EXHIBIT 10.4













                          CONSOLIDATED LEASE AGREEMENT

                           DATED AS OF JANUARY 1, 2002

                                     BETWEEN

                         EQUITY INNS PARTNERSHIP, L.P.,

                                    AS LESSOR

                                       AND

                            ENN LEASING COMPANY, INC.

                                    AS LESSEE







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                                                 TABLE OF CONTENTS

ARTICLE I  ....................................................................1
   1.1  Leased Property........................................................1
   1.2  Individual Leased Property.............................................2
   1.3  Separate Lease Agreements..............................................2
   1.4  Term...................................................................2
ARTICLE II  ...................................................................2
ARTICLE III  .................................................................13
   3.1  Rent..................................................................13
   3.2  Confirmation of Percentage Rate.......................................16
   3.3  Additional Charges....................................................17
   3.4  Rent Payable Without Deduction........................................18
   3.5  Conversion of Property................................................18
   3.6  Budgets...............................................................18
   3.7  Approval of Capital Budget............................................19
   3.8  Capital Projects......................................................19
   3.9  Books and Records.....................................................19
ARTICLE IV  ..................................................................19
   4.1  Payment of Impositions................................................19
   4.2  Notice of Impositions.................................................20
   4.3  Adjustment of Impositions.............................................21
   4.4  Utility Charges.......................................................21
   4.5  Insurance Premiums....................................................21
   4.6  Ground Rent...........................................................21
   4.7  Franchise Fees........................................................21
ARTICLE V  ...................................................................21
   5.1  No Termination, Abatement, etc........................................21
   5.2  Abatement Procedures..................................................22
ARTICLE VI  ..................................................................22
   6.1  Ownership of the Leased Property......................................22
   6.2  Lessee's Personal Property............................................22
   6.3  Lessor's Representations..............................................22
   6.4  Lessee's Representations..............................................23
   6.5  Lessor's Lien.........................................................23
ARTICLE VII  .................................................................23
   7.1  Condition of the Leased Property......................................23
   7.2  Use of the Leased Property............................................23
   7.3  Lessor to Grant Easements, etc........................................24
ARTICLE VIII  ................................................................25
   8.1  Compliance with Legal and Insurance Requirements, etc.................25
   8.2  Legal Requirement Covenants...........................................25
   8.3  Environmental Covenants...............................................25
ARTICLE IX  ..................................................................28
   9.1  Maintenance and Repair................................................28
   9.2  Encroachments, Restriction, Etc.......................................29






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ARTICLE X  ...................................................................30
   10.1  Alterations..........................................................30
   10.2  Salvage..............................................................30
   10.3  Joint Use Agreements.................................................30
ARTICLE XI  ..................................................................30
ARTICLE XII  .................................................................31
ARTICLE XIII  ................................................................32
   13.1  General Insurance Requirements.......................................32
   13.2  Responsibility for Premiums..........................................33
   13.3  Replacement Cost.....................................................33
   13.4  Workers' Compensation................................................33
   13.5  Waiver of Subrogation................................................33
   13.6  Form Satisfactory, etc...............................................33
   13.7  Increase in Limits...................................................34
   13.8  Blanket Policy.......................................................34
   13.9  Separate Insurance...................................................34
   13.10  Reports On Insurance Claims.........................................34
ARTICLE XIV  .................................................................35
   14.1  Insurance Proceeds...................................................35
   14.2  Reconstruction in the Event of Damage or Destruction Covered
            by Insurance......................................................35
   14.3  Reconstruction in the Event of Damage or Destruction Not
            Covered by Insurance..............................................36
   14.4  Lessee's Property....................................................37
   14.5  Abatement of Rent....................................................37
   14.6  Damage Near End of Term..............................................37
   14.7  Waiver...............................................................37
ARTICLE XV  ..................................................................37
   15.1  Definitions..........................................................37
   15.2  Parties' Rights and Obligations......................................37
   15.3  Total Taking.........................................................38
   15.4  Allocation of Award..................................................38
   15.5  Partial Taking.......................................................38
   15.6  Temporary Taking.....................................................38
ARTICLE XVI  .................................................................39
   16.1  Events of Default....................................................39
   16.2  Surrender............................................................41
   16.3  Damages..............................................................41
   16.4  Waiver...............................................................42
   16.5  Application of Funds.................................................42
ARTICLE XVII  ................................................................42
ARTICLE XVIII  [INTENTIONALLY OMITTED]........................................43
ARTICLE XIX  .................................................................43
   19.1  REIT Requirements....................................................43
   19.2  Lessee Officer and Employee Limitation...............................45
   19.3  Payments to Affiliates of Lessee.....................................45
   19.4  Management Agreement.................................................45
ARTICLE XX  ..................................................................46






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ARTICLE XXI  .................................................................46
ARTICLE XXII  ................................................................46
ARTICLE XXIII  ...............................................................47
   23.1  Subletting and Assignment............................................47
   23.2  Attornment...........................................................48
ARTICLE XXIV  ................................................................48
ARTICLE XXV  .................................................................49
ARTICLE XXVI  ................................................................49
ARTICLE XXVII  ...............................................................49
ARTICLE XXVIII  ..............................................................49
ARTICLE XXIX  ................................................................49
ARTICLE XXX  .................................................................50
   30.1  Conveyance by Lessor.................................................50
   30.2  Other Interests......................................................50
ARTICLE XXXI  ................................................................50
ARTICLE XXXII  ...............................................................50
ARTICLE XXXIII  ..............................................................50
ARTICLE XXXIV  ...............................................................51
   34.1  Lessor May Grant Mortgages...........................................51
   34.2  Lessee's Right to Cure...............................................51
   34.3  Foreclosure..........................................................52
   34.4  Grant of Easements or Imposition of Restrictions.....................52
   34.5  Outparcels, Leases and Licenses......................................52
ARTICLE XXXV  ................................................................52
   35.1  Miscellaneous........................................................52
   35.2  Transition Procedures................................................53
   35.3  Waiver of Presentment, etc...........................................53
ARTICLE XXXVI  ...............................................................53
ARTICLE XXXVII  [INTENTIONALLY OMITTED].......................................54
ARTICLE XXXVIII  .............................................................54
ARTICLE XXXIX  ...............................................................54
ARTICLE XL  ..................................................................55
ARTICLE XLI  .................................................................55
ARTICLE XLII  ................................................................56
ARTICLE XLIII  ...............................................................56



EXHIBIT A -                Legal Descriptions
EXHIBIT B -                List of the Leases
EXHIBIT C -                Schedule of Lease Terms
EXHIBIT D -                Certain Items Classified as "Capital"
EXHIBIT E -                Form of Operating Budget
EXHIBIT F -                Form of Capital Budget







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                          CONSOLIDATED LEASE AGREEMENT


         THIS CONSOLIDATED LEASE AGREEMENT (this "Lease"), made as of the 1st
day of January, 2001, by and between EQUITY INNS PARTNERSHIP, L.P., a Tennessee
limited partnership (the "Lessor"), and ENN LEASING COMPANY, INC., a Tennessee
corporation (the "Lessee"), provides as follows:

                              W I T N E S S E T H:

         WHEREAS, Lessor and Lessee desire to enter into this Lease to evidence
the terms and conditions upon which Lessor will lease and demise to Lessee the
Leased Property, and the terms and conditions upon which Lessee will lease and
take from Lessor the Leased Property.

         NOW, THEREFORE, intending to be legally bound, Lessor and Lessee agree
that Lessor, in consideration of the payment of rent by Lessee to Lessor, the
covenants and agreements to be performed by Lessee, and upon the terms and
conditions hereinafter stated, does hereby rent and lease unto Lessee, and
Lessee does hereby rent and lease from Lessor, the Leased Property.

                                    ARTICLE I

         1.1      Leased Property.  The Leased Property is comprised of Lessor's
interest in the following:

                  (a) the various parcels of land or ground leasehold interests
         which are subject to the Leases listed on Exhibit B attached hereto and
         more particularly described in the legal descriptions attached hereto
         as Exhibit A (the "Land");

                  (b) all buildings, structures and other improvements of every
         kind, including, but not limited to, alleyways and connecting tunnels,
         sidewalks, utility pipes, conduits and lines (on-site and offsite),
         parking areas and roadways appurtenant to such buildings and structures
         presently situated upon the Land (collectively, the "Leased
         Improvements");

                  (c)    all easements, rights and appurtenances relating to the
         Land and the Leased Improvements;

                  (d) all equipment, machinery, fixtures, and other items of
         property required for or incidental to the use of the Leased
         Improvements as a hotel, including all components thereof, now and
         hereafter permanently affixed to or incorporated into the Leased
         Improvements, including, without limitation, all furnaces, boilers,
         heaters, electrical equipment, heating, plumbing, lighting,
         ventilating, refrigerating, incineration, air and water pollution
         control, waste disposal, air-cooling and air-conditioning systems and
         apparatus, sprinkler systems and fire and theft protection equipment,
         all of which to the greatest extent permitted by law are hereby deemed
         by the parties hereto to constitute real estate, together with all
         replacements, modifications, alterations and additions thereto
         (collectively, the "Fixtures");

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                  (e) all furniture and furnishings and all other items of
         personal property (excluding Inventory and personal property owned by
         Lessee) located on, and used in connection with, the operation of the
         Leased Improvements as a hotel, together with all replacements,
         modifications, alterations and additions thereto; and

                  (f) all existing leases of space within the Leased Property
         (including any security deposits or collateral held by Lessor pursuant
         thereto).

THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, FINANCING INSTRUMENTS, MORTGAGES,
DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER MATTERS WHICH WOULD BE
DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY
THEREOF.

         1.2 Individual Leased Property. The intent of the parties is that this
Lease shall constitute a separate lease for each individual Leased Property and
not all of the Leased Properties collectively or any combination of two or more
of the Leased Properties. Unless the context otherwise requires, "Leased
Property" shall mean any individual hotel property listed in Exhibit B and shall
not mean all of the hotels collectively or any combination of two (2) or more
hotels.

         1.3 Separate Lease Agreements. At the request of either Party, the
other Party shall enter into an individual lease agreement, in form and
substance substantially similar to this Lease, as to any one or more of the
hotel properties listed on Exhibit B providing for Rent attributable to such
hotel properties under this Agreement, and shall cause a subordination agreement
to be executed with respect to any management agreements affecting any hotels
subject to such individual leases.

         1.4 Term. The term of the Lease (the "Term") shall commence on January
1, 2002 (the "Commencement Date") and shall end on ______________, unless sooner
terminated or later renewed and extended in accordance with the provisions
hereof.

                                   ARTICLE II

         Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as are at the time applicable, (c) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (d) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

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         Additional Charges:  As defined in Section 3.3.

         Affiliate: As used in this Lease the term "Affiliate" of a person shall
mean (a) any person that, directly or indirectly, Controls or is Controlled by
or is under common Control with such person, (b) any other person that owns,
beneficially, directly or indirectly, more than fifty percent (50%) of the
outstanding capital stock, shares or equity interests of such person, or (c) any
officer, director, employee, partner or trustee of such person or any person
Controlling, Controlled by or under common Control with such person (excluding
trustees and persons serving in similar capacities who are not otherwise an
Affiliate of such person). The term "person" means and includes individuals,
corporations, general and limited partnerships, stock companies or associations,
joint ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts, or other entities and governments and agencies and
political subdivisions thereof.

         Annual Budgets: As used in this Lease, the term "Annual Budgets" shall
mean the Operating Budget and Capital Budget prepared, delivered and approved in
accordance with Section 3.6.

         Annual Revenue Computation:  As defined in Exhibit C.

         Award:  As defined in Section 15.1(c).

         Base Rate: The rate of interest announced publicly by Citibank, N.A.,
in New York, New York, from time to time, as such bank's base rate. If no such
rate is announced or becomes discontinued, then such other rate as Lessor may
reasonably designate.

         Base Rent:  As defined in Article III.

         Beverage Sales: Gross revenue from (i) the sale of wine, beer, liquor
or other alcoholic beverages, whether sold in the bar or lounge, delivered to a
guest room, sold at meetings or banquets or at any other location at the Leased
Property or from (ii) non-alcoholic beverages sold in the bar or lounge. Such
revenues shall not include the following:

                           (a)      Any gratuity or service charge added to a
                  customer's bill or statement in lieu of a gratuity which is
                  paid to an employee;

                           (b)      Any revenues that are subsequently credited,
                  rebated or refunded in the ordinary course of business; and

                           (c)      Sales taxes or taxes of any other kind
                  imposed on the sale of alcoholic or other beverages.

         Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which national banks in the City of New York, New York, or in
the municipality wherein the Leased Property is located are closed.

         Capital Budget:  As defined in Section 3.6(b).

         Capital Expenditures:  Amounts advanced to pay the costs of Capital
Improvements.

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         Capital Improvements: Improvements to (A) the external walls and
internal load-bearing walls (other than windows and plate glass) of the
Facility; (B) the roof of the Facility; (C) private roadways, parking areas,
sidewalks and curbs appurtenant thereto (other than cleaning, patching and
striping); (D) mechanical, electrical and plumbing systems that service common
areas, entire wings of the Facility or the entire Facility, including conduit
and ductwork connected thereto; and (E) items of the types described on Exhibit
D attached hereto as "Capital items" of the Facility.

         CERCLA:  The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

         Code:  The Internal Revenue Code of 1986, as amended.

         Commencement Date:  As defined in Section 1.4 of the Lease.

         Condemnation, Condemnor:  As defined in Section 15.1.

         Consumer Price Index:  The "Consumer Price Index" published by the
Bureau of Labor Statistics of the United States Department of Labor, U.S. City
Average, All Items for Urban Wage Earners and Clerical Workers (1982-1984 =
100).

         Control: (Including the correlative meanings of the terms "controlled
by" and "under common control with"), as used with respect to any person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, through the ownership
of voting securities, partnership interests or other equity interests.

         Date of Taking:  As defined in Section 15.1(b).

         Eligible Independent Contractor: A management company that meets the
following requirements:

                           (a) The management company does not own, directly or
                  indirectly, more than 35% of the outstanding stock of Equity
                  Inns.

                           (b) If the management company is a corporation, no
                  more than 35% of the total combined voting power of its
                  outstanding stock (or 35% of the total shares of all classes
                  of its outstanding stock) or, if it is not a corporation, no
                  more than 35% of the ownership interest in its assets or
                  profits is owned, directly or indirectly, by one or more
                  Persons owning 35% or more of the outstanding stock of Equity
                  Inns.

                           (c)      Neither Equity Inns, the Lessor, the Lessee,
                  nor any Affiliate thereof derives any income from the
                  management company.

                           (d) At the time that the management company enters
                  into a management agreement with the Lessee to operate the
                  Leased Property, the management company (or any "related
                  person" within the meaning of Section 856(d)(9)(F) of the
                  Code) is actively engaged in the trade or business of
                  operating "qualified lodging facilities"

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                  within the meaning of Section 856(d)(9)(D) of the Code for any
                  Person who is not a "related person" within the meaning of
                  Section 856(d)(9)(F) of the Code with respect to Equity Inns
                  or the Lessee (an "Unrelated Person"). For purposes of
                  determining whether the requirement of this paragraph (d) has
                  been met, a management company shall be treated as being
                  actively engaged in such a trade or business if the management
                  company (i) derives at least 10% of both its profits and
                  revenue from operating "qualified lodging facilities" within
                  the meaning of Section 856(d)(9)(D) of the Code for Unrelated
                  Persons or (ii) complies with any regulations or other
                  administrative guidance under Section 856(d)(9) of the Code
                  that provide a "safe harbor" rule with respect to the amount
                  of hotel management business with Unrelated Persons that is
                  necessary to qualify as an "eligible independent contractor"
                  within the meaning of such Code section.

         Environmental Authority:  Any department, agency or other body or
component of any Government that exercises any form of jurisdiction or authority
under any Environmental Law.

         Environmental Authorization: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.

         Environmental Laws: All applicable federal, state, local and foreign
laws and regulations relating to pollution of the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), including, without limitation, laws and regulations relating to
emissions, discharges, Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials. Environmental
Laws include, but are not limited to, CERCLA, FIFRA, RCRA, SARA and TSCA.

         Environmental Liabilities: Any and all obligations to pay the amount of
any judgment or settlement, the cost of complying with any settlement, judgment
or order for injunctive or other equitable relief, the cost of compliance or
corrective action in response to any notice, demand or request from an
Environmental Authority, the amount of any civil penalty or criminal fine, and
any court costs and reasonable amounts for attorney's fees, fees for witnesses
and experts, and costs of investigation and preparation for the defense of any
claim or any Proceeding, regardless of whether such Proceeding is threatened,
pending or completed, that may be or have been asserted against or imposed upon
Lessor, Lessee, any Predecessor, the Leased Property or any property used
therein and arising out of:

                           (a)      Failure of Lessee, Lessor, any Predecessor
                  or the Leased Property to comply at any time with all
                  Environmental Laws;

                           (b)      Presence of any Hazardous Materials on, in,
                  under, at or in any way affecting the Leased Property;

                           (c)      A Release at any time of any Hazardous
                  Materials on, in, at, under or in any way affecting the Leased
                  Property;

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                           (d)      Identification of Lessee, Lessor or any
                  Predecessor as a potentially responsible party under CERCLA or
                  under any Environmental Law similar to CERCLA;

                           (e) Presence at any time of any above-ground and/or
                  underground storage tanks, as defined in RCRA or in any
                  applicable Environmental Law on, in, at or under the Leased
                  Property or any adjacent site or facility; or

                           (f) Any and all claims for injury or damage to
                  persons or property arising out of exposure to Hazardous
                  Materials originating or located at the Leased Property, or
                  resulting from operation thereof or any adjoining property.

         Equity Inns:  Equity Inns, Inc., a Tennessee corporation.

         Event of Default:  As defined in Section 16.1.

         Facility:  The hotel and/or other facility offering lodging and other
services or amenities being operated or proposed to be operated on the Leased
Property.

         Fair Market Rental: The fair market rental of the Leased Property means
the rental which a willing tenant not compelled to rent would pay a willing
landlord not compelled to lease for the use and occupancy of such Leased
Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder and (b) determined in accordance with the
appraisal procedures set forth in Article XXXIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee.

         Fair Market Value: The fair market value of the Leased Property means
an amount equal to the price that a willing buyer not compelled to buy would pay
a willing seller not compelled to sell for such Leased Property, (a) assuming
the same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Article XXXIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee, (c) assuming that such seller
must pay customary closing costs and title premiums, and (d) taking into account
the positive or negative effect on the value of the Leased Property attributable
to the interest rate, amortization schedule, maturity date, prepayment penalty
and other terms and conditions of any encumbrance that is assumed by the
transferee. In addition, in determining the Fair Market Value with respect to
damaged or destroyed Leased Property such value shall be determined as if such
Leased Property has not been so damaged or destroyed.

         FIFRA:  The Federal Insecticide, Fungicide, and Rodenticide Act, as
amended.

         Fiscal Year:  The 12-month period from January 1 to December 31.

         Fixtures:  As defined in Section 1.1.

         Food Sales: Gross revenue from the sale, for on-site consumption, of
food and non-alcoholic beverages sold at the Leased Property, including in
respect to guest rooms, banquet rooms, meeting rooms and other similar rooms.
Such revenues shall not include the following:

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                           (a)      Vending machine sales;

                           (b)      Any gratuity or service charges added to a
                  customer's bill or statement in lieu of a gratuity which is
                  paid to an employee;

                           (c)      Non-alcoholic beverages sold from the bar or
                  lounge;

                           (d)      Sales taxes or taxes of any other kind
                  imposed on the sale of food or non-alcoholic beverages; and

                           (e)      Any revenues that are subsequently credited,
                  refunded or rebated in the ordinary course of business.

         Franchise Agreement:  Any franchise agreement or license agreement with
a franchisor under which the Facility is operated.

         Furniture and Equipment: For purposes of this Lease, the terms
"furniture and equipment" shall mean collectively all furniture, furnishings,
wall coverings, fixtures and hotel equipment and systems located at, or used in
connection with, the Facility, together with all replacements therefor and
additions thereto, including, without limitation, (i) all equipment and systems
required for the operation of kitchens and bars, if any, laundry and dry
cleaning facilities, (ii) office equipment, (iii) dining room wagons, materials
handling equipment, cleaning and engineering equipment, (iv) telephone and
computerized accounting systems, and (v) vehicles.

         Government: The United States of America, any state, district or
territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any political subdivision of
any of the foregoing.

         Gross Operating Expenses: For purposes of this Lease, the term "Gross
Operating Expenses" shall mean all salaries and employee expense and payroll
taxes (including salaries, wages, bonuses and other compensation of all
employees at the Facility, and benefits including life, medical and disability
insurance and retirement benefits), expenditures described in Section 9.1,
operational supplies, utilities, insurance to be provided by Lessee under the
terms of this Lease, governmental fees and assessments, food, beverages, laundry
service expense, the cost of Inventories and fixed asset supplies, license fees,
advertising, marketing, reservation systems and any and all other operating
expenses as are reasonably necessary for the proper and efficient operation of
the Facility incurred by Lessee in accordance with the provisions hereof
(excluding, however, (i) federal, state and municipal excise, sales and use
taxes collected directly from patrons and guests or as a part of the sales price
of any goods, services or displays, such as gross receipts, admissions, cabaret
or similar or equivalent taxes paid over to federal, state or municipal
governments, (ii) expenditures by Lessor pursuant to Article XIII and (iii)
payments on any Mortgage or other mortgage or security instrument on the Leased
Property); all determined in accordance with generally accepted accounting
principles and the Uniform System. No part of Lessee's central office overhead
or general or administrative expense (as opposed to that of the Facility) shall
be deemed to be a part of Gross Operating

                                        7


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Expenses, as herein provided; provided that accounting services provided to the
Leased Property but performed at Lessee's central office shall be included in
Gross Operating Expenses. Reasonable out- of-pocket expenses of Lessee incurred
for the account of or in connection with the hotel operations, including but not
limited to postage, telephone charges and reasonable travel expenses of
employees, officers and other representatives and consultants of Lessee and its
Affiliates, shall be deemed to be a part of Gross Operating Expenses and such
persons shall be afforded reasonable accommodations, food, beverages, laundry,
valet and other such services by and at the hotel without charge to such persons
or Lessee.

         Gross Operating Profit:  For any Fiscal Year, the excess of Gross
Revenues for such Fiscal Year over Gross Operating Expenses for such Fiscal
Year.

         Gross Revenues: All revenues, receipts, and income of any kind derived
directly or indirectly by Lessee from or in connection with the Facility
(including rentals or other payments from tenants, lessees, licensees or
concessionaires but not including their gross receipts) whether on a cash basis
or credit, paid or collected, determined in accordance with generally accepted
accounting principles and the Uniform System, excluding, however: (i) funds
furnished by Lessor, (ii) federal, state and municipal excise, sales, and use
taxes collected directly from patrons and guests or as a part of the sales price
of any goods, services or displays, such as gross receipts, admissions, cabaret
or similar or equivalent taxes and paid over to federal, state or municipal
governments, (iii) gratuities, (iv) proceeds of insurance and Condemnation, (v)
proceeds from sales other than sales in the ordinary course of business, (vi)
all loan proceeds from financing or refinancings of the hotel or interests
therein or components thereof, (vii) judgments and awards, except any portion
thereof arising from normal business operations of the hotel, and (viii) items
constituting "allowances" under the Uniform System.

         Hazardous Materials:  All chemicals, pollutants, contaminants, wastes
and toxic substances, including without limitation:

                           (a)      Solid or hazardous waste, as defined in RCRA
                  or in any Environmental Law;

                           (b)      Hazardous substances, as defined in CERCLA
                  or in any Environmental Law;

                           (c)      Toxic substances, as defined in TSCA or in
                  any Environmental Law;

                           (d)      Insecticides, fungicides, or rodenticides,
                  as defined in FIFRA or in any Environmental Law; and

                           (e)      Gasoline or any other petroleum product or
                  byproduct, polychlorinated biphenyls, asbestos and urea
                  formaldehyde.

         Hotel: Each hotel and/or other facility offering lodging and other
services or amenities being operated or proposed to be operated on the Leased
Property.

                                        8


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         Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessee or its business conducted upon the Leased Property), assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term), water, sewer or other rents and
charges, excises, tax inspection, authorization and similar fees and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Leased Property or the business conducted thereon by Lessee (including all
interest and penalties thereon caused by any failure in payment by Lessee),
which at any time prior to, during or with respect to the Term hereof may be
assessed or imposed on or with respect to or be a lien upon (a) Lessor's
interest in the Leased Property, (b) the Leased Property, or any part thereof or
any rent therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity conducted
on or in connection with the Leased Property, or the leasing or use of the
Leased Property or any part thereof by Lessee. Nothing contained in this
definition of Impositions shall be construed to require Lessee to pay (1) any
tax based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on Lessor or any other person, or (2) any net revenue tax of
Lessor or any other person, or (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any Leased Property or the proceeds
thereof, or (4) any single business, gross receipts (other than a tax on any
rent received by Lessor from Lessee), transaction, privilege or similar taxes as
the same relate to or are imposed upon Lessor, except to the extent that any
tax, assessment, tax levy or charge that Lessee is obligated to pay pursuant to
the first sentence of this definition and that is in effect at any time during
the Term hereof is totally or partially repealed, and a tax, assessment, tax
levy or charge set forth in clause (1) or (2) is levied, assessed or imposed
expressly in lieu thereof.

         Indemnified Party:  Either of a Lessee Indemnified Party or a Lessor
Indemnified Party.

         Indemnifying Party:  Any party obligated to indemnify an Indemnified
Party pursuant to Section 8.3 or Article XXII.

         Initial Period:  The period ending on the tenth (10th) anniversary of
the last day of the month in which the Commencement Date occurs.

         Insurance Requirements:  All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.

         Inventory: All "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System, including, but not limited to,
linens and other non-depreciable personal property, and including any property
of the type described in Section 1221(1) of the Code.

         Land:  As defined in Article I.

         Lease:  This Lease, as it relates to each Leased Property or all of the
Leased Property as the context may require.

                                        9


<PAGE>





         Leased Improvements; Leased Property:  Each as defined in Article I.

         Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the maintenance,
construction, use or alteration thereof (whether by Lessee or otherwise),
whether or not hereafter enacted and in force, including (a) all laws, rules or
regulations pertaining to the environment, occupational health and safety and
public health, safety or welfare, and (b) any laws, rules or regulations that
may (1) require repairs, modifications or alterations in or to the Leased
Property or (2) in any way adversely affect the use and enjoyment thereof; and
all permits, licenses and authorizations and regulations relating thereto and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee), at any time in force affecting
the Leased Property.

         Lending Institution: Any insurance company, credit company, federally
insured commercial or savings bank, national banking association, savings and
loan association, employees welfare, pension or retirement fund or system,
corporate profit sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, such trust having a net worth of
at least $10,000,000.

         Lessee:  The Lessee designated on this Lease and its permitted
successors and assigns.

         Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's
interest) in Lessee, the officers, directors, stockholders, employees, agents
and representatives of Lessee and any corporate stockholder, agent, or
representative of Lessee, and the respective heirs, personal representatives,
successors and assigns of any such officer, director, stockholder, employee,
agent or representative.

         Lessee's Personal Property:  As defined in Section 6.2.

         Lessor:  The Lessor designated on this Lease and its respective
successors and assigns.

         Lessor Indemnified Party: Lessor, any Affiliate of Lessor, or any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's or
partnership interest) in Lessor, the officers, directors, stockholders,
employees, agents and representatives of the general partner of Lessor and any
partner, agent, or representative of Lessor, and the respective heirs, personal
representatives, successors and assigns of any such officer, director, partner,
stockholder, employee, agent or representative.

         Management Agreement:  As defined in Section 19.4.

         Manager:  As defined in Section 19.4.

         Minimum Price.  The sum of (a) the equity in the Leased Property at the
time of acquisition of the Leased Property by Lessor (i.e., that portion of the
purchase price of the Leased Property paid

                                       10


<PAGE>





by Lessor in cash) plus (b) other capital expenditures on the Leased Property by
Lessor after the date of acquisition by Lessor plus (c) the unpaid principal
balance of all encumbrances against the Leased Property at the time of purchase
of the Leased Property by Lessee, less (x) all proceeds received by Lessor from
any financing or refinancing of the Leased Property after the date of
acquisition by Lessor (after payment of any debt refinanced and net of any costs
and expenses incurred in connection with such financing or refinancing,
including, without limitation, loan points, commitment fees and commissions and
legal fees) and (y) the net amount (after deduction of all reasonable legal fees
and other costs and expenses, including, without limitation, expert witness
fees, incurred by Lessor in connection with obtaining any such proceeds or
award) of all insurance proceeds received by Lessor and awards received by
Lessor from any partial Taking of the Leased Property that are not applied to
restoration.

         Mortgage:  As defined in Section 30.2.

         Notice:  A notice given pursuant to Article XXXII.

         Officer's Certificate: A certificate of Lessee reasonably acceptable to
Lessor, signed by the chief financial officer or other authorized officer of the
entity authorized so to sign on behalf of Lessee, or any other person whose
power and authority to act has been authorized by delegation in writing by any
such officer.

         Operating Budget:  As defined in Section 3.6(a).

         Other Leases:  Any other lease between Lessor and its Affiliate, as
lessor, and Lessee.

         Other Income: All revenues, receipts and income of any kind derived
directly or indirectly from or in connection with the Facility and included in
Gross Revenues, other than Room Revenues, Food Sales and Beverage Sales.

         Overdue Rate: On any date, a rate equal to the Base Rate plus 5% per
annum, but in no event greater than the maximum rate then permitted under
applicable law.

         Payment Date:  Any due date for the payment of any installment of Base
Rent or Percentage Rent.

         Percentage Rent:  As defined in Section 3.1(b).

         Person:  Any Government, natural person, corporation, partnership or
other legal entity.

         Personal Property Taxes: All personal property taxes imposed on the
furniture, furnishings or other items of personal property located on, and used
in connection with, the operation of the Leased Improvements as a hotel (other
than Inventory and other personal property owned by the Lessee), together with
all replacement, modifications, alterations and additions thereto.

         Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by the Lessee,
either contractually or by operation of law, relating to the Leased Property.

                                       11


<PAGE>




         Primary Intended Use:  As defined in Section 7.2(b).

         Proceeding: Any judicial action, suit or proceeding (whether civil or
criminal), any administrative proceeding (whether formal or informal), any
investigation by a governmental authority or entity (including a grand jury),
and any arbitration, mediation or other non-judicial process for dispute
resolution.

         Qualified Manager: A Manager that is (or is controlled by, controlling
or under common control with) either (a) an entity then owned or controlled by
the executive management or shareholders of Equity Inns, or (b) a professional
management company which at the time of its engagement as Manager shall be the
property manager for at least ten (10) hotel properties containing at least one
thousand three hundred (1,300) rooms exclusive of the Leased Properties.

         Quarterly Revenues Computation:  As defined in Exhibit C.

         RCRA:  The Resource Conservation and Recovery Act, as amended.

         Real Estate Taxes: All real estate taxes, including general and special
assessments, if any, which are imposed upon the Land, and any improvements
thereon.

         Rejectable Offer Price:  An amount equal to the greater of (a) the Fair
Market Value, determined as of the applicable purchase date, or (b) the Minimum
Price.

         Release: A "Release" as defined in CERCLA or in any Environmental Law,
unless such Release has been properly authorized and permitted in writing by all
applicable Environmental Authorities or is allowed by such Environmental Law
without authorizations or permits.

         Rent:  Collectively, the Base Rent, Percentage Rent, and Additional
Charges.

         Revenues Computations:  Shall mean, collectively, the Quarterly
Revenues Computation, and the Annual Revenues Computation.

         Room Revenues: Gross revenue from the rental of guest rooms, whether to
individuals, groups or transients, at the Facility, excluding the following:

                           (a)     the amount of all credits, rebates or refunds
                  to customers, guests or patrons; and

                           (b)     all sales taxes or any other taxes imposed on
                  the rental of such guest rooms; and

                           (c)     any fees collected for amenities including,
                  but not limited to, telephone, laundry, movies or concessions.

         SARA:  The Superfund Amendments and Reauthorization Act of 1986, as
amended.

                                       12


<PAGE>





         State:  The State or Commonwealth of the United States in which the
Leased Property is located.

         Subsidiaries:  Corporations in which Lessee owns, directly or
indirectly, more than 50% of the voting stock or Control, as applicable
(individually, a "Subsidiary").

         Taking: A taking or voluntary conveyance during the Term hereof of all
or part of the Leased Property, or any interest therein, or right accruing
thereto or use thereof, as the result of, or in settlement of, any Condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.

         Term:  As defined in Section 1.4.

         TSCA:  The Toxic Substances Control Act, as amended.

         Unavoidable Delays: Delays due to strikes, lock-outs, labor unrest,
inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party under
this Lease or any guaranty of this Lease.

         Uneconomic for its Primary Intended Use: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the governing body of the entity authorized
to act on behalf of the managing member of Lessee, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, among other relevant factors, the number of usable rooms
and projected revenues, such that Lessee intends to, and shall, complete the
cessation of operations from the Leased Facility.

         Uniform System: Shall mean the "Uniform System of Accounts for Hotels"
(9th Revised Edition, 1996) as published by the American Hotel and Motel
Association, as it may be amended from time to time with such exceptions as may
be required by the provision of this Lease.

         Unsuitable for its Primary Intended Use: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the governing body of the entity authorized
to act on behalf of the managing member of Lessee, due to casualty damage or
loss through Condemnation, the Facility cannot function as an integrated hotel
facility consistent with standards applicable to a well maintained and operated
hotel.

                                   ARTICLE III

         3.1 Rent. Lessee will pay to Lessor in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, in immediately available funds, at Lessor's address set forth on
the signature page or at such other place or to such other Person, as Lessor
from time to time may designate in a Notice, all Base Rent, Percentage Rent and
Additional Charges, during the Term, as follows:

                                       13


<PAGE>





                  (a) Base Rent: During the Term, the annual sum in the amount
         set forth on Exhibit C hereto (as adjusted under Section 3.1(e)) as the
         "Base Rent" for the Leased Property, payable in advance in equal,
         consecutive monthly installments, on or before the tenth day of each
         calendar month of the Term ("Base Rent"); provided, however, that the
         first and last monthly payments of Base Rent shall be pro-rated as to
         any partial month (subject to adjustment as provided in Sections 5.2,
         14.5 and 15.3); and

                  (b) Percentage Rent: For each Fiscal Year during the Term
         commencing with the Fiscal Year beginning January 1, 2001, Tenant shall
         pay percentage rent ("Percentage Rent") quarterly, with respect to the
         four calendar quarters of each Fiscal Year (excluding such quarters or
         portions thereof which precede the Commencement Date), in an amount
         calculated by the following formula:


                          The amount equal to the Quarterly Revenues Computation
                          (as defined on Exhibit C attached hereto)

                                              less

                          an amount equal to the Base Rent paid year to date for
                          the applicable Fiscal Year

                                              less

                          an amount equal to Percentage Rent paid year to date
                          for the applicable Fiscal Year

                                              equals

                          Percentage Rent for the applicable quarter.

                  Notwithstanding the amounts of Percentage Rent paid quarterly
pursuant to the formula set forth above, for any Fiscal Year during the Term
commencing with the Fiscal Year in which the Commencement Date occurs, the
Percentage Rent payable under this Lease shall be no less than or greater than
the amount calculated by the following formula:

                           The amount equal to the Annual Revenue Computation
                          (as defined on Exhibit C attached hereto)

                                              less

                           an amount equal to Base Rent paid year to date for
                           the applicable Fiscal Year

                                              equals

                           Percentage Rent for the applicable Fiscal Year.

                                       14


<PAGE>





                  (c) Officer's Certificates. Within 30 days after the last day
         of each quarter of each Fiscal Year (or part thereof) in the Term,
         Lessee shall deliver to Lessor an Officer's Certificate reasonably
         acceptable to Lessor, together with the applicable quarterly Percentage
         Rent payment, setting forth the calculation of Percentage Rent accrued
         and paid for such quarter including the Quarterly Revenues Computation.
         Such quarterly payments shall be based on the formulas set forth in
         Section 3.1(b). There shall be no reduction in the Base Rent regardless
         of the result of the Revenue Computation.

                  In addition, on or before March 31 of each year during the
         Term, Lessee shall deliver to Lessor an Officer's Certificate
         reasonably acceptable to Lessor setting forth the computation of the
         actual Percentage Rent that accrued for each quarter of the Fiscal Year
         that ended on the immediately preceding December 31. Additionally, if
         the annual Percentage Rent due and payable for any Fiscal Year (as
         shown in the applicable Officer's Certificate) exceeds the amount
         actually paid as Percentage Rent by Lessee for such year, Lessee shall
         pay such excess to Lessor at the time such certificate is delivered. If
         the Percentage Rent actually due and payable for such Fiscal Year is
         shown by such certificate to be less than the amount actually paid as
         Percentage Rent for the applicable Fiscal Year, Lessor shall reimburse
         such amount to Lessee.

                  Any difference between the annual Percentage Rent due and
         payable for any Fiscal Year (as shown in the applicable Officer's
         Certificate) and the total amount of quarterly payments for such Fiscal
         Year actually paid by Lessee as Percentage Rent, whether in favor of
         Lessor or Lessee, shall bear interest at the Overdue Rate, which
         interest shall accrue from the due date of the last quarterly payment
         for the Fiscal Year until the amount of such difference shall be paid
         or otherwise discharged. Any such interest payable to Lessor shall be
         deemed to be and shall be payable as Additional Charges.

                  The obligation to pay Percentage Rent due through the date of
         termination of this Lease shall survive the expiration or earlier
         termination of the Term, and a final reconciliation, taking into
         account, among other relevant adjustments, any adjustments which are
         accrued after such expiration or termination date but which related to
         Percentage Rent accrued prior to such termination date, and Lessee's
         good faith best estimate of the amount of any unresolved contractual
         allowances, shall be made not later than two years after such
         expiration or termination date, but Lessee shall advise Lessor within
         60 days after such expiration or termination date of Lessee's best
         estimate at that time of the approximate amount of such adjustments,
         which estimate shall not be binding on Lessee or have any legal effect
         whatsoever.

                  (d) CPI Adjustments. For each Fiscal Year during the Term
         beginning with the Fiscal Year identified as the "CPI Adjustment Date"
         for each Leased Property as shown on Exhibit C, the Base Rent then in
         effect, and the threshold dollar amounts of Room Revenues then included
         in the Revenues Computations set forth in Section 3.1(b), shall be
         adjusted as follows:

                           (1)      The average Consumer Price Index for the
         twelve months ended on September 30 of the most recently completed

                                       15


<PAGE>





                  Fiscal Year shall be divided by the average Consumer Price
                  Index for the twelve months ended on September 30 of the prior
                  Fiscal Year;

                           (2) The new Base Rent for the then current Fiscal
                  Year shall be equal to the product of the Base Rent in effect
                  in the most recently ended Fiscal Year and the quotient
                  obtained under subparagraph (1) above;

                           (3) The new threshold dollar amounts in the
                  applicable Revenues Computations described in Section 3.1(b)
                  above for the then current Fiscal Year shall be the product of
                  the threshold dollar amounts of Room Revenues in effect in the
                  most recently ended Fiscal Year and the quotient obtained in
                  subparagraph (1) above.

                           The amount of any adjustment under paragraphs
         (d)(1)-(3) to Base Rent and the threshold dollar amounts of Room
         Revenues for any Fiscal Year shall not exceed 7% of the Base Rent and
         threshold dollar amounts of Room Revenues applicable for the prior
         Fiscal Year.

                           Lessor shall calculate the annual Consumer Price
         Index adjustments as soon as reasonably possible after the Consumer
         Price Index becomes available and shall notify Lessee in writing of the
         amount of the annual adjustment, together with a copy of the
         computation showing the adjustment amount.

                           Adjustments calculated as set forth above in the Base
         Rent and threshold dollar amounts of Room Revenues shall be effective
         on the CPI Adjustment Date set forth on Exhibit C. If Rent is paid in
         any Fiscal Year prior to determination of the amount of any adjustment
         to Base Rent or the threshold dollar amounts of Room Revenues
         applicable for such Fiscal Year, payment adjustments for any shortfall
         in or overpayment of Rent paid shall be made with the first Base Rent
         payment due after the amount of the adjustments is determined.

                           The "average Consumer Price Index" for any period
         shall be the average of the Consumer Price Index for all months during
         the period.

                           (4) If (1) a significant change is made in the number
                  or nature (or both) of items used in determining the Consumer
                  Price Index, or (2) the Consumer Price Index shall be
                  discontinued for any reason, the Bureau of Labor Statistics
                  shall be requested to furnish a new index comparable to the
                  Consumer Price Index, together with information which will
                  make possible a conversion to the new index in computing the
                  adjusted Base Rent and threshold dollar amounts of Room
                  Revenues hereunder. If for any reason the Bureau of Labor
                  Statistics does not furnish such an index and such
                  information, the parties will instead mutually select, accept
                  and use such other index or comparable statistics on the cost
                  of living in Washington, D.C. that is computed and published
                  by an agency of the United States or a responsible financial
                  periodical of recognized authority.

                                       16


<PAGE>





         3.2 Confirmation of Percentage Rate. Lessee shall utilize, or cause to
be utilized, an accounting system for the Leased Property in accordance with its
usual and customary practices, and in accordance with generally accepted
accounting principles and the Uniform System, that will accurately record all
data necessary to compute Percentage Rent, and Lessee shall retain, for at least
five years after the expiration of each Fiscal Year (and in any event until the
reconciliation described in Section 3.1(d) for such Fiscal Year has been made),
reasonably adequate records conforming to such accounting system showing all
data necessary to compute Percentage Rent for the applicable Fiscal Years.
Lessor, at its expense (except as provided hereinbelow), shall have the right
from time to time by its accountants or representatives to audit the information
that formed the basis for the data set forth in any Officer's Certificate
provided under Section 3.1(d) and, in connection with such audits, to examine
all Lessee's records (including supporting data, sales and excise tax returns
and franchise reports) reasonably required to verify Percentage Rent, subject to
any prohibitions or limitations on disclosure of any such data under Legal
Requirements. If any such audit discloses a deficiency in the payment of
Percentage Rent, and either Lessee agrees with the result of such audit or the
matter is otherwise determined or compromised, Lessee shall forthwith pay to
Lessor the amount of the deficiency, as finally agreed or determined, together
with interest at the Overdue Rate from the date when said payment should have
been made to the date of payment thereof; provided, however, that as to any
audit that is commenced more than two years after the date Percentage Rent for
any Fiscal Year is reported by Lessee to Lessor, the deficiency, if any, with
respect to such Percentage Rent shall bear interest at the Overdue Rate only
from the date such determination of deficiency is made unless such deficiency is
the result of gross negligence or willful misconduct on the part of Lessee, in
which case interest at the Overdue Rate will accrue from the date such payment
should have been made to the date of payment thereof. If any such audit
discloses that the Percentage Rent actually due from Lessee for any Fiscal Year
exceed those reported by Lessee by more than 3%, Lessee shall pay the cost of
such audit and examination. Any proprietary information obtained by Lessor
pursuant to the provisions of this Section shall be treated as confidential,
except that such information may be used, subject to appropriate confidentiality
safeguards, in any litigation between the parties and except further that Lessor
may disclose such information to prospective lenders. The obligations of Lessee
contained in this Section shall survive the expiration or earlier termination of
this Lease.

         3.3 Additional Charges. In addition to the Base Rent and Percentage
Rent, (a) Lessee also will pay and discharge as and when due and payable all
other amounts, liabilities, obligations and Impositions (other than Impositions
which are Lessor's obligations hereunder) and (b) in the event of any failure on
the part of Lessee to pay any of those items referred to in clause (a) of this
Section 3.3, Lessee also will promptly pay and discharge every fine, penalty,
interest and cost that may be added for non-payment or late payment of such
items (the items referred to in clauses (a) and (b) of this Section 3.3 being
additional rent hereunder and being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of non-payment of the Additional Charges as in
the case of non-payment of the Base Rent including, but not limited to, the
right to pay such Additional Charges on behalf of Lessee and to require
reimbursement thereof by Lessee, together with interest thereon at the Overdue
Rate. If any installment of Base Rent, Percentage Rent or Additional Charges
(but only as to those Additional Charges that are payable directly to Lessor)
shall not be paid on its due date, Lessee will pay Lessor on demand, as
Additional

                                       17


<PAGE>





Charges, a late charge (to the extent permitted by law) computed at the Overdue
Rate on the amount of such installment, from the due date of such installment to
the date of payment thereof. To the extent that Lessee pays any Additional
Charges to Lessor pursuant to any requirement of this Lease, Lessee shall be
relieved of its obligation to pay such Additional Charges to the entity to which
they would otherwise be due and Lessor shall pay same from monies received from
Lessee.

         3.4 Rent Payable Without Deduction. The Rent shall be paid to Lessor so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent, Percentage Rent and Additional Charges throughout the Term, all as
more fully set forth in Article V, but subject to any other provisions of this
Lease that expressly provide for adjustment or abatement of Rent or other
charges or expressly provide that certain expenses or maintenance shall be paid
or performed by Lessor.

         3.5 Conversion of Property. If, during the Term, Lessee desires to
provide food and beverage operations at the Facility (other than complimentary
continental breakfast), Lessee shall give notice of such desire to Lessor.
Lessor and Lessee shall then commence negotiations to adjust Rent to reflect the
proposed change to the operation of the Facility, each acting reasonably and in
good faith. All other terms of this Lease will remain substantially the same.
During negotiations, which shall not extend beyond 60 days, Lessee shall not
"convert" the Facility and shall continue fulfilling its obligations under the
existing terms of this Lease. If no agreement is reached after such 60-day
period, Lessee shall withdraw such notice and this Lease shall continue in full
force.

         3.6 Budgets. Not later than sixty (60) days prior to the commencement
of each Fiscal Year, Lessee shall submit the following Budgets to Lessor:

                  (a) An operating budget ("Operating Budget") prepared in
         accordance with this Section 3.6(a), in substantially the form of
         Exhibit E attached hereto. The Operating Budget shall be prepared in
         good faith and otherwise in accordance with the Uniform System to the
         extent applicable and shall show by month and quarter and for the full
         Fiscal Year in the degree of detail specified by the Uniform System,
         the following:

                           (1) Lessee's reasonable estimate of Gross Revenues
                  (including room rates and Room Revenues), Gross Operating
                  Expenses, and Gross Operating Profits for the forthcoming
                  Fiscal Year itemized on schedules on a quarterly basis as
                  approved by Lessor and Lessee, as same may be revised or
                  replaced from time to time by Lessee and approved by Lessor,
                  together with the assumptions, in narrative form, forming the
                  basis of such schedules.

                           (2)      An estimate of the amounts to be dedicated
                  to routine, non-capital repair and maintenance.

                           (3)      A cash flow projection.

                           (4)      Lessee's reasonable estimate of Percentage
                  Rent by quarter for the Fiscal Year.

                           (5)      A narrative description of the program for
                  advertising and marketing the Hotel for the forthcoming Fiscal

                                       18


<PAGE>





                  Year containing a detailed budget itemization of the proposed
                  advertising expenditures by category and the assumptions, in
                  narrative form, forming the basis of such budget itemizations.

                  (b) A capital budget ("Capital Budget") in substantially the
         form of Exhibit F attached hereto, containing a description in
         reasonable detail of the proposed Capital Improvements and an estimate
         of all amounts Lessor will be requested to provide for Capital
         Improvements to the Facility or any of its components for the Fiscal
         Year. The Capital Budget shall be prepared in accordance with the
         Uniform System to the extent applicable.

         3.7 Approval of Capital Budget. Within thirty (30) days following
submission of the Capital Budget to Lessor, Lessor shall give Lessee written
notice either (a) that Lessor approves the Capital Budget or (b) indicating with
reasonable specificity the respects in which Lessor objects to the Capital
Budget. In the latter event, Lessor and Lessee shall act promptly, reasonably
and in good faith to seek to resolve Lessor's objections. In the event that
Lessor and Lessee fail to reach agreement with respect to the Capital Budget
within thirty (30) days after receipt of Lessor's written notice, Lessee and
Lessor shall refer any disputed Capital Budget matter to arbitration using
procedures set forth in Article XLI hereof and each party shall endeavor to
cause such arbitration to be completed as quickly as possible, but in any event
not later than six (6) months following referral to arbitration. In the event
Lessor fails to deliver the notice set forth in this section within the required
time period, the Capital Budget shall be deemed approved. Lessor shall be
obligated to make all Capital Expenditures which are pursuant to a Capital
Budget which has been approved or deemed approved in accordance with the
procedures set forth above.

         3.8      Capital Projects.

                  (a) The selection of all design professionals and contractors
         for capital projects shall be made by Lessor, after consultation with
         Lessee.

                  (b) Lessor may require that all contracts in connection with
         capital projects be subject to competitive bidding procedures
         reasonably acceptable to Lessor. Lessor shall also have the right to
         review and approve all contract bids, whether competitively bid or not.
         Lessor may also retain, at its sole cost and expense, an inspecting
         architect or engineer to monitor costs, time, quality and performance
         for all capital projects.

         3.9 Books and Records. Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Facility on
an accrual basis, all in accordance with the Uniform System and generally
accepted accounting principles and the obligations of Lessee under this Lease.
The books of account and all other records relating to or reflecting the
operation of the Facility shall be kept either at the Facility or at Lessee's
offices and shall be available to Lessor and its representatives and its
auditors or accountants, at all reasonable times for examination, audit,
inspection, and transcription. All of such books and records pertaining to the
Facility, including, without limitation, books of account, guest records and
front office records, at all times shall be the property of Lessor and shall not
be removed from the Facility or Lessee's offices without Lessor's approval.

                                       19


<PAGE>





                                   ARTICLE IV

         4.1 Payment of Impositions. Subject to Article XII relating to
permitted contests, Lessee will pay, or cause to be paid, all Impositions (other
than Real Estate Taxes and Personal Property Taxes, which shall be paid by
Lessor) before any fine, penalty, interest or cost may be added for non-
payment, such payments to be made directly to the taxing or other authorities
where feasible, and will promptly furnish to Lessor copies of official receipts
or other satisfactory proof evidencing such payments. Lessee's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and in such event, shall pay
such installments during the Term hereof (subject to Lessee's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Lessor, at its expense, shall, to the extent required or permitted by
applicable law, prepare and file all tax returns in respect of Lessor's net
income, gross receipts, sales and use, single business, transaction privilege,
rent, ad valorem, franchise taxes, Real Estate Taxes, Personal Property Taxes
and taxes on its capital stock, and Lessee, at its expense, shall, to the extent
required or permitted by applicable laws and regulations, prepare and file all
other tax returns and reports in respect of any Imposition as may be required by
governmental authorities. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Lessee, the same shall be paid over to or
retained by Lessee if no Event of Default shall have occurred hereunder and be
continuing. If an Event of Default shall have occurred and be continuing, any
such refund shall be paid over to or retained by Lessor. Any such funds retained
by Lessor due to an Event of Default shall be applied as provided in Article
XVI. Lessor and Lessee shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. Lessee
shall file all Personal Property Tax returns in such jurisdictions where it is
legally required to so file. Lessor, to the extent it possesses the same, and
Lessee, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
property classified as personal property. Where Lessor is legally required to
file Personal Property Tax returns, Lessee shall provide Lessor with copies of
assessment notices in sufficient time for Lessor to file a protest. Lessor may,
upon notice to Lessee, at Lessor's option and at Lessor's sole expense, protest,
appeal, or institute such other proceedings (in its or Lessee's name) as Lessor
may deem appropriate to effect a reduction of real estate or personal property
assessments for those Impositions to be paid by Lessor, and Lessee, at Lessor's
expense as aforesaid, shall fully cooperate with Lessor in such protest, appeal,
or other action. Lessor hereby agrees to indemnify, defend, and hold harmless
Lessee from and against any claims, obligations, and liabilities against or
incurred by Lessee in connection with such cooperation. Billings for
reimbursement of Personal Property Taxes by Lessee to Lessor shall be
accompanied by copies of a bill therefor and payment thereof which identify the
personal property with respect to which such payments are made. Lessor, however,
reserves the right to effect any such protest, appeal or other action and, upon
notice to Lessee, shall control any such activity, which shall then go forward
at Lessor's sole expense. Upon such notice, Lessee, at Lessor's expense, shall
cooperate fully with such activities.

                                       20


<PAGE>





         4.2 Notice of Impositions. To the extent Lessor is notified of any
Impositions, Lessor shall give prompt Notice to Lessee of such Impositions
payable by Lessee hereunder, provided that Lessor's failure to give any such
Notice shall in no way diminish Lessee's obligations hereunder to pay such
Impositions, but such failure shall obviate any default hereunder for a
reasonable time after Lessee receives Notice of any Imposition which it is
obligated to pay during the first taxing period applicable thereto.

         4.3 Adjustment of Impositions. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.

         4.4 Utility Charges. Lessee will be solely responsible for obtaining
and maintaining utility services to the Leased Property and will pay or cause to
be paid all charges for electricity, gas, oil, water, sewer and other utilities
used in the Leased Property during the Term.

         4.5      Insurance Premiums.  Lessee will pay or cause to be paid all
premiums for the insurance coverages required to be maintained by it under
Article XIII.

         4.6 Ground Rent. In the event that Lessor's interest in the Land is
pursuant to a ground lease, Lessor shall be solely responsible for payment of
any ground rent due with respect to the Leased Property, and shall promptly
deliver to Lessee any default notice received by Lessor pursuant to the ground
lease.

         4.7      Franchise Fees.  Lessee will pay or cause to be paid all
franchise fees due and owing in accordance with the terms and conditions of the
Franchise Agreement.

                                    ARTICLE V

         5.1 No Termination, Abatement, etc. Except as otherwise specifically
provided in this Lease, and except for loss of the Franchise Agreement solely by
reason of any action or inaction by Lessor, Lessee, to the extent permitted by
law, shall remain bound by this Lease in accordance with its terms and shall
neither take any action without the written consent of Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of the Rent, or setoff against the Rent, nor
shall the obligations of Lessee be otherwise affected by reason of (a) any
damage to, or destruction of, any Leased Property or any portion thereof from
whatever cause or any Taking of the Leased Property or any portion thereof, (b)
the lawful or unlawful prohibition of, or restriction upon, Lessee's use of the
Leased Property, or any portion thereof, or the interference with such use by
any Person, corporation, partnership or other entity, or by reason of eviction
by paramount title, (c) any claim which Lessee has or might have against Lessor
by reason of any default or breach of any warranty by Lessor under this Lease or
any other agreement between Lessor and Lessee, or to which Lessor and Lessee are
parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor, or (e) for any other
cause whether similar or dissimilar to any of the foregoing other than a
discharge of Lessee from any such obligations as a matter of law. Lessee hereby
specifically waives all rights, arising from any

                                       21


<PAGE>





occurrence whatsoever, which may now be conferred upon it by law to (1) modify,
surrender or terminate this Lease or quit or surrender the Leased Property or
any portion thereof, or (2) entitle Lessee to any abatement, reduction,
suspension or deferment of the Rent or other sums payable by Lessee hereunder,
except as otherwise specifically provided in this Lease. The obligations of
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.

         5.2 Abatement Procedures. In the event of a partial Taking as described
in Section 15.5, the Lease shall not terminate, but the Base Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Lessee and Lessor, taking into consideration, among other relevant factors, the
number of usable rooms, the amount of square footage, or the revenues affected
by such partial Taking. If Lessor and Lessee are unable to agree upon the amount
of such abatement within 30 days after such partial Taking, the matter may be
submitted by either party to arbitration in accordance with the provisions of
Article XLI hereof for resolution.

                                   ARTICLE VI

         6.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to
the possession and use of the Leased Property upon the terms and conditions of
this Lease.

         6.2 Lessee's Personal Property. Lessee will acquire and maintain
through the Term such Inventory as is required to operate the Leased Property in
the manner contemplated by this Lease. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of personal property
(including Inventory) owned by Lessee. Lessee, at the commencement of the Term,
and from time to time thereafter, shall provide Lessor with an accurate list of
all such items of Lessee's personal property (collectively, the "Lessee's
Personal Property"). Lessee may, subject to the first sentence of this Section
6.2 and the conditions set forth below, remove any of Lessee's Personal Property
set forth on such list at any time during the Term or upon the expiration or any
prior termination of the Term. All of Lessee's Personal Property, other than
Inventory, not removed by Lessee within ten days following the expiration or
earlier termination of the Term shall be considered abandoned by Lessee and may
be appropriated, sold, destroyed, or otherwise disposed of by Lessor without
first giving Notice thereof to Lessee, without any payment to Lessee and without
any obligation to account therefor. Lessee will, at its expense, restore the
Leased Property to the condition required by Section 9.1(d), including repair of
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee or Lessor. Subject to Article XXXVII
[INTENTIONALLY OMITTED], upon the expiration or earlier termination of the Term,
Lessor or its designee shall have the option to purchase all Inventory on hand
at the Leased Property at the time of such expiration or termination for a sale
price equal to the fair market value of such Inventory. Lessee may make such
financing arrangements, title retention agreements, leases or other agreements
with respect to the Lessee's Personal Property as it sees fit provided that
Lessee first advises Lessor of any such arrangement and such arrangement
expressly provides that in the event of Lessee's

                                       22


<PAGE>





default thereunder, Lessor (or its designee) may assume Lessee's obligations and
rights under such arrangement.

         6.3 Lessor's Representations. Lessor represents and warrants that (a)
Lessor has full partnership authority to grant to the Lessee the leasehold
interest described in this Lease, and (b) that this Lease has been duly
authorized by all necessary partnership action on behalf of Lessor and by all
necessary trust action on behalf of the general partner of Lessor.

         6.4 Lessee's Representations. Lessee represents and warrants that (a)
Lessee is a validly existing limited liability company organized under the laws
of the State of Delaware and is qualified to do business in all states in which
it is required to so qualify due to the nature of its business activities, (b)
Lessee has the requisite power and authority to enter into this Lease and (c)
this Lease has been duly authorized by all necessary corporate, partnership or
limited liability company action on behalf of the Lessee and the entity
authorized to act on behalf of the managing member of the Lessee.

         6.5 Lessor's Lien. To the fullest extent permitted by applicable law,
Lessor is granted a lien and security interest on all Lessee's personal property
now or hereinafter placed in or upon the Leased Property, and such lien and
security interest shall remain attached to such Lessee's personal property until
payment in full of all Rent and satisfaction of all of Lessee's obligations
hereunder; provided, however, Lessor shall subordinate its lien and security
interest to that of any non-Affiliate of Lessee which finances such Lessee's
personal property or any non-Affiliate conditional seller of such Lessee's
personal property, the terms and conditions of such subordination to be
satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall,
upon the request of Lessor, execute such financing statements or other documents
or instruments reasonably requested by Lessor to perfect the lien and security
interests herein granted.

                                   ARTICLE VII

         7.1 Condition of the Leased Property. Lessee acknowledges receipt and
delivery of possession of the Leased Property. Lessee has examined and otherwise
has knowledge of the condition of the Leased Property and has found the same to
be satisfactory for its purposes hereunder. Lessee is leasing the Leased
Property "as is" in its present condition. Lessee waives any claim or action
against Lessor in respect of the condition of the Leased Property. LESSOR MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY, OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE LEASED
PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.

         7.2      Use of the Leased Property.

                  (a) Lessee covenants that it will proceed with all due
         diligence and will exercise its best efforts to obtain and to maintain
         all approvals needed to use and operate the Leased Property and the

                                       23


<PAGE>





         Facility under applicable local, state and federal law.

                  (b) Lessee shall use or cause to be used the Leased Property
         only as a hotel facility, and for such other uses as may be necessary
         or incidental to such use or such other use as otherwise approved by
         Lessor (the "Primary Intended Use"). Lessee shall not use the Leased
         Property or any portion thereof for any other use without the prior
         written consent of Lessor, which consent may be granted, denied or
         conditioned upon Lessor's sole discretion. No use shall be made or
         permitted to be made of the Leased Property, and no acts shall be done,
         which will cause the cancellation or increase the premium of any
         insurance policy covering the Leased Property or any part thereof
         (unless another adequate policy satisfactory to Lessor is available and
         Lessee pays any premium increase), nor shall Lessee sell or permit to
         be kept, used or sold in or about the Leased Property any article which
         may be prohibited by law or fire underwriter's regulations. Lessee
         shall, at its sole cost, comply with all of the requirements pertaining
         to the Leased Property of any insurance board, association,
         organization or company necessary for the maintenance of insurance, as
         herein provided, covering the Leased Property and Lessee's Personal
         Property.

                  (c) Subject to the provisions of Articles XIV and XV, Lessee
         covenants and agrees that during the Term it will (1) operate
         continuously the Leased Property as a hotel facility, (2) keep in full
         force and effect and comply with all the provisions of the Franchise
         Agreement (except that Lessee shall have no obligation to complete any
         capital improvements to the Leased Property required by the franchisor
         unless the Lessor funds the costs thereof), (3) not terminate or amend
         the Franchise Agreement without the consent of Lessor, (4) maintain
         appropriate certifications and licenses for such use and (5) will seek
         to maximize the Gross Revenues generated therefrom consistent with
         sound business practices.

                  (d) Lessee shall not commit or suffer to be committed any
         waste on the Leased Property, or in the Facility, nor shall Lessee
         cause or permit any nuisance thereon.

                  (e) Lessee shall neither suffer nor permit the Leased Property
         or any portion thereof, or Lessee's Personal Property, to be used in
         such a manner as (1) might reasonably tend to impair Lessor's (or
         Lessee's, as the case may be) title thereto or to any portion thereof,
         or (2) may reasonably make possible a claim or claims of adverse usage
         or adverse possession by the public, as such, or of implied dedication
         of the Leased Property or any portion thereof, except as necessary in
         the ordinary and prudent operation of the Facility on the Leased
         Property.

                  (f) Lessee agrees to deliver to Lessor upon request by Lessor
         from time to time a list of hotels and motels (and locations) owned or
         managed by Lessee and its Affiliates.

         7.3 Lessor to Grant Easements, etc. Lessor will, from time to time, so
long as no Event of Default has occurred and is continuing, at the request of
Lessee and at Lessee's cost and expense (but subject to the approval of Lessor,
which approval shall not be unreasonably withheld or delayed), (a) grant
easements and other rights in the nature of easements with respect to the Leased
Property to third parties, (b) release existing easements or other rights in the
nature of easements which are for the benefit of the Leased Property, (c)
dedicate or transfer unimproved portions of the Leased

                                       24


<PAGE>





Property for road, highway or other public purposes, (d) execute petitions to
have the Leased Property annexed to any municipal corporation or utility
district, (e) execute amendments to any covenants and restrictions affecting the
Leased Property and (f) execute and deliver to any person any instrument
appropriate to confirm or effect such grants, releases, dedications, transfers,
petitions and amendments (to the extent of its interests in the Leased
Property), but only upon delivery to Lessor of an Officer's Certificate stating
that such grant, release, dedication, transfer, petition or amendment does not
interfere with the proper conduct of the business of Lessee on the Leased
Property and does not materially reduce the value of the Leased Property.

                                  ARTICLE VIII

         8.1 Compliance with Legal and Insurance Requirements, etc. Subject to
Section 8.3(b) below and Article XII relating to permitted contests, Lessee, at
its expense, will promptly (a) comply with all applicable Legal Requirements and
Insurance Requirements in respect of the use, operation, maintenance, repair and
restoration of the Leased Property, and (b) procure, maintain and comply with
all appropriate licenses and other authorizations required for any use of the
Leased Property and Lessee's Personal Property then being made, and for the
proper erection, installation, operation and maintenance of the Leased Property
or any part thereof.

         8.2 Legal Requirement Covenants. Subject to Section 8.3(b) below,
Lessee covenants and agrees that the Leased Property and Lessee's Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not
permit or suffer to exist any unlawful use of the Leased Property by others.
Lessee shall acquire and maintain all appropriate licenses, certifications,
permits and other authorizations and approvals needed to operate the Leased
Property in its customary manner for the Primary Intended Use, and any other
lawful use conducted on the Leased Property as may be permitted from time to
time hereunder. Lessee further covenants and agrees that Lessee's use of the
Leased Property and maintenance, alteration, and operation of the same, and all
parts thereof, shall at all times conform to all Legal Requirements, unless the
same are finally determined by a court of competent jurisdiction to be unlawful
(and Lessee shall cause all such sub-tenants, invitees or others to so comply
with all Legal Requirements). Lessee may, however, upon prior Notice to Lessor,
contest the legality or applicability of any such Legal Requirement or any
licensure or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights hereunder, and
at Lessee's sole expense. If by the terms of any such Legal Requirement
compliance therewith pending the prosecution of any such proceeding may legally
be delayed without the incurrence of any lien, charge or liability of any kind
against the Facility or Lessee's leasehold interest therein and without
subjecting Lessee or Lessor to any liability, civil or criminal, for failure so
to comply therewith, Lessee may delay compliance therewith until the final
determination of such proceeding. If any lien, charge or civil or criminal
liability would be incurred by reason of any such delay, Lessee, on the prior
written consent of Lessor, which consent shall not be unreasonably withheld, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Lessor to criminal liability and Lessee both (a) furnishes to
Lessor security reasonably satisfactory to Lessor against any loss or injury by
reason of such contest or delay and (b) prosecutes the contest with due
diligence and in good faith.

         8.3      Environmental Covenants.  Lessor and Lessee (in addition to,
and not in diminution of, Lessee's covenants and undertakings in Sections 8.1
and 8.2 hereof) convenant and agree as follows:

                                       25


<PAGE>





of, Lessee's covenants and undertakings in Sections 8.1 and 8.2 hereof) covenant
and agree as follows:

                  (a) At all times hereafter until the later of (i) such time as
         all liabilities, duties or obligations of Lessee to the Lessor under
         the Lease have been satisfied in full and (ii) such time as Lessee
         completely vacates the Leased Property and surrenders possession of the
         same to Lessor, Lessee shall fully comply with all Environmental Laws
         applicable to the Leased Property and the operations thereon. Lessee
         agrees to give Lessor prompt written notice of (1) all Environmental
         Liabilities; (2) all pending, threatened or anticipated Proceedings,
         and all notices, demands, requests or investigations, relating to any
         Environmental Liability or relating to the issuance, revocation or
         change in any Environmental Authorization required for operation of the
         Leased Property; (3) all Releases at, on, in, under or in any way
         affecting the Leased Property, or any Release known by Lessee at, on,
         in or under any property adjacent to the Leased Property; and (4) all
         facts, events or conditions that could reasonably lead to the
         occurrence of any of the above-referenced matters.

                  (b) Lessor hereby agrees to defend, indemnify and save
         harmless any and all Lessee Indemnified Parties from and against any
         and all Environmental Liabilities other than Environmental Liabilities
         which were caused by the acts, or grossly negligent failures to act, of
         Lessee.

                  (c) Lessee hereby agrees to defend, indemnify and save
         harmless any and all Lessor Indemnified Parties from and against any
         and all Environmental Liabilities which were caused by the acts, or
         grossly negligent failures to act, of Lessee.

                  (d) If any Proceeding is brought against any Indemnified Party
         in respect of an Environmental Liability with respect to which such
         Indemnified Party may claim indemnification under either Section 8.3(b)
         or (c), the Indemnifying Party, upon request, shall at its sole expense
         resist and defend such Proceedings, or cause the same to be resisted
         and defended by counsel designated by the Indemnified Party and
         approved by the Indemnifying Party, which approval shall not be
         unreasonably withheld; provided, however, that such approval shall not
         be required in the case of defense by counsel designated by any
         insurance company undertaking such defense pursuant to any applicable
         policy of insurance. Each Indemnified Party shall have the right to
         employ separate counsel in any such Proceeding and to participate in
         the defense thereof, but the fees and expenses of such counsel will be
         at the sole expense of such Indemnified Party unless such counsel has
         been approved by the Indemnifying Party, which approval shall not be
         unreasonably withheld. The Indemnifying Party shall not be liable for
         any settlement of any such Proceeding made without its consent, which
         shall not be unreasonably withheld, but if settled with the consent of
         the Indemnifying Party, or if settled without its consent (if its
         consent shall be unreasonably withheld), or if there be a final
         nonappealable judgment for an adversary party in any such Proceeding,
         the Indemnifying Party shall indemnify and hold harmless the
         Indemnified Parties from and against any liabilities incurred by such
         Indemnified Parties by reason of such settlement or judgment.

                  (e)      At any time any Indemnified Party has reason to
         believe circumstances exist

                                       26


<PAGE>





         which could reasonably result in an Environmental Liability, upon
         reasonable prior written notice to Lessee stating such Indemnified
         Party's basis for such belief, an Indemnified Party shall be given
         immediate access to the Leased Property (including, but not limited to,
         the right to enter upon, investigate, drill wells, take soil borings,
         excavate, monitor, test, cap and use available land for the testing of
         remedial technologies), Lessee's employees, and to all relevant
         documents and records regarding the matter as to which a
         responsibility, liability or obligation is asserted or which is the
         subject of any Proceeding; provided that such access may be conditioned
         or restricted as may be reasonably necessary to ensure compliance with
         law and the safety of personnel and facilities or to protect
         confidential or privileged information. All Indemnified Parties
         requesting such immediate access and cooperation shall endeavor to
         coordinate such efforts to result in as minimal interruption of the
         operation of the Leased Property as practicable.

                  (f) The indemnification rights and obligations provided for in
         this Article VIII shall be in addition to any indemnification rights
         and obligations provided for elsewhere in this Lease.

                  (g) The indemnification rights and obligations provided for in
         this Article VIII shall survive the termination of this Agreement.

                  For purposes of this Section 8.3, all amounts for which any
Indemnified Party seeks indemnification shall be computed net of (a) any actual
income tax benefit resulting therefrom to such Indemnified Party, (b) any
insurance proceeds received (net of tax effects) with respect thereto, and (c)
any amounts recovered (net of tax effects) from any third parties based on
claims the Indemnified Party has against such third parties which reduce the
damages that would otherwise be sustained; provided that in all cases, the
timing of the receipt or realization of insurance proceeds or income tax
benefits or recoveries from third parties shall be taken into account in
determining the amount of reduction of damages. Each Indemnified Party agrees to
use its reasonable efforts to pursue, or assign to Lessee or Lessor, as the case
may be, any claims or rights it may have against any third party which would
materially reduce the amount of damages otherwise incurred by such Indemnified
Party.

                  Notwithstanding anything to the contrary contained in this
Lease, if Lessor shall become entitled to the possession of the Leased Property
by virtue of the termination of the Lease or repossession of the Leased
Property, then Lessor may assign its indemnification rights under Section 8.3 of
this Lease (but not any other rights hereunder) to any Person to whom the Lessor
subsequently transfers the Leased Property, subject to the following conditions
and limitations, each of which shall be deemed to be incorporated into the terms
of such assignment, whether or not specifically referred to therein:

                           (1) The indemnification rights referred to in this
                  section may be assigned only if a known Environmental
                  Liability then exists or if a Proceeding is then pending or,
                  to the knowledge of Lessee or Lessor, then threatened with
                  respect to the Leased Property;

                           (2)      Such indemnification rights shall be limited
                  to Environmental Liabilities relating to or specifically
                  affecting the Leased Property; and

                                       27


<PAGE>





                           (3) Any assignment of such indemnification rights
                  shall be limited to the immediate transferee of Lessor and
                  shall not extend to any such transferee's successors or
                  assigns.

                                   ARTICLE IX

         9.1      Maintenance and Repair.

                  (a) Unless caused by Lessee's negligence or willful misconduct
         or that of its employees or agents, Lessee shall not be required to
         bear the cost of any Capital Improvements, including (without
         limitation) Capital Improvements required by the Franchisor under the
         Franchise Agreement. Lessor shall be responsible for all Capital
         Expenditures, subject to (i) Lessor's right to approve all Capital
         Expenditures, in connection with Lessor's approval or deemed approval
         of the Capital Budget pursuant to Section 3.7 and (ii) Lessor's right
         in its sole discretion to refuse to make any Capital Expenditure
         required by the Franchisor; provided that, if such refusal results in a
         default under or termination of the Franchise Agreement, Lessor shall
         be responsible for all damages, termination payments payable by Lessee
         under the terms of the Franchise Agreement, application fees for a new
         franchise license approved by Lessor, increased royalty fees and other
         costs arising out of such refusal or out of the resulting need to apply
         for and enter into a substitute franchise license agreement. Except as
         set forth in the preceding sentence, nothing herein shall be construed
         to require Lessor to build or rebuild any improvement on the Leased
         Property, or to fund any repairs, replacements, alterations,
         restorations or renewals of any nature or description to the Leased
         Property, whether ordinary or extraordinary, foreseen or unforeseen, or
         to make any expenditure whatsoever with respect thereto, in connection
         with this Lease, or to maintain the Leased Property in any way. Lessee
         hereby waives, to the extent permitted by law, the right to make
         repairs at the expense of Lessor pursuant to any law in effect at the
         time of the execution of this Lease or hereafter enacted. Lessor shall
         have the right to give, record and post, as appropriate, notices of
         nonresponsibility under any mechanic's lien laws now or hereafter
         existing.

                  (b) Lessee will keep the Leased Property and all private
         roadways, sidewalks and curbs appurtenant thereto that are under
         Lessee's control, including windows and plate glass, parking lots,
         mechanical, electrical and plumbing systems and equipment (including
         conduit and ductwork), and non-load bearing interior walls, in good
         order and repair, except for ordinary wear and tear (whether or not the
         need for such repairs occurred as a result of Lessee's use, any prior
         use, the elements or the age of the Leased Property, or any portion
         thereof), and, except as otherwise provided in Articles XIV or XV, with
         reasonable promptness, make all necessary and appropriate repairs,
         replacements, and improvements thereto of every kind and nature,
         whether interior or exterior, ordinary or extraordinary, foreseen or
         unforeseen, or arising by reason of a condition existing prior to the
         commencement of the Term of this Lease (concealed or otherwise), or
         required by any governmental agency having jurisdiction over the Leased
         Property, except as to the structural elements of the Leased
         Improvements. Lessee, however, shall be permitted to prosecute claims
         against Lessor's predecessors in title for breach of any representation
         or warranty or

                                       28


<PAGE>





         for any latent defects in the Leased Property to be maintained by
         Lessee unless Lessor is already diligently pursuing such a claim. All
         repairs shall, to the extent reasonably achievable, be at least
         equivalent in quality to the original work. Lessee will not take or
         omit to take any action, the taking or omission of which might
         materially impair the value or the usefulness of the Leased Property or
         any part thereof for its Primary Intended Use. Notwithstanding any
         other provision of this Lease, however, other than under Articles XIV
         and XV on the conditions set forth therein, Lessee shall not be
         required to bear the costs of complying with this section with respect
         to items classified as capital items under U.S. generally accepted
         accounting principles, but shall be required to comply with this
         section as to such items if and to the extent that amounts made
         available therefor by Lessor from the reserve required to be
         established by Lessor under Article XXXIX or are otherwise provided by
         Lessor.

                  (c) Nothing contained in this Lease and no action or inaction
         by Lessor shall be construed as (i) constituting the request of Lessor,
         expressed or implied, to any contractor, subcontractor, laborer,
         materialman or vendor to or for the performance of any labor or
         services or the furnishing of any materials or other property for the
         construction, alteration, addition, repair or demolition of or to the
         Leased Property or any part thereof, or (ii) giving Lessee any right,
         power or permission to contract for or permit the performance of any
         labor or services or the furnishing of any materials or other property
         in such fashion as would permit the making of any claim against Lessor
         in respect thereof or to make any agreement that may create, or in any
         way be the basis for any right, title, interest, lien, claim or other
         encumbrance upon the estate of Lessor in the Leased Property, or any
         portion thereof.

                  (d) Lessee will, upon the expiration or prior termination of
         the Term, vacate and surrender the Leased Property to Lessor in the
         condition in which the Leased Property was originally received from
         Lessor, except as repaired, rebuilt, restored, altered or added to as
         permitted or required by the provisions of this Lease and except for
         ordinary wear and tear (subject to the obligation of Lessee to maintain
         the Leased Property in accordance with Section 9.1(b) above during the
         entire Term of the Lease), or damage by casualty or Condemnation
         (subject to the obligations of Lessee to restore or repair as set forth
         herein).

         9.2 Encroachments, Restriction, Etc. If any of the Leased Improvements,
at any time, materially encroach upon any property, street or right-of-way
adjacent to the Leased Property, or violate the agreements or conditions
contained in any lawful restrictive covenant or other agreement affecting the
Leased Property, or any part thereof, or impair the rights of others under any
easement or right-of-way to which the Leased Property is subject, then promptly
upon the request of Lessor or at the behest of any person affected by any such
encroachment, violation or impairment, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of an adverse final determination, either (a)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Lessor or Lessee or (b) make such changes in the Leased
Improvements, and take such other actions, as Lessee in the good faith exercise
of its judgment deems reasonably practicable to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the

                                       29


<PAGE>





operation of the Leased Improvements for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements were operated prior to
the assertion of such violation, impairment or encroachment. Any such alteration
shall be made in conformity with the applicable requirements of Article X.
Lessee's obligations under this Section 9.2 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance held by Lessor.

                                    ARTICLE X

         10.1 Alterations. After receiving approval of Lessor, which approval
shall not be unreasonably withheld, Lessee shall have the right to make such
additions, modifications or improvements to the Leased Property from time to
time as Lessee deems desirable for its permitted uses and purposes, provided
that such action will not significantly alter the character or purposes or
significantly detract from the value or operating efficiency thereof and will
not significantly impair the revenue-producing capability of the Leased Property
or adversely affect the ability of the Lessee to comply with the provisions of
this Lease. The cost of such additions, modifications or improvements to the
Leased Property shall be paid by Lessee, and all such additions, modifications
and improvements shall, without payment by Lessor at any time, be included under
the terms of this Lease and upon expiration or earlier termination of this Lease
shall pass to and become the property of Lessor. Nothing set forth in this
Section 10.1 is intended to abrogate or limit Lessor's obligations to make
Capital Expenditures as set forth in the approved Capital Budget pursuant to
Section 3.7.

         10.2 Salvage. All materials which are scrapped or removed in connection
with the making of repairs required by Articles IX or X shall be or become the
property of Lessor or Lessee depending on which party is paying for or providing
the financing for such work.

         10.3 Joint Use Agreements. If Lessee constructs additional improvements
that are connected to the Leased Property or share maintenance facilities, HVAC,
electrical, plumbing or other systems, utilities, parking or other amenities,
the parties shall enter into a mutually agreeable cross-easement or joint use
agreement, the form of which has been approved in advance by Lessor, to make
available necessary services and facilities in connection with such additional
improvements, to protect each of their respective interests in the properties
affected, and to provide for separate ownership, use, and/or financing of such
improvements.

                                   ARTICLE XI

         Liens. Subject to the provision of Article XII relating to permitted
contests, Lessee will not directly or indirectly create or allow to remain and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, included as exceptions in the title policy
insuring Lessor's interest in the Leased Property, (c) restrictions, liens and
other encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens for
those taxes upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Article XXIII hereof, (f) liens for Impositions or for
sums resulting from noncompliance with Legal Requirements so long as (1) the
same are not yet payable or are payable without the addition of any

                                       30


<PAGE>





fine or penalty or (2) such liens are in the process of being contested as
permitted by Article XII, (g) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed or not yet due, provided that (1)
the payment of such sums shall not be postponed under any related contract for
more than 60 days after the completion of the action giving rise to such lien
and such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article XII
hereof, and (h) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXIV of this Lease.

                                   ARTICLE XII

         Permitted Contests. Lessee shall have the right to contest the amount
or validity of any Imposition to be paid by Lessee or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, charge or
claim ("Claims") not otherwise permitted by Article XI, by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Lessee's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Article provided), on condition, however, that such legal
proceedings shall not operate to relieve Lessee from its obligations hereunder
and shall not cause the sale or risk the loss of any portion of the Leased
Property, or any part thereof, or cause Lessor or Lessee to be in default under
any mortgage, deed of trust, security deed or other agreement encumbering the
Leased Property or any interest therein. Upon the request of Lessor, Lessee
shall either (a) provide a bond or other assurance reasonably satisfactory to
Lessor that all Claims which may be assessed against the Leased Property
together with interest and penalties, if any, thereon will be paid, or (b)
deposit within the time otherwise required for payment with a bank or trust
company as trustee upon terms reasonably satisfactory to Lessor, as security for
the payment of such Claims, money in an amount sufficient to pay the same,
together with interest and penalties in connection therewith, as to all Claims
which may be assessed against or become a Claim on the Leased Property, or any
part thereof, in said legal proceedings. Lessee shall furnish Lessor and any
lender of Lessor with reasonable evidence of such deposit within five days of
the same. Lessor agrees to join in any such proceedings if the same be required
to legally prosecute such contest of the validity of such Claims; provided,
however, that Lessor shall not thereby be subject to any liability for the
payment of any costs or expenses in connection with any proceedings brought by
Lessee; and Lessee covenants to indemnify and save harmless Lessor from any such
costs or expenses. Lessee shall be entitled to any refund of any Claims and such
charges and penalties or interest thereon which have been paid by Lessee or paid
by Lessor and for which Lessor has been fully reimbursed. In the event that
Lessee fails to pay any Claims when due or to provide the security therefor as
provded in this paragraph and to diligently prosecute any contest of the same,
Lessor may, upon ten (10) days' advance Notice to Lessee, pay such charges
together with any interest and penalties and the same shall be repayable by
Lessee to Lessor as Additional Charges at the next Payment Date provided for in
this Lease; provided, however, that should Lessor reasonably determine that the
giving of such Notice would risk loss to the Leased Property or cause damage to
Lessor, then Lessor shall give such Notice as is practical under the
circumstances. Lessor reserves the right to contest any of the Claims at its
expense not pursued by Lessee. Lessor and Lessee agree to cooperate in
coordinating the contest of any claims.

                                       31


<PAGE>





                                  ARTICLE XIII

         13.1     General Insurance Requirements.

         During the Term of this Lease, Lessee shall at all times keep the
Leased Property insured with the kinds and amounts of insurance described below.
This insurance shall be written by qualified, solvent companies which can
legally write insurance in the State. The policies must name Lessor as the
insured or as an additional named insured, as the case may be. Losses shall be
payable to Lessor or Lessee as provided in this Lease. Subject to Section 13.10,
any loss adjustment with respect to the insurance coverages set forth in items
(a), (b) and (c), below shall require the written consent of Lessor and Lessee,
each acting reasonably and in good faith. Evidence of insurance shall be
deposited with Lessor. The policies on the Leased Property, including the Leased
Improvements, Fixtures and Lessee's Personal Property, shall include:

                  (a) Building insurance of risks on the "Special Form" or "All
         Risk Form" in an amount not less than 100% of the then full replacement
         cost thereof (as defined in Section 13.3) or such other amount which is
         acceptable to Lessor, and personal property insurance on the "Special
         Form" or "All Risk Form" in the full amount of the replacement cost
         thereof;

                  (b)      Earthquake and flood insurance in reasonable and
         adequate amounts as mutually agreed by Lessor and Lessee.

                  (c) Insurance for loss or damage (direct and indirect) from
         steam boilers, pressure vessels or similar apparatus, now or hereafter
         installed in the Facility, in the minimum amount of $5,000,000 or in
         such greater amounts as are then customary or as may be reasonably
         requested by Lessor from time to time;

                  (d) Loss of income insurance on the "Special Form" or "All
         Risk Form", in the amount of the greater of (i) one year of Base Rent
         or (ii) the prior Fiscal Year's Base Rent plus Percentage Rent for the
         benefit of Lessor, and business income or business interruption
         insurance on the "Special Form" or "All Risk Form" in amounts not less
         than one year of gross profit, for the benefit of Lessee;

                  (e) Commercial general liability insurance, with amounts not
         less than $10,000,000 covering each of the following: bodily injury,
         death, or property damage liability per occurrence, personal and
         advertising injury, general aggregate, products and completed
         operations, with respect to Lessor, and liquor law or "dram shop"
         liability, if liquor or alcoholic beverages are served on the Leased
         Property, with respect to Lessor and Lessee;

                  (f) Insurance covering such other hazards and in such amounts
         as may be customary for comparable properties in the area of the Leased
         Property and is available from insurance companies, insurance pools or
         other appropriate companies authorized to do business in the State at
         rates which are economically practicable in relation to the risks
         covered as may be reasonably requested by Lessor;

                  (g)      Fidelity bonds with limits and deductibles as may be
         reasonably requested by

                                       32


<PAGE>





         Lessor, covering Lessee's employees in job classifications normally
         bonded under prudent hotel management practices in the United States or
         otherwise required by law;

                  (h)      Worker's compensation insurance to the extent
         necessary to protect Lessor and the Leased Property against Lessee's
         worker's compensation claims;

                  (i)      Vehicle liability insurance for owned, non-owned, and
         hired vehicles, in the amount of $1,000,000; and

                  (j)      Such other insurance as Lessor may reasonably request
         for facilities such as the Leased Property and the operation thereof.

         13.2     Responsibility for Premiums.  Lessee shall keep in force the
foregoing insurance coverage at its expense.

         13.3 Replacement Cost. The term "full replacement cost" as used herein
shall mean the actual replacement cost of the Leased Property requiring
replacement from time to time including an increased cost of construction
endorsement, if available, and the cost of debris removal. In the event either
party believes that full replacement cost (the then-replacement cost less such
exclusions) has increased or decreased at any time during the Lease Term, it
shall have the right to have such full replacement cost re-determined.

         13.4 Workers' Compensation. Lessee, at its sole cost, shall at all
times maintain adequate workers' compensation insurance coverage for all persons
employed by Lessee on the Leased Property. Such workers' compensation insurance
shall be in accordance with the requirements of applicable local, state and
federal law.

         13.5 Waiver of Subrogation. All insurance policies carried by Lessor or
Lessee covering the Leased Property, the Fixtures, the Facility or Lessee's
Personal Property, including, without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such waiver clause or endorsement so long as the same are
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to do
so.

         13.6 Form Satisfactory, etc. All of the policies of insurance referred
to in this Article XIII shall be written in a form, with deductibles and by
insurance companies reasonably satisfactory to Lessor; provided, however, that
the qualitative financial condition and operating performance (or claims-paying
ability) of such insurance companies must be rated in at least the third highest
rating category of a nationally recognized statistical rating organization or
rated at least A:VIII by A.M. Best. Lessee shall be permitted to acquire
insurance through insurance companies which are Affiliates of Lessee and which
otherwise satisfy the requirements of this Article XIII, provided that the terms
of such insurance shall be no more favorable to such Affiliates than would the
same insurance if purchased from an independent third party. Lessee shall pay
all of the premiums therefor, and deliver such policies or certificates thereof
to Lessor prior to their effective date (and, with respect to any renewal
policy, 30 days prior to the expiration of the existing policy), and in the
event of the failure

                                       33


<PAGE>





of Lessee either to effect such insurance as herein called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to Lessor
at the times required, Lessor shall be entitled, but shall have no obligation,
to effect such insurance and pay the premiums thereon, and Lessee shall
reimburse Lessor for any premium or premiums paid by Lessor for the coverages
required under this Section upon written demand therefor, and Lessee's failure
to repay the same within 30 days after Notice of such failure from Lessor shall
constitute an Event of Default within the meaning of Section 16.1(b). Each
insurer mentioned in this Article XIII shall agree, by endorsement to the policy
or policies issued by it, or by independent instrument furnished to Lessor, that
it will give to Lessor thirty (30) days' written notice before the policy or
policies in question shall be materially altered, allowed to expire or canceled.

         13.7 Increase in Limits. If either Lessor or Lessee at any time deems
the limits of the personal injury or property damage under the comprehensive
public liability insurance then carried to be either excessive or insufficient,
Lessor and Lessee shall endeavor in good faith to agree on the proper and
reasonable limits for such insurance to be carried and such insurance shall
thereafter be carried with the limits thus agreed on until further change
pursuant to the provisions of this Section.

         13.8 Blanket Policy. Notwithstanding anything to the contrary contained
in this Article XIII, Lessee may bring the insurance provided for herein within
the coverage of a so-called blanket policy or policies of insurance carried and
maintained by Lessee; provided, however, that the coverage afforded to Lessor
and Lessee will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all other requirements of this
Lease by reason of the use of such blanket policy of insurance, and provided
further that the requirements of this Article XIII are otherwise satisfied.

         13.9 Separate Insurance. Lessee shall not on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished, or increase the amount of any then
existing insurance by securing an additional policy or additional policies,
unless all parties have an insurable interest in the subject matter of the
insurance, including in all cases Lessor, are included therein as additional
insured, and the loss is payable under such additional separate insurance in the
same manner as losses are payable under this Lease. Lessee shall immediately
notify Lessor that Lessee has obtained any such separate insurance or of the
increasing of any of the amounts of the then existing insurance.

         13.10 Reports On Insurance Claims. Lessee shall promptly investigate
and make a complete and timely written report to the appropriate insurance
company, as to all accidents, claims for damage relating to the ownership,
operation, and maintenance of the Leased Property, any damage or destruction to
the Leased Property and the estimated cost of repair thereof and shall prepare
any and all reports required by any insurance company in connection therewith.
All such reports shall be timely filed with the insurance company as required
under the terms of the insurance policy involved, and a final copy of such
report shall be furnished to Lessor. Lessee shall not adjust, settle, or
compromise any insurance loss, or execute proofs of such loss, with respect to
the insurance coverages set forth in Subsections 13.1(a), 13.1(b) or 13.1(c), in
the aggregate amount of $10,000 or more, with respect to any single casualty or
other event, without the prior written consent of Lessor, which consent shall
not be unreasonably withheld, delayed or conditioned.

                                       34


<PAGE>





                                   ARTICLE XIV

         14.1 Insurance Proceeds. Subject to the provisions of Section 14.6, all
proceeds payable by reason of any loss or damage to the Leased Property, or any
portion thereof, and insured under any policy of insurance required by Article
XIII of this Lease shall be paid to Lessor and held in trust by Lessor in an
interest-bearing account, shall be made available, if applicable, for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and, if applicable, shall be paid
out by Lessor from time to time for the reasonable costs of such reconstruction
or repair upon satisfaction of reasonable terms and conditions specified by
Lessor. Any excess proceeds of insurance remaining after the completion of the
restoration or reconstruction of the Leased Property shall be equitably
apportioned between Lessor and Lessee in proportion to the then fair market
values of the respective estates and interests of Lessor and Lessee in and to
the Leased Property and under this Lease. If neither Lessor nor Lessee is
required or elects to repair and restore, and the Lease is terminated without
purchase by Lessee as described in Section 14.2, all such insurance proceeds
shall be retained by Lessor. All salvage resulting from any risk covered by
insurance shall belong to Lessor.

         14.2     Reconstruction in the Event of Damage or Destruction Covered
by Insurance.

                  (a) Except as provided in Section 14.6, if during the Term the
         Leased Property is totally or partially destroyed by a risk covered by
         the insurance described in Article XIII and the Facility thereby is
         rendered Unsuitable for its Primary Intended Use, Lessee may, at
         Lessee's option, either (1) restore the Facility to substantially the
         same condition as existed immediately before the damage or destruction
         and otherwise in accordance with the terms of the Lease (subject to the
         provisions of Section 14.2(c)), or (2) terminate the Lease with respect
         to the Leased Property without further liability hereunder and all
         insurance proceeds shall be equitably apportioned between Lessor and
         Lessee in proportion to the then fair market values of the respective
         estates and interests of Lessor and Lessee in and to the Leased
         Property and under this Lease. If this Lease terminates pursuant to
         this Section 14.2(a), the Lessee shall pay all Rent due through the
         date of such termination. If Lessee restores the facility, the
         insurance proceeds shall be paid out by Lessor from time to time for
         the reasonable costs of such restoration upon satisfaction of
         reasonable terms and conditions, and any excess proceeds remaining
         after such restoration shall be equitably apportioned between Lessor
         and Lessee in proportion to the then fair market values of the
         respective estates and interests of Lessor and Lessee in and to the
         Leased Property and under this Lease.

                  (b) Except as provided in Section 14.6, if during the Term the
         Leased Property is partially destroyed by a risk covered by the
         insurance described in Article XIII, but the Facility is not thereby
         rendered Unsuitable for its Primary Intended Use, Lessee shall restore
         the Facility to substantially the same condition as existed immediately
         before the damage or destruction and otherwise in accordance with the
         terms of the Lease, subject to the provisions of Section 14.2(c). Such
         damage or destruction shall not terminate this Lease; provided,
         however, that if Lessee cannot within a reasonable time obtain all
         necessary government

                                       35


<PAGE>





         approvals, including building permits, licenses and conditional use
         permits, after diligent efforts to do so, to perform all required
         repair and restoration work and to operate the Facility for its Primary
         Intended Use in substantially the same manner as that existing
         immediately prior to such damage or destruction and otherwise in
         accordance with the terms of the Lease, Lessee may give Lessor written
         notice of termination of the Lease (without affecting any other Leases
         then in effect between Lessor and Lessee) and terminate this Lease with
         respect to the Leased Property without further liability hereunder
         other than for accrued obligations hereunder and any other obligations
         which survive the termination of this Lease and Lessor shall be
         entitled to retain all insurance proceeds. If Lessee restores the
         Facility, the insurance proceeds shall be paid out by Lessor from time
         to time for the reasonable costs of such restoration upon satisfaction
         of reasonable terms and conditions specified by Lessor, and any excess
         proceeds remaining after such restoration shall be equitably
         apportioned between Lessor and Lessee in proportion to the then fair
         market values of the respective estates and interests of Lessor and
         Lessee in and to the Leased Property and under this Lease.

                  (c) If the estimated cost of the repair or restoration exceeds
         the amount of proceeds received by Lessor and Lessee from the insurance
         required under Article XIII (other than as a result of Lessee's failure
         to maintain the types and amounts of insurance coverage required by
         Article XIII), and Lessee indicates a desire to restore the Facility if
         adequate funds were made available, then if Lessor elects to direct
         Lessee to make such repairs or restoration, Lessor shall be obligated
         to contribute any excess amounts needed to restore the Facility prior
         to the commencement of work thereon. Such difference to be held in
         trust, together with any other insurance proceeds, for application to
         the cost of repair and restoration, shall be paid by Lessor to Lessee
         promptly after Lessor receives Lessee's written invoice therefor. In
         the event Lessee indicates a desire to restore the Facility but Lessor
         declines to provide the additional funds necessary to do so, each of
         Lessor or Lessee shall have the right to terminate this Lease as to the
         Facility in question, without in any way affecting this Lease with
         respect to any other Leased Property, by giving notice to the other.
         Upon such termination all insurance proceeds with respect to the Leased
         Property in question shall be retained by Lessor.

         14.3 Reconstruction in the Event of Damage or Destruction Not Covered
by Insurance. Except as provided in Section 14.6, if during the Term the
Facility is totally or substantially destroyed by a risk not covered by the
insurance described in Article XIII, whether or not such damage or destruction
renders the Facility Unsuitable for its Primary Intended Use, Lessee at its
option may either (a) restore the Facility to substantially the same condition
it was in immediately before such damage or destruction and such damage or
destruction shall not terminate this Lease (subject to the provisions of Section
14.2(c)), or (b) terminate the Lease with respect to the Leased Property without
further liability hereunder. If such damage or destruction is not material,
Lessee shall restore the Facility to substantially the same condition as existed
immediately before the damage or destruction and otherwise in accordance with
the terms of the Lease, and such damage or destruction shall not terminate the
Lease.

         14.4    Lessee's Property.  All insurance proceeds payable by reason of
any loss of or damage to any of Lessee's Personal Property shall be paid to
Lessee; provided, however, no such payments shall diminish or reduce the

                                       36


<PAGE>





insurance payments otherwise payable to or for the benefit of Lessor hereunder.

         14.5 Abatement of Rent. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect provided that
Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall not abate during the period required for the
applicable repair and restoration; provided that the Lessee shall receive a
credit against such rental payments and other charges in an amount equal to any
loss of income insurance proceeds actually received by Lessor pursuant to any
loss of income insurance pursuant to Section 13.1(d).

         14.6 Damage Near End of Term. Notwithstanding any provisions of Section
14.2 or 14.3 appearing to the contrary, if damage to or destruction of the
Facility rendering it Unsuitable for its Primary Intended Use occurs during the
last 24 months of the Term, then Lessee shall have the right to terminate this
Lease by giving written notice to Lessor within thirty (30) days after the date
of damage or destruction, whereupon all accrued Rent shall be paid immediately,
and this Lease shall automatically terminate five days after the date of such
notice, without any further liability by Lessee to Lessor other than liabilities
that expressly survive a termination of this Lease.

         14.7 Waiver. Lessee hereby waives any statutory rights of termination
that may arise by reason of any damage or destruction of the Facility that
Lessor is obligated to restore or may restore under any of the provisions of
this Lease.

                                   ARTICLE XV

         15.1     Definitions.

                  (a) "Condemnation" means a Taking resulting from (1) the
         exercise of any governmental power, whether by legal proceedings or
         otherwise, by a Condemnor, and (2) a voluntary sale or transfer by
         Lessor to any Condemnor, either under threat of condemnation or while
         legal proceedings for condemnation are pending.

                  (b)      "Date of Taking" means the date the Condemnor has the
         right to possession of the property being condemned.

                  (c)      "Award" means all compensation, sums or anything of
         value awarded, paid or received on a total or partial Condemnation.

                  (d)      "Condemnor" means any public or quasi-public
         authority, or private corporation or individual, having the power of
         Condemnation.

         15.2 Parties' Rights and Obligations. If during the Term there is any
Condemnation of all or any part of the Leased Property or any interest in this
Lease, the rights and obligations of Lessor and Lessee shall be determined by
this Article XV.

         15.3     Total Taking.  If title to the fee of the whole of the Leased
Property is condemned by any Condemnor, this Lease shall cease and terminate as
of the Date of Taking by the Condemnor.

                                       37


<PAGE>





If title to the fee of less than the whole of the Leased Property is so taken or
condemned, which nevertheless renders the Leased Property Unsuitable or
Uneconomic for its Primary Intended Use, Lessee and Lessor shall each have the
option, by notice to the other, at any time prior to the Date of Taking, to
terminate this Lease as of the Date of Taking. Upon such date, if such Notice
has been given, this Lease shall thereupon cease and terminate. All Base Rent,
Percentage Rent and Additional Charges paid or payable by Lessee hereunder shall
be apportioned as of the Date of Taking, and Lessee shall promptly pay Lessor
such amounts.

         15.4 Allocation of Award. The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor's loss of business beyond the
Term, shall be solely the property of and payable to Lessor. Any Award made for
loss of Lessee's business during the remaining Term, if any, for the taking of
Lessee's Personal Property, or for removal and relocation expenses of Lessee in
any such proceedings shall be the sole property of and payable to Lessee. In any
Condemnation proceedings Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective expense; provided, however, neither party
shall initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to the other party.

         15.5 Partial Taking. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is still suitable for its Primary
Intended Use and not Uneconomic for its Primary Intended Use, or if Lessee or
Lessor is entitled but neither elects to terminate this Lease as provided in
Section 15.3, Lessee at its cost shall with all reasonable dispatch, but only to
the extent of any condemnation awards made available to Lessee and any other
sums advanced by Lessor pursuant to the next sentence, restore the untaken
portion of any Leased Improvements so that such Leased Improvements constitute a
complete architectural unit of the same general character and condition (as
nearly as may be possible under the circumstances) as the Leased Improvements
existing immediately prior to the Condemnation. If the condemnation awards are
not adequate to restore the Facility to that condition, each of Lessor and
Lessee shall have the right to terminate this Lease, without in any way
affecting any other leases in effect between Lessor and Lessee, by giving Notice
to the other; provided, however that, if such termination is by Lessee, Lessor
shall have the right, in its sole discretion, to nullify the termination and
keep this Lease in full force by providing, within thirty (30) days after
Lessee's Notice of termination, a Notice to Lessee of Lessor's unconditional,
legally binding obligation to be responsible for all restoration costs in excess
of the condemnation awards. If this Lease is not terminated and Lessee restores
the Facility, the condemnation awards, and any other sums made available by
Lessor as aforesaid, shall be held in trust by Lessor and paid out by Lessor
from time to time for the reasonable costs of such restoration upon satisfaction
of reasonable terms and conditions, and any excess awards remaining after such
restoration shall be retained by Lessor unless the partial condemnation
materially impairs the operations or financial performance of the Facility, in
which latter event the award shall be equitably apportioned between Lessor and
Lessee in proportion to the then fair market values of the respective estates
and interests of Lessor and Lessee in and to the Leased Property and under this
Lease.

         15.6     Temporary Taking.  If the whole or any part of the Leased
Property or of Lessee's interest under this Lease is condemned by any Condemnor
for its temporary use or occupancy, this Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the terms herein
specified, the full amounts of Base Rent and Additional Charges.  In addition,
Lessee

                                       38


<PAGE>





shall pay Percentage Rent at a rate equal to the average Percentage Rent during
the last three preceding Fiscal Years (or if three Fiscal Years shall not have
elapsed, the average during the preceding Fiscal Years). Except only to the
extent that Lessee may be prevented from so doing pursuant to the terms of the
order of the Condemnor, Lessee shall continue to perform and observe all of the
other terms, covenants, conditions and obligations hereof on the part of the
Lessee to be performed and observed, as though such Condemnation had not
occurred. In the event of any Condemnation as in this Section 15.6 described,
the entire amount of any Award made for such Condemnation allocable to the Term
of this Lease, whether paid by way of damages, rent or otherwise, shall be paid
to Lessee. Lessee covenants that upon the termination of any such period of
temporary use or occupancy it will, at its sole cost and expense (subject to
Lessor's contribution as set forth below), restore the Leased Property as nearly
as may be reasonably possible to the condition in which the same was immediately
prior to such Condemnation, unless such period of temporary use of occupancy
extends beyond the expiration of the Term, in which case Lessee shall not be
required to make such restoration. If restoration is required hereunder, Lessor
shall contribute to the cost of such restoration that portion of its entire
Award that is specifically allocated to such restoration in the judgment or
order of the court, if any, and Lessee shall fund the balance of such costs.

                                   ARTICLE XVI

         16.1     Events of Default.  If any one or more of the following events
(individually, an "Event of Default") occurs:

                  (a)      if an Event of Default occurs under any Other Lease
         between Lessor and its Affiliate, as lessor, and Lessee; or

                  (b) if Lessee fails to make payment of the Base Rent,
         Percentage Rent or Additional Charges within ten (10) days after
         written notice from Lessor that the same has become due and payable; or

                  (c) except as set forth in Sections 16.1(b), if either party
         fails to observe or perform any other term, covenant or condition of
         this Lease and such failure is not cured by such party within a period
         of thirty (30) days after receipt by such party of Notice thereof from
         the other party, unless such failure cannot with due diligence be cured
         within a period of thirty (30) days, in which case it shall not be
         deemed an Event of Default if such party proceeds promptly and with due
         diligence to cure the failure and diligently completes the curing
         thereof provided, however, in no event shall such cure period extend
         beyond 90 days after such Notice; or

                  (d) if Lessee, any parent entity (which for the purposes of
         this Section shall be deemed to include any direct or indirect parent
         entity with effective management control over the Lessee) or lease
         guarantor shall file a petition in bankruptcy or reorganization for an
         arrangement pursuant to any federal or state bankruptcy law or any
         similar federal or state law, or shall be adjudicated a bankrupt or
         shall make an assignment for the benefit of creditors or shall admit in
         writing its inability to pay its debts generally as they become due, or
         if a petition or answer proposing the adjudication of Lessee, any
         parent entity or lease guarantor

                                       39


<PAGE>





         as a bankrupt or its reorganization pursuant to any federal or state
         bankruptcy law or any similar federal or state law shall be filed in
         any court and Lessee, any parent entity or lease guarantor shall be
         adjudicated a bankrupt and such adjudication shall not be vacated or
         set aside or stayed within sixty (60) days after the entry of an order
         in respect thereof, or if a receiver of the Lessee, any parent entity
         or lease guarantor or of the whole or substantially all of the assets
         of the Lessee, any parent entity or lease guarantor shall be appointed
         in any proceedings brought by the Lessee, any parent entity or lease
         guarantor or if any such receiver, trustee or liquidator shall be
         appointed in any proceeding brought against Lessee, any parent entity
         or lease guarantor shall not be vacated or set aside or stayed within
         sixty (60) days after such appointment; or

                  (e) if Lessee, any parent entity or lease guarantor is
         liquidated or dissolved, or begins proceedings toward such liquidation
         or dissolution, or, if Lessee, any parent entity or lease guarantor in
         any manner, permits the sale or divestiture of substantially all of its
         assets; or

                  (f) if the estate or interest of Lessee in the Leased Property
         or any part thereof (i) is voluntarily or involuntarily transferred,
         assigned, conveyed, levied upon or attached in any proceeding (unless
         Lessee is contesting such lien or attachment in good faith in
         accordance with Article XII hereof) or (ii) is transferred, assigned or
         conveyed; or

                  (g) if, except as a result of damage, destruction or a partial
         or complete Condemnation, Lessee voluntarily ceases operations on the
         Leased Property for a period in excess of thirty (30) days; or

                  (h) if an event of default has been declared by the franchisor
         under the Franchise Agreement with respect to the Facility on the
         Leased Premises as a result of any action or failure to act by the
         Lessee or any other person with whom Lessee contracts for management
         services at the Facility (other than a failure to complete a Capital
         Improvement required by the franchisor resulting from Lessor's failure
         to fund the Capital Expenditure therefor pursuant to Section 9.1(b))
         and Lessee has failed, within thirty (30) days thereafter, to cure such
         default by either (1) curing the underlying default under the Franchise
         Agreement and paying all costs and expenses associated therewith, or
         (2) obtaining at Lessee's sole cost and expense a substitute franchise
         license agreement with a substitute franchisor acceptable to Lessor, on
         terms and conditions acceptable to Lessor; provided, however, that if
         Lessee is in good faith disputing an assertion of default by the
         franchisor or is proceeding diligently to cure such default, the 30-day
         period shall be extended for such period of time as Lessee continues
         during this period to dispute such default in good faith or diligently
         proceeds to cure such default (but in any event not longer than ninety
         (90) days following the assertion of default by the franchisor) and so
         long as there is no period during which the Facility is not operated
         pursuant to a Franchise Agreement approved by Lessor; or

                  (i) the occurrence of an Event of Default under any guaranty
         of lease in favor of Lessor with respect to Lessee's obligations under
         this Lease.

                  Then, and in any such event, Lessor may exercise one or more
remedies available to it hereni or at law or in equity, including, but not

                                       40


<PAGE>





limited to, its right to terminate this Lease with respect to an individual
Leased Property or any other Leases identified on Exhibit B, or, in the case of
a breach by Lessor under subsection (c) above, Lessee may exercise one or more
remedies available to it herein or at law or in equity, including, but not
limited to, its right to terminate this Lease with respect to the individual
Leased Property with respect to which Lessor has breached its obligations under
subsection (c) above (but not with respect to any other Leases identified on
Exhibit B).

                  If litigation is commenced with respect to any alleged default
under this Lease, the prevailing party in such litigation shall receive, in
addition to its damages incurred, such sum as the court shall determine as its
reasonable attorneys' fees, and all costs and expenses incurred in connection
therewith.

                  No Event of Default (other than a failure to make a payment of
money) shall be deemed to exist under clause (c) during any time the curing
thereof is prevented by an Unavoidable Delay, provided that upon the cessation
of such Unavoidable Delay, Lessee remedies such default or Event of Default
without further delay.

         16.2 Surrender. If an Event of Default occurs (and the event giving
rise to such Event of Default has not been cured within the curative period
relating thereto as set forth in Section 16.1) and is continuing, whether or not
this Lease has been terminated pursuant to Section 16.1, Lessee shall, if
requested by Lessor so to do, immediately surrender and assign to Lessor or
Lessor's designee the Leased Property including, without limitation, any and all
books, records, files, licenses, permits and keys relating thereto, and quit the
same and Lessor may enter upon and repossess the Leased Property by reasonable
force, summary proceedings, ejectment or otherwise, and may remove Lessee and
all other persons and any and all personal property from the Leased Property,
subject to rights of any hotel guests and to any requirement of law. Lessee
hereby waives any and all requirements of applicable laws for service of notice
to re-enter the Leased Property. Lessor shall be under no obligation to, but may
if it so chooses, relet the Leased Property or otherwise mitigate Lessor's
damages, except unless otherwise required by applicable law.

         16.3 Damages. Neither (a) the termination of this Lease, (b) the
repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.

                  Lessee shall forthwith pay to Lessor, at Lessor's option, as
and for liquidated and agreed current damages for Lessee's default, either:

                           (1) Without termination of Lessee's right to
                  possession of the Leased Property, each installment of Rent
                  (including Percentage Rent as determined below) and other sums
                  payable by Lessee to Lessor under the Lease as the same
                  becomes due and payable, which Rent and other sums shall bear
                  interest at the Overdue Rate, and Lessor may enforce, by
                  action or otherwise, any other term or covenant of this Lease;

                                       41


<PAGE>





                  or

                           (2)      the sum of:

                                (A)    the unpaid Rent which had been earned at
                           the time of termination, repossession or reletting,
                           and

                                (B) the worth at the time of termination,
                           repossession or reletting of the amount by which the
                           unpaid Rent for the balance of the Term after the
                           time of termination, repossession or reletting,
                           exceeds the amount of such rental loss that Lessee
                           proves could be reasonably avoided and as reduced for
                           rentals received after the time of termination,
                           repossession or reletting, if and to the extent
                           required by applicable law, and

                                (C) any other amount necessary to compensate
                           Lessor for all the detriment proximately caused by
                           Lessee's failure to perform its obligations under
                           this Lease or which in the ordinary course of things,
                           would be likely to result therefrom. The worth at the
                           time of termination, repossession or reletting of the
                           amount referred to in subparagraph (B) is computed by
                           discounting such amount at the discount rate of the
                           Federal Reserve Bank of New York at the time of award
                           plus 1%.

Percentage Rent for the purposes of this Section 16.3 shall be a sum equal to
(i) the average of the annual amounts of the Percentage Rent for the three
Fiscal Years immediately preceding the Fiscal Year in which the termination,
re-entry or repossession takes place, or (ii) if three Fiscal Years shall not
have elapsed, the average of the Percentage Rent during the preceding Fiscal
Years during which the Lease was in effect, or (iii) if one Fiscal Year has not
elapsed, the amount derived by annualizing the Percentage Rent from the
effective date of this Lease.

         16.4 Waiver. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (a) any right to a
trial by jury in the event of summary proceedings to enforce the remedies set
forth in this Article XVI, and (b) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt and Lessor waives
any right to "pierce the corporate veil" of Lessee other than to the extent
funds shall have been inappropriately paid any Affiliate of Lessee following a
default resulting in an Event of Default.

         16.5 Application of Funds. Any payments received by Lessor under any of
the provisions of this Lease during the existence or continuance of any Event of
Default shall be applied to Lessee's obligations in the order that Lessor may
determine or as may be prescribed by the laws of the State.

                                  ARTICLE XVII

         Lessor's Right to Cure Lessee's Default. If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease
including, without limitation, Lessee's failure to comply with the terms of any
Franchise Agreement other than a failure to complete improvements required by
the franchisor because the Lessor has not provided Lessee with funds

                                       42


<PAGE>





therefor, and fails to cure the same within the relevant time periods provided
in Section 16.1, Lessor, without waiving or releasing any obligation of Lessee,
and without waiving or releasing any obligation or default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform such
act for the account and at the expense of Lessee, and may, to the extent
permitted by law, enter upon the Leased Property for such purpose and, subject
to Section 16.4, take all such action thereon as, in Lessor's opinion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
Lessee. All sums so paid by Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, in each case to the
extent permitted by law) so incurred, together with a late charge thereon (to
the extent permitted by law) at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessor, shall be paid by Lessee to
Lessor on demand. The obligations of Lessee and rights of Lessor contained in
this Article shall survive the expiration or earlier termination of this Lease.

                                  ARTICLE XVIII

[INTENTIONALLY OMITTED]

                                   ARTICLE XIX

         19.1     REIT Requirements.

                  (a) Lessee understands that in order for Equity Inns to
         qualify as a REIT, the following requirements (the "REIT Requirements")
         must be satisfied:

                           (1) Anything contained in this Lease to the contrary
                  notwithstanding, the average of the fair market value of
                  Lessor's personal property that is leased to the Lessee under
                  a lease at the beginning and end of a Fiscal Year shall not
                  exceed 15% of the average of the aggregate fair market values
                  of all of Lessor's property that is leased to Lessee under
                  such lease at the beginning and at the end of such Fiscal Year
                  (the "Personal Property Limitation"). If Lessor reasonably
                  anticipates that the Personal Property Limitation will be
                  exceeded with respect to a Leased Property for any Fiscal
                  Year, Lessor shall notify Lessee, and Lessee either (a) shall
                  purchase at fair market value any personal property
                  anticipated to be in excess of the Personal Property
                  Limitation ("Excess Personal Property") either from the Lessor
                  or a third party or (b) shall lease the Excess Personal
                  Property from a third party. In either case, Lessee's Rent
                  obligation shall be equitably adjusted. In addition, in the
                  case of the purchase or lease of Excess Personal Property by
                  the Lessee from a third party, the Lessor's capital
                  expenditure reserve obligation pursuant to Article XXXIX shall
                  be appropriately decreased to reflect the reduced need for
                  Lessor-owned personal property. Notwithstanding anything to
                  the contrary set forth above, Lessee shall not be responsible
                  in any way for determining whether or not Lessee has exceeded
                  or will exceed the Personal Property Limitation, and shall not
                  be liable to Lessor or any of its shareholders in the event
                  that the Personal Property Limitation is exceeded, as long as
                  Lessee meets its obligation to acquire or lease any Excess
                  Personal Property as provided above. This Section 19.1 is
                  intended to ensure that the Rent qualifies as

                                       43


<PAGE>





                  "rents from real property," within the meaning of Section
                  856(d) of the Code, or any similar or successor provisions
                  thereto, and shall be interpreted in a manner consistent with
                  such intent.

                           (2) Anything contained in this Lease to the contrary
                  notwithstanding, Lessee shall not sublet the Leased Property
                  on any basis such that the rental to be paid by the sublessee
                  thereunder would be based, in whole or in part, on either (a)
                  the income or profits derived by the business activities of
                  the sublessee, or (b) any other formula such that any portion
                  of the Rent would fail to qualify as "rents from real
                  property" within the meaning of Section 856(d) of the Code, or
                  any similar or successor provision thereto.

                           (3) Lessee cannot sublet the Leased Property to any
                  Person in which Equity Inns owns, directly or indirectly, a
                  10% or more interest, within the meaning of Section
                  856(d)(2)(B) of the Code, or any similar or successor
                  provisions thereto.

                           (4) Lessee agrees to make an election to be, and to
                  operate as a "taxable REIT subsidiary" of Equity Inns within
                  the meaning of Section 856(e) of the Code, or any similar or
                  successor provision thereto.

                           (5) Lessee shall not (i) directly or indirectly
                  operate or manage a "lodging facility" within the meaning of
                  Section 856(d)(9)(D)(ii) of the Code or a "health care
                  facility" within the meaning of Section 856(e)(6)(D)(ii) or
                  (ii) directly or indirectly provide to any other person (under
                  a franchise, license, or otherwise) rights to any brand name
                  under which any lodging facility or health care facility is
                  operated; provided, however, that Lessee may provide such
                  rights to Manager to operate or manage a lodging facility as
                  long as such rights are held by Lessee as a franchisee,
                  licensee, or in a similar capacity and such lodging facility
                  is either owned by Lessee or is leased to Lessee by Lessor or
                  one of its Affiliates.

                           (6) Lessee agrees, and agrees to use reasonable
                  efforts to cause its Affiliates, to use their best efforts to
                  permit the REIT Requirements to be satisfied. Lessee agrees
                  and agrees to use reasonable efforts to cause its Affiliates,
                  to cooperate in good faith with Equity Inns and Lessor to
                  ensure that the REIT Requirements are satisfied, including but
                  not limited to, providing Equity Inns with information about
                  the ownership of Lessee, and its Affiliates to the extent that
                  such information is reasonably available. Lessee agrees, and
                  agrees to use reasonable efforts to cause its Affiliates, upon
                  request by Equity Inns, and, where appropriate, at Equity
                  Inns' expense, to take reasonable action necessary to ensure
                  compliance with the REIT Requirements. Immediately after
                  becoming aware that the REIT Requirements are not, or will not
                  be, satisfied, Lessee shall notify, or use reasonable efforts
                  to cause its Affiliates to notify, Equity Inns of such
                  noncompliance.

         19.2 Lessee Officer and Employee Limitation. Anything contained in this
Lease to the contrary notwithstanding, none of the officers or employees of the
Lessee or any Lessee Affiliate shall be officers or employees of Manager (or any
Person who operates or manages the Leased Property).

                                       44


<PAGE>





In addition, if a Person serves as both (a) a director of the Lessee or Lessee
Affiliate and (b) a director or trustee and officer (or employee) of Manager (or
any Person who operates or manages the Leased Property), that Person shall not
receive any compensation for serving as a director of the Lessee or any Lessee
Affiliate. If a Person serves as both (a) director or Manager of any Lessee
Affiliate (or any Person who operates or manages the Leased Property) and (b) a
director and officer (or employee) of Lessee, that Person shall not receive any
compensation for serving as a director or Manager of such Lessee Affiliate.

         19.3 Payments to Affiliates of Lessee. Notwithstanding anything to the
contrary contained in this Lease, Lessee shall make no payments to Affiliates as
Gross Operating Expenses unless expressly set forth in the Operating Budget or
an approved Capital Budget or otherwise expressly agreed to in writing by
Lessor, in either case, after full written disclosure (including information
regarding competitive pricing) by Lessee to Lessor of the affiliation and any
other related information requested by Lessor. Furthermore, Lessee shall be
permitted to contract with its Affiliates for management and other services and
to pay fees for such services, provided that such contracts and fees are
disclosed in writing to Lessor and such fees shall not be included in Gross
Operating Expenses and Lessee's obligation to pay such fees shall be
subordinated to Lessee's obligation to pay Base Rent, Percentage Rent and
Additional Charges to Lessor pursuant to the terms of this Lease.

         19.4 Management Agreement. Lessee agrees that in order to comply with
certain of the REIT Requirements, it will, at all times, during the Term cause
the Leased Property to be operated and managed by a management company
("Manager") that is an Eligible Independent Contractor. Lessee shall provide
Lessor with an executed copy of all agreements relating to the management or
operation of the Facility (a "Management Agreement"). Lessor shall have the
right in its sole and absolute discretion to approve or disapprove in advance
any Manager or proposed Manager of the Facility which is not a Qualified
Manager. Unless waived by Lessor, any Management Agreement must provide that (i)
upon termination of this Lease or termination of Lessor's or Lessee's right to
possession of the Leased Property for any reason, the Management Agreement may
be terminated by Lessor without liability for any payment due or to become due
to the Manager thereunder; (ii) any management fees shall be subordinated to
payments of Rent to Lessor hereunder; and (iii) in the event Lessee is in
default, the Manager shall, at the election of Lessor and provided the Manager
continues to be paid, and Lessor (or any party acting by or through Lessor)
agrees to perform Lessee's other obligations to Manager under the Management
Agreement which accrue subsequent to the date the Lessor makes such election,
continue to perform under the terms of the Management Agreement for a period not
to exceed ninety (90) days, provided that such election by Lessor shall not
constitute a waiver by Lessor of any rights or remedies Lessor may have as a
result of Lessee's default. No fees or other amounts payable by Lessee to any
Manager shall excuse Lessee from its obligations to pay Rent and other amounts
payable by Lessee to Lessor hereunder. No Management Agreement may be amended or
modified in any manner which materially affects the subordination of the
management fees without the prior written consent of Lessor.

                                   ARTICLE XX

         Holding Over.  If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such
possession shall be as a tenant at sufferance

                                       45


<PAGE>





during which time Lessee shall pay as rental each month two times the aggregate
of (a) one-twelfth of the aggregate Base Rent and Percentage Rent payable with
respect to the last Fiscal Year of the Term, (b) all Additional Charges accruing
during the applicable month and (c) all other sums, if any, payable by Lessee
under this Lease with respect to the Leased Property. During such period, Lessee
shall be obligated to perform and observe all of the terms, covenants and
conditions of this Lease, but shall have no rights hereunder other than the
right, to the extent given by law to tenancies at sufferance, to continue its
occupancy and use of the Leased Property. Nothing contained herein shall
constitute the consent, express or implied, of Lessor to the holding over of
Lessee after the expiration or earlier termination of this Lease.

                                   ARTICLE XXI

         Risk of Loss. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than those caused by Lessor and those claiming from, through, or under
Lessor) is assumed by Lessee except as specifically provided in this Lease, and,
in the absence of negligence, willful misconduct or breach of this Lease by
Lessor, Lessor shall in no event be answerable or accountable therefor, nor
shall any of the events mentioned in this Section entitle Lessee to any
abatement of Rent except as specifically provided in this Lease.

                                  ARTICLE XXII

         Indemnification. Notwithstanding the existence of any insurance, and
without regard to the policy limits of any such insurance or self-insurance, but
subject to Section 16.4 and Article VIII, Lessee will protect, indemnify, hold
harmless and defend Lessor from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), to the extent
permitted by law, imposed upon or incurred by or asserted against Lessor
Indemnified Parties by reason of: (a) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Leased
Property or adjoining sidewalks, including without limitation any claims under
liquor liability, "dram shop" or similar laws, (b) any past, present or future
use, misuse, non-use, condition, management, maintenance or repair by Lessee or
any of its agents, employees or invitees of the Leased Property or Lessee's
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which a Lessor Indemnified Party is made a
party or participant related to such use, misuse, non-use, condition,
management, maintenance, or repair thereof by Lessee or any of its agents,
employees or invitees, including any failure of Lessee or any of its agents,
employees or invitees to perform any obligations under this Lease or imposed by
applicable law (other than arising out of a Condemnation proceedings), (c) any
Impositions that are the obligations of Lessee pursuant to the applicable
provisions of this Lease, (d) any failure on the part of Lessee to perform or
comply with any of the terms of this Lease, and (e) the non-performance of any
of the terms and provisions of any and all existing and future subleases of the
Leased Property to be performed by the landlord thereunder.

         Lessor shall indemnify, save harmless and defend Lessee Indemnified
Parties from and against

                                       46


<PAGE>





all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses imposed upon or incurred by or asserted against Lessee
Indemnified Parties as a result of (a) the gross negligence or willful
misconduct of Lessor arising in connection with this Lease; (b) any failure on
the part of Lessor to perform or comply with any of the terms of this Lease; (c)
any Impositions that are the obligations of Lessor pursuant to the applicable
provisions of this Lease; (d) any liability arising under the Franchise
Agreement as a result of inadequate funding by Lessor for Capital Expenditures;
(e) liabilities or obligations arising under the Americans with Disabilities Act
(except to the extent relating to alterations performed by or actions taken by
Lessee subsequent to the Commencement Date of this Lease); or (f) contractual
liabilities to third parties not affiliated with Lessee (including franchisors)
relating to, or arising out of, the termination of this Lease by reason of an
Event of Default by Lessor prior to the expiration of any such third party
contract.

         To the extent that neither of the foregoing paragraphs applies to a
particular liability, action, claim, damage, cost or expense arising out of
operation of the Leased Property, such liability, action, claim, damage, cost or
expense shall be paid as a Gross Operating Expense.

         Any amounts that become payable by an Indemnifying Party under this
Section shall be paid within ten (10) days after liability therefor on the part
of the Indemnifying Party is determined by litigation or otherwise, and if not
timely paid, shall bear a late charge (to the extent permitted by law) at the
Overdue Rate from the date of such determination to the day of payment. An
Indemnifying Party, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against the Indemnified
Party. The Indemnified Party, at its expense, shall be entitled to participate
in any such claim, action, or proceeding, and the Indemnifying Party may not
compromise or otherwise dispose of the same without the consent of the
Indemnified Party, which may not be unreasonably withheld. Nothing herein shall
be construed as indemnifying a Lessor Indemnified Party against its own grossly
negligent acts or omissions or willful misconduct.

         Lessee's or Lessor's liability for a breach of the provisions of this
Article shall survive any termination of this Lease.

                                  ARTICLE XXIII

         23.1 Subletting and Assignment. Subject to the provisions of Article
XIX and Section 23.2 and any other express conditions or limitations set forth
herein, Lessee may, but only with the prior written consent of Lessor, which
consent may not be unreasonably withheld or delayed, (a) assign this Lease or
sublet all or any part of the Leased Property to an Affiliate of Lessee, or (b)
sublet any retail or restaurant portion of the Leased Improvements in the normal
course of the Primary Intended Use; provided that any subletting to any party
other than an Affiliate of Lessee shall not individually as to any one such
subletting, or in the aggregate, materially diminish the actual or potential
Percentage Rent payable under this Lease. Any other assignment or subletting
shall require the express written consent of Lessor, which consent may be
withheld, delayed or conditioned in Lessor's sole discretion. In the case of a
subletting, the sublessee shall comply with the provisions of Section 23.2, and
in the case of an assignment, the assignee shall assume in writing and agree to
keep and perform all of the terms of this Lease on the part of Lessee to be kept
and performed and shall be, and become, jointly and severally liable with Lessee
for the performance thereof. Notwithstanding

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<PAGE>





the above, Lessee may assign the Lease without the consent of Lessor to any
party providing a loan to Lessee or any of its affiliates (a "Lender") provided
(a) the assignment is for the purpose of granting a collateral interest in
Lessee's economic interest in the Leases or in any future leases between Lessor
and Lessee, to the Lender, or in the economic interest of any Affiliate of
Lessee in the Leases, to secure such loan and (b) such assignment is not made in
violation of Lessee's organic documents. In case of either an assignment or
subletting made during the Term, Lessee shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Lessee hereunder. An original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor. Any transfer of a Controlling interest in
Lessee shall be subject to the same limitations as are applicable to a direct
assignment of this Lease pursuant to this Section 23.1.

         23.2 Attornment. Lessee shall insert in each sublease permitted under
Section 23.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) if this Lease terminates before the expiration of such
sublease, the sublessee hereunder will, at Lessor's option, attorn to Lessor and
waive any right the sublessee may have to terminate the sublease or to surrender
possession thereunder as a result of the termination of this Lease, and (c) if
the sublessee receives a written Notice from Lessor or Lessor's assignees, if
any, stating that an uncured Event of Default exists under this Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such Notice, or as such party may direct.
All rentals received from the sublessee by Lessor or Lessor's assignees, if any,
as the case may be, shall be credited against the amounts owing by Lessee under
this Lease.

                                  ARTICLE XXIV

         Officer's Certificates; Financial Statements; Lessor's Estoppel
Certificates and Covenants.

                  (a) At any time and from time to time upon not less than ten
         (10) days' Notice by Lessor, Lessee will furnish to Lessor an Officer's
         Certificate certifying that this Lease is unmodified and in full force
         and effect (or that this Lease is in full force and effect as modified
         and setting forth the modifications), the date to which the Rent has
         been paid, whether to the knowledge of Lessee there is any existing
         default or Event of Default hereunder by Lessor or Lessee, and such
         other information as may be reasonably requested by Lessor. Any such
         certificate furnished pursuant to this Section may be relied upon by
         Lessor, any lender and any prospective purchaser of the Leased
         Property.

                  (b) Throughout the Term, Lessee will furnish to Lessor all
         financial statements and financial and operating information, and
         access to Lessee's books and records as are required by Lessor, as
         reasonably determined by Lessor.

                  (c) At any time and from time to time upon not less than ten
         (10) days' Notice by Lessee, Lessor will furnish to Lessee or to any
         person designated by Lessee an estoppel certificate certifying that
         this Lease is unmodified and in full force and effect (or that this

                                       48


<PAGE>





         Lease is in full force and effect as modified and setting forth the
         modifications), the date to which Rent has been paid, whether to the
         knowledge of Lessor there is any existing default or Event of Default
         on Lessee's part hereunder, and such other information as may be
         reasonably requested by Lessee.

                                   ARTICLE XXV

         Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives as frequently as reasonably requested by Lessor to
inspect the Leased Property and Lessee's accounts and records pertaining thereto
and make copies thereof, during usual business hours upon reasonable advance
notice, subject only to any business confidentiality requirements reasonably
requested by Lessee.

                                  ARTICLE XXVI

         No Waiver. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.

                                  ARTICLE XXVII

         Remedies Cumulative. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.

                                 ARTICLE XXVIII

         Acceptance of Surrender. No surrender to Lessor of this Lease or of the
Leased Property or any part thereof, or of any interest therein, shall be valid
or effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.

                                  ARTICLE XXIX

         No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person or
entity may acquire, own or hold, directly or indirectly: (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.

                                       49


<PAGE>





                                   ARTICLE XXX

         30.1 Conveyance by Lessor. If Lessor or any successor owner of the
Leased Property conveys the Leased Property in accordance with the terms hereof
other than as security for a debt, and the grantee or transferee of the Leased
Property expressly assumes all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, Lessor or such
successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer as to the Leased
Property and all such future liabilities and obligations shall thereupon be
binding upon the new owner.

         30.2 Other Interests. This Lease and Lessee's interest hereunder shall
at all times be subject and subordinate to the lien and security title of any
deeds to secure debt, deeds of trust, mortgages, or other interests heretofore
or hereafter granted by Lessor in order to finance or refinance the Leased
Property and to any and all advances to be made thereunder and to all renewals,
modifications, consolidations, replacements, substitutions, and extensions
thereof (all of which are herein called the "Mortgage").

                                  ARTICLE XXXI

         Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes
due and complies with all of the terms of this Lease and performs its
obligations hereunder, in each case within the applicable grace periods, if any,
Lessee shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor, but subject to all liens and encumbrances subject
to which the Leased Property was conveyed to Lessor or hereafter consented to by
Lessee or provided for herein. Notwithstanding the foregoing, Lessee shall have
the right by separate and independent action to pursue any claim it may have
against Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this Section.

                                  ARTICLE XXXII

         Notices. All notices, demands, requests, consents approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to Lessor at its principal office, as
indicated on the signature page hereof, Attention: President, and addressed to
Lessee as indicated on the signature page hereof, Attention: Manager, or to such
other address or addresses as either party may hereafter designate. Personally
delivered Notice shall be effective upon receipt, and Notice given by mail shall
be complete at the time of deposit in the U.S. Mail system, but any prescribed
period of Notice and any right or duty to do any act or make any response within
any prescribed period or on a date certain after the service of such Notice
given by mail shall be extended five days.

                                 ARTICLE XXXIII

         Appraisers.  If it becomes necessary to determine the Fair Market Value
or Fair Market Rental


                                       50


<PAGE>





of the Leased Property for any purpose of this Lease, the party required or
permitted to give Notice of such required determination shall include in the
Notice the name of a person selected to act as appraiser on its behalf. Within
ten (10) days after Notice, Lessor (or Lessee, as the case may be) may appoint a
second person as appraiser on its behalf. The appraisers thus appointed, each of
whom must be a member of the American Institute of Real Estate Appraisers (or
any successor organization thereto) with at least five years' experience in the
State appraising property similar to the Leased Property, shall, within
forty-five (45) days after the date of the Notice appointing the first
appraiser, proceed to appraise the Leased Property to determine the Fair Market
Value or Fair Market Rental thereof as of the relevant date (giving effect to
the impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one appraiser shall have been so
appointed, then the determination of such appraiser shall be final and binding
upon the parties. To the extent consistent with sound appraisal practice as then
existing at the time of any such appraisal, such appraisal shall be made on a
basis consistent with the basis on which the Leased Property was appraised for
purposes of determining its Fair Market Value at the time the Leased Property
was acquired by Lessor. If two appraisers are appointed and if the difference
between the amounts so determined does not exceed 5% of the lesser of such
amounts, then the Fair Market Value or Fair Market Rental shall be an amount
equal to 50% of the sum of the amounts so determined. If the difference between
the amounts so determined exceeds 5% of the lesser of such amounts, then such
two appraisers shall have twenty (20) days to appoint a third appraiser. If no
such appraiser shall have been appointed within such twenty (20) days or within
ninety (90) days of the original request for a determination of Fair Market
Value or Fair Market Rental, whichever is earlier, either Lessor or Lessee may
apply to any court having jurisdiction to have such appointment made by such
court. Any appraiser appointed by the original appraisers or by such court shall
be instructed to determine the Fair Market Value or Fair Market Rental within 45
days after appointment of such appraiser. The determination of the appraiser
which differs most in the terms of dollar amount from the determinations of the
other two appraisers shall be excluded, and 50% of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value or air Market Rental of the Leased Property, as the case may be.
This provision for determining by appraisal shall be specifically enforceable to
the extent such remedy is available under applicable law, and any determination
hereunder shall be final and binding upon the parties except as otherwise
provided by applicable law. Lessor and Lessee shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half of the
fees and expenses of the appraiser appointed by it and each shall pay one-half
of the fees and expenses of the third appraiser and one-half of all other costs
and expenses incurred in connection with each appraisal.

                                  ARTICLE XXXIV

         34.1 Lessor May Grant Mortgages. Without the consent of Lessee, Lessor
may, subject to the terms and conditions set forth below in this Section XXXIV,
from time to time, directly or indirectly, create or otherwise cause to exist
any Mortgage upon the Leased Property, or any portion thereof or interest
therein, whether to secure any borrowing or other means of financing or
refinancing.

         34.2     Lessee's Right to Cure.  if Lessor breaches any covenant to be
performed by it under


                                       51


<PAGE>





this Lease, Lessee, after Notice to and demand upon Lessor, without waiving or
releasing any obligation hereunder, and in addition to all other remedies
available to Lessee, may (but shall be under no obligation at any time
thereafter to) make such payment or perform such act for the account and at the
expense of Lessor. All sums so paid by Lessee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) so incurred,
together with interest thereon at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to
Lessee on demand or, following entry of a final, nonappealable judgment against
Lessor for such sums, may be offset by Lessee against the Base Rent payments
next accruing or coming due. The rights of Lessee hereunder to cure and to
secure payment from Lessor in accordance with this Section 34.2 shall survive
the termination of this Lease with respect to the Leased Property.

         34.3 Foreclosure. In the event of Lessor's default under any mortgage
created or otherwise existing on the Leased Property resulting in a foreclosure
by Lessor's lender and the early termination of this Lease, Lessor shall pay to
Lessee the then current Fair Market Value of Lessee's interests under this Lease
as of the date of such early termination.

         34.4 Grant of Easements or Imposition of Restrictions. Lessor may not
grant easements or impose restrictions with respect to any Leased Property
without the express written consent of Lessee, which consent may not be
unreasonably withheld.

         34.5 Outparcels, Leases and Licenses. The Lessor, without the consent
of the Lessee, shall have the right to (a) develop, subdivide, lease, sell,
construct, operate or maintain improvements on that portion of the Land, if any,
not necessary for the operations of the Hotel, provided the intended use of such
portion of the Land would not materially interfere with the operations of the
Hotel (as determined by Lessee in its reasonable discretion), and (b) lease or
license portions of the Leased Property for telecommunications and similar or
related facilities, billboards or other uses, to the extent such leases or
licenses do not materially interfere with the operations of the Hotel; provided,
however, that in the event such lease or license is for a rooftop
telecommunications antennae, then the revenues received by the Lessor shall be
distributed 50% to the Lessee and 50% to the Lessor. The Lessee agrees to (i)
cooperate with Lessor or any designee of Lessor with respect to any outparcel or
lease or license which is in compliance with the provisions of this section and
(ii) terminate this Lease as to any outparcel created under this section.

                                  ARTICLE XXXV

         35.1 Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other interest
rate provided for in any provision of this Lease are based upon a rate in excess
of the maximum rate permitted by applicable law, the parties agree that such
charges shall be fixed at the maximum permissible rate. Neither this Lease nor
any provision hereof may be changed, waived, discharged or terminated except by
a written instrument in recordable form signed by Lessor and Lessee. All the
terms and provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The headings in this Lease are for convenience of reference only

                                       52


<PAGE>





and shall not limit or otherwise affect the meaning hereof. This Lease shall be
governed by and construed in accordance with the laws of the State, but not
including its conflicts of laws rules.

         35.2 Transition Procedures. Upon the expiration or termination of the
Term of this Lease, for whatever reason, Lessor and Lessee shall do the
following (and the provisions of this Section 35.2 shall survive the expiration
or termination of this Lease until they have been fully performed) and, in
general, shall cooperate in good faith to effect an orderly transition of the
management lease or of the Facility.

                  (a) Transfer of Licenses. Upon the expiration or earlier
         termination of the Term, Lessee shall use its best efforts (i) to
         transfer to Lessor or Lessor's nominee or assignee all Franchise
         Agreements, licenses, operating permits and other governmental
         authorizations and all contracts, including contracts with governmental
         or quasi-governmental entities, that may be necessary for the operation
         of the Facility (collectively, "Licenses"), or (ii) if such transfer is
         prohibited by law or Lessor otherwise elects, to cooperate with Lessor
         or Lessor's nominee in connection with the processing by Lessor or
         Lessor's nominee of any applications for, all Licenses; provided, in
         either case, that the costs and expenses of any such transfer or the
         processing of any such application shall be paid by Lessor or Lessor's
         nominee.

                  (b) Leases and Concessions. Lessee shall assign to Lessor or
         Lessor's nominee simultaneously with the termination of this Lease, and
         the assignee shall assume all leases and concession agreements in
         effect with respect to the Facility then in Lessee's name.

                  (c) Books and Records. All books and records for the Facility
         kept by Lessee pursuant to Section 3.7 shall be delivered promptly to
         Lessor or Lessor's nominee, simultaneously with the termination of this
         Lease, but such books and records shall thereafter be available to
         Lessee at all reasonable times for inspection, audit, examination, and
         transcription for a period of one (1) year and Lessee may retain (on a
         confidential basis) copies or computer records thereof.

                  (d) Remittance. Lessee shall remit to Lessor or Lessor's
         nominee, simultaneously with the termination of this Lease, all funds
         remaining, if any, after payment of all accrued Gross Operating
         Expenses, and other amounts due Lessee and after deducting the costs of
         any scheduled repair, replacement, or refurbishment of Furniture and
         Equipment with respect to which deposits have been made.

         35.3 Waiver of Presentment, etc. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance and waives
all notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.

                                  ARTICLE XXXVI

         Memorandum of Lease. Lessor and Lessee shall promptly upon the request
of either enter into a short form memorandum of this Lease, in form suitable for
recording under the laws of the State in which reference to this Lease, and all
options contained herein, shall be made. Lessee shall

                                       53


<PAGE>





pay all costs and expenses of recording such memorandum of this Lease.

                                 ARTICLE XXXVII

[INTENTIONALLY OMITTED]

                                 ARTICLE XXXVIII

         Compliance with Franchise Agreement. Lessee shall comply in every
respect with the provisions of the Franchise Agreement (other than requirements
with respect to funding Capital Improvements which shall be the responsibility
of Lessor) so as to avoid any default thereunder during the term of this Lease.
Lessee shall not terminate, extend, modify or enter into any Franchise Agreement
without in each instance first obtaining Lessor's prior written consent. Lessor
and Lessee agree to cooperate fully with each other in the event it becomes
necessary to obtain a Franchise Agreement extension or modification or a new
franchise for the Leased Property. If the Franchise Agreement expires prior to
the expiration of the Lease Term, Lessee, with the prior approval of Lessor,
shall endeavor to obtain a new or extended franchise license. Lessee shall be
the franchisee under any such franchise agreement. In the event of a change in
the franchise for the Leased Property, Lessor and Lessee shall promptly
negotiate in good faith appropriate and mutually acceptable modifications to the
Rent terms for such Leased Property under this Lease. In the event that Lessor
and Lessee are unable to agree, within sixty (60) days after such change in the
franchise, that modifications to the Rent terms are warranted by the change in
franchise or to agree on appropriate modifications to the Rent terms either
Party may elect to submit the matter to arbitration pursuant to Article XLI
hereof. During the pendency of the negotiations and/or arbitration, Lessee shall
continue to pay Rent in accordance with the terms of the Lease, with possible
retroactive adjustments based on the outcome of the negotiations and/or
arbitration. To the extent required by the Franchise Agreement, Lessor shall
secure its obligations to make capital expenditures or pay real property taxes
by either depositing the required funds in escrow with an escrow agent
acceptable to the franchisor or by dedicating for such purpose a portion of
Lessor's line of credit either by issuance of a letter of credit in favor of the
franchisor or in some other manner acceptable to the franchisor. If upon any
expiration or earlier termination of the Lease (other than upon an Event of
Default by Lessee), a Franchise Agreement remains in effect, or would but for
such expiration or termination remain in effect, Lessor shall indemnify, defend
and hold Lessee harmless with respect to the obligations and liabilities arising
thereunder after the date of expiration or termination of this Lease.

                                  ARTICLE XXXIX

         Capital Expenditures and Reserves. Lessor agrees to establish a reserve
account together with all interest earned thereon for each Facility (the
"Capital Expenditure Reserve Account") to fund Capital Expenditures in an amount
equal to four percent (4%) of annual Room Revenues from each Facility, net of
amounts actually expended for Capital Expenditures for such Facility during any
Fiscal Year. Any funds escrowed pursuant to a Franchise Agreement or Mortgage
and designated for Capital Expenditures shall be deemed to be part of the
Capital Expenditure Reserve Account for the applicable Leased Property. Any
funds escrowed pursuant to a Mortgage may be pledged as security for such
Mortgage, which pledge may provide that, in the event of a default by Lessor
under the

                                       54


<PAGE>





Mortgage, the escrowed funds may be applied to the balance of the loan secured
by the Mortgage; provided, however, that in the event the holder of the Mortgage
exercises such remedy, Lessor shall be obligated immediately to deposit into the
Capital Expenditure Reserve Account any amount which may then be necessary to
bring the funds in such account (together with any funds remaining in any other
accounts of Lessor dedicated for such purpose) up to the aggregate level
required by this Article XXXIX. The Capital Expenditure Reserve Account for each
Facility may be commingled by Lessor with similar accounts of Lessor with
respect to other hotel properties leased by Lessor to Lessee. Upon request by
Lessee not more frequently than twice a year, Lessor shall provide Lessee a
written report stating the amounts held in such Capital Expenditure Reserve
Account with respect to each Leased Property and amounts disbursed out of said
account with respect to each Leased Property during the prior Fiscal Year. Upon
written request by Lessee to Lessor stating the specific use to be made and the
reasonable approval thereof by Lessor, the funds in the Capital Expenditure
Reserve Account shall be made available by Lessor for use by Lessee for Capital
Expenditures in connection with the Primary Intended Use as set forth in the
approved Capital Budget; provided, however, that no amounts made available under
this Article shall be used to purchase proerty (other than "real property"
within the meaning of Treasury Regulations Section 1.856-3(d)), to the extent
that doing so would cause the Lessor to recognize income other than "rents from
real property" as defined in Section 856(d) of the Code. Lessor's obligation to
fund the Capital Expenditure Reserve Account shall be cumulative and any Capital
Expenditures with respect to a Facility made in a Fiscal Year (including Fiscal
Years preceding the Term of this Lease) in excess of four percent (4%) of Gross
Revenues on a cumulative basis shall be credited to the Capital Expenditure
Reserve Account for that Facility. All amounts in the Capital Expenditure
Reserve Account are the property of Lessor. Lessee shall have no interest in the
Capital Expenditure Reserve Account other than with respect to the funding of
amounts in a Capital Budget approved by Lessor.

                                   ARTICLE XL

         Catastrophic Market Changes. In the event that a Catastrophic Market
Change (as hereinafter defined) occurs with respect to the market in which a
Leased Property is located, Lessor agrees, upon written request from Lessee, to
consider in good faith marketing such Leased Property for sale to a third party;
provided, however, that the Lessor shall have no legally binding obligation to
market or sell the Leased Property. In the event that such sale is consummated,
this Lease shall be terminated upon the date of the transfer and, thereupon,
neither party shall be further obligated to the other under this Lease,
including, without limitation, any obligation by Lessee to pay Rent to Lessor
beyond the date of transfer. For purposes of this Article XL, "Catastrophic
Market Change" means a specific event or series of specific events (and not
general economic conditions), not caused in whole or in part by Lessee or
Lessee's Affiliates, which is reasonably deemed by Lessee to be permanent or
long- term and which is expected to reduce annual Gross Revenues at the Leased
Property to a level at which such annual Gross Revenues will be less than the
sum of Rent plus Gross Operating Expenses.

                                   ARTICLE XLI

         Arbitration. Except as otherwise expressly provided, in the event a
dispute should arise concerning the interpretation or application of any of the
provisions of this Agreement, the parties agree that the dispute shall be
submitted to arbitration by the American Arbitration Association under

                                       55


<PAGE>





its then prevailing rules, except as modified by this Article XLI. The
Arbitration Tribunal shall be formed of three (3) Arbitrators each of which
shall have at least five (5) years' experience in hotel operation, management or
ownership, one (1) to be appointed by each of Lessor and Lessee and the third
(3rd) to be appointed by the American Arbitration Association. The arbitration
shall take place in the county in which the Leased Property is located and shall
be conducted in the English language. The arbitration award shall be final and
binding upon the parties hereto and subject to no appeal, and shall deal with
the question of costs of arbitration and all matters related thereto. Judgment
upon the award rendered may be entered into any court having jurisdiction, or
applications may be made to such court for an order of enforcement. Any
arbitration under this Article XLI shall be submitted within three (3) months
following the notice which triggers the arbitration, and shall be concluded
within one (1) year thereafter. In the event either of the foregoing deadlines
are missed, either party may proceed to commence a court proceeding to resolve
the dispute.

                                  ARTICLE XLII

         Change in REIT Status or REIT Regulations. In the event that Equity
Inns terminates its status as a real estate investment trust ("REIT") for tax
purposes, or in the event that the Internal Revenue Code provisions are amended
so that REITs are permitted to operate hotels, Lessor may elect to terminate
this Lease. In the event that this Lease is so terminated, Lessor shall be
obligated to pay to Lessee a termination payment equal to the Net Present Value
(as hereinafter defined), as of the termination date of this Lease, of the cash
flow to Lessee from the operations of the Leased Property (after payment of all
Rent hereunder. The "Net Present Value" of the cash flow to Lessee from the
operations of the Leased Property shall be calculated by multiplying (a) the
average annual EBITDA (as hereinafter defined) to Lessee net of all Rent for the
three (3) Fiscal Years ended immediately prior to the termination date, times
(b) the number of Fiscal Years (or portions thereof) remaining in the Lease
Term, times (c) one hundred percent (100%) plus the average annual percentage
increase in the Consumer Price Index during the three (3) Fiscal Years ended
immediately prior to the date of sale, and (d) discounting the product of (a)
times (b) times (c) above by the Base Rate plus one percent. "EBITDA" means net
earnings before interest, taxes, depreciation and amortization.

                                  ARTICLE XLIII

         Lessor's Option to Terminate Lease. In the event Lessor enters into a
bona fide contract to sell the Leased Property, Lessor shall immediately provide
Lessee with Notice of such contract, in which event Lessee shall be permitted to
terminate the Lease effective upon the closing thereof. Effective upon such
closing, this Lease shall terminate and be of no further force and effect except
as to any obligations of the parties existing as of such date that survive
termination of this Lease. As compensation for the early termination of its
leasehold estate under this Article XLIII, Lessor shall within 90 days of such
closing either (a) pay to Lessee in cash the fair market value of Lessee's
leasehold estate hereunder as of the closing of the sale of the Leased Property
or (b) offer to lease to Lessee one or more substitute hotel facilities pursuant
to one or more leases that would create for the Lessee leasehold estates that
have an aggregate fair market value of no less than the fair market value of the
original leasehold estate, both such values as determined as of the closing of
the sale of the Leased Property. If Lessor elects and complies with the option
described in (b) above, regardless

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<PAGE>





of whether Lessee enters into the lease(s) described therein, Lessor shall have
no further obligations to Lessee with respect to compensation for the early
termination of this Lease. In the event Lessor and Lessee are unable to agree
upon the fair market value of an original or replacement leasehold estate, it
shall be determined by appraisal using the appraisal procedure set forth in
Article XXXIII.

         For the purposes of this Section, fair market value of the leasehold
estate means, as applicable, an amount equal to the price that a willing buyer
not compelled to buy would pay a willing seller not compelled to sell for
Lessee's leasehold estate under this Lease or an offered replacement leasehold
estate.

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


                            [Signature Page Follows]

                  [Remainder of Page Intentionally Left Blank]

                                       57


<PAGE>




                                 SIGNATURE PAGE
                          CONSOLIDATED LEASE AGREEMENT


                                           LESSOR

                                           EQUITY INNS PARTNERSHIP, L.P.


                                           By:   EQUITY INNS TRUST,
                                                 its general partner


Signed and acknowledged                    By:
                                                 -------------------------------
in the presence of:                        Name:
                                                 -------------------------------
                                           Address:
------------------------                         -------------------------------


                                           LESSEE

                                           ENN LEASING COMPANY, INC.


Signed and acknowledged                    By:
                                                 -------------------------------
in the presence of:                        Name:
                                                 -------------------------------
                                           Address:
------------------------                         -------------------------------

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