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                                                                    Exhibit 10.4




                          APPLE HOSPITALITY FIVE, INC.

                  2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

                           EFFECTIVE DECEMBER __, 2002

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                          APPLE HOSPITALITY FIVE, INC.

                  2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

                           EFFECTIVE DECEMBER __, 2002

     1.   Purpose. The purpose of this Apple Hospitality Five, Inc. 2002
Non-Employee Directors Stock Option Plan (the "Plan") is to encourage ownership
in Apple Hospitality Five, Inc. (the "Company) by non-employee members of the
Board, in order to promote long-term stockholder value and to provide
non-employee members of the Board with an incentive to continue as directors of
the Company.

     2.   Definitions. As used in the Plan, the following terms have the
meanings indicated:

          (a)  "Act" means the Securities Exchange Act of 1934, as amended.

          (b)  "Board" means the board of directors of the Company.

          (c)  "Code" means the Internal Revenue Code of 1986, as amended.

          (d)  "Company" means Apple Hospitality Five, Inc., a Virginia
     corporation.

          (e)  "Company Stock" means Units consisting of one common share and
     one Series A preferred share, no par value, of the Company. If the par
     value of the Company Stock is changed, or in the event of a change in the
     capital structure of the Company (as provided in Section 12), the shares
     resulting from such a change shall be deemed to be Company Stock within the
     meaning of the Plan.

          (f)  "Date of Grant" means the date as of which an Eligible Director
     is automatically awarded an Option pursuant to Section 7.

          (g)  "Disability" or "Disabled" means a physical or mental condition
     that prevents the director from performing his customary duties with the
     Company. The

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     Board shall determine whether a Disability exists on the basis of competent
     medical evidence, and such determination shall be conclusive.

          (h)  "Eligible Director" means a director described in Section 4.

          (i)  "Employer" means the Company.

          (j)  "Fair Market Value" means, on any given date, (i) if the Company
     Stock is traded on an exchange, the closing registered sales prices of the
     Company Stock on such day on the exchange on which it generally has the
     greatest trading volume, (ii) if the Company Stock is traded on the
     over-the-counter market, the average between the closing bid and asked
     prices on such day as reported by NASDAQ, or (iii) if the Company Stock is
     not traded on any exchange or over-the-counter market, the fair market
     value shall be determined by the Board using any reasonable method in good
     faith.

          (k)  "Initial Closing" means the first closing of the Offering that
     will occur after the Minimum Offering is achieved.

          (l)  "Insider" means a person subject to Section 16(b) of the Act.

          (m)  "Minimum Offering" means the sale of 2,857,143 Units of Company
     Stock pursuant to the Offering.

          (n)  "Offering" means, collectively, (1) the sale of up to $30,000,000
     in shares of Company Stock to the public and the registration of such
     shares with the Securities and Exchange Commission, as authorized by
     resolutions of the Board dated September __, 2002 (the "Initial Offering"),
     and (2) the issuance of any additional shares of Company Stock as
     authorized by resolutions of the Board from time to time, which issuance
     occurs before the termination of this Plan (the "Additional Offerings").

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          (o)  "Option" means a right to acquire Company Stock granted under the
     Plan, at a price determined in accordance with the Plan.

     3.   Administration. The Plan shall be administered by the Board. Options
shall be granted as described in Section 7. However, the Board shall have all
powers vested in it by the terms of the Plan, including, without limitation, the
authority (within the limitations described herein) to prescribe the form of the
agreement embodying the grant of Options, to construe the Plan, to determine all
questions arising under the Plan, and to adopt and amend rules and regulations
for the administration of the Plan as it may deem desirable. Any decision of the
Board in the administration of the Plan, as described herein, shall be final and
conclusive. The Board may act only by a majority of its members in office,
except that members thereof may authorize any one or more of their number or any
officer of the Company to execute and deliver documents on behalf of the Board.
No member of the Board shall be liable for anything done or omitted to be done
by him or any other member of the Board in connection with the Plan, except for
his own willful misconduct or as expressly provided by statue.

     4.   Participation in the Plan. Each director of the Company who is not
otherwise an employee of the Employer or any subsidiary of the Company and was
not an employee of the Employer or subsidiary for a period of at least one year
before the Date of Grant shall be eligible to participate in the Plan.

     5.   Stock Subject to the Plan. Subject to Section 12 of the Plan, there
shall be reserved for issuance under the Plan an aggregate of 45,000 shares of
Company Stock plus 2.0% of the total number of shares of Company Stock issued in
the Offering in excess of the Minimum Offering, which shall be authorized, but
unissued shares. Shares allocable to Options or portions

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thereof granted under the Plan that expire or otherwise terminate unexercised
may again be subjected to an Option under the Plan.

     6.   Non-Statutory Stock Options. All options granted under the Plan shall
be non-statutory in nature and shall not be entitled to special tax treatment
under Code section 422.

     7.   Award, Terms, Conditions and Form of Options. Each Option shall be
evidenced by a written agreement in such form as the Board shall from time to
time approve, which agreement shall comply with and be subject to the following
terms and conditions:

          (a)  Automatic Award of Option.

               (i)   As of the Initial Closing, each Eligible Director shall
          automatically receive an Option to purchase 500 shares of Company
          Stock plus 0.0125% of the number of shares of Company Stock in excess
          of the Minimum Offering sold by the Initial Closing.

               (ii)  As of each June 1 during the years 2003 and ending upon the
          termination of the Plan, each Eligible Director shall automatically
          receive an Option to purchase 0.02% of the total number of shares of
          Company Stock issued and outstanding on that date.

               (iii) [As of the effective date of the amendment and restatement
          of this Plan, each Eligible Director shall automatically receive an
          Option to purchase 5,000 shares of Company Stock.]

               (iv)  As of the election as a director of any new person who
          qualifies as an Eligible Director, such Eligible Director shall
          automatically receive an Option to purchase 5,000 shares of Company
          Stock.

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               (v)  If at any time under the Plan there are not sufficient
          shares available to fully permit the automatic Option grants described
          in this paragraph, the Option grants shall be reduced pro rate (to
          zero if necessary) so as not to exceed the number of shares available.

          (b)  Option Exercise Price. The Option exercise price shall be the
     Fair Market Value of the shares of Company Stock subject to the Option on
     the Date of Grant.

          (c)  Options Not Transferable. An Option shall not be transferable by
     the optionee otherwise than by will, or by the laws of descent and
     distribution, and shall be exercised during the lifetime of the optionee
     only by him. An Option transferred by will or by the laws of descent and
     distribution may be exercised by the optionee's personal representative
     within one year of the date of the optionee's death to the extent the
     optionee could have exercised the Option on the date of his death. No
     Option or interest therein may be transferred, assigned, pledged or
     hypothecated by the optionee during his lifetime, whether by operation of
     law or otherwise, or be made subject to execution, attachment or similar
     process.

          (d)  Exercise of Options. In no event shall an Option be exercisable
     earlier than six months from the later of the Date of Grant or the date of
     approval of the Plan by stockholders of the Company. Furthermore, no Option
     may be exercised:

               (i)  Before any amendment or restatement that requires
          shareholder approval pursuant to Section 13 of the Plan, is approved
          by stockholders of the Company;

               (ii) Unless at such time the optionee is a director of the
          Company, except that he may exercise the Option within three years of
          the date he ceases to

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          be a director of the Company if he ceased to be a director more than
          six months after the Date of Grant of the Option;

               (iii) After the expiration of ten years from the Date of Grant;
          and

               (iv)  Except by written notice to the Company at its principal
          office, stating the number of shares the optionee has elected to
          purchase, accompanied by payment in cash and/or by delivery to the
          Company of shares of Company Stock (valued at Fair Market Value on the
          date of exercise) in the amount of the full Option exercise price for
          the shares of Company Stock being acquired thereunder.

     8.   Withholding. If the Company is required by law to withhold federal or
state income taxes when an Option is exercised, the Company shall have the right
to retain or sell without notice shares of Company Stock having a Fair Market
Value sufficient on such date or dates as may be determined by the Board (but
not more than five business days prior to the date on which such shares would
otherwise have been delivered) to cover the amount of any federal or state
income tax required to be withheld or otherwise deducted and paid with respect
to such payment and the exercise of the Option, remitting any balance to the
optionee; provided, however, that the optionee shall have the right to make
other arrangements satisfactory to the Company or to provide the Company with
the funds to enable it to pay such tax. Notwithstanding the foregoing, the
Company shall not sell shares of Company Stock if the Optionee is an Insider and
such sale will cause the Optionee to incur a liability under Section 16(b) of
Exchange Act.

     9.   Modification, Extension and Renewal of Options. The Board shall have
the power to modify, extend or renew outstanding Options and to authorize the
grant of new options in substitution therefor, provided that any such action may
not enhance the rights of the optionee

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without stockholder approval or have the effect of altering, enhancing or
impairing any rights or obligations of any person under any Option previously
granted without the consent of the optionee.

     10.  Termination. The Plan shall terminate upon the earlier of:

          (a)  The adoption of a resolution of the Board terminating the Plan;
     or

          (b)  The date on which the Company's existence terminates (provided,
     however, that if the existence of the Company is reinstated as permitted by
     law, the Plan shall continue during the effective period of any
     reinstatement, subject to earlier termination pursuant to Section 10(a)
     above).

No termination of the Plan shall without his consent materially and adversely
affect any of the rights or obligations of any person under any Option
previously granted under the Plan.

     11.  Limitation of Rights..

          (a)  No Right to Continue as a Director. Neither the Plan nor any
     action taken pursuant to the Plan shall constitute or be evidence of any
     agreement or understanding, express or implied, that the Company will
     retain any person as a director for any period of time.

          (b)  No Stockholders Rights Under Options. An optionee shall have no
     rights as a stockholder with respect to shares covered by his Option until
     the date of exercise of the Option, and, except as provided in Section 12,
     no adjustment will be made for dividends or other rights for which the
     record date is prior to the date of such exercise.

     12.  Changes in Capital Structure.

          (a)  In the event of a stock dividend, stock split or combination of
     shares, recapitalization or merger in which the Company is the surviving
     corporation or other

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     change in the Company's capital stock (including, but not limited to, the
     creation or issuance to shareholders generally of rights, options or
     warrants for the purchase of common stock or preferred stock of the
     Company), the number and kind of shares of stock or securities of the
     Company to be subject to the Plan and to Options then outstanding or to be
     granted thereunder, the maximum number of shares or securities which may be
     delivered under the Plan, the exercise price and other relevant provisions
     shall be appropriately adjusted by the Board, whose determination shall be
     binding on all persons. If the adjustment would produce fractional shares
     with respect to any unexercised Option, the Board may adjust appropriately
     the number of shares covered by the Option so as to eliminate the
     fractional shares.

          (b)  If the Company is a party to a consolidation or a merger in which
     the Company is not the surviving corporation, a transaction that results in
     the acquisition of substantially all of the Company's outstanding stock by
     a single person or entity, or a sale or transfer of substantially all of
     the Company's assets, the Board may take such actions with respect to
     outstanding Options as the Board deems appropriate.

          (g)  Notwithstanding anything in the Plan to the contrary, the Board
     may take the foregoing actions without the consent of any optionee and the
     Board's determination shall be conclusive and binding on all persons for
     all purposes.

     13.  Amendment of the Plan. The Board (except as provided below) may
suspend or discontinue the Plan or revise or amend the Plan in any respect;
provided, however, that without approval of the stockholders of the Company no
revision or amendment shall increase the number of shares subject to the Plan
(except as provided in Section 12) or materially increase the benefits accruing
to participants under the Plan. The Plan shall not be amended more than once

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every six months other than an amendment required to comply with changes in the
Internal Revenue Code or the Employee Retirement Income Security Act of 1974 or
regulations thereunder. Notwithstanding the foregoing, the Board may
unilaterally amend the Plan and the terms of Options granted hereunder to ensure
compliance with Rule 16b-3 of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended.

     14. Notice. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows: (a) if the Company - at its principal business address to the attention
of the President; (b) if to any participant - at the last address of the
participant know to the sender at the time the notice or other communication is
sent.

     15. Governing Law. The terms of this Plan shall be governed by the laws of
the Commonwealth of Virginia.

     IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
____ day of _________, 2002.


                                    APPLE HOSPITALITY FIVE, INC.


                                    By: ________________________________
                                        Glade M. Knight,
                                        Chairman of the Board

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