecured Indebtedness for the most
recent 12 calendar months
 
E. C divided by D
 
 
 
$  
 
 
$  
 
 
$  
 
 
 
 
E must be equal to or greater than 2.0 to 1.0
     
9.8(e)
Minimum Fixed Charge Coverage
 
A. Adjusted EBITDA for the most recent 12 calendar months
 
B. Ground Lease Expense for the most recent 12 calendar months
 
C. Sum of A plus B
 
D. Fixed Charges for the most recent 12 calendar months
 
E. C divided by D
 
 
$  
 
$  
 
$  
 
$  
 
 
E must be greater than or equal to the amount 1.5 to 1.0
The following computation of the limits imbedded in the definitions, together
with the supporting schedule attached hereto, is true and correct.
 
 
Limitation on Excluded Investment Affiliates (see definition)
 
Ownership Percentage
 
A.
The largest Consolidated Group Pro Rata Share of any Investment Affiliate
 
%
A must be less than
20%
Book Value
 
B.
The aggregate book value of the Consolidated Group’s investment in all Excluded
Investment Affiliates
 
$  
C.
$35,000,000
$  
D.
The amount of the Borrowing Base attributable to Properties Under Development
 
$  
E.
C minus D
$  
B must be less than or equal to E

 
In addition, the Consolidated Group does not have voting control of, or the
ability to otherwise direct the actions of any Investment Affiliate, and no
Investment Affiliate has Indebtedness which is recourse to, or guaranteed by,
any member of the Consolidated Group.
 
Date:      
 
By:      
 
Name:      
 
Title:      
 

--------------------------------------------------------------------------------

SCHEDULE I
 
CALCULATION OF COVENANTS
 

     
1.
Total Cost
A. Book Value of all Newly Acquired Properties, Excluded Properties and
Properties under Development owned by the Consolidated Group
 
B. Accumulated Depreciation on such Properties
 
C. Consolidated Group Pro Rata Share of the book value of all Newly Acquired
Properties, Excluded Properties and Properties under Development owned by
Investment Affiliates
 
D. Consolidated Group Pro Rata Share of the depreciation associated with such
Properties owned by Investment Affiliates
 
E. Sum of A, B, C, and D
 
 
$  
 
$  
 
 
 
$  
 
 
$  
 
$  
2.
Total Indebtedness
A. Indebtedness of the Consolidated Group
 
1. indebtedness for borrowed money
2. obligations under financing and capital leases
3. Guarantee Obligations
4. Letters of credit
5. Other items which constitute Indebtedness not included in the above
 
B. Consolidated Group Pro Rata Share of all Indebtedness of any Investment
Affiliate other than Excluded Investment Affiliates (to the extent not included
in A)
 
1. Indebtedness for borrowed money
2. Obligations under financing and capital leases
3. Guarantee Obligations
4. Letters of Credit
5. Other items which constitute Indebtedness not included in the above
 
C. Sum of A and B equals Total Indebtedness
 
 
 
$  
$  
$  
$  
 
$  
 
 
 
 
 
$  
$  
$  
$  
 
$  
 
$  
3.
EBITDA for the most recent four quarters
 
A. Net income of the Consolidated Group applicable to common shareholders
excluding income from Investment Affiliates
 
B. Consolidated Group Pro Rata Share of net income of Investment Affiliates
other than Excluded Investment Affiliates
 
C. Preferred Stock Expense
 
D. All gains or losses from sale of assets, write downs, debt or equity
restructure, adjusting for non-cash effect of straight lining of rents
 
E. Effect of discontinued operations
 
F. Effect of income taxes
 
G. Effect of minority interests
 
H. Interest Expense
 
I. Depreciation, amortization and non cash items
 
J. Adjustment for Properties not owned during whole period
 
K. Sum of (A plus B) plus sum of (C plus D plus E plus F plus G plus H plus I
plus J) equals EBITDA.
 
Note: For: C, D, E, F, G, H, I, and J only the Consolidate Group Pro Rata Share
shall be added back to the extent the foregoing items relate to Investment
Affiliates.
 
 
 
$  
 
 
$  
 
$  
 
 
$  
 
$  
 
$  
 
$  
 
$  
 
$  
 
$  
 
 
$  
4.
Adjusted EBITDA for any period
 
A. EBITDA for any period
 
B. Agreed FF&E Reserve for all Properties of the Consolidated Group  during such
period
 
C. Consolidated Group Pro Rata Share of 4% of gross room revenues for such
period on each Property owned by Investment Affiliates
 
D. A minus the sum of B plus C equals Adjusted EBITDA
 
 
$  
 
 
$  
 
 
$  
 
$  
5.
Fixed Charges for the most recent four quarters
 
A. Interest Expense
 
B. Regularly scheduled principal payments of Indebtedness of the Consolidated
Group
 
C. Consolidated Group Pro Rata Share of any regularly scheduled principal
payments of an Investment Affiliate (other than Excluded Investment Affiliates)
 
D. Preferred Stock Expense
 
E. Ground Lease Expense
 
F. Sum of A, B, C, D, and E equals Fixed Charges
 
 
$  
 
 
$  
 
 
$  
 
$  
 
$  
 
$  

 

 

Exhibit I - Page

 

--------------------------------------------------------------------------------

EXHIBIT J
 
Intentionally Deleted
 

 

Exhibit J - Page

 

--------------------------------------------------------------------------------

EXHIBIT K
 
ASSIGNMENT AND ASSUMPTION AGREEMENT
 
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
 
For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below, the interest in and to all of the Assignor’s rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto that represents the
amount and percentage interest identified below of all of the Assignor’s
outstanding rights and obligations under the respective facilities identified
below (including without limitation any letters of credit, guaranties and
swingline loans included in such facilities and, to the extent permitted to be
assigned under applicable law, all claims (including without limitation contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity), suits, causes of action and any other right of the
Assignor against any Person whether known or unknown arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby) (the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
 
1. Assignor:
 
2. Assignee:      [and is an Affiliate/Approved Fund of [identify Lender]1 
Select as Applicable
 
3. Borrower(s):
 
4. Agent:        , as the agent under the Credit Agreement.
 
5. Credit Agreement: The [amount] Credit Agreement dated as of _______________
among [name of Borrower(s)], the Lenders party thereto, [name of Agent], as
Agent, and the other agents party thereto.
 
6. Assigned Interest:
 
Facility Assigned
Aggregate Amount of Commitment/Loans for all Lenders*
Amount of Commitment/Loans Assigned*
Percentage Assigned of Commitment/Loans2 
____________3 
$
$
_______%
____________
$
$
_______%
____________
$
$
_______%

 
7. Trade Date:     4 
 
Effective Date: ____________________, 20__ [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]
 
The terms set forth in this Assignment and Assumption are hereby agreed to:
 
ASSIGNOR
[NAME OF ASSIGNOR]
 
By:      
Title:      
 
ASSIGNEE
[NAME OF ASSIGNEE]
 
By:      
Title:      

[Consented to and]5  Accepted:   
 
[NAME OF AGENT], as Agent
 
By:     
 
Title:     
 
[Consented to:]6 
 
*Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.
 
[NAME OF RELEVANT PARTY]
 
By:     
 
Title:     
 

--------------------------------------------------------------------------------

ANNEX 1
 
TERMS AND CONDITIONS FOR
 
ASSIGNMENT AND ASSUMPTION
 
1. Representations and Warranties.
 
1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby. Neither the Assignor nor any of its officers, directors, employees,
agents or attorneys shall be responsible for (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency, perfection, priority, collectibility, or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document, (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Loan Document, (v) inspecting any of
the property, books or records of the Borrower, or any guarantor, or (vi) any
mistake, error of judgment, or action taken or omitted to be taken in connection
with the Loans or the Loan Documents.
 
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are “plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be “plan assets” under ERISA,
(v) agrees to indemnify and hold the Assignor harmless against all losses, costs
and expenses (including, without limitation, reasonable attorneys’ fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee’s non-performance of the obligations assumed under this
Assignment and Assumption, (vi) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Agent or any other Lender, and (vii)
attached as Schedule 1 to this Assignment and Assumption is any documentation
required to be delivered by the Assignee with respect to its tax status pursuant
to the terms of the Credit Agreement, duly completed and executed by the
Assignee and (b) agrees that (i) it will, independently and without reliance on
the Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.
 
2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. From and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and
to the Assignee for amounts which have accrued from and after the Effective
Date.
 
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.
 

--------------------------------------------------------------------------------

ADMINISTRATIVE QUESTIONNAIRE
 
(Schedule to be supplied by Closing Unit or Trading Documentation Unit)
 

 

--------------------------------------------------------------------------------

1
2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
3 Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Revolving
Credit Commitment,” “Term Loan Commitment,” etc.
4 Insert if satisfaction of minimum amounts is to be determined as of the Trade
Date.
5 To be added only if the consent of the Agent is required by the terms of the
Credit Agreement.
6 To be added only if the consent of the Borrower and/or other parties (e.g.
Swingline Lender, L/C Issuer) is required by the terms of the Credit Agreement.

Exhibit K - Page

 

--------------------------------------------------------------------------------

EXHIBIT L
 
AMENDMENT TO UNSECURED REVOLVING CREDIT AGREEMENT
 
This Amendment to Unsecured Revolving Credit Agreement (the “Amendment”) is made
as of    , 2006, by and among Equity Inns Partnership, L.P., a Tennessee limited
partnership, Equity Inns/West Virginia Partnership, L.P., a Tennessee limited
partnership, EQI Orlando 2, L.L.C., a Delaware limited liability company and EQI
Financing Partnership I, L.P., a Tennessee limited partnership (collectively,
“Borrower”) Equity Inns Trust, Equity Inns Services, L.L.C. and Equity Inns,
Inc. (collectively, “Guarantor”), JPMorgan Chase Bank, N.A., individually and as
“Administrative Agent,” and one or more new or existing “Lenders” shown on the
signature pages hereof.
 
R E C I T A L S
 
A. Borrower, Administrative Agent and certain other Lenders have entered into a
Unsecured Revolving Credit Agreement dated as of __________, 2006 (the “Credit
Agreement”). All capitalized terms used herein and not otherwise defined shall
have the meanings given to them in the Credit Agreement.
 
B. Pursuant to the terms of the Credit Agreement, the Lenders initially agreed
to provide Borrower with a revolving credit facility in an aggregate principal
amount of up to $150,000,000. The Borrower, the Administrative Agent and the
Lenders now desire to amend the Credit Agreement in order to, among other things
(i) increase the Aggregate Commitment to $__________________; and (ii) admit
[name of new banks] as “Lenders” under the Credit Agreement.
 
NOW, THEREFORE, in consideration of the foregoing Recitals and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
 
AGREEMENTS

1. The foregoing Recitals to this Amendment hereby are incorporated into and
made part of this Amendment.
 
2. From and after _________, ____ (the “Effective Date”) (i) [name of new banks]
shall be considered as “Lenders” under the Credit Agreement and the Loan
Documents, and (ii) [name of existing lenders] shall each be deemed to have
increased its Commitment to the amount shown next to their respective signatures
on the signature pages of this Amendment, each having a Commitment in the amount
shown next to their respective signatures on the signature pages of this
Amendment. The Borrower shall, on or before the Effective Date, execute and
deliver to each of such new or existing Lenders a new or Note in the amount of
such Commitment.
 
3. From and after the Effective Date, the Aggregate Commitment shall equal
__________ Million Dollars ($___,000,000).
 
4. For purposes of Section 15.1 of the Credit Agreement (Giving Notice), the
address(es) and facsimile number(s) for [name of new banks] shall be as
specified below their respective signature(s) on the signature pages of this
Amendment.
 
5. The Borrower hereby represents and warrants that, as of the Effective Date,
there is no Default or Event of Default, the representations and warranties
contained in Articles VI and VII of the Credit Agreement are true and correct as
of such date as and to the extent set forth therein, except to the extent any
such representation or warranty is stated to relate solely to an earlier date,
in which case such representation or warranty shall be true and correct on and
as of such earlier date and the Borrower has no offsets or claims against any of
the Lenders.
 
6. As expressly modified as provided herein, the Credit Agreement shall continue
in full force and effect.
 
7. This Amendment may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Amendment by signing any such counterpart.
 
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of
the date first written above.
 
EQUITY INNS PARTNERSHIP, L.P.

By: Equity Inns Trust, its General Partner

By:      
Name: ______________________________
Title:      

EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.

 
By:
Equity Inns Services, L.L.C., its General Partner

By:      
Name:      
Its:      

EQI ORLANDO 2, L.L.C.
 
By: ________________________________
Name: J. Mitchell Collins
Its: ______________________________

EQI FINANCING PARTNERSHIP I, L.P.
 

 
By:
EQI Financing Corporation, its General Partner

 
By: ________________________________
Name: J. Mitchell Collins
Title: Executive VP

EQUITY INNS, INC.

By:      
Title:      

EQUITY INNS TRUST

By:      
Title:      

EQUITY INNS SERVICES, L.L.C.

By:      
Its:      

JPMORGAN CHASE BANK, N.A., Individually and as Administrative Agent

By:      
Print Name:     
Title:      

277 Park Avenue, 3rd Floor
New York, NY 10172
Facsimile: 646/ 534-0574
Attention: Donald Shokrian
Amount of Commitment: $   

[NAME OF NEW LENDER]

By:      
Print Name:     
Title:      

[Address of New Lender]
Phone:     
Facsimile:    
Attention:    

 

Exhibit L - Page

 

--------------------------------------------------------------------------------

SCHEDULE 1.1
 
Existing Letters of Credit
 

 
JPM Reference Number
 
Original B1 L/C Number
 
Booking Party Name
 
Beneficiary Name
 
Liab Outstanding Amount
 
Issue / Advising Date
 
Current Expiration Date
 
CPCS-214002
 
-
 
EQUITY INNS PARTNERSHIP LP
 
WACHOVIA BANK, NATIONAL ASSOCIATION
 
600,000.00
 
NOV 15, 2005
 
NOV 14, 2006
 
CPCS-214003
 
-
 
EQUITY INNS PARTNERSHIP LP
 
WELLS FARGO BANK, N.A., AS TRUSTEE
 
1,072,000.00
 
NOV 15, 2005
 
NOV 14, 2006
 
CPCS-214005
 
-
 
EQUITY INNS PARTNERSHIP LP
 
WACHOVIA BANK, NATIONAL ASSOCIATION
 
600,000.00
 
NOV 15, 2005
 
NOV 14, 2006
 
CPCS-634814
 
SLT323375
 
EQUITY INNS PARTNERSHIP LP
 
GE CAPITAL CORP C/O GEMSA LOAN
 
113,730.00
 
FEB 15, 2002
 
OCT 24, 2007
 
CPCS-634815
 
SLT323377
 
EQUITY INNS PARTNERSHIP LP
 
GE CAPITAL CORP C/O GEMSA LOAN
 
149,270.00
 
FEB 15, 2002
 
OCT 24, 2007
 
CPCS-634909
 
SLT326051
 
EQUITY INNS PARTNERSHIP LP
 
LASALLE NAT. BANK,
 
357,504.28
 
FEB 15, 2002
 
OCT 24, 2006
 
Total
 
 
 
 
 
 
 
$2,892,504.28
 
 
 
 
 

 

Schedule 1.1 - Page

 

--------------------------------------------------------------------------------

SCHEDULE 6.19
 
ENVIRONMENTAL COMPLIANCE
 
All environmental matters identified in the environmental reports delivered to
Administrative Agent in connection with the Facility.
 

 

Schedule 6.19 - Page

 

--------------------------------------------------------------------------------

SCHEDULE 6.24
 
TRADE NAMES
 

 

Schedule 6.24 - Page

 

--------------------------------------------------------------------------------

SCHEDULE 6.25
 
SUBSIDIARIES (BORROWERS) OWNING UNENCUMBERED ASSETS
 

Name
Entity Type
Percentage Ownership
Property Owned
Equity Inns Partnership, L.P.(1)
Tennessee limited partnership
   
Equity Inns/West Virginia Partnership, L.P.(1)
Tennessee limited partnership
Operating Partnership owns 99% LP interest
Holiday Inn/Bluefield*
Holiday Inn/Oak Hill*
EQI Orlando 2, L.L.C.(1)
Delaware limited liability company
Operating Partnership owns 100% interest
Embassy Suites/Orlando*
EQI Financing Partnership I, L.P.(1)
Tennessee limited partnership
Operating Partnership owns 99% LP interest
Hampton Inn/Cleveland, OH*
Hampton Inn/Columbus, GA*
Hampton Inn/Gurnee, IL*
Hampton Inn/Gastonia, NC*
Residence Inn/Omaha, NE*
Hampton Inn/Fayetteville, NC*
Holiday Inn/Mt. Pleasant, SC*

_______________________
* Borrowing Base Asset under this Agreement.
(1) Entity is a Borrower under this Agreement.

 

Schedule 6.25 - Page

 

--------------------------------------------------------------------------------

SCHEDULE 7.16
 
SUBSIDIARIES OF GUARANTORS OWNING UNENCUMBERED ASSETS
 
Name
Entity Type
Percentage Ownership
Property Owned
Equity Inns, Inc.
Tennessee corporation
   
Equity Inns Trust
Maryland real estate investment trust
100% of outstanding common shares owned by Equity Inns, Inc.
 
Equity Inns Partnership, L.P.
Tennessee limited partnership
Trust owns approximately 96% general partnership interest in the Operating
Partnership
Residence Inn/Burlington*
Residence Inn/Colorado Springs*
Hampton Inn/Pickwick*
Hampton Inn/Addison*
Hampton Inn/Columbia*
Homewood Suites/Augusta*
AmeriSuites/Cincinnati-Blue Ash*
AmeriSuites/Miami*
AmeriSuites/Baton Rouge*
AmeriSuites/Las Vegas*
AmeriSuites/Miami*
AmeriSuites/Minneapolis*
AmeriSuites/Nashville*
Homewood/Seattle*(
Homewood/Chicago*
Hampton Inn/Urbana*
Hampton Inn/East Lansing*
Hampton Inn/Grand Rapids*
SpringHill Suites/Grand Rapids*
Hampton Inn/Nashville-Briley Pkwy(1)
Courtyard/Houston(1)
Hampton Inn/Boca Raton(1)
Hampton Inn & Suites/Boynton Beach(1)
Hampton Inn/Deerfield Beach(1)
Hampton Inn/Palm Beach Gardens(1)
Hampton Inn/West Palm Beach(1)
Hampton Inn/Orlando*
Residence Inn/Sarasota(1)
Courtyard/Sarasota(1)
Residence Inn/Ft. Myers(1)
Hampton Inn/Peabody(1)
Homewood Suites/Peabody*
SpringHill Suites/Sarasota*
TownPlace Suites/Savannah*
Courtyard/Orlando Maitland(1)
Residence Inn/Tampa North(1)
Residence Inn/Mobile(1)
Fairfield Inn/Atlanta*
SpringHill Suites/Houston*
SpringHill Suites/San Antonio*
Equity Inns/West Virginia Partnership, L.P.
Tennessee Limited Partnership
1% GP interest held by Equity Inns Services, L.L.C. and 99% limited partnership
interest held by the Operating Partnership
Holiday Inn/Bluefield*
Holiday Inn/Oak Hill*
EQI Orlando 2, L.L.C.
Delaware limited liability company
Operating Partnership owns 100% interest
Embassy Suites/Orlando*
EQI Financing Partnership I, L.P.
Tennessee limited partnership
Approximately 1% general partnership owned by EQI Financing Corporation and 99%
limited partnership interest held by Operating Partnership
Hampton Inn/Cleveland, OH*
Hampton Inn/Columbus, GA*
Hampton Inn/Gurnee, IL*
Hampton Inn/Gastonia, NC*
Residence Inn/Omaha, NE*
Hampton Inn/Fayetteville, NC*
Holiday Inn/Mt. Pleasant, SC*

* Borrowing Base Asset under this Agreement.

(1)  
Hotel is currently encumbered by mortgage debt and is not a Borrowing Base Asset
under this Agreement.