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                                                                     Exhibit 4.2

                             STOCKHOLDERS AGREEMENT

   

                  STOCKHOLDERS AGREEMENT (this "Agreement") dated as of
September 30, 1996 among Doubletree Corporation, a Delaware corporation
(together with its subsidiaries, "Doubletree"), Jack P. DeBoer ("DeBoer"), an
individual, the DeBoer Family Partnership, a Kansas general partnership (the
"DeBoer Partnership") (DeBoer and the DeBoer Partnership constituting the
shareholders of JPD Corporation ,a Kansas corporation ("JPD Corporation")) and
the Warren D. Fix Family Partnership, L.P., a Kansas limited partnership (the
"Fix Partnership")(collectively, the "Initial Stockholders").
    

                              W I T N E S S E T H:

                  WHEREAS, the membership interests in Candlewood Hotel Company,
LLC, a Delaware limited liability Company ("Candlewood LLC") and certain
subsidiary limited liability companies and the stock of JPD Corporation are
proposed to be transferred and assumed by Candlewood Hotel Company, Inc., a
Delaware corporation ("Candlewood" or the "Company") (the "Initial
Reorganization");


   
                  WHEREAS, in connection with the Initial Reorganization,
Doubletree, JPD Corporation and the Fix Partnership entered into an
Incorporation and Registration Rights Agreement dated as of September 1, 1996
(the "Registration Rights Agreement") providing, among other things, the
parties with certain rights, including the right, under certain
circumstances to transfer their respective interests in Candlewood LLC and JPD
Corporation to Candlewood in exchange for shares of common stock of Candlewood
and to register their respective shares of common stock of Candlewood so
acquired pursuant to the Securities Act of 1933, as amended (the "Securities
Act);
    


   
                  WHEREAS, pursuant to the Registration Rights Agreement, the
Members of Candlewood LLC have approved the Reorganization and the filing by the
Company of a registration statement under the Securities Act, as a result of
which (a) the Company has been incorporated having authorized capital stock
consisting of 100,000,000 shares of Common Stock, par value $.01 per share (the
"Candlewood Common Stock") , and 5,000,000 shares of Preferred Stock, par value
$.01 per share, (b) 5,175,000 shares of Candlewood Common Stock will be issued
and outstanding, of which 2,587,500 shares will be owned of record and
beneficially by Doubletree, 1,869,469 shares will be owned of record and
beneficially by DeBoer, 329,906 shares will be owned of record and beneficially
by the DeBoer Partnership and 388,125 shares will be owned of record and
beneficially by the Fix Partnership;
    


                  WHEREAS, the Registration Rights Agreement, as amended,
requires that the Initial Stockholders execute and deliver a stockholders
agreement in the form hereof;

                  NOW, THEREFORE, in consideration of the premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
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ARTICLE I.        DEFINITIONS AND INTERPRETATION

                  Section 1.1.      Definitions.  As used in this Agreement:

                  "Affiliate" of a Holder means any Person, other than
Candlewood, controlling, controlled by or under common control with such Holder.

                  "Annual Election" means the annual election of Directors held
in accordance with the By-laws, including any such election by stockholders'
consent.

                  "Board" means the Board of Directors of Candlewood.

                  "By-laws" mean the By-laws of Candlewood.

                  "Candlewood Entity" means Candlewood and each of its
                  Subsidiaries.

                  "Certificate of Incorporation" means the Restated Certificate
of Incorporation of Candlewood in the form filed with the Delaware Secretary of
State on October 16, 1996.

                  "DeBoer/Fix Director" means each Initial DeBoer/Fix Director
and each Person nominated by the DeBoer/Fix Holders pursuant to Section 2 and
elected as a Director.

   
                  "DeBoer/Fix Holders" means DeBoer, the DeBoer Partnership and
the Fix Partnership (so long as they are each a Holder) and each Permitted
Transferee, other than Candlewood, who becomes a Holder by acquiring any
DeBoer/Fix Shares in compliance with Section 4.8.
    

   
                  "DeBoer/Fix Shares" means the shares of Candlewood Common
Stock owned of record and beneficially by DeBoer, the DeBoer Partnership and
the Fix Partnership on the Effective Date.
    

   
                  "DeBoer Holders" means DeBoer and the DeBoer Partnership (so
long as they are each a Holder) and each Permitted Transferee of DeBoer, other
than Candlewood, who becomes a Holder by acquiring any DeBoer Shares in
compliance with Section 4.8.
    

   
                  "DeBoer Shares" means the shares of Candlewood Common Stock
owned of record and beneficially by DeBoer and the DeBoer Partnership on the
Effective Date.
    
                  "Director" means a director of Candlewood.

                  "Disposition" has the meaning given to such term in 
Section 3.1.
                  "Doubletree Director" means any Person nominated by the
Doubletree Holders and elected as a Director.


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                  "Doubletree Holders" means Doubletree (so long as it is a
Holder) and each Permitted Transferee of Doubletree, other than Candlewood, who
becomes a Holder by acquiring any Doubletree Shares in compliance with Section
4.8.

                  "Doubletree Shares" means the Shares of Candlewood Common
Stock owned of record and beneficially by Candlewood on the Effective Date.

   
                  "Effective Date" means the date on which the Doubletree
Shares, the DeBoer Shares and the Fix Partnership Shares were issued to
Doubletree, DeBoer, the DeBoer Partnership and the Fix Partnership.
    
                  "Fix Partnership Holders" means the Fix Partnership (so long
as it is a Holder) and each Permitted Transferee of the Fix Partnership, other
than Candlewood, who becomes a Holder by acquiring any Fix Partnership Shares in
compliance with Section 4.8.

                  "Fix Partnership Shares" means the shares of Candlewood Common
Stock owned of record and beneficially by the Fix Partnership on the Effective
Date.

                  "Holder" means a record and beneficial owner of any Subject
Shares.

                  "Initial Doubletree Directors" means Richard Ferris and Peter
Ueberroth.

                  "Initial DeBoer/Fix Directors" means Jack DeBoer and Warren
Fix.

                  "Permitted Transferee" of a Holder means (i) a successor to
such Holder by operation of law pursuant to a statutory merger, consolidation,
dissolution or liquidation, (ii) a purchaser of all or substantially all of such
Holder's assets, or (iii) a Person owning, directly or indirectly, a majority of
the Voting securities or other comparable equity interests of such Holder, a
Person under common control with such Person or a Person of which such Holder
owns, directly or indirectly, a majority of the outstanding Voting Securities or
other comparable equity interests; provided, however, that in each case the
successor, purchaser or Person referred to in Clauses (i), (ii) or (iii) of this
definition was an Affiliate of such Holder prior to such merger, consolidation,
dissolution, liquidation, purchase of assets or acquisition of Voting Securities
or other comparable equity interests and, in each case referred to in this
definition, the Permitted Transferee has become a party to and bound by this
Agreement as to all Subject Shares then being transferred to it in compliance
with by Section 4.8. "Permitted Transferee" includes successive transferees in
transactions described in the preceding sentence.

                  "Person" means an individual, partnership, corporation,
unincorporated organization or association, trust, government or department,
unit or political subdivision of a government, or other entity.

                  "Public Sale" means a sale of Candlewood Common Stock by
Candlewood and/or by one or more Holders of Subject Shares to one or more
underwriters for distribution pursuant 

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to an effective registration statement under the Securities Act in accordance
with the Registration Rights Agreement.

                  "Reorganization" means any merger or consolidation of
Candlewood with or into any other Person, any recapitalization or
reclassification of capital stock or other equity interests of Candlewood or any
sale of all or substantially all of the assets of Candlewood in any one or
series of related transactions other than in connection with the Initial
Reorganization.

                  "Subject Shares" means the Doubletree Shares, the DeBoer
Shares and the Fix Partnership Shares; provided, however, that at all times,
such term shall include all Subject shares that have been transferred by a
Holder to a Permitted Transferee of such Holder. Notwithstanding the foregoing,
upon (A) the Disposition of any Subject Shares pursuant to a Public Sale to any
Person or (B) the Disposition of any Subject Shares other than pursuant to a
Public Sale after the termination of Section 3.1 (as provided in Section 4.7(a))
to any Person other than a Permitted Transferee of the Holder thereof, the
shares so cancelled or disposed of shall cease to be Subject Shares and
thereafter shall not be subject to any of the terms and conditions of this
Agreement (other than Section 4.1(d)).

                  "Subsidiaries" means each corporation, partnership, joint
venture or other entity in which Candlewood owns, directly or indirectly, more
than 50% of the outstanding Voting Securities.

                  "Voting Securities" means shares of capital stock or equity
interests the holders of which are at the time entitled to elect a majority of
the issuer's board of directors or other comparable body.

                  Additional terms are defined where used in this Agreement.

                  Section 1.2. Interpretation. Each definition in this Agreement
includes the singular and the plural, and references to the neuter gender
include the masculine and feminine whenever appropriate. References to any
statute mean such statute as amended at the time and include any successor
legislation, and references to a business day mean any day other than Saturday,
Sunday or legal holiday where Candlewood's principal office is located. The
words "herein", "hereof" and "hereunder" refer to this Agreement as a whole. The
headings of the Articles and Sections are for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement. Unless the
context otherwise requires, references to Articles, Sections and Subsections
mean the Articles, Sections and Subsections of this Agreement.

                  Section 1.3. Changes in Candlewood Common Stock. If during the
term of this Agreement the outstanding shares of Candlewood Common Stock shall
be changed into a different number of shares or a different class or classes of
shares by reason of any split-up, combination, reclassification or other
recapitalization, or if a stock dividend shall be declared on shares of
Candlewood Common Stock with a record date during such term, the terms of this
Agreement (including its definitions) shall be appropriately modified to give
effect to such occurrence.

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                  Section 1.4. Partial Invalidity. Each provision of this
Agreement shall be interpreted so as to render it valid and enforceable under
applicable law. A finding that any such provision is invalid or unenforceable in
any jurisdiction or in any particular circumstance shall not affect its validity
or enforceability under the laws of any other jurisdiction or in any other
circumstances.

                  Section 1.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed entirely in such State.

ARTICLE II.       VOTING OF SUBJECT SHARES AND GOVERNANCE

                  Section 2.1. Composition of Board. (a) On the Effective Date
and until the completion of a Public Sale, the number of Directors shall be
four, of which two shall be Doubletree Directors and two shall be DeBoer/Fix
Directors.

                  (b) From and after the initial Public Sale, the following
provisions shall be applicable:

                  (i) The number of Directors comprising the whole Board shall
         initially be four, subject to increase as provided in Section
         2.1(b)(ii). Commencing with the first Annual Election after the initial
         Public Sale, the number of Directors comprising the whole Board shall
         be determined as provided in the By-laws.

                  (ii) Not later than December 31, 1996, the number of Directors
         comprising the whole Board shall be increased-to at least 6 Directors,
         at least two of whom shall be individuals who are not nominated as
         provided in Sections 2.3 through 2.4, inclusive, and are not otherwise
         affiliated with any Holder (the "Unaffiliated Directors"). The initial
         Unaffiliated Directors shall be elected by unanimous vote of the
         Directors who are then in office; and each Holder shall use its
         reasonable best efforts to recruit suitable candidates for election as
         the initial Unaffiliated Directors as soon as practicable. Any
         successor Unaffiliated Directors shall be recruited by the Holders in
         the same manner, approved by unanimous vote of the Directors who are
         then in office and elected at an Annual Election in accordance with
         this Agreement or, if the election occurs at any time other than an
         Annual Election, elected by unanimous vote of the Directors who are
         then in office.

                  (iii) The number of Doubletree Directors shall be the product
         of the number of Directors comprising the whole Board who are not
         Unaffiliated Directors (the "Affiliated Directors") multiplied by
         one-half.

                  (iv) The number of DeBoer/Fix Directors shall be the product
         of the number of Affiliated Directors multiplied by one-half.

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                  (vi) Notwithstanding the immediately preceding clauses (iii)
         and (iv) if there shall be a number of Affiliated Directors which is
         not evenly divisible by two, the Doubletree Holders and the DeBoer/Fix
         Holders shall agree upon and jointly nominate the additional director.

   
                  (c) Each of the Doubletree Holders, DeBoer Holders and Fix
Partnership Holders, agrees to vote its Subject Shares (or sign written consents
in lieu thereof) at each Annual Election, and at all other times when required
to fill a vacancy on the Board, however arising, and to take all such other
action as may be reasonably necessary (including, without limitation, causing
one or more of the Directors nominated by it to be removed or resign promptly
after any change in ownership of Subject Shares), so that the Board shall be
constituted as provided in Section 2.1(a) or (b), as applicable, and to the
extent herein provided shall consist of the appropriate numbers in accordance
with this Section 2.1 of Doubletree Directors and DeBoer/Fix Directors nominated
in accordance with Sections 2.3, and 2.4, as applicable, and (not later than
December 31, 1996) Unaffiliated Directors nominated in accordance with Section
2.1(b)(ii).
    

   
                  Section 2.2. Election of Initial Board. (a) Each of
Doubletree, the Fix Partnership, DeBoer and the DeBoer Partnership hereby
authorize, consent to and approve the election of each of the Initial Directors
and the DeBoer/Fix Directors as Directors to serve until their respective
successors have been duly elected pursuant to this Agreement, the Certificate
of Incorporation, the By-laws and applicable law.
    

                  Section 2.3. Changes in Doubletree Directors. (a) The
Doubletree Holders may designate the individual to fill any vacancy on the Board
resulting from the death, resignation or removal of any Doubletree Director by
giving written notice to Candlewood (which shall promptly forward a copy of such
notice to each Holder). Within not more than 10 days after the notice described
in the preceding sentence is so forwarded, the Holders will use their best
efforts to cause the election to the Board of the nominee named in such notice.

                  (b) The Doubletree Holders may nominate the individual to
succeed any Doubletree Director who will not stand for re-election, and may
change any such nomination, at any Annual Election by giving written notice to
Candlewood of its nominees as Doubletree Directors not less than 45 days (or, in
the case of unforeseen circumstances, such shorter period as may be permitted by
law) prior to the date fixed for any Annual Election which is scheduled to occur
after the initial Public Sale. If the notice specified in the preceding sentence
is not given within the time required, the incumbent Doubletree Directors shall
be deemed to be the nominees for election as Doubletree Directors at such Annual
Election.

                  Section 2.4. Changes in DeBoer/Fix Directors. (a) The
DeBoer/Fix Holders may designate the individual to fill any vacancy on the Board
resulting from the death, resignation or removal of any DeBoer/Fix Director by
giving written notice to Candlewood (which shall promptly forward a copy of such
notice to each Holder). Within not more than 10 days after the notice described
in the preceding sentence is so forwarded, the Holders will use their best
efforts to cause the election to the Board of the nominee named in such notice.

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                  (b) The DeBoer/Fix Holders may nominate the individual to
succeed any DeBoer/Fix Director who will not stand for re-election, and may
change any such nomination, at any Annual Election by giving written notice to
Candlewood of its nominee as DeBoer/Fix Director not less than 45 days (or, in
the case of unforeseen circumstances, such shorter period as may be permitted by
law) prior to the date fixed for any Annual Election which is scheduled to occur
after the initial Public Sale. If the Notice specified in the preceding sentence
is not given within the time required, the incumbent DeBoer/Fix Directors shall
be deemed to be the nominee for election as DeBoer/Fix Directors at such Annual
Election.

                  Section 2.5. Removal of Directors. A Doubletree Director may
not be removed from the Board except by delivery to Candlewood and all Holders
of a written notice of such removal signed by the Doubletree Holders. A
DeBoer/Fix Director may not be removed from the Board except by delivery to
Candlewood and all Holders of a written notice of such removal signed by the
DeBoer/Fix Holders. Within not more than 10 days after such notice is given,
each of the Holders shall execute and deliver to Candlewood its written consent
to the removal specified in such notice or, if requested by whichever of the
Doubletree Holders or the DeBoer/Fix Holders, shall have given such notice in
accordance with this Section 2.5, shall vote its Subject Shares in favor of such
removal.

                  Section 2.6. Approvals Required for Certain Corporate Actions.
Subject to Section 4.5, the parties agree that without the written approval of
the Doubletree Holders and the DeBoer/Fix Holders:

                  (a) Neither the Certificate of Incorporation nor the By-laws
         shall be amended (except in accordance with the reasonable
         recommendations of the managing underwriter for the initial Public Sale
         pursuant to the Registration Rights Agreement, as amended);

                  (b) No Candlewood Entity shall acquire, directly or indirectly
         (through a stock or asset purchase or otherwise), any assets, in one or
         a series of related transactions with the same or related sellers, for
         an aggregate purchase price in excess of $10,000,000;

                  (c) No Candlewood Entity shall sell, transfer or otherwise
         dispose of, directly or indirectly (through a stock or asset sale or
         otherwise), any assets outside the ordinary course of business, in one
         or a series of related transactions, for an aggregate sale price in
         excess of $10,000,000;

                  (d) No Candlewood Entity shall make any capital expenditure,
         or any series of related capital expenditures, in excess of an
         aggregate of $10,000,000;

                  (e) No Candlewood Entity shall purchase, redeem or repurchase
         any Subject Shares, any shares of its capital stock or any of its
         partnership interests or any shares of capital stock or partnership
         interests of any other Candlewood Entity, except for (a) any redemption
         or repurchase by a Subsidiary directly or indirectly wholly-owned by
         Candlewood of shares of capital stock or partnership interests issued
         by such Subsidiary, 

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         or (b) except for a repurchase of Subject Shares pursuant to Section
         2(d) of the Registration Rights Agreement.

                  (f) Candlewood shall not declare or pay any dividend or
         declare or make any other distribution in respect of its capital stock;

                  (g) No Candlewood Entity shall issue, sell or grant additional
         shares of its capital stock or membership interests or options or
         warrants exercisable for or securities or other rights convertible into
         or exchangeable for shares of its capital stock or partnership
         interests, or issue or agree to issue any phantom stock rights, or file
         any registration statement (other than pursuant to the demand
         registration rights provided in Section 2 of the Registration Rights
         Agreement) with respect to the proposed sale of any of the foregoing;

                  (h) Neither Candlewood nor any Subsidiary not directly or
         indirectly wholly-owned by Candlewood shall authorize or consummate any
         stock dividend or stock split (except in accordance with the reasonable
         recommendations of the managing underwriter for the initial Public Sale
         pursuant to the Registration Rights Agreement);

                  (i) No Candlewood Entity shall incur or assume any
         indebtedness for borrowed money, other than indebtedness incurred
         solely to refund indebtedness existing on the Effective Date and other
         than pursuant to Candlewood's line of credit with GMAC and borrowings
         from Doubletree, in excess of $10,000,000 in the aggregate;

                  (j) No Candlewood Entity shall loan its funds to any other
         Person or extend its credit to any other Person other than in the
         ordinary course of business;

                  (k) No Candlewood Entity shall guarantee the obligations of
         any other Person, other than guarantees not in excess of $10,000,000
         executed in the ordinary course of business;

                  (l) No Candlewood Entity shall enter into any joint venture
         that involves an aggregate investment or receipt of proceeds in excess
         of $10,000,000;

                  (m) No Candlewood Entity shall engage in any business which is
         not significantly related to the business that Candlewood is conducting
         on the Effective Date;

                  (n) No Candlewood Entity shall enter into (A) any transaction
         or other arrangement not in the ordinary and proper course of business
         on an arm's length basis with Doubletree, Mr. Jack DeBoer, Mr. Warren
         Fix, JPD Corporation, the DeBoer Partnership or the Fix Partnership, or
         any entity in which any of them or their respective Affiliates has a
         greater than 5% interest or has a control relationship or (B) any loan
         to or management, employment or consulting agreement with any of the
         foregoing;

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                  (o) No Candlewood Entity shall change its accounting
         principles or practices (except as required by generally accepted
         accounting principles) or hire a firm other than KPMG Peat Marwick to
         act as its independent public accountants;

                  (p) No Candlewood Entity shall establish compensation payable
         to any manager, officer, director, employee or other agent if such
         compensation as to any one of the foregoing, in the aggregate, would
         exceed $500,000 in any year, or establish compensation for Mr. Jack
         DeBoer or Mr. Warren Fix if such compensation as to either of them, in
         the aggregate, would exceed $300,000 in any year.

                  (q) No Candlewood Entity shall enter into any other
         transaction or other arrangement not in the ordinary course of
         business; and

                  (r) Candlewood shall not consolidate or amalgamate with, or
         merge with or into, or acquire all or substantially all of the assets
         or control of, any other business organization other than in the course
         of the Initial Reorganization; provided, however, that, in the case of
         Doubletree, such approval shall not be unreasonably withheld;

                  (s) No Candlewood Entity shall dissolve, liquidate or wind up
         its affairs;

                  (t) There shall be no increase in the number of members of the
         Board, either by amendment to the Certificate of Incorporation, the
         By-laws or otherwise, except as provided in Section 2.1.

                  (u) Candlewood shall not cause or permit any Subsidiary
         holding assets representing all or substantially all the assets of
         Candlewood and its Subsidiaries, on a consolidated basis (the "Group")
         or any group of Subsidiaries holding all or substantially all of such
         assets to (A) consolidate or amalgamate with, or merge into, any entity
         that is not a member of the Group, (B) sell (in a single transaction or
         a series of related transactions) all or substantially all of such
         assets to an entity that is not a member of the Group or (C) dissolve,
         liquidate or wind up its (or their) affairs; or

                  (v) No Candlewood Entity shall permit or obligate any
         Candlewood Entity or otherwise agree, either individually or as a
         consolidated group, to make any decision, or take any action, described
         in items (a) through (q) above;

                  (w) Provided, however, that if at any time either Doubletree
         Holders or the DeBoer/Fix Holders, as the case may be, shall own less
         than 20% of the outstanding shares of Candlewood Common Stock, all
         rights of the Doubletree Holders or the DeBoer/Fix Holders, as the case
         may be, under this Section 2.6 shall terminate and be of no further
         force or effect.

                  Section 2.7 Purchase Rights. In furtherance and not by way of
limitation of Section 2.6, additional shares of Common Stock of Candlewood, or
securities convertible into or exchangeable for such shares, if such shares or
securities are to be sold for cash, shall be first 


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offered to the Holders of then outstanding Subject Shares in proportion to the
number of such Subject Shares held by them, respectively, which offer shall be
outstanding for a period of not less than 30 days from receipt of written notice
thereof; provided, however, that Candlewood shall have the right to issue such
additional shares or such securities, without first offering them to such
Holders, if such additional shares or securities are to be sold for cash through
an offering to its employees or to the employees of any Subsidiary for such
consideration and upon such terms and conditions as shall be approved by the
Doubletree Holders and the DeBoer/Fix Holders pursuant to clause (g) of Section
2.6, so long as applicable, and by the Board; and provided, further, that,
except as aforesaid, no Holder shall have any preemptive or other right to
subscribe for or acquire any shares of capital stock or other securities issued
by Candlewood.

   
                  Section 2.8. Agent for Affiliated Holders. If a portion or all
of the Subject Shares held by Doubletree, DeBoer, the DeBoer Partnership or the
Fix Partnership shall be transferred to one or more Permitted Transferees,
resulting in the Subject Shares which were theretofore held by such Holder being
held by more than one Holder, then Doubletree, DeBoer, the DeBoer Partnership or
the Fix Partnership, as the case may be, shall: (i) act, or shall cause one of
such Holders to act, as agent and proxy for all purposes of this Agreement
(including without limitation the voting of Subject Shares, the nomination of
Directors, the giving of consents, the approval of amendments, the receipt of
notices, etc.) for all of the Doubletree Holders, DeBoer Holders or the Fix
Partnership Holders, as the case may be, and (ii) specify in writing to the
other parties that it (or such other Holder) is to act as such agent and proxy,
and thereafter the other parties shall be entitled to look solely to, and to
deal solely with, the person so specified for all purposes of this Agreement as
if such Holder held all the Subject Shares held by the party providing such
notice and its Permitted Transferees.
    
                  
   
                  Section 2.9. Irrevocable Proxy. The Fix Partnership Holders
and the DeBoer Partnership hereby appoint DeBoer as its and their proxy to
exercise in DeBoer's sole discretion all rights of the Fix Partnership Holders
and the DeBoer Partnership to nominate and/or remove each DeBoer/Fix Director
and to exercise all rights pursuant to Section 2.6 hereof. This proxy is coupled
with an interest in Candlewood and shall be irrevocable. Except as set forth
below in this paragraph, this proxy may be invoked by DeBoer at any time by
notice to the other Holders but, unless and until invoked, such rights may be
exercised by the Fix Partnership Holders and the DeBoer Partnership; provided,
however, that upon the death of Warren D. Fix all such rights shall
automatically vest in DeBoer which shall thereafter have the sole right to
exercise all such rights of the Fix Partnership Holders. Notwithstanding the
foregoing, this proxy may not be invoked or exercised after the death of Jack
DeBoer. 
     


ARTICLE III.      RESTRICTIONS ON TRANSFERS OF SUBJECT SHARES; VOTING 
                  AGREEMENTS; AND LIQUIDATION AGREEMENT

                  Section 3.1. Dispositions Prior to Initial Public Sale. Until
the termination of the provisions of this Section 3.1, no Holder shall (a) sell,
assign, transfer by operation of law or otherwise, pledge, hypothecate, grant
any security interest or other lien in or otherwise dispose of any of its
Subject Shares, or make or permit any indirect transfer of such Subject Shares
through an issuance of such Holder's capital stock or other equity interests
resulting in a direct or indirect 

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change in the beneficial ownership-of a majority of its Voting Securities or
other equity interests (a "Disposition"), or (b) agree or otherwise become
obligated to take any action referred to in clause (a) of this Section 3.1;
provided, however, that, subject to Section 4.8, the restrictions set forth in
such clauses (a) and (b) shall not apply to a Disposition of Subject Shares: (A)
to a Permitted Transferee of such Holder, whether pursuant to a Reorganization
or otherwise, (B) in a Public Sale or (C) sold by Doubletree pursuant to Section
2(d) of the Registration Rights Agreement.

ARTICLE IV.       GENERAL PROVISIONS

                  Section 4.1. Legend on Share Certificates for Subject Shares.
(a) All certificates for Subject Shares which are subject to the terms and
provisions of Article II and/or Article III shall bear the following legend:

                  The shares represented by this certificate (the "Shares") have
                  not been registered under the Securities Act of 1933, as
                  amended, and no sale, transfer or other disposition may be
                  made of the Shares unless they have been so registered or
                  Candlewood Hotel Company, Inc. (the "Company") has been
                  furnished with a legal opinion from a nationally recognized
                  law firm satisfactory to it that such registration is not
                  required. The Shares are also subject to certain restrictions
                  on transfer and requirements as to voting contained in the
                  Stockholders Agreement dated as of September 30, 1996 among
                  the Company, the registered holder of the Shares and certain
                  other stockholders, a copy of which is on file with the
                  Secretary of the Company.

                  (b) Upon the termination of this Agreement pursuant to Section
4.5(a), each Holder shall be entitled to receive, in exchange for any
certificate for Candlewood Common Stock bearing the legend set forth in
subsection (a) of this Section 4.1, a certificate bearing a legend containing
only the first sentence of such legend, unless Candlewood shall have determined
(based upon the advice of legal counsel) that such legend is then no longer
required.

                  (c) The restrictions on transfer of the Subject Shares
provided in this Agreement shall also be noted in the Candlewood stock register.

                  (d) If any shares of Candlewood Common Stock shall cease to be
Subject Shares in accordance with this Agreement, any Person acquiring such
shares shall be entitled to receive, in exchange for any certificate for such
shares bearing the legend set forth in subsection (a) of this Section 4.1, a
certificate bearing a legend containing only the first sentence of such legend,
unless Candlewood shall have determined (based upon the advice of legal counsel)
that such legend is then no longer required.

                  Section 4.2. Notices. All notices, requests or demands
required or permitted by this Agreement: (i) shall be in writing; (ii) shall be
deemed to have been given, forwarded, made 

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or delivered: (x) if delivered in person or by overnight courier service, when
received, (y) if transmitted by telefax, when so transmitted if evidence of
completed transmission is received, and (z) if sent by prepaid registered or
certified mail, return receipt requested, on the earlier of the date of receipt
or the seventh day after it is mailed; and (iii) shall be addressed: if to
Candlewood, at Lakepoint Office Park, 9342 East Central, Wichita, Kansas 67206,
Attention: President (or to such other address as Candlewood shall furnish by
notice given to each Holder), and if to any Holder, at such Holder's address
appearing on the Holder List (as hereinafter defined).

                  Section 4.3. Holder List. Candlewood shall maintain a list
(the "Holder List") of the name and address of each Holder and the number of
Subject Shares held by it. Each Holder shall give prompt notice to Candlewood of
any change in the information pertaining to it in the Holder List, but in the
absence of such notice Candlewood and each other Holder may treat the
information reflected in the current Holder List as correct. Candlewood shall
furnish a copy of the Holder List to any Holder upon request.

                  Section 4.4. Amendments, Waivers and Consents. This Agreement
may be amended only by a document executed (which may be in counterparts) by
Candlewood and all of the Holders. Any Holder may waive the benefit of any
provision of this Agreement, either in a specific instance or generally, by
delivering to Candlewood and each other Holder a consent to such waiver. All
consents required or permitted by this Agreement shall be in writing and signed
by the party to be charged therewith.

                  Section 4.5. Termination. (a) All provisions of this Agreement
shall terminate as to all Subject Shares on the close of business on the day
before the tenth anniversary of the Effective Date. In the event of a Public
Sale prior to such tenth anniversary, the provisions of Section 3.1 shall
terminate on the date on which such Public Sale is completed. All provisions of
this Agreement shall terminate (prior to such tenth anniversary) on the first
day on which the Subject Shares shall comprise less than a majority of the total
number of shares of Candlewood Common Stock then outstanding. This Agreement or
any provision hereof may be terminated by a document executed in the manner
provided in Section 4.4 for amendments to this Agreement with the same force and
effect as provided therein. Candlewood shall give prompt written notice of any
termination under this Section 4.5(a) to all Holders.

                  (b) The termination of this Agreement or any provision hereof
shall not affect any action taken or agreement entered into prior to such
termination or any liability under any obligation previously incurred under this
Agreement, all of which shall survive such termination.

   
                  Section 4.6. Equitable Remedies; Submission to Arbitration.
(a) Each Holder, by becoming a party to this Agreement, acknowledges and agrees
that its breach or nonperformance of any provision of this Agreement in
accordance with the specific terms hereof would result in irreparable harm to
Candlewood and to each other Holder for which money damages would not provide an
adequate remedy. Accordingly, each Holder (i) agrees that Candlewood and each
other Holder shall be entitled to specific performance or injunctive or other
equitable relief against such Holder in the event of its breach or other
non-performance of any of 
    


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<PAGE>   13
   
the provisions of this Agreement; and (ii) waives any requirement for the
securing or posting of any bond in connection with such remedy.
    

                  (b) EXCEPT AS OTHERWISE PROVIDED IN SECTION 4.6(a), EACH
HOLDER IRREVOCABLY AGREES THAT ALL DISPUTES IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR ANY OTHER AGREEMENT
CONTEMPLATED HEREBY SHALL BE RESOLVED BY ARBITRATION IN THE CITY OF LOS ANGELES,
STATE OF CALIFORNIA, UNDER THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
The arbitrator to resolve any such dispute shall be selected by the Holders who
are involved in the dispute, shall have expertise and experience in the
resolution of disputes similar to the dispute to be resolved and shall not be an
Affiliate of any Holder. If such Holders are unable to agree on such selection,
each such Holder shall select one arbitrator and such arbitrators shall select
an arbitrator meeting the criteria set forth in the immediately preceding
sentence to resolve such dispute. The fees and expenses of any arbitrator
selected by any Holder shall be paid by such Holder; the fees and expenses of
any other arbitrators shall be shared equally by the Holders who are involved in
the dispute. All other expenses of such arbitration shall be paid by the Holder
incurring the same.

                  Section 4.7. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of Candlewood and each Holder; provided, however, that Candlewood may not assign
this Agreement except by operation of law or to a purchaser of all or
substantially all of its business and assets; and provided further, that no
Holder may assign this Agreement except in connection with a transfer of Subject
Shares by such transferring Holder to another Person which thereupon becomes a
Holder with respect to such Subject Shares, all in accordance with Section 3.1
and Section 4.8.

                  Section 4.8. Counterparts; Additional Parties. This Agreement
(a) may be executed in counterparts, all of which together shall constitute a
single agreement, and (b) shall become effective on the Effective Date. Prior to
any Disposition of Subject Shares to a Permitted Transferee, without regard to
whether or not Section 3.1 is then in effect, the Holder effecting such
Disposition shall cause such Permitted Transferee to execute and deliver to
Candlewood and all of the Holders a supplemental agreement to this Agreement, in
form and substance reasonably satisfactory to each of them, whereby such
Permitted Transferee shall agree to become a party to and be bound by all of the
terms and conditions of this Agreement applicable to a Holder of Subject Shares
and confirm that all of the Subject Shares to be acquired by such Permitted
Transferee in such shall continue to be subject to this. As promptly as
practicable, Candlewood shall cause a fully executed counterpart of this
Agreement or any supplemental agreement referred to in this Section 4.8 to be
delivered to each Holder.


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<PAGE>   14
                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.


DOUBLETREE CORPORATION
   
a Delaware corporation
    

By:      
         ---------------------------------
         David L. Stivers
         Senior Vice President, General 
         Counsel and Secretary


THE WARREN D. FIX FAMILY 
   
PARTNERSHIP, a Kansas limited partnership
    
By:      
         ---------------------------------
         Warren D. Fix, General Partner


------------------------------------------
   
JACK P. DEBOER


THE DEBOER FAMILY PARTNERSHIP,
a Kansas general partnership


By:      
         ---------------------------------
         Jack P. DeBoer, General Partner

    

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