EXHIBIT 10.8





                       SECURED REVOLVING CREDIT AGREEMENT


                          DATED AS OF OCTOBER 26, 2000

                                      AMONG

                         EQUITY INNS PARTNERSHIP, L.P.,
                   EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.
                                       AND
                        EQUITY INNS PARTNERSHIP II, L.P.,
                                   AS BORROWER

                                       AND

                                  BANK ONE, NA,
                        CREDIT LYONNAIS NEW YORK BRANCH,
                             BANK OF AMERICA, N.A.,
                           NATIONAL BANK OF COMMERCE,
                                  AMSOUTH BANK,
                                       AND
                    UNION PLANTERS BANK, NATIONAL ASSOCIATION
                                   AS LENDERS

                                       AND

                                  BANK ONE, NA,
                            AS ADMINISTRATIVE AGENT,

                         BANC ONE CAPITAL MARKETS, INC.,
                        AS CO-LEAD ARRANGER/BOOK MANAGER,

                        CREDIT LYONNAIS NEW YORK BRANCH,
             AS SYNDICATION AGENT AND CO-LEAD ARRANGER/BOOK MANAGER

                                       AND

                              BANK OF AMERICA, N.A.
                             AS DOCUMENTATION AGENT




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                       SECURED REVOLVING CREDIT AGREEMENT

         THIS SECURED  REVOLVING  CREDIT AGREEMENT is entered into as of October
26, 2000, 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, Inc., a Tennessee corporation which is
wholly-owned by Equity Inns, Inc.;

         EQUITY INNS  PARTNERSHIP  II,  L.P.,  a Tennessee  limited  partnership
having its principal  place of business c/o Equity Inns,  Inc.,  7700 Wolf River
Boulevard,  Germantown,  Tennessee 38138 ("Equity II"), the sole general partner
of which is Equity  Inns  Trust  and the sole  limited  partner  of which is the
Operating  Partnership  (the Operating  Partnership,  EIP/WV and Equity II being
referred to herein collectively as the "Borrower");

         BANK ONE, NA ("Bank One"), a national bank organized  under the laws of
the  United  States of America  having an office at 1 Bank One  Plaza,  Chicago,
Illinois 60670;

         CREDIT  LYONNAIS  NEW YORK  BRANCH  ("Credit  Lyonnais"),  the New York
branch of a French banking  corporation,  having an office at 1301 Avenue of the
Americas, New York, New York 10019;

         BANK OF AMERICA, N.A. ("Bank of America"), having an office at 901 Main
Street, 51st Floor, Dallas, Texas 75202-3714;

         NATIONAL  BANK OF  COMMERCE,  having an office at 7770  Poplar  Avenue,
Suite 105, Germantown, Tennessee 38138;

         AMSOUTH BANK ("AmSouth"), a state banking corporation, having an office
at 1900 Fifth Avenue North, AmSouth-Sonat Tower, 9th Floor, Birmingham,  Alabama
35203;

         UNION PLANTERS  BANK,  NATIONAL  ASSOCIATION,  having an office at 6200
Poplar Avenue, 4th Floor, Memphis, Tennessee 38119;

         BANC ONE CAPITAL MARKETS, INC. ("BOCM"), as Co-Lead Arranger/Book
Manager;

         CREDIT LYONNAIS, as Syndication Agent ("Syndication Agent") and Co-Lead
Arranger/Book Manager;

         BANK OF AMERICA, as Documentation Agent ("Documentation Agent"); and

         BANK ONE,  as  Administrative  Agent  ("Administrative  Agent") for the
Lenders (as defined below).


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                                    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 an Amended and  Restated  Unsecured  Revolving  Credit
Agreement dated as of June 23, 1999 (the "Existing Agreement").

    C. Borrower desires to repay the credit facility extended under the Existing
Agreement and replace it with this facility and another loan.

         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 I.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 the Agreed FF&E Reserve 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 the Agreed FF&E Reserve for such
Property.

         "Administrative  Agent" means Bank One, acting as agent for the Lenders
in connection with the  transactions  contemplated  by this  Agreement,  and its
successors in such capacity.


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         "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 $125,000,000,  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 such Property during such period.

         "Agreement"  means this  Secured  Revolving  Credit  Agreement  and all
amendments, modifications and supplements hereto.

         "Agreement Effective Date" shall mean November 2, 2000.

         "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 2.6.

         "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.

         "Appraisal" shall mean an appraisal  commissioned by the Administrative
Agent,  and  acceptable to the  Administrative  Agent and Required  Lenders,  in
compliance with the Financial Institutions Reform,  Recovery and Enforcement Act
of 1989, as amended, and the regulations  promulgated  thereunder ("FIRREA") and
with the Uniform Standards of Professional Appraisal Practice.

         "Appraised  Value" shall mean the "as-is" appraised value of a Property
as shown on an Appraisal.

         "Approved  Management  Agreement"  means a management  agreement with a
tenant  under a  Permitted  Operating  Lease  which (i) will not have an adverse
effect  upon  the  Collateral,   (ii)  contains  terms  which  are  commercially
reasonable and standard in the industry, (iii) is with any or


<PAGE>



all of the  following  management  companies  or  their  Affiliates:  Interstate
Management,  Prime  Hospitality,  Starwood  Hotels  and  Resorts,  Bristol/Bass,
Crestline  Capital,  Marriott  International,  Meristar Hotels and Resorts,  RFS
Hotels,  Bristol,  Hilton  and any  entity  created  for the  purposes  of hotel
management  which was formed by  individuals  who as of the Agreement  Effective
Date are  directors  and officers of Equity  Inns,  provided  such  officers and
directors  continue to own a majority of the ownership  interests in such entity
and have  effective  management  control of such  entity,  and (iv)  unless such
requirement has been otherwise waived by the Administrative Agent, is subject to
a   lender-manager   agreement   with  the   Administrative   Agent  having  the
subordination  provisions  attached  hereto as Exhibit P and made a part  hereof
and/or other provisions which are reasonably  satisfactory to the Administrative
Agent in form and  substance  regarding  the  subordination  of such  management
agreement.

         "Arrangers" means Banc One Capital Markets, Inc. ("BOCM") and Credit
Lyonnais, collectively.

         "Assignment of Contracts"  means an Assignment of Contracts in the form
of Exhibit O attached  hereto and made a part hereof,  assigning the  agreements
relating to the Collateral.

         "Assignment   of  Leases"  means  the   collective   reference  to  the
assignments of leases to be recorded against the Initial Collateral Pool Assets,
together  with any  assignments  of leases  on  Properties  added to  Collateral
hereafter  pursuant to Section 2.20 hereof,  each of which shall be contained in
the Mortgage or Deed of Trust for such Collateral Pool Asset.

         "Assumed Debt Amount" is defined in Section 9.11 hereof.

         "Bank One" means Bank One, NA.
          --------

         "Base  LIBOR  Rate"  means,  with  respect to a LIBOR  Advance  for the
relevant  LIBOR  Interest  Period,   the  rate  reasonably   determined  by  the
Administrative  Agent to be the rate at which deposits in immediately  available
funds in Dollars are offered by the Administrative Agent to first-class banks in
the London interbank  eurodollar market at approximately  11:00 a.m. London time
two Business Days prior to the first day of such LIBOR Interest  Period,  in the
approximate  amount  of  the  relevant  LIBOR  Advance  and  having  a  maturity
approximately equal to such LIBOR Interest Period.

         "Borrower" means, collectively the Operating Partnership, Equity II and
EIP/WV,  on a joint and several  basis,  along with their  respective  permitted
successors and assigns.

         "Borrowing  Base" means, as of any date, the aggregate  Collateral Pool
Asset Values of each then-current Collateral Pool Asset.

         "Borrowing Base Availability"  means, as of any date, the lesser of (a)
55% of the Borrowing Base or (b) the sum of (i) an amount which,  if it were the
Allocated  Facility  Amount,  would  produce the Included  Collateral  Pool Debt
Service  Coverage Ratio of 1.75 plus (ii) 55% of the aggregate  Collateral  Pool
Asset Values of the Excluded Properties.

         "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.


<PAGE>



         "Business Day" means a day,  other than a Saturday,  Sunday or holiday,
on which banks are open for business in Chicago,  Illinois,  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.

         "Collateral"  means  all  assets  of the  Loan  Parties,  now  owned or
hereinafter  acquired,  upon  which a Lien is  purported  to be  created  by any
Security Document including, without limitation, the Collateral Pool Assets.

         "Collateral Pool Assets" means the collective  reference to the Initial
Collateral  Pool  Assets  and any other  Properties  added as  "Collateral  Pool
Assets"  from time to time under  Section 2.20  hereof,  provided  that the term
"Collateral  Pool Assets" as of any date shall not include any  Collateral  Pool
Asset  which has been  previously  released  from the  applicable  Mortgage  and
Assignment  of Leases under the procedure  set forth in Section  2.19(c)  hereof
(and not subsequently added as a "Collateral Pool Asset" under Section 2.20).

         "Collateral  Pool Asset Value" means, as of any date, for each Included
Collateral Pool Asset the most recent Appraised  Value,  unless the Borrower has
owned such  Collateral Pool Asset for less than a year, in which case Collateral
Pool Asset  Value  shall be the lesser of the  all-in  acquisition  cost of such
Property or the Appraised  Value.  For the Excluded  Properties,  the Collateral
Pool Asset Value will be the lesser of (i) the Total Cost of such  Property,  or
(ii) the  "stabilized"  appraised  value of such Property as  established  by an
Appraisal,  based upon stabilization assumptions and projections approved by the
Administrative Agent.

         "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


<PAGE>



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 four percent (4%) 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) income as  reported  by the  Consolidated  Group in
accordance   with  GAAP  (reduced  to  eliminate  any  income  from   Investment
Affiliates),  but before (i)  extraordinary  items and gains or losses  from the
sale of assets, (ii) Interest Expense, and (iii) depreciation,  amortization and
income tax (if any) expense,  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,  then  EBITDA  will be
adjusted to reflect  proforma net  operating  income for such  Property as if it
were


<PAGE>



owned for the entire  period.  If a Property  has been sold during such  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.

         "Eligible  Property"  shall  mean any  Property  for which  each of the
following  requirements  listed in clauses (i)  through  (xiv) below is met with
respect to such Property.  The Borrower shall establish and certify that each of
these  requirements has been met when the Borrower seeks to have a Property that
is not one of the Initial  Collateral  Pool Assets included as a Collateral Pool
Asset pursuant to Section 2.20.

                       (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  conforming to
                  ASTM Practice E 1527-97 and  acceptable to the  Administrative
                  Agent,

                       (vi) there  exist no Liens on such  Property,  other than
                  Liens  securing  this  Facility  and  those   Permitted  Liens
                  described in Subsections (i), (ii),  (iii),  (iv) and (vii) of
                  Section 9.6,

                       (vii)  such Property is operated as one of the following:
                  a Hampton Inn, a Homewood Suites, a Residence Inn, an
                  AmeriSuites, or a hotel, resort or inn in the Marriott, Hilton
                  or Starwood line,

                       (viii) when such  Property's  Collateral Pool Asset Value
                  is added to the then- current  Borrowing Base, at least 90% of
                  such sum shall be derived from Properties which are,  directly
                  or indirectly, wholly owned and controlled by the Borrower,

                       (ix) when such Property's  Collateral Pool Asset Value is
                  added to the then-  current  Borrowing  Base,  at least 90% of
                  such sum shall be derived from Properties which are,  directly
                  or indirectly, held in fee simple by the Borrower or a Wholly-
                  Owned Subsidiary,

                       (x) the average  occupancy of such  Property for the most
                  recent  period of 12  consecutive  months for which  financial
                  results have been delivered to the Administrative  Agent shall
                  have  been  at  least  60%,  unless  it  is a  Property  Under
                  Development;

                       (xi) when such Property's  Collateral Pool Asset Value is
                  added to the  then-  current  Borrowing  Base,  the  aggregate
                  Collateral  Pool Asset  Values of all  Collateral  Pool Assets
                  located in any one state shall not exceed 25% of the Borrowing
                  Base;

                       (xii)   such Property's Collateral Pool Asset Value does
                  not exceed 20% of the Borrowing Base;

                       (xiii) such  Property has been in  operation  for no less
                  than 24 months,  unless such Property is an Excluded  Property
                  or a Property Under Development,  provided such Property Under
                  Development meets the requirements of Sections 8.3, and

                       (xiv) when such Property's Collateral Pool Asset Value is
                  added to the then- current Borrowing Base, the total amount of
                  the  Borrowing   Base   attributable   to   Properties   Under
                  Development  shall  not  exceed  the  lesser of (i) 60% of the
                  aggregate  Total  Cost of such  Properties  Under  Development
                  included in the Borrowing Base, (ii) $15,000,000 and (iii) the
                  difference  between  $25,000,000  and the  book  value  of the
                  Consolidated   Group's   investment  in  Excluded   Investment
                  Affiliates.

         "Environmental  Indemnity" means an Indemnity  Agreement in the form of
Exhibit A, relating to possible  environmental  liabilities  associated with the
Collateral Pool Assets.

         "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.

         "Equity Inns" means Equity Inns, Inc., a Tennessee corporation.

         "Equity II" means Equity Inns Partnership II, L.P., a Tennessee limited
partnership.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended, and regulations promulgated thereunder from time to time.


<PAGE>



         "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; (iv) the aggregate book value in accordance with GAAP of the Consolidated
Group's  investment in all Excluded  Investment  Affiliates  does not exceed the
lesser of $15,000,000 and the difference  between  $25,000,000 and the amount of
the Borrowing  Base  attributable  to Projects  Under  Development;  and (v) the
Consolidated Group Pro Rata Share of the aggregate  Indebtedness of all Excluded
Investment  Affiliates (other than Excluded  Investment  Affiliates for which no
investment  (negative  or  positive)  is reported  on the  balance  sheet of the
Consolidated  Group)  does not exceed  $45,000,000.  If at any time an  Excluded
Investment  Affiliate  causes a violation of Section (v) above,  such Investment
Affiliate shall cease to be an Excluded Investment Affiliate hereunder.

         "Excluded  Properties" means (a) the Homewood Suites located in Chicago
and  Orlando  for the period from the  Agreement  Effective  Date until April 1,
2002,  and (b) the  AmeriSuites  located  in Las Vegas for the  period  from the
Agreement Effective Date until April 1, 2001.

         "Existing  Agreement" means that certain Amended and Restated Unsecured
Revolving  Credit  Agreement  dated  as of  June  23,  1999 by and  between  the
Borrower, the Administrative Agent and certain other Lenders.

         "Facility"  means the secured  revolving  credit facility  described in
Section 2.1.

         "Facility Letter of Credit" means a Letter of Credit issued pursuant to
Article III of this Agreement.

         "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 $20,000,000.

         "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.  (Chicago
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.


<PAGE>



         "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.

         "Free Cash Flow" means, for any period,  Funds From Operations less (i)
the Agreed FF&E Reserve for such period for the  Properties  less (ii) scheduled
principal  amortization  (excluding  balloon  payments  due on  maturity) on all
Indebtedness of the Consolidated Group for such period.

         "Funds  From  Operations"  for any period,  means GAAP net  income,  as
adjusted  by  (i)  excluding  gains  and  losses  from  property   sales,   debt
restructuring and property  write-downs and adjusting for the non-cash effect of
straight-lining  of  rents,  (ii)  straight-lining  various  ordinary  operating
expenses which are payable less  frequently than monthly (e.g. real estate taxes
and Ground Lease  Expense),  (iii) deducting  Preferred Stock Expense,  and (iv)
adding back depreciation,  amortization and 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 SEC Staff Accounting Bulletin No. 101.

         "GMAC Loan" means that certain  $97,020,000  loan from  General  Motors
Acceptance Corporation to GMAC Partnership.

         "GMAC Partnership" means EQI Financing Partnership II, L.P., the
borrower under the GMAC Loan.

         "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


<PAGE>



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, Equity Inns Services, Inc., a Tennessee corporation and
Equity Inns.

         "Guaranty"  means the Guaranty  executed by the  Guarantors in the form
attached hereto as Exhibit D.

         "Included Collateral Pool Assets" means, as of any date, all Collateral
Pool Assets which are not Excluded Properties as of such date.

         "Included Collateral Pool Debt Service Coverage Ratio" means, as of any
date, for a specified  Allocated Facility Amount, the ratio of (a) the aggregate
Adjusted Net  Operating  Income of all Included  Collateral  Pool Assets for the
most recent four (4) consecutive fiscal quarters for which financial  statements
have been  delivered to the  Administrative  Agent to (b) the greater of (x) the
aggregate interest that would have accrued on such specified  Allocated Facility
Amount,  for the most recent four (4) consecutive fiscal quarters at an interest
rate equal to the average  interest  rate under the  Facility for such period or
(y) the annual  principal and interest  payments that would be required to fully
amortize a loan in a principal amount equal to such specified Allocated Facility
Amount  if paid in equal  monthly  installments  over a period of 25 years at an
interest  rate  equal  to the  yield  as of the  last  Business  Day of the most
recently  completed  fiscal quarter on those  obligations  of the U.S.  Treasury
having a maturity date closest to a date 10 years after such fiscal quarter end,
plus 2.50% per annum.

         "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


<PAGE>



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.

         "Initial  Collateral  Pool Assets"  means the  Properties  described on
Schedule 1 attached  hereto and made a part  hereof  which  shall be included as
Collateral under the Loan Documents as of the Agreement Effective Date.

         "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.  Bank One shall be the
sole Issuing Bank.

         "Lenders" means Bank One 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".

         "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.



<PAGE>



         "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, 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).

         "Limited  Recourse  Guaranty" means a guaranty in the form of Exhibit C
attached  hereto  executed  by each  entity  other than a  Borrower  that owns a
Collateral Pool Asset.

         "Loan" means,  with respect to a Lender,  such Lender's  portion of any
Advance.

         "Loan  Documents" means this Agreement,  the Notes,  the Guaranty,  the
Limited  Recourse  Guaranties,  the  Environmental  Indemnity  Agreement and the
Security  Documents  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.


<PAGE>



         "Maturity  Date" means  October 26, 2003 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.

         "Mortgages"  means the  collective  reference to the deeds of trust and
mortgages to be recorded  against the Initial  Collateral Pool Assets,  together
with  any  deeds  of trust  and  mortgages  on  Properties  added to  Collateral
hereafter pursuant to Section 2.20 hereof,  each of which shall be substantially
in the form  attached  hereto as Exhibit M and made a part hereof,  conformed as
required by the Administrative Agent to applicable local law.

         "Net Cash Proceeds" is defined in Section 9.11 hereof.

         "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, plus 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).

         "Note" means the 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  included  as a
Collateral Pool Asset.

         "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  Operating  Lease"  means  (i) a  lease  between  one of the
Borrowers or a Wholly-Owned  Subsidiary and Crossroads/Memphis  Partnership LLC,
Crossroads   Future  Company  LLC  or  another  entity  directly  or  indirectly
wholly-owned by Interstate Hotels


<PAGE>



Management,  Inc. on  substantially  the same lease form as has previously  been
approved by the  Administrative  Agent and the Syndication Agent (which includes
without  limitation a guaranty of the tenant's  obligations by Interstate Hotels
Management, Inc. (or Patriot American Hospitality,  Inc.) and Interstate Hotels,
LLC and a  cross-default  provision  with all other leases between either of the
entities  comprising the Borrower or a  Wholly-Owned  Subsidiary and any of such
tenants)  and with  specific  rental  terms for each lease to be approved by the
Administrative Agent, or (ii) a lease between one of the entities comprising the
Borrower or a Wholly-Owned  Subsidiary and Prime Hospitality  Corporation,  or a
subsidiary  thereof on substantially  the same lease form as has previously been
approved by the Administrative Agent and the Syndication Agent and with specific
rental terms for each lease to be approved by the Administrative Agent, or (iii)
similar  leases  with other  entities  similarly  approved  as to lease form and
specific  rental terms,  provided that the identity of each such other entity is
approved by either (A) the  Administrative  Agent and the  Syndication  Agent so
long as such other entity,  when aggregated with all other entities not named in
clauses (i) or (ii) above or previously  approved by the Required  Lenders under
clause (B) of this clause (iii),  does not lease  Properties  representing  more
than 5% of the total  rooms in all  Properties  then  owned by the  Consolidated
Group or (B) the  Required  Lenders if such entity is not  eligible for approval
under  clause (A) of this  clause  (iii).  Notwithstanding  the  foregoing,  the
Lenders  acknowledge  that after the Agreement  Effective  Date Borrower may (a)
terminate the Permitted  Operating  Leases on some or all of the Properties,  or
(b) cause the tenant under such Permitted Operating Leases on some or all of the
Properties to assign the Permitted Operating Lease to one or more taxable Wholly
Owned  Subsidiaries of Equity Inns which will enter into  management  agreements
with existing or newly-formed  management companies.  If Borrower terminates the
Permitted Operating Leases, it will enter into new Permitted Operating Leases on
the same Properties with one or more taxable Wholly Owned Subsidiaries of Equity
Inns.  The Lenders'  consent shall not be required for any of such  transfers of
the tenant's  position under such Permitted  Operating Leases and such operating
leases shall continue to be "Permitted  Operating Leases" so long as (a) each of
such lease  transfers will not have an adverse effect upon the  Collateral,  (b)
the new tenant has executed  and  delivered  to the  Administrative  Agent (i) a
Subordination  Agreement  in the form of  Exhibit  Q-2 and (ii) a joinder in the
Security Agreement subjecting its interest in any of its personal property which
would  otherwise  be deemed to be a part of the  Collateral  Pool  Assets to the
Liens securing the  Obligations,  and (c) the management  agreements  qualify as
Approved Management Agreements hereunder.

         "Permitted Liens" are defined in Section 9.6 hereof.

         "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.


<PAGE>


         "Prime Rate" means a rate per annum equal to the prime rate of interest
announced by Bank One 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.  A Property  Under  Development  that is included as a
Collateral  Pool  Asset  shall  continue  to  be  treated  as a  Property  Under
Development until it has been open for at least 24 months.

         "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.

         "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 two-thirds (2/3) of the then-current  Aggregate Commitment
or, if the Aggregate  Commitment has been terminated,  Lenders  holding,  in the
aggregate,  more than two-thirds  (2/3) 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.

         "Security  Documents" means the collective  reference to the Mortgages,
the Assignments of Leases, the Guarantees, UCC Financing Statements,  Assignment
of  Contracts,  and all other  security  documents  hereafter  delivered  to the
Administrative  Agent  granting  a Lien on any asset or assets of any  Person to
secure the obligations  and liabilities of the Borrower  hereunder and under any
of the other Loan  Documents or to secure any guarantee of any such  obligations
and liabilities.

         "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 $7,500,000,  which is included in, and is not
in addition to, the Swingline Lender's total Commitment hereunder.

         "Swingline Lender" shall mean Bank One, 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 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  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.

         "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 I.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 II.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 Availability; 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 ("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   and  EIP/WV  and  Equity  II  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 II.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 II.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  II.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 II.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 II.6 Applicable  Margins and Fees. The ABR Applicable  Margin,  the
LIBOR Applicable Margin and the Applicable  Commitment Fee Percentage to be used
in calculating  the interest rate  applicable to different types of Advances and
the Commitment Fee shall vary from time to time in accordance  with the ratio of
Total Indebtedness to EBITDA:

      Ratio of                       LIBOR         ABR          Applicable
Total Indebtedness to              Applicable   Applicable      Commitment
       EBITDA                        Margin       Margin      Fee Percentage
 --------------------              ----------   ----------    --------------

       Less than 2.5                  1.50%        0.50%           0.25%
2.5 or over, but less than 3.0        1.75%        0.75%           0.30%
3.0 or over, but less than 3.5        2.00%        1.00%           0.40%
3.5 or over, but less than 4.0        2.25%        1.25%           0.45%
4.0 or over, but less than 4.5        2.50%        1.50%           0.50%
4.5 or over, but less than 4.75       2.75%        1.75%           0.55%


    The Applicable Margins and Applicable  Commitment Fee Percentage will change
only 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  II.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) payable  quarterly in
arrears on the last day of each calendar quarter  hereafter  beginning  December
31, 2000 and ending on the Maturity Date.  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 II.8     Other Fees.

          (a)         The Borrower agrees to pay all fees payable to the
Administrative Agent and Banc One Capital Markets, 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 II.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 II.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 (Chicago  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 II.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.  (Chicago  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.  (Chicago 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.  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 (Chicago time) on each Borrowing  Date, each Lender
shall  make  available  its Loan or Loans,  in funds  immediately  available  in
Chicago 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.  (Chicago  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.  (Chicago 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 II.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 Bank One 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  II.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 II.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 II.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 II.16 Swingline  Loans. In addition to the other options  available
to Borrower  hereunder,  up to $7,500,000 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  (Chicago  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 II.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.  $2,000,000.00)  or any integral
multiple of Two Million  Dollars (U.S.  $2,000,000.00)  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 II.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 $175,000,000 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
$175,000,000 without the approval of all of the Lenders.

     Section II.19       Optional Prepayments; Mandatory Prepayments; Release of
Properties.

          (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  Availability,  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 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.

          (c) The  Borrower  shall  have the  right at any time and from time to
time,  on five (5)  Business  Days prior  written  notice to the  Administrative
Agent,  to obtain a release of any  Collateral  Pool  Asset from the  applicable
Mortgage and  Assignment  of Leases by repaying on the date of such release such
amount  as  may  be  required  for  it to  provide  the  Compliance  Certificate
referenced  below taking into  account the  release,  provided (i) no Default or
Event of Default has occurred and is  continuing or shall occur upon the release
of such  Collateral  Pool Asset and (ii)  Borrower  has  provided  a  Compliance
Certificate in the form of Exhibit I hereto signed by a Qualified Officer of the
Operating  Partnership  and  Equity  Inns  certifying  to  Borrower's  continued
compliance with all of the financial and other material covenants under the Loan
Documents  after the  removal of such  Collateral  Pool Asset and, to the extent
necessary, repayment of any Advances.

     Section II.20         Procedures for Addition of Collateral Pool Assets.

          (a) The  Borrower  may  propose to include  additional  Properties  as
Collateral  Pool  Assets by  sending  written  proposals  for  inclusion  to the
Administrative  Agent  along  with (i) the items  listed on  Schedule  2, (ii) a
request  for  Administrative  Agent  to  order  an  Appraisal  of  the  proposed
additional  Property and the other items,  such as  additional  Loan  Documents,
needed to finalize the addition of such Property to the  Collateral  Pool Assets
as shown on Schedule 3, (iii)  evidence that the  qualifications  required under
the definition of "Eligible  Property" are met, (iv) a request that the Required
Lenders  evaluate and approve the Appraisal and Appraised Value of such Property
(applicable for all Properties) and (v) that the Required  Lenders  evaluate and
approve the Property  for  inclusion in the  Collateral  (applicable  if (A) the
Appraised  Value of such  Property,  when combined with the aggregate  Appraised
Values of all other  Properties  added to the Collateral  after the date of this
Agreement  pursuant to this  Section,  is greater than  $75,000,000,  or (B) the
interest of the Owner of such Property is the tenant's  interest  under a ground
lease or any other estate less than fee simple  title).  Items  (i)-(iii)  above
shall be  immediately  forwarded to the Lenders by the  Administrative  Agent if
their  approval  is  required  under  item (iv).  Administrative  Agent (and the
Lenders,  as the case may be) shall endeavor to utilize all of the due diligence
reports  obtained by Borrower  from  third-party  providers and certified to the
Lenders by the third-party providers and not require new reports (except for the
Appraisals),  but the Administrative  Agent and the Lenders reserve the right to
require  independent  reports  if  the  Borrower's  report  was  prepared  by  a
third-party provider not reasonably  satisfactory or if the Administrative Agent
or the Lenders in good faith believe the report furnished contains an inaccuracy
or is not  current  or is  incomplete  in any  material  respect.  If all  items
required  by  Schedule 2 and the  preceding  sentence  accompany  or precede the
written proposal,  the written proposal shall so indicate. If all items required
by Schedule 2 do not  accompany  or precede the written  proposal,  the Borrower
shall accompany the last item required by Schedule 2 with a letter notifying the
Administrative  Agent that it has  completed  delivery of all items  required by
Schedule  2. The  relevant  time  periods for  acceptance  or  rejection  by the
Administrative  Agent and/or the Required  Lenders shall commence upon the later
of (1) receipt of the completed  Appraisal by both the Administrative  Agent and
the Lenders and (2) receipt by the Administrative  Agent of the proposal and all
items  required  by  Schedule  2.  When both  items (1) and (2) above  have been
delivered,  the  Administrative  Agent shall immediately notify Borrower and the
relevant time periods for acceptance or rejection shall  commence.  For purposes
of this Section 2.20,  Borrower may begin the process of including an additional
Collateral  Pool Asset if  Borrower  has a binding  contract  to  purchase  such
Property  provided that  Borrower  shall have  consummated  the purchase of such
Property on or before the date such Property is included in the Collateral.

          (b) The  Administrative  Agent shall have fifteen (15)  Business  Days
after the Administrative  Agent has actually received the completed Appraisal as
well as  Borrower's  proposal and all items set forth in Schedule 2 with respect
to a proposed  Collateral  Pool  Asset  pursuant  to this  Section to notify the
Borrower in writing as to whether  the  proposed  Collateral  Pool Asset is an
Eligible  Property  that is satisfactory to the Administrative Agent pursuant to
Section 2.20(a) above. The failure of the Administrative Agent to respond to the
Borrower's request within such fifteen Business Day  period  shall be deemed  to
be a denial that such proposed Collateral Pool  Asset qualifies  as an  Eligible
Property  that is satisfactory to the  Administrative  Agent.  The Lenders shall
have fifteen (15) Business Days after they have actually received the  completed
Appraisal and other documents to which they are entitled pursuant to Section
2.20(a) above (it being  acknowledged  that this period will run  substantially
concurrently with Administrative   Agent's  review  period  in  light  of
Administrative  Agent's obligation  under Section 2.20(a) to immediately forward
those items to the Lenders) to notify the Administrative Agent (who shall notify
the Borrower after all  responses  from the Lenders  are  received  or deemed
received)  as to (i) whether the Appraisal and Appraised Value are satisfactory,
or (ii) whether the Appraisal and Appraised Value are satisfactory and whether
the proposed Eligible Property  otherwise  is approved as a  Collateral  Pool
Asset, if the Required Lenders' approval  is required  as to the latter pursuant
to Section 2.20(a) above. The failure of any Lender to respond to the Borrower's
request  within such  fifteen  Business  Day  period  shall be deemed to be an
approval  of the Appraisal  and  consent  to the  inclusion  of  such  Eligible
Property  in the Collateral.   If  the   proposed   Collateral   Pool  Asset  is
deemed  by  the Administrative  Agent  to be  an  Eligible  Property  and  is
approved by the Administrative Agent in the manner  aforesaid, and the Appraisal
and Appraised Value are approved (or deemed approved) by the Required  Lenders,
that Property shall be automatically approved for inclusion in the Collateral
without the need for any further approval by the other Lenders.  If the proposed
Collateral Pool Asset is an Eligible Property but was not approved by the
Administrative  Agent, Borrower  may by written  notice to the  Administrative
Agent  request  that it nevertheless  be included in the Collateral  pursuant to
the procedure set forth in Section  2.20(c).  Upon the  approval  by the
Administrative  Agent (and the Required  Lenders,  if required)  for  inclusion
of an Eligible  Property in the Collateral and the  satisfaction of all
requirements listed in Schedule 3 with respect thereto,  such Eligible  Property
shall be added to the Collateral as a Collateral Pool Asset.  The Administrative
Agent shall supply,  at the written request of any Lender,  copies of any of the
documents  described on Schedule 2 and 3 to such Lender.

          (c)  With  respect  to any  Property  requested  to be  included  as a
Collateral  Pool Asset which does not qualify under  Section  2.20(b) due to the
Administrative  Agent's  failure to approve  such  Property,  the  Borrower  may
request   that  such   Property  be  included   as  a   Collateral   Pool  Asset
notwithstanding  such failure, by written notice to the Administrative  Agent to
be  forwarded  to the  Lenders.  Such  proposed  Collateral  Pool Asset shall be
included  if and only if (i)  such  Property  qualifies  in all  respects  as an
Eligible  Property,  and (ii) the  Required  Lenders  in their  sole  discretion
approve the  Borrower's  request  that such  proposed  Collateral  Pool Asset be
included.  Lenders shall respond to the Administrative  Agent and the failure of
any Lender to respond in writing to the  Borrower's  request within fifteen (15)
Business  Days of receipt of the  Borrower's  request  for such  Property  to be
included  in the  Collateral,  together  with  delivery of such of the items set
forth in Schedule 2 as a Lender may  request,  shall be deemed to be approval by
such Lender of the Borrower's request to include such Property in the
Collateral.  The  Administrative  Agent shall  promptly  notify the  Borrower in
writing if the Required Lenders approve the Borrower's request for such Eligible
Property to be included in the Collateral.

     Section  II.21  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).

                                  Article III.

                        THE LETTER OF CREDIT SUBFACILITY

     Section III.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 III.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 Availability,  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

                       (iv)    Business Day immediately preceding the Maturity
                  Date.

     Section III.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 III.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.  (Chicago  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 III.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 III.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 III.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 III.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  III.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 IV.1  Yield Protection.  If 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  IV.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 IV.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  IV.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  IV.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  V.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 paid all fees then due and payable to the Lenders,  and
the  Administrative  Agent  hereunder,  (ii) all of the  conditions set forth in
Section 5.2 are  satisfied,  and (iii) 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,  and a certified copy of a certificate  from
the  Secretary  of State or  equivalent  state  official of the states where the
Initial  Collateral  Pool  Assets  are  located,  dated  as of the  most  recent
practicable date,  showing the qualification to transact business in said states
by the entities which own such Initial Collateral Pool Assets.

          (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),  including  Mortgages  and
Assignments of Leases for all Initial  Collateral Pool Assets,  duly executed by
authorized officers of the appropriate entity.

          (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,  substantially in the form attached hereto
as Exhibit E.

          (h) Opinion of Illinois  Counsel.  A written  opinion,  from  Illinois
outside counsel for the Borrower and the Guarantors  which counsel is reasonably
satisfactory to Administrative Agent,  substantially in the form attached hereto
as Exhibit F.

          (i) Opinion of Local  Counsel.  A written  opinion from counsel in the
state where a  Collateral  Pool Asset is located,  which  counsel is  reasonably
satisfactory to Administrative Agent, with respect to the Security Documents for
such Collateral Pool Asset substantially in the form of Exhibit G.

          (j) Existing  Facility.  Evidence that the loan from General  Electric
Capital   Corporation  ("GECC  Loan")  has  closed  and  proceeds  of  at  least
$100,000,000  have been  disbursed  to or for the benefit of  Borrower,  and all
obligations  of the  Borrower to the lenders  under the Existing  Agreement  and
under the facilities  which Borrower has with Credit  Lyonnais and National Bank
of Commerce have been paid, or will be paid from the initial Advance  hereunder,
and such other evidence of  termination of all such  agreements as is reasonably
required by the Administrative Agent.

          (k)     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 June 30, 2000;

                       (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

          (l) 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.

          (m)  Actions to Perfect  Liens.  The  Administrative  Agent shall have
received  evidence in form and  substance  satisfactory  to it that all filings,
recordings,  registrations and other actions, including,  without limitation the
recording of all Mortgages  and  Assignments  of Leases on all  Properties to be
included in the Initial  Collateral  Pool and the filing of all UCC-1  financing
statements,  necessary or, in the opinion of the Administrative Agent, desirable
to  perfect  the  Liens  created  by the  Security  Documents  shall  have  been
completed.

          (n) Surveys. The Administrative Agent shall have received a survey for
each Property in the Initial  Collateral Pool hereunder  either (i) certified to
the  Administrative  Agent  or (ii)  recertified  to the  Administrative  Agent,
together  with a  certificate  of the Borrower  that no material  changes in the
location or configuration  of the improvements on the Properties  subject to the
Mortgages  have occurred since the date of the initial  survey,  and which is in
all other respects reasonably satisfactory to the Administrative Agent.

          (o) Title  Insurance  Policy.  The  Administrative  Agent  shall  have
received  in respect of each  Initial  Collateral  Pool Asset  hereunder a title
policy (or policies)  showing no exceptions to title other than those  permitted
under the Mortgages and Assignments of Leases, except such as may be approved by
the Administrative Agent, naming the Administrative Agent for the benefit of the
Lenders as the insured under such policy and containing such "tie-in", revolving
credit and other endorsements as may be available in the applicable jurisdiction
and as the Administrative Agent may require. The Administrative Agent shall have
received  evidence  satisfactory  to it that  all  premiums  in  respect  of any
endorsements,  and all charges for  mortgage  recording  tax, if any,  have been
paid.

          (p) Flood  Insurance.  If any  portion of any  Property in the Initial
Collateral  Pool is located in an area identified as a special flood hazard area
by the Federal  Emergency  Management  Agency or other  applicable  agency,  the
Administrative  Agent shall have received (i) a policy of flood  insurance which
(A) covers any parcel of  improved  real  property  which is  encumbered  by any
Mortgage  (B) is written in an amount  not less than the  outstanding  principal
amount of the indebtedness secured by
such Mortgage which is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the Act,  whichever is less,  and (C) has a term ending not later than the
maturity of the indebtedness secured by such Mortgage and (ii) confirmation that
the Borrower has received the notice required  pursuant to Section  208(e)(3) of
Regulation  H of the Board of Governors of the Federal  Reserve  System.  To the
extent any Property included in the Initial Collateral Pool is not located in an
area  identified  as a  special  flood  hazard  area  by the  Federal  Emergency
Management  Agency or other  agency,  the  certification  of the  survey of such
Property to be delivered pursuant to clause (m) above shall include confirmation
of such fact.

          (q) Copies of Documents.  The Administrative Agent shall have received
a copy of all recorded  documents  with respect to the Initial  Collateral  Pool
Assets  referred  to, or listed as  exceptions  to title in, the title policy or
policies referred to in Section 4.1(n) and a copy,  certified by such parties as
the Administrative Agent may deem appropriate,  of all other documents affecting
the Properties covered by each Mortgage,  including without limitation copies of
any ground leases on any of such Properties.

          (r) 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,  judgement 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.

          (s) Insurance.  The Administrative  Agent shall have received evidence
in form and substance satisfactory to it that all of the requirements of Section
3 of each of the Mortgages shall have been satisfied.

          (t)    Borrowing Notice.  The Administrative Agent shall have received
a Borrowing Notice in accordance with Section 2.11 hereunder.

          (u) Appraisals.  The Administrative  Agent shall have received current
Appraisals  which shall indicate the Collateral Pool Asset Value for each of the
Initial Collateral Pool Assets.

          (v) Environmental Report/Certification. The Administrative Agent shall
have received,  at the Borrower's  expense,  a detailed report and certification
(or  updated  report  and  recertification)  for each  Property  in the  Initial
Collateral  Pool prepared by a consultant  acceptable to  Administrative  Agent,
which shall  include,  inter alia,  a  certification  that such  consultant  has
obtained and  examined  the list of prior  owners and  tenants,  and has made an
on-site physical examination of the relevant Property and improvements  thereon,
and a visual  observation of the surrounding areas, and disclosing the extent of
past or present Materials of Environmental Concern activities or the presence of
Materials of Environmental Concern.

          (w)         Leases and Estoppels.  The Administrative Agent shall have
received (i) in the case of all Initial Collateral Pool Assets which are subject
to a ground lease,  estoppel  letters from the ground  lessor thereunder in form
and substance  satisfactory to the Administrative Agent, and (ii) in the case of
all Permitted  Operating Leases and tenants  thereunder,   (A)  tenant  estoppel
certificates in form and substance  acceptable to the Administrative  Agent, and
(B) upon request of the Administrative Agent and to the extent in the possession
of the Borrower,  the  Guarantors,  the  Management  Company or the Owner of the
relevant Property,  current, certified financial statements of the tenant and of
any guarantor of its obligations.

          (x) Subordination of Permitted  Operating Leases.  The  Administrative
Agent shall have  received  fully  executed  copies of all  Permitted  Operating
Leases affecting the Initial Collateral Pool Assets and shall have, on behalf of
the Lenders,  entered into subordination  agreements with the tenants thereunder
substantially  in the form attached hereto as Exhibit Q-1 and made a part hereof
reasonably  satisfactory  to the  Administrative  Agent  in form  and  substance
regarding the  subordination  of the Permitted  Operating Leases relating to the
Initial Collateral Pool Assets.

     Section V.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;

          (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; and

          (c)        The following conditions of Section 5.1 shall have been and
remain satisfied as of the date of the advance: (k)(i), (k)(iii) and (k)(iv).

         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 VI.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  and 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 and
each of the  Operating  Partnership  and EIP/WV is duly  qualified  as a foreign
limited partnership,  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 VI.2  Corporate/Partnership  Powers.  The  execution,  delivery and
performance of the Loan Documents required to be delivered by Borrower hereunder
are within the partnership authority of such entities and the corporate or trust
powers of the general  partners 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  either of the  entities  comprising  the  Borrower is a party or by which
either of the entities comprising the Borrower or any of their respective assets
may be bound or affected.

     Section VI.3 Power of Officers. The officers of the general partner 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  VI.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 VI.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)  Neither 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 VI.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 VI.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 VI.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 VI.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  VI.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 VI.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  VI.12 Public  Utility  Holding  Company Act. The Borrower is not a
"holding  company"  or a  "subsidiary  company"  of a "holding  company,"  or an
"affiliate" of a "holding  company," or of a "subsidiary  company" of a "holding
company,"  within the  definitions of the Public Utility  Holding Company Act of
1935, as amended.

     Section VI.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 VI.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 VI.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 VI.16         [Intentionally Omitted].

     Section  VI.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  VI.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 VI.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 VI.20 Insurance.  Borrower has obtained or cause to be obtained the
insurance  which  Borrower is required to furnish to Lenders  under Section 3 of
each of the Mortgages.

     Section VI.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  VI.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 VI.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 VI.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 VI.25 Subsidiaries.  Schedule 6.25 hereto contains an accurate list
of all of the presently existing  Subsidiaries of Borrower,  setting forth their
respective  jurisdictions  of  formation,  the  percentage  of their  respective
Capital Stock owned by it 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 VI.26 Security Interests. At all times after execution and delivery
of the  Security  Documents by the Loan Parties  thereto and  completion  of the
filings and recordings listed on Schedule 3, the security  interests created for
the benefit of the Administrative Agent and the Lenders pursuant to the Security
Documents will constitute valid,  perfected security interests in the collateral
subject  thereto,  subject to no other  Liens  whatsoever  except for  Permitted
Liens.

     Section VI.27         Collateral Pool Assets.

          (a) Each of the representations and warranties made by each Loan Party
in its Security  Documents with respect to any Collateral Pool Asset is true and
correct in all material respects.

          (b) No  Collateral  Pool  Asset is  located  in an area  that has been
identified by the Secretary of Housing and Urban  Development  as an area having
special flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973,  as amended,  or any successor  law, or, if located  within any such area,
Borrower has obtained and will  maintain  the  insurance  prescribed  in Section
5.1(p) hereof.

          (c) To the  Borrower's  knowledge,  except as shown on Schedule  6.19,
each  Collateral  Pool Asset and the  present use and  occupancy  thereof are in
material compliance with all applicable zoning ordinances (without reliance upon
adjoining or other properties), building codes, land use and Environmental Laws,
and other similar laws ("Applicable Laws").

          (d) Each Collateral Pool Asset is served by all utilities required for
the current or  contemplated  use  thereof.  All utility  service is provided by
public  utilities and each  Collateral Pool Asset has accepted or is equipped to
accept such utility service.

          (e) All public roads and streets  necessary  for service of and access
to each Collateral  Pool Asset for the current or contemplated  use thereof have
been  completed,  are serviceable and all-weather and are physically and legally
open for use by the public.

          (f) Each  Collateral  Pool  Asset is served by public  water and sewer
systems or, if a  Collateral  Pool Asset is not  serviced by a public  water and
sewer system, the
alternate  systems  are  adequate  and  meet,  in  all  material  respects,  all
requirements and regulations of, and otherwise  comply in all material  respects
with, all Applicable Laws with respect to such alternate systems.

          (g) Borrower is not aware of any latent or patent  structural or other
significant  deficiency of any Collateral Pool Asset. Each Collateral Pool Asset
is free of damage and waste that would materially and adversely affect the value
of such  Collateral  Pool  Asset,  is in good  repair  and there is no  deferred
maintenance  other than ordinary wear and tear.  Each  Collateral  Pool Asset is
free from damage  caused by fire or other  casualty.  There is no pending or, to
the actual knowledge of Borrower,  threatened condemnation proceedings affecting
any Collateral Pool Asset, or any material part thereof.

          (h) To  Borrower's  knowledge,  all liquid and solid  waste  disposal,
septic and sewer systems located on each and every  Collateral Pool Asset are in
a good and safe  condition and repair and to Borrower's  knowledge,  in material
compliance with all Applicable Laws with respect to such systems.

          (i) All  improvements  on each  Collateral  Pool  Asset lie within the
boundaries and building  restrictions of the legal description of record of such
Collateral Pool Asset, no  improvements  encroach upon easements  benefiting any
Collateral Pool Asset other than encroachments that do not materially  adversely
affect the use or occupancy of a Collateral  Pool Asset and no  improvements  on
adjoining  properties  encroach  upon any  Collateral  Pool  Asset or  easements
benefiting  any  Collateral  Pool  Asset  other than  encroachments  that do not
materially adversely affect the use or occupancy of a Collateral Pool Asset. All
amenities,  access routes or other items that materially benefit each Collateral
Pool Asset are under direct control of Borrower,  constitute permanent easements
that benefit all or part of such Collateral  Pool Asset or are public  property,
and each  Collateral  Pool Asset,  by virtue of such easements or otherwise,  is
contiguous to a physically  open,  dedicated all weather public street,  and has
the necessary permits for ingress and egress.

          (j) There are no delinquent taxes, ground rents, water charges,  sewer
rents, assessments, insurance premiums, leasehold payments, or other outstanding
charges  affecting any Collateral Pool Asset except to the extent such items are
being  contested  in good  faith  and as to which  adequate  reserves  have been
provided.

          (k) Each  Collateral  Pool Asset conforms to all  requirements  for an
Eligible  Property  except that certain  Initial  Collateral Pool Assets may not
satisfy condition (x) of the conditions for being an Eligible Property.

         A breach of any of the representations and warranties contained in this
Section 6.27 with respect to a Property  shall  disqualify  such  Property  from
being a  Collateral  Pool  Asset for so long as such  breach  continues  (unless
otherwise  approved by the Required  Lenders) but shall not constitute a Default
(unless the elimination of such Property as a Collateral Pool Asset results in a
Default under one of the other provisions of this Agreement).

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  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 VII.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  VII.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 VII.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  VII.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 VII.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 VII.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 VII.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  VII.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 VII.9 Investment Company Act of 1940. Neither 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  VII.10  Public  Utility  Holding  Company  Act.   Neither  of  the
Guarantors  is a  "holding  company"  or a  "subsidiary  company"  of a "holding
company," or an "affiliate" of a "holding company," or of a "subsidiary company"
of a "holding  company,"  within the  definitions of the Public Utility  Holding
Company Act of 1935, as amended.

     Section  VII.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 VII.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 VII.13        [Intentionally Omitted].

     Section  VII.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  VII.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 VII.16 Subsidiaries. Schedule 7.16 hereto contains an accurate list
of all of the presently existing Subsidiaries of Guarantors, setting forth their
respective  jurisdictions  of  formation,  the  percentage  of their  respective
Capital Stock owned by it 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 VII.17     Status.  Equity Inns is a corporation listed and in good
standing on the New York Stock Exchange ("NYSE").

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 VIII.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 VIII.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 or chief accounting 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 summary  listing of
                  capital  expenditures,  a report  listing and  describing  all
                  newly acquired Properties, including their cash flow, cost
                  and secured Indebtedness, if any, 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;

                       (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 90 days after the close of
                  each fiscal year,  reports in form and substance  satisfactory
                  to the  Lenders,  certified  by Equity  Inns' chief  financial
                  officer or chief accounting  officer  containing Net Operating
                  Income and hotel operating statements from the operators under
                  the Permitted  Operating  Leases for each individual  Property
                  owned  by  the  Borrower  or  a  Wholly-Owned  Subsidiary  and
                  included in the Borrowing Base, provided that the Borrower and
                  the  Guarantors  shall in no event be obligated to furnish any
                  such  hotel  operating  statement  any  earlier  than five (5)
                  Business Days after the  Borrower's  receipt  thereof from the
                  applicable operator;

                       (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 Equity Inns' chief financial  officer or chief  accounting
                  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
                  Collateral  Pool  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.
                  The request for a reappraisal of any Collateral Pool Asset, as
                  long as such Collateral Pool Asset has not been the subject of
                  an Appraisal  in the  preceding  12 months,  is hereby  deemed
                  reasonable; 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  VIII.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  aggregate  Total Cost of all
Properties  Under  Development  shall not  exceed  10% of the Total  Cost of all
Properties owned by the Consolidated Group.

     Section VIII.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  VIII.5  Insurance.  Provide a  certificate  of insurance  from all
insurance  carriers who maintain  policies with respect to the Properties within
thirty  (30)  days  after  the end of each  fiscal  year,  evidencing  that  the
insurance  required  to be  furnished  to Lenders  pursuant  to Section 3 of the
Mortgages] is in full force and effect.  Borrower  shall timely pay, or cause to
be  paid,  all  premiums  on all  insurance  policies  required  under  the Loan
Documents  from time to time.  Borrower  shall  promptly  notify  its  insurance
carrier  or agent  therefor  (with a copy of such  notification  being  provided
simultaneously to Administrative  Agent) if there is any occurrence which, under
the terms of any insurance policy then in effect with respect to the Properties,
requires such notification.

     Section  VIII.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 VIII.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  VIII.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 VIII.9 ERISA. Comply in all material respects with all requirements
of ERISA applicable to it with respect to each Plan.

     Section VIII.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),  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  VIII.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 VIII.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 attached as Exhibit J
hereto and made a part hereof.

     Section VIII.13  Eligible  Properties.  Cause all Collateral Pool Assets to
continue to meet all the  requirements  included in the  definition of "Eligible
Property"  hereunder  (except  for the  condition  regarding  60%  occupancy  in
subsection (x) of those requirements).

     Section VIII.14 Required Repairs.  Cause all items designated as "Immediate
Repairs" in the Property  Condition Report prepared by IVI Architects  Engineers
and  Construction  Consultants in connection  with the Initial  Collateral  Pool
Assets to be completed within sixty 6 months after the Agreement  Execution.  If
such work is not completed  with respect to any Property,  the Required  Lenders
can require such Property to not be included as a Collateral Pool Asset in which
case Borrower shall make any payment required by Section 2.19(b) within the time
period provided therein.

     Section VIII.15 Additional  Environmental Studies. Cause further testing of
the ground water quality at the Property  located in Birmingham,  Alabama.  Such
investigation  and testing  shall be  completed  within sixty (60) days from the
Agreement Effective Date and if the results are unsatisfactory to Administrative
Agent it can require  such  Properties  to not be included  as  Collateral  Pool
Assets in which case Borrower shall make any payment required by Section 2.19(b)
within the time period provided therein.

                                   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 IX.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 and Equity II, (ii) Equity Inns Services,  Inc. 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 the stock in Equity Inns Services,  Inc.,  (iv) any
pledge of, other encumbrance on, or conversion to limited partnership  interests
of, any of the general partnership interests 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 IX.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 IX.3          Leverage; Additional Recourse Indebtedness. Permit or
suffer:

          (a)  From the Agreement Effective Date through March 31, 2002, the
the ratio of Total Indebtedness to EBITDA to exceed 4.75;

          (b)  From April 1, 2002 through Maturity Date, the ratio of Total
Indebtedness to EBITDA to exceed 4.50; or

          (c)  At  any  time,  the  aggregate   Recourse   Indebtedness  of  the
Consolidated  Group  to  exceed  the  sum of (a) the  then-outstanding  Advances
hereunder plus (b) $50,000,000.

     Section IX.4          Dividends.  Permit or suffer:

          (a) At any time after the  Agreement  Effective  Date,  the  aggregate
amount of dividends paid by Equity Inns (excluding Preferred Stock Expense) plus
the amount paid by Equity Inns to repurchase its stock, without duplication, for
the most recent four fiscal quarters for which financial  reports are available,
to exceed 90% of the Funds From  Operations  of Equity Inns for such four fiscal
quarters,  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.

          (b) As of the following  dates, the aggregate amount of dividends paid
by Equity Inns (excluding Preferred Stock Expense), without duplication, for the
most recent four fiscal quarters for which financial  reports are available,  to
exceed the following percentages of Free Cash Flow of the Consolidated Group for
such four fiscal  quarters,  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:



    Quarter End Dates                Percentage of Free Cash Flow
    -----------------                ----------------------------

June 30, 2000 and September                     110%
30, 2000

December 31, 2000 through
December 31, 2001                               105%

March 31, 2002 through
Maturity Date                                   100%


          (c) As of the following  dates, the aggregate amount of dividends paid
by Equity Inns (excluding Preferred Stock Expense), without duplication, for the
most recent four fiscal quarters for which financial reports are available, plus
the  amount  paid by  Equity  Inns  for the  repurchase  of its  stock,  without
duplication,  for such four fiscal quarters, to exceed the following percentages
of the sum of Free Cash  Flow of the  Consolidated  Group  for such four  fiscal
quarters plus 50% of all Net Cash  Proceeds from the sales of Properties  during
such four fiscal quarters, in each case 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:

    Quarter End Dates                       Percentage
    -----------------                       ----------

June 30, 2000 and September
30, 2000                                        110%

December 31, 2000 through
December 31, 2001                               105%

March 31, 2002 through
Maturity Date                                   100%

     Section IX.5  Floating  Rate Debt.  Permit the  Consolidated  Group to have
outstanding  Indebtedness  for borrowed  money that bears interest at a floating
rate (including this Facility) in excess of $150,000,000 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 IX.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
                  and, in the case of any mechanic's  lien on a Collateral  Pool
                  Asset,  for which an  affirmative  endorsement to the Lender's
                  title insurance policy has been provided to the Administrative
                  Agent;

                       (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,  provided  that  Collateral
                  Pool  Assets  shall  only be  subject  to such  matters as are
                  listed as exceptions to the title insurance  policies for such
                  Collateral  Pool  Assets  which  have  been  submitted  to and
                  approved by the Administrative Agent;

                       (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 IX.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 IX.8  Indebtedness, Coverage and Net Worth Covenants.  Permit or
suffer:

          (a) as of any day, the Tangible Net Worth of the  Consolidated  Group,
to be less than the sum of (i) eighty percent (80%) of the Consolidated  Group's
Tangible Net Worth as of June 30, 2000 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 June 30, 2000 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 any day, the ratio of (A) the sum of (i) Adjusted EBITDA for
the most recent twelve (12) full calendar  months plus (ii) Ground Lease Expense
for such period to (B) Fixed Charges for such period to be less than 1.75 to 1;

          (c)    as of any day, the ratio of Adjusted EBITDA of the Consolidated
Group for the most recent twelve (12) full calendar  months to Interest  Expense
for such period to be less than 2.25 to 1;

     Section IX.9 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.

     Section IX.10         Minimum Borrowing Base.  Permit, as of any date, the
then-current Borrowing Base to be less than $125,000,000.

     Section IX.11 Share Repurchase.  Permit,  during any quarter, (the "Current
Quarter"), the aggregate amount paid by Equity Inns for stock repurchases during
such quarter to exceed the sum of (a) 50% of the greater of (i) $0 and (ii) Free
Cash Flow of the  Consolidated  Group during the preceding  four quarter  period
ending  immediately  prior to  commencement of the Current Quarter (the "Prior 4
Quarters")  minus any  amounts  attributable  to  dividend  payments  (excluding
Preferred Stock Expense) and stock repurchases during the Prior 4 Quarters, plus
(b) 50% of all Net Cash  Proceeds  from sales of  Properties  during the Prior 4
Quarters (subject to the limit hereinafter set forth). As used herein, "Net Cash
Proceeds"  shall mean the sales proceeds from the sales of Properties  minus the
Assumed Debt Amount and any expenses  associated with such sale. As used herein,
"Assumed  Debt Amount" shall mean either (a) if the Property was financed with a
specific  amount of debt, any debt required to be repaid in connection  with the
sale of such Property,  or (b) if the Property was financed as part of a pool of
Properties  (including  without  limitation any Properties  financed pursuant to
this Facility),  the greater of (i) the Collateral Pool Asset Value attributable
to such Property sold (if it is a Collateral  Pool Asset being sold)  multiplied
by the average  advance rate (i.e. the ratio of Allocated  Facility Amount under
the Facility to the Borrowing  Base) under the Facility at the time of such sale
or a comparable  amount if the Property  being sold was financed  with a pool of
other assets based on a borrowing  base  formulation or (ii) the total amount of
debt repaid pursuant to the release of such Property from the pool.

Notwithstanding  the  foregoing,  the  amount of stock  repurchases  that can be
supported by 50% of Net Cash Proceeds  from sales of Properties  during any four
quarter period shall be further  limited so that such amount does not exceed the
following  amounts less the  aggregate  amount of stock  previously  repurchased
since the Agreement  Effective  Date based upon Net Cash Proceeds from the sales
of Properties:

         (a)  $6,000,000  until  September  30,  2001;  (b)  $12,000,000   until
         September 30, 2002; and (c) $18,000,000 until the Facility  Termination
         Date.

Each Compliance  Certificate delivered pursuant to Section 8.2(v) shall show the
amount of shares  repurchased  during the preceding  quarter,  the amount of the
permitted share
repurchases  during such  quarter in  accordance  with the terms of this Section
9.11  (broken down as to whether  based on Free Cash Flow or net  proceeds  from
asset sales),  and based on the results of the preceding  four fiscal  quarters,
the amount that Equity Inns may repurchase during the then Current Quarter.

                                   Article X.

                                    DEFAULTS

         The  occurrence  of any  one or  more  of the  following  events  shall
constitute an Event of Default:

     Section X.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  X.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 X.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 X.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  X.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 X.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 X.7 Covenants,  Agreements and Other Conditions. The Borrower fails
to perform or observe  any of the other  covenants,  agreements  and  conditions
contained in Articles  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  X.8 No  Longer  General  Partner.  Equity  Inns  shall no  longer,
directly or indirectly,  hold 100% of the general  partnership  interests in the
two entities constituting the Borrower.

     Section X.9    Material Adverse Financial Change.  Any one of the Operating
Partnership, EIP/WV, Equity Inns or Equity Inns Trust has suffered a Material
Adverse Financial Change or is Insolvent.

     Section X.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 X.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 X.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 X.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 X.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  X.15 REIT  Status.  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.

     Section X.16          Mortgage Default.  There shall be an Event of Default
(as defined in the Mortgages) under any of the Mortgages.

     Section X.17          Enforceability of Security Documents.  (i) Any of the
Security Documents shall cease, for any reason, to be in full force and effect,
or the Borrower or any other Loan Party which is a party to any of the Security
Documents shall so assert or (ii)  the  Lien  created  by any of the  Security
Documents  shall  cease to be enforceable or of the same effect and priority
purported to be created thereby.

                                   Article XI.

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     Section XI.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 Bank One 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 XI.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.

     Section XI.3  Foreclosure. The Lenders hereby agree to the following in the
event of foreclosure under any of the Mortgages or any other attempt at
realization of the security thereunder:

          (a) To  subscribe  to  and  accept  its  Percentage  of the  ownership
interests in any entity  organized to hold title to the  Collateral  Pool Assets
and that the nature of such entity shall be determined by the Required  Lenders,
subject to each  Lender's  right to hold its  interests  in such  entity in, and
assign such  interests  to, any  affiliate  of such  Lender or any other  entity
required by laws or regulations  governing such Lender. The Administrative Agent
is hereby  authorized to act for and on behalf of the Lenders in all  day-to-day
matters  with  respect to the  exercise of rights  described  herein such as the
supervision  of  attorneys,  accountants,  appraisers  or others  acting for the
benefit of all of the Lenders in  connection  with  litigation,  foreclosure  or
realization of all or any security  given as Collateral  for the  Obligations or
other similar actions.

          (b) If the  Lenders  acquire  the  Collateral  Pool  Assets  either by
foreclosure or deed in lieu of foreclosure,  to negotiate in good faith to reach
agreement  in  writing  relating  to  the  ownership,  operation,   maintenance,
marketing and sale of such  Collateral Pool Assets and that such agreement shall
be consistent with the following:

                       (i) The  Collateral  Pool  Assets  will  not be held as a
                  long-term  investment  but will be  marketed  in an attempt to
                  sell them in a time  period  consistent  with the  regulations
                  applicable to national  banks for owning real estate.  Current
                  appraisals of the Collateral  Properties  shall be obtained by
                  the  Administrative   Agent  from  time  to  time  during  the
                  ownership period at Lenders'  expense (without  diminishing or
                  releasing  any  obligation  of the  Borrower  to pay for  such
                  costs) and an appraised value shall be established and updated
                  from time to time based on such appraisals.

                       (ii)   Certain   decisionmaking   with   respect  to  the
                  day-to-day  operations of the Properties  will be delegated to
                  management  and  leasing  agents.  All  agreements  with  such
                  management  and leasing agents will be subject to the approval
                  of the Required  Lenders.  The day-to-day  supervision of such
                  agents shall be done by the Administrative Agent.

                       (iii) Except as provided in the following sentences,  all
                  decisions  as to whether to sell the  Collateral  Pool  Assets
                  shall  be  subject  to  the   approval  of  all  the  Lenders.
                  Notwithstanding  the foregoing,  the Lenders agree that if the
                  Administrative  Agent  receives a bona fide "all  cash"  offer
                  from an entity not affiliated  with the Borrower or any Lender
                  for the purchase of any of the Collateral Pool Assets and such
                  offer  equals  or  exceeds  ninety  percent  (90%) of the most
                  recent  appraised  value  of such  Collateral  Pool  Asset  as
                  established  by an appraisal  prepared in accordance  with the
                  standards   established   in  this  Agreement  that  has  been
                  completed   within  six  months  of  such   offer,   then  the
                  Administrative Agent shall give written notice of such offer
                  to the Lenders and request their approval for sale at such a
                  price.  If the Required  Lenders approve of such a sale (or
                  are deemed to approve of such a sale) then the  Administrative
                  Agent,  acting on behalf  of the  Lenders,  is irrevocably
                  authorized to accept such offer.

                       (iv) All expenses  incurred by the  Administrative  Agent
                  and  Lenders  in  connection  with the  ownership,  operation,
                  maintenance,  marketing and sale of the Collateral Pool Assets
                  shall be  allocated  among the Lenders pro rata in  accordance
                  with their respective Percentages.

                       (v) All expenditures and other actions taken with respect
                  to the Collateral Pool Assets shall at all times be subject to
                  the regulations and requirements  pertaining to national banks
                  applicable  thereto.  Without  limiting the  generality of the
                  foregoing, all necessary approvals from regulatory authorities
                  in  connection  with any  expenditure  of funds by the Lenders
                  shall be a condition to such expenditure.

                                  Article XII.

                            THE ADMINISTRATIVE AGENT

     Section  XII.1  Appointment.  Bank One 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 XII.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 XII.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 XII.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 XII.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  XII.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 XII.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 XII.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 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 XII.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 XII.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 XII.11 Successor Administrative Agent. Each Lender agrees that Bank
One shall  serve as  Administrative  Agent at all times  during the term of this
Facility,  except that Bank One may resign as Administrative  Agent in the event
(x) Bank One 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) Bank One shall determine, in its sole
reasonable discretion,  that because of its other banking relationships with the
Consolidated  Group at the  time of such  decision  Bank  One's  resignation  as
Administrative Agent would be necessary in order to avoid creating an appearance
of   impropriety   on  the  part  of  Bank  One.  Bank  One  (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 Bank One (or any successor Administrative Agent) of its
duties as Administrative Agent hereunder). Upon any such resignation or removal,
Credit Lyonnais shall be the successor  Administrative Agent (unless objected to
by the Required  Lenders) or, if Credit Lyonnais  declines or is so objected to,
the Required Lenders shall have the right to 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  XII.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  XII.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  XII.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  XII.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 XII.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 XIII.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 XIII.2        Participations.

                  13.2.1 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.

                  13.2.2 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 XIII.3        Assignments.

                  13.3.1 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  Administrative  Agent or  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), and a modification to the
         Mortgages if required by  Administrative  Agent) in connection with any
         such  assignment,  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,  plus the cost of recording  fees and
         taxes  applicable  to the  replacement  notes and  modification  of the
         Mortgages and Assignment of Leases,  and any applicable  endorsement of
         the title insurance policies.  Notwithstanding anything to the contrary
         in  this  Agreement  or  Exhibit  K,  so  long  as any  portion  of the
         Collateral Pool Assets is located in the State of Texas, no replacement
         note or notes will be issued that would require a  modification  to the
         Mortgages or such Collateral Pool Assets unless the selling Lender pays
         for replacement title insurance policies therefore.

                  13.3.2 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 13.3.2,  subject to
         13.3.1,  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.

     Section XIII.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  XIII.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.

                                  Article XIV.

                               GENERAL PROVISIONS

     Section  XIV.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 XIV.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 XIV.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 XIV.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 XIV.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 XIV.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,  (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,  (d)
all out-of-pocket  expenses incurred by the  Administrative  Agent in connection
with Collateral Pool Assets,  including,  without  limitation,  the ordering and
review  of  Appraisals,  environmental  reports  and  engineering  reports  with
reference to the Collateral Pool Assets,  and (e) all title premiums,  recording
fees and taxes (including documentary,  intangible,  and similar taxes and fees)
related  to the  Mortgages  and Notes,  and  similar  costs  related to the Loan
Documents.   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 is 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  XIV.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 XIV.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  XIV.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
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     Section XIV.10 Consent to  Jurisdiction.  THE BORROWER  HEREBY  IRREVOCABLY
SUBMITS  TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY  UNITED  STATES  FEDERAL OR
ILLINOIS  STATE COURT  SITTING IN CHICAGO,  ILLINOIS 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 CHICAGO, ILLINOIS.

     Section XIV.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  XIV.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 the Guarantors
                  under the Loan Documents; or

                       (vi)    releases the Mortgage and Assignment of Leases
                  encumbering any Collateral Pool Asset, except expressly
                  provided for herein; or

                       (vii)   changes the definition of Required Lenders or
                  Supermajority Lenders or modifies any requirement for consent
                  by each of the Lenders; or

                       (viii)   modifies  the  definition  of  "Borrowing   Base
                  Availability"  or "Collateral Pool Asset Value" or modifies or
                  waives any  covenant  contained  in  Sections  9.3,  9.8(b) or
                  9.8(c) hereof; or

                     (ix) modifies this Section 14.12(a); or

          (b) the Supermajority Lenders, if such amendment or waiver modifies or
waives the covenant in Section 9.9; 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 XIV.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 XIV.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 XIV.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  XIV.16  Limitation  on Liability of EIP/WV.  The  liability of the
Borrower  under this Agreement for the  Obligations  shall be joint and several.
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 XV.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: Howard A. Silver
                           Telecopy:  (901) 754-2374

                           To Guarantors:

                           Equity Inns, Inc.
                           7700 Wolf River Boulevard
                           Germantown, Tennessee  38138
                           Attention: Howard A. Silver
                           Telecopy:  (901) 754-2374

                  Each of the above with a copy to:

                           Hunton & Williams
                           1900 K Street, NW
                           Washington, DC 70015
                           Attention: Kenneth Cestari, Esq.
                           Telecopy:  (202) 778-2201

                  To each Lender:

                           As shown below the Lenders' signatures.

                  To the Administrative Agent:

                           Bank One, NA
                           Corporate Real Estate Division
                           1 Bank One Plaza
                           Chicago, Illinois  60670-0151
                           Attention: Patricia Leung
                           Telecopy:  (312) 732-1117

                  With a copy to:

                          Sonnenschein Nath & Rosenthal
                           8000 Sears Tower
                           Chicago, Illinois  60606
                           Attention: Patrick G. Moran, Esq.
                           Telecopy:  (312) 876-7934

     Section XV.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.




<PAGE>





         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:  /s/ Donald H. Dempsey
                                         ---------------------------------------
                                    Its: E.V.P.

                                    EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.

                                    By:  EQUITY INNS SERVICES, INC., its General
                                         Partner


                                    By:  /s/ Donald H. Dempsey
                                         ---------------------------------------
                                    Its: E.V.P.

                                    EQUITY INNS PARTNERSHIP II, L.P.

                                    By:  EQUITY INNS TRUST, its General Partner


                                    By:  /s/ Donald H. Dempsey
                                         ---------------------------------------
                                    Its: E.V.P.





<PAGE>






LENDERS:                            BANK ONE, NA
                                    Individually and as Administrative Agent


                                    By:  /s/ Kenneth J. Nelson
                                         ---------------------------------------
                                    Title:  Sr. Vice President
                                    Commitment:  $28,416,667.34
                                    Percentage of Aggregate Commitment:
                                       22.7333338720%

                                    Address for Notices:
                                    Corporate Real Estate Division
                                    1 Bank One Plaza
                                    Chicago, Illinois  60670-0151
                                    Attention:  Patricia Leung
                                    Telephone:  312/732-8619
                                    Telecopy:  312/732-1117







<PAGE>








                                    CREDIT LYONNAIS NEW YORK BRANCH
                                    Individually and as Syndication Agent and
                                    Co-Lead
                                    Arranger/Book Manager


                                    By:  /s/ Dave Bowers
                                         ---------------------------------------
                                    Title:  Vice President
                                    Commitment:  $28,416,666.33
                                    Percentage of Aggregate Commitment:
                                       22.7333330640%

                                    Address for Notices:
                                    Lodging Group
                                    1301 Avenue of the Americas
                                    New York, New York  10019
                                    Attention:  Dave Bowers
                                    Telephone:  212/261-7831
                                    Telecopy:  212/261-7532









<PAGE>








                                    BANK OF AMERICA, N.A.
                                    Individually and as Documentation Agent


                                    By:  /s/ Roger C. Davis
                                         ---------------------------------------
                                    Title:  Structuring Specialist
                                    Commitment:  $28,416,666.33
                                    Percentage of Aggregate Commitment:
                                       22.7333330640%


                                    Address for Notices:
                                    901 Main Street
                                    51st Floor
                                    Dallas, Texas  75202-3714
                                    Attention:  Lesa Butler
                                    Telephone:  214/209-2089
                                    Telecopy:  214/209-0085






<PAGE>




                                    NATIONAL BANK OF COMMERCE


                                    By:  /s/ Billy Frank
                                         ---------------------------------------
                                    Title:  V.P.
                                    Commitment:  $20,000,000.00
                                    Percentage of Aggregate Commitment:
                                       16.0000000000%

                                    Address for Notices:
                                    7770 Poplar Avenue
                                    Suite 105
                                    Germantown, Tennessee 38138
                                    Attention:  William Frank
                                    Telephone:  901/757-4874
                                    Telecopy:  901/757-4883




<PAGE>



                                    AMSOUTH BANK


                                    By:  /s/ Lawrence Clark
                                         ---------------------------------------
                                    Title:  V.P.
                                    Commitment:  $15,000,000.00
                                    Percentage of Aggregate Commitment:
                                       12.0000000000%

                                    Address for Notices:
                                    1900 Fifth Avenue North
                                    AmSouth-Sonat Tower, 9th Floor
                                    Birmingham, Alabama  35203
                                    Attention:  Lawrence Clark
                                    Telephone:  205/581-7493
                                    Telecopy:  205/326-4075






<PAGE>




                                    UNION PLANTERS BANK, NATIONAL ASSOCIATION


                                    By:  /s/ Elizabeth Rouse
                                         ---------------------------------------
                                    Title:  S.V.P.
                                    Commitment:  $4,750,000.00
                                    Percentage of Aggregate Commitment:
                                       3.8000000000%

                                    Address for Notices:
                                    6200 Poplar Avenue
                                    4th Floor
                                    Memphis, Tennessee  38119
                                    Attention:  Elizabeth Rouse
                                    Telephone:  901/580-5470
                                    Telecopy:  901/580-5451







<PAGE>







         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:  /s/ Donald H. Dempsey
                                         ---------------------------------------
                                    Title:  E.V.P.

                                    EQUITY INNS TRUST


                                    By:  /s/ Donald H. Dempsey
                                         ---------------------------------------
                                    Title:  E.V.P.







<PAGE>







                                    EXHIBIT A

                           FORM OF INDEMNITY AGREEMENT

                 See Indemnity Agreement of even date herewith.








<PAGE>







                                    EXHIBIT B

                                  FORM OF NOTE


                                                                 _________, 2000



         On or before the  Maturity  Date,  as defined in that  certain  Secured
Revolving Credit Agreement dated as of October 26, 2000 (the "Agreement")  among
EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership, EQUITY INNS/WEST
VIRGINIA  PARTNERSHIP,  L.P., a Tennessee  limited  partnership  and EQUITY INNS
PARTNERSHIP   II,  L.P.,   a  Tennessee   limited   partnership   (collectively,
"Borrower"),  CREDIT LYONNAIS NEW YORK BRANCH,  individually  and as Syndication
Agent, BANK OF AMERICA, N.A., individually and as Documentation Agent, Bank One,
NA, 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 Chicago,  Illinois,  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 Illinois.

         All liability of the entities  comprising the Borrower  hereunder shall
be joint and several.  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:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------


                                    EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.,
                                    a Tennessee limited partnership

                                    By:  Equity Inns Services, Inc., its general
                                         partner


                                    By:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------


                                    EQUITY INNS PARTNERSHIP II, L.P.,
                                    a Tennessee limited partnership

                                    By:  Equity Inns Trust, its general partner


                                    By:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------






<PAGE>




                              PAYMENTS OF PRINCIPAL


                             Unpaid
                             Principal                          Notataion
Date                         Balance                            Made by













































<PAGE>



                                    EXHIBIT C

                        Form of Limited Recourse Guaranty

See form of Limited Recourse Guaranty of even date herewith  delivered by E.I.P.
Orlando, L.P.








<PAGE>


                                    EXHIBIT D

                                FORM OF GUARANTY


         This  Guaranty  made as of October ___,  2000,  by Equity  Inns,  Inc.,
Equity Inns Services, Inc. and Equity Inns Trust (collectively, "Guarantor"), to
and  for  the  benefit  of Bank  One,  NA,  individually  ("Bank  One"),  and as
administrative agent for itself and the lenders listed on the signature pages of
the Revolving Credit  Agreement (as defined below),  all other lenders which are
parties  thereto from time to time and their  respective  successors and assigns
(collectively, "Lender").

                                                     RECITALS

         A.       Equity Inns Partnership, L.P., a Tennessee limited partnership
and Equity Inns/West Virginia Partnership, L.P., a Tennessee limited partnership
and Equity Inns Partnership II, L.P., a Tennessee limited partnership
(collectively, "Borrower"), and

Guarantor have requested that Lender make an secured revolving credit facility
available to Borrower in the aggregate principal amount of up to $125,000,000
("Facility").

         B.  Lender  has  agreed to make  available  the  Facility  to  Borrower
pursuant to the terms and  conditions set forth in an Secured  Revolving  Credit
Agreement   bearing  even  date  herewith   between  Borrower  and  the  Lenders
("Revolving  Credit  Agreement").  All  capitalized  terms  used  herein and not
otherwise  defined  shall  have  the  meanings  ascribed  to such  terms  in the
Revolving Credit Agreement.

         C. Borrower has executed and delivered to Lender one or more Promissory
Notes or Promissory Notes each of even date in the aggregate principal amount of
$125,000,000  as evidence  of its  indebtedness  to Lender  with  respect to the
Facility (the promissory notes described above,  together with any amendments or
allonges thereto, or restatements,  replacements or renewals thereof, and/or new
promissory  notes to new  Lenders  under the  Revolving  Credit  Agreement,  are
collectively referred to herein as the "Note").

         D. Equity Inns Trust is the sole general partner of two of the entities
comprising the Borrower,  Equity Inns Services, Inc. is the sole general partner
of the other entity  comprising the Borrower and Equity Inns, Inc. is the holder
of 100% of the stock of Equity Inns Services,  Inc.,  and  therefore,  Guarantor
will derive financial benefit from the Facility evidenced by the Note, Revolving
Credit  Agreement  and the other Loan  Documents.  The execution and delivery of
this Guaranty by Guarantor is a condition precedent to the performance by Lender
of its obligations under the Revolving Credit Agreement.

                                   AGREEMENTS

         NOW, THEREFORE, Guarantor, in consideration of the matters described in
the foregoing  Recitals,  which  Recitals  are  incorporated  herein and made a
part hereof, and for other good and valuable consideration, hereby agrees as
follows:

        1)  Guarantor absolutely, unconditionally, and irrevocably guarantees to
Lender:

          (a) the full and prompt  payment of the  principal  of and interest on
the Note when due, whether at stated maturity,  upon  acceleration or otherwise,
and at all times thereafter, and the prompt payment of all sums which may now be
or may  hereafter  become due and owing  under the Note,  the  Revolving  Credit
Agreement, and the other Loan Documents;

          (b)    the payment of all Enforcement Costs (as hereinafter defined in
Paragraph 7 hereof); and

          (c) the full,  complete,  and punctual  observance,  performance,  and
satisfaction of all of the  obligations,  duties,  covenants,  and agreements of
Borrower under the Revolving Credit Agreement and the Loan Documents.

          (d) All amounts  due,  debts,  liabilities,  and  payment  obligations
described  in  subparagraphs  (a) and (b) of this  Paragraph  1 are  referred to
herein as the "Facility Indebtedness." All obligations described in subparagraph
(c) of this Paragraph 1 are referred to herein as the "Obligations."

                  1) In the event of any default by  Borrower in making  payment
         of the Facility Indebtedness,  or in performance of the Obligations, as
         aforesaid,  in each case beyond the expiration of any applicable  grace
         period,  Guarantor  agrees,  on demand  by Lender or the  holder of the
         Note,  to pay all the  Facility  Indebtedness  and to  perform  all the
         Obligations as are or then or thereafter become due and owing or are to
         be  performed  under  the  terms  of the  Note,  the  Revolving  Credit
         Agreement  and the  other  Loan  Documents,  and to pay any  reasonable
         expenses  incurred by Lender in  connection  with the Facility or under
         any  of  the  Loan  Documents,   including,   without  limitation,  all
         reasonable  attorneys' fees and costs.  Lender shall have the right, at
         its option,  either before, during or after pursuing any other right or
         remedy  against  Borrower or  Guarantor,  to perform any and all of the
         Obligations by or through any agent,  contractor or  subcontractor,  or
         any of  their  agents,  of its  selection,  all as  Lender  in its sole
         discretion deems proper,  and Guarantor shall indemnify and hold Lender
         free and  harmless  from and  against any and all loss,  damage,  cost,
         expense,  injury, or liability Lender may suffer or incur in connection
         with the exercise of its rights under this Guaranty or the  performance
         of the Obligations, except to the extent the same arises as a result of
         the gross negligence or willful misconduct of Lender.

         All of the remedies set forth herein and/or provided by any of the Loan
Documents or law or equity shall be equally available to Lender,  and the choice
by Lender of one such  alternative over another shall not be subject to question
or  challenge by  Guarantor  or any other  person,  nor shall any such choice be
asserted as a defense,  set-off,  or failure to mitigate  damages in any action,
proceeding, or counteraction by Lender to recover or seeking any other  remedy
under this  Guaranty,  nor shall such choice preclude Lender from  subsequently
electing to exercise a different remedy.  The  parties  have  agreed  to  the
alternative  remedies  hereinabove specified  in part  because  they  recognize
that the choice of remedies in the event of a failure hereunder will necessarily
be and should properly be a matter of business judgment,  which the passage of
time and events may or may not prove to have been the best choice to  maximize
recovery by Lender at the lowest cost to Borrower  and/or  Guarantor.  It is the
intention of the parties that such choice  by Lender be given conclusive  effect
regardless  of such  subsequent developments.

        2)   Guarantor  does  hereby  waive  (i)  notice of  acceptance  of this
             Guaranty  by Lender and any and all  notices  and  demands of every
             kind which may be required to be given by any statute, rule or law,
             (ii) any defense,  right of set-off or other claim which  Guarantor
             may have  against the  Borrower or which  Guarantor or Borrower may
             have against  Lender or the holder of the Note,  (iii)  presentment
             for payment,  demand for payment, notice of nonpayment or dishonor,
             protest and notice of protest,  diligence in collection and any and
             all formalities which otherwise might be legally required to charge
             Guarantor  with  liability,  (iv) any  failure  by Lender to inform
             Guarantor  of any facts  Lender  may now or  hereafter  know  about
             Borrower,  the Facility,  or the  transactions  contemplated by the
             Revolving  Credit  Agreement,  it being  understood and agreed that
             Lender  has no duty so to inform  and that the  Guarantor  is fully
             responsible for being and remaining informed by the Borrower of all
             circumstances  bearing on the existence or creation, or the risk of
             nonpayment   of  the   Facility   Indebtedness   or  the   risk  of
             nonperformance  of the  Obligations,  and (v) any and all  right to
             cause a  marshalling  of assets of the Borrower or any other action
             by any court or governmental body with respect thereto, or to cause
             Lender to proceed  against  any other  security  given to Lender in
             connection  with  the  Facility  Indebtedness  or the  Obligations.
             Credit may be granted or  continued  from time to time by Lender to
             Borrower  without  notice  to  or  authorization   from  Guarantor,
             regardless of the  financial or other  condition of the Borrower at
             the time of any such grant or  continuation.  Lender  shall have no
             obligation to disclose or discuss with  Guarantor its assessment of
             the financial condition of Borrower. Guarantor acknowledges that no
             representations  of any kind whatsoever have been made by Lender to
             Guarantor.  No  modification  or waiver of any of the provisions of
             this Guaranty  shall be binding upon Lender except as expressly set
             forth in a writing  duly signed and  delivered on behalf of Lender.
             Guarantor further agrees that any exculpatory language contained in
             the Revolving Credit Agreement and the Note shall in no event apply
             to this  Guaranty,  and will not  prevent  Lender  from  proceeding
             against Guarantor to enforce this Guaranty.

        3)   Guarantor  further agrees that  Guarantor's  liability as guarantor
             shall in nowise be impaired by any renewals or extensions which may
             be made from time to time, with or without the knowledge or consent
             of Guarantor of the time for payment of interest or principal under
             the Note or by any forbearance or delay in  collecting  interest or
             principal  under the Note,  or by any waiver by Lender under the
             Revolving  Credit Agreement or any other Loan  Documents,  or by
             Lender's  failure or election not to pursue any other remedies it
             may have against  Borrower,  or by any change or  modification  in
             the Note, Revolving Credit Agreement or any other  Loan  Documents,
             or by  the  acceptance  by  Lender  of any additional  security  or
             any increase, substitution  or  change therein, or by  the  release
             by  Lender of any  security  or any withdrawal  thereof or decrease
             therein, or by the application of payments received from any source
             to the payment of any obligation other than the  Facility
             Indebtedness,  even though  Lender  might lawfully  have elected to
             apply such payments to any part or all of the Facility
             Indebtedness,  it  being  the  intent  hereof  that Guarantor shall
             remain liable as principal for payment of the Facility Indebtedness
             and performance of the Obligations until all indebtedness  has been
             paid in full and the other terms, covenants and  conditions  of the
             Revolving Credit Agreement and other Loan Documents and this
             Guaranty  have been  performed,  notwithstanding any act or  thing
             which  might  otherwise operate  as a legal  or equitable discharge
             of a surety.  Guarantor further understands and agrees  that Lender
             may at any time enter  into  agreements  with Borrower to amend and
             modify the Note, Revolving Credit Agreement or other Loan
             Documents,  or any thereof,  and may waive or release any provision
             or  provisions  of the Note,  the  Revolving  Credit Agreement  and
             other  Loan  Documents  or any  thereof,  and,  with reference  to
             such  instruments,  may make and enter  into any such agreement or
             agreements as Lender and Borrower may deem proper and desirable,
             without in any manner impairing this Guaranty or any of Lender's
             rights  hereunder or any of the  Guarantor's obligations hereunder.

        4)   This  is  an  absolute,   unconditional,   complete,   present  and
             continuing   guaranty  of  payment  and   performance  and  not  of
             collection.  Guarantor agrees that this Guaranty may be enforced by
             Lender  without  the  necessity  at any  time  of  resorting  to or
             exhausting  any other  security or  collateral  given in connection
             herewith or with the Note, the Revolving Credit  Agreement,  or any
             of the other Loan Documents,  or resorting to any other guaranties,
             and  Guarantor  hereby  waives the right to require  Lender to join
             Borrower in any action brought  hereunder or to commence any action
             against or obtain any  judgment  against  Borrower or to pursue any
             other remedy or enforce any other right.  Guarantor  further agrees
             that nothing  contained  herein or otherwise  shall prevent  Lender
             from pursuing  concurrently or successively all rights and remedies
             available  to it at  law  and/or  in  equity  or  under  the  Note,
             Revolving  Credit  Agreement or any other Loan  Documents,  and the
             exercise  of any  of its  rights  or the  completion  of any of its
             remedies  shall not  constitute a discharge  of any of  Guarantor's
             obligations  hereunder,  it being  the  purpose  and  intent of the
             Guarantor that the obligations of such Guarantor hereunder shall be
             primary, absolute,  independent and unconditional under any and all
             circumstances  whatsoever.  Neither  Guarantor's  obligations under
             this Guaranty nor any remedy for the  enforcement  thereof shall be
             impaired, modified,  changed  or released  in any manner whatsoever
             by any impairment, modification, change, release or  limitation  of
             the liability of Borrower under the Note, Revolving Credit
             Agreement or other Loan  Documents or by reason of  Borrower's
             bankruptcy or by reason of any creditor or  bankruptcy  proceeding
             instituted by or against Borrower.  This Guaranty shall continue to
             be effective and be deemed to have  continued in existence or be
             reinstated  (as the case may be) if at any time  payment  of all or
             any part of any sum payable  pursuant to the Note, Revolving Credit
             Agreement or any other Loan  Document  is  rescinded  or  otherwise
             required  to be returned  by  the  payee  upon  the  insolvency,
             bankruptcy,   or reorganization  of the payor,  all as though such
             payment to Lender had not been made, regardless of whether Lender
             contested the order requiring the return of such payment.  The
             obligations of Guarantor pursuant to the preceding  sentence shall
             survive any termination, cancellation, or release of this Guaranty.

        5)   This Guaranty  shall be assignable by Lender to any assignee of all
             or a portion of Lender's rights under the Loan Documents.


        6)   If:  (i) this  Guaranty,  the Note or any other  Loan  Document  is
             placed in the hands of an attorney for  collection  or is collected
             through  any legal  proceeding;  (ii) an  attorney  is  retained to
             represent Lender in any bankruptcy,  reorganization,  receivership,
             or other  proceedings  affecting  creditors' rights and involving a
             claim  under  this  Guaranty,   the  Note,  the  Revolving   Credit
             Agreement,  or any Loan Document;  (iii) an attorney is retained to
             provide  advice or other  representation  with  respect to the Loan
             Documents in  connection  with an  enforcement  action or potential
             enforcement  action;  or (iv) an attorney is retained to  represent
             Lender in any other legal proceedings whatsoever in connection with
             this  Guaranty,  the  Note,  any  Competitive  Bid Loan  Note,  the
             Revolving  Credit  Agreement,  any of the  Loan  Documents,  or any
             property  subject  thereto  (other  than any  action or  proceeding
             brought by any Lender or  participant  against  the  Administrative
             Agent (as defined in the  Revolving  Credit  Agreement)  alleging a
             breach by the  Administrative  Agent of its  duties  under the Loan
             Documents),  then  Guarantor  shall pay to Lender  upon  demand all
             reasonable attorney's fees, costs and expenses,  including, without
             limitation,  court costs, filing fees, recording costs, expenses of
             foreclosure,  title insurance  premiums,  survey costs,  minutes of
             foreclosure,   and  all  other  costs  and  expenses   incurred  in
             connection  therewith  (all of which  are  referred  to  herein  as
             "Enforcement   Costs"),  in  addition  to  all  other  amounts  due
             hereunder.

        7)   The parties  hereto  intend that each  provision  in this  Guaranty
             comports  with all  applicable  local,  state and federal  laws and
             judicial decisions.  However, if any provision or provisions, or if
             any portion of any  provision or  provisions,  in this  Guaranty is
             found by a court of law to be in violation of any applicable local,
             state  or  federal  ordinance,   statute,  law,  administrative  or
             judicial  decision,  or public  policy,  and if such  court  should
             declare such portion, provision or
             provisions of this Guaranty to be illegal, invalid,  unlawful, void
             or unenforceable  as written,  then it is the intent of all parties
             hereto that such portion,  provision or  provisions  shall be given
             force to the fullest possible extent that they are legal, valid and
             enforceable, that the remainder of this Guaranty shall be construed
             as if  such  illegal,  invalid,  unlawful,  void  or  unenforceable
             portion,  provision or provisions were not contained  therein,  and
             that the rights,  obligations  and interest of Lender or the holder
             of the Note under the remainder of this Guaranty  shall continue in
             full force and effect.

        8)   Any indebtedness of Borrower to Guarantor now or hereafter existing
             is hereby  subordinated  to the  Facility  Indebtedness.  Guarantor
             agrees that until the entire Facility Indebtedness has been paid in
             full,  (i)  Guarantor  will  not  seek,   accept,   or  retain  for
             Guarantor's  own account,  any payment from  Borrower on account of
             such subordinated  debt, and (ii) any such payments to Guarantor on
             account of such  subordinated  debt shall be collected and received
             by  Guarantor  in trust for Lender and shall be paid over to Lender
             on  account  of the  Facility  Indebtedness  without  impairing  or
             releasing the obligations of Guarantor hereunder.

        9)   Guarantor  waives and releases any claim  (within the meaning of 11
             U.S.C.  ss. 101) which Guarantor may have against  Borrower arising
             from a payment made by Guarantor under this Guaranty and agrees not
             to assert or take advantage of any subrogation  rights of Guarantor
             or Lender or any right of  Guarantor  or Lender to proceed  against
             (i) Borrower for reimbursement,  or (ii) any other guarantor or any
             collateral  security  or guaranty or right of offset held by Lender
             for the payment of the Facility Indebtedness and performance of the
             Obligations,  nor shall  Guarantor  seek or be entitled to seek any
             contribution or reimbursement  from Borrower or any other guarantor
             in respect of payments made by Guarantor hereunder. It is expressly
             understood  that the waivers and  agreements of Guarantor set forth
             above constitute additional and cumulative benefits given to Lender
             for its security and as an  inducement  for its extension of credit
             to Borrower.  Nothing contained in this Paragraph 10 is intended to
             prohibit Guarantor from making all distributions to its constituent
             shareholders  which are  required by law from time to time in order
             for  Guarantor to maintain  its status as a real estate  investment
             trust in compliance with all applicable  provisions of the Code (as
             defined in the Revolving Credit Agreement).

        10)  Any  amounts  received  by Lender from any source on account of any
             indebtedness  may be applied by Lender  toward the  payment of such
             indebtedness,  and in such order of application, as Lender may from
             time to time elect.

        11)  The Guarantor hereby submits to personal  jurisdiction in the State
             of Illinois for the enforcement of this Guaranty and waives any and
             all personal rights to object to such jurisdiction for the purposes
             of litigation to enforce this Guaranty.  Guarantor  hereby consents
             to the jurisdiction of either the Circuit  Court of Cook County,
             Illinois,  or the United States District  Court  for the  Northern
             District of  Illinois,  in any action,  suit, or  proceeding  which
             Lender may at any time wish to file in  connection  with  this
             Guaranty  or any  related  matter. Guarantor  hereby agrees that an
             action,  suit,  or  proceeding to enforce this  Guaranty may be
             brought in any state or federal court in the State of  Illinois and
             hereby waives any objection which Guarantor  may have to the laying
             of the venue of any such  action, suit, or proceeding in any such
             court; provided,  however, that the provisions of this Paragraph
             shall not be deemed to preclude Lender from filing any such action,
             suit,  or  proceeding  in any other appropriate forum.

        12)  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 Guarantor:

                      Equity Inns, Inc.
                      7700 Wolf River Boulevard
                      Germantown, Tennessee  38138
                      Attention:  Howard A. Silver
                      Telecopy:   (901) 754-7668

             With a copy to:

                      Hunton & Williams
                      1751 Pinnacle Drive
                      Suite 1700
                      McLean, Virginia  22102
                      Attention:  Gerald R. Best
                      Telecopy:   (703) 714-7410

             To the Lender:

                      c/o Bank One, NA, as agent
                      Corporate Real Estate Division
                      1 Bank One Plaza
                      Chicago, Illinois  60670-0151
                      Attention: Patricia Leung
                      Telecopy:  (312) 732-1117

             With a copy to:

                      Sonnenschein Nath & Rosenthal
                      8000 Sears Tower
                      Chicago, Illinois  60606
                      Attention: Patrick G. Moran, Esq.
                      Telecopy:  (312) 876-7934

or at such  other  address  as the  party  to be  served  with  notice  may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.

        13)  This Guaranty shall be binding upon the heirs, executors, legal and
             personal  representatives,  successors and assigns of Guarantor and
             shall inure to the benefit of Lender's successors and assigns.

        14)  This Guaranty  shall be construed  and enforced  under the internal
             laws of the State of Illinois.

        15)  The liability of the entities  comprising the Guarantor  under this
             Guaranty  shall be joint and several.  The liability of Equity Inns
             Services,  Inc.  under this Guaranty  shall not exceed a percentage
             (equal  to the  percentage  partnership  interest  of  Equity  Inns
             Services,   Inc.  in  EIP/WV)  of  the  amount  by  which  (A)  the
             then-current  fair market value of  attributable  to 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 the Revolving Credit Agreement,  calculated in each
             case  as  of  the  Maturity   Date  or  the  date  of  any  earlier
             acceleration of the Obligations, as applicable.

        16)  GUARANTOR 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  GUARANTY OR ANY OTHER LOAN DOCUMENT
             OR RELATING THERETO OR ARISING FROM THE LENDING  RELATIONSHIP WHICH
             IS THE SUBJECT OF THIS  GUARANTY  AND AGREE THAT ANY SUCH ACTION OR
             PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.






<PAGE>



    IN WITNESS  WHEREOF,  Guarantor has  delivered  this Guaranty as of the date
first written above.

                                    EQUITY INNS, INC., a Tennessee corporation


                                    By:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------


                                    EQUITY INNS TRUST, a Maryland real estate
                                    investment trust


                                    By:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------


                                    EQUITY INNS SERVICES, INC., a Tennessee
                                    corporation


                                    By:
                                         ---------------------------------------
                                    Its:
                                         ---------------------------------------






<PAGE>







STATE OF ___________                )
                                    )       SS.
COUNTY OF _________                 )


    I, the undersigned,  a Notary Public,  in and for said County,  in the State
aforesaid,  DO HEREBY CERTIFY,  that , of Equity Inns, Inc., personally known to
me to be the same person whose name is subscribed  to the foregoing  instrument,
appeared  before  me this day in person  and  acknowledged  that he  signed  and
delivered the said  instrument as his own free and voluntary act and as the free
and voluntary  act of said  corporation,  for the uses and purposes  therein set
forth.

    GIVEN under my hand and Notarial Seal, this day of October, 2000.




                                            ------------------------------------
                                            Notary Public






<PAGE>







STATE OF ___________                )
                                    )       SS.
COUNTY OF _________                 )


    I, the undersigned,  a Notary Public,  in and for said County,  in the State
aforesaid,  DO HEREBY CERTIFY, that , of Equity Inns Trust,  personally known to
me to be the same person whose name is subscribed  to the foregoing  instrument,
appeared  before  me this day in person  and  acknowledged  that he  signed  and
delivered the said  instrument as his own free and voluntary act and as the free
and voluntary act of said trust, for the uses and purposes therein set forth.

    GIVEN under my hand and Notarial Seal, this day of October, 2000.


                                            ------------------------------------
                                            Notary Public






<PAGE>







STATE OF ___________                )
                                    )       SS.
COUNTY OF _________                 )


    I, the undersigned,  a Notary Public,  in and for said County,  in the State
aforesaid,  DO HEREBY CERTIFY, that , of Equity Inns Services,  Inc., personally
known to me to be the same  person  whose name is  subscribed  to the  foregoing
instrument,  appeared  before me this day in  person  and  acknowledged  that he
signed and delivered  the said  instrument as his own free and voluntary act and
as the free and voluntary act of said trust,  for the uses and purposes  therein
set forth.

    GIVEN under my hand and Notarial Seal, this day of October, 2000.



                                      ------------------------------------------
                                      Notary Public







<PAGE>







                                    EXHIBIT E

                          OPINION OF TENNESSEE COUNSEL

             See Opinion dated of even date from Hunton & Williams.







<PAGE>







                                    EXHIBIT F

                           OPINION OF ILLINOIS COUNSEL

           See Opinion dated of even date from Schiff Hardin & Waite.







<PAGE>







                                    EXHIBIT G

                            OPINION OF LOCAL COUNSEL







<PAGE>







                                    EXHIBIT H

                               WIRING INSTRUCTIONS

     To:        Bank One, NA,
                as Administrative Agent (the "Agent")
                under the Credit Agreement Described Below

       Re:      Secured Revolving Credit Agreement, dated as of October 26, 2000
                (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. and Equity Inns Partnership
                II,  L.P.   (collectively,   the  "Borrower"),   Bank  One,  NA,
                individually and as  Administrative  Agent,  Credit Lyonnais New
                York Branch,  individually  and as  Syndication  Agent,  Bank of
                America,  NA,  individually and as Documentation  Agent, 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. and Equity Inns Partnership II, L.P.

Transfer Funds To:  Bank One, NA



For Account No.
               -----------------------------------------------------------------

Reference/Attention To
                      ----------------------------------------------------------

Authorized Officer (Customer Representative)       Date
                                                        ------------------------



--------------------------------------------       -----------------------------
(Please Print)                                     Signature

Bank Officer Name




--------------------------------------------       -----------------------------
(Please Print)                                     Signature

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







<PAGE>


                                    EXHIBIT I

                         FORM OF COMPLIANCE CERTIFICATE


Under Credit Agreement dated as of October ___, 2000, between Equity Inns
Partnership, L.P., Equity Inns / West Virginia Partnership, L.P. and Equity Inns
Partnership II, L.P., as Borrower and Bank One, NA ("Bank One") as
Administrative agent, Credit Lyonnais New York Branch as Syndication Agent and
Co-Lead Arranger/Book Manager, Bank of America, N.A., as Documentation Agent,
and the Lenders defined therein (the "Credit Agreement").

The undersigned, as _________ of Equity Inns Partnership L.P., and as __________
of Equity Inn / West Virginia Partnership L.P., pursuant to Section 8.2 of the
Credit Agreement, hereby certify to Bank One 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  for the most recent  ended
        fiscal quarter, together with the supporting schedule attached hereto is
        true and correct:

         A.  Total Collateral Pool Asset Values          $______________________
         B.  55% of A                                    $______________________
         C.  The principal amount which would produce
             an Included Collateral Pool Debt Service
             Coverage Ratio of 1.75 (from 1L of
             Schedule I)                                 $______________________
         D.  55% of the total Collateral Pool Asset
             Values of the Excluded Properties           $______________________
         E.  C plus D                                    $______________________
         F.  The lesser of B and E                       $______________________
         G.  Allocated Facility Amount                   $______________________
                                                          G must be less than or
                                                          Equal to F


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

9.3      Leverage.

         A.  Total Indebtedness                          $______________________
         B.  EBITDA                                      $______________________
         C.  A divided by B                              $______________________
         D.  4.75
         E.  4.50                                     C must be less than or
                                                      equal to D before April 1,
                                                      2002 and less than or
                                                      equal to E thereafter

9.3      Additional Recourse Indebtedness

         A.  Recourse Indebtedness of the Consolidated
             Group                                       $______________________
         B.  Allocated Facility Amount                   $______________________
         C.  $50,000,000
         D.  B plus C                                    $______________________
                                                          A must be less than or
                                                          equal to D

9.4      Dividends

I.      A.  Total dividends for the past four quarters
            (excluding preferred stock)                  $______________________

        B.  Total amount paid for stock repurchases
            for the past four quarters                   $______________________

        C.  A plus B                                     $______________________

        D.  90% of the Funds From Operations for the
            past four quarters                           $______________________
                                                          D must be less than
                                                          or equal to C

II.    A. Total dividends for the past four quarters
          (excluding preferred stock)                    $______________________

        B.  110% of Free Cash Flow                       $______________________
                                                          A must be less than or
                                                          equal to B through
                                                          quarter ending 9-30-00

        C.  105% of Free Cash Flow                       $______________________
                                                          A must be less than or
                                                          equal to C from
                                                          quarter ending
                                                          12-31-00 through
                                                          quarter ending
                                                          12-31-01

        D.  100% of Free Cash Flow                       $______________________
                                                          A must be less than or
                                                          equal to D from
                                                          quarter ending 3-31-02
                                                          through the Maturity
                                                          Date

III.   A. Total dividends for the past four quarters
          (excluding preferred stock)                    $______________________

        B.  Total amount paid for stock repurchases
            for the past four quarters                   $______________________

        C.  A plus B                                     $______________________

        D.  Free Cash Flow                               $______________________

        E.  50% of Net Cash Proceeds from the sales
            of Properties for the past four quarters     $______________________

        F.  D plus E                                     $______________________

       G.   110% of F                                    $______________________
                                                          C must be less than or
                                                          equal to G through
                                                          quarter ending 9-30-00

       H.   105% of F                                    $______________________
                                                          C must be less than or
                                                          equal to H from
                                                          quarter ending
                                                          12-31-00 through
                                                          quarter ending
                                                          12-31-01

       I. 100% of F                                      $______________________
                                                          C must be less than or
                                                          equal to I from
                                                          quarter ending 3-31-02
                                                          through the Maturity
                                                          Date

9.5      Floating Rate Debt

       A. Floating Rate Debt                             $______________________
                                                          Must be less than
                                                          $150mm


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)   Minimum Tangible Net Worth.

         A.   Tangible Net Worth of the Consolidated
              Group                                      $______________________

         B.   80% of Tangible Net Worth at 6/30/00       $______________________

         C.   75% of equity interest issued after
              6/30/00                                    $______________________

         D.   Sum of B and C                             $______________________
                                                          A must be greater than
                                                          or equal to D

9.8(b)   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 1.75

9.8(c)   Minimum Interest Coverage

         A.   Adjusted EBITDA for the most recent
              12 calendar months                         $______________________

         B.   Interest Expense for the most recent
              12 calendar months                         $______________________

         C.   A divided by B                              ______________________
                                                          C should be greater
                                                          than or equal to 2.25


8.3      Limitations on Properties Under Development

         A.   Aggregate Total Cost of all Properties
              Under Development                          $______________________

         B.   10% of Total Cost of all Properties
              owned by the Consolidated Group            $______________________
                                                          A must be less than or
                                                          equal to B

9.11     Share Repurchase

         A.   Total amount paid by Equity Inns for
              stock repurchase during the most
              recently completed quarter                 $______________________

         B.   Amount Available for repurchases during
              such quarter (from last quarter's
              compliance certificate)                    $______________________
                                                          A must be less than or
                                                          equal to B.

         C.   $0

         D.   Free Cash Flow of the Consolidated
              Group for the Prior 4 Quarters minus
              any amounts attributable to dividend
              payments (other than Preferred Stock
              Expense) and stock repurchases             $______________________

         E.   The greater of C and D                     $______________________

         F.   50% of E                                   $______________________

         G.   Net Cash Proceeds from sales of
              Properties during the Prior 4 Quarters.    $______________________

         H.   50% of G                                   $______________________

         I.   The maximum aggregate amount of stock
              repurchases from Net Cash Proceeds
              permitted per Section 9.11 of the
              Credit Agreement minus Stock Repurchases
              from Net Cash Proceeds in prior periods
              (see Item 9E in Schedule I)                $______________________

         J.   The lesser of H and I                      $______________________

         K.   The sum of F and J = Amount available
              for stock repurchases during Current
              Quarter                                    $______________________


The following  computation of the limits imbedded in the  definitions,  together
with the supporting schedule attached hereto, is true and correct.

Limitations in Borrowing Base (See definition of "Eligible Property")

             Borrower Properties
         A.   Borrowing Base

         B.   Total Collateral Pool Asset Values
              of Properties which are, directly or
              indirectly, wholly owned and controlled
              by Borrower                                $______________________

         C.   B divided by A                              _____________________%
                                                          C must be greater than
                                                          or equal to 90%

         Fee Simple Properties
         D.   Total Collateral Pool Asset Values of
              Properties which are, directly or
              indirectly, held in fee simple by
              Borrower or a Wholly-Owned Subsidiary      $______________________

         E.   D divided by A                              _____________________%
                                                          E must be greater than
                                                          or equal to 90%

         State Concentration
         F.   Total Collateral Pool Asset Values of
              all Collateral Pool Assets located in
              the state containing the Properties
              which makes up the greatest percentage
              of the Borrowing Base                      $______________________

         G.   F divided by A                              _____________________%
                                                          G must be less than or
                                                          equal to 25%

         Individual Asset Concentration
         H.   Collateral Pool Asset Value of the
              Collateral Pool Asset which makes up
              the greatest percentage of the Borrowing
              Base                                       $______________________

         I.   H divided by A                              _____________________%
                                                          I must be less than or
                                                          equal to 20%

         Properties Under Development
         J.   Total amount of the Borrowing Base
              attributable to Properties Under
              Development                                $______________________

         K.   60% of the Aggregate Total Cost of
              all Properties Under Development
              included in the Borrowing Base             $______________________

         L.   $15,000,000                                $______________________

         M.   $25,000,000 minus the book value
              of the Consolidated Group's investment
              in Excluded Investment Affiliates          $______________________

         N.   The lesser of K, L, and M                  $______________________
                                                          Must be greater than
                                                          or equal to J


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.       $15,000,000

D.       $25,000,000

E.       The amount of the Borrowing Base attributable
         to Projects Under Development                   $______________________

F.       D minus E                                       $______________________

G.       The lesser of C and F                           $______________________
                                                          B must be less than or
                                                          equal to G

Indebtedness
H.       Consolidated Group Pro Rata Share
         of the aggregate Indebtedness of all
         Excluded Investment Affiliates (other than
         those for which no investment is reported
         on the balance sheet of the Consolidated
         Group)                                          $______________________
                                                          H must be less than or
                                                          equal to $45,000,000

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:
       -------------------------------------








<PAGE>







                                   SCHEDULE I
                            CALCULATION OF COVENANTS



1.      Included Collateral Pool Debt Service Coverage Ratio

         A.   Net Operating Income of all Included
              Collateral Pool Assets for the past
              four quarters                              $______________________

         B.   Agreed FF&E Reserve for the past four
              quarters                                   $______________________

         C.   A minus B                                  $______________________

         D.   C divided by 1.75 = annual debt service
              payment amount resulting in 1.75 Included
              Collateral Pool Debt Service Coverage
              Ratio                                      $______________________

         E.   Average Interest Rate for the Facility
              or the past 4 quarters                      _____________________%

         F.   D divided by E                             $______________________

         G.   Yield on 10-year Treasuries as of the
              last Business Day of the most recently
              completed quarter.                          _____________________%

         H.   2.50%

         I.   G plus H                                   $______________________

         J.   Debt Service Constant for loan with
              equal monthly payments and an interest
              rate equal to I above and a 25 year
              amortization Schedule.                      _____________________%

         K.   D divided by J                             $______________________

         L    The lesser of F and K (The principal
              amount which would produce an
              Included Collateral Pool Debt Service
              Coverage Ratio of 1.75)                    $______________________

   2.    Total Cost

         A.       Book Value of all Properties owned
                  by the Consolidated Group              $______________________

         B.       Accumulated Depreciation on such
                  Properties                             $______________________

         C.       Consolidated Group Pro Rata Share
                  of the book value of all properties
                  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                  $
                                                          ======================

3.       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                           $______________________


4.       EBITDA for the most recent twelve full calendar months

         A.       EBITDA of the Consolidated Group
                  excluding income from Investment
                  Affiliates                             $______________________

         B.       Consolidated Group Pro Rata Share
                  of EBITDA of Investment Affiliates
                  other than Excluded Investment
                  Affiliates                             $______________________

         C.       All extraordinary items included
                  in A or B                              $______________________

         D.       All gains or losses from sale of
                  assets                                 $______________________

         E.       Sum of A plus B less sum of C
                  plus D equals EBITDA                   $______________________

5.       Adjusted EBITDA for the most recent 12 full calendar months

         A.       EBITDA for the most recent 12 full
                  calendar months                        $______________________

         B.       4% of gross room revenues for the
                  past four quarters on all Properties   $______________________

         C.       A minus B equals Adjusted EBITDA       $______________________

6.       Interest Expense for the most recent twelve full calendar months

         A.       Interest Expense of the Consolidated
                  Group                                  $______________________

         B.       Consolidated Group Pro Rata Share
                  of any accrued or paid interest of
                  an Investment Affiliate (other than
                  Excluded Investment Affiliates)        $______________________

         C.       Sum of A plus B equals Interest
                  Expense                                $______________________

7.       Fixed Charges for the most recent twelve full calendar months

         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                          $______________________

8.       Free Cash Flow for the past four Quarters

         A.       Funds From Operations for the past
                  four quarters                          $______________________

         B.       Aggregate Room Revenue for the past
                  four quarters on all Properties        $______________________

         C.       B multiplied by 4%.

         D.       Scheduled principal payments on all
                  Indebtedness of the Consolidated
                  Group for the past four quarters       $______________________

         E.       Preferred Stock Expense for the
                  past four quarters                     $______________________

         F.       A minus the sum of C, D and E
                  equals Free Cash Flow                  $______________________

9.       Stock Repurchase from Net Cash Proceeds

         A.       Net Cash Proceeds for most recent
                  quarter                                $______________________

         B.       Net Cash Proceeds for the first
                  three of the last four quarters        $______________________

         C.       Total Net Cash Proceeds for last
                  four quarters                          $______________________

         D.       Stock repurchased during most
                  recent quarter from Net Cash
                  Proceeds                               $______________________

         E.       Cumulative amount of Stock
                  repurchased during the term of the
                  Facility from Net Cash Proceeds        $______________________








<PAGE>


                                    EXHIBIT J


             MINIMUM SPECIFICATIONS FOR ENVIRONMENTAL INVESTIGATIONS

                  The following are  Guidelines for the  qualification  of firms
and   environmental   professionals  and  for  information  to  be  included  in
Environmental  Site  Assessments.  These standards  include the minimum elements
common  to  acceptable  site  assessments.  Generally,  it is  intended  for the
standards  to be  consistent  with those  outlined in the  American  Society for
Testing and Materials ("ASTM") Designation: E 1527-93.

Qualifications of Investigating Firm
                  The firm or  environmental  professional  must have 5 years of
experience in hazardous substances investigation. The environmental professional
supervising and signing the report should be experienced in  environmental  site
investigations,  and should have relevant environmental experience and technical
qualifications,   such  as  demonstrated  by  professional  registration  and/or
advanced   education  in  related   disciplines.   The  firm  or   environmental
professional  performing  the work should have adequate  professional  liability
insurance.  Borrower  and  Lenders  may agree in advance on  qualified  firms or
environmental  professionals that will conduct the Phase I Reports. Borrower may
from time to time select other firms or  environmental  professionals  that meet
the minimum qualifications set out above to conduct a Phase I Report, subject to
approval of the  Administrative  Agent, which approval shall not be unreasonably
withheld or delayed.

Depth of Reporting Required
                  Phase I - consists of site  description,  review of historical
and  regulatory  data  and  physical  inspection.   The  firm  or  environmental
professional  will follow the standard  practices  set out in the ASTM E 1527-93
guidelines in conducting the Phase I Site Assessment and drafting the Report and
in preparing the Findings and Conclusions.
All deletions and deviations from the ASTM E 1527-93  guidelines shall be listed
individually  and in  detail.  As an  additional  component  of the Phase I Site
Assessment,  the firm or  environmental  professional  will  conduct an asbestos
survey or  inspection  in  accordance  with the  protocols set by OSHA under the
Occupational  Safety & Health  Act  (including  protocols  set  forth  under the
Asbestos Hazard Emergency  Response Act (AHERA) that are  incorporated  into the
OSHA protocols) unless an alternate  protocol is approved by the  Administrative
Agent. In all events such survey or inspection  shall comply with all applicable
Environmental Laws, including,  but not limited to, 29 C.F.R. ss. 1910.1001. The
firm or environmental  professional  will also conduct a lead-based paint survey
or inspection when  necessary,  including but not limited to prior to demolition
or  renovation  work  and as  required  by all  applicable  Environmental  Laws,
including,  but not limited to 29 C.F.R.  ss. ss.  1910.1025 and 1926.62.  If no
potential contamination is indicated, the report should so state, and a specific
statement should be made that no further investigation is required.
                  Phase II - If a Phase I examination  indicates the presence of
recognized  environmental  conditions  which would warrant  further  appropriate
inquiry, the consultant should document the basis for that conclusion, recommend
a testing program for further evaluation,  including the areas to be tested and,
if appropriate, the hazardous constituents of concern, sampling procedures to be
used and methods used to assess the samples. If after evaluating the
recommendation,  the Borrower determines that a Phase II is necessary,  then the
Borrower will request the firm or environmental professional to prepare a bid,
and may solicit competitive bids from other firms or environmental
professionals. The Phase II Report should document the extent, and, if possible,
source,  of  contamination  so that the  Borrower can assess
whether  remediation is required  under  applicable  Environmental  Laws. If the
Borrower plans to conduct  remediation  estimated to cost more than $250,000 for
any  Project,   the  Borrower  will  promptly  provide  written  notice  to  the
Administrative  Agent. If the Borrower does not follow the recommendation of the
firm or  environmental  professional  to  conduct  a Phase II  investigation  or
remediation for any Project,  the Borrower will promptly  provide written notice
to the Administrative Agent. Reliance on Phase I Report The Phase I Report shall
include a statement that the firm or environmental professional acknowledges
that the Lenders will be relying on the Report.







<PAGE>


                                    EXHIBIT K

                          FORM OF ASSIGNMENT AGREEMENT



         This Assignment  Agreement (this "Assignment  Agreement")  between (the
"Assignor") and (the  "Assignee") is dated as of , 20 . The parties hereto agree
as follows:

         1.  PRELIMINARY  STATEMENT.  The  Assignor  is a  party  to an  Secured
Revolving Credit Agreement  (which, as it may be amended,  modified,  renewed or
extended from time to time is herein called the "Credit Agreement") described in
Item 1 of Schedule 1 attached  hereto  ("Schedule  1").  Capitalized  terms used
herein and not otherwise  defined  herein shall have the meanings  attributed to
them in the Credit Agreement.

         2. ASSIGNMENT AND ASSUMPTION.  The Assignor hereby sells and assigns to
the Assignee,  and the Assignee hereby  purchases and assumes from the Assignor,
an interest in and to the  Assignor's  rights and  obligations  under the Credit
Agreement  such that after giving effect to such  assignment  the Assignee shall
have purchased  pursuant to this  Assignment  Agreement the percentage  interest
specified  in Item 3 of  Schedule 1 of all  outstanding  rights and  obligations
under  the  Credit  Agreement  and  the  other  Loan  Documents.  The  aggregate
Commitment  (or  Loans,  if  the  applicable  Commitment  has  been  terminated)
purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.

         3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1  or  two  (2)  Business  Days  (or  such  shorter  period  agreed  to  by  the
Administrative Agent) after a Notice of Assignment  substantially in the form of
Exhibit "I" attached  hereto has been  delivered to the Agent.  In no event will
the Effective Date occur if the payments  required to be made by the Assignee to
the Assignor on the Effective Date under Sections 4 and 5 hereof are not made on
the proposed  Effective Date,  unless otherwise agreed to in writing by Assignor
and Assignee.  The Assignor  will notify the Assignee of the proposed  Effective
Date no later than the Business Day prior to the proposed  Effective Date. As of
the Effective  Date, (i) the Assignee shall have the rights and obligations of a
Lender  under the Loan  Documents  with  respect to the  rights and  obligations
assigned to the Assignee  hereunder and (ii) the Assignor  shall  relinquish its
rights  and be  released  from  its  corresponding  obligations  under  the Loan
Documents  with respect to the rights and  obligations  assigned to the Assignee
hereunder.

         4. PAYMENTS OBLIGATIONS.  On and after the Effective Date, the Assignee
shall be  entitled  to receive  from the  Administrative  Agent all  payments of
principal,  interest and fees with respect to the interest assigned hereby.  The
Assignee shall advance funds directly to the  Administrative  Agent with respect
to all Loans and reimbursement payments made on or after the Effective Date with
respect to the interest  assigned  hereby.  [In  consideration  for the sale and
assignment of Loans hereunder, (i) the Assignee shall pay the Assignor,  on the
Effective  Date, an amount equal to the principal  amount of the portion of all
Adjusted  Alternate  Base Rate Loans assigned to the Assignee hereunder and (ii)
with respect to each ratable LIBOR Advance made by the Assignor  and assigned to
the Assignee  hereunder  which is outstanding on the Effective Date,  (a) on the
last day of the Interest  Period therefor or (b) on such  earlier date agreed to
by the Assignor and the Assignee or (c) on the date on which any such Loan
either becomes due (by acceleration or otherwise)  or is prepaid (the date as
described in the  foregoing  clauses (a), (b) or (c) being hereinafter  referred
to as the "Fixed Due Date"), the Assignee shall pay the Assignor an amount equal
to the principal amount of the portion of such Loan assigned to the Assignee
which is  outstanding on the Fixed Due Date. If the Assignor and the Assignee
agree that the  applicable  Fixed Due Date for such Loan shall be the Effective
Date, they shall agree,  solely for purposes of dividing  interest paid by the
Borrower on such Loan, to an alternate  interest rate  applicable to the portion
of such Loan  assigned  hereunder for the period from the Effective Date to the
end of the related  Interest  Period (the "Agreed Interest  Rate") and any
interest  received  by the  Assignee  in excess of the Agreed  Interest  Rate,
with  respect  to such Loan for such  period, shall be remitted to the Assignor.
In the  event a  prepayment  of any  Loan  which is existing on the  Effective
Date and  assigned by the  Assignor to the  Assignee hereunder  occurs after the
Effective Date but before the  applicable  Fixed Due Date,  the  Assignee  shall
remit to the  Assignor  any  excess of the  funding indemnification amount  paid
by the  Borrower  under  Section 4.4 of the Credit Agreement an account of such
prepayment with respect to the portion of such Loan assigned to the Assignee
hereunder over the amount which would have been paid if such  prepayment  amount
were  calculated  based on the Agreed Interest Rate and only covered the portion
of the Interest  Period after the Effective  Date.  The Assignee  will  promptly
remit to the Assignor (i) the portion of any principal payments  assigned
 hereunder  and received from the Administrative Agent with respect  to any such
Loan  prior to its Fixed Due Date and (ii) any amounts  of interest on Loans and
fees received from the  Administrative  Agent which relate to the portion of the
Loans assigned to the Assignee hereunder for periods prior to the Effective
Date, in the case of ratable Adjusted Alternate Base Rate Loans or Fees, or the
Fixed Due Date, in the case of LIBOR Loans,  and not  previously paid by the
Assignee to the  Assignor.]*  In the event that either party hereto receives any
payment to which the other party  hereto is  entitled  under this Assignment
Agreement,  then the party receiving such amount shall promptly remit it to the
other party hereto.

         5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor
a fee on each day on which a payment of interest or Commitment  Fees or Facility
Letter of Credit  Fees is made under the Credit  Agreement  with  respect to the
amounts assigned to the Assignee  hereunder (other than a payment of interest or
Commitment  Fees or Facility  Letter of Credit Fees  attributable  to the period
prior to the  Effective  Date or, in the case of LIBOR Loans,  the Payment Date,
which the Assignee is obligated to deliver to the Assignor pursuant to Section 4
hereof). The amount of such fee shall be the difference between (i) the interest
or fee, as applicable, paid with respect to the amounts assigned to the Assignee
hereunder  and (ii) the  interest or fee, as  applicable,  which would have been
paid with respect to the amounts assigned to the Assignee  hereunder if each
interest rate was calculated at the rate of % rather than the actual  percentage
used to calculate  the interest rate paid by the  Borrower  or if the Commitment
Fee or Facility Letter of Credit Fee was calculated at the rate of % rather than
the actual  percentage used to calculate the  Commitment  Fee or Facility Letter
of Credit Fee paid by the Borrower,  as applicable.  In addition, the Assignee
agrees to pay ___% of the fee required to be paid to the  Agent  in  connection
with  this  Assignment  Agreement.  [This sentence can be revised appropriately
based on how the fee is being paid.] *Each Assignor  may  insert  its  standard
provisions  in lieu of the  payment  terms included in Sections 4 and 5 of this
Exhibit.

         6.  REPRESENTATIONS  OF THE  ASSIGNOR;  LIMITATIONS  ON THE  ASSIGNOR'S
LIABILITY.  The  Assignor  represents  and  warrants  that it is the  legal  and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim  created by the Assignor.  It is
understood  and agreed that the  assignment  and  assumption  hereunder are made
without  recourse  to  the  Assignor  and  that  the  Assignor  makes  no  other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any  of its  officers,  directors,  employees,  agents  or  attorneys  shall  be
responsible  for (i)  the due  execution,  legality,  validity,  enforceability,
genuineness,  sufficiency  or  collectability  of any Loan  Document,  including
without  limitation,  documents  granting the  Assignor and the other  Lenders a
security  interest  in  assets  of the  Borrower  or  any  guarantor,  (ii)  any
representation,  warranty or statement made in or in connection  with any of the
Loan  Documents,  (iii)  the  financial  condition  or  creditworthiness  of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or  provisions of any of the Loan  Documents,  (v)  inspecting  any of the
Property,  books or records of the  Borrower,  its  Subsidiaries  or  Investment
Affiliates, (vi) the validity, enforceability,  perfection, priority, condition,
value or  sufficiency  of any  collateral  securing or  purporting to secure the
Loans or (vii) any mistake,  error of judgment, or action taken or omitted to be
taken in connection with the Loans or the Loan Documents.

         7.  REPRESENTATIONS OF THE ASSIGNEE.  The Assignee (i) confirms that it
has  received  a copy of the  Credit  Agreement  and the other  Loan  Documents,
together with copies of the financial  statements  requested by the Assignee and
such other  documents and  information as it has deemed  appropriate to make its
own credit analysis and decision to enter into this Assignment  Agreement,  (ii)
agrees that it will,  independently and without reliance upon the Administrative
Agent, the Syndication Agent, the Assignor or any other Lender and based on such
documents and information at it shall deem appropriate at the time,  continue to
make its own  credit  decisions  in taking or not taking  action  under the Loan
Documents,  (iii) appoints and authorizes the Administrative  Agent to take such
action  as agent on its  behalf  and to  exercise  such  powers  under  the Loan
Documents as are  delegated to the  Administrative  Agent by the terms  thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees that
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,
(v) agrees  that its payment  instructions  and notice  instructions  are as set
forth in the  attachment  to Schedule 1, (vi)  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,  [and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the  Assignee  is
entitled to receive  payments  under the Loan  Documents without  deduction or
withholding of any United States federal income  taxes].** **to be  inserted  if
the  Assignee  is not  incorporated  under the laws of the United States, or a
state thereof.

         8.  INDEMNITY.  The Assignee  agrees to indemnify and hold the Assignor
harmless  against any and 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 Agreement.

         9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 13.3.1 of the Credit  Agreement to assign the
rights  which are  assigned to the  Assignee  hereunder to any entity or person,
provided  that (i) any such  subsequent  assignment  does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation,  order,
writ,  judgment,  injunction or decree and that any consent  required  under the
terms of the Loan  Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained,  the Assignee is not thereby  released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under Sections 4, 5 and 8 hereof.

         10.  REDUCTIONS  OF  AGGREGATE  COMMITMENT.  If  any  reduction  in the
Aggregate  Commitment  occurs between the date of this Assignment  Agreement and
the Effective  Date, the percentage  interest  specified in Item 3 of Schedule 1
shall remain the same,  but the dollar amount  purchased  shall be  recalculated
based on the reduced Aggregate Commitment.

         11.      ENTIRE AGREEMENT.  This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.

         12.      GOVERNING LAW.  This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.

         13.      NOTICES.  Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement.  For the purpose
hereof, the addresses of the parties hereto until notice of a change is
delivered) shall be the address set forth in the attachment to Schedule 1.


         IN WITNESS  WHEREOF,  the parties hereto have executed this  Assignment
Agreement by their duly authorized officers as of the date first above written.

                                    [NAME OF ASSIGNOR]



                                    By:
                                         ---------------------------------------
                                    Title:
                                         ---------------------------------------


                                    [NAME OF ASSIGNEE]



                                    By:
                                         ---------------------------------------
                                    Title:
                                         ---------------------------------------












<PAGE>







                                  SCHEDULE 1 TO
                              ASSIGNMENT AGREEMENT



1.       Description and Date of Credit Agreement:

2.       Date of Assignment Agreement:               , 19
                                        -------------    --

3.       Amounts (As of Date of Item 2 above):

                  a.       Aggregate Commitment
                           (Loans)* under
                           Credit Agreement              $______________________

                  b.       Assignee's Percentage
                           of the Aggregate Commitment
                           purchased under this
                           Assignment Agreement**         _____________________%

         4.       Amount of Assignee's Commitment
                  (Loan Amount)* Purchased under
                  this Assignment Agreement              $______________________

         5.       Amount of Assignor's Commitment
                  (Loan Amount) After Purchase under
                  this Assignment Agreement              $______________________

         6.       Proposed Effective Date:




Accepted and Agreed:

[NAME OF ASSIGNOR]                             [NAME OF ASSIGNEE]



By:_________________________________           By:______________________________

Title:______________________________           Title:___________________________



 * If a Commitment has been terminated, insert outstanding Loans in place of
   Commitment
** Percentage taken to 10 decimal places






<PAGE>







                           ATTACHMENT TO SCHEDULE 1 TO
                              ASSIGNMENT AGREEMENT



     Attach Assignor's Administrative Information Sheet, which must include
    notice address and account information for the Assignor and the Assignee






<PAGE>







                                 EXHIBIT "I" TO
                              ASSIGNMENT AGREEMENT

                              NOTICE OF ASSIGNMENT



                                                          ________________, 20__



To:      [NAME OF ADMINISTRATIVE AGENT]


From:    [NAME OF ASSIGNOR] (the "Assignor")

         [NAME OF ASSIGNEE] (the "Assignee")



                      i) We refer to that  Secured  Revolving  Credit  Agreement
                (the  "Credit  Agreement")  described  in Item 1 of  Schedule  1
                attached hereto  ("Schedule 1").  Capitalized  terms used herein
                and  not  otherwise  defined  herein  shall  have  the  meanings
                attributed to them in the Credit Agreement.

             ii)This Notice of Assignment (this "Notice") is given and delivered
                to the  Administrative  Agent  pursuant to Section 13.3.1 of the
                Credit Agreement.

             iii) The Assignor and the Assignee  have entered into an Assignment
                Agreement,  dated  as of , 20 (the  "Assignment"),  pursuant  to
                which,  among other  things,  the Assignor  has sold,  assigned,
                delegated and transferred to the Assignee,  and the Assignee has
                purchased, accepted and assumed from the Assignor the percentage
                interest  specified in Item 3 of Schedule 1 of all outstandings,
                rights  and  obligations  under the Credit  Agreement.  From and
                after such  purchase,  the  Assignee's  Commitment  shall be the
                amount  specified  in Item 4 of  Schedule  1 and the  Assignor's
                Commitment  shall be the amount  specified in Item 5 of Schedule
                1. The Effective  Date of the  Assignment  shall be the later of
                the date  specified  in Item 5 of Schedule 1 or two (2) Business
                Days (or such shorter period as agreed to by the  Administrative
                Agent) after this Notice of  Assignment  and any fee required by
                Section  13.3.1 of the Credit  Agreement  have been delivered to
                the Administrative Agent, provided that the Effective Date shall
                not occur if any condition  precedent  agreed to by the Assignor
                and the  Assignee  or set  forth  in  Section  13 of the  Credit
                Agreement has not been satisfied.

             iv)The Assignor and the Assignee hereby give to the  Administrative
                Agent  notice  of the  assignment  and  delegation  referred  to
                herein. The Assignor will confer with the  Administrative  Agent
                before the date  specified  in Item 6 of Schedule 1 to determine
                if the Assignment  Agreement will become  effective on such date
                pursuant to Section 3 hereof, and will confer with the
                Administrative Agent to determine the Effective Date pursuant to
                Section 3 hereof if it occurs  thereafter.  The  Assignor  shall
                notify the Administrative Agent if the Assignment Agreement does
                not become effective on any proposed  Effective Date as a result
                of the failure to satisfy the conditions  precedent agreed to by
                the   Assignor  and  the   Assignee.   At  the  request  of  the
                Administrative  Agent, the Assignor will give the Administrative
                Agent written confirmation of the satisfaction of the conditions
                precedent.

             v) The  Assignor or the  Assignee  shall pay to the  Administrative
                Agent on or before  the  Effective  Date the  processing  fee of
                $3,000 required by Section 13.3.1 of the Credit Agreement.

             vi)If Notes are outstanding on the Effective Date, the Assignor and
                the Assignee  request and direct that the  Administrative  Agent
                prepare and cause the  Borrower to execute and deliver new Notes
                or, as appropriate,  replacements notes, to the Assignor and the
                Assignee.  The Assignor  and, if  applicable,  the Assignee each
                agree to deliver to the  Administrative  Agent the original Note
                received by it from the Borrower  upon its receipt of a new Note
                in the appropriate amount.

             vii) The Assignee advises the Administrative  Agent that notice and
                payment instructions are set forth in the attachment to Schedule
                1.

             viii)The Assignee  hereby  represents and warrants that none of the
                funds, monies,  assets or other consideration being used to make
                the purchase  pursuant to the  Assignment  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.

             ix)The Assignee  authorizes the Administrative  Agent to act as its
                agent  under the Loan  Documents  in  accordance  with the terms
                thereof. The Assignee acknowledges that the Administrative Agent
                has no duty to supply  information  with respect to the Borrower
                or the Loan Documents to the Assignee until the Assignee becomes
                a party to the Credit Agreement.*

*May be eliminated if Assignee is a party to the Credit  Agreement  prior to the
Effective Date.

NAME OF ASSIGNOR                               NAME OF ASSIGNEE



By:_________________________________           By:______________________________


Title:______________________________           Title:___________________________




ACKNOWLEDGED AND CONSENTED TO
BY BANK ONE, NA,
as Administrative Agent



By:_________________________________

Title:______________________________



                 [Attach photocopy of Schedule 1 to Assignment]







<PAGE>







                                    EXHIBIT L

                                  AMENDMENT TO
                       SECURED REVOLVING CREDIT AGREEMENT


      This Amendment to the Secured Revolving Credit Agreement (the "Agreement")
is made as of ____________________, __________________, by and among Equity Inns
Partnership, L.P., a Tennessee limited partnership, Equity Inns/West Virginia
Partnership, L.P., a Tennessee limited partnership and Equity Inns Partnership
II, L.P., a Tennessee limited partnership (collectively, "Borrower") Equity Inns
Trust, Equity Inns Services, Inc. and Equity Inns, Inc. (collectively,
"Guarantor"), Bank One, NA, 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
Credit  Agreement  dated  as of  October  __,  2000  (as  amended,  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 $125,000,000.  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 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:
            --------------------------------------------------

         Title:
               -----------------------------------------------



EQUITY INNS/WEST VIRGINIA PARTNERSHIP, L.P.

By:      EQUITY INNS SERVICES, INC., its General Partner

         By:
            --------------------------------------------------

         Title:
               -----------------------------------------------



EQUITY INNS PARTNERSHIP II, L.P.

By:      EQUITY INNS TRUST, its General Partner

         By:
            --------------------------------------------------

         Title:
               -----------------------------------------------

EQUITY INNS, INC.

By:
   --------------------------------------------------

Title:
      -----------------------------------------------



EQUITY INNS TRUST

By:
   --------------------------------------------------

Title:
      -----------------------------------------------


EQUITY INNS SERVICES, INC.

By:
   --------------------------------------------------

Title:
      -----------------------------------------------



BANK ONE, NA, Individually and as Administrative Agent

By:
Print Name:
Title:

1 Bank One Plaza
Chicago, Illinois  60670
Facsimile:  312/732-1117
Attention:  Corporate Real Estate
Amount of Commitment:  $


[NAME OF NEW LENDER]

By:
Print Name:
Title:

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<PAGE>







                                    EXHIBIT M

                                FORM OF MORTGAGE

                                 (see attached)








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                                    EXHIBIT N

                              INTENTIONALLY DELETED








<PAGE>







                                    EXHIBIT O

                             ASSIGNMENT OF CONTRACTS

                See Assignment of Contract of even date herewith.








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                                    EXHIBIT P

            FORM OF SUBORDINATION LANGUAGE FOR MANAGEMENT AGREEMENTS


         This  Agreement  shall be  subordinate  to any mortgage  encumbering  a
Hotel, and Manager agrees to enter into a lender-manager  agreement with respect
to  each  Hotel,  which  agreement  shall  contain   reasonable   lender-manager
provisions,  including,  without limitation,  Manager's  acknowledgment that its
real estate  interest in and to a Hotel,  if any,  created by this  Agreement is
subordinate  to any mortgage  encumbering  such Hotel,  including  providing any
purchaser of such Hotel at a foreclosure  sale or  deed-in-lieu  of  foreclosure
(including  the lender) with the right to terminate  this Agreement with respect
to such Hotel; provided,  however, in no event will Manager agree to subordinate
or waive its right to receive fees,  reimbursements or indemnification  payments
under this Agreement  arising prior to termination (but (a) if this Agreement is
terminated by the lender or such purchaser  with respect to such Hotel,  Manager
shall  not look to the  lender  for  payment  of such  fees,  reimbursements  or
indemnification   payments   and   Manager's   right  to   receive   such  fees,
reimbursements or indemnification payments shall be subordinated to the lender's
rights  and  (b) if this  Agreement  is not  terminated  by the  lender  or such
purchaser  with  respect  to such  Hotel,  then  such  fees,  reimbursements  or
indemnification payments shall be payable by the lender or such purchaser).









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                                   EXHIBIT Q-1

                              FORM OF SUBORDINATION

            AGREEMENT FOR PERMITTED OPERATING LEASES (NON-AFFILIATED)


See  Subordination  Non-Disturbance  and  Attornment  Agreement  Crossroads  and
Consolidated  Lease  Estoppel   Subordination   Non-Disturbance  and  Attornment
Agreement delivered concurrently herewith.






<PAGE>


                                   EXHIBIT Q-2

                              FORM OF SUBORDINATION

              AGREEMENT FOR PERMITTED OPERATING LEASES (AFFILIATES)



         This Subordination and Attornment  Agreement (the "Agreement") is dated
as of January 1, 2001, among BANK ONE, NA, a national banking  association,  not
individually  but as "Agent" for the  benefit of the  lenders  from time to time
under    the    Credit    Facility     described    below    (the    "Lenders"),
___________________________.,  a Delaware  corporation (the "Tenant") and EQUITY
INNS PARTNERSHIP, L.P.(the "Landlord").

                                    RECITALS

         A. The Landlord is the legal or beneficial  owner of a fee or leasehold
estate in the hotel properties  listed on Schedule 1, which Schedule is attached
hereto and made a part hereof by this  reference  (individually  a "Property" or
collectively the "Properties" or the "Premises").

         B. The Lenders have  extended to Landlord and its  affiliates a certain
secured  revolving  facility  (the  "Credit  Facility")  in the initial  maximum
principal sum of $125,000,000,  subject to further increase to $175,000,000,  on
the terms,  covenants and provisions  contained in a certain  Secured  Revolving
Credit  Agreement dated as of October __, 2000 as amended and modified from time
to time (as so modified and amended,  and as the same may  hereafter be modified
and amended, the "Credit Agreement").

         C. The Credit Facility is secured by various mortgages, deeds of trust,
deeds to secure debt,  assignments of leases and similar instruments in favor of
the  Agent  for the  benefit  of the  Lenders  (collectively,  the  "Mortgages")
encumbering  the  Properties  and certain  other hotel  properties  owned by the
Landlord and its  affiliates.  The  Mortgages  and any other  documents  now and
hereafter evidencing,  securing or otherwise relating to the Credit Facility are
hereinafter collectively referred to as the "Security Documents."

         D.  Tenant  is the  lessee  of all of the  Properties  by the  terms of
certain lease  agreements  described in Schedule 2 which is attached  hereto and
made a part hereof,  as amended and  modified  from time to time (as so modified
and amended,  and as the same may hereafter be modified and amended as expressly
permitted in accordance  with the terms and  provisions  hereof,  individually a
"Lease" and collectively the "Leases").

         E.  The intent of the parties is that this Agreement shall be construed
as a separate subordination and attornment agreement for each Lease and for each
Property.

                                    AGREEMENT

         For mutual consideration, including the mutual covenants and agreements
set forth below,  the Lenders'  consent to Landlord's  execution and delivery of
the Leases and the  substantial  economic  benefit  Tenant  will derive from the
extension of the Credit Facility by Lenders to Landlord and its affiliates,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

         1.  Subordination.  Tenant agrees that each Lease and all of the terms,
covenants and provisions thereof and all rights,  remedies and options of Tenant
thereunder,  including,  without limitation, (a) any right of Tenant to purchase
all or part of the  Property  demised  under  such  Lease and any right of first
offer available to Tenant to purchase all or part of the Property  demised under
such Lease (such rights,  collectively,  the "Options"), (b) any renewal options
for the  benefit  of Tenant,  (c)  Tenant's  interest,  if any,  in the  Capital
Expenditure  Reserve  Account  (as  defined in such  Lease) and (d) any right to
insurance  proceeds or  condemnation  awards,  shall at all times be subject and
subordinate to the Security Documents and the lien thereof and to all present or
future  advances  under  the  Credit  Facility  and  all  renewals,  amendments,
modifications,   consolidations,  replacements  and  extensions  of  the  Credit
Facility and the Security  Documents,  to the full extent of all amounts secured
by the Security  Documents from time to time. Said  subordination is to have the
same  force  and  effect  as  if  the  Security  Documents  and  such  renewals,
modifications,  consolidations,  replacements  and extensions  thereof have been
executed,  acknowledged,  delivered  and  recorded  prior  to  such  Lease,  any
amendments or modifications thereof and any notice thereof.

         2. Tenant Options.  Notwithstanding  anything to the contrary contained
in this  Agreement,  provided  Tenant is not then in default  under terms of the
related  Lease or this  Agreement,  Tenant may  exercise  any of the  Options or
renewal rights granted to it under, and in strict  accordance with the terms of,
such Lease;  provided,  however,  Tenant acknowledges that Landlord's ability to
convey  all or any  portion  of the  Premises  free and clear of the lien of the
Security Documents shall be subject to the fulfillment by Landlord of all terms,
provisions and conditions contained in Section 2.19(c) of the Credit Agreement.

         3. Lack of  Nondisturbance.  Tenant  acknowledges  that the Agent shall
have the right to terminate each of the Leases  pursuant to a foreclosure of the
related Mortgage, notwithstanding anything to the contrary in Article XXX of the
Lease or in any other provision thereof or in this Agreement.

         4. Attornment. Tenant agrees that, at the written election of the Agent
given to Tenant  which  election  may be given or withheld  in the Agent's  sole
discretion,  in the  event  of a  foreclosure  of  any  or  all of the  Security
Documents  by  Agent  or the  acceptance  of an  assignment  or  deed in lieu of
foreclosure  by  Agent on  behalf  of the  Lenders  (or any  assignee,  nominee,
designee  or  successor  of  Agent  or the  Lenders)  to  ownership  of a fee or
leasehold (as the case may be) interest or interests in any of the
Premises,  Tenant will attorn to and  recognize  as its landlord the party which
thereby takes title (whether fee or leasehold, as the case may be) to all or any
part of the premises subject to the related Lease or Leases for the remainder of
the term of such Lease or Leases  (including  all  extension  periods which have
been or are hereafter exercised in accordance with the provisions of such Lease)
upon the same terms and  conditions as are set forth in such Leases,  which will
thenceforth  be deemed direct leases  between such party and Tenant,  and Tenant
hereby agrees to pay and perform all of the  obligations  of Tenant  pursuant to
such Leases.  If such written  election is made,  Agent or such other party,  by
virtue of such  foreclosure,  shall be deemed to have  assumed  and agreed to be
bound,  as  substitute  landlord,  by the terms and  conditions  of such  Leases
(including,  without limitation, any obligations with respect to the maintenance
and use of the  Capital  Expenditure  Reserve  Account)  until the sale or other
disposition of its interest,  except that such assumption shall not be deemed of
itself  an  acknowledgment  by such new  landlord  of the  validity  of any then
existing  claims of Tenant  against  any prior  landlord  (including  Landlord);
provided however,  that the Agent, the Lenders, and any such assignee,  nominee,
designee or successor of the Agent or the Lenders, as the case may be, shall not
be (i) liable for any accrued obligation of Landlord,  or for an act or omission
of  Landlord,  whether  prior  to or  after  such  foreclosure  or  transfer  by
assignment or deed in lieu of foreclosure  not arising by, through or under such
new landlord,  in effectuating  such transfer or  foreclosure,  (ii) required to
make (or to permit  proceeds of insurance or  condemnation  awards to be used by
Tenant to pay for) any repairs to the  Premises  required as a result of fire or
other  casualty or by reason of  condemnation  unless such new landlord shall be
expressly  obligated  under the  Lease to make  such  repairs  (or  permit  such
proceeds  or  awards  to be used for such  purposes)  and  shall  have  received
sufficient  casualty  insurance  proceeds or condemnation  awards to finance the
completion of such repairs,  (iii) required to make any capital  improvements to
the Premises which  Landlord may have agreed to make, but had not completed,  or
to perform or provide any services not related to possession or quiet  enjoyment
of the  Premises,  unless  in each  case such new  landlord  shall be  expressly
obligated  to do so  under  such  Lease,  or  (iv)  subject  to any  offsets  or
counterclaims  which shall have accrued to Tenant against  Landlord prior to the
date upon which such new  landlord  shall become the owner of all or part of the
Premises.  If the Agent so elects in  writing to  require  Tenant's  attornment,
except as set forth to the  contrary  in clause (i) or (iv) of this  paragraph 5
above,  all rights and  obligations  under such Leases shall  continue as though
such  foreclosure  proceedings  had not  been  brought  or as  though  a deed or
assignment in lieu of  foreclosure  had not been granted,  and such new landlord
shall  recognize  all of Tenant's  rights under such Leases  except as expressly
provided otherwise in this Agreement.  Tenant acknowledges and agrees that, from
and after the date on which such new  landlord  becomes the owner of all or part
of the  Properties,  for purposes of calculating  the "Minimum  Price" under the
Leases  with  respect to such  Properties,  the date on which such new  landlord
becomes the owner shall be deemed to be the date of acquisition, the "equity" of
such new landlord under clause (a) of the definition of "Minimum Price" shall be
deemed to be the greater of (i) that portion of the aggregate  Obligations under
the Credit Agreement  reasonably allocated to such Property by the Agent or (ii)
the purchase price paid for such Property at the foreclosure sale, such Property
shall be  deemed  to be free of  encumbrances  as of such  date and all  further
adjustments  to the  "Minimum  Price" for such  Property  will be made from such
initial "equity" amount.

         5. Tenant Rights upon Landlord Security  Documents  Default.  The Agent
acknowledges  the rights of Tenant to cure any  defaults of  Landlord  under the
Mortgages  contained  in  Section  34.2 of each of the  Leases.  In  furtherance
thereof,  the Agent  shall (a) give  Tenant the same  notice,  if any,  given to
Landlord of any default or  acceleration  of any obligation  secured by any such
Mortgage or other Security Document or any sale in foreclosure  thereunder,  (b)
permit  Tenant  to cure  any  such  default  on  Landlord's  behalf  within  any
applicable cure period (and seek reimbursement of all costs associated therewith
from Landlord) and (c) permit Tenant to appear by its  representative and to bid
at any sale in foreclosure made with respect to any of the Security Documents.

         6. Tenant Estoppel. Tenant hereby represents and warrants to Agent that
as of the date  hereof  (i)  Tenant  is the owner  and  holder  of the  lessee's
interest  under the  Leases,  (ii) none of the  Leases  have  been  modified  or
amended,  (iii) each of the Leases is in full force and effect,  (iv) Tenant has
taken  possession  of the Premises on a rent- paying  basis,  (v) to the best of
Tenant's  knowledge and belief,  neither Tenant nor Landlord is in default under
any of the terms, covenants or provisions of any of the Leases, and (vi) neither
Tenant nor, to the best of Tenant's knowledge and belief, Landlord has commenced
any action or given or received any notice for the purposes of  terminating  any
of the Leases.

         7. Landlord Lease Default.  Tenant shall notify Agent of any default by
Landlord  under any Lease  which  could or would  entitle  Tenant to cancel such
Lease or abate the rent (or any portion thereof) payable to Landlord thereunder.
Tenant agrees that, notwithstanding any provisions of any Lease to the contrary,
no notice of  cancellation  shall be effective  unless Agent shall have received
notice of the  default  giving rise to such  cancellation  and shall have failed
within thirty (30) days after receipt of such notice to cure such default, or if
such default  cannot be cured within thirty (30) days,  shall have failed within
thirty  (30) days after  receipt of such notice to  commence  and to  thereafter
diligently pursue any action necessary to cure such default; provided,  however,
in no event shall such cure  period  extend  beyond  ninety (90) days after such
notice. Nothing contained in this paragraph 8 shall be construed as imposing any
obligation on Agent to cure any default by Landlord under any Lease.

         8.       (a)      Tenant Notices and Agent Audit Access.  Tenant hereby
acknowledges and agrees that, from and after the date hereof (and without regard
to whether any default then exists under any Lease or whether Agent has
exercised any other rights available to it hereunder or under the Security
Documents), (i) Tenant shall deliver to Agent copies of any and all notices
delivered to Landlord pursuant to or otherwise in connection with any Lease,
simultaneously with Tenant's delivery of the same to Landlord, and (ii) all of
the audit, examination, inspection, transcription and related rights of Landlord
pursuant to Section 3.9 and Article 25 of each of the Leases shall inure to the
benefit of Agent and may be exercised by Agent at all the times and to the full
extent provided therein with respect to Landlord.

                  (b) Agent  Receipt  of Rents.  In the  event  Tenant  receives
written  notice from Agent that rentals and/or other monies due under any of the
Leases  are to be paid to Agent,  Tenant  shall pay to  Agent,  or as  otherwise
directed  by  Agent,  by check  made  payable  solely  to Agent or as  otherwise
directed by Agent,  all rentals and other monies due or to become due under such
Leases, and Landlord hereby expressly authorizes Tenant to make such payments to
Agent,  or as  otherwise  directed by Agent and  Landlord  hereby  releases  and
discharges  Tenant of and from any  liability to Landlord on account of any such
payments.  Should Tenant fail to make payment as directed by Agent after receipt
of any such notice  from  Agent,  Tenant  shall  remain  liable to Agent for all
amounts so paid after receipt of such notice.

         9. Insurance,  Casualty and Condemnation.  Notwithstanding any contrary
or inconsistent  provisions  contained in any Lease or in the Credit  Agreement,
with respect to each and every Property which is both (a) part of the Collateral
Pool Assets under the Credit  Facility  and (b) demised to Tenant  pursuant to a
Lease, the following provisions will apply:

                  A.  Insurance  Requirements.  During  the  term of the  Credit
Facility  and for so long as any portion of the  Obligations  (as defined in the
Credit Agreement) shall remain  outstanding,  Tenant shall maintain the types of
insurance  with  respect to the Premises as are  required by the  provisions  of
Article 13 of each of the Leases and shall otherwise perform its obligations set
forth in such Article 13. Notwithstanding anything contained in any Lease to the
contrary,  Tenant shall not be permitted to acquire  insurance through insurance
companies  which are  Affiliates  (as  defined in the  Leases) of Tenant even if
insurance  otherwise  satisfies the  requirements of Section 13.6 of the Leases.
Without  limiting  the  generality  of the  foregoing,  all  insurance  policies
insuring  against  casualty  and  business  interruption  and other  appropriate
policies  required  under the Leases  shall  include  noncontributing  mortgagee
endorsements  in favor of Agent with loss payable to Agent,  as well as standard
waiver of  subrogation  endorsements,  and shall provide that the coverage shall
not be  terminated  or modified,  nor a risk changed  without  thirty (30) days'
advance  written  notice to  Landlord  and Agent.  If any portion of the insured
risks are  re-insured,  the  re-insurance  policies shall contain  "cut-through"
endorsements reasonably satisfactory to Agent. Tenant shall pay the premiums for
such insurance  policies as the same become due and payable.  Not later than ten
(10)  days  prior to the  expiration  date of each of such  insurance  policies,
Tenant will deliver to Agent  certificates  of insurance for a renewal policy or
policies  marked  "premium  paid" or accompanied by other evidence of payment of
premium  reasonably  satisfactory  to  Agent.  If any  insurance  policy or part
thereof  shall expire or be withdrawn or become void by reason of the failure or
impairment  of the  capital  of any  company  in which  the  insurance  shall be
carried,  or if at any time Agent is not in receipt of written evidence that all
insurance  required  hereunder  is in  force  and  effect  or if for any  reason
whatsoever  the insurance  shall be reasonably  unsatisfactory  to Agent,  Agent
shall have the absolute and unconditional right without prior notice to Landlord
or Tenant to take such action as Agent deems  necessary  to protect the interest
of Agents in the Premises,  including without limitation,  the obtaining of such
insurance coverage as Agent deems appropriate,  and  Landlord  agrees to pay to
Agent and upon demand by Agent all expenses  incurred  by Agent in  connection
with  such  action  or by Agents in obtaining  such  insurance  and  keeping it
in effect,  together  with  interest thereon at the  Default  Rate (as  defined
in the Credit Agreement).  Except as otherwise hereinafter specifically provided
below in  subparagraph  B, if any portion of the Premises  shall be damaged or
destroyed,  in whole or in part, by fire or other  property  hazard or casualty,
Tenant  shall give prompt  notice thereof to Agent and Landlord and one hundred
(100%)  percent of the net amount of all insurance  proceeds received by Agent,
Tenant or Landlord as a result of such damage or destruction, after deduction of
reasonable costs and expenses, if any, in collecting the same,  shall be applied
in reduction of  Obligations  (as such term is defined in the Credit Agreement)
under the Credit Facility.

                  B. Application of Insurance to Repair.  Tenant will give Agent
and Landlord prompt notice of any loss or damage to all or any portion of the
Premises, and in the event of any such loss or damage, the following provisions
shall apply:

                  (i)  Settlement.  In case of loss or damage  covered by any of
         the insurance  policies required under Article 13 of any Lease,  Tenant
         shall not have the right to settle  and  adjust  any claim  under  such
         insurance  policies  without the consent of Agent (which  consent shall
         not be unreasonably  withheld or delayed);  provided,  however, that so
         long as no default or event of  default  under such Lease has  occurred
         and is continuing,  Tenant shall have the right, without the consent of
         Agent,  to settle and adjust  claims  relating to an insurance  loss of
         less than $10,000.  Tenant shall, in good faith and with due diligence,
         file and  prosecute  its  claim or  claims  for any such loss or damage
         covered  by the  insurance  policies,  and  shall  cause the same to be
         collected and paid over to Agent;  provided,  however,  Tenant (and, to
         the extent  provided in such Lease,  Landlord)  shall have the right to
         receive  the  proceeds  of claims of less  than  $10,000  as long as no
         default or event of default  under such Lease shall have  occurred  and
         shall be  continuing;  and  provided,  further,  that such proceeds are
         applied  to  reimburse  Tenant  for the cost of  restoring,  repairing,
         replacing or rebuilding  (herein  generally called  "Restoration")  the
         Premises or the affected  portion thereof  subsequent to such damage or
         destruction,  in  accordance  with  subparagraph  (xiv) below.  Each of
         Tenant and  Landlord  hereby  appoints  Agent its  attorney-in-fact  to
         endorse  any  checks,  drafts  or other  instruments  representing  any
         proceeds of such insurance.

                  (ii)  Restoration.  Notwithstanding  anything to the  contrary
         contained in subparagraph (i) above, if at any one time during the term
         of the Credit Facility,  up to (but not more than) three (3) Properties
         shall have been  damaged or destroyed  by fire or other  casualty  such
         that,  simultaneously,  any three (3) Properties are not  substantially
         complete and open for occupancy, provided that the aggregate book value
         plus  depreciation  (i.e.,  "Total  Cost"  as  defined  in  the  Credit
         Agreement)  of such Property or  Properties  (in each case  immediately
         prior  to  the  casualty  in  question)  shall  not  exceed  10% of the
         aggregate  Total Cost of all the Properties  immediately  prior to such
         casualty,  then Agent shall,  in accordance with the provisions of this
         paragraph hereinafter set forth, make available to Tenant for
         Restoration the net amount ("Net  Proceeds") of all insurance  proceeds
         received by Agent as a result of such damage or destruction,  after
         deduction of the reasonable  costs and expenses in collecting  the
         insurance proceeds;  provided,  further,  that (a) no default or event
         of default under such Lease shall have occurred and shall be
         continuing;   (b)  Tenant  shall,  as  soon  as  reasonably practicable
         after such casualty and, in any event, in accordance with the
         applicable  provisions of such Lease, commence and shall thereafter
         diligently  pursue to completion  the  Restoration of the Premises to a
         condition as near as possible to the condition of Premises  immediately
         prior to such  casualty;  (c)  Agent  shall  have  determined  that the
         applicable hotel franchise or license agreement shall not be terminated
         with  respect  to any  Property  as a  result  of such  fire  or  other
         casualty, but will remain in full force and effect during and after the
         completion  of the repair and  restoration  of such Property or that an
         alternative   franchise   agreement  or  commitment   therefor  from  a
         nationally  recognized  franchisor of  comparable or better  reputation
         will be  secured  for  the  Property  within  sixty  (60)  days of such
         casualty;  and (d) such Lease shall not be  terminated  with respect to
         any  Property  as a result  of such fire or other  casualty,  but shall
         remain in full force and effect during and after the  completion of the
         Restoration of such Property(ies).

                  (iii) Tenant Termination/Purchase Option. Nothing contained in
         this  paragraph  shall  be  construed  to  limit,  modify,  vitiate  or
         otherwise  affect  the rights of Tenant  pursuant  to Article 14 of any
         Lease to elect to terminate  such Lease,  to require  Landlord to offer
         the affected  Property or Properties for sale to Tenant, or to purchase
         (or offer to purchase)  the affected  Property or  Properties,  in each
         case in accordance with the terms and provisions of such Article 14, it
         being  understood  and agreed that if Tenant  shall  exercise  any such
         right or option to terminate  such Lease (except in connection  with an
         acquisition  of a Property or  Properties  as provided in Article 14 of
         such Lease), or if such Lease is otherwise  terminated  pursuant to the
         provisions  of Article 14 of such Lease,  Agent shall have the absolute
         and unconditional right to apply the Net Proceeds to the payment of the
         Obligations under the Credit Facility.  Notwithstanding  the foregoing,
         unless Landlord shall have obtained,  in accordance with the provisions
         of Section  2.19(c) of the Credit  Agreement,  Agent's  approval of any
         such  acquisition by Tenant pursuant to Article 14 of such Lease,  such
         acquisition  shall  constitute  an Event  of  Default  and the  subject
         Property  shall remain  subject to the lien of the  Security  Documents
         after the  consummation of such  acquisition.  In any event, the entire
         amount of the Rejectable Offer Price (as defined in such Lease) for any
         such  acquisition  shall  be  paid  to  Agent  for  application  to the
         Obligations in accordance with the provisions of Section 2.19(c) of the
         Credit Agreement.

                  (iv) Tenant Purchase Note Proceeds.  In the event Lender makes
         Net Proceeds available to Tenant for Restoration of any of the
         Properties, Tenant shall be obligated to use such Net Proceeds solely
         for Restoration in accordance with the provisions of the related Leases
         and this paragraph.  If Tenant acquires the affected  Property or
         Properties in accordance  with the provisions of Article 14 of the
         related Leases (which acquisition shall be subject to the provision of
         the foregoing  clause (iii)),  Agent shall disburse the Net Proceeds to
         Tenant (or, at Tenant's  option,  cause the same to be  applied  to the
         Obligations  and  credit  the  amount  of such Net Proceeds against the
         Rejectable Offer Price payable to Agent pursuant to clause (iii)
         above).

                  (v) Approved Work,  Deficiency Deposit and Construction Funds.
         In the event  that Agent  makes Net  Proceeds  available  to Tenant for
         Restoration  of any of  the  Properties,  Tenant  hereby  covenants  to
         restore the same in accordance with plans and specifications reasonably
         approved by Agent,  and Tenant shall cause to be prepared and presented
         to Agent and Landlord a certified construction statement, acceptable to
         Agent,  showing the total estimated cost of the  Restoration  (the work
         being certified in such statement being hereinafter  referred to as the
         "Approved  Work");  if  such  cost  exceeds  the  available   insurance
         proceeds, Landlord shall pay the excess of the amount of such cost over
         the amount of the available insurance proceeds, in cash, to Agent, as a
         condition  precedent to any disbursement of Net Proceeds by Agent. Such
         excess (the "Deficiency  Deposit") shall be held and disbursed by Agent
         pursuant to the  provisions  of this  paragraph  (Net  Proceeds and any
         Deficiency  Deposit  paid  to  Agent  being  hereinafter   referred  to
         collectively as the "Construction  Funds"). Any such Deficiency Deposit
         shall be disbursed prior to the disbursement of any Net Proceeds.

                  (vi) Construction  Funds Account Interest.  Construction Funds
         shall be held by Agent in an interest-bearing account selected by Agent
         in its sole and  absolute  discretion  and may be  commingled  with any
         other  accounts of Agent and until so disbursed  (in strict  accordance
         with the terms hereof),  shall constitute  additional  security for the
         Obligations. Upon the final disbursement of the Construction Funds, the
         party or parties  entitled  thereto shall receive their  respective pro
         rata share of any interest earned thereon.

                  (vii) Monthly  Disbursement.  The Construction  Funds shall be
         made available to Tenant,  not more frequently than once every 30 days,
         as  the   Restoration   of  the  Property  or  Properties  in  question
         progresses.

                  (viii) Consultant; Casualty Retainage. In no event shall Agent
         be obligated to make  disbursements of the Construction Funds in excess
         of an amount equal to the costs actually incurred from time to time for
         work  in  place  as  part  of  the  repair  and   restoration   of  the
         Improvements,  as  certified  by  an  independent  consulting  engineer
         reasonably  acceptable to Agent and Landlord (the "Consultant"),  minus
         the Casualty Retainage.  The term "Casualty  Retainage" as used in this
         paragraph  shall  mean an  amount  equal to 10% of the  costs  actually
         incurred for work in place as part of the  Restoration  of a particular
         Property,   as  certified  by  the  Consultant.   Notwithstanding   the
         foregoing,  the Casualty  Retainage being held by Agent with respect to
         work or materials supplied by any subcontractor  or materialman in
         connection with the Approved Work will be released by Agent,  upon
         request by Tenant,  provided (a) no default or event of default has
         occurred and is continuing under the Security Documents, (b) Consultant
         verifies to Agent that such subcontractor or materialman has completed
         100% of all work and has supplied 100% of all the material  under such
         materialman's  subcontract  and in conformity with the plans and
         specifications  therefor accepted by Agent, Tenant and Consultant,  (c)
         such subcontractor or materialman will be paid in full upon the release
         of the portion of the Casualty Retainage  being held  with  respect  to
         such  subcontractor  or  materialman,  (d) such subcontractor  or
         materialman  executes  and delivers all lien waivers which may be
         reasonably  requested or required by Agent or by the title company
         insuring the lien waivers which may be reasonably requested or required
         by Agent or by the  title  company  insuring  the lien of the Security
         Documents to induce such title  company to insure the lien of the
         Security  Documents  against any mechanic's or  materialman's  lien
         which may be filed by such  subcontractor or materialman,  and (e) if a
         surety  bond is in place in  accordance  with  the  provisions  of this
         Agreement, such release of such portion of the Casualty Retainage shall
         be  approved  by any  surety  company  which has  issued a  payment  or
         performance  bond with respect to such  subcontractor  or  materialman.
         Construction  Funds may be  disbursed  by Agent  directly  or through a
         third  party  escrow  agent,  such  as,  but not  limited  to,  a title
         insurance  company,  or its agents,  as Agent may determine in its sole
         discretion.

                  (ix) Contractor  Certificates  and Lien Waivers.  Tenant shall
         deliver or cause to be delivered to Agent,  with each such Consultant's
         certificate,  sworn  statements  and  lien  waivers  from  the  general
         contractor and such subcontractors as Agent shall determine in its sole
         discretion,  in an amount at least equal to the amount of  Construction
         Funds  to  be  paid  out  to  Tenant  pursuant  to  each   Consultant's
         certificate and dated as of the date of the  disbursement to which they
         relate.

                  (x) Plans  and  Costs.  Tenant  shall  deliver  or cause to be
         delivered to Agent such other evidence as Agent may reasonably request,
         from time to time,  during the  Restoration,  as to the progress of the
         work,  compliance with the approved plans and specifications,  the cost
         of the work and the total amount needed to complete the work.

                  (xi)  Progress  Reports.  Tenant shall  deliver or cause to be
         delivered to Agent,  at no cost to Agent,  such other evidence as Agent
         may  reasonably   request  from  time  to  time   (including,   without
         limitation,  a current title rundown),  showing that there are no liens
         against the Premises filed in connection  with the  Restoration  (other
         than liens  which will be paid with the  Construction  Funds,  provided
         that Agent shall not have previously  disbursed  Construction  Funds to
         Tenant  for the  payment  of the items  which are the  subject  of such
         liens),  that  the  remaining  Construction  Funds  are  sufficient  to
         complete the Restoration,  and that the Security  Documents,  including
         the Mortgages, remain insured as a first priority lien or liens on the
         Premises with the same priority as on the date of the initial
         execution, delivery and recording of the same.

                  (xii) Excess Net Proceeds Deficiency  Deposit.  The excess, if
         any, of the Net Proceeds,  together with  interest  thereon,  after the
         Consultant has certified to Agent that the  Restoration of the Property
         or  Properties in question has been  completed in  accordance  with the
         provisions  of  this  paragraph,   and  Lender  has  received  evidence
         satisfactory  to Agent  that all  costs  incurred  in  connection  with
         Restoration have been paid in full,  shall be disbursed to Tenant,  and
         the  remaining  balance,  if any, of the  Deficiency  Deposit  shall be
         remitted by Agent to Landlord.

                  (xiii) Failure to Perform.  In the event Tenant or Landlord at
         any time shall fail to promptly and fully  perform the  conditions  and
         covenants set forth in this paragraph,  or in the event that during the
         Restoration  a default or an event of default  under the related  Lease
         shall  occur,  Agent may, at its option,  immediately  cease making any
         further payments to Tenant for such  Restoration,  and may further,  at
         its option,  apply the Construction Funds then in its possession either
         to the  Obligations in such order,  priority and  proportions as Lender
         shall elect in its sole and absolute  discretion or to  Restoration  in
         the manner above provided and notwithstanding any such default or event
         of default,  without affecting the liens of the Security  Documents and
         the obligations thereunder or hereunder.

                  (xiv) Minor Casualty. Notwithstanding anything to the contrary
         contained  in this  paragraph,  if the Net  Proceeds  allocable  to any
         individual  Property  shall be less  than  $10,000  and if the costs of
         completing  the  Restoration  shall  be less  than  $10,000,  such  Net
         Proceeds  shall be disbursed by Agent to Tenant upon receipt,  provided
         that no default or event of default under the Lease shall have occurred
         and be continuing,  and provided further, that Tenant delivers to Agent
         a written undertaking  expeditiously to commence the Restoration and to
         complete  the  same  with  due  diligence,   in  a  manner   reasonably
         satisfactory  to Agent and otherwise in accordance  with the provisions
         of this  paragraph.  Upon completion of the  Restoration,  Tenant shall
         deliver to Agent evidence reasonably  satisfactory to Agent, including,
         upon  request of Agent,  lien  waivers,  that such  proceeds  have been
         expended for the  Restoration and the Restoration has been completed in
         good and  workmanlike  manner,  free of liens (other than those held by
         Agent) and in compliance with law.

                  C.       Application of Condemnation Award to Repair.

                  (i) Award.  If all or any portion of the  Premises is taken by
         any  public  or  quasi-public   authority  through  eminent  domain  or
         otherwise,  Agent is hereby  authorized to collect and receive from the
         condemnation authorities the aggregate amount of all awards or payments
         received  as a result of such  taking,  less the  reasonable  costs and
         expenses, if any, incurred in collecting the same (such net amount, the
         "Award").  Agent is hereby  authorized to give appropriate receipts and
         acquittances therefor.  Tenant and Landlord  shall give Agent immediate
         notice of the actual or threatened  commencement of any condemnation or
         eminent domain proceedings affecting all or any part of any of the
         Premises and shall deliver to Agent copies of any and all papers served
         in connection with any such proceedings upon receipt of the same.

                  (ii)  Application  of Award.  The Agent  shall be  entitled to
         apply the amount of any Award made with  respect to the Premises or for
         loss of rent, or for Landlord's loss of business beyond the term of the
         related  Lease,  in  reduction  of the  Obligations  under  the  Credit
         Facility.  Any part of an Award  made  for  loss of  Tenant's  business
         during the  remaining  term of such  Lease,  if any,  for the taking of
         Tenant's  Personal  Property (as defined in such Lease), or for removal
         and relocation expenses of Tenant in any such proceedings shall be paid
         over to Tenant.  Tenant may also make a claim for any additional  award
         to the  extent it does not  diminish  any  portion of the Award due and
         payable for the account of Landlord.

                  (iii)  Notwithstanding  the foregoing,  if up to (but not more
         than) three (3)  Properties  shall have been  affected by such  takings
         such  that   simultaneously,   any  three   (3)   Properties   are  not
         substantially  complete  and  open  for  occupancy,  provided  that the
         aggregate book value plus depreciation  (i.e.,  "Total Cost" as defined
         in the Credit  Agreement) of such Property or Properties  (in each case
         immediately  prior to the taking in  question)  shall not exceed 10% of
         the aggregate Total Cost of all of the Properties  immediately prior to
         such casualty,  then Agent shall,  in accordance with the provisions of
         this paragraph, make the Award available to Landlord for Restoration of
         the  Premises,  provided  that (a) no default or event of default under
         the related  Leases shall have  occurred and shall be  continuing;  (b)
         Tenant shall, as soon as reasonably  practicable after suck taking and,
         in any event, in accordance with applicable  provisions of such related
         Leases,  commence and shall thereafter  diligently pursue to completion
         the  Restoration  of the Premises to a condition as near as possible to
         the  condition of the Premises  immediately  prior to such taking;  (c)
         Agent shall have  determined  that the  applicable  hotel  franchise or
         license  agreement shall not be terminated with respect to any Property
         as a result of such  taking,  but will  remain in full force and effect
         during and after the  completion of the repair and  restoration of such
         Property  or that an  alternative  franchise  agreement  or  commitment
         therefor  from a nationally  recognized  franchisor  of  comparable  or
         better  reputation  will be secured for such Property within sixty (60)
         days of such taking; and (d) the related Leases shall not be terminated
         as a result of such  taking,  but shall remain in full force and effect
         during and after the completion of the Restoration of such Property.

                  (iv)  Administration of Award for Restoration.  Any such Award
         shall be held or  disbursed  and  applied  to  Restoration  in the same
         manner as is  provided  in  subparagraph  B above  with  respect to the
         application of Net Proceeds (it being understood  that for  purposes of
         this   subparagraph  C,  the  term "Construction  Funds"  shall  mean,
         collectively,  the  Award  and any Deficiency  Deposit which may be
         required to be deposited with Agent as a  result of  the  insufficiency
         of the Award to pay the cost of Restoration, and the term "Restoration"
         shall  mean  the  restoring, repairing,  replacing or rebuilding of the
         Premises or any part thereof subsequent to a taking by  condemnation or
         eminent domain of all or any part of the Premises, such Restoration  to
         be completed free of liens (other than the liens held by Agent), in
         compliance with all applicable law and otherwise in accordance with the
         provisions  of the related Lease and this Agreement).  Any Construction
         Funds resulting from the receipt of any Award shall be held and
         disbursed by Agent in the manner provided in subparagraph B above with
         respect to Net Proceeds and shall constitute  additional  security for
         the  Obligations  under the Credit Facility.  The balance of any Award
         remaining  after the completion of Restoration in accordance  with this
         paragraph  shall be  applied to Obligations  under the Credit Facility,
         unless a partial  condemnation materially  impairs the  operations  or
         financial  performance  of the Property,  in which case the Award shall
         be  equitably  apportioned  as provided in Section 15.5 of the related
         Lease,  and  Landlord's  share thereof shall be applied to Obligations
         under the Credit Facility.

                  (v) Nothing  contained in this paragraph shall be construed to
         limit,  modify,  vitiate  or  otherwise  affect the rights of Tenant or
         Landlord pursuant to Article XV of any Lease to elect to terminate such
         Lease, it being  understood and agreed that if Tenant or Landlord shall
         exercise any such right or option to terminate such Lease,  Agent shall
         have the  absolute  and  unconditional  right to apply the Award to the
         payment of the Obligations under the Credit Facility.

                  D.  Provisions  of  Credit  Agreement  and  Lease.  Except  as
expressly  provided to the  contrary  in  subparagraphs  A through C above,  the
provisions  of Section 5 of each of the Mortgages and Articles 14 and 15 of each
of the Leases  remain in full force and effect and the  obligations  of Landlord
thereunder  shall not be modified by the terms and provisions of this Agreement.
In the event of any  conflict  between  the terms and  provisions  of the Credit
Agreement  or the  Leases (as the case may be) and the terms and  provisions  of
this paragraph, the terms of this paragraph shall control.

         10.  Notices.  Any notice,  election,  communication,  request or other
document  or demand  required  or  permitted  under this  Agreement  shall be in
writing and shall be deemed delivered on the earlier to occur of (a) receipt, or
(b) the  date of  delivery,  refusal  or  nondelivery  indicated  on the  return
receipt,  if deposited in a United States  Postal  Service  depository,  postage
prepaid, sent certified or registered mail, return receipt requested, or if sent
via a recognized  commercial courier service providing for a receipt,  addressed
to Tenant or Agent, as the case may be, at the following addresses:

If to Tenant:
               --------------------------------------------


               Attn:
                    ---------------------------------------


with a copy to:
               --------------------------------------------


               Attn:
                    ---------------------------------------






<PAGE>







If to Agent:               Bank One, NA
                                    Corporate Real Estate Division
                                    1 Bank One Plaza, 14th Floor
                                    Mail Suite 0315
                                    Chicago, Illinois  60670
                                    Attn:  Ms. Patricia Leung

with a copy to:            Sonnenschein Nath & Rosenthal
                                    233 South Wacker Drive
                                    8000 Sears Tower
                                    Chicago, Illinois  60606
                                    Attn:  Patrick G. Moran, Esquire

Any party may change its address for  purposes of notices  hereunder by delivery
of written  notice to the other fifteen (15) days prior to the effective date of
such change.

         11. Successors.  The term "Agent" as used herein includes any successor
or assign of the named Agent herein, including without limitation, any purchaser
at a foreclosure  sale and any  transferee  pursuant to an assignment or deed in
lieu of foreclosure,  and their successors and assigns, and the term "Tenant" as
used  herein  includes  any  successor  and assign of the named  Tenant  herein;
provided,  however, that such reference to Tenant's successors and assigns shall
not be  construed  as Agent's  consent to any  assignment  or other  transfer by
Tenant.  The term "Premises" as used herein shall include land and  improvements
now or  hereafter  thereon,  and  estates  therein  encumbered  by the  Security
Documents, and shall mean, unless the context otherwise requires, any individual
hotel property.

         12. Further Assurances. Each of the parties hereto hereby covenants and
agrees  to sign,  execute  and  deliver,  or cause to be  signed,  executed  and
delivered,  and to do or make,  or cause  to be done or  made,  upon  reasonable
request  of the  other  party  hereto  or  Landlord,  any  and  all  agreements,
instruments,  papers,  deeds,  acts or  things,  supplemental,  confirmatory  or
otherwise, as may be reasonably required by the requesting party for the purpose
of or in connection with provisions of this Agreement.

         13. Partial Validity.  If any provision of this Agreement is held to be
invalid or  unenforceable by a court of competent  jurisdiction,  such provision
shall be deemed modified to the extent  necessary to be enforceable,  or if such
modification  is not  practicable,  such provision  shall be deemed deleted from
this Agreement,  and the other provisions of this Agreement shall remain in full
force and effect, and shall be liberally construed in favor of Agent.

         14. Amendments.  Neither this Agreement nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing executed by the party against which enforcement of the
termination, amendment, supplement, waiver or modification is sought.
Additionally, the Leases shall not be modified or amended, nor shall the same be
terminated other than in strict accordance with the terms and provisions
thereof,  without the advance prior written consent of Agent in each instance.

         15. Nonrecourse.  Notwithstanding anything contained to the contrary in
this Agreement or under the terms of the Leases, in the event Agent, the Lenders
or any  assignee,  nominee,  designee or  successor  of the Agent or the Lenders
takes  possession  of  all  or  any  portion  of the  Premises  by  virtue  of a
foreclosure or deed or assignment in lieu of foreclosure, such party's liability
as "Landlord/Lessor"  under the related Leases shall be expressly limited to its
interest in the Properties demised under such Leases..

         16.      Counterparts.  This Agreement may be executed in a number of
identified counterparts.  If so executed, each of such counterparts is to be
deemed an original for all purposes, and all such counterparts shall,
collectively, constitute one agreement, but in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.

         17.        Governing Law. With respect to each Lease and Mortgage, this
Agreement shall be construed in accordance with the laws of the state wherein
the related Property is located.



                   [Balance of Page Intentionally Left Blank]







<PAGE>







                                 SIGNATURE PAGE
                         SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT


                                    BANK ONE, NA, not individually but as Agent
                                    as aforesaid


                                    By:
                                          --------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                          --------------------------------------


STATE OF ILLINOIS,

COUNTY OF COOK, to-wit:

         The foregoing  instrument was  acknowledged  before me in the County of
Cook,   State   of   Illinois,    this   ____   day   of   January,   2001,   by
____________________________________,  as  _____________________________________
of Bank One, NA, on behalf of the bank.

         My commission expires:  ______________________.


                                            -----------------------------
                                            Notary Public

[NOTARIAL SEAL]






<PAGE>







SIGNATURE PAGE

                         SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT


                                    TENANT:



                                    By:
                                          --------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                          --------------------------------------



STATE OF                       ,
         ----------------------

CITY/COUNTY OF                       , to-wit:
               ----------------------

         The foregoing  instrument was acknowledged before me in the City/County
of   ,   State   of   this   ___   day   of   January,   2001,   by  ,   as   of
____________________________, a Delaware corporation, on behalf of the company.

         My commission expires:  ______________________.


                                              -----------------------------
                                              Notary Public

[NOTARIAL SEAL]






<PAGE>







SIGNATURE PAGE

                         SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT


                                    EQUITY INNS PARTNERSHIP, L.P.

                                    By:   Equity Inns Trust, its general partner

                                    By:
                                          --------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                          --------------------------------------




STATE OF                       ,
         ----------------------

CITY/COUNTY OF                       , to-wit:
               ----------------------

         The foregoing  instrument was acknowledged before me in the City/County
of , State of this ___ day of January,  2001,  by , as of Equity  Inns Trust,  a
Maryland  real  estate  investment  trust,  as general  partner  of Equity  Inns
Partnership,   L.P.,  a  Tennessee  limited   partnership,   on  behalf  of  the
partnership.

         My commission expires:  ______________________.


                                              -----------------------------
                                              Notary Public

[NOTARIAL SEAL]






<PAGE>







                      SCHEDULE 1 - [Equity Inns Affiliates]

                                    PREMISES


Name and Location



         [List all Properties in Collateral Pool as of January 1,
         2001]





















<PAGE>







                                   SCHEDULE 2

                              DESCRIPTION OF LEASE

1.  Consolidated Lease Agreement dated as of January 1, 2001 between Equity Inns
Partnership, L.P. and ___________________________________ [insert hotel location
and repeat].










<PAGE>







                                   SCHEDULE 1

                     LIST OF INITIAL COLLATERAL POOL ASSETS

ALABAMA                      ILLINOIS                   TEXAS
-------                      --------                   -----
HAMPTON INN (Mtn. Brook)     HOMEWOOD SUITES            HAMPTON INN (Dallas)
2731 U.S. Highway 280        40 East Grand Avenue       4555 Beltway
Birmingham, AL  35223        Chicago, IL 60611          Addison, TX 75244

ARIZONA                      LOUISIANA                  COMFORT INN
-------                      ---------                  121 East I-20
HAMPTON INN                  AMERISUITES                Arlington, TX 76018
4415 Civic Center Plaza      6080 Bluebonnet Blvd.
Scottsdale, AZ               Baton Rouge, LA 70809

ARKANSAS                     MINNESOTA                  VERMONT
--------                     ---------                  -------
HAMPTON INN                  AMERISUITES (Minneapolis)  RESIDENCE INN
500 West 29                  7800 International Drive   1 Hurricane Lane
N. Little Rock, AR  72114    Bloomington, MN 5542       Williston, VT 05495

COLORADO                     NEVADA                     WASHINGTON
--------                     ------                     ----------
RESIDENCE INN                AMERISUITES                HOMEWOOD SUITES
3880 Academy Blvd.           4520 Paradise Road         206 Western Avenue W.
Colorado Springs, CO  80917  Las Vegas, NV 89109        Seattle, WA 98119

HAMPTON INN                  NORTH CAROLINA             WEST VIRGINIA
7425 Commerce Drive          --------------             -------------
Colorado Springs, CO  80919  HAMPTON INN                HOLIDAY INN
                             1740 Highway 15-501        Rt. 460 By-Pass
FLORIDA                      Chapel Hill, NC 27514      Bluefield, WV 24701
-------
AMERISUITES                  HOLIDAY INN EXPRESS        HOLIDAY INN
3655 NW 82nd Avenue          1700 Winkler Street        340 Oyler Avenue
Miami, FL 33166              Wilkesboro, NC 28697       Oak Hill, WV 25901

AMERISUITES (Kendall)        OHIO
11520 S.W. 88th Street       ----
Miami, FL  33176             AMERISUITES (Cincinnati)
                             11435 Reed Hartman Highway
HOMEWOOD SUITES              Blue Ash, OH 45241
8745 International Drive
Orlando, FL  32819           SOUTH CAROLINA
                             --------------
GEORGIA                      HAMPTON INN
-------                      1094 Chris Drive
HAMPTON INN                  W. Columbia, SC 29169
3400 Northlake Parkway
Atlanta, GA 30345            TENNESSEE
                             ---------
HOMEWOOD SUITES              HAMPTON INN & SUITES
1049 Stevens Creek Rd.       2935 N. Germantown Rd.
Augusta, GA 30907            Bartlett, TN 38133

                             AMERISUITES (Nashville)
                             650 Bakers Bridge Avenue
                             Franklin, TN  37067

                             HAMPTON INN
                             1585 Sycamore View
                             Memphis, TN  38134

                             HAMPTON INN
                             Corner of Hwy, 57 & Old South
                             Pickwick Dam, TN  3836








<PAGE>







                                   SCHEDULE 2

           LIST OF DOCUMENTS TO BE DELIVERED TO ADMINISTRATIVE AGENT
              WITH PROPOSAL FOR ADDITION OF COLLATERAL PROPERTIES

A.        Survey

B.       Title Insurance Commitment

B.       Copies of All Recorded Documents

D.       Flood Insurance, if applicable

E.       Evidence of Casualty and Liability Insurance (or commitment to issue)

F.       Environmental Report/Certification

G.       Permitted Operating Lease (or draft thereof)

H.       Management Agreement (or draft thereof), if applicable

I.       Property Condition Report

J.       Lessee/Manager financials, if applicable

K.       Occupancy Certificate, if available in that jurisdiction

L.       2 years of Historical Operating Statements, unless new construction or
         new acquisition, to the extent Borrower has owned the Property during
         such 2 year period

M.       Pro-Forma Operating Statements, unless new construction or new
         acquisition

N.       Capital Expenditure Budget, unless new construction or new acquisition

O.       Franchisor Commitment

All items shall meet  substantially  the same standards as the prior  deliveries
for the Initial Collateral Properties.






<PAGE>







                                   SCHEDULE 3

                        LIST OF ITEMS TO BE COMPLETED TO
                   FINALIZE ADDITION OF COLLATERAL PROPERTIES

A.       Execution, delivery and recording of applicable Mortgage and Assignment
         of Leases, together with a Limited Recourse Guaranty and joinders to
         the other security documents if the applicable Owner is a Wholly Owned
         Subsidiary

B.       Organizational Documents for the Owner

C.       Opinion of Counsel for Owner

D.       Resolution regarding authority of Owner

E.       Incumbency Certificate regarding Owner

F.       UCC-1 Financing Statements from Owner

G.       Lien Searches

H.       Issuance of Title Insurance Policy and Endorsements, including
         insurance over possible mechanic's lien claims

I.       Receipt of Estoppel Certificates from ground lessor, if applicable

J.       Subordination Agreements with lessee under Permitted Operating Lease
         together with a joinder to the Security Agreement

K.       Lender-Manager Agreement, if applicable

L.       Receipt of Appraisal and confirmation that it conforms to requirements

M.       Franchise Agreement

N.       Permitted Operating Lease

O.       Evidence of Casualty and Liability Insurance






<PAGE>







                                  SCHEDULE 6.19

                            ENVIRONMENTAL COMPLIANCE


         All  environmental  matters  identified  in the  environmental  reports
delivered to Administrative Agent in connection with the Facility.







<PAGE>







                                  SCHEDULE 6.24

                                   TRADE NAMES



                                      None.






<PAGE>







                                  SCHEDULE 6.25

                            SUBSIDIARIES (BORROWERS)



Name                            Entity Type              Percentage Ownership
----                            -----------              --------------------
Equity Inns Partnership, L.P.   Tennessee limited
                                  partnership

ENN Company, Inc.               Tennessee corporation    95.2% non-voting shares

Equity Inns Partnership II,     Tennessee limited        99% limited partner of
  L.P.                            partnership              this entity

Equity Inns/West Virginia       Tennessee limited        99% limited partner of
  Partnership, L.P.               partnership              this entity

EIP Orlando, L.P.               Tennessee limited        99% limited partner of
                                  partnership              this entity

EQI Financing Partnership       Tennessee limited        99% limited partner of
  I, L.P.                         partnership              this entity

EQI Financing Partnership       Tennessee limited        99% limited partner of
  II, L.P.                        partnership              this entity

EQI Financing Partnership       Tennessee limited        99% limited partner of
  III, L.P.                       partnership              this entity

EQI Financing Partnership       Tennessee limited        99% limited partner of
  IV, L.P.                        partnership              this entity

EQI Financing Partnership       Tennessee limited        99% limited partner of
  V, L.P.                         partnership              this entity

EQI/WV Financing Partnership,   Tennessee limited        99% limited partner of
  L.P.                            partnership              this entity

EQI/WV Financing Partnership    Tennessee limited        99% limited partner of
  II, L.P.                        partnership              this entity

Equity Inns Partnership II,     Tennessee limited
  L.P.                            partnership

None

Equity Inns/West Virginia       Tennessee limited
  Partnership, L.P.               partnership

None


<PAGE>


                                  SCHEDULE 7.16

                            SUBSIDIARIES (GUARANTORS)



Name                            Entity Type              Percentage Ownership
----                            -----------              --------------------
Equity Inns, Inc.               Tennessee corporation

Equity Inns Services, Inc.      Tennessee corporation    100% of outstanding
                                                           shares

Equity Inns Trust               Maryland real estate     100% of all interests
                                  investment trust

Equity Inns TRS Holdings,       Tennessee corporation    100% of outstanding
  Inc.                                                     shares

ENN Leasing Company, Inc.       Tennessee corporation    100% of outstanding
                                                           shares by Equity Inns
                                                           TRS Holdings, Inc.

ENN Leasing Company I,          Delaware SP V limited    100% owned by Equity
  L.L.C.                          liability company        Inns TRS Holdings,
                                                           Inc.

ENN Leasing Company II,         Delaware SP V limited    100% owned by Equity
  L.L.C.                          liability company        Inns TRS Holdings,
                                                           Inc.

ENN Leasing Company III,        Delaware SP V limited    100% owned by Equity
   L.L.C.                         liability company        Inns TRS Holdings,
                                                           Inc.

ENN Leasing Company IV,         Delaware SP V limited    100% owned by Equity
   L.L.C.                         liability company        Inns TRS Holdings,
                                                           Inc.

ENN Leasing Company V,          Delaware SP V limited    100% owned by Equity
  L.L.C.                          liability company        Inns TRS Holdings,
                                                           Inc.

Equity Inns Services, Inc.      Tennessee corporation

Equity Inns/West Virginia       Tennessee limited        1% of general
   Partnership, L.P.              partnership              partnership interest

E. Inns Orlando, Inc.           Tennessee corporation    100% of outstanding
   E.I.P. Orlando, L.P.                                    shares

E. Inns Orlando, Inc.           Tennessee limited        E. Inns Orlando, Inc. a
  L.P.                            partnership              1% general
                                                           partnership interest
                                                           in EIP Orlando, L.P.
                                                           and Equity Inns
                                                           Partnership, L.P. is
                                                           a 99% limited partner
                                                           of this entity
Equity Inns Trust               Maryland real estate
                                  investment trust

Equity Inns Partnership,        Tennessee limited        Approximately 96%
  L.P.                            partnership              general partnership
                                                           interest in the
                                                           Operating Parntership

Equity Inns Partnership         Tennessee limited        1% general partnership
  II, L.P.                        partnership               interest


EQI Financing Corporation       Tennessee corporation    100% of outstanding
                                                           shares
EQI Financing Partnership       Tennessee limitmed       Approximately 1%
  I, L.P.                         partnership              general partnership
                                                           by EQI Financing
                                                           Corporation

ENN Company, Inc.               Tennessee corporation    92.5% of outstanding
                                                           shares

EQI Financing Corporation       Tennessee corporation    100% of outstanding
  II                                                       shares

EQI/WV Financing                Tennessee limited        1% general partnership
  Partnership, L.P.               partnership              interest owned by
                                                           EQI Financing
                                                           Corporation II

EQI Financing Partnership       Tennessee corporation    1% general partnership
  II, L.P.                                                 interest owned by
                                                           EQI Financing
                                                           Corporation II

EQI Financing Corporation       Tennessee corporation    100% outstanding
  III                                                      shares

EQI Financing Partnership       Tennessee limited        1% general partnership
  III, L.P.                       partnership              intereste by EQI
                                                           Financing Corporation
                                                           III

EQI/WV Financing Corporation    Tennessee corporation    100% of outstanding
                                                           shares

EQI/WV Financing Partnership    Tennessee limited        1% general partnership
  II, L.P.                        partnership              interest by EQI/WV
                                                           Financing Corporation

EQI Financing Corporation IV    Tennessee corporation    100% of outstanding
                                                           shares

EQI Financing Partnership IV,   Tennessee limited        1% general partnership
  L.P.                            partnership              interest by EQI/WV
                                                           Financing Corporation
                                                           IV

EQI Financing Corporation V     Tennessee corporation    100% of outstanding
                                                           shares

EQI Financing Partnership V,    Tennessee limited        1% general partnership
  L.P.                            partnership              interest by EQI/WV
                                                           Financing Corporation
                                                           V




<PAGE>


                                Table of Contents


SECURED REVOLVING CREDIT AGREEMENT.............................................1

RECITALS.......................................................................2

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS....................................2
-------------------------------------------

   SECTION 1.1    DEFINITIONS.  ...............................................2
   -----------    -----------
   SECTION 1.2    FINANCIAL STANDARDS.........................................19
   -----------    -------------------

ARTICLE II. THE FACILITY......................................................20
------------------------

   SECTION 2.1    THE FACILITY; LIMITATIONS ON BORROWING......................20
   -----------    --------------------------------------
   SECTION 2.2    MATURITY DATE...............................................20
   -----------    -------------
   SECTION 2.3    REQUESTS FOR ADVANCES; RESPONSIBILITY FOR ADVANCES..........21
   -----------    --------------------------------------------------
   SECTION 2.4    EVIDENCE OF CREDIT EXTENSIONS...............................21
   -----------    -----------------------------
   SECTION 2.5    RATABLE AND NON-RATABLE LOANS...............................21
   -----------    -----------------------------
   SECTION 2.6    APPLICABLE MARGINS AND FEES.................................21
   -----------    ---------------------------
   SECTION 2.7    ............................................................22
   -----------
   SECTION 2.8    OTHER FEES..................................................22
   -----------    ----------
   SECTION 2.9    MINIMUM AMOUNT OF EACH ADVANCE..............................22
   -----------    ------------------------------
   SECTION 2.10   INTEREST....................................................22
   ------------   --------
   SECTION 2.11   SELECTION OF RATE OPTIONS AND LIBOR INTEREST PERIODS........23
   ------------   ----------------------------------------------------
   SECTION 2.12   METHOD OF PAYMENT...........................................25
   ------------   -----------------
   SECTION 2.13   DEFAULT.....................................................25
   ------------   -------
   SECTION 2.14   LENDING INSTALLATIONS.......................................26
   ------------   ---------------------
   SECTION 2.15   ............................................................26
   ------------
   SECTION 2.16   SWINGLINE LOANS.............................................26
   ------------   ---------------
   SECTION 2.17   VOLUNTARY REDUCTION OF AGGREGATE COMMITMENT AMOUNT..........27
   ------------   --------------------------------------------------
   SECTION 2.18   INCREASE IN AGGREGATE COMMITMENT............................27
   ------------   --------------------------------
   SECTION 2.19   OPTIONAL PREPAYMENTS; MANDATORY PREPAYMENTS; RELEASE
                  OF PROPERTIES...............................................28
   ------------   ----------------------------------------------------
   SECTION 2.20   PROCEDURES FOR ADDITION OF COLLATERAL POOL ASSETS...........29
   ------------   -------------------------------------------------
   SECTION 2.21   APPLICATION OF MONEYS RECEIVED..............................31
   ------------   ------------------------------

ARTICLE III. THE LETTER OF CREDIT SUBFACILITY.................................31
---------------------------------------------

   SECTION 3.1    OBLIGATION TO ISSUE.........................................31
   -----------    -------------------
   SECTION 3.2    TYPES AND AMOUNTS...........................................32
   -----------    -----------------
   SECTION 3.3    CONDITIONS..................................................32
   -----------    ----------
   SECTION 3.4    PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT........32
   -----------    ----------------------------------------------------
   SECTION 3.5    REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUING BANK...........34
   -----------    -------------------------------------------------
   SECTION 3.6    PARTICIPATION...............................................34
   -----------    -------------
   SECTION 3.7    PAYMENT OF REIMBURSEMENT OBLIGATIONS........................35
   -----------    ------------------------------------
   SECTION 3.8    COMPENSATION FOR FACILITY LETTERS OF CREDIT.................36
   -----------    -------------------------------------------
   SECTION 3.9    LETTER OF CREDIT COLLATERAL ACCOUNT.........................37
   -----------    -----------------------------------

ARTICLE IV. CHANGE IN CIRCUMSTANCES...........................................37
-----------------------------------

   SECTION 4.1    YIELD PROTECTION............................................37
   -----------    ----------------
   SECTION 4.2    CHANGES IN CAPITAL ADEQUACY REGULATIONS.....................38
   -----------    ---------------------------------------
   SECTION 4.3    AVAILABILITY OF LIBOR ADVANCES..............................38
   -----------    ------------------------------
   SECTION 4.4    FUNDING INDEMNIFICATION.....................................39
   -----------    -----------------------
   SECTION 4.5    LENDER STATEMENTS; SURVIVAL OF INDEMNITY....................39
   -----------    ----------------------------------------

ARTICLE V. CONDITIONS PRECEDENT...............................................40
-------------------------------

   SECTION 5.1    CONDITIONS PRECEDENT TO CLOSING.............................40
   -----------    -------------------------------
   SECTION 5.2    CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES AND
                  ISSUANCE. ..................................................44
   -----------    -----------------------------------------------

ARTICLE VI. REPRESENTATIONS AND WARRANTIES....................................44
------------------------------------------

   SECTION 6.1    EXISTENCE...................................................44
   -----------    ---------
   SECTION 6.2    CORPORATE/PARTNERSHIP POWERS................................45
   -----------    ----------------------------
   SECTION 6.3    POWER OF OFFICERS...........................................45
   -----------    -----------------
   SECTION 6.4    GOVERNMENT AND OTHER APPROVALS..............................45
   -----------    ------------------------------
   SECTION 6.5    SOLVENCY....................................................45
   -----------    --------
   SECTION 6.6    COMPLIANCE WITH LAWS........................................46
   -----------    --------------------
   SECTION 6.7    ENFORCEABILITY OF AGREEMENT.................................46
   -----------    ---------------------------
   SECTION 6.8    TITLE TO PROPERTY...........................................46
   -----------    -----------------
   SECTION 6.9    LITIGATION..................................................46
   -----------    ----------
   SECTION 6.10   EVENTS OF DEFAULT...........................................46
   ------------   -----------------
   SECTION 6.11   INVESTMENT COMPANY ACT OF 1940..............................46
   ------------   ------------------------------
   SECTION 6.12   PUBLIC UTILITY HOLDING COMPANY ACT..........................46
   ------------   ----------------------------------
   SECTION 6.13   REGULATION U................................................47
   ------------   ------------
   SECTION 6.14   NO MATERIAL ADVERSE FINANCIAL CHANGE........................47
   ------------   ------------------------------------
   SECTION 6.15   FINANCIAL INFORMATION.......................................47
   ------------   ---------------------
   SECTION 6.16   [INTENTIONALLY OMITTED].....................................47

   SECTION 6.17   ERISA.......................................................47
   ------------   -----
   SECTION 6.18   TAXES.......................................................47
   ------------   -----
   SECTION 6.19   ENVIRONMENTAL MATTERS.......................................47
   ------------   ---------------------
   SECTION 6.20   INSURANCE...................................................48
   ------------   ---------
   SECTION 6.21   NO BROKERS..................................................48
   ------------   ----------
   SECTION 6.22   NO VIOLATION OF USURY LAWS..................................49
   ------------   --------------------------
   SECTION 6.23   NOT A FOREIGN PERSON........................................49
   ------------   --------------------
   SECTION 6.24   NO TRADE NAME...............................................49
   ------------   -------------
   SECTION 6.25   SUBSIDIARIES................................................49
   ------------   ------------
   SECTION 6.26   SECURITY INTERESTS..........................................49
   ------------   ------------------
   SECTION 6.27   COLLATERAL POOL ASSETS......................................49
   ------------   ----------------------

ARTICLE VII. ADDITIONAL REPRESENTATIONS AND WARRANTIES........................51
------------------------------------------------------

   SECTION 7.1    EXISTENCE...................................................51
   -----------    ---------
   SECTION 7.2    CORPORATE OR TRUST POWERS...................................51
   -----------    -------------------------
   SECTION 7.3    POWER OF OFFICERS...........................................51
   -----------    -----------------
   SECTION 7.4    GOVERNMENT AND OTHER APPROVALS..............................52
   -----------    ------------------------------
   SECTION 7.5    COMPLIANCE WITH LAWS........................................52
   -----------    --------------------
   SECTION 7.6    ENFORCEABILITY OF GUARANTY..................................52
   -----------    --------------------------
   SECTION 7.7    LIENS; CONSENTS.............................................52
   -----------    ---------------
   SECTION 7.8    LITIGATION..................................................52
   -----------    ----------
   SECTION 7.9    INVESTMENT COMPANY ACT OF 1940..............................52
   -----------    ------------------------------
   SECTION 7.10   PUBLIC UTILITY HOLDING COMPANY ACT..........................52
   ------------   ----------------------------------
   SECTION 7.11   NO MATERIAL ADVERSE FINANCIAL CHANGE........................52
   ------------   ------------------------------------
   SECTION 7.12   FINANCIAL INFORMATION.......................................52
   ------------   ---------------------
   SECTION 7.13   [INTENTIONALLY OMITTED].....................................53

   SECTION 7.14   ERISA.......................................................53
   ------------   -----
   SECTION 7.15   TAXES.......................................................53
   ------------   -----
   SECTION 7.16   SUBSIDIARIES................................................53
   ------------   ------------
   SECTION 7.17   STATUS......................................................53
   ------------   ------

ARTICLE VIII. AFFIRMATIVE COVENANTS...........................................53
-----------------------------------

   SECTION 8.1    NOTICES.....................................................54
   -----------    -------
   SECTION 8.2    FINANCIAL STATEMENTS, REPORTS, ETC..........................54
   -----------    -----------------------------------
   SECTION 8.3    EXISTENCE AND CONDUCT OF OPERATIONS; LIMITATIONS ON
                  INVESTMENTS.................................................56
   -----------    ---------------------------------------------------
   SECTION 8.4    MAINTENANCE OF PROPERTIES...................................57
   -----------    -------------------------
   SECTION 8.5    INSURANCE...................................................57
   -----------    ---------
   SECTION 8.6    PAYMENT OF OBLIGATIONS......................................57
   -----------    ----------------------
   SECTION 8.8    ADEQUATE BOOKS..............................................57
   -----------    --------------
   SECTION 8.9    ERISA.......................................................57
   -----------    -----
   SECTION 8.10   MAINTENANCE OF STATUS.......................................57
   ------------   ---------------------
   SECTION 8.11   USE OF PROCEEDS.............................................58
   ------------   ---------------
   SECTION 8.12   PRE-ACQUISITION ENVIRONMENTAL INVESTIGATIONS................58
   ------------   --------------------------------------------
   SECTION 8.13   ELIGIBLE PROPERTIES.........................................58
   ------------   -------------------
   SECTION 8.14   REQUIRED REPAIRS............................................58
   ------------   ----------------
   SECTION 8.15   ADDITIONAL ENVIRONMENTAL STUDIES............................58
   ------------   --------------------------------

ARTICLE IX. NEGATIVE COVENANTS................................................58
------------------------------

   SECTION 9.1    CHANGE OF BORROWER OWNERSHIP................................58
   -----------    ----------------------------
   SECTION 9.2    USE OF PROCEEDS.............................................59
   -----------    ---------------
   SECTION 9.3    LEVERAGE; ADDITIONAL RECOURSE INDEBTEDNESS.
                  PERMIT OR SUFFER:...........................................59
   -----------    ------------------------------------------
   SECTION 9.4    DIVIDENDS.  PERMIT OR SUFFER:...............................59
   -----------    ---------
   SECTION 9.5    FLOATING RATE DEBT..........................................60
   -----------    ------------------
   SECTION 9.6    LIENS.......................................................60
   -----------    -----
   SECTION 9.7    FF&E EXPENDITURES...........................................61
   -----------    -----------------
   SECTION 9.8    INDEBTEDNESS, COVERAGE AND NET WORTH COVENANTS.
                  PERMIT OR SUFFER:...........................................62
   -----------    ----------------------------------------------
   SECTION 9.9    MERGERS.....................................................62
   -----------    -------
   SECTION 9.10   MINIMUM BORROWING BASE......................................62
   ------------   ----------------------
   SECTION 9.11   SHARE REPURCHASE............................................62
   ------------   ----------------

ARTICLE X. DEFAULTS...........................................................63
-------------------

   SECTION 10.1   NONPAYMENT OF PRINCIPAL.....................................63
   ------------   -----------------------
   SECTION 10.2   CERTAIN COVENANTS...........................................63
   ------------   -----------------
   SECTION 10.3   NONPAYMENT OF INTEREST AND OTHER OBLIGATIONS................63
   ------------   --------------------------------------------
   SECTION 10.4   CROSS DEFAULT...............................................63
   ------------   -------------
   SECTION 10.5   LOAN DOCUMENTS..............................................64
   ------------   --------------
   SECTION 10.6   REPRESENTATION OR WARRANTY..................................64
   ------------   --------------------------
   SECTION 10.7   COVENANTS, AGREEMENTS AND OTHER CONDITIONS..................64
   ------------   ------------------------------------------
   SECTION 10.8   NO LONGER GENERAL PARTNER...................................64
   ------------   -------------------------
   SECTION 10.9   MATERIAL ADVERSE FINANCIAL CHANGE...........................64
   ------------   ---------------------------------
   SECTION 10.10     BANKRUPTCY...............................................64
   -------------     ----------
   SECTION 10.11     LEGAL PROCEEDINGS........................................65
   -------------     -----------------
   SECTION 10.12     ERISA....................................................65
   -------------     -----
   SECTION 10.13     FAILURE TO SATISFY JUDGMENTS.............................65
   -------------     ----------------------------
   SECTION 10.14     ENVIRONMENTAL REMEDIATION................................65
   -------------     -------------------------
   SECTION 10.15     REIT STATUS..............................................66
   -------------     -----------
   SECTION 10.16     MORTGAGE DEFAULT.........................................66
   -------------     ----------------
   SECTION 10.17     ENFORCEABILITY OF SECURITY DOCUMENTS.....................66
   -------------     ------------------------------------

ARTICLE XI. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES....................66
----------------------------------------------------------

   SECTION 11.1   ACCELERATION................................................66
   ------------   ------------
   SECTION 11.2   PRESERVATION OF RIGHTS; AMENDMENTS..........................66
   ------------   ----------------------------------
   SECTION 11.3   FORECLOSURE.................................................67
   ------------   -----------

ARTICLE XII. THE ADMINISTRATIVE AGENT.........................................68
-------------------------------------

   SECTION 12.1   APPOINTMENT.................................................68
   ------------   -----------
   SECTION 12.2   POWERS......................................................68
   ------------   ------
   SECTION 12.3   GENERAL IMMUNITY............................................68
   ------------   ----------------
   SECTION 12.4   NO RESPONSIBILITY FOR LOANS, RECITALS, ETC..................69
   ------------   ------------------------------------------
   SECTION 12.5   ACTION ON INSTRUCTIONS OF LENDERS...........................69
   ------------   ---------------------------------
   SECTION 12.6   EMPLOYMENT OF ADMINISTRATIVE AGENTS AND COUNSEL.............69
   ------------   -----------------------------------------------
   SECTION 12.7   RELIANCE ON DOCUMENTS; COUNSEL..............................69
   ------------   ------------------------------
   SECTION 12.8   ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION....69
   ------------   --------------------------------------------------------
   SECTION 12.9   RIGHTS AS A LENDER..........................................70
   ------------   ------------------
   SECTION 12.10     LENDER CREDIT DECISION...................................70
   -------------     ----------------------
   SECTION 12.11     SUCCESSOR ADMINISTRATIVE AGENT...........................70
   -------------     ------------------------------
   SECTION 12.12     NOTICE OF DEFAULTS.......................................71
   -------------     ------------------
   SECTION 12.13     REQUESTS FOR APPROVAL....................................71
   -------------     ---------------------
   SECTION 12.14     COPIES OF DOCUMENTS......................................71
   -------------     -------------------
   SECTION 12.15     DEFAULTING LENDERS.......................................71
   -------------     ------------------
   SECTION 12.16     CO-AGENTS: LEAD MANAGERS.................................72
   -------------     ------------------------

ARTICLE XIII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...............72
---------------------------------------------------------------

   SECTION 13.1   SUCCESSORS AND ASSIGNS......................................72
   ------------   ----------------------
   SECTION 13.2   PARTICIPATIONS..............................................73
   ------------   --------------
   SECTION 13.3   ASSIGNMENTS.................................................73
   SECTION 13.4   DISSEMINATION OF INFORMATION................................74
   ------------   ----------------------------
   SECTION 13.5   TAX TREATMENT...............................................75
   ------------   -------------

ARTICLE XIV. GENERAL PROVISIONS...............................................75
-------------------------------

   SECTION 14.1   SURVIVAL OF REPRESENTATIONS.................................75
   ------------   ---------------------------





   SECTION 14.2   GOVERNMENTAL REGULATION.....................................75
   ------------   -----------------------
   SECTION 14.3   TAXES.......................................................75
   ------------   -----
   SECTION 14.4   HEADINGS....................................................75
   ------------   --------
   SECTION 14.6   EXPENSES;...................................................75
   ------------   ---------
   SECTION 14.7   SEVERABILITY OF PROVISIONS..................................76
   ------------   --------------------------
   SECTION 14.8   NONLIABILITY OF THE LENDERS.................................76
   ------------   ---------------------------
   SECTION 14.9   CHOICE OF LAW...............................................76
   ------------   -------------
   SECTION 14.10     CONSENT TO JURISDICTION..................................76
   -------------     -----------------------
   SECTION 14.11     WAIVER OF JURY TRIAL.....................................77
   -------------     --------------------
   SECTION 14.12     ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT..............77
   -------------     -------------------------------------------
   SECTION 14.13     DEALINGS WITH THE BORROWER...............................78
   -------------     --------------------------
   SECTION 14.14     SET-OFF..................................................78
   -------------     -------
   SECTION 14.15     COUNTERPARTS.............................................79
   -------------     ------------
   SECTION 14.16     LIMITATION ON LIABILITY OF EIP/WV........................79
   -------------     ---------------------------------

ARTICLE XV. NOTICES...........................................................79
-------------------

   SECTION 15.1   GIVING NOTICE...............................................79
   ------------   -------------
   SECTION 15.2   CHANGE OF ADDRESS...........................................80
   ------------   -----------------