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                                                                   EXHIBIT 10.20


                       FIRST AMENDMENT TO MASTER AGREEMENT

         THIS FIRST AMENDMENT TO MASTER AGREEMENT ("Agreement") is made as of
the 21st day of November 1996, among Doubletree Corporation, a Delaware
corporation ("Tree"), RFS, Inc., a Tennessee corporation (the "Lessee"), RFS
Hotel Investors, Inc., a Tennessee corporation ("RFSI"), RFS Partnership, L.P.,
a Tennessee limited partnership (the "Lessor"), RFS Leasing, Inc., a Tennessee
corporation and a wholly-owned subsidiary of the Lessee (the "Additional
Lessee"), RFS Financing Partnership, L.P., a Tennessee limited partnership (the
'Additional Lessor") and DTR RFS Lessee, Inc., a California corporation ("DTR
Lessee").


                                    RECITALS


         A. The Lessor and the Lessee are parties to that certain Consolidated
Lease Amendment dated as of February 27, 1996 (the "Existing Lease"), which
Existing Lease represents (as of the date hereof) forty-eight (48) separate
leases (the "Existing Leases").

         B. The Lessor and DTR Lessee are parties to that certain Lease
Agreement dated as of May 30, 1996 (the "Existing DTR Lease").

         C. The Lessor currently owns forty-eight (48) hotel properties
described in Exhibit A that are leased under the Existing Lease to the Lessee
and owns the hotel property described in Exhibit B (the "Del Mar Hotel") that is
leased under the Existing DTR Lease to DTR Lessee.

         D. The Lessor is transferring to the Additional Lessor as of the date
hereof its fee interest in 15 of the hotel properties (the "Transfer Hotels"),
identified on Exhibit A and Exhibit B as Transfer Hotels, and in connection with
such transfer the Lessor desires to assign to the Additional Lessor all of its
rights under (1) the 14 leases represented by the Existing Lease
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relating to all of the Transfer Hotels other than the Del Mar Hotel (the "14
Existing Leases") and (2) the Existing DTR Lease relating to the Del Mar Hotel.

         E. In connection with the transfer of the Transfer Hotels to the
Additional Lessor, at the request of the Lessor and the Additional Lessor, (1)
the Lessee has agreed to assign to the Additional Lessee all of its rights under
the 14 Existing Leases and (2) DTR Lessee has agreed to assign to the Additional
Lessee the Existing DTR Lease relating to the Del Mar Hotel.

         F. The Additional Lessor and the Additional Lessee desire to amend
certain provisions of the 14 Existing Leases and the Existing DTR Lease.

         G. The Lessor and the Lessee desire to amend certain provisions of the
Existing Lease relating to the 34 hotel properties (the "Remaining Hotels")
identified on Exhibit A as Remaining Hotels.

         H. The parties hereto desire to amend the Master Agreement dated as of
February 1, 1996 (the "Original Master Agreement") among Tree, Seedling Merger
Subsidiary, Inc. (which was subsequently merged into the Lessee), the Lessee,
RFSI and the Lessor, to make certain amendments and other agreements with
respect to the foregoing and the Original Master Agreement.

                                   AGREEMENTS

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1. Certain Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Original Master Agreement.
Unless the context otherwise


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requires, (a) references to the singular shall include the plural and vice
versa, (b) references to gender shall include all genders, (c) references to
designated "Sections " or other subdivisions are references to the designated
Sections or other subdivisions of this Amendment or the Original Master
Agreement, as applicable, (d) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP and, if
applicable, the Uniform System of Accounts (as defined in the Existing Lease)
and (e) the words 'herein," "hereof," and "hereunder" and other words of similar
import refer to this Amendment or the Original Master Agreement, as applicable,
as a whole and not to any particular Section or other subdivision.

         2. Assignment and Assumption of the 14 Existing Leases and the Existing
DTR Lease.

                  a.       By the Lessor and the Additional Lessor:

                           (i) The Lessor hereby (A) assigns to the Additional
                  Lessor all of its right, title and interest in and to the 14
                  Existing Leases and the Existing DTR Lease and (B) conveys,
                  transfers and assigns to the Additional Lessor all of its
                  interest in and to any fixtures, equipment and other personal
                  property used in connection with the Transfer Hotels.

                           (ii) The Additional Lessor hereby (A) accepts the
                  assignments, conveyances and transfers in paragraph (i) above
                  and (B) assumes all of the obligations of the Lessor under the
                  14 Existing Leases and the Existing DTR Lease accruing from
                  and after the date hereof.

                           (iii) The Lessor hereby agrees to hold the Additional
                  Lessor harmless from the obligations and liabilities of the
                  "Lessor" under the 14 Existing Leases

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and the Existing DTR Lease arising from or relating to events or circumstances
occurring prior to the date hereof. The Additional Lessor hereby agrees to hold
the Lessor harmless from the obligations and liabilities of the "Lessor" under
the 14 Existing Leases and the Existing DTR Lease arising from or relating to
events or circumstances occurring on or after the date hereof.

         b. By the Lessee, DTR Lessee and the Additional Lessee:

                  (i) The Lessee hereby (A) assigns to the Additional Lessee all
         of its right, title and interest in and to the 14 Existing Leases and
         (B) conveys, transfers and assigns to the Additional Lessee all of its
         interest in and to any fixtures, equipment and other personal property
         used in connection with the Transfer Hotels other than the Del Mar
         Hotel.

                  (ii) DTR Lessee hereby (A) assigns to the Additional Lessee
         all of its right, title and interest in and to the Existing DTR Lease
         and (B) conveys, transfers and assigns to the Additional Lessee all of
         its interest in and to any fixtures, equipment and other personal
         property used in connection with the Del Mar Hotel.

                  (iii) The Additional Lessee hereby (A) accepts the
         assignments, conveyances and transfers in paragraphs (i) and (ii) above
         and (B) assumes all of the obligations of the Lessee under the 14
         Existing Leases and of DTR Lessee under the Existing DTR Lease, in each
         case accruing from and after the date hereof.


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                  (iv) Each of the Lessee and DTR Lessee hereby agrees to hold
         the Additional Lessee harmless from the obligations and liabilities of
         the "Lessee" under the 14 Existing Leases and the Existing DTR Lease,
         respectively, arising from or relating to events or circumstances
         occurring prior to the date hereof. The Additional Lessee hereby agrees
         to hold harmless the Lessee and the DTR Lessee from the obligations and
         liabilities of the "Lessee" under the 14 Existing Leases and the
         Existing DTR Lease, respectively, arising from or relating to events or
         circumstances occurring on or after the date hereof.

         c. The Lessor agrees to look solely to the Lessee with respect to the
obligations of the "Lessee" under the 14 Existing Leases accruing, or arising
from or relating to events or circumstances occurring, prior to the date hereof
and solely to the DTR Lessee with respect to the obligations of the "Lessee"
under the Existing DTR Lease accruing, or arising from or relating to events or
circumstances occurring, prior to the date hereof; and the Additional Lessor
agrees that it will have no rights or claims with respect thereto. The
Additional Lessor agrees to look solely to the Additional Lessee with respect to
the obligations of the "Lessee" under the 14 Existing Leases and the Existing
DTR Lease accruing, or arising from or relating to events or circumstances
occurring, from and after the date hereof; and the Lessor agrees that it will
have no rights or claims with respect thereto.

         d. The Lessee and the DTR Lessee agree to look solely to the Lessor
with respect to the obligations of the "Lessor" under the 14 Existing Leases and
the Existing DTR Lease, respectively, accruing, or arising from or relating to
events or circumstances


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occurring, prior to the date hereof; and the Additional Lessee agrees that it
will have no rights or claims with respect thereto. The Additional Lessee agrees
to look solely to the Additional Lessor with respect to the obligations of the
"Lessor" under the 14 Existing Leases and the Existing DTR Lease, respectively,
accruing, or arising from or relating to events or circumstances occurring, from
and after the date hereof; and the Lessee and the DTR Lessee each agrees that it
will have no rights or claims with respect thereto.

         3. Modification and Amendment of the Existing Lease and the Existing
DTR Lease

                  a. Contemporaneously with the execution of this Agreement, the
         Additional Lessor and the Additional Lessee shall execute the Second
         Consolidated Lease Amendment pursuant to which the 14 Existing Leases
         and the Existing DTR Lease shall be restated and amended, effective as
         of the date hereof.

                  b. Contemporaneously with the execution of this Agreement, the
         Lessor and the Lessee shall execute the Third Consolidated Lease
         Amendment pursuant to which the 34 leases represented by the Existing
         Lease relating to the Remaining Hotels shall be restated and amended,
         effective as of the date hereof.

         4. Amendments to the Original Master Agreement. The following
amendments to the Original Master Agreement shall be effective as of the date
hereof:

                  a. Section 1 of the Original Master Agreement shall be amended
         hereby as follows:

                           (i) the definition of "Current Hotels" shall be
                  deleted in its entirety and the following substituted
                  therefor:

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         CURRENT HOTELS - shall mean the hotels leased by the Lessee from the
         Lessor as of the Closing Date, plus the Del Mar Hotel.

                  (ii) the definition of "Default by the Lessee" shall be
         deleted in its entirety and the following substituted therefor:

                  DEFAULT BY THE LESSEE - shall have the meaning set forth in
                  Section 15a.

                  (iii) the definition of "Percentage Lease" shall be deleted in
         its entirety and the following substituted therefor:


                  PERCENTAGE LEASE - shall mean, (A) with respect to a Current
                  Hotel that is a Transfer Hotel, the percentage lease with
                  respect to such hotel represented by the Second Consolidated
                  Lease Amendment between the Additional Lessor and the
                  Additional Lessee, (B) with respect to a Current Hotel that is
                  not a Transfer Hotel, the percentage lease with respect to
                  such hotel represented by the Third Consolidated Lease
                  Amendment between the Lessor and the Lessee and (C) with
                  respect to each Additional Hotel, the percentage lease entered
                  into between the Lessor and the Lessee with respect to such
                  hotel.

                  (iv) the definition of "Percentage Rent" shall be amended
         hereby by inserting the clause "or Additional Lessee's" after the word
         "Lessee's."


         b. Section 4(b) of the Original Master Agreement shall be amended by
inserting the following at the end of Section 4(b):


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         Notwithstanding any provisions of this Section 4(b) to the contrary,
the Additional Lessor and the Additional Lessee shall have the same rights and
obligations as the Lessor and the Lessee, respectively, under this Section 4(b),
provided, however, that such rights and obligations are and shall remain subject
to the terms of the Consolidated Lease Estoppel, Subordination, Attornment and
Non-Disturbance Agreement dated as of November 21, 1996 (the "SND Agreement")
among the Additional Lessor, the Additional Lessee and LaSalle National Bank for
so long as the SND Agreement remains in effect.

            Section 5(a) of the Original Master Agreement shall be deleted in
its entirety and the following substituted therefor:


                  a. Net Worth. At all times during the terms of the Percentage
                  Leases relating to the Remaining Hotels and the Additional
                  Hotels, Tree shall cause the Lessee to maintain and the Lessee
                  shall maintain , a Net Worth in an amount at least equal to 
                  $11,000,000. At all times during the terms of the Percentage
                  Leases relating to the Transfer Hotels, Tree and the Lessee
                  shall cause the Additional Lessee to maintain and the
                  Additional Lessee shall maintain, a Net Worth in an amount at
                  least equal to $4,000,000. The Lessee shall at all times
                  maintain an adequate amount of Working Capital to operate the
                  Remaining Hotels and the Additional Hotels. The

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                  Additional Lessee shall at all times maintain an adequate
                  amount of Working Capital to operate the Transfer Hotels.

         d. Section 7(a) of the Original Master Agreement shall be deleted in
its entirety and the following substituted therefor:


                  a. Changes in Structure. Tree represents that as of November
                  21, 1996, the Additional Lessee is a wholly-owned subsidiary
                  of the Lessee and the Lessee is a wholly-owned subsidiary of
                  Tree and Tree will have the sole economic and voting interest
                  in the Lessee. Until the earlier to occur of (i) the
                  expiration of ten years following the Closing Date or (ii) the
                  date of redemption or conversion of the Preferred Stock,
                  without the prior written consent following not less than 60
                  days prior written notice to the Lessor or the Additional
                  Lessor, as the case may be, which consent shall not be
                  unreasonably withheld, Tree, the Lessee and the Additional
                  Lessee shall not permit any merger, sale of its stock or sale,
                  transfer or conveyance of all or substantially all of the
                  assets of the Lessee or the Additional Lessee if, as a result
                  thereof, the Lessee or the Additional Lessee, or the surviving
                  entity, would cease to be controlled, directly or indirectly,
                  by Tree. After the date described in the preceding sentence,
                  any merger, sale of stock, transfer or conveyance of all or
                  substantially all of the assets of the Lessee or the
                  Additional Lessee which results in the Lessee

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                  or the Additional Lessee ceasing to be controlled, directly or
                  indirectly, by Tree shall require the prior written consent of
                  the Lessor or the Additional Lessor, as the case may be, which
                  consent shall not be unreasonably withheld and which shall be
                  granted by the Lessor or the Additional Lessor, as the case
                  may be, if the party proposed to acquire control of the Lessee
                  or the Additional Lessee or its assets obtains the approval of
                  the Franchisors to serve as franchise licensee for the
                  affected Hotels and, if applicable, of liquor licensing
                  authorities for the affected Hotels, and either (x) has
                  substantial experience in the leasing and/or managing of
                  hotels of the type then owned by the Lessor or the Additional
                  Lessor, as the case may be, and in the operation of hotels
                  licensed by one or more of the Franchisors, or (y) provides
                  reasonable assurance to the Lessor or the Additional Lessor,
                  as the case may be, that such party will maintain the senior
                  management organization of the Lessee or the Additional
                  Lessee, as the case may be, materially intact, or (z) enters
                  into management arrangements for the operation of the affected
                  Hotels under terms satisfactory to the Lessor or the
                  Additional Lessor, as the case may be, during the remainder of
                  the terms of the Percentage Lease, by an entity that satisfies
                  either (x) or (y) above. Prior to any transaction otherwise
                  permissible under the preceding sentence,

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                  Tree, the Lessee or the Additional Lessee, as the case may be,
                  and the proposed transferee shall acknowledge and agree in
                  writing with the Lessor or the Additional Lessor, as the case
                  may be, with respect to the restrictions on change in control
                  set forth herein and shall agree that no further transfer of
                  capital stock or assets may be made by such transferee except
                  pursuant to the provisions of this Section.

         e. Section 7(c) of the Original Master Lease Agreement shall be amended
hereby by inserting the clause "and the Additional Lessee" after the word
"Lessee."

         f. Sections 8, 9 and 10 of the Original Master Agreement shall be
deleted in their entirety and the following substituted therefor:

                  8. Financial Statements; Indemnification; Due Diligence;
         Confidential.

                           a. Financial Disclosure. During the term of any
                  Percentage Lease, Tree, the Lessee and the Additional Lessee
                  agree:

                           (i) to make available to RFSI, the Lessor and the
                  Additional Lessor,

                                    (A) not more than 30 days following the end
                           of the first three calendar quarters of each year,
                           quarterly unaudited financial statements, including
                           balance sheet, statement of operations, statement of

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shareholders' equity, statement of cash flows and schedules for each of the
Lessee and the Additional Lessee for the most recently ended calendar quarter
and the comparable prior year period prepared in conformity with GAAP;

         (B) not more than 60 days after the end of each calendar year, audited
annual financial statements and schedules for each of the Lessee and the
Additional Lessee for the most recently ended calendar year prepared in
accordance with GAAP, audited by a national accounting firm reasonably
acceptable to RFSI, the Lessor and the Additional Lessor;

         (C) any historical financial information necessary to re-state
historical financial information to conform to the presentation of each of the
Lessee's and the Additional Lessee's audited and unaudited financial statements
at any future time; and

         (D) on a timely basis, any other information reasonably requested by
RFSI, the Lessor or the Additional Lessor to permit RFSI, the


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                  Lessor or the Additional Lessor to meet their filing and
                  reporting requirements under the 1934 Act and to file and have
                  declared effective registration statements under the 1933 Act,
                  including providing information necessary to complete the
                  "Management's Discussion and Analysis of Financial Condition
                  and Results of Operations" section of RFSI's 1934 Act reports
                  and 1933 Act registration statements as it may relate to the
                  Lessee, the Additional Lessee or the Hotels.

                  (ii) to provide to RFSI, the Lessor and the Additional Lessor
         operating and financial reports described on Exhibit E hereto.


                  (iii) that the Lessee and the Additional Lessee shall bear the
         cost of obtaining, preparing and providing all information required to
         be furnished to the Lessor, the Additional Lessor and RFSI under this
         Section 8(a), including the cost and related expenses of the annual
         audit of the financial statements of the Lessee and the Additional
         Lessee, except as provided in Section 5 of the First Amendment to
         Master Agreement.


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         b. Indemnification. RFSI and the Lessor agree, jointly and severally,
to indemnify, defend (with counsel acceptable to the Lessee), and hold harmless
the Lessee, the Additional Lessee and their respective officers, directors and
controlling persons from and against any losses, claims, damages, expenses or
liabilities (or actions in respect thereof) to which the Lessee, the Additional
Lessee and their respective officers, directors or controlling persons may
become subject under the 1933 Act, the 1934 Act or otherwise, insofar as such
losses, claims, damages, expenses or liabilities or actions in respect thereof
arise out of or are based upon the 1934 Act reports or 1933 Act registration
statements of RFSI or the Lessor, except to the extent any such claims,
liabilities, losses, damages, expenses, or liabilities (or actions in respect
thereof) result from any untrue statement of a material fact or omission of any
material fact in the information provided by the Lessee or the Additional Lessee
to RFSI, the Lessor or the Additional Lessor pursuant to subsections (i) and
(ii) of this Section 8(a). The Lessee and Tree agree, jointly and severally, to
indemnify, defend (with counsel acceptable to RFSI and the Lessor) and hold
harmless RFSI, the Lessor and the Additional Lessor, and their respective
officers, directors and controlling persons from and against any losses, claims,
damages, expenses or liabilities (or actions in respect thereof) to which RFSI,
the Lessor or the Additional Lessor or their respective officers, directors or
controlling

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persons may become subject under the 1933 Act, the 1934 Act or otherwise,
insofar as such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact or omissions of any material fact in any information furnished by
the Lessee or the Additional Lessee to RFSI, the Lessor or the Additional Lessor
pursuant to subsections (i)(A), (B) and (C) of this Section 8(a).

                  C. Due Diligence. During the term of any Percentage Lease,
         Tree, the Lessee and the Additional Lessee agree:

                           (i) to permit the Lessor, the Additional Lessor and
                  RFSI, together with their independent public accountants,
                  counsel, financial advisors, underwriters, underwriters'
                  counsel, rating agencies, lenders and others having a
                  legitimate interest in the Lessee's, the Additional Lessee's
                  or the Hotels' financial condition and results of operations,
                  during regular business hours, upon reasonable notice and at
                  the sole cost of the Lessor, the Additional Lessor and RFSI
                  (provided there shall be no charge by the Lessee or the
                  Additional Lessee to the Lessor, the Additional Lessor or RFSI
                  for the time of the Lessee's or the Additional Lessee's
                  officers or employees), to interview


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         officers and employees of the Lessee or the Additional Lessee and to
         have access to and review:

                           (A) the general accounting records of the Lessee or
                  the Additional Lessee or any Hotel for purposes of performing
                  an audit of the Lessee or the Additional Lessee or any Hotel
                  in accordance with generally accepted auditing standards and
                  to conduct reasonable due diligence with respect to the Lessee
                  or the Additional Lessee and their respective business
                  activities and the Hotels; and

                           (B) the Lessee's or the Additional Lessee's corporate
                  records, minutebooks, contracts and other documents,
                  agreements or items relating to the operation of the Hotels
                  and the Lessee's or the Additional Lessee's financial
                  condition.

                  (ii) to cooperate promptly and fully with the Lessor, the
         Additional Lessor and RFSI, upon request and at the cost of Lessor and
         the Additional Lessor (except with respect to the cost of obtaining,
         preparing and providing the information required to be furnished to
         RFSI, the Lessor and the Additional Lessor under Section 8(a) above and
         any costs relating to the time of employees or officers

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                  of the Lessee, the Additional Lessee or Tree, other than as
                  provided in Section 5 of the First Amendment to Master
                  Agreement), in making available such information with respect
                  to the Lessee, the Additional Lessee or the Hotels as may be
                  required by any regulatory agency, including the Commission
                  and the National Association of Securities Dealers, Inc., the
                  Nasdaq Stock Market or any stock exchange on which RFSI's, the
                  Lessor's or the Additional Lessor's securities may be
                  registered, listed or traded.

                           (iii) to use their best efforts to cause the
                  independent public accountants preparing audits of the Lessee
                  or the Additional Lessee to provide RFSI, the Lessor or the
                  Additional Lessor, at the sole cost of the Lessor, the
                  Additional Lessor and RFSI with all consents of such
                  accountants required for RFSI's, the Lessor's or the
                  Additional Lessor's filings under the 1933 Act or the 1934 Act
                  or to have RFSI's, the Lessor's or the Additional Lessor's
                  registration statements be declared effective under the 1933
                  Act.

         d. Confidentiality. To the extent Lessor, the Additional Lessor or RFSI
on the one hand, or the Lessee, the Additional Lessee or Tree on the other,
obtains information or

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         becomes aware of material information concerning the other that is not
         disclosed in a public announcement or filing under the 1933 Act or the
         1934 Act by Tree or RFSI, each party agrees that it shall not
         improperly disclose or unlawfully utilize such information or otherwise
         act unlawfully with respect thereto.

         9. REIT Requirements.


         a. Tree, the Lessee and the Additional Lessee understand that, in order
for RFSI to qualify as a REIT, the following requirements (the "REIT
Requirements") must be satisfied:


                  (i) The average of the adjusted tax bases of the Lessor's or
         the Additional Lessor's personal property that is leased to the Lessee
         or the Additional Lessee under a lease at the beginning and end of a
         calendar year cannot exceed 15% of the average of the aggregate
         adjusted tax bases of all of the Lessor's or the Additional Lessor's
         property that is leased to the Lessee or the Additional Lessee under
         such lease at the beginning and end of such calendar year.


                  (ii) Neither the Lessee nor the Additional Lessee can sublet
         the property that is leased to it by the Lessor or the Additional
         Lessor, or enter into any similar arrangement, on any basis such that
         the rental or other

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         amounts paid by the sublessee thereunder would be based, in whole or
         in part, on either (i) the net income or profits derived by the
         business activities of the sublessee or (ii) any other formula such
         that any portion of the rent paid by the Lessee or the Additional
         Lessee to the Lessor or the Additional Lessor would fail to qualify as
         "rents from real property" within the meaning of Section 856(d) of the
         Code.

                  (iii) Neither the Lessee nor the Additional Lessee can
         sublease the property leased to it by the Lessor or the Additional
         Lessor to, or enter into any similar arrangement with, any person in
         which RFSI owns, directly or indirectly, a 10% or more interest, within
         the meaning of Section 856(d)(2)(B) of the Code.

                  (iv) RFSI cannot own, directly or indirectly, a 10% or more
         interest in the Lessee or the Additional Lessee, within the meaning of
         Section 856(d)(2)(B) of the Code.

                  (v) No person can own, directly or directly, capital stock of
         RFSI that exceeds the "Limit" (as defined in RFSI's Charter, as amended
         and restated).


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                  b. Tree, the Lessee and the Additional Lessee agree, and agree
         to use reasonable efforts to cause their Affiliates, to use their best
         efforts to permit the REIT Requirements to be satisfied. Tree, the
         Lessee and the Additional Lessee agree, and agree to use reasonable
         efforts to cause their Affiliates, to cooperate in good faith with
         RFSI, the Lessor and the Additional Lessor to ensure that the REIT
         Requirements are satisfied, including but not limited to, providing
         RFSI with information about the ownership of Tree, the Lessee, the
         Additional Lessee and their Affiliates to the extent that such
         information is reasonably available. Tree, the Lessee and the
         Additional Lessee agree, and agree to use reasonable efforts to cause
         their Affiliates, upon request by RFSI, and, where appropriate, at
         RFSI's expense, to take reasonable action necessary to ensure
         compliance with the REIT Requirements. Immediately after becoming aware
         that the REIT Requirements are not, or will not be, satisfied, Tree,
         the Lessee or the Additional Lessee shall notify, or use reasonable
         efforts to cause their Affiliates to notify, RFSI of such
         noncompliance.

         10. Termination of REIT Status. Notwithstanding anything herein or in
any Percentage Lease to the contrary, in the event RFSI terminates its status as
a real estate investment trust for federal income tax purposes, the Lessor and
the Additional Lessor may elect to terminate all then-existing Percentage Leases
and terminate the Right of First Refusal by providing the Lessee or the
Additional


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Lessee, as the case may be, at least 30 days prior written notice, or such
longer notice as may be required by statute or regulation to comply with the
WARN Act or other similar or successor federal or state laws, and by satisfying
the following requirements:

                  (i) if such terminations occur prior to sale, redemption or
         conversion of all of the Preferred Stock, RFSI shall purchase from the
         Lessee within twenty (20) business days after the date of such
         terminations, all of the then-outstanding Preferred Stock then owned by
         the Lessee at a price per share equal to the greater of (A) the Stated
         Value plus all accrued and unpaid dividends at the date of such
         redemption or (B) the product of (1) the weighted average of the sales
         prices of RFSI's common stock for all transactions reported on the
         Nasdaq Stock Market or principal exchange on which RFSI's common stock
         is then traded during the ten (10) business days preceding the second
         business day preceding the date of purchase of the Preferred Stock or,
         if RFSI's common stock is no longer traded on the Nasdaq Stock Market
         or a recognized exchange, the fair market value thereof as mutually
         agreed by RFSI and the Lessee, or if RFSI and the Lessee cannot so
         agree, by appraisal by an independent third party designated by RFSI
         and the Lessee or by their respective designees multiplied by (2) the
         number of shares of Common Stock into which a share of Preferred Stock
         then held by the


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         Lessee would be convertible, if converted on the business day preceding
         the date of the redemption; and

                  (ii) if such terminations occur prior to the tenth (10th)
         anniversary of the Closing Date, the Lessor shall pay to the Lessee an
         amount equal to $5,000,000, which amount shall be reduced by $41,667
         for each calendar month which has expired during the ten (10) year
         period following the Closing Date; and


                  (iii) the Lessor or the Additional Lessor shall pay the Lessee
         or the Additional Lessee, as the case may be, the fair market value of
         the Percentage Leases based on the then-remaining terms of the
         Percentage Leases determined in the manner set forth in Article XXXVII
         of the Form Percentage Lease. The Lessor and the Additional Lessor must
         elect to terminate both the Right of First Refusal and all then-
         existing Percentage Leases in exercising their rights under this
         Section 10.

         g. The first sentence of Section 14 of the Original Master Agreement
shall be deleted in its entirety and the following substituted therefor:

                  From and after the date of the First Amendment to Master
         Agreement, (i) an Event of Default (as defined in the Percentage
         Leases) by the Additional Lessee under a Percentage Lease with respect
         to a Transfer Hotel will continue to create an Event of Default under
         the Percentage Leases with respect to all other Transfer Hotels and
         (ii) an Event of Default by the Lessee under a Percentage Lease with
         respect to

                                       22
<PAGE>   23
         a Remaining Hotel will continue to create an Event of Default under the
         Percentage Leases with respect to all other Remaining Hotels. From and
         after the date of the First Amendment to Master Agreement, (i) a
         default or an Event of Default under a Percentage Lease with respect to
         a Transfer Hotel shall not constitute a default or an Event of Default
         under a Percentage Lease with respect to any Remaining Hotel and (ii) a
         default or an Event of Default with respect to a Remaining Hotel shall
         not constitute a default or an Event of Default under a Percentage
         Lease with respect to a Transfer Hotel.

         h. Section 15a of the Original Master Agreement shall be deleted in its
entirety and the following substituted therefor:


                  Default.


                  a. A "Default by the Lessee" shall exist under this Agreement
         if any of the following occur:


                           (i) Minimum Net Worth. During the term of any
                  Percentage Lease, (a) the Additional Lessee fails to maintain
                  a minimum Net Worth as set forth in Section 5 and does not
                  cure any deficiency within 30 days following written notice
                  thereof from the Additional Lessor or (b) the Lessee fails to
                  maintain a minimum Net Worth as set forth in Section 5
                  and does not cure any deficiency within 30 days following
                  written notice thereof from the Lessor.

                                       23
<PAGE>   24
                           (ii) Default Under Percentage Leases. An Event of
                  Default occurs under any of the Percentage Leases.

                           (iii) Other Breaches. The Lessee or the Additional
                  Lessee fails to comply with any other provision of this
                  Agreement for a period of 30 days after being notified by the
                  Lessor or the Additional Lessor in writing of the provisions
                  of this Agreement with which the Lessee or the Additional
                  Lessee, as the case may be, has failed to comply; provided
                  that if such default (other than a failure to pay any rent
                  under any Percentage Lease when due (after any applicable cure
                  period), which shall be subject to the provisions set forth in
                  the Percentage Leases, and any failure to maintain the minimum
                  Net Worth, which shall be subject to the provisions of
                  subsection 15a(i) above) cannot with due diligence be cured
                  within a 30 day period, such period shall be extended for such
                  reasonable time as the Lessee or the Additional Lessee, as the
                  case may be, promptly and with due diligence commences and
                  continues the cure thereof but in no event for a period of
                  more than 90 days following the date of notice from the Lessor
                  or the Additional Lessor, as the case may be. 

                          i. Section 16 of the Original Master Agreement shall
                       be amended such that notices made to the Additional 
                       Lessee shall be made in the same manner in which 
                       notices are required to be made to the Lessee and 
                       notices made to the

                                       24
<PAGE>   25
Additional Lessor shall be made in the same manner in which notices are required
to be made to the Lessor.

5. Certain Expenses Associated with the Additional Lessee.

         a. The Additional Lessor and the Lessor jointly and severally agree
that they shall be responsible for the following costs and expenses related to
the organization and on-going maintenance of the Additional Lessee.

                  (i) the costs and expenses of incorporating and organizing the
         Additional Lessee in Tennessee and qualifying the Additional Lessee to
         do business in each of the states in which a Transfer Property is
         located, including all filing fees, reasonable counsel fees and other
         fees with respect thereto;

                  (ii) all costs and expenses incurred in connection with
         transferring the 14 Existing Leases and the Existing DTR Lease to the
         Additional Lessee, including (A) costs and expenses incurred in
         connection with transferring the related franchise licenses and any
         other licenses and permits from the Lessee or DTR Lessee to the
         Additional Lessee, (B) the preparation, negotiation and execution of
         the Second Consolidated Lease Amendment and Third Consolidated Lease
         Amendment, the First Amendment to Master Agreement, the management
         agreements between the Additional Lessee and affiliated managers, the
         Consolidated Lease Estoppel, Subordination, Attornment and
         Non-Disturbance Agreement relating to the Transfer Hotels and any other

                                       25
<PAGE>   26
documents entered into by the Additional Lessee in connection with the transfer
of the Transfer Properties and (C) reasonable fees and costs of counsel relating
to the foregoing;

         (iii) the ongoing fees, annual business taxes and similar amounts
required to be paid to governmental authorities by the Additional Lessee in
order to maintain its corporate existence and be qualified to do business and
remain in good standing in each of the states in which the Transfer Properties
are located (net of such amounts, if any, by which Lessee's or DTR Lessee's
obligations have been reduced as a result of the assignment of the 14 Existing
Leases and the DTR Lease to the Additional Lessee, taking into account the fact
that the Lessee will be required to maintain its qualification to do business in
all of the states in which the Transfer Hotels covered by the 14 Existing Leases
are located because, incident to the assignment of the 14 Existing Leases by the
Lessor to the Additional Lessor and by the Lessee to the Additional Lessee, at
the request of the Additional Lessor, the Lessee has been engaged to manage such
Hotels); and

         (iv) The incremental cost with respect to the ongoing administration
and accounting of the Additional Lessee to the extent such cost, together with
the related costs of the Lessee, exceed the costs that the Lessee and DTR Lessee
would otherwise have incurred (A) if the 14 Existing Leases and the Existing DTR
Lease had not been transferred to

                                       26
<PAGE>   27
         the Additional Lessee and the Additional Lessee had not been formed,
         and (B) if the Lessee had not been engaged to manage the Transfer
         Hotels covered by the 14 Existing Leases.


                  (b) In the event the Lessee or the Additional Lessee pays any
         of the costs or fees for which the Additional Lessor and the Lessor are
         responsible pursuant to paragraph (a) above, the Lessor and/or the
         Additional Lessor shall reimburse the Lessee or the Additional Lessee,
         as applicable, for such costs or fees no later than 30 days following
         receipt of satisfactory evidence that such amounts were paid.

                  (c) The Lessee and the Additional Lessee agree to cooperate
         with the Additional Lessor in determining what amounts are payable by
         the Lessor and the Additional Lessor to the Lessee or the Additional
         Lessee pursuant to paragraph (a) above and agree that neither the
         Lessor nor the Additional Lessor shall be responsible for any costs or
         expenses with respect to the items listed in paragraph (a) above to the
         extent the Lessee or DTR Lessee would otherwise have been responsible
         for such costs and expenses (A) if the 14 Existing Leases and the
         Existing DTR Lease had not been transferred to the Additional Lessee
         and the Additional Lessee had not been formed, and (B) if the Lessee
         had not been engaged to manage the Transfer Hotels covered by the 14
         Existing Leases.


         6. Transfer of Licenses and Permits. The parties acknowledge that in
order to meet the timing requirements of the Lessor and the Additional Lessor in
connection with the transfer of the Transfer Hotels by the Lessor to the
Additional Lessor and, incident thereto, the transfer

                                       27
<PAGE>   28
to the Additional Lessee of the interest of the Lessee and the DTR Lessee in
the 14 Existing Leases and the Existing DTR Lease, respectively, there has not
been sufficient time in which to also effect the transfer of certain licenses
and other governmental authorizations (including, in the case of certain of the
Transfer Hotels, liquor licenses) with respect to the operation of the Transfer
Hotels from the Lessee and the DTR Lessee to the Additional Lessee and to obtain
all requisite governmental approvals with respect thereto (collectively, the
"Governmental Transfer Approvals"). Accordingly, the parties agree that (a)
notwithstanding anything to the contrary contained in the Second Consolidated
Lease Amendment (including, without limitation, Sections 8.1 and 8.2 thereof),
the absence of the Governmental Transfer Approvals until such time that such
Governmental Transfer Approvals initially are obtained shall not constitute a
default or an Event of Default under the Second Consolidated Lease Amendment or
a "Default by the Lessee" under the Original Master Agreement, as amended
hereby, except to the extent the Additional Lessee is in breach of its
obligations under paragraph (c) below which breach continues uncured beyond the
expiration of the notice and grace periods provided for in Section 16.1(d) of
the Second Consolidated Lease Amendment and in Section 15a of the Original
Master Agreement, as amended hereby; (b) the Lessor and the Additional Lessor
agree, jointly and severally, to indemnify, defend (with counsel reasonably
acceptable to the Additional Lessee), and hold harmless the Additional Lessee
and its officers, directors and controlling persons from and against any losses,
claims, damages, expenses or liabilities (or actions in respect thereof) to
which the Additional Lessee or its officers, directors or controlling persons
may become subject by reason of the absence of the Governmental Transfer
Approvals; and (c) at the expense of the Lessor and the Additional Lessor as set
forth in Section 5 above, the Additional Lessee shall


                                       28
<PAGE>   29
promptly apply for and diligently seek the Governmental Transfer Approvals and
the Lessor, the Additional Lessor, the Lessee, the DTR Lessee and the Additional
Lessee shall cooperate with each other in order to expeditiously obtain the
Governmental Transfer Approvals.

         7. Recording the SND Agreement. The parties acknowledge that the form
in which the SND Agreement has been executed was not appropriate to permit the
recording of the SND Agreement in all jurisdictions in which the Transfer Hotels
are located. Accordingly, contemporaneously with the execution of this
Amendment, counterparts of the SND Agreement are being recorded in some but not
all of the jurisdictions in which the Transfer Hotels are located. The Lessor
and the Additional Lessor agree that, promptly following the execution of this
Amendment, they will have counterparts of the SND Agreement re-executed by all
parties thereto in form sufficient to permit, and shall promptly thereafter
effect, the recording of the SND Agreement in each jurisdiction in which a
Transfer Hotel is located in which the SND Agreement has not previously been
recorded.



                                      * * *

As amended hereby, the Original Master Agreement is ratified, confirmed and
approved.




                                       29
<PAGE>   30
        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
                                                  RFS HOTEL INVESTORS, INC.


                                                  By:  /s/ Michael J. Pascal
                                                      --------------------------
                                                  Name: Michael J. Pascal
                                                        ------------------------
                                                  Title: CEO\Secretary\Treasurer
                                                         -----------------------



                                                  RFS PARTNERSHIP, L.P.

                                                  By: RFS Hotel Investors, Inc.,
                                                       general partner

                                                  By: /s/ Michael J. Pascal
                                                      --------------------------
                                                  Name: Michael J. Pascal
                                                        ------------------------
                                                  Title: CEO/Secretary/Treasurer
                                                         -----------------------



                                                  RFS FINANCING PARTNERSHIP

                                                  By: RFS Financing Corporation,
                                                      general partner

                                                  By: /s/ Michael J. Pascal
                                                      --------------------------
                                                  Name: Michael J. Pascal
                                                        ------------------------
                                                  Title: V.P.
                                                         -----------------------



                                                  DOUBLETREE CORPORATION


                                                  By: /s/ David L. Stivers
                                                      --------------------------
                                                  Name: David L. Stivers
                                                        ------------------------
                                                  Title: SR. V.P.
                                                         -----------------------
<PAGE>   31
                                                  RIFS, INC.


                                                  By:  /s/ Larry Russell
                                                      --------------------------
                                                  Name: Larry Russell
                                                        ------------------------
                                                  Title: Secretary
                                                         -----------------------


                                                  DTR RPS LESSEE, INC.

                                                  By: /s/ David A. Heuck
                                                      --------------------------
                                                  Name: David A. Heuck
                                                        ------------------------
                                                  Title: V.P.
                                                         -----------------------


                                                  RFS LEASING, INC.

                                                  By: /s/ Larry Russell
                                                      --------------------------
                                                  Name: Larry Russell
                                                        ------------------------
                                                  Title: Secretary
                                                         -----------------------