EXHIBIT 10.3

[LOGO]                                                      JACKSON, MISSISSIPPI
                                                              PROMUS HOTELS, INC
                                                              755 CROSSOVER LANE
                                                       MEMPHIS, TENNESSEE  38117
                                                                       99-hom/co

                                 HOMEWOOD SUITES
                                LICENSE AGREEMENT


DATED  JANUARY 4, 2000  BETWEEN  PROMUS  HOTELS,  INC.,  A DELAWARE  CORPORATION
      -----------------
("LICENSOR"),   AND  APPLE  SUITES  MANAGEMENT,  INC.,  A  VIRGINIA  CORPORATION
                     -----------------------------------------------------------
("LICENSEE"), WHOSE ADDRESS IS 306 EAST MAIN STREET, RICHMOND, VIRGINIA 23219 .
                               -------------------------------------------------

                          THE PARTIES AGREE AS FOLLOWS:

1.       THE LICENSE.

         Licensor  owns,  operates and  licenses a system  designed to provide a
         distinctive,  high quality  hotel  service to the public under the name
         "Homewood  Suites"  (the  "SYSTEM").   High  standards  established  by
         Licensor  are the  essence of the  System.  Future  investments  may be
         required  of  Licensee  under  this  License  Agreement  ("AGREEMENT").
         Licensee has independently investigated the risks of the business to be
         operated hereunder,  including current and potential market conditions,
         competitive factors and risks, has read Licensor's  "Franchise Offering
         Circular,"  and has made an  independent  evaluation of all such facts.
         Aware of the  relevant  facts,  Licensee  desires  to enter  into  this
         Agreement  in  order to  obtain  a  license  to use the  System  in the
         operation  of a Homewood  Suites  hotel  located at 853 CENTRE  STREET,
         JACKSON,  MISSISSIPPI  39157 (the "HOTEL") subject to the terms of this
         Agreement.

         a.     THE  HOTEL.  The Hotel  comprises  all  structures,  facilities,
                appurtenances,  furniture, fixtures, equipment, and entry, exit,
                parking  and other  areas from time to time  located on the site
                approved  for  the  Hotel  and   acknowledged   by  Licensor  in
                anticipation of the execution of this  Agreement,  or located on
                any land from time to time  approved by Licensor for  additions,
                signs or other  facilities.  No change in the number of approved
                guest suites  ("GUEST  SUITES")  reflected on  Attachment B (the
                "RIDER")  and no other  significant  change  in the Hotel may be
                made without  Licensor's prior approval.  Redecoration and minor
                structural  changes that comply with  Licensor's  standards  and
                specifications  will  not be  considered  significant.  Licensee
                represents that it is entitled to possession of the Hotel during
                the  entire  License  Term  without   restrictions   that  would
                interfere with anything contemplated in this Agreement.

         b.     THE SYSTEM.  The System is composed of elements,  as  designated
                from time to time by  Licensor,  designed to identify  "Homewood
                Suites  hotels" to the consuming  public and/or to contribute to
                such  identification and its association with quality standards.
                The  System at  present  includes  the  service  mark  "Homewood
                Suites"  and such  other  service  marks  and  such  copyrights,
                trademarks and similar property rights as may be designated from
                time to time by Licensor  to be part of the System;  access to a
                reservation service; distribution of advertising,  publicity and
                other  marketing  programs  and  materials;  the  furnishing  of
                training programs and materials,  standards,  specifications and
                policies for construction, furnishing, operation, appearance and
                service  of the  Hotel,  and  other  requirements  as  stated or

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                referred  to in  this  Agreement  and  from  time to time in the
                Manual  (as  defined  herein)  or  in  other  communications  to
                Licensee;  and programs for  inspecting the Hotel and consulting
                with  Licensee.  Licensor  may add  elements  to the  System  or
                modify,  alter or delete  elements of the System  (including the
                trade  name  and/or  brand  name  of  the  Hotel)  at  its  sole
                discretion from time to time. Licensee is only authorized to use
                "Homewood  Suites"  service  marks  and trademarks  at  or    in
                connection with the Hotel.

         c.     THE  MANUAL.  Licensee  acknowledges  the  receipt  of a current
                Homewood  Suites   Standards  Manual   ("MANUAL").   The  Manual
                contains,   among   other   matters,   minimum   standards   and
                requirements for constructing, equipping, furnishing, supplying,
                operating,  maintaining and marketing the Hotel.  Licensor shall
                have the  right  to  change  the  Manual  from  time to time and
                Licensee  agrees to abide by the Manual as  changed.  The Manual
                shall  at all  times  remain  the  sole  property  of  Licensor.
                Licensee  shall  use all  reasonable  efforts  to  maintain  the
                confidentiality  of the  Manual.  Licensee  shall  not  make  or
                distribute copies of the Manual or any portion thereof.

         d.     APPLICATION  OF MANUAL.  All hotels  operated  within the System
                will be  subject to the  Manual,  as it may from time to time be
                modified  or  revised by  Licensor.  Licensor  may,  in its sole
                discretion,  grant limited  exceptions  from compliance with the
                Manual  which may be made based on local  conditions  or special
                circumstances.  Each  material  change  in the  Manual  will  be
                explained in writing to Licensee at least 30 days before it goes
                into  effect.   Licensee  is   responsible   for  the  costs  of
                implementing all changes required because of modification to the
                Manual.

                Licensor  may  require  that  particular  models  or  brands  of
                furniture,   fixtures,   equipment,   food,   and  other   items
                (collectively,  the  "SUPPLIES") be used in the operation of the
                Hotel or be purchased from Licensor or from a source  designated
                by Licensor.  Otherwise, Licensee may purchase all Supplies from
                any source as long as the  standards and  specifications  in the
                Manual  are  met,  which  standards  and  specifications  may be
                changed  by  Licensor  from  time  to  time.  Licensee  will  be
                responsible for the costs, if any,  associated with the purchase
                of Supplies or changing brands, models or sources of supply.

2.       GRANT OF LICENSE.

         Licensor  hereby  grants  to  Licensee  a  nonexclusive   license  (the
         "LICENSE") to use the System only at the Hotel, only in connection with
         the operation of a Homewood Suites hotel,  only in accordance with this
         Agreement and only during the "License  Term"  beginning  with the date
         hereof and terminating as provided in Paragraph 13. The License applies
         to the  location  of the Hotel  specified  herein  and no  other.  This
         Agreement does not limit Licensor's right, or the rights of any parent,
         subsidiary,  division or affiliate of Licensor ("ENTITIES"),  to use or
         license  to others  the  System or any part  thereof or to engage in or
         license  any  business   activity  at  any  other  location.   Licensee
         acknowledges  that  Licensor and its Entities are and may in the future
         be engaged in other business activities  including activities involving
         transient lodging and related  activities which may be or may be deemed
         to be competitive with the System; that facilities,  programs, services
         and/or personnel used in connection with the System may also be used in
         connection  with such other  business  activities  of Licensor  and its
         Entities; and that Licensee is acquiring no rights hereunder other than
         the non-exclusive right to use the System in connection with a Homewood
         Suites hotel as  specifically  defined  herein in  accordance  with the
         terms of this Agreement.

3.       LICENSOR'S RESPONSIBILITIES.

         a.       TRAINING.  During the  License  Term,  Licensor  will  specify
                  required and  optional  training  programs  and provide  these
                  programs at various locations. Licensee may be charged for (i)
                  required training services and materials and (ii) for optional
                  training  services  and  materials  if provided  to  Licensee.
                  Travel,  lodging  and  other  expenses  of  Licensee  and  its
                  employees will be borne by Licensee.

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         b.       RESERVATION  SERVICES.  During the  License  Term,  so long as
                  Licensee is in full  compliance with the obligations set forth
                  in this  Agreement,  Licensor will afford  Licensee  access to
                  reservation services for the Hotel.

         c.       CONSULTATION.  Licensor will,  from time to time at Licensor's
                  sole discretion,  make available to Licensee  consultation and
                  advice  in  connection   with   operations,   facilities   and
                  marketing.  Licensor shall have the right to establish fees in
                  advance for its advice and consultation on a  projectbyproject
                  basis.

         d.       ARRANGEMENTS  FOR  MARKETING,   ETC.  Licensor  will  use  the
                  Marketing/Reservation  Contribution  for costs associated with
                  advertising,  promotion,  publicity, market research and other
                  marketing   programs   and   related   activities,   including
                  reservation  programs  and  services.  Licensor may enter into
                  arrangements   for   development,    marketing,    operations,
                  administrative,  technical and support functions,  facilities,
                  programs,  services and/or personnel with any other entity and
                  may use any facilities,  programs,  services and/or  personnel
                  used in  connection  with the  System in  connection  with any
                  business activities of its Entities. Licensor is not obligated
                  to expend  funds for  marketing  or  reservation  services  in
                  excess  of the  amounts  received  from  Licensees  using  the
                  System. Licensor and its designees shall have no obligation in
                  administering any marketing and reservation activities to make
                  expenditures    for   Licensee   which   are   equivalent   or
                  proportionate  to Licensee's  payments,  or to ensure that any
                  particular  hotel benefits  directly or  proportionately  from
                  such expenditures.

         e.       INSPECTIONS/COMPLIANCE  ASSISTANCE.  Licensor has the right to
                  inspect  the  Hotel at any  time,  with or  without  notice to
                  Licensee,  to determine if the Hotel is in compliance with the
                  standards and rules of operation  set forth in the Manual.  If
                  the Hotel  fails to comply  with such  standards  and rules of
                  operation, Licensor may, at its option and at Licensee's cost,
                  require an action plan to correct the  deficiencies.  Licensee
                  must then take all steps necessary to correct any deficiencies
                  within the times established by Licensor.  Licensor's approval
                  of an action  plan does not waive any rights it may have under
                  this Agreement nor does it relieve Licensee of any obligations
                  under this Agreement.

4.       PROPRIETARY RIGHTS.

         a.       OWNERSHIP OF THE SYSTEM.  Licensee  acknowledges  and will not
                  contest,  either  directly or  indirectly,  Licensor's (or its
                  affiliates,  as the case may be)  unrestricted  and  exclusive
                  ownership  of the System and any  element(s)  or  component(s)
                  thereof,  and acknowledges that Licensor has the sole right to
                  grant licenses to use all or any element(s) or component(s) of
                  the System. Licensee specifically agrees and acknowledges that
                  Licensor (or its affiliates) is the owner of all right,  title
                  and interest in and to the service mark "Homewood Suites", its
                  distinguishing  characteristics,  trade names,  service marks,
                  trademarks,  logos,  copyrights,  slogans, etc., and all other
                  marks associated with the System  ("MARKS")  together with the
                  goodwill symbolized thereby and that Licensee will not contest
                  directly or indirectly  the validity or ownership of the Marks
                  either  during  the  term of  this  Agreement  or at any  time
                  thereafter. All improvements and additions whenever made to or
                  associated with the System by the parties to this Agreement or
                  anyone else,  and all service marks,  trademarks,  copyrights,
                  and service mark and trademark registrations at any time used,
                  applied for or granted in connection with the System,  and all
                  goodwill  arising from Licensee's use of the Marks shall inure
                  to the benefit of and become the  property of Licensor (or its
                  applicable affiliate).  Upon expiration or termination of this
                  Agreement,   no   monetary   amount   shall  be   assigned  as
                  attributable to any goodwill associated with Licensee's use of
                  the System or any  element(s)  or  component(s)  of the System
                  including the name or Marks.

         b.       USE OF NAME.  Licensee  will not use the  word  "Homewood"  or
                  "Homewood  Suites" or any similar  word(s)  in its  corporate,
                  partnership,  business  or  trade  name,  or in  any  Internet
                  related  name  (including a domain name) except as provided in
                  this  Agreement  or the Manual,  nor  authorize or permit such
                  word(s) to be used by anyone else.

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5.       TRADEMARK AND SERVICE MARK.

         a.       TRADEMARK  DISPUTES.  Licensor  will  have the sole  right and
                  responsibility   to  handle   disputes   with  third   parties
                  concerning use of all or any part of the System,  and Licensee
                  will, at its reasonable  expense,  extend its full cooperation
                  to  Licensor in all such  matters.  All  recoveries  made as a
                  result of disputes  with third  parties  regarding  use of the
                  System  or any  part  thereof  shall  be for  the  account  of
                  Licensor.  Licensor  need not initiate  suit  against  alleged
                  imitators or infringers and may settle any dispute by grant of
                  a license or otherwise. Licensee will not initiate any suit or
                  proceeding  against  alleged  imitators or  infringers  or any
                  other suit or proceeding to enforce or protect the System.

         b.       PROTECTION  OF NAMES AND MARKS.  Both  parties will make every
                  effort  consistent  with the foregoing to protect and maintain
                  the Marks and name  "Homewood  Suites" and its  distinguishing
                  characteristics  as  standing  for the  System  and  only  the
                  System.  Licensee  agrees  to  execute  any  documents  deemed
                  necessary by Licensor or its counsel to obtain  protection for
                  Licensor's  Marks or to maintain their continued  validity and
                  enforceability.  Licensee  agrees to use such  names and Marks
                  only in  connection  with the  operation of a Homewood  Suites
                  hotel  and in the  manner  authorized  by  Licensor.  Licensee
                  acknowledges  that any  unauthorized use of the names or Marks
                  shall constitute  infringement of Licensor's rights.  Licensee
                  must  notify  Licensor   immediately,   in  writing,   of  any
                  infringement or challenge to Licensee's use of the Marks or of
                  any unauthorized use or possible misuse of Licensor's Marks or
                  Licensor's proprietary information.

6.       LICENSEE'S RESPONSIBILITIES.

         a.       OPERATIONAL AND OTHER  REQUIREMENTS.  During the License Term,
                  Licensee will:

                  (1)   promptly  pay to Licensor  all amounts due  Licensor and
                        its  Entities  as  royalties  or  fees or for  goods  or
                        services purchased by Licensee;

                  (2)   maintain the Hotel in a clean,  safe and orderly  manner
                        and in first class condition;

                  (3)   provide efficient, courteous and high-quality service to
                        the public;

                  (4)   operate  the Hotel 24 hours a day every  day,  except as
                        otherwise   permitted  by  Licensor   based  on  special
                        circumstances;

                  (5)   strictly comply in all respects with the Manual and with
                        all  other  policies,  procedures  and  requirements  of
                        Licensor which may be from time to time  communicated to
                        Licensee;

                  (6)   strictly comply with Licensor's reasonable  requirements
                        to protect  the  System  and the Hotel  from  unreliable
                        sources of supply;

                  (7)   strictly comply with Licensor's requirements as to:

                        (a)   the types of  services  and  products  that either
                              must or may be used,  promoted  or  offered at the
                              Hotel;

                        (b)   use, display, style and type of signage;

                        (c)   directory and reservation  service listings of the
                              Hotel;

                        (d)   training   of  persons  to  be   involved  in  the
                              operation of the Hotel;

                        (e)   participation   in  all   marketing,   reservation
                              service,   advertising,   training  and  operating
                              programs designated by Licensor as System-wide (or
                              areawide)  programs based on Licensors  assessment
                              of the  long-term

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                              best   interests  of  hotels  using  the   System,
                              considering the interest of the System overall;

                        (f)   maintenance,   appearance  and  condition  of  the
                              Hotel;

                        (g)   quality and types of services offered to customers
                              at the Hotel, and

                        (h)   its 100% Satisfaction Guarantee rule of operation,
                              and any  similar  rules of  operation  designed to
                              maintain  or  improve   relationships  with  past,
                              present  and  potential  guests  and  other  hotel
                              customers,  as such rule or rules are in effect or
                              as they may be established or revised hereafter;

                  (8)   use such automated guest service and/or hotel management
                        and/or telephone system(s) which Licensor deems to be in
                        the best  interests of the  System  based on  Licensor's
                        assessment  of the  long-term  best  interests of hotels
                        using  the  System,  considering  the  interests  of the
                        System overall,  including any additions,  enhancements,
                        supplements  or variants  thereof which may be developed
                        during the term hereof;

                  (9)   participate in and use those reservation  services which
                        Licensor deems to be in the best interests of the System
                        based on  Licensors  assessment  of the  long-term  best
                        interests  of hotels using the System,  considering  the
                        interests   of  the  System   overall,   including   any
                        additions, enhancements, supplements or variants thereof
                        which may be developed during the term hereof;

                  (10)  adopt  improvements  or  changes to the System as may be
                        from time to time designated by Licensor;

                  (11)  strictly  comply  with  all  governmental  requirements,
                        including  the filing and  maintenance  of any  required
                        trade name or fictitious name registrations,  paying all
                        taxes,  and  maintaining all  governmental  licenses and
                        permits  necessary  to operate  the Hotel in  accordance
                        with the System;

                  (12)  permit   inspection   of   the   Hotel   by   Licensor's
                        representatives  at any time and give them free  lodging
                        for such time as may be reasonably necessary to complete
                        their inspections;

                  (13)  upon request by Licensor, provide to Licensor statistics
                        on Hotel  operations  in the form  specified by Licensor
                        and using definitions specified by Licensor;

                  (14)  promote the Hotel on a local or regional  basis  subject
                        to Licensor's requirements as to form, content and prior
                        approvals;

                  (15)  ensure  that no part of the  Hotel or  System is used to
                        further  or  promote  another  lodging  facility  or any
                        business that competes with any business  Licensor or an
                        affiliate  engages in at any time  during the  Agreement
                        (including,  but not limited to, the timeshare resort or
                        vacation ownership business),  except for those approved
                        by Licensor, its parent, subsidiaries or affiliates;

                  (16)  use every  reasonable means to encourage use of Homewood
                        Suites  facilities  everywhere by the public;  provided,
                        however,  this will not prohibit Licensor from requiring
                        Licensees  participation  in programs  designed to refer
                        prospective  customers to other hotels (in the System or
                        otherwise);

                  (17)  in all respects use  Licensee's  best efforts to reflect
                        credit upon and create  favorable public response to the
                        name "Homewood Suites";

                  (18)  comply   with   Licensor's    requirements    concerning
                        confidentiality of information;

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<PAGE>
                  (19)  not at any  time  during  the  term of  this  Agreement,
                        through itself or any member of an affiliated  group (as
                        defined by the Internal  Revenue  Code) own, in whole or
                        in  part,   or  be  the  licensor  of,  a  hotel  brand,
                        tradename,  system or chain without the written  consent
                        of  Licensor  in its  sole  discretion.  Hereafter,  any
                        entity that,  through itself or any  affiliate,  owns in
                        whole or in part,  or is the  licensor of a hotel brand,
                        tradename,  system or chain  shall be  referred  to as a
                        COMPETITOR; and

                  (20)  maintain  possession  and control of the Hotel and Hotel
                        site.

         b.       UPGRADING  OF THE HOTEL.  Licensor  may at any time during the
                  License Term require substantial modernization, rehabilitation
                  and  other  upgrading  of the  Hotel to meet the then  current
                  standards  specified in the Manual as long as those  standards
                  apply to a majority of the hotels operated by Licensor and its
                  licensees in the same brand or category as the Hotel.  Nothing
                  in this paragraph shall be construed to relieve  Licensee from
                  the obligation to maintain  acceptable product quality ratings
                  at the Hotel and  maintain  the Hotel in  accordance  with the
                  Manual at all times during the Agreement.  Limited  exceptions
                  from those  standards  may be made by Licensor  based on local
                  conditions   or  special   circumstances.   If  the  upgrading
                  requirements  contained in this  Paragraph  6b cause  Licensee
                  undue  hardship,  Licensee  may  terminate  this  Agreement by
                  paying a fee computed according to Paragraph 13f.

         c.       STAFF AND MANAGEMENT. Licensee is at all times responsible for
                  the management of the Hotel's  business.  Licensee may fulfill
                  this  responsibility  by  retaining a third  party  management
                  company  ("MANAGER");  provided,  however,  Licensee shall not
                  enter into any lease,  management  agreement or other  similar
                  arrangement for the operation of the Hotel or any part thereof
                  with any entity without the prior written  consent of Licensor
                  in Licensors sole discretion (there being no obligation on the
                  part of Licensor to approve a third party management company).
                  Licensee understands that Licensor will not normally approve a
                  Competitor  to manage the Hotel,  or any entity that  (through
                  itself  or  an  affiliate)  is  the  exclusive  manager  for a
                  Competitor.  If a  Manager  becomes a  Competitor  at any time
                  during the term of the Agreement,  Licensee shall have 90 days
                  to retain a  substitute  manager  suitable to  Licensor.  As a
                  prerequisite  for  Licensor's  approval  of  a  Manager,   the
                  proposed  management  agreement  must  provide  (1)  that  the
                  Manager has  authority  for the  day-to-day  management of the
                  Hotel;  (2) that the Manager has the  authority to perform the
                  obligations of the Licensee under this Agreement; and (3) that
                  in the case of any  conflict  between this  Agreement  and the
                  management agreement, this Agreement prevails.

7.       FEES.

         a.       Commencing  on the  opening  date of the  Hotel as a  Homewood
                  Suites  hotel  and  continuing  for  the  full  term  of  this
                  Agreement,  for each month (or part of a month), Licensee will
                  pay to Licensor by the 15th of the following month:

                  (1)    a royalty fee equal to 4 percent of the gross  revenues
                         attributable  to or payable for rental of Guest  Suites
                         at the Hotel with  deductions  for sales and room taxes
                         only ("GROSS SUITES REVENUE"); and

                  (2)    a  "MARKETING/RESERVATION   CONTRIBUTION"  equal  to  4
                         percent     of    Gross     Suites     Revenue.     The
                         Marketing/Reservation Contribution is subject to change
                         by    Licensor    from    time    to    time,     which
                         Marketing/Reservation  Contributions do not include the
                         cost,   installation   or  maintenance  of  reservation
                         services equipment or training; and

                  (3)    all amounts due  Licensor  for any other  miscellaneous
                         fees or invoices or for goods or services  purchased by
                         or   provided  to  Licensee  or  paid  by  Licensor  on
                         Licensee's behalf; and

                  (4)    an amount equal to any sales, gross receipts or similar
                         tax imposed on Licensor for the receipt of the payments
                         required in (1), (2) and (3) of this  Paragraph  above,

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<PAGE>

                         unless the tax is an optional  alternative to an income
                         tax otherwise payable by Licensor.

         b.       Licensee will operate the Hotel so as to maximize Gross Suites
                  Revenue  consistent with sound marketing and industry practice
                  and will not engage in any  conduct  which is likely to reduce
                  Gross  Suites  Revenue  in order  to  further  other  business
                  activities.

         c.       Royalties may be charged on revenues (or upon any other basis,
                  if so determined by Licensor)  from any activity  conducted at
                  the Hotel if added by  mutual  agreement  and if:  (i) not now
                  offered at hotels within the System generally and is likely to
                  benefit significantly from or be identified significantly with
                  the  Homewood  Suites  name or other  aspects of the System or
                  (ii) designed or developed by or for Licensor.

         d.       Licensor may charge for optional products or services accepted
                  by Licensee  from Licensor  either in accordance  with current
                  practice or as developed in the future.

         e.       A Guest  Suite  addition  fee for guest suite  additions  to a
                  hotel set forth in Licensor's then current "FRANCHISE OFFERING
                  CIRCULAR"  shall be paid by Licensee to Licensor on Licensee's
                  submission  of an  application  to add any Guest Suites to the
                  Hotel.  As a condition  to Licensor  granting  its approval of
                  such application, Licensor may require Licensee to upgrade the
                  Hotel, subject to Paragraph 6b.

         f.       Local and regional  marketing  programs and related activities
                  may be conducted by Licensee,  but only at Licensee's  expense
                  and subject to Licensor's requirements. Reasonable charges may
                  be made by Licensor for optional advertising materials ordered
                  or used by Licensee for such programs and activities.

         g.       Licensee  shall   participate   in  Licensor's   travel  agent
                  commission  program(s) as it may be modified from time to time
                  and shall  reimburse  Licensor  on or before  the 15th of each
                  month for call costs associated with such programs  including,
                  but not limited to, travel agent  commissions  and third party
                  reservation  service  charges  (such  as  airline  reservation
                  systems).

         h.       Each payment paid by Licensor  under this Paragraph 7 shall be
                  accompanied by the monthly statement  referred to in Paragraph
                  8.  Licensor  may  apply  any  amounts   received  under  this
                  Paragraph 7 to any amounts  due under this  Agreement.  If any
                  amounts  are  not  paid  when  due,  such  non-payment   shall
                  constitute a breach of this Agreement  and, in addition,  such
                  unpaid amounts will accrue a service  charge  beginning on the
                  first day of the month following the due date of 1 1/2 percent
                  per month but not to exceed the maximum  amount  permitted  by
                  applicable law.

8.       RECORDS AND AUDITS.

         a.       DAILY  AND  MONTHLY  REPORTS.  At  the  request  of  Licensor,
                  Licensee  shall prepare and deliver daily reports to Licensor,
                  which reports will contain information reasonably requested by
                  Licensor  on a  daily  basis,  such as  daily  rate  and  room
                  occupancy,   and  which  may  be  used  by  Licensor  for  its
                  reasonable purposes. At least monthly,  Licensee shall prepare
                  a  statement  which will  include all  information  concerning
                  Gross Suites Revenue,  other revenues  generated at the Hotel,
                  suite occupancy rates,  reservation data and other information
                  required  by  Licensor   (the   "DATA").   The  Data  will  be
                  permanently   recorded  and  retained  as  may  be  reasonably
                  required by Licensor. By the 15th of each month, Licensee will
                  submit to Licensor a statement  setting forth the Data for the
                  previous month and  reflecting the  computation of the amounts
                  then due under Paragraph 7. The statement will be in such form
                  and detail as Licensor  may  reasonably  request  from time to
                  time, and may be used by Licensor for its reasonable purposes.

         b.       MAINTENANCE OF RECORDS.  Licensee  shall, in a manner and form
                  satisfactory   to  Licensor  and  utilizing   accounting   and
                  reporting   standards  as  reasonably  required  by  Licensor,
                  prepare on a current basis (and preserve for no less than four
                  years),  complete and

                                       7

<PAGE>
                  accurate  records  concerning  Gross  Suites  Revenue  and all
                  financial,  operating,  marketing  and  other  aspects  of the
                  Hotel,  and  maintain  an  accounting  system  which fully and
                  accurately reflects all financial aspects of the Hotel and its
                  business.  Such records shall  include  books of account,  tax
                  returns,  governmental reports, register tapes, daily reports,
                  and complete quarterly and annual financial statements (profit
                  and loss statements, balance sheets and cash flow statements).

         c.       AUDIT.  Licensor may require Licensee to have the Gross Suites
                  Revenue or other monies due  hereunder  computed and certified
                  as  accurate  by a  certified  public  accountant.  During the
                  License  Term and for two years  thereafter,  Licensor and its
                  authorized  agents shall have the right to verify  information
                  required  under  this  Agreement  by  requesting,   receiving,
                  inspecting and auditing,  at all reasonable times, any and all
                  records  referred  to above  wherever  they may be located (or
                  elsewhere if reasonably  requested by  Licensor).  If any such
                  inspection or audit discloses a deficiency in any payments due
                  hereunder,  Licensee shall immediately pay to Licensor (i) the
                  deficiency,  (ii) a service  charge  thereon  as  provided  in
                  Paragraph  7h,  and  (iii)  all  inspection  and  audit  costs
                  (including travel, lodging, meals, salaries and other expenses
                  of  the   inspecting   or  auditing   personnel).   Licensor's
                  acceptance of Licensee's payment of any deficiency as provided
                  for herein shall not waive  Licensor's right to terminate this
                  Agreement as provided for herein in Paragraph 13. If the audit
                  discloses   an   overpayment,   Licensor   shall   refund  the
                  overpayment to Licensee within 30 days.

         d.       ANNUAL FINANCIAL STATEMENTS.  Licensee will submit to Licensor
                  complete year-end financial statements for the Hotel, Licensee
                  and/or any  guarantors as soon as available but not later than
                  90 days after the end of Licensee's fiscal year. Licensee will
                  certify them to be true and correct and to have been  prepared
                  in accordance with generally  accepted  accounting  principles
                  consistently  applied,  and any false  certification will be a
                  breach of this Agreement.

         e.       All of the information  provided to Licensor  pursuant to this
                  paragraph or any other part of this Agreement,  or pursuant to
                  any   agreement   ancillary  to  this   Agreement   (including
                  agreements  relating to the System 21 business system or other
                  property   management   system   provided  by  Licensor)  (the
                  "INFORMATION"),  shall be the property of  Licensor.  HOWEVER,
                  NOTWITHSTANDING  ANYTHING TO THE  CONTRARY IN THIS  AGREEMENT,
                  INFORMATION,  SUCH AS FINANCIAL  STATEMENTS,  PREPARED FOR THE
                  HOTEL, LICENSEE AND/OR GUARANTORS,  WHICH ANY SUCH PARTIES ARE
                  REQUIRED BY LAW OR BY THEIR NORMAL  BUSINESS  PRACTICES TO USE
                  FOR OTHER PURPOSES (SUCH AS IN FILINGS WITH THE SECURITIES AND
                  EXCHANGE  COMMISSION OR OTHER GOVERNMENTAL  AUTHORITIES OR FOR
                  TRANSMISSION  TO  SHAREHOLDERS)  MAY BE USED BY THEM  FOR SUCH
                  PURPOSES,  AND SUCH  PARTIES  SHALL  RETAIN  OWNERSHIP IN SUCH
                  INFORMATION  TO THE  EXTENT  NECESSARY  TO  PERMIT  SUCH  USE.
                  NEVERTHELESS,  LICENSOR  SHALL  OWN  THE  COPIES  OF ANY  SUCH
                  INFORMATION  PROVIDED BY ANY SUCH PARTIES IN  ACCORDANCE  WITH
                  THE  TERMS OF THIS  AGREEMENT.  Licensor  will use  reasonable
                  efforts to sort,  categorize,  classify and otherwise  analyze
                  the  information  to help licensees  market their hotels.  The
                  Information   will  remain  the  proprietary   information  of
                  Licensor  which  Licensor  will share with  licensees  only as
                  determined  by Licensor in its sole  discretion.  Licensor and
                  its  affiliates  may  use  the   Information  for  any  reason
                  whatsoever,  including an earnings claim in Licensors offering
                  circular.

9.       INDEMNITY.

         SUBJECT TO THE PROVISIONS OF ANY MANAGEMENT  AGREEMENT BETWEEN LICENSOR
         (AS MANAGER  THEREUNDER) AND LICENSEE (AS OWNER  THEREUNDER),  Licensee
         will indemnify,  during and after the term of this Agreement,  Licensor
         and  its  affiliates,   and  their  respective   officers,   directors,
         employees, agents,  predecessors,  successors and assigns ("INDEMNIFIED
         PARTIES") against, hold them harmless from, and promptly reimburse them
         for, all payments of money (fines, damages, legal fees, expenses, etc.)
         by  reason  of  any  claim,   demand,  tax,  penalty,  or  judicial  or
         administrative  investigation  or proceeding  (even where negligence of
         Licensor and/or its Entities and/or their Indemnified Parties is actual
         or alleged) arising from any claimed occurrence at the Hotel or arising
         from,  as a  result  of,  or in  connection  with  the  development  or
         operation  of the Hotel  (including,  but

                                       8
<PAGE>

         not  limited  to,  the  design,  construction,  financing,  furnishing,
         equipment,  acquisition  of supplies or  operation  of the Hotel in any
         way),  or any other of Licensee's  acts,  omissions or  obligations  or
         those of anyone  associated or affiliated with Licensee or the Hotel in
         any way arising out of or related to this Agreement. At the election of
         Licensor, Licensee will also defend Licensor and/or its Entities and/or
         their Indemnified Parties against the same. In any event, Licensor will
         have the right, through counsel of its choice, to control any matter to
         the extent it could directly or indirectly  affect  Licensor and/or its
         Entities and/or their Indemnified  Parties  financially.  Licensee will
         also reimburse Licensor for all expenses, including attorneys' fees and
         court costs,  reasonably  incurred by Licensor to protect itself and/or
         its  Entities  and/or  their  Indemnified  Parties  from,  or to remedy
         Licensee's defaults or to collect any amounts due under this Agreement.

10.      INSURANCE.

         a.       Licensee  will  comply  with  Licensor's   specifications  for
                  insurance  as to  amount  and  type  of  coverage  as  may  be
                  reasonably  specified by Licensor from time to time in writing
                  and will in any  event  maintain  as a minimum  the  following
                  insurance underwritten by an insurer approved by Licensor:

                  (1)      employer's   liability   and  workers'   compensation
                           insurance as prescribed by applicable law; and

                  (2)      liquor  liability  insurance,  if applicable,  naming
                           Licensor  and its then  current  Entities  and  their
                           predecessors,  successors  and assigns as  additional
                           insureds with single-limit  coverage for personal and
                           bodily  injury  and  property   damage  of  at  least
                           $10,000,000 for each occurrence; and

                  (3)      commercial   general   liability    insurance   (with
                           products,   completed   operations  and   independent
                           contractors  coverage) and  comprehensive  automobile
                           liability  insurance,  all on an  occurrence  and per
                           location  basis  naming  Licensor,  its  Entities and
                           their   predecessors,   successors   and  assigns  as
                           additional  insureds and  underwritten  by an insurer
                           approved by Licensor,  with single-limit coverage for
                           personal and bodily injury and property  damage of at
                           least $10,000,000 for each occurrence; and

                  (4)      in  connection  with all  construction  at the  Hotel
                           during  the  License  Term,  Licensee  will cause the
                           general   contractor  to  maintain  with  an  insurer
                           approved by  Licensor  commercial  general  liability
                           insurance (with products,  completed operations,  and
                           independent  contractors  coverage including workers'
                           compensation and automobile  liability  insurance for
                           such independent  contractors) in at least the amount
                           of $10,000,000  for each  occurrence for personal and
                           bodily injury and property damage with Licensor,  its
                           Entities  and  their  predecessors,   successors  and
                           assigns as additional insureds.

         b.       EVIDENCE  OF   INSURANCE/CHANGES.   This  coverage   shall  be
                  evidenced by original  certificates of insurance  submitted to
                  Licensor simultaneously herewith,  annually hereafter and each
                  time a change is made in any  insurance or insurance  carrier,
                  Licensee  will furnish to Licensor  certificates  of insurance
                  including the term and coverage of the insurance in force, the
                  persons insured,  and a statement that the coverage may not be
                  cancelled,  altered or permitted to lapse or expire without 30
                  days advance  written  notice to Licensor.  Licensor will send
                  Licensee notice of any policy or coverage which  Licensor,  in
                  its sole  discretion,  finds  unacceptable and upon receipt of
                  such notice,  Licensee will promptly  undertake to change such
                  policy or coverage.

         c.       If  Licensee  fails or  neglects  to  obtain or  maintain  the
                  insurance  or  policy  limits   required  by  this  Agreement,
                  Licensor shall have the option,  without notice, to obtain and
                  maintain such  insurance for Licensee,  and Licensee shall pay
                  immediately upon demand  therefore,  the premiums and the cost
                  incurred by Licensor in taking such action.

11.      TRANSFER.


                                       9
<PAGE>


         a.       TRANSFER OF THIS  AGREEMENT BY LICENSOR.  Licensor  shall have
                  the right to  transfer  or  assign  this  Agreement  or any of
                  Licensor's rights, obligations, or assets under this Agreement
                  to any person or legal  entity  provided  that the  transferee
                  assumes all of Licensor's  obligations  to Licensee under this
                  Agreement.

         b.       TRANSFERS BY LICENSEE.

                  (1)      General Statement of Explanation and Intent.

                           This Agreement is not transferable by Licensee, and a
                           change  in  ownership  of the  Hotel or the  licensed
                           business (i.e.,  either this Agreement,  the Licensee
                           or any indirect  ownership  interest in the Licensee)
                           is  not  allowed   under  this   Agreement.   Certain
                           intra-family  transfers  of interest and (in the case
                           of corporate licensees) corporate  restructurings are
                           permitted as long as the requirements described below
                           are met.  However,  Licensor  has  entered  into this
                           Agreement  with a particular  Licensee or its owners.
                           If the  Licensee  wants to transfer  the Hotel or its
                           interest in the  licensed  business,  such a transfer
                           will  constitute  a "change  of  ownership".  If  the
                           transferee  wants to continue to operate the Hotel as
                           a Homewood Suites hotel,  the transferee will have to
                           apply for a new license which, if approved, will last
                           at  most  for  the   balance  of  the  term  of  this
                           Agreement.   If  the  change  of   ownership  is  not
                           approved,  or if the  transferee  does  not  want  to
                           continue  to operate  the Hotel as a Homewood  Suites
                           hotel,   Licensor   may  refuse  to  consent  to  the
                           termination  of  this  Agreement.  If  Licensor  does
                           consent to termination, this Agreement will terminate
                           and  Licensee  will  owe   liquidated   damages.   In
                           addition,   if  the  transfer  is  to  a  Competitor,
                           Licensor  has  the  right  to  buy  the  Hotel.   The
                           foregoing  explanation  is more fully  described  and
                           qualified by the following specific provisions.

                  (2)      Licensee understands and acknowledges that the rights
                           and duties set forth in this  Agreement  are personal
                           to Licensee,  and that Licensor has entered into this
                           Agreement   in  reliance  on  the   business   skill,
                           financial   capacity,   and  personal   character  of
                           Licensee (if Licensee is an individual),  and that of
                           the partners,  members,  or  stockholders of Licensee
                           (if Licensee is a partnership,  company, corporation,
                           or other  legal  entity).  Accordingly,  no direct or
                           indirect  interest in the Hotel or in this Agreement,
                           and no direct or indirect Equity Interest (as defined
                           herein) in Licensee may be sold, leased, assigned, or
                           transferred,  (such instances  hereafter  referred to
                           collectively as a "TRANSFER"), without the consent of
                           the Licensor.  Nothing herein shall require Licensors
                           approval for any pledge,  mortgage,  or hypothecation
                           of all or any  part  of the  assets  of the  licensed
                           business  (other  than this  Agreement  or any Equity
                           Interest  in  Licensee)  to banks  or  other  lending
                           institutions.

                  (3)      Any  purported  Transfer,  by  operation  of  law  or
                           otherwise,  not in accordance  with the provisions of
                           this  Agreement  shall be null  and  void  and  shall
                           constitute  a breach  of this  Agreement,  for  which
                           Licensor may  terminate  this  Agreement  upon notice
                           without  opportunity  to cure  pursuant to  Paragraph
                           13d,  and as a  result  of  which  Licensee  will owe
                           liquidated damages.

                  (4)      References  in this  Agreement to "EQUITY  INTERESTS"
                           shall mean any direct or indirect beneficial interest
                           in Licensee (an "INDIRECT" interest is an interest in
                           an entity other than the Licensee that either itself,
                           or through others,  has an interest in the Licensee).
                           In addition,  "PUBLICLY-TRADED EQUITY INTEREST" shall
                           mean  any  Equity  Interest  which is  traded  on any
                           securities  exchange or is quoted in any  publication
                           or  electronic  reporting  service  maintained by the
                           National  Association of Securities Dealers,  Inc. or
                           any of its successors. In computing changes of Equity
                           Interests, limited partners will not be distinguished
                           from general  partners.  Licensor's  judgment will be
                           final if there is any  question as to the  definition
                           of  Equity  Interest  or as  to  the  computation  of
                           relative Equity Interests, the principal


                                       10
<PAGE>
                           considerations  being:  direct and indirect (i) power
                           to exercise  control  over the  affairs of  Licensee;
                           (ii) right to share in Licensee's profits;  and (iii)
                           exposure to risk in the Licensee's business.

                  (5)      Licensee  represents  that the Equity  Interests  are
                           directly  and (if  applicable)  indirectly  owned  as
                           shown on the Rider.

         c.       PROCEDURES FOR TRANSFERS. Licensee must provide written notice
                  to Licensor in advance of any  proposed  Transfer  stating the
                  identity of the prospective  transferee,  purchaser, or lessee
                  and the terms and conditions of the conveyance. As a condition
                  to consenting to the transfer, Licensor may require any one or
                  more of the following to be met:

                  (1)      Licensee  will  upon  request  provide  a copy of any
                           proposed   agreement   of  transfer   and  all  other
                           information  with respect  thereto which Licensor may
                           reasonably require;

                  (2)      Licensee will upon request provide  documents showing
                           ownership structure of the Licensee,  site control by
                           the Licensee, possession or management control by the
                           Licensee,  financial  statements of any participants,
                           and  any  other  documents  reasonably  requested  by
                           Licensor;

                  (3)      Licensee  will upon request pay a  processing  fee to
                           Licensor of up to $5,000 to cover Licensor's costs to
                           review and consent to the Transfer; provided however,
                           in the case of a transfer of Equity  Interests  which
                           require  registration  under  any  federal  or  state
                           securities  law,  Licensee will pay a processing  fee
                           that will not exceed $25,000;

                  (4)      Licensee and all  participants in any proposed public
                           offering   (including  the  sale  of  partnership  or
                           membership  interests)  (i) agree to fully  indemnify
                           Licensor in connection  with the  registration,  (ii)
                           furnish Licensor with all information requested,  and
                           (iii)  avoid  using   Licensors   service   marks  or
                           trademarks    or   otherwise    implying   Licensor's
                           participation in or endorsing of any public offering;

                  (5)      Licensee will at all times adequately provide for the
                           management of the Hotel during any Transfer; or

                  (6)      Licensor  may  require  the  transferee  to  promptly
                           execute a new license  agreement  on  Licensor's then
                           current  license  agreement for the unexpired term of
                           this   Agreement,   and   Licensor  may  require  the
                           guarantee  of the new license  agreement  by the same
                           guarantors   of   this   Agreement   (or   substitute
                           guarantors   approved   by   Licensor   in  its  sole
                           discretion).

         d.       PERMITTED TRANSFERS.  Licensor will not unreasonably  withhold
                  consent to any of the following  Transfers  provided  Licensee
                  complies  with  all the  requirements  specified  by  Licensor
                  pursuant to Subparagraph c above (it being  understood that if
                  Licensee  is in  default of any of its  obligations  under the
                  Agreement,  it will not be unreasonable for Licensor to refuse
                  to consent to any of these Transfers):

                  (1)      Equity Interests which are not publicly-traded may be
                           transferred,  if  after  the  transaction,  Glade  M.
                           Knight  owns,  directly or  indirectly,  a beneficial
                           interest  in the  general  partner  of  Licensee  and
                           controls the  management and policies of such general
                           partner and not less than 50% of all Equity Interests
                           are owned, directly or indirectly, by Glade M. Knight
                           and, in the case of any such permitted transfer,  the
                           requirements  of clauses (3) and (6) of  subparagraph
                           c. above need not be complied with by Licensee.

                  (2)      Publicly-traded  equity  interests may be transferred
                           (without Licensor's consent and without notification)
                           if such  transfer is exempt from  registration  under
                           federal  securities law and if immediately before and
                           after the transfer,  the  transferor

                                       11
<PAGE>
                           and  transferee  respectively  each own less  than 25
                           percent of the Equity Interests in Licensee.

                  (3)      Licensee,  if a  natural  person,  may  transfer  its
                           interest  in the  License or Equity  Interest  in the
                           Licensee  to  one  or  more  of  Licensee's   spouse,
                           parents, siblings,  nephews,  descendants or spouses'
                           descendants  or to a  corporation  entirely  owned by
                           Licensee ("PERMITTED TRANSFEREES").

                  (4)      If Licensee is a natural person,  upon the Licensee's
                           death,  the License or Licensee's Equity  Interest in
                           the Licensee will pass in accordance  with Licensee's
                           will, or, if Licensee dies  intestate,  in accordance
                           with laws of intestacy  governing the distribution of
                           the Licensee's  estate,  as the case may be, provided
                           the  transferee  is one  or  more  of the  decedent's
                           Permitted   Transferees    (excluding    corporations
                           formerly  owned by the  Licensee) and within one year
                           after the death the  Permitted  Transferees  meet all
                           Licensors   normal   requirements   of  an   approved
                           applicant.

                  (5)      Licensee may sell or lease the Hotel, the Hotel site,
                           or any portion thereof if, in the reasonable judgment
                           of  Licensor,  after  such  transfer,  Licensee  will
                           retain  possession  and control of the Hotel site and
                           management control of the Hotel operations (which may
                           be via third party  management  contract  pursuant to
                           Paragraph  6c).  If, in the  reasonable  judgment  of
                           Licensor,  the  transfer  of the Hotel will result in
                           the loss of  possession  or  control  of the Hotel or
                           Hotel site or management  of the Hotel,  the transfer
                           will constitute a change of ownership as described in
                           Subparagraph e.

         e.       CHANGE OF OWNERSHIP.

                  (1)      Any  Transfer  that does not  qualify as a  permitted
                           transfer under  Subparagraph d above shall constitute
                           a change of ownership.  If in the case of a change of
                           ownership,  the  transferee  desires to  continue  to
                           operate  the Hotel as a Homewood  Suites  hotel,  the
                           transferee  must  submit  an  application  for  a new
                           license agreement. The new license, if approved, will
                           be at most for the unexpired term of this  Agreement.
                           The transferee  shall be  responsible  for all normal
                           fees and costs (including  application fees and costs
                           of improvements to the Hotel).

                  (2)      Licensor  shall  process  such  change  of  ownership
                           application  in good  faith  and in  accordance  with
                           Licensor's  then  current  procedures,  criteria  and
                           requirements   regarding   upgrading  of  the  Hotel,
                           credit, operational abilities and capabilities, prior
                           business dealings,  market  feasibility,  guarantees,
                           and other  factors  deemed  relevant by Licensor.  If
                           such change of  ownership  application  is  approved,
                           Licensor and the new owner shall,  upon  surrender of
                           this Agreement,  enter into a new license  agreement.
                           The new license agreement shall be on Licensor's then
                           current  form and  contain  Licensor's  then  current
                           terms (except for duration),  and if applicable,  the
                           new  license   agreement   will   contain   specified
                           upgrading and other requirements.  If the application
                           is approved, Licensee submits a voluntary termination
                           of this  Agreement  and  signs a  release  (in a form
                           satisfactory  to  Licensor)  of  all  claims  against
                           Licensor,  and the proposed new owner  executes a new
                           license  within 30 days of the sale of the Hotel,  no
                           liquidated  damages described in Paragraph 13 will be
                           owed  by  Licensee  for  the   termination   of  this
                           Agreement.

                  (3)      If a change of ownership application for the proposed
                           transferee   is  not  approved  by  Licensor  or  the
                           transferee  does not want to  continue to operate the
                           Hotel as a Homewood Suites hotel, Licensor may refuse
                           consent to the transfer and reserve all remedies;  if
                           Licensee does consent and the Transfer  occurs,  then
                           this Agreement shall terminate  pursuant to Paragraph
                           13d hereof and  Licensor  shall be entitled to all of
                           its remedies including liquidated damages.
                                       12
<PAGE>

         f.       TRANSFER TO COMPETITOR.  Notwithstanding any of the foregoing,
                  if the  Licensee  receives a bona fide offer from a Competitor
                  to purchase or lease the Hotel or to purchase  Licensee or any
                  entity that controls  Licensee,  or to purchase an interest in
                  either,  and  Licensee  or any  person or entity  that owns or
                  controls Licensee wishes to accept such offer,  Licensee shall
                  give written notice thereof to Licensor,  stating the name and
                  full identity of the prospective  purchaser or tenant,  as the
                  case may be,  including  the names and addresses of the owners
                  of  the  capital   stock,   partnership   interests  or  other
                  proprietary interests of such prospective purchaser or tenant,
                  the price or  rental  and all  terms  and  conditions  of such
                  proposed transaction, together with all other information with
                  respect  thereto which is requested by Licensor and reasonably
                  available  to  Licensee.  Within  60  days  after  receipt  by
                  Licensor of such written notice from Licensee,  Licensor shall
                  elect by written  notice to Licensee one of the following four
                  alternatives:

                  (1)      If the proposed transaction is a sale or lease of the
                           Hotel,  Licensor  (or its  designee)  shall  have the
                           right to  purchase  or lease the Hotel  premises  and
                           related property at the same price or rental and upon
                           the same terms and  conditions  as those set forth in
                           such bona fide offer from a Competitor. In such event
                           Licensee  and  Licensor  (or  its   designee)   shall
                           promptly enter into an agreement for sale or lease at
                           the price or rental and on terms consistent with such
                           bona fide offer.

                  (2)      If the proposed transaction is a purchase of all or a
                           portion of the stock or assets  (which  includes  the
                           Hotel)  of  Licensee  or  the  person  that  owns  or
                           controls  Licensee,  Licensor (or its designee) shall
                           have the right to  purchase  the Hotel  premises  and
                           related property.  If the parties are unable to agree
                           as to a purchase  price and terms within  thirty days
                           of Licensor's election,  the fair market value of the
                           Hotel   premises  and  related   property   shall  be
                           determined by  arbitration  as follows:  Either party
                           may  by  written  notice  to  the  other  appoint  an
                           arbitrator.  Thereupon,  within  15  days  after  the
                           giving of such  notice,  the other  shall by  written
                           notice to the former appoint another arbitrator,  and
                           in default of such second  appointment the arbitrator
                           first  appointed shall be the sole  arbitrator.  When
                           any two arbitrators have been appointed as aforesaid,
                           they  shall,   if   possible,   agree  upon  a  third
                           arbitrator   and  shall  appoint  him  by  notice  in
                           writing, signed by both of them in triplicate, one of
                           which triplicate notices shall be given to each party
                           hereto;  but  if 15  days  shall  lapse  without  the
                           appointment  of the third  arbitrator  as  aforesaid,
                           then such third  arbitrator shall be appointed by the
                           American  Arbitration  Association from its qualified
                           panel of arbitrators, and shall be a person having at
                           least ten (10) years' recent  professional experience
                           as  to  the   subject   matter  in   question.   Upon
                           appointment  of the third  arbitrator  (whichever way
                           appointed as aforesaid),  the three arbitrators shall
                           meet and render  their  decision.  The  decision of a
                           majority  of  the  arbitrators  so  chosen  shall  be
                           conclusive. Licensor (or its designee) shall have the
                           right,  at any time within 30 days of being  notified
                           in  writing of the  decision  of the  arbitrators  as
                           aforesaid, to purchase the Hotel premises and related
                           property at the valuation  fixed by the  arbitrators.
                           The parties  shall share  equally the expense of such
                           arbitration.

                  (3)      To terminate this Agreement,  in which event Licensee
                           shall  be  obligated  to pay to  Licensor  liquidated
                           damages  pursuant  to a  Special  Termination  as set
                           forth in Paragraph 13f.

                  (4)      To refuse to consent to the  Transfer,  reserving all
                           remedies under the applicable law.

         g.       FINANCING.  The construction and/or operation of the Hotel may
                  not be  financed by a public  offering of any right,  title or
                  interest in the Hotel,  the property upon which it is built or
                  the receipts from its  operation  without the prior review and
                  approval of the applicable documentation by Licensor. Licensee
                  shall   submit  a   non-refundable   $25,000   fee  with  said
                  documentation.

12.      CONDEMNATION AND CASUALTY.



                                       13
<PAGE>
         a.       CONDEMNATION.  Licensee shall, at the earliest  possible time,
                  give Licensor notice of any proposed taking by eminent domain.
                  If  Licensor  agrees  that  the  Hotel or a  substantial  part
                  thereof is to be taken,  Licensor may, in its sole  discretion
                  and  within  a  reasonable  time of the  taking  (within  four
                  months) transfer this Agreement to a nearby location  selected
                  by  Licensee.  If  Licensor  approves  the  new  location  and
                  authorizes  the transfer and if within one year of the closing
                  of the Hotel Licensee opens a new hotel at the new location in
                  accordance with Licensor's specifications,  then the new hotel
                  will be deemed to be the Hotel licensed under this  Agreement.
                  If a  condemnation  takes place and a new hotel does not,  for
                  whatever  reason,  become the Hotel  under this  Agreement  in
                  strict  accordance with this paragraph (or if it is reasonably
                  evident  to  Licensor  that  such  will  be  the  case),  this
                  Agreement  will terminate  immediately  upon notice thereof by
                  Licensor  to  Licensee,  without  the  payment  of  liquidated
                  damages as calculated in Paragraph 13f.

         b.       CASUALTY.  If the Hotel is damaged by fire or other  casualty,
                  Licensee will  expeditiously  repair the damage. If the damage
                  or  repair   requires   closing  the  Hotel,   Licensee   will
                  immediately notify Licensor,  will repair or rebuild the Hotel
                  according   to    Licensor's    standards,    will    commence
                  reconstruction  within four  months  after  closing,  and will
                  reopen the Hotel for continuous business operations as soon as
                  practicable  (but in any  event  within  one  year  after  the
                  closing of the Hotel), giving Licensor ample advance notice of
                  the date of reopening.  If the Hotel is not reopened according
                  to this Paragraph,  this Agreement will terminate immediately,
                  upon notice thereof by Licensor to Licensee,  with the payment
                  of liquidated damages as calculated in Paragraph 13f, provided
                  however,  if Licensee's  insurer  fails to pay the  applicable
                  insurance  policy  proceeds  to  Licensee,  or  if  Licensee's
                  lender,  pursuant to a valid agreement with Licensee,  refuses
                  to allow  the  insurance  proceeds  to be used for  repair  or
                  rebuilding,  the  Agreement  may  be  terminated  by  Licensee
                  without payment of the liquidated damages in Paragraph 13f. In
                  such case  Licensee  shall  notify  Licensor  and  provide any
                  reasonable proof requested by Licensor.

         c.       NO  EXTENSIONS  OF TERM.  Nothing  in this  Paragraph  12 will
                  extend the License Term but Licensee  shall not be required to
                  make any payments  pursuant to Paragraph 7 for periods  during
                  which  the  Hotel is  closed  by  reason  of  condemnation  or
                  casualty.

13.      TERMINATION.

         a.       EXPIRATION OF TERM. Unless terminated earlier,  this Agreement
                  will expire without notice 20 YEARS FROM THE EFFECTIVE DATE OF
                  THIS AGREEMENT, AS DEFINED ON ATTACHMENT B HEREIN.

         b.       PERMITTED  TERMINATION  PRIOR TO EXPIRATION OF TERM.  Licensee
                  may  terminate  this  Agreement  on  the  tenth  or  fifteenth
                  anniversary  date of the  opening  of the  Hotel by  giving at
                  least  12 but  not  more  than 15  months  advance  notice  to
                  Licensor  accompanied  by the payment as provided in Paragraph
                  13f herein.

         c.       TERMINATION OR SUSPENSION BY LICENSOR ON ADVANCE NOTICE.  This
                  Agreement may be  terminated if Licensee  fails to satisfy any
                  obligations  under this  Agreement or any  attachment  hereto.
                  Except in the case of an immediate  termination as provided in
                  subparagraph  13d below,  this  Agreement  shall  terminate if
                  Licensee  fails to cure an Event of Default after the Licensor
                  furnishes adequate notice of termination based on the Event of
                  Default.

                  (1)      An "EVENT OF  DEFAULT"  shall  occur if the  Licensee
                           fails  to   satisfy   or  comply   with  any  of  the
                           requirements,  conditions,  or terms set forth in (i)
                           this Agreement or any attachment  including,  but not
                           limited to, any provisions regarding: any transfer of
                           the Hotel, or any direct or indirect  interest in the
                           Agreement  or   Licensee,   any   representation   or
                           warranty,   any  fee   obligation,   any  operational
                           requirements (including the standards in the Manual);
                           trademarks usage;  maintenance of records,  insurance
                           and indemnity;  or (ii) any other  agreement  between
                           Licensor (or

                                       14
<PAGE>
                           an  affiliate)  and  Licensee  relating to the Hotel,
                           including,   but  not   limited   to,  any   property
                           management  system  agreement,  such as the System 21
                           business system agreement, or any agreement to manage
                           the Hotel.

                  (2)      Notice of  termination  shall be adequate,  if mailed
                           thirty (30) days (or such longer  period  required by
                           applicable law) in advance of the termination date.

                  (3)      Licensor's  notice of  termination  shall not relieve
                           Licensee of its  obligations  under this Agreement or
                           any attachment.

                  (4)      As a result of Licensee's  efforts to comply with the
                           terms and  conditions  contained on  Attachment A and
                           elsewhere  in this  Agreement,  Licensee  will  incur
                           substantial  expense and expend  substantial time and
                           effort.   Licensee   acknowledges   and  agrees  that
                           Licensor  shall have no  liability or  obligation  to
                           Licensee for any losses, obligations,  liabilities or
                           expenses incurred by Licensee if (i) Licensee commits
                           an Event of Default as described in Paragraph 13c(1);
                           (ii) the Hotel is not  authorized by Licensor to Open
                           as defined in Attachment A or (iii) this Agreement is
                           terminated because Licensee has not complied with the
                           terms and conditions of this Agreement.

                  (5)      Notwithstanding the foregoing,  following an Event of
                           Default,  Licensor  may at  any  time,  in  its  sole
                           discretion,   suspend  its  obligations   under  this
                           Agreement (including reservation services).

         d.       IMMEDIATE   TERMINATION  BY  LICENSOR.   Notwithstanding   the
                  foregoing   paragraph,   this  Agreement  may  be  immediately
                  terminated  (or  terminated at the earliest time  permitted by
                  applicable  law)  if one or  more  of the  following  material
                  breaches to this Agreement or any Attachment occur:

                  (1)      Any Event of Default  where a prior  Event of Default
                           had also occurred during the preceding 12 months, but
                           the License was not terminated because Licensee cured
                           the prior Event of Default;

                  (2)      Licensee or any guarantor of  Licensee's  obligations
                           hereunder shall:

                           (a)      generally  not pay its debts as they  become
                                    due or shall admit in writing its  inability
                                    to pay its  debts,  or shall  make a general
                                    assignment for the benefit of creditors; or

                           (b)      commence  any  case,   proceeding  or  other
                                    action seeking reorganization,  arrangement,
                                    adjustment,   liquidation,   dissolution  or
                                    composition of it or its debts under any law
                                    relating    to    bankruptcy,    insolvency,
                                    reorganization  or  relief  of  debtors,  or
                                    seeking appointment of a receiver,  trustee,
                                    custodian or other  similar  official for it
                                    or for  all or any  substantial  part of its
                                    property; or

                           (c)      take  any   corporate  or  other  action  to
                                    authorize any of the actions set forth above
                                    in Paragraphs (a) or (b).

                  (3)      Any case, proceeding or other action against Licensee
                           or any such guarantor  shall be commenced  seeking to
                           have  an  order  for  relief  entered  against  it as
                           debtor,  or  seeking   reorganization,   arrangement,
                           adjustment,  liquidation,  dissolution or composition
                           of  it  or  its  debts  under  any  law  relating  to
                           bankruptcy,  insolvency,  reorganization or relief of
                           debtors,   or  seeking  appointment  of  a  receiver,
                           trustee,  custodian or other similar  official for it
                           or for all or any  substantial  part of its property,
                           and such case, proceeding or other action (i) results
                           in the entry of an order for relief  against it which
                           is not fully stayed within seven  business days after
                           the entry thereof or (ii) remains  undismissed  for a
                           period of 45 days; or
                                       15
<PAGE>
                  (4)      an attachment remains on all or a substantial part of
                           the  Hotel or of  Licensee's  or any such  guarantors
                           assets for 30 days; or

                  (5)      Licensee or any such  guarantor  fails within 60 days
                           of the entry of a final judgment  against Licensee in
                           any amount exceeding $50,000 to discharge,  vacate or
                           reverse the judgment,  or to stay execution of it, or
                           if appealed, to discharge the judgment within 30 days
                           after a final adverse decision in the appeal; or

                  (6)      Licensee loses  possession or the right to possession
                           of all or a  significant  part of the  Hotel or Hotel
                           site; or

                  (7)      Licensee  fails to continue to identify  the Hotel to
                           the public as a Homewood Suites hotel; or

                  (8)      Licensee   contests   in  any  court  or   proceeding
                           Licensor's ownership of the System or any part of the
                           System,  or the  validity  of any  service  marks  or
                           trademarks associated with Licensor's business; or

                  (9)      Any action is taken toward  dissolving or liquidating
                           Licensee   or  any  such   guarantor,   if  it  is  a
                           corporation  or  partnership,  except  for death of a
                           partner; or

                  (10)     Licensee  or  any  of  its   principals   is,  or  is
                           discovered to have been convicted of a felony (or any
                           other  offense if it is likely to  adversely  reflect
                           upon or affect the Hotel,  the System,  the  Licensor
                           and/or its Entities in any way; or

                  (11)     Licensee   maintains   false  books  and  records  of
                           accounts or submits false reports or  information  to
                           Licensor.

                  (12)     Licensee   becomes  a   Competitor   (as  defined  in
                           Paragraph 6a(19).

         e.       DE-IDENTIFICATION OF HOTEL UPON TERMINATION.  Upon termination
                  or expiration of the term,  Licensee will take whatever action
                  is  necessary to assure that no use is made of any part of the
                  System  (including  but not  limited  to the  Marks)  at or in
                  connection with the Hotel or otherwise.  Licensee shall return
                  to Licensor  the Manual and all other  proprietary  materials,
                  remove all distinctive System features of the Hotel, including
                  the primary  freestanding  sign down to the structural  steel,
                  and  take  all  other  actions  ("DE-IDENTIFICATION  ACTIONS")
                  required to preclude any  possibility of confusion on the part
                  of the public that the Hotel is still using all or any part of
                  the System or is otherwise holding itself out to the public as
                  a Homewood Suites hotel.  If within 30 days after  termination
                  of  this   Agreement   Licensee  fails  to  comply  with  this
                  paragraph,  Licensor or its agents at Licensee's expense,  may
                  enter   the   premises   of   the   Hotel   to   perform   the
                  De-identification Actions. The preceding sentence shall not in
                  any way limit  Licensor's  other rights or remedies under this
                  Agreement.

         f.       LIQUIDATED  DAMAGES.  The parties  recognize the difficulty of
                  ascertaining  damages to  Licensor  resulting  from  premature
                  termination   of  this   Agreement,   and  have  provided  for
                  liquidated damages, which represent the parties' best estimate
                  as to the damages arising from the circumstances in which they
                  are  provided  and which are only  damages  for the  premature
                  termination  of this  Agreement,  and not as a  penalty  or as
                  damages for breaching  this  Agreement or in lieu of any other
                  payment.  If this  Agreement is  terminated  other than by the
                  expiration of the term  described in Paragraph  13a,  Licensee
                  will pay Licensor,  within 10 days of termination,  liquidated
                  damages in an amount determined as follows:

                  (1)      an amount equal to the amount payable under Paragraph
                           7  (regarding  Fees)  for the  three  years  prior to
                           termination; or

                  (2)      if the Hotel  opened  but has been Open for less than
                           three  years,  an amount equal to the greater of: (i)
                           36 times the monthly  average payable under Paragraph
                           7,  or  (ii)  36  times  the  amount   payable  under
                           Paragraph   7  for  the  last  full  month  prior  to
                           termination; or
                                       16
<PAGE>

                  (3)      if the Hotel  opened,  but has not been in  operation
                           for one full  month,  an amount  equal to $3,000  per
                           Guest Suite in the Hotel; or

                  (4)      if   the   Agreement   is   terminated   before   the
                           commencement  of  construction  or of  the  Work  (as
                           described in the  applicable  attachment),  an amount
                           equal to the  initial  application  fee that would be
                           due for a license application according to Licensor's
                           then current franchise offering circular (in addition
                           to any initial application fee already paid); or

                  (5)      if the Agreement is terminated after  commencement of
                           construction or of the Work but before opening of the
                           Hotel,  an  amount  equal to two  times  the  initial
                           application fee; or

                  (6)      if the Agreement is terminated  pursuant to Paragraph
                           13b (permitted  termination  after 10th or 15th year)
                           only,  an amount  equal to the amount  payable  under
                           Paragraph  7 for the two  years  prior to  notice  of
                           termination.

                  Furthermore, Licensee recognizes the additional harm by way of
                  confusion   with   respect  to  national   accounts,   greater
                  difficulty in re-entering  the market,  and damage to goodwill
                  of the Marks that  Licensor  will  suffer in the case of (i) a
                  Licensee who  terminates two or more license  agreements  with
                  Licensor at approximately the same time (between either itself
                  or  its  affiliates  and  Licensor)  or  (ii) a  license  that
                  terminates as a result of the Hotel or Licensee being acquired
                  by a  Competitor,  and the Licensor is unable or elects not to
                  buy the Hotel pursuant to Paragraph 11f (each of these will be
                  referred to as a "SPECIAL TERMINATION").  Licensee agrees that
                  in the case of a Special Termination, the amount of liquidated
                  damages as calculated above will be doubled.

14.      RENEWAL.

         This Agreement is non-renewable.

15.      RELATIONSHIP OF PARTIES.

         a.       NO AGENCY RELATIONSHIP. Licensee is an independent contractor.
                  Neither party is the legal  representative or agent of, or has
                  the power to obligate (or has the right to direct or supervise
                  the daily  affairs of) the other for any  purpose  whatsoever.
                  Licensor  and   Licensee   expressly   acknowledge   that  the
                  relationship intended by them is a business relationship based
                  entirely  on, and defined by, the express  provisions  of this
                  Agreement  and that no  partnership,  joint  venture,  agency,
                  fiduciary or employment relationship is intended or created by
                  reason of this Agreement.

         b.       LICENSEE'S  NOTICES TO PUBLIC CONCERNING  INDEPENDENT  STATUS.
                  Licensee  will  take  all  necessary   steps  including  those
                  reasonably  requested  by Licensor to minimize the chance of a
                  claim being made against  Licensor for anything that occurs at
                  the Hotel,  or for acts,  omissions or obligations of Licensee
                  or anyone associated or affiliated with Licensee or the Hotel.
                  Such steps may, for example,  include  giving  notice in Guest
                  Suites, public rooms and advertisements, on business forms and
                  stationery,  etc., making clear to the public that Licensor is
                  not the owner or operator of the Hotel and is not  accountable
                  for  what  happens  at the  Hotel.  Unless  required  by  law,
                  Licensee will not use the words "Homewood",  "Homewood Suites"
                  or any other names or mark associated with the System to incur
                  any obligation or indebtedness on behalf of Licensor. Licensee
                  shall not enter  into or  execute  any  contracts  in the name
                  "Homewood  Suites  hotel",  and all  contracts for the Hotel's
                  operations  and  services at the Hotel shall be in the name of
                  Licensee or Licensee's management company. Likewise, the words
                  "Homewood",  "Homewood Suites",  or any similar words will not
                  be  used  to  name or  identify  developments  adjacent  to or
                  associated with the Hotel, nor will Licensee use such names in
                  its general business in any manner separated from the business
                  of the Hotel.



                                       17
<PAGE>
16.      MISCELLANEOUS.

         a.       SEVERABILITY AND INTERPRETATION. The remedies provided in this
                  Agreement  are  not  exclusive.   If  any  provision  of  this
                  Agreement  is held to be  unenforceable,  void or  voidable as
                  being contrary to the law or public policy of the jurisdiction
                  entitled  to  exercise  authority  hereunder,   all  remaining
                  provisions  shall  nevertheless  continue  in full  force  and
                  effect  unless  deletion  of  such  provision(s)  impairs  the
                  consideration  for this Agreement in a manner which frustrates
                  the purpose of the parties or makes  performance  commercially
                  impracticable.  The  provisions  of this  Agreement  shall  be
                  interpreted  based on the reasonable  intention of the parties
                  in the context of this  transaction  without  interpreting any
                  provision in favor of or against any party whether or not such
                  party  was the  drafting  party  or by such  party's  position
                  relative to the other party.  Any covenant,  term or provision
                  of this Agreement  which, in order to effect the intent of the
                  parties, must survive the termination of this Agreement, shall
                  survive any such termination.

         b.       CONTROLLING LAW. This Agreement shall become valid when signed
                  by the  parties  hereto.  It shall be deemed  made and entered
                  into in the  State of  Tennessee  and  shall be  governed  and
                  construed  under and in accordance  with the laws of the State
                  of  Tennessee.  In  entering  into  this  Agreement,  Licensee
                  acknowledges  that it has  sought,  voluntarily  accepted  and
                  become  associated  with  Licensor  who  is  headquartered  in
                  Memphis,  Tennessee,  and that this Agreement contemplates and
                  will  result  in  business   relationships   with   Licensor's
                  headquarter's   personnel.   The  choice  of  law  designation
                  permits,  but does not require that all suits  concerning this
                  Agreement be filed in the State of Tennessee.

         c.       EXCLUSIVE  BENEFIT.  This  Agreement  is  exclusively  for the
                  benefit  of the  parties  hereto,  and it may not give rise to
                  liability to a third party,  except as otherwise  specifically
                  set forth  herein.  No agreement  between  Licensor and anyone
                  else is for the benefit of Licensee.

         d.       ENTIRE  AGREEMENT.  Licensor and the Licensee each acknowledge
                  and  warrant to each other that they wish to have all terms of
                  this business  relationship defined in this written agreement.
                  Neither  Licensor nor Licensee wishes to enter into a business
                  relationship  with the other in which any terms or obligations
                  are the subject of alleged  oral  statements  or in which oral
                  statements   serve  as  the  basis  for  creating   rights  or
                  obligations  different than or supplementary to the rights and
                  obligations set forth in this Agreement. Accordingly, Licensor
                  and Licensee  agree that this  Agreement  and any  Attachments
                  hereto  and  the  documents  referred  to  herein,   shall  be
                  construed  together and shall  supersede  and cancel any prior
                  and/or   contemporaneous   discussions  or  writings  (whether
                  described   as   representations,    inducements,    promises,
                  agreements  or any  other  term)  between  Licensor  or anyone
                  acting on its behalf and Licensee or anyone acting on his, her
                  or its behalf, which might be taken to constitute  agreements,
                  representations,  inducements,  promises or understandings (or
                  any  equivalent to such terms) with respect to this  Agreement
                  or the  relationship  between  the parties  and  Licensor  and
                  Licensee each agree that they have placed,  and will place, no
                  reliance on any such  discussions or writings.  This Agreement
                  (including  any  Attachments  and the  documents  referred  to
                  herein),  is the entire  agreement  between  the  parties  and
                  contains all of the terms, conditions,  rights and obligations
                  of the parties  with  respect to the Hotel or any other aspect
                  of the relationship  between the parties. No future license or
                  offer of a  license  for  additional  locations  or any  other
                  business  activity  have been promised to Licensee and no such
                  license or offer shall come into existence, except by means of
                  a separate  writing,  executed by  Licensor's  officer or such
                  other entity granting the license and specifically  identified
                  as a License Agreement. No change, modification,  amendment or
                  waiver  of any of the  provisions  of this  Agreement  will be
                  effective and binding upon  Licensor  unless it is in writing,
                  specifically  identified as an amendment to this Agreement and
                  signed by Licensor's officer.

         e.       LICENSOR'S  WITHHOLDING  CONSENT.  Licensor  may  withhold its
                  consent,  wherever  required  under  this  Agreement,  if  any
                  default or breach by  Licensee  exists  under this  Agreement.
                  Approvals  and  consents  by  Licensor  will not be  effective
                  unless  evidenced  by a  writing  duly  executed  on behalf of
                  Licensor.
                                       18
<PAGE>

         f.       NOTICES.  Any notice must be in writing and will be  effective
                  on  either  (1)  the  day  it is  sent  via  facsimile  with a
                  confirmation  of  receipt;  or (2) the  third  day after it is
                  mailed by first class mail;  or (3) the day it is delivered by
                  express  delivery  service;  or (4) the  third day after it is
                  sent by certified mail to the appropriate party at its address
                  first  stated  above or to such person and at such  address as
                  may be designated by notice hereunder.

         g.       GENERAL   RELEASE.   Licensee   and  its   respective   heirs,
                  administrators,  executors, agents,  representatives and their
                  respective  successors and assigns,  hereby  release,  remise,
                  acquit and forever  discharge  Licensor  and its  Entities and
                  their officers, directors,  employees, agents, representatives
                  and their  respective  successors and assigns from any and all
                  actions,  claims,  causes of  action,  suits,  rights,  debts,
                  liabilities,   accounts,  agreements,   covenants,  contracts,
                  promises, warrants, judgments,  executions,  demands, damages,
                  costs and expenses,  whether known or unknown at this time, of
                  any kind or nature, absolute or contingent,  if any, at law or
                  in equity, on account of any matter, cause or thing whatsoever
                  which has happened, developed or occurred at any time from the
                  beginning  of time to and  including  the  date of  Licensee's
                  execution and delivery to Licensor of this  Agreement and that
                  they will not institute any suit or action at law or otherwise
                  against Licensor directly or indirectly  relating to any claim
                  released hereby by Licensee.  This release and covenant not to
                  sue shall survive the termination of this Agreement.  Licensee
                  shall take  whatever  steps are  necessary or  appropriate  to
                  carry out the terms of this release upon Licensor's request.

         h.       DESCRIPTIVE   HEADINGS.   The  descriptive  headings  in  this
                  Agreement  are for  convenience  only and shall not control or
                  affect the meaning or  construction  of any  provision in this
                  Agreement.

         i.       WARRANTIES.  Licensee warrants, represents and agrees that all
                  statements  made by Licensee in the  Application  submitted to
                  Licensor  in  anticipation  of this  Agreement  and all  other
                  documents  and  information  submitted  by Licensee  are true,
                  correct and  complete as of the date hereof and will  continue
                  to be updated  so that they are true,  correct  and  complete.
                  This warranty and representation shall survive the termination
                  of this Agreement.

         j.       TIME.  Time is of the essence in this Agreement.

         k.       INCLUDING. Including shall mean including, without limitation.

         l.       COUNTERPARTS.  This Agreement may be executed in counterparts,
                  and each copy so  executed  and  delivered  shall be deemed an
                  original.

         m.       AMENDMENTS.  If an  amendment  to this  Agreement  is required
                  prior to its execution, said amendment shall be made a part of
                  this  Agreement  as an  Attachment.  If an  amendment  to this
                  Agreement is necessary  after its  execution,  said  amendment
                  shall  be  made a part  of  this  Agreement  in the  form of a
                  separate document.

         n.       PERFORMANCE  REQUIREMENTS/RESPONSIBILITIES.  Attachment  A  is
                  hereby  incorporated  by  reference  and  made a part  of this
                  Agreement  to set  forth  certain  of  Licensee's  performance
                  conditions and requirements.

         o.       BUSINESS  JUDGMENT.  The  parties  hereto  recognize,  and any
                  mediator  or  judge is  affirmatively  advised,  that  certain
                  provisions of this Agreement describe the right of Licensor to
                  take (or refrain from taking)  certain actions in the exercise
                  of its  assessment of the long-term  best  interests of hotels
                  using the  System,  considering  the  interests  of the System
                  overall.  Where such decisions have been taken by Licensor and
                  are supported by the business judgment of Licensor,  neither a
                  mediator  nor a judge  nor any  other  person  reviewing  such
                  decisions  shall  substitute  his, her or its judgment for the
                  judgment so exercised by Licensor.

17.      EXPIRATION OF OFFER.



                                       19
<PAGE>

         This  Agreement  constitutes  an offer  which must be  accepted  by the
         Licensee  named on the signature  page hereof by dating,  executing and
         returning to Licensor two copies  hereof (and all  attachments  hereto,
         including,  if required,  the Guaranty) on or before the date specified
         on the Rider.


IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the date
first stated above.

LICENSEE:                                  LICENSOR:

APPLE SUITES MANAGEMENT, INC.              PROMUS HOTELS, INC.

BY:    /S/  GLADE M. KNIGHT                BY:
    -------------------------------            ---------------------------------
NAME:  GLADE KNIGHT                        NAME:  THOMAS P. POWELL
      -----------------------------              -------------------------------
TITLE: CHIEF EXECUTIVE OFFICER             TITLE: SR. VICE PRESIDENT-DEVELOPMENT
      -----------------------------              -------------------------------
WITNESS:  /S/  C. DOUGLAS SCHEPKER         WITNESS:
        ---------------------------                -----------------------------
DATE:                                      DATE:
      -----------------------------               ------------------------------


                                       20
<PAGE>

                                    GUARANTY


Location:   853 CENTRE STREET, JACKSON, MISSISSIPPI
--------------------------------------------------------------------------------

As an  inducement  to Promus  Hotels,  Inc.  ("LICENSOR")  to execute  the above
License   Agreement,   the   undersigned,    jointly   and   severally,   hereby
unconditionally  warrant to Licensor and its  successors and assigns that all of
Licensee's   representations  in  the  License  Agreement  and  the  application
submitted  by Licensee to obtain the License  Agreement  are true and  guarantee
that all of Licensee's obligations under the above License Agreement,  including
any amendments thereto whenever made (the "AGREEMENT"),  will be punctually paid
and performed.

Upon  default  by  Licensee  or  notice  from  Licensor,  the  undersigned  will
immediately make each payment required of Licensee under the Agreement.  Without
affecting the obligations of the undersigned  under this Guaranty,  Licensor may
without notice to the undersigned extend,  modify or release any indebtedness or
obligation  of Licensee,  or settle,  adjust or  compromise  any claims  against
Licensee.  The undersigned waive notice of amendment of the Agreement and notice
of demand for payment or performance by Licensee.

Upon the death of an individual guarantor,  the estate of such guarantor will be
bound by this Guaranty but only for defaults and obligations  hereunder existing
at the time of death,  and the obligations of the other guarantors will continue
in full force and effect.

The Guaranty  constitutes a guaranty of payment and not of collection,  and each
of the  guarantors  specifically  waives any  obligation  of Licensor to proceed
against  Licensee  on any money or  property  held by  Licensee  or by any other
person or entity as collateral  security,  by way of set off or  otherwise.  The
undersigned  further agree that this Guaranty  shall continue to be effective or
be  reinstated  as the  case  may  be,  if at  any  time  payment  or any of the
guaranteed obligations is rescinded or must otherwise be restored or returned by
Licensor upon the insolvency, bankruptcy or reorganization of Licensee or any of
the undersigned, all as though such payment has not been made.

This Guaranty shall be governed and construed  under and in accordance  with the
laws of the State of Tennessee.

IN WITNESS  WHEREOF,  each of the undersigned has signed this Guaranty as of the
date of the above Agreement.


Witnesses:                              Guarantors:

                                        Apple Suites, Inc.

/s/  C. Douglas Schepker                By: /s/  Glade M. Knight          (Seal)
----------------------------               -------------------------------
                                            Glade Knight, President


                                       21
<PAGE>

                      ATTACHMENT A - PERFORMANCE CONDITIONS
                               CHANGE OF OWNERSHIP



I.       CONSULTATION.   Licensee  or  its  representative(s)  shall  meet  with
         Licensor at a location  selected by Licensor,  within 30 days following
         the  date  of  Licensee's  receipt  of  a  request  from  Licensor  for
         consultation  and  coordination  with the project  manager  assigned to
         Licensee by Licensor.

II.      WORK AND PURCHASE  REQUIREMENT.  Attachment C, the Product  Improvement
         Plan (the "PIP"), is incorporated by reference,  attached to and made a
         part of this  Agreement.  Licensee shall perform the renovation  and/or
         construction  work and  purchase  the items  described  on the PIP (the
         "WORK")  on or before  the  completion  date  specified  on the  Rider.
         Whether or not indicated on the PIP, the Work shall include  Licensee's
         purchasing  and/or  leasing and  installing  all  fixtures,  equipment,
         furnishings,   furniture,   signs,   computer   terminals  and  related
         equipment,  supplies  and other  items which would be required of a new
         Homewood  Suites  licensee  under the Manual and such other  equipment,
         furnishings  and  supplies  as may be  required by Licensor in order to
         operate the Hotel.  Licensee shall be solely  responsible for obtaining
         all necessary  licenses,  permits and zoning variances required for the
         Hotel.

III.     APPROVAL OF ARCHITECT/ENGINEER AND CONTRACTOR.  Licensor shall have the
         right to approve the  architect/engineer,  general contractor and major
         subcontractors  for the Work.  The Work shall not  commence  until such
         approval  has been  granted,  which  approvals  may be  conditioned  on
         bonding  of the  contractors.  Prior to  commencement  of the Work,  if
         requested by Licensor,  Licensee shall submit to Licensor,  resumes and
         financial statements of the architect/engineer,  general contractor and
         any major sub-contractors for the Work and such additional  information
         concerning  their experience and financial  responsibility  as Licensor
         may request.

IV.      APPROVAL OF PLANS. On or before the Plans  submission date specified on
         the Rider,  Licensee  shall  submit to Licensor,  Licensee's  plans and
         specifications  and  drawings  for the  Work,  including  the  proposed
         furnishings, fixtures, equipment and signs (collectively,  "PLANS") for
         approval.  Licensor may supply Licensee with  representative  prototype
         Guest Room and  public  area plans and  schematic  building  plans as a
         guide for preparation of plans and  specifications  for the Hotel. Once
         Licensor has  approved the Plans,  no change shall be made to the Plans
         without  the  advance  consent of  Licensor.  In  approving  the Plans,
         Licensor  does not in any manner  warrant the depth of its  analysis or
         assume  any  responsibility  for  the  efficacy  of  the  Plans  or the
         resulting  construction.  Licensee  shall  cause the  Hotel  renovation
         and/or  construction  to be in  accordance  with  this  Agreement,  the
         approved Plans, the Manual and the PIP.

V.       COMMENCEMENT; COMPLETION. Licensee shall commence the Work on or before
         the  date   specified  on  the  Rider  and  shall   continue  the  Work
         uninterrupted (except for interruption by reason of events constituting
         force majeure) until it is completed. Notwithstanding the occurrence of
         any events  constituting  force majeure,  or any other cause,  the Work
         shall be  completed  and the Hotel shall be  furnished,  equipped,  and
         shall otherwise be in compliance with this Agreement not later than the
         date  specified  on the  Rider.  Licensor  shall have the sole right to
         determine  whether the Work has been completed in accordance  with this
         Agreement, the approved Plans, the Manual and the PIP.

VI.      INSPECTION. During the course of the Work, Licensee shall, and Licensee
         shall cause the architect, engineer, contractors, and subcontractors to
         cooperate fully with Licensor for the purpose of permitting Licensor to
         inspect the Hotel in order to determine  whether the Work is being done
         in  accordance  with this  Agreement  and shall  provide  Licensor with
         samples of construction materials, etc. as Licensor may request.

VII.     REPORTS.  Licensee  shall submit to Licensor  each month after the date
         hereof  (or more  frequently  if  Licensor  shall so  request) a report
         showing progress made toward fulfilling the terms of this Agreement.



                                 Attachment A-1
<PAGE>

VIII.    ACQUISITION OF EQUIPMENT, FURNISHINGS, AND SUPPLIES/STAFFING.  Licensee
         shall order, purchase and/or lease and install all fixtures, equipment,
         furnishings,   furniture,   signs,   computer   terminals  and  related
         equipment,   supplies  and  other  items  required  by  Licensor,  this
         Agreement, the approved Plans, the Manual and the PIP.

         In  accordance  with the  Manual  and such  other  instructions  as are
         furnished to Licensee by Licensor,  Licensee  shall cause to be hired a
         staff to operate the Hotel,  and all such personnel shall be trained as
         required by the Manual.  All costs and  expenses  incurred  directly or
         indirectly in hiring and training such staff shall be paid by Licensee,
         except as expressly provided otherwise in the Manual.

IX.      COST OF CONSTRUCTION AND EQUIPPING. Licensee shall bear the entire cost
         of the  Work,  including  the  cost of the  plans,  professional  fees,
         licenses and permits, equipment, furniture, furnishings and supplies.

X.       LIMITATION  OF  LIABILITY.  Notwithstanding  the right of  Licensor  to
         approve the Plans, the architect, engineer and certain contractors, and
         to inspect the Work and the Hotel,  Licensor shall have no liability or
         obligation with respect to the Work, or the design and  construction of
         the Hotel, as the rights of Licensor are being exercised solely for the
         purpose of assuring  compliance  with the terms and  conditions of this
         Agreement.  Licensor  does  not  undertake  to  approve  the  Hotel  as
         complying with governmental requirements or as being safe for guests or
         other third parties.  Licensee should not rely upon Licensor's approval
         for any purpose  whatsoever  except  compliance  with  Licensor's  then
         prevailing standards and requirements of the Manual.

XI.      CONDITIONAL   AUTHORIZATION.   Licensor  may  conditionally   authorize
         Licensee to continue  to operate the Hotel as a Homewood  Suites  hotel
         even  though  Licensee  has not fully  complied  with the terms of this
         Agreement.  Under certain circumstances,  Licensor may suspend services
         to the Hotel (including  reservation  services) while the Work is being
         performed by Licensee.

XII.     PERFORMANCE OF AGREEMENT.  Licensee  agrees to satisfy all of the terms
         and conditions of this  Agreement,  and to equip,  supply and staff the
         Hotel in accordance  with this Agreement and to cooperate with Licensor
         in connection  therewith.  As a result of Licensee's  efforts to comply
         with the terms and  conditions of this  Agreement,  Licensee will incur
         substantial  expense and expend  substantial time and effort.  Licensee
         acknowledges  and  agrees  that  Licensor  shall have no  liability  or
         obligation  to Licensee  for any losses,  obligations,  liabilities  or
         expenses  incurred by Licensee if this Agreement is terminated  because
         Licensee  has not  complied  with  the  terms  and  conditions  of this
         Agreement.


                                 Attachment A-2
<PAGE>

                                  ATTACHMENT B
                           RIDER TO LICENSE AGREEMENT

<TABLE>
<S>                                                           <C>
1.       Name and Address of Licensee:                        Apple Suites Management, Inc.
                                                              Attn:  Glade M. Knight
                                                              306 East Main Street
                                                              Richmond, Virginia  23219

2.       Location of Hotel:                                   853 Centre Street
                                                              Jackson, Mississippi  39157

3.       Number of Approved Guest Rooms:                      91

4.       Effective Date of License:                           Date Apple  Suites,  Inc.  closes the  purchase of and obtains
                                                              possession and control of the Hotel ("Closing")

                                                              It shall be a  condition  precedent  to the  validity  of this
                                                              Agreement,  and this Agreement shall be of no force and effect
                                                              and Licensee shall have no rights  hereunder  unless and until
                                                              on or before  December 6, 1999,  Licensee shall have submitted
                                                              to Licensor,  written verification,  in a form satisfactory to
                                                              Licensor,  that  Closing  has  occurred.  Within  five days of
                                                              Closing,  Licensee  shall submit to Licensor (i) a copy of the
                                                              deed,  as recorded,  transferring  the Hotel to Apple  Suites,
                                                              Inc., (ii) a copy of the lease agreement  between Licensee and
                                                              Apple Suites, Inc., and (iii) the franchise application fee in
                                                              the amount of $45,000

5.       Term of License to Expire:                           20 years from the date of Closing

6.       Plans Submission Dates:                              as required under the Product Improvement Plan (Attachment C)

7.       Construction or Work Commencement Date:              upon Closing

8.       Construction or Work Completion Date:                within 90 days of  Closing  but not later  than March 1, 2000

9.       Offer Expiration Date [Paragraph 17]:                December 6, 1999

10.      Ownership of Licensee:                               Apple Suites Management, Inc.                    100%

                                                              Stockholder:
                                                              Glade Knight                            100%
</TABLE>

                                 Attachment B-1