Document:

EXHIBIT 10.2

                                                            Loan Nos. 03-0213838
                                                                      03-0213839
                                                                      03-0213840

                   AGREEMENT REGARDING INDENTURE AND MORTGAGES

         This AGREEMENT  REGARDING INDENTURE AND MORTGAGES (this "Agreement") is
     made as of January 1, 2001 between LASALLE BANK NATIONAL ASSOCIATION (f/k/a
     LaSalle National Bank), as Indenture Trustee for EQI FINANCING  PARTNERSHIP
     I, L.P.  COMMERCIAL  MORTGAGE  BONDS,  SERIES  1997-1  (ALender@),  and EQI
     FINANCING  PARTNERSHIP  I,  L.P.,  a  Tennessee  limited  partnership  (the
     ABorrower@).

                                    RECITALS

         WHEREAS,  Borrower is the owner of a fee estate in  twenty-one  various
     hotel  properties  listed in Exhibit "A", which Exhibit is attached  hereto
     and made a part hereof by this reference  (collectively,  the  AProperty@),
     and the hotels (collectively, the AHotels) located on the Property;

         WHEREAS,  Lender is the  indenture  trustee  under an  indenture  dated
     February 6, 1997 (the AIndenture@)  under which Borrower has issued certain
     bonds (the ABonds@);

         WHEREAS,  the Bonds are secured by various  mortgages,  deeds of trust,
     deeds to  secure  debt and  similar  instruments  in favor of  Lender  (the
     AExisting  Mortgages@)  encumbering the Property,  which Existing Mortgages
     are  identified  in Exhibit "B"  attached  hereto and made a part hereof by
     this  reference.  The Existing  Mortgages  and any other  documents now and
     hereafter  evidencing,  securing  or  otherwise  relating  to the Bonds are
     hereinafter collectively referred to as the ASecurity Documents@;

         WHEREAS,  pursuant  to a certain  Consolidated  Lease  Amendment  dated
     November 15, 1996,  as amended by a certain  Successor  Consolidated  Lease
     Amendment  dated  February 6, 1997  (collectively  and as so  modified  and
     amended,  the AOriginal  Leases@),  Crossroads/Memphis  Financing  Company,
     L.L.C. (AOriginal Lessee@) had leased the Premises from Borrower;

         WHEREAS, the Original Leases have been terminated, and Borrower and ENN
     Leasing Company I, L.L.C., a Delaware limited liability company  (ATenant@)
     have  entered into a  Consolidated  Lease  Agreement of even date  herewith
     (hereinafter  referred to as the  ALease@),  pursuant  to which  Tenant has
     leased the Property from Borrower;

         WHEREAS,  Lender,  Tenant and Borrower have entered into a Consolidated
     Lease Estoppel and Subordination  Agreement (hereinafter referred to as the
     "Lease Subordination"),

<PAGE>

     dated of even date herewith, pursuant to which the Lease is subordinated to
     the Existing Mortgages;

         WHEREAS,  Tenant has entered into certain management agreements of even
     date herewith providing for the provision of management  services to Tenant
     with respect to the Hotels (each such management  agreement is individually
     referred to herein as a  AManagement  Agreement@  and  collectively  as the
     AManagement  Agreements@  and each manager under a Management  Agreement is
     individually  referred to herein as a  AManager@  and  collectively  as the
     AManagers@);

         WHEREAS,   each  Manager  and  Tenant  have  entered  into  a  separate
     assignment and  subordination of management  agreement (each such agreement
     is   individually   referred   to   herein  as  a   "Management   Agreement
     Subordination"    and    collectively   as   the   "Management    Agreement
     Subordinations"),  dated of even date herewith, in favor of Lender pursuant
     to which the Management  Agreements have been  subordinated to the Existing
     Mortgages;

         WHEREAS,  Tenant,  Lender and Borrower have entered into a Security and
     Lockbox  Agreement  (hereinafter  referred to as the "Lockbox  Agreement"),
     dated of even date  herewith,  to provide for the  payment of cash  amounts
     otherwise due Tenant to a bank account  controlled by or maintained for the
     benefit of Midland Loan Services,  Inc.  ("Servicer"),  acting as Agent for
     Lender, as more particularly provided in the Lockbox Agreement;

         WHEREAS,  in connection with the execution of the Lease, Lender desires
     that the Borrower and Tenant enter into this Agreement,  in accordance with
     the terms of the Existing  Mortgages and the Indenture,  to clarify certain
     defined  terms and  provisions  contained  in the Security  Documents  that
     reference  the  Original  Lease and to include  references  to the  Lockbox
     Agreement, the Lease Subordination, and the Management Agreement
     Subordinations;

         NOW,   THEREFORE,   in  consideration  of  the  premises  and  the  due
     performance of the  commitments and agreements  hereinafter set forth,  and
     other  valuable  consideration,  the receipt and  sufficiency  of which are
     hereby acknowledged, the parties hereto agree as follows:

         1.     Definitions.  Undefined capitalized terms used in this Agreement
     shall have the same meaning given such terms in the Security Documents.

         2.     Existing Mortgages.  Lender and Borrower hereby agree that
     certain terms and provisions of the Existing Mortgages shall be clarified
     from and after the date hereof as follows:

         (a) Section 5.16(b) of the Existing Mortgages shall be deemed to state,
     from and after the date hereof,  as follows,  for purposes of incorporating
     the  form  of   subordination   agreement   applicable  to  the  Management
     Agreements:

               "(b)  such replacement lessee executes an agreement substantially
               similar  to  the  Subordination  Agreement  and such  replacement
               manager  executes  an  agreement  substantially  similar  to  the
               Management Agreement Subordination."

                                        2

<PAGE>

         (b) Section 5.21(a) of the Existing Mortgages shall be deemed to state,
     from and after the date hereof,  as follows,  for purposes of conforming to
     the terms of the new Lease.

                  "The Beneficiary  acknowledges that the Borrower is a party to
         a lease  agreement  (the  "Lease")  with Lessee,  pursuant to which the
         entire Mortgaged  Property has been leased to the Lessee.  The Borrower
         represents  and  warrants  that it has not  entered  into any  lease or
         occupancy agreement of any kind or nature with respect to the Mortgaged
         Property  other than the Lease.  The Borrower shall not amend or modify
         the Lease or cancel or terminate the Lease (except in connection with a
         Lease Event of Default or a termination  otherwise  expressly permitted
         under the Lease) without the prior written consent of the  Beneficiary,
         which  consent will be given upon  confirmation  from the Rating Agency
         that  such  action  will  not  cause  a  qualification,  withdrawal  or
         downgrading  of the ratings then  maintained  by the Rating Agency with
         respect to the Bonds.  To the extent  any  obligation  of the  Borrower
         hereunder  is an  obligation  to be  performed  by the Lessee under the
         Lease, the Borrower shall fulfill such obligation by causing the Lessee
         to perform such obligations."

         3.      Indenture.  Lender and Borrower hereby agree that certain terms
     and provisions of the Indenture shall be clarified from and after the date
     hereof as follows:

         (a) Any  references  in Section  5.21 of the  Indenture to the "Comfort
     Letter"  attached as Exhibit J to the  Indenture  shall be deemed to refer,
     from and after the date hereof,  to the forms of comfort  letters  attached
     hereto as Exhibit "C".

         (b) The Glossary of terms attached to the Indenture shall  incorporate,
     from and after the date of this Agreement, the following new definitions of
     existing  defined  terms,  and the defined terms existing prior to the date
     hereof shall no longer be in full force and effect:

                  "'Lease' shall mean, with respect to each Mortgaged  Property,
         the  agreement  pursuant to which the Borrower  rents and leases to the
         Lessee  and the  Lessee  rents  and  leases  from  the  Borrower,  such
         Mortgaged  Property,  which  agreement is  evidenced by a  Consolidated
         Lease  Agreement,  dated as of January 1, 2001,  between  Borrower  and
         Lessee embodying the Lease for each of the Mortgaged Properties.

                  'Lessee' shall mean ENN Leasing Company I, L.L.C.

                  'Loan Documents' shall mean the Mortgages,  the  Subordination
         Agreement,  the  Indenture,  the  Bonds,  the  Lockbox  Agreement,  the
         Management   Agreement   Subordination,   and  all  other   agreements,
         instruments,   certificates   and  documents   (including  all  Uniform
         Commercial Code financing statements) delivered by or on

                                        3

<PAGE>

         behalf of the  Borrower  or its  Affiliates  to  evidence or secure the
         Bonds or otherwise in  satisfaction  of the  requirements  of documents
         identified above.

                  'Subordination  Agreement' shall mean the  Consolidated  Lease
         Estoppel  and  Subordination  Agreement,  dated as of  January 1, 2001,
         among the Lessee, the Issuer and the Indenture Trustee.

                  'Management  Agreement'  shall mean the management  agreements
         between Lessee and the Manager relating to the management and operation
         of the Hotels by the Manager.

                  'Manager' shall mean, individually and collectively,
         Crossroads Hospitality Company, L.L.C., a Delaware limited liability
         company, Crestline Hotels & Resorts, Inc., a Delaware corporation, and
         Promus Hotels, Inc., a Delaware corporation, or any substitute manager
         approved by Beneficiary in accordance with the terms and conditions of
         the applicable Mortgage."

         (c)   The Glossary of terms attached to the Indenture shall incorporate
     the following new defined terms:

                  "'Lockbox  Agreement'  shall  mean the  Security  and  Lockbox
         Agreement,  dated as of January 1, 2001, executed by Lessee, Issuer and
         Indenture Trustee.

                  'Management Agreement  Subordination' shall mean, individually
         and  collectively,  the  Assignment  and  Subordination  of  Management
         Agreements,  dated as of January 1, 2001,  executed  by Lessee and each
         Manager in favor of Indenture Trustee."

         4.     Representations and Warranties. Borrower represents and warrants
     to Lender as follows:

         (a) Borrower has made  available to Lender a correct and complete  copy
     of the Lease and all amendments  thereto.  As of the date hereof, the Lease
     is  unmodified  and in full force and effect and  Borrower is not,  and, to
     Borrower's knowledge, Tenant is not in default under the Lease.

         (b) As of the date hereof, the Management Agreements applicable to each
     of the Mortgaged Properties are unmodified and in full force and effect and
     Borrower is not, and, to Borrower's knowledge, the Lessee is not in default
     under the Management Agreements.

         (c) The execution,  delivery and  performance of this Agreement and the
     transactions  contemplated hereby (i) are within the authority of Borrower,
     (ii) have been duly authorized by all necessary  proceedings on the part of
     Borrower,  (iii) do not and will not conflict  with or result in any breach
     or  contravention of any provision of law,  statute,  rule or regulation to
     which Borrower is subject or any judgment, order, writ, injunction,

                                        4

<PAGE>

     license or permit applicable to Borrower, (iv) do not and will not conflict
     with or  constitute  a default  (whether  with the  passage  of time or the
     giving of  notice,  or both)  under  any  provision  of the  organizational
     documents  of  Borrower,  or any  agreement,  contract or other  instrument
     binding  upon  Borrower or any of its  properties  or to which  Borrower is
     subject, and (v) do not and will not result in or require the imposition of
     any lien or other encumbrance on any of the properties, assets or rights of
     Borrower,  other than the liens and  encumbrances  created by the  Security
     Documents.

         (d)  This  Agreement   constitutes   the  valid  and  legally   binding
     obligations of Borrower enforceable in accordance with the respective terms
     and provisions hereof.

         (e) The execution,  delivery and  performance of this Agreement and the
     transactions  contemplated hereby do not require the approval or consent of
     Borrower,  its general and limited  partners and their partners,  directors
     and  shareholders,  or the  authorization,  consent,  or approval of or any
     license or permit  issued by, or any filing or  registration  with,  or the
     giving of any notice to, any court, department,  board, commission or other
     governmental agency or authority other than those already obtained.

         5. Ratification.  Except as hereinabove set forth, all terms, covenants
     and provisions of the Security Documents remain unaltered and in full force
     and effect,  and the parties hereto do hereby  expressly ratify and confirm
     the Security Documents as clarified herein. Nothing in this Agreement shall
     be deemed or construed to constitute, and there has not otherwise occurred,
     a  novation,   cancellation,   satisfaction,   release,  extinguishment  or
     substitution  of the  indebtedness  evidenced by the Indenture or the other
     obligations of Borrower under the Security Documents.

         6.    Expenses.  All expenses, including without limitation, reasonable
     legal fees, incurred by Lender in connection with the preparation,
     negotiation and closing of this Agreement and the transactions contemplated
     hereby shall be paid by Borrower.

         7.       Counterparts.  This Agreement may be executed in any number of
     counterparts which shall together constitute but one and the same
     agreement.

         8.  Recording.  Borrower  hereby  agrees  that  this  Agreement  may be
     recorded at any time in the jurisdictions where the Existing Mortgages were
     recorded, in Lender's sole discretion,  following an Event of Default or at
     any time that Lender  believes in its  reasonable  business  judgment  that
     recording is necessary  (a) to comply with the  requirements  of applicable
     law, (b) to properly maintain its collateral,  or (c) as otherwise required
     to  be  consistent  with  sound  servicing  practices  and  standards.  Any
     recording  or  filing  fees  incurred  as a  result  thereof  shall  be the
     responsibility of Borrower.

         9.     Governing Law. This Agreement shall be governed and construed in
     accordance with the laws of the state of New York, except that at all times
     any provisions herein relating to or affecting the Existing Mortgages shall
     be governed by and construed

                                        5

<PAGE>

     in accordance with the laws of the state in which the Property  relating to
     such Existing Mortgage is located.

         10.   Successors and Assigns.  This Agreement shall be binding upon and
     shall inure to the benefit of the parties hereto and their respective
     permitted successors, successors-in-title and assigns as provided in the
     Security Documents.

                  [remainder of page intentionally left blank]

                                        6

<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have hereto set their hands and
     affixed their seals as of the day and year first above written.

                                    BORROWER:

                                    EQI FINANCING PARTNERSHIP I, L.P.

                                    By:  EQI Financing Corporation, its general
                                         partner

                                    By:    /S/ Howard A. Silver
                                           -------------------------------------
                                    Name:  Howard A. Silver
                                           -------------------------------------
                                    Title: President
                                           -------------------------------------

<PAGE>

                                    LENDER:

                                    LASALLE BANK NATIONAL  ASSOCIATION (f/k/a
                                    LaSalle National Bank), as Indenture Trustee
                                    for EQI FINANCING PARTNERSHIP I, L.P.
                                    COMMERCIAL MORTGAGE BONDS, SERIES 1997-1

                                    BY: MIDLAND LOAN SERVICES, INC., a Delaware
                                        corporation, its attorney-in-fact

                                    By:    /s/ C.J. Sipple
                                           -------------------------------------
                                    Name:  C.J. Sipple
                                           -------------------------------------
                                    Title: E.V.P. and Servicing Officer
                                           -------------------------------------

<PAGE>

                                   EXHIBIT "A"

                                  The Property

     Hampton InnCSarasota, FL

     Hampton InnCFt. Worth, TX

     Hampton InnCChicago (Gurnee), IL

     Hampton InnCKnoxville (Alcoa, TN

     Hampton InnCAnn Arbor, MI

     Comfort InnCJacksonville Beach, FL

     Hampton InnCMilford, CT

     Hampton InnCChicago (Naperville), IL

     Holiday InnCCharleston (Mt. Pleasant), SC

     Hampton InnCLouisville, KY

     Hampton InnCJacksonville, FL

     Hampton InnCMeriden, CT

     Hampton InnCIndianapolis, IN

     Hampton InnCCleveland (Westlake), OH

     Hampton InnCCollege Station, TX

     Hampton InnCAustin, TX

     Hampton InnCFayetteville, NC

     Holiday InnCWinston-Salem, NC

     Residence InnCOmaha, NE

     Hampton InnCGastonia, NC

     Hampton InnCColumbus, GA

<PAGE>

                                   EXHIBIT "B"

                             The Existing Mortgages

         The Following Existing Mortgages,  dated as of February 6, 1997, by EQI
         Financing  Partnership I, L.P., as Borrower,  to and for the benefit of
         LaSalle National Bank, the indenture trustee, as Beneficiary:

         1.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Sarasota, FL

         2.    Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn Ft. Worth, TX

         3.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Chicago (Gurnee), IL

         4.    Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn Knoxville (Alcoa),
               TN

         5.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Ann Arbor, MI

         6.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Comfort Inn Jacksonville Beach, FL

         7.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Milford, CT

         8.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Chicago (Naperville), IL

         9.    Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Holiday Inn Charleston (Mt.
               Pleasant), SC

         10.   Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Louisville, KY

         11.   Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Jacksonville, FL

         12.   Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Meriden, CT

         13.   Mortgage, Assignment of Leases and Rents, Security Agreement and
               Fixture Filing Statement for Hampton Inn Indianapolis, IN

<PAGE>

         14.   Open-End Mortgage, Assignment of Leases and Rents, Security
               Agreement and Fixture Filing Statement for Hampton Inn Cleveland
               (Westlake), OH

         15.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn College Station, TX

         16.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn Austin, TX

         17.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn Fayetteville, NC

         18.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Holiday Inn Winston-Salem, NC

         19.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Residence Inn Omaha, NE

         20.   Deed of Trust, Assignment of Leases and Rents, Security Agreement
               and Fixture Filing Statement for Hampton Inn Gastonia, NC

         21.   Deed to Secure Debt, Assignment of Leases and Rents, Security
               Agreement and Fixture Filing Statement for Hampton Inn Columbus,
               GA

         [Copies of the Existing Mortgages omitted for purposes of this filing]EXHIBIT 10.3

                                 LOAN AGREEMENT

                            dated as of June 16, 1999

                                      among

                       EQI FINANCING PARTNERSHIP II, L.P.
                                       and
                       EQI/WV FINANCING PARTNERSHIP, L.P.
                               as Borrower Parties

                                       and
                      GMAC COMMERCIAL MORTGAGE CORPORATION
                                    as Lender

<PAGE>

                                 LOAN AGREEMENT

         This LOAN  AGREEMENT  is dated as of June 16, 1999 and entered  into by
and among EQI FINANCING  PARTNERSHIP II, L.P., a Tennessee  limited  partnership
("EQI"),  EQI/WV FINANCING  PARTNERSHIP,  L.P., a Tennessee limited  partnership
("EQI/WV";  and  together  with EQI,  "Borrower";  EQI and EQI/WV are  sometimes
referred to herein  collectively  as "Borrower  Parties" and  individually  as a
"Borrower  Party");  and GMAC  COMMERCIAL  MORTGAGE  CORPORATION,  a  California
corporation  (together  with its  successors  and assigns as  permitted  herein,
"Lender"),   with  offices  at  650  Dresher  Road,  P.O.  Box  1015,   Horsham,
Pennsylvania 19044, Attn: Servicing - Executive Vice President.

         WHEREAS,  Lender has this day made a loan to Borrower  in the  original
principal  amount of  Ninety-Seven  Million  Twenty  Thousand and No/100 Dollars
($97,020,000.00),  which loan is evidenced by the Note (as defined below) and is
secured by, among other things, a first mortgage lien granted by Borrower on the
Properties (as defined below).

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions  and  covenants  herein  contained,   Borrower  Parties  and  Lender,
intending to be legally bound, agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

Section 1.1       Certain Defined Terms.

         The terms defined below are used in this Agreement as so defined. Terms
defined  in the  preamble  and  recitals  to  this  Agreement  are  used in this
Agreement as so defined.  Capitalized  terms not otherwise  defined herein shall
have the meanings  ascribed to such terms in the Minnesota  Mortgage (as defined
below).

         "Affiliate"  means in  relation to any Person,  any other  Person:  (i)
directly or indirectly controlling, controlled by, or under common control with,
the first Person;  (ii)  directly or  indirectly  owning or holding five percent
(5%) or more of any equity  interest in the first Person;  or (iii) five percent
(5%) or more of whose  voting  stock or other  equity  interest  is  directly or
indirectly  owned or held by the first Person.  For purposes of this definition,
"control"  (including  with  correlative  meanings,   the  terms  "controlling",
"controlled  by" and "under common control with") means the possession  directly
or indirectly  of the power to direct or cause the  direction of the  management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, the Borrower Parties shall
be considered to be Affiliates of each other,  irrespective  of whether they now
or hereafter  satisfy the foregoing  criteria.  Where the term Affiliate is used
without qualification such as "of Lender" or "of Borrower",  the same shall mean
an Affiliate of Borrower. The Borrower Sponsors are Affiliates of Borrower.

<PAGE>

         "Agreement"  means  this  Loan  Agreement   (including  all  schedules,
exhibits, annexes and appendices hereto).

         "Allocated  Loan Amount"  means the amount of the Loan  allocated,  for
property release purposes,  to a particular Property, as such allocated loan sum
for each  Property  is set forth on Schedule  1.1 --  Allocated  Loan  Amounts /
Properties. Borrower understands and acknowledges that each Property secures the
entire Loan, and in a foreclosure, bankruptcy or other Loan enforcement setting,
Lender's recovery against a particular Property shall not be limited by, and may
not bear any relationship to, the Allocated Loan Amount.

         "Bankruptcy  Code" means Title 11 of the United States Code, as amended
from time to time, and all rules and regulations promulgated thereunder.

         "Borrower Parties" is defined in the first paragraph of this Agreement.

         "Borrower Sponsors" means, collectively, Equity Inns Partnership, L.P.,
a Tennessee limited partnership, Equity Inns, Inc., a Tennessee corporation, and
Equity Inns Trust, a Maryland Trust.

         "Borrower Party Secretary" has the meaning set forth in Section 3.1.

         "Business  Day" means any day  excluding  Saturday,  Sunday and any day
which is a legal holiday under the laws of the  Commonwealth  of Pennsylvania or
State of New York or is a day on which banking institutions located in either of
such states is closed.

         "Capital Lease" means any lease of any property (whether real, personal
or mixed) that,  in conformity  with GAAP,  should be accounted for as a capital
lease.

         "Closing" means the funding of the Loan contemplated by this Agreement.

         "Closing Certificate" has the meaning set forth in Section 3.1.

         "Closing Date" means the date on which the Closing occurs.

         "Contingent Obligation",  as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness,  lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability,  or the primary effect
thereof,  is to provide  assurance  to the obligee of such  liability  that such
liability will be paid or discharged,  or that any agreements  relating  thereto
will be complied  with, or that the holders of such  liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit  issued  for the  account  of that  Person or as to which  that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar

<PAGE>

agreement or arrangement  designed to protect  against  fluctuations in interest
rates; or (D) under any foreign  exchange  contract,  currency swap agreement or
other similar  agreement or arrangement  designed to protect that Person against
fluctuations in currency values.  Contingent  Obligations  shall include (i) the
direct or indirect  guaranty,  endorsement (other than for collection or deposit
in the ordinary  course of business),  co-making,  discounting  with recourse or
sale  with  recourse  by such  Person of the  obligation  of  another,  (ii) the
obligation to make  take-or-pay  or similar  payments if required  regardless of
nonperformance  by any other  party or  parties to an  agreement,  and (iii) any
liability of such Person for the obligations of another through any agreement to
purchase,  repurchase  or  otherwise  acquire  such  obligation  or any property
constituting security therefor, to provide finds for the payment or discharge of
such obligation or to maintain the solvency,  financial condition or any balance
sheet  item or  level  of  income  of  another.  The  amount  of any  Contingent
Obligation  shall be equal to the  amount of the  obligation  so  guaranteed  or
otherwise supported or, if not a fixed and determined amount, the maximum amount
so guaranteed.

         "Contractual   Obligation",   as  applied  to  any  Person,  means  any
indenture, mortgage, deed of trust, lending arrangement,  contract, undertaking,
agreement or other  instrument to which that Person is a party or by which it or
any of its  properties  is  bound or to  which  it or any of its  properties  is
subject including, without limitation, the Loan Documents.

         "Default"  means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default,  and also any condition or event
that,  after  notice  or  lapse of time or both,  would  constitute  an Event of
Default  if that  condition  or event  were  not  cured or  removed  within  any
applicable grace or cure period.

         "Defeasance"  and all  defined  terms  containing  the  same  have  the
meanings set forth in Section 2.3.

         "Dollars"  and the sign "$" mean the lawful money of the United  States
of America.

         "DSCR" means the ratio, as determined by Lender, of

                  (i) the NOI from the Properties  (adjusted as specified below)
for the twelve  consecutive  (12) month period used by Lender in accordance with
its then-standard  underwriting  practices  (consistent with the requirements of
the Rating Agency), to

                  (ii) the annual debt  service as  projected  by Lender for the
Loan,  based on that  assumed  debt  service  constant  used by Lender under its
then-current  underwriting  standards  for  loans  and  borrowers  of this  type
(consistent with the requirements of the Rating Agency).

In determining DSCR after any Property has been released from its Mortgage by
reason of Defeasance, the following shall not be included: (i) the NOI from such

<PAGE>

Property, (ii) the Defeasance  Collateral or the income stream  therefrom,  and
(iii) debt service for the portion of the outstanding principal amount of the
Loan equal to the Release Price applicable to such Property.

         "Employee  Benefit  Plan" means any  employee  benefit  plan within the
meaning of Section 3(3) of ERISA  (including a Multiemployer  Plan) (i) which is
maintained for employees of Borrower or any ERISA  Affiliate,  (ii) which has at
any time within the preceding six (6) years been maintained for the employees of
Borrower or any current or former ERISA Affiliate or (iii) for which Borrower or
any ERISA Affiliate has any liability, including contingent liability.

         "Environmental Claims" has the meaning set forth in Section 4.14.

         "Environmental  Indemnity" means the Environmental  Indemnity Agreement
dated as of the Closing Date herewith from Borrower and Guarantors to Lender.

         "Environmental  Laws" means all present  and future  federal,  state or
local laws, statutes,  ordinances,  codes, rules, regulations,  orders, decrees,
common  law,  or  directives,  in any  case  imposing  liability,  reporting  or
monitoring  requirements,  or standards of conduct, or relating to the indoor or
outdoor  environment,  industrial  hygiene,  public or worker health and safety,
natural resources,  pollution,  waste management,  or the handling,  generation,
release, disposal or storage of Hazardous Material.

         "Environmental Reports" means environmental reports and audits prepared
by  environmental  engineers  and/or  consultants   satisfactory  to  Lender  in
accordance with standards acceptable to Lender.

         "ERISA" means the Employee  Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.

         "ERISA  Affiliate"  means any (i) corporation  which is a member of the
same controlled  group of corporations  (within the meaning of Section 414(b) of
the IRC) as Borrower,  (ii)  partnership or other trade or business  (whether or
not incorporated)  under common control (within the meaning of Section 414(c) of
the IRC) with  Borrower,  (iii)  member  of the same  affiliated  service  group
(within the meaning of Section 414(m) of the IRC) as Borrower or any corporation
described in clause (i) above or any partnership or trade or business  described
in clause (ii) or (iv) other  Person  which is required  to be  aggregated  with
Borrower  pursuant to regulations  promulgated  under Section 414(o) of the IRC.
Notwithstanding  the foregoing,  each of the Borrower Parties shall be deemed to
be ERISA  Affiliates of each other for purposes of this Agreement,  irrespective
of whether or not the foregoing criteria are satisfied now or hereafter.

         "Financing Statements" means the UCC Financing Statements naming the
applicable Borrower Parties, as debtor, and Lender, as secured party, required

<PAGE>

under applicable state law to perfect the security interests  created  hereunder
or under the other Loan Documents.

         "GAAP" means generally accepted  accounting  principles as set forth in
Statement on Auditing  Standards No. 69 entitled "The Meaning of Present  Fairly
in Conformity with Generally Accepted  Accounting  Principles in the Independent
Auditor's  Report"  issued  by the  Auditing  Standards  Board  of the  American
Institute of Certified Public  Accountants and statements and  pronouncements of
the  Financial   Accounting   Standards   Board  that  are   applicable  to  the
circumstances as of the date of determination.

         "Ground Leases" means the leases and other agreements pursuant to which
Borrower holds any leasehold interest in any Property.

         "Hazardous Material" means all or any of the following: (A) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in,  regulated by, or otherwise  classified  pursuant to, any  applicable
Environmental Laws, including any so defined, listed, regulated or classified as
"hazardous  substances",   "hazardous  materials",  "hazardous  wastes",  "toxic
substances", "pollutants",  "contaminants", or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious,  harmful
or dangerous  properties;  (B) oil,  petroleum or petroleum derived  substances,
natural gas, natural gas liquids or synthetic gas and drilling fluids,  produced
waters  and  other  wastes  associated  with  the  exploration,  development  or
production of crude oil, natural gas or geothermal resources;  (C) any flammable
substances or explosives or any radioactive materials; (D) asbestos in any form;
(E) electrical  equipment which contains any oil or dielectric  fluid containing
polychlorinated biphenyls; (F) radon; or (G) urea formaldehyde.

         "Indebtedness",  as applied to any Person,  means: (A) all indebtedness
for  borrowed  money;  (B) that portion of  obligations  with respect to Capital
Leases  that is  properly  classified  as a  liability  on a  balance  sheet  in
conformity  with  GAAP;  (C) notes  payable  and  drafts  accepted  representing
extensions of credit whether or not representing  obligations for borrowed money
(other than trade indebtedness incurred in the ordinary course of business); (D)
any  obligation  owed  for all or any  part of the  deferred  purchase  price of
property or services if the purchase  price is due more than six months from the
date the  obligation  is incurred or is evidenced  by a note or similar  written
instrument;  and (E) all  indebtedness  secured by any Lien on any  property  or
asset  owned or held by that  Person  regardless  of  whether  the  indebtedness
secured  thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person.

         "Investment"  means  (A) any  direct  or  indirect  purchase  or  other
acquisition  by  Borrower  of  any  beneficial  interest  in,  including  stock,
partnership  interest or other Securities of, any other Person or (B) any direct
or  indirect  loan,  advance or capital  contribution  by  Borrower to any other
Person,  including  all  indebtedness  and accounts  receivable  from that other
Person that are

<PAGE>

not  current  assets or did not arise  from  sales to that  other  Person in the
ordinary course of business.  The amount of any Investment shall be the original
cost of such  Investment  plus the cost of all  additions  thereto,  without any
adjustments  for increases or decreases in value,  or write-ups,  write-downs or
write-offs with respect to such investment.

           "IRC" shall mean the United States Internal  Revenue Code of 1986, as
amended,  and the related Treasury Department  regulations,  including temporary
regulations.

         "Lien" means any lien, mortgage,  pledge, security interest,  charge or
encumbrance  of any kind,  whether  voluntary  or  involuntary,  (including  any
conditional  sale or other title  retention  agreement,  any lease in the nature
thereof, and any agreement to give any security interest).

         "Loan" shall have the meaning indicated in Section 2. 1.

         "Material  Adverse Effect" means (A) a material adverse effect upon the
business,  operations,  properties, assets or condition (financial or otherwise)
of Borrower  or (B) the  material  impairment  of the ability of Borrower or any
Affiliate thereof which is a party to a Loan Document to perform its obligations
under any such Loan  Documents  or of Lender to enforce  or  collect  any of the
Obligations.  In  determining  whether any  individual  event would  result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect,  a Material  Adverse Effect shall be deemed to have occurred if the
cumulative  effect of such event and all other then existing events would result
in a Material Adverse Effect.

         "Minnesota Mortgage" means that certain Mortgage,  Assignment of Leases
and Rents,  Security  Agreement  and Fixture  Filing dated as of the date hereof
executed by EQI for the benefit of Lender and encumbering that certain Residence
Inn Hotel located at 3040 Eagandale Road, Eagan, MN.

         "Mortgages" means collectively, the mortgages, deeds of trust and deeds
to secure debt from Borrower to or for the benefit of Lender,  each constituting
a lien on a Property as collateral for the Loan.

         "Multiemplover Plan" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make,  contributions  within the  preceding  six (6) years,  or for
which Borrower or any ERISA  Affiliate has any liability,  including  contingent
liability.

         "New Loan Documents" shall have the meaning indicated in Section 2.4.

         "Note" shall have the meaning indicated in Section 2.1.

<PAGE>

         "Obligations"  means all  obligations,  liabilities and indebtedness of
every  nature  of  Borrower  from  time to time  owed to  Lender  under the Loan
Documents, including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees,  costs and expenses,  whether primary,
secondary, direct, contingent,  fixed or otherwise,  heretofore, now and/or from
time to time hereafter  owing, due or payable whether before or after the filing
of a proceeding under the Bankruptcy Code by or against Borrower.

         "Optional  Prepayment  Date"  shall have the  meaning  set forth in the
Note.

         "Pension  Plan"  means  any  Employee   Benefit  Plan,   other  than  a
Multiemployer  Plan,  which is subject to the provisions of Part 3 of Title I of
ERISA,  Title IV of ERISA or Section 412 of the IRC and (A) which is  maintained
for  employees of Borrower,  or any of its ERISA  Affiliates or (B) which has at
any time within the preceding six (6) years been maintained for the employees of
Borrower  or any of its  current or former  ERISA  Affiliates,  or (C) for which
Borrower  or  any  ERISA  Affiliate  has  any  liability,  including  contingent
liability.

         "Person"  means and includes  natural  persons,  corporations,  limited
liability companies,  limited partnerships,  general  partnerships,  joint stock
companies,  joint  ventures,  associations,   companies,  trusts,  banks,  trust
companies,  land trusts, business trusts or other organizations,  whether or not
legal entities,  and governments and agencies and political subdivisions thereof
and their  respective  permitted  successors  and  assigns  (or in the case of a
governmental person, the successor functional equivalent of such Person).

         ""Property"  and  "Properties"  means those hotels,  motels,  and other
lodging  facilities  which  serve as  collateral  for the  Loan  and upon  which
Mortgages will be recorded on the Closing Date. If any such lodging  facility is
sold and all Liens of the  Mortgages are released  therefrom in accordance  with
this Agreement,  then such lodging facility shall cease to be a "Property".  The
Properties as of the Closing are  identified  on Schedule 1.1 -- Allocated  Loan
Amounts / Properties.

         "Rating Agency" shall mean any one or more of Standard & Poor's Rating
Group, Moody's Investors Service, Duff & Phelps Credit Rating Co., Fitch
Investors Service, L.P., or any other nationally- recognized statistical rating
organization designated by Lender in its sole discretion.

         "Release  Price"  shall  mean,  at any time and for any  Property,  one
hundred  twenty-five  percent  (125%)  of the  Allocated  Loan  Amount  for such
Property, plus accrued interest thereon through the date of payment to Lender.

         "Release Property" shall have the meaning set forth in Section 2.4.

<PAGE>

         "Remaining Collateral Pool" shall have the meaning set forth in Section
2.3.

         "REMIC" and "REMIC Trust" have the meanings set forth in Section 2.3.

         "Secondary  Market  Transaction"  has the  meaning set forth in Section
6.4.

         "Securities"  (whether  or not  capitalized)  means any stock,  shares,
voting trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness,  secured or unsecured,  convertible,  subordinated or
otherwise,  or in general any instruments  commonly known as "securities" or any
certificates  of  interest,  shares or  participations  in  temporary or interim
certificates  for the purchase or  acquisition  of or any right to subscribe to,
purchase or acquire, any of the foregoing.
         "Securitization" shall mean a rated offering of securities representing
direct  or  indirect  interests  in one or more  mortgage  loans or the right to
receive income therefrom.

         "Substitution" shall have the meaning set forth in Section 2.4.

         "Substitute Property" shall have the meaning set forth in Section 2.4.

         "Substitution Date" shall have the meaning set forth in Section 2.4.

         "Termination  Event"  means:  (A) a  "Reportable  Event"  described  in
Section 4043 of ERISA and the regulations  issued thereunder with respect to any
Pension  Plan;  (B) the  withdrawal  of Borrower or any ERISA  Affiliate  from a
Pension  Plan  during a plan year in which it was a  "substantial  employer"  as
defined in Section  4001(a)(2)  or 4068(f) of ERISA;  (C) the  termination  of a
Pension  Plan,  the filing of a notice of intent to  terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; (D) the institution of proceedings to terminate,  or the appointment of a
trustee with  respect to, any Pension  Plan by the PBGC;  (E) any other event or
condition which would constitute  grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(F) the partial or complete withdrawal of Borrower or any ERISA Affiliate from a
Multiemployer  Plan; (G) the imposition of a Lien pursuant to Section 412 of the
IRC or Section 302 of ERISA;  (H) any event or  condition  which  results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA;  or (I) any event or condition  which results in the  termination of a
Multiemployer  Plan under Section 4041A of ERISA or the  institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

         "Title Company" means Chicago Title  Insurance  Company and TICOR Title
Insurance Corporation or such other title insurance company as may be designated
by Lender, subject to the reasonable approval of Borrower.

<PAGE>

         "Title  Policies" means a mortgagee's  policy of title insurance issued
on the 1970 ALTA form by the Title Company,  together with such  reinsurance and
direct access agreements as Lender may require, insuring that each Mortgage is a
valid first and prior enforceable lien on the Borrower's fee simple interest (or
leasehold  interest,  as applicable) in the Properties  (including any easements
appurtenant  thereto)  subject  only  to  such  exceptions  to  coverage  as are
acceptable  to Lender.  Without  limitation,  there shall be no liens on the fee
superior to the Mortgage,  other than statutory liens for nondelinquent property
taxes.  Each Title Policy shall contain such endorsements as Lender may require,
including   deletion  of  the  creditors'   rights   exception  and  affirmative
endorsement  coverage  for  creditors'  rights  risks.  All  such  policies  and
endorsements shall be in form specified by Lender.

Section 1.2   Accounting Terms: Utilization of GAAP for Purposes of Calculations
              Under Agreement.

         For purposes of this  Agreement,  all  accounting  terms not  otherwise
defined herein shall have the meanings assigned to such terms in conformity with
GAAP.

Section 1.3   Other Definitional Provisions.

         References to  "Articles",  "Sections",  "Subsections",  "Exhibits" and
"Schedules" shall be to Articles, Sections, subsections, Exhibits and Schedules,
respectively,  of this Agreement unless otherwise  specifically provided. Any of
the terms defined in Section 1 .1 may, unless the context otherwise requires, be
used  in the  singular  or  the  plural  depending  on the  reference.  In  this
Agreement, "hereof", "herein", "hereto", "hereunder" and the like mean and refer
to this  Agreement as a whole and not merely to the specific  article,  section,
subsection,  paragraph or clause in which the  respective  word  appears;  words
importing any gender include the other genders;  references to "writing" include
printing, typing, lithography and other means of reproducing words in a tangible
visible form; the words "including", "includes" and "include" shall be deemed to
be followed by the words  "without  limitation";  references to  agreements  and
other contractual  instruments shall be deemed to include subsequent amendments,
assignments,  and  other  modifications  thereto,  but only to the  extent  such
amendments,  assignments and other modifications are not prohibited by the terms
of this  Agreement or any other Loan  Document;  references  to Persons  include
their  respective   permitted   successors  and  assigns  or,  in  the  case  of
governmental  Persons,  Persons  succeeding  to the  relevant  functions of such
Persons;  and all references to statutes and related  regulations  shall include
any amendments of same and any successor statutes and regulations.

                                    ARTICLE 2
                     LOAN TERMS / DEFEASANCE / SUBSTITUTION

Section 2.1       Loan.

<PAGE>

         (A) Loan.  Subject to the terms and conditions of this Agreement and in
reliance upon the  representations  and warranties of Borrower  contained herein
and in the other Loan Documents, Lender agrees to lend to Borrower, and Borrower
agrees to borrow from  Lender,  a loan (the  "Loan") in the  original  principal
amount  of   Ninety-Seven   Million   Twenty   Thousand   and   No/100   Dollars
($97,020,000.00).

         (B) Note.  The Loan shall be evidenced  by two (2) separate  promissory
notes (collectively, the "Note"), each duly executed by Borrower and in form and
substance  satisfactory to Lender, one such note being in the original principal
sum  of  Three  Million  Eight  Hundred  Forty   Thousand  and  No/100   Dollars
($3,840,000.00)  and the other such note being in the original  principal amount
of  Ninety-Three   Million  One  Hundred  Eighty  Thousand  and  No/100  Dollars
($93,180,000.00).

         (C) Use of Proceeds.  The proceeds of the Loan shall be used to (i) pay
all recording fees and taxes, title insurance  premiums,  the costs and expenses
incurred by Lender and Borrower  Parties,  including the legal fees and expenses
of counsel to Lender and Borrower Parties, and other costs and expenses approved
by Lender (which  approval  will not be  unreasonably  withheld)  related to the
Loan; (ii) establish the Accounts  required under the Loan Documents;  and (iii)
for certain other business and commercial uses of Borrower.

         (D) Sums  Payable  Under  Note.  The Note  sets  forth  the  provisions
regarding the  calculation  of sums payable  thereunder and the method of making
such payments, including without limitation, the calculation and payments of the
regular  interest  rate,  the default  interest  rate,  late charges,  principal
amortization and payments due at maturity.

Section 2.2   Prepayments.

         No  prepayment  of the Loan shall be allowed in whole or in part except
as expressly provided in the Note. No other right to prepay shall be implied.

Section 2.3   Defeasance.

         (A) Defeasance  Generally.  Subject to compliance with and satisfaction
of the terms and  conditions of this Section,  Borrower  shall have the right on
any Monthly  Payment Date (defined  below) after the  Defeasance  Lockout Period
Expiration  Date (defined  below) and prior to the Optional  Prepayment Date (as
defined in the Note),  to obtain release of one or more of the  Properties  from
the Lien of the applicable  Mortgages (such event being hereinafter  referred to
as a  "Defeasance")  by  delivering  sufficient  funds to Lender  for  Lender to
purchase the applicable  Defeasance  Collateral  (defined below) as security for
the payment of the Loan. "Monthly Payment Date" shall mean the first day of each
calendar month prior to the Maturity Date. "Defeasance Lockout Period Expiration
Date" shall mean that date which is three (3) years after the date hereof.

<PAGE>

         (B) Conditions. As a condition precedent to any Defeasance and prior to
any release of the applicable Property,  all of the following requirements shall
have been satisfied:

                  (i) Borrower shall provide not less than 30 days prior written
notice to Lender of the  Monthly  Payment  Date upon which  Borrower  intends to
effect a Defeasance  hereunder (the "Defeasance  Date")  identifying the subject
Properties.

                  (ii)    No Default or Event of Default shall exist at the time
of the Defeasance.

                  (iii) Borrower shall pay to Lender a sum of money,  sufficient
in  Lender's  determination,  for  Lender to  purchase  the  required  amount of
Defeasance  Collateral,   as  described  in  clause  (D)  below;  in  connection
therewith, Borrower hereby appoints Lender as its agent and attorney-in-fact for
the  purpose of using such sums to  purchase  the  Defeasance  Collateral,  such
appointment being irrevocable and coupled with an interest.

                  (iv)  Borrower  shall  deliver  a  release  of the  applicable
Property from the lien of the  applicable  Mortgage,  Financing  Statements  and
other  applicable  Loan  Documents  evidencing a Lien against such Property (for
execution by Lender),  in forms  appropriate for the  jurisdiction in which such
Property is located.

                  (v) The DSCR for the Properties that will be undefeased  after
such Defeasance  (that is, not including the Property  subject to the Defeasance
and not including all Properties as to which  Defeasance  shall have  previously
occurred)  (such  Properties  being  hereinafter  referred to as the  "Remaining
Collateral  Pool"),  shall be at least  1.90:1.0.  Borrower  shall be permitted,
without  payment of any  prepayment  fee, to provide to Lender funds to purchase
such  additional  Defeasance  Collateral  (as  determined  by Lender in its sole
discretion),  in excess of that which would otherwise be required hereunder,  in
order to achieve net cash flow from such Defeasance Collateral and the Remaining
Collateral  Pool as  would  equate,  in  Lender's  sole  determination,  to such
required minimum 1.90 DSCR.

                  (vi) All accrued and unpaid principal,  interest and all other
sums due under the Note,  this  Agreement and the other Loan Documents up to the
Defeasance Date, including,  without limitation, all costs and expenses incurred
by Lender or its agents in connection  with such Defeasance  (including  without
limitation,   the  reasonable  fees  and  expenses  incurred  by  attorneys  and
accountants in connection with the review of the proposed Defeasance  Collateral
and  the  preparation  of the  Defeasance  Security  Agreement  (as  hereinafter
defined)  and related  documentation),  shall be paid in full on or prior to the
Defeasance Date.

                  (vii)   At Lender's election, Borrower shall have delivered to
Lender all necessary documents to amend and restate the Note as required by

<PAGE>

Lender to reflect that all or a portion of the real property  security for the
Note has been  defeased. After such restatement, at Lender's option, there may
be one or more notes. Such restated  note or notes shall be in form and
substance  satisfactory  to Lender, and the allocation of security among such
notes shall be determined by Lender in its sole discretion. As used herein, as
to any Defeasance, the "Defeasance Note" shall mean the note(s) that is (are)
secured in whole or part by the  applicable Defeasance Collateral. Therefore,
after defeasance of all of the Properties, the Defeasance  Note shall (and if
Defeasance has occurred as to fewer than all of the Properties, then, at
Lender's  option,  the Defeasance Note may) be secured solely by Defeasance
Collateral.

                  (viii)  Borrower  shall  execute and deliver to Lender any and
all  certificates,  opinions,  documents  or  instruments  required by Lender in
connection  with the Defeasance,  including,  without  limitation,  a pledge and
security  agreement  satisfactory  to Lender  creating a first  priority lien in
favor  of  Lender  in  the  Defeasance   Collateral  (a   "Defeasance   Security
Agreement"), which shall provide among other things, that any excess received by
Lender  from the  Defeasance  Collateral  over the  amounts  payable by Borrower
hereunder  shall be held by Lender as additional  security,  and that any excess
remaining  after payment in full of all  obligations  of Borrower under the Loan
Documents shall be refunded to Borrower.

                  (ix)  Borrower  shall have  delivered  to Lender an opinion of
Borrower's counsel in form and substance satisfactory to Lender stating that (a)
the Defeasance  Collateral  and the proceeds  thereof have been duly and validly
assigned and  delivered  to Lender,  that Lender has a valid,  perfected,  first
priority lien and security interest in the Defeasance  Collateral  delivered and
the proceeds thereof (with appropriate assumptions regarding factual matters and
the  applicable  uniform  commercial  code as it relates to the priority of such
lien),  and  that the  Defeasance  Security  Agreement  is  enforceable  against
Borrower in accordance with its terms and (b) if the Lender shall at the time of
the Defeasance be a REMIC  (defined  below),  (1) the Defeasance  Collateral has
been  validly  assigned  to the REMIC  Trust  which  holds the Note (the  "REMIC
Trust"),   (2)  the  Defeasance  has  been  effected  in  accordance   with  the
requirements of Treasury Regulation Section 1.860(G)-2(a)(8) (as such regulation
may be amended or  substituted  from time to time) and will not be treated as an
exchange  pursuant to Section 1001 of the IRC and (3) the tax  qualification and
status of the REMIC Trust as a REMIC will not be adversely  affected or impaired
as a result  of the  Defeasance.  The term  "REMIC"  shall  mean a "real  estate
mortgage investment conduit" within the meaning of Section 860D of the IRC.

                  (x)  Borrower   shall  have   delivered   to  Lender   written
confirmation  from the Rating  Agencies  selected by Lender that such Defeasance
will not result in a withdrawal,  downgrade or  qualification  of the respective
ratings by the applicable  Rating  Agencies of any securities in connection with
the applicable  securitization  which are then outstanding in effect immediately
prior to such Defeasance. If required by Lender or the Rating Agencies, Borrower
shall,  at  Borrower's  expense,  also  deliver  or  cause  to  be  delivered  a
non-consolidation opinion with respect to Borrower or the Defeasance Obligor

<PAGE>

(as defined  below) in form and substance satisfactory to Lender and the Rating
Agencies.

                  (xi)  Borrower  shall  deliver an officer's  certificate  from
Borrower  certifying  that the  requirements  set forth in this Section 2.3 have
been satisfied.

                  (xii) Borrower shall have satisfied such  additional  criteria
as Lender  then  shall  reasonably  require in  connection  with  defeasance  of
mortgage loans generally.

         (C) Substituted  Defeasance  Obligor. In connection with any Defeasance
hereunder,  Borrower may, or at the option of Lender shall,  in each instance at
Borrower's  expense,  establish or designate a successor  entity  acceptable  to
Lender in its sole and absolute  discretion  (the  "Defeasance  Obligor") and in
such event,  Borrower shall transfer and assign all of its  obligations,  rights
and  duties  under  and to the  Defeasance  Note  together  with the  Defeasance
Collateral to such Defeasance Obligor.  Such Defeasance Obligor shall assume the
obligations under the Defeasance Note and any Defeasance  Security  Agreement as
well as under such provisions of the Loan Documents as Lender may designate,  in
each case pursuant to an assumption agreement in form and substance satisfactory
to Lender.  As conditions to such assignment and assumption,  Borrower shall (i)
deliver to Lender an opinion of counsel  (delivered by counsel  satisfactory  to
Lender)  in form and  substance  satisfactory  to Lender  stating,  among  other
things, that such assumption  agreement is enforceable against Borrower and such
successor  entity in accordance with its terms and that the Note, the Defeasance
Security Agreement and the Loan Documents as so assumed, are enforceable against
such successor  entity in accordance with their  respective  terms, and (ii) pay
all reasonable costs and expenses incurred by Lender or its agents in connection
with such assignment and assumption (including without limitation, the review of
the  proposed  transferee  and the  preparation  of the  assumption  and related
documentation),  and, after Defeasance of all of the Properties,  Borrower shall
be relieved  of its  obligations  under such  documents  and the Loan  Documents
(except for  provisions of the Loan  Documents  pertaining  to  indemnification,
choice  of law,  waivers,  payment  of costs  and  attorneys'  fees,  and  other
provisions which by their terms expressly survive payment in full).

         (D)  Defeasance   Collateral  -  Quantities  and  Criteria.   The  term
"Defeasance   Collateral"  as  used  herein  shall  mean  direct,   non-callable
obligations of the Treasury of the United States of America,  for which its full
faith and credit is pledged,  that provide for payments  prior,  but as close as
possible, to all successive Monthly Payment Dates occurring after the Defeasance
Date,  with each such  payment  being equal to or greater than the amount of the
corresponding  installment  of principal  and interest  under the Note and other
Loan  Documents,  including the payment in full of all  obligations  outstanding
hereunder and under the Note and other Loan Documents  assuming Borrower were to
prepay  the  Note in full on the  Optional  Prepayment  Date.  In the  case of a
Defeasance  of fewer than all of the  Properties,  the amount of the  Defeasance
Collateral shall be sufficient, as determined by Lender, to pay a portion of the

<PAGE>

aggregate monthly debt service,  other Loan sums and amounts due at the Optional
Prepayment Date attributable to a portion of Loan principal equal to the Release
Price  for  the  applicable  Property,   determined  immediately  prior  to  the
Defeasance.

         (E)  Defeasance  Collateral  -  Security  Interest.  Etc.  Each  of the
obligations  of the  United  States of  America  that is part of the  Defeasance
Collateral  shall be duly  endorsed as directed  by Lender or  accompanied  by a
written  instrument of transfer in form and  substance  wholly  satisfactory  to
Lender (including,  without  limitation,  such instruments as may be required by
the depository  institution  holding such securities or by the issuer thereof as
the case may be, to effectuate book entry transfers and pledges through the book
entry  facilities of such  institution) in order to perfect upon the delivery of
the Defeasance  Collateral the first priority security interest therein in favor
of the Lender in conformity with all applicable state and federal laws governing
the granting of such security interest. Borrower shall authorize and direct that
the payments  received from such obligations shall be made directly to Lender or
Lender's  designee  and applied to satisfy the  obligations  of Borrower  or, if
applicable, Defeasance Obligor, under the Defeasance Note.

         (F)  Costs and  Expenses.  Borrower  shall pay on demand  all costs and
expenses (including  reasonable  attorneys' fees) incurred by Lender directly or
indirectly in connection  with the  Defeasance  and the release of the Property,
whether or not the Defeasance or release actually occurs.  Without limitation of
the foregoing,  Borrower shall pay on demand any revenue,  documentary  stamp or
intangible  taxes or any other tax or charge due in connection with the creation
of the  Defeasance  Note,  the  modification  of the  Note,  and  all  costs  of
acquisition and administration of the Defeasance Collateral.

         (G) Release of Property.  Upon compliance with all of the  requirements
and conditions pertaining to Defeasance set forth above, Lender shall release or
cause the release of the applicable  Property from the lien of the Mortgages and
the other Loan Documents in accordance with the terms hereof and thereof.

Section 2.4   Substitution of Properties.

         (A) Substitution Generally. Subject to compliance with and satisfaction
of the terms and  conditions of this Section,  Borrower  shall have the right on
any  Substitution  Date (as defined below) after the  Defeasance  Lockout Period
Expiration Date and prior to the Optional  Prepayment Date, to obtain release of
one or more of the Properties  from the Lien of the Applicable  Mortgages and to
substitute  one or more hotel  properties  (each such  property,  including  all
related real and  personal  property,  a  "Substitute  Property")  for each such
released  Property,  as  substituted  collateral  for the Loan (such event being
hereinafter referred to as a "Substitution").

<PAGE>

         (B) Conditions.  As a condition  precedent to any such Substitution and
prior to any release of the applicable  Property or Properties (such Property or
Properties  to  be  released  being  hereinafter   referred  to  as  a  "Release
Property"), all the following requirements shall have been satisfied:

                  (i)  Borrower  shall  provide  not less than  thirty (30) days
prior  written  notice to  Lender  of the  Monthly  Payment  Date or other  date
reasonably  acceptable  to  Lender  upon  which  Borrower  intends  to  effect a
Substitution hereunder (the "Substitution Date") identifying the subject Release
Property or Release Properties, as well as the corresponding Substitute Property
or Substitute Properties.

                  (ii)    No Default or Event of Default shall exist at the time
of the Substitution.

                  (iii)  Borrower  shall  deliver  a release  of the  applicable
Release Property from the lien of the applicable Mortgage,  Financing Statements
and other applicable Loan Documents evidencing a Lien against such Property (for
execution by Lender),  in forms  appropriate for the  jurisdiction in which such
Release Property is located.

                  (iv) The  Allocated  Loan  Amount of the  Release  Property or
Release  Properties as of any  particular  Substitution  Date,  shall not exceed
Twenty-Five  Million  Dollars  ($25,000,000),  and the aggregate  Allocated Loan
Amount of all  Release  Properties  released  by Lender  from and after the date
hereof shall not exceed Fifty Million Dollars ($50,000,000).

                  (v) The  Substitute  Property  shall  be of  like-kind  as the
Release Property for which it is being substituted,  as reasonably determined by
Lender. As used herein "like-kind" shall mean that each Release Property and its
corresponding  Substitute  Property shall be hotel properties with substantially
the  same  level  of  services  and  amenities,   each  having  franchises  from
nationally-recognized  hotel  franchisors,  and with net cash flow and  property
valuations that are in the aggregate  substantially similar,  unless any of such
consistent characteristics is waived by Lender.
                  (vi) All accrued and unpaid principal,  interest and all other
sums due under this  Agreement  and the Note and other Loan  Documents up to the
Substitution  Date,  including,  without  limitation,  all  costs  and  expenses
incurred by Lender or its agents in connection with such Substitution,  shall be
paid in full on or prior to the Substitution Date.

                  (vii) Borrower shall execute and deliver to Lender any and all
certificates,   opinions,   documents  or  instruments  required  by  Lender  in
connection  with  the  Substitution,  including,  without  limitation,  Lender's
then-current form of mortgage or deed of trust and related security  agreements,
and shall provide Lender with a valid, enforceable  first-priority lien upon the
Substitute  Property,  including all land,  improvements,  furniture,  fixtures,
equipment,  accounts,  reserves and other  property  related to such  Substitute
Property.

<PAGE>

                  (viii)   Borrower   shall  provide   Lender  with  a  Phase  I
environmental  report  for  the  Substitute  Property,  prepared  by  a  company
acceptable  to Lender,  and with such report  being in form and content and with
such   conclusions  as  regards   environmental   matters  as  satisfy  Lender's
then-current requirements.

                  (ix)  Borrower  shall  provide  Lender with a  structural  and
engineering report for the Substitute Property, prepared by a company acceptable
to Lender and being in form and content and having  such  conclusions  as to the
structural  and  engineering  status of the  Substitute  Property  as  satisfies
Lender's   then-current   requirements.   Borrower   shall  escrow  one  hundred
twenty-five  percent  (125%)  of the cost of any  immediate  repairs  which  are
recommended  by  such  report,  pursuant  to an  escrow  agreement  or  holdback
agreement satisfactory to Lender.

                  (x)  Borrower  shall  furnish  Lender with an appraisal of the
Substitute  Property  from an  appraiser  acceptable  to Lender  and in form and
content satisfying  Lender's  then-current  requirements,  which appraisal shall
reflect a  loan-to-value  ratio not in excess of fifty-five  percent (55%).  The
numerator of such loan-to-value  ratio shall be based upon the  then-outstanding
principal  balance  of the  Loan  and the  denominator  of such  ratio  shall be
calculated by adding (i) the appraised value of the Substitute Property (in lieu
of the appraised  property of the  applicable  Release  Property)  plus (ii) the
appraised  value  of all  other  Properties  that  are  part  of  the  Remaining
Collateral Pool (or, in Lender's sole discretion,  in lieu of requiring  current
appraisals  of all such  property,  such other  valuation  as is  acceptable  to
Lender).

                  (xi) Borrower's title to the Substitute Property shall be free
and clear of all liens and  encumbrances  and shall otherwise  satisfy  Lender's
reasonable  underwriting  requirements.  Borrower  shall obtain title  insurance
coverage for Lender for the Substitute Property,  similar to the Title Policies,
reflecting  Lender's  first-priority  mortgage  lien and otherwise in accordance
with Lender's reasonable requirements.

                  (xii) The Substitute Property must generate a stabilized NOI ,
in accordance  with Lender's  then-current  underwriting  criteria and practices
(consistent  with the  requirements of the Rating Agency),  which is equal to or
greater than the stabilized NOI of the applicable  Release Property for which it
is being substituted.
                  (xiii)   Borrower shall own the Substitute Property in fee
simple.

                  (xiv)  Borrower  shall have  delivered to Lender an opinion of
Borrower's counsel in form and substance satisfactory to Lender stating that (a)
the  Substitute  Property has been duly  mortgaged,  assigned  and  delivered to
Lender,  that Lender has a valid,  perfected  lien and security  interest in all
portions of the Substitute Property, and that the new mortgage or deed of trust,
security  agreement  and  other  loan  documents  applicable  to the  Substitute
Property  (the  "New  Loan  Documents")  are  enforceable  against  Borrower  in
accordance with their  respective  terms and (b) if the Lender shall at the time
of the Substitution be a REMIC, (1) the New Loan Documents have been validly

<PAGE>

assigned  to the REMIC Trust which holds the Note (the "REMIC Trust"),  (2) the
Substitution has been effected in a manner that is not in  violation  of the
requirements  of the  IRC,  if  any,  and (3) the tax qualification  and status
of the REMIC  Trust as a REMIC  will not be  adversely affected or impaired as a
result of the Substitution.

                  (xv)  Borrower   shall  have   delivered  to  Lender   written
confirmation  from the Rating Agencies selected by Lender that such Substitution
will not result in a withdrawal,  downgrade or  qualification  of the respective
ratings by the applicable  Rating  Agencies of any securities in connection with
the applicable  securitization  which are then outstanding in effect immediately
prior to such  Substitution.  If  required  by  Lender or the  Rating  Agencies,
Borrower shall, at Borrower's  expense,  also deliver or cause to be delivered a
non-consolidation  opinion with  respect to Borrower (as defined  below) in form
and substance satisfactory to Lender and the Rating Agencies.

                  (xvi)  Borrower  shall deliver an officer's  certificate  from
Borrower  certifying  that the  requirements  set forth in this Section 2.4 have
been satisfied.

                  (xvii) Borrower shall have satisfied such additional  criteria
as  Lender  then  shall  reasonably  require  in  connection  with  release  and
substitution of mortgage loans generally.

         (C)  Costs and  Expenses.  Borrower  shall pay on demand  all costs and
expenses (including  reasonable  attorneys' fees) incurred by Lender directly or
indirectly in connection  with the  Substitution  and the release of the Release
Property,  whether or not the Substitution or release  actually occurs.  Without
limitation  of  the  foregoing,  Borrower  shall  pay  on  demand  any  revenue,
documentary stamp, mortgage tax, title insurance premium, or intangible taxes or
any other tax or charge  due in  connection  with the  execution,  delivery  and
recordation of the New Loan Documents and all instruments related thereto.

         (D) Release of Property.  Upon compliance with all of the  requirements
and conditions  pertaining to Substitution set forth above, Lender shall release
or cause the release of the  applicable  Release  Property  from the lien of the
Mortgages and the other Loan  Documents in accordance  with the terms hereof and
thereof.

Section 2.5       Other Property Releases.

         Except as described in Sections 2.3 and 2.4 above, no Property shall be
released from the lien of any mortgage or deed of trust held by Lender  securing
the Loan, except in accordance with Section 5.6 below.

                                    ARTICLE 3

                               CONDITIONS TO LOAN

Section 3.1   Conditions to Funding of the Loan on the Closing Date.

<PAGE>

         The  obligations of Lender to find the Loan are subject to the prior or
concurrent satisfaction of the conditions set forth below. Where in this Section
any documents,  instruments or information  are to be delivered to Lender,  then
the  condition  shall not be satisfied  unless (i) the same shall be in form and
substance  satisfactory to Lender,  and (ii) if so required by Lender,  Borrower
shall deliver to Lender a certificate duly executed by Borrower stating that the
applicable document, instrument or information is true and complete and does not
omit to state any information  without which the same might reasonably be deemed
misleading.

         (A) Loan  Documents.  On or before the day prior to the  Closing  Date,
Borrower  shall  deliver  and cause to be  delivered  to Lender  all of the Loan
Documents specified in Schedule 3.1(A),  together with such other Loan Documents
as may be required by Lender,  each,  unless  otherwise  noted,  dated as of the
Closing Date, duly executed, in form and substance satisfactory to Lender and in
quantities designated by Lender (except for the Note, of which only the original
shall be signed).

         (B) Performance of Agreements, Truth of Representations and Warranties.
Each Borrower  Party and all other Persons  executing any agreement on behalf of
any Borrower Party shall have performed in all material  respects all agreements
which this Agreement  provides shall be performed on or before the Closing Date.
The  representations  and  warranties  contained  herein  and in the other  Loan
Documents shall be true, correct and complete in all material respects on and as
of the Closing Date.

         (C)  Searches.  Lender  shall have  received  certified  copies of UCC,
judgment, tax lien, bankruptcy and litigation search reports with respect to all
Borrower Parties, all dated not more than 30 days prior to the Closing Date, and
delivered prior to the Closing Date.

         (D) Opinions of Counsel.  On or before the Closing  Date,  Lender shall
have received from Hunton & Williams,  counsel for Borrower, its written opinion
as to (w) the due formation,  valid existence, and good standing of the Borrower
Parties, (x) the due authorization, execution and delivery of this Agreement and
the  Loan  Documents,  (y)  nonconsolidation  of  Borrower  in  bankruptcies  of
Affiliates,  including Borrower  Sponsors,  and (z) such other matters as may be
requested  by Lender.  Also on or before the  Closing  Date,  Lender  shall have
received  opinions of local counsel to Borrower or Lender in the states in which
the  Properties  are located,  as to  enforceability  and such other  matters as
Lender may request.  By  execution of this  document,  Borrower  authorizes  and
directs such  counsel to render such  opinions and deliver the same to Lender on
or before the Closing Date.

<PAGE>

         (E) Insurance Policies and Endorsements. On or before the Closing Date,
Lender shall have received copies of  certificates of insurance  (dated not more
than thirty (30) days prior to the Closing Date) regarding insurance required to
be maintained  under this Agreement and the other Loan Documents,  together with
endorsements satisfactory to Lender naming Lender as additional insured and loss
payee,  as required  by Lender,  under such  policies.  In  addition,  as to any
insurance  covering  matters arising under  Environmental  Law that Borrower may
have as to any of the  Properties,  the same  shall be  endorsed  to  Lender  as
required by Lender.

         (F)  Certificates of Formation and Good Standing.  Prior to the Closing
Date,  Lender shall have  received  copies of the  organizational  documents and
filings  of  each  Borrower  Party,  each  Borrower  Parties'  general  partner,
Guarantors,  and Tenant,  together with good standing  certificates  (or similar
documentation)  (including  verification  of tax  status)  from the state of its
formation,  from the state in which its principal  place of business is located,
from the states where it owns Properties,  and from all states in which the laws
thereof require such Person to be qualified and/or licensed to do business. Each
such  certificate  shall be dated not more  than  sixty  (60) days  prior to the
Closing Date, as applicable,  and certified by the applicable Secretary of State
or other authorized  governmental entity. In addition,  on or before the Closing
Date both the secretary or corresponding  officer of each Borrower Party, or the
secretary or corresponding  officer of the partner,  trustee, or other Person as
required by such Borrower Party's organizational  documents (as the case may be,
the "Borrower  Party  Secretary")  shall have  delivered to Lender a certificate
stating that the copies of the  organizational  documents as delivered to Lender
are true and complete  and are in full force and effect,  and that the same have
not been amended except by such amendments as have been so delivered to Lender.

         (G)  Certificates  of  Incumbency  and  Resolutions.  On or before  the
Closing  Date,  Lender  shall  have  received  certificates  of  incumbency  and
resolutions  of each  Borrower  Party,  Guarantors,  and their  constituents  as
requested  by Lender,  approving  and  authorizing  the Loan and the  execution,
delivery and performance of the Loan Documents, certified as of the Closing Date
by the  appropriate  Borrower Party  Secretary as being in full force and effect
without modification or amendment.

         (H) Letter of Direction.  Prior to the Closing Date,  Lender shall have
received a letter of direction from Borrower  addressed to Lender, or settlement
statement signed by Borrower and Lender, with respect to the disbursement of the
proceeds of the Loan.

         (I) Financial Statements.  Prior to the Closing Date, Lender shall have
received financial statements for the four most recent fiscal years, and for the
current fiscal year to date for the Properties. The financial statements for the
Borrower  shall be audited on a  consolidated  basis for the most recent  fiscal
year;  and to the extent that audited  financial  statements  are  available for
prior  years,  Borrower  shall  provide  them.  If any such  statements  are not
available for Properties that have not been owned by Borrower for the applicable
periods, then Borrower shall provide such financial reports as are available.

<PAGE>

All such financial statements shall be certified  to  Lender  by the  applicable
Borrower  Party  (through  its  chief financial  officer),  which  certification
shall  be  in  form  and  substance reasonably satisfactory to Lender.

         (J) Appointment of Agent for Service. Prior to the Closing Date, Lender
shall have received a letter  appointing CT Corporation  System as each Borrower
Party's agent for service of process, and evidence of retention of said agent.

         (K) Closing  Certificate.  On or before the Closing Date,  Lender shall
have received  certificates  dated as of such date executed by Borrower and also
the chief  financial  officer (or similar  officer)  of Borrower  (the  "Closing
Certificate") stating that: (i) on such date, no Default or Event of Default has
occurred and is  continuing;  (ii) no material  adverse  change in the financial
condition or operations  of the business of Borrower or the projected  cash flow
of  Borrower  has  occurred  since  December  31, 1998 (or if there has been any
change,  specifying  such  change  in  detail);  (iii) the  representations  and
warranties  set forth in this  Agreement  are true and  correct in all  material
respects on and as of such date with the same effect as though made on and as of
such date (or if any such  representations or warranties require  qualification,
specifying such qualification in detail); (iv) there has been no material change
in any  of the  documents,  instruments,  or  information  delivered  to  Lender
pursuant  to this  Article  (or if there has been any  change,  specifying  such
change in detail); (v) Borrower on such date is in compliance with all the terms
and  provisions  set  forth in this  Agreement  on its part to be  observed  and
performed, and (vi) that after giving effect to the Loan, the fair salable value
of the assets of Borrower will exceed the probable  liability on its debts, that
Borrower will be able to pay its debts as they mature and that Borrower will not
have unreasonably small capital to conduct its business.

         (L) Appraisals.  Prior to the Closing Date,  Lender shall have received
an independent  appraisal of each Property from an appraiser  engaged by Lender,
which  indicates the fair market value of such Property and is  satisfactory  to
Lender in all respects. Each such appraisal shall conform in all respects to the
requirements  for surveys  set forth in the  Financial  Institutions  Reform and
Recovery Act of 1989 and the  regulations  promulgated  thereunder (as if Lender
were an institution under the jurisdiction thereof) and the Uniform Standards of
Professional Appraisal Practices of the Appraisal Foundation.

         (M) Environmental Reports. Prior to the Closing Date, Lender shall have
received and approved  Environmental  Reports prepared or updated not later than
sixty  (60)  days  prior to the  Closing,  relating  to each of the  Properties,
together with letters from the preparer(s) thereof entitling Lender to rely upon
the Environmental Reports.

         (N) Operating Leases, Management,  License and Franchise Agreements. On
or before the Closing Date,  Lender shall have received  certified copies of all
Operating  Leases,  management  agreements,  license  agreements  and  franchise
agreements relating to the Properties.

<PAGE>

         (O) Zoning. On or before the 10th day prior to the Closing Date, Lender
shall have received evidence reasonably  satisfactory to Lender as to the zoning
and subdivision compliance of the Properties.

         (P)     Franchisor Comfort Letters.   Prior to the Closing Date, Lender
shall have received so-called "comfort letters" or equivalent assurances with
respect to each of the Properties, from Amerisuites Hospitality, Inc.
(Amerisuites), Promus Hotels, Inc. (Hampton Inn and Homewood Suites), Marriott
International, Inc. (Residence Inn by Marriott) and/or other franchisors, as the
case may be.

         (Q) Title  Policies.  Prior to the Closing,  Lender shall have received
preliminary title reports or title commitments for all Properties.  On or before
the Closing  Date,  Lender  shall have  received  and  approved  pro forma Title
Policies for each  Mortgage,  and as of the Closing the Title  Company  shall be
irrevocably committed and prepared immediately to issue the Title Policies.

         (R) Surveys.  Prior to the Closing  Date,  Lender shall have received a
survey of each  Property  reasonably  satisfactory  to Lender and  sufficient to
enable the Title Company to delete the "standard survey  exception" from the pro
forma Title Policies and to issue a "same as survey" endorsement.

         (S)  Licenses,  Permits and  Approvals.  On or before the Closing Date,
Lender  shall have  received  copies of a final,  unconditional  certificate  of
occupancy  issued  with  respect  to each  Property,  together  with  all  other
applicable  licenses,  permits and  approvals  required for the Borrower to own,
use,  occupy,  operate and maintain  such  Properties,  including  all necessary
licenses for food service and the service of alcoholic beverages.

         (T) Leases and Other Agreements.  On or before the Closing Date, Lender
shall have  received  and  approved  certified  copies of all  operating  leases
(including  each Operating  Lease),  operating  agreements,  service  contracts,
management  agreements,  franchise  agreements  and  equipment  leases,  if any,
relating to Borrower's ownership and operation of the Properties.

         (U) Lender's  Inspection.  On or before the Closing Date,  Lender shall
have  received  a  satisfactory  property  condition  report  for  each  of  the
Properties.  Such report  shall set forth any items of deferred  maintenance  at
such  Property.  Such  reports  shall be prepared by engineers  satisfactory  to
Lender.

         (V)  Deposits.  The  deposits  required  herein  and in the other  Loan
Documents, including without limitation, the initial deposits into the Accounts,
shall have been made from Loan funds.

         (W)      Ground Leases. Estoppels.  Prior to the Closing, Lender shall
have received certified copies of the Ground Leases; and not later than the

<PAGE>

Closing, Lender shall have received such estoppel  certificates  and  agreements
as Lender may require,  duly executed by Borrower and the holders of superior
interests in the Properties that are subject to Ground Leases.

         (X)  Commitment  Fee. At the Closing,  Lender  shall have  received its
financing  fee of  twenty-five  one-hundredths  percent  (0.25%) of the  maximum
principal amount of the Loan, which is paid in full.

         (Y)     Legal Fees: Closing Expenses.  Borrower shall have paid any and
all legal fees and expenses of counsel to Lender, together with all recording
fees, mortgage taxes, other taxes, title insurance premiums, and other costs and
expenses related to the Closing.

         (Z)    Other Requirements.  Prior to the Closing Date, Borrower Parties
shall have satisfied such other conditions as Lender may reasonably request.

         (AA) Other  Review.  Lender  shall have  completed  all other review of
Borrower  Parties,  the  Properties,  and such  other  items  as they  determine
relevant, and shall have determined based upon such review to find the Loan.

                                    ARTICLE 4
                    BORROWER'S REPRESENTATIONS AND WARRANTIES

         In order to induce Lender to enter into this  Agreement and to make the
Loan,  each Borrower Party  represents and warrants to Lender that the following
statements, after giving effect to the Loan, will be, true, correct and complete
as of the Closing Date.

Section 4.1   Organization, Powers, Capitalization, Good Standing, Business.

         (A)  Organization  and  Powers.   Each  Borrower  Party  is  a  limited
partnership,  duly  organized,  validly  existing and in good standing under the
laws of the State of Tennessee. EQI Financing Corporation II is the sole general
partner of each  Borrower  Party.  Equity  Inns  Partnership,  L.P. is a limited
partnership and Equity Inns, Inc. is a corporation, in each case duly organized,
validly existing and in good standing under the laws of Tennessee. Each Borrower
Party and  Borrower  Sponsor has all  requisite  power and  authority to own and
operate its  properties,  to carry on its business as now conducted and proposed
to be conducted, and to enter into each Loan Document to which it is a party and
to perform the terms thereof.

         (B)  Qualification.  Each Borrower  Party is duly qualified and in good
standing  in the  state  of its  formation  and in each  state  where  it owns a
Property.  In  addition,  each  Borrower  Party  is duly  qualified  and in good
standing in each state where  necessary  to carry on its  present  business  and
operations,  except in jurisdictions in which the failure to be qualified and in
good  standing  could not  reasonably  be  expected  to have a Material  Adverse
Effect. All jurisdictions in which each Borrower Party is qualified to do
business are set forth on Schedule 4.1(B).

<PAGE>

         (C) Business.  Each  Borrower  Party is engaged only in the business of
owning and operating its Properties, and EQI Financing Corporation II is engaged
only in the  business  of acting as the sole  general  partner of each  Borrower
Party.

Section 4.2       Authorization of Borrowing, etc.

         (A) Authorization of Borrowing. Borrower has the power and authority to
incur the  Indebtedness  evidenced  by the Note.  The  execution,  delivery  and
performance  by each  Borrower  Party and  Borrower  Sponsor of each of the Loan
Documents  to  which  it is a party  and the  consummation  of the  transactions
contemplated  thereby have been duly  authorized by all  necessary  partnership,
trustee, corporate or other action, as the case may be.

         (B) No  Conflict.  The  execution,  delivery  and  performance  by each
Borrower Party and Borrower Sponsor of the Loan Documents to which it is a party
and the  consummation of the transactions  contemplated  thereby do not and will
not: (1) violate (x) any provision of law  applicable  to any Borrower  Party or
Borrower  Sponsor;  (y)  the  partnership  agreement,   certificate  of  limited
partnership,  certificate of  incorporation,  bylaws,  declaration of trust,  or
other organizational  documents,  as the case may be, of each Borrower Party and
Borrower  Sponsor;  or (z) any order,  judgment  or decree of any court or other
agency of government binding on any Borrower Party or any of its Affiliates; (2)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any  Contractual  Obligation of any Borrower Party
or any of its Affiliates; (3) result in or require the creation or imposition of
any Lien upon any of the Properties or any other assets of any Borrower Party or
any of its  Affiliates;  or (4)  require  any  approval or consent of any Person
under any Contractual Obligation of any Borrower Party or any of its Affiliates,
other than those approvals or consents which have been obtained on or before the
dates required under such Contractual Obligation, but in no event later than the
Closing Date.

         (C) Governmental Consents.  The execution,  delivery and performance by
each Borrower Party and Borrower  Sponsor of the Loan Documents to which it is a
party, and the consummation of the transactions  contemplated thereby do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal,  state or other governmental authority
or regulatory body.

         (D) Binding  Obligation.  This  Agreement  is, and the Loan  Documents,
including the Note,  when executed and delivered  will be, the legally valid and
binding obligations of each Borrower Party and Borrower Sponsor which is a party
to the  same,  each  enforceable  against  the  Borrower  Parties  and  Borrower
Sponsors,  as applicable,  in accordance with their respective terms, subject to
bankruptcy, insolvency, moratorium, reorganization and other similar laws

<PAGE>

affecting  creditor's  rights.  No Borrower  Party or  Borrower  Sponsor has any
defense  or  offset  to any of its  obligations  under  the Loan  Documents.  No
Borrower  Party or any Affiliate  thereof has any claim against  Lender,  or any
officer, employee, agent, director, or Affiliate of Lender.

Section 4.3   Financial Statements.

         All financial statements  concerning any of Borrower and its Affiliates
which have been or will  hereafter  be  furnished by or on behalf of Borrower to
Lender  pursuant to this  Agreement  have been or will be prepared in accordance
with GAAP,  consistently  applied  (except as disclosed  therein) and do or will
present fairly the financial  condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods then ended.

Section 4.4   Indebtedness and Contingent Obligations.

         As of the Closing,  no Borrower  Party shall have any  Indebtedness  or
Contingent  Obligations  except for the  Obligations  and except those,  if any,
expressly permitted by this Agreement or any of the Mortgages.

Section 4.5   Title to Properties; Liens; Zoning; Leases; Agreements; Rent Roll;
              Lease Issues; Condition.

         (A)  Borrower  has good and  marketable  fee simple (or  leasehold,  as
applicable)  title to its respective  Properties.  Borrower owns and will own at
all times all personal  property  relating to its respective  Properties  (other
than  personal  property  owned by each  Tenant  and by any sub-  tenants of any
Property as set forth on Schedule 4.5(A), subject only to those title exceptions
shown  in the  Title  Policies.  Except  for  such  title  exceptions,  all such
Properties are free and clear of Liens. There are no proceedings in condemnation
or eminent  domain  affecting  any of the  Properties,  and to the  knowledge of
Borrower, none is threatened.

         (B) Each Property is zoned for hotel use (or such use is  grandfathered
or  permitted  pursuant  to a  variance  or  special  exception  as set forth on
Schedule  4.5(B) - 1), which zoning  designation  (or variance or exception,  as
applicable)  is  unconditional,  in full  force and  effect,  and is beyond  all
applicable  appeal  periods.  Except as set forth in the  immediately  preceding
sentence  and,  each of the  Properties  is in  compliance  with all  applicable
zoning, subdivision and land use laws, regulations and ordinances. Except as set
forth  on  Schedule  4.5(B)  - 2,  in the  event  that  all or any  part  of the
improvements  located on a Property are destroyed or damaged,  said improvements
can be  legally  reconstructed  to  their  condition  prior  to such  damage  or
destruction,  and thereafter exist for the same use without violating any zoning
or other  ordinances  applicable  thereto and without the necessity of obtaining
any variances or special permits, other than customary demolition,  building and
other  construction  related permits (except for those  Properties which use has
been  grandfathered or granted a variance or special  exception).  Except as set
forth on Schedule 4.5(B) - 3, each Property contains enough peremanent parking

<PAGE>

spaces (both regular spaces and handicap spaces), or unstriped available paved
space to satisfy all requirements  imposed by applicable laws with respect to
parking. No legal proceedings are pending or, to the knowledge of Borrower,
threatened with respect to the zoning of any of the  Properties.  To the
 knowledge  of Borrowerbased  on the  zoning  letters,  neither  the  zoning nor
any  other  right  to construct, use or operate the Properties is in any way
dependent upon or related to any real estate other than the applicable
Properties. No tract map, parcel map, condominium plan, condominium declaration,
or plat of subdivision will be recorded by Borrower with respect to any Property
without Lender's prior written consent.

         (C)  There  are no  Leases  affecting  any  Property  other  than  each
Operating Lease described in the Mortgages,  the equipment  leases  described in
Section 11(d) of the Mortgages,  and certain  telecommunication leases with Apex
Company,  or an affiliate  thereof,  at those  Properties  which are leased from
Borrower by Wayne Holding Corp. Except for the tenants  identified in the Leases
that have been delivered to Lender, no Person (other than hotel guests occupying
hotel rooms and suites) has any right to occupy any portion of the Property, and
to the  knowledge of Borrower  after due inquiry,  no Person is so occupying any
portion of any Property.

         (D)  Borrower  has  provided  Lender,  or has caused  Tenant to provide
Lender, with true and complete copies of all contracts and agreements  affecting
each Property and the operation and management of each Property,  including, all
management  agreements,  all license agreements,  all franchise agreements,  the
Ground  Leases  and all  Leases,  tenancies  or other  contracts  or  agreements
relating to the use, maintenance,  development, operation or management thereof.
Since the date of their provision to Lender, to the best of Borrower's knowledge
(after due  inquiry),  none of the  foregoing  agreements  has been  modified or
amended in any respect and no such  modification  or amendment is  contemplated.
Except as set forth on Schedule  4.5(D),  and except for the Loan Documents,  no
Borrower  is a party to, and will not be a party to any  agreement,  document or
instrument  other  than the Loan  Documents  and other  than its  organizational
documents.

         (E) True and correct copies of the Operating Leases are attached hereto
as Schedule 4.5(E). (i) the Operating Leases are in full force and effect;  (ii)
neither  Borrower  has  given any  notice of  default  to any  tenant  under any
Operating Lease which remains uncured; (iii) no tenant has any set off, claim or
defense to the enforcement of any Operating Lease;  (iv) no tenant is in arrears
in the payment of rent,  additional  rent or any other  charges  whatsoever  due
under any Operating  Lease,  or, to the knowledge of Borrower,  is materially in
default  in the  performance  of any  other  obligations  under  the  applicable
Operating Lease; (v) Borrower has completed all work or alterations  required of
the  landlord  or  lessor  under  each  Operating  Lease,  and all of the  other
obligations  of  landlord  or  lessor  under  the  Operating  Leases  have  been
performed;  and (vi)  there  are no rent  concessions  (whether  in form of cash
contributions,  work  agreements,  assumption  of  an  existing  tenant's  other
obligations, or otherwise) or extensions of time whatsoever not reflected in
such Operating Lease.

<PAGE>

         (F) There are no legal proceedings commenced (or, to the best knowledge
of Borrower,  threatened)  against  Borrower by any tenant or former tenant.  No
rental in excess of one month's rent has been  prepaid  under any of the Leases.
Each of the Leases is valid and  binding on the  parties  thereto in  accordance
with its terms.  The execution of this  Agreement  and the other Loan  Documents
will not constitute an event of default under any of the Leases.

         (G) All of the improvements  located on each Property  ("Improvements")
are in good condition and repair,  except for the  contemplated  renovations set
forth on  Schedule  4.5(G) - 1.  Borrower  is not aware of any  latent or patent
structural or other significant defect or deficiency in the Improvements. Except
as set forth on  Schedule  4.5(G) - 2, city  water  supply,  storm and  sanitary
sewers,  and  electrical,  gas and  telephone  facilities  are available to each
Property within the boundary lines of each Property,  are sufficient to meet the
reasonable  needs of each Property as now used or presently  contemplated  to be
used, and no other utility facilities are necessary to meet the reasonable needs
of each  Property  as now used,  and  design  and  as-built  conditions  of each
Property  are such that  surface  and storm  water does not  accumulate  on each
Property and does not drain from each Property across land of adjacent  property
owners  in any  manner  which  would  have a  Material  Adverse  Effect  on such
Property. Except as set forth on Schedule 4.5(G) - 3, no part of any Property is
within a flood plain and none of the Improvements  create an encroachment  over,
across or upon any Property's boundary lines, rights of way or easements, and no
building or other  improvements  on adjoining  land create such an  encroachment
which could reasonably be expected to have a Material Adverse Effect. All public
roads and streets  necessary for service of and access to the Properties for the
current and  contemplated  uses thereof have been completed and are  serviceable
and are physically  and legally open for use by the public.  All liquid or solid
waste disposal, septic or sewer system located at the Properties are in good and
safe condition and repair and in compliance with all applicable law.

Section 4.6   Litigation: Adverse Facts.

         Except as set forth on  Schedule  4.6 or for  those  matters  for which
coverage has been tendered and accepted (without  reservation) by the applicable
insurance  carrier,  there are no  judgments  outstanding  against any  Borrower
Party, or affecting any property of any Borrower Party, nor is there any action,
charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration now pending or, to the best knowledge of Borrower after due inquiry,
threatened against any Borrower Party. The actions,  charges,  claims,  demands,
suits,  proceedings,  petitions,  investigations  and  arbitrations set forth on
Schedule 4.6 will not result, if adversely determined,  and could not reasonably
be expected to result, either individually or in the aggregate,  in any Material
Adverse  Effect on Borrower or the  Properties and do not relate to and will not
affect the consummation of the transactions contemplated hereby.

<PAGE>

Section 4.7   Payment of Taxes.

         All material tax returns and reports of each Borrower Party required to
be filed have been  timely  filed,  and all taxes,  assessments,  fees and other
governmental  charges upon such Person and upon its properties,  assets,  income
and  franchises  which are due and payable  have been paid when due and payable.
There is not presently pending (and to the best of Borrower's  knowledge,  there
is not  contemplated)  any special  assessment  against any Property or any part
thereof.  No part of any  Property is  included or assessed  under or as part of
another  tax lot or parcel,  and no part of any other  property  is  included or
assessed  under or as part of the tax lots or parcels  comprising  any Property.
None of the United  States  income tax  returns of  Borrower  Parties  are under
audit.  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
Borrower  Parties in respect of any taxes or other  governmental  charges are in
accordance with GAAP.

Section 4.8   Adverse Contracts.

         Except  for the  Loan  Documents  and  each  Operating  Lease,  neither
Borrower nor any of its  Affiliates is a party to or bound by, nor is any of its
property  subject to or bound by any contract or other agreement which restricts
its  ability  to  conduct  its  business  in  the  ordinary  course  or,  either
individually  or in the  aggregate,  has a  Material  Adverse  Effect  or  could
reasonably  be  expected  to  have  a  Material  Adverse  Effect.  All  existing
management (property and asset), brokerage or other such similar agreements with
a  Borrower  Affiliate  with  respect  to  assets  owned  by  Borrower,  may  be
terminated,  without cause and without  payment of a penalty or fee, on not less
than thirty (30) days prior written  notice in the event that Lender at any time
exercises  any of its rights to take control  (voting or otherwise) of Borrower.
All fees paid under any such agreement with an Affiliate shall be subordinate to
the Indebtedness and all payments due under the Loan Documents.

Section 4.9   Performance of Agreements.

         No  Borrower  Party is in default  in the  performance,  observance  or
fulfillment of any of the obligations,  covenants or conditions contained in any
Contractual  Obligation  of any such Person which could have a Material  Adverse
Effect.

Section 4.10  Governmental Regulation.

         Borrower is not subject to regulation  under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940
or to any federal or state statute or  regulation  limiting its ability to incur
indebtedness for borrowed money.

Section 4.11  Employee Benefit Plans.

         Except  with  respect  to plans,  trusts or  agreements  identified  on
Schedule 4.11:

<PAGE>

         (A) No Other Plans.  Neither Borrower nor any ERISA Affiliate maintains
or  contributes  to, or has any obligation  (including a contingent  obligation)
under,  any Employee  Benefit Plans.  Neither  Borrower nor any ERISA  Affiliate
maintains or  contributes  to any employee  welfare  benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to employees after termination of
employment  other than as  specifically  required by Part 6 of Title I of ERISA.
Neither  Borrower  nor any Person that is or was an ERISA  Affiliate at any time
during the immediately preceding six years has ever maintained, been required to
contribute  to, been required to pay any amount or had any  obligation  (whether
actual or contingent)  with respect to any Pension Plan or  Multiemployer  Plan.
Neither  Borrower  nor any ERISA  Affiliate  is the  grantor of a grantor  trust
established pursuant to Subpart E of Subchapter J of the IRC.

         (B) ERISA and IRC Compliance and Liability.  Each Employee Benefit Plan
(i) has been  administered  in  accordance  with its terms and (ii)  complies in
form, and has been maintained and operated in accordance  with, the requirements
of ERISA and, where  applicable,  the IRC,  except where failure to comply would
not result in a material liability to any such Person and except for the failure
to adopt any  required  amendments  for which the remedial  amendment  period as
defined in Section 401(b) of the IRC has not yet expired.  Each Employee Benefit
Plan that is intended to be qualified  under Section  401(a) of the IRC has been
determined by the Internal  Revenue  Service ("IRS") to be so qualified and each
trust related to such plan has been determined to be exempt under Section 501(a)
of the IRC. No  material  liability  has been  incurred by Borrower or any ERISA
Affiliate  which remains  unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan. Borrower and each ERISA Affiliate has complied in all
material  respects  with  the  applicable  requirements  of Part 6 of Title I of
ERISA.

         (C)  Funding.  No  Pension  Plan has been  terminated.  No  accumulated
funding  deficiency  (as  defined in Section  412 of the IRC) has been  incurred
(without regard to any waiver granted under Section 412 of the IRC), nor has any
funding  waiver from the IRS been  received  or  requested  with  respect to any
Pension  Plan,  nor has  Borrower  or any  ERISA  Affiliate  failed  to make any
contributions  or to pay any amounts due and owing as required by Section 412 of
the IRC,  Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such  contributions  under  Section  412 of the IRC or  Section  302 of
ERISA,  nor has there been any event  requiring  any  disclosure  under  Section
4041(c)(3)(C), 4063(a) or 4068(f) of ERISA with respect to any Pension Plan.

         (D)  Prohibited  Transactions  and Payments.  Neither  Borrower nor any
ERISA Affiliate has: (1) engaged in a nonexempt prohibited transaction described
in Section 406 of ERISA or Section 4975 of the IRC;  (2) incurred any  liability
to the PBGC which  remains  outstanding  other than the payment of premiums  and
there are no premium  payments  which are due and  unpaid;  (3) failed to make a
required contribution or payment to a Multiemployer Plan; or

<PAGE>

(4)  failed to make a  required  installment  or other  required  payment  under
Section 412 of the IRC.

         (E)      No Termination Event.  No Termination Event has occurred or is
reasonably expected to occur.

         (F) ERISA Litigation.  No material  proceeding,  claim,  lawsuit and/or
investigation  is  existing  or, to the best  knowledge  of  Borrower  after due
inquiry,  threatened  concerning or involving any (1) employee  welfare  benefit
plan (as defined in Section 3(1) of ERISA)  currently  maintained or contributed
to by Borrower or any ERISA  Affiliate,  (2) Pension  Plan or (3)  Multiemployer
Plan, other than routine claims for benefits.

Section 4.12  Intellectual Property.

         Schedule 4.12 sets forth a complete listing of all patents, trademarks,
tradenames,  and other  intellectual  property  rights  owned by or  licensed to
Borrower for use in the ownership, operation and management of the businesses of
Borrower.  Except as set  forth in  Schedule  4.12,  Borrower  has no  licenses,
patents,  trademarks,  tradenames,  or other intellectual property rights of any
other Person.

Section 4.13  Broker's Fees.

         No brokers or finders fee,  commission or similar  compensation will be
payable  with  respect to the  issuance  or sale of the Note or any of the other
transactions  contemplated  hereby  or by any of the  Loan  Documents.  No other
similar fees or commissions  will be payable by any Borrower Party for any other
services rendered ancillary to the transactions contemplated hereby.

Section 4.14  Environmental Compliance.

         (A)  No  Environmental  Claims.  There  are  no  claims,   liabilities,
investigations,  litigation,  administrative proceedings,  whether pending or to
the knowledge of Borrower,  threatened,  or judgments or orders  relating to any
Hazardous  Materials  or otherwise  arising out of or relating to  Environmental
Laws (collectively called "Environmental Claims") asserted or threatened against
Borrower,  or relating to any real property currently or formerly owned,  leased
or operated by Borrower.  Except as disclosed in the Environmental  Reports,  to
the best knowledge of Borrower, neither Borrower nor any other Person has caused
or  permitted  any  Hazardous  Material  to  be  used,   generated,   reclaimed,
transported,  released,  treated,  stored or disposed of in a manner which could
form the basis for an Environmental Claim against Borrower or any Property.

         (B)      Storage of Hazardous Materials.  Except as disclosed in the
Environmental Reports delivered to Lender in accordance with Section 3.1, and
except for those items and materials customarily used in connection with the

<PAGE>

management of property similar to the Properties  which  materials at the
Properties  exist only in reasonable quantities,  and  are  stored  and  used,
in  accordance  with  all  applicable Environmental  Laws, to the best knowledge
of Borrower  after due inquiry,  no Hazardous Materials are or were stored or
otherwise located,  and no underground storage  tanks or surface  impoundments
are or were  located,  on real property currently  or formerly owned,  leased or
operated by  Borrower,  or to the best knowledge of Borrower after due inquiry,
on adjacent  parcels of real property, and no part of such real  property, or to
the best  knowledge of Borrower after due inquiry,  no part of such adjacent
parcels of real property,  including the groundwater  located  therein  or
thereunder,   is  presently  contaminated  by Hazardous Materials.

         (C) Compliance with  Environmental  Laws. To the knowledge of Borrower,
each  Property and Borrower  has been and is  currently in  compliance  with all
applicable Environmental Laws, including obtaining and maintaining in effect all
permits,  licenses or other authorizations required by applicable  Environmental
Laws.

Section 4.15  Solvency.

         As of and from and after the Closing, each Borrower Party: (A) owns and
will own assets the fair saleable  value of which are (1) greater than the total
amount of liabilities (including Contingent  Obligations) of such Borrower Party
and (2)  greater  than the  amount  that will be  required  to pay the  probable
liabilities of such Borrower Party's then existing debts as they become absolute
and matured  considering  all financing  alternatives  and potential asset sales
reasonably  available  to  such  Borrower  Party;  (B) has  capital  that is not
insufficient  in  relation  to  its  business  as  presently  conducted  or  any
contemplated  or  undertaken  transaction;  and (C) does not intend to incur and
does not believe  that it will incur debts  beyond its ability to pay such debts
as they become due.

Section 4.16      Disclosure.

         To the best  knowledge of Borrower,  no  representation  or warranty of
Borrower  contained  in this  Agreement,  the other Loan  Documents or any other
document,  certificate or written statement  furnished to Lender by or on behalf
of Borrower for use in connection  with the Loan  Documents  contains any untrue
statement of a material fact or omitted,  omits or will omit to state a material
fact necessary in order to make the statements  contained  herein or therein not
misleading in light of the  circumstances  in which the same were made. There is
no material fact known to Borrower that has had or will have a Material  Adverse
Effect  and that has not  been  disclosed  herein  or in such  other  documents,
certificates  and statements  furnished to Lender for use in connection with the
transactions contemplated hereby.

<PAGE>

Section 4.17  Use of Proceeds and Margin Security.

         Borrower  shall use the  proceeds of the Loan only for the purposes set
forth  herein and  consistent  with all  applicable  laws,  statutes,  rules and
regulations. No portion of the proceeds of the Loan shall be used by Borrower or
Person in any manner that might cause the borrowing or the  application  of such
proceeds to violate  Regulation G, Regulation U, Regulation T or Regulation X or
any other  regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities and Exchange Act of 1933.

Section 4.18  Insurance.

         Schedule  4.18 sets forth a complete  and accurate  description  of all
policies of insurance  for Borrower  that are in effect as of the Closing  Date.
Borrower is adequately  insured under such policies,  no notice of  cancellation
has been  received  with respect to such  policies and Borrower is in compliance
with  all  conditions  contained  in such  policies.  Borrower  understands  and
acknowledges  that, as set forth in the  Mortgages,  to the extent that Borrower
does not obtain insurance policies required thereunder,  Lender has the right to
do so.

Section 4.19  Compliance with Laws.

         To the knowledge of Borrower,  Borrower is not in violation of any, and
the Properties  and other assets owned by Borrower are in compliance  with each,
law, ordinance, rule, regulation,  order, policy, guideline or other requirement
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  properties,  including,  without limitation,  any
violation  relating to the "Americans With Disabilities Act," or relating to any
use, release,  storage,  transport or disposal of any Hazardous Material,  which
violation  or  non-compliance  would  subject  Borrower or any of its  partners,
officers,  trustees,  or employees to criminal  liability or could reasonably be
expected to have, either individually or together with all such other violations
and  non-compliance,  a Material  Adverse  Effect and no such violation has been
alleged. Borrower has filed in a timely manner all reports,  documents and other
materials  required to be filed by it with any  governmental  bureau,  agency or
instrumentality (and the information  contained in each of such filings is true,
correct and complete in all respects), except where failure to make such filings
would not have a Material Adverse Effect.  Borrower has retained all records and
documents  required to be retained by it pursuant to any law,  ordinance,  rule,
regulation,  order,  policy,  guideline or other requirement of any governmental
authority,  except where  failure to retain such  records  would not subject any
Borrower  Party  or any of  its  respective  partners,  officers,  trustees,  or
employees to criminal  liability  and could not  reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.

Section 4.20      Investments.

         No Borrower Party has any Investment in any Person.

<PAGE>

Section 4.21  Legal Opinions.

         The Borrower  Parties  reviewed  and are familiar  with all opinions of
legal  counsel  to be  delivered  in  connection  with  the  Loan.  None  of the
assumptions set forth in such opinions is incorrect.

Section 4.22  Bankruptcy.

         None  of the  Borrower  Parties  or any  Affiliate  of any of them is a
debtor,  and no property of any of them (including each Property) is property of
the estate,  in any voluntary or involuntary  case under the Bankruptcy  Code or
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter in effect, whether in the United States or elsewhere. None of them and
no  property  of any of them is under the  possession  or control of a receiver,
trustee or other custodian. None of them has made any assignment for the benefit
of creditors.  No such assignment or bankruptcy or similar case or proceeding is
now contemplated.

Section 4.23  Defaults.

         No Default or Event of Default exists.

Section 4.24  Names, Principal Places of Business.

         The principal place of business of each Borrower Party is c/o Equity
Inns, Inc., 7700 Wolf River Boulevard, Germantown, Tennessee  38138.  Borrower
has used no trade names or variations on their names.

                                    ARTICLE 5
                              COVENANTS OF BORROWER

         Each Borrower Party  covenants and agrees that until payment in full of
the Loan,  all accrued and unpaid  interest  and all other  Obligations,  unless
Lender shall otherwise give its prior written consent, such Person shall perform
and comply with all covenants in this Article 5 applicable to such Person.

Section 5.1   Estoppel Certificates.

         (A)  Within  ten (10)  Business  Days  following  a request  by Lender,
Borrower  shall  provide  to  Lender  a  duly  acknowledged   written  statement
confirming the amount of the outstanding Indebtedness,  the terms of payment and
maturity date of the Note, the date to which interest has been paid, and whether

<PAGE>

any offsets or defenses exist against the Indebtedness, and if any such  offsets
or defenses are alleged to exist, the nature thereof shall be set forth in
detail.

         (B)  Within  ten (10)  Business  Days  following  a written  request by
Borrower,  Lender shall provide to Borrower for  informational  purposes only, a
duly acknowledged  written statement setting forth the amount  outstanding under
the Note,  the date to which  interest  has been paid,  and  whether  Lender has
provided  Borrower  with written  notice of any Event of Default  which  remains
uncured. Compliance by Lender with the requirements of this Section shall be for
informational purposes only and shall not be deemed to be a waiver of any rights
or remedies of Lender hereunder or under any other Loan Document.

Section 5.2   Restriction on Fundamental Changes.

         No Borrower Party:

         (A) will,  or will  permit or suffer  any other  Person  to: (i) amend,
modify or waive any term or provision of its partnership agreement,  certificate
of limited  partnership,  certificate of incorporation,  bylaws,  declaration of
trust, or other organizational documents, as the case may be, unless required by
law or (ii) liquidate,  wind-up or dissolve itself (or suffer any liquidation or
dissolution);

         (B) except as expressly permitted by Section 13 of each Mortgage, will,
or will permit or suffer any other  Person on its behalf,  to: (i) issue,  sell,
assign,  pledge,  convey,  dispose or otherwise  encumber any stock,  membership
interest,  partnership  interest,  or other equity or beneficial interest in any
Person or (ii) grant any options,  warrants,  purchase  rights or other  similar
agreements or understandings with respect thereto;

         (C) acquire by purchase or otherwise all or any part of the business or
assets of, or stock or other evidence of beneficial ownership of, any Person.

Section 5.3       Transactions with Affiliates.

         Borrower will not directly or indirectly  enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any property
or the  rendering  of any  service)  with any  Affiliate of Borrower or with any
director,  officer or employee of any Borrower  Party,  or  transactions  in the
ordinary  course of and pursuant to the reasonable  requirements of the business
of Borrower  and upon fair and  reasonable  terms which are fully  disclosed  to
Lender  and are no less  favorable  to  Borrower  than  would be  obtained  in a
comparable  arm's length  transaction  with a Person that is not an Affiliate of
Borrower. Notwithstanding the foregoing, no payments may be made with respect to
any transaction  with Affiliates upon the occurrence and during the continuation
of a Default or Event of Default. Each agreement with any Affiliate shall be for
a term not to  exceed  one (1)  year,  and  shall  provide  that the same may be
terminated by Lender at its option during the continuation of an Event of
Default.

<PAGE>

Section 5.4   Compliance with ERISA.

         (A) Employee Benefit Plans.  Except as listed in Schedule 4.11, none of
Borrower or their ERISA  Affiliates  is a party to any  Employee  Benefit  Plan,
Pension  Plan  or   Multiemployer   Plan.  As  to  any  Employee  Benefit  Plan,
Multiemployer  Plan or Pension  Plan listed on Schedule  4.11,  with  reasonable
promptness,  and in any event within thirty (30) days, Borrower will give notice
of and/or deliver to Lender copies of (1) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications  received or sent by
any ERISA  Affiliate  with respect to such  request;  and (2) the failure of any
ERISA  Affiliate to make a required  installment or payment under Section 302 of
ERISA or Section 412 of the IRC by the due date.

         (B) Termination Events.  Promptly and in any event within ten (10) days
of becoming  aware of the  occurrence  of or  forthcoming  occurrence of any (1)
Termination  Event or (2) "prohibited  transaction,"  as such term is defined in
Section 406 of ERISA or Section 4975 of the IRC, in connection  with any Pension
Plan or any trust created  thereunder,  Borrower will deliver to Lender a notice
specifying the nature thereof,  what action the applicable  Person has taken, is
taking or proposes to take with  respect  thereto  and,  when known,  any action
taken or threatened by the IRS, the Department of Labor or the PBGC with respect
thereto.

         (C) ERISA Notices.  With reasonable  promptness but in any event within
ten (10) days,  Borrower  will deliver to Lender  copies of (1) any favorable or
unfavorable  determination letter from the IRS regarding the qualification of an
Employee  Benefit Plan under Section 401(a) of the IRC; (2) all notices received
by Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee  appointed to administer  any Pension  Plan;  (3) each
schedule  (Actuarial  Information) to the annual report (Form 5500 Series) filed
by Borrower or any ERISA  Affiliate  with the IRS with  respect to each  Pension
Plan;  (4) all  notices  received  by  Borrower  or any ERISA  Affiliate  from a
Multiemployer  Plan sponsor  concerning  the  imposition or amount of withdrawal
liability  pursuant to Section  4202 of ERISA,  or the  imposition  of any other
liability  under ERISA;  (5) each funding waiver request filed with the IRS with
respect to any  Pension  Plan;  and (6)  notification  of any  increases  in the
benefits  of  any  Pension  Plan  or  the   contributions   required  under  any
Multiemployer  Plan.  For purposes of this Section,  Borrower shall be deemed to
know all facts known by the in-house  administrator of any Employee Benefit Plan
of which  Borrower or any ERISA  Affiliate is the plan  sponsor.  Borrower  will
notify  Lender in writing  within five (5) Business  Days of Borrower  obtaining
knowledge or reason to know that  Borrower or any ERISA  Affiliate  has filed or
intends  to file a notice  of intent  to  terminate  any  Pension  Plan  under a
distress termination within the meaning of Section 4041(c) of ERISA.

         (D)      Certain Covenants.  Borrower shall not:

                  (i) permit the occurrence of any Termination Event which would
result in a liability to Borrower or any ERISA Affiliate in excess of $100,000;

<PAGE>

                  (ii) permit the present value of all benefit liabilities under
all  Pension  Plans to exceed the  current  value of the assets of such  Pension
Plans allocable to such benefit liabilities by more than $100,000;

                  (iii) permit any  accumulated funding  deficiency in excess of
$100,000  (as  defined in Section  302 of ERISA and Section 412 of the IRC) with
respect to any Pension Plan, whether or not waived;

                  (iv  fail  to  make  any   contribution   or  payment  to  any
Multiemployer Plan which Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such  Multiemployer  Plan, or any law pertaining
thereto  which  results  in or is likely to result in a  liability  in excess of
$100,000;

                  (v  engage  or  permit  ERISA  Affiliate  to  engage,  in  any
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC for
which a civil penalty  pursuant to Section  502(i) of ERISA or a tax pursuant to
Section 4975 of the IRC in excess of $100,000 is imposed; or

                  (vi fail, or permit any ERISA Affiliate to fail, to establish,
maintain and operate each  Employee  Benefit Plan in  compliance in all material
respects with the provisions of ERISA, the IRC and all other applicable laws and
the regulations and interpretations thereof.

         (E No Plan Assets.  Borrower  shall not, at any time during the term of
this Agreement,  become (1) an employee  benefit plan as defined in Section 3(3)
of ERISA which is subject to ERISA, (2) a plan as defined in Section  4975(e)(1)
of the IRC which is  subject  to Section  4975 of the IRC,  (3) a  "governmental
plan" within the meaning of Section 3(32) of ERISA or (4) an entity any of whose
underlying  assets  constitute  "plan assets" of any such employee benefit plan,
plan or governmental plan for purposes of Title I or ERISA,  Section 4975 of the
IRC or any state statutes applicable to the Borrower  regulating  investments of
governmental plans.

Section 5.5       Princeton, New Jersey Franchise.

         Lender  acknowledges that there currently exists certain defaults under
the franchise  agreement (the  "Princeton  Franchise  Agreement")  from Marriott
International,  Inc. or a subsidiary  thereof pertaining to the Property located
at 4225 Route 1 in Princeton, New Jersey. Lender agrees not to declare a Default
or Event of  Default  solely as a result  of such  default  under the  Princeton
Franchise Agreement; provided, however, Lender may declare a Default an Event of

<PAGE>

Default (i) if the Princeton  Franchise  Agreement is terminated  for any reason
and is not replaced by a substitute  franchisor  acceptable to Lender and to the
Rating Agency; or (ii) if the Princeton Franchise Agreement is not renewed on or
prior to its current  expiration  date of April 5, 2003 and is not replaced by a
substitute  franchisor  acceptable to Lender and to the Rating Agency.  Borrower
agrees to use its best efforts to comply and to require that Tenant  comply with
any plan to cure all defaults under the Princeton Franchise Agreement.

Section 5.6       Satisfaction of Loan; Release of Mortgages.

         Borrower  hereby  acknowledges  and agrees that the Loan is secured by,
among other things,  Lender's  mortgage lien on,  assignment of leases and rents
from,  and  security  interest in all of the  Properties.  Such  mortgage  lien,
assignment and security interest is evidenced by, among other  instruments,  the
Minnesota  Mortgage and the Other Mortgages (as defined therein).  The Minnesota
Mortgage  and the Other  Mortgages  are  cross-defaulted;  they are also  cross-
collateralized  in that the Property  described in each such mortgage  serves as
collateral  for the full  amount  of the  Loan.  In order to  reduce  Borrower's
expenditure for mortgage and recording  taxes and for title insurance  premiums,
Lender has agreed to allocate the Loan among the various Properties, such amount
being the  Allocated  Loan  Amount  as to each  Property.  Notwithstanding  such
allocation  made by Lender at  Borrower's  request,  Borrower  acknowledges  and
agrees that each Property secures the full amount of the Loan, and that,  except
for any releases of  Properties  made  pursuant to Section 2.3 or 2.4 above,  no
such  Property  shall be released from the lien of the  applicable  mortgage and
other Loan Documents until satisfaction in full of all amounts outstanding under
the Loan,  including  fees and expenses due Lender.  Borrower shall not claim or
assert  that  any  Property  is  entitled  to be  released  from the lien of the
mortgage or deed of trust applicable to such Property  regardless of whether the
outstanding  principal  balance of the Loan has been  reduced by an amount  that
equals or exceeds the Allocated Loan Amount allocated to such Property. Borrower
acknowledges  that  following the  occurrence  and during the  continuance of an
Event of Default, Lender may pursue its rights and remedies, at Lender's option,
against one Property,  or against  several  Properties or against all Properties
without in any way exhausting or restricting  Lender's  ability to subsequently,
in one or more proceedings, pursue other available remedies. Lender shall not be
required to marshal assets.

                                    ARTICLE 6
                RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS

Section 6.1   Secondary Market Transaction Generally.

         Lender shall have the right to engage in one or more  Secondary  Market
Transactions,  and to  structure  and  restructure  all or any part of the Loan,
including without limitation in multiple tranches,  as a wraparound loan, or for
inclusion in a REMIC or other Securitization.  Without limitation,  Lender shall
have the right to cause the Note and the Mortgages to be split into one or more

<PAGE>

loans (which may be evidenced by multiple notes, at Lender's option) secured by
one or more mortgages (some or all of which may or may not be cross-collaterized
or cross defaulted, at Lender's option) in  whatever proportion  Lender
determines,  and  thereafter  to engage in Secondary  Market Transactions  with
respect  to all or any  part of the  indebtedness  and  loan documentation,
subject, however, to  the  requirements  of  Section  6.2.  In addition,  Lender
may impose  additional  structuring  requirements  to address cross-
collateralization,  cross-default,  and other issues, subject,  however to the
requirements of Section 6.2. Borrower  acknowledges that it is the intention of
the parties that all or a portion of the Loan will be  securitized  and that all
or a  portion  of the Loan  will be rated  by one or more  Rating  Agencies.
Borrower further  acknowledges that additional  structural  modifications may be
required to satisfy issues raised by any Rating  Agencies,  subject,  however to
the requirements of Section 6.2.

Section 6.2   Cooperation: Limitations.

         Borrower  Parties shall use its best efforts to cooperate in good faith
with Lender in effecting any such restructuring or Secondary Market Transaction.
Such cooperation shall include without limitation, executing and delivering such
amendments to the Loan Documents as Lender may request,  including executing and
delivering  replacement  notes  and  mortgages,  provided  however  that no such
amendment  shall modify (i) the effective  interest rate payable under the Note;
(ii) the stated maturity date of the Note,  (iii) the effective  amortization of
the  principal  amount  of the  Note,  (iv)  any  other  economic  terms  of the
Obligations,  (v) the non-  recourse  provisions  of the  Loan,  and (vi)  other
provisions of the Loan  Documents that would  reasonably be deemed  material and
adverse to Borrower.  Such  cooperation also shall include using best efforts to
obtain such certificates and assurances from governmental entities and others as
Lender  may  request.  Notwithstanding  anything  herein  or in the  other  Loan
Documents to the contrary,  Lender shall be solely  responsible for all fees and
expenses incurred in connection with any Secondary Market Transaction, including
without  limitation,  the  reasonable  fees and expenses  (including  reasonable
attorneys' fees and expenses)  incurred by Borrower  Parties in cooperating with
any such Secondary Market Transaction in accordance with this Agreement.

Section 6.3   Information.

         The  Borrower  Parties  shall  provide  such  information  provided  by
Borrower Parties and Affiliates and documents  relating to the Borrower Parties,
Guarantors,  the  Properties  and  the  business  and  operations  of all of the
foregoing as Lender may reasonably request in connection with any such Secondary
Market Transaction. Lender shall be permitted to share all such information with
the investment  banking firms,  Rating  Agencies,  accounting  firms, law firms,
other  third  party  advisory  firms,  potential  investors,  and other  parties
involved in any proposed Secondary Market Transaction.  Any such information may
be incorporated into offering  documents for the Secondary Market  Transactions.
Lender and all of the aforesaid  third-party advisors and professional firms and
investors shall be entitled to rely upon such information, and Borrower shall

<PAGE>

indemnify, defend, and hold harmless Lender from and against any losses, claims,
damages and liabilities that arise out of or are based upon any untrue statement
or alleged untrue  statement of any material fact contained in such information
certified as true and correct by Borrower Parties and provided by Borrower
Parties and  Affiliates  or that arise out of or are based upon the omission or
alleged  omission to state  therein a material  fact  required to be stated  in
such  certified  information  or  necessary  in  order  to  make  the statements
in  such  information not  misleading.  Lender  may  publicize  the existence of
the  Obligations  in  connection  with  Lender's  Secondary  Market Transaction
activities or otherwise.

Section 6.4   Additional Provisions.

         In  any  Secondary   Market   Transaction,   Lender  may  transfer  its
obligations  under this  Agreement  and under the other Loan  Documents  (or may
transfer the portion thereof  corresponding  to the  transferred  portion of the
Obligations of Borrower),  and thereafter the assigning Lender shall be relieved
of any  obligations  hereunder and under the other Loan Documents  arising after
the date of said transfer with respect to the  transferred  interest,  except to
the extent that such assigning Lender expressly in writing retains any liability
or  obligations  under  the  Loan  Documents,  including  any  express  retained
obligations  as a servicer of the REMIC Trust.  Each  transferee  investor shall
become a "Lender" hereunder.

         As used herein,  "Secondary  Market  Transaction"  means any of (i) the
sale, assignment,  or other transfer of all or any portion of the Obligations or
the Loan Documents or any interest  therein to one or more  investors,  (ii) the
sale,  assignment,  or other transfer of one or more participation  interests in
the  Obligations  or Loan  Documents  to one or more  investors,  or  (iii)  the
transfer or deposit of all or any portion of the  Obligations  or Loan Documents
to or with one or more trusts or other entities which may sell  certificates  or
other instruments to investors evidencing an ownership interest in the assets of
such trust or the right to receive income or proceeds therefrom.

                                    ARTICLE 7
                                  MISCELLANEOUS

Section 7.1   Expenses and Attorneys' Fees.

         Whether  or  not  the   transactions   contemplated   hereby  shall  be
consummated,  Borrower agrees, jointly and severally,  to promptly pay all fees,
costs  and  expenses   incurred  by  Lender  in  connection   with  any  matters
contemplated by or arising out of this Agreement,  including the following,  and
all such fees, costs and expenses shall be part of the  Obligations,  payable on
demand to the extent not paid from expense deposits  previously made by Borrower
to Lender:  (A) fees, costs and expenses  (including  attorneys' fees, and other
professionals  retained by Lender)  incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the financing

<PAGE>

arrangements  evidenced by the Loan Documents;  (B) fees,  costs and expenses
(including  attorneys' fees and other professionals retained by Lender) incurred
in connection with the administration of the Loan Documents and the Loan and any
amendments, modifications and waivers relating thereto;  (C) fees, costs and
expenses  (including  attorneys' fees and fees of other  professionals  retained
by  Lender)  incurred  in any action to enforce this Agreement or the other Loan
Documents or to collect any payments due from Borrower under this Agreement, the
Note or any other Loan Document or incurred in  connection  with any refinancing
or  restructuring  of the credit arrangements provided under this Agreement,
whether in the nature of a "workout" or in connection with any insolvency or
bankruptcy proceedings or otherwise; and (D) fees, costs and expenses of all
appraisals required hereunder or under any other Loan Documents and other fees,
costs and expenses  incurred in connection with any Defeasance or Substitution
hereunder.  Notwithstanding  the foregoing, Lender  shall pay its own fees and
expenses  of Lender  incurred in a Secondary Market Transaction.

Section 7.2   Indemnity.

         In addition to the  payment of expenses as required  elsewhere  herein,
whether or not the transactions contemplated hereby shall be consummated, and in
addition to any other  indemnifications  set forth in the other Loan  Documents,
Borrower  agrees to  indemnify,  pay and hold Lender and any holder of the Note,
and the officers,  directors,  employees,  agents,  affiliates  and attorneys of
Lender and such holders  (collectively  called the "Indemnitees")  harmless from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits, claims, tax liabilities,  broker's or finders fees,
costs,  expenses and disbursements of any kind or nature  whatsoever  (including
the fees and  disbursements  of counsel for such  Indemnitees in connection with
any   investigative,   administrative  or  judicial   proceeding   commenced  or
threatened,  whether or not such Indemnitee shall be designated a party thereto)
that may be imposed on, incurred by, or asserted against that Indemnitee, in any
manner relating to or arising out of (A) the negotiation,  execution,  delivery,
performance,  administration,  or enforcement of any of the Loan Documents,  (B)
any of the  transactions  contemplated by the Loan  Documents,  (C) any material
breach by Borrower of any representation, warranty, covenant, or other agreement
contained in any of the Loan Documents,  (D) the presence,  release,  threatened
release,  disposal,  removal,  or cleanup of any Hazardous  Material located on,
about,  within or affecting  any of the  properties or assets of Borrower or any
violation of any applicable  Environmental Law for which Borrower is liable, (E)
Lender's agreement to make the Loan hereunder, or (F) the use or intended use of
the proceeds of the Loan (the foregoing liabilities herein collectively referred
to as the  "Indemnified  Liabilities");  provided that no Borrower shall have an
obligation to an Indemnitee  hereunder with respect to  Indemnified  Liabilities
arising from the gross  negligence or willful  misconduct of that  Indemnitee as
determined  by a  court  of  competent  jurisdiction.  To the  extent  that  the
undertaking  to  indemnify,  pay and hold  harmless  set forth in the  preceding
sentence  may be  unenforceable  because  it is  violative  of any law or public
policy,  Borrower shall  contribute the maximum  portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all

<PAGE>

Indemnified  Liabilities  incurred  by the  Indemnitees  or any  of  them.  This
provision  shall  not cause  Borrower  to be Liable  for  obligations  which are
expressly excluded from Borrower's liability under the Environmental Indemnity.

Section 7.3   Amendments and Waivers.

         Except  as  otherwise  provided  herein,  no  amendment,  modification,
termination or waiver of any provision of this Agreement,  the Note or any other
Loan  Document,  or consent to any  departure  therefrom,  shall in any event be
effective  unless  the same  shall be in  writing  and  signed by  Lender.  Each
amendment,  modification,  termination  or waiver shall be effective only in the
specific  instance  and for the  specific  purpose  for which it was  given.  No
amendment,  modification,  termination  or waiver of any  provision  of the Note
shall be effective without the written concurrence of the holder of the Note. No
notice to or demand on  Borrower  in any case shall  entitle  Borrower  or other
Person  to  any  other  or  further   notice  or  demand  in  similar  or  other
circumstances.

Section 7.4   Retention of Borrower's Documents.

         Lender may, in accordance with Lender's customary practices, destroy or
otherwise  dispose  of all  documents,  schedules,  invoices  or  other  papers,
delivered by Borrower to Lender unless Borrower requests in writing that same be
returned.  Upon such request and at Borrower's expense, Lender shall return such
papers when Lender's actual or anticipated need for same has terminated.

Section 7.5   Notices.

         All notices shall be given in accordance  with the terms and provisions
of the Mortgages.

Section 7.6   Survival of Warranties and Certain Agreements.

         All  agreements,  representations  and  warranties  made  herein  shall
survive the  execution  and delivery of this  Agreement,  the making of the Loan
hereunder and the execution and delivery of the Note.  Notwithstanding  anything
in this Agreement or implied by law to the contrary,  the agreements of Borrower
set forth in Sections  7.1,  7.2, 7.14 and 7.15 shall survive the payment of the
Loan and the  termination of this  Agreement.  Subject to Section 7.8, all other
representations,  warranties  and agreements of Borrower and Lender set forth in
this  Agreement  shall  terminate  upon  payment  in  full of the  Loan  and the
termination of this Agreement.

Section 7.7   Failure or Indulgence Not Waiver: Remedies Cumulative.

         No failure or delay on the part of Lender or any holder of any Note in
the exercise of any power, right or privilege hereunder or under the Note or any

<PAGE>

other Loan Document shall  impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right,  power or privilege.  All rights and
remedies existing under this Agreement, the Note and the other Loan Documents
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.  To the fullest extent permitted by applicable  law, each Borrower
hereby agrees that Lender may bring separate actions on this Loan Agreement, the
Note, the Mortgages or any of the other Loan Documents and each Borrower hereby
expressly waives any rights it may have  under the law of any state to object to
or raise a defense  in any such action regarding such splitting of causes of
actions.

Section 7.8   Marshaling: Payments Set Aside.

         Lender shall not be under any obligation to marshal any assets in favor
of any Person or against or in payment of any or all of the Obligations.  To the
extent that any Person makes a payment or payments to Lender,  or Lender enforce
its remedies or exercise  its rights of setoff,  and such payment or payments or
the proceeds of such  enforcement or setoff or any part thereof are subsequently
invalidated,  declared  to be  fraudulent  or  preferential,  set  aside  and/or
required  to be repaid to a  trustee,  receiver  or any  other  party  under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery,  the Obligations or part thereof originally intended to
be satisfied,  and all Liens,  if any,  rights and remedies  therefor,  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

Section 7.9   Independence of Covenants.

         All covenants hereunder shall be given in any jurisdiction  independent
effect so that if a particular  action or  condition is not  permitted by any of
such  covenants,  the fact that it would be permitted by an exception  to, or be
otherwise  within  the  limitations  of,  another  covenant  shall not avoid the
occurrence  of a  Default  or an Event of  Default  if such  action  is taken or
condition exists.

Section 7.10  Severability.

         The invalidity,  illegality or  unenforceability in any jurisdiction of
any  provision in or  obligation  under this  Agreement,  the Note or other Loan
Documents shall not affect or impair the validity, legality or enforceability of
the remaining provisions or obligations under this Agreement,  the Note or other
Loan Documents or of such provision or obligation in any other jurisdiction.

<PAGE>

Section 7.11  Headings.

         Section and subsection  headings in this Agreement are included  herein
for  convenience  of  reference  only and  shall not  constitute  a part of this
Agreement for any other purpose or be given any substantive effect.

Section 7.12  APPLICABLE LAW.

         THIS AGREEMENT AND ALL OF THE LOAN DOCUMENTS  (EXCEPT,  AS TO THE OTHER
LOAN DOCUMENTS,  TO THE EXTENT EXPRESSLY  PROVIDED  OTHERWISE  THEREIN) SHALL BE
GOVERNED  BY, AND SHALL BE  CONSTRUED  AND  ENFORCED  IN  ACCORDANCE  WITH,  THE
INTERNAL LAWS OF THE STATE OF PENNSYLVANIA,  WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

Section 7.13  Successors and Assigns: Subsequent Holders of Note.

         This  Agreement  shall be binding  upon and inure to the benefit of the
parties  hereto and their  respective  successors  and  assigns  except  that no
Borrower  Party may assign its rights or  obligations  hereunder or under any of
the other Loan Documents.

Section 7.14 Sophisticated Parties. Reasonable Terms. No Fiduciary Relationship.

         The Borrower Parties  represent,  warrant and acknowledge that (i) they
are  sophisticated  real estate  investors,  familiar with  transactions of this
kind,  and (ii)  they  have  entered  into this  Agreement  and the  other  Loan
Documents after conducting their own assessment of the alternatives available to
them in the  market,  and after  lengthy  negotiations  in which  they have been
represented  by legal  counsel  of  their  choice.  The  Borrower  Parties  also
acknowledge  and agree that the rights of Lender  under this  Agreement  and the
other Loan Documents are reasonable and appropriate,  taking into  consideration
all of the facts and circumstances  including without limitation the quantity of
the Loan, the nature of the Properties, and the risks incurred by Lender in this
transaction.  No  provision  in  this  Agreement  or in any of  the  other  Loan
Documents and no course of dealing between the parties shall be deemed to create
(i) any  partnership  or joint venture  between Lender and Borrower or any other
Person, or (ii) any fiduciary or similar duty by Lender to Borrower or any other
Person.  The  relationship  between  Lender  and  Borrower  is  exclusively  the
relationship of a creditor and a debtor,  and all  relationships  between Lender
and any other Borrower Party are ancillary to such creditor/debtor relationship.

Section 7.15      Limitation of Liability.

         Neither  Lender,  nor  any  affiliate,   officer,  director,  employee,
attorney,  or agent of Lender,  shall have any  liability  with  respect to, and
Borrower hereby waives, releases, and agrees not to sue any of them upon, any

<PAGE>

claim for any  special,  indirect,  incidental,  or consequential  damages
suffered or incurred  by  Borrower in  connection  with, arising out of, or in
any way related  to, this  Agreement  or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the  other  Loan
Documents,  other  than the  gross  negligence or  willful misconduct of Lender.
Borrower hereby waives, releases, and agrees not to sue Lender or any of
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive  damages in  respect of any claim in  connection  with, arising out of,
or in any way related  to,  this  Agreement  or any of the other Loan Documents,
or any of the transactions contemplated by this Agreement or any of the
transactions contemplated hereby except to the extent same is caused by the
gross negligence or willful misconduct of Lender.

Section 7.16  No Duty.

         All attorneys, accountants,  appraisers, and other professional Persons
and  consultants  retained by Lender shall have the right to act  exclusively in
the  interest of Lender and shall have no duty of  disclosure,  duty of loyalty,
duty of care, or other duty or  obligation  of any type or nature  whatsoever to
any Borrower Party or Affiliates thereof, or any other Person.

Section 7.17  Entire Agreement.

         This  Agreement,  the Note,  and the other Loan  Documents  referred to
herein embody the final, entire agreement among the parties hereto and supersede
any and all prior commitments, agreements,  representations, and understandings,
whether  written or oral,  relating to the subject  matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties  hereto.  There are no oral  agreements
among the parties hereto.

Section 7.18  Construction: Supremacy of the Loan Agreement.

         Borrower and Lender  acknowledge  that each of them has had the benefit
of legal  counsel of its own  choice and has been  afforded  an  opportunity  to
review this  Agreement and the other Loan  Documents  with its legal counsel and
that this  Agreement  and the other  Loan  Documents  shall be  construed  as if
jointly drafted by Borrower and Lender.

Section 7.19  CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

         BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED
WITHIN THE COUNTY OF MONTGOMERY,  COMMONWEALTH OF  PENNSYLVANIA,  OR ANY FEDERAL
COURT LOCATED WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA AND IRREVOCABLY AGREES
THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR

<PAGE>

PROCEEDINGS  ARISING  OUT OF OR  RELATING  TO THIS  AGREEMENT  OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.  BORROWER ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,  THE NONEXCLUSIVE
JURISDICTION  OF THE  AFORESAID  COURTS  AND  WAIVES  ANY  DEFENSE  OF FORUM NON
CONVENIENS,  AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS  AGREEMENT,  THE NOTE, SUCH OTHER LOAN DOCUMENTS OR SUCH
OBLIGATION.  BORROWER  DESIGNATES AND APPOINTS CT CORPORATION  SYSTEM,  AND SUCH
OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHOM  IRREVOCABLY  AGREES
IN WRITING TO SERVE AS BORROWER'S AGENT TO RECEIVE ON BEHALF OF BORROWER SERVICE
OF ALL PROCESS IN ANY SUCH  PROCEEDINGS  IN ANY SUCH COURT,  SUCH SERVICE  BEING
HEREBY  ACKNOWLEDGED  BY BORROWER TO BE EFFECTIVE  AND BINDING  SERVICE IN EVERY
RESPECT.  IF CT CORPORATION SYSTEM IS NOT PERSONALLY  AVAILABLE,  PROCESS MAY BE
SERVED UPON CT CORPORATION SYSTEM BY UNITED STATES REGISTERED OR CERTIFIED MAIL,
WHICH SERVICE SHALL BE DEEMED  EFFECTIVE  FIVE (5) DAYS AFTER  MAILING,  TO 1635
MARKET STREET,  PHILADELPHIA,  PA 19103. A COPY OF ANY SUCH PROCESS SO SERVED ON
CT  CORPORATION  SYSTEM,  OR SUCH OTHER  PERSONS AS MAY HEREAFTER BE SELECTED BY
BORROWER,  SHALL BE  MAILED  BY LENDER BY  REGISTERED  MAIL TO  BORROWER  AT ITS
ADDRESS PROVIDED HEREIN EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW,
ANY  FAILURE  TO MAIL SUCH COPY  SHALL NOT  AFFECT  THE  VALIDITY  OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE,  BORROWER
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE  SUFFICIENT  NOTICE.
NOTHING  HEREIN  SHALL  AFFECT THE RIGHT TO SERVE  PROCESS  IN ANY OTHER  MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDE TO BRING PROCEEDINGS  AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

Section 7.20  WAIVER OF JURY TRIAL.

         BORROWER  AND LENDER  HEREBY  WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY
TRIAL OF ANY  CLAIM  OR  CAUSE  OF  ACTION  BASED  UPON OR  ARISING  OUT OF THIS
AGREEMENT,  ANY OF THE LOAN DOCUMENTS,  OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP
THAT IS BEING ESTABLISHED.  BORROWER AND LENDER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF

<PAGE>

BORROWER OR LENDER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES  THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT  MATTER OF THIS  TRANSACTION,  INCLUDING  WITHOUT LIMITATION,  CONTRACT
CLAIMS, TORT CLAIMS,  BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY  CLAIMS.  BORROWER  AND LENDER  ACKNOWLEDGE  THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS  AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE  DEALINGS.  BORROWER AND
LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING  CONSULTATION  WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,  AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT,  THE LOAN DOCUMENTS,  OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 7.21  Sole Discretion of Lender.

         Wherever  pursuant to this Loan  Agreement  Lender  exercises any right
given  to it to  approve  or  disapprove,  or any  arrangement  or term is to be
satisfactory  to Lender,  the decision of Lender to approve or  disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory  shall be
in the sole  discretion  of Lender  (exercised  in its good  faith and not in an
arbitrary or capricious manner) and shall be final and conclusive, except as may
be otherwise expressly and specifically provided herein.

Section 7.22  Joint and Several.

         The  obligations  and  liabilities of each of the Borrower  Parties set
forth in this Agreement shall be joint and several.

Section 7.23  Counterparts: Effectiveness.

         This Agreement and any amendments,  waivers,  consents,  or supplements
may be executed in any number of counterparts and by different parties hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original, but all of which counterparts together shall constitute but

<PAGE>

one and the same instrument.  This Agreement shall become  effective  upon the
execution  of a  counterpart  hereof by each of the parties hereto.

Section 7.24  Limited Recourse.

         Subject to the limitations and exceptions contained in Section 9 of the
Note and  Section  42 of the  Mortgages,  Borrower  shall not have any  personal
recourse  liability  for  amounts  owing under the Note or any of the other Loan
Documents  and no deficiency  judgment  therefor  shall be enforced  against the
personal assets of Borrower other than the Properties.

<PAGE>

         IN WITNESS  WHEREOF,  the respective  duly  authorized  officers of the
undersigned have executed this Agreement as of the date first written above.

                                    BORROWER PARTIES:

                                    EQI FINANCING PARTNERSHIP II, L.P., a
                                    Tennessee limited partnership

                                    By:  EQI Financing Corporation II, a
                                         Tennessee corporation, its general
                                          partner

                                    By:      /s/ Bradley W. Barber
                                             -----------------------------------

                                    Name:    Bradley W. Barber
                                             -----------------------------------

                                    Title:   V.P.
                                             -----------------------------------

                                    EQI/WV FINANCING PARTNERSHIP, L.P., a
                                    Tennessee limited partnership

                                    By:  EQI FINANCING CORPORATION II, a
                                         Tennessee corporation, its general
                                         partner

                                    By:      /s/ Bradley W. Barber
                                             -----------------------------------

                                    Name:    Bradley W. Barber
                                             -----------------------------------

                                    Title:   V.P.
                                             -----------------------------------

                                    LENDER

                                    GMAC COMMERCIAL MORTGAGE
                                    CORPORATION, a California corporation

<PAGE>

                                    By:      /s/ Morgan G. Earnest, II
                                             -----------------------------------
                                    Name:    Morgan G. Earnest, II
                                             -----------------------------------
                                    Title:   Senior Vice President
                                             -----------------------------------

<PAGE>

                                   ATTACHMENTS

Schedule 1.1 -- Allocated  Loan  Amounts /  Properties  Schedule  3.1(A) -- Loan
Documents  Schedule  4.1(B) --  States  Where  Borrower  Parties  Are  Qualified
Schedule 4.5(A) -- Tenant / Sub-Tenant-Owned Personal Property Schedule 4.5(B) -
1 --  Zoning  Variances  / Special  Exceptions  Schedule  4.5(B) - 2 --  Zoning:
Exceptions  to By-Right  Rebuilding  Schedule  4.5(B) - 3 -- Parking  Exceptions
Schedule  4.5(D) -- Other  Agreements of Borrower  Schedule  4.5(E) -- Copies of
Operating Leases Schedule 4.5(G) - 1 -- Contemplated Renovations Schedule 4.5(G)
- 2 --  Utility  Problems  Schedule  4.5(G) - 3 -- Flood  Plain /  Encroachments
Schedule  4.6 --  Litigation  Schedule  4.11 --  ERISA  Plans  Schedule  4.12 --
Intellectual Property Schedule 4.18 -- Insurance Policies

<PAGE>

                                  SCHEDULE 1.1

                       ALLOCATED LOAN AMOUNTS / PROPERTIES

          Allocated Loan Amounts                          Properties
          ----------------------                          ----------

1.  Mortgage, Assignment of Leases and           1.  AmeriSuites hotel located
    Rents, Security Agreement and Fixture            at 9104 Keystone Crossing,
    Filing - ($3,840,000)                            Indinapolis, IN 46240

2.  Mortgage, Assignment of Leases and           2.  AmeriSuites hotel located
    Rents, Security Agreement and Fixture            at 6801 West 112th Street,
    Filing - ($3,590,000)                            Overland Park, KS 66211

3.  Open-End Mortgage, Assignment of             3.  AmeriSuites hotel located
    Leases and Rents, Security Agreement and         at 7490 Vantage Drive,
    Fixture Filing - ($4,650,000)                    Columbus, OH 43235

4.  Deed of Trust, Assignment of Leases and      4.  AmeriSuites hotel located
    Rents, Security Agreement and Fixture            at 7905 Giacosa Place,
    Filing - ($3,460,000)                            Memphis, TN 38133

5.  Credit Line Deed of Trust, Assignment of     5.  AmeriSuites hotel located
    Leases and Rents, Security Agreement and         at 4100 Cox, Glen Allen,
    Fixture Filing - ($5,410,000)                    VA 23060

6.  Mortgage, Assignment of Leases and           6.  Hampton Inn hotel located
    Rents, Security Agreement and Fixture            at 10591 Metcalf Frontage
    Filing - ($4,410,000)                            Road, Overland Park, KS
                                                     66212

7.  Deed of Trust, Assignment of Leases and      7.  Hampton Inn hotel located
    Rents, Security Agreement and Fixture            at 11212 North Newark
    Filing - ($3,620,000)                            Circle, Kansas City, MO
                                                     64153

8.  Deed of Trust, Assignment of Leases and      8.  Hampton Inn hotel located
    Rents, Security Agreement and Fixture            at 5320 Poplar Avenue,
    Filing - ($4,750,000)                            Memphis, TN 38119

9.  Deed of Trust, Assignment of Leases and      9.  Hampton Inn hotel located
    Rents, Security Agreement and Fixture            at 1577 Gateway Boulevard,
    Filing - ($3,120,000)                            Richardson, TX 75080

10. Credit Line Deed of Trust, Assignment of     10. Hampton Inn hotel located
    Leases and Rents, Security Agreement and         at 1053 Van Voorhis Road,
    Fixture Filing - ($4,050,000)                    Morgantown, WV 26505

<PAGE>

          Allocated Loan Amounts                          Properties
          ----------------------                          ----------

11. Leasehold Deed of Trust, Assignment of       11. Homewood Suites hotel
    Leases and Rents, Security Agreement and         located at 2001 East
    Fixture Filing - ($7,130,000)                    Highland Avenue, Phoenix,
                                                     AZ 85026

12. Open-End Mortgage, Assignment of             12. Homewood Suites hotel
    Leases and Rents, Security Agreement and         located at 2670 East Kemper
    Fixture Filing - ($3,320,000)                    Road, Sharonville, OH
                                                     45241

13. Deed of Trust, Assignment of Leases and      13. Homewood Suites hotel
    Rents, Security Agreement and Fixture            located at 4323 Spectrum
    Filing - ($4,140,000)                            One, San Antonio, TX 78230

14. Deed of Trust, Assignment of Leases and      14. Residence Inn hotel located
    Rents, Security Agreement and Fixture            at 6477 East Speedway
    Filing - ($5,330,000)                            Blvd., Tucson, AZ 85710

15. Mortgage, Assignment of Leases and           15. Residence Inn hotel located
    Rents, Security Agreement and Fixture            at 3040 Eagandale Road,
    Filing - ($6,500,000)                            Eagan, MN 55121

16. Leasehold Mortgage, Assignment of            16. Residence Inn hotel located
    Leases and Rents, Security Agreement and         at 90 Park Road, Tinton
    Fixture Filing - ($4,700,000)                    Falls, NJ 07724

17. Deed of Trust, Assignment of Leases and      17. Residence Inn hotel located
    Rents, Security Agreement and Fixture            at 1710 NE Multnomah
    Filing - ($10,590,000)                           Street, Portland, OR 97232

18. Mortgage, Assignment of Leases and           18. Hampton Inn hotel located
    Rents, Security Agreement and Fixture            at 20600 Haggerty Road,
    Filing - ($4,440,000)                            Northville, MI 48167

19. Mortgage, Assignment of Leases and           19. Residence Inn hotel located
    Rents, Security Agreement and Fixture            at 4225 Route 1, Princeton,
    Filing - ($9,970,000)                            NJ 08543
--------------------------------------------------------------------------------

<PAGE>

                                 SCHEDULE 3.1(A)

All documents are dated as of June 16, 1999 unless otherwise noted.

         The Loan Agreement.

         The Promissory  Note made by the Borrower and the WV Borrower,  payable
to the Lender, in the original principal amount of $93,180,000.00 plus interest.

         The Promissory  Note made by the Borrower and the WV Borrower,  payable
to the Lender, in the original principal amount of $3,840,000, plus interest.

         The Guaranty of Recourse  Obligations  made by the  Guarantors  for the
benefit of the Lender with respect to the Loan.

         The  Environmental  Indemnity  Agreement  made by the Borrower,  the WV
Borrower  and the  Guarantors  for the benefit of the Lender with respect to the
Loan.

         The Security  Agreement  between the Borrower,  the WV Borrower and the
Lender.

         The Assignment of Contracts, Licenses, Permits, Agreements,  Warranties
and  Approvals  made by the  Borrower and the WV Borrower for the benefit of the
Lender with respect to the Loan.

         The Lockbox Account  Agreement made by the Borrower and the WV Borrower
for the benefit of the Lender with respect to the Loan.

         The  Replacement  Reserve  Agreement  made by the  Borrower  and the WV
Borrower for the benefit of the Lender with respect to the Loan.

         The Repair Holdback Letter made by the Borrower and the WV Borrower for
the benefit of the Lender with respect to the Loan.

         The Side Letter regarding  Parking made by the Borrower for the benefit
of the Lender with respect to the Loan.

         The Leasehold Deed of Trust,  Assignment of Leases and Rents,  Security
Agreement and Fixture Filing from the Borrower with respect to property  located
in Phoenix, Arizona.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and Fixture Filing from the Borrower with respect to property located in Tucson,
Arizona.

         The Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing from the Borrower with respect to property located in
Indianapolis, Indiana.

<PAGE>

         The Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing from the Borrower with respect to property located in Overland
Park, Kansas.

         The Mortgage,  Assignment of Leases and Rents,  Security  Agreement and
Fixture  Filing from the Borrower  with respect to property  located in Overland
Park (Frontage Road), Kansas.

         The Mortgage,  Assignment of Leases and Rents,  Security  Agreement and
Fixture Filing from the Borrower with respect to property located in Northville,
Michigan.

         The Mortgage,  Assignment of Leases and Rents,  Security  Agreement and
Fixture  Filing from the  Borrower  with  respect to property  located in Eagan,
Minnesota.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and Fixture Filing from the Borrower with respect to property  located in Kansas
City, Missouri.

         The Mortgage,  Assignment of Leases and Rents,  Security  Agreement and
Fixture Filing from the Borrower with respect to property  located in Princeton,
New Jersey.

         The  Leasehold  Mortgage,  Assignment  of Leases  and  Rents,  Security
Agreement and Fixture Filing from the Borrower with respect to property  located
in Tinton Falls, New Jersey.

         The  Open-End  Mortgage,  Assignment  of  Leases  and  Rents,  Security
Agreement and Fixture Filing from the Borrower with respect to property  located
in Columbus, Ohio.

         The  Open-End  Mortgage,  Assignment  of  Leases  and  Rents,  Security
Agreement and Fixture Filing from the Borrower with respect to property  located
in Sharonville, Ohio.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and  Fixture  Filing  from the  Borrower  with  respect to  property  located in
Portland, Oregon.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and  Fixture  Filing  from the  Borrower  with  respect to  property  located in
Richardson, Texas.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and Fixture  Filing from the Borrower  with  respect to property  located in San
Antonio, Texas.

         The Credit Line Deed of Trust, Assignment of Leases and Rents, Security
Agreement  and  Fixture  Filing from the WV  Borrower  with  respect to property
located in Morgantown, West Virginia.

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and Fixture  Filing from the  Borrower  with  respect to  properties  located in
Memphis, Tennessee.

<PAGE>

         The Deed of Trust,  Assignment of Leases and Rents,  Security Agreement
and Fixture  Filing from the  Borrower  with  respect to  properties  located in
Memphis (Poplar Avenue), Tennessee.

         The Credit Line Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture  Filing (the  "Virginia  Deed of Trust") from the Borrower
with respect to properties located in Glen Allen (Richmond), Virginia.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Phoenix, Arizona.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Tucson, Arizona.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Indianapolis, Indiana.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Overland Park, Kansas.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Overland Park (Frontage Road), Kansas.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Northville, Michigan.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Eagan, Minnesota.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Kansas City, Missouri.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Princeton, New Jersey.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Tinton Falls, New Jersey.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Columbus, Ohio.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Sharonville, Ohio.

<PAGE>

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Portland, Oregon.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Memphis, Tennessee.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Memphis (Poplar Avenue), Tennessee.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in Richardson, Texas.

         The  Assignment  of Leases and Rents and Profits from the Borrower with
respect to property located in San Antonio, Texas.

         The   Assignment  of  Leases  and  Rents  and  Profits  (the  "Virginia
Assignment  of Leases")  from the Borrower  with respect to property  located in
Glen Allen (Richmond), Virginia.

         The  Assignment  of Leases and Rents and  Profits  from the WV Borrower
with respect to property located in Morgantown, West Virginia.

         The Borrower's and General Partner's Affidavit and Solvency Certificate
made by the Borrower,  the WV Borrower and the Guarantors for the benefit of the
Lender with respect to the Loan.

         The Borrower's  Document  Certification made by the Borrower and the WV
Borrower for the benefit of the Lender with respect to the Loan.

         The Guarantors' Certification made by the Guarantors for the benefit of
the Lender with respect to the Loan.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Phoenix,  Arizona for filing in the Real Estate  Records of
Maricopa County, Arizona, and centrally in the State of Arizona.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Tucson,  Arizona for filing in the Real  Estate  Records of
Pima County, Arizona, and centrally in the State of Arizona.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in  Indianapolis,  Indiana  for filing (i) in the Real  Estate
Records of Marion County,  Indiana,  and centrally in the State of Indiana,  and
(ii) the UCC-2 Financing  Statement in the Real Estate Records of Marion County,
Indiana.

<PAGE>

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Overland Park,  Kansas for filing in the Real Estate Records
of Johnson County, Kansas, and centrally in the State of Kansas.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in  Overland  (Frontage  Road),  Kansas for filing in the Real
Estate Records of Johnson County, Kansas and centrally in the State of Kansas.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Northville,  Michigan for filing in the Real Estate Records
of Wayne County, Michigan, and centrally in the State of Michigan.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Eagan,  Minnesota for filing in the Real Estate  Records of
Dakota County, Minnesota, and centrally in the State of Minnesota.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Kansas  City,  Missouri  for filing in (i) the Real  Estate
Records of Platte County, Missouri, (ii) the Personal Property Records in Platte
County, Missouri, and (iii) centrally in the State of Missouri.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Princeton,  New Jersey for filing in Middlesex  County,  New
Jersey, and centrally in the State of New Jersey.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Tinton Falls, New Jersey for filing in Monmouth County,  New
Jersey, and centrally in the State of New Jersey.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Columbus,  Ohio for filing in (i) the Real Estate Records of
Franklin  County,  Ohio, (ii) the Personal  Property Records of Franklin County,
Ohio, and (iii) centrally in the State of Ohio.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Sharonville,  Ohio for filing in (i) the Real Estate Records
of Hamilton County, Ohio, (ii) the Personal Property Records of Hamilton County,
Ohio, and centrally in the State of Ohio.

         The UCC-1A  Financing  Statements  from the  Borrower  with  respect to
property located in Portland,  Oregon for filing in the Real Property Records of
Multnomah County, Oregon, and the UCC-1 Financing Statement for filing centrally
in the State of Oregon.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in Memphis,  Tennessee for filing in the Real Estate Records of
Shelby County, Tennessee, and centrally in the State of Tennessee.

<PAGE>

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Memphis (Poplar  Avenue),  Tennessee for filing in the Real
Estate  Records  of Shelby  County,  Tennessee,  and  centrally  in the State of
Tennessee.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Richardson,  Texas for filing in the Real Estate Records of
Dallas County, Texas, and centrally in the State of Texas.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property located in San Antonio,  Texas for filing in the Real Estate Records of
Bexar County, Texas, and centrally in the State of Texas.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
property  located in Glen Allen  (Richmond),  Virginia (the "Virginia  Financing
Statements") for filing in the Real Estate Records of Henrico County,  Virginia,
and centrally in the Commonwealth of Virginia.

         The UCC-1  Financing  Statements  from the WV Borrower  with respect to
property  located in  Morgantown,  West  Virginia  for filing in the Real Estate
Records of Monongalia County, West Virginia,  and centrally in the State of West
Virginia.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
accounts located in Tennessee for filing centrally in the State of Tennessee.

         The UCC-1  Financing  Statements  from the  Borrower  with  respect  to
accounts   located  in  Pennsylvania  for  filing  centrally  in  the  State  of
Pennsylvania.

         The UCC-1  Financing  Statements  from the West Virginia  Borrower with
respect to accounts  located in Tennessee  for filing  centrally in the State of
Tennessee.

         The UCC-1  Financing  Statements  from the West Virginia  Borrower with
respect to accounts located in Pennsylvania for filing centrally in the State of
Pennsylvania.

         The Consolidated Lease Estoppel, Subordination, Non-Disturbance and
Attornment Agreement made by the Borrower and Crossroads Future Financing
Company, L.L.C. for the benefit of the Lender with respect to the Loan.

         The Consolidated Lease Estoppel, Subordination, Non-Disturbance and
Attornment Agreement made by the Borrower and Wayne Holding Corp. for the
benefit of the Lender with respect to the Loan.

         The Consolidated  Lease Estoppel,  Subordination,  Non-Disturbance  and
Attornment  Agreement  made by the  Borrower  and  Crossroads/Memphis  Financing
Company II, L.L.C. for the benefit of the Lender with respect to the Loan.

<PAGE>

         The Consolidated  Lease Estoppel,  Subordination,  Non-Disturbance  and
Attornment  Agreement made by the WV Borrower and  Crossroads/Memphis  Financing
Company II, L.L.C. for the benefit of the Lender with respect to the Loan.

<PAGE>

                                 SCHEDULE 4.1(B)

EQI Financing Partnership II, L.P.:
----------------------------------

         Tennessee
         Indiana
         Kansas
         Ohio
         Tennessee
         Virginia
         Texas
         Arizona
         Minnesota
         New Jersey
         Oregon
         Michigan

EQI/WV Financing Partnership, L.P.:
-----------------------------------

         Tennessee
         West Virginia

<PAGE>

                                  SCHEDULE 4-5A

                   TENANT / SUB-TENANT-OWNED PERSONAL PROPERTY

Schedule of personal property not owned by the Borrower:

         All  furniture,  fixtures,  and  equipment  are owned by the  Borrower,
except   (A)   the   possible    exception   of   cable   television    systems,
telecommunications equipment, computers,  reservation systems, and copy machines
under capital leases  required by a franchisor or (B)  "Inventory" as defined by
the Uniform System of accounts for hotels, which is owned by the Tenants and (C)
other  minor  articles  of  personal  property  owned  by the  tenants  or their
management companies.

<PAGE>

                               SCHEDULE 4.5(B) - 1

                      ZONING VARIANCES / SPECIAL EXCEPTIONS

         To the knowledge of the Borrower,  there are no  grandfathered  uses or
improvements,  variances or special  exceptions  with respect to zoning  matters
except  as  expressly  set  forth in the  Zoning  and Site  Requirement  Surveys
prepared by The  Planning & Resource  Corporation,  true,  correct and  complete
copies of which have been delivered to the Lender.

<PAGE>

                                SCHEDULE 4.5(B)-2

                    ZONING: EXCEPTIONS TO BY-RIGHT REBUILDING

                                      NONE

<PAGE>

                                SCHEDULE 4.5(B)-3

                               PARKING EXCEPTIONS

         The minor parking  deficiencies (which never exceed five parking spaces
per hotel) as disclosed in the Zoning and Site  Requirement  Surveys prepared by
The Planning & Zoning Resource Corporation, true, complete and correct copies of
which have been delivered to the Lender.

<PAGE>

                                 SCHEDULE 4.5(D)

                          OTHER AGREEMENTS OF BORROWER

         The Ground Leases, the Leases, capital improvement contracts,  and such
other  agreements  in the  ordinary  course of  business  and to comply with the
requirements of the Loan Documents.

<PAGE>

                                SCHEDULE 4.5 (E)

                           COPIES OF OPERATING LEASES

<PAGE>

                                SCHEDULE 4.5(G)-1

                            CONTEMPLATED RENOVATIONS

                                 (See Attached)

<PAGE>

                                SCHEDULE 4.5(G)-2

                                UTILITY PROBLEMS

         All utilities are available,  with the possible  exception of gas where
electric heat is available.

<PAGE>

                                SCHEDULE 4.5(G)-3

                           FLOOD PLAIN / ENCROACHMENTS

         None of the properties are within a flood plain except as expressly set
forth in the surveys of the property, true and correct copies of which have been
delivered to the Lender.

         There are no major encroachments with respect to the properties, except
as shown on the surveys, true and correct copies of which have been delivered to
the Lender.

<PAGE>

                                  SCHEDULE 4.6

                                   LITIGATION

       There is no material litigation pending against the Borrower Group.

<PAGE>

                                  SCHEDULE 4.11

                                   ERISA PLANS

1.  Equity Inns Services, Inc. 401(k) Profit Sharing Plan and Trust.

2.  Equity Inns, Inc. Executive Deferred Compensation Plan.

3.  Equity Inns, Inc. Executive Deferred Compensation Plan Trust.  This Trust is
    a "grantor trust," established pursuant to Subpart E of Subchapter J of the
    IRC.

4.  Change and Control and Termination Agreements, by and Between Equity Inns
    Services, Inc., Equity Inns, Inc. and each of several executives employed by
    Equity Inns Services, Inc. These agreements contain provisions requiring the
    provision of welfare benefits to executives after termination of employment
    in certain circumstances.

5.  Group Health & Dental Plan

6.  Group Life Insurance Plan

7.  Long-Term Disability Benefit Plan

8.  Vision Care Plan

<PAGE>

                                  SCHEDULE 4.12

                              INTELLECTUAL PROPERTY

         None.  Hotel brand names are owned by the franchisor and franchised to
the tenant/franchisee.

<PAGE>

                                  SCHEDULE 4.18

                               INSURANCE POLICIES

         All insurance policies are obtained and maintained by the Tenants,  not
the Borrower Parties, and certificates of insurance therefor have been delivered
to the Lender.

<PAGE>

                                    INDEX TO
                           LOAN AND SECURITY AGREEMENT

                                                                        Page No.

ARTICLE 1- DEFINITIONS.........................................................1

Section 1.1       Certain Defined Terms........................................1

Section 1.2       Accounting Terms: Utilization of GAAP for Purposes of
                  Calculations Under Agreement.................................8

Section 1.3       Other Definitional Provisions................................9

ARTICLE 2 - LOAN TERMS / DEFEASANCE / SUBSTITUTION.............................9

Section 2.1       Loan.........................................................9

         (A)      Loan.........................................................9

         (B)      Note.........................................................9

         (C)      Use of Proceeds..............................................9

         (D)      Sums Payable Under Note.....................................10

Section 2.2       Prepayments.................................................10

Section 2.3       Defeasance..................................................10

         (A)      Defeasance Generally........................................10

         (B)      Conditions..................................................10

         (C)      Substituted Defeasance Obligor..............................12

         (D)      Defeasance Collateral - Quantities and Criteria.............13

         (E)      Defeasance Collateral - Security Interest. Etc..............13

         (F)      Costs and Expenses..........................................13

<PAGE>

         (G)      Release of Property.........................................13

Section 2.4       Substitution of Properties..................................14

         (A)      Substitution Generally......................................14

         (B)      Conditions..................................................14

         (C)      Costs and Expenses..........................................16

         (D)      Release of Property.........................................16

Section 2.5       Other Property Releases.....................................16

ARTICLE 3 - CONDITIONS TO LOAN................................................17

Section 3.1       Conditions to Funding of the Loan on the Closing Date.......17

         (A)      Loan Documents..............................................17

         (B)      Performance of Agreements, Truth of Representations
                  and Warranties..............................................17

         (C)      Searches....................................................17

         (D)      Opinions of Counsel.........................................17

         (E)      Insurance Policies and Endorsements.........................18

         (F)      Certificates of Formation and Good Standing.................18

         (G)      Certificates of Incumbency and Resolutions..................18

         (H)      Letter of Direction.........................................18

         (I)      Financial Statements........................................18

         (J)      Appointment of Agent for Service............................19

         (K)      Closing Certificate.........................................19

<PAGE>

         (L)      Appraisals..................................................19

         (M)      Environmental Reports.......................................19

         (N)      Operating Leases, Management, License and Franchise
                  Agreement.................s.................................19

         (O)      Zoning......................................................20

         (P)      Franchisor Comfort Letters..................................20

         (Q)      Title Policies..............................................20

         (R)      Surveys.....................................................20

         (S)      Licenses, Permits and Approvals.............................20

         (T)      Leases and Other Agreements.................................20

         (U)      Lender's Inspection.........................................20

         (V)      Deposits....................................................20

         (W)      Ground Leases. Estoppels....................................20

         (X)      Commitment Fee..............................................21

         (Y)      Legal Fees: Closing Expenses................................21

         (Z)      Other Requirements..........................................21

         (AA)     Other Review................................................21

ARTICLE 4 - BORROWER'S REPRESENTATIONS AND WARRANTIES.........................21

Section 4.1       Organization, Powers, Capitalization, Good Standing,
                  Business....................................................21

         (A)      Organization and Powers.....................................21

         (B)      Qualification...............................................21

         (C)      Business....................................................21

<PAGE>

Section 4.2       Authorization of Borrowing, etc.............................22

         (A)      Authorization of Borrowing.  ...............................22

         (B)      No Conflict.................................................22

         (C)      Governmental Consents.......................................22

         (D)      Binding Obligation..........................................22

Section 4.3       Financial Statements........................................22

Section 4.4       Indebtedness and Contingent Obligations.....................23

Section 4.5       Title to Properties; Liens; Zoning; Leases; Agreements;
                  Rent Roll; Lease Issues; Condition..........................23

Section 4.6       Litigation: Adverse Facts...................................25

Section 4.7       Payment of Taxes............................................25

Section 4.8       Adverse Contracts...........................................25

Section 4.9       Performance of Agreements...................................26

Section 4.10      Governmental Regulation.....................................26

Section 4.11      Employee Benefit Plans......................................26

         (A)      No Other Plans..............................................26

         (B)      ERISA and IRC Compliance and Liability......................26

         (C)      Funding.....................................................27

         (D)      Prohibited Transactions and Payments........................27

         (E)      No Termination Event........................................27

<PAGE>

         (F)      ERISA Litigation............................................27

Section 4.12      Intellectual Property.......................................27

Section 4.13      Broker's Fees...............................................28

Section 4.14      Environmental Compliance....................................28

         (A)      No Environmental Claims.....................................28

         (B)      Storage of Hazardous Materials..............................28

         (C)      Compliance with Environmental Laws..........................28

Section 4.15      Solvency....................................................28

Section 4.16      Disclosure..................................................29

Section 4.17      Use of Proceeds and Margin Security.........................29

Section 4.18      Insurance...................................................29

Section 4.19      Compliance with Laws........................................29

Section 4.20      Investments.................................................30

Section 4.21      Legal Opinions..............................................30

Section 4.22      Bankruptcy..................................................30

Section 4.23      Defaults....................................................30

Section 4.24      Names, Principal Places of Business.........................30

ARTICLE 5 - COVENANTS OF BORROWER.............................................31

Section 5.1       Estoppel Certificates.......................................31

Section 5.2       Restriction on Fundamental Changes..........................31

Section 5.3       Transactions with Affiliates................................31

<PAGE>

Section 5.4       Compliance with ERISA.......................................32

         (A)      Employee Benefit Plans......................................32

         (B)      Termination Events..........................................32

         (C)      ERISA Notices...............................................32

         (D)      Certain Covenants...........................................33

         (E)      No Plan Assets..............................................33

Section 5.5       Princeton, New Jersey Franchise.............................34

Section 5.6       Satisfaction of Loan; Release of Mortgages..................34

ARTICLE 6 - RESTRUCTURING LOAN, SECONDARY MARKET
          TRANSACTIONS........................................................35

Section 6.1       Secondary Market Transaction Generally......................35

Section 6.2       Cooperation: Limitations....................................35

Section 6.3       Information.................................................35

Section 6.4       Additional Provisions.......................................36

ARTICLE 7 - MISCELLANEOUS.....................................................36

Section 7.1       Expenses and Attorneys' Fees................................36

Section 7.2       Indemnity...................................................37

Section 7.3       Amendments and Waivers......................................38

Section 7.4       Retention of Borrower's Documents...........................38

Section 7.5       Notices.....................................................38

Section 7.6       Survival of Warranties and Certain Agreements...............38

<PAGE>

Section 7.7       Failure or Indulgence Not Waiver: Remedies Cumulative.......38

Section 7.8       Marshaling: Payments Set Aside..............................39

Section 7.9       Independence of Covenants...................................39

Section 7.10      Severability................................................39

Section 7.11      Headings....................................................39

Section 7.12      APPLICABLE LAW..............................................40

Section 7.13      Successors and Assigns: Subsequent Holders of Note..........40

Section 7.14      Sophisticated Parties. Reasonable Terms.
                  No Fiduciary Relationship...................................40

Section 7.15      Limitation of Liability.....................................40

Section 7.16      No Duty.....................................................41

Section 7.17      Entire Agreement............................................41

Section 7.18      Construction: Supremacy of the Loan Agreement...............41

Section 7.19      CONSENT TO JURISDICTION AND SERVICE OF PROCESS..............41

Section 7.20      WAIVER OF JURY TRIAL........................................42

Section 7.21      Sole Discretion of Lender...................................43

Section 7.22      Joint and Several...........................................43

Section 7.23      Counterparts: Effectiveness.................................43

Section 7.24      Limited Recourse............................................43

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