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                                                                    EXHIBIT 4(B)

                               KOGER EQUITY, INC.
                                     BY-LAWS

                                       AS
                              AMENDED AND RESTATED
                                       ON
                                FEBRUARY 17, 2000

                                    ARTICLE I
                                     OFFICES

         SECTION 1. Registered Office. The registered office of the Company
shall be in the State of Florida and shall be at such place as the Board of
Directors of the Company (the "Board of Directors") may determine.

         SECTION 2. Principal Executive Office. The principal executive office
of the Company shall be in the City of Jacksonville, State of Florida, or in
such other place as the Board of Directors may from time to time determine.

         SECTION 3. Other Offices. The Company may also have offices at such
other places, both within and outside of the State of Florida as the Board of
Directors may from time to time determine.

                                   ARTICLE II
                                  STOCKHOLDERS

         SECTION 1. Place of Meetings. Meetings of the stockholders of the
Company shall be held at such place, either within or outside of the State of
Florida as shall be determined from time to time by the Board of Directors and
stated in a notice of meeting or in a duly executed waiver of notice thereof.

         SECTION 2. Annual Meeting. The annual meeting of the stockholders shall
be held on such day in the month of May, or in such other month, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Except as the Articles of Incorporation of the Company (the
"Articles of Incorporation") or the Florida Business Corporation Act (the "Act")
may provide otherwise, any business may be considered at an annual meeting.
Failure to hold an annual meeting does not invalidate the Company's existence or
affect any otherwise valid corporate acts.

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         SECTION 3. Special Meeting. Except as the Articles of Incorporation or
the Act may otherwise provide, Special Meetings of the stockholders, for any
purpose or purposes, may be called by the Chairman of the Board of Directors, by
the Vice Chairman of the Board of Directors, by the Chief Executive Officer, by
the President or by a majority of the Board of Directors or upon the written
request of stockholders holding in the aggregate at least ten percent (10%) in
amount of the entire outstanding capital stock of the Company issued and
outstanding and entitled to vote at such meeting. If a special meeting is called
at the written request of stockholders, such request shall state with
specificity the purpose or purposes of such meeting and the matters proposed to
be acted on. Any business of the Company transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice thereof.

         SECTION 4. Notice of Meetings and Waiver of Notice. Not less than ten
(10) days nor more than sixty (60) days before the date of any meeting of
stockholders, written or printed notice of the meeting shall be given to each
stockholder entitled to vote at the meeting and to each other stockholder not
entitled to vote who is entitled by statute to receive notice of the meeting.
The notice shall state the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
Notice is given to a stockholder when it is personally delivered to the
stockholder, left at the stockholder's residence or usual place of business, or
mailed to the stockholder at the stockholder's address as it appears on the
records of the Company. If such notice is mailed with postage thereon prepaid,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the stockholder at the stockholder's post office address as it
appears on the records of the Company.

         In the case of a special meeting of stockholders convened at the
written request of the stockholders, as provided for in Section 3 of this
Article II, the notice herein provided for shall be given in the manner herein
provided, not less than ten (10) days nor more than sixty (60) days before the
date of the meeting.

         Notwithstanding the foregoing provisions, each person who is entitled
to notice of any meeting of stockholders waives notice if the stockholder
attends such meeting in person or by proxy, or if the stockholder, before or
after the meeting, submits a signed waiver of the notice which is filed with the
records of stockholders' meetings. When a meeting of stockholders is adjourned
to another time and place, unless the Board of Directors after the adjournment
shall fix a new record date for an adjourned meeting, notice of such adjourned
meeting need not be given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment was taken.

         SECTION 5. Quorum and Voting. The holders of a majority of the stock
issued and outstanding and entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
the Act or the Articles of Incorporation. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person

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or represented by proxy shall decide any question, unless such question is one
upon which by express provision of the Act or the Articles of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, by majority vote and
without notice other than announcement at the meeting, except as required by
Section 4 of this Article II, shall have power to adjourn the meeting from time
to time until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. In the event that at any meeting a quorum exists for the transaction
of some business but does not exist for the transaction of other business, the
business as to which a quorum is present may be transacted by the holders of
stock present in person or by proxy who are entitled to vote thereon.

         SECTION 6. General Right to Vote and Proxies. Each outstanding share of
stock is entitled to one (1) vote on each matter submitted to a vote at a
meeting of stockholders. A stockholder may vote the stock the stockholder owns
as shown on the record of stockholders of the Company as of the record date,
determined pursuant to Section 7 of this Article II, either in person or by
written proxy signed by the stockholder or by the stockholder's duly authorized
attorney-in-fact, but no proxy shall be voted or acted upon after eleven (11)
months from its date, unless the proxy provides for a longer period.

         SECTION 7. Fixing of Record Date and List of Stockholders. In order
that the Company may determine the stockholders (a) entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof or (b) entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or (c) entitled to exercise any rights with respect to any change,
conversion, or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date which shall not be
less than ten (10) days nor more than seventy (70) days before the date then
fixed for the holding of any meeting of the stockholders, nor more than seventy
(70) days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting which it must do if the meeting
is adjourned to a date more than one hundred twenty (120) days after the date
fixed for the original meeting. At any meeting of stockholders, a full, true and
complete list of all stockholders entitled to vote at such meeting, showing the
number and class of shares held by each and certified by the transfer agent for
such class or by the Secretary, shall be furnished by the Secretary.

         SECTION 8. Organization and Order of Business. At each meeting of the
stockholders, the Chairman of the Board of Directors, or in the Chairman's
absence or inability to act, the Vice Chairman of the Board of Directors or in
the Chairman's or Vice Chairman's absence or inability to act, the Chief
Executive Officer of the Company, or in the absence or inability to act of the
Chairman of the Board, Vice Chairman of the Board or the Chief Executive
Officer, the President of the Company or in the absence or inability to act of
the Chairman of the Board, Vice Chairman

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of the Board, Chief Executive Officer or the President, a Vice President of the
Company designated by the Board of Directors shall act as Chairman of the
meeting. The Secretary of the Company, or in the Secretary's absence or
inability to act, any person appointed by the Chairman of the Board or the
presiding Chairman of the meeting, shall act as Secretary of the meeting and
keep the minutes thereof. The order of business of all meetings of the
stockholders shall be determined by the Chairman of the meeting, who shall have
the authority in his discretion to regulate the conduct of such meeting,
including, without limitation, to impose restrictions on the persons (other than
stockholders of the corporation or their duly appointed proxies) who may attend
such meeting, to regulate and restrict the making of statements or asking of
questions at such meeting and to cause the removal from such meeting of any
person who has disrupted or appears likely to disrupt the proceedings at such
meeting. At a meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be properly brought
before a meeting of stockholders, business must be (a) specified in the notice
of meeting (or any supplement thereto) given as provided in these by-laws, (b)
otherwise properly brought before the meeting by or at the direction of a
majority of the Board of Directors then in office, or (c) otherwise properly
brought before the meeting by a stockholder. For business to be properly brought
before a meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation and the stockholder must
be a stockholder of record at the time such notice is given. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation, not less than seventy (70) days
nor more than ninety (90) days prior to the meeting; provided, however, that in
the event that the date of the meeting is not publicly announced by the
Corporation by mail, press release or otherwise more than seventy (70) days
prior to the meeting, notice by the stockholder to be timely must be delivered
to the Secretary of the Corporation not later than the close of business on the
tenth (10th) day following the day on which such announcement of the date of the
meeting was made. A stockholder's notice to the secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
address, as it appears on the corporation's books, of the stockholder proposing
such business, (c) the number of shares of the corporation's common stock which
are beneficially owned by the stockholder, and (d) any material financial
interest of the stockholder in such business. Notwithstanding anything in these
by-laws to the contrary, no business shall be conducted at any meeting except in
accordance with the procedures set forth in this Section 8, and if the Chairman
of the meeting should so determine, he shall so declare to the meeting any such
business not properly brought before the meeting shall not be transacted
Notwithstanding the foregoing provisions of this Section 8, a stockholder shall
also comply with all applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder with respect to the
matters set forth in this Section.

         SECTION 9. Conduct of Voting. At all meetings of stockholders, the
proxies and ballots shall be received, and all questions concerning the
qualifications of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the Chairman of the meeting.

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                                   ARTICLE III
                               BOARD OF DIRECTORS

         SECTION 1. General Powers. The business and affairs of the Company
shall be managed under the direction of its Board of Directors. All powers of
the Company may be exercised by or under authority of the Board of Directors,
except as conferred on or reserved to the stockholders by the Act, the Articles
of Incorporation or these By-Laws.

         SECTION 2. Number of Directors. The number of Directors which shall
constitute the whole Board of Directors shall not be less than one (1), with the
exact number of Directors as may be fixed from time to time by resolution of the
Board of Directors. The initial Board of Directors shall consist of three (3)
Directors until changed as herein provided, a majority of which Directors shall
be persons who are not Affiliates (as defined in Section 4 of Article IX of
these By-Laws) or employees of any independent contractor of the Company or an
Affiliate (as defined in Section 4 of Article IX of these By-Laws) of such
independent contractor. Directors need not be stockholders of the Company.

         SECTION 3. Nomination, Election and Tenure of Directors. Nominations
for the election of Directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of Directors. Any stockholder
entitled to vote for the election of Directors at a meeting may nominate persons
for election as Directors by giving timely notice thereof in proper written form
to the secretary accompanied by a petition signed by at least one hundred (100)
record holders of the common stock of the corporation which shows the number of
shares held by each person and which represent in the aggregate one percent (1%)
of the outstanding shares entitled to vote in the election of Directors. To be
timely, notice shall be delivered to or mailed and received at the principal
executive offices not less than seventy (70) days nor more than ninety (90) days
prior to the meeting; provided, however, that in the event that less than
seventy (70) days' notice or prior public disclosure of the date of the meeting
is given or made to the stockholders, to be timely, notice by the stockholder
must be received at the principal executive offices not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper
written form, a stockholder's notice shall set forth in writing (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected and (ii) as to the stockholder giving the notice (x) the
name and address, as they appear on the corporation's books, of such stockholder
and (y) the number of shares of the corporation which are beneficially owned by
such stockholder. At the request of the Board of Directors, any person nominated
by the Board of Directors for election as a Director shall furnish to the
secretary the information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. In the event that a stockholder seeks
to

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nominate one or more Directors, the secretary shall appoint one or more
inspectors to determine whether a stockholder has complied with this Section 3.
If the inspectors shall determine that a stockholder has not complied with this
Section 3, the inspectors shall direct the Chairman of the meeting to declare to
the meeting that a nomination was not made in accordance with the procedures
prescribed by the by-laws, and the Chairman shall so declare to the meeting and
the defective nomination shall be disregarded. Except as provided in Section 5
of this Article III, the Directors shall be elected at the annual meeting of
stockholders and shall hold office until the next annual meeting and until their
successors are elected and qualified, unless sooner displaced. Directors are
eligible for re-election, and a Director may resign at any time by giving
written notice to the Company.

         SECTION 4. Removal of Director. The stockholders may remove any
Director or Directors at any time, with or without cause, by the affirmative
vote of a majority of all the votes entitled to be cast for the election of
Directors and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of the removed Directors. A majority of the
Directors may remove a Director for cause.

         SECTION 5. Vacancies on the Board of Directors. A majority of the
remaining Directors, whether or not sufficient to constitute a quorum, or a sole
remaining Director, may fill a vacancy on the Board of Directors which results
from any cause except an increase in the number of Directors, and a majority of
the entire Board of Directors may fill a vacancy which results from an increase
in the number of Directors. A Director elected by the Board of Directors to fill
a vacancy serves for the balance of the term of the replaced Director, unless
sooner displaced.

         SECTION 6. Regular Meetings. After each meeting of stockholders at
which a Board of Directors shall have been elected, the Board of Directors so
elected shall meet as soon as practicable for the purpose of organization and
the transaction of other business. No notice of such meeting shall be necessary
to the newly elected Directors in order legally to constitute the meeting,
provided a quorum shall be present. Any other regular meeting of the Board of
Directors shall be held at such time and at any place within or outside of the
State of Florida as may be determined by the Board of Directors, the Chairman of
the Board of Directors, Vice Chairman of the Board of Directors, the Chief
Executive Officer of the Company, or the President of the Company.

         SECTION 7. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors, the Chief Executive Officer of the Company,
the President of the Company, or by a majority of the Board of Directors by vote
at a meeting, or by a majority of the Board of Directors in writing without a
meeting. A special meeting of the Board of Directors shall be held on such date
and at any place within or outside of the State of Florida as may be designated
from time to time by the Chairman of the Board of Directors, the Vice Chairman
of the Board of Directors, the Chief Executive Officer of the Company, the
President of the Company or the Board of Directors.

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         SECTION 8. Notice of Meeting. Except for regular meetings held after a
meeting of the stockholders as provided in Section 6 of this Article III, the
Secretary of the Company, or in the Secretary's absence or inability to act, any
officer of the Company appointed by the Chairman of the Board of Directors, the
Vice Chairman of the Board of Directors, the Chief Executive Officer of the
Company, or the President of the Company, shall give notice to each Director of
each regular and special meeting of the Board of Directors. The notice shall
state the date and place of the meeting. Notice is given to a Director when it
is delivered personally to him, left at his residence or usual place of
business, or sent by telegraph, cablegram, or telephonic communication, at least
twenty-four (24) hours prior to the time of the meeting or, in the alternative,
by first-class mail, postage prepaid, addressed to the Director at his post
office or his address as it appears on the records of the Company, at least four
(4) days before the day on which such meeting is to be held. If mailed with
postage prepaid, such notice shall be deemed to be given when deposited in the
United States mail addressed to the Director at his address as it appears in the
records of the Secretary. The notice need not state the business to be
transacted at or the purpose of the meeting. No notice of any meeting of the
Board of Directors need be given to any Director who attends, or to any Director
who, in writing executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. Any meeting of the Board of
Directors may adjourn from time to time to reconvene at the same or some other
place, and no notice need be given of any such adjourned meeting other than by
announcement.

         SECTION 9. Action by Directors. The action of a majority of the
Directors present at a meeting at which a quorum of the Board of Directors is
present constitutes action of the Board of Directors, except as otherwise
provided in the Act, the Articles of Incorporation, or these By-Laws in respect
of any investment or action by the Company which involves a potential conflict
of interest between the Company and any independent contractor retained by the
Company or any Affiliate (as defined in Section 4 of Article IX of these
By-Laws) of any such independent contractor. A majority of the entire Board of
Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Directors present, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally noticed.

         SECTION 10. Organization. The Chairman of the Board of Directors of the
Company shall preside at each meeting of the Board of Directors. In the absence
or inability of the Chairman of the Board to preside at a meeting, the Vice
Chairman of the Board of Directors of the Company shall preside at a meeting. In
the absence or inability of either of the Chairman or Vice Chairman of the Board
to preside at a meeting, the Chief Executive Officer of the Company shall
preside at a meeting. In the absence or inability of the Chairman of the Board,
the Vice Chairman of the Board, or the Chief Executive Officer to preside at a
meeting, the President of the Company shall preside at a meeting. In the absence
or inability of the Chairman of the Board, Vice Chairman of the Board, the Chief
Executive Officer or the President to preside at a meeting, another Director
chosen by a majority of the Directors present, shall act as Chairman of the
meeting and preside thereat. The Secretary of the Company or, in the Secretary's
absence or inability to act, any person

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appointed by the Chairman of the Board or the presiding Chairman shall act as
Secretary of the meeting and keep the minutes thereof.

         SECTION 11. Meeting by a Conference Telephone. Members of the Board of
Directors or of any committee thereof may participate in a meeting by means of a
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
a meeting.

         SECTION 12. Consent in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent or consents are filed with the
minutes of proceedings of the Board of Directors or committee.

         SECTION 13. Compensation. Directors may receive compensation for
services to the Company in their capacities as Directors in such manner and in
such amounts as may be fixed from time to time by the Board of Directors, and
expenses, if any, of attendance at each regular or special meeting of the Board
of Directors, or any committee of the Board of Directors, or any meeting of
stockholders. No such payment shall preclude any Director from serving the
Company in any other capacity and receiving compensation therefor.

                                   ARTICLE IV
                             COMMITTEES OF DIRECTORS

         SECTION 1. Committees. The Board of Directors may, by resolution
adopted by a majority of the full Board of Directors, appoint or designate one
or more committees, each committee of the Board of Directors to consist of two
(2) or more Directors, and may delegate to such committees any of the powers of
the Board of Directors except such powers as are required to be performed by the
Board of Directors under the Act, the Articles of Incorporation, or these
By-Laws.

         SECTION 2. Minutes and Reports. Each committee of the Board of
Directors shall keep minutes of its proceedings and shall report the same to the
Board of Directors, and any action taken by the committees shall be subject to
revision and alteration by the Board of Directors, provided that no rights of
third persons shall be affected by any such revision or alteration.

         SECTION 3. Notice. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors, and a
waiver thereof in writing, signed by the Director entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the committee meeting in person shall be deemed
equivalent to the giving of such notice to such Director.

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         SECTION 4. Quorum, Voting and General. One-third (1/3), but not less
than two (2), of the members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of the majority present shall be the act
of such committee. The Board of Directors or the Chairman of the Board of
Directors may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meetings unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
the power at any time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent or disqualified
member, or to dissolve any such committee.

                                    ARTICLE V
                                    OFFICERS

         SECTION 1. The officers of the Company shall consist of a Chairman of
the Board of Directors, a Vice Chairman of the Board of Directors, a Chief
Executive Officer, a President, a Secretary, a Chief Financial Officer, a Chief
Accounting Officer, and a Treasurer, each of whom shall be elected by the Board
of Directors at the first meeting of directors immediately following the annual
meeting of shareholders of the Company, and shall serve until their successors
are chosen and qualified. Such other officers and assistant officers and agents,
as may be deemed necessary, may be elected or appointed by the Board of
Directors, the Chief Executive Officer or the President from time to time. Any
two (2) or more offices may be held by the same person. The failure to elect a
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, a
Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a
Chief Accounting Officer or Treasurer shall not affect the existence of the
Company.

         SECTION 2. Duties. The officers of the Company shall have the following
duties:

         The CHAIRMAN OF THE BOARD OF DIRECTORS shall preside at all meetings of
Shareholders and the Board of Directors of this corporation.

         The VICE CHAIRMAN OF THE BOARD OF DIRECTORS shall, in the absence of
the Chairman of the Board of Directors, preside at all meetings of the
stockholders and the Board of Directors.

         The CHIEF EXECUTIVE OFFICER shall have general supervisory authority
over the management of the business and affairs of this corporation, subject to
the direction of the Board of Directors and in the absence of the Chairman of
the Board of Directors and the Vice Chairman of the Board of Directors, shall
preside at all meetings of the stockholders and the Board of Directors.

         The PRESIDENT shall have general and active management of the business
and affairs of the corporation subject to the directions of the Chief Executive
Officer and the Board of Directors, and in the absence of the Chairman of the
Board of Directors, the Vice Chairman of the Board of

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Directors and the Chief Executive Officer, shall preside at all meetings of the
stockholders and the Board of Directors.

         The SECRETARY shall have custody of, and maintain, all of the corporate
records except the financial records; shall record the minutes of all meetings
of the shareholders and Board of Directors, send all notices of meetings out,
and perform such other duties as may be prescribed by the Board of Directors,
Chief Executive Officer or the President.

         The CHIEF FINANCIAL OFFICER shall have general and active management of
the financial affairs of the corporation subject to the directions of the Chief
Executive Officer, the President and the Board of Directors and shall perform
such other duties as may be prescribed by the Board of Directors, the Chief
Executive Officer or the President.

         The CHIEF ACCOUNTING OFFICER shall have custody of all corporate funds
and financial records, shall keep full and accurate accounts of receipts and
disbursements and render accounts thereof at the annual meetings of stockholders
and whenever else required by the Board of Directors, the Chief Executive
Officer or the President, and shall perform such other duties as may be
prescribed by the Board of Directors, the Chief Executive Officer, the President
or the Chief Financial Officer.

         The TREASURER shall assist the Chief Accounting Officer in the
performance of his or her duties and perform such other duties as may be
prescribed by the Board of Directors, the Chief Executive Officer, the
President, the Chief Financial Officer or the Chief Accounting Officer.

         SECTION 3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board whenever in its
judgment the best interests of the Company will be served thereby.

         Any officer or agent elected by the stockholders may be removed only by
vote of the stockholders, unless the stockholders shall have authorized the
Directors to remove such officer or agent.

         Any officer or agent elected or appointed by either of the Chief
Executive Officer or the President may be removed by the officer who appointed
such officer or by the Board of Directors.

         Any vacancy, however occurring, in any office may be filled by the
Board of Directors. Removal of any officer shall be without prejudice to the
contract rights, if any, of the person so removed; however, election or
appointment of an officer or agent shall not of itself create contractual
rights.

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                                   ARTICLE VI
                               INVESTMENT POLICIES

         SECTION 1. General. The Board of Directors shall determine the
Company's investment policies and shall review those policies at least annually
to determine that the policies are being followed by the Company and are in the
best interests of its stockholders.

         It shall be the duty of the Board of Directors to insure that the
purchase, sale, retention and disposal of Company assets, and the investment
policies of the Company and the limitations thereon or amendment thereof are at
all times in compliance with the restrictions applicable to real estate
investment trusts pursuant to the Internal Revenue Code of 1986, as it may be
amended from time to time (the "Internal Revenue Code").

         The Company will not, without the approval of a majority of the Board
of Directors, acquire from or sell to a Director, an officer or employee of the
Company, any person in which a Director owns more than a one percent (1%)
interest, or any Affiliate (as defined in Section 4 of Article IX of these
By-Laws) of any of the foregoing, any of the assets or other property of the
Company, or make loans to any of the foregoing.

         SECTION 2. Limitations. Each of the following limitations shall apply
only to the extent that each limitation must be satisfied in order for the
Company to qualify as a real estate investment trust under the Internal Revenue
Code, and to the extent that each limitation is required for such qualification,
each limitation may not be changed without the approval of the holders of a
majority of the outstanding shares: (1) the Company may not hold property
primarily for sale to customers in the ordinary course of business; (2) the
Company may not issue "redeemable securities" as defined in the Investment
Company Act of 1940; (3) the Company may not invest in any real estate
investment trust which holds investments or engages in activities which the
Company would be prohibited from engaging in by these By-Laws; (4) the Company
may not invest in commodities or commodity future contracts other than
"financial futures" contracts intended to hedge the Company against losses from
its temporary investments; (5) the Company may not invest more than one percent
(1%) of its assets in real estate contracts of sale, unless such contracts are
recordable in the chain of title; and (6) the Company may not engage in trading
(as compared with investment activities) or engage in the underwriting or the
agency distribution of securities issued by others.

                                   ARTICLE VII
                                      STOCK

         SECTION 1. Certificate for Stock. Every holder of stock in the Company
shall be entitled to have a certificate or certificates which represents and
certifies the number and kind and class of shares of stock owned by each such
stockholder in the Company. Certificates for fractional shares shall not be
issued. Each stock certificate shall include on its face the name of the
Company, the

                                       11
<PAGE>   12

name of the stockholder or other person to whom it is issued, the class of stock
and the number of shares represented by the certificate. It shall be in such
form, not inconsistent with the Act or with the Articles of Incorporation, as
shall be approved by the Board of Directors or any officer or officers
designated for such purpose by resolution of the Board of Directors. Each stock
certificate shall be signed by the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors, the Chief Executive Officer, the President,
or a Vice President, and countersigned by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer. Each certificate may be
sealed with the actual corporate seal or a facsimile of it or in any other form
and the signatures may be either manual or facsimile signatures. Where a
certificate is countersigned: (i) by a transfer agent other than the Company or
its employee; or (ii) by a registrar other than the Company or its employee, any
other signature on the certificate may be facsimile. In case any officer,
transfer agent or registrar, who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, the certificate may
nevertheless be issued by the Company with the same effect as if such officer,
transfer agent or registrar had not ceased to be such as of the date of its
issue.

         SECTION 2. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates of stock and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.

         SECTION 3. Stock Ledger. The Company shall maintain a stock ledger
which contains the name and address of each stockholder of the Company and the
number of shares of stock of each class which the stockholder holds. The stock
ledger may be in written form or in any other form capable of producing copies
for visual inspection. The original or a duplicate of the stock ledger shall be
kept at the offices of the transfer agent, within or outside the State of
Florida, or, if none, at the principal executive office of the Company.

         SECTION 4. Lost, Destroyed or Mutilated Certificates. Subject to such
rules, regulations and procedures as may be determined or set by the Board of
Directors, the holder of any certificates representing shares of stock in the
Company shall immediately notify the Company of any loss, destruction or
mutilation of such certificate, and the Company may issue a new certificate of
stock in the place of any certificate theretofore issued by the Company upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be stolen, lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
stolen, lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and to
give the Company a bond, with sufficient surety, to indemnify it against any
loss or claim which may arise by reason of the issuance of a new certificate.

         SECTION 5. Payment of Redeemed Shares. Any shares of stock in the
Company, redeemed by the Company as Excess Shares pursuant to the provisions of
Paragraph (d) of Article V - CAPITAL STOCK of the Articles of Incorporation,
shall be paid for by the Company at the

                                       12
<PAGE>   13

redemption price, as provided in Article V of the Articles of Incorporation, as
soon as reasonably practicable after the receipt by the stockholder of the
notice calling the Excess Shares for redemption by the Company.

                                  ARTICLE VIII
                                     FINANCE

         SECTION 1. Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness issued in the name
of the Company shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.

         SECTION 2. Fiscal Year. The fiscal year of the Company shall be the
calendar year.

                                   ARTICLE IX
                                SUNDRY PROVISIONS

         SECTION 1. Books and Records. The Company shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any committee when
exercising any of the powers of the Board of Directors.

         SECTION 2. Distributions to Stockholders. Each distribution to
stockholders of income or capital assets shall be accompanied by a written
statement disclosing the source of the funds distributed. The amount and date of
distributions to stockholders shall be determined in the sole discretion of the
Board of Directors of the Company.

         SECTION 3. Transactions With Affiliates. Except as otherwise provided
in the Articles of Incorporation or these By-Laws, the Company shall not enter
into any transaction with any independent contractor retained by the Company or
any Affiliate (as defined in Section 4 below) of such independent contractor, or
with any officer or Director, or any Affiliate of any officer of Director
unless: (i) such transaction is approved by a majority of the Directors, who are
not Affiliates (as defined in Section 4 below) of such independent contractor or
a party to the transaction or (ii) such transaction is approved by the
stockholders of the Company; or (iii) such transaction is fair and reasonable to
the Company and its stockholders; or (iv) the terms of such transaction are at
least as favorable as the terms of any comparable transaction made on an arm's
length basis and known to the Board of Directors; or (v) the appraised value of
any property being acquired in such transaction is not less than the total
consideration paid by the Company in such transaction.

         SECTION 4. Affiliates Defined. As used in these By-Laws, the term
"Affiliate" of another person shall mean any person directly or indirectly
owning, controlling, or holding with power to

                                       13
<PAGE>   14

vote, five percent (5%) or more of the outstanding voting securities of such
other person; any person, five percent (5%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with power to
vote, by such person; any person directly or indirectly controlling, controlled
by, or under common control with, such other person; and any officer, Director,
or employee of such person. The term "person" includes a natural person,
company, corporation, trust, partnership (limited or general) or any other
organization.

         SECTION 5. Company Seal. There shall be a suitable seal, bearing the
name of the Company, which shall be in the charge of the Secretary. It shall be
in such form, not inconsistent with the Act or with the Articles of
Incorporation, as shall be approved by the Board of Directors or any officer or
officers designated for such purpose by resolution of the Board of Directors.
The Board of Directors may authorize one or more duplicate seals and provide for
the custody thereof. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.

         SECTION 6. Amendments. Any and all provisions of these By-Laws may be
altered or repealed and new By-Laws may be adopted by the stockholders of the
Company at any regular or special meeting in accordance with Section 5 of
Article II of these By-Laws, or by the Board of Directors.

------------------------------
March 28, 2000
------------------------------
BYLAWSAM.DKE

                                       14<PAGE>   1

                                                                   EXHIBIT 10.14

================================================================================

                           FOURTH AMENDED AND RESTATED
                                REVOLVING CREDIT
                                    AGREEMENT

                           DATED AS OF JANUARY 7, 2000

                                      AMONG

                             RFS PARTNERSHIP, L.P.,

                                  AS BORROWER,

                           RFS HOTEL INVESTORS, INC.,
                                  AS GUARANTOR,

                         BANC OF AMERICA SECURITIES LLC,
                                AS LEAD ARRANGER,

                             BANK OF AMERICA, N.A.,
                            AS AGENT AND LENDER, AND

                            THE SEVERAL OTHER LENDERS
                        FROM TIME TO TIME PARTIES HERETO

================================================================================
<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
<S>                                                                        <C>
ARTICLE I - DEFINITIONS                                                       3

ARTICLE II - THE CREDIT                                                      22
     2.1     Assignment and Assumption; Conversion; Commitment Increase.     22
     2.2     Final Principal Payment.                                        24
     2.3     Ratable Loans.                                                  24
     2.4     Collateral.                                                     24
     2.5     Unused Credit Fee.                                              25
     2.6     Commitment Fee; Other Fees.                                     25
     2.7     Minimum Amount of Each Advance.                                 26
     2.8     Optional Principal Payments.                                    26
     2.9     Manner of Borrowing and Method of Selecting Types and
             Interest Periods for New Advances; Borrowing Base;
             Lender Obligations.                                             26
     2.10    Conversion and Continuation of Outstanding Advances.            27
     2.11    Changes in Interest Rate, Etc.                                  28
     2.12    Rates Applicable After Default; Late Fee.                       30
     2.13    Method of Payment.                                              30
     2.14    Increase in Aggregate Commitment.                               31
     2.15    Notes; Telephonic Notices.                                      31
     2.16    Interest Payment Dates; Interest and Fee Basis.                 32
     2.17    Notification of Advances, Interest Rates and Prepayments.       32
     2.18    Lending Installations.                                          32
     2.19    Non-Receipt of Funds By the Agent.                              32
     2.20    Withholding Tax Exemption.                                      33
     2.21    Voluntary Reduction of Aggregate Commitment Amount.             33
     2.22    Usury.                                                          34
     2.23    Application of Moneys Received by the Agent.                    34

ARTICLE III - THE LETTER OF CREDIT SUBFACILITY                               35
     3.1     Obligation to Issue.                                            35
     3.2     Types and Amounts.                                              35
     3.3     Conditions.                                                     36
     3.4     Procedure for Issuance of Facility Letters of Credit.           36
     3.5     Reimbursement Obligations, Duties of Issuing Bank.              38
     3.6     Participation.                                                  39
     3.7     Payment of Reimbursement Obligations.                           40
     3.8     Compensation for Facility Letters of Credit.                    41
     3.9     Letter of Credit Collateral Account.                            42

ARTICLE IV - CHANGE IN CIRCUMSTANCES                                         42
     4.1     Yield Protection.                                               42
</TABLE>

<PAGE>   3

<TABLE>
<S>                                                                         <C>
     4.2     Changes in Capital Adequacy Regulations.                        43
     4.3     Funding Indemnification.                                        43
     4.4     Lender Statements, Survival of Indemnity.                       43
     4.5     Limitation on the Borrower's Liability.                         44

ARTICLE V - CONDITIONS PRECEDENT                                             44
     5.1     Conditions to Closing.                                          44
     5.2     Conditions to Each Advance, Issuance of Facility Letter of
             Credit and Continuation/Conversion.                             45
     5.3     Conditions to Secured Collateral Pool.                          46
     5.4     Conditions to Negative Collateral Pool.                         51

ARTICLE VI - REPRESENTATIONS AND WARRANTIES                                  54
     6.1     Existence.                                                      54
     6.2     Authorization and Validity.                                     54
     6.3     No Conflict; Government Consent.                                54
     6.4     Financial Statements; Material Adverse Change.                  55
     6.5     Taxes.                                                          55
     6.6     Litigation and Contingent Obligations.                          55
     6.7     Subsidiaries.                                                   55
     6.8     ERISA.                                                          56
     6.9     Accuracy of Information.                                        56
     6.10    Regulation U.                                                   57
     6.11    Material Agreements.                                            57
     6.12    Compliance With Laws.                                           57
     6.13    Ownership of Collateral Pool Properties.                        57
     6.14    Investment Company Act.                                         57
     6.15    Public Utility Holding Company Act.                             57
     6.16    Solvency.                                                       57
     6.17    Insurance.                                                      58
     6.18    NYSE and REIT Status.                                           59
     6.19    Environmental Matters.                                          59
     6.20    Licenses, Etc.                                                  60
     6.21    Judgments.                                                      60
     6.22    Lessee; Property Manager.                                       61
     6.23    Updated Schedules.                                              61
     6.24    Collateral Pool Properties.                                     61

ARTICLE VII - COVENANTS                                                      63
     7.1     Financial Reporting.                                            63
     7.2     Use of Proceeds.                                                66
     7.3     Notice of Default.                                              66
     7.4     Conduct of Business.                                            66
     7.5     Taxes.                                                          67
     7.6     Insurance.                                                      67
     7.7     Compliance with Laws.                                           67

</TABLE>

<PAGE>   4

<TABLE>
<S>                                                                         <C>
     7.8     Maintenance of Collateral Pool Properties.                      67
     7.9     Inspection.                                                     68
     7.10    Maintenance of Status.                                          68
     7.11    Distributions.                                                  68
     7.12    Merger; Sale of Assets.                                         69
     7.13    Release of Mortgages or Negative Pledge Agreements.             69
     7.14    Liens.                                                          69
     7.15    Affiliates.                                                     70
     7.16    Interest Rate Hedging.                                          70
     7.17    Consolidated Net Worth.                                         70
     7.18    Additional Financial Covenants.                                 71
     7.19    Environmental Matters.                                          72
     7.20    Negative Pledge Agreements.                                     76
     7.21    Manager.                                                        77
     7.22    Acceleration Notice.                                            77
     7.23    Additional Covenants.                                           77
     7.24    Calculation of Financial Covenants Upon Property Breaches.      77
     7.25    Leases.                                                         77
     7.26    Franchises.                                                     77

ARTICLE VIII - DEFAULTS                                                      77

ARTICLE IX - ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES                  80
     9.1     Acceleration.                                                   80
     9.2     Amendments, Waivers, Decisions.                                 81
     9.3     Preservation of Rights.                                         82

ARTICLE X - GENERAL PROVISIONS                                               82
     10.1    Survival of Representations.                                    82
     10.2    Governmental Regulation.                                        82
     10.3    Taxes.                                                          82
     10.4    Headings.                                                       83
     10.5    Entire Agreement.                                               83
     10.6    Several Obligations; Benefits of This Agreement.                83
     10.7    Expenses; Indemnification.                                      83
     10.8    Numbers of Documents.                                           84
     10.9    Accounting.                                                     84
     10.10   Severability of Provisions.                                     84
     10.11   Nonliability of Lenders, Arranger, Agent.                       84
     10.12   Publicity.                                                      84
     10.13   Brokers.                                                        84
     10.14   Confidentiality.                                                84
     10.15   Appraisals.                                                     85
     10.16   CHOICE OF LAW.                                                  85
     10.17   CONSENT TO JURISDICTION.                                        85
     10.18   WAIVER OF JURY TRIAL.                                           85

</TABLE>

<PAGE>   5

<TABLE>
<S>                                                                          <C>
     10.19   MANDATORY ARBITRATION.                                          85
     10.20   Year 2000 Problem.                                              87

ARTICLE XI - THE AGENT AND AGREEMENTS AMONG LENDERS                          87
     11.1    Appointment.                                                    87
     11.2    Powers.                                                         87
     11.3    General Immunity.                                               87
     11.4    No Responsibility for Loans, Recitals, Etc.                     88
     11.5    Action on Instructions of Lenders.                              88
     11.6    Employment of Agents and Counsel.                               88
     11.7    Reliance on Documents, Counsel.                                 88
     11.8    Agent's Reimbursement and Indemnification.                      88
     11.9    Rights as a Lender.                                             89
     11.10   Lender Credit Decision; Non-Reliance on Agents
             and Other Lenders.                                              89
     11.11   Resignation of Agent; Removal of Agent; Successor Agent.        90
     11.12   Notice of Defaults.                                             90
     11.13   Requests for Approval.                                          91
     11.14   Copies of Documents.                                            91
     11.15   Defaulting Lenders.                                             91

ARTICLE XII - RATABLE PAYMENTS                                               92

ARTICLE XIII - BENEFIT OF AGREEMENT; PARTICIPATIONS; ASSIGNMENTS             92
     13.1    Successors and Assigns.                                         92
     13.2    Participations.                                                 93
     13.3    Assignments.                                                    93
     13.4    Dissemination of Information.                                   94
     13.5    Tax Treatment.                                                  95
     13.6    Possession of Loan Documents and Register.                      95
ARTICLE XIV - NOTICES                                                        95
     14.1    Giving Notice.                                                  95
     14.2    Change of Address.                                              95
     14.3    Accounts.                                                       95

ARTICLE XV - COUNTERPARTS                                                    96

</TABLE>

<PAGE>   6

                                    EXHIBITS

Exhibit A      Form of Note
Exhibit B      Form of Opinion
Exhibit C      Form of Compliance Certificate
Exhibit D      Assignment Agreement
Exhibit E      Loan/Credit Related Money Transfer Instruction
Exhibit F      Minimum Specifications for Environmental Investigations
Exhibit G      Secured Collateral Pool
Exhibit H      Negative Collateral Pool
Exhibit I-1    Borrowing Notice
Exhibit I-2    Conversion/Continuation Notice
Exhibit I-3    Letter of Credit Request
Exhibit J      Commitment Amounts and Percentages

                                    SCHEDULES

Schedule 1     Subsidiaries and Investment Affiliates
Schedule 2     Indebtedness and Liens
Schedule 3     Plans and Multiemployer Plans
Schedule 4     Environmental Disclosures
Schedule 5     Noncompliance with Laws
Schedule 6     Litigation and Investigations
Schedule 7     Contingent Obligations
Schedule 8     Indebtedness Defaults
Schedule 9     Lessees and Managers other than RFS, Inc.

                                       ix
<PAGE>   7

             FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

         This Fourth Amended and Restated Revolving Credit Agreement, dated as
of January 7, 2000 is among RFS PARTNERSHIP, L.P., a Tennessee limited
partnership (the "Borrower"), RFS HOTEL INVESTORS, INC., a Tennessee corporation
(the "Guarantor"), the several banks, financial institutions and other entities
from time to time parties to this Agreement (collectively, the "Lenders"), and
BANK OF AMERICA, N.A., a national banking association, (the "Agent").

                                    RECITALS

         A. The Borrower is primarily engaged in the business of purchasing,
developing, owning, operating, leasing, managing, financing and selling Hotel
Properties (as defined herein).

         B. The Guarantor is the sole general partner of the Borrower and the
Guarantor is qualified as a real estate investment trust with its common stock
listed on the New York Stock Exchange.

         C. Boatmen's Bank of Tennessee ("BBOT") has heretofore made loans
available to the Guarantor, formerly as borrower, in the maximum aggregate
principal amount of $75,000,000 (hereinafter as modified and/or increased called
the "Facility"), as set forth in that certain First Amended Revolving Credit and
Term Loan Agreement dated as of February 20, 1996, as modified by that certain
First Modification of First Amended Revolving Credit and Term Loan Agreement and
of Related Documents dated as of May 19, 1996 (collectively the "BBOT Loan
Agreement").

         D. BBOT has heretofore transferred undivided participation interests in
the Facility (the "Participations") to SouthTrust Bank of Georgia, N.A., First
Tennessee Bank National Association, and First National Bank of Commerce, New
Orleans (collectively the "Participating Lenders"), pursuant to the terms of
that certain First Amended Participation Agreement dated as of May 29, 1996 (the
"Participation Agreement").

         E. By Amended and Restated Revolving Credit and Term Loan Agreement
dated as of July 30, 1997 (the "Restated Loan Agreement"), the Borrower became
the borrower and assumed the obligations of the Guarantor, formerly as the
borrower, relating to the Facility set forth in the BBOT Loan Agreement, the
Participations were converted into a single direct multiple-lender line of
credit, and the Facility was increased to the maximum aggregate principal amount
of $175,000,000.

         F. In connection with the Restated Loan Agreement, BBOT assigned all of
its right, title and interest in and to the Facility, the BBOT Loan Agreement,
the Participation Agreement and the other Loan Documents (as herein defined) to
NationsBank which then, together with the Participating Lenders, terminated the
Participation Agreement and assigned to the Participating Lenders an undivided
interest in and to the Facility. NationsBank also placed of record in each
jurisdiction where a Mortgage was already of record an assignment, modification
and assumption agreement, assigning its rights therein to the Agent as agent for
the Lenders, modifying such

                                       1

<PAGE>   8

Mortgage to reflect the increase in the Facility and extension of the Facility
Termination Date, and reflecting the assumption of the Obligations by the
Borrower, and including certain other matters.

         G. Contemporaneously with the termination of the Participation
Agreement, NationsBank and the Participating Lenders assigned to the remaining
Lenders such portions of the Commitment existing under the BBOT Loan Agreement
as were necessary to properly distribute to all Lenders their proper pro rata
shares of the Commitment existing under the BBOT Loan Agreement, followed
contemporaneously by an increase in the Facility and Commitment as set forth in
the Restated Loan Agreement and the appointment of NationsBank as the Agent for
the Lenders pursuant to the terms thereof. NationsBanc Capital Markets, Inc.
("NCMI"), subsequently known as NationsBanc Montgomery Securities LLC ("NMS")
and now known as Banc of America Securities, LLC ("BAS"), arranged the increase
in the Facility requested by the Borrower and the Guarantor from $75,000,000 to
$175,000,000, and NCMI and NationsBank coordinated the closing of such increase.

         H. By Second Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of October 1, 1997, made and entered into by and among the
Borrower, the Guarantor, the Lenders party thereto and the Agent (the "Second
Restated Loan Agreement"), the parties modified the Restated Loan Agreement to
adjust the interest rate options therein, to add certain additional financial
covenants and delete or modify certain existing financial covenants, and to
include certain other modifications.

         I. By First Amendment to Second Amended and Restated Revolving Credit
and Term Loan Agreement dated as of June 4, 1998, made and entered into by and
among the Borrower, the Guarantor, the Lenders party thereto and the Agent (the
"First Amendment to Second Restated Loan Agreement"), the parties modified the
Second Restated Loan Agreement to increase the Facility to the maximum aggregate
principal amount of $190,000,000, to modify certain existing financial
covenants, and to include certain other modifications, all to be effective from
the date thereof through and including December 31, 1998.

         J. By Second Amendment to Second Amended and Restated Revolving Credit
and Term Loan Agreement dated as of June 30, 1998, made and entered into by and
among the Borrower, the Guarantor, the Lenders party thereto and the Agent (the
"Second Amendment to Second Restated Loan Agreement"; the Second Restated Loan
Agreement, as modified by the First Amendment to Second Restated Loan Agreement
and the Second Amendment to Second Restated Loan Agreement, being hereinafter
referred to as the "Amended Second Restated Loan Agreement"), the parties
modified and added certain definitions.

         K. By letter dated November 6, 1998 (the "Waiver Letter"), Agent, on
behalf of the Required Lenders, waived any defaults arising due to breaches of
Section 7.18(d) of the Amended Second Restated Loan Agreement through December
31, 1998.

         L. By Third Amended and Restated Revolving Credit Agreement, dated as
of December 22, 1998, made and entered into by and among the Borrower, the
Guarantor, the Lenders party thereto and the Agent (the "Third Restated Loan
Agreement"), the parties modified the

                                       2
<PAGE>   9

Amended Second Restated Loan Agreement to decrease the Facility to the maximum
aggregate principal amount of $100,000,000 in exchange for the release of
certain Collateral Pool Property, to modify certain existing financial
covenants, and to include certain other modifications.

         M. By First Amendment to Third Amended and Restated Revolving Credit
Agreement dated as of June 30, 1998, made and entered into by and among the
Borrower, the Guarantor, the Lenders party thereto and the Agent (the "First
Amendment to Third Restated Loan Agreement"; the Third Restated Loan Agreement,
as modified by the First Amendment to Third Restated Loan Agreement, being
hereinafter referred to as the "Amended Third Restated Loan Agreement"), the
parties modified certain provisions.

         N. The Borrower has asked that the Amended Third Restated Loan
Agreement be further modified to increase the Facility to the aggregate
principal amount of $130,000,000.00, to permit the possible future increase in
the Facility to $140,000,000 and to modify certain existing financial covenants.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                                  DEFINITIONS

         As used in this Agreement:

         "Adjusted Cash Flow" means the lesser of (i) lease payments for the
trailing twelve (12) months less real estate taxes for the latest available
year, property insurance and the Capital Expenditure Reserve Amount or (ii)
Property Operating Income (as defined herein, but before deducting real estate
taxes, insurance, any capital expenditures and any management fee) for the
trailing twelve (12) months less real estate taxes for the latest available
year, property insurance, the Capital Expenditure Reserve Amount and a
management fee equal to four percent (4%) of trailing twelve (12) month gross
room revenues.

         "Adjusted EBITDA" means EBITDA less the Capital Expenditure Reserve
Amount. Wherever in this Agreement such term is used (except in Section
7.18(c)), it is understood that for any Completed Development Hotel or any Hotel
Property owned by the Borrower for less than twelve (12) months, historical
EBITDA for the period of the Borrower's ownership will be used to calculate
Adjusted EBITDA, unless the Borrower requests in writing at least fifteen (15)
Business Days prior to the date such calculation is to be made that the Borrower
prefers to use projected EBITDA for such Hotel Property. Approval of such a
request will be at the Agent's sole discretion.

                                       3

<PAGE>   10

         "Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the Borrower or a Qualified
Borrower of the same Type and, in the case of LIBOR Advances, for the same
Interest Period, including Reimbursement Obligations.

         "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

         "Agent" means Bank of America, N.A. in its capacity as agent for the
Lenders pursuant to Article XI, and not in its individual capacity as a Lender,
and any successor Agent appointed pursuant to Article XI.

         "Aggregate Commitment", or "Aggregate Commitment Amount" means the
aggregate of (i) the Commitments of all the Lenders, which initially shall be
$130,000,000, plus (ii) the aggregate amount of all Increased Commitments
effected pursuant to Section 2.14 hereof; which aggregate amount is subject to
the Borrower's right to reduce the Aggregate Commitment pursuant to Section 2.21
and which aggregate amount shall otherwise only be increased with the consent of
all Lenders.

         "Agreement" means this Fourth Amended and Restated Revolving Credit
Agreement, as it may be amended or modified and in effect from time to time.

         "Allocated Facility Amount" means, at any time, the sum of all then
outstanding Advances and the then existing Facility Letter of Credit
Obligations.

         "Amended Second Restated Loan Agreement" is defined in the recitals to
this Agreement.

         "Amended Third Restated Loan Agreement" is defined in the recitals to
this Agreement.

         "Applicable Advance Rate" means the applicable percentage (as it may
change from time to time upon the agreement of the Borrower and the Lenders) of
either Cost or Implied Value used to calculate the Borrowing Base which for
Hotel Properties in the Secured Collateral Pool is 50%, and for Hotel Properties
in the Negative Collateral Pool is 40%.

         "Applicable Cap Rate" means 11.5% initially, may be reviewed from time
to time by the Lenders and shall be subject to adjustment by the Required
Lenders in their sole discretion based upon market conditions for comparable
property types upon thirty (30) days' written notice to Borrower. In no event
shall the Applicable Cap Rate be adjusted more than one (1) time in any trailing
twelve (12) month rolling period.

         "Applicable Laws" is defined in Section 6.24(c).

         "Arranger" means BAS.

                                       4

<PAGE>   11

         "Article" means an article of this Agreement unless another document is
specifically referenced.

         "Assignment" is defined in Section 13.3.

         "Assignments of Rents and Leases" means the assigning of all rents,
leases, issues and profits from Hotel Properties in the Secured Collateral Pool
as part of the Collateral for the Obligations including, without limitation, the
Leases.

         "Authorized Officer" means with respect to any Person, any of the
president, executive vice president, chief operating officer, chief financial
officer or treasurer, general partner, or chief manager acting singly on behalf
of such Person, who has been duly authorized to execute any document and to act
on behalf of such Person.

         "BAS" means Banc of America Securities LLC, formerly known as
NationsBanc Montgomery Securities LLC.

         "BBOT" means Boatmen's Bank of Tennessee.

         "BBOT Loan Agreement" means that certain First Amended Revolving Credit
and Term Loan Agreement dated as of February 20, 1996, as modified by that
certain First Modification of First Amended Revolving Credit and Term Loan
Agreement and of Related Documents dated as of May 19, 1996, all entered into by
and between BBOT, the Borrower, and the Guarantor.

         "BBOT Note" means that certain Replacement Master Revolving Line of
Credit Promissory Note dated May 29, 1996 in the principal amount of $75,000,000
evidencing the Facility prior to the date hereof, and which BBOT Note was
replaced by the Notes, as hereinafter defined.

         "Bank of America" means Bank of America, N.A., in its individual
capacity, and its successors.

         "Borrower" means RFS Partnership, L.P., and its successors and
permitted assigns.

         "Borrowing Base" means the amount of the Aggregate Commitment available
to the Borrower hereunder, which amount is the sum of (a) for each Collateral
Pool Property owned or open for less than four (4) fiscal quarters, the
Applicable Advance Rate times the Cost, plus (b) for each Collateral Pool
Property owned or open for four (4) fiscal quarters or more, the Applicable
Advance Rate times the Implied Value of the Collateral Pool Property. However,
the aggregate Borrowing Base attributable to Completed Development Hotels in the
Secured Collateral Pool cannot exceed 15%. Further, the aggregate Borrowing Base
attributable to Completed Development Hotels in the Negative Collateral Pool
cannot exceed 15% of the aggregate Borrowing Base attributable to all Negative
Collateral Pool properties.

         "Borrowing Date" means a date on which an Advance is made hereunder.

                                       5

<PAGE>   12

         "Borrowing Notice" is defined in Section 2.9.

         "Break-up Fee" means a sum equal to the aggregate of any loss, cost,
liability or expense incurred by the Lenders, or any of them, as a result of the
prepayment of the Obligations, or portion thereof, whether due to acceleration
or in due course in connection with conversions to or from a LIBOR Loan
including, without limitation, any loss in obtaining, liquidating or employing
funds from third parties, and any loss of yield, as determined by any Lender, on
a present value basis, in its judgment reasonably exercised; but the Break-up
Fee shall in no event be less than zero.

         "Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in Dallas, Texas for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Dallas, Texas for the conduct of substantially all of their commercial
lending activities.

         "Capital Expenditure Reserve Amount" means, for any period, 4% of the
trailing twelve (12) month gross revenues.

         "Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person which is not a corporation
and any and all warrants or options to purchase any of the foregoing.

         "Capitalized Lease" of a Person means any lease of Property imposing
obligations on such Person, as lessee thereunder, which are required in
accordance with GAAP to be capitalized on a balance sheet of such Person.

         "Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.

         "Cash Equivalents" means, as of any date, (i) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities of not more than one year
from such date, (ii) time deposits and certificates of deposit having maturities
of not more than one year from such date and issued by any domestic commercial
bank having (A) senior long-term unsecured debt rated at least A or the
equivalent thereof by S&P or A2 or the equivalent thereof by Moody's and (B)
capital and surplus in excess of $100,000,000, (iii) commercial paper rated at
least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by
Moody's and in either case maturing within 120 days from such date; and (iv)
shares of any money market mutual fund rated at least AAA or the equivalent
thereof by S&P or at least AAA or the equivalent thereof by Moody's.

         "Change" is defined in Section 4.2.

                                       6
<PAGE>   13

         "Closing Date" means January 7, 2000.

         "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

         "Collateral" means all property of every type and kind which now or
hereafter secures the Obligations, including, without limitation, the Hotel
Properties in the Secured and Negative Collateral Pools, the Leases and the
Consolidated Lease (including all rents, leases, issues and profits resulting
therefrom or relating thereto), the Letter of Credit Collateral Account, and all
real and personal property described in the Security Documents.

         "Collateral Pool" means all Hotel Properties included in the Secured
Collateral Pool and the Negative Collateral Pool.

         "Collateral Pool Property" means any Hotel Property in the Collateral
Pool.

         "Commitment" means the commitment to lend the maximum principal amount
available under the Facility and, for each Lender, the obligation of such Lender
to make Loans not exceeding the amount set forth in Exhibit J or as set forth in
any Notice of Assignment relating to any assignment that has become effective
pursuant to Section 13.3.2, as such amount may be modified from time to time
pursuant to the terms hereof.

         "Commitment Fee" means the sum so described and payable in accordance
with Section 2.6.

         "Completed Development Hotels" means Hotel Properties open less than
twelve (12) months.

         "Condemnation" is defined in Section 8.9.

         "Consolidated Lease" means that certain Consolidated Amended Lease
Agreement dated as of February 27, 1996, by and between the Borrower, as lessor,
and RFS, Inc., as lessee, as the same may have been, or may hereafter be,
modified, amended or restated.

         "Consolidated Lease Estoppel" means that certain Consolidated Lease
Estoppel, Subordination, Attornment and Non-Disturbance Agreement dated February
26, 1996, entered into by and between the Borrower, the Guarantor, RFS, Inc.,
and BBOT.

         "Consolidated Net Worth" means, as of any date of determination, an
amount equal to (a) Total Assets as of such date minus (b) Total Liabilities as
of such date minus (c) GAAP minority interest as of such date (not including
minority interests attributable to operating partnerships).

         "Consolidated Total Indebtedness" means, as of any date of
determination, all Indebtedness of the Borrower, the Guarantor, any Qualified
Borrowers and any of their Subsidiaries, determined

                                       7
<PAGE>   14

on a consolidated basis, such consolidation to be in accordance with GAAP, after
eliminating intercompany items.

         "Controlled Group" means all members of a controlled group of
corporations, partnerships (including joint ventures), limited liability
companies and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, the Guarantor, Qualified
Borrowers, or any of their Subsidiaries are treated as a single employer under
Section 414 of the Code.

         "Conversion/Continuation Notice" is defined in Section 2.10.

         "Cost" means for any Hotel Property the purchase price of such Hotel
Property plus the cost of any capital improvements performed by the Borrower
which the Agent has agreed to accept as part of the Cost of such Hotel Property.
For purposes of the Collateral Pool Properties existing as of the Closing Date,
"Cost" shall mean the amount set forth beside each Hotel Property listed on
Exhibits G or H attached hereto.

         "Debt Service" means, for any trailing twelve (12) month period, (a)
Interest Expense for such period plus (b) the aggregate amount of regularly
scheduled principal payments of Indebtedness (excluding balloon payments)
required to be made during such period by the Borrower, the Guarantor, any
Qualified Borrower or any of their Subsidiaries plus (c) a percentage of all
such regularly scheduled principal payments required to be made during such
period by any Investment Affiliate on Indebtedness taken into account in
calculating Interest Expense, equal to the greater of (x) the percentage of the
principal amount of such Indebtedness for which the Borrower, the Guarantor, or
any Qualified Borrower, or any Subsidiary is liable and (y) the percentage
ownership interest in such Investment Affiliate held by the Borrower, the
Guarantor and any Subsidiaries, in the aggregate, without duplication.

         "Default" means an event of default described in Article VIII.

         "Defaulting Lender" means any Lender which fails or refuses to perform
its obligations under this Agreement within the time period specified for
performance of such obligation, or, if no time frame is specified, if such
failure or refusal continues for a period of 5 Business Days after written
notice from the Agent; provided that if such Lender cures such failure or
refusal, such Lender shall cease to be a Defaulting Lender.

         "Distribution" means, with respect to Guarantor: the declaration or
payment of any dividend or distribution on or in respect of any shares of any
class of Capital Stock or beneficial interest in Guarantor, other than dividends
or distributions payable solely in equity securities of Guarantor; the purchase,
redemption, exchange or other retirement of any shares of any class of Capital
Stock or beneficial interest of Guarantor, directly or indirectly through a
Subsidiary of Guarantor or otherwise; the return of capital by Guarantor to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of Capital Stock or beneficial interest of Guarantor. With respect
to the Borrower, Distribution means the declaration or payment of any
distribution of cash

                                       8
<PAGE>   15

or cash flow to the partners of the Borrower, the return of capital by the
Borrower to its partners, or any other distribution on or in respect of any
partnership interests in the Borrower.

         "EBITDA" means income before extraordinary items (but after the impact
of minority interests and reduced to eliminate any income from Investment
Affiliates), as reported by the Borrower, the Guarantor and their Subsidiaries
on a trailing twelve (12) month consolidated basis in accordance with GAAP, plus
Interest Expense, depreciation, amortization and income tax (if any) expense
plus a percentage of such income (adjusted as described above) of any Investment
Affiliate equal to the allocable economic interest in such Investment Affiliate
held by the Borrower, the Guarantor and any Subsidiaries, in the aggregate
(provided that no item of income or expense shall be included more than once in
such calculation even if it falls within more than one of the foregoing
categories). The policies and procedures prescribed by SAB 101 will be utilized
in the calculation of EBITDA.

         "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) a financial institution or other entity that is an "accredited investor" (as
defined in Rule 501 under the Securities Act of 1933, as amended) having (i)
total assets of at least $10,000,000,000, (ii) a long-term unsecured debt rating
of at least Baa1 by Moody's and BBB+ by Standard & Poor's and (iii) an office in
the United States; or (d) any other Person approved by the Agent.

         "Environmental Claim" means any investigative, enforcement, cleanup,
removal, containment, remedial or other private or governmental or regulatory
action at any time threatened, instituted or completed pursuant to any
applicable Environmental Requirement, against the Borrower, the Guarantor, any
Qualified Borrower or any Subsidiary, or against or with respect to any Hotel
Properties or any condition, use or activity on any of the Hotel Properties
(including any such action against the Agent or the Lenders), and any claim at
any time threatened or made by any person against the Borrower, the Guarantor,
any Qualified Borrower or any Subsidiary, or against or with respect to any of
the Hotel Properties or any condition, use or activity on any of the Hotel
Properties (including any such claim against Agent or the Lenders), relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
or in any way arising in connection with any Hazardous Material or any
Environmental Requirement.

         "Environmental Law" means any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision, order,
injunction, decree, or rule of common law, and any judicial interpretation of
any of the foregoing, which pertains to health, safety, any Hazardous Material,
or the environment (including but not limited to ground or air or water or noise
pollution or contamination, and underground or above ground tanks) and shall
include without limitation, the Solid Waste Disposal Act, 42 U.S.C. '6901 et
seq.; the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. '9601 et seq. ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"); the Hazardous Materials
Transportation Act, 49 U.S.C. '1801 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. '1251 et seq.; the Clean Air Act, 42 U.S.C. '7401 et
seq.; the Toxic Substances Control Act, 15 U.S.C. '2601 et seq.; the Safe
Drinking Water Act, 42 U.S.C. '300f et seq.; any applicable state air quality
Act; any applicable state underground storage tank act; any applicable Water
Quality Control Act; any applicable Comprehensive Solid Waste Management Act;
any applicable Oil or Hazardous

                                       9
<PAGE>   16

Material Spill or Release Act; any applicable Hazardous Waste Management Act;
any applicable Hazardous Site Response Act, and any other state or federal
environmental statutes, and all rules, regulations, orders and decrees now or
hereafter promulgated under any of the foregoing, as any of the foregoing now
exist or may be changed or amended or come into effect in the future.

         "Environmental Requirement" means any Environmental Law, agreement or
restriction (including but not limited to any condition or requirement imposed
by any insurance or surety company), as the same now exists or may be changed or
amended or come into effect in the future, which pertains to health, safety, any
Hazardous Material, or the environment, including but not limited to ground or
air or water or noise pollution or contamination, and underground or aboveground
tanks.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

         "Facility" is defined in Recital C.

         "Facility Letter of Credit" means a Letter of Credit issued hereunder.

         "Facility Letter of Credit Fee" is defined in Section 3.8 (a).

         "Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, without
duplication, of the Borrower, the Guarantor or any Qualified Borrower with
respect to Facility Letters of Credit, including the aggregate undrawn
face-amount of the then outstanding Facility Letters of Credit, but not
including Reimbursement Obligations.

         "Facility Termination Date" means July 30, 2003, or such earlier date
on which the principal balance of the Facility and all other sums due in
connection with the Facility shall be due as a result of the acceleration of the
Facility.

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Dallas,
Texas Time) on such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.

         "Fee Letter" means that certain letter of even date with this Agreement
from Agent and Arranger to Borrower which sets forth the agreement with respect
to certain fees payable to Agent and Arranger.

                                       10
<PAGE>   17

         "First Amendment to Second Restated Loan Agreement" is defined in the
recitals to this Agreement.

         "First Amendment to Third Restated Loan Agreement" is defined in the
recitals to this Agreement.

         "Funds Available for Distribution" or "FAD" means, with respect to the
Borrower, the Guarantor and their respective Subsidiaries for any fiscal period,
an amount equal to Funds From Operations plus non-real estate depreciation and
the amortization of deferred financing costs for such period less (a) the
Capital Expenditure Reserve Amount for such Person for such period, and (b) the
aggregate amount of scheduled principal payments on the Consolidated Total
Indebtedness of such Person (excluding optional prepayments and scheduled
principal payments in respect of any such Indebtedness which is payable in a
single installment at final maturity) required to be made during such period.

         "Funds From Operations" or "FFO" means, as to any period, an amount
equal to (a) income (loss) from operations of the Borrower, the Guarantor and
their respective Subsidiaries for such period, excluding gain (loss) from debt
restructuring and sale of Hotel Properties, plus (b) depreciation and
amortization of real estate assets, plus (minus) (c) to the extent not included
in clause (a) above, gain (loss) on the sales of outparcels made in the ordinary
course of business, and after adjustments for Investment Affiliates, determined
in each case on a combined basis in accordance with GAAP. Adjustments for
Investment Affiliates will be calculated to reflect funds from operations on the
same basis.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied in a manner consistent
with that used in preparing the financial statements referred to in Section 7.1.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any quasi-governmental agency exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

         "Guarantee Obligation" means, as to any Person (the "guaranteeing
person"), any obligation (determined without duplication) of (a) the
guaranteeing person or (b) another Person (including, without limitation, any
bank under any Letter of Credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counter-indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2), to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase any property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation

                                       11
<PAGE>   18

or (iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the maximum stated
amount of the primary obligation relating to such Guarantee Obligation (or, if
less, the maximum stated liability set forth in the instrument embodying such
Guarantee Obligation), provided, that in the absence of any such stated amount
or stated liability, the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower, the Guarantor or any Subsidiary in good
faith.

         "Guarantor" means RFS Hotel Investors, Inc.

         "Hazardous Material" means any substance, whether solid, liquid or
gaseous, which is listed, defined or regulated as a "hazardous substance",
"hazardous waste" or "solid waste", or otherwise classified as hazardous or
toxic, in or pursuant to any Environmental Requirement; or which is or contains
asbestos, radon, any polychlorinated biphenyl, urea formaldehyde foam
insulation, explosive or radioactive material, or motor fuel or other petroleum
hydrocarbons; or which causes or poses a threat to cause a contamination or
nuisance on any real property or any adjacent real property or a hazard to the
environment or to the health or safety of persons on any real property.

         "Hotel Property" or "Hotel Properties" means any parcel of real
property owned by the Borrower, the Guarantor, or any Subsidiary, Investment
Affiliate, Qualified Borrower or Joint Venture, on which parcel is either
located a hotel, or on which construction of a hotel has commenced.

         "Implied Debt Service" means twelve (12) times the monthly payment
required to fully amortize the Allocated Facility Amount using a constant
calculated based upon (a) a fixed rate of interest equal to an amount which is
2.25% per annum above the most recent monthly average of the daily yields on all
outstanding United States Treasury Securities adjusted to a constant maturity of
seven (7) years, as most recently published by the Federal Reserve Board in
Federal Reserve Statistical Release Document H.15(519), Selected Interest Rates,
and such rate then rounded upwards to the nearest .125% and (b) a twenty (20)
year amortization schedule; provided however, that in no event shall the
constant used for such calculation be less than nine percent (9%).

         "Implied Value" means for any Hotel Property an amount arrived at based
upon that Hotel Property's Adjusted Cash Flow, divided by the Applicable Cap
Rate.

         "Indebtedness" of any Person at any date means without duplication, (a)
all indebtedness of such Person for borrowed money which is outstanding
according to GAAP, (b) all obligations of such Person for the deferred purchase
price of property or services, (c) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar instrument, (d) all
Capitalized Lease Obligations, (e) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (f) all Guarantee
Obligations of such Person (excluding in any calculation of consolidated
indebtedness of the Borrower and the Guarantor, Guarantee Obligations of the
Borrower or the Guarantor in respect of primary obligations of any Qualified
Borrower or any

                                       12

<PAGE>   19

Subsidiary), (g) all reimbursement obligations of such Person for Letters of
Credit and other contingent liabilities, (h) all liabilities secured by any Lien
(other than Liens for taxes not yet due and payable) on any property owned by
such Person even though such Person has not assumed or otherwise become liable
for the payment thereof, (i) any repurchase obligation or liability of such
Person or any of its Subsidiaries with respect to accounts or notes receivable
sold by such Person or any of its Subsidiaries, (j) if such Person is the
Borrower or the Guarantor, such Person's pro rata share of debt in Investment
Affiliates and any loans where such Person is liable as a general partner, (k)
the greater of (i) the Borrower's, the Guarantor's and all Subsidiaries'
recourse interest in an Investment Affiliate's debt that is not consolidated
with the Borrower's, the Guarantor's or any Subsidiaries' financial statements,
or (ii) pro rata interest in all debt owed by an Investment Affiliate which is
either recourse or non-recourse to the Borrower, or the Guarantor, or any
Subsidiary, as applicable, that is not consolidated with the Borrower's, the
Guarantor's or any Subsidiaries' financial statements, (l) any pre-sale
obligations of such Person relating to the purchase of any real or personal
property, (m) Total Liabilities, (n) any amounts payable under any interest rate
protection product (to the extent permitted by the Loan Documents and without
implying consent thereto), (o) any other amounts considered debt by rating
agencies and (p) any forward equity commitments.

         "Interest Expense" means all interest expense of the Borrower, the
Guarantor and any Qualified Borrower and their Subsidiaries determined in
accordance with GAAP plus (i) capitalized interest not covered by an interest
reserve from a loan facility, plus (ii) the allocable portion (based on
liability) of any accrued or paid interest incurred on any obligation for which
the Borrower, the Guarantor, any Qualified Borrower or any Subsidiary is wholly
or partially liable under repayment, interest carry, or performance guarantees,
or other relevant liabilities (excluding amoritized fees which are classified as
interest), plus (iii) the greater of (x) allocable percentage of any accrued or
paid interest incurred on any Indebtedness of any Investment Affiliate, whether
recourse or non-recourse, equal to the applicable economic interest in such
Investment Affiliate held by the Borrower, the Guarantor and any Subsidiaries,
in the aggregate, or (y) the amount of all interest expense on all recourse
Indebtedness the Borrower, the Guarantor, any Qualified Borrower, and/or their
Subsidiaries, have in any Investment Affiliate, provided that no expense shall
be included more than once in such calculation even if it falls within more than
one of the foregoing categories.

         "Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business and other than advances to, or deposits with,
contractors and suppliers in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or contribution of
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, notes, debentures or
other securities of any other Person made by such Person.

         "Investment Affiliate" means any Person in which the Borrower, the
Guarantor or any Qualified Borrower, or any Subsidiary, directly or indirectly,
have an ownership interest, including, without limitation, Joint Ventures, whose
financial results are not consolidated under GAAP with their financial results
on their consolidated financial statements.

         "Issuance Date" is defined in Section 3.4(a)(2).

                                       13
<PAGE>   20

         "Issuance Notice" is defined in Section 3.4(c).

         "Issuing Bank" means, with respect to each Facility Letter of Credit,
any Lender which issues such Facility Letter of Credit. The initial Issuing Bank
shall be Bank of America.

         "Joint Venture" means any joint venture partnership in which the
Borrower, the Guarantor, any Qualified Borrower or any Subsidiary is a joint
venture partner.

         "Lease or Leases" means any lease or all leases of any or all of the
Collateral Pool Properties, with the Borrower as the lessor and with either RFS,
Inc., as the lessee (including, without limitation, the Consolidated Lease), or
with any other Person as the lessee approved by the Required Lenders.

         "Lenders" means the lending institutions listed on the signature pages
of this Agreement, their respective permitted successors and assigns and any
other lending institutions that subsequently become parties to this Agreement.

         "Lending Installation" means, with respect to a Lender, any office,
branch, subsidiary or affiliate of such Lender.

         "Lessee" means RFS, Inc., a Tennessee corporation, or any other Person
approved by the Required Lenders, now or hereafter party to any of the Leases as
the tenant or lessee thereunder.

         "Letter of Credit" means a letter of credit of a Person which is issued
upon the application of such Person or upon which such Person is an account
party or for which such Person is in any way liable.

         "Letter of Credit Collateral Account" is defined in Section 3.9.

         "Letter of Credit Request" is defined in Section 3.4(a).

         "Leverage Ratio" means the ratio of Consolidated Total Indebtedness
divided by the Total Asset Value.

         "LIBOR Advance" means an Advance which bears interest at a LIBOR Basis.

         "LIBOR Basis" means a per annum rate of interest (rounded upwards, if
necessary, to the nearest whole one-sixteenth of 1%) determined pursuant to the
following formula:

                                                         LIBOR Rate
                                               ----------------------------
                  LIBOR Basis =         100% - LIBOR Reserve Percentage

PLUS the number of basis points set forth beside the Leverage Ratio applicable
at any given time (as determined by Agent based upon the most recent compliance
certificate delivered to Agent in

                                       14

<PAGE>   21

accordance with Section 7.1(e) hereof or otherwise and effective as of the date
of receipt of such certificate if such certificate is accepted by Agent) in the
following grid after adjustment for insurance costs and other appropriate
regulatory costs and adjustments (other than reserve requirements):

<TABLE>
<CAPTION>

         ----------------------------------------------------------------------
                     LEVERAGE RATIO                       BASIS POINTS
         ----------------------------------------------------------------------
         <S>                                              <C>
                           <25%                              150.0
         ----------------------------------------------------------------------
                      $25% and <35%                          165.0
         ----------------------------------------------------------------------
                      $35% and <40%                          175.0
         ----------------------------------------------------------------------
                      $40% and <45%                          200.0
                          $45%                               225.0
         ----------------------------------------------------------------------
</TABLE>

         "LIBOR Interest Period" means, with respect to any LIBOR Advance, a
period from the date on which the LIBOR Basis shall become effective as to such
LIBOR Advance to thirty (30), sixty (60), ninety (90), or one hundred eighty
(180) days thereafter, subject however to the following:

         (i) if any LIBOR Interest Period would otherwise end on a day which is
not a Business Day, that LIBOR Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such LIBOR Interest Period into another calendar month, in which event such
LIBOR Interest Period shall end on the immediately preceding Business Day; and

         (ii) any LIBOR Interest Period which begins on the last Business Day of
a calendar month (or on a day for which there is no corresponding day in the
calendar month at the end of such LIBOR Interest Period) shall, subject to
clause (iii) below, end on the last Business Day of a calendar month; and

         (iii) No LIBOR Interest Period shall extend beyond the Facility
Termination Date.

         "LIBOR Loan" means a Loan which bears interest at a LIBOR Basis.

         "LIBOR Rate" means for any LIBOR Advance for any LIBOR Interest Period
therefor, the rate per annum appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such LIBOR Interest Period for a term comparable to such LIBOR Interest
Period. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, for any LIBOR Advance for any LIBOR Interest Period therefor, the
rate per annum appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two (2) Business Days prior to the first day of such LIBOR Interest Period for a
term comparable to such LIBOR Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.

                                       15

<PAGE>   22

         "LIBOR Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of LIBOR Advances is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. LIBOR Advances shall be deemed to constitute Eurocurrency liabilities and
as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to any Lender. The LIBOR Basis shall be adjusted automatically on and as of
the effective date of any change in the LIBOR Reserve Percentage.

         "Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement but excluding the leasehold interest of a lessee in a lease that is
not a Capitalized Lease).

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

         "Loan Documents" means this Agreement, the Notes, the Mortgages, the
Negative Pledge Agreements, the Fee Letter and any guaranty, reaffirmation of
guaranty, environmental indemnity agreement, or other document executed and
delivered by the Borrower, the Guarantor, any Qualified Borrower, any Investment
Affiliate, or any of their Subsidiaries, from time to time and evidencing,
securing, guaranteeing or relating to the payment or performance of the
Obligations, as any of the foregoing may be amended, modified, restated,
renewed, extended or reaffirmed from time to time.

         "Material Adverse Effect" means a material adverse effect on (i) the
business, Hotel Property, results of operations or financial condition of the
Borrower, the Guarantor, any Qualified Borrower or any of their Subsidiaries
taken as a whole or (ii) the ability of the Borrower or the Guarantor to perform
their obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the remedies or material rights
of the Agent or the Lenders thereunder.

         "Maximum Amount" means the maximum nonusurious aggregate amount of all
interest permitted by such state or states whose laws are held by any court of
competent jurisdiction to govern the interest rate provisions of the Facility or
the federal laws of the United States applicable to the transaction, whichever
laws allow the greater interest, as such laws now exist or may hereafter be
changed or amended or come into effect in the future.

         "Maximum Rate" means the maximum nonusurious rate of interest per annum
permitted by such state or states whose laws are held by any court of competent
jurisdiction to govern the interest rate provisions of the Facility, or the
federal laws of the United States applicable to the transaction,

                                       16
<PAGE>   23

whichever laws allow the greater interest, as such laws now exist or may
hereafter be changed or amended or come into effect in the future. The Maximum
Rate shall be applied by taking into account all amounts characterized by
applicable law as interest on the Obligations, so that the aggregate of all
interest does not exceed the Maximum Amount.

         "Mortgage" means any deed of trust, deed to secure debt or mortgage
encumbering a Hotel Property which secures the Obligations.

         "Multiemployer Plan" means a Plan to which more than one employer is
obligated to make contributions, and which is maintained pursuant to one or more
collective bargaining agreements to which the Borrower or any member of the
Controlled Group is a party.

         "NMS" means NationsBanc Montgomery Securities LLC.

         "NationsBank" means NationsBank, N.A., in its individual capacity,
and its successors.

         "Bank of America Prime Rate" means, on any day, the rate of interest
per annum then most recently established by Bank of America as its "prime rate".
Any such rate is a general reference rate of interest, may not be related to any
other rate, and may not be the lowest or best rate actually charged by Bank of
America to any customer or a favored rate, and may not correspond with future
increases or decreases in interest rates charged by other lenders or market
rates in general.

         "Negative Collateral Pool" means a specified group of Hotel Properties
not encumbered by Mortgages encumbering Hotel Properties that have been accepted
by the Lenders into the Collateral Pool but which the Borrower or other Person
owning any such Hotel Property has agreed not to encumber, transfer, pledge,
assign, mortgage or otherwise hypothecate in any manner.

         "Negative Pledge Agreement" means a written agreement executed by the
Borrower or any other Person which owns a Hotel Property wherein the Borrower or
such Person agrees not to encumber, transfer, pledge, assign, mortgage or
otherwise hypothecate such Hotel Property in any manner.

         "Non-Conforming Investments" is defined in Section 7.4.

         "Note" or "Notes" means the renewal promissory note or notes, in
substantially the form of Exhibit A attached to this Agreement, duly executed by
the Borrower as of the Closing Date and payable to the order of each Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note(s).

         "Notice of Assignment" is defined in Section 13.3.2.

         "Obligations" means all indebtedness and obligations of the Borrower
arising under or relating to, this Agreement, the Notes, the Mortgages, as well
as under all other Loan Documents including, without limitation, all unpaid
principal of and accrued and unpaid interest on the Notes, the Facility Letter
of Credit Obligations and all accrued and unpaid fees and all expenses,

                                       17
<PAGE>   24

reimbursements, indemnities and other obligations (including, without
limitation, Reimbursement Obligations) of the Borrower or if and to the extent
applicable, any Qualified Borrower to the Lenders or to any Lender, the Agent,
or any indemnified party hereunder arising under the Loan Documents.

         "Participating Lenders" means all financial institutions named in the
Participation Agreement to whom BBOT transferred an undivided participation in
the Facility.

         "Participations" means the interests of the Participating Lenders in
the Facility.

         "Participation Agreement" means that certain First Amended
Participation Agreement dated as of May 29, 1996, entered into by and between
BBOT and the other Participating Lenders.

         "Participants" is defined in Section 13.2.1.

         "Payment Date" means, with respect to the payment of interest accrued
on any Prime Advance or any LIBOR Advance, the first Business Day of each
calendar month.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

         "Percentage" means for each Lender the percentage of the Aggregate
Commitment allocated to such Lender as set forth in Exhibit J.

         "Perimeter Note" means that certain promissory note dated December 15,
1989, in the original principal amount of $6,000,000 secured by a Mortgage
encumbering a Hotel Property in Fulton County, Georgia.

         "Permitted Liens" are defined in Section 7.14.

         "Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust, limited liability company or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

         "Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.

         "Prime Advance" means an Advance which bears interest at the Prime
Rate.

         "Prime Loan" means a Loan which bears interest at the Prime Rate.

         "Prime Rate" means, for any day, a rate per annum equal to the greater
of (i) the Bank of America Prime Rate for such day plus the number of basis
points set forth beside the Leverage Ratio applicable at any given time (as
determined by Agent based upon the most recent compliance certificate delivered
to Agent in accordance with Section 7.1(e) hereof or otherwise and effective as

                                       18

<PAGE>   25

of the date of receipt of such certificate if such certificate is accepted by
Agent) in the grid set forth below, in each case changing when and as the Bank
of America Prime Rate changes, or (ii) the Federal Funds Effective Rate for such
day plus 50 basis points, in each case changing when and as the Federal Funds
Effective Rate changes:

<TABLE>
<CAPTION>

          ---------------------------------------------------------------------
                     LEVERAGE RATIO                    BASIS POINTS
          ---------------------------------------------------------------------
          <S>                                          <C>
                          <25%                              0.0
          ---------------------------------------------------------------------
                     $25% and <35%                          0.0
          ---------------------------------------------------------------------
                     $35% and <40%                         25.0
          ---------------------------------------------------------------------
                     $40% and <45%                         50.0
                          $45%                             75.0
          ---------------------------------------------------------------------
</TABLE>

         "Property Breach" is defined in Section 7.24.

         "Property Operating Income" means, with respect to any Hotel Property
owned by the Borrower, the Guarantor, any Qualified Borrower, any Subsidiary or
any Investment Affiliate, for any period, earnings from rental operations
(computed in accordance with GAAP but without deduction for reserves)
attributable to such Hotel Property plus depreciation, amortization and interest
expense for such period, and, if such period is less than a year, adjusted by
straight lining various ordinary operating expenses which are payable less
frequently than once during every such period (e.g. real estate taxes and
insurance).

         "Purchaser" is defined in Section 13.3.l.

         "Qualified Borrower" means any entity, other than the Borrower, in
which the Borrower or the Guarantor owns an interest, the Indebtedness of which
entity is guaranteed by the Borrower or the Guarantor, and with respect to which
the Borrower or the Guarantor has provided to the Agent an unconditional
guaranty of payment satisfactory in form and substance to the Agent, as well as
such notes, opinions, financial statements, organizational and authorization
documents, security or collateral documents and other documents as the Agent may
require in order for such entity to be able to receive an Advance under the
Facility.

         "Qualified Lender" means a financial institution with assets over
$5,000,000,000 that is generally in the business of making loans comparable to
the Loans made under the Facility and that maintains an office in the United
States.

         "Register" is defined in Section 13.6.

         "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

                                       19

<PAGE>   26

         "Reimbursement Obligations" means at any time, the aggregate of the
Obligations of the Borrower and any Qualified Borrowers to the Lenders, the
Issuing Bank and the Agent in respect of all unreimbursed payments or
disbursements made by the Lenders, the Issuing Bank and the Agent under or in
respect of the Facility Letters of Credit.

         "Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

         "Required Lenders" means Lenders in the aggregate having at least 66
2/3 % of the Aggregate Commitment (not held by Defaulting Lenders who are not
entitled to vote) or, if the Aggregate Commitment has been terminated, Lenders
in the aggregate holding at least 66 2/3 % of the aggregate unpaid principal
amount of the outstanding Advances and Facility Letter of Credit Obligations
(not held by Defaulting Lenders who are not entitled to vote).

         "Restated Loan Agreement" is defined in the recitals to this Agreement.

         "SAB 101" means Staff Accounting Bulletin No. 101 of the Securities and
Exchange Commission issued December 3, 1999.

         "Second Amendment to Second Restated Loan Agreement" is defined in the
recitals to this Agreement.

         "Second Restated Loan Agreement" is defined in the recitals to this
Agreement.

         "Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

         "Secured Collateral Pool" means a specified group of Hotel Properties
encumbered by Mortgages which have been accepted by the Lenders into the
Collateral Pool to secure the Obligations.

         "Security Documents" means all Loan Documents executed by or on behalf
of the Borrower, the Guarantor, any Subsidiary, any Qualified Borrower, or any
Investment Affiliate which pledge, mortgage, encumber or constitute a lien upon
any of their real or personal property as part of the Collateral, including,
without limitation the Mortgages and the Assignments of Rents and Leases, any
UCC financing statements, and all supporting documents relating thereto,
including, without limitation, title insurance policies, surveys, appraisals,
and environmental surveys or reports.

         "Senior Loans" is defined in Section 11.15.

                                       20

<PAGE>   27

         "Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.

         "Subsidiary" means a corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by the Borrower, the
Guarantor, or any Qualified Borrower and provided such corporation, partnership
or other entity is consolidated with the Borrower, the Guarantor, or any such
Qualified Borrower for financial reporting purposes under GAAP.

         "Third Restated Loan Agreement" is defined in the recitals to this
Agreement.

         "Total Assets" means all GAAP assets of the Borrower, the Guarantor,
any Qualified Borrowers and any of their Subsidiaries.

         "Total Asset Value" means the sum of (a) for each open Hotel Property
owned or open for less than four (4) fiscal quarters, whether or not such Hotel
Property is included in the Collateral Pool, 100% of the Cost of the Hotel
Property plus (b) for each open Hotel Property owned or open for four (4) fiscal
quarters or more, whether or not such Hotel Property is included in the
Collateral Pool, the Implied Value of the Hotel Property, plus (c) 100% of cash
and Cash Equivalents in accordance with GAAP.

         "Total Liabilities" means all GAAP liabilities (not inclusive of GAAP
minority interest or GAAP deferred/unearned revenue liability arising solely
from the application of the policies and procedures prescribed by SAB 101) of
the Borrower, the Guarantor, any Qualified Borrowers and any of their
Subsidiaries.

         "Total Property Operating Income" means the sum of (i) Property
Operating Income for each Hotel Property owned (including leaseholds) by the
Borrower and its Subsidiaries and any Qualified Borrower, and (ii) (without
redundancy) the Borrower's pro rata share (based on percentage interest in
operating income) of Property Operating Income from any Hotel Property owned
(including leaseholds) by the Guarantor, and any Qualified Borrowers or
Investment Affiliates.

         "Transferee" is defined in Section 13.4.

         "Type" means, with respect to any Advance, its nature as a Prime
Advance or a LIBOR Advance.

         "Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
determined under Section 4001(a)(18)(A)

                                       21
<PAGE>   28

of ERISA exceeds the fair market value of all such Plan assets allocable to such
benefits determined as of the then most recent valuation date for such Plans.

         "Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

         "Unused Credit Fee" means the fee payable by the Borrower to the Agent
for the benefit of the Lenders as set out in Section 2.5.

         "Value" means the Implied Value for Secured Collateral Pool properties
owned or open for more than four (4) fiscal quarters, and means the Cost of
Hotel Properties in the Secured Collateral Pool owned or open for less than four
(4) fiscal quarters. However, the aggregate Value attributable to Completed
Development Hotels in the Secured Collateral Pool cannot exceed 15% of the
aggregate Value attributable to all Hotel Properties in the Secured Collateral
Pool.

         "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, association, joint venture
or similar business organization of which 100% of the ownership interests having
ordinary voting power and at least 95% of all other classes of ownership
interest shall at the time be so owned or controlled by such Person.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

                                   ARTICLE II

                                   THE CREDIT

         II.1 Assignment and Assumption; Conversion; Commitment Increase.

                  II.1.1 Assignment and Assumption. Pursuant to the Restated
         Loan Agreement, as the same was subsequently amended and restated and
         is being further amended and restated hereby, the Guarantor has
         heretofore transferred and assigned to the Borrower, and the Borrower
         has heretofore assumed, in the place and stead of the Guarantor, all
         indebtedness and obligations relating to or arising out of the BBOT
         Note and the BBOT Loan Agreement and all other documents relating
         thereto. The Guarantor has, effective as of July 30, 1997, executed a
         guaranty agreement in form and content acceptable to the Lenders
         guaranteeing the Obligations.

                  II.1.2 Conversion. BBOT has, by separate assignment executed
         July 30, 1997, assigned to NationsBank all its right, title and
         interest in and to the Facility, the BBOT Loan Agreement, the
         Participation Agreement and the other Loan Documents. Pursuant to the

                                       22
<PAGE>   29

         Restated Loan Agreement, as the same was subsequently amended and
         restated and is being further amended and restated hereby, the
         Participation Agreement was terminated by NationsBank, as
         successor-in-interest to BBOT, and the Participating Lenders, and
         NationsBank assigned to the Participating Lenders their respective pro
         rata portions of the Commitment existing under the BBOT Loan Agreement.
         If deemed necessary by the Agent in connection with the termination of
         the Participations, all Lenders other than the Participating Lenders
         have heretofore agreed to pay to Bank of America, as
         successor-in-interest to NationsBank, upon demand their respective pro
         rata shares of all outstanding Advances existing on or after the date
         of termination of the Participations. It is understood and agreed that
         the Participations have heretofore been converted into direct
         obligations to lend, and the Participating Lenders have assumed their
         respective pro rata portions of the Commitment to make Advances and
         their respective pro rata portions of all other obligations of Bank of
         America, as successor-in-interest to NationsBank, which, in turn, was
         successor-in-interest to BBOT, under or in regards to the Facility as
         heretofore set forth in the BBOT Loan Agreement, as the same was
         amended and restated by the Restated Loan Agreement, by the Amended
         Second Restated Loan Agreement, and by the Amended Third Restated Loan
         Agreement, and as the same is being amended and restated hereby, and as
         such Commitment was increased as set forth in the Restated Loan
         Agreement, as amended and restated by the Amended Second Restated Loan
         Agreement, by the Amended Third Restated Loan Agreement, and as the
         same is being amended and restated hereby. Likewise, Bank of America
         and the Participating Lenders have heretofore assigned to the remaining
         Lenders such portions of the Commitment existing under the BBOT Loan
         Agreement as necessary to properly distribute to all Lenders their
         proper pro rata shares of the Commitment existing under the BBOT Loan
         Agreement in accordance and consistent with their respective
         Percentages of the Aggregate Commitment allocated to the Lenders, as
         set forth opposite their signatures in the Restated Loan Agreement as
         the same was amended and restated by the Amended Second Restated Loan
         Agreement, and by the Amended Third Restated Loan Agreement.

                  Bank of America and, to the extent of any interest they may
         have had, the Participating Lenders, have heretofore assigned to the
         Agent as the agent for the Lenders pursuant to the terms of Article XI
         of the Restated Loan Agreement, the Amended Second Restated Loan
         Agreement and the Amended Third Restated Loan Agreement as the same is
         being amended and restated hereby, all of their right, title and
         interest in and to the Obligations, the Collateral and the other Loan
         Documents, and directed the Agent to place of record in each
         jurisdiction where a Mortgage appears of record an appropriate
         assignment and modification agreement reflecting the transfer of such
         Mortgage and related Loan Documents from Bank of America to the Agent,
         as agent for the Lenders.

                  It is also understood and agreed that the assignments by Bank
         of America and the Participating Lenders of an undivided interest in
         the Facility were outright and absolute assignments, and not the sale
         or transfer of a participation interest, and were not intended to
         constitute a refinance of the Facility.

                                       23

<PAGE>   30

                  II.1.3 Commitment; Notes. The Facility has heretofore been
         increased from $75,000,000, as set forth in the BBOT Loan Agreement, to
         $175,000,000, as set forth in the Restated Loan Agreement and to
         $190,000,000, as set forth in the First Amendment to Second Restated
         Loan Agreement and reduced to $100,000,000.00 as set forth in the Third
         Restated Loan Agreement. The Facility is contemporaneously herewith
         being increased to $130,000,000.00, subject to the possible increase to
         $140,000,000 pursuant to Section 2.14. From and including the Closing
         Date and prior to the Facility Termination Date, each Lender hereby
         agrees and reaffirms its Commitment, subject to the terms and
         conditions set forth in this Agreement, to make Loans to the Borrower
         from time to time in amounts not to exceed in the aggregate for each
         Lender at any one time outstanding the amount of such Lender's
         Commitment (as set forth in Exhibit J) minus such Lender's Percentage
         of Facility Letter of Credit Obligations and Reimbursement Obligations.
         Subject to the terms of this Agreement, the Borrower may borrow, repay
         and reborrow at any time prior to the Facility Termination Date. The
         Commitments of each Lender to lend under this Agreement shall expire on
         the Facility Termination Date. In connection with the increased
         Facility, the Borrower has contemporaneously herewith executed and
         delivered to each Lender a Note in the amount of each Lender's
         Commitment, which Notes collectively replace, renew and restate the
         BBOT Note and modify the Aggregate Commitment Amount evidenced thereby.

         II.2 Final Principal Payment. Any outstanding Advances and all other
unpaid Obligations shall be paid in full by the Borrower on the Facility
Termination Date.

         II.3 Ratable Loans. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment. The Advances may be
Prime Advances, LIBOR Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.9 and 2.10.

         II.4 Collateral.

                           (a) The Collateral shall consist primarily of
                  cross-collateralized and cross-defaulted first priority
                  Mortgages encumbering Hotel Properties in the Secured
                  Collateral Pool, and by Negative Pledge Agreements restricting
                  the transfer, pledge or other hypothecation of Hotel
                  Properties in the Negative Collateral Pool, both of which
                  groups of Hotel Properties form the Collateral Pool or
                  Collateral Pool Properties, and are listed on Exhibits G and H
                  respectively attached hereto, with the franchise and
                  franchisor for each such Hotel Property identified thereon
                  which have been approved by the Lenders. Each Collateral Pool
                  Property must be domestic, that is, located in the lower
                  forty-eight (48) continental United States of America, must be
                  subject to a current franchise agreement (with no defaults
                  thereunder) approved by the Lenders with a franchisor that is
                  acceptable to the Lenders, must be unencumbered with only such
                  exceptions as have been approved by the Lenders, must be open
                  for business and fully operational, and must otherwise be in
                  compliance with the applicable provisions of Article V hereof.
                  Notwithstanding the foregoing, all Collateral Pool Properties
                  must be wholly owned directly by either the Borrower or the
                  Guarantor and not by any Joint Ventures or wholly owned
                  Subsidiary of the

                                       24
<PAGE>   31

                  Borrower or the Guarantor, and no Hotel Properties owned by
                  Joint Ventures or wholly owned Subsidiaries of the Borrower or
                  the Guarantor may be included in the Collateral Pool.

                           (b) The Mortgages encumbering the Hotel Properties
                  presently in the Secured Collateral Pool which have heretofore
                  secured the Facility evidenced by the BBOT Note, pursuant to
                  the terms of the BBOT Loan Agreement, as amended and restated
                  by the Restated Loan Agreement, the Amended Second Restated
                  Loan Agreement and the Amended Third Restated Loan Agreement,
                  which is being amended and restated hereby, have heretofore
                  been assigned to the Agent as a continuing part of the
                  Collateral, subject to being reviewed by and acceptable to the
                  Lenders in accordance with the conditions precedent set forth
                  in Article V, Section 5.1, hereof. In the event at any time
                  the Lenders determine that any item required by the applicable
                  provisions of Article V hereof, whether for existing or future
                  Collateral Pool Properties, is not available, or has not been
                  provided, or is not acceptable, such item may, in the Lenders'
                  sole discretion, either be waived, or, in the alternative,
                  such Hotel Property for which the item has not been provided
                  or is unacceptable may be removed from the Collateral Pool, in
                  which event the Borrowing Base shall be adjusted accordingly
                  to reflect the removal of such Hotel Property. In the
                  alternative, the Borrower may substitute another Hotel
                  Property for the one so removed, provided such Hotel Property
                  is acceptable to the Lenders, and all conditions precedent to
                  the inclusion of such Hotel Property in the Collateral Pool
                  have been complied with, including, without limitation, the
                  conditions of either Section 5.3 or 5.4, as applicable. Any
                  such Hotel Property so removed from the Collateral Pool shall
                  upon the written request from the Borrower be released by the
                  Agent from the lien of any Mortgage, or from the restrictions
                  of any Negative Pledge Agreement, provided there is then
                  existing no Default or Unmatured Default then existing
                  hereunder, and provided all provisions of Section 7.13 hereof
                  have been complied with.

         II.5 Unused Credit Fee. The Borrower has heretofore agreed and hereby
agrees to pay to the Agent for the account of each Lender the Unused Credit Fee
from the Closing Date to and including the Facility Termination Date, calculated
at the rate of 0.18% per annum on the actual daily unborrowed portion of such
Lender's Commitment (which is equal to the difference between (a) such Lender's
Commitment on such day and (b) the then outstanding Loans owed to such Lender
plus the Lender's Percentage of any outstanding and undrawn Facility Letters of
Credit) payable quarterly in arrears on the first day of each calendar quarter
beginning January 1, 1999 and on the Facility Termination Date; provided,
however, that the Unused Credit Fee shall be calculated at the reduced rate of
0.125% per annum on the actual daily unborrowed portion of such Lender's
Commitment for any day on which the principal balance of all outstanding and
unpaid Loans held by such Lender plus its Percentage of outstanding and undrawn
Facility Letters of Credit is greater than 50% of such Lender's Commitment.
Notwithstanding the foregoing, all accrued Unused Credit Fees shall be payable
on the effective date of any termination of the obligations of the Lenders to
make Loans hereunder.

         II.6 Commitment Fee; Other Fees.

                                       25

<PAGE>   32

                  II.6.1 Commitment Fee. The Borrower has contemporaneously
         herewith paid to the Agent for the account of each Lender the
         Commitment Fee in the amount of $800,000 which is the total of (a)
         1.00% of the $30,000,000 of increase in the Facility pursuant to this
         Agreement, and (b) 0.50% of the existing $100,000,000 of the Facility.
         The Commitment Fee is fully earned, due and payable upon the execution
         of this Agreement.

                  II.6.2 Other Fees. The Borrower agrees to pay all other fees
         payable to the Agent and/or the Arranger for their own accounts or for
         the account of the Lenders pursuant to the terms hereof and/or the Fee
         Letter.

         II.7 Minimum Amount of Each Advance. Each LIBOR Advance shall be in the
minimum amount of $2,000,000 (and in multiples of $100,000 if in excess
thereof), and each Prime Advance shall be in the minimum amount of $1,000,000
(and in multiples of $100,000 if in excess thereof), provided, however, that any
Prime Advance may be in the amount of the unused Aggregate Commitment.

         II.8 Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium (subject to reimbursement, upon demand, of the
Lenders' Break-up Fee and all other breakage and re-deployment costs in the case
of prepayment of LIBOR Advances), all or any part of outstanding Prime Advances
or LIBOR Advances, upon two (2) Business Days' prior notice to the Agent and
each such prepayment shall be in a minimum amount of $50,000.00 or in multiples
thereof, provided that a LIBOR Advance may not be paid prior to the last day of
the applicable LIBOR Interest Period unless Borrower pays the Break-up Fee.

         II.9 Manner of Borrowing and Method of Selecting Types and Interest
Periods for New Advances; Borrowing Base; Lender Obligations.

                  II.9.1 Manner of Borrowing and Method of Selecting Types and
         Interest Periods for New Advances. The Borrower shall select the Type
         of Advance and, in the case of each LIBOR Advance, the LIBOR Interest
         Period applicable to each Advance from time to time. The Borrower shall
         give the Agent irrevocable notice substantially in the form of Exhibit
         I-1 attached hereto (a "Borrowing Notice") (i) not later than 1:00 p.m.
         (Dallas, Texas Time) at least one, (1) Business Day before the
         Borrowing Date of each Prime Advance, and (ii) not later than 1:00 p.m.
         (Dallas, Texas Time) at least three (3) Business Days before the
         Borrowing Date for each LIBOR Advance, specifying:

                           (a) the Borrowing Date, which shall be a Business
                  Day, of such Advance,

                           (b) the aggregate amount of such Advance,

                           (c) the Type of Advance selected, and

                           (d) in the case of each LIBOR Advance, the LIBOR
                  Interest Period applicable thereto.

                                       26

<PAGE>   33

                  II.9.2 Borrowing Base. Availability under the Facility shall
         be determined according to the Borrowing Base. In no event shall the
         Borrower be entitled hereunder to Advances or Facility Letters of
         Credit which would cause the Allocated Facility Amount at any time
         under the Loans to exceed the lesser of (i) the Borrowing Base or (ii)
         the Aggregate Commitment Amount. Furthermore, any Collateral Pool
         Property whose operating franchise license is canceled shall be
         immediately deducted from the Borrowing Base until such time as a
         franchise reasonably acceptable to the Lenders is obtained with respect
         to such Collateral Pool Property. In the alternative, the Borrower may
         substitute another Hotel Property for the one whose franchise license
         has been canceled, provided such Hotel Property is acceptable to the
         Lenders and all conditions precedent to the inclusion of such Hotel
         Property in the Collateral Pool have been complied with, including
         without limitation, the conditions of either Sections 5.3 or 5.4, as
         applicable. In such event, upon the substitution of such Hotel
         Property, upon the written request from the Borrower, the Hotel
         Property deducted from the Borrowing Base calculation shall be released
         by the Agent from the lien of any Mortgage, or from the restrictions of
         any Negative Pledge Agreement, provided there is no Default or
         Unmatured Default then existing hereunder, and provided all provisions
         of Section 7.13 hereof have been complied with.

                  II.9.3 Lender Obligations. Not later than 12:00 noon (Dallas,
         Texas Time) (as to each Lender other than Wells Fargo Bank which shall
         provide its Federal Reference Number and time not later than 12:30 p.m.
         (Dallas, Texas Time)) on each Borrowing Date, each Lender shall make
         available its Loan or Loans, in funds immediately available in Dallas,
         Texas to the Agent at the account specified pursuant to Article XIV.
         The Lenders shall not be obligated to match fund their LIBOR Advances.
         The Agent will promptly make the funds so received from the Lenders
         available to the Borrower from the Agent's aforesaid account. No LIBOR
         Interest Period may end after the Facility Termination Date and, unless
         all of the Lenders otherwise agree in writing, in no event may there be
         more than five (5) different LIBOR Interest Periods for LIBOR Advances
         outstanding at any one time.

         II.10 Conversion and Continuation of Outstanding Advances. Prime
Advances shall continue as Prime Advances unless and until such Prime Advances
are converted into LIBOR Advances. Each LIBOR Advance shall continue as a LIBOR
Advance until the end of the then applicable LIBOR Interest Period therefor, at
which time such LIBOR Advance shall be automatically converted into a Prime
Advance unless the Borrower shall have given the Agent a Conversion/Continuation
Notice requesting that, at the end of such LIBOR Interest Period, such LIBOR
Advance shall continue as a LIBOR Advance for the same or another LIBOR Interest
Period. The Borrower may elect from time to time to convert all or any part of
an Advance of any Type into any other Type of Advance; provided that any
conversion of any LIBOR Advance (whether due to acceleration or otherwise) shall
be made on, and only on, the last day of the Interest Period applicable thereto
unless the Borrower pays the applicable Break-up Fee, to be paid on the same
Business Day as the conversion occurs. The Borrower shall give the Agent
irrevocable notice substantially in the form of Exhibit I-2 attached hereto (a
"Conversion/Continuation Notice") of each conversion of an Advance not later
than 1:00 p.m. (Dallas, Texas Time) at least one Business Day, in the case of a
conversion into a Prime Advance, or three Business Days, in the case of a

                                       27
<PAGE>   34
into or continuation of a LIBOR Advance, prior to the date of the requested
conversion or continuation, specifying:

                           (a) the requested date which shall be a Business Day,
                  of such conversion or continuation;

                           (b) the aggregate amount and Type of the Advance
                  which is to be converted or continued; and

                           (c) the amount and Type(s) of Advance(s) into which
                  such Advance is to be converted or continued and, in the case
                  of a conversion into or continuation of a LIBOR Advance, the
                  duration of the LIBOR Interest Period applicable thereto.

         II.11 Changes in Interest Rate, Etc. Each Prime Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a LIBOR Advance
into a Prime Advance pursuant to Section 2.10 to but excluding the date it is
paid or is converted into a LIBOR Advance pursuant to Section 2.10 hereof, at a
rate per annum equal to the Prime Rate for such day. Changes in the rate of
interest on that portion of any Advance maintained as a Prime Advance will take
effect simultaneously with each change in the Prime Rate. Each LIBOR Advance
shall bear interest from and including the first day of the LIBOR Interest
Period applicable thereto to (but not including) the last day of such LIBOR
Interest Period at the LIBOR Basis determined as applicable to such LIBOR
Advance.

         If, on or prior to the first day of any LIBOR Interest Period,

                           (a) the Agent shall have reasonably determined (which
                  determination shall be conclusive and binding) that by reason
                  of circumstances affecting the London interbank market or
                  other Eurodollar market, as applicable, adequate and
                  reasonable means do not exist for ascertaining the LIBOR
                  Basis, or

                           (b) the Agent shall have reasonably determined (which
                  determination shall be conclusive and binding) that the LIBOR
                  Basis will not adequately and fairly reflect the cost to the
                  Lenders of such LIBOR Advance for such LIBOR Interest Period,

then the Agent shall forthwith give notice thereof to the Borrower, whereupon
until the Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Lenders to allow new LIBOR
Advances shall be suspended.

         If, after the date of this Agreement, the adoption of any applicable
law, rule or regulations, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Agent or the Lenders with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for the Lenders to make,
maintain or fund LIBOR Loans, the Agent shall forthwith give notice thereof to
the Borrower, whereupon until the Agent notifies the

                                       28

<PAGE>   35

Borrower that the circumstances giving rise to such suspension no longer exist,
the obligation of the Lenders to allow LIBOR Advances shall be suspended. If the
Agent shall determine that the Lenders may not lawfully continue to maintain any
outstanding LIBOR Loans to maturity and shall so specify in such notice, such
LIBOR Loans shall be immediately converted to a borrowing at the Prime Rate.

         If, after the date of this Agreement, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Agent or the Lenders with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:

                           (a) shall subject the Lenders to any tax, duty or
                  other direct charge with respect to the LIBOR Loans or this
                  Agreement or shall change the basis of taxation of payments to
                  the Lenders of the principal of or interest on LIBOR Loans or
                  any other amounts due under this Agreement in respect to LIBOR
                  Loans or the Lenders' obligations to allow LIBOR Advances
                  (except for changes in the rate of tax on the overall net
                  income of any Lender imposed by the jurisdiction in which any
                  Lender's principal executive office is located); or

                           (b) shall impose, modify or deem applicable any
                  reserve, special deposit or similar requirement (including,
                  without limitation, any such requirement imposed by the Board
                  of Governors of the Federal Reserve System, but excluding with
                  respect to any LIBOR Loan any such requirement included in an
                  applicable LIBOR Reserve Percentage) against assets of,
                  deposits with or for the account of, or credit extended by,
                  any Lender or shall impose on any Lender or the interbank
                  market for Eurodollar deposits and other condition affecting
                  LIBOR Loans, this Agreement or the obligation of any Lender to
                  allow LIBOR Advances;

and the result of any of the foregoing is to increase the cost to any Lender of
allowing or maintaining LIBOR Loans or to reduce the amount of any sum received
or receivable by any Lender under this Agreement with respect thereto, by an
amount deemed by the Agent, in its good faith judgment, to be material, then,
within fifteen (15) days after demand by the Agent, the Borrower shall pay to
the Agent for the benefit of the Lenders such additional amount or amounts as
will compensate the Lenders for such increased cost or reduction. The Agent will
promptly notify the Borrower of any event of which it has knowledge, occurring
after the date hereof, which will entitle the Lenders to compensation pursuant
to this paragraph. A certificate of the Agent claiming compensation under this
paragraph, setting forth the additional amount or amounts to be paid to it
hereunder, and explaining in reasonable detail the estimates, data and
calculations of such amount, shall be conclusive and binding in the absence of
manifest error. In determining such amount, the Agent may use any reasonable
averaging and attribution methods. In lieu of paying the compensation to the
Lenders described in this paragraph, the Borrower may elect, promptly upon
receiving notice from the Agent of the event entitling the Lenders to such
compensation, to have any LIBOR Loan converted to a Prime Advance, subject to
the Borrower's payment of any Break-up Fee due as a result of such conversion.

                                       29

<PAGE>   36

         II.12 Rates Applicable After Default; Late Fee. Notwithstanding
anything to the contrary contained in Sections 2.9 or 2.10, during the
continuance of a Default or Unmatured Default, the Agent may, at the option of
the Required Lenders, by written notice to the Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any provision of
Section 9.2 requiring unanimous consent of the Lenders to changes in interest
rates), declare that no Advance may be made as, converted into or continued
beyond its current term as a LIBOR Advance. During the continuance of a Default,
the Agent may, at the option of the Required Lenders, by prior written notice to
the Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 9.2 requiring unanimous consent of the
Lenders to changes in interest rates), declare that (a) each LIBOR Advance shall
bear interest for the applicable LIBOR Interest Period at a rate per annum equal
to the lesser of (i) the rate otherwise applicable to such LIBOR Interest Period
plus 4% per annum or (ii) the Maximum Rate, until such Default shall have been
cured and (b) each Prime Advance shall bear interest at a rate per annum equal
to the lesser of (i) the Prime Rate otherwise applicable to the Prime Advance
plus 4% per annum or (ii) the Maximum Rate until such Default shall have been
cured; provided that such rates shall become applicable automatically without
notice to the Borrower if a Default occurs under Section 8.7 or Section 8.8.

         If any principal or interest is not paid when due, the Borrower shall
pay, on demand, a late charge of $.04 for each dollar of each installment which
becomes past due for a period exceeding ten (10) days to help defray the added
expense incurred in handling said delinquent installment, provided that in the
event any such late charge should be determined by a court of competent
jurisdiction to constitute interest, in no event shall such interest be due or
payable in excess of the Maximum Rate.

         II.13 Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's account specified pursuant to
Article XIV, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by 1:00 p.m. (Dallas, Texas Time) on the
date when due and shall be applied ratably by the Agent among the Lenders. Any
payment received after 1:00 p.m. shall be processed as of the next Business Day.
Each payment delivered to the Agent for the account of any Lender shall be
delivered promptly by the Agent to such Lender in the same type of funds that
the Agent received at its account specified pursuant to Article XIV or at any
Lending Installation specified in a notice received by the Agent from such
Lender promptly. If any payment received by the Agent is not delivered to a
Lender by the closing of business on the same Business Day as received by the
Agent (with respect to payments received by 1:00 p.m., Dallas, Texas Time) or
the next Business Day (with respect to payments received after 1:00 p.m.,
Dallas, Texas Time), such Lender shall receive from the Agent interest at the
Federal Funds Effective Rate on the payment. The Agent is hereby authorized to
charge the specific account of the Borrower, if any, maintained with Bank of
America for such purpose, for each payment of principal, interest and fees as it
becomes due hereunder. The Borrower shall not have any liability to any Lender
for the failure of the Agent to promptly deliver funds to any such Lender and
shall be deemed to have made all such payments on the date the respective
payment is made by the Borrower to the Agent provided that it is received by the
Agent no later than the time specified in this Section 2.13.

                                       30
<PAGE>   37

         II.14 Increase in Aggregate Commitment. (a) Subsequent to the Execution
Date, the Borrower may, on one or more occasions, upon at least 10 days' notice
to the Agent (which shall promptly provide a copy of such notice to the
Lenders), propose to increase the Aggregate Commitment by an amount not to
exceed $10,000,000 in the aggregate of all such increases pursuant to this
Section 2.14 (that is, the Aggregate Commitment shall not exceed $140,000,000)
(the amount of any such increase, the "Increased Commitments"). In such notice,
the Borrower shall designate one or more banks or other financial institutions
(which may be, but need not be, one or more of the existing Lenders) which at
the time agree to (i) in the case of any such bank or other financial
institution that is an existing Lender, increase its Commitment and (ii) in the
case of any other such bank or other financial institution (an "Additional
Lender"), become a party to this Agreement. No bank or other financial
institution may become an Additional Lender unless it would qualify as an
Eligible Assignee for the purposes of Article XIII hereof. The sum of the
increases in the Commitments of the existing Lenders pursuant to this subsection
(a) plus the Commitments of the Additional Lenders shall not in the aggregate
exceed the unsubscribed amount of the Increased Commitments. No existing Lender
shall be required to increase its Commitments in connection with an increase in
the amount of the Aggregate Commitment pursuant to this Section 2.14.
Notwithstanding the foregoing, the Aggregate Commitment shall not be increased
during the last twelve (12) months prior to the Facility Termination Date.

                  (b) An increase in the amount of the Aggregate Commitment
pursuant to this Section 2.14 shall become effective upon the receipt by the
Agent of an agreement in form and substance satisfactory to the Agent signed by
the Borrower, by the Guarantors, by each Additional Lender and by each other
Lender whose Commitment is to be increased, setting forth the new Commitments of
such Lenders and setting forth the agreement of each Additional Lender to become
a party to this Agreement and to be bound by all the terms and provisions
hereof, together with such evidence of appropriate corporate authorization on
the part of the Borrowers with respect to the Increased Commitments (including
authorization of payment to the Lenders, Agent or Arranger of any costs or fees
which may be incurred under Section 2.6 hereof in connection with reallocation
of outstanding loans) as the Agent may reasonably request. Upon receipt by the
Agent of a fully executed agreement in accordance with this Section 2.14(b),
Agent shall prepare a replacement Exhibit J reflecting the correct Percentage
and Commitment for each existing Lender and Additional Lender, which replacement
Exhibit J shall be delivered by Agent to each existing Lender and Additional
Lender and shall constitute Exhibit J to this Agreement for all purposes.

         II.15 Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note, provided, however, that the failure to so record
shall not affect the Borrower's obligations under such Note. Each Lender's books
and records, including without limitation, the information, if any, recorded by
the Lender on the schedule attached to its Note, shall be deemed to be prima
facie correct absent manifest error. The Borrower hereby authorizes the Lenders
and the Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices made by any
person or persons the Agent or any Lender in good faith believes to be an
Authorized Officer. The Borrower agrees to deliver promptly to the Agent a
written confirmation signed by an Authorized Officer of each telephonic notice.
If the written confirmation differs in any

                                       31

<PAGE>   38

material respect from the action taken by the Agent and the Lenders, the records
of the Agent and the Lenders shall govern absent manifest error.

         II.16 Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Advance shall be payable on each Payment Date, commencing with the first
such date to occur after the date hereof, and at the Facility Termination Date,
whether by acceleration or otherwise. Interest accrued on each LIBOR Advance
shall not be payable on any date on which the LIBOR Advance is prepaid (provided
that nothing herein shall authorize a prepayment which is not otherwise
permitted hereunder), or converted to another LIBOR Advance or to a Prime
Advance, as the case may be, but shall be payable on the next Payment Date.
Interest, Unused Credit Fees and Facility Letter of Credit Fees shall be
calculated for actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to 1:00 p.m. (Dallas,
Texas Time) at the place of payment, unless such Advance is repaid on the date
that it was made. If any payment of principal of or interest on an Advance shall
become due on a day which is not a Business Day, such payment shall be made on
the next succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.

         II.17 Notification of Advances, Interest Rates and Prepayments.
Promptly after receipt thereof (but in no event later than the close of business
(Dallas, Texas Time) one Business Day prior to the proposed Borrowing Date for a
Prime Advance or the close of business three Business Days prior to the proposed
Borrowing Date for a LIBOR Advance) the Agent will notify each Lender in writing
by facsimile of the contents of each Borrowing Notice, Conversion/Continuation
Notice, and prepayment notice received by it hereunder. The Agent will notify
each Lender and the Borrower of the interest rate applicable to each LIBOR
Advance promptly upon determination of such interest rate and will give each
Lender and the Borrower prompt notice of each change in the Prime Rate.

         II.18 Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.

         II.19 Non-Receipt of Funds By the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
the Borrower has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand by the Agent, repay to the Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Effective Rate for such day. If a Lender has not in

                                       32
<PAGE>   39

fact made such payment to the Agent, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate per annum equal to the Federal Funds Effective Rate for such date. If
such Lender does not make such payment upon the Agent's demand therefor, the
Agent shall promptly notify the Borrower, and the Borrower shall immediately pay
such amount to the Agent together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available by
the Agent until the date the Agent recovers such amount at the rate applicable
to the relevant Loan. Nothing in this Section 2.19 shall be deemed to relieve
any Lender from its obligation to fulfill any portion of its Commitment
hereunder or to prejudice any rights which the Borrower may have against any
Lender as a result of any default by such Lender hereunder.

         No Lender shall be responsible for any default by any other Lender in
its obligation to make Loans hereunder, and each Lender shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the failure of
any other Lender to fulfill its Commitment hereunder.

         II.20 Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes and an
Internal Revenue Service Form W-8 or W-9 or applicable successor form, as the
case may be, to establish an exemption from United States backup withholding
tax. Each Lender which so delivers a Form 1001 or 4224 and Form W-8 or W-9
further undertakes to deliver to each of the Borrower and the Agent two
additional copies of such Form (or a successor form) on or before the date that
such form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the occurrence of
any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes and is exempt
from backup withholding, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax or is not exempt from backup
withholding tax.

         II.21 Voluntary Reduction of Aggregate Commitment Amount. Upon at least
five (5) Business Days' prior irrevocable written notice (or telephonic notice
promptly confirmed in writing) to the Agent, the Borrower shall have the right,
without premium or penalty, to permanently reduce the Aggregate Commitment
provided that (a) the Borrower may not reduce the Aggregate Commitment below the
Allocated Facility Amount at the time of such requested reduction, (b) any

                                       33
<PAGE>   40

such partial reduction shall be in the minimum aggregate amount of U.S.
$5,000,000 or any integral multiple of $5,000,000 in excess thereof and (c) the
Borrower may not reduce the Aggregate Commitment to an amount less than
$50,000,000. Any reduction of the Aggregate Commitment shall be applied pro rata
to each Lender's Commitment. In addition, upon any such reduction, the Agent
shall release such Hotel Properties from the Collateral Pool as are requested by
the Borrower in writing, provided such Hotel Properties released are acceptable
to the Lenders in their sole discretion, and provided the Borrower complies with
Section 7.13 hereof and that all covenants and terms of this Agreement remain in
compliance after such release.

         II.22 Usury. The Borrower, the Lenders, the Agent and all other parties
to the Loan Documents intend to conform to and contract in strict compliance
with applicable usury law from time to time in effect. All agreements between
the Borrower and the Lenders (or any other party liable with respect to any of
the Obligations) are hereby limited by the provisions of this Section which
shall override and control all such agreements, whether now existing or
hereafter arising. In no way, nor in any event or contingency (including but not
limited to prepayment, default, demand for payment, or acceleration of the
maturity of any Obligation), shall the interest taken, reserved, contracted for,
charged, chargeable, or received under this Agreement, a Note, any of the other
Loan Documents, or otherwise, exceed the Maximum Rate. If, from any possible
construction of any document, interest would otherwise be payable in excess of
the Maximum Amount, any such construction shall be subject to the provisions of
this Section and such document shall ipso facto be automatically reformed and
the interest payable shall be automatically reduced to the Maximum Amount,
without the necessity of execution of any amendment or new document. If any
Lender shall ever receive anything of value which is characterized as interest
under applicable law and which would apart from this provision be in excess of
the Maximum Amount, an amount equal to the amount which would have been
excessive interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Obligations in the inverse order of its maturity
and not to the payment of interest, or be refunded to the Borrower or the other
payor thereof, at the election of such Lender in its sole discretion or as
required by applicable law. The right to accelerate maturity of a Note or any
other Indebtedness does not include the right to accelerate any interest which
has not otherwise accrued on the date of such acceleration, and the Lenders do
not intend to charge or receive any unearned interest in the event of
acceleration. All interest paid or agreed to be paid to the Lenders shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full stated term (including any renewal or extension) of
such Indebtedness such that such interest does not exceed the Maximum Amount. As
used in this Section, the term "applicable law" shall mean the laws of such
state or states whose laws are held by any court of competent jurisdiction to
govern or the federal laws of the United States applicable to this transaction,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.

         II.23 Application of Moneys Received by the Agent. All moneys collected
or received by the Agent on account of the Facility directly or indirectly,
shall be applied in the following order of priority:

                           (a) to the payment of all reasonable costs (including
                  without limitation all costs payable to any Lender of which
                  the Agent has been notified) incurred in the

                                       34
<PAGE>   41

                  collection of such moneys of which the Agent shall have given
                  notice to the Borrower;

                           (b) to the reimbursement of any yield protection due
                  to the Lenders in accordance with Section 4.1;

                           (c) to the payment of any fee due to the Issuing Bank
                  pursuant to Section 3.8(b), to the Lenders pursuant to Section
                  3.8(a) in connection with the issuance of a Facility Letter of
                  Credit, to the payment of the Commitment Fee to the Lenders,
                  to the payment of the Unused Credit Fee to the Lenders, if any
                  of the same are then due, in accordance with their
                  Percentages, and to the payment of the Agent's Fee to the
                  Agent if then due;

                           (d) (i) in case the entire unpaid principal of the
                  Loan shall not have become due and payable, the whole amount
                  received as interest and Facility Letter of Credit Fee then
                  due to the Lenders (other than a Defaulting Lender) as their
                  respective Percentages appear or (ii) in case the entire
                  unpaid principal of the Loan shall have become due and
                  payable, as a result of a Default or otherwise, to the payment
                  of the whole amount then due and payable on the Loan for
                  principal, together with interest thereon at the Default Rate
                  or the interest rate, as applicable, to the Lenders (other
                  than a Defaulting Lender) as their respective Percentages
                  appear until paid in full; and

                           (e) to the payment of any sums due to each Defaulting
                  Lender as their respective Percentages appear (provided that
                  the Agent shall have the right to set-off against such sums
                  any amounts due from such Defaulting Lender).

                                   ARTICLE III

                        THE LETTER OF CREDIT SUBFACILITY

         III.1 Obligation to Issue. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, the Issuing Bank hereby agrees to issue for the
account of the Borrower, one or more Facility Letters of Credit in accordance
with this Article III, from time to time during the period ending thirty (30)
days prior to the Facility Termination Date.

         III.2 Types and Amounts. The Issuing Bank shall not, except with the
prior written consent of all Lenders:

                           (a) issue any Facility Letter of Credit if the
                  aggregate maximum amount then available for drawing under
                  Letters of Credit issued by such Issuing Bank, after

                                       35
<PAGE>   42

                  giving effect to the Facility Letter of Credit requested
                  hereunder, shall exceed any limit imposed by law or regulation
                  upon such Issuing Bank provided, in such event, the Borrower
                  shall have the right to select (with the approval of the
                  alternate Issuing Bank but not the other Lenders) an alternate
                  Issuing Bank which shall be one of the Lenders;

                           (b) issue any Facility Letter of Credit if, after
                  giving effect thereto, the aggregate Facility Letter of Credit
                  Obligations would exceed $10,000,000 or the Allocated Facility
                  Amount would exceed the Aggregate Commitment;

                           (c) issue any Facility Letter of Credit having an
                  expiration date, or containing automatic extension provisions
                  to extend such date, to a date which is less than thirty (30)
                  days preceding the Facility Termination Date; or

                           (d) issue any Facility Letter of Credit having an
                  expiration date which is more than fifteen (15) months after
                  the date of its issuance.

         III.3 Conditions. In addition to being subject to the satisfaction of
the conditions contained in Section 5.2 hereof, the obligation of the Issuing
Bank to issue any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:

                           (a) the Borrower shall have delivered to the Issuing
                  Bank at such times and in such manner as the Issuing Bank may
                  reasonably prescribe such documents and materials as may be
                  reasonably required pursuant to the terms of the proposed
                  Facility Letter of Credit (it being understood that if any
                  inconsistency exists between such documents and the Loan
                  Documents, the terms of the Loan Documents shall control) and
                  the proposed Facility Letter of Credit shall be reasonably
                  satisfactory to the Issuing Bank as to form and content;

                           (b) as of the date of issuance, no order, judgment or
                  decree of any court, arbitrator or governmental authority
                  shall purport by its terms to enjoin or restrain the Issuing
                  Bank from issuing the requested Facility Letter of Credit and
                  no law, rule or regulation applicable to the Issuing Bank and
                  no request or directive (whether or not having the force of
                  law) from any governmental authority with jurisdiction over
                  the Issuing Bank shall prohibit or request that the Issuing
                  Bank refrain from the issuance of Letters of Credit generally
                  or the issuance of the requested Facility Letter of Credit in
                  particular, provided, in such event, the Borrower shall have
                  the right to select an alternate Issuing Bank which shall be
                  one of the Lenders;

                           (c) there shall not exist any Default or Unmatured
                  Default; and

                           (d) the Borrower shall have paid those portions of
                  the Facility Letter of Credit Fee referred to in Section 3.8
                  hereof that are due on the Issuance Date.

         III.4 Procedure for Issuance of Facility Letters of Credit.

                                       36

<PAGE>   43

                           (a) The Borrower shall give the Issuing Bank and the
                  Agent at least five (5) Business Days' prior written notice of
                  any requested issuance of a Facility Letter of Credit under
                  this Agreement substantially in the form of Exhibit I-3
                  attached hereto (a "Letter of Credit Request") (except that,
                  in lieu of such written notice, the Borrower may give the
                  Issuing Bank and the Agent telephonic notice of such request
                  if confirmed in writing by delivery to the Issuing Bank and
                  the Agent (i) by the close of business on such day (A) of a
                  telecopy of the written notice required hereunder which has
                  been signed by an Authorized Officer, or (B) of a telex
                  containing all information required to be contained in such
                  written notice and (ii) promptly (but in no event later than
                  the requested date of issuance) of the written notice required
                  hereunder containing the original signature of an Authorized
                  Officer); such notice shall specify:

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

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

                                    (3)     the date on which such requested
                                            Facility Letter of Credit is to
                                            expire which date (exclusive of
                                            automatic extension periods so long
                                            as the Facility Letter of Credit
                                            gives the Issuing Bank the right to
                                            issue a notice that the expiration
                                            date will not be extended) shall be
                                            a Business Day and shall in no event
                                            be later than the earlier of fifteen
                                            months after the Issuance Date and
                                            thirty (30) days prior to the
                                            Facility Termination Date;

                                    (4)     the purpose for which such Facility
                                            Letter of Credit is to be issued
                                            (such purpose shall comply with the
                                            requirements of Section 7.2);

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

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

                  At the time such request is made, the Borrower shall also
                  provide the Agent and the Issuing Bank with a copy of the
                  specific form, if any, of the Facility Letter of Credit that
                  the Borrower is requesting be issued, which shall be subject
                  to the reasonable approval of the Issuing Bank and the Agent.
                  Such notice, to be effective, must be received by such Issuing
                  Bank and the Agent not later than 2:00 p.m. (Dallas, Texas

                                       37

<PAGE>   44

                  Time) on the last Business Day on which notice can be given
                  under this Section 3.4(a). The Agent shall promptly but in no
                  event later than three (3) Business Days prior to the Issuance
                  Date give a copy of the Letter of Credit Request to the other
                  Lenders. The Borrower shall also deliver to the Agent and the
                  Issuing Bank the compliance certificate required in Section
                  5.2 together with each Letter of Credit Request.

                           (b) Subject to the terms and conditions of this
                  Article III and provided that the applicable conditions set
                  forth in Section 5.2 hereof have been satisfied, such Issuing
                  Bank shall, on the Issuance Date, issue a Facility Letter of
                  Credit on behalf of the Borrower in accordance with the Letter
                  of Credit Request and the Issuing Bank's usual and customary
                  business practices unless the Issuing Bank has actually
                  received (i) written notice from the Borrower specifically
                  revoking the Letter of Credit Request with respect to such
                  Facility Letter of Credit, or (ii) written or telephonic
                  notice from the Agent stating that the issuance of such
                  Facility Letter of Credit would violate Section 3.2.

                           (c) The Issuing Bank shall give the Agent and the
                  Borrower written or telex notice, or telephonic notice
                  confirmed promptly thereafter in writing, of the issuance of a
                  Facility Letter of Credit (the "Issuance Notice") and the
                  Agent shall promptly give a copy of the Issuance Notice to the
                  other Lenders.

                           (d) The Issuing Bank shall not extend or amend any
                  Facility Letter of Credit (other than an automatic extension)
                  unless the requirements of this Section 3.4 are met as though
                  a new Facility Letter of Credit was being requested and
                  issued.

                           (e) The Issuing Bank shall give the Agent written or
                  telex notice, or telephonic notice confirmed promptly
                  thereafter in writing, of any extension or amendment of a
                  Facility Letter of Credit and the Agent shall promptly give a
                  copy of such notice to the Lenders.

         III.5 Reimbursement Obligations, Duties of Issuing Bank.

                           (a) The Issuing Bank shall promptly notify the
                  Borrower and the Agent of any draw under a Facility Letter of
                  Credit, and the Agent shall promptly notify the other Lenders
                  that such draw has occurred. Any such draw shall constitute an
                  Advance of the Facility in the amount of the Reimbursement
                  Obligation with respect to such Facility Letter of Credit and
                  shall bear interest from the date of the relevant drawing(s)
                  under the pertinent Facility Letter of Credit at the Prime
                  Rate until instructed otherwise by the Borrower in accordance
                  with Section 2.10 hereof; provided that if any Default or an
                  Unmatured Default involving the payment of money exists at the
                  time of any such drawing(s), then the Borrower shall reimburse
                  the Issuing Bank for drawings under a Facility Letter of
                  Credit issued by the Issuing Bank no later than the next
                  succeeding Business Day after the payment by the Issuing

                                       38
<PAGE>   45

                  Bank and until repaid such Reimbursement Obligation shall bear
                  interest from the date funded at the Default Rate.

                           (b) Any action taken or omitted to be taken by the
                  Issuing Bank under or in connection with any Facility Letter
                  of Credit, if taken or omitted in the absence of willful
                  misconduct or gross negligence, shall not put the Issuing Bank
                  under any resulting liability to the Borrower or any Lender
                  or, provided that such Issuing Bank has complied with the
                  procedures specified in Section 3.4, relieve a Lender of its
                  obligations hereunder to the Issuing Bank. In determining
                  whether to pay under any Facility Letter of Credit, the
                  Issuing Bank shall have no obligation relative to the Lenders
                  other than to confirm that any documents required to be
                  delivered under such Letter of Credit appear to have been
                  delivered in compliance, and that they appear to comply on
                  their face, with the requirements of such Letter of Credit.

         III.6 Participation.

                           (a) Immediately upon issuance by the Issuing Bank of
                  any Facility Letter of Credit in accordance with the
                  procedures set forth in Section 3.4, each Lender shall be
                  deemed to have irrevocably and unconditionally purchased and
                  received from the Issuing Bank, without recourse,
                  representation or warranty, an undivided interest and
                  participation equal to such Lender's Percentage in such
                  Facility Letter of Credit (including, without limitation, all
                  obligations of the Borrower with respect thereto) and any
                  security therefor or guaranty pertaining thereto. Each
                  Lender's obligation to make further Loans to the Borrower
                  (other than any payments such Lender is required to make under
                  subparagraph (b) below) or issue any Facility Letters of
                  Credit on behalf of the Borrower shall be reduced by such
                  Lender's Percentage of the undrawn portion of each Facility
                  Letter of Credit outstanding, as well as any outstanding
                  Reimbursement Obligations.

                           (b) In the event that the Issuing Bank makes any
                  payment under any Facility Letter of Credit and the Borrower
                  shall not have repaid such amount to the Issuing Bank pursuant
                  to Section 3.7 hereof, the Issuing Bank shall promptly notify
                  the Agent, which shall promptly notify each Lender of the
                  same, and each Lender shall within one (1) Business Day
                  unconditionally pay to the Agent for the account of the
                  Issuing Bank the amount of such Lender's Percentage of the
                  unreimbursed amount of such payment, and the Agent shall
                  promptly pay such amount to the Issuing Bank. Notwithstanding
                  the foregoing, unless the Borrower shall notify the Agent of
                  the Borrower's intent to repay the Reimbursement Obligation on
                  the date of the related drawing under any Facility Letter of
                  Credit, such Reimbursement Obligation shall simultaneously
                  with such drawing be converted to and become a Prime Loan as
                  set forth in Section 2.10. The failure of any Lender to make
                  available to the Agent for the account of any Issuing Bank its
                  Percentage of the unreimbursed amount of any such payment
                  shall not relieve any other Lender of its obligation hereunder
                  to make available to the Agent for the account of such Issuing
                  Bank its Percentage of the unreimbursed amount of any payment
                  on the date such payment is to be made, but

                                       39
<PAGE>   46

                  no Lender shall be responsible for the failure of any other
                  Lender to make available to the Agent its Percentage of the
                  unreimbursed amount of any payment on the date such payment is
                  to be made. Any Lender which fails to make any payment
                  required pursuant to this Section 3.6(b) shall be deemed to be
                  a Defaulting Lender hereunder.

                           (c) If the Issuing Bank receives a payment on account
                  of a Reimbursement Obligation, including any interest thereon,
                  the Issuing Bank shall promptly pay to the Agent and the Agent
                  shall promptly pay to each Lender which has funded its
                  participating interest therein, in immediately available
                  funds, an amount equal to such Lender's Percentage thereof.

                           (d) Upon the request of the Agent or any Lender, an
                  Issuing Bank shall furnish to the Agent or such Lender copies
                  of any Facility Letter of Credit to which that Issuing Bank is
                  party and such other documentation as may reasonably be
                  requested by the Agent or such Lender.

                           (e) The obligations of a Lender to make payments to
                  the Agent for the account of each Issuing Bank with respect to
                  a Facility Letter of Credit shall be absolute, unconditional
                  and irrevocable, not subject to any counterclaim, set-off,
                  qualification or exception whatsoever other than a failure of
                  any such Issuing Bank to comply with the terms of this
                  Agreement relating to the issuance of such Facility Letter of
                  Credit and shall be made in accordance with the terms and
                  conditions of this Agreement under all circumstances.

         III.7 Payment of Reimbursement Obligations.

                           (a) The Borrower agrees to pay to the Agent for the
                  account of each Issuing Bank the amount of all Advances for
                  Reimbursement Obligations, interest and other amounts payable
                  to such Issuing Bank under or in connection with any Facility
                  Letter of Credit when due irrespective of any claim, set-off,
                  defense or other right which the Borrower may have at any time
                  against any Issuing Bank or any other Person, under all
                  circumstances, including without limitation any of the
                  following circumstances:

                                    (i) any lack of validity or enforceability
                           of this Agreement or any of the other Loan Documents;

                                    (ii) the existence of any claim, setoff,
                           defense or other right which the Borrower may have at
                           any time against a beneficiary named in a Facility
                           Letter of Credit or any transferee of any Facility
                           Letter of Credit (or any Person for whom any such
                           transferee may be acting), the Agent, the Issuing
                           Bank, any Lender, or any other Person, whether in
                           connection with this Agreement, any Facility Letter
                           of Credit, the transactions contemplated herein or
                           any unrelated transactions (including any underlying
                           transactions between the Borrower and the beneficiary
                           named in any Facility Letter of Credit);

                                       40
<PAGE>   47

                                    (iii) any draft, certificate or any other
                           document presented under the Facility Letter of
                           Credit proving to be forged, fraudulent, invalid or
                           insufficient in any respect of any statement therein
                           being untrue or inaccurate in any respect;

                                    (iv) the surrender or impairment of any
                           security for the performance or observance of any of
                           the terms of any of the Loan Documents; or

                                    (v) the occurrence of any Default or
                           Unmatured Default.

                           (b) In the event any payment by the Borrower received
                  by the Issuing Bank or the Agent with respect to a Facility
                  Letter of Credit and distributed by the Agent to the Lenders
                  on account of their participations is thereafter set aside,
                  avoided or recovered from the Agent or the Issuing Bank in
                  connection with any receivership, liquidation, reorganization
                  or bankruptcy proceeding, each Lender which received such
                  distribution shall, upon demand by the Agent, contribute such
                  Lender's Percentage of the amount set aside, avoided or
                  recovered together with interest at the rate required to be
                  paid by the Issuing Bank or the Agent upon the amount required
                  to be repaid by the Issuing Bank or the Agent.

         III.8 Compensation for Facility Letters of Credit.

                           (a) The Borrower shall pay to the Agent, for the
                  ratable account of the Lenders, based upon the Lenders'
                  respective Percentages, a per annum fee (the "Facility Letter
                  of Credit Fee") with respect to each Facility Letter of Credit
                  that is equal to 1.50% of the face amount of the Facility
                  Letter of Credit of which .25% of the face amount shall be
                  paid to the Issuing Bank on the Issuance Date as set forth in
                  Section 3.8 (b) hereof. The balance of the Facility Letter of
                  Credit Fee (1.25%) relating to any Facility Letter of Credit
                  shall be due and payable in advance in equal installments
                  (except for the first payment which may be a partial payment
                  based on the proportionate share of the quarter then
                  remaining) commencing on the first day of January, 1999, for
                  any Facility Letter of Credit then outstanding, and continuing
                  on the first day of the months of April, July, October and
                  January, each year thereafter, and, to the extent any such
                  fees are then due and unpaid, on the Facility Termination Date
                  such unpaid fees shall be due and payable in full. The Agent
                  shall promptly remit such balance of the Facility Letter of
                  Credit Fees, when paid, to the Lenders (including the Issuing
                  Bank) in accordance with their respective Percentages thereof.
                  The Borrower shall not have any liability to any Lender for
                  the failure of the Agent to promptly deliver funds to any such
                  Lender and shall be deemed to have made all such payments on
                  the date the respective payment is made by the Borrower to the
                  Agent, provided such payment is received by the time specified
                  in Section 2.16 hereof.

                                       41

<PAGE>   48

                           (b) The Issuing Bank shall receive solely for its own
                  account the aforesaid issuance fee of .25% of the face amount
                  of each Facility Letter of Credit, payable by the Borrower on
                  the Issuance Date for each such Facility Letter of Credit. The
                  Issuing Bank shall also be entitled to receive its reasonable
                  out-of-pocket costs and the Issuing Bank's standard charges of
                  issuing, amending and servicing Facility Letters of Credit and
                  processing draws thereunder.

         III.9 Letter of Credit Collateral Account. The Borrower hereby agrees
that it will, if required pursuant to the terms of a Facility Letter of Credit
or Section 9.1, maintain a special collateral account (the "Letter of Credit
Collateral Account") at the Agent's office at the address specified pursuant to
Section 14.1, in the name of the Borrower but under the sole dominion and
control of the Agent, for the benefit of the Lenders, and in which the Borrower
shall have no interest other than as set forth in Section 9.1. Such Letter of
Credit Collateral Account shall be funded to the extent required by Section 9.1.
In addition to the foregoing, the Borrower hereby grants to the Agent, for the
benefit of the Lenders, a properly perfected security interest in and to the
Letter of Credit Collateral Account, any funds that may hereafter be on deposit
in such account and the proceeds thereof. The Borrower agrees to execute a
security agreement and such other documents as the Agent may require in
connection therewith.

                                   ARTICLE IV

                            CHANGE IN CIRCUMSTANCES

         IV.1 Yield Protection. If, after the date hereof, any law or any
governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith,

                           (a) subjects any Lender or any applicable Lending
                  Installation to any tax, duty, charge or withholding on or
                  from payments due from the Borrower (excluding federal, state
                  and local income, franchise or similar taxes on the overall
                  income of any Lender or applicable Lending Installation), or
                  changes the basis of taxation of payments to any Lender in
                  respect of its loans, Facility Letters of Credit or other
                  amounts due it hereunder, or

                           (b) imposes or increases or deems applicable any
                  reserve, assessment, insurance charge, special deposit or
                  similar requirement against assets of, deposits with or for
                  the account of, or credit extended by, any Lender or any
                  applicable Lending Installation (other than reserves and
                  assessments taken into account in determining the interest
                  rate applicable to LIBOR Advances), or

                           (c) imposes any other condition the result of which
                  is to increase the cost to any Lender or any applicable
                  Lending Installation of making, funding or maintaining loans
                  or reduces any amount receivable by any Lender or any
                  applicable Lending

                                       42
<PAGE>   49

                  Installation in connection with loans, or requires any Lender
                  or any applicable Lending Installation to make any payment
                  calculated by reference to the amount of loans held, Letters
                  of Credit issued or participated in, or interest received by
                  it, by an amount reasonably deemed material by such Lender
                  then,

                           (d) within fifteen (15) days of written demand by
                  such Lender pursuant to Section 4.4, the Borrower shall pay
                  such Lender that portion of such increased expense incurred or
                  reduction in an amount received which such Lender determines
                  is attributable to making, funding and maintaining its Loans
                  and its Commitment.

         IV.2 Changes in Capital Adequacy Regulations. If the amount of capital
required or expected to be maintained by each Lender, the Lending Installations
of the Lenders or the corporations controlling the Lenders (as the case may be)
is increased as a result of a Change (as hereinafter defined), then, within
fifteen days of written demand by such Lender pursuant to Section 4.4, the
Borrower shall pay each such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion on such increased capital which
such Lender determines is attributable to this Agreement, its Loans, its
interest in the Facility Letters of Credit, or its obligation to make Loans
hereunder or participate in or issue Facility Letters of Credit (after taking
into account such Lender's policies as to capital adequacy). "Change" means (i)
any change after the date of this Agreement in the Risk-Based Capital Guidelines
or (ii) any adoption of or change in any other law, rule, regulation, policy,
guideline, interpretation, or directive of any Governmental Authority having
jurisdiction after the date of this Agreement which affects the amount of
capital required or reasonably expected to be maintained by each of the Lenders
or the Lending Installations, or the corporations controlling such Lenders, (as
the case may be). "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

         IV.3 Funding Indemnification. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable LIBOR Interest Period,
whether because of acceleration, prepayment or otherwise, or a LIBOR Advance is
not made on the date specified by the Borrower for any reason, the Borrower will
pay to the Agent for the benefit of the applicable Lenders the Break-up Fee upon
the Borrower's receipt of the written notice pursuant to Section 4.5.

         IV.4 Lender Statements, Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its LIBOR Loans and shall take other measures in its discretion to
reduce any liability of the Borrower to such Lender under Sections 4.1 and 4.2
or to avoid the unavailability of a Type of a LIBOR Advance under Section 2.11,
so long as such designation or other measure is not disadvantageous to such
Lender. Each Lender shall deliver a written statement of such Lender to the
Agent and to the Borrower as to the amount due, if any, under Sections 4.1, 4.2
or 4.3. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be

                                       43

<PAGE>   50

final, conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Loan shall be calculated as though each Lender funded its LIBOR Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the LIBOR Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement shall be payable on demand after receipt by
the Borrower of the written statement. The obligations of the Borrower under
Sections 4.1, 4.2 and 4.3 shall survive payment of the Obligations and
termination of this Agreement for a period of one year.

         IV.5 Limitation on the Borrower's Liability. The Borrower shall not be
obligated to compensate any Lender pursuant to Sections 4.1, 4.2 or 4.3 for any
amounts attributable to a period more than one year prior to such Lender's
written notice under Section 4.4 of its intention to seek compensation under
Sections 4.1, 4.2 or 4.3.

                                    ARTICLE V

                              CONDITIONS PRECEDENT

         V.1 Conditions to Closing. This Agreement shall not be effective unless
and until (a) the Borrower shall have paid all fees then due and payable to the
Lenders, the Agent and the Arranger hereunder, and (b) the Borrower shall have
furnished to the Agent, in form and substance satisfactory to the Lenders and
their counsel and with sufficient copies for the Lenders, the following:

                           (a) The duly executed originals of the Loan
                  Documents, (all of which must have been reviewed by and
                  acceptable to the Agent) including this Agreement;

                           (b) Certified copies of the articles of
                  incorporation, limited partnership certificate, limited
                  liability company agreement or other organizational document
                  of the Borrower, the Guarantor, each Subsidiary and each
                  Qualified Borrower, to the extent applicable, with all
                  amendments and certified by the appropriate governmental
                  officer of the state of organization as of a recent date, but
                  only to the extent of any changes or additions thereto since
                  June 4, 1998;

                           (c) Certificates of good standing for the Borrower,
                  the Guarantor, each Subsidiary and each Qualified Borrower
                  certified by the appropriate governmental officer of the state
                  of organization, and foreign qualification certificates for
                  the Borrower and the Guarantor, certified by the appropriate
                  governmental officer, for each jurisdiction where any assets
                  are located and each other jurisdiction where the failure to
                  so qualify or be licensed (if required) would have a Material
                  Adverse Effect;

                           (d) Copies, certified by an officer of the Borrower,
                  the Guarantor, each Subsidiary and each Qualified Borrower, as
                  applicable, of each of the foregoing

                                       44
<PAGE>   51

                  Persons' respective by-laws, partnership agreement, operating
                  agreement or similar document, to the extent applicable,
                  together with all amendments thereto, but only to the extent
                  of any changes or additions thereto since June 4, 1998;

                           (e) An incumbency certificate, executed by an
                  Authorized Officer of the Borrower, which shall identify by
                  name and title and bear the signature of the Persons
                  authorized to sign the Loan Documents and to make borrowings
                  hereunder on behalf of the Borrower, upon which certificate
                  the Agent and the Lenders shall be entitled to rely until
                  informed of any change in writing by the Borrower;

                           (f) Copies, certified by the Secretary or Assistant
                  Secretary, of the Guarantor's (as the sole general partner of
                  the Borrower) Board of Directors' resolutions (and resolutions
                  of other bodies, if any are deemed necessary by counsel for
                  any Lender) authorizing on behalf of the Borrower as its sole
                  general partner the Advances provided for herein and the
                  execution, delivery and performance of the Loan Documents to
                  be executed and delivered by the Borrower hereunder;

                           (g) A written opinion of the Borrower's and the
                  Guarantor's counsel, addressed to the Lenders in substantially
                  the form of Exhibit B hereto;

                           (h) A certificate, signed by an officer of the
                  Guarantor, as the sole general partner of the Borrower,
                  stating that on the Closing Date no Default or Unmatured
                  Default has occurred and is continuing and that all
                  representations and warranties of the Borrower contained
                  herein are true and correct as of the Closing Date as and to
                  the extent set forth herein and that the Borrower is in
                  compliance with all covenants, terms and conditions of this
                  Agreement and the other Loan Documents;

                           (i) A pro forma compliance certificate in the form
                  attached hereto as Exhibit C;

                           (j) Evidence that all parties whose consent is
                  required for the Borrower to execute the Loan Documents have
                  provided such consents;

                           (k) Current UCC-11, judgment and tax lien searches
                  acceptable to the Agent; and;

                           (l) A title search or abstract for each property
                  within the Secured Collateral Pool and the Negative Collateral
                  Pool as of the Closing Date, and a commitment to endorse each
                  mortgage title policy for each property within the Secured
                  Collateral Pool as of the Closing Date, marked in a manner
                  satisfactory to Agent and in conformity with the requirements
                  of Section 5.3(j) hereof.

         V.2 Conditions to Each Advance, Issuance of Facility Letter of Credit
and Continuation/Conversion. The following conditions must be satisfied as a
condition precedent to

                                       45
<PAGE>   52

the making of an Advance, the issuance of a Facility Letter of Credit, or the
continuation of a LIBOR Advance or conversion of an existing Advance into a
LIBOR Advance:

                           (a) There exists no Default or Unmatured Default;

                           (b) The representations and warranties contained in
                  Article VI are true and correct as of such Borrowing Date,
                  Issuance Date, or date of conversion and/or continuation as
                  and to the extent set forth therein, except to the extent any
                  such representation or warranty is stated to relate solely to
                  an earlier date, in which case such representation or warranty
                  shall be true and correct on and as of such earlier date and
                  except for Property Breaches, in which case the compliance
                  certificate shall contain a calculation of the financial
                  covenants with and without including the Hotel Property with
                  respect to which there is a Property Breach and demonstrate
                  compliance with such covenants both with and without inclusion
                  of such Hotel Property;

                           (c) All legal matters incident to the making of such
                  Advance shall be reasonably satisfactory to the Lenders and
                  their counsel;

                           (d) Written money transfer instructions, in
                  substantially the form of Exhibit E hereto, addressed to the
                  Agent and signed by an Authorized Officer, together with such
                  other related money transfer authorizations as the Agent may
                  have reasonably requested; and

                           (e) Such approvals, opinions and documents pertaining
                  to any Advance requested by or on behalf of a Qualified
                  Borrower as the Agent may require have been provided.

         Each Borrowing Notice, Letter of Credit Request, and
Conversion/Continuation Notice shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 5.2(a) and (b) have been
satisfied.

         V.3 Conditions to Secured Collateral Pool. No Hotel Property may
henceforth be included in the Secured Collateral Pool until the Agent has
received, with respect to each such Hotel Property, each of the following
documents or information, which documents and information shall in all respects
be acceptable in form and substance to the Agent and the Lenders and their
counsel:

                           (a) Security Documents. Such Security Documents as
                  the Agent shall require including, without limitation, a
                  Mortgage in recordable form duly executed by the Borrower in
                  form and content acceptable to the Agent and its counsel and
                  giving the Agent a first priority lien on said Hotel Property
                  subject only to those easements or encumbrances consented to
                  in writing by the Agent ("Permitted Exceptions").

                                       46
<PAGE>   53

                           (b) Security Agreements. Security Agreements duly
                  executed by the Borrower, granting to the Agent a first
                  priority security interest in all furniture, furnishings,
                  equipment, fixtures, supplies, inventory, accounts, licenses,
                  franchise agreements, general intangibles and other personal
                  property of every kind and description used in connection with
                  the ownership, operation and or management of each such Hotel
                  Property, together with (i) acknowledgment copies of financing
                  statements (UCC-1's) duly filed under the Uniform Commercial
                  Code of all jurisdictions necessary or, in the opinion of the
                  Agent, desirable to perfect the security interests created by
                  the Security Agreements; and (ii) certified copies of requests
                  for information (form UCC-11's) identifying all of the
                  financing statements on file with respect to the Borrower, the
                  Guarantor, any Qualified Borrower and the Lessee, as
                  applicable, indicating that no party claims an interest in any
                  of the personal property composing part of the Collateral. At
                  the Agent's option, the Security Agreements may be contained
                  in the Mortgages.

                           (c) Evidence of Due Authorization of Security
                  Documents and Corporate or Partnership Good Standing.
                  Certified copies of all partnership or corporate action, as
                  applicable, taken by each party executing a Mortgage, Security
                  Agreement, Assignments of Rents and Leases, UCC-1 financing
                  statements, and all other Loan Documents and other
                  instruments, certificates or agreements required by the Agent,
                  including resolutions of its board of directors or appropriate
                  partnership action, as applicable, authorizing the execution,
                  delivery and performance of the Security Documents and
                  evidence of the good standing of each party to each of the
                  Security Documents under their respective state's organization
                  and any other state the Agent deems necessary or appropriate.

                           (d) Assignments of Rents and Leases. The Assignment
                  of Rents and Leases with respect to each such Hotel Property
                  duly executed by the Borrower, which assignments may be
                  contained in the Mortgages at the Agent's option.

                           (e) Franchise Agreements. Copies of the franchise
                  agreement under which each such Hotel Property will be
                  operated, a copy of the franchisor's most recent inspection
                  report, and, unless waived by the Agent, a letter from each
                  franchisor agreeing to give notices to the Agent of any
                  defaults by the franchisee.

                           (f) Leases. Copies of each Lease and any service
                  agreements relating to each such Hotel Property, all of which
                  shall be acceptable in form and content to the Agent.

                           (g) Subordinations. Subordination agreement(s) duly
                  executed by the Lessee under the Leases subordinating the
                  Leases to the Mortgages.

                           (h) Management Agreements. Copy of any management
                  agreement for any Hotel Property subject to a management
                  agreement providing for management by a company satisfactory
                  to the Agent, and an assignment to the Agent of any such

                                       47
<PAGE>   54

                  management agreement, as well as the subordination thereof and
                  management fees thereunder to the Mortgage for the subject
                  Hotel Property, and the consent of the manager thereto, all in
                  form and content acceptable to the Agent and its counsel.

                           (i) Surveys. An ALTA (or its equivalent acceptable to
                  the Agent) as-built survey of each such Hotel Property from a
                  licensed surveyor acceptable to the Agent, the Agent's counsel
                  and the title insurance company. The survey must be sufficient
                  in form and content so that the title insurance company will
                  issue an ALTA mortgagee's title insurance policy in which the
                  standard boundary, encroachment and survey exceptions have
                  been deleted. The survey for any Secured Collateral Pool
                  Property acquired by the Borrower after the date hereof must
                  be dated within ninety (90) days prior to the issuance of the
                  title policy and be certified to the Agent and the title
                  insurance company in form acceptable to the Agent. The survey
                  must show all easements or restrictions reflected as
                  exceptions in the title insurance policies and must not show
                  any matters affecting a particular Hotel Property which is
                  objectionable to the Agent. The survey shall indicate whether
                  any part of the particular Hotel Property is located within a
                  flood plain area.

                           (j) Title Insurance Policies. A mortgagee title
                  insurance policy with respect to each such Hotel Property in
                  an amount equal to 45% of the Value as of the date the
                  applicable Hotel Property is accepted into the Collateral
                  Pool, naming the Agent as the insured party, showing no liens
                  against such Hotel Property except for the Mortgage and
                  reflecting fee simple title to the Hotel Property in the
                  Borrower, subject to no exceptions except for Permitted
                  Exceptions. Such policy shall be issued by a title insurance
                  company acceptable to the Agent, and shall contain affirmative
                  coverage as to survey matters, and such other affirmative
                  coverage or endorsements (including, without limitation,
                  so-called tie-in endorsement or equivalent thereof acceptable
                  to the Agent) as may be reasonably required by the Agent.

                           (k) Environmental Audits. A hazardous materials
                  report site assessment for each such Hotel Property, performed
                  and issued by a nationally recognized environmental audit
                  firm, or as otherwise mutually agreed upon by the Borrower and
                  the Agent, addressed to the Agent as a party entitled to rely
                  thereon, dated not more than six (6) months prior to the date
                  the applicable Hotel Property is accepted into the Collateral
                  Pool, in compliance with the requirements of Exhibit F and
                  reflecting no indication of adverse environmental conditions
                  at the subject Hotel Property, including, without limitation,
                  asbestos, and including a certification that the Hotel
                  Property is not located on, and has not disturbed, a protected
                  wetlands area.

                           (l) Physical Inspections. A report of an independent
                  inspecting engineering firm satisfactory to the Agent as to
                  the physical condition of each such Hotel Property reflecting
                  a condition of such Hotel Property acceptable to the Agent and
                  the independent satisfaction of the Agent with the physical
                  condition of the Hotel Property pursuant to the on-site
                  inspection of officers of the Agent, for which

                                       48
<PAGE>   55

                  inspections such officers shall be permitted access to the
                  Hotel Property during reasonable hours. All out of pocket
                  expenses incurred by the Agent in connection with such
                  inspections shall be payable on demand by the Borrower.

                           (m) Certificates of Insurance. Each of (i) a current
                  certificate of insurance as to the insurance maintained by the
                  Borrower on such Hotel Property (including flood insurance if
                  necessary) from the insurer or an independent insurance broker
                  dated as of the date of determination, identifying insurers,
                  types of insurance, insurance limits, and policy terms (which
                  certificate may evidence inclusion of such Hotel Property
                  under a "blanket" policy maintained by the Borrower); (ii)
                  certified copies of all policies evidencing such insurance (or
                  certificates therefor signed by the insurer or an agent
                  authorized to bind the insurer); and (iii) such further
                  information and certificates from the Borrower, its insurers
                  and insurance brokers as the Agent may request.

                           (n) Appraisals. Any existing appraisal of each such
                  Hotel Property which the Borrower may have access to. (Upon
                  any Default or Unmatured Default the Agent may order an
                  appraisal on any or all Collateral Pool Properties at the
                  Borrower's expense prepared by an MAI appraiser acceptable to
                  the Agent).

                           (o) Environmental Indemnity. An Environmental
                  Indemnity Agreement in form and content satisfactory to the
                  Agent and its counsel, executed by the Borrower, with respect
                  to each such Hotel Property.

                           (p) Opinion of Counsel. The favorable opinion of
                  counsel for the Borrower qualified to practice in the State in
                  which the Hotel Property is located, addressed to Agent as to
                  the enforceability against the Borrower of the Security
                  Documents, as applicable, and all other documents to be
                  delivered by such entities and, with respect to the Borrower,
                  specifically opining as to the existence and sufficiency of
                  consideration for the Security Documents to be signed by it,
                  each such opinion letter to be in form and content acceptable
                  to the Agent, and opining as to such other matters as the
                  Agent may request.

                           (q) Independent Market Study. An independent market
                  study acceptable to the Agent on each such Hotel Property.

                           (r) Certificate of Occupancy; As Built Plans and
                  Specifications. To the extent available or obtainable, a copy
                  of the certificate of occupancy for such Hotel Property, or
                  other evidence satisfactory to the Agent that no certificate
                  of occupancy is necessary to the use and occupation thereof,
                  together with a copy of as-built plans and specifications for
                  such Hotel Property, showing all improvements thereon to the
                  fullest extent available to the Borrower or in the Borrower's
                  possession.

                           (s) Zoning Compliance. A zoning letter or certificate
                  from the appropriate local official (or other evidence
                  satisfactory to the Agent) confirming that the use of

                                       49
<PAGE>   56

                  the Hotel Property is in compliance with zoning regulations or
                  is an otherwise permitted use, and other evidence reasonably
                  satisfactory to the Agent that in case of casualty the
                  improvements could be rebuilt in substantially the manner
                  existing prior to such casualty.

                           (t) Permit Assurances. Evidence by the Borrower or
                  the Borrower's agents or representatives reasonably
                  satisfactory to the Agent that all activities being conducted
                  on such Hotel Property which require federal, state or local
                  licenses or permits have been duly licensed and that such
                  licenses or permits are in full force and effect.

                           (u) Operating Statements. Operating statements for
                  such Hotel Property in form acceptable to the Agent covering
                  each of the last twelve (12) consecutive calendar months (or,
                  if twelve (12) calendar months have not passed since
                  completion of construction of such Hotel Property, an
                  operating statement for each quarter since such completion)
                  ending immediately prior to the addition of such Hotel
                  Property to the Secured Collateral Pool; provided, however,
                  that if twelve (12) calendar months have not passed since the
                  Borrower acquired title to the Hotel Property, such operating
                  statements for periods prior to the Borrower's ownership as
                  are in the Borrower's possession or reasonably obtainable by
                  the Borrower.

                           (v) Doing Business Opinion or Title Endorsement. For
                  Hotel Properties located in such states as the Agent may
                  designate, either (i) an opinion, dated the date of the
                  inclusion of each such Hotel Property in the Secured
                  Collateral Pool, of legal counsel acceptable to the Agent
                  qualified to practice in the state in which such Hotel
                  Property is located, or (ii) a doing-business endorsement to
                  the title insurance policy required by Section 5.3 (j) hereof,
                  each to the effect that neither the Agent nor any Lender shall
                  be required to qualify to do business in such state or any
                  political subdivision thereof or to become liable to pay any
                  taxes in such state or any political subdivision thereof
                  solely on account of the receipt of the security title or lien
                  on such Hotel Property securing the Obligations, such opinion
                  or endorsement to be satisfactory to the Agent, subject to
                  practices customary in such state with respect to the scope
                  and substance of such opinion or endorsement.

                           (w) Photographs. Photographs of the Hotel Property,
                  and a listing of amenities.

                           (x) Legal Description. A legal description of the
                  Hotel Property.

                           (y) Site Plan. A site plan.

                           (z) Location Map. A location map with the Hotel
                  Property clearly identified thereon.

                                       50
<PAGE>   57

                           (aa) Borrowing Base. The Cost and Implied Value for
                  each Hotel Property from which the Borrowing Base can be
                  determined.

                           (bb) Pro forma Compliance Certificate. A pro forma
                  compliance certificate in the form attached hereto as
                  Exhibit C.

                           (cc) Other Documents. Such other approvals, opinions,
                  information or documents as the Agent may request, it being
                  understood that all Hotel Properties now or hereafter being
                  considered for inclusion in the Secured Collateral Pool must
                  be acceptable to the Lenders.

         If at any time the Agent reasonably determines, in its sole discretion,
that a Hotel Property should be removed from the Secured Collateral Pool,
whether due to environmental concerns which have changed or become known since
the date of inclusion in the Secured Collateral Pool, casualty or otherwise, the
Agent shall so notify the Borrower in writing and such Hotel Property shall
thereafter no longer be considered part of the Secured Collateral Pool, nor
included in the calculation of the Borrowing Base. Any such Hotel Property so
removed from the Secured Collateral Pool shall upon written request from the
Borrower be released by the Agent from the lien of any Mortgage provided there
is then existing no Default or Unmatured Default hereunder and the provisions of
Section 7.13 hereof have been complied with. In addition, the Borrower may
substitute another Hotel Property for the one removed from the Secured
Collateral Pool provided such new Hotel Property is acceptable to the Lenders
and all conditions precedent to the inclusion of such Hotel Property in the
Secured Collateral Pool have been complied with including, without limitation,
the provisions of Section 7.13 hereof.

         V.4 Conditions to Negative Collateral Pool. No Hotel Property may be
included in the Negative Collateral Pool until the Agent has received, with
respect to each such Hotel Property, each of the following documents or
information, which documents and information shall in all respects be acceptable
in form and substance to the Agent and the Lenders and their counsel:

                           (a) Negative Pledge.  The Negative Pledge Agreement.

                           (b) UCC Searches. Certified copies of requests for
                  information (form UCC-11) identifying all of the financing
                  statements on file with respect to the Borrower, the
                  Guarantor, any Qualified Borrower and the Lessee, as
                  applicable, indicating that no Person claims an interest in
                  any of the personal property belonging to the Borrower and
                  located on or at the Hotel Property.

                           (c) Evidence of Due Authorization and Corporate or
                  Partnership Good Standing. Certified copies of all partnership
                  or corporate action, as applicable, taken by each party
                  executing a Negative Pledge Agreement, and all other Loan
                  Documents and other instruments, certificates or agreements
                  required by the Agent, including resolutions of its board of
                  directors or appropriate partnership action, as applicable,
                  authorizing the execution, delivery and performance of the
                  Negative Pledge Agreement and evidence of the good standing of
                  each party to each Negative Pledge

                                       51
<PAGE>   58

                  Agreement under their respective state's organization and any
                  other state the Agent deems necessary or appropriate.

                           (d) Franchise Agreements. Copies of the franchise
                  agreement under which each such Hotel Property will be
                  operated, a copy of the franchisor's most recent inspection
                  report, and, unless waived by the Agent, a letter from each
                  franchisor agreeing to give notices to the Agent of any
                  defaults by the franchisee.

                           (e) Leases. Copies of each Lease and any service
                  agreements relating to each such Hotel Property all of which
                  shall be acceptable in form and content to the Agent.

                           (f) Management Agreements. Copy of any management
                  agreement for any Hotel Property subject to a management
                  agreement providing for management by a company satisfactory
                  to the Agent, and an assignment to the Agent of any such
                  management agreement, all in form and content acceptable to
                  the Agent and its counsel.

                           (g) Title Insurance Policies; Updated Searches.
                  Copies of any owner's title insurance policy with respect to
                  each such Hotel Property showing no liens encumbering such
                  Hotel Property and reflecting fee simple title to the Hotel
                  Property in the Borrower, subject to no exceptions except for
                  Permitted Exceptions. The Borrower shall also provide updated
                  title searches or abstracts sufficient to allow the Agent to
                  determine the Hotel Property is unencumbered as of the date
                  hereof.

                           (h) Environmental Audits. Any existing hazardous
                  materials report site assessment for each such Hotel Property,
                  reflecting no indication of adverse environmental conditions
                  at the subject Hotel Property, including, without limitation,
                  asbestos, and including a certification that the Hotel
                  Property is not located on, and has not disturbed, a protected
                  wetlands area.

                           (i) Physical Inspections. Any existing report of an
                  inspecting engineering firm as to the physical condition of
                  each such Hotel Property reflecting a condition of such Hotel
                  Property acceptable to the Agent and the independent
                  satisfaction of the Agent with the physical condition of the
                  Hotel Property pursuant to the on-site inspection of officers
                  of the Agent, for which inspections such officers shall be
                  permitted access to the Hotel Property during reasonable
                  hours. All out of pocket expenses incurred by the Agent in
                  connection with such inspections shall be payable on demand by
                  the Borrower.

                           (j) Appraisals. Any existing appraisal of each such
                  Hotel Property which the Borrower may have access to. (Upon
                  any Default or Unmatured Default the Agent may order an
                  appraisal on any or all Collateral Pool Properties at the
                  Borrower's expense prepared by an MAI appraiser acceptable to
                  the Agent).

                                       52
<PAGE>   59

                           (k) Environmental Indemnity. An Environmental
                  Indemnity Agreement in form and content satisfactory to the
                  Agent and its counsel, executed by the Borrower, with respect
                  to each such Hotel Property.

                           (l) Operating Statements. Operating statements for
                  such Hotel Property acceptable to the Agent covering each of
                  the last twelve (12) consecutive calendar months (or, if
                  twelve (12) calendar months have not passed since completion
                  of construction of such Hotel Property, an operating statement
                  for each quarter since such completion) ending immediately
                  prior to the addition of such Hotel Property to the Negative
                  Collateral Pool; provided, however, that if twelve (12)
                  calendar months have not passed since the Borrower acquired
                  title to the Hotel Property, such operating statements for
                  periods prior to the Borrower's ownership as are in the
                  Borrower's possession or reasonably obtainable by the
                  Borrower.

                           (m) Photographs. Photographs of the Hotel Property,
                  and a listing of amenities.

                           (n) Legal Description. A legal description of the
                  Hotel Property.

                           (o) Site Plan. A site plan.

                           (p) Location Map. A location map with the Hotel
                  Property clearly identified thereon.

                           (q) Independent Market Study. An independent market
                  study acceptable to the Agent.

                           (r) Borrowing Base. The Cost and Implied Value for
                  each Hotel Property from which the Borrowing Base can be
                  determined.

                           (s) Pro forma Compliance Certificate. A pro forma
                  compliance certificate in the form attached hereto as
                  Exhibit C.

                           (t) Other Documents. Such other approvals, opinions,
                  information or documents as the Agent may request.

         If at any time the Agent reasonably determines, in its sole discretion,
that a Hotel Property should be removed from the Negative Collateral Pool,
whether due to environmental concerns which have changed or become known since
the date of inclusion in the Negative Collateral Pool, casualty or otherwise,
the Agent shall so notify the Borrower in writing and such Hotel Property shall
thereafter no longer be considered part of the Negative Collateral Pool, nor
included in the calculation of the Borrowing Base. Any such Hotel Property so
removed from the Negative Collateral Pool shall upon written request from the
Borrower be released from the Negative Pledge Agreement applicable thereto
provided there is then existing no Default or Unmatured Default hereunder, and
the provisions of Section 7.13 hereof have been complied with. In addition, the

                                       53

<PAGE>   60

Borrower may substitute another Hotel Property for the one removed from the
Negative Collateral Pool provided such Hotel Property is acceptable to the
Lenders and all conditions precedent to the inclusion of such Hotel Property in
the Negative Collateral Pool have been complied with.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

         The Borrower and the Guarantor represent and warrant to the Lenders
that as of the date hereof, and as of each Borrowing Date, Issuance Date and
each conversion and/or continuation (except as otherwise disclosed to and
approved by the Required Lenders):

         VI.1 Existence. They are duly organized, validly existing and in good
standing under the laws of the State of Tennessee, with their principal places
of business in Memphis, Tennessee, and are duly qualified as a foreign
partnership or corporation (as applicable), properly licensed (if required), in
good standing and have all requisite authority to conduct their business in each
jurisdiction in which either owns Hotel Properties and, except where the failure
to be so qualified or to obtain such authority would not have a Material Adverse
Effect, in each other jurisdiction in which their business is conducted. Each of
their Subsidiaries, Qualified Borrowers and Investment Affiliates is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite authority to conduct its
business in each jurisdiction in which it owns Hotel Property, and except where
the failure to be so qualified or to obtain such authority would not have a
Material Adverse Effect, in each other jurisdiction in which it conducts
business.

         VI.2 Authorization and Validity. They have the power and authority and
legal right to execute and deliver the Loan Documents and to perform their
respective obligations thereunder. The execution and delivery by them of the
Loan Documents and the performance of their obligations thereunder have been
duly authorized by proper proceedings, and the Loan Documents constitute legal,
valid and binding obligations of the Borrower and the Guarantor enforceable
against them in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

         VI.3 No Conflict; Government Consent. Neither the execution and
delivery by them of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate in
any material respect any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on, respectively, the Borrower, the
Guarantor or any of their Subsidiaries or Qualified Borrowers or any of such
entities' articles of incorporation, by-laws, certificates of limited
partnership, partnership agreements or operating agreements, as the case may be,
or the provisions of any indenture, declaration of trust, instrument or
agreement to which any entity is a party or is subject, or by which it, or its
Hotel Property, is bound, or conflict with or constitute a default thereunder,
or result in the creation or imposition of any Lien in, of or on the Hotel
Property of such entity pursuant to the terms of any such indenture,

                                       54
<PAGE>   61

instrument or agreement. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents.

         VI.4 Financial Statements; Material Adverse Change. The most recent
consolidated financial statements of the Borrower, the Guarantor and their
Subsidiaries delivered to the Lenders prior to the date that this representation
is made were prepared in accordance with GAAP in effect on the date such
statements were prepared and fairly present the consolidated financial condition
and operations of the Borrower, the Guarantor and their Subsidiaries at such
date and the consolidated results of their operations for the period then ended.
Since the date of such financial statements, there has been no change in the
business, property, results of operations or financial condition of the
Borrower, the Guarantor or their Subsidiaries which have or could be reasonably
expected to have a Material Adverse Effect.

         VI.5 Taxes. The Borrower, the Guarantor and their Subsidiaries, and any
Qualified Borrowers, have filed all United States federal tax returns and all
other tax returns which are required to be filed and have paid all taxes due
pursuant to said returns or pursuant to any assessment received by,
respectively, the Borrower, the Guarantor, any of their Subsidiaries or any
Qualified Borrowers, except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. No tax liens have
been filed and no claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of the Borrower, the Guarantor and
their Subsidiaries, and to the Borrower's and the Guarantor's collective
knowledge, their Qualified Borrowers in respect of any taxes or other
governmental charges are adequate.

         VI.6 Litigation and Contingent Obligations. Except as set forth on
Schedule 6, there is no litigation, arbitration, governmental investigation or
proceeding pending or, to the knowledge of any of the Guarantor's officers,
threatened, in a writing received by the Borrower, the Guarantor, a Subsidiary,
or a Qualified Borrower, against or affecting the Borrower , the Guarantor or
any of their Subsidiaries, Qualified Borrowers or Investment Affiliates which,
if adversely determined, would have a Material Adverse Effect. Except as
disclosed on Schedule 7, they have no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section
7.1, which would have or could be reasonably expected to have a Material Adverse
Effect.

         VI.7 Subsidiaries. Schedule 1 hereto contains an accurate list of all
of the presently existing Subsidiaries and Investment Affiliates of the Borrower
and the Guarantor, setting forth their respective jurisdictions of formation,
the percentage of their respective Capital Stock owned by them or their
Subsidiaries, properties owned and a description of its business and with
respect to Investment Affiliates, whether such Investment Affiliate constitutes
a Qualified Borrower. All of the issued and outstanding shares of Capital Stock
of such Subsidiaries and, to the Borrower's and the Guarantor's collective
knowledge, such Investment Affiliates have been duly authorized and issued and
are fully paid and non-assessable.

                                       55

<PAGE>   62

         VI.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do
not in the aggregate exceed $1,000,000. Neither the Borrower nor the Guarantor,
nor any other member of the Controlled Group has incurred any withdrawal
liability to Multiemployer Plans in excess of $250,000 in the aggregate. If
withdrawals from all Multiemployer Plans occurred, the liability would not
exceed $250,000. Each Plan and, to the Borrower's and the Guarantor's collective
knowledge, each Multiemployer Plan, complies in all material respects with all
applicable requirements of law and regulations and the Borrower, the Guarantor
and all members of the Controlled Group have complied in all material respects
with ERISA and the Code with respect to each Plan. No Reportable Event has
occurred with respect to any Plan, neither the Borrower nor the Guarantor nor
any other member of the Controlled Group has withdrawn from any Plan or
Multiemployer Plan or initiated steps to do so, and no steps have been taken to
reorganize or terminate any Plan or, to the Borrower's or the Guarantor's
collective knowledge, Multiemployer Plan. Neither the Borrower nor the Guarantor
nor any member of the Controlled Group has any Plans or is a party to any
collective bargaining agreements other than those listed on Schedule 3. There is
no accumulated funding deficiency (as defined in Section 412 of the Code or
Section 302 of ERISA) outstanding which could reasonably be expected to have a
Material Adverse Effect, there is no lien outstanding under Section 412 of the
Code or Section 302 of ERISA with respect to assets of the Borrower or the
Guarantor or any member of the Controlled Group and no requirement to provide
security under Section 401(a)(29) of the Code or Section 307 of ERISA has been
or is reasonably expected to be imposed on assets of the Borrower, the Guarantor
or any member of the Controlled Group. No liability to the PBGC or the Internal
Revenue Service with respect to any Plan or Multiemployer Plan or trust related
thereto has been or is reasonably expected to be incurred by the Borrower or the
Guarantor or any member of the Controlled Group which could reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor the
Guarantor nor any member of the Controlled Group has any contingent liability
with respect to any post-retirement benefits under any "welfare plan" (as
defined in Section 3(l) of ERISA) nor withdrawal liability or exit fee or charge
with respect to any such post-retirement benefits under any welfare plan which
could reasonably be expected to have a Material Adverse Effect. Throughout the
term of the Loan, the Borrower and the Guarantor are not and neither will be an
"employee benefit plan" as defined in Section 3(32) of ERISA or a "governmental
plan" within the meaning of Section 3(3) of ERISA, none of the assets of the
Borrower or the Guarantor will constitute "plan assets" of one or more plans for
purposes of Title I of ERISA, and neither the Borrower nor the Guarantor will be
subject to state statutes applicable to Borrower or the Guarantor regulating
investments and fiduciary obligations with respect to governmental plans.

         VI.9 Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower, the Guarantor or
any of their Subsidiaries or any Investment Affiliates, or Qualified Borrowers,
to the Agent or any Lender for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Borrower, the Guarantor
or any of their Subsidiaries, any Investment Affiliates or Qualified Borrowers
to the Agent or any Lender will be, true and accurate (taken as a whole) on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time. There are no facts, events or conditions
directly and specifically affecting the Borrower, the Guarantor, their
Subsidiaries or any Investment Affiliate or

                                       56

<PAGE>   63

Qualified Borrower known to the Borrower or the Guarantor and not disclosed to
the Agent or not disclosed in the information furnished by or on behalf of the
Borrower, the Guarantor, their Subsidiaries or any Investment Affiliates or
Qualified Borrowers, which, in the aggregate, have or could be reasonably
expected to have a Material Adverse Effect.

         VI.10 Regulation U. They do not hold any margin stock (as defined in
Regulation U).

         VI.11 Material Agreements. Neither they nor any Subsidiary or
Investment Affiliate or Qualified Borrower is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party, which default could have
a Material Adverse Effect, or (ii) except as disclosed on Schedule 8 any
agreement or instrument evidencing or governing Indebtedness.

         VI.12 Compliance With Laws. Except as set forth in Schedule 5 they and
their Subsidiaries and any Investment Affiliates and Qualified Borrowers have
complied in all material respects, to their collective knowledge, with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Hotel Property except where such non-compliance would not have
a Material Adverse Effect. Except as disclosed on Schedule 5, neither the
Borrower, the Guarantor, any Subsidiary, nor any Investment Affiliate nor any
Qualified Borrower, has received any written notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable federal, state and local environmental, health and safety statutes
and regulations or the subject of any federal or state remedial action
responding to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could have a Material
Adverse Effect.

         VI.13 Ownership of Collateral Pool Properties. On the date of this
Agreement, the Borrower will have good title, free of all Liens other than
Permitted Liens, to all of the Collateral Pool Properties as identified on
Exhibits G and H.

         VI.14 Investment Company Act. Neither Borrower, the Guarantor nor any
Subsidiary or any Investment Affiliate or Qualified Borrower is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.

         VI.15 Public Utility Holding Company Act. Neither Borrower, the
Guarantor nor any Subsidiary or any Investment Affiliate or Qualified Borrower
is a "holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

         VI.16 Solvency.

                           (a) Immediately after the Closing Date and
                  immediately following the making of each Loan and after giving
                  effect to the application of the proceeds of such

                                       57
<PAGE>   64

                  Loans, (a) the fair value of the assets of the Borrower, the
                  Guarantor and their Subsidiaries on a consolidated basis, at a
                  fair valuation, will exceed the debts and liabilities,
                  subordinated, contingent or otherwise, of the Borrower, the
                  Guarantor and their Subsidiaries on a consolidated basis; (b)
                  the present fair saleable value of all property of the
                  Borrower, the Guarantor and their Subsidiaries on a
                  consolidated basis will be greater than the amount that will
                  be required to pay the probable liability of the Borrower, the
                  Guarantors and their Subsidiaries on a consolidated basis on
                  their debts and other liabilities, subordinated, contingent or
                  otherwise, as such debts and other liabilities become absolute
                  and matured; (c) the Borrower, the Guarantor and their
                  Subsidiaries on a consolidated basis will be able to pay their
                  debts and liabilities, subordinated, contingent or otherwise,
                  as such debts and liabilities become absolute and matured; and
                  (d) the Borrower, the Guarantor and their Subsidiaries on a
                  consolidated basis will not have unreasonably small capital
                  with which to conduct the businesses in which they are engaged
                  as such businesses are now conducted and are proposed to be
                  conducted after the date hereof.

                           (b) They do not intend to, or to permit any of their
                  Subsidiaries, Investment Affiliates or Qualified Borrowers to
                  incur debts beyond their ability to pay such debts as they
                  mature, taking into account the timing of and amounts of cash
                  to be received by them or any such Subsidiary and the timing
                  of the amounts of cash to be payable on or in respect of their
                  Indebtedness or the Indebtedness of any such Subsidiary.

         VI.17 Insurance. While any of the Obligations remain outstanding the
Borrower shall procure and maintain or shall cause to be procured and maintained
continuously in effect, policies of insurance in form and amounts and issued by
companies, associations or organizations licensed to do business in the states
in which the Collateral Pool Properties are located, with a Best's Rating of no
less than A, XII and otherwise satisfactory to the Agent covering such
casualties, risk, perils, liabilities and other hazards reasonably required by
the Agent. All original policies, or certificates thereof, and endorsements and
renewals thereof shall be delivered to and retained by the Agent unless the
Agent waives this requirement in writing. All policies shall expressly protect
or recognize the Lenders' interests as required by the Agent. Without limiting
the generality of the foregoing, the Borrower shall provide or cause to be
provided the following types of insurance coverage:

                           (a) Until repayment and/or fulfillment of the
                  Obligations: (i) property insurance on a "special causes of
                  loss" replacement cost basis (or fire, extended coverage and
                  difference in conditions basis) including flood, earthquake
                  and sinkhole coverages in amount equal to the replacement cost
                  of the Collateral Pool Properties, naming the Agent as
                  mortgagee and loss/payee under a standard form mortgagee
                  clause; (ii) Comprehensive General Liability Insurance
                  (including contractual liability, owners and contractors
                  protective coverages, products & completed operations,
                  personal & advertising injury liability, fire damage, legal
                  liability and alienated premises coverage) and Comprehensive
                  Auto Liability Insurance in a minimum amount of $20,000,000
                  per each occurrence; (iii) Statutory Workers' Compensation and
                  Employer's Liability Insurance in the minimum amounts of
                  $1,000,000 each accident, $1,000,000 each employee-disease,
                  $1,000,000 policy

                                       58
<PAGE>   65

                  limit-disease; and (iv) Rent loss insurance against loss of
                  income by reason of any hazard covered under the insurance
                  required under this subparagraph (a) in an amount sufficient
                  to avoid any co-insurance penalty, but in any event for not
                  less than two (2) years gross receipts from all sources of
                  income from the Collateral Pool Properties.

                           (b) Such additional insurance as may be reasonably
                  required by the Agent from time to time in the event that any
                  of the Collateral Pool Properties are exposed to hazards and
                  risks with respect to which the Agent deems the existing
                  insurance inadequate to properly protect its interests.

         All policies of insurance shall have attached thereto a lender's loss
payable endorsement for the benefit of the Agent as loss payee, in form
satisfactory to the Agent. The Borrower shall furnish the Agent with a certified
copy of an original or a certificate of insurance of all policies of insurance
required. All policies or certificates, as the case may be, of insurance shall
set forth the coverage, the limits of liability, the name of the carrier, the
policy number, the Bests' Rating of the carrier and the period of coverage. In
addition, all policies of insurance required under the terms hereof shall (i)
contain an endorsement or agreement by the insurer that any loss shall be
payable in accordance with the terms of such policy, notwithstanding any act or
negligence of the Borrower or any party holding under the Borrower which might
otherwise result in a forfeiture of said insurance and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deductions against the
Borrower, (ii) indemnify the Agent against losses due to its sole or
contributory negligence. At least twenty (20) days prior to the expiration of
each required policy, the Borrower shall deliver to the Agent evidence of the
renewal or replacement of such policy, continuing such insurance in their form
as required by this agreement. All such policies shall contain a provision that
notwithstanding any contrary agreement between the Borrower and the applicable
insurance company, such policies will not be canceled, allowed to lapse without
renewal, surrendered or amended (which provision shall include any reduction in
the scope or limits of coverage) without at least thirty (30) days prior written
notice to the Agent.

         VI.18 NYSE and REIT Status. The Guarantor's common stock is listed on
the New York Stock Exchange and there is no proceeding pending to delist said
stock, and the Guarantor is qualified as a real estate investment trust and
currently is in compliance with all applicable provisions of the Code.

         VI.19 Environmental Matters. Except as disclosed in Schedule 4, after
due inquiry and investigation in accordance with good commercial or customary
practices, without regard to whether the Agent or the Lenders have or hereafter
obtain any knowledge or report of the environmental condition of any of the
Collateral Pool Properties, each of the following representations and warranties
is true and correct except to the extent that the facts and circumstances giving
rise to any such failure to be so true and correct, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:

                           (a) During the period of the Borrower's, and/or the
                  Guarantor's, ownership of the Collateral Pool Properties, the
                  Collateral Pool Properties have not been used

                                       59
<PAGE>   66

                  for industrial or manufacturing purposes, for landfill,
                  dumping or other waste disposal activities or operations, for
                  generation, storage, use, sale, treatment, processing,
                  recycling or disposal of any Hazardous Material in violation
                  of any applicable Environmental Requirement, for underground
                  or aboveground storage tanks, or for any other use that could
                  give rise to the release of any Hazardous Material on any of
                  the Collateral Pool Properties; to the best of their
                  knowledge, no such use of any of the Collateral Pool
                  Properties occurred at any time prior to the period of their
                  ownership; and to the best of their knowledge, no such use on
                  any adjacent property occurred at any time prior to the date
                  hereof;

                           (b) to the best of their knowledge, there is no
                  Hazardous Material, storage tank (or similar vessel) whether
                  underground or otherwise, sump or well currently on any of the
                  Collateral Pool Properties;

                           (c) they have received no notice and have no
                  knowledge of any Environmental Claim regarding any of the
                  Collateral Pool Properties or any adjacent property;

                           (d) the present conditions, uses and activities on
                  the Collateral Pool Properties do not violate any
                  Environmental Requirement and the uses of the Collateral Pool
                  Properties which Borrower (and each tenant and subtenant, if
                  any) makes and intends to make of the Properties comply and
                  will comply with all applicable Environmental Requirements;
                  and neither they, nor to their knowledge, any tenant or
                  subtenant, has obtained or is required to obtain any permit or
                  other authorization to construct, occupy, operate, use or
                  conduct any activity on any of the Collateral Pool Properties
                  by reason of any Environmental Requirement;

                           (e) None of the Collateral Pool Properties appear on
                  the National Priorities List or any other list or database of
                  hotels maintained by any local, state or federal agency or
                  department showing Collateral Pool Properties which are known
                  to contain or which are suspected of containing a Hazardous
                  Material; and

                           (f) They have never applied for and been denied
                  environmental impairment liability insurance coverage relating
                  to any of the Collateral Pool Properties.

         VI.20 Licenses, Etc. The Borrower, the Guarantor, their Subsidiaries,
and any Qualified Borrowers or Investment Affiliates have obtained and hold in
full force and effect, all material trademarks, trade names, copyrights,
licenses, permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights consents and approvals which are
necessary for the operation of the Collateral Pool Properties.

         VI.21 Judgments. There are no judgments, decrees, or orders of any kind
against the Borrower, the Guarantor, their Subsidiaries, any Qualified Borrowers
or any Investment Affiliates unpaid of record which would have a Material
Adverse Effect.

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<PAGE>   67

         VI.22 Lessee; Property Manager. Except as set forth on Schedule 9, as
of the date hereof, the Lessee and manager of each Collateral Pool Property is
RFS, Inc.

         VI.23 Updated Schedules. The Borrower will, at the Agent's request,
update any or all of the Schedule(s) to this Agreement by delivery to the Agent
of such revised Schedule(s) and, from and after the date of delivery of such
updated Schedule(s) to the Agent, and its approval by the Required Lenders, the
representations and warranties of the Borrower hereunder shall be deemed to
reflect such revised Schedule, provided, however, in no event may the Borrower
cure any Default hereunder by substituting a revised Schedule for one that was
incorrect when submitted.

         VI.24 Collateral Pool Properties. Exhibits G and H hereto contain a
complete and accurate list of Hotel Properties in the Secured Collateral Pool
and in the Negative Collateral Pool as of the Closing Date, and as supplemented
from time to time. With respect to each such Collateral Pool Property, the
Borrower hereby represents and warrants as follows except to the extent
disclosed in writing to the Lenders and approved by the Required Lenders (which
approval shall not be unreasonably withheld):

                           (a) No portion of any improvement on each Collateral
                  Pool Property is located in an area identified by the
                  Secretary of Housing and Urban Development or any successor
                  thereto as an area having special flood hazards pursuant to
                  the National Flood Insurance Act of 1968 or the Flood Disaster
                  Protection Act of 1973, as amended, or any successor law, or,
                  if located within any such area, the Borrower has obtained and
                  will maintain the insurance prescribed in Section 6.17 hereof.

                           (b) The Borrower, or the Lessee, has obtained all
                  material certificates, licenses and other approvals,
                  governmental and otherwise, necessary for the operation of
                  each Collateral Pool Property and the conduct of its business
                  and all required zoning, building code, land use,
                  environmental and other similar permits or approvals which it
                  is required to maintain, all of which are in full force and
                  effect as of the date hereof and not subject to revocation,
                  suspension, forfeiture or modification.

                           (c) To the Borrower's knowledge, each Collateral Pool
                  Property and the present use and occupancy thereof are in
                  material compliance with all applicable zoning ordinances
                  (without reliance upon adjoining or other properties),
                  building codes, land use and Environmental Laws, laws relating
                  to the disabled including, but not limited to, the Americans
                  with Disabilities Act to the extent applicable, and other
                  similar laws ("Applicable Laws").

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

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<PAGE>   68

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

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

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

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

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

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

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<PAGE>   69

                           (k) Each Collateral Pool Property is assessed for
                  real estate tax purposes as one or more wholly independent tax
                  lot or lots, separate from any adjoining land or improvements
                  not constituting a part of such lot or lots, and no other land
                  or improvements is assessed and taxed together with any
                  Collateral Pool Property or any portion thereof.

                           (l) Each Collateral Pool Property is operated in
                  compliance with a franchise agreement entered into with a
                  franchise chain approved by the Lenders, and the Borrower is
                  not in default under any of the terms thereof.

                           (m) A breach of any of the representations and
                  warranties contained in this Section 6.24 with respect to a
                  Collateral Pool Property shall disqualify, unless otherwise
                  approved by the Required Lenders, such Collateral Pool
                  Property from being in the Collateral Pool but shall not
                  constitute a Default (unless the elimination of such
                  Collateral Pool Property from the Collateral Pool results in a
                  Default under one of the other provisions of this Agreement).

                                   ARTICLE VII

                                    COVENANTS

         During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

         VII.1 Financial Reporting. The Borrower and the Guarantor will
maintain, for themselves and each Subsidiary, and shall cause each Qualified
Borrower and Investment Affiliate to maintain, a system of accounting
established and administered in accordance with GAAP, and shall furnish to the
Lenders:

                           (a) As soon as available, but in any event not later
                  than forty-five (45) days after the close of each fiscal
                  quarter, for the Borrower and the Guarantor an unaudited
                  consolidated balance sheet as of the close of each such period
                  and the related unaudited consolidated statements of income
                  and retained earnings and of cash flows of the Borrower, the
                  Guarantor and their Subsidiaries for such period and the
                  portion of the fiscal year through the end of such period,
                  setting forth in each case in comparative form the figures for
                  the previous year, including, without limitation, a list of
                  all contingent liabilities, all certified by the Borrower's
                  and the Guarantor's chief Authorized Officers, and, for the
                  Guarantor, as soon as available, but in any event not later
                  than ninety (90) days after the close of each fiscal year,
                  similar audited financial statements prepared by a public
                  accounting firm acceptable to the Agent;

                                       63
<PAGE>   70

                           (b) As soon as available, but in any event not later
                  than forty-five (45) days after the close of each fiscal
                  quarter, for the Borrower, the Guarantor and their
                  Subsidiaries, related reports in form and substance
                  satisfactory to the Lenders, all certified by the Borrower's
                  and the Guarantor's chief financial officers or chief
                  accounting officers, including a statement of Funds From
                  Operations, Adjusted EBITDA, a listing of capital expenditures
                  (in the level of detail as disclosed in the Borrower's most
                  recent Form 10Q), a report listing and describing all
                  Collateral Pool Properties included in either the Secured or
                  Negative Collateral Pools, including, without limitation, each
                  Collateral Pool Property's name, franchise affiliations,
                  lessee name and address, Adjusted Cash Flow, Borrowing Base,
                  Cost, Property Operating Income, Adjusted EBITDA, lease
                  payments, real estate taxes, calculation of the Capital
                  Expenditure Reserve Amount, management fees, occupancy rates,
                  square footage, date acquired or completed, and such other
                  information as may be requested to evaluate the quarterly
                  compliance certificate delivered as provided below;

                           (c) As soon as publicly available but in no event
                  later than the date such reports are to be filed with the
                  Securities Exchange Commission, copies of all Form 1OKs, 1OQs,
                  8Ks, and any other annual, quarterly, monthly or other
                  reports, copies of all registration statements and any other
                  public information which the Borrower, the Guarantor or any of
                  their Subsidiaries files with the Securities Exchange
                  Commission and to the extent any of such reports contains
                  information required under the other subsections of this
                  Section 7.1, the information need not be furnished separately
                  under the other subsections;

                           (d) As soon as available, but in any event not later
                  than ninety (90) days after the close of each fiscal year of
                  the Borrower, the Guarantor and their Subsidiaries, reports in
                  form and substance satisfactory to the Lenders, certified by
                  their respective Authorized Officers containing Property
                  Operating Income for each Collateral Pool Property;

                           (e) Not later than forty-five (45) days after the end
                  of each of the first three fiscal quarters, and not later than
                  ninety (90) days after the end of the fiscal year, a
                  compliance certificate in substantially the form of Exhibit C
                  hereto signed by the Borrower's and the Guarantor's Authorized
                  Officers confirming that the Borrower and the Guarantor are in
                  compliance with all of the covenants of the Loan Documents,
                  showing the calculations and computations necessary to
                  determine compliance with the financial covenants contained in
                  this Agreement (including such schedules and backup
                  information as may be necessary to demonstrate such
                  compliance) and stating that to such officer's best knowledge,
                  no other Default or Unmatured Default exists, or if any
                  Default or Unmatured Default exists, stating the nature and
                  status thereof;

                           (f) As soon as possible and in any event within ten
                  (10) Business Days after the Borrower or the Guarantor knows
                  that any Reportable Event has occurred with respect to any
                  Plan, a statement, signed by their chief Authorized Officers,
                  describing

                                       64
<PAGE>   71

                  said Reportable Event and within twenty (20) days after such
                  Reportable Event, a statement signed by such Authorized
                  Officers describing the action which they propose to take with
                  respect thereto; and within ten (10) Business Days of receipt,
                  any notice from the Internal Revenue Service, PBGC or
                  Department of Labor with respect to a Plan regarding any
                  excise tax, proposed termination of a Plan, prohibited
                  transaction or fiduciary violation under ERISA or the Code
                  which could result in any liability to the Borrower or the
                  Guarantor or any member of the Controlled Group in excess of
                  $100,000; and within ten (10) Business Days of filing, any
                  Form 5500 filed by the Borrower or the Guarantor with respect
                  to a Plan, or any member of the Controlled Group which
                  includes a qualified accountant's opinion;

                           (g) As soon as possible and in any event within
                  thirty (30) days after receipt by the Borrower or the
                  Guarantor, a copy of (i) any notice or claim to the effect
                  that the Borrower or the Guarantor or any of their
                  Subsidiaries or Qualified Borrowers or Investment Affiliates
                  is or may be liable to any Person as a result of the release
                  by such entity, or any of its Subsidiaries, or any other
                  Person of any toxic or hazardous waste or substance into the
                  environment, and (ii) any notice alleging any violation of any
                  federal, state or local environmental, health or safety law or
                  regulation by the Borrower, the Guarantor or any of their
                  Subsidiaries or Qualified Borrowers or Investment Affiliates,
                  which, in either case, could be reasonably likely to have a
                  Material Adverse Effect;

                           (h) Promptly upon the furnishing thereof to the
                  partners of the Borrowers or shareholders of the Guarantor,
                  copies of all financial statements, reports and proxy
                  statements so furnished;

                           (i) Promptly upon the distribution thereof to the
                  press or the public, copies of all press releases;

                           (j) As soon as possible, and in any event within ten
                  (10) days after the Borrower or the Guarantor knows of any
                  fire or other casualty or any pending or threatened
                  condemnation or eminent domain proceeding with respect to all
                  or any portion of any Collateral Pool Property, a statement
                  signed by the Authorized Officer of the Borrower or the
                  Guarantor, describing such fire, casualty or condemnation and
                  the action the Borrower intends to take with respect thereto;

                           (k) Promptly upon the giving of any notices of
                  default under any of the Leases, copies of all such notices;

                           (l) Not later than forty-five (45) days after the end
                  of each quarter, an unaudited financial statement for each
                  Qualified Borrower that is not a Subsidiary and has received
                  an Advance (including, without limitation, a balance sheet,
                  income statement, statement of sources and uses of funds and
                  listing of contingent liabilities), certified by an Authorized
                  Officer;

                                       65
<PAGE>   72

                           (m) As soon as possible and in any event within
                  thirty (30) days prior to the commencement of each calendar
                  year, the Borrower shall supply a detailed capital expenditure
                  budget for that calendar year for each Collateral Pool
                  Property, all in form and detail acceptable to the Required
                  Lenders; and

                           (n) Such other information (including, without
                  limitation, financial statements for the Borrower or the
                  Guarantor and non-financial information) as the Agent or any
                  Lender may from time to time reasonably request.

         VII.2 Use of Proceeds. (a) The Borrower will use the proceeds of the
Advances and the Facility Letters of Credit for the general business purposes of
the Borrower, including working capital needs, closing costs, and interim or
other financing for acquisitions of new Hotel Properties, construction of new
Hotel Properties or capital improvements or renovations of existing improvements
on Hotel Properties, and to repay outstanding Indebtedness; and (b) the Borrower
will not, nor will it permit any Qualified Borrower or any Subsidiary to, use
any of the proceeds of the Advances (i) to purchase or carry any "margin stock"
(as defined in Regulation U) or (ii) to fund any tender offer for all or
substantially all of another Person's outstanding Capital Stock registered with
the Securities and Exchange Commission under the Securities Act of 1933, unless
such Person shall have consented to such tender offer prior to its commencement
and the Required Lenders shall have consented to such use of the proceeds of
such Advance.

         VII.3 Notice of Default. The Borrower and the Guarantor will give, and
will cause each of their Subsidiaries and each Qualified Borrower to give,
prompt notice in writing to the Lenders of the occurrence of any Default or
Unmatured Default and of any other development, financial or otherwise, which
could be reasonably likely to have a Material Adverse Effect.

         VII.4 Conduct of Business. The Borrower and the Guarantor will do, and
will cause each of their Subsidiaries and Qualified Borrowers to do, all things
necessary to remain duly incorporated and/or duly qualified, validly existing
and in good standing as a real estate investment trust, corporation, general
partnership, limited liability company or limited partnership, as the case may
be, in its jurisdiction of incorporation/formation. The Borrower will maintain
all requisite authority to conduct its business in each jurisdiction in which
the Collateral Pool Properties are located and, except where the failure to be
so qualified would not have a Material Adverse Effect, in each jurisdiction
required to carry on and conduct its businesses in substantially the same manner
as it is presently conducted, and, specifically, neither the Borrower nor the
Guarantor nor their Subsidiaries nor any Qualified Borrowers will undertake, or
be allowed to undertake, any business other than the acquisition, development,
ownership, management, operation and leasing of Hotel Properties and ancillary
businesses specifically related thereto, except that the Borrower, the Guarantor
and their Subsidiaries and any Qualified Borrowers may invest in the following
assets or property ("Non-Conforming Investments"), subject to such limitations
as are hereinafter set forth:

                           (a) unimproved land;

                           (b) other non-income producing property holdings
                  (excluding cash and Cash Equivalents that are hereby deemed
                  conforming) and income producing properties

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                  other than Hotel Properties or other investments not
                  considered the Borrower's primary course of business;

                           (c) stock holdings (excluding stock holdings in
                  Subsidiaries and Investment Affiliates engaged in the
                  Borrower's primary course of business that are hereby deemed
                  conforming);

                           (d) mortgages; and

                           (e) Joint Ventures and partnerships (excluding those
                  investments in Investment Affiliates engaged in the Borrower's
                  primary course of business that are hereby deemed conforming).

         The total investment (i.e. amounts actually expended as of such date)
in Non-Conforming Investments in the aggregate shall never exceed 15% of Total
Assets. The total aggregate amount of all budgeted costs (whether or not
actually expended) for Hotel Properties under development shall never exceed 10%
of Total Assets. The total investment in the aggregate by the Borrower in Joint
Ventures, partnerships and other Investment Affiliates engaged in the Borrower's
primary course of business that are hereby deemed conforming shall never exceed
15% of Total Assets.

         VII.5 Taxes. The Borrower and the Guarantor will pay, and will cause
each of their Subsidiaries and Qualified Borrowers to pay, when due all taxes,
assessments and governmental charges and levies upon them of their income,
profits or properties, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.

         VII.6 Insurance.

                           (a) The Borrower and the Guarantor will, and will
                  cause each of their Subsidiaries and Qualified Borrowers to,
                  maintain with financially sound and reputable insurance
                  companies insurance on all its Collateral Pool Properties in
                  such amounts and covering such risks as is consistent with
                  sound business practice and in compliance with the
                  representation in Section 6.17, and the Borrower will furnish
                  to the Agent or any Lender upon request full information as to
                  the insurance carried.

                           (b) The Borrower will promptly notify the Agent if
                  there has been a termination of any insurance policy or a
                  material change in coverage or of the credit rating of the
                  insurer providing such coverage.

         VII.7 Compliance with Laws. The Borrower and the Guarantor will, and
will cause each of their Subsidiaries and Qualified Borrowers to, be in material
compliance, with all laws, rules and regulations and with all final orders,
writs, judgments, injunctions, decrees or awards to which they may be subject.

         VII.8 Maintenance of Collateral Pool Properties. The Borrower and the
Guarantor will, and will cause each of their Subsidiaries, Qualified Borrowers,
and the Lessee to, do all things necessary to maintain, preserve, protect and
keep the Collateral Pool Properties in good repair, working order and

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<PAGE>   74

condition, and make all necessary and proper repairs, renewals and replacements
so that their businesses carried on in connection therewith may be properly
conducted at all times.

         VII.9 Inspection. Upon reasonable notice, the Borrower and the
Guarantor will, and will cause each of their Subsidiaries and Qualified
Borrowers and the Lessees to, permit the Lenders, by their respective
representatives and agents, to inspect any of the Hotel Properties, books and
financial records of the Borrower and the Guarantor and each of their
Subsidiaries and Qualified Borrowers and the Lessee, to examine and make copies
of the books of accounts and other financial records of the Borrower and the
Guarantor and each of their Subsidiaries, Qualified Borrowers and the Lessee,
and to discuss the affairs, finances and accounts of the Borrower and the
Guarantor and each of their Subsidiaries, Qualified Borrowers and lessees of
Hotel Properties, and to be advised as to the same by, their respective officers
at such reasonable times during normal business hours and reasonable intervals
as the Lenders may reasonably designate.

         VII.10 Maintenance of Status. The Guarantor shall at all times (a)
maintain the listing of its common stock on the New York Stock Exchange and not
take any action that results in a proceeding to delist such stock, and (b)
maintain its status as a real estate investment trust in compliance with all
applicable provisions of the Code.

         VII.11 Distributions.

                           (a) The Guarantor shall not pay any Distribution
                  which for any four (4) successive quarters is in excess of (i)
                  ninety-five percent (95%) of its Funds From Operations for
                  such fiscal quarters, or (ii) one hundred percent (100%) of
                  its Funds Available for Distribution for such fiscal quarters;
                  provided that the limitation contained in this Section 7.11(a)
                  shall not preclude the Guarantor from making Distributions in
                  an amount equal to the minimum distributions required under
                  the Code to maintain the REIT status of Guarantor, as
                  evidenced by a certification of the principal financial or
                  accounting officer of the Guarantor containing calculations in
                  detail reasonably satisfactory in form and substance to the
                  Agent.

                           (b) Notwithstanding Section 7.11(a), the Guarantor
                  shall be permitted to pay a Distribution of Net Proceeds from
                  Sale of Assets (as hereinafter defined). For purposes of this
                  Section 7.11(b), the term "Net Proceeds from Sale of Assets"
                  shall mean the gross proceeds from the sale, conveyance or
                  other disposition of a Hotel Property minus either (i) 50% if
                  the Hotel Property was in the Secured Collateral Pool or (ii)
                  40% if the Hotel Property was in the Negative Collateral Pool.

                           (c) In the event that there is a continuing Default
                  under Section 8.1 or Section 8.2, or there is a continuing
                  Default under Section 8.3 relating to a breach of any of the
                  covenants contained in Sections 7.4, 7.17 and 7.18, the
                  Guarantor shall make no Distribution other than Distributions
                  in an amount equal to the minimum distributions required under
                  the Code to maintain the REIT status of Guarantor, as
                  evidenced by a certification of the principal financial or
                  accounting officer of the Guarantor containing calculations in
                  detail reasonably satisfactory in form and substance to the
                  Agent.

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<PAGE>   75

         VII.12 Merger; Sale of Assets. The Borrower and Guarantor will not, nor
will they permit any of their Subsidiaries or Qualified Borrowers to, enter into
any merger, consolidation, reorganization or liquidation or transfer or
otherwise dispose of all or a portion of their property except for (a) such
transactions that occur between Wholly-Owned Subsidiaries, (b) transactions
where the Borrower or the Guarantor is the surviving entity and there is no
change in business conducted or loss of an investment grade rating on such
entity's long-term unsecured debt and no other Default results from such
transaction, or (c) transactions that are approved in advance in writing by the
Lenders.

         VII.13 Release of Mortgages or Negative Pledge Agreements. In addition
to any other specific provisions herein allowing the release of a Mortgage or a
Negative Pledge Agreement, provided there is no Default or Unmatured Default
hereunder, the Borrower may by written request to the Agent obtain a release of
a Mortgage or a Negative Pledge Agreement encumbering or affecting any
Collateral Pool Property if such Hotel Property is either being (i) sold by the
Borrower under an arms-length contract to a Person which is not also the
Guarantor, a Subsidiary of the Borrower or the Guarantor, or a Qualified
Borrower, (ii) is being included by the Borrower in a securitization offering,
or (iii) is being removed from the Collateral Pool due to other reasons as set
forth in this Agreement, provided that in any such event at least one (1) of the
following provisions is satisfied:

                           (a) the Borrower provides a substitute Hotel Property
                  acceptable to the Lenders and complies with all conditions
                  precedent herein to the inclusion of such Hotel Property in
                  the Collateral Pool, or

                           (b) the outstanding principal balance of the Facility
                  is reduced in an amount satisfactory to the Lenders and
                  availability under the Facility is reduced by an equivalent
                  sum on a pro rata basis.

In addition to the foregoing, in order to obtain a release of any Mortgage or
Negative Pledge Agreements, whether due to the sale of a Collateral Pool
Property, or otherwise, all covenants must still be met as evidenced by a pro
forma compliance certificate in the form attached hereto as Exhibit "C".
Notwithstanding the foregoing, or any other provision herein to the contrary,
the Agent shall be under no obligation to release any Mortgage or Negative
Pledge Agreement if the mix of the remaining Collateral Pool Property types is
not acceptable to the Required Lenders, in their sole but reasonable discretion.

         VII.14 Liens. The Borrower and the Guarantor will not, nor will they
permit any of their Subsidiaries or Qualified Borrowers to, create, incur, or
suffer to exist any Lien in, of or on their Collateral Pool Properties, except:

                           (a) Liens for taxes, assessments or governmental
                  charges or levies on their Collateral Pool Properties if the
                  same shall not at the time be delinquent or thereafter can be
                  paid without penalty, or are being contested in good faith and
                  by appropriate proceedings and for which adequate reserves
                  shall have been set aside on their books;

                           (b) Liens which arise by operation of law, such as
                  carriers', warehousemen's, landlords', materialmen and
                  mechanics' liens and other similar liens arising in the
                  ordinary course of business which secure payment of
                  obligations not more than thirty

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<PAGE>   76

                  (30) days past due or which are being contested in good faith
                  by appropriate proceedings and for which adequate reserves
                  shall have been set aside on its books;

                           (c) Liens arising out of pledges or deposits under
                  worker's compensation laws, unemployment insurance, old age
                  pensions, or other social security or retirement benefits, or
                  similar legislation;

                           (d) Utility easements, building restrictions, zoning
                  restrictions, easements and such other encumbrances or charges
                  against real property as are of a nature generally existing
                  with respect to properties of a similar character and which do
                  not in any material way affect the marketability of the same
                  or interfere with the use thereof in their businesses;

                           (e) Liens of any Subsidiary, Qualified Borrower or
                  Investment Affiliate in favor of the Borrower;

                           (f) Liens existing on the date hereof and described
                  in Schedule 2 hereto; and

                           (g) Liens arising in connection with any Indebtedness
                  permitted hereunder to the extent such Liens will not result
                  in a violation of any of the provisions of this Agreement.

         Liens permitted pursuant to this Section 7.14 shall be deemed to be
"Permitted Liens".

         VII.15 Affiliates. The Borrower and the Guarantor will not, nor will
they permit any of their Subsidiaries or any Qualified Borrowers or Investment
Affiliates to, enter into any transaction (including, without limitation, the
purchase or sale of any Hotel Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of their business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, Qualified
Borrower or Investment Affiliate than they would obtain in a comparable
arms-length transaction.

         VII.16 Interest Rate Hedging. The Borrower and the Guarantor will not
enter into or remain liable upon, nor will they permit any Subsidiary, Qualified
Borrower or Investment Affiliate to enter into or remain liable upon, any
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options unless such
agreement, device or arrangement was entered into by the Borrower, a Subsidiary,
a Qualified Borrower or Investment Affiliate in the ordinary course of its
business for the purpose of hedging interest rate risk to any of them.

         VII.17 Consolidated Net Worth. The Borrower, the Guarantor and their
Subsidiaries, as of the last day of any fiscal quarter, shall maintain a
Consolidated Net Worth of not less than the sum of (a) $345,500,000 plus (b)
eighty-five percent (85%) of the net cash proceeds received by the Guarantor
(net of customary related fees and expenses) in connection with any offering of
stock in the Guarantor after March 31, 1999.

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<PAGE>   77

         VII.18 Additional Financial Covenants. The Borrower and the Guarantor
and all Subsidiaries shall at all times comply with the following additional
financial covenants:

                           (a) Debt Coverage Ratios.

                                    (i) Minimum Collateral Pool Debt Coverage
                           Ratio. The Borrower, the Guarantor, and their
                           Subsidiaries shall maintain a minimum debt coverage
                           ratio on the Collateral Pool Properties of at least
                           2:00:1.00 at all times. This ratio shall be
                           calculated by dividing Adjusted Cash Flow from the
                           Collateral Pool Properties by Implied Debt Service.

                                    (ii) Minimum Corporate Debt Coverage Ratio.
                           The Borrower, the Guarantor and their Subsidiaries
                           shall maintain a minimum consolidated corporate debt
                           coverage ratio of 2.25:1.00 at all times. This ratio
                           shall be calculated by dividing Adjusted EBITDA by
                           the total Debt Service on Consolidated Total
                           Indebtedness.

                                    (iii) Special Cure for Debt Coverage Ratio
                           Defaults. For purposes of determining compliance with
                           the debt coverage ratio covenants set forth above in
                           Section 7.18(a)(i) and (ii), upon any Default under
                           said covenants, and upon the Borrower's written
                           request to the Agent given no later than two (2)
                           Business Days after such Default occurs, the Borrower
                           shall be allowed ninety (90) days from the original
                           date the Default occurred, to cure such Default
                           before the Agent and/or the Lenders can exercise
                           their remedies. If during this time period the
                           Default is not cured, but the ratio is improved from
                           the previous quarter by at least 50% of the previous
                           report's short fall expressed as a percent (i.e., if
                           the ratio was 92% of the requirement, the ratio must
                           have improved to at least 96% of the required ratio),
                           the Borrower may have a second consecutive ninety
                           (90) day cure period upon written request to the
                           Agent given no later than two (2) Business Days after
                           the end of the first ninety (90) day time period. The
                           first and second cure periods will not be provided to
                           the Borrower if the Default results from a debt
                           coverage ratio which is less than 90% of the required
                           covenant, or if any other Default exists at either
                           time.

                                    (iv) Minimum Corporate Fixed Charge Ratio.
                           The Borrower, the Guarantor and their Subsidiaries
                           shall maintain a minimum consolidated fixed charge
                           ratio of 2.00:1.00 at all times. This ratio shall be
                           calculated by dividing Adjusted EBITDA by the sum of
                           (i) Debt Service on Consolidated Total Indebtedness
                           plus (ii) preferred dividends paid during such
                           trailing twelve (12) month period.

                           (b) Minimum Interest Coverage. The Borrower, the
                  Guarantor and their Subsidiaries shall maintain a minimum
                  interest coverage on Consolidated Total Indebtedness of at
                  least 2.75:1.00. This ratio shall be measured quarterly, using
                  a trailing twelve (12) month rolling average for the
                  immediately preceding twelve (12)

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<PAGE>   78
                  month period, and shall be calculated by dividing Adjusted
                  EBITDA by Interest Expense.

                           (c) Total Indebtedness Limitation. Consolidated Total
                  Indebtedness shall not exceed at any time 4.5 times the
                  trailing four (4) quarter Adjusted EBITDA.

                           (d) Total Liabilities Limitation. Total Liabilities
                  of the Borrower, the Guarantor and their Subsidiaries shall
                  not exceed at any time fifty percent (50%) of the sum of the
                  Borrower's, the Guarantor's and their Subsidiaries' Total
                  Liabilities and Consolidated Net Worth.

                           (e) Limit on Additional Indebtedness. Neither the
                  Borrower nor the Guarantor, nor any Qualified Borrower or any
                  of their Subsidiaries may incur any additional Indebtedness
                  after the Closing Date in excess of $15,000,000 without the
                  prior written approval of all Lenders, which any Lender may
                  grant or withhold in its sole discretion. The restriction set
                  forth in the preceding sentence of this Section 7.18(f) shall
                  not apply with respect to non-recourse secured Indebtedness so
                  long as no Default or Unmatured Default exists hereunder.

                           (f) Borrowing Base. At no time shall the Allocated
                  Facility Amount exceed the Borrowing Base.

                           (g) Leverage Ratio. At no time shall the Leverage
                  Ratio exceed 45%. Nothing contained in the definitions of
                  LIBOR Basis or Prime Rate shall be deemed to modify this
                  covenant.

         VII.19 Environmental Matters.

                  VII.19.1 Violation. The Borrower and the Guarantor will not
         cause, commit, permit or allow to continue (i) any violation of any
         Environmental Requirement (a) by the Borrower or (b) by or with respect
         to any of the Collateral Pool Properties or any use of or condition or
         activity on any of the Collateral Pool Properties, or (ii) the
         attachment of any environmental lien to any of the Collateral Pool
         Properties. The Borrower will not place, install, dispose of or
         release, or cause, permit, or allow the placing, installation,
         disposal, spilling, leaking, dumping or release of, any Hazardous
         Material or storage tank (or similar vessel) on any of the Hotel
         Properties and will keep the Hotel Properties free of Hazardous
         Material. Notwithstanding the foregoing provisions of this Section
         7.19, the Borrower shall not be in default hereunder should the
         Borrower or the Lessee store minimal quantities of substances on any of
         the Hotel Properties which technically could be considered Hazardous
         Material, provided that: such substances are of a type and are held
         only in a quantity normally used in connection with the construction,
         occupancy or operation of comparable buildings (such as cleaning
         fluids, and supplies normally used in the day to day operation of
         business offices), such substances are being held, stored and used in
         complete and strict compliance with all applicable Environmental
         Requirements, and the indemnity in Section 7.19.5 of this Agreement
         shall always apply to such substances, and it shall be and continue to
         be the responsibility of the Borrower to take, or cause any tenant to
         take, all remedial actions required under and in

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         accordance with Section 7.19.4 of this Agreement in the event of any
         unlawful release of any such substance.

                  VII.19.2 Notice to the Lenders. The Borrower shall promptly
         deliver to the Agent a copy of each report pertaining to the Collateral
         Pool Properties or to the Borrower prepared by or on behalf of the
         Borrower pursuant to any Environmental Requirement. The Borrower shall
         immediately advise the Agent in writing of any Environmental Claim or
         of the discovery of any Hazardous Material on any of the Hotel
         Properties, as soon as the Borrower first obtains knowledge thereof,
         including a full description of the nature and extent of the
         Environmental Claim and/or Hazardous Material and all relevant
         circumstances.

                  VII.19.3 Site Assessments and Information. If the Agent or any
         Lender shall ever have reason to believe that any Hazardous Material
         affects any of the Hotel Properties, or if any Environmental Claim is
         made or threatened, or if a default shall have occurred under the Loan
         Documents, or upon the occurrence of the Transition Date (defined
         below) if requested by the Agent, the Borrower will at its expense
         provide to the Agent from time to time, in each case within thirty (30)
         days after the Agent's request, an Environmental Assessment (defined
         below) made after the date of the Agent's request. As used in this
         Agreement, the term "Environmental Assessment" means a report
         (including all drafts thereof) of an environmental investigation and
         analysis of the subject Collateral Pool Property of such scope
         (including but not limited to the taking of soil borings and air and
         groundwater samples and other above and below ground testing) as the
         Agent may request, by a consulting firm acceptable to Agent and made in
         accordance with Agent's established guidelines. The Borrower will
         cooperate with each consulting firm making any such Environmental
         Assessment and will supply to the consulting firm, from time to time
         and promptly on request, all information available to the Borrower to
         facilitate the completion of the Environmental Assessment. If the
         Borrower fails to furnish the Agent within ten (10) days after the
         Agent's request with a copy of an agreement with an acceptable
         environmental consulting firm to provide such Environmental Assessment
         to be made at the Borrower's expense and risk, the Agent and its
         designees are hereby granted access to the Hotel Properties at any time
         or times, upon reasonable notice (which may be written or oral), and a
         license which is coupled with an interest and irrevocable, to make or
         cause to be made such Environmental Assessments. The Agent may disclose
         to interested parties any information the Agent ever has about the
         environmental condition or compliance of the Hotel Property, but shall
         be under no duty to disclose any such information except as may be
         required by law. The Agent shall be under no duty to make any
         Environmental Assessment of any of the Hotel Properties, and in no
         event shall any such Environmental Assessment by Agent be or give rise
         to a representation that any Hazardous Materials is or is not present
         on the subject Hotel Property, or that there has been or shall be
         compliance with any Environmental Requirement, nor shall the Borrower
         or any other person be entitled to rely on any Environmental Assessment
         made by the Agent or at the Agent's request. The Agent and the Lenders
         owe no duty of care to protect the Borrower or any other person
         against, or to inform them of, any Hazardous Material or other adverse
         condition affecting any of the Collateral Pool Properties.

                  VII.19.4 Remedial Actions.

                           (a) If any Hazardous Material is discovered on any of
                  the Collateral Pool Properties at any time and regardless of
                  the cause, (i) the Borrower shall promptly at the

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                  Borrower's sole risk and expense remove, treat, and dispose of
                  the Hazardous Material in compliance with all applicable
                  Environmental Requirements and solely under the Borrower's
                  name (or if removal is prohibited by any Environmental
                  Requirement, take whatever action is required by any
                  Environmental Requirement), in addition to taking such other
                  action as is necessary to have the full use and benefit of the
                  subject Collateral Pool Property as contemplated by the Loan
                  Documents, and provide the Agent with satisfactory evidence
                  thereof; and (ii) if requested by the Agent, provide to the
                  Agent within thirty (30) days of the Agent's request a bond,
                  letter of credit or other financial assurance evidencing to
                  the Agent's satisfaction that all necessary funds are readily
                  available to pay the costs and expenses of the actions
                  required by clause (i) preceding and to discharge any
                  assessments or liens established against the subject
                  Collateral Pool Property as a result of the presence of the
                  Hazardous Material on the Collateral Pool Property. Within
                  fifteen (15) days after completion of such remedial actions,
                  Borrower shall obtain and deliver to the Agent an
                  Environmental Assessment of the Hotel Property made after such
                  completion and confirming to the Agent's satisfaction that all
                  required remedial action as stated above has been taken and
                  successfully completed and that there is no evidence or
                  suspicion of any contamination or risk of contamination on the
                  subject Hotel Property or any adjacent property, or of
                  violation of any Environmental Requirement, with respect to
                  any such Hazardous Material.

                           (b) The Agent may, but shall never be obligated to,
                  remove or cause the removal of any Hazardous Material from any
                  of the Collateral Pool Properties (or if removal is prohibited
                  by any Environmental Requirement, take or cause the taking of
                  such other action as is required by any Environmental
                  Requirement) if the Borrower fails to promptly commence such
                  remedial actions following discovery and thereafter diligently
                  prosecute the same to the satisfaction of the Agent (without
                  limitation of the Agent's rights to declare a default under
                  any of the Loan Documents and to exercise all rights and
                  remedies available by reason thereof); and the Agent and its
                  designees are hereby granted access to the Collateral Pool
                  Properties at any time or times, upon reasonable notice (which
                  may be written or oral), and a license which is coupled with
                  an interest and irrevocable, to remove or cause such removal
                  or to take or cause the taking of any such other action.

                  VII.19.5 Indemnity.

                           (a) The Borrower, the Guarantor and their
                  Subsidiaries hereby agree to protect, indemnify and hold (i)
                  the Agent, the Arranger and the Lenders; (ii) any persons or
                  entities owned or controlled by, owning or controlling, or
                  under common control or affiliated with the Agent or the
                  Lenders; (iii) any participants in the Facility; (iv) the
                  directors, officers, partners, employees and agents of the
                  Lenders and/or such persons or entities; and (v) the heirs,
                  personal representatives, successors and assigns of each of
                  the foregoing persons or entities (each an "Indemnified
                  Party") harmless from and against, and, if and to the extent
                  paid, reimburse them on demand for, any and all Environmental
                  Damages (as hereinafter defined). Without limitation, the
                  foregoing indemnity shall apply to each Indemnified Party with
                  respect to Environmental Damages which in whole or in part are
                  caused by or arise out of the negligence of such (and/or any
                  other) Indemnified Party. However, such indemnity shall not
                  apply to a particular

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<PAGE>   81

                  Indemnified Party to the extent that the subject of the
                  indemnification is caused by or arises out of the gross
                  negligence or willful misconduct of that particular
                  Indemnified Party. Upon demand by the Agent, the Borrower
                  shall diligently defend any Environmental Claim which affects
                  any of the Collateral Pool Properties or is made or commenced
                  against any of the Agent or the Lenders, whether alone or
                  together with the Borrower or any other person, all at the
                  Borrower's own cost and expense and by counsel to be approved
                  by the Agent in the exercise of its reasonable judgment. In
                  the alternative, at any time the Agent or any Lender may elect
                  to conduct its own defense through counsel selected by the
                  Agent or such Lender and at the cost and expense of the
                  Borrower.

                           (b) As used in this Agreement, the term
                  "Environmental Damages" means all claims, demands, liabilities
                  (including strict liability), losses, damages (including
                  consequential damages), causes of action, judgments,
                  penalties, fines, costs and expenses (including fees, costs
                  and expenses of attorneys, consultants, contractors, experts
                  and laboratories), of any and every kind or character,
                  contingent or otherwise, matured or unmatured, known or
                  unknown, foreseeable or unforeseeable, made, incurred,
                  suffered, brought, or imposed at any time and from time to
                  time, whether before or after the Transition Date (as
                  hereinafter defined) and arising in whole or in part from:

                                    (i) The presence of any Hazardous Material
                           on any of the Collateral Pool Properties, or any
                           escape, seepage, leakage, spillage, emission,
                           release, discharge or disposal of any Hazardous
                           Material on or from any of the Collateral Pool
                           Properties, or the migration or release or threatened
                           migration or release of any Hazardous Material to,
                           from or through any of the Collateral Pool
                           Properties, on or before the Transition Date; or

                                    (ii) any act, omission, event or
                           circumstance existing or occurring in connection with
                           the handling, treatment, containment, removal,
                           storage, decontamination, clean-up, transport or
                           disposal of any Hazardous Material which is at any
                           time on or before the Transition Date present on any
                           of the Hotel Properties; or

                                    (iii) the breach of any representation,
                           warranty, covenant or agreement contained in this
                           Agreement because of any event or condition occurring
                           or existing on or before the Transition Date; or

                                    (iv) any violation on or before the
                           Transition Date, of any Environmental Requirement in
                           effect on or before the Transition Date, regardless
                           of whether any act, omission, event or circumstance
                           giving rise to the violation constituted a violation
                           at the time of the occurrence or inception of such
                           act, omission, event or circumstance; or

                                    (v) any Environmental Claim, or the filing
                           or imposition of any environmental lien against any
                           of the Collateral Pool Properties, because of,
                           resulting from, in connection with, or arising out of
                           any of the matters referred

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                           to in subparagraphs (i) through (iv) preceding; and
                           regardless of whether any of the foregoing was caused
                           by the Borrower or the Lessee, or a prior owner of
                           any of the Collateral Pool Properties or its tenant
                           or subtenant, or any third party, including but not
                           limited to (a) injury or damage to any person,
                           property or natural resource occurring on or off of
                           any of the Collateral Pool Properties, including but
                           not limited to the cost of demolition and rebuilding
                           of any improvements on real property; (b) the
                           investigation or remediation of any such Hazardous
                           Material or violation of Environmental Requirement,
                           including but not limited to the preparation of any
                           feasibility studies or reports and the performance of
                           any cleanup, remediation, removal, response,
                           abatement, containment, closure, restoration,
                           monitoring or similar work required by any
                           Environmental Requirement or necessary to have full
                           use and benefit of the subject Collateral Pool
                           Property as contemplated by the Loan Documents
                           (including any of the same in connection with any
                           foreclosure action or transfer in lieu thereof); (c)
                           all liability to pay or indemnify any person or
                           governmental authority for costs expended in
                           connection with any of the foregoing; (d) the
                           investigation and defense of any claim, whether or
                           not such claim is ultimately defeated; and (e) the
                           settlement of any claim or judgment.

                           (c) As used in this Agreement, the term "Transition
                  Date" means the earlier of the following two dates: (i) the
                  date on which the Obligations have been paid and performed in
                  full and the Mortgages have been released; or (ii) the date on
                  which the liens of the Mortgages are fully and finally
                  foreclosed or a conveyance by deed in lieu of such foreclosure
                  is fully and finally effective and possession of the
                  Collateral Pool Properties has been given to and accepted by
                  the purchaser or grantee free of occupancy and claims to
                  occupancy by the Borrower and the Borrower's heirs, devisees,
                  representatives, successors and assigns; provided that, if
                  such payment, performance, release, foreclosure or conveyance
                  is challenged, in bankruptcy proceedings or otherwise, the
                  Transition Date shall be deemed not to have occurred until
                  such challenge is validly released, dismissed with prejudice
                  or otherwise barred by law from further assertion.

                           (d) The indemnification agreements contained in this
                  Section 7.19 are not secured by the Collateral.

         VII.20 Negative Pledge Agreements. The Borrower, the Guarantor and
their Subsidiaries agree that throughout the Facility, they shall not transfer,
assign, mortgage, hypothecate, grant or agree to a negative pledge or otherwise
encumber any of the Hotel Properties, whether or not such Hotel Properties are
to be included in the Collateral Pool, or any other asset or property of the
Borrower, the Guarantor or their Subsidiaries except to the extent permitted in
Section 7.18(f), in any event subject to the provisions of Section 7.13, if
applicable. The Borrower further agrees to execute Negative Pledge Agreements
for all Hotel Properties in the Negative Collateral Pool, such agreements to be
in recordable form such that they can be recorded by the Agent in the proper
land records office for the state and county where each such Collateral Pool
Property is located. The effectiveness of the Negative Pledge Agreements shall
not in any way be conditioned upon the recordation of such recordable
instruments.

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         VII.21 Manager. The Collateral Pool Properties shall at all times be
managed by RFS, Inc. or another Person approved in writing by the Required
Lenders, it being understood that any other manager identified on Schedule 9 is
acceptable to the Lenders.

         VII.22 Acceleration Notice. Borrower agrees that it shall, within ten
(10) days after receipt of written notice that any Indebtedness aggregating
$5,000,000 or more of the Borrower, the Guarantor, any Qualified Borrower or any
Subsidiary or Investment Affiliate has been accelerated, provide written notice
to the Agent of such acceleration.

         VII.23 Additional Covenants. The Borrower and the Guarantor will not
engage in or willingly permit any illegal activities at any Collateral Pool
Property.

         VII.24 Calculation of Financial Covenants Upon Property Breaches. In
the event of a breach of a representation or warranty under Article VI or of a
covenant under Sections 7.5, 7.6, 7.7, 7.8, 7.14, 7.19, 7.20, 7.21 or 7.23, or
in the event of the occurrence of any other event which has a Material Adverse
Effect on the operation of any Collateral Pool Property (collectively a
"Property Breach"), or if there are environmental disclosures concerning a
Collateral Pool Property contained in Schedule 4, such Hotel Property shall be
excluded from the Borrowing Base, and the Borrower shall be required to
demonstrate financial covenant compliance under applicable provisions of Article
VII both with and without the affected Collateral Pool Property for as long as
such breach or condition shall exist. At the Borrower's option, upon written
notice and request to the Agent, the Borrower may substitute another Hotel
Property for the Hotel Property excluded, provided such new Hotel Property is
acceptable to the Lenders and all conditions precedent to the inclusion of such
Hotel Property in the Collateral Pool, as well as the release of a Hotel
Property therefrom, have been complied with. Furthermore, upon such substitution
the Borrower may obtain the release of such Hotel Property excluded from the
Borrowing Base from the lien of any Mortgage or from the restrictions of any
Negative Pledge Agreement only if no Default or Unmatured Default then exists
hereunder and all provisions of Section 7.13 hereof have been complied with.

         VII.25 Leases. The Borrower will duly perform all obligations as
landlord under the Leases and shall not amend any of the Leases in any material
manner without the Agent's prior written consent, which consent will not be
unreasonably withheld.

         VII.26 Franchises. The Borrower shall comply, and shall take all
reasonable and necessary steps to ensure that the Lessee complies, with all
requirements of all franchise agreements affecting the use and operation of the
Collateral Pool Properties, and shall promptly notify the Agent within ten (10)
days of the Borrower learning of any default or alleged default under any such
franchise agreement(s), or of any change therein which could have a Material
Adverse Effect.

                                  ARTICLE VIII

                                    DEFAULTS

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

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         VIII.1 Nonpayment of any principal payment on any Note within five (5)
Business Days of the Borrower's receipt of written notice from the Agent,
provided, however, once such written notice has been given, whether or not such
payment is made, no further written notice will be required in that same
calendar year for any subsequent nonpayment of principal on any Note in order
for such nonpayment to constitute a Default.

         VIII.2 Nonpayment of (a) interest upon any Note, any Commitment Fee,
Facility Letter of Credit Fee, Unused Credit Fee, or other fee under any of the
Loan Documents within five (5) Business Days after the same becomes due or (b)
any other payment Obligation under any of the Loan Documents within five (5)
Business Days of the Borrower's receipt of written notice from the Agent
provided, however, once such written notice has been given, whether or not such
payment is made, no further written notice will be required in that same
calendar year for any subsequent nonpayment of another payment Obligation in
order for such nonpayment under this Section 8.2 (b) to constitute a Default.

         VIII.3 The breach of any of the terms or provisions of Sections 7.1(c),
(d) and (e), 7.2(b), 7.6, 7.10, 7.11, 7.12, 7.13, 7.14, 7.16, 7.17, 7.18, 7.19,
7.20, or 7.21, or a breach of any of the terms or provisions of Section 7.1
(other than as set forth above) which remains uncured for ten (10) Business Days
after the Borrower's receipt of written notice from the Agent, provided,
however, in the event such breach of Section 7.18 results from an adjustment by
the Required Lenders in the Applicable Cap Rate, such breach shall not
constitute a Default hereunder if within six (6) months from the date of such
adjustment in the Applicable Cap Rate, the Borrower either reduces the Allocated
Facility Amount to a sum equal to or less than the Borrowing Base (in which case
the Aggregate Commitment Amount of the Facility shall be presumably reduced
unless the Lenders otherwise agree), or provides additional Collateral
satisfactory to the Lenders necessary to restore compliance.

         VIII.4 Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement (other than Section 6.24 and a
Property Breach unless such breach causes a Default under another provision of
this Article VIII), any Loan, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made.

         VIII.5 The breach of any of the other terms or provisions of this
Agreement which is not remedied within thirty (30) days, or ninety (90) days for
a breach which is curable but cannot be cured within thirty (30) days but is
being diligently cured, after the receipt of written notice from the Agent.

         VIII.6 Any default by the Borrower, the Guarantor, any Qualified
Borrower or any Investment Affiliate (to the extent the Indebtedness is recourse
to such Person), or any of their Subsidiaries (after applicable cure periods)
under any other loan documents relating to any of such Persons in connection
with any Indebtedness other than the Obligations aggregating in excess of
$50,000,000.

         VIII.7 The Borrower, the Guarantor, any Qualified Borrower or any
Investment Affiliate that is not a Subsidiary (a) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (b) make an assignment for the benefit of creditors, (c) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any Substantial
Portion of its Property, (d) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect or
seeking to adjudicate it as a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization,

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<PAGE>   85

arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (e) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 8.7, (f) fail to
contest in good faith any appointment or proceeding described in Section 8.8, or
(g) not pay, or admit in writing its inability to pay, its debts generally as
they become due.

         VIII.8 A receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower, the Guarantor, any Qualified Borrower or
any Investment Affiliate that is not a Subsidiary, or any Subsidiary or any
portion of its property, or a proceeding described in Section 8.7(d) shall be
instituted against any of them and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of sixty (60)
consecutive days.

         VIII.9 Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Hotel Properties of the Borrower, the
Guarantor, any Qualified Borrower or any Investment Affiliates or any
Subsidiaries which, when taken together with all other of their property so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a substantial (as determined in the Agent's reasonable discretion)
portion of their property.

         VIII.10 The Borrower, the Guarantor, any Qualified Borrower or
Investment Affiliate or any Subsidiaries shall fail within sixty (60) days to
pay, bond or otherwise discharge any judgments or orders for the payment of
money in an amount which, when added to all other judgments or orders
outstanding against any of them would exceed $10,000,000 in the aggregate, which
have not been stayed on appeal or otherwise appropriately contested in good
faith, unless the liability is insured against and the insurer has not
challenged coverage of such liability.

         VIII.11 The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan, the PBGC or other
party that it has incurred withdrawal liability or is in default of payments to
such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Borrower or any other
member of the Controlled Group as withdrawal liability (determined as of the
date of such notification) or amounts in default, exceeds $250,000 or requires
payments exceeding $100,000 per annum.

         VIII.12 The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan or the PBGC or other
party that such Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if as a result of such reorganization
or termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $250,000 per year.

         VIII.13 (a) A Reportable Event shall occur with respect to a Plan, or
(b) any Plan shall incur an accumulated funding deficiency (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived, or fail
to make a required installment payment on or before the due date under

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<PAGE>   86

Section 412 of the Code or Section 302 of ERISA, or (c) the Borrower or a member
of the Controlled Group shall have engaged in a nonexempt prohibited transaction
under Section 4975 of the Code or Section 406 of ERISA, or (d) the Borrower or
any member of the Controlled Group shall fail to pay when due an amount which it
shall have become liable to pay to the PBGC, or any Plan, any Multiemployer
Plan, or (e) Borrower or any member of the Controlled Group shall have received
a notice from the PBGC of its intention to terminate a Plan or to appoint a
trustee to administer a Plan, or Multiemployer Plan, or a condition exists by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
a Plan must be terminated, or (f) any other event or condition shall occur or
exist with respect to any employee benefit plan (as defined in Section 3(3) of
ERISA) or Plan or any Multiemployer Plan, which could reasonably be expected to
subject the Borrower or any member of the Controlled Group to any tax, penalty
or other liability or the imposition of any lien or security interest on the
Borrower or any member of the Controlled Group, provided, however, that any
event or circumstance in Section 8.13(a) through (f) shall only be an Event of
Default if it would result in liability to Borrower in excess of $250,000 per
year; or (g) the assets of the Borrower or the Guarantor become or are deemed to
be assets of an employee benefit plan (as defined in Section 3(3) of ERISA or a
plan as defined in Section 4975 of the Code). No Default under this Section 8.13
shall be deemed to have been or be waived or corrected because of any disclosure
by the Borrower.

         VIII.14 Failure to remediate within the time period required by law or
governmental order, (or within a reasonable time in light of the nature of the
problem if no specific time period is so established), environmental problems in
violation of applicable law (a) related to Collateral Pool Properties of the
Borrower, the Guarantor, any Qualified Borrower or any Investment Affiliates or
any Subsidiaries if the affected Collateral Pool Properties have an aggregate
book value in excess of $10,000,000 or (b) where the estimated cost of
remediation is in the aggregate in excess of $500,000, in each case after all
administrative hearings and appeals have been concluded.

         VIII.15 The occurrence of any default under any Loan Document other
than this Agreement or the breach of any of the terms or provisions of any Loan
Document other than this Agreement, which default or breach continues beyond any
period of grace therein provided.

         VIII.16 Robert Solmson ceases to be active in the day-to-day management
and operation of the Borrower and the Guarantor and a successor to Mr. Solmson
approved by the Required Lenders is not appointed within four (4) months of Mr.
Solmson's departure, demise or physical or mental incapacitation.

                                   ARTICLE IX

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

         IX.1 Acceleration. If any Default described in Sections 8.7 or 8.8
occurs with respect to the Borrower, the Guarantor, any Qualified Borrower or
any Subsidiary or Investment Affiliate, the obligations of the Lenders to make
Loans and of the Issuing Bank to issue Facility Letters of Credit hereunder
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Agent or any
Lender. If any other Default (other than a Property Breach unless such breach
causes a Default under any other provision of Article VIII) occurs

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<PAGE>   87

and is continuing, the Required Lenders may terminate or suspend the obligations
of the Lenders to make Loans hereunder, and to issue Facility Letters of Credit,
or declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, upon written notice to the
Borrower.

         In addition to the foregoing, following the occurrence and during the
continuance of a Default and so long as any Facility Letter of Credit has not
been fully drawn and has not been canceled or expired by its terms, upon demand
by the Agent the Borrower shall establish and deposit in the Letter of Credit
Collateral Account cash in an amount equal to the aggregate undrawn face amount
of all outstanding Facility Letters of Credit and all fees and other amounts due
or which may become due with respect thereto. The Borrower shall have no control
over funds in the Letter of Credit Collateral Account, which funds will be
invested by the Agent from time to time at its discretion in certificates of
deposit of Bank of America having a maturity not exceeding thirty (30) days.
Such funds shall be promptly applied by the Agent to reimburse any Issuing Bank
for drafts drawn from time to time under the Facility Letters of Credit,
provided, however, interest accrued on such funds shall remain in the Letter of
Credit Collateral Account to be used for reimbursement as set forth above. Such
funds, if any, remaining in the Letter of Credit Collateral Account following
the payment of all Obligations in full shall, unless Agent is otherwise directed
by a court of competent jurisdiction, be promptly paid over to the Borrower.

         If, within forty-five (45) days after acceleration of the maturity of
the Obligations or termination of the obligations of the Lenders to make Loans
hereunder or to issue Facility letters of Credit as a result of any Default
(other than any Default as described in Sections 8.7 or 8.8 with respect to the
Borrower) and before any judgment or decree for the payment of the Obligations
shall have been obtained or entered, the Required Lenders (in their sole
discretion) may direct the Agent by notice to the Borrower, to rescind and annul
such acceleration and/or termination.

         IX.2 Amendments, Waivers, Decisions. Subject to the provisions of this
Article IX, the Required Lenders (or the Agent with the consent or direction in
writing of the Required Lenders) and the Borrower may waive or amend any terms
or conditions of this Agreement and enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder,
releasing any Mortgages or Negative Pledge Agreements except as provided in
Section 7.13 hereof, or waiving any Default hereunder; provided, however, that
no such supplemental agreement shall, without the consent of all Lenders:

                           (a) Extend the Facility Termination Date or forgive
                  all or any portion of the principal amount of any Loan or
                  accrued interest thereon or the Commitment Fee, or any other
                  fees, reduce the applicable margin or spread on the underlying
                  interest rate options applicable to the various Types of
                  Advances except as provided in the applicable interest rate
                  grids based upon the Leverage Ratio, or otherwise modify or
                  add to such interest rate options, or extend the time of
                  payment of any of the Obligations.

                           (b) Reduce the percentage specified in the definition
                  of Required Lenders or change any provision that currently
                  requires an approval from the Required Lenders, all Lenders or
                  the specific Lender affected, to approval by a different
                  standard.

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                           (c) Increase the amount of the Aggregate Commitment.

                           (d) Permit the Borrower to assign its rights under
                  this Agreement.

                           (e) Amend Sections 2.2, 2.3, 3.4(a), 3.8(a), 7.4,
                  7.11, 7.18, 13.2, 13.3 or this Section 9.2.

                           (f) Release or limit the liability of Borrower, the
                  Guarantor, or any Qualified Borrower with respect to the
                  Obligations.

                           (g) Add any Hotel Property to the Collateral Pool.

                           (h) Amend or modify the definition of, or provisions
                  for the calculation of, the Borrowing Base.

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, and no amendment increasing
the Commitment of any Lender shall be effective without the written consent of
such Lender.

         IX.3 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 9.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.

                                    ARTICLE X

                               GENERAL PROVISIONS

         X.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans herein contemplated.

         X.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         X.3 Taxes. Any taxes (excluding federal, state and local income or
franchise or other similar taxes on the overall net income of any Lender) or
other similar assessments or charges made by any

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governmental or revenue authority in respect of the Loan Documents shall be paid
by the Borrower, together with interest and penalties, if any.

         X.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

         X.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Guarantor, the Agent, and the Lenders
and supersede all prior commitments, agreements and understandings among the
Borrower, the Guarantor, the Agent, and the Lenders relating to the subject
matter thereof, except for the agreement of the Borrower to pay certain fees to
the Agent and the agreement of the Agent to pay certain fees to the Lenders.

         X.6 Several Obligations; Benefits of This Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.

         X.7 Expenses; Indemnification. The Borrower and the Guarantor shall
reimburse upon demand the Arranger, the Agent, and each Lender for any costs,
and reasonable out-of-pocket expenses (including, without limitation, all
reasonable fees for consultants and reasonable fees and expenses for attorneys
for the Arranger, the Agent and each Lender) in connection with the preparation,
negotiation, execution, delivery, amendment or modification of the Loan
Documents, as well as any syndication or assignment of any of their rights under
the Loan Documents as set forth in Section 13.3 hereof. The Borrower and the
Guarantor also agree to reimburse upon demand the Arranger, the Agent, and the
Lenders for any costs, internal charges and reasonable out-of-pocket expenses
(including, without limitation, appraisal expenses and all reasonable fees and
expenses for attorneys for the Arranger, the Agent and the Lenders) paid or
incurred by the Arranger or the Agent (whether in its capacity as arranger, or,
in the case of Bank of America, in its capacity as the Agent) or any Lender in
connection with the collection and enforcement of the Loan Documents (including,
without limitation, any workout). The Borrower and the Guarantor further agree
to indemnify and hold harmless the Agent, the Arranger and each Lender and their
directors, officers, employees, agents, attorneys and Affiliates against all
losses, claims, damages, penalties, judgments, liabilities and reasonable
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not such entity is a party thereto) which any of
them may pay or incur arising out of or relating to this Agreement, the other
Loan Documents, the Hotel Properties, the transactions contemplated hereby or
the direct or indirect application or proposed application of the proceeds of
any Loan hereunder, other than liability arising from the gross negligence or
willful misconduct of the party being indemnified. The obligations of the
Borrower and the Guarantor under this Section 10.7 shall survive the Facility
Termination Date and continue for the benefit of the Agent, the Arranger, each
Lender, and all of their respective agents, representatives, employees,
officers, directors, and partners at all times after the Borrower's acceptance
of the Commitment (whether or not any expenses were incurred before or after the
execution of the Commitment Letter by the Borrower) as evidenced by its
execution of the Commitment Letter.

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<PAGE>   90

         X.8 Numbers of Documents. All financial statements, notices, closing
documents, press releases, compliance certificates and requests hereunder shall
be furnished to the Agent with sufficient counterparts so that the Agent may
furnish one to each of the Lenders.

         X.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except that any
calculation or determination which is to be made on a consolidated basis shall
be made for the Borrower, the Guarantor and all their Subsidiaries.

         X.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

         X.11 Nonliability of Lenders, Arranger, Agent. The relationship between
the Borrower, on the one hand, and the Lenders, the Arranger and the Agent on
the other, shall be solely that of borrower and lender. Neither the Agent, the
Arranger nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent, the Arranger nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations. Neither the
Arranger nor the Agent shall have any responsibilities to the Borrower or
Lenders under this Agreement except to the extent, if any, expressly set forth
herein.

         X.12 Publicity. Each Lender and the Arranger shall have the right to do
a tombstone publicizing the transaction contemplated hereby upon the consent of
the Borrower which shall not be unreasonably withheld.

         X.13 Brokers. The Borrower and the Agent each hereby represent and
warrant that no brokers or finders were used in connection with procuring the
financing contemplated hereby and the Borrower hereby agrees to indemnify and
save the Agent and each Lender harmless from and against any and all
liabilities, losses, costs and expenses (including attorneys' fees or court
costs) suffered or incurred by the Agent or any Lender as a result of any claim
or assertion by any party claiming by, through or under the Borrower, the
Guarantor, any Qualified Borrower, any Investment Affiliate or any of their
Subsidiaries that it is entitled to compensation in connection with the
financing contemplated hereby.

         X.14 Confidentiality. With respect to the financial statements and
other information delivered pursuant to Section 7.1, and any other information
obtained by any Lender or any assignee of any Lender pursuant to this Section
10.14 or otherwise, each Lender and each assignee of any Lender agree that, to
the extent that such information therein contained has not theretofore otherwise
been disclosed in such a manner as to render such information no longer
confidential, such Lender and such assignee will employ reasonable procedures
reasonably designed to maintain the confidential nature of the information
therein contained; provided that anything herein contained to the contrary
notwithstanding, any Lender or its assignee may disclose or disseminate such
information to: (a) its employees, agents, attorneys accountants, and the
Arranger who would ordinarily have access to such information in the normal
course of the performance of their duties; (b) such third parties as such Lender
may deem reasonably necessary in connection with or in response to (i)
compliance with any law, ordinance or governmental order, regulation, rule,
policy, subpoena, investigation, regulatory authority request or

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requests, or (ii) any order, decree, judgment, subpoena, notice of discovery or
similar ruling or pleading issued, filed, served or purported on its face to be
issued, filed or served by or under authority of any court, tribunal,
arbitration board of any governmental or industry agency, commission, authority,
board or similar entity or in connection with any proceeding, case or matter
pending (or on its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity; and (c) any prospective assignee of or Participant in such
Lender's interest, provided such prospective assignee or Participant agrees in
writing to be bound by these provisions.

         X.15 Appraisals. Upon any Default or Unmatured Default hereunder, the
Agent may order new or updated appraisals on any Collateral Pool Properties
selected by the Agent. Such appraisals shall be at the Borrower's expense and
the Borrower shall fully cooperate with the Agent to facilitate the preparation
of such appraisals.

         X.16 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TENNESSEE, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

         X.17 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR TENNESSEE
STATE COURT SITTING IN MEMPHIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN, SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN MEMPHIS, TENNESSEE.

         X.18 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

         X.19 MANDATORY ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE

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FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE
RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
ENDISPUTE, INC., DOING BUSINESS AS J.A.M.S./ENDISPUTE ("J.A.M.S."), AS AMENDED
FROM TIME TO TIME, AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

                           (a) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
                  IN THE CITY OF DALLAS, TEXAS AND ADMINISTERED BY J.A.M.S. WHO
                  WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
                  PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
                  AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
                  HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE
                  DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY,
                  UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
                  COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL SIXTY
                  (60) DAYS.

                           (b) RESERVATIONS OF RIGHTS. NOTHING IN THIS AGREEMENT
                  SHALL BE DEEMED TO (i) LIMIT THE APPLICABILITY OF ANY
                  OTHERWISE APPLICABLE STATUTES OF LIMITATION OR RESPONSE AND
                  ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (ii) BE A WAIVER
                  BY THE LENDERS OF THE PROTECTION AFFORDED TO THEM BY 12 U.S.C.
                  SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (iii)
                  LIMIT THE RIGHT OF ANY LENDER (A) TO EXERCISE SELF HELP
                  REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
                  FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
                  (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
                  SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF OR THE
                  APPOINTMENT OF A RECEIVER. THE LENDERS MAY EXERCISE SUCH SELF
                  HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
                  PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE
                  PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO
                  THIS AGREEMENT. AT THE LENDER'S OPTION, FORECLOSURE UNDER A
                  MORTGAGE MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING: THE
                  EXERCISE OF A POWER OF SALE UNDER THE MORTGAGE, OR BY JUDICIAL
                  SALE UNDER THE MORTGAGE, OR BY JUDICIAL FORECLOSURE. NEITHER
                  THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
                  MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR
                  ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF
                  ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
                  ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
                  RESORT TO SUCH REMEDIES.

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NO PROVISION IN THE LOAN DOCUMENTS REGARDING SUBMISSION TO JURISDICTION AND/OR
VENUE IN ANY COURT IS INTENDED OR SHALL BE CONSTRUED TO BE IN DEROGATION OF THE
PROVISIONS IN ANY LOAN DOCUMENT FOR ARBITRATION OF ANY CONTROVERSY OR CLAIM.

         X.20 Year 2000 Problem. Borrower hereby represents and warrants to the
Agent and the Lenders that Borrower has (i) initiated a review and assessment of
all areas within its and each of its Affiliates' business and operations
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower or any of its Affiliates (or its suppliers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Affiliates' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have a Material Adverse Effect.
Borrower will promptly notify the Agent in the event that Borrower discovers or
determines that any computer application (including those of its suppliers and
vendors) that is material to its or any of its Affiliates' business and
operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Material
Adverse Effect.

                                   ARTICLE XI

                     THE AGENT AND AGREEMENTS AMONG LENDERS

         XI.1 Appointment. Subject to the provisions of Section 11.11, Bank of
America is hereby appointed as the Agent hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Agent to act as the
agent of such Lender. The Agent agrees to act as such upon the express
conditions contained in this Article XI. The Agent shall not have a fiduciary
relationship in respect of the Borrower or any Lender by reason of this
Agreement. The Agent agrees to administer this Facility in the same manner as it
administers similar facilities for its own account.

         XI.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.

         XI.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct and except for any
liability of the Agent for breach of an express agreement made by the Agent
herein to take or not take actions based on the approval or direction of a
requisite number of Lenders.

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         XI.4 No Responsibility for Loans, Recitals, Etc. Neither the Agent nor
any of its directors, officers, agents, employees, attorneys-in-fact or
Affiliates shall be responsible for or have any duty to ascertain, inquire into,
or verify (a) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (b) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Document,
including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in Article V, except receipt of items required to be delivered to the
Agent; (d) the validity, effectiveness, enforceability, collectibility,
sufficiency or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith (provided that the Agent shall be
obligated to furnish copies of the Loan Documents to the Lenders); or (e) the
value, sufficiency, creation, perfection or priority of any interest in any
collateral security. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily furnished by the Borrower to the Agent in its
individual capacity.

         XI.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders unless such action or inaction requires the consent of all the
Lenders or an individual Lender not included in the direction of the Required
Lenders pursuant to this Agreement, and such instructions and any action taken
or failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.

         XI.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as the Agent hereunder and under any other Loan Document by or through
employees, agents, attorneys and attorneys-in-fact and so long as it exercises
reasonable care in the selection of such parties, the Agent shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, due solely to the default, negligence or misconduct of
any such parties. The Agent shall be entitled to advice of counsel concerning
all matters pertaining to the agency hereby created and its duties hereunder and
under any other Loan Document.

         XI.7 Reliance on Documents, Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

         XI.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent (in its capacity as Agent but not as Lender)
ratably in proportion to their respective Commitments (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents including reasonable out-of pocket
expenses in connection with the preparation, execution and delivery of the Loan
Documents, (ii) for any other reasonable out-of-pocket expenses incurred by the
Agent on behalf of the Lenders, in connection with the administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and

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nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby, or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent or an action relating to a dispute which is solely between the Agent and
one or more Lenders in which the other Lender prevails, or an action taken or
not taken by Agent contrary to the express requirements contained herein
pertaining to the requisite number of lenders required to approve or direct
certain actions. The obligations of the Lenders under this Section 11.8 shall
survive payment of the Obligations and termination of this Agreement.

         XI.9 Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers and the same duties and obligations
hereunder and under any other Loan Document as any Lender and may exercise the
same as though it were not the Agent, and the term "Lender" or "Lenders" shall,
at any time when the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Borrower, the Guarantor or any of their
Subsidiaries in which the Borrower, the Guarantor or such Subsidiary is not
restricted hereby from engaging with any other Person.

         XI.10 Lender Credit Decision; Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agent, BAS, nor any of their
officers, directors, employees, agents, attorneys, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Agent, BAS or any Affiliate thereof hereinafter taken, including any review
of the affairs of the Borrower, the Guarantor, any Qualified Borrower,
Investment Affiliate, or Subsidiary, shall be deemed to constitute any
representation or warranty by the Agent or BAS to any Lender. Each Lender
represents to the Agent and BAS that it has, independently and without reliance
upon the Agent or BAS or any other Lender, or any of their respective officers,
directors, employees, agents, attorneys, attorneys-in-fact, or Affiliates, and
based on such documents and information as it has deemed appropriate made its
own credit analysis, appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and credit
worthiness of the Borrower, the Guarantor, any Qualified Borrower, Investment
Affiliate, or Subsidiary and made its own decision to make its loans hereunder
and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent, BAS or any other lender or
any of their respective officers, directors, employees, agents, attorneys,
attorneys-in-fact or Affiliates, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals, and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower, the Guarantor, any Qualified
Borrower, Investment Affiliate, or Subsidiary. The Agent shall promptly provide
to the Lenders copies of all notices of Default, copies of all financial
statements, certificates and other information pursuant to Section 11.14. Except
for such notices, reports and other documents expressly required to be furnished
to the Lenders by the Agent hereunder, the Agent and BAS shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Borrower, the Guarantor, any
Qualified Borrower, Investment Affiliate or Subsidiary, which may come

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into the possession of the Agent, BAS or any of their officers, directors,
employees, agents, attorneys, attorneys-in-fact or Affiliates.

         XI.11 Resignation of Agent; Removal of Agent; Successor Agent.

                           (a) Resignation of Agent. The Agent may resign at any
                  time by giving prior written notice thereof to the Lenders and
                  the Borrower. Upon any such resignation, the Required Lenders
                  shall have the right to appoint a successor Agent. If no
                  successor Agent shall have been so appointed by the Required
                  Lenders and shall have accepted such appointment within thirty
                  (30) days after the retiring Agent's giving notice of
                  resignation, then the retiring Agent may, on behalf of the
                  Lenders, appoint a successor Agent. Any such successor Agent
                  shall be either a Lender or a commercial bank organized under
                  the laws of the United States of America or any state thereof
                  and have total assets of at least $25,000,000,000 (as shown on
                  its most recently published statement of condition) and whose
                  debt obligations (or whose parent's debt obligations) are
                  rated not less than Baa1 by Moody's or BBB+ by Standard &
                  Poor's, and is generally in the business of making loans
                  comparable to the Loans made under this Facility. If the
                  successor Agent is a subsidiary of a bank, total assets and
                  rating requirement shall apply only to the parent bank. In the
                  event that the retiring Agent, after becoming entitled to
                  appoint a successor Agent as set forth above, does not appoint
                  a successor agent within sixty (60) days after the retiring
                  Agent giving notice of resignation, the Lenders shall perform
                  all the duties of the Agent hereunder and the Borrower shall
                  make all payments in respect of the Obligations to the
                  applicable Lender and for all other purposes shall deal
                  directly with the Lenders. No successor Agent shall be deemed
                  to be appointed hereunder until such successor Agent has
                  accepted the appointment.

                           (b) Removal of Agent. The Lenders may remove the
                  Agent as the Agent hereunder and appoint a successor Agent
                  upon not less than thirty (30) days' prior written notice
                  signed by Lenders whose Commitment Percentages equal 66 2/3%
                  of the Aggregate Commitment exclusive of the Agent's
                  Commitment, if the Agent is grossly negligent or is guilty of
                  willful misconduct in the performance of its duties hereunder,
                  as determined in the reasonable discretion of the Lenders
                  signing the foregoing written notice.

                           (c) Successor Agents. Upon the acceptance of any
                  appointment as Agent under this Agreement by a successor
                  Agent, such successor Agent shall thereupon succeed to and
                  become vested with all the rights, powers, discretion,
                  privileges, and duties of the retiring Agent upon written
                  notice thereof to the Borrower, and the retiring Agent shall
                  be discharged from its duties and obligations under this
                  Agreement excepting with respect to its willful misconduct or
                  gross negligence occurring prior to its discharge. After any
                  retiring Agent's resignation or removal under this Agreement
                  as Agent, the provisions of this Article 11 shall continue in
                  effect for its benefit in respect of any actions taken or
                  omitted to be taken by it while it was acting as the Agent.

         XI.12 Notice of Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder (other than a Default resulting from the nonpayment of any principal,
interest or fees due hereunder) unless the Agent has received notice from

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a Lender or another Person referring to a Loan Document describing such Default
or Unmatured Default and stating that such notice is a "notice of default." In
the event the Agent receives such a notice, the Agent shall give notice thereof
to the Lenders within one (1) Business Day of the Agent's receipt thereof. The
Agent shall take such action with respect to such Default or Unmatured Default
as shall be reasonably directed by the Required Lenders. Each Lender shall give
the Agent written notice of any Default or Unmatured Default within one (1)
Business Day of such Lender's knowledge of a Default or Unmatured Default.

         XI.13 Requests for Approval. If the Agent requests in writing the
consent or approval of a Lender, unless otherwise provided herein or in any
other Loan Document, such Lender shall respond and either approve or disapprove
definitively in writing to the Agent within ten (10) Business Days (or sooner if
such notice specifies a shorter period, but in no event less than five (5)
Business Days for responses based on the Agent's good faith determination that
circumstances exist warranting its request for an earlier response) after such
written request from the Agent, and within fifteen (15) Business Days of the
written request from the Agent and the receipt of all documents and information
required by Sections 5.3 and 5.4, as applicable, when considering new Hotel
Properties for inclusion in the Collateral Pool. If the Lender does not so
respond, that Lender shall be deemed to have approved the request. Upon request,
the Agent shall notify the Lenders which Lenders, if any, failed to respond to a
request for approval.

         XI.14 Copies of Documents. The Agent shall promptly deliver to each of
the Lenders copies of all notices of Default and other formal notices sent or
received and according to Section 14 of this agreement. The Agent shall deliver
to Lenders within fifteen (15) Business Days following receipt, copies of all
financial statements and certificates except to the extent such items are
required to be furnished directly to the Lenders by the Borrower hereunder.
Within fifteen (15) Business Days after a request by a Lender to the Agent for
other documents previously furnished to the Agent by the Borrower, the Agent
shall provide copies of such documents to such Lender except where this
Agreement obligates the Agent to provide copies in a shorter period of time.

         XI.15 Defaulting Lenders. At such time as a Lender becomes a Defaulting
Lender, such Defaulting Lender's right to vote on matters which are subject to
the consent or approval of the Required Lenders, each affected Lender or all
Lenders shall be immediately suspended until such time as the Lender is no
longer a Defaulting Lender. If a Defaulting Lender has failed to fund its
Percentage of any Advance and until such time as such Defaulting Lender
subsequently funds its Percentage of such Advance, all Obligations owing to such
Defaulting Lender hereunder shall be subordinated in right of payment, as
provided in the following sentence, to the prior payment in full of all
principal of, interest on and fees relating to the Loans funded by the other
Lenders in connection with any such Advance in which the Defaulting Lender has
not funded its Percentage (such principal, interest and fees being referred to
as "Senior Loans" for the purposes of this section). All amounts paid by the
Borrower and otherwise due to be applied to the Obligations owing to such
Defaulting Lender pursuant to the terms hereof shall be distributed by the Agent
to the other Lenders in accordance with their respective Percentages
(recalculated for the purposes hereof to exclude the Defaulting Lender) until
all Senior Loans have been paid in full. At that point, the "Defaulting Lender"
shall no longer be deemed a Defaulting Lender. After the Senior Loans have been
paid in full equitable adjustments will be made in connection with future
payments by the Borrower to the extent a portion of the Senior Loans had been
repaid with amounts that otherwise would have been distributed to a Defaulting
Lender but for the operation of this Section 11.15. This provision governs only
the relationship among the Agent, each

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Defaulting Lender and the other Lenders; nothing hereunder shall limit the
obligation of the Borrower to repay all Loans in accordance with the terms of
this Agreement. The provisions of this section shall apply and be effective
regardless of whether a Default occurs and is continuing, and notwithstanding
(i) any other provision of this Agreement to the contrary, (ii) any instruction
of the Borrower as to its desired application of payments or (iii) the
suspension of such Defaulting Lender's right to vote on matters which are
subject to the consent or approval of the Required Lenders or all Lenders.

                                   ARTICLE XII

                                RATABLE PAYMENTS

         If any Lender has payment made to it upon its Loans (other than
payments received pursuant to Sections 4.1, 4.2 or 4.4) in a greater proportion
than that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Loans held by the other Lenders so that
after such purchase each Lender will hold its ratable proportion of Loans. If
any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their Loans. In case
any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.

                                  ARTICLE XIII

                BENEFIT OF AGREEMENT; PARTICIPATIONS; ASSIGNMENTS

         XIII.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Guarantor and the Lenders and their successors and permitted assigns, except
that (i) the Borrower and the Guarantor shall not have the right to assign their
rights or obligations under the Loan Documents and (ii) any assignment by any
Lender must be made in compliance with Section 13.3. Notwithstanding clause (ii)
of this Section 13.1, any Lender may at any time, without the consent of the
Borrower, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank or to an Affiliate; provided, however, that no
such assignment shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 13.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.

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         XIII.2   Participations.

                  XIII.2.1 Permitted Participants; Effect. Any Lender, in the
         ordinary course of its business and in accordance with applicable law,
         at any time, may sell participating interests in any Loan owing to such
         Lender, any Note held by such Lender, any Commitment of such Lender or
         any other interest of such under the Loan Documents. Any Person to whom
         such a participating interest is sold is a "Participant." In the event
         of any such sale by a Lender of participating interests to a
         Participant, such Lender's obligations under the Loan Documents shall
         remain unchanged, such Lender shall remain solely responsible to the
         other parties hereto for the performance of such obligations, such
         Lender shall remain the holder of any such Note for all purposes under
         the Loan Documents, all amounts payable by the Borrower under this
         Agreement shall be determined as if such Lender had not sold such
         participating interests, and the Borrower and the Agent shall continue
         to deal solely and directly with such Lender in connection with such
         Lender's rights and obligations under the Loan Documents.

                  XIII.2.2 Voting Rights. Each Lender shall retain the sole
         right to approve, without the consent of any Participant, any
         amendment, modification or waiver of any provision of the Loan
         Documents other than any amendment, modification or waiver with respect
         to any Loan or Commitment in which such Participant has an interest
         which forgives principal, interest or fees or reduces the interest rate
         or fees payable with respect to any such Loan or Commitment or
         postpones any date fixed for any regularly-scheduled payment of
         principal of, or interest or fees on, any such Loan or Commitment or
         releases any guarantor of any such Loan or releases any substantial
         portion of collateral, if any, securing such Loan.

         XIII.3   Assignments.

                  XIII.3.1 Permitted Assignments. In addition to the assignments
         permitted in Section 13.1 hereof, any Lender may, in the ordinary
         course of its business, with the prior written consent of the Agent,
         which consent shall not be unreasonably withheld, and in accordance
         with applicable law, at any time, assign all or any portion of its
         rights and obligations under the Loan Documents pursuant to an
         assignment agreement substantially in the form of Exhibit D, to one or
         more Eligible Assignees, provided that (a) any such assignment shall be
         in a minimum aggregate amount of $10,000,000 of such Lender's
         Commitment, and in integral multiples of $1,000,000 above such amount
         (or the remaining amount of the Commitment held by such Lender), (b)
         each such assignment shall be of a constant, not varying, percentage of
         all of the assigning Lender's rights and obligations under the
         Commitment being assigned, and (c) any Lender wishing to assign all or
         a portion of its Commitment who has received a bona fide offer to
         purchase all or a portion of its Commitment must first offer to assign
         such Commitment, or portion thereof, for the same sum as set forth in
         said offer, by written notice to all other Lenders, followed by ten
         (10) Business Days during which time any other Lender may by written
         notice to the assigning Lender as well as the Agent exercise its right
         of first refusal to purchase such Commitment, or portion thereof. In
         the event more than one (1) Lender exercises such right, the amount of
         the Commitment to be assigned shall be divided equally among such
         Lenders, with the payment of funds due from each such purchasing Lender
         to be made within five (5) Business Days of the date of such written
         notice from the end of the ten (10) day right of first refusal period.
         Any Lender considering an assignment of all or a portion of its
         Commitment is hereby authorized to disseminate any information it now
         has or hereafter obtains pertaining to the Facility, including, without
         limitation, any of the Loan Documents and any credit or other
         information on the Borrower and the Guarantor, and any

                                       93
<PAGE>   100

         Subsidiaries, Qualified Borrowers or Investment Affiliates, to any such
         assignee, or prospective assignee, affiliates of the Agent or the
         Lenders, including, without limitation, BAS, any regulatory body having
         jurisdiction over the Agent or the Lenders, and to any other Persons as
         necessary or appropriate in the Agent's or the Lenders' reasonable
         judgment. Unless such Lender assigns its entire interest, it must
         maintain a minimum Commitment of $10,000,000 (exclusive of any portion
         of its Commitment in which it has sold a participation interest, other
         than participations where such Lender retains full voting control).
         Notwithstanding the foregoing provisions, any assignment by a Lender to
         another Lender, or an Affiliate thereof, or an Affiliate of the
         assigning Lender shall not be subject to (i) the $10,000,000 minimum
         assignment amount , (ii) the requirement to first offer to assign such
         Commitment, or portion thereof, to all other Lenders, or (iii) the fee
         in Section 13.3.2(b) hereof, and, further, such assignment shall
         release the transferor Lender from its obligations hereunder. If the
         Aggregate Commitment is reduced, the references to $10,000,000
         contained in this Section 13.3.1 shall be reduced proportionately. Any
         Person to whom such rights and obligations are assigned is a
         "Purchaser." Such assignment shall be substantially in the form of
         Exhibit D hereto or in such other form as may be agreed to by the
         parties thereto (the "Assignment"). So long as no Default or Unmatured
         Default exists hereunder, in no event shall Bank of America's
         Commitment amount be reduced below the largest Commitment amount for
         any of the other Lenders.

                  XIII.3.2 Effect; Effective Date. Upon (a) delivery to the
         Agent and the Borrower of a notice of assignment, substantially in the
         form attached as Exhibit I to Exhibit D hereto (a "Notice of
         Assignment"), together with any consents required by Section 13.3.1,
         and (b) payment of a $3,500 fee to the Agent for processing such
         assignment, such assignment shall become effective on the effective
         date specified in such Notice of Assignment. The Notice of Assignment
         shall contain a representation by the Purchaser to the effect that none
         of the consideration used to make the purchase of the Commitment and
         Loans under the applicable assignment agreement are "plan assets" as
         defined under ERISA and that the rights and interests of the Purchaser
         in and under the Loan Documents will not be "plan assets" under ERISA.
         On and after the effective date of such assignment, such Purchaser
         shall for all purposes be a Lender party to this Agreement and any
         other Loan Document executed by the Lenders and shall have all the
         rights and obligations of a Lender under the Loan Documents, to the
         same extent as if it were an original party hereto, and no further
         consent or action by the Borrower, the Lenders or the Agent shall be
         required to release Bank of America with respect to the percentage of
         the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
         consummation of any assignment to a Purchaser pursuant to this Section
         13.3.2, the transferor Lender, Agent and the Borrower shall make
         appropriate arrangements so that replacement Notes are issued to such
         transferor Lender, if applicable, and new Notes or, as appropriate,
         replacement Notes, are issued to such Purchaser, in each case in
         principal amounts reflecting their Commitment, as adjusted pursuant to
         such assignment.

         XIII.4 Dissemination of Information. The Borrower and the Guarantor
authorize each Lender to disclose to the Arranger and to any Participant or
Purchaser, or any other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective Transferee any and
all information in such Lender's possession concerning the creditworthiness of
the Borrower, the Guarantor and their Subsidiaries, provided that such
Transferees agree to maintain the confidentiality of any information that is
confidential in the manner set forth in Section 10.14.

                                       94
<PAGE>   101

         XIII.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.20.

         XIII.6 Possession of Loan Documents and Register. The Agent shall keep
and maintain complete and accurate files and records of all matters pertaining
to the Loan. Upon reasonable prior notice to the Agent by any Lender, other than
any privileged attorney/client information or documentation or other internal
information or documentation deemed by the Agent to be privileged or proprietary
in nature, the Agent will make available to such Lender and their
representatives and agents, the files and records relating to the Facility for
inspection and copying at their expense during normal business hours. The Agent
shall also maintain at its address specified pursuant to Article XIV, a copy of
each Assignment delivered to and accepted by it and a listing of the names and
addresses of the Lenders, the amount of each Lender's Commitment and Percentage
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Agent, and the
Lenders may treat each person or entity whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection and copying by the Borrower or any Lender during normal
business hours upon reasonable prior notice to the Agent.

                                   ARTICLE XIV

                                     NOTICES

         XIV.1 Giving Notice. Except as otherwise permitted by Section 2.15 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answer back confirmed in the case of telexes).

         XIV.2 Change of Address. The Borrower, the Guarantor, the Arranger, the
Agent and any Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.

         XIV.3 Accounts. The Agent shall deliver to each Lender and the
Borrower, and each Lender shall deliver to the Agent wiring instructions
containing account information for purposes of the payment of sums due under
this Agreement.

                                       95
<PAGE>   102

                                   ARTICLE XV

                                  COUNTERPARTS

         This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Guarantor, the Arranger, the Agent and the Lenders and each party has notified
the Agent by telex or telephone, that it has taken such action.

                                       96
<PAGE>   103

IN WITNESS WHEREOF, the Borrower, the Guarantor, the Arranger, the Agent and the
Lenders have executed this Agreement as of the date first above written.

                                     The "Borrower"

                                     RFS PARTNERSHIP, L.P.

                                     By:  RFS Hotel Investors, Inc.
                                                   Its General Partner
                                     By:
                                        ----------------------------------------
                                     Name:
                                           -------------------------------------
                                     Title:
                                           -------------------------------------

                                     Notice Address:

                                     850 Ridge Lake Blvd., Suite 220
                                     Memphis, Tennessee 38119
                                     Attention:  Mike Pascal
                                     Telephone:  901/767-7005
                                     Facsimile:  901/818-5260

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       97
<PAGE>   104

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     The "Guarantor"

                                     RFS HOTEL INVESTORS, INC.,

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

                                     Notice Address:

                                     850 Ridge Lake Blvd., Suite 220
                                     Memphis, Tennessee 38119
                                     Attention:  Mike Pascal
                                     Telephone:  901/767-7005
                                     Facsimile:  901/818-5260

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       98
<PAGE>   105

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

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

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

                                     Notice Address:

                                     Bank of America, N.A.
                                     901 Main Street, 51st Floor
                                     Dallas, Texas 75202
                                     Attention:  D. Bryce Langen
                                     Telephone:  214-209-1074
                                     Facsimile:  214-209-0085

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       99
<PAGE>   106

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     SOUTHTRUST BANK, N.A.

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

                                     Notice Address:

                                     600 W. Peachtree St., 22nd Floor
                                     Atlanta, GA 30308
                                     Attention:  Robert M. Searson
                                     Telephone:  404-853-5754
                                     Facsimile:  404-853-5766

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                      100
<PAGE>   107

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     FIRST TENNESSEE BANK NATIONAL ASSOCIATION

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

                                     Notice Address:

                                     First Tennessee Bank National Association
                                     165 Madison Avenue, 10th Floor
                                     Memphis, Tennessee   38103
                                     Attention:  Robert P. Nieman
                                     Telephone:  901-523-4259
                                     Facsimile:  901-523-4235

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                      101
<PAGE>   108

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     PNC BANK, NATIONAL ASSOCIATION

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

                                      Notice Address:

                                      249 5th Avenue
                                      P1-POPP-19-2
                                      Pittsburgh, PA  15222
                                      Attention:  Wayne Robertson
                                      Telephone:  412-762-8452
                                      Facsimile:  412-762-6500

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                      102
<PAGE>   109

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     WELLS FARGO BANK

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

                                     Notice Address:

                                     2859 Paces Ferry Rd.
                                     Suite 1805
                                     Atlanta, GA 30339
                                     Attention:  Mark D. Imig
                                     Telephone:  770-435-3800
                                     Facsimile:  770-435-2262

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                      103
<PAGE>   110

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                     AMSOUTH BANK

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

                                     Notice Address

                                     1900 5th Ave. North
                                     Birmingham, AL 35203
                                     Attention: Lawrence Clark
                                     Telephone: 205-581-7493
                                     Facsimile: 205-326-4075

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                      104
<PAGE>   111

                                    EXHIBIT A

                                      NOTE

                                  FORM OF NOTE

$________________                                              January___, 2000

         RFS Partnership, L.P., a Tennessee limited partnership (the
"Borrower"), promises to pay to the order of _______________ (the "Lender") the
principal sum ______________________ Dollars ($_____________), in immediately
available funds at the main office of Bank of America, N.A. in Dallas, Texas,
together with interest on the unpaid principal amount hereof at the rates and on
the dates set forth in the Agreement (as hereinafter defined). The Borrower
shall pay the remaining unpaid principal of and accrued and unpaid interest on
this Loan in full on the Facility Termination Date.

         The Lender shall, and is hereby authorized to, record in accordance
with its usual practice, the date and amount of each Loan and the date and
amount of each principal payment hereunder.

         This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Fourth Amended and Restated Revolving Credit Agreement
among the Borrower, Bank of America, N.A., individually as a Lender and as
Agent, Banc of America Securities LLC, and the other Lenders named therein,
dated as of the date hereof (the "Agreement"), to which Agreement reference is
hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Agreement.

         If there is an Unmatured Default or Default under the Agreement or any
other Loan Document and Agent exercises the remedies provided under the
Agreement and/or any of the Loan Documents for the Lenders, then in addition to
all amounts recoverable by the Agent and the Lenders under such documents, the
Agent and the Lenders shall be entitled to receive on demand reasonable
attorneys fees and expenses incurred by Agent and the Lenders in connection with
the exercise of such remedies.

         The Borrower and all endorsers severally waive presentment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of this Note,
and any and all lack of diligence or delays in collection or enforcement of this
Note, and expressly agree that this Note, or any payment hereunder, may be
extended from time to time, and expressly consent to the release of any party
liable for the obligation secured by this Note, the release of any of the
security for this Note, the acceptance of any other security therefor, or any
other indulgence or forbearance whatsoever, all without notice to any party and
without affecting the liability of the Borrower and any endorsers hereof.

         This Note shall be governed and construed under the internal laws of
the State of Tennessee.

                                       1
<PAGE>   112

         IN WITNESS WHEREOF, the Borrower has executed this Note under seal as
of the date first written above.

                                     RFS PARTNERSHIP, L.P.

                                     By:  RFS Hotel Investors, Inc.
                                                   Its General Partner

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

         [CORPORATE SEAL]

                                     Notice Address:

                                     850 Ridge Lake Blvd., Suite 220
                                     Memphis, Tennessee 38119
                                     Attention:  Mike Pascal
                                     Telephone:  901-767-7005
                                     Facsimile:  901-818-5260

                                       2
<PAGE>   113

                                    EXHIBIT B

                                 FORM OF OPINION

                                                       ______________, 19_____
The Agent and
the Lenders who are parties to
Credit Agreement described below

Gentlemen/Ladies:

         We are counsel for RFS Partnership, L.P. (the "Borrower"), and have
represented the Borrower in connection with its execution and delivery of that
certain Fourth Amended and Restated Revolving Credit Agreement among the
Borrower, Bank of America, N.A., individually and as Agent, Banc of America
Securities LLC and the Lenders named therein, providing for Advances in an
aggregate principal amount not exceeding $130,000,000 at any one time
outstanding and dated as of _______________ (the "Agreement"). All capitalized
terms used in this opinion and not otherwise defined shall have the meanings
attributed to them in the Agreement.

         We have examined the Borrower's Partnership Agreement and Covenants as
well as the Guarantor's articles of incorporation, by-laws, and resolutions, the
Loan Documents and such other matters of fact and law which we deem necessary in
order to render this opinion. Based upon the foregoing, it is our opinion that:

         1. The Borrower and the Guarantor and each of their Subsidiaries and
each Qualified Borrower are either duly incorporated corporations or duly
qualified and formed limited partnerships, validly existing and in good standing
under the laws of their states of incorporation or formation, and they each have
all requisite authority and power to enter into, and perform the obligations
under, the Loan Documents and to conduct business in each jurisdiction in which
they conduct business.

         2. The execution and delivery of the Loan Documents by the Borrower and
the Guarantor and the performance by them of their respective obligations under
the Loan Documents have been duly authorized by all necessary corporate action
and/or proceedings on their part and will not:

                  (a) require any consent of the Borrower's limited partners or
         the Guarantor's shareholders;

                  (b) violate any law, rule, regulation, order, writ, judgment,
         injunction, decree or award binding on the Borrower or the Guarantor or
         any of their Subsidiaries or the Borrower's, the Guarantor's or any
         Subsidiary's articles of incorporation, by-laws, certificate of limited
         partnership, partnership agreement, or any indenture, instrument or
         agreement binding upon the Borrower or the Guarantor or any of their
         Subsidiaries,

                                       1
<PAGE>   114

                  (c) result in, or require, the creation or imposition of any
         Lien pursuant to the provisions of any indenture, instrument or
         agreement binding upon the Borrower or the Guarantor or any of their
         Subsidiaries

         3. The Loan Documents have been duly executed and delivered by the
Borrower and the Guarantor and constitute their legal, valid and binding
obligations enforceable in accordance with their respective terms except to the
extent the enforcement thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
subject also to the availability of equitable remedies if equitable remedies are
sought.

         4. There is no litigation or proceeding against the Borrower or the
Guarantor or any of their Subsidiaries which, if adversely determined, could
have a Material Adverse Effect.

         5. No approval, authorization, consent, adjudication or order of, or
registration or filing with, any governmental authority, which has not been
obtained or made by the Borrower or the Guarantor or any of their Subsidiaries,
is required to be obtained or made by the Borrower or the Guarantor or any of
their Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the payment
by the Borrower of the Guarantor of their obligations under the Loan Documents.

         6. The Loan does not violate the usury laws or laws regulating the use
or forbearance of money of Tennessee and the operation of any term of the
Agreement or Loan Documents, including, without limitation, the terms regarding
late charges and default interest rate or the lawful exercise of any right
thereunder, shall not render the Agreement or Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission. set-off, counterclaim
or defense.

         7. The Guarantor qualifies as a real estate investment trust in
accordance with all applicable requirements of the Internal Revenue Code.

         This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.

                                       Very truly yours,

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

                                       2
<PAGE>   115

                                    EXHIBIT C

                             COMPLIANCE CERTIFICATE

                                       1
<PAGE>   116

                                    EXHIBIT D

                              ASSIGNMENT AGREEMENT

This Assignment Agreement (this "Assignment Agreement") between
______________________ (the "Assignor") and _______________________ (the
"Assignee") is dated as of ______________, 19___. The parties hereto agree as
follows:

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

         2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, without recourse and without representation or warranty, express
or implied, except as expressly set forth herein, and the Assignee hereby
purchases and assumes from the Assignor, an interest in and to the Assignor's
rights and obligations under the Credit Agreement and the other Loan Documents,
such that after giving effect to such assignment the Assignee shall have
purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement and the other Loan Documents. The aggregate
Commitment (or Loans, if the applicable Commitment has been terminated)
purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.

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

         4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby. The Assignee shall
advance funds directly to the Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. In consideration for the sale and assignment of Loans
hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date, an
amount equal to the principal amount of the portion of all Prime Loans assigned
to the Assignee hereunder and (ii) with respect to each LIBOR Loan

                                       1
<PAGE>   117

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

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

                                       2
<PAGE>   118

collateral securing or purporting to secure the Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with the
Loans or the Loan Documents.

         6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement and the other Loan Documents,
together with copies of the financial statements requested by the Assignee and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment Agreement, (ii)
agrees that it will, independently and without reliance upon the Agent, the
Documentation Agent, the Assignor or any other Lender and based on such
documents and information at it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, (iii) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, (vii)
attaches either U.S. Internal Revenue Service Form 4224 or Form 1001 certifying
that the Assignee claims entitlement to complete exemption from U.S. Federal
withholding tax on all interest payments under the Loans and (viii) if Assignee
is organized under the laws of any jurisdiction other than the United States or
any state thereof, agrees to provide Assignor and the Agent a new Form 4224 or
Form 1001 upon the expiration or obsolescence of any previously delivered form
and comparable statements in accordance with applicable U.S. laws and
regulations, and amendments duly executed and completed by Assignee, and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.

         7. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's nonperformance
of the obligations assumed under this Assignment Agreement.

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

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

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

                                       3
<PAGE>   119

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

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

                                    [NAME OF ASSIGNOR]

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

                                     [NAME OF ASSIGNEE]

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

                                       4
<PAGE>   120

                                   SCHEDULE I

                             to Assignment Agreement

1.       Description and Date of Credit Agreement:

2.       Date of Assignment Agreement: _____________, 19___

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

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

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

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

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

6.       Proposed Effective Date:                                   __________

Accepted and Agreed:

[NAMES OF ASSIGNOR]                     [NAMES OF ASSIGNEE]

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

*  If a Commitment has been terminated, insert outstanding Loans in place of
   Commitment
** Percentage taken to 8 decimal places

                                       5
<PAGE>   121

                Attachment to SCHEDULE I to ASSIGNMENT AGREEMENT

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

                                       6
<PAGE>   122

                                   EXHIBIT "I"

                             to Assignment Agreement

                              NOTICE OF ASSIGNMENT

                                                             _______________, 19
To:   [NAME OF AGENT]

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

      [NAME OF ASSIGNEE] (the "Assignee")

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

         2. This Notice of Assignment (this "Notice") is given and delivered to
the Agent pursuant to Section 13.3.2 of the Credit Agreement.

         3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of ____________, 19__ (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule I of all
outstandings, rights and obligations under the Credit Agreement. From and after
such purchase, the Assignee's Commitment shall be the amount specified in Item 4
of Schedule I and the Assignor's Commitment shall be the amount specified in
Item 5 of Schedule I. The Effective Date of the Assignment shall be the later of
the date specified in Item 5 of Schedule I or two (2) Business Days (or such
shorter period as agreed to by the Agent) after this Notice of Assignment has
been delivered to the Agent, provided that the Effective Date shall not occur if
any condition precedent agreed to by the Assignor and the Assignee or set forth
in Section 13 of the Credit Agreement has not been satisfied.

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

                                       7
<PAGE>   123

         5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $3,500 required by Section 13.3.2 of the
Credit Agreement.

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

         7. The Assignee advises the Agent that notice and payment instructions
are set forth in the attachment to Schedule I.

         8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.

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

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

NAME OF ASSIGNOR                        NAME OF ASSIGNEE

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

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

ACKNOWLEDGED AND CONSENTED TO
BY Agent

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

[ATTACH PHOTOCOPY OF SCHEDULE I TO ASSIGNMENT]

                                       8
<PAGE>   124

                                    EXHIBIT E

                 LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

To:      The Bank of America, N.A.
         as Agent (the "Agent") under the Credit Agreement Described Below

Re:      Fourth Amended and Restated Revolving Credit Agreement, dated as of
         ______________, (as amended, modified, renewed or extended from time to
         time, the "Agreement"), among RFS Partnership, L.P. (the "Borrower"),
         Bank of America, N.A., individually and as Agent, Banc of America
         Securities LLC and the Lenders named therein. Terms used herein and not
         otherwise defined shall have the meanings assigned thereto in the
         Credit Agreement.

         The Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Advances or other extensions of credit from time to time until receipt by the
Agent of a specific written revocation of such instructions by the Borrower,
provided, however, that the Agent may otherwise transfer funds as hereafter
directed in writing by the Borrower in accordance with Section 14.1 of the
Credit Agreement or based on any telephonic notice made in accordance with
Section 2.15 of the Credit Agreement.

Facility Identification Number(s)
                                  ----------------------------------------------
Customer/Account Name

Transfer Funds To
                  --------------------------------------------------------------

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

For Account No.
                ----------------------------------------------------------------
Reference/Attention To
                       ---------------------------------------------------------

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

(Please Print)                                       Signature

Bank Officer Name                                    Date
                                                          ----------------------

(Please Print)                                       Signature

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

                                       1
<PAGE>   125

                                    EXHIBIT F

                           Minimum Specifications for
                          Environmental Investigations

(See attached)

                                       1
<PAGE>   126

                                    EXHIBIT G

                             Secured Collateral Pool
                             (As of January 7, 2000)

<TABLE>
<CAPTION>
Hotel (Franchise)            City                State   Franchisor              Cost*
<S>  <C>                     <C>                 <C>      <C>                  <C>
1.   Hampton                 Ft. Lauderdale        FL     Hampton              $ 6,408,505
2.   Hampton                 Warren                MI     Hampton              $ 4,059,968
3.   Hampton                 Minnetonka            MN     Hampton              $ 6,291,190
4.   Hampton                 Lincoln               NE     Hampton              $ 6,086,330
5.   Hampton                 Tulsa                 OK     Hampton              $ 7,189,123
6.   Hawthorne               Atlanta               GA     Hawthorne Suites     $21,265,179
7.   Holiday Inn             Louisville            KY     Holiday              $ 7,038,697
8.   Holiday Inn             Lafayette             LA     Holiday              $12,534,620
9.   Holiday Inn             Flint                 MI     Holiday              $15,269,124
10.  Holiday Inn             Clayton               MO     Holiday              $17,922,222
11.  Holiday Inn             Columbia              SC     Holiday              $ 7,697,098
12.  Holiday Inn Express     Arlington Heights     IL     Holiday              $ 5,411,385
13.  Holiday Inn Express     Downers Grove         IL     Holiday              $ 7,326,516
14.  Holiday Inn Express     Bloomington           MN     Holiday              $ 9,077,513
15.  Residence Inn           Torrance              CA     Residence            $22,857,650
16.  Residence Inn           Wilmington            DE     Residence            $10,811,555
</TABLE>

* as of November 30, 1999

         Choice =     Choice Hotels International, Inc.
         Hampton =    Hampton Inn Hotel Division, Inc. Promus Hotel Corp.
         Holiday =    Holiday Inn Franchise Division, Inc. Holiday Inn Worldwide
         Residence =  Residence Inn by Marriott
         Promus =     Promus Hotel Corporation
         ITT =        ITT Sheraton
         Marriott =   Marriott International, Inc.

                                       1
<PAGE>   127

                                   EXHIBIT H

                            Negative Collateral Pool
                            (As of January 7, 2000)

<TABLE>
<CAPTION>
Hotel (Franchise)         City              State       Franchisor         Cost*
<S>                       <C>               <C>         <C>             <C>
Courtyard by Marriott     Flint               MI        Marriott        $ 6,637,000
Hampton                   Laredo              TX        Promus          $ 6,029,000
Hampton                   Plano               TX        Promus          $ 7,001,000
Hampton                   Houston             TX        Promus          $ 6,550,000
Residence Inn             Tyler               TX        Residence       $ 9,106,000
Residence Inn             Fishkill            NY        Residence        14,364,000
Residence Inn             Atlanta             GA        Residence        13,195,000
Hampton Inn               Chandler            AZ        Promus            5,444,000
Beverly Heritage          Milpitas            CA        Independent      39,344,000
Homewood Suites           Chandler            AZ        Promus            6,731,000
Hampton Inn               Sedona              AZ        Promus            6,095,000
Residence Inn             Jacksonville        FL        Residence         7,903,000
Residence Inn             West Palm Beach     FL        Residence         6,453,000
Hampton Inn               Jacksonville        FL        Promus            6,096,000
TownePlace Suites         Fort Worth          TX        Marriott          6,720,000
TownePlace Suites         Miami               FL        Marriott          6,695,000
</TABLE>

 *as of January, 2000

         Choice =     Choice Hotels International, Inc.
         Hampton =    Hampton Inn Hotel Division, Inc. Promus Hotel Corp.
         Holiday =    Holiday Inn Franchise Division, Inc. Holiday Inn Worldwide
         Residence =  Residence Inn by Marriott
         Promus =     Promus Hotel Corporation
         ITT =        ITT Sheraton
         Marriott =   Marriott International, Inc.

                                       1
<PAGE>   128

                                   EXHIBIT I-1

                                BORROWING NOTICE

Notice Date:  _____________

TO:               Bank of America, N.A., Agent
BORROWER:         RFS Partnership, L. P.

LOAN:             $130,000,000.00 Fourth Amended and Restated Revolving Credit
                  Agreement dated as of __________ (as thereafter amended from
                  time to time referred to as the "Loan Agreement")

ADVANCE:

ADVANCE AMOUNT REQUESTED:  $
                            -------------------------

EFFECTIVE DATE OF ADVANCE:                            (1 day for Prime Advance/
                           --------------------------
3 days for LIBOR Advance from Notice Date)

ADVANCE TYPE:                       Prime Advance/LIBOR Advance (Circle one)
                                    ---------------------------
If a LIBOR Advance:

         INTEREST PERIOD:           30, 60, 90 or 180   (Circle One)
                                    -----------------

         EXPIRATION DATE OF
         INTEREST PERIOD:
                                    -----------------

INTEREST RATE WILL BE SET BY AGENT 2 BUSINESS DAYS PRIOR TO THE EFFECTIVE DATE
OF THE ADVANCE.

AGENT IS AUTHORIZED TO WIRE THE ADVANCE AMOUNT TO BORROWER'S ACCOUNT PER
STANDING WIRING INSTRUCTIONS.

PAYMENT:

PAYMENT AMOUNT REMITTED:   $
                            -------------------------

PROPOSED DATE OF PAYMENT:                          (if different from above)
                          -------------------------

ADVANCE TYPE TO BE REPAID: Prime Advance/LIBOR Advance   (Circle one)
                           ---------------------------

If a LIBOR Advance, select tranche
to be repaid:                       $               (original $  amt of tranche)
                                    ----------------

                                       2
<PAGE>   129

                                                    (orig Exp Date of tranche)

BREAK-UP FEE TO BE
COLLECTED IN ADDITION TO
PAYMENT AMOUNT:
                          --------------------------------

THE ABOVE PAYMENT AMOUNT AND BREAK-UP FEE WILL BE WIRED BY BORROWER TO AGENT PER
STANDING WIRING INSTRUCTIONS.

All capitalized terms not otherwise defined herein shall have the meanings as
set forth in the Loan Agreement.

Borrower represents and warrants that:

1. All of the representations and warranties of the Borrower contained in the
Loan Agreement continue to be true and correct at such time, both before and
after giving effect to the application of the proceeds of the Advance hereto;

2. The incumbency of the Authorized Officers of the corporate general partner of
the Borrower as stated in the most recent certificate dated ___________________,
199__ delivered to the Agent by the Borrower, has not been modified, amended or
rescinded; and

3. There does not exist and, after giving effect to the Advance hereto, there
will not exist, a Default or Unmatured Default under the Loan Agreement.

                                       RFS Partnership, L.P.

                                       By: RFS Hotel Investors, Inc.,
                                           Its General Partner

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

                                       3
<PAGE>   130

                                   EXHIBIT I-2

                         CONVERSION/CONTINUATION NOTICE

                                                 Notice Date:

TO:       Bank of America, N.A., Agent
BORROWER: RFS Partnership, L. P.
LOAN:     $130,000,000.00 Fourth Amended and Restated Revolving Credit and Term
          Agreement dated as of _____________ (as thereafter amended from time
          to time referred to as the "Loan Agreement")

AMOUNT TO BE CONVERTED:             $
                                     -------------------------------------

EFFECTIVE DATE OF CONVERSION:                         (1 day for  PrimeAdvance/
                              ----------------------
3 days for LIBOR Advance from Notice Date)

CONVERSION TYPE:

If converting to Prime Rate:

         NOTE: No notice is required if the Effective Date of the Conversion is
         at the end of the then applicable LIBOR Interest Period.

         ORIGINAL AMOUNT AND EXPIRATION
         DATE OF INTEREST PERIOD OF LIBOR
         ADVANCE SUBJECT TO CONVERSION:     $
                                             ---------------------------

If converting to LIBOR Rate:

         INTEREST PERIOD:           30, 60, 90 or 180    (Circle One)
                                    -----------------

         EXPIRATION DATE OF

         INTEREST PERIOD:
                                    --------------------------------------------
         INTEREST RATE:
                                    --------------------------------------------

BREAK-UP FEE TO BE COLLECTED:       $
                                    --------------------------------------------

THE ABOVE BREAK-UP FEE WILL BE WIRED BY BORROWER TO AGENT PER STANDING WIRING
INSTRUCTIONS.

All capitalized terms not otherwise defined herein shall have the meanings as
set forth in the Loan Agreement.

                                       1
<PAGE>   131

Borrower represents and warrants that:

1.       All of the representations and warranties of the Borrower under the
         Loan Agreement continue to be true and correct at such time, both
         before and after giving effect to the application of the conversion
         hereto;

2.       The incumbency of the Authorized Officers of the corporate general
         partner of the Borrower as stated in the most recent certificate dated
         ___________________, 199__ delivered to the Agent by the Borrower, has
         not been modified, amended or rescinded; and

3.       There does not exist and, after giving effect to the conversion hereto,
         there will not exist, a Default or an Unmatured Default under the Loan
         Agreement.

                                        RFS Partnership, L.P.

                                        By: RFS Hotel Investors, Inc.,
                                            General Partner

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

                                   EXHIBIT I-3

                            LETTER OF CREDIT REQUEST

         I, _______________________________, am an Authorized Officer of RFS
Hotel Investors, Inc. (the "General Partner"), the general partner of RFS
Partnership, L.P. (the "Borrower"), and as such Authorized Officer, do hereby
certify pursuant to the provisions of the Fourth Amended and Restated Revolving
Credit Agreement dated as of __________ (as amended from time to time, the "Loan
Agreement"), by and among the Borrower, Agent, Banc of America Securities LLC,
the Lenders thereto (collectively, the "Lenders"), to ______________ [Bank of
America, N.A. or other Lender], as issuer of certain letters of credit (in such
capacity, the "Issuing Bank") and Bank of America, N.A., as agent for the
Lenders (in such capacity, the "Agent"), that:

         1. Pursuant to Section 3.4 of the Loan Agreement, the Borrower hereby
requests the issuance by the Issuing Bank of a Facility Letter of Credit in the
stated amount of $______________ to be issued on ____________, 199__ (the
"Issuance Date") and expire on _____________________, 199__, for the benefit of
___________________________ (the "Beneficiary"), substantially in the form of or
containing the terms as set forth in Exhibit A attached hereto.

         2.       The address of the Beneficiary is as follows:

                                       2
<PAGE>   132

         3. I hereby certify to the Agent that the Issuing Bank is permitted to
issue such Facility Letter of Credit for such purpose under the terms of Section
7.2 of the Loan Agreement. The purpose of such Letter of Credit is: ____________
_______________________.

         4. After giving effect to the issuance of the Letter of Credit hereto,
the aggregate Facility Letter of Credit Obligations will not exceed
$10,000,000.00 and the Allocated Facility Amount will not exceed the Aggregate
Commitment.

         5. There does not exist on this date, and will not exist after issuance
of the requested Facility Letter of Credit, a Default or Unmatured Default.

         6. No material adverse change has occurred in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower since the date of the Loan Agreement.

         7. All representations and warranties of the Borrower made under the
Loan Agreement, which in accordance with Section VI of the Loan Agreement are
made at and as of the time of such issuance of the requested Facility Letter of
Credit, are true and correct in all material respects as of the date hereof,
both before and after giving effect to the issuance of the Facility Letter of
Credit in connection with which this Request is given, except to the extent that
such representations and warranties relate solely to an earlier date (in such
case such representations and warranties shall have been true and accurate on
and as of such earlier date), and except for changes in factual circumstances
specifically permitted under the Loan Agreement.

         8. The incumbency of the Authorized Officers of the General Partner, as
stated in the most recent certificate dated ___________________, 199__ delivered
to the Agent by the Borrower, has not been modified, amended or rescinded.

Capitalized terms used herein and not otherwise defined are used as defined in
the Loan Agreement.

                                       3
<PAGE>   133

Dated as of this ________ day of ___________________, 199__.

                                    RFS Partnership, L.P.

                                    By: RFS Hotel Investors, Inc.,
                                        General Partner

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

                                       4
<PAGE>   134

                                    EXHIBIT J

                       COMMITMENT AMOUNTS AND PERCENTAGES

<TABLE>
<CAPTION>
Lender                       Commitment Amount              Percentage
------                       -----------------              ----------
<S>                          <C>                              <C>
Bank of America, N.A         $  25,000,000.00              19.230769231%
SouthTrust Bank, N.A         $  25,000,000.00              19.230769231%
First Tennessee Bank
    National Association     $  20,000,000.00              15.384615384%
PNC Bank, N.A                $  20,000,000.00              15.384615384%
Wells Fargo Bank             $  20,000,000.00              15.384615384%
AmSouth Bank                 $  20,000,000.00              15.384615384%
                             ----------------              ------------
                             $ 130,000,000.00                100.00%
</TABLE>

                                       1
<PAGE>   135

                                   SCHEDULE 1

                     SUBSIDIARIES AND INVESTMENT AFFILIATES

1.       RFS Managers, Inc. (owned 100% by RFS Hotel Investors, Inc.)

2.       RFS Financing Partnership, L.P. (owned 99% by RFS Partnership, L.P. and
         1% by RFS Financing Corp.)

3.       RFS Financing Corp. (owned 100% by RFS Hotel Investors, Inc.)

4.       Ridge Lake L.P., having as its general partner Ridge Lake General
         Partner, Inc. (owned 100% by RFS Hotel Investors, Inc.)

                                       1
<PAGE>   136

                                   SCHEDULE 2

                             INDEBTEDNESS AND LIENS

None.

                                       1
<PAGE>   137

                                   SCHEDULE 3

                          PLANS AND MULTIEMPLOYER PLANS

None.

                                       1
<PAGE>   138

                                   SCHEDULE 4

                            ENVIRONMENTAL DISCLOSURES

None.

                                       1
<PAGE>   139

                                   SCHEDULE 5

                             NONCOMPLIANCE WITH LAWS

None.

                                       1
<PAGE>   140

                                   SCHEDULE 6

                          LITIGATION AND INVESTIGATIONS

         Eminent Domain Proceeding (Case No. CV762336) styled Santa Clara County
Transit District v. Gus Enterprises VIII, Title Insurance and Trust Co., Society
National Bank, Trustee of the George Gund Trust No. 9, RCA Corp., Sunnyvale
Host, Inc., Prudential Insurance Co. and DOES I-50 inclusive. [Note RFS
Partnership, L.P., is successor in interest to Gus Enterprises VIII.]

                                       1
<PAGE>   141

                                   SCHEDULE 7

                             CONTINGENT OBLIGATIONS

None.

                                       1
<PAGE>   142

                                   SCHEDULE 8

                              INDEBTEDNESS DEFAULTS

None.

                                       1
<PAGE>   143

                                   SCHEDULE 9

                    LESSEES AND MANAGERS OTHER THAN RFS, INC.

Property                                               Lessee
--------                                               ------

Residence Inn Jacksonville                  Landcom Hospitality Management, Inc.
Hampton Inn Jacksonville                    Landcom Hospitality Management, Inc.

Residence Inn West Palm Beach               Pinnacle Hotel Management, LLC

TownePlace Suites Miami Lakes               Landcom Hospitality Management, Inc.
TownePlace Suites Miami Airport             Landcom Hospitality Management, Inc.

                                                        Manager
                                                        -------

Hotel Rex                                   Joie de Vivre Hotels, Inc.

                                       1

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