EXHIBIT 10.5








                          CONSOLIDATED LEASE AGREEMENT

                           DATED AS OF JANUARY 1, 2001

                                     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...................................................................14
         3.1. Rent............................................................14
         3.2. Confirmation of Percentage Rate.................................18
         3.3. Additional Charges..............................................19
         3.4. Rent Payable Without Deduction..................................19
         3.5. Conversion of Property..........................................19
         3.6. Budgets.........................................................19
         3.7. Approval of Capital Budget......................................20
         3.8. Capital Projects................................................21
         3.9. Books and Records...............................................21
ARTICLE IV....................................................................21
         4.1. Payment of Impositions..........................................21
         4.2. Notice of Impositions...........................................22
         4.3. Adjustment of Impositions.......................................22
         4.4. Utility Charges.................................................23
         4.5. Insurance Premiums..............................................23
         4.6. Ground Rent.....................................................23
         4.7. Franchise Fees..................................................23
ARTICLE V.....................................................................23
         5.1. No Termination, Abatement, etc..................................23
         5.2. Abatement Procedures............................................24
ARTICLE VI....................................................................24
         6.1. Ownership of the Leased Property................................24
         6.2. Lessee's Personal Property......................................24
         6.3. Lessor's Representations........................................25
         6.4. Lessee's Representations........................................25
         6.5. Lessor's Lien...................................................25
ARTICLE VII...................................................................25
         7.1. Condition of the Leased Property................................25
         7.2. Use of the Leased Property......................................25
         7.3. Lessor to Grant Easements, etc..................................26
ARTICLE VIII..................................................................27
         8.1. Compliance with Legal and Insurance Requirements, etc...........27



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         8.2. Legal Requirement Covenants.....................................27
         8.3. Environmental Covenants.........................................28
ARTICLE IX....................................................................30
         9.1. Maintenance and Repair..........................................30
         9.2. Encroachments, Restriction, Etc.................................31
ARTICLE X.....................................................................32
         10.1. Alterations....................................................32
         10.2. Salvage........................................................32
         10.3. Joint Use Agreements...........................................32
ARTICLE XI....................................................................32
ARTICLE XII...................................................................33
ARTICLE XIII..................................................................34
         13.1. General Insurance Requirements.................................34
         13.4. Workers' Compensation..........................................35
         13.5. Waiver of Subrogation..........................................35
         13.6. Form Satisfactory, etc.........................................36
         13.7. Increase in Limits.............................................36
         13.8. Blanket Policy.................................................36
         13.9. Separate Insurance.............................................36
         13.10. Reports On Insurance Claims...................................37
ARTICLE XIV...................................................................37
         14.1. Insurance Proceeds.............................................37
         14.2. Reconstruction in the Event of Damage or Destruction
               Covered by Insurance...........................................37
         14.3. Reconstruction in the Event of Damage or Destruction
               Not Covered by Insurance.......................................39
         14.4. Lessee's Property..............................................39
         14.5. Abatement of Rent..............................................39
         14.6. Damage Near End of Term........................................39
         14.7. Waiver.........................................................39
ARTICLE XV....................................................................40
         15.1. Definitions....................................................40
         15.2. Parties' Rights and Obligations................................40
         15.3. Total Taking...................................................40
         15.4. Allocation of Award............................................40
         15.5. Partial Taking.................................................41
         15.6. Temporary Taking...............................................41
ARTICLE XVI...................................................................42
         16.1. Events of Default..............................................42
         16.2. Surrender......................................................44



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         16.3. Damages........................................................44
         16.4. Waiver.........................................................45
         16.5. Application of Funds...........................................45
ARTICLE XVII..................................................................45
ARTICLE XVIII.................................................................46
ARTICLE XIX...................................................................46
         19.1. REIT Requirements..............................................46
         19.2. Lessee Officer and Employee Limitation.........................47
         19.3. Payments to Affiliates of Lessee...............................48
         19.4. Management Agreement...........................................48
ARTICLE XX....................................................................48
ARTICLE XXI...................................................................49
ARTICLE XXII..................................................................50
ARTICLE XXIII.................................................................51
         23.1. Subletting and Assignment......................................51
         23.2. Attornment.....................................................51
ARTICLE XXIV..................................................................52
ARTICLE XXV...................................................................52
ARTICLE XXVI..................................................................52
ARTICLE XXVII.................................................................53
ARTICLE XXVIII................................................................53
ARTICLE XXIX..................................................................53
ARTICLE XXX...................................................................53
         30.1. Conveyance by Lessor...........................................53
         30.2. Other Interests................................................53
ARTICLE XXXI..................................................................54
ARTICLE XXXII.................................................................54
ARTICLE XXXIII................................................................54
ARTICLE XXXIV.................................................................55
         34.1. Lessor May Grant Mortgages.....................................55
         34.2. Lessee's Right to Cure.........................................55
         34.3. [INTENTIONALLY OMITTED]........................................55
         34.4. Grant of Easements or Imposition of Restrictions...............56
         34.5. Outparcels, Leases and Licenses................................56
ARTICLE XXXV..................................................................56
         35.1. Miscellaneous..................................................56
         35.2. Transition Procedures..........................................56
         35.3. Waiver of Presentment, etc.....................................57



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ARTICLE XXXVI.................................................................57
ARTICLE XXXVII................................................................57
ARTICLE XXXVIII...............................................................57
ARTICLE XXXIX.................................................................58
ARTICLE XL....................................................................59
ARTICLE XLI...................................................................59
ARTICLE XLII..................................................................60
ARTICLE XLIII.................................................................60

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



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by the parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto (collectively, the "Fixtures");

                  (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, 2001 (the "Commencement Date") and shall end on November 30, 2011,
unless sooner terminated or later renewed and extended in accordance with the
provisions hereof.






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                                   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:

         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:




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                  (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.

         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.



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         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" 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.



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         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;

                  (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.



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         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:

(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



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                  (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 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,



                                        8


<PAGE>





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.

         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



                                        9


<PAGE>





(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.



                                       10


<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.



                                       11


<PAGE>





         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 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.




                                       12


<PAGE>





         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.

         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.



                                       13


<PAGE>





         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.

         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



                                       14


<PAGE>





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:

(a) Base Rent:  During the period commencing on the Commencement Date and ending
at the end of the first month-end following the tenth (10th) anniversary thereof
(the  "Initial  Period"),  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, 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



                                       15


<PAGE>







                                      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 Initial
Period  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.

                  (c) At  least  one  hundred  twenty  (120)  days  prior to the
         expiration of the Initial Period,  Lessor and Lessee shall negotiate in
         good  faith  modifications  to the Rent for the final five (5) years of
         the Lease  Term to adjust  such  Rent to  market  rates for hotel  REIT
         leases for similar  hotel/motel  properties  at that time. In the event
         Lessor  and  Lessee  are  unable to agree upon Rent terms for the final
         five (5)  years of the Term of the  Lease,  at least  ninety  (90) days
         prior to the expiration of the Initial  Period,  the Rent terms for the
         final five (5) years of that Lease  shall be  determined  by a panel of
         three (3) parties having generally  recognized  expertise in evaluating
         hotel REIT  leases.  Lessee and the Lessor each shall have the right to
         designate  one panel member and the two (2) panel members so designated
         will designate the third panel member.  Rent terms approved by at least
         two (2) of the three (3) panel  members  will be  binding on Lessee and
         Lessor for the final five (5) years of the Lease Term.  In  determining
         the market  rates for the final five (5) years of the Lease  Term,  the
         panel members  shall be  instructed to consider  hotel REIT lease terms
         with respect to similar hotel/motel property types.



                                       16


<PAGE>





                  (d) 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,  commencing
         with  March 31,  2001,  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.

                  (e) 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



                                       17


<PAGE>





         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  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 (e)(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.

                By way of  example,  for Leases with a CPI  Adjustment  Date of
         January 1, 1998 or  earlier,  the  amount  of Base Rent and the
         threshold dollar amounts of Room Revenues in the Revenues  Computations
         for the Fiscal Year commencing January 1, 1998 shall be adjusted to
         reflect any change in the  average  Consumer  Price  Index  for the
         twelve months ended September 30, 1997 as compared to the twelve months
         ended September 30, 1996.

                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.



                                       18


<PAGE>





                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.

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



                                       19


<PAGE>





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  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.



                                       20


<PAGE>





         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:

(i)      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.

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

(iii)    A cash flow projection.

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

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



                                       21


<PAGE>





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  in
Pittsburgh,  Pennsylvania  or Orlando,  Florida 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.



                                   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



                                       22


<PAGE>





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.

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




                                       23


<PAGE>





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



                                       24


<PAGE>





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
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



                                       25


<PAGE>





Leased Property  caused by the removal of Lessee's  Personal  Property,  whether
effected by Lessee or Lessor.  Subject to Article XXXVII, 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  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  corporation  organized  under  the  laws of the  State  of
Tennessee  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 action on behalf 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



                                                       26


<PAGE>





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 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



                                       27


<PAGE>





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 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.





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<PAGE>





                                  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) 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 Leases have



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<PAGE>





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
which could  reasonably  result in an Environmental  Liability,  upon reasonable
prior written notice to



                                       30


<PAGE>





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;




                                       31


<PAGE>





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

(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



                                       32


<PAGE>





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
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



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<PAGE>





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
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.



                                       34


<PAGE>






                                   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 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



                                       35


<PAGE>





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.

                                  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



                                       36


<PAGE>





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  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



                                       37


<PAGE>





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 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



                                       38


<PAGE>





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.


                                   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



                                       39


<PAGE>





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



                                       40


<PAGE>





government 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.


                                       41


<PAGE>





         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
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.



                                       42


<PAGE>






(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.  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



                                       43


<PAGE>





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 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.





                                       44


<PAGE>





                                   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 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



                                       45


<PAGE>





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 herein or at law or in equity, including, but not 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.




                                       46


<PAGE>





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; or



                                       47


<PAGE>






(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.




                                       48


<PAGE>





                                  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 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:

(i)               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



                                       49


<PAGE>





                  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 "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.

(ii)              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.

(iii)             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.

(iv)              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.




                                       50


<PAGE>





(v)               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.

(vi)              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). 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




                                       51


<PAGE>





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.  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 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



                                       52


<PAGE>





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.




                                       53


<PAGE>





                                  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  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.



                                       54


<PAGE>





         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  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



                                       55


<PAGE>





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  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.



                                       56


<PAGE>




                                   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.




                                       57


<PAGE>





                                  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.


                                   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.





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<PAGE>


                                 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 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) 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 Fair



                                       59


<PAGE>





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.  Subject to the  provisions  of Section
34.3,  if Lessor  breaches  any covenant to be performed by it under 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.    [INTENTIONALLY OMITTED.

         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



                                       60


<PAGE>





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 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




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<PAGE>





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 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



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<PAGE>





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 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



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<PAGE>





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 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



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<PAGE>





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  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.




                                       65


<PAGE>





         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]




                                       66


<PAGE>





                                 SIGNATURE PAGE
                          CONSOLIDATED LEASE AGREEMENT


                                    LESSOR

                                    EQUITY INNS PARTNERSHIP, L.P.


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

State of Tennessee                          )
                                            )        SS.
County of Shelby                            )


                  BEFORE ME, a Notary  Public in and for said State and  County,
personally   appeared    _______________________,    the   ________________   of
________________________           _______________________________,            a
_________________________,  who  acknowledged  that he  executed  the  foregoing
instrument for and on behalf of said general partner,  that the same was his own
free act and deed,  individually and as such officer,  and the free act and deed
of the partnership.

                  IN  TESTIMONY  WHEREOF,  I have  hereunto set my hand and seal
this ____ day of ________________________, 2001.


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

                                             My commission expires:_____________


                        SIGNATURES CONTINUED ON NEXT PAGE




<PAGE>





                                 SIGNATURE PAGE
                          CONSOLIDATED LEASE AGREEMENT


                                    LESSEE

                                    ENN LEASING COMPANY, INC.


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


State of Tennessee                          )
                                            )        SS.
County of Shelby                            )


                  BEFORE ME, a Notary  Public in and for said State and  County,
personally  appeared  __________________________________,  the  ____________  of
___________________  a   ________________________,   who  acknowledged  that  he
executed   the    foregoing    instrument    for   and   on   behalf   of   said
____________________,  that the same was his own free act and deed, individually
and as such officer, and the free act and deed of the _________________________.

                  IN  TESTIMONY  WHEREOF,  I have  hereunto set my hand and seal
this ____ day of ________________________, 2001.


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

                                             My commission expires:_____________











<PAGE>





                                                                       Exhibit A

                               Legal Descriptions







<PAGE>







                                                                       Exhibit B

                                 List of Leases



Comfort  Inn --  Arlington, Texas
Holiday  Inn  Express --  Wilkesboro, North Carolina
Hampton Inn -- Scottsdale, Arizona
Residence Inn -- Burlington, Vermont
Residence Inn -- Colorado Springs, Colorado
Hampton Inn -- Pickwick, Tennessee
Hampton  Inn --  Addison, Texas
Hampton  Inn -- Atlanta (Northlake), Georgia
Hampton Inn -- Birmingham (Vestavia Hills), Alabama
Hampton Inn -- Chapel Hill, North Carolina
Hampton Inn -- Colorado Springs, Colorado
Hampton Inn -- West Columbia, South Carolina
Hampton Inn -- Little Rock, Arkansas
Hampton Inn -- Memphis (Sycamore View), Tennessee
Hampton Inn -- Nashville (Briley Parkway), Tennessee
Homewood Suites -- Augusta, Georgia
Hampton Inn -- San Antonio, Texas
Hampton  Inn & Suites  --  Memphis (Bartlett), Tennessee
Homewood  Suites  -- Seattle, Washington
Homewood Suites -- Chicago (Grand Avenue), Illinois





<PAGE>






                                                                       Exhibit C
                             Schedule of Lease Terms


Comfort Inn
     Arlington, Texas

     Base Rent:  The annual sum of $641,423 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation: (a) an amount equal to 30% of
              the first  $402,804 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues in  excess of  $402,804 (as  adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation: (a) an amount equal to 30% of
              the first  $805,607 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues  in  excess of  $805,607  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue Computation: (a) an amount equal to 30% of
              the first  $1,208,411 in year to date Room Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues in excess of  $1,208,411  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 30% of the
              first $1,611,214  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues in excess of  $1,611,214  (as adjusted
              under Section 3.1(d)).

II.  Holiday Inn Express
     Wilkesboro, North Carolina

     Base Rent:  The annual sum of $235,563 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 35%
              of the first  $192,094 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues  in  excess of  $192,094  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation: (a) an amount equal to 35% of
              the first  $384,188 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues  in  excess of  $384,188  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 35%
              of the irst  $576,282 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 69% of all
              year to date Room  Revenues  in  excess of  $576,282  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue Computation:  (a) an amount equal to 35% of the
              first $768,376 in year to date Room Revenues (as adjusted under

<PAGE>





              Section  3.1(d)) plus (b) an amount equal to 69% of all year to
              date Room Revenues in excess of $768,376 (as adjusted under
              Section 3.1(d)).


III. Hampton Inn
     Scottsdale, Arizona

     Base Rent:  The annual sum of $855,415 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 37%
              of the first  $399,910 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 73% of all
              year to date Room  Revenues  in  excess of  $399,910  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $799,819 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 73% of all
              year to date Room  Revenues  in  excess of  $799,819  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 37% of
              the first  $1,199,729 in year to date Room Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 73% of all
              year to date Room  Revenues in excess of  $1,199,729  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 37% of the
              first $1,599,638  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 73% of all
              year to date Room  Revenues in excess of  $1,599,638  (as adjusted
              under Section 3.1(d)).

IV.  Residence Inn by Marriott
     Burlington, Vermont

     Base Rent:  The annual sum of $713,725 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues  Computation: (a) an amount equal to 37% of
              the first  $465,449 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues  in  excess of  $465,449  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $930,897 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues  in  excess of  $930,897  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first $1,396,346 in year to date Room Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues in excess of  $1,396,346  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue Computation:  (a) an amount equal to 37% of the
              first $1,861,794 in year to date Room Revenues (as adjusted under
              Section 3.1(d)) plus (b) an amount equal to 74% of all year




<PAGE>





              to date Room Revenues in excess of $1,861,794 (as adjusted under
              Section 3.1(d)).

V.   Residence Inn by Marriott
     Colorado Springs, Colorado

     Base Rent:  The annual sum of $846,601 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 37%
              of the first  $390,076 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 75% of all
              year to date Room  Revenues  in  excess of  $390,076  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $780,152  year to date Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 75% of all
              year to date Room  Revenues  in  excess of  $780,152  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $1,170,227 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an  amount  equal to 75%
              of all year to date Room  Revenues in excess of  $1,170,227  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 37% of the
              first $1,560,303  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 75% of all
              year to date Room  Revenues in excess of  $1,560,303  (as adjusted
              under Section 3.1(d)).

VI.  Hampton Inn
     Pickwick, Tennessee

     Base Rent:  The annual sum of $182,935 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 32%
              of the first  $193,618 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 65% of all
              year to date Room  Revenues  in  excess of  $193,618  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 32%
              of the first  $376,235 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 65% of all
              year to date Room  Revenues  in  excess of  $376,235  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 32%
              of the first  $580,853 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 65% of all
              year to date Room  Revenues  in  excess of  $580,853  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 32% of the
              first $774,470 in year to date Room Revenues (as adjusted  under
              Section 3.1(d))  plus (b) an amount  equal to 65% of all year to
              date Room Revenues in excess of $774,470 (as adjusted under
              Section 3.1(d)).





<PAGE>





VII.  Hampton Inn
      Addison, Texas

     Base Rent: The annual sum of $1,062,993 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 36.2%
              of the first  $405,799 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.4% of all
              year to date Room  Revenues  in  excess of  $405,799  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 36.2%
              of the first  $811,598 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.4% of all
              year to date Room  Revenues  in  excess of  $811,598  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 36.2%
              of the first  $1,217,397 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 72.4%
              of all year to date Room  Revenues in excess of  $1,217,397  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 36.2% of the
              first $1,623,196  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.4% of all
              year to date Room  Revenues in excess of  $1,623,196  (as adjusted
              under Section 3.1(d)).

VIII.    Hampton Inn
         Atlanta (Northlake), Georgia

     Base Rent:  The annual sum of $762,362 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35.9%
              of the first  $343,159 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.9% of all
              year to date Room  Revenues  in  excess of  $343,159  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 35.9%
              of the first  $686,318 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.9% of all
              year to date Room  Revenues  in  excess of  $686,318  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 35.9%
              of the first  $1,029,477 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 71.9%
              of all year to date Room  Revenues in excess of  $1,029,477  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 35.9% of the
              first $1,372,636  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.9% of all
              year to date Room  Revenues in excess of  $1,372,636  (as adjusted
              under Section 3.1(d)).

IX.  Hampton Inn
     Birmingham (Vestavia), Alabama




<PAGE>






     Base Rent:  The annual sum of $623,662 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 34.9%
              of the first  $393,262 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.8% of all
              year to date Room  Revenues  in  excess of  $393,262  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 34.9%
              of the first  $786,524 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.8% of all
              year to date Room  Revenues  in  excess of  $786,524  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 34.9%
              of the first  $1,179,786 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 69.8%
              of all year to date Room  Revenues in excess of  $1,179,786  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 34.9% of the
              first $1,573,048  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.8% of all
              year to date Room  Revenues in excess of  $1,573,048  (as adjusted
              under Section 3.1(d)).

X.   Hampton Inn
     Chapel Hill, North Carolina

     Base Rent:  The annual sum of $789,003 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 36.2%
              of the first  $346,023 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.3% of all
              year to date Room  Revenues  in  excess of  $346,023  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 36.2%
              of the first  $692,045 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.3% of all
              year to date Room  Revenues  in  excess of  $692,045  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 36.2%
              of the first  $1,038,068 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 72.3%
              of all year to date Room  Revenues in excess of  $1,038,068  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 36.2% of the
              first $1,384,090  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.3% of all
              year to date Room  Revenues in excess of  $1,384,090  (as
              adjusted  under Section 3.1(d)).

XI.  Hampton Inn
     Colorado Springs, Colorado

     Base Rent:  The annual sum of $490,730 (as adjusted under Section 3.1(d)).





<PAGE>






     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35.6%
              of the first  $388,907 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.2% of all
              year to date Room  Revenues  in  excess of  $388,907  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 35.6%
              of the first  $777,814 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.2% of all
              year to date Room  Revenues  in  excess of  $777,814  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 35.6%
              of the first  $1,166,721 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 71.2%
              of all year to date Room  Revenues in excess of  $1,166,721  (as
               adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 35.6% of the
              first $1,555,628  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.2% of all
              year to date Room  Revenues in excess of  $1,555,628  (as
              adjusted  under Section 3.1(d)).

XII. Hampton Inn
     West Columbia, South Carolina

     Base Rent:  The annual sum of $667,089 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35.3%
              of the first  $324,225 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.5% of all
              year to date Room  Revenues  in  excess of  $324,225  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 35.3%
              of the first  $648,450 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.5% of all
              year to date Room  Revenues  in  excess of  $648,450  (as
              adjusted  under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 35.3%
              of the first  $972,675 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.5% of all
              year to date Room  Revenues  in  excess of  $972,675  (as adjusted
              under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 35.3% of the
              first $1,296,900  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.5% of all
              year to date Room  Revenues in excess of  $1,296,900  (as adjusted
              under Section 3.1(d)).

XIII. Hampton Inn
      Little Rock, Arkansas

     Base Rent:  The annual sum of $617,120 (as adjusted under Section 3.1(d)).






<PAGE>




     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35.6%
              of the first  $347,416 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.3% of all
              year to date Room Revenues in excess of 347,416 (as adjusted under
              Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 35.6%
              of the first  $694,831 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.3% of all
              year to date Room  Revenues  in  excess of  $694,831  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 35.6%
              of the first  $1,042,247 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 71.3%
              of all year to date Room  Revenues in excess of  $1,042,247  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 35.6% of the
              first $1,389,662  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 71.3% of all
              year to date Room  Revenues in excess of  $1,389,662  (as adjusted
              under Section 3.1(d)).

XIV.  Hampton Inn
      Memphis (Sycamore View), Tennessee

     Base Rent:  The annual sum of $467,710 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 34.8%
              of the first  $408,867 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.5% of all
              year to date Room  Revenues  in  excess of  $408,867  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 34.8%
              of the first  $817,735 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.5% of all
              year to date Room  Revenues  in  excess of  $817,735  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 34.8%
              of the first  $1,226,602 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 69.5%
              of all year to date Room  Revenues in excess of  $1,226,602  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 34.8% of the
              first $1,635,469  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 69.5% of all
              year to date Room  Revenues in excess of  $1,635,469  (as adjusted
              under Section 3.1(d)).

XV.      Hampton Inn
         Nashville (Briley Parkway), Tennessee

     Base Rent:  The annual sum of $853,314 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35.4%
              of the first $435,058 in year to date Room Revenues (as adjusted



<PAGE>





              under Section  3.1(d)) plus (b) an amount equal to 70.9% of all
              year to date Room  Revenues in excess of $435,058 (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 35.4%
              of the first  $870,115 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.9% of all
              year to date Room  Revenues  in  excess of  $870,115  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 35.4%
              of the first  $1,305,173 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 70.9%
              of all year to date Room  Revenues in excess of  $1,305,173  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 35.4% of the
              first $1,740,230  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 70.9% of all
              year to date Room  Revenues in excess of  $1,740,230  (as
              adjusted  under Section 3.1(d)).

XVI.     Homewood Suites
         Augusta, Georgia

     Base Rent:  The annual sum of $420,510 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 37.2%
              of the first  $271,649 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues  in  excess of  $271,649  (as
              adjusted  under Section 3.1(d)).

2.            Two  Quarters Revenue Computation:  (a) an amount equal to 37.2%
              of the first  $543,297 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues  in  excess of  $543,297  (as
              adjusted  under Section 3.1(d)).

3.            Three Quarters Revenue Computation:  (a) an amount equal to 37.2%
              of the first  $814,946 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues  in  excess of  $814,946  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an amount equal to 37.2% of the
              first $1,086,594  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues in excess of  $1,086,594  (as
              adjusted  under Section 3.1(d)).

XVII.    Hampton Inn
         San Antonio, Texas

     Base Rent: The annual sum of $1,419,670 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 37%
              of the first  $485,609 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues  in  excess of  $485,609  (as
              adjusted  under Section 3.1(d)).




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2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $971,218 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues  in  excess of  $971,218  (as
              adjusted  under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $1,456,826 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an  amount  equal to 74%
              of all year to date Room  Revenues in excess of  $1,456,826  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 37% of the
              first $1,942,435  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 74% of all
              year to date Room  Revenues in excess of  $1,942,435  (as
              adjusted  under Section 3.1(d)).





<PAGE>





XVIII.  Hampton Inn & Suites
        Bartlett (Memphis), Tennessee

     Base Rent:  The annual sum of $824,321 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter Revenues Computation:  (a) an amount equal to 35% of
              the first  $402,723 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.5% of all
              year to date Room  Revenues  in  excess of  $402,723  (as
              adjusted  under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 35%
              of the first  $805,446 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.5% of all
              year to date Room  Revenues  in  excess of  $805,446  (as adjusted
              under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 35%
              of the first  $1,208,168 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 72.5%
              of all year to date Room  Revenues in excess of  $1,208,168  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 35% of the
              first $1,610,891  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 72.5% of all
              year to date Room  Revenues in excess of  $1,610,891  (as
              adjusted  under Section 3.1(d)).

XIX.     Homewood Suites
         Seattle, Washington

     Base Rent: The annual sum of $2,215,620 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 37%
              of the first  $926,500 in year to date Room  Revenues (as adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues  in  excess of  $926,500  (as adjusted
              under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $1,853,000 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 74.5%
              of all year to date Room  Revenues in excess of  $1,853,000  (as
              adjusted  under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 37%
              of the first  $2,779,500 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an amount equal to 74.5%
              of all year to date Room  Revenues in excess of  $2,779,500  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 37% of the
              first $3,706,000  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an amount equal to 74.5% of all
              year to date Room  Revenues in excess of  $3,706,000  (as adjusted
              under Section 3.1(d)).

XX.      Homewood Suites
         Chicago (Grand Avenue), Illinois




<PAGE>






     Base Rent: The annual sum of $4,250,700 (as adjusted under Section 3.1(d)).

     Percentage Rent:

1.            First Quarter  Revenues  Computation:  (a) an amount equal to 49%
              of the first  $2,431,725 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an  amount  equal to 71%
              of all year to date Room  Revenues in excess of  $2,431,725  (as
              adjusted  under Section 3.1(d)).

2.            Two  Quarters  Revenue  Computation:  (a) an amount equal to 49%
              of the first  $4,863,450 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an  amount  equal to 71%
              of all year to date Room  Revenues in excess of  $4,863,450  (as
              adjusted  under Section 3.1(d)).

3.            Three Quarters  Revenue  Computation:  (a) an amount equal to 49%
              of the first  $7,295,175 in year to date Room Revenues (as
              adjusted under Section  3.1(d))  plus (b) an  amount  equal to 71%
              of all year to date Room  Revenues in excess of  $7,295,175  (as
              adjusted  under Section 3.1(d)).

4.            Annual Revenue  Computation:  (a) an  amount  equal to 49% of the
              first $9,726,900  in year to  date  Room  Revenues  (as  adjusted
              under Section  3.1(d))  plus (b) an  amount  equal to 71% of all
              year to date Room  Revenues in excess of  $9,726,900  (as adjusted
              under Section 3.1(d)).

Each of B.(1)  through (3) for each hotel listed above shall be referred to as a
"Quarterly Revenues Computation."

Each B.(4) for each hotel  listed  above  shall be  referred  to as the  "Annual
Revenue Computation."




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                                                                       Exhibit D

                      Certain Items Classified as "Capital"







<PAGE>








                                                                       Exhibit E

                            Form of Operating Budget







<PAGE>




                                                                       Exhibit F

                             Form of Capital Budget