Document:

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                                                                    EXHIBIT 10.1

22 RESIDENCE INNS

                    AMENDED AND RESTATED MANAGEMENT AGREEMENT

                                 by and between

                         RESIDENCE INN BY MARRIOTT, INC.

                                  as "MANAGER"

                                       and

                         AHM RES II LIMITED PARTNERSHIP

                                   as "LESSEE"

                           Dated as of August 28, 2002

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                                TABLE OF CONTENTS

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                                                                                  PAGE
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ARTICLE I    DEFINITION OF TERMS ................................................   3

  1.01  Definition of Terms .....................................................   3

ARTICLE II   APPOINTMENT OF MANAGER .............................................  24

  2.01  Appointment .............................................................  24
  2.02  Delegation of Authority .................................................  24
  2.03  Licenses and Permits ....................................................  25
  2.04  Non-Discrimination ......................................................  26

ARTICLE III  OWNERSHIP OF THE INNS ..............................................  27

  3.01  Ownership of the Inns ...................................................  27

ARTICLE IV   TERM ...............................................................  29

  4.01  Term ....................................................................  29
  4.02  Performance Termination .................................................  30
  4.03  Actions to be Taken on Termination ......................................  32

ARTICLE V    COMPENSATION OF MANAGER ............................................  34

  5.01  Management Fee ..........................................................  34
  5.02  Distributions of Operating Profit .......................................  34
  5.04  Accounting and Interim Payment ..........................................  37
  5.05  Manager Loans ...........................................................  38

ARTICLE VI   WORKING CAPITAL AND FIXED ASSET SUPPLIES ...........................  40

  6.01  Working Capital .........................................................  40
  6.02  Fixed Asset Supplies ....................................................  40

ARTICLE VII  REPAIRS, MAINTENANCE AND REPLACEMENTS ..............................  42

  7.01  Routine Repairs and Maintenance .........................................  42
  7.02  Repairs and Equipment Reserve ...........................................  42
  7.03  Building Alterations, Improvements, Renewals, and Replacements ..........  47
  7.04  Liens ...................................................................  49
  7.05  Ownership of Replacements ...............................................  49
  7.06  Design Specifications ...................................................  50
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ARTICLE VIII   BOOKKEEPING AND BANK ACCOUNTS ..........................  51

   8.01   Books and Records ...........................................  51
   8.02   Accounts, Expenditures ......................................  52
   8.03   Annual Operating Projection .................................  53
   8.04   Operating Losses; Credit ....................................  53

ARTICLE IX     TRADEMARKS, TRADE NAMES AND SERVICE MARKS ..............  55

   9.01   Tradmarks, Trade Names and Service Marks ....................  55
   9.02   Purchase of Inventories and Fixed Asset Supplies ............  56
   9.03   Computer Software ...........................................  56
   9.04   Breach of Covenant ..........................................  57

ARTICLE X      MANAGEMENT AND USE OF THE INNS .........................  58

  10.01   Management of the Inns ......................................  58
  10.02   Chain Services ..............................................  58
  10.03   Owner's Right to Inspect ....................................  59

ARTICLE XI     INSURANCE ..............................................  60

  11.01   Property Insurance ..........................................  60
  11.02   Operational Insurance .......................................  61
  11.03   Coverage ....................................................  62
  11.04   Cost and Expense ............................................  62
  11.05   Lessee Provided Coverage ....................................  63
  11.06   Policies and Endorsements ...................................  64

ARTICLE XII    TAXES ..................................................  65

  12.01   Real Estate and Personal Property Taxes .....................  65

ARTICLE XIII   INN EMPLOYEES ..........................................  66

  13.01   Employees ...................................................  66

ARTICLE XIV    DAMAGE, CONDEMNATION AND FORCE MAJEURE .................  68

  14.01   Damage and Repair ...........................................  68
  14.02   Condemnation ................................................  69
  14.03   Force Majeure ...............................................  70

ARTICLE XV     DEFAULTS ...............................................  71

  15.01   Events of Default ...........................................  71
  15.02   Remedies ....................................................  72
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ARTICLE XVI    WAIVER AND PARTIAL INVALIDITY ...............................  74

   16.01  Waiver ...........................................................  74
   16.02  Partial Invalidity ...............................................  74

ARTICLE XVII   ASSIGNMENT ..................................................  75

   17.01  Assignment .......................................................  75
   17.02  Mortgages and Collateral Assignments .............................  76

ARTICLE XVIII  SALE OF AN INN OR INNS ......................................  78

   18.01  Right of First Refusal ...........................................  78
   18.02  Effect of Sale of Inn ............................................  80

ARTICLE XIX    MISCELLANEOUS ...............................................  82

   19.01  Right to Make Agreement ..........................................  82
   19.02  Consents .........................................................  82
   19.03  Agency ...........................................................  82
   19.04  Applicable Law ...................................................  83
   19.05  Recordation ......................................................  83
   19.06  Headings .........................................................  83
   19.07  Notices ..........................................................  84
   19.08  Limited Liability ................................................  85
   19.09  Confidentiality ..................................................  85
   19.10  Offerings ........................................................  86
   19.11  Expert Decisions .................................................  87
   19.12  Entire Agreement .................................................  88

EXHIBIT A      Locations of the Inns .......................................   1
EXHIBIT A-1    Legal Description ...........................................   4
EXHIBIT A-2    Legal Description ...........................................   5
EXHIBIT A-3    Legal Description ...........................................   6
EXHIBIT A-4    Legal Description ...........................................   7
EXHIBIT A-5    Legal Description ...........................................   8
EXHIBIT A-6    Legal Description ...........................................   9
EXHIBIT A-7    Legal Description ...........................................  10
EXHIBIT A-8    Legal Description ...........................................  11
EXHIBIT A-9    Legal Description ...........................................  12
EXHIBIT A-10   Legal Description ...........................................  13
EXHIBIT A-11   Legal Description ...........................................  14
EXHIBIT A-12   Legal Description ...........................................  15
EXHIBIT A-13   Legal Description ...........................................  16
EXHIBIT A-14   Legal Description ...........................................  17
EXHIBIT A-15   Legal Description ...........................................  18
EXHIBIT A-16   Legal Description ...........................................  19

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EXHIBIT A-17   Legal Description ..............................................  20
EXHIBIT A-18   Legal Description ..............................................  21
EXHIBIT A-19   Legal Description ..............................................  22
EXHIBIT A-20   Legal Description ..............................................  23
EXHIBIT A-21   Legal Description ..............................................  24
EXHIBIT A-22   Legal Description ..............................................  25
EXHIBIT B      Percentages Used for Reductions ................................  26
EXHIBIT D      First Priority Return Reduced by the Applicable Percentage .....
EXHIBIT E      Breakdown of Competitive Set ...................................
EXHIBIT F      Subordination, Non-Disturbance and Attornment Agreement ........
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                    AMENDED AND RESTATED MANAGEMENT AGREEMENT

         This Amended and Restated Management Agreement ("Management Agreement"
or "Agreement") is executed as of the _____ day of ______________, 2002
("Amendment Date"), by AHM RES II LIMITED PARTNERSHIP ("Lessee"), a Virginia
limited partnership with a mailing address at 10 South Third Street, Richmond,
Virginia 23219, and RESIDENCE INN BY MARRIOTT, INC. ("Manager"), a Delaware
corporation, with a mailing address at c/o Marriott International, Inc.,10400
Fernwood Road, Bethesda, Maryland 20817.

                                R E C I T A L S:

         A. Lessee is an indirect wholly-owned subsidiary of Apple Hospitality
Two, Inc., a Virginia corporation and real estate investment trust ("Apple
Hospitality") which is also the indirect owner through AHT Res II GP, Inc., a
Virginia corporation and AHT Res II LP, Inc., a Virginia corporation, of 100%
equity of Marriott Residence Inn II Limited Partnership ("Owner"), which owns
twenty-two (22) Residence Inn by Marriott Hotels (collectively, the "Inns" or
individually, an "Inn"), as more particularly described in Section 1.01 hereof)
which are being operated under the trade name "Residence Inn" or "Residence Inn
by Marriott" or "Marriott Residence Inn," located upon the twenty-two parcels of
real property (collectively, the "Sites" or individually, a "Site") described on
Exhibit A attached to this Agreement and incorporated herein. Each Site is
improved by buildings containing guest suites, a GATEHOUSE (a registered
trademark of Manager) building containing a common area lobby, meeting rooms and
administrative offices, and certain other amenities and related facilities (the
"Buildings"). Each respective Site and the Buildings thereon are collectively
referred to as an "Inn," as more particularly described in Section 1.01 hereof.

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         B. Owner has leased to Lessee and Lessee has leased from Owner the Inns
pursuant to that certain Master Lease Agreement of even date hereof (the "Hotel
Lease").

         C. Owner and Manager are parties to that certain Amended and Restated
Management Agreement dated as of March 22, 1996, as amended by (i) that certain
Working Capital Maintenance and Debt Service Agreement dated March 22, 1996,
among Manager and Owner; (ii) that certain Modification, Subordination and
Non-Disturbance Agreement, Estoppel, Assignment and Consent dated March 22,
1996, among Manager, Owner, and Nomura Asset Capital Corporation ("Nomura")
("Modification, Subordination and Non-Disturbance Agreement, Estoppel,
Assignment and Consent"); (iii) that certain Coordination Agreement dated March
22, 1996, between Owner and Manager; and (iv) that certain Letter Agreement
dated October 9, 1998, between Owner and Manager (collectively, the "Old
Management Agreement"), pursuant to which Manager manages and operates the Inns
for the account of Owner.

         D. Pursuant to that certain Consent, Assignment and Assumption of
Management Agreement of even date herewith, Owner has assigned its interest in
the Old Management Agreement to Lessee, subject to certain obligations set forth
in such Consent, Assignment and Assumption of Management Agreement and that
certain Owner Agreement of even date hereof.

         E. Lessee and Manager desire and have agreed to amend and restate the
Old Management Agreement in its entirety, upon the terms and conditions set
forth in this Agreement. NOW, THEREFORE, in consideration of the mutual
covenants contained in this Agreement and other good and valuable consideration,
the receipt of which is hereby

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acknowledged, Owner and Manager agree to amend and restate the Old Management
Agreement in its entirety as follows:

                                    ARTICLE I

                               DEFINITION OF TERMS

         1.01 Definition of Terms

         The following terms when used in the Agreement shall have the meanings
indicated:

         "Accounting Period" shall mean the four (4) week accounting periods
having the same beginning and ending dates as Manager's four (4) week accounting
periods, except that an Accounting Period may occasionally contain five (5)
weeks when necessary to conform Manager's accounting system to the calendar.

         "Actual Debt Service" shall mean during each Fiscal Year (prorated for
portions thereof) (a) during the term of the Term Loan, the total annual
payments of principal and interest under the Loan Agreement as set forth on
Exhibit "C" attached hereto, and (b) during the term of any loan obtained by
Owner to finance the Refinanced Principal Amount, the lesser of (i) an amount
equal to 10.5% times the Refinanced Principal Amount per Fiscal Year plus
amortization of principal during each Fiscal Year on the Refinanced Principal
Amount pursuant to a 25 year amortization schedule; or (ii) the actual interest
paid or accrued in that Fiscal Year (provided that the rate is a commercially
reasonable market interest rate), plus the actual amortization of principal in
that Fiscal Year (provided that the amortization rate is a commercially
reasonable market rate) on the Refinanced Principal Amount; provided, however,
that upon the Termination of this Agreement with respect to a given Inn or Inns
(whether in connection with the Sale of the Inn or Inns, or pursuant to other
applicable provisions of this Agreement), the Actual Debt Service shall,
notwithstanding anything to the contrary in the Loan Agreement or any document

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related thereto, be reduced by the applicable percentage attributable to such
Inn or Inns, as set forth on Exhibit "B" hereto.

         "Additional Inn Investment" shall mean any amounts expended by Owner
after the acquisition of title to the Inns by Owner or expended by Lessee, for
the following purposes:

           a)   to fund the cost of any expansion, previously consented to by
                Manager, of any Inn;

           b)   to fund the cost of any repairs or replacements, with respect to
                any Inn, which are not covered by insurance proceeds under
                Section 14.01.A;

           c)   to fund the cost of any building alterations, improvements,
                replacements and related expenses, requested by Manager, under
                Section 7.03.A.2; and

           d)   to fund any reasonable business needs (not including amounts
                funded under Section 7.02.E) of Lessee relating to operation of
                one or more of the Inns, as requested by or otherwise approved
                by Manager.

         "Additional Inn Investment Loan" shall mean any indebtedness incurred
by Owner or by Lessee to fund an Additional Inn Investment or any refinancing
thereof.

          "Adjusted Capital Contributions" shall mean the balance, from time to
time, of:

          (i)   the Capital Contributions; plus

          (ii)  any Additional Inn Investments, other than any Additional Inn
                Investment funded by an Additional Inn Investment Loan on which
                debt service constitutes Qualifying Debt Service; less

          (iii) cumulative distributions to the partners of Owner of Net Sales
                Proceeds and Net Refinancing Proceeds;

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provided, however, that upon the Termination of this Agreement with respect to a
given Inn or Inns (whether in connection with the Sale of the Inn or Inns or
pursuant to other applicable provisions in this Agreement), the Adjusted Capital
Contributions shall be reduced by the amount of any Additional Inn Investment
attributable to such Inn or Inns.

     "Administrative Expenses" shall mean, with respect to any Fiscal Year, an
annual amount equal to the lesser of (i) the aggregate amount of payments for,
or reserves created for payment for, administrative expenses of Owner with
respect to such Fiscal Year; or (ii) an amount equal to $350,000 for Fiscal Year
1996, which amount will be increased by the CPI Percentage for each Fiscal Year
thereafter.

     "Affiliate" shall mean any individual or entity directly or indirectly
through one or more intermediaries, controlling, controlled by or under common
control with a party. The term "control," as used in the immediately preceding
sentence, means, with respect to a corporation, the right to exercise, directly
or indirectly, more than fifty percent (50%) of the voting rights attributable
to the shares of the controlled corporation, and, with respect to an entity that
is not a corporation, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of the controlled
entity.

     "Agreement" shall mean this Amended and Restated Management Agreement
between Lessee and Manager with respect to the 22 Inns listed on Exhibit "A"
hereto.

     "Annual Operating Projection" shall have the meaning ascribed to it in
Section 8.03.

     "Average Revenue Index" shall mean the sum of the Revenue Index for each
Inn that has not been previously Terminated hereunder (whether in connection
with a Sale of the Inn or Inns, or pursuant to other applicable provisions of
this Agreement) divided by the total number of Inns

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that have not been previously Terminated hereunder (whether in connection with a
Sale of the Inn or Inns, or pursuant to other applicable provisions of this
Agreement).

     "Average Revenue Index Threshold" shall mean the sum of the Revenue Index
Threshold for each Inn that has not been previously Terminated hereunder
(whether in connection with a Sale of the Inn or Inns, or pursuant to other
applicable provisions of this Agreement) divided by the total number of Inns
that have not been previously Terminated hereunder (whether in connection with a
Sale of the Inn or Inns, or pursuant to other applicable provisions of this
Agreement).

     "Average Revenue Per Available Room" shall mean the sum of the Revenue per
Available Room for the hotels in the Competitive Set for the Inn in question
divided by the total number of hotels in the Competitive Set for the Inn in
question.

     "Base Management Fee" shall mean an amount payable to Manager, subject to
the provisions of Article V hereof, for the following services hereunder:
corporate planning and policy services, financial planning and corporate
financial services, risk planning and insurance services, corporate executive
management, legislative and governmental representation, in-house legal services
and protection of the "Marriott" trade name and trademarks. Such amount shall be
equal, during any given Fiscal Year (or portion thereof), to two percent (2%) of
Gross Revenues.

     "Bossier City Inn" shall mean the Residence Inn by Marriott located in
Shreveport/ Bossier City, Louisiana, which is owned by Bossier RIBM Two LLC and
managed by Manager pursuant to the terms of that certain Management Agreement
dated March 22, 1996.

     "Building" shall have the meaning ascribed to it in the Recitals.

     "Building Estimate" shall have the meaning ascribed to it in Section
7.03.A.

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     "Capital Contributions" shall mean Sixty-nine Million Two Hundred
Forty-three Thousand Dollars ($69,243,000); provided, however, that upon the
Termination of this Agreement with respect to a given Inn or Inns (whether in
connection with the Sale of the Inn or Inns or pursuant to other applicable
provisions in this Agreement), the amount of Capital Contributions shall be
reduced by the applicable percentage attributable to such Inn or Inns as set
forth on Exhibit "B" hereto.

     "Chain Services" shall have the meaning ascribed to it in Section 10.02.

     "Competitive Set" shall mean the group of hotels which are chosen as
competitive to the Inn, being the hotels that are generally within the same
hotel market segment as the Inn. As of the Amendment Date, the parties agree
that the Competitive Set shall consist of the hotels listed on Exhibit E for
each of the Inns. If any of such hotels, subsequent to the Amendment Date,
either changes its chain affiliation or ceases to operate or otherwise ceases to
reflect the general criteria set forth in the first sentence of this definition,
Lessee and Manager agree to mutually, reasonably and in good faith, discuss
appropriate changes to the foregoing list of the hotels that shall comprise the
Competitive Set. Disputes regarding such changes to the Competitive Set will be
resolved by the Expert in accordance with the provisions of Section 19.10.

     "Computer Lease" means a lease or other agreement under which computer
equipment located in one or more Inns is leased to Lessee or to Manager, as
agent for Lessee (including the license, if any, of operating software
therefore).

     "Contingent Management Fees (IMF)" shall mean the cumulative total (which
shall not bear interest) of those portions of any Incentive Management Fees for
each Fiscal Year (or portion thereof) which are not paid to Manager in such
Fiscal Year owing to the limitations set forth in Section 5.02 hereof, plus the
remaining unpaid balance (which shall not bear interest) of

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those portions of the Contingent Management Fees (IMF) allocable to the Inns
which were not paid to Manager pursuant to the provisions of the Old Management
Agreement.

     "CPI Percentage" shall mean the percentage by which the "Consumer Price
Index for All Urban Consumer (CPI-U); U.S. City Average, 1982-84=100, All Items"
(or appropriate substitute index if such index is no longer published) (the
"CPI") for November of the previous Fiscal Year exceeds the CPI for November
1996.

     "Debt Service Reserve Account" shall have the meaning ascribed to it in the
exhibit entitled "Cash Management Procedures", which is an exhibit to the
Modification, Subordination and Non-Disturbance Agreement, Estoppel, Assignment
and Consent.

     "Deductions" shall have the meaning ascribed to it in the definition of
Operating Profit.

     "Defeasance Deposits" shall have the meaning ascribed to it in the Loan
Agreement.

     "Effective Date" shall mean December 29, 1988, which is the date on which
Owner first acquired fee title to one or more of the Inns.

     "Equipment Leases" shall mean all or any FF&E Leases, Telephone Leases,
Computer Leases, TV System Leases and motor vehicle leases.

     "Expert" shall mean an independent, nationally recognized hotel consulting
firm or individual who is qualified to resolve the issue in question, or a
nationally recognized accounting firm with a hospitality division (other than an
accounting or consulting firm with a then existing relationship with Manager,
Lessee or their respective Affiliates), who is appointed in each instance by
agreement of the parties or, failing agreement, each party shall select one (1)
such nationally recognized consulting firm, accounting firm or individual, as
the case may be, and the two (2) respective firms and/or individuals so selected
shall select another such nationally recognized consulting firm, accounting firm
or individual, as the case may be, to be the Expert.

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Each party agrees that it shall not appoint an individual as an Expert hereunder
if the individual is, as of the date of appointment or within six (6) months
prior to such date, employed by such party, either directly or as a consultant
or accountant, in connection with any other matter. In the event that either
party calls for an Expert determination pursuant to the terms hereof, the
parties shall have ten (10) days from the date of such request to agree upon an
Expert and, if they fail to agree, each party shall have an additional ten (10)
days to make its respective selection of a firm or individual, and within ten
(10) days of such respective selections, the two (2) respective firms and/or
individuals so selected shall select another such nationally recognized
consulting firm, accounting firm or individual, as the case may be, to be the
Expert. If either party fails to make its respective selection of a firm or
individual within the ten (10) day period provided for above, then the other
party's selection shall be the Expert. Also, if the two (2) respective firms
and/or individuals so selected shall fail to select a third nationally
recognized consulting firm, accounting firm or individual to be the Expert, then
such Expert shall be appointed by the American Arbitration Association and shall
be a qualified person having at least ten (10) years recent professional
experience as to the subject matter in question.

     "FF&E" shall mean furniture, furnishings, fixtures, vehicles, carpeting and
equipment, but shall not include Fixed Asset Supplies.

     "FF&E Lease" means a lease of any FF&E located in one or more Inns other
than a TV System Lease, a Telephone Lease, a Computer Lease, or a lease of a
motor vehicle used primarily for transporting Inn guests.

     "First Priority Return" shall mean an annual non-cumulative amount retained
by Lessee out of certain portions of Operating Profit, as set forth in Section
5.02 hereof, equal to $75,000 plus ten percent (10%) of the balance, from time
to time, of (i) Capital Contributions, plus

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(ii) any Additional Inn Investments made after the Amendment Date, other than
any Additional Inn Investments funded by Additional Inn Investment Loans;
provided, however, that upon the Termination of this Agreement with respect to a
given Inn or Inns (whether in connection with the Sale of the Inn or Inns, or
pursuant to other applicable provisions of this Agreement), the First Priority
Return, as used thereafter, shall be reduced by the applicable percentage for
such Inn or Inns, as set forth in Exhibit "D" hereto.

     "Fiscal Year" shall mean Manager's Fiscal Year which now ends at midnight
on the Friday closest to December 31 in each calendar year; the new Fiscal Year
begins on the Saturday immediately following said Friday. Any partial Fiscal
Year between the Effective Date and the commencement of the first full Fiscal
Year shall constitute a separate Fiscal Year. A partial Fiscal Year between the
end of the last full Fiscal Year and the Termination of this Agreement shall
also constitute a separate Fiscal Year. If Manager's Fiscal Year is changed in
the future, appropriate adjustment to this Agreement's reporting and accounting
procedures shall be made; provided, however, that no such change or adjustment
shall alter the term of this Agreement or in any way reduce the distribution of
Operating Profit or other payments due hereunder.

     "Fixed Asset Supplies" shall mean items included within "Property and
Equipment" under the Uniform System of Accounts including, but not limited to,
linen, china, glassware, tableware, uniforms, and similar items, whether used in
connection with public space or suites.

     "Force Majeure" shall have the meaning ascribed to it in Section 14.03
hereof.

     "Gross Revenues" shall mean all revenues and receipts of every kind derived
from operating the Inns and all departments and parts thereof, including, but
not limited to: income (from both cash and credit transactions) from rental of
rooms, stores, offices, exhibit or sales space of every kind; license, lease and
concession fees and rentals (not including gross receipts

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of licensees, lessees and concessionaires); income from vending machines; health
club membership fees; food and beverage sales; wholesale and retail sales of
merchandise (except as otherwise provided in Section 7.02.C hereof with respect
to the sale of FF&E), service charges, and proceeds, if any, from business
interruption or other loss of income insurance; provided, however, that Gross
Revenues shall not include: (i) gratuities to employees of any of the Inns; (ii)
federal, state or municipal excise, sales or use taxes or similar Impositions
collected directly from patrons or guests or included as part of the sales price
of any goods or services; (iii) Net Refinancing Proceeds or Net Sales Proceeds;
(iv) proceeds from the sale of FF&E; (v) interest received or accrued with
respect to the funds in the Reserve or the other operating accounts of the Inns;
or (vi) any refunds, rebates, discounts and credits of a similar nature, given,
paid or returned in the course of obtaining Gross Revenues or components
thereof.

       "Impositions" shall have the meaning ascribed to it in Section 12.01.

       "Incentive Management Fee" shall mean an amount which equals fifteen
percent (15%) of Operating Profit in any Fiscal Year in which the total
Operating Profit is less than the Operating Profit Objective, and twenty-three
and one-half percent (23.5%) of Operating Profit in any Fiscal Year in which the
total Operating Profit equals or exceeds the Operating Profit Objective,
provided that cumulative Incentive Management Fees shall not exceed twenty
percent (20%) of cumulative Operating Profit during the period in which the Inns
are owned by the Owner. Payment of the Incentive Management Fee to Manager shall
be subject to the provisions of Article V hereof.

       "Initial Term" shall have the meaning ascribed to it in Section 4.01.

       "Inn" or "Inns" shall refer individually or collectively to the twenty
two (22) inns located on the twenty two (22) Sites described on Exhibit "A"
hereto. The term "Inn" or "Inns" shall

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incorporate not only the Site or Sites but also all easement or other
appurtenant rights thereto, together with the Buildings and all other
improvements constructed or to be constructed thereon, and all FF&E and Fixed
Asset Supplies installed or located therein.

       "Inn Term" shall have the meaning ascribed to it in Section 4.01.

       "Inventories" shall mean "Inventories" as defined in the Uniform System
of Accounts, such as, but not limited to, provisions in storerooms,
refrigerators, pantries and kitchens; beverages in wine cellars and bars; other
merchandise intended for sale; fuel; mechanical supplies; stationery; and other
expensed supplies and similar items.

       "Lender" shall mean Nomura, or its successors or assigns.

       "Loan Agreement" shall mean that certain Loan Agreement dated March 22,
1996, entered into between Owner and Lender regarding the Term Loan.

       "Management Agreement" shall have the same meaning as "Agreement".

       "Manager" shall have the meaning ascribed to it in the Preamble hereto.

       "Manager Loans" shall have the meaning ascribed to it in Section 5.05.

       "Marketing Fund" shall mean that certain fund (or any successor to such
fund) maintained by Manager, Marriott, or a Marriott Affiliate, in its capacity
as franchisor of the System, to pay for the following System costs: all costs
associated with developing, preparing, producing, directing, administering,
conducting, maintaining and disseminating advertising, marketing, promotional
and public relations materials, programs, campaigns, sales and marketing
seminars and training programs, and similar activities of every kind and nature,
including the Residence Inn directory; conducting market research; and paying
the central operational costs of the Residence Inn reservation system; provided,
however, that any costs described in this definition of Marketing Fund may, at
the option of Manager and any association which may be

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formed by the Residence Inn by Marriott franchisees, be charged directly to each
inn in the System on the basis of actual use by or benefit to each inn and, in
such event, shall become Deductions. As of the Amendment Date, the current
system-wide charge is two and one-half percent (2.5%) of Suite Revenues. The
actual advertising and marketing program activities that will be supported by
the Marketing Fund may change and shall be determined by Marriott. Commencing
with Fiscal Year 2002, the system-wide charge shall not be increased without a
majority vote by members of The Residence Inn Association or its successor in
favor of such increase.

       "Marriott" shall mean Marriott International, Inc., the corporate parent
of Manager.

       "Marriott Affiliate" shall mean an Affiliate of Marriott.

       "Maturity Date" shall mean March 11, 2022, which is the original stated
maturity date of the indebtedness incurred by Owner pursuant to the Term Loan,
or, if earlier, the date of any refinancing or prepayment of such indebtedness.

       "Net Refinancing Proceeds" shall mean the cumulative full amount
disbursed (in one or more advances) under any loan or loans obtained by Owner,
from time to time, to the extent such disbursement or disbursements are not used
for the following purposes: (i) simultaneous repayment of other indebtedness of
Owner; (ii) commercially reasonable transaction costs; and (iii) the payment of,
or creation of reserves deemed necessary in the reasonable discretion of Owner
for, Administrative Expenses.

       "Net Sales Proceeds" shall mean the cumulative net proceeds received by
Owner, from time to time, from any one or more of the following: (i) any Sale of
an Inn; (ii) the exchange, condemnation, eminent domain taking, casualty or
other disposition of any of (or any portion of) the Inns or the Sites; or (iii)
the liquidation of Owner's property interest in the Inns in connection

                                       13

<PAGE>

with a dissolution of Owner. The phrase "net proceeds," as used in the foregoing
sentence, shall mean the gross proceeds received from any of the foregoing to
the extent such gross proceeds are not used for the following purposes: (i)
simultaneous repayment of indebtedness secured by the Inn or Inns being sold (or
the pro rata portion of indebtedness secured by all the Inns) or restoration of
the Inn in the case of a condemnation, eminent domain proceeding, or casualty;
(ii) commercially reasonable transaction costs; and (iii) the payment of, or
creation of reserves deemed necessary in the reasonable discretion of Owner for,
Administrative Expenses of Owner. The term "Net Sales Proceeds" shall not
include proceeds from dispositions of FF&E described in Section 7.02.C hereof.

       "Operating Loss" shall mean a negative Operating Profit.

       "Operating Profit" shall mean the excess of Gross Revenues over the
following deductions ("Deductions") incurred by Manager, on behalf of Lessee, in
operating the Inns:

       1. The cost of sales including salaries, wages (including accruals for
year-end bonuses to key management employees), fringe benefits, payroll taxes
and other costs related to employees of each Inn (the foregoing costs shall not
include salaries and other employee costs of executive personnel of Manager who
do not work at one of the Inns on a regular basis; except that the foregoing
costs shall include the allocable portion of the salary and other employee costs
of any general manager or other supervisory personnel (not including regional
vice-presidents or regional sales people) assigned to a "cluster" of hotels and
inns which includes one or more of the Inns);

       2. Departmental expenses, administrative and general expenses and the
cost of marketing, advertising and business promotion, heat, light and power,
and routine repairs, maintenance and minor alterations treated as Deductions
under Section 7.01;

                                       14

<PAGE>

       3. The cost of Inventories and Fixed Asset Supplies consumed in the
operation of each Inn;

       4. A reasonable reserve for uncollectible accounts receivable as
determined by Manager;

       5. All costs and fees of independent accountants or other third parties
who perform services required or permitted hereunder;

       6. All costs and fees of technical consultants and operational experts
for specialized services;

       7. The Residence Inn System Fee;

       8. The Base Management Fee;

       9. The Inns' pro rata share of costs and expenses incurred by Manager in
providing Chain Services;

       10. Insurance costs and expenses as provided in Article XI;

       11. Taxes, if any, payable by or assessed against Manager related to this
Agreement or to Manager's operation of the Inns (exclusive of Manager's income
taxes) and all Impositions;

       12. The contributions to the Repairs and Equipment Reserve which are
required pursuant to Section 7.02;

       13. The contributions required to be made, as they may change from time
to time, to the Marketing Fund in order for the Inns to remain members of the
System (such contributions are presently two and one-half percent (2.5%) of
Suite Revenues); and

       14. Such other costs and expenses as are specifically provided for
elsewhere in this Agreement or are otherwise reasonably necessary for the proper
and efficient operation of the Inns.

                                       15

<PAGE>

         "Operating Profit Objective" shall mean the amount of Twenty-four
Million Seven Hundred Seventy-six Thousand Dollars ($24,776,000) provided,
however, that upon the Termination of this Agreement with respect to a given Inn
or Inns (whether in connection with the Sale of the Inn or Inns, or pursuant to
other applicable provisions of this Agreement), the Operating Profit Objective
shall be reduced by the applicable percentage attributable to such Inn or Inns,
as set forth on Exhibit "B" hereto.

         "Operative Principal Amount" shall mean the principal amount
outstanding under the Loan Agreement as of the Maturity Date, which amount shall
be deemed to have been reduced if not actually reduced by the amount of all
Defeasance Deposits.

         "Original Management Agreement" shall mean that certain Management
Agreement between Owner and Manager with an execution date of November 23, 1988.

         "Owner" shall have the meaning ascribed to it in the Preamble.

         "Owner's Capital Return" shall mean the sum of: (a) an amount which,
when added to all previous or simultaneous retentions or receipts by Owner of
Operating Profit (less the aggregate amount of Qualifying Debt Service
(including that portion of Qualifying Debt Service paid by Owner pursuant to the
Original Management Agreement allocable to the 22 Inns based on the allocation
of the purchase price paid by Owner for the purchase of the 22 Inns and the
Bossier City Inn) and Administrative Expenses paid or repaid by Owner (or
reserved for) out of such Operating Profit), Net Sales Proceeds and Net
Refinancing Proceeds, equals a cumulative return on the weighted average
Adjusted Capital Contributions, from time to time, of twelve percent (12%) per
annum from the Effective Date through the date such Net Sales Proceeds or Net
Refinancing Proceeds are realized; plus (b) an amount which equals the Adjusted
Capital

                                       16

<PAGE>

Contributions as of the date on which such Net Sales Proceeds or Net Refinancing
Proceeds are realized by Owner.

         "Partnership Filing Period" shall mean such period of time (not to
exceed seventy-five (75) days) after the close of each Fiscal Year within which
the Lessee must receive final accounting statements from Manager with respect to
such Fiscal Year in order for Owner to have a reasonable period of time within
which to prepare and make all required filings with the Securities and Exchange
Commission and other applicable governmental agencies.

         "Prime Rate" shall mean the base rate of interest announced from time
to time by Deutsche Bank AG, New York, New York.

         "Prospectus" shall have the meaning ascribed to it in Section 19.11.

         "Qualifying Debt Service" shall mean:

         1.    As to any Fiscal Year (prorated for portions thereof) during the
term of this Agreement, the Actual Debt Service; plus

         2.    The interest and principal actually paid or accrued (provided
that the terms of each such loan are commercially reasonable) pursuant to
Additional Inn Investment Loans. In no event, however, shall "Qualifying Debt
Service" include, with respect to any indebtedness incurred to fund any
Additional Inn Investment: (i) any balloon payments; or (ii) that portion of any
such indebtedness which is incurred for the purpose of distributing the same to
the partners of Owner; provided, however, that upon the Termination of this
Agreement with respect to a given Inn or Inns (whether in connection with a Sale
of the Inn or Inns, or pursuant to other applicable provisions of this
Agreement), Qualifying Debt Service shall be reduced by interest and principal
on any (or any portion of any) Additional Inn Investment Loans attributable to
such Inn or Inns. The term "balloon payments," as used in this Agreement, shall
mean any

                                       17

<PAGE>

repayments or prepayments of principal in any given Fiscal Year (regardless of
whether the borrower is permitted or obligated to make same) to the extent that
such repayments or prepayments exceed five percent (5%) per year of the
outstanding principal amount of such indebtedness as of the date of full
disbursement thereof to the borrower thereunder; minus

         3.    The interest and principal actually paid or accrued (provided
that the terms of each such loan are commercially reasonable) pursuant to
Additional Inn Investment Loans that are included in the calculation of the
Actual Debt Service as an element of the Refinanced Principal Amount or
otherwise.

         "Refinanced Principal Amount" shall mean that portion of the principal
amount of indebtedness incurred by Owner to refinance the debt outstanding under
the Loan Agreement and all Additional Inn Investment Loans attributable to the
Inns then subject to this Agreement being refinanced concurrently therewith as
shall be equal to the sum of: (a) the Operative Principal Amount, plus (b) the
outstanding principal balances of Additional Inn Investment Loans being
refinanced, plus (c) commercially reasonable transaction costs and loan
origination fees relating to such refinancing, but only to the extent such costs
and fees do not exceed, in the aggregate, two percent (2%) of the aggregate of
the Operative Principal Amount plus the outstanding principal balances of
Additional Inn Investment Loans begin refinanced.

         "Renewal Term" or "Renewal Terms" shall have the meaning ascribed to it
in Section 4.01.

         "Repairs and Equipment Reserve" shall have the meaning ascribed to it
in Section 7.02.A.

         "Repairs and Equipment Estimate" shall have the meaning ascribed to it
in Section 7.02.D.

                                       18

<PAGE>

         "Replacement FF&E" shall mean the items enumerated in paragraphs (1)
and (2) of Section 7.02.A.

         "Reserve" shall have the meaning ascribed to it in Section 7.02.A.

         "Residence Inn System Fee" shall mean an amount paid to Manager for the
following services hereunder: divisional financial services; product planning
and development; employee planning; protection of the "Marriott Residence Inn"
"Residence Inn by Marriott," and "Residence Inn" trade names, trademarks, logos
and service marks; and the services of Manager's technical and operational
experts making periodic inspection and consultation visits to the Inns (but not
the services of the personnel of the Architecture and Construction Division of
Marriott providing architectural, technical or procurement services for any Inn,
which shall be treated as a Deduction described in subsection 6 of the
definition of "Operating Profit"). Such amount shall be equal, during any given
Fiscal Year (or portion thereof), to four percent (4%) of Suite Revenues.

         "Revenue Data Publication" shall mean Smith's STAR Report, a monthly
publication distributed by Smith Travel Research, Inc. of Gallatin, Tennessee,
or an alternative source, reasonably satisfactory to both parties, of data
regarding the Revenue Per Available Room of hotels in the general trade area of
the Inn. If such Smith's STAR Report is discontinued in the future, or ceases
(in the reasonable opinion of either Lessee or Manager) to be a satisfactory
source of data regarding the Revenue Per Available Room of various hotels in the
general trade area of the Inn, Manager shall select an alternative source for
such data, subject to Lessee's approval. If the parties fail to agree on such
alternative source within a reasonable period of time, the matter shall be
resolved by the Expert in accordance with the provisions of Section 19.10.

                                       19

<PAGE>

         "Revenue Index" shall mean that fraction that is equal to (a) the
Revenue Per Available Room for the Inn divided by (b) the Average Revenue Per
Available Room for the hotels in the Competitive Set for such Inn, as set forth
in the Revenue Data Publication. Appropriate adjustments to the Revenue Index
shall be made in the event of a major renovation of the Inn.

         "Revenue Index Threshold" shall mean a fraction equal to one hundred
(100) divided by one hundred (100), or 1.00 as a decimal. However, if the entry
of one or more hotels into the Competitive Set for an Inn (or the removal of one
or more hotels from the Competitive Set for an Inn) causes significant
variations in the Revenue Index that do not reflect the Inn's true position in
the relevant market, appropriate adjustments shall be made to the Revenue Index
Threshold by mutual consent of Lessee and Manager.

         "Revenue Per Available Room" shall mean (i) the term "revenue per
available room" as defined by the Revenue Data Publication, or (ii) if the
Revenue Data Publication is no longer being used (as more particularly set forth
in the definition of "Revenue Data Publication"), the aggregate gross room
revenues of the Inn in question for a given period of time divided by the total
room nights for such period. If clause (ii) of the preceding sentence is being
used, a "room" shall be an available inn guest room that is keyed as a single
unit.

         "Sale of an Inn" or "Sale of the Inns" shall mean any sale, assignment,
transfer or other disposition, for value or otherwise, voluntary or involuntary,
of Owner's and/or Lessee's title to one or more of the Inns and/or the Sites
(either fee or leasehold title, as the case may be). For purposes of this
Agreement, a "Sale of the Inn" shall also include (i) a lease (or sublease) of
the Inns or Sites and (ii) any sale, transfer, or other disposition, for value
or otherwise, in a single transaction or a series of related transactions, of
the controlling interest in Owner or Lessee. The phrase "controlling interest"
shall mean the right (through equity ownership, by contract, or by

                                       20

<PAGE>

any other arrangement) to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the shares of Owner or
Lessee, as the case may be, or, if Owner or Lessee is a partnership, of the
general partner (or managing partner, if more than one) of Owner or Lessee, as
the case may be. Notwithstanding the foregoing, the term "Sale of the Inns"
shall not be deemed or construed to include (i) any transfer, conversion or
exchange of publicly-held or publicly-traded securities of Owner's ultimate
parent entity, by operation of law or otherwise, or any issuance of additional
securities of Owner's ultimate parent entity; (ii) any sale, assignment,
transfer or other disposition of the Inn or the Site by Owner or Lessee to an
Affiliate of Owner, provided that, a subsequent sale, assignment, transfer,
lease, sublease or other disposition of the Inns or Sites by or a change in
"controlling interest" of such Affiliate would constitute a "Sale of the Inns";
(iii) a collateral assignment intended to provide security for a loan; or (iv)
the lease of the Inns by Owner to Lessee under the Hotel Lease; provided that,
with respect to clauses (i) and (ii) of this sentence, if Manager believes (and
so states in writing to Lessee) that any one or more of the following is true:
(a) that the proposed purchaser is engaged in the business of operating (as
distinguished from owning or financing) hotels or other lodging facilities in
competition with Manager, Marriott or any Marriott Affiliate; (b) that the
proposed purchaser is known as being of bad moral character or is in control of
or controlled by persons known as being of bad moral character, or (c) that the
financial condition and prospects of the proposed purchaser are not adequate to
discharge the obligations of Lessee under this Agreement, Manager shall have the
right to terminate this Agreement, by written notice to Lessee, with respect to
such Inn or Inns.

                                       21

<PAGE>

         "Second Priority Return" shall mean an annual non-cumulative amount
retained by Lessee out of certain portions of Operating Profit, as set forth in
Section 5.02 hereof, equal to five percent (5%) of the balance from time to
time, of:

         (i)   the Capital Contributions; plus

         (ii)  any Additional Inn Investments made prior to the Amendment Date,
         other than any Additional Inn Investments funded by Additional Inn
         Investment Loans; less

         (iii) cumulative distributions to the partners of Owner of Net Sales
         Proceeds and Net Refinancing Proceeds;

provided, however, that upon the Termination of this Agreement with respect to a
given Inn or Inns (whether in connection with the Sale of the Inn or Inns, or
pursuant to other applicable provisions of this Agreement), the Second Priority
Return, as used thereafter, shall be reduced by the applicable percentage for
such Inn or Inns, as set forth in Exhibit "D" hereto.

         "Site" or "Sites" refer individually or collectively to the parcels of
land whose addresses are set forth on Exhibit "A" attached hereto and
incorporated herein.

         "Suite Revenues" shall mean that portion of the Gross Revenues of any
Inn, or of all of the Inns, which is attributable to the rental of guest suites.

         "System" shall mean all inns which are operated under the "Residence
Inn by Marriott," "Residence Inn" or "Marriott Residence Inn" trade names.

         "Telephone Lease" means any lease of the telephones and/or other
telecommunication systems and equipment located in one or more Inns.

         "Term Loan" shall mean the term loan in the principal amount of One
Hundred Forty Million Dollars ($140,000,000) provided to Owner by Lender to
refinance the Inns.

                                       22

<PAGE>

         "Termination" shall mean the expiration or sooner cessation of the
Agreement with respect to a given Inn or Inns.

         "Total Original Cost" shall mean the amount of One Hundred Eighty-six
Million Nine Hundred Thirty-two Thousand Dollars ($186,932,000); provided,
however, that upon the Termination of this Agreement with respect to a given Inn
or Inns (whether in connection with a Sale of the Inn or Inns or pursuant to
other applicable provisions of this agreement), the Total Original Cost, as used
thereafter, shall be reduced by the applicable percentage attributable to such
Inn or Inns, as set forth on Exhibit "B".

         "Trade Names" shall have the meaning ascribed in Section 9.01.

         "TV System Lease" means a lease or other agreement under which
equipment (excluding television sets) for the transmission into Inn suites or
televised programming is leased or otherwise provided, regardless of whether
such lease or other agreement contains a right or option to purchase such
equipment.

         "Uniform System of Accounts" shall mean the Uniform System of Accounts
for Hotels, Ninth Revised Edition, 1996, as published by the Hotel Association
of New York City, Inc.

         "Working Capital" shall mean funds which are reasonably necessary for
the day-to-day operation of the business of the Inns, including, without
limitation, amounts sufficient for the maintenance of change and petty cash
funds, operating bank accounts, receivables, payrolls, prepaid expenses and
funds required to maintain Inventories, less accounts payable and accrued
current liabilities.

                                END OF ARTICLE I

                                       23

<PAGE>

                                   ARTICLE II

                             APPOINTMENT OF MANAGER

         2.01  Appointment

         Lessee hereby appoints and employs Manager as Lessee's exclusive agent
to supervise, direct and control the management and operation of the Inns for
the term provided in Article IV. Manager accepts said appointment and agrees to
manage the Inns during their respective Inn Terms in accordance with the terms
and conditions hereinafter set forth. The performance of all activities by
Manager hereunder shall be for the account of Lessee. Manager may not delegate
its duties hereunder except to Marriott or a Marriott Affiliate which satisfies
the requirements of Section 17.01.A.1 hereof.

         2.02  Delegation of Authority

         The operations of the Inns shall be under the exclusive supervision and
control of Manager which, except as otherwise specifically provided in the
Agreement, shall be responsible for the proper and efficient operation of the
Inns. Manager shall have discretion and control, free from interference,
interruption or disturbance, in all matters relating to management and operation
of each Inn, including, without limitation, charges for rooms and commercial
space, credit policies, food and beverage services, employment policies,
granting of concessions or leasing of shops and agencies within each Inn,
receipt, holding and disbursement of funds, maintenance of bank accounts,
procurement of Inventories, supplies and services, promotion and publicity and,
generally, all activities necessary for operation of the Inns. Manager shall be
entitled to contract with companies that are Marriott Affiliates (or companies
in which Manager has an ownership interest if such interest is not sufficient to
make such a company a Marriott Affiliate) to provide goods and/or services to
the Inns; provided that the prices and/or terms for

                                       24

<PAGE>

such goods and/or services are competitive. Additionally, Manager may contract
for the purchase of goods and services for the Inns with third parties that have
other contractual relationships with Manager and Marriott Affiliates, so long as
the prices and terms are competitive. In determining, pursuant to the foregoing,
whether such prices and/or terms are competitive, they will be compared to the
prices and/or terms which would be available from reputable and qualified
parties for goods and/or services of similar quality, and the goods and/or
services which are being purchased shall be grouped in reasonable categories,
rather than being compared item by item. The prices paid may include overhead
and the allowance of a reasonable return to Marriott Affiliates (or companies in
which Manager has an ownership interest if such interest is not sufficient to
make such a company a Marriott Affiliate). Lessee acknowledges and agrees that,
with respect to any purchases of goods or services pursuant to this Section 2.02
and subject to the foregoing qualification that prices and/or terms are
competitive, Marriott Affiliates may retain as part of the reasonable return
those allowances, credits, rebates, commissions and discounts received with
respect to any such purchases, provided that, such allowances, credits, rebates,
commissions and discounts that are in excess of the reasonable return shall be
paid or credited to Lessee.

         2.03  Licenses and Permits

         A.    Lessee agrees upon request by Manager to sign promptly and
without charge applications for licenses, permits or other instruments necessary
for operation of each Inn, which applications shall be prepared by Manager as
necessary from time to time.

         B.    Manager shall have the option to terminate the Agreement with
respect to a given Inn, at any time, upon one hundred twenty (120) days' written
notice to Lessee, in the event of a withdrawal or revocation, by any lawful
governing body having jurisdiction thereof, of any

                                       25

<PAGE>

license or permit that materially affects the operation of the Inn provided: (i)
such withdrawal or revocation is not the fault of Manager, but rather is due to
circumstances beyond Manager's reasonable control; (ii) all applicable appeals
to higher governmental authorities regarding such withdrawal or revocation have
been exhausted; and (iii) Manager has made every reasonable effort to obtain a
substitute license or permit that would allow for the continued operation of
such Inn as a first-class facility in accordance with Manager's standards for
Residence Inn by Marriott hotels.

         2.04  Non-Discrimination

         The parties recognize that Manager, Marriott and Marriott Affiliates
either own or manage other hotels and inns. Certain of these hotels and inns,
now or in the future, may be located within the general geographical area of one
or more of the Inns. Manager shall institute reasonable internal controls and
procedures to ensure that no favoritism shall be accorded to such other hotels
or inns on the basis of the ownership thereof and that, at all times during the
term of this Agreement, Manager will operate the various hotels or inns under
its management, including the Inns, in a non-discriminatory manner.

                                END OF ARTICLE II

                                       26

<PAGE>

                                   ARTICLE III

                              OWNERSHIP OF THE INNS

         3.01  Ownership of the Inns

         A.    Lessee hereby covenants that it will have, keep and maintain its
leasehold interest, and that it will cause Owner to keep and maintain its fee
title to the Site of each Inn and such Inn free and clear of any and all liens,
encumbrances or other charges, except as follows:

               1.   Easements or other encumbrances (other than those described
in subsections 2, 3 and 4 hereof) that do not materially adversely affect the
operation of any Inn by Manager, including, without limitation, any encumbrances
or other defects of title subject to which title was conveyed to Owner;

               2.   Mortgages, deeds of trust or similar security instruments
or like instruments ("Mortgages") which: (i) contain a provision reasonably
acceptable to Manager's counsel that this Agreement will not be subject to
forfeiture or Termination other than in accordance with the terms hereof,
notwithstanding a default under such Mortgage; and either (ii) secure either (x)
any indebtedness on which all or a portion of the payments constitute Qualifying
Debt Service, or (y) debt incurred for distribution to the partners of Owner; or
(iii) secure any amount due under the Loan Agreement;

               3.   Liens for taxes, assessments, levies or other public charges
not yet due or that are being contested in good faith; and

               4.   Liens, encumbrances, or other charges resulting from
Manager's acts.

         B.    Provided Manager is not in monetary default under this Agreement,
Lessee shall pay and discharge, or cause Owner to pay and discharge (whichever
is applicable), on or before the due date, any and all installments of principal
and interest due and payable upon any

                                       27

<PAGE>

Mortgage described in this Section (including, without limitation, any amounts
owed under the Loan Agreement) and shall indemnify Manager from and against all
claims, litigation and damages other than damages representing Manager's lost
profits) arising from the failure to make such payments as and when required.

                               END OF ARTICLE III

                                       28

<PAGE>

                                   ARTICLE IV

                                      TERM

         4.01  Term

         A.    The term of this Agreement shall be from the Effective Date to
the expiration of the Inn Term (as defined in subsection B below) for the last
Inn to which this Agreement applies.

         B.    With respect to each Inn, the "Inn Term" shall consist of an
"Initial Term" and the "Renewal Term(s)". The "Initial Term" shall begin on the
Effective Date, or such later date as Owner assumed title to such Inn, and shall
continue until December 28, 2012. Each Inn Term may thereafter be renewed by
Manager, at its sole option, (on the same terms and conditions contained herein,
except as set forth in the final sentence of this Section 4.01.B), for one (1)
period of five (5) Fiscal Years followed by each of four (4) successive periods
of ten (10) Fiscal Years each ("Renewal Terms"), provided that (i) Manager
exercises its renewal option with respect to at least eighty percent (80%) of
the Inns that have not been previously terminated hereunder that either (a) meet
the then-current brand standards employed for the System or (b) are subject to
property improvement programs reasonably required by Manager, and (ii) an "event
of default" by Manager has not occurred under Section 15.01 hereof (or, if such
an "event of default" has occurred, that it is being cured in accordance with
the provisions of Section 15.01 or 15.02 hereof). If Manager elects to exercise
such option to renew as to any or all of the Inns, it shall give Owner notice to
that effect at least eighteen (18) months prior to the expiration of the then
current Inn Term with respect to such Inn or Inns. If Manager does not elect to
renew the term of this Agreement, as to one or more of the Inns, on the
expiration of the then current Inn Term with respect to such Inn or Inns,
Manager shall continue to manage such Inn or Inns during the final eighteen (18)
months of their respective Inn Terms, unless, during such eighteen (18)

                                       29

<PAGE>

month period, Owner effects a sale of such Inn or Inns or secures a new manager
therefore, in which case the respective Inn Terms of such affected Inns shall be
prematurely terminated, as of the date of such sale or the effective date of
such new management contract so long as Owner has given Manager at least
seventy-five (75) days prior written notice of such sale date. In the event
Manager elects to renew as to some, but not all, of the Inns, the adjustments
described in subsections B through E of Section 18.02 shall be made to this
Agreement. Manager agrees that upon completion of the improvements set forth in
the capital expenditure plan that is current as of the Amendment Date all of the
Inns subject thereto will be deemed to comply with the brand standards generally
employed for the System that are current as of the end of the Initial Term.

         4.02  Performance Termination

         A.    1.   Commencing with the Effective Date and continuing until the
end of Fiscal Year 2003, subject to the provisions of Section 4.02.B and C
below, Lessee shall have the option to terminate this Agreement with respect to
all of the Inns if, with respect to any three (3) consecutive Fiscal Years
during the aforementioned period, the average of the Operating Profit (computed,
for purposes of this Section 4.02.A only, without deducting any Impositions) for
all of the Inns does not equal or exceed eight percent (8%) of the sum total of
(i) the Total Original Cost, and (ii) any Additional Inn Investments previously
made with respect to the Inns that were subject to this Agreement during the
relevant periods.

               2.   Commencing with Fiscal Year 2004 and continuing until the
end of the term of this Agreement, subject to the provisions of Section 4.02 B
and C below, Lessee shall have the option to terminate this Agreement with
respect to all of the Inns if, with respect to any two (2) consecutive Fiscal
Years during the aforementioned period:

                                       30

<PAGE>

               (i)  The average Operating Profit computed for purposes of this
         Section 4.02A only, (without deducting any Impositions) for all of the
         Inns does not equal or exceed eight percent (8%) of the sum total of
         (i) the Total Original Cost, and (ii) any Additional Inn Investments
         previously made with respect to any Inn; and

               (ii) The Average Revenue Index for all of the Inns during each
         such Fiscal Year is less than the Average Revenue Index Threshold for
         such Fiscal Year.

         B.    Such option to terminate shall be exercised by serving written
notice thereof on Manager no later than sixty (60) days after the receipt by
Lessee of the annual accounting under Section 8.01 hereof for such second or
third consecutive Fiscal Year, as the case may be. Such notice shall state the
basis on which Lessee asserts the right of termination and shall show all
mathematical calculations constituting the basis therefore. If Manager does not
elect to avoid termination pursuant to Section 4.02.C below, this Agreement
shall terminate as of the end of the second full Accounting Period following the
date on which Manager receives Lessee's written notice of its intent to
terminate this Agreement. Lessee's failure to exercise its right to terminate
this Agreement pursuant to Section 4.02.A during any given Fiscal Year shall not
be deemed an estoppel or waiver of Lessee's right to terminate this Agreement as
to subsequent Fiscal Years to which this Section may apply.

         C.    Upon receipt of Lessee's written notice of termination under
Section 4.02.B, Manager shall have the option, to be exercised within sixty (60)
days after receipt of said notice, to avoid such termination by advancing to
Lessee the amount of any deficiency described in Section 4.02.A. If Manager
exercises such option, then the foregoing Lessee's election to terminate this
Agreement under Section 4.02.A shall be canceled and of no force or effect and
this Agreement shall not terminate. Such cancellation, however, shall not affect
the right of

                                       31

<PAGE>

Lessee, as to each subsequent Fiscal Year to which Section 4.02.A applies, to
again elect to terminate this Agreement pursuant to the provisions of Section
4.02.A (which subsequent election shall again be subject to Manager's rights
under this Section 4.02.C). If Manager does not exercise its option to make the
advance permitted by this Section 4.02.C, then this Agreement shall be
terminated as of the date set forth in Section 4.02.B. Amounts advanced by
Manager pursuant to this Section 4.02.C and in connection with a deficiency that
has occurred under 4.02.A.1 shall be recovered by Manager, without interest, in
subsequent Fiscal Years, in the same manner and with the same priority as
Contingent Management Fees (IMF). Amounts advanced by Manager pursuant to this
Section 4.02 C and in connection with a deficiency that has occurred under
Section 4.02 A.2 shall not be recovered by Manager.

         4.03  Actions to be Taken on Termination

         Upon a Termination of this Agreement with respect to any one or more of
the Inns, the following shall be applicable:

         A.    Manager shall prepare a final accounting statement with respect
to such Inn or Inns, as more particularly described in Section 8.01 hereof,
dated as of the date of Termination. Within thirty (30) days of the receipt by
Lessee of such final accounting statement, the parties will make whatever cash
adjustments are necessary pursuant to such final statement. The cost of
preparing such final accounting statement shall be a Deduction, unless the
Termination occurs as a result of a default by either party, in which case the
defaulting party shall pay such cost.

         B.    Manager shall release and transfer to Lessee any of Lessee's
funds which are held or controlled by Manager with respect to such Inn or Inns.

         C.    Manager shall make available to Lessee such books and records
respecting such Inn or Inns (including those from prior years, subject to
Manager's reasonable records retention

                                       32

<PAGE>

policies) as will be needed by Lessee to prepare the accounting statements, in
accordance with the Uniform System of Accounts, for such Inn or Inns for the
year in which the Termination occurs and for any subsequent year.

         D.    Manager shall (to the extent permitted by law) assign to Lessee
or to the new manager all operating licenses and permits for such Inn or Inns
which have been issued in Manager's name (including liquor and restaurant
licenses, if any); provided that if Manager has expended any of its own funds in
the acquisition of any of such licenses or permits, Lessee shall reimburse
Manager therefore if it has not done so already.

         E.    Appropriate adjustments shall be made regarding the application
of this Agreement to any remaining Inns, such as, but not limited to, those
adjustments described in Section 18.02 and 7.02.F, and the re-computation of
Actual Debt Service, Operating Profit Objective, Total Original Cost and other
amounts as described in the definitions of those terms in Article I hereof.

         F.    Various other actions shall be taken, as described in this
Agreement, including, but not limited to, the actions described in Sections
5.05, 6.01, 13.01.C, 9.02 and 11.04.

         G.    Manager shall peacefully vacate and surrender such Inn or Inns to
Lessee.

                               END OF ARTICLE IV

                                       33

<PAGE>

                                    ARTICLE V

                             COMPENSATION OF MANAGER

         5.01  Management Fee

         In consideration of services to be performed during the term of this
Agreement, Manager shall, subject to the provisions of Section 5.02 hereof, be
paid the sum of the following as its management fee:

               (a)      the Base Management Fee; plus

               (b)      the Residence Inn System Fee; plus

               (c)      the Incentive Management Fee; plus

               (d)      the Contingent Management Fee (IMF) (if applicable).

The Incentive Management Fee and Contingent Management Fee (IMF) will be payable
based on Operating Profit as provided in Sections 5.02 and 5.03 hereof. The Base
Management Fee and the Residence Inn System Fee shall be payable based on Gross
Revenues and Suite Revenues, as applicable, and shall not be subject to
limitations based on the amount of Operating Profit.

         5.02  Payment of Management Fees based on Operating Profit

         In each Fiscal Year (and with respect to each Accounting Period within
each such Fiscal Year, as more particularly described in Section 5.04 hereof),
Operating Profit shall be retained or paid, as applicable and to the extent
available, in accordance with the following order of priority:

         A.    First, an amount equal to Qualifying Debt Service (which shall be
prorated among the Accounting Periods within any given Fiscal Year) shall be
retained by Lessee;

         B.    Second, the amount needed to pay, or to create reserves deemed
necessary in the reasonable discretion of Lessee for, Administrative Expenses
shall be retained by Lessee.

                                       34

<PAGE>

         C.    Third, an amount equal to the First Priority Return (which shall
be prorated among the Accounting Periods within any given Fiscal Year) shall be
retained by Lessee less the amount of any outstanding Manager Loans, which
amount shall be paid to Manager for repayment of such loans out of the amount
otherwise being retained by Lessee pursuant to this subsection C;

         D.    Intentionally deleted.

         E.    Fourth, the remaining balance of Operating Profit shall be
divided into two (2) equal halves, one-half to be retained by Lessee and the
other half to be paid to Manager, until the one-half retained by Lessee and the
one-half paid to Manager are each (separately) equal to the Second Priority
Return (which shall be prorated among the Accounting Periods within any given
Fiscal Year) at which point payments under this subsection E shall cease and any
remaining balance of Operating Profit shall be paid in accordance with
subsections F and G below. The one-half paid to Manager under this subsection E
shall be applied to the payment (in sequence) of the Incentive Management Fee
for the current Fiscal Year and any Contingent Management Fee (IMF).
Notwithstanding any other provisions hereof, the amount paid to Manager under
this subsection E shall in no event exceed the Incentive Management Fee for the
current Fiscal Year and any Contingent Management Fees (IMF).

         F.    Fifth, the remaining balance of Operating Profit (after retention
by the Lessee of an amount equal to the Second Priority Return in accordance
with Subsection E), shall be divided into two portions: (i) seventy-five percent
(75%) of such balance shall be paid to Manager subject to the last sentence of
this subsection F, and (ii) twenty-five percent (25%) shall be retained by
Lessee. The 75% portion paid to Manager under this subsection F shall be applied
to the payment (in sequence) of the balance of the Incentive Management Fee for
the current

                                       35

<PAGE>

Fiscal Year and the balance of any Contingent Management Fees (IMF).
Notwithstanding any other provisions hereof, the amount paid to Manager under
this subsection F, when added to the amount paid to Manager under subsection E
above, shall in no event exceed the balance of the Incentive Management Fees for
the current Fiscal Year and the balance of any Contingent Management Fees (IMF).

         G.    Sixth, any remaining balance of Operating Profit shall be
retained by Lessee.

         5.03  Application of Net Sales Proceeds and Net Refinancing Proceeds

         In the event that Owner, from time to time during the term of this
Agreement, realizes Net Sales Proceeds or Net Refinancing Proceeds and, at that
time, there exist any unpaid (i) Manager Loans, (ii) Incentive Management Fees,
or (iii) Contingent Management Fees (IMF), such Net Sales Proceeds or Net
Refinancing Proceeds, as applicable, shall be retained or paid out by Owner to
the maximum extent possible, in the following order of priority:

         A.    First, an amount equal to the Owner's Capital Return as of the
date on which such Net Sales Proceeds or Net Refinancing Proceeds are realized
by Owner shall be retained by Owner less the amount of any outstanding Manager
Loans, which amount shall be paid by Owner to Manager out of the amount
otherwise being retained by Owner pursuant to this subsection A;

         B.    Second, an amount equal to any unpaid Incentive Management Fees
and Contingent Management Fees (IMF) shall be paid in such order of priority to
Manager; and

         C.   Third, all remaining Net Sales Proceeds and Net Refinancing
Proceeds shall be retained by Owner.

                                       36

<PAGE>

         5.04  Accounting and Interim Payment

         A.    Within twenty (20) days after the close of each Accounting
Period, Manager shall submit an interim accounting to Lessee showing Gross
Revenues, Suite Revenues, Deductions, Operating Profit, and applications thereof
with respect to the Inns, and an operating balance sheet for each Inn. Manager
shall transfer with each accounting any interim amounts due Lessee and shall
retain any interim amounts due Manager (as described in Section 5.01 hereof).
Each accounting will be prepared on a consolidated basis and on an individual
Inn basis.

         B.    Calculations and payments of the Incentive Management Fee, the
Base Management Fee, the Residence Inn System Fee, and applications of Operating
Profit made with respect to each Accounting Period within a Fiscal Year shall be
accounted for cumulatively. Within the Partnership Filing Period, Manager shall
submit an accounting to Lessee, as more fully described in Section 8.01, for the
immediately preceding Fiscal Year, which accounting shall be controlling over
the interim accountings. Any adjustments required by the Fiscal Year accounting
shall be made by cash payments within five (5) business days of the receipt by
Lessee of such final accounting. No adjustment shall be made for any Operating
Loss in a preceding or subsequent Fiscal Year.

         C.    If the Operating Profit for any Fiscal Year exceeds the Operating
Profit Objective, Manager shall be entitled to an Incentive Management Fee of
twenty-three and a half percent (23.5%) of Operating Profit for that entire
Fiscal Year, and appropriate year-end adjustments shall be made if the interim
cumulative accountings for that Fiscal Year were based on the Incentive
Management Fee being fifteen percent (15%) of Operating Profit. Beginning with
the first Accounting Period in the next succeeding Fiscal Year, and continuing
during all Accounting

                                       37

<PAGE>

Periods for the remainder of such next succeeding Fiscal Year, Manager shall be
entitled to perform the above-described interim cumulative accountings on the
assumption that the Incentive Management Fee for that entire Fiscal Year will be
twenty-three and a half percent (23.5%) of Operating Profit; subject, however,
to appropriate year-end adjustments if the final accounting pursuant to Section
8.01 hereof for any such Fiscal Year shows that in fact the Operating Profit
Objective was not exceeded during such Fiscal Year, and that therefore the
Incentive Management Fee for that Fiscal Year is fifteen percent (15%) of
Operating Profit. In all subsequent Fiscal Years, Manager shall be entitled to
perform the above-described interim cumulative accountings on the assumption
that the Incentive Management Fee will be twenty-three and a half percent
(23.5%) of Operating Profit if, and only if, the Incentive Management Fee for
the immediately preceding Fiscal Year was in fact twenty-three and a half
percent (23.5%) of Operating Profit; otherwise, such interim cumulative
accountings will be performed on the assumption that the Incentive Management
Fee will be fifteen percent (15%) of Operating Profit; regardless of which
assumption is used, appropriate year-end adjustments will be made if such
assumption proves to be incorrect. Notwithstanding anything in this subsection C
to the contrary, cumulative Incentive Management Fees shall at no time exceed
twenty percent (20%) of cumulative Operating Profit during the period in which
the Inns are owned by the Owner, provided, however, that for purposes of
calculating such cumulative Incentive Management Fees, there shall not be
counted that portion, if any, of the Incentive Management Fee for Fiscal Years
1988, 1989, 1990 and 1991 that would have been paid for such year but was not
paid due to the limitations of Section 5.02 pursuant to the provisions of the
Original Management Agreement.

         5.05  Manager Loans

                                       38

<PAGE>

         Manager shall have the right, but not the obligation, at any time and
from time to time, to advance funds reasonably needed for additional Working
Capital and to fund any shortfalls in the Debt Service Reserve Account in an
amount which when added to the outstanding balance of previous such advances
shall not exceed the average amount of the Deductions for each Accounting Period
during the preceding full thirteen (13) Accounting Periods. Any such advances
shall be deemed a loan by Manager to Lessee in such amount (each, a "Manager
Loan"), shall bear interest at one percent (1%) above the Prime Rate, and shall
be repayable by Lessee or Owner out of, including, without limitation, Operating
Profit in the priority set forth in Section 5.02, and Net Sales Proceeds and Net
Refinancing Proceeds in the priority set forth in Section 5.03, and as required
by Section 18.02.G. Lessee shall evidence any such loan by executing a
promissory note payable to Manager in the principal amount of each such loan and
bearing interest as aforesaid. Each such note shall be payable upon the earlier
of (i) ten (10) years from the date of such advance, or (ii) the sale of
substantially all of the Inns; and, during the term of this Agreement, shall be
payable out of Operating Profit, Net Sales Proceeds and Net Refinancing
Proceeds, and as required by Section 18.02.G.

                                END OF ARTICLE V

                                       39

<PAGE>

                                   ARTICLE VI

                    WORKING CAPITAL AND FIXED ASSET SUPPLIES

         6.01  Working Capital

         The parties recognize that Owner has, prior to the Amendment Date,
provided to Manager funds for Working Capital. The parties further recognize
that, as of the Amendment Date, the level of Working Capital funds is reasonably
believed to be reasonably sufficient for the operations of each Inn, subject at
all times to seasonal differences and changes in circumstances after the
Amendment Date. Lessee shall from time to time hereafter advance, within five
(5) days after receipt of Manager's written request, any additional funds
necessary to maintain Working Capital at levels reasonably determined by Manager
to be necessary to satisfy the needs of each Inn as its operation may from time
to time require. In the event Lessee fails to advance additional Working Capital
within said five (5) day period, Manager may, in addition to any other rights or
remedies available to it at law or in equity: (i) retain the required amounts
from any portion of Operating Profit otherwise to be retained by Lessee, (ii)
make a Manager Loan to Lessee in accordance with Section 5.05, and (iii)
terminate this Agreement upon not less than thirty (30) days written notice to
Lessee. Funds so advanced for Working Capital shall be utilized by Manager on
behalf of Lessee for the purposes of this Agreement pursuant to cash-management
policies established for the System. Upon Termination with respect to any Inn or
Inns, Manager shall return to Lessee any unused Working Capital, except for
Inventories purchased by Manager pursuant to Section 9.02 and except for the
outstanding balance of all Working Capital advances by Manager made as Manager
Loans.

         6.02  Fixed Asset Supplies

                                       40

<PAGE>

     The parties agree that prior to the Amendment Date, Owner had supplied
Fixed Asset Supplies or funds required therefore for all of the Inns. The
parties further recognize that, as of the Amendment Date, the level of funds for
Fixed Asset Supplies is reasonably believed to be reasonably sufficient for the
operations of each Inn, subject at all times to seasonal differences and changes
in circumstances after the Amendment Date. Lessee shall from time to time
hereafter promptly advance, upon request of Manager, any additional funds
necessary to maintain Fixed Asset Supplies at levels determined by Manager to be
necessary to satisfy the needs of each Inn as its operation may from time to
time require. Fixed Asset Supplies shall remain the property of Lessee
throughout the term of the Agreement except for Fixed Asset Supplies purchased
by Manager pursuant to Section 9.02.

                                END OF ARTICLE VI

                                       41

<PAGE>

                                   ARTICLE VII

                      REPAIRS, MAINTENANCE AND REPLACEMENTS

     7.01   Routine Repairs and Maintenance

     Manager shall maintain each Inn in good repair and condition and in
conformity with applicable laws and regulations and shall make or cause to be
made such routine maintenance, repairs and minor alterations, the cost of which
can be expensed under generally accepted accounting principles, as it, from time
to time, deems necessary for such purposes. The cost of such maintenance,
repairs and alterations shall be paid from Gross Revenues and shall be treated
as a Deduction in determining Operating Profit.

     7.02   Repairs and Equipment Reserve

     A.     Manager shall establish, on a consolidated basis (or on such other
basis as may be reasonably required by lenders providing financing to Lessee or
Owner with respect to the Inns), an escrow reserve account ("Repairs and
Equipment Reserve" or the "Reserve"), in a bank or similar institution
reasonably acceptable to both Manager and Lessee, to cover the cost of:

            1.  Replacements and renewals related solely to the FF&E of the
Inns; and

            2.  Certain routine repairs and maintenance to each Inn's Building
which are normally capitalized under generally accepted accounting principles,
such as exterior and interior repainting; resurfacing building walls, floors,
roofs and parking areas; buying or leasing replacement vehicles; and replacing
folding walls and the like, but which are not major repairs, alterations,
improvements, renewals or replacements to such Building's structure or to its
mechanical, electrical, heating, ventilating, air conditioning, plumbing or
vertical transportation systems, the cost of which are to be paid by Lessee
under Section 7.03, rather than from the Reserve.

                                       42

<PAGE>

          B.  Each Fiscal Year, subject to the provisions of subsection E below,
Manager shall transfer into the Reserve an amount equal to five percent (5%) of
Gross Revenues. Transfers into the Reserve shall be made at the time of each
interim accounting described in Section 5.04.A hereof. Commencing with Fiscal
Year 2001, Manager shall have the right, but not the obligation, to increase the
amount it transfers into the Reserve to any amount greater than five percent
(5%) but not exceeding six percent (6%) of Gross Revenues for such Fiscal Year
and successive Fiscal Year thereafter if, based upon a review of Replacement
FF&E requirements for the Inns, such increase is necessary in Manager's
reasonable judgment to fund future Replacement FF&E that would be necessary to
maintain the Inns in accordance with Manager's standards for Residence Inns. Any
amounts held in the Reserve may be applied, as between the Inns, without regard
to the source of such amounts, provided that such application satisfies the
requirements of this Article VII. All amounts transferred to the Reserve shall
be deducted from Gross Revenues in determining Operating Profit and shall be
deposited in the special Reserve account described in Section 7.02.A hereof.

          C.  Manager shall from time to time make such (1) replacements and
renewals to the FF&E of the Inns, and (2) repairs to each Inn Building of the
nature described in Section 7.02.A.2, as it deems necessary, up to the balance
in the Repairs and Equipment Reserve. No expenditures will be made in excess of
said balance without the approval of Lessee. Withdrawals from the Reserve shall
be made only by representatives of Manager whose signatures have been
authorized. Additionally, with respect to renovation projects in excess of
$500,000 at an Inn, Lessee shall have the right to designate a contractor that
Manager must allow to bid on such project and whose bid Manager must consider in
good faith in selecting the contractor. At the end of each Fiscal Year, any
amounts remaining in the Repairs and Equipment

                                       43

<PAGE>

Reserve shall be carried forward to the next Fiscal Year. Proceeds from the sale
of FF&E no longer necessary to the operation of each Inn shall be added to the
Reserve. The Reserve will be kept in an interest-bearing account, and any
interest which accrues thereon shall be retained in the Reserve. Neither (i)
proceeds from the disposition of FF&E, nor (ii) interest which accrues on
amounts held in the Reserve, shall (a) result in any reduction in the required
contributions to the Reserve set forth in subsection B above, nor (b) be
included in Gross Revenues. Manager, in its reasonable discretion, and subject
to the exceptions stated below, shall decide whether to purchase or lease any
Replacement FF&E or motor vehicles used in transporting Inn guests. If Manager
enters into any lease of Replacement FF&E or motor vehicles used in transporting
Inn guests, it shall do so on Lessee's behalf and as Lessee's agent; or, upon
Manager's recommendation and request, Lessee shall directly enter into such
leases. Notwithstanding the foregoing, Manager shall not and shall not require
Lessee to enter into any lease other than (i) Telephone Leases, (ii) Computer
Leases, (iii) TV System Leases, (iv) FF&E Leases, and (v) leases of vehicles
used in transporting Inn guests. With respect to FF&E Leases only, Manager shall
be required to obtain Lessee's prior written approval before entering into or
requesting that Lessee enter into any FF&E Lease, if (a) the fair market value
of the FF&E with respect to all FF&E Leases relating to each Inn (including
those being entered into) would exceed at any time Two Hundred Thousand Dollars
($200,000) (as increased each Fiscal Year after Fiscal Year 1996 by the CPI
Percentage) in respect of such Inn, (b) the FF&E to be covered by such FF&E
Lease is FF&E that is not customarily leased in the hotel industry in the United
States, or (c) such FF&E Lease is on payment terms (including the amounts and
schedule of payments) that would be materially more favorable to the lessor
thereof than payment terms customary in the hotel industry in the United States
for similar leases. With respect to TV System Leases only,

                                       44

<PAGE>

Manager shall be required to obtain Lessee's prior written approval before
entering into or requesting the Lessee enter into any TV System Lease, if (a)
the equipment to be covered by such TV System Lease is not customarily leased in
the hotel industry in the United States or (b) such TV System Lease is on
payment terms (including the amounts and schedule of payments) that would be
materially more favorable to the lessor thereof than payment terms customary in
the hotel industry in the United States for similar leases. In cases described
in the preceding two sentences, Lessee's approval shall not be unreasonably
withheld; provided, however, that the failure of any Lender to approve such
leasing proposal shall justify Lessee in withholding its approval.

     D.  Manager shall prepare an estimate ("Repairs and Equipment Estimate") of
the expenditures necessary for (1) replacements and renewals to the FF&E of the
Inns, and (2) repairs to each Inn building of the nature described in Section
7.02.A.2, during the ensuing Fiscal Year and shall submit such Repairs and
Equipment Estimate to Lessee at the same time it submits the Annual Operating
Projection described in Section 8.03. Lessee shall have the right to approve the
Repairs and Equipment Estimate with respect to individual expenditures of
$10,000 or more. With respect to individual expenditures of less than $10,000,
Lessee shall have the right to approve the aggregate amount of all such
expenditures on an Inn by Inn basis. Disputes regarding the Repairs and
Equipment Estimate will be resolved by the Expert in accordance with the
provisions of Section 19.10. The Repairs and Equipment Estimate shall be
prepared on a consolidating basis showing proposed expenditures as to each Inn.
It shall also indicate the time schedule for making such replacements and
renewals.

     E.  The percentage contributions for the Repairs and Equipment Reserve
described in Section 7.02.B are estimates based upon Manager's prior experience.
As each Inn ages, these

                                       45

<PAGE>

percentages either (i) may not be sufficient to keep the Reserve at the levels
necessary to make the replacements and renewals to the FF&E of such Inn, or to
make the repairs to such Inn building of the nature described in Section
7.02.A.2, which are required to maintain such inn as a first-class facility in
accordance with Manager's standards for Residence Inns, or (ii) may be in excess
of those amounts necessary to maintain such Inn as a first-class facility in
accordance with Manager's standards for Residence Inns. If the Manager
reasonably determines that the percentages contained in Section 7.02.B are in
excess of the amounts sufficient to maintain the Inns as first-class facilities
in accordance with Manager's standards for Residence Inns, the Manager may
reduce the percentages.

     If the Repairs and Equipment Estimate prepared in good faith by Manager
exceeds the available funds in the Repairs and Equipment Reserve, Lessee will:

          1.  Agree to increase the annual percentage in Section 7.02.B to
provide the additional funds required, or

          2.  Arrange to obtain outside financing for the additional funds
required, in which event the principal and interest payments on such financing
shall constitute Deductions in determining Operating Profit, or

          3.  Provide the additional funds required; in which case, such amounts
(plus interest at the Prime Rate plus one percent (1%) per annum) shall be
repaid to Lessee from Gross Revenues in equal installments over the period of
the next sixty-five (65) Accounting Periods, and such installment repayments
shall be Deductions.

     A failure or refusal by Lessee to agree in writing to either 1, 2 or 3
above within a sixty (60) day period after Manager's request therefore shall
entitle Manager, within sixty (60) days after such failure or refusal, to notify
Lessee that it will terminate this Agreement, as to those

                                       46

<PAGE>

Inns as to which agreement was not reached, as of a date six (6) months after
the date of Manager's notice. If Manager does not so notify Lessee, it shall
continue to manage the Inns in question, as provided under this Agreement,
without the aforesaid increase in the percentage contribution to the Reserve. If
Lessee agrees to obtain outside financing or provide additional funding as
described in Subsection 2 or 3 above but fails to deposit such funds into the
Reserve within sixty (60) days after such agreement, then, in addition to any
other remedies to which it is entitled, Manager shall be entitled to (i) notify
Lessee that it will terminate this Agreement as to those Inns for which funds
were not deposited as of a date three (3) months after the date of Manager's
notice, or (ii) continue to manage the Inn or Inns without making such
alterations, improvements, renewals, or replacements.

     F.    Upon Termination of this Agreement with respect to any one or more of
the Inns, whether pursuant to Section 7.02.E above or pursuant to other
provisions of this Agreement, that portion of the Reserve properly allocable to
said Inn or Inns shall be released from the Reserve and paid to Lessee unless
Manager will continue operating some or all of the Inns being terminated from
this Management Agreement, in which case Manager shall transfer all amounts held
in the Reserve properly allocable to the Inns Manager will continue operating to
one or more new accounts for the benefit of the new owner or owners of such
Inns.

     7.03  Building Alterations, Improvements, Renewals, and Replacements

     A.    Manager shall prepare an annual estimate of the expenses necessary
for major repairs, alterations, improvements, renewals and replacements (which
repairs, alterations, improvements, renewals and replacements are not among
those referred to in Section 7.02.A.2) to the structural, mechanical,
electrical, heating, ventilating, air conditioning, plumbing or vertical
transportation elements of each of the Buildings ("Building Estimate") and shall
submit

                                       47

<PAGE>

such Building Estimate to Lessee for its approval at the same time the Annual
Operating Projection is submitted. The Building Estimate shall be prepared on a
consolidating basis showing proposed expenditures as to each Inn. Additionally,
with respect to major repairs, alterations, improvements, renewals, or
replacements in excess of $500,000 at an Inn, Lessee shall have the right to
designate a contractor that Manager must allow to bid on such project and whose
bid Manager must consider in good faith in selecting the contractor. Manager
shall not make any expenditures for such purposes without the prior written
consent of Lessee. However, if major repairs, alterations, improvements,
renewals or replacements to any Inn are required by reason of any law,
ordinance, regulation or order of a competent government authority, or are
otherwise required for the continued safe and orderly operation of such Inn,
Manager shall immediately give Lessee notice thereof and shall be authorized
(but not obligated) to take appropriate remedial action without such approval if
Lessee does not act; provided that Manager shall in no event act without
obtaining Lessee's prior consent if the cost of such remedial action exceeds,
for any given Inn, four percent (4%) of such Inn's annual Gross Revenues for the
immediately preceding full Fiscal Year. Lessee shall bear the cost of all such
alterations, improvements, renewals or replacements by either:

         1.  Providing outside financing for the additional funds required, in
which event the principal and interest payments on such financing shall
constitute Qualifying Debt Service, or

         2.  Providing the additional funds required, which amounts shall be
treated as Additional Inn Investments hereunder.

     B.  If Lessee does not approve the Building Estimate as to one or more or
all of the Inns within sixty (60) days after it has been submitted, Manager may,
within sixty (60) days after

                                       48

<PAGE>

the end of said sixty-day period, notify Lessee that it will terminate this
Agreement as to those Inns as to which agreement was not reached as of a date
six (6) months after the date of Manager's notice. If Manager does not so notify
Lessee, it shall continue to manage the Inns in question, as provided under this
Agreement, without making any expenditures in the Building Estimate that were
not approved. If Lessee approves the Building Estimate as to one or more or all
of the Inns but fails to deliver funds required by such Building Estimate as to
one or more Inns within sixty (60) days after such approval, then Manager may,
at its option and in addition to any other remedies available to it, (i) notify
Lessee that it will terminate this Agreement as to those Inns for which funds
were not deposited as of a date three (3) months after the date of Manager's
notice, (ii) use funds from the Reserve to pay for the expenditures in the
approved Building Estimate, or (iii) continue to manage the Inn or Inns without
making such alterations, improvements, renewals or replacements.

     7.04  Liens

     Manager and Lessee shall use their best efforts to prevent any liens from
being filed against any Inn which arise from any maintenance, repairs,
alterations, improvements, renewals or replacements in or to such Inn. Manager
and Lessee shall cooperate fully in obtaining the release of any such liens, and
the cost thereof, if the lien was not occasioned by the fault of either party,
shall be treated the same as the cost of the matter to which it relates. If the
lien arises as a result of the fault of either party, then the party at fault
shall bear the cost of obtaining the lien release.

     7.05  Ownership of Replacements

     All repairs, alterations, improvements, renewals or replacements made
pursuant to Article VII, and all amounts kept in the Reserve, shall be the
property of Lessee.

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<PAGE>

     7.06  Design Specifications

           Subject to brand design standards generally employed for the System,
with respect to any capital expenditure programs submitted to Lessee by Manager,
Lessee shall have the right to choose in its reasonable discretion one prototype
package for such capital expenditure program from the variety of standard
prototype packages available to complete such program. With respect to custom
design packages that fall outside the scope of the then-current brand design
standards and prototype packages generally employed for the System, Lessee and
Manager must mutually agree upon the details of such custom design packages,
including design specifications.

                               END OF ARTICLE VII

                                       50

<PAGE>

                                  ARTICLE VIII

                          BOOKKEEPING AND BANK ACCOUNTS

     8.01  Books and Records

     A.    Books of control and account shall be kept on the accrual basis and
in material respects in accordance with the Uniform System of Accounts, with the
exceptions provided in the Agreement. Lessee may at reasonable intervals during
Manager's normal business hours examine such records. Within the Partnership
Filing Period, Manager shall furnish Lessee a statement in reasonable detail
summarizing the operations of the Inns for the immediately preceding Fiscal Year
and a certificate of Manager's chief accounting officer certifying that such
year-end statement is true and correct. The parties shall, within five (5)
business days after the receipt of such statement, make any adjustments, by cash
payment, in the amounts paid or retained for such Fiscal Year as are needed
because of the final figures set forth in such statement. If Lessee desires, at
its own expense, to audit such statement and supporting records, Lessee shall
begin such audit within ninety (90) days following its receipt of such statement
and shall complete such audit within ninety (90) days after commencement of the
audit. If Lessee does not make such an audit, then such statement shall be
deemed to be conclusively accepted by Lessee as being correct, and Lessee shall
have no right thereafter, except in the event of fraud by Manager, to question
or examine the same. If any audit by Lessee discloses an understatement of any
amounts due Lessee, Manager shall promptly pay Lessee such amounts found to be
due, plus interest thereon (at the Prime Rate plus one percent (1%) per annum)
from the date such amounts should originally have been paid. If, however, the
audit discloses that Manager has not received any amounts due it, Lessee shall
pay Manager such amounts, plus interest thereon (at the Prime Rate plus one
percent (1%) per annum) from the date such amounts should originally

                                       51

<PAGE>

have been paid. Any dispute concerning the correctness of an audit, which
dispute is not resolved within sixty (60) days after such dispute is raised in
writing, shall be settled by an Expert, in accordance with Section 19.11.

     B.    If Lessee's audit discloses an error in the total payment of amounts
due Lessee, for any Fiscal Year so audited, that is in excess of five percent
(5%), Manager shall pay for the cost of Lessee's audit. In addition, in such
event, Lessee may audit the statements of Inn operations and supporting records
for the two (2) preceding Fiscal Years. Lessee shall bear the cost of such
audit, except for the cost thereof relating to any Fiscal Year in which the
audit discloses an error in excess of five percent (5%) in the payment of
amounts due Lessee.

     C.    All statements shall be prepared on a consolidated basis and on an
individual Inn basis; however, to the extent Manager prepares them for its own
internal purposes, Manager shall, on Lessee's written request, furnish Lessee
with copies of unaudited statements prepared for each Inn separately.

     8.02  Accounts, Expenditures

     A.    All funds derived from operation of the Inns shall be deposited by
Manager in a bank account in a bank designated by Manager. Withdrawals from said
accounts shall be made only by representatives of Manager whose signatures have
been authorized. Reasonable petty cash funds shall be maintained at each Inn.

     B.    All payments made by Manager hereunder shall be made from authorized
bank accounts, petty cash funds, or from Working Capital provided pursuant to
Section 6.01. Manager shall not be required to make any advance or payment to or
for the account of Lessee except out of such funds, and Manager shall not be
obligated to incur any liability or obligation for Lessee's account without
assurances that necessary funds for the discharge thereof will be

                                       52

<PAGE>

provided by Lessee. Debts and liabilities incurred by Manager as a result of its
operation and management of the Inns pursuant to the terms hereof, whether
asserted before or after the Termination of this Agreement, will be paid by
Lessee to the extent funds are not available for that purpose from the operation
of the Inns.

     8.03  Annual Operating Projection

     A.    Manager shall submit to Lessee for its review, thirty (30) days prior
to the beginning of each Fiscal Year, an "Annual Operating Projection." Manager
will consider in good faith suggestions made by Lessee with respect to the
Annual Operating Projection and make modifications thereto that Manager deems
appropriate. Such projection shall project, on a consolidated basis, and on an
individual Inn basis, the estimated Gross Revenues, average daily suite rates,
average occupancy, departmental profits, Deductions, and Operating Profit for
the forthcoming Fiscal Year for the Inns, taking into account each Inn's market
area. Manager shall use its best efforts to adhere to the Annual Operating
Projection. It is understood, however, that the Annual Operating Projection is
an estimate only and that unforeseen circumstances such as, but not limited to,
the costs of labor, material, services and supplies, casualty, operation of law,
or economic and market conditions may make adherence to the Annual Operating
Projection impracticable, and Manager shall be entitled to depart therefrom due
to causes of the foregoing nature.

     B.    If Owner or Lessee intends to sell or refinance any one or more of
the Inns, Manager agrees to cooperate in providing information to facilitate
such sale or refinancing.

     8.04  Operating Losses; Credit

     A.    To the extent there is an Operating Loss for any Accounting Period,
additional funds in the amount of any such deficiency shall be provided by
Lessee within twenty (20) days

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<PAGE>

after Manager has given written notice to Lessee of such Operating Loss. If
Manager elects not to so notify Lessee or if Lessee does not so fund such
deficiency on Manager's request (but, in such latter case, without affecting
Manager's other remedies under this Agreement), Manager shall have the right to
withhold an amount equal to such deficiency from future disbursements of funds
otherwise due to Lessee.

     B.   In no event shall either party borrow money in the name of or pledge
the credit of the other.

                               END OF ARTICLE VIII

                                       54

<PAGE>

                                   ARTICLE IX

                    TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     9.01  Trademarks, Trade Names and Service Marks

     A.    During the term of the Agreement, each Inn shall be known as a
"Residence Inn" or "Residence Inn by Marriott" or "Marriott Residence Inn", with
such additional identification as may be necessary to provide local
identification. If the name of the "Residence Inn by Marriott" System is
changed, Manager will change the name of each Inn to conform thereto. The names
"Marriott," "Residence Inn," "Residence Inn by Marriott" and "Marriott Residence
Inn" (each of the foregoing names, together with any combination thereof, shall
herein be collectively referred to as the "Trade Names") when used alone or in
connection with another word or words, and the Marriott or Residence Inn
trademarks, service marks, other trade names, symbols, logos and designs shall
in all events remain the exclusive property of Manager or Marriott, and nothing
contained herein shall confer on Lessee the right to use any of the Trade Names,
or the Marriott or Residence Inn trademarks, service marks, other trade names,
symbols, logos or designs otherwise than in strict accordance with the terms of
this Agreement. Except as provided in Section 9.02, upon Termination with
respect to an Inn, any use of or right to use any of the Trade Names, or any of
the Marriott or Residence Inn trademarks, service marks, other trade names,
symbols, logos or designs by Lessee shall cease forthwith with respect to such
Inn and Lessee shall promptly remove from such Inn any signs or similar items
which contain any of said Trade Names, trademarks, service marks, other trade
names, symbols, logos or designs. If Lessee has not removed such signs or
similar items promptly upon Termination, Manager shall have the right to remain
at such Inn as long as is necessary for it to do so.

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<PAGE>

     B.    Included under the terms of this Section are all trademarks, service
marks, trade names, symbols, logos or designs used in conjunction with the Inns,
including but not limited to restaurant names, lounge names, etc., whether or
not the marks contain the "Marriott" name or the "Residence Inn" name. The right
to use such trademarks, service marks, trade names, symbols, logos or designs
belongs exclusively to Manager or Marriott, and the use thereof inures to the
benefit of Manager or Marriott whether or not the same are registered and
regardless of the source of the same.

     9.02  Purchase of Inventories and Fixed Asset Supplies

     Upon Termination, either of this entire Agreement or with respect to a
given Inn, Manager shall have the option, to be exercised within thirty (30)
days after Termination, to purchase, at their then book value, any items of such
Inn's Inventories and Fixed Asset Supplies as may be marked with any Trade Name,
or any Marriott or Residence Inn trademark, other trade name, symbol, logo or
design. In the event Manager does not exercise such option, Lessee agrees that
it will use any such items not so purchased exclusively in connection with such
Inn (or one of the other Inns) until they are consumed.

     9.03  Computer Software

     A.    Any computer software (including upgrades and replacements) at any of
the Inns that is owned by Manager, Marriott, a Marriott Affiliate, or the
licensor of any of them is proprietary to its owner or licensor, as the case may
be, and shall in all events remain the exclusive property of such owner or
licensor, and nothing contained in this Agreement shall confer on Lessee the
right to use any of such software with the exception of any computer software at
the Inns that is commercially available to the public.

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<PAGE>

     B.    Upon Termination of this Agreement with respect to any given Inn or
all Inns, Manager shall have the right to remove from each Inn with respect to
which this Agreement has been terminated, at its expense within a reasonable
time thereafter and without compensation to Lessee, the RICHIE System software
and any other computer software (including upgrades and replacements), owned by
Manager, Marriott, any Marriott Affiliate or the licensor of any of them, with
the exception of any computer software at the Inns that is commercially
available to the public. Furthermore, upon any such Termination, Manager shall
be entitled to remove from any Inn with respect to which this Agreement has been
terminated, at its expense within a reasonable time thereafter and without
compensation to Lessee, any computer equipment utilized as part of a centralized
reservation system or owned by a party other than Lessee. In the event of any
such removal hereunder, Manager shall provide to Lessee, in a form reasonably
satisfactory to Lessee and at Lessee's expense, all information and data with
respect to the Inns stored in such computer software, provided that, to the
extent such information or data is proprietary or confidential to Marriott, such
information or data shall not be provided to Lessee.

     9.04  Breach of Covenant

     Manager, Marriott and/or its Affiliates shall be entitled, in case of any
breach of the covenants of Article IX by Lessee or others claiming through it,
to injunctive relief and to any other right or remedy available at law. Article
IX shall survive Termination.

                                END OF ARTICLE IX

                                       57

<PAGE>

                                    ARTICLE X

                         MANAGEMENT AND USE OF THE INNS

     10.01   Management of the Inns

     Manager shall manage each Inn under standards comparable to those
prevailing in other inns in the "Residence Inn by Marriott" System, including
all activities in connection therewith which are customary and usual to such an
operation.

     10.02   Chain Services

     Manager shall, commencing with the Effective Date and thereafter during the
term of this Agreement, cause to be furnished to each Inn certain services
("Chain Services") which are furnished generally on a central or regional basis
to other inns in the "Residence Inn by Marriott" System which are managed by
Manager, Marriott, or any Marriott Affiliate, and which benefit each Inn as a
participant in such System. Chain Services shall include: (i) divisional
executive management; (ii) sales office services; the development of programs
for training and manpower development; and computer payroll and accounting
services; and (iii) such additional central and regional services as may from
time to time be furnished for the benefit of inns in the "Residence Inn by
Marriott" System or in substitution for services now performed at individual
inns which may be more efficiently performed on a group basis. The services
described in this Section 10.02 shall not include services which are described
in the definitions of "Base Management Fee" and "Residence Inn System Fee."
Costs and expenses incurred in the providing of such services shall be allocated
on a fair and equitable basis, on a "per-suite" basis, among all "Residence Inn
by Marriott" inns managed by Manager in the United States receiving the same. To
the extent that services described in this Section 10.02 have been funded
through the

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<PAGE>

Marketing Fund, there will be no allocation of the costs and expenses thereof
under this Section 10.02.

     10.03   Lessee's Right to Inspect

     Lessee or its agents shall have access to any Inn at any and all reasonable
times for the purpose of protecting the same against fire or other casualty,
prevention of damage to the Inn, inspection, making repairs, or showing such Inn
to prospective purchasers, tenants or mortgagees.

                                END OF ARTICLE X

                                       59

<PAGE>

                                   ARTICLE XI

                                    INSURANCE

     11.01  Property Insurance

     A.     Manager shall, commencing with the Effective Date and for the
duration of each Inn Term, procure and maintain, using funds deducted from Gross
Revenues in determining Operating Profit, with insurance companies approved by
Lessee, a minimum of the following insurance:

            1.  Insurance on each Inn (including contents) against loss or
damage by all perils included in "all risk" (as such term is commonly used in
the insurance industry) coverage, in an amount not less than one hundred percent
(100%) of the replacement cost thereof, except that if such 100% replacement
cost coverage is not available on reasonable rates and terms, then such
insurance shall be in an amount not less than ninety percent (90%) of the
replacement cost thereof (less excavation and foundation costs), of each Inn;

            2.  Earthquake (except in California) and flood insurance, if
available on reasonable rates and terms, to be determined at the discretion of
Manager;

            3.  Insurance against loss or damage from explosion of boilers,
pressure vessels, pressure pipes and sprinklers, to the extent applicable,
installed in each Inn;

            4.  Business interruption insurance covering loss of profits and
necessary continuing expenses for interruptions caused by any occurrence covered
by the insurance referred to in Section 11.01.A.1, 2 and 3, for a period of not
less than one (1) year after the occurrence, of a type and in amounts and with
such deductible limits as are generally established by Manager at the other inns
it owns or manages under the Marriott Residence Inn name in the United States.

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<PAGE>

            5.  Such other insurance for protection against claims, liabilities
and losses arising out of or connected with the operation of the Inns as
reasonably required by Owner's lenders holding First Mortgages on the Inns.

     B.     All policies of insurance required under Section 11.01. A. 1, 2, 3
and 4 shall insure Owner, Lessee, Manager, and the holder of the first mortgage
indebtedness with respect to the Inns (a "First Mortgage"); and any losses
thereunder shall be payable to the parties as and to the extent their respective
interests, if any, may appear.

     C.     Any Mortgage on any Inn shall contain provisions to the effect that
proceeds of the insurance policies required to be carried under Section 11.01
shall be available for repair and restoration of such Inn.

     11.02  Operational Insurance

     Manager shall, commencing with the Effective Date and for the duration of
each Inn Term, procure and maintain, using funds deducted from Gross Revenues in
determining Operating Profit, with insurance companies approved by Lessee the
following insurance:

     A.     Workers' compensation and employer's liability insurance as may be
required under applicable laws covering all of Manager's employees at each Inn,
with such deductible limits or self-insured retentions as are generally
established by Manager at the other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States;

     B.     Fidelity bonds, with reasonable limits and deductibles to be
determined by Manager, covering its employees in job classifications normally
bonded in the other inns it owns or manages under the "Residence Inn by
Marriott" name in the United States or as otherwise required by law, and
comprehensive crime insurance to the extent Manager and Lessee mutually agree it
is necessary for each Inn;

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<PAGE>

         C. Comprehensive general public liability insurance against claims for
personal injury, death or property damage occurring on, in, or about each Inn,
and automobile insurance on vehicles operated in conjunction with such Inn, with
a combined single limit of not less than Twenty-five Million Dollars
($25,000,000) for each occurrence for personal injury, death and property
damage, with such deductible limits or self-insured retentions as are generally
established by Manager at the other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States; if Manager feels in its reasonable
discretion that higher limits are appropriate, it will obtain them; and

         D. Such other insurance in amounts as Manager in its reasonable
judgment deems advisable for protection against claims, liabilities and losses
arising out of or connected with the operation of the Inns or as reasonably
required by Owner's lenders holding First Mortgages on the Inns.

         11.03    Coverage

         All insurance described in Sections 11.01 and 11.02 may be obtained by
Manager by endorsement or equivalent means under its or Marriott's blanket
insurance policies, provided that such blanket policies substantially fulfill
the requirements specified herein. Deductible limits and self-insured retentions
shall be as provided in the blanket policies covering the inns owned or managed
by Manager under the "Residence Inn by Marriott" name in the United States. In
addition, Manager may self-insure workers' compensation insurance (if it has
legally qualified to do so) or otherwise retain such risks or portions thereof
as it does with respect to other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States.

         11.04    Cost and Expense

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<PAGE>

         Insurance premiums and any costs or expenses with respect to the
insurance described in this Article XI shall be Deductions in determining
Operating Profit. Premiums on policies for more than one year shall be charged
pro rata against Gross Revenues over the period of the policies. The expenses
incurred in maintaining Manager's self-insurance program shall be charged on an
equitable basis to the inns participating in such programs. Any reserves,
losses, costs, damages or expenses which are uninsured, or fall within
deductible limits, shall be treated as a cost of insurance and shall be
Deductions in determining Operating Profit. Upon Termination, either of this
entire Agreement or with respect to a given Inn, an escrow fund in an amount
reasonably acceptable to Manager (which amount, when funded, shall thereafter be
final as between Lessee and Manager) shall be established from Gross Revenues
(or, if Gross Revenues are not sufficient, with funds provided by Lessee) to
cover the amount of any deductible limits and all other costs which will
eventually have to be paid by Manager with respect to pending or contingent
claims, including those which arise after Termination for causes arising during
the term of the Agreement.

         11.05 Lessee Provided Coverage

         Notwithstanding anything to the contrary contained in this Article XI,
Lessee may, at its option, with sixty (60) days advance written notice to
Manager, procure the insurance coverage required under Section 11.01 hereof.
Premiums for such coverage shall be treated as a Deduction; provided, that if
the cost of such insurance and the related deductibles procured by Lessee
exceeds the cost of Manager's insurance for comparable coverage, all excess
costs, deductibles and coverages shall be the sole responsibility of Lessee and
shall not be a Deduction. If Lessee exercises its option to procure such
insurance, Lessee hereby waives its rights of recovery from Manager and its
affiliates, directors, officers and employees for loss or damage to

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<PAGE>

an Inn, and any resultant interruption of business, to the extent covered by the
insurance provided herein.

         11.06 Policies and Endorsements

         A.    Where permitted, all insurance provided under Article 11.01 and
11.02C shall name Lessee, Owner and any lender or mortgagee designated by Owner
as additional insureds or mortgagee as applicable. Manager shall deliver to such
additional insureds certificates of insurance with respect to all policies so
procured, including existing, additional and renewal policies and, in the case
of insurance about to expire, shall deliver certificates of insurance with
respect to the renewal policies prior to the respective dates of expiration.

         B.    All policies of insurance provided for under Article XI shall, to
the extent obtainable, have attached thereto an endorsement that such policy
shall not be cancelled or materially changed without at least thirty (30) days'
prior written notice to the certificate holder. Each property insurance policy
maintained in accordance with Article XI shall contain a specific waiver of
subrogation with respect to property claims.

                                END OF ARTICLE XI

                                       64

<PAGE>

                                   ARTICLE XII

                                      TAXES

         12.01 Real Estate and Personal Property Taxes

         All real estate and personal property taxes, levies, assessments and
similar charges on or relating to each Inn ("Impositions") during each Inn Term
shall be paid by Manager from Gross Revenues, before any fine, penalty, or
interest is added thereto or lien placed upon any Inn or upon the Agreement,
unless payment thereof is in good faith being contested and enforcement thereof
is stayed. Any such payments shall be a Deduction in determining Operating
Profit. Lessee shall, within five (5) days of receipt, furnish Manager with
copies of official tax bills and assessments which it may receive with respect
to any of the Inns. Either Owner, Lessee or Manager (in which case Lessee agrees
to sign, or cause Owner to sign, the required applications and otherwise
cooperate with Manager in expediting the matter) may initiate proceedings to
contest any Imposition, and all reasonable costs of any such contest shall be
paid from Gross Revenues and shall be a Deduction in determining Operating
Profit.

                               END OF ARTICLE XII

                                       65

<PAGE>

                                  ARTICLE XIII

                                  INN EMPLOYEES

         13.01 Employees

         A.    All personnel employed at each Inn shall at all times be the
employees of Manager. Manager shall have absolute discretion to hire, promote,
supervise, direct and train all employees at each Inn, to fix their compensation
and, generally, establish and maintain all policies relating to employment.
Manager shall use best efforts to notify Lessee as soon as practical of any
anticipated changes in the persons who occupy the positions of General Manager
and Director of Sales and Marketing for any Inn; provided, however, that the
parties acknowledge and agree that any failure by Manager to provide such notice
shall neither constitute an "event of default" under this Agreement nor
constitute a material breach of this Agreement.

         B.    Manager shall decide whom, if any, of the employees of each Inn
shall reside at such Inn, and shall be permitted to provide free accommodations
and amenities to its employees and representatives living at or visiting each
Inn in connection with its management or operation. No person shall otherwise be
given gratuitous accommodations or services without prior joint approval of
Lessee and Manager except in accordance with usual practices of the hotel and
travel industry.

         C.    At Termination with respect to a given Inn, other than a
Termination (i) by reason of a default of Manager hereunder or (ii) at Manager's
option (except as a result of a default by Lessee), provided that the expiration
of a given Inn Term under Section 4.01 shall not be deemed "at Manager's option"
for purposes of this Section 13.01, an escrow fund shall be established from
Gross Revenues (or, if Gross Revenues are not sufficient, with funds provided by
Lessee)

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<PAGE>

to reimburse Manager for all costs and expenses incurred by Manager in
terminating its employees at the affected Inn, such as severance pay,
unemployment compensation and other employee liability costs arising out of the
termination of employment of Manager's employees at such Inn.

         D. Neither Lessee nor Manager shall effect a Termination of this
Agreement without allowing sufficient time for Manager to comply with notice
requirements of federal and state laws and regulations regarding the closing of
a business or termination of employees, and Manager shall comply with such
notice requirements; provided, however, that this provision shall not be
applicable if Lessee or its new hotel manager hires a sufficient number of Inn
employees to avoid Manager incurring liability under such notice requirements in
connection with such termination, and Lessee (or its permitted successors and
assigns, if applicable), shall indemnify, defend and hold Manager, Marriott
Affiliates and each of their officers, directors, shareholders, agents and
assigns, harmless from all costs, expenses, damages, penalties, actions, claims,
obligations and liabilities, including reasonable attorneys' fees, to the extent
arising or resulting from any such liability under federal and state laws and
regulations (including, but not limited to the WARN Act ) regarding the closing
of a business or termination of employees.

                               END OF ARTICLE XIII

                                       67

<PAGE>

                                   ARTICLE XIV

                     DAMAGE, CONDEMNATION AND FORCE MAJEURE

         14.01 Damage and Repair

         A.    If, during the term hereof, any of the Inns is damaged or
destroyed by fire, casualty or other cause, Lessee shall, at its cost and
expense and with all reasonable diligence, repair or replace the damaged or
destroyed portion of such Inn to the same condition as existed previously. To
the extent available, proceeds from the insurance described in Section 11.01 or
Section 11.05, as the case may be, shall be applied to such repairs or
replacements. However, Lessee shall not be obligated to so repair or replace the
damaged or destroyed portion of such Inn if one or more of the following is
true: (i) the Inn is so badly damaged or destroyed that it cannot reasonably be
repaired or replaced within one (1) year of the date on which the construction
work relating to the repair and/or replacement would begin; (ii) with respect to
insurance obtained by Manager under Section 11.01, the proceeds of such
insurance available for such repair or replacement are less than ninety percent
(90%) of the estimated repair and replacement costs; or (iii) the remainder of
the Inn Term with respect to such Inn is less than ten (10) years, and Manager
fails to agree to extend such Inn Term to a date which is at least ten (10)
years after the estimated date of the completion of such repair and/or
replacement. If Lessee has elected to obtain insurance under Section 11.05,
Lessee shall be obligated to so repair or replace the damaged or destroyed
portion of such Inn if the insurance proceeds that would have been available for
such repair or replacement had the insurance been procured by Manager under
Section 11.01, are greater than or equal to ninety percent (90%) of the
estimated repair and replacement costs. If Lessee elects not to repair or
replace said damaged portion of such Inn for

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<PAGE>

one or more of the foregoing reasons, it shall so notify Manager by written
notice within ninety (90) days after the date of the casualty.

       B. In the event damage or destruction to any Inn from any cause
materially and adversely affects the operation of such Inn and (i) Lessee fails
to promptly commence and complete the repairing, rebuilding or replacement of
the same so that such Inn shall be substantially the same as it was prior to
such damage or destruction, or (ii) Lessee notifies Manager, pursuant to the
provisions of Section 14.01.A above, that Lessee will not repair or replace such
damage for one or more of the reasons set forth in Section 14.01.A, Manager may,
at its option, terminate the Agreement with respect to such Inn upon sixty (60)
days' written notice.

       14.02 Condemnation

       A. In the event all or substantially all of any Inn shall be taken in any
eminent domain, condemnation, compulsory acquisition, or similar proceeding by
any competent authority for any public or quasi-public use or purpose, or in the
event a portion of such Inn shall be so taken, but the result is that it is
unreasonable to continue to operate such Inn, this Agreement shall terminate
with respect to such Inn. Owner, Lessee and Manager shall each have the right to
initiate such proceedings as they deem advisable to recover any damages to which
they may be entitled.

       B. In the event a portion of any Inn shall be taken by the events
described in Section 14.02.A, or an entire Inn is affected but on a temporary
basis, and the result is not to make it unreasonable to continue to operate such
Inn, this Agreement shall not terminate. However, so much of any award for any
such partial taking or condemnation as shall be necessary to render

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<PAGE>

such Inn equivalent to its condition prior to such event shall be used for such
purpose. Owner shall retain the balance of such award, subject to the provisions
of any mortgage of the Inn.

       14.03 Force Majeure

       A. If acts of God, acts of war, civil disturbance, or governmental action
(collectively herein referred to as "Force Majeure") make it impractical for
either Lessee or Manager to perform any of its respective obligations hereunder,
such obligation shall be suspended until it is again possible for the affected
party to perform it. In addition, if such an event, in Manager's or Lessee's
reasonable judgment, makes continued operation of an Inn impractical for more
than a reasonable temporary period, then Manager or Lessee may terminate this
Agreement as to such Inn on sixty (60) days written notice to Lessee or Manager,
as the case may be.

       B. The provisions of Section 14.03.A shall not apply to the specific
provisions of this Agreement regarding (i) damage or destruction, (ii)
condemnation, and (iii) withdrawal or revocation of licenses or permits.

                               END OF ARTICLE XIV

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<PAGE>

                                   ARTICLE XV

                                    DEFAULTS

       15.01 Events of Default

       The following shall constitute "events of default" to the extent
permitted by applicable law:

       A. The failure of either party to make any payment required to be made in
accordance with the terms hereof within ten (10) days after written notice that
such payment has not been made; or

       B. Unless Section 15.01.A is applicable, the breach by either party of
any material representation, warranty or covenant contained in this Agreement,
or the default by either party in the performance of any covenants,
undertakings, obligations or conditions set forth in this Agreement, which
breach or default shall not have been cured within thirty (30) days after notice
of such breach or default; provided that an "event of default" shall not exist
with regard thereto if such breach or default (i) is not attributable to a
failure to pay any sums due under this Agreement and (ii) such breach or default
is curable (but not within such thirty (30) day period) and the defaulting party
commences the cure of said breach or default within said thirty (30) day period
and thereafter proceeds diligently and in good faith to complete such cure; or

       C. If a court of competent jurisdiction has entered a final,
non-appealable judgment finding Manager liable for fraud, gross negligence or
willful and wanton misconduct in its dealings with Lessee hereunder; or

       D. If Manager or Owner or Lessee shall apply for or consent to the
appointment of a receiver, trustee or liquidator of all or a substantial part of
its assets or make a general assignment for the benefit of its creditors, or
file a voluntary petition in bankruptcy or a petition

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<PAGE>

seeking reorganization, composition, arrangement with creditors, liquidation or
similar relief under any present or future statute, law or regulation, or file
any answer admitting the material allegations of a petition filed against it in
any such proceeding, or be adjudicated a bankrupt or insolvent, or take any
action looking toward dissolution; or

       E. If any final order, judgment or decree (that is, an order, judgment or
decree affirmed on appeal to a court of last resort or after the expiration of
any period to appeal) shall be entered without the application, approval or
consent of Manager or Owner or Lessee by any court of competent jurisdiction,
approving a petition seeking reorganization, composition, arrangement with
creditors, liquidation or similar relief under any present or future statute,
law or regulation with respect to Manager or Owner or Lessee, or appointing a
receiver, trustee or liquidator of all or a substantial part of Manager's or
Owner's or Lessee's assets and such order, judgment or decree shall continue
unstayed and in effect for an aggregate of sixty (60) days (whether or not
consecutive).

       15.02 Remedies

       A. If, at any time during the term of this Agreement, an "event of
default" (as defined in Section 15.01) shall occur, then the non-defaulting
party may, at its option, terminate this Agreement by giving notice to the other
party, specifying a date, not earlier than thirty (30) days after the receipt of
such notice, for Termination of this Agreement. If the default has not been
cured on or before the date specified in the aforesaid notice, this Agreement
shall terminate on such date.

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<PAGE>

       B. The rights set forth in Section 15.02.A shall not be in substitution
for, but shall be in addition to, any and all rights and remedies available to
the non-defaulting party by reason of applicable law.

                                END OF ARTICLE XV

                                       73

<PAGE>

                                   ARTICLE XVI

                          WAIVER AND PARTIAL INVALIDITY

       16.01 Waiver

       The failure of either party to insist upon a strict performance of any of
the terms or provisions of the Agreement, or to exercise any option, right or
remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision hereof shall be deemed to have been made
unless expressed in writing and signed by such party.

       16.02 Partial Invalidity

       If any portion of the Agreement shall be declared invalid by order,
decree or judgment of a court, the Agreement shall be construed as if such
portion had not been inserted herein except when such construction would operate
as an undue hardship on Manager or Lessee or constitute a substantial deviation
from the general intent and purpose of said parties as reflected in the
Agreement.

       END OF ARTICLE XVI

                                       74

<PAGE>

                                  ARTICLE XVII

                                   ASSIGNMENT

       17.01 Assignment

       A. Neither party shall assign or transfer or permit the assignment or
transfer of this Agreement without the prior written consent of the other;
provided, however, that Manager shall have the right, without such consent, to
(1) assign its interest in this Agreement to Marriott or any Marriott Affiliate
which (i) has adequate experience in managing hotels and has adequate capital to
conduct its business as Manager under this Agreement, and (ii) agrees in writing
to be bound by and comply with the terms of this Agreement (such written
agreement to be delivered to Owner); and (2) lease shops or grant concessions at
the Inns so long as the terms of any such leases or concessions do not exceed
the term of this Agreement. Nothing contained herein shall prevent (i) the
conditional assignment of this Agreement by Lessee as security for any Mortgage
on the Inns pursuant to Section 17.02; (ii) the transfer of this Agreement in
connection with a merger or consolidation or a sale of all or substantially all
of the assets of Marriott; (iii) an assignment of this Agreement in connection
with an approved Sale of one or more of the Inns pursuant to Section 18.01.A.2;
or (iv) any sale, assignment, transfer or other disposition of an Inn or Site by
Owner or Lessee to an Affiliate of Owner, provided that, with respect to this
clause (iv), if any of the following is true: (i) that the proposed purchaser is
engaged in the business of operating (as distinguished from owning or financing)
hotels or other lodging facilities in competition with Manager, Marriott or any
Marriott Affiliate; (ii) that the proposed purchaser is known as being of bad
moral character or is in control of or controlled by persons known as being of
bad moral character, or (iii) that the financial condition and prospects of the
proposed purchaser are not adequate to discharge the obligations of Lessee under
this Agreement, then any

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<PAGE>

such sale, assignment, transfer or other disposition of an Inn or Site by Owner
or Lessee to an Affiliate of Owner or Lessee shall be prohibited.

       B. In the event either party consents to an assignment of this Agreement
by the other, no further assignment shall be made without the express consent in
writing of such party, unless such assignment may otherwise be made without such
consent pursuant to the terms of this Agreement. An assignment by either Lessee
or Manager of its interest in this Agreement shall not relieve Lessee or
Manager, as the case may be, from their respective obligations under this
Agreement, and shall inure to the benefit of, and be binding upon, their
respective successors, heirs, legal representatives, or assigns.

       17.02 Mortgages and Collateral Assignments

       Lessee or Owner may from time to time (i) grant Mortgages encumbering the
Inns, and (ii) collaterally assign its interest under this Agreement as
additional security, provided that all such Mortgages and collateral
assignments: (a) are granted or entered into in connection with indebtedness
that is described in Section 3.01.A.2 (ii) and (iii) hereof, and (b) each
contain a non-disturbance provision in the form described in Section 3.01.A.2(i)
hereof. Provided that all of the provisions of Section 3.01.A.2 are complied
with, Manager agrees that (in connection with Lessee or Owner obtaining such
secured loans) it will: (x) deliver to the lender, upon Lessee's or Owner's
written request therefore, a statement that this Agreement is in full force and
effect and that there are no outstanding defaults hereunder, or, if there are
outstanding defaults, describing what they are; (y) subordinate Manager's
interest in this Agreement to the rights of the lender upon foreclosure of any
such Mortgage or upon the granting of a deed in lieu of foreclosure; and (z)
attorn to and recognize such lender or its assignee as being the "Owner" or
"Lessee" (as the case may be) under this Agreement upon a conveyance of title to
the Inns to such lender or its

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<PAGE>

assignee, whether such conveyance is the result of a foreclosure of said
Mortgage, or is the result of a deed in lieu of foreclosure; provided that, such
lender simultaneously agrees to execute a non-disturbance, subordination and
attornment agreement substantially in the form attached hereto as Exhibit F,
which shall be recordable in the jurisdictions where the Inns are located.

                               END OF ARTICLE XVII

                                       77

<PAGE>

                                  ARTICLE XVIII
                             SALE OF AN INN OR INNS

       18.01 Right of First Refusal

       A. It is a principal inducement for Manager to enter into this
transaction that the twenty-two (22) Inns shall not, at any one time, ever be
owned by more than five (5) separate individuals or entities each of whom has a
management agreement with Manager with respect to its Inn or Inns. Accordingly,
Lessee agrees that neither it nor Owner will have the right to enter into a Sale
of an Inn if such a transaction, when consummated, would result in the
twenty-two (22) Inns being owned by more than five (5) separate owners. Subject
to the foregoing, if Owner or Lessee receives a bona fide written offer to enter
into a Sale of an Inn, and desires to accept such offer, Lessee shall, or shall
cause Owner to give written notice thereof to Manager stating the name of the
prospective purchaser or tenant, as the case may be, the price or rental and the
terms and conditions of such proposed Sale of the Inn, together with all other
information requested by Manager and reasonably available to Owner or Lessee.
Within thirty (30) days after the date of receipt of Lessee's or Owner's written
notice and such other information, Manager shall elect, by written notice to
Lessee, one of the following alternatives:

       1. To purchase or lease such Inn or Inns at the same price or rental and
upon the same terms and conditions as those set forth in the written notice from
Lessee or Owner to Manager or upon other terms acceptable to Owner, in which
event Lessee and Manager shall promptly enter into an agreement for such sale or
lease and shall finalize the same within ninety (90) days.

       2. To consent to such Sale of an Inn and to agree to enter into a new
management agreement, with respect to such Inn or Inns, with such purchaser or
tenant, which

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<PAGE>

new management agreement will be on all of the terms and conditions of this
Agreement, except that the Actual Debt Service and the Operating Profit
Objective shall be only the portion thereof allocable to such Inn or Inns based
on the percentages as set forth in Exhibit "B" hereof, and except that, in
preparing such new management agreement, appropriate adjustments shall be made
to all other terms and provisions of this Agreement which have been agreed to
and/or computed on the assumption that this Agreement will apply to all
twenty-two (22) Inns (and reciprocal adjustments shall likewise be made to this
Agreement itself, which will be applicable to the Inns not being sold under this
Section 18.01, as set forth in Section 18.02 hereof); provided, however, that if
Manager in good faith believes (and so states in writing to Lessee) that any one
or more of the following is true: (i) that the proposed purchaser is engaged in
the business of operating (as distinguished from owning or financing) hotels or
other lodging facilities in competition with Manager, Marriott or any Marriott
Affiliate; (ii) that the proposed purchaser is known as being of bad moral
character or is in control of or controlled by persons known as being of bad
moral character; or (iii) that the financial condition and prospects of the
proposed purchaser are not adequate to discharge the obligations of Lessee under
this Agreement, Manager shall have the right to terminate this Agreement, by
written notice to Lessee, with respect to such Inn or Inns, and Manager shall
not be required to enter into such new management agreement with respect
thereto. The effective date of such Termination shall coincide with the date of
the finalization of the proposed Sale of the Inn. Such Termination shall not be
effective if Sale of the Inn is not finalized.

       B. If Manager shall fail to elect any of the above alternatives within
said thirty (30) day period, such failure shall be conclusively deemed to
constitute an election under subsection 2 above to enter into a new management
agreement, with respect to such Inn or Inns, with such

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<PAGE>

purchaser or tenant, and the provisions thereof shall prevail as if Manager had
consented in writing thereto. Any proposed Sale of the Inn of which notice has
been given by Lessee or Owner to Manager hereunder must be finalized within one
hundred eighty (180) days following the giving of such notice, unless Manager
has exercised its option under subsection 1 above to purchase or lease the Inns.
Failing such finalization, such notice, and any response thereto given by
Manager, shall be null and void and all of the provisions of Section 18.01.A
must again be complied with before Lessee or Owner shall have the right to
finalize a Sale of an Inn upon the terms contained in said notice, or otherwise.

       18.02 Effect of Sale of Inn

       Upon the consummation of the Sale of an Inn, subject to the provisions of
Section 18.01, then:

       A. This Agreement shall terminate with respect to such Inn, but not with
respect to the remaining Inns; as to such Inn involved in the Sale, the actions
described in Section 4.03 shall be taken (except that, if Manager is entering
into a new management agreement with the purchaser or tenant, as the case may
be, of such Inn, then (i) the actions described in subsections D and G of
Section 4.03 shall not be necessary), and (ii) the actions described in
subsection C of Section 4.03 shall be complied with to the extent such books and
records are in Manager's control or possession and shall apply to those books
and records related only to the period prior to such termination;

       B. The Actual Debt Service shall be reduced by the percentage thereof
allocable to such Inn as set forth in Exhibit "B" hereto;

       C. The Operating Profit Objective shall be reduced by the percentage
thereof allocable to such Inn as set forth in Exhibit "B" hereto;

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<PAGE>

       D. A portion of the Repairs and Equipment Reserve maintained pursuant to
Section 7.02 hereof shall be transferred to the purchaser of such Inn (or, at
the direction of the Lessee, released to the Lessee); such portion shall be
computed by multiplying the Repairs and Equipment Reserve by a fraction, the
numerator of which shall be the Gross Revenues attributable to such Inn being
sold for the most recently concluded Fiscal Year and the denominator of which
shall be the Gross Revenues attributable to all the Inns for such Fiscal Year;

       E. Appropriate adjustments shall be made to those other terms and
provisions of this Agreement (e.g., Working Capital, insurance) which have been
agreed on, computed or established on the assumption that this Agreement will
apply to all twenty-two (22) of the Inns;

       F. Unless Manager has elected not to enter into a new management
agreement with the purchaser or tenant, as the case may be, of such Inn, for one
or more of the reasons set forth in subsections (i),(ii) and (iii) of Section
18.01.A.2 hereof, Manager and such purchaser or tenant shall execute the new
management agreement described in Section 18.01.A.2.; and

       G. Lessee shall pay Manager an amount equal to a portion of the
outstanding balance of all Manager Loans determined by multiplying the total
outstanding balance of all Manager Loans by a fraction, the numerator of which
is the amount of Operating Profit attributable to the Inn being sold for the
immediately preceding full Fiscal Year, and the denominator of which is the
amount of Operating Profit from all Inns for the immediately preceding full
Fiscal Year.

                              END OF ARTICLE XVIII

                                       81

<PAGE>

                                   ARTICLE XIX
                                  MISCELLANEOUS

       19.01 Right to Make Agreement

       Each party warrants, with respect to itself, that neither the execution
of the Agreement nor the finalization of the transactions contemplated hereby
shall violate any provision of law or judgment, writ, injunction, order or
decree of any court or governmental authority having jurisdiction over it;
result in or constitute a breach or default under any indenture, contract, other
commitment or restriction to which it is a party or by which it is bound; or
require any consent, vote or approval which has not been taken, or at the time
of the transaction involved shall not have been given or taken. Each party
covenants that it has and will continue to have throughout the term of the
Agreement and any extensions thereof, the full right to enter into the Agreement
and perform its obligations hereunder.

       19.02 Consents

       Wherever in the Agreement the consent or approval of Lessee or Manager is
required, such consent or approval shall not be unreasonably withheld, shall be
in writing and shall be executed by a duly authorized officer or agent of the
party granting such consent or approval. If either Lessee or Manager fails to
respond within thirty (30) days to a request by the other party for a consent or
approval, such consent or approval shall be deemed to have been given (except as
otherwise provided in this Agreement).

       19.03 Agency

       The relationship of Lessee and Manager shall be that of principal and
agent, and nothing contained in the Agreement shall be construed to create a
partnership or joint venture between them or their successors in interest.
Manager's agency established by the Agreement is coupled

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<PAGE>

with an interest and may not be terminated by Lessee until the expiration of the
term of the Agreement, except as provided in Section 4.02 or Article XV.
Notwithstanding the agency relationship created by the Agreement, nothing
contained herein shall prohibit, limit or restrict (except as specifically set
forth in Section 2.04 hereof) Manager, Marriott, or any of its Affiliates and
subsidiaries from developing, owning, operating, leasing, managing or
franchising inns, hotels or other lodging products in any of the market areas
where any of the Inns are located.

         19.04 Applicable Law

         The Agreement shall be construed under and shall be governed by the
laws of the State of Maryland.

         19.05 Recordation

         The terms and provisions of the Agreement shall run with the parcels of
land designated as the Sites, and with Lessee's interest therein, and shall be
binding upon all successors to such interest. At the request of either party,
the parties shall execute sufficient copies of an appropriate memorandum of the
Agreement in recordable form and cause the same to be recorded in each of the
jurisdictions where the Inns are located. Any cost of such recordation shall be
initially borne by Lessee, reimbursed to Lessee from Gross Revenues, and treated
as a Deduction.

         19.06 Headings

         Headings of Articles and Sections are inserted only for convenience and
are in no way to be construed as a limitation on the scope of the particular
Articles or Sections to which they refer.

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<PAGE>

         19.07 Notices

Notices, statements and other communications to be given under the terms of the
Agreement shall be in writing and delivered by hand against receipt or sent by
certified or registered mail or Express Mail service, postage prepaid, return
receipt requested, or by Federal Express (or other nationally-recognized
overnight courier), marked for next business day delivery, with delivery charges
paid by the sender:

         To Lessee:

         Apple Hospitality Management, Inc.
         10 South Third Street
         Richmond, Virginia 23219
         Attn: Glade M. Knight

         with a copy to Owner at:

         Marriott Residence Inn II Limited Partnership
         c/o Apple Hospitality Two, Inc.
         306 East Main Street
         Richmond, Virginia 23219
         Attn: Glade M. Knight

         with a copy, which shall not constitute notice, to:

         Jenkens & Gilchrist, P.C.
         1445 Ross Ave., Suite 3200
         Dallas, Texas 75202
         Attn: Thomas E. Davis

         To Manager:

         Residence Inn by Marriott, Inc.
         c/o Marriott International, Inc.
               Law Department
         10400 Fernwood Road
         Bethesda, Maryland 20817
         Attn: North American Lodging Operations
                 Dept. 52/923

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<PAGE>

         With Copy to:

         Residence Inn by Marriott, Inc.
         c/o Marriott International, Inc.
               Lodging Finance
         10400 Fernwood Road
         Bethesda, Maryland 20817
         Attn:  Senior Vice President
                   Global Asset Management

or at such other address as is from time to time designated by the party
receiving the notice. Any such notice which is properly mailed shall be deemed
to have been served as of five (5) days after said posting for purposes of
establishing that the sending party complied with the applicable time
limitations set forth herein, but shall not be binding on the addressee until
actually received. Any such notice which is properly sent by Federal Express (or
other nationally-recognized overnight courier) shall be deemed to have been
served as of the business day after being sent for purposes of establishing that
the sending party complied with the applicable time limitations set forth
herein, but shall not be binding on the addressee until actually received.

         19.08 Limited Liability

         Manager agrees that no limited partner of Owner shall have any personal
liability hereunder in excess of such limited partner's contribution to the
capital of Owner.

         19.09 Confidentiality

         The parties agree that matters set forth in and all information,
budgets and reports generated as a result of this Agreement are strictly
confidential and each party will make every effort to ensure that the
information is not disclosed to any outside person or entities (including the
press), other than such parties' lenders, equity holders, bona fide prospective
investors or purchasers, and their respective accountants, counsel and other
consultants or advisors, without the written consent of the other party except
as may be reasonably necessary (i) to obtain

                                       85

<PAGE>

licenses, permits and other public approvals necessary for the refurbishment or
operation of the Inns, (ii) in connection with Owner's or Lessee's financing of
the Inns or any Sale of any Inn, (iii) in connection with a sale of a
controlling interest in Owner, Manager or Marriott, as permitted under this
Agreement, (iv) in connection with an audit or other investigation conducted
pursuant to this Agreement or the Owner's, Lessee's or Manager's interest in any
of the Inns, (v) in connection with a foreclosure sale on Owner's or Lessee's
interest in the Inns, or (vi) as required by any law, rule, regulation or
judicial process, or by any regulatory or supervisory authority having
jurisdiction over the parties or their Affiliates. Notwithstanding the foregoing
or anything to the contrary set forth herein, the obligations of a recipient
party with respect to confidential information under this Agreement shall remain
in effect except to the extent that: (i) such confidential information becomes
generally available to the public other than as a result of unauthorized
disclosure by the recipient or persons to whom such recipient has made the
information available; (ii) the recipient can demonstrate that such confidential
information was received by such recipient on a non-confidential basis, prior to
receipt from the other party, from a third party lawfully possessing and
lawfully entitled to disclose such information; (iii) such confidential
information consists of aggregated historical financial information; and (iv)
the party seeking to disclose such confidential information can demonstrate to
the reasonable satisfaction of the other party that the information sought to be
disclosed is customarily disclosed by at least 80% of all hotel owners directly
or indirectly owning hotels in the United States.

         19.10 Offerings

         A. Owner and Lessee agree to indemnify, defend and hold Manager,
Marriott, and all their Affiliates (and their respective directors, officers,
shareholders, employees and agents) harmless from and against all loss, costs,
liability and damage (including attorneys' fees and

                                       86

<PAGE>

expenses, and the cost of litigation related thereto) arising out of any
Prospectus (as defined below) or the offering described therein for which Owner,
Lessee or any of their affiliates is an issuer or sponsor.

         B. Owner and Lessee and their respective Affiliates agree that, in
connection with any Prospectus issued after the Amendment Date, such Prospectus
shall contain a clear and prominent statement indicating that neither Manager,
Marriott, nor any of their Affiliates will be deemed an issuer, obligor or
guarantor in respect of any securities described in such Prospectus, nor will
they have any responsibility or liability for any statement or omission
contained in the Prospectus or for such securities.

         C. Owner and Lessee and their respective Affiliates agree that they
will not use any of Manager's trademarks in the Prospectus except Owner and
Lessee or their respective Affiliates may use (i) any photographs of any
property (even if such photograph may include signs which contain such
trademarks) and (ii) any textual description of Owner and Lessee or respective
Affiliates (or of their respective businesses or financial results) which
contains the words "Residence Inn by Marriott" or similar marks; provided,
however, that in cases (i) and (ii), the Prospectus contains an appropriate
legend indicating that such trademarks are property of Marriott International,
Inc. or one of its affiliates.

         D. A "Prospectus" is any prospectus, private placement memorandum,
offering circular or offering documentation or other written or oral statements,
which offers any equity or debt security issued by the Owner or the lessee.

         19.11 Expert Decisions

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<PAGE>

         Where this Agreement calls for a matter to be referred to an Expert for
determination, the following provisions shall apply:

         A. The use of the Expert shall be the exclusive remedy of the parties
and neither party shall attempt to adjudicate any dispute in any other forum.
The decision of the Expert shall be final and binding on the parties and shall
not be capable of challenge, whether by arbitration, in court or otherwise;

         B. Each party shall be entitled to make written submissions to the
Expert, and if a party makes any submission it shall also provide a copy to the
other party and the other party shall have the right to comment on such
submission. The parties shall make available to the Expert all books and records
relating to the issue in dispute and shall render to the Expert any assistance
requested of the parties. The costs of the Expert and the proceedings shall be
borne as directed by the Expert unless otherwise provided for herein. The Expert
may direct that such costs be treated as Deductions;

         C. With respect to any matter referred to the Expert for determination
under Section 7.02D, the Expert shall make its decision by applying the
standards applicable to hotels in accordance with the System standards
(including compliance with the requirements of any quality assurance program)
and determining whether the matter at issue is necessary to satisfy such
standards; and

         D. The terms of engagement of the Expert shall include an obligation on
the part of the Expert to: (i) notify the parties in writing of his decision
within forty-five (45) days from the date on which the Expert has been selected
(or such other period as the parties may agree or as set forth herein); and (ii)
establish a timetable for the making of submissions and replies.

         19.12 Entire Agreement

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<PAGE>

         The Agreement, together with other writings signed by the parties
expressly stated to be supplemental hereto and together with any instruments to
be executed and delivered pursuant to the Agreement, constitutes the entire
agreement between the parties and supersedes all prior understandings and
writings, and may be changed only by a writing signed by the parties hereto.

         END OF ARTICLE XIX

                                       89

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
executed as of the day and year first written above.

                                           AHM RES II LIMITED PARTNERSHIP

Attest:                                    By:     AHM RES II, GP
                                                   General Partner

/s/ J. Philip Hart                         By:/s/ Glade M. Knight
-------------------                        -----------------------
Secretary                                  Name:   Glade M. Knight
                                           Title:  Vice President

Attest:                                    RESIDENCE INN BY MARRIOTT, INC.,
                                           a Delaware corporation
                                           ("Manager")

 /s/ Margery Breneman                      By:/s/ M. Lester Pulse, Jr.
---------------------                      ---------------------------
Assistant Secretary                        Name:
                                           Title:  Vice President

                                       90

<PAGE>

                                    EXHIBIT A

                              Locations of the Inns

1)   Birmingham, Alabama

          #3 Greenhill Parkway at U.S. Hwy. 280
          Birmingham, Alabama  35243

2)   Arcadia, California

          Huntington Drive and Second Street just off I-210
          Arcadia, California

3)   Irvine, California

          Alton Pkwy and Morgan near I-5 and I-405
          Irvine, California

4)   Placentia, California

          700 West Kimberly
          Placentia, California  92670

5)   Boca Raton, Florida

          525 NW 77th Street
          Boca Raton, Florida  33487

6)   Jacksonville, Florida

          Interstate 95 and Baymeadows Exit
          8365 Dix Ellis Trail
          Jacksonville, Florida  32256

7)   Pensacola, Florida

          7230 Plantation Road
          Pensacola, Florida  32504

<PAGE>

8)   St. Petersburg/Clearwater, Florida

          5050 Ulmerton Road
          Clearwater, Florida  34620

9)   Chicago/Deerfield, Illinois

          Corporate 500 Drive
          Deerfield, Illinois  60015

10)  Boston/Danvers, Massachusetts

          U.S. Route 1
          Danvers, Massachusetts

11)  Kalamazoo, Michigan

          I-94 and Portage Road
          Kalamazoo, Michigan

12)  Jackson, Mississippi

          881 East River Place
          Jackson, Mississippi  39202

13)  Santa Fe, New Mexico

          1698 Galisteo Street
          Santa Fe, New Mexico  87501

14)  Charlotte North, North Carolina

          8503 U.S. Highway 29
          Charlotte, North Carolina  28213

15)  Greensboro, North Carolina

          2000 Veasley Street
          Greensboro, North Carolina  27407

                                       2

<PAGE>

16)  Las Vegas, Nevada

          Paradise Road and Convention Center Drive
          Las Vegas, Nevada

17)  Akron, Ohio

          120 Montrose West Avenue
          I-77 at Route 18
          Akron, Ohio  44321

18)  Philadelphia/Berwyn, Pennsylvania

          600 West Swedesford Road
          Berwyn, Pennsylvania  19312

19)  Columbia, South Carolina

          150 Stoneridge Drive
          Columbia, South Carolina  29221

20)  Spartanburg, South Carolina

          9011 Fairforest Road
          Spartanburg, South Carolina  29305

21)  Memphis East, Tennessee

          6141 Poplar Pike
          Memphis, Tennessee  38119

22)  Lubbock, Texas

          2551 South Loop 289
          Lubbock, Texas  79423

                                       3

<PAGE>

                            EXHIBITS A-1 through A-22

                               Legal Descriptions

                                    (omitted)

                                       4

<PAGE>

                                    EXHIBIT B

                         Percentages Used for Reductions

                                              Applicable Percentage

1)    Birmingham, Alabama                           5.26%
2)    Arcadia, California                           6.55%
3)    Irvine, California                            5.19%
4)    Placentia, California                         3.40%
5)    Boca Raton, Florida                           5.30%
6)    Jacksonville, Florida                         4.25%
7)    Pensacola, Florida                            2.71%
8)    St. Petersburg/Clearwater, Florida            3.78%
9)    Chicago/Deerfield, Illinois                   4.17%
10)   Boston/Danvers, Massachusetts                 4.59%
11)   Kalamazoo, Michigan                           3.45%
12)   Jackson, Mississippi                          4.95%
13)   Santa Fe, New Mexico                          5.08%
14)   Charlotte North, North Carolina               2.94%
15)   Greensboro, North Carolina                    6.08%
16)   Las Vegas, Nevada                            11.95%
17)   Akron, Ohio                                   3.88%
18)   Philadelphia/Berwyn, Pennsylvania             5.09%
19)   Columbia, South Carolina                      3.71%
20)   Spartanburg, South Carolina                   2.62%
21)   Memphis East, Tennessee                       2.66%
22)   Lubbock, Texas                                2.39%
                                                   ------
      TOTAL                                        100.00%
                                                   ------

                                       26

<PAGE>

                                    EXHIBIT C

                   Schedule of Principal and Interest Payments

                                    (omitted)

<PAGE>

                                    EXHIBIT D

           First Priority Return Reduced by the Applicable Percentage

                                                           Applicable Percentage

1)       Birmingham, Alabama                                       5.26%

2)       Arcadia, California                                       6.55%

3)       Irvine, California                                        5.19%

4)       Placentia, California                                     3.40%

5)       Boca Raton, Florida                                       5.30%

6)       Jacksonville, Florida                                     4.25%

7)       Pensacola, Florida                                        2.71%

8)       St. Petersburg/Clearwater, Florida                        3.78%

9)       Chicago/Deerfield, Illinois                               4.17%

10)      Boston/Danvers, Massachusetts                             4.59%

11)      Kalamazoo, Michigan                                       3.45%

12)      Jackson, Mississippi                                      4.95%

13)      Santa Fe, New Mexico                                      5.08%

14)      Charlotte North, North Carolina                           2.94%

15)      Greensboro, North Carolina                                6.08%

16)      Las Vegas, Nevada                                        11.95%

17)      Akron, Ohio                                               3.88%

18)      Philadelphia/Berwyn, Pennsylvania                         5.09%

19)      Columbia, South Carolina                                  3.71%

20)      Spartanburg, South Carolina                               2.62%

21)      Memphis East, Tennessee                                   2.66%

22)      Lubbock, Texas                                            2.39%
                                                                 ------
         TOTAL                                                   100.00%
                                                                 ------

<PAGE>

                                    EXHIBIT E

                          Breakdown of Competitive Set

                                    (omitted)

<PAGE>

                                    EXHIBIT F

                         SUBORDINATION, NON-DISTURBANCE

                            AND ATTORNMENT AGREEMENT

     THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made and entered into as of the _____ day of ______________,
______________ , among: (i) _______________________________ ("Mortgagee"), a
____________ corporation having an address at
_____________________________________; (ii) Marriott Residence Inn II Limited
Partnership ("Owner"), a Delaware limited partnership having an address at 306
East Main Street, Richmond, Virginia 23219; and (iii) Residence Inn by Marriott,
Inc. ("Manager"), a Delaware corporation having an address at 10400 Fernwood
Road, Bethesda, Maryland 20817.

                                R E C I T A L S

     1. Owner and Mortgagee each are party to the Loan Agreement (defined in
Section 1 below).

     2. Owner is the owner of the Inn (defined in Section 1 below), and
Mortgagee is the holder of the Mortgage (defined in Section 1 below) that
encumbers the Inn.

     3. Owner and AMH Res II Limited Partnership ("Lessee") have entered into
that certain Master Hotel Lease Agreement (defined in Section 1 below) pursuant
to which Owner has leased the Hotel to Lessee.

     4. Lessee and Manager have entered into the Management Agreement (defined
in Section 1 below), and in connection therewith, Lessee, Lessor and Manager
have entered into that certain Owner Agreement of even date thereof.

     5. Mortgagee and Manager desire to provide for Manager's continued
management of the Inn pursuant to the Management Agreement, notwithstanding any
default by Owner or Lessee under the Loan Agreement, the Mortgage or the
Management Agreement, upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually agree
and covenant as follows:

<PAGE>

     1. Definitions. Any capitalized term that is not specifically defined in
this Agreement shall have the meaning set forth in the Management Agreement. The
following terms when used in this Agreement shall have the meanings indicated:

     "Foreclosure" shall mean any exercise of the remedies available to the
holder of the Mortgage, upon a default under the Mortgage, which results in a
transfer of title to or possession of the Inn. The term "Foreclosure" shall
include, without limitation: (i) a transfer by judicial foreclosure; (ii) a
transfer by deed in lieu of foreclosure; (iii) the appointment by a court of a
receiver to assume possession of the Inn; (iv) a transfer of either ownership or
control of the Owner, by exercise of a stock pledge or otherwise; (v) a transfer
resulting from an order given in a bankruptcy, reorganization, insolvency or
similar proceeding; (vi) if title to the Inn is held by a tenant under a ground
lease, an assignment of the tenant's interest in such ground lease; or (vii) any
similar judicial or non-judicial exercise of the remedies held by the holder of
the Mortgage.

     "Foreclosure Date" shall mean the date on which title to or possession of
the Inn is transferred by means of a Foreclosure.

     "Inn" shall mean that certain inn containing approximately [___________]
guest rooms that is located on the site described in Exhibit "A" hereto.

     "Loan Agreement" shall mean that certain Loan dated between Owner and
Mortgagee.

     "Management Agreement" shall mean that certain Amended and Restated
Management Agreement, dated _____________, 2002, between Lessee and Manager
pursuant to which Manager manages the Inn on behalf of Lessee. The term
"Management Agreement," as used in this Agreement, shall include any amendments,
modifications, supplements, replacements or extensions of the Amendment and
Restatement of Management Agreement.

     "Master Hotel Lease" shall mean that certain hotel lease dated between
Owner and Lessee.

     "Mortgage" shall mean that certain mortgage, dated _______________, ______,
in the principal amount of ______________________ Dollars ($________), which was
recorded in the Office of the Clerk of ____________ County, ______________, on
_________________, _____, in Book _____, Page _____. The Mortgage encumbers the
Inn. The term "Mortgage," as used in this Agreement, shall include: (i) any
amendments, modifications, supplements, replacements, extensions or refinancings
of the original "Mortgage" that was recorded as set forth above; and (ii) any
existing or future financing by Mortgagee that is wholly or partially secured by
the Inn, including a "blanket mortgage" encumbering properties other than the
Inn.

     "Mortgagee" shall mean any of the following: (i) the entity identified as
the "Mortgagee" in the Preamble; (ii) any successors or assigns of that entity;
(iii) any nominee or designee of that entity (or any other entity described in
this definition); (iv) any initial or subsequent assignee of all or any portion
of the interest of that entity in the Mortgage; or (v) any entity that is a
participant in the financing secured by the Mortgage, or otherwise acquires an
equitable interest in the Mortgage.

     "Subsequent Owner" shall mean any individual or entity that acquires title
to or possession of the Inn or through a Foreclosure (together with any
successors or assigns thereof), including, without limitation, (i) Mortgagee,
(ii) any purchaser of the Inn from Mortgagee, or any lessee of the Inn from
Mortgagee, or (iii) any purchaser of the Inn at Foreclosure.

     2. Subordination of Management Agreement. Subject to the parties'
compliance with the provisions of this Agreement, the Management Agreement and
all right, title and interest of Manager in and to the Inn are and shall be
subject and subordinate to the lien of the Mortgage; provided, however, that,
notwithstanding the foregoing subordination, neither Mortgagee nor any
Subsequent Owner shall name Manager as a defendant in any Foreclosure

<PAGE>

(unless required by law in order for Mortgagee to obtain complete relief in a
judicial foreclosure proceeding, in which event Manager may be so named subject
to the non-disturbance obligations set forth in Section 3 of this Agreement and
provided that (i) such naming shall not be in derogation of any of the rights of
Manager set forth in this Agreement and (ii) the Management Agreement shall not
be subject to forfeiture or termination, other than in accordance with the terms
thereof, by reason of such suit, action or proceeding or any judgment rendered
therein) or otherwise take steps that are inconsistent with Section 3 of this
Agreement.

     3.   Non-Disturbance.

          A.   In the event any Subsequent Owner comes into possession of or
acquires title to the Inn either at or following a Foreclosure, Mortgagee agrees
(which agreement shall be binding on all Subsequent Owners) that if, at such
time, the Management Agreement has not expired or otherwise been earlier
terminated in accordance with its terms, then Mortgagee and all Subsequent
Owners shall recognize Manager's rights under the Management Agreement and
Manager shall not be disturbed in its right to manage and operate the Inn
pursuant to the provisions of the Management Agreement.

          B.   If, at the time that a Subsequent Owner acquires its interest by
Foreclosure, the Management Agreement has terminated for any reason whatsoever
or Manager does not have the right to manage or operate the Inn pursuant to the
provisions of the Management Agreement (in each case other than due to an Event
of Default by Manager under the Management Agreement), Subsequent Owner and
Manager shall immediately enter into a replacement agreement on the same terms
and conditions as the Management Agreement, except that the term of such
replacement agreement shall start from the date the Management Agreement
terminates (or, as applicable, the date on which Manager no longer has the right
to manage or operate the Inn pursuant to the provisions of the Management
Agreement) and shall continue for the balance of the term that would have
otherwise remained under the Management Agreement.

     4.   Attornment. Manager agrees that, upon a Foreclosure of the Mortgage,
provided that (subject to the provisions of Section 3 above) the Management
Agreement has not expired or otherwise been earlier terminated in accordance
with its terms, Manager shall attorn to any Subsequent Owner and shall remain
bound by all of the terms, covenants and conditions of the Management Agreement,
for the balance of the remaining term thereof (and any renewals thereof that may
be effected in accordance with the Management Agreement) with the same force and
effect as if such Subsequent Owner were the "Owner" under the Management
Agreement; provided, however, that Manager shall be under no such obligation to
so attorn: (i) if such Subsequent Owner would not qualify as a permitted
transferee under Section 18.01 of the Management Agreement; or (ii) unless such
Subsequent Owner, within twenty (20) days after the Foreclosure Date (or, in the
event such Subsequent Owner acquires title to the Inn after the Foreclosure
Date, within twenty (20) days after the date of such acquisition of title to the
Inn), assumes all of the obligations of the "Owner" under the Management
Agreement that arise from and after the Foreclosure Date (or such later date of
acquisition of title to the Inn), pursuant to a written assumption agreement
that is reasonably acceptable to Manager and that shall be delivered to Manager.
Upon the written request of Mortgagee, Manager shall periodically execute and
deliver a statement, in a form reasonably satisfactory to Mortgagee, reaffirming
Manager's obligation to attorn as set forth in this Section 4.

     5.   Notice and Opportunity to Cure.

          A.   In the event of a Default by Lessee in the performance or
observance of any of the terms and conditions of the Management Agreement, and
in the event that Manager gives written notice thereof to Lessee pursuant to
Article XV of the Management Agreement, Manager shall also give a duplicate copy
(herein referred to as the "First Notice") of such notice to Mortgagee, in
accordance with Section 8 of this Agreement. In addition, in the event that such
Default is not cured within the applicable cure period under Article XV of the
Management Agreement, and Manager intends to exercise its remedy of terminating
the Management Agreement, Manager shall send a second notice (the "Second
Notice") to Mortgagee, in accordance with Section 8 hereof, stating Manager's
intention to terminate the Management Agreement. Manager shall forbear from
taking any action to terminate the Management Agreement for a period of thirty
(30) days after the service of the First Notice, and for an additional period of
thirty (30) days after the service of the Second Notice (if such Second Notice
is required, as set forth above).

<PAGE>

          B.   No notice given by Manager to Lessee shall be effective as a
notice under Article XV of the Management Agreement unless the applicable
duplicate notice to Mortgagee that is required under Section 5.A hereof (either
the First Notice or the Second Notice, as the case may be) is given to Mortgagee
in accordance with this Agreement. It is understood that any failure by Manager
to give such a duplicate notice (either the First Notice or the Second Notice,
as the case may be) to Mortgagee shall not be a default by Manager either under
this Agreement or under the Management Agreement, but rather shall operate only
to void the effectiveness of any such notice by Manager to Lessee under Article
XV of the Management Agreement.

<PAGE>

          C.   Manager agrees to accept performance by Mortgagee with the same
force and effect as if the same were performed by Lessee, in accordance with the
provisions and within the cure periods prescribed in the Management Agreement
(except that Mortgagee shall have such additional cure periods, not available to
Lessee, as are set forth in Section 5.A hereof).

          D.   Except as specifically limited in the foregoing paragraphs,
nothing contained herein shall preclude Manager from exercising any of its
rights or remedies against Lessee with respect to any default by Lessee under
the Management Agreement.

     6.   Notice to Manager. Mortgagee shall deliver to Manager a copy of any
notice of default under the Mortgage that Mortgagee sends to Owner.

     7.   Assignment of Management Agreement. Owner has, pursuant to the
applicable provisions of the Mortgage, collaterally assigned to Mortgagee, as
additional security for the indebtedness evidenced by the Mortgage, all of
Owner's right, title and interest in and to the Management Agreement, including
the right to distributions payable to Lessee pursuant thereto. Manager hereby
acknowledges that it has been given a copy of the foregoing assignment. Owner
and Manager hereby acknowledge and agree that, upon the occurrence of a default
under the Loan Agreement or Mortgage, Mortgagee may (from time to time) give
Manager a notice or notices directing Manager to pay to Mortgagee subsequent
distributions under Article V or other applicable provisions under the
Management Agreement that would otherwise be payable to Lessee, and Manager
agrees to comply with any such notice. Manager shall continue to make payments
in compliance with any such notice from Mortgagee until Manager receives written
instructions to the contrary from Mortgagee. Owner and Lessee hereby give
consent to any such payments by Manager to Mortgagee that are in compliance with
any such notice. The foregoing consents by Owner and Lessee shall be deemed to
be irrevocable until the entire debt secured by the Mortgage has been
discharged, as evidenced either by the recordation of a satisfaction or release
executed by Mortgagee, or by the delivery of a written statement to that effect
from Mortgagee to Manager. It is understood that Manager shall comply with the
direction set forth in any such notice without any necessity to investigate
Mortgagee's reasons for sending such notice, or to confirm whether or not Owner
is in fact in default under the terms of the Loan Agreement or Mortgage.

     8.   Notices. Notices, statements and other communications to be given
under the terms of this Agreement shall be in writing and delivered by hand
against receipt or sent by certified or registered mail, postage prepaid, return
receipt requested, or by Federal Express (or other nationally-recognized
overnight courier), marked for next business day delivery, with delivery charges
paid by the sender:

          To Mortgagee:

          To Owner:

          Marriott Residence Inn II Limited Partnership
          c/o Apple Hospitality Two, Inc.
          306 East Main Street
          Richmond, Virginia  23219
          Attn:  Glade M. Knight

          To Lessee:

          AHM Res II Limited Partnership

<PAGE>

          c/o Apple Hospitality Management, Inc.
          10 South Third Street
          Richmond, Virginia  23219
          Attn:  Glade M. Knight

          and, if to Owner or Lessee, with a copy,
          which shall not constitute notice, to:

          Jenkens & Gilchrist, P.C/
          1445 Ross Av., suite 3200
          Dallas, Texas  75202
          Attn:  Thomas E. Davis

          To Manager:

          Residence Inn by Marriott, Inc.
          c/o Marriott International, Inc.
          10400 Fernwood Road
          Bethesda, Maryland 20817
          Attn:  Law Department, 52/923
          Senior Operations Attorney
          FAX:   301/380-6727

or at such other address as is from time to time designated by the party
receiving the notice. Any such notice which is properly mailed shall be deemed
to have been served as of five (5) days after said posting for purposes of
establishing that the sending party complied with the applicable time
limitations set forth herein, but shall not be binding on the addressee until
actually received. Any such notice which is properly sent by Federal Express (or
other nationally-recognized overnight courier) shall be deemed to have been
served as of the business day after being sent for purposes of establishing that
the sending party complied with the applicable time limitations set forth
herein, but shall not be binding on the addressee until actually received.

     9.   Estoppel Certificates. Manager shall, at any time and from time to
time upon not less than thirty (30) days' prior written notice from Mortgagee,
execute, acknowledge and deliver to Mortgagee, or to any third party specified
by Mortgagee, a statement in writing: (a) certifying (i) that the Management
Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect and
stating the modifications) and (ii) the date through which the management fees
due under the Management Agreement have been paid; (b) stating whether or not to
the best knowledge of Manager (i) there is a continuing default by Lessee in the
performance or observance of any covenant, agreement or condition contained in
the Management Agreement, or (ii) there shall have occurred any event that, with
the giving of notice or passage of time or both, would become such a default,
and, if so, specifying each such default or occurrence of which Manager may have
knowledge; and (c) stating such other information as Mortgagee may reasonably
request. Such statement shall be binding upon Manager and may be relied upon by
Mortgagee and/or such third party specified by Mortgagee as aforesaid.

     10.  Confirmatory Documentation.

     The provisions of Section 2, Section 3 and Section 4 of this Agreement are
and shall be fully effective and binding between the parties, upon the
occurrence of the conditions set forth in such Sections, without the execution

<PAGE>

of any further instruments by any party. Notwithstanding the foregoing, each
party to this Agreement shall have the right (from time to time, for so long as
this Agreement is in effect) to request either or both of the other parties to
execute documentation (in form reasonably satisfactory to all signing parties)
confirming (if true) that such conditions (if any) have been satisfied and that
the provisions of Section 2, Section 3 and/or Section 4 hereof have been
implemented. In such event, each of the parties that are requested to execute
such confirmatory documentation agrees to execute it within a reasonable period
of time (not to exceed thirty (30) days) after its receipt of such request.

     11.  Miscellaneous.

          A.   This Agreement may be executed in a number of identical
counterparts. If so executed, all counterparts shall, collectively, constitute
one agreement, but in making proof of this Agreement, it shall not be necessary
to produce or account for more than one such counterpart, provided that xerox or
facsimile copies of all signatures are produced.

          B.   The terms and conditions of this Agreement shall inure to the
benefit of, and be binding upon, the respective successors, heirs, legal
representations and assigns of each of the parties hereto.

          C.   Notwithstanding anything herein to the contrary, the commencement
and prosecution of Foreclosure proceedings under the Mortgage is a matter
entirely within the discretion of Mortgagee.

          D.   The use of the neuter gender in this Agreement shall be deemed to
include any other gender, and words in the singular number shall be held to
include the plural, when the sense requires.

          E.   In the event the Management Agreement shall be amended, modified
or supplemented, the Management Agreement, as so amended, modified or
supplemented, shall continue to be subject to the provisions of this Agreement
without the necessity of any further act by the parties hereto.

          F.   The provisions of this Agreement shall not be modified, amended,
waived, discharged or terminated except by a written document signed by all of
the parties hereto.

     G.   This Agreement and its validity, interpretation and enforcement shall
          be governed by the laws of the state in which the Inn is located.

     H.   Captions of Sections herein are inserted only for convenience and are
          in no way to be construed as a limitation on the scope of the
          particular Sections to which they refer.

          I.   If any term, covenant or condition of this Agreement is held to
be invalid, illegal or unenforceable in any respects, all other terms and
conditions of this Agreement shall remain in full force and effect.

     J.   The waiver by any party of the performance of any covenant, condition
          or promise shall not invalidate this Agreement and shall not be
          considered a waiver of any other covenant, condition or promise. No
          such waiver shall constitute a waiver of the time for performing any
          other act or identical act required to be performed at a later time.
          The exercise of any remedy provided in this Agreement shall not
          constitute a waiver of any remedy provided by law or in equity, and
          the provision in this Agreement of any remedy shall not exclude any
          other remedy unless such remedy is expressly excluded hereby.

<PAGE>

                         [Signatures are on next page.]

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

Attest:               ________________________________("Mortgagee"),
                      a _______________________ corporation

_________________________  By:_______________________________
Assistant Secretary                  Title:______________________________

Attest:                            RESIDENCE INN BY MARRIOTT, INC. ("Manager"),
                                   a Delaware corporation

_________________________  By:_______________________________
Assistant Secretary                  Title:  Vice President

Attest/Witness:                                  _____________________("Owner"),
                                     a_________________________

_________________________  By:________________________________

<PAGE>

[insert acknowledgments, in the form required for recordation in the
jurisdiction in which the Inn is located, for the individuals signing on behalf
of Mortgagee, Owner and Manager]

<PAGE>

                                   EXHIBIT "A"

           TO SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

                          Legal Description of the Site

                                    (omitted)<PAGE>

                                                                    EXHIBIT 10.2

                          MASTER HOTEL LEASE AGREEMENT

                         EFFECTIVE AS OF AUGUST 28, 2002

                                     BETWEEN

                 MARRIOTT RESIDENCE INN II LIMITED PARTNERSHIP,
                         A DELAWARE LIMITED PARTNERSHIP

                                    AS LESSOR

                                       AND

                         AHM RES II LIMITED PARTNERSHIP
                         A VIRGINIA LIMITED PARTNERSHIP

                                    AS LESSEE

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE 1 LEASED PROPERTY; OTHER DEFINITIONS.................................    1
---------
  1.1. Leased Property.......................................................    1
  1.2. Definitions...........................................................    2
ARTICLE 2 TERM; TERMINATION .................................................   14
--------
  2.1. Term..................................................................   14
  2.2. Lessor's Option to Terminate Lease....................................   14
  2.3. Transition Procedures.................................................   15
  2.4. Holding Over..........................................................   16
ARTICLE 3 RENT; RENT ADJUSTMENTS ............................................   17
---------
  3.1. Rent..................................................................   17
  3.2. Confirmation of Percentage Rent and Sundry Rent.......................   21
  3.3. Additional Charges....................................................   22
  3.4. Net Lease; No Termination, Abatement, Etc.............................   22
  3.5. Material Changes in Economic Climate..................................   23
  3.6. Rent Adjustment:  Basic Assumptions Incorrect.........................   24
ARTICLE 4 ANNUAL BUDGETS; BOOKS AND RECORDS..................................   25
---------
  4.1. Annual Budget.........................................................   25
  4.2. Books and Records.....................................................   25
ARTICLE 5 IMPOSITIONS; HOTEL COSTS...........................................   26
---------
  5.1. Payment of Impositions................................................   26
  5.2. Notice of Impositions.................................................   27
  5.3. Adjustment of Impositions.............................................   27
  5.4. Utility Charges.......................................................   27
  5.5. Insurance Premiums....................................................   27
  5.6. Fees..................................................................   27
  5.7. Ground Rent...........................................................   27
ARTICLE 6 LEASED PROPERTY; LESSEE'S PERSONAL PROPERTY........................   27
---------
  6.1. Ownership of the Leased Property......................................   27
  6.2. Lessee's Personal Property............................................   27
  6.3. Lessor's Lien.........................................................   28
  6.4. Lessor's Option to Purchase Assets of Lessee..........................   28
ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY...............................   28
---------
  7.1. Condition of the Leased Property......................................   28
  7.2. Use of the Leased Property............................................   29
  7.3. Lessor to Grant Easements, Etc........................................   30
ARTICLE 8 LESSEE'S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS..............   30
---------
  8.1. Compliance with Legal and Insurance Requirements, Etc.................   30
  8.2. Legal Requirement Covenants...........................................   30
  8.3. Environmental Covenants...............................................   32
ARTICLE 9 MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS............   34
---------
  9.1. Maintenance and Repairs...............................................   34
  9.2. Encroachments, Restrictions, Etc......................................   35
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE 10 ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE .....................   36
----------
  10.1. Alterations........................................................   36
  10.2. Salvage............................................................   36
  10.3. Joint Use Agreements...............................................   36
  10.4. [Reserved].........................................................   36
  10.5. Furniture, Fixture and Equipment Allowance.........................   36
ARTICLE 11 COMPLIANCE WITH MANAGEMENT AGREEMENT............................   37
----------
  11.1. Compliance with Management Agreement...............................   37
ARTICLE 12 PERMITTED LIENS AND CONTESTS....................................   37
----------
  12.1. Liens..............................................................   37
  12.2. Permitted Contests.................................................   38
ARTICLE 13 INSURANCE REQUIREMENTS..........................................   38
----------
  13.1. General Insurance Requirements.....................................   38
  13.2. Replacement Cost...................................................   40
  13.3. Waiver of Subrogation..............................................   40
  13.4. Form Satisfactory, Etc.............................................   40
  13.5. Increase in Limits.................................................   41
  13.6. Blanket Policy.....................................................   41
  13.7. No Separate Insurance..............................................   41
  13.8. Reports On Insurance Claims........................................   41
ARTICLE 14 CASUALTY INSURANCE PROCEEDS; RECONSTRUCTION.....................   42
----------
  14.1. Insurance Proceeds.................................................   42
  14.2. Reconstruction in the Event of Damage or Destruction Covered
        by Insurance.......................................................   42
  14.3. Reconstruction in the Event of Damage or Destruction Not Covered
        by Insurance.......................................................   43
  14.4. Lessee's Property..................................................   43
  14.5. Abatement of Rent..................................................   43
  14.6. Damage Near End of Term............................................   44
  14.7. Waiver.............................................................   44
ARTICLE 15 CONDEMNATION; AWARD ALLOCATION .................................   44
----------
  15.1. Definitions........................................................   44
  15.2. Parties' Rights and Obligations....................................   44
  15.3. Total Taking.......................................................   44
  15.4. Allocation of Award................................................   45
  15.5. Partial Taking.....................................................   45
  15.6. Temporary Taking...................................................   45
ARTICLE 16 DEFAULT BY LESSEE; LESSOR'S REMEDIES............................   46
----------
  16.1. Events of Default..................................................   46
  16.2. Surrender..........................................................   47
  16.3. Damages............................................................   47
  16.4. Waiver.............................................................   48
  16.5. Application of Funds...............................................   49
  16.6. Lessor's Right to Cure Lessee's Default............................   49
ARTICLE 17 DEFAULT BY LESSOR; LESSEE'S REMEDIES............................   49
----------
  17.1. Breach by Lessor...................................................   49
  17.2. Lessee's Right to Cure.............................................   50
  17.3. Provisions Relating to Purchase of the Leased Property by Lessee...   50
</TABLE>

                                       ii

<PAGE>

ARTICLE 18 INDEMNIFICATION..................................................  50
----------
  18.1. Indemnification.....................................................  50
ARTICLE 19 REIT REQUIREMENTS AND RESTRICTIONS...............................  51
----------
  19.1. Personal Property Limitation........................................  51
  19.2. Sublease Rent Limitation............................................  52
  19.3. Sublease Tenant Limitation..........................................  52
  19.4. Lessee Ownership Limitations........................................  52
  19.5. Lessee Officer and Employee Limitation..............................  52
  19.6. Payments to Affiliates of Lessee....................................  52
ARTICLE 20 SUBLETTING AND ASSIGNMENT........................................  53
----------
  20.1. Subletting and Assignment...........................................  53
  20.2. Attornment..........................................................  53
  20.3. Conveyance by Lessor................................................  53
ARTICLE 21 QUIET ENJOYMENT; RISK OF LOSS....................................  54
----------
  21.1. Quiet Enjoyment.....................................................  54
  21.2. Risk of Loss........................................................  54
ARTICLE 22 LESSOR MORTGAGES; SUBORDINATION OF LEASE.........................  54
----------
  22.1. Lessor May Grant Liens..............................................  54
  22.2. Subordination of Lease..............................................  54
ARTICLE 23 ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS; INSPECTION RIGHTS...  55
----------
  23.1. Estoppel Certificates; Financial Statements.........................  55
  23.2. Lessor's Right to Inspect...........................................  56
ARTICLE 24 APPRAISERS.......................................................  56
----------
  24.1. Appraisers..........................................................  56
ARTICLE 25 ARBITRATION AND DISPUTE RESOLUTION PROCEDURES....................  57
----------
  25.1. Arbitration.........................................................  57
  25.2. Alternative Arbitration.............................................  57
  25.3. Arbitration Procedure...............................................  57
ARTICLE 26 NOTICES..........................................................  58
----------
  26.1. Notices.............................................................  58
ARTICLE 27 MISCELLANEOUS....................................................  58
----------
  27.1. No Waiver...........................................................  58
  27.2. Remedies Cumulative.................................................  58
  27.3. Waiver of Trial by Jury.............................................  59
  27.4. Acceptance of Surrender.............................................  59
  27.5. No Merger of Title..................................................  59
  27.6. Waiver of Presentment, Etc..........................................  59
  27.7. Action for Damages..................................................  59
  27.8. Lease Assumption in Bankruptcy Proceeding...........................  59
  27.9. Enforceability......................................................  59
  27.10.Memorandum of Lease.................................................  60

                                      iii

<PAGE>

Exhibit A - Legal Description
Schedule 2.1 - Commencement Dates
Schedule 3.1(a) - Base Rents
Schedule 3.1(b) - Suite Revenue Breakpoints

                                       iv

<PAGE>

                          MASTER HOTEL LEASE AGREEMENT

         THIS MASTER HOTEL LEASE AGREEMENT (hereinafter called "Lease"),
effective as of the 28/th/ day of August, 2002, by and between Marriott
Residence Inn II Limited Partnership, a Delaware limited partnership
(hereinafter called "Lessor"), and AHM Res II Limited Partnership, a Virginia
limited partnership (hereinafter called "Lessee"), provides as follows:

                                   AGREEMENT:

         Lessor, for and in consideration of the payment of rent by Lessee to
Lessor, the covenants and agreements to be performed by Lessee, and upon the
terms and conditions hereinafter stated, does hereby rent and lease unto Lessee,
and Lessee does hereby rent and lease from Lessor, the Leased Property.

                                   ARTICLE 1

                       LEASED PROPERTY; OTHER DEFINITIONS

         1.1.   Leased Property. The Leased Property shall mean and is comprised
of Lessor's interest in the following:

                (a)   the land described in Exhibit A attached hereto and by
reference incorporated herein (the "Land");

                (b)   all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and offsite), parking areas and
roadways appurtenant to such buildings and structures presently situated upon
the Land (collectively, the "Leased Improvements");

                (c)   all easements, rights and appurtenances relating to the
Land and the Leased Improvements;

                (d)   all equipment, machinery, fixtures, and other items of
property required for or incidental to the use of the Leased Improvements as a
hotel, including all components thereof, now and hereafter permanently affixed
to or incorporated into the Leased Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which to the
greatest extent permitted by law are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively, the "Fixtures");

                (e)   all furniture and furnishings and all other items of
personal property (excluding Inventory and personal property owned by Lessee)
located on, and used in connection with, the operation of the Leased
Improvements as a hotel, together with all replacements, modifications,
alterations and additions thereto; and

<PAGE>

                (f)   all existing leases of space within the Leased Property
(including any security deposits or collateral held by Lessor pursuant thereto).

THE LEASED PROPERTY IS DEMISED IN ITS PRESENT CONDITION WITHOUT REPRESENTATION
OR WARRANTY (EXPRESSED OR IMPLIED) BY LESSOR AND SUBJECT TO THE RIGHTS OF
PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE INCLUDING ALL
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS OF RECORD
INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS AND OTHER MATTERS WHICH WOULD BE
DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY AN ACCURATE SURVEY
THEREOF.

         1.2.   Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as are at the time applicable, (c) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (d) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

                Additional Charges: As defined in Section 3.3.

                Affiliate: As used in this Lease the term "Affiliate" of a
Person shall mean (a) any Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person, (b) any other Person
that owns, beneficially, directly or indirectly, ten percent (10%) or more of
the outstanding capital stock, shares or equity interests of such Person, or (c)
any officer, director, employee, partner, manager or trustee of such Person or
any Person controlling, controlled by or under common control with such Person
or any Person that owns, beneficially, directly or indirectly, ten percent (10%)
or more of the outstanding capital stock, shares or equity interests of such
Person (excluding trustees and Persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.

                Annual Budget: As used in this Lease, the term "Annual Budget"
shall mean an operating and capital budget prepared by Lessee and delivered to
Lessor in accordance with Section 4.1.

                Award: As defined in Subsection 15.1(a).

                                       2

<PAGE>

                Base Rate: The rate of interest announced publicly by Citibank,
N.A., in New York, New York, from time to time, as such bank's base rate. If no
such rate is announced or if such rate becomes discontinued, then such other
rate as Lessor may reasonably designate.

                Base Rent: As defined in Subsection 3.1(a).

                Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which national banks in the City of New York, New
York, or in the municipality wherein the Leased Property is located are closed.

                CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

                Change of Control: The sale, conveyance, assignment,
encumbering, pledging, hypothecation, granting a security interest in, granting
of options with respect to, or other disposition of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration) of any class stock or other equity interests in a Person
(other than among existing holders of interests in such Person on the
Commencement Date and/or family members of such holders and/or trusts for the
benefit of any of the foregoing) that, upon a transfer of any portion thereof,
will create in the transferee thereof, directly or indirectly, a majority of any
class of stock or other equity interests of such Person.

                Claims: As defined in Section 12.2.

                COBRA: As defined in Subsection 8.2(b).

                Code: The Internal Revenue Code of 1986, as amended.

                Commencement Date: As defined in Section 2.1.

                Competitive Set: As defined in the STR Reports. Lessor and
Lessee shall work in good faith to determine any additions and deletions to the
Hotel's Competitive Set, on or before November 15th of each year, with such
changes to be applicable for the following Fiscal Year. In the event Lessor and
Lessee cannot agree to the Hotel's Competitive Set by November 15th of any year,
such unagreed items shall be determined by Smith Travel Research (or, if it
refuses or is unable to do so, by arbitration pursuant to Section 25.2). The
costs of resetting the Hotel's Competitive Set shall be borne equally by the
parties.

                Comparison Month: As defined in Subsection 3.1(e).

                Condemnation, Condemnor: As defined in Section 15.1

                Consolidated Financials: For any fiscal year or other accounting
period for Lessee and its consolidated subsidiaries, if any, statements of
earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective fiscal year to
the end of such period and the related balance sheet as at the end of such
period,

                                       3

<PAGE>

together with the notes thereto, all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with generally accepted
accounting principles and audited by independent certified public accountants
acceptable to Lessor in its sole discretion.

                Consumer Price Index: The "U.S. City Average, All Items"
Consumer Price Index for All Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor (Base: 1982-1984=100), or
any successor index thereto. If the Consumer Price Index is hereafter converted
to a different standard reference base or otherwise revised, any determination
hereunder that uses the Consumer Price Index shall be made with the use of such
conversion factor, formula or table for converting the Consumer Price Index as
may be published by the Bureau of Labor Statistics, or, if the Bureau shall no
longer publish the same, then with the use of such conversion factor, formula or
table as may be published by Prentice Hall, Inc., or, failing such publication,
by any other nationally recognized publisher of similar statistical information.

                Date of Taking: As defined in Subsection 15.1(d).

                Encumbrance: As defined in Section 22.1.

                Environmental Audit: As defined in Subsection 8.3(b).

                Environmental Authority: Any department, agency or other body or
component of any Government that exercises any form of jurisdiction or authority
under any Environmental Law.

                Environmental Authorization: Any license, permit, order,
approval, consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.

                Environmental Laws: All applicable federal, state, local and
foreign laws and regulations relating to pollution of the environment (including
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including without limitation laws and regulations relating
to emissions, discharges, Releases or threatened Releases of Hazardous Materials
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
Environmental Laws include but are not limited to CERCLA, FIFRA, RCRA, SARA and
TSCA.

                Environmental Liabilities: Any and all obligations to pay the
amount of any judgment or settlement, the cost of complying with any settlement,
judgment or order for injunctive or other equitable relief, the cost of
compliance or corrective action in response to any notice, demand or request
from an Environmental Authority, the amount of any civil penalty or criminal
fine, and any court costs and reasonable amounts for attorney's fees, fees for
witnesses and experts, and costs of investigation and preparation for defense of
any claim or any Proceeding, regardless of whether such Proceeding is
threatened, pending or completed, that may be or have been asserted against or
imposed upon Lessor, Lessee, any Predecessor, the Leased Property or any
property used therein and arising out of:

                                       4

<PAGE>

                (a)   Failure of Lessee, Lessor, any Predecessor or the Leased
Property to comply at any time with all Environmental Laws;

                (b)   Presence of any Hazardous Materials on, in, under, at or
in any way affecting the Leased Property;

                (c)   A Release at any time of any Hazardous Materials on, in,
at, under or in any way affecting the Leased Property;

                (d)   Identification of Lessee, Lessor or any Predecessor as a
potentially responsible party under CERCLA or under any Environmental Law
similar to CERCLA;

                (e)   Presence at any time of any above-ground and/or
underground storage tanks, as defined in RCRA or in any applicable Environmental
Law on, in, at or under the Leased Property or any adjacent site or facility; or

                (f)   Any and all claims for injury or damage to Persons or
property arising out of exposure to Hazardous Materials originating or located
at the Leased Property, or resulting from operation thereof or any adjoining
property.

                Event of Default: As defined in Section 16.1.

                Fair Market Rental: The fair market rental of the Leased
Property means the rental which a willing tenant not compelled to rent would pay
a willing landlord not compelled to lease for the use and occupancy of such
Leased Property pursuant to the Lease for the term in question, (a) assuming
that Lessee is not in default thereunder and (b) determined in accordance with
the appraisal procedures set forth in Article 24 or in such other manner as
shall be mutually acceptable to Lessor and Lessee.

                Fair Market Value: The fair market value of the Leased Property
means an amount equal to the price that a willing buyer not compelled to buy
would pay a willing seller not compelled to sell for such Leased Property, (a)
assuming the same is unencumbered by this Lease, (b) determined in accordance
with the appraisal procedures set forth in Article 24 or in such other manner as
shall be mutually acceptable to Lessor and Lessee, (c) assuming that such seller
must pay customary closing costs and title premiums, and (d) taking into account
the positive or negative effect on the value of the Leased Property attributable
to the interest rate, amortization schedule, maturity date, prepayment penalty
and other terms and conditions of any encumbrance that is assumed by the
transferee. In addition, in determining the Fair Market Value with respect to
damaged or destroyed Leased Property such value shall be determined as if such
Leased Property had not been so damaged or destroyed.

                FIFRA: The Federal Insecticide, Fungicide, and Rodenticide Act,
as amended.

                Fiscal Year: The twelve (12) month period from January 1 to
December 31, or any shorter period at the beginning or end of the Term.

                                       5

<PAGE>

                Fixtures: As defined in Section 1.1.

                Force Majeure: An Unavoidable Occurrence, generally affecting
travel and/or the hotel or lodging business in the market and/or submarket in
which the Hotel is located.

                Furniture and Equipment: For purposes of this Lease, the terms
"furniture and equipment" shall mean collectively all furniture, furnishings,
wall coverings, fixtures and hotel equipment and systems located at, or used in
connection with, the Hotel, together with all replacements therefor and
additions thereto, including, without limitation, (i) all equipment and systems
required for the operation of kitchens and bars, laundry and dry cleaning
facilities, (ii) office equipment, (iii) material handling equipment, cleaning
and engineering equipment, (iv) telephone and computerized accounting systems,
and (v) vehicles.

                Government: The United States of America, any state, district or
territory thereof, any foreign nation, any state, district, department,
territory or other political division thereof, or any agency or political
subdivision of any of the foregoing.

                Gross Operating Expenses: The term "Gross Operating Expenses"
shall include (i) all costs and expenses of operating the Hotel included within
the meaning of the term "Total Costs and Expenses" contained in the Uniform
System and, (ii) without duplication, the following: all salaries and employee
expense and payroll taxes (including salaries, wages, bonuses and other
compensation of all employees of the Hotel, and benefits including life, medical
and disability insurance and retirement benefits), expenditures described in
Section 9.1, operational supplies, utilities, insurance to be provided by Lessee
under the terms of this Lease, governmental fees and assessments, common area
maintenance costs and other common area fees and assessments, food, beverages,
laundry service expense, the cost of Inventories, license fees, advertising,
marketing, reservation systems and any and all other operating expenses as are
reasonably necessary for the proper and efficient operation of the Hotel and the
Leased Property incurred by Lessee in accordance with the provisions hereof
(excluding, however, (i) federal, state and municipal excise, sales and use
taxes collected directly from patrons and guests or as a part of the sales price
of any goods, services or displays, such as gross receipts, admissions, cabaret
or similar or equivalent taxes paid over to federal, state or municipal
governments, (ii) the cost of insurance to be provided under Article 13, (iii)
expenditures by Lessor pursuant to Article 13 and (iv) payments on any Mortgage
or other mortgage or security instrument on the Hotel); all determined in
accordance with generally accepted accounting principles. No part of Lessee's
central office overhead or general or administrative expense (as opposed to that
of the Hotel) shall be deemed to be a part of Gross Operating Expenses, as
herein provided. Reasonable out-of-pocket expenses of Lessee incurred for the
account of or in connection with the Hotel operations, including but not limited
to postage, telephone charges and reasonable travel expenses of employees,
officers and other representatives and consultants of Lessee and its Affiliates,
shall be deemed to be a part of Gross Operating Expenses and such Persons shall
be afforded reasonable accommodations, food, beverages, laundry, valet and other
such services by and at the Hotel without charge to such Persons or Lessee.

                Gross Operating Profit: For any Fiscal Year, the excess of Gross
Revenues for such Fiscal Year over Gross Operating Expenses for such Fiscal
Year.

                                       6

<PAGE>

                Gross Revenues: All revenues, receipts, and income of any kind
derived directly or indirectly by Lessee from or in connection with the Hotel
(including rentals or other payments from tenants, lessees, licensees or
concessionaires but not including their gross receipts) whether on a cash basis
or credit, paid or collected, determined in accordance with generally accepted
accounting principles, excluding, however: (i) funds furnished by Lessor, (ii)
federal, state and municipal excise, sales, and use taxes collected directly
from patrons and guests or as a part of the sales price of any goods, services
or displays, such as gross receipts, admissions, cabaret or similar or
equivalent taxes and paid over to federal, state or municipal governments, (iii)
the amount of all credits, rebates or refunds to customers, guests or patrons,
and all service charges, finance charges, interest and discounts attributable to
charge accounts and credit cards, to the extent the same are paid to Lessee by
its customers, guests or patrons, or to the extent the same are paid for by
Lessee to, or charged to Lessee by, credit card companies, (iv) gratuities or
service charges actually paid to employees, (v) proceeds of insurance and
condemnation, (vi) proceeds from sales other than sales in the ordinary course
of business, (vii) all loan proceeds from financing or refinancings of the Hotel
or interests therein or components thereof, (viii) judgments and awards, except
any portion thereof arising from normal business operations of the Hotel, and
(ix) items constituting "allowances" under the Uniform System.

                Hazardous Materials: All chemicals, pollutants, contaminants,
wastes and toxic substances, including without limitation:

                (a)   Solid or hazardous waste, as defined in RCRA or any other
Environmental Law;

                (b)   Hazardous substances, as defined in CERCLA or any other
Environmental Law;

                (c)   Toxic substances, as defined in TSCA or any other
Environmental Law;

                (d)   Insecticides, fungicides, or rodenticides, as defined in
FIFRA or any other Environmental Law; and

                (e)   Gasoline or any other petroleum product or byproduct,
polychlorinated biphenyl, asbestos and urea formaldehyde.

                Hotel: The hotel and/or other facility offering lodging and
other services or amenities being operated or proposed to be operated on the
Leased Property.

                Hotel Market Decline: A period of six (6) consecutive calendar
months during which there is (i) a twenty percent (20%) decline in average hotel
occupancy for the Hotel from the average hotel occupancy levels for same period
during the prior calendar year and (ii) a twenty percent (20%) decline in
average hotel occupancy for the Hotel's Competitive Set from the average hotel
occupancy levels for the same period during the prior calendar year, as
published in the applicable STR Reports.

                                       7

<PAGE>

                Impositions: Collectively, all taxes (including, without
limitation, all ad valorem, sales and use, single business, gross receipts,
transaction, privilege, rent or similar taxes as the same relate to or are
imposed upon Lessee or its business conducted upon the Leased Property),
assessments (including, without limitation, all assessments for public
improvements or benefit, whether or not commenced or completed prior to the date
hereof and whether or not to be completed within the Term), ground rents, water,
sewer or other rents and charges, excises, tax inspection, authorization and
similar fees and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property or the business conducted thereon by
Lessee (including all interest and penalties thereon caused by any failure in
payment by Lessee), which at any time prior to, during or with respect to the
Term hereof may be assessed or imposed on or with respect to or be a lien upon
(a) Lessor's interest in the Leased Property, (b) the Leased Property, or any
part thereof or any rent therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on or in connection with the Leased Property, or the
leasing or use of the Leased Property or any part thereof by Lessee. Nothing
contained in this definition of Impositions shall be construed to require Lessee
to pay (1) any tax based on net income (whether denominated as a franchise or
capital stock or other tax) imposed on Lessor or any other Person, or (2) any
net revenue tax of Lessor or any other Person, or (3) any tax imposed with
respect to the sale, exchange or other disposition by Lessor of any Leased
Property or the proceeds thereof, or (4) any single business, gross receipts
(other than a tax on any rent received by Lessor from Lessee), transaction,
privilege or similar taxes as the same relate to or are imposed upon Lessor,
except to the extent that any tax, assessment, tax levy or charge that Lessee is
obligated to pay pursuant to the first sentence of this definition and that is
in effect at any time during the Term hereof is totally or partially repealed,
and a tax, assessment, tax levy or charge set forth in clause (1) or (2) is
levied, assessed or imposed expressly in lieu thereof.

                Indemnified Party: Either of a Lessee Indemnified Party or a
Lessor Indemnified Party.

                Indemnifying Party: Any party obligated to indemnify an
Indemnified Party pursuant to Sections 8.3 or 18.1.

                Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.

                Inventory: All "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System, including without limitation linens,
china, silver, glassware and other non-depreciable personal property, and
including any property of the type described in Section 1221(1) of the Code.

                Land: As defined in Section 1.1.

                Lease: This Lease.

                Leased Improvements; Leased Property: Each as defined in Section
1.1.

                                       8

<PAGE>

                Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting either the Leased Property or the
maintenance, construction, use or alteration thereof (whether by Lessee or
otherwise), whether now in force or hereafter enacted and in force, including
(a) all laws, rules or regulations pertaining to the environment, occupational
health and safety and public health, safety or welfare, and (b) any laws, rules
or regulations that may (1) require repairs, modifications or alterations in or
to the Leased Property or (2) in any way adversely affect the use and enjoyment
thereof; and all permits, licenses and authorizations and regulations relating
thereto and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee), at any time in force affecting
the Leased Property.

                Lending Institution: Any insurance company, credit company,
federally-insured commercial or savings bank, national banking association,
savings and loan association, employees welfare, pension or retirement fund or
system, corporate profit sharing or pension trust, college or university, or
real estate investment trust, including any corporation qualified to be treated
for federal tax purposes as a real estate investment trust, such trust having a
net worth of at least $10,000,000.

                Lessee: The Lessee designated on this Lease and its respective
permitted successors and assigns.

                Lessee Indemnified Party: Lessee, any Affiliate of Lessee, any
other Person against whom any claim for indemnification may be asserted
hereunder as a result of a direct or indirect ownership interest (including a
stockholder's or member's interest) in Lessee, the officers, directors,
stockholders, members, managers, employees, agents and representatives of
Lessee, and the respective heirs, personal representatives, successors and
assigns of any such officer, director, stockholder, member, manager, employee,
agent or representative.

                Lessee's Personal Property: As defined in Section 6.2.

                Lessor: The Lessor designated In this Lease and its respective
successors and assigns.

                Lessor Indemnified Party: Lessor, any Affiliate of Lessor, any
other Person against whom any claim for indemnification may be asserted
hereunder as a result of a direct or indirect ownership interest (including a
stockholder's or partnership interest) in Lessor, the officers, directors,
stockholders, members, managers, employees, agents and representatives of the
general partner of Lessor and any partner, agent, or representative of Lessor,
and the respective heirs, personal representatives, successors and assigns of
any such officer, director, stockholder, partner, member, manager, employee,
agent or representative.

                Licenses: As defined in Subsection 2.3(a).

                Management Agreement: The agreement pursuant to which Manager
operates the Hotel.

                                       9

<PAGE>

                Manager: Residence Inn by Marriott, Inc., a Delaware
corporation, or any successor manager that is retained by Lessee to operate the
Hotel pursuant to this Lease and the Management Agreement.

                Minimum Price: The sum of (a) the equity in the Leased Property
at the time of acquisition of the Leased Property by Lessor, plus (b) other
capital expenditures on the Leased Property by Lessor after the date hereof
(less depreciation and amortization thereof) plus (c) the unpaid principal
balance plus accrued interest and any other amounts then due and payable of all
encumbrances against the Leased Property at the time of purchase of the Leased
Property by Lessee, less (x) all proceeds received by Lessor from any financing
or refinancing of the Leased Property after the date hereof (after payment of
any debt refinanced and net of any costs and expenses incurred in connection
with such financing or refinancing, including, without limitation, loan points,
commitment fees and commissions and legal fees) and (y) the net amount (after
deduction of all reasonable legal fees and other costs and expenses, including
without limitation expert witness fees, incurred by Lessor in connection with
obtaining any such proceeds or award) of all insurance proceeds received by
Lessor and awards received by Lessor from any partial Taking of the Leased
Property that are not applied to restoration.

                Mortgage: As defined in Section 22.2.

                National Economic Decline: A period of six (6) consecutive
calendar months during which there occurs or continues a ten percent (10%)
decline in average hotel occupancy, from average hotel occupancy levels for the
same period during the prior calendar year, for all open and operating hotels in
the United States as determined from the applicable STR Reports or, if the STR
Reports are not longer published, other reputable national economic data
regarding the hospitality industry.

                Notice: As defined in Article 26.

                Officer's Certificate: A certificate of Lessee reasonably
acceptable to Lessor, signed by the chief financial officer or another officer
authorized so to sign by the board of directors or other governing body of
Lessee, or bylaws or limited liability company agreement of Lessee, or any other
Person whose power and authority to act has been authorized by delegation in
writing by any such officer.

                Optional Termination Date: As defined in Section 2.2.

                Overdue Rate: On any date, a rate equal to the Base Rate plus
five percent (5%) per annum, but in no event greater than the maximum rate then
permitted under applicable law.

                Payment Date: Any due date for the payment of any installment of
Base Rent.

                Percentage Rent: As defined in Subsection 3.1(b).

                                       10

<PAGE>

                Person: Any Government, natural person, corporation, general or
limited partnership, limited liability company, stock company or association,
joint venture, association, company, trust, bank, trust company, land trust,
business trust, or other entity.

                Personal Property Taxes: All personal property taxes imposed on
the furniture, furnishings or other items of personal property located on, and
used in connection with, the operation of the Leased Improvements as a hotel
(other than Inventory and other personal property owned by Lessee), together
with all replacement, modifications, alterations and additions thereto.

                Predecessor: Any Person whose liabilities arising under any
Environmental Law have or may have been retained or assumed by Lessor or Lessee,
either contractually or by operation of law, relating to the Leased Property.

                Primary Intended Use: As defined in Subsection 7.2(b).

                Proceeding: Any judicial action, suit or proceeding (whether
civil or criminal), any administrative proceeding (whether formal or informal),
any investigation by a governmental authority or entity (including a grand
jury), and any arbitration, mediation or other non-judicial process for dispute
resolution.

                Quarterly Revenues Computation: As defined in Subsection 3.1(b).

                RCRA: The Resource Conservation and Recovery Act, as amended.

                Real Estate Taxes: All real estate taxes, including general and
special assessments, if any, which are imposed upon the Land, and any
improvements thereon.

                Regional Market Decline: A period of six (6) consecutive
calendar months during which there is a twenty percent (20%) decline in average
hotel occupancy from hotel occupancy levels for the same period during the then
prior calendar year, for all open and operating hotels in the Smith Travel
Research Region in which the Hotel is located, as determined from applicable STR
Reports or, if the STR Reports are no longer published, other reputable regional
economic data regarding the hospitality industry.

                Rejectable Offer Price: An amount equal to the greater of (a)
the Fair Market Value, determined as of the applicable purchase date, or (b) the
Minimum Price.

                Release: A "Release" as defined in CERCLA or in any
Environmental Law, unless such Release has been properly authorized and
permitted in writing by all applicable Environmental Authorities or is allowed
by such Environmental Law without authorizations or permits.

                Rent: Collectively, the Base Rent, Percentage Rent, Sundry Rent
and Additional Charges.

                Repositioning: As defined in Section 3.6.

                                       11

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                SARA: The Superfund Amendments and Reauthorization Act of 1986,
as amended.

                Solvent: As to any Person, (a) the sum of the assets of such
Person exceeds its liabilities and (b) such Person has sufficient capital with
which to conduct its business as presently conducted and as proposed to be
conducted.

                State: The state or commonwealth in which the Hotel is located.

                STR Reports: Reports compiled by Smith Travel Research, or its
successor, which contain historical supply and demand, occupancy, and average
rate information for the Hotel and hotels with which it competes (or, in the
event that Smith Travel Research discontinues providing such information,
reports of similar nature compiled by an authority recognized nationally in the
hospitality industry).

                Subsidiaries: Persons in which Lessee owns, directly or
indirectly, more than fifty percent (50%) of the voting stock or control, as
applicable.

                Suite Revenue Breakpoint: As defined in Subsection 3.1(b).

                Suite Revenues: All revenues, receipts, and income of any kind
derived directly or indirectly by Lessee from or in connection with the rental
of guest rooms or suites, whether to individuals, groups or transients, at the
Hotel, whether on a cash basis or credit, paid or collected, determined in
accordance with generally accepted accounting principles, but excluding the
following:

                (a)   The amount of all credits, rebates or refunds to
customers, guests or patrons, and all service charges, finance charges, interest
and discounts attributable to charge accounts and credit cards, to the extent
the same are paid to Lessee by its customers, guests or patrons, or to the
extent the same are paid for by Lessee to, or charged to Lessee by, credit card
companies;

                (b)   All sales taxes or any other taxes imposed on the rental
of such guest rooms or suites;

                (c)   Gratuities or service charges actually paid to employees;

                (d)   Proceeds of business interruption and other insurance; and

                (e)   Sundry Revenues.

                Sundry Rent: As defined in Section 3.1(c).

                Sundry Revenues: All revenues, receipts, and income derived from
the Hotel's meeting rooms, telephones, TV and movie rentals, check room,
washroom, laundry, valet, vending machines, and other sources not specified
herein as Suite Revenues.

                                       12

<PAGE>

                Taking: A taking or voluntary conveyance during the Term hereof
of all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of, any Condemnation
or other eminent domain Proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.

                Term: As defined in Section 2.1.

                TSCA: The Toxic Substances Control Act, as amended.

                Unavoidable Delays: Delays due to strikes, lock-outs, labor
unrest, inability to procure materials, power failure, acts of God, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party under
this Lease or any guaranty of this Lease.

                Unavoidable Occurrence. The occurrence of strikes, lockouts,
labor unrest, gasoline and other energy shortages, widespread disruption of air,
auto or other travel, inability to procure materials or services, power or other
utility failure, acts of God (such as hurricanes, tornadoes, earthquakes, floods
and mud slides), governmental restrictions, war or other enemy or terrorist
action, civil commotion, fire, casualty, condemnation or other similar causes,
in each case, if such cause is beyond the reasonable control of Lessee; provided
that (i) lack of funds shall not be deemed a cause beyond the reasonable control
of either party hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such party under this Lease or
any guaranty of this Lease, and (ii) any such occurrence is an extraordinary, as
opposed to a routine or cyclical, material event that was not reasonably
foreseeable when the then-applicable Annual Budget was prepared.

                Uneconomic for its Primary Intended Use: A state or condition of
the Hotel such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, the Hotel cannot be operated on a commercially practicable basis
for its Primary Intended Use, taking into account, among other relevant factors,
the number of usable rooms and projected revenues, such that Lessee intends to,
and shall, complete the cessation of operations from the Leased Hotel.

                Uniform System: The Uniform System of Accounts for Hotels (9th
Revised Edition, 1996) as published by the Hotel Association of New York City,
Inc., with such later revisions as may be agreed to by both Lessor and Lessee.

                Unsuitable for its Primary Intended Use: A state or condition of
the Hotel such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, due to casualty damage or loss through Condemnation, the Hotel
cannot function as an integrated hotel facility consistent with standards
applicable to a well maintained and operated hotel.

                                       13

<PAGE>

                WARN Act: As defined in Subsection 8.2(b).

                Working Capital: Funds reasonably necessary for the day-to-day
operation of the Hotel's business for a thirty (30) day period, including,
without limitation, amounts sufficient for the maintenance of change and petty
cash funds, operating bank accounts, payrolls, accounts payable, accrued current
liabilities, and funds required to maintain Inventories.

                                   ARTICLE 2

                                TERM; TERMINATION

         2.1.   Term.

                (a)   The term of the Lease (the "Term") shall commence on the
date specified in Schedule 2.1 (the "Commencement Date"), and shall end on the
tenth (10th) anniversary of the Commencement Date, unless sooner terminated in
accordance with the provisions hereof or extended to an anniversary of the
initial expiration date pursuant to this Article 2.

                (b)   Lessee is granted the option to extend the Term of this
Lease for a period of five (5) years (the "First Extension"), provided that
Lessee is not in default hereunder either at the time of deemed exercise of the
option or at the end of the original Term, which option must be exercised by
written notice to Lessor at least one hundred twenty (120) days prior to the
expiration of the original Term. The First Extension shall be upon the same
terms, conditions and rentals as set forth herein for the original Term.

                (c)   Lessee is granted an option to extend the Term for a
period of five (5) years following the end of the First Extension (the "Second
Extension"), provided that Lessee is not in default hereunder either at the time
of exercise of the option or at the end of the First Extension, which option
must be exercised by written notice to Lessor at least one hundred twenty (120)
days prior to the expiration of the First Extension. If such option is
exercised, Lessor and Lessee shall negotiate in good faith modifications to the
Rent for the Second Extension to adjust such Rent to market rates for
arms-length hotel REIT leases between unrelated parties for similar hotel
properties at that time. In the event Lessor and Lessee are unable to agree upon
Rent terms for the Second Extension at least ninety (90) days prior to the
expiration of the Term, the Rent terms for the Second Extension shall be
determined by a panel of three (3) persons who have generally recognized
expertise in evaluating hotel REIT leases and who are not Affiliates of Lessor
or Lessee. Lessee and the Lessor each shall have the right to designate one
panel member and the two (2) panel members so designated will designate the
third panel member. Rent terms approved by at least two (2) of the three (3)
panel members will be binding on Lessee and Lessor for the Second Extension,
which shall be otherwise on the terms set forth herein. In determining the
market rates for the Second Extension, the panel members shall be instructed to
consider hotel REIT lease terms with respect to similar hotel property types.
The Second Extension shall be otherwise upon the same terms and conditions as
set forth herein for the original Term.

         2.2.   Lessor's Option to Terminate Lease. In the event Lessor enters
into a bona fide contract to sell the Leased Property to a non-Affiliate, there
is a Change of Control of Lessor, or the

                                       14

<PAGE>

provisions of the Code are amended to permit Lessor to operate hotels or
otherwise render the structure embodied by this Lease to be obsolete, Lessor may
terminate the Lease by giving not less than thirty (30) days' prior Notice to
Lessee of Lessor's election to terminate the Lease effective upon, as
appropriate, the closing under such contract, the date of such Change of
Control, or the effective date of such amendment to the Code (or any other
specified date within 30 days after such date) (the "Optional Termination
Date"). Effective upon the Optional Termination Date, this Lease shall terminate
and be of no further force and effect except as to any obligations of the
parties existing as of such date that survive termination of this Lease. As
compensation for the early termination of its leasehold estate under this
Section 2.2, Lessor shall within 12 months of the Optional Termination Date
either (a) pay to Lessee the fair market value of Lessee's leasehold estate
hereunder plus interest thereon at the Base Rate as of the Optional Termination
Date or (b) offer to lease to Lessee one or more substitute hotel facilities
pursuant to one or more leases that would create for Lessee leasehold estates
that have an aggregate fair market value of no less than the fair market value
of the original leasehold estate, both such values as determined as of the
Optional Termination Date. Lessor also shall pay to Lessee, or reimburse Lessee
for any assignment fees, termination fees or other liabilities arising under the
Management Agreement solely as a result of the assignment or termination of such
Management Agreement in connection with the termination of this Lease under this
Section 2.2. If Lessor elects and complies with the option described in (b)
above, regardless of whether Lessee enters into the lease(s) described therein,
Lessor shall have no further obligations to Lessee with respect to compensation
for the early termination of this Lease. In the event Lessor and Lessee are
unable to agree upon the fair market value of an original or replacement
leasehold estate, it shall be determined by appraisal using the appraisal
procedure set forth in Article 24.

         For the purposes of this Article, fair market value of the leasehold
estate means, as applicable, an amount equal to the price that a willing buyer
not compelled to buy would pay a willing seller not compelled to sell for
Lessee's leasehold estate under this Lease or an offered replacement leasehold
estate, taking into account that the leasehold estate is encumbered by an
arm's-length Management Agreement.

         2.3.   Transition Procedures. Upon the expiration or termination of the
Term of this Lease, for whatever reason (other than a purchase of the Leased
Property by Lessee), Lessor and Lessee shall do the following (and the
provisions of this Section 2.3 shall survive the expiration or termination of
this Lease until they have been fully performed) and, in general, shall
cooperate in good faith to effect an orderly transition of the management and/or
lease of the Hotel:

                (a)   Transfer of Licenses. Lessee shall use reasonable efforts
(i) to transfer to Lessor or Lessor's nominee all licenses, operating permits
and other governmental authorizations and all contracts, including contracts
with governmental or quasi-governmental entities, that may be necessary for the
operation of the Hotel (collectively, "Licenses"), or (ii) if such transfer is
prohibited by law or Lessor otherwise elects, to cooperate with Lessor or
Lessor's nominee in connection with the processing by Lessor or Lessor's nominee
of any applications for, all Licenses; provided, in either case, that the costs
and expenses of any such transfer or the processing of any such application
shall be paid by Lessor or Lessor's nominee.

                                       15

<PAGE>

                (b)   Leases and Concessions. Lessee shall assign to Lessor or
Lessor's nominee simultaneously with the termination of this Lease, and the
assignee shall assume, all leases and concession agreements in effect with
respect to the Hotel then in Lessee's name.

                (c)   Books and Records. All books and records for the Hotel
kept by Lessee pursuant to Section 4.2 shall be delivered promptly to Lessor or
Lessor's nominee, simultaneously with the termination of this Lease, but such
books and records shall thereafter be available to Lessee at all reasonable
times for inspection, audit, examination, and transcription for a period of one
(1) year and Lessee may retain (on a confidential basis) copies or computer
records thereof.

                (d)   Receivables and Payables. Lessee shall be entitled to
retain all cash, bank accounts and house banks, and to collect all Gross
Revenues and accounts receivable accrued through the termination date. Lessee
shall be responsible for the payment of Rent, all Gross Operating Expenses and
all other obligations of Lessee accrued under this Lease as of the termination
date, and Lessor or Lessor's nominee shall be responsible for all Gross
Operating Expenses of the Hotel accruing after the termination date.

                (e)   Final Accounting. Lessee shall, within forty five (45)
days after the expiration or termination of the Term, prepare and deliver to
Lessor a final accounting statement, dated as of the date of the expiration or
termination, along with a statement of any sums due from Lessee to Lessor
pursuant hereto and payment of such funds.

                (f)   Inventory. Lessee shall insure that the Leased Property,
at the date of such termination or expiration, has Inventory of a substantially
equivalent nature and amount as exists at the Leased Property on the
Commencement Date, and Lessor or its designee shall acquire such Inventory from
Lessee for a sale price equal to the fair market value of such Inventory.

                (g)   Surrender. Lessee will, upon the expiration or prior
termination of the Term, vacate and surrender the Leased Property to Lessor in
the condition in which the Leased Property was originally received from Lessor,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Lease and except for ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased Property in good
order and repair, as would a prudent owner, during the entire Term of the
Lease), or damage by casualty or Condemnation (subject to the obligations of
Lessee to restore or repair as set forth in the Lease)

         The provisions of this Section 2.3 shall survive the expiration or
termination of this Lease until they have been fully performed. Nothing
contained herein shall limit Lessor's rights and remedies under this Lease if
such termination occurs as the result of an Event of Default.

         2.4.   Holding Over. If Lessee for any reason remains in possession of
the Leased Property after the expiration or earlier termination of the Term,
such possession shall be as a tenant at sufferance during which time Lessee
shall pay as rental each month 150% of the aggregate of (a) one-twelfth of the
aggregate Base Rent and Percentage Rent payable with respect to the last Fiscal
Year of the Term, (b) all Additional Charges accruing during the applicable
month and (c) all other sums, if any, payable by Lessee under this Lease with
respect to the Leased Property. During such period, Lessee shall be obligated to
perform and observe all of the terms, covenants and conditions

                                       16

<PAGE>

of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenancies at sufferance, to continue its occupancy and
use of the Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.

                                   ARTICLE 3
                             RENT; RENT ADJUSTMENTS

         3.1.   Rent. Lessee will pay to Lessor in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, in immediately available funds, at Lessor's address set forth in
Article 26 hereof or at such other place or to such other Person as Lessor from
time to time may designate in a Notice, all Base Rent, Percentage Rent, Sundry
Rent and Additional Charges, during the Term, as follows:

                (a)   Base Rent: The annual sum specified in Schedule 3.1(a)
(prorated for fiscal year 2002), as adjusted pursuant to Subsection 3.1(e)
hereof, payable in advance in equal, consecutive monthly installments, on or
before the tenth day of each calendar month of the Term ("Base Rent"); provided,
however, that the first monthly payment of Base Rent shall be payable during the
second calendar month of the Term, and that the first and last monthly payments
of Base Rent shall be pro rated as to any partial month (subject to adjustment
as provided in Sections 14.5, 15.3 and 15.5).

                (b)   Percentage Rent: For each calendar quarter during the Term
commencing with the calendar quarter in which the Commencement Date falls and
ending with the calendar quarter in which the Term (including any applicable
extensions) ends, Lessee shall pay percentage rent ("Percentage Rent").

         Percentage Rent for the applicable quarter shall be an amount equal to
the following formula:

                The amount equal to the applicable Quarterly Revenues
         Computation (as defined below) less the sum of

                      (i)  an amount equal to the Base Rent paid with respect to
                such quarter and all prior calendar quarters of the applicable
                Fiscal Year and

                      (ii) an amount equal to Percentage Rent paid with respect
                to all prior calendar quarters of the applicable Fiscal Year.

For the purpose of the above formula:

         The quarterly revenues computation ("Quarterly Revenues Computation")
is equal to the amount obtained by adding, for the applicable calendar quarter,
an amount equal to the sum of (i) seventeen percent (17%) of all Fiscal Year to
date Suite Revenues up to the applicable suite revenue breakpoint (the "Suite
Revenue Breakpoint") described in Schedule 3.1(b), attached hereto,

                                       17

<PAGE>

(prorated for the first and last calendar quarters of the Term (including any
applicable extensions)) and fifty-five percent (55%) of all Fiscal Year to date
Suite Revenues in excess of the applicable Suite Revenue Breakpoint. At the
beginning of each Fiscal Year, the Suite Revenue Breakpoints shall be adjusted
by the same percentage that the Base Rent is adjusted pursuant to Subsection
3.1(e).

The Percentage Rent shall be payable as follows:

       (i)      with respect to each calendar month of the Term, except for the
                calendar months in the first partial and next two full calendar
                quarters at the beginning of the Term, Lessee shall pay on or
                before the last day of the calendar month an amount equal to the
                excess, if any, of (A) seventy-five percent (75%) of the amount
                of Lessee's budgeted Percentage Rent payable with respect to the
                then current calendar month (which budgeted amount shall be
                equal to one-third (1/3) of the quarterly estimate of Percentage
                Rent included in the Annual Budget for the calendar quarter in
                which the calendar month occurs) over (B) Base Rent for such
                calendar month; and

       (ii)     with respect to each calendar quarter of the Term, except for
                the calendar months in the first partial and next two full
                calendar quarters at the beginning of the Term, Lessee shall pay
                on or before the 15/th/ day following the end of the calendar
                quarter an amount equal to the amount, if any, by which the
                aggregate of all payments in respect of Base Rent and Percentage
                Rent for such calendar quarter shall be less than the amount
                determined pursuant to the Quarterly Revenues Computation for
                such calendar quarter; and

       (iii)    with respect to the first partial and next two full calendar
                quarters at the beginning of the Term, Lessee shall pay on or
                before the 15/th/ day following the end of the calendar quarter
                an amount equal to the amount, if any, by which the aggregate of
                all payments in respect of Base Rent for such calendar quarter
                shall be less than the amount determined pursuant to the
                Quarterly Revenues Computation of such calendar quarter.

In no event will the amount of Percentage Rent payable for any calendar quarter
or the result of any Quarterly Revenues Computation be less than zero, and there
shall be no reduction in the Base Rent regardless of the result of any Quarterly
Revenues Computation.

                (c)   Sundry Rent. For each calendar quarter during the Term
commencing with the calendar quarter in which the Commencement Date falls and
ending with the calendar quarter in which the Term (including any applicable
extensions) ends, Lessee shall pay sundry rent ("Sundry Rent"). Sundry Rent
shall be an amount equal to fifty-five percent (55%) of all Fiscal Year to date
Sundry Revenues less an amount equal to Sundry Rent paid with respect to all
prior calendar quarters of the applicable Fiscal Year. Sundry Rent shall be
payable as follows:

       (i)      with respect to each calendar month of the Term, except for the
                calendar months in the first partial and next two full calendar
                quarters at the beginning of the Term, on or before the last day
                of the calendar month an amount equal to seventy-five percent

                                       18

<PAGE>

                (75%) of the amount of Lessee's budgeted Sundry Rent payable
                with respect to the then current calendar month (which budgeted
                amount shall be equal to one-third (1/3) of the quarterly
                estimate of Sundry Rent included in the Annual Budget for the
                calendar quarter in which the calendar month occurs); and

       (ii)     with respect to each calendar quarter of the Term, except for
                the calendar months in the first partial and next two full
                calendar quarters at the beginning of the Term, on or before the
                15/th/ day following the end of the calendar quarter an amount
                equal to the amount, if any, by which the aggregate of all
                payments pursuant to Section 3.1(c)(i) in respect of Sundry Rent
                for such calendar quarter shall be less than fifty-five percent
                (55%) of Sundry Revenues for such calendar quarter; and

       (iii)    with respect to the first partial and next two full calendar
                quarters at the beginning of the Term, on or before the 15/th/
                day following the end of the calendar quarter.

                (d)   Officer's Certificates. Additionally, an Officer's
Certificate shall be delivered to Lessor quarterly, together with such quarterly
Percentage Rent payment and quarterly Sundry Rent payment, setting forth the
calculation of such rent payment for such quarter, within thirty (30) days after
each of the first three quarters of each Fiscal Year (or part thereof) in the
Term. Such quarterly payments shall be based on the formula set forth in
Subsection 3.1(b) and 3.1(c), as applicable. There shall be no reduction in the
Base Rent regardless of the result of the Quarterly Revenues Computations.

       In addition, on or before March 1 of each year, commencing with March 1,
2003, Lessee shall deliver to Lessor an Officer's Certificate reasonably
acceptable to Lessor setting forth the computation of the actual Percentage Rent
and Sundry Rent that accrued for each quarter of the Fiscal Year that ended on
the immediately preceding December 31 and shall pay to Lessor Percentage Rent
and Sundry Rent, if due and payable, for the last quarter of the applicable
Fiscal Year. Additionally, if the annual Percentage Rent or Sundry Rent due and
payable for any Fiscal Year (as shown in the applicable Officer's Certificate)
exceeds the amount actually paid as Percentage Rent or Sundry Rent by Lessee for
such year, Lessee also shall pay such excess to Lessor at the time such
certificate is delivered. If the Percentage Rent or Sundry Rent actually due and
payable for such Fiscal Year is shown by such certificate to be less than the
amount actually paid as Percentage Rent or Sundry Rent for the applicable Fiscal
Year, Lessor, at its option, shall reimburse such amount to Lessee or credit
such amount against subsequent months' Base Rent or Sundry Rent, as applicable,
and with respect to Percentage Rent, to the extent necessary, subsequent
quarters' Percentage Rent payments. Any such credit to Base Rent shall not be
applied for purposes of calculating Percentage Rent payable for any subsequent
quarter.

       Any difference between the annual Percentage Rent or Sundry Rent due and
payable for any Fiscal Year (as shown in the applicable Officer's Certificate or
as adjusted pursuant to Section 3.3) and the total amount of quarterly payments
for such Fiscal Year actually paid by Lessee as Percentage Rent or Sundry Rent,
whether in favor of Lessor or Lessee, shall bear interest at the Overdue Rate,
which interest shall accrue from the due date of the last quarterly payment for
the Fiscal Year until the amount of such difference shall be paid or otherwise
discharged. Any such interest payable to Lessor shall be deemed to be and shall
be payable as Additional Charges.

                                       19

<PAGE>

         The obligation to pay Percentage Rent and Sundry Rent shall survive the
expiration or earlier termination of the Term, and a final reconciliation,
taking into account, among other relevant adjustments, any adjustments which are
accrued after such expiration or termination date but which related to
Percentage Rent and Sundry Rent accrued prior to such termination date, and
Lessee's good faith best estimate of the amount of any unresolved contractual
allowances, shall be made not later than two (2) years after such expiration or
termination date, but Lessee shall advise Lessor within sixty (60) days after
such expiration or termination date of Lessee's best estimate at that time of
the approximate amount of such adjustments, which estimate shall not be binding
on Lessee or have any legal effect whatsoever.

                (e)   CPI Adjustments to Base Rent and Percentage Rent. For each
year of the Term beginning on or after January 1, 2003, the Base Rent shall be
adjusted from time to time as follows:

                      (1)   If the most recently published Consumer Price Index
                as of the last day of the last month (the "Comparison Month") of
                any Fiscal Year is different than the average Consumer Price
                Index for the twelve (12) month period prior thereto, the Base
                Rent for the next Fiscal Year shall be adjusted by the
                percentage change in the Consumer Price Index calculated as
                follows:

                            (A)  The difference between the Consumer Price Index
                for the most recent Comparison Month and the average Consumer
                Price Index for the twelve (12) month period prior thereto shall
                be divided by the average Consumer Price Index for the twenty
                four (24) month period prior thereto.

                            (B)  The Base Rent shall be multiplied by the lesser
                of (i) seven percent (7%) or (ii) the quotient obtained in
                subparagraph (e)(1)(A) above.

                            (C)  The product obtained in subparagraph (e)(1)(B)
                above shall be added to the Base Rent.

         Adjustments in the Base Rent shall be effective on the first day of the
first calendar month of the Fiscal Year to which such adjusted Base Rent
applies. The Suite Revenue Breakpoint then included in the Quarterly Revenues
Computation pursuant to Subsection 3.1(b) shall be similarly adjusted, effective
with any such adjustment in the Base Rent.

                      (2)   If (i) a significant change is made in the number or
                nature (or both) of items used in determining the Consumer Price
                Index, or (ii) the Consumer Price Index shall be discontinued
                for any reason, the Bureau of Labor Statistics shall be
                requested to furnish a new index comparable to the Consumer
                Price Index, together with information which will make possible
                a conversion to the new index in computing the adjusted Base
                Rent hereunder. If for any reason the Bureau of Labor Statistics
                does not furnish such an index and such information, the parties
                will instead mutually select, accept and use such other index or
                comparable statistics on

                                       20

<PAGE>

                the cost of living in Washington, D.C. that is computed and
                published by an agency of the United States or a responsible
                financial periodical of recognized authority.

                (f)   Manager Fund-up Cure Payments. If and to the extent that
Manager pays amounts to Lessee pursuant to the Management Agreement in order to
avoid termination of the Management Agreement by Lessee for Manager's failure to
meet certain performance hurdles described therein, such amounts shall be
treated as additional Suite Revenues for purposes of the Percentage Rent
calculation hereunder.

                (g)   Allocation of Rent. The parties hereto acknowledge and
agree that the Base Rent paid or payable by Lessee to Lessor hereunder shall, to
the extent relevant, be allocated between the personal property and real
property constituting Leased Property hereunder in direct proportion to the then
recognizable fair market value of such personal property and real property.
Percentage Rent in excess of Base Rent shall be allocated solely to real
property.

         3.2.   Confirmation of Percentage Rent and Sundry Rent. Lessee shall
utilize, or cause to be utilized, an accounting system for the Leased Property
in accordance with its usual and customary practices, and in accordance with
generally accepted accounting principles, that will accurately record all data
necessary to compute Percentage Rent and Sundry Rent, and Lessee shall retain,
for at least four (4) years after the expiration of each Fiscal Year (and in any
event until the reconciliation described in Subsection 3.1(c) for such Fiscal
Year has been made), reasonably adequate records conforming to such accounting
system showing all data necessary to compute Percentage Rent and Sundry Rent for
the applicable Fiscal Years. Lessor, at its expense (except as provided
hereinbelow), shall have the right from time to time, upon prior written notice
to Lessee and Manager, by its accountants or representatives to audit the
information that formed the basis for the data set forth in any Officer's
Certificate provided under Subsection 3.1(d) and, in connection with such
audits, to examine all Lessee's records (including supporting data and sales and
excise tax returns) reasonably required to verify Percentage Rent and Sundry
Rent, subject to any prohibitions or limitations on disclosure of any such data
under Legal Requirements; provided, however that Lessor may only inspect or
audit records in Manager's possession subject to the terms of Lessee's access
thereto under the Management Agreement. If any such audit discloses a deficiency
in the payment of Percentage Rent or Sundry Rent, and either Lessee agrees with
the result of such audit or the matter is otherwise determined or compromised,
Lessee shall forthwith pay to Lessor the amount of the deficiency, as finally
agreed or determined, together with interest at the Overdue Rate from the date
when said payment should have been made to the date of payment thereof;
provided, however, that as to any audit that is commenced more than two (2)
years after the date Percentage Rent or Sundry Rent for any Fiscal Year is
reported by Lessee to Lessor, the deficiency, if any, with respect to such
Percentage Rent or Sundry Rent shall bear interest at the Overdue Rate only from
the date such determination of deficiency is made unless such deficiency is the
result of gross negligence or willful misconduct on the part of Lessee, in which
case interest at the Overdue Rate will accrue from the date such payment should
have been made to the date of payment thereof. If any such audit discloses that
the Percentage Rent or Sundry Rent actually due from Lessee for any Fiscal Year
exceed those reported by Lessee by more than three percent (3%), Lessee shall
pay the cost of such audit and examination. Any proprietary information obtained
by Lessor pursuant to the provisions of this Section shall be treated as
confidential, except that such information may be used, subject to appropriate

                                       21

<PAGE>

confidentiality safeguards, in any litigation between the parties and except
further that Lessor may disclose such information to prospective lenders. The
obligations of Lessee contained in this Section shall survive the expiration or
earlier termination of this Lease.

         3.3.   Additional Charges. In addition to the Base Rent, Percentage
Rent and Sundry Rent, (a) Lessee also will pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions that Lessee
assumes or agrees to pay under this Lease, and (b) in the event of any failure
on the part of Lessee to pay any of those items referred to in clause (a) of
this Section 3.3, Lessee also will promptly pay and discharge every fine,
penalty, interest and cost that may be added for non-payment or late payment of
such items (the items referred to in clauses (a) and (b) of this Section 3.3
being additional rent hereunder and being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of non-payment of the Additional Charges as in
the case of non-payment of the Base Rent. If any installment of Base Rent,
Percentage Rent and Sundry Rent or Additional Charges (but only as to those
Additional Charges that are payable directly to Lessor) shall not be paid on its
due date, Lessee will pay Lessor on demand, as Additional Charges, a late charge
(to the extent permitted by law) computed at the Overdue Rate on the amount of
such installment, from the due date of such installment to the date of payment
thereof. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due and Lessor shall pay same from monies received from Lessee.

         3.4.   Net Lease; No Termination, Abatement, Etc.

                (a)   The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Base
Rent, Percentage Rent, Sundry Rent and Additional Charges throughout the Term,
all as more fully set forth in Article 5, but subject to any other provisions of
this Lease that expressly provide for adjustment or abatement of Rent or other
charges or expressly provide that certain expenses or maintenance shall be paid
or performed by Lessor.

                (b)   Except as otherwise specifically provided in this Lease,
and except for loss of the Management Agreement solely by reason of any action
or inaction by Lessor, Lessee, to the extent permitted by law, shall remain
bound by this Lease in accordance with its terms and shall neither take any
action without the written consent of Lessor (which shall not be unreasonably
withheld or delayed) to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of the Rent, or
setoff against the Rent, nor shall the obligations of Lessee be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
or any portion thereof from whatever cause or any Taking of the Leased Property
or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any Person other than Lessor, (c) any claim
which Lessee has or might have against Lessor by reason of any default or breach
of any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting

                                       22

<PAGE>

Lessor or any assignee or transferee of Lessor, or (e) for any other cause
whether similar or dissimilar to any of the foregoing other than a discharge of
Lessee from any such obligations as a matter of law. Lessee hereby specifically
waives all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law to (1) modify, surrender or terminate this
Lease or quit or surrender the Leased Property or any portion thereof, or (2)
entitle Lessee to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessee hereunder shall be separate
and independent covenants and agreements and the Rent and all other sums payable
by Lessee hereunder shall continue to be payable in all events unless the
obligations to pay the same shall be terminated pursuant to the express
provisions of this Lease or by termination of this Lease other than by reason of
an Event of Default.

         3.5.   Material Changes in Economic Climate.

                (a)   In the event of the occurrence of a Force Majeure or a
Hotel Market Decline, Lessor and Lessee shall, in good faith, negotiate possible
modifications to the Base Rent and Percentage Rent to reduce such Base Rent and
Percentage Rent to recent market rates for hotel REIT leases for similar hotel
properties in the Hotel's Competitive Set, retroactively effective as of the
first calendar month of the Term following the last day of the six-month period
during which such Hotel Market Decline has occurred with the excess of Base Rent
and Percentage Rent actually paid for such period over the reduced Base Rent and
Percentage Rent, plus interest thereon at the Base Rate, to be credited to the
next payments of Rent due and owing hereunder. If Lessor and Lessee are unable
to agree that a Force Majeure or a Hotel Market Decline has occurred, within
thirty (30) days after the date of written certification from Lessee to Lessor
that a Force Majeure and Hotel Market Decline has occurred (accompanied by
reasonably detailed computations and documentation to support such assertion),
the matter may be submitted by either party to arbitration under Section 25.2
hereof for resolution (during which period Lessee shall continue to pay Base
Rent and Percentage Rent as required under Section 3.1 of this Lease). If,
within ninety (90) days (during which period Lessee shall continue to pay Base
Rent and Percentage Rent as required under Section 3.1 of this Lease) following
the date of such written certification from Lessee (or the date of a decision of
an arbitrator if required hereunder to determine that a Force Majeure and Hotel
Market Decline has occurred), Lessor and Lessee are unable to agree upon the
amount of reduction in Base Rent and Percentage Rent contemplated hereby, Lessee
shall have the option to terminate this Lease upon not less than thirty (30)
days prior written notice to Lessor.

                (b)   In the event of the occurrence of a National Economic
Decline or a Regional Market Decline, Lessor and Lessee shall, in good faith,
negotiate (i) possible modifications to the Base Rent and Percentage Rent to
reduce such Base Rent and Percentage Rent to recent market rates for hotel REIT
leases for similar hotel properties in the Hotel's Competitive Set, and (ii)
possible modifications to the Base and Percentage Rent payable under each of the
Other Leases for Other Hotels in the same Region (as defined in the STR Reports)
as the Hotel to reduce such Base Rent and Percentage Rent to recent market rates
for hotel REIT leases for similar hotel properties in the Hotel's Competitive
Set, in each case retroactively effective as of the first calendar month of the
Term following the last day of the six month period during which such Regional
Market Decline has occurred with the excess of Base Rent and Percentage Rent
actually paid for such period over the reduced Base Rent and Percentage Rent,
plus interest thereon at the Base Rent, to

                                       23

<PAGE>

be credited to the next payments of Rent due and owing hereunder. If, within
thirty (30) days after the date of written certification from Lessee to Lessor
that a National Economic Decline and Regional Market Decline has occurred
(accompanied by reasonably detailed computations and documentation to support
such assertion), Lessor and Lessee are unable to agree that a National Economic
Decline or Regional Market Decline has occurred, the matter may be submitted by
either party to arbitration under Section 25.2 hereof for resolution (during
which period Lessee shall continue to pay Base Rent and Percentage Rent as
required under Section 3.1 of this Lease). If, within ninety (90) days (during
which period Lessee shall continue to pay Base Rent and Percentage Rent as
required under Section 3.1 of this Lease) following the date of such initial
written certification from Lessee (or the date of a decision of an arbitrator if
required hereunder to determine that a National Economic Decline and Regional
Market Decline has occurred), Lessor and Lessee are unable to agree upon the
amount of reduction in Base Rent and Percentage Rent contemplated hereby, Lessee
shall have the option, upon not less than sixty (60) days prior written notice
to Lessor, to terminate all (but not less than all) of the Existing Leases of
hotels in the same Region as the Hotel, including this Lease.

         3.6.   Rent Adjustment: Basic Assumptions Incorrect. Except to the
extent that doing so would cause Lessor to recognize income other than "rents
from real property" as defined in Section 856(d) of the Code, notwithstanding
anything herein (other than Article 19) to the contrary, if (i) the facts and
circumstances underlying the documented, basic assumptions upon which both
Lessor and Lessee have relied in determining the Base Rent, the Suite Revenue
Breakpoint, and the Percentage Rent payable hereunder become materially
incorrect solely as a result of (A) a decision to re-brand the Hotel that is
made after the Commencement Date, (B) the scope or cost of substantial
renovations or other capital improvements to the Hotel, or (C) the
implementation of any other hotel repositioning strategies (that were not
planned as of the Commencement Date) resulting in significant disruption of the
operations of the Hotel (collectively, a "Repositioning"), and (ii) Lessor and
Lessee so agree in writing, then Lessor and Lessee shall, in good faith,
negotiate modifications to the Base Rent, Suite Revenue Breakpoint and
Percentage Rent to adjust (i.e., increase, decrease or reallocate among revenue
categories) such Base Rent, Suite Revenue Breakpoint and Percentage Rent to
reflect such change in basic assumptions for the affected periods, using the
same methodology and other basic assumptions as were initially utilized in
determining the Base Rent, Suite Revenue Breakpoint and Percentage Rent
hereunder. If Lessor and Lessee are unable to agree, within thirty (30) days
after the date of written certification from either Lessee or Lessor to the
other party that a good faith dispute exists, as to the existence of the
occurrence of a Repositioning or the adjustments to be made to the amounts or
percentages for the Base Rent, Suite Revenue Breakpoint and Percentage Rent
hereunder as a result of any repositioning, the dispute may be submitted by
either party to arbitration under Section 25.2 hereof for resolution (during
which period Lessee shall continue to pay Base Rent and Percentage Rent as
required under Section 3.1 of this Lease); provided, however, that for purposes
of applying the procedures in Section 25.3 to such arbitration, the target
deadline therein for concluding the arbitration shall be shortened from ninety
(90) days to thirty (30) days.

                                       24

<PAGE>

                                   ARTICLE 4
                        ANNUAL BUDGETS; BOOKS AND RECORDS

         4.1.   Annual Budget. Not later than thirty (30) days prior to the
commencement of each Fiscal Year, Lessee shall submit the Annual Budget to
Lessor. The Annual Budget shall contain the following, to the extent included in
the operating budgets and capital budgets provided to Lessee by Manager under
the management agreement for the Hotel:

                (a)   Lessee's reasonable estimate of Gross Revenues (including
room rates and Suite Revenues), Gross Operating Expenses, and Gross Operating
Profits for the forthcoming Fiscal Year itemized on schedules on a quarterly
basis as approved by Lessor and Lessee, as same may be revised or replaced from
time to time by Lessee and approved by Lessor, together with the assumptions, in
narrative form, forming the basis of such schedules.

                (b)   An estimate of the amounts to be dedicated to the repair,
replacement, or refurbishment of Furniture and Equipment.

                (c)   An estimate of any amounts Lessor will be required to
provide for required or desirable capital improvements to the Hotel or any of
its components.

                (d)   A cash flow projection.

                (e)   A business plan, which shall describe business objectives
and strategies for the forthcoming Fiscal Year, and shall include without
limitation an analysis of the market area in which the Hotel competes, a
comparison of the Hotel and its business with competitive hotels, an analysis of
categories of potential guests, and a description of sales and marketing
activities designed to achieve and implement identified objectives and
strategies.

         4.2.   Books and Records. Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Hotel on an
accrual basis, all in accordance with generally accepted accounting principles
and the obligations of Lessee under this Lease. The books of account and all
other records relating to or reflecting the operation of the Hotel shall be kept
either at the Hotel or at Lessee's offices in Richmond, Virginia or at Manager's
central offices, and shall be available to Lessor and its representatives and
its auditors or accountants, at all reasonable times, upon prior written notice
to Lessee and Manager, for examination, audit, inspection, and transcription;
provided, however that Lessor may only inspect or audit records in Manager's
possession subject to the terms of Lessee's access thereto under the Management
Agreement. All of such books and records pertaining to the Hotel including,
without limitation, books of account, guest records and front office records, at
all times shall be the property of Lessor and shall not be removed from the
Hotel or Lessee's offices or Manager's central offices (but may be moved among
any of the foregoing) by Lessee without Lessor approval.

                                       25

<PAGE>

                                    ARTICLE 5
                            IMPOSITIONS; HOTEL COSTS

         5.1.   Payment of Impositions. Subject to Section 12.2 (relating to
permitted contests), Lessee will pay, or cause to be paid, all Impositions
(other than Real Estate Taxes and Personal Property Taxes, which shall be paid
by Lessor) before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing or other
authorities where feasible, and will promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments. Lessee's
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. If any such Imposition may, at the option of the taxpayer, lawfully be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), Lessee may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments and
in such event, shall pay such installments during the Term hereof (subject to
Lessee's right of contest pursuant to the provisions of Section 12.2) as the
same respectively become due and before any fine, penalty, premium, further
interest or cost may be added thereto. Lessor, at its expense, shall, to the
extent required or permitted by applicable law, prepare and file all tax returns
in respect of Lessor's net income, gross receipts, sales and use, single
business, transaction privilege, rent, ad valorem, franchise taxes, Real Estate
Taxes, Personal Property Taxes and taxes on its capital stock, and Lessee, at
its expense, shall, to the extent required or permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in respect of
any Imposition as may be required by governmental authorities. If any refund
shall be due from any taxing authority in respect of any Imposition paid by
Lessee, the same shall be paid over to or retained by Lessee if no Event of
Default shall have occurred hereunder and be continuing. If an Event of Default
shall have occurred and be continuing, any such refund shall be paid over to or
retained by Lessor. Any such funds retained by Lessor due to an Event of Default
shall be applied as provided in Article 16. Lessor and Lessee shall, upon
request of the other, provide such data as is maintained by the party to whom
the request is made with respect to the Leased Property as may be necessary to
prepare any required returns and reports. Lessee shall file all Personal
Property Tax returns in such jurisdictions where it is legally required so to
file. Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property classified as
personal property. Where Lessor is legally required to file Personal Property
Tax returns, Lessee shall provide Lessor with copies of assessment notices in
sufficient time for Lessor to file a protest. Lessor may, upon Notice to Lessee,
at Lessor's option and at Lessor's sole expense, protest, appeal, or institute
such other proceedings (in its or Lessee's name) as Lessor may deem appropriate
to effect a reduction of real estate or personal property assessments for those
Impositions to be paid by Lessor, and Lessee, at Lessor's expense as aforesaid,
shall fully cooperate with Lessor in such protest, appeal, or other action.
Lessor hereby agrees to indemnify, defend, and hold harmless Lessee from and
against any claims, obligations, liabilities and loss against or incurred by
Lessee in connection with such cooperation. Billings for reimbursement of
Personal Property Taxes by Lessee to Lessor shall be accompanied by copies of a
bill therefor and payments thereof which identify the personal property with
respect to which such payments are made. Lessor, however, reserves the right to
effect any such protest, appeal or other action and, upon Notice to Lessee,
shall control any such activity, which shall then go forward at Lessor's sole
expense. Upon such Notice, Lessee, at Lessor's expense, shall cooperate fully
with such activities.

                                       26

<PAGE>

                5.2.   Notice of Impositions. Lessor shall give prompt Notice to
Lessee of all Impositions payable by Lessee hereunder of which Lessor at any
time has knowledge, provided that Lessor's failure to give any such Notice shall
in no way diminish Lessee's obligations hereunder to pay such Impositions, but
such failure shall obviate any default hereunder for a reasonable time after
Lessee receives Notice of any Imposition which it is obligated to pay during the
first taxing period applicable thereto.

                5.3.   Adjustment of Impositions. Impositions imposed in respect
of the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.

                5.4.   Utility Charges. Lessee will be solely responsible for
obtaining and maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property during the Term.

                5.5.   Insurance Premiums. Lessee will pay or cause to be paid
all premiums for the insurance coverage's required to be maintained by it under
Article 13.

                5.6.   Fees. Lessee will maintain in full force and effect, and
pay or cause to be paid all fees and other charges payable pursuant to, any
Management Agreement with respect to the Hotel.

                5.7.   Ground Rent. In the event that Lessor's interest in the
Land is pursuant to a Ground Lease or sublease, Lessor shall be solely
responsible for the payment of any ground rent, building rent or subrent, as the
case may be, due with respect to the Leased Property.

                                   ARTICLE 6
                   LEASED PROPERTY; LESSEE'S PERSONAL PROPERTY

                6.1.   Ownership of the Leased Property. Lessee acknowledges
that the Leased Property is the property of Lessor and that Lessee has only the
right to the possession and use of the Leased Property upon the terms and
conditions of this Lease.

                6.2.   Lessee's Personal Property. Lessee will acquire and
maintain throughout the Term such Inventory as is required to operate the Leased
Property in the manner contemplated by this Lease. Lessee may (and shall as
provided hereinbelow), at its expense, install, affix or assemble or place on
any parcels of the Land or in any of the Leased Improvements, any items of
personal property (including Inventory) owned by Lessee. Lessee, at the
commencement of the Term, and from time to time thereafter, shall provide Lessor
with an accurate list of all such items of Lessee's personal property
(collectively, the "Lessee's Personal Property"). Lessee may, subject to the
first sentence of this Section 6.2 and the conditions set forth below, remove
any of Lessee's Personal Property set forth on such list at any time during the
Term or upon the expiration or any prior termination of the Term. All of
Lessee's Personal Property, other than Inventory, not removed by Lessee within
ten (10) days following the expiration or earlier termination of the Term shall
be

                                       27

<PAGE>

considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving Notice thereof to Lessee,
without any payment to Lessee and without any obligation to account therefor.
Lessee will, at its expense, restore the Leased Property to the condition
required by Subsection 2.3(g), including repair of all damage to the Leased
Property caused by the removal of Lessee's Personal Property, whether effected
by Lessee or Lessor. Upon the expiration or earlier termination of the Term,
Lessor or its designee shall have the option to purchase all Inventory on hand
at the Leased Property at the time of such expiration or termination for a sale
price equal to the fair market value of such Inventory. Lessee may make such
financing arrangements, title retention agreements, leases or other agreements
with respect to Lessee's Personal Property as it sees fit provided that Lessee
first advises Lessor of any such arrangement and such arrangement expressly
provides that in the event of Lessee's default thereunder, Lessor (or its
designee) may assume Lessee's obligations and rights under such arrangement.

                6.3.   Lessor's Lien. To the fullest extent permitted by
applicable law, Lessor is granted a lien and security interest on all Lessee's
personal property now or hereinafter placed in or upon the Leased Property, and
such lien and security interest shall remain attached to such Lessee's personal
property until payment in full of all Rent and satisfaction of all of Lessee's
obligations hereunder; provided, however, Lessor shall subordinate its lien and
security interest to that of any non-Affiliate of Lessee which finances such
Lessee's personal property or any non-Affiliate conditional seller of such
Lessee's personal property, the terms and conditions of such subordination to be
satisfactory to Lessor in the exercise of reasonable discretion. Lessee shall,
upon the request of Lessor, execute such financing statements or other documents
or instruments reasonably requested by Lessor to perfect the lien and security
interests herein granted. Lessee hereby authorizes Lessor to execute and file
financing statements signed only be a representative of Lessor covering the
security interest of Lessor in Lessee's personal property.

                6.4.   Lessor's Option to Purchase Assets of Lessee. Effective
on not less than ninety (90) days' prior Notice given at any time within one
hundred eighty (180) days before the expiration of the Term, but not later than
ninety (90) days prior to such expiration, or upon such shorter Notice period as
shall be appropriate if this Lease is terminated prior to its expiration date,
Lessor shall have the option to purchase all (but not less than all) of the
assets of Lessee, tangible and intangible, relating to the Leased Property
(other than this Lease), at the expiration or termination of this Lease for an
amount (payable in cash on the expiration date of this Lease) equal to the fair
market value thereof as appraised in conformity with Article 24, except that the
appraisers need not be members of the American Institute of Real Estate
Appraisers, but rather shall be appraisers having at least ten (10) years'
experience in valuing similar assets. Notwithstanding any such purchase, Lessor
shall obtain no rights to any trade name or logo used in connection with the
Management Agreement unless separate agreement as to such use is reached with
the applicable franchisor.

                                   ARTICLE 7
                      CONDITION AND USE OF LEASED PROPERTY

                7.1.   Condition of the Leased Property. Lessee acknowledges
receipt and delivery of possession of the Leased Property. Lessee has examined
and otherwise has knowledge of the condition of the Leased Property and has
found the same to be satisfactory for its purposes

                                       28

<PAGE>

hereunder. Lessee is leasing the Leased Property "as is" in its present
condition. Lessee waives any claim or action against Lessor in respect of the
condition of the Leased Property. LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY, OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS
SATISFACTORY TO IT. Provided, however, to the extent permitted by law, Lessor
hereby assigns to Lessee all of Lessor's rights to proceed against any
predecessor in title (other than any Affiliate of Lessee which conveyed the
Property to Lessor) for breaches of warranties or representations or for latent
defects in the Leased Property. Lessor shall fully cooperate with Lessee in the
prosecution of any such claim, in Lessor's or Lessee's name, all at Lessee's
sole cost and expense. Lessee hereby agrees to indemnify, defend and hold
harmless Lessor from and against any claims, obligations and liabilities against
or incurred by Lessor in connection with such cooperation.

         7.2.   Use of the Leased Property.

                (a)   Lessee covenants that it will proceed with all due
diligence and will exercise reasonable efforts to obtain and to maintain all
Licenses and other approvals needed to use and operate the Leased Property and
the Hotel under applicable local, state and federal law.

                (b)   Lessee shall use or cause to be used the Leased Property
only as a Residence Inn by Marriott hotel facility, and for such other uses as
may be necessary or incidental to such use or such other use as otherwise
approved by Lessor (the "Primary Intended Use"). Lessee shall not use the Leased
Property or any portion thereof for any other use without the prior written
consent of Lessor, which consent may be granted, denied or conditioned in
Lessor's sole discretion. No use shall be made or permitted to be made of the
Leased Property, and no acts shall be done, which will cause the cancellation or
increase the premium of any insurance policy covering the Leased Property or any
part thereof (unless another adequate policy satisfactory to Lessor is available
and Lessee pays any premium increase), nor shall Lessee sell or permit to be
kept, used or sold in or about the Leased Property any article which may be
prohibited by law or fire underwriter's regulations. Lessee shall, at its sole
cost, comply with all of the requirements pertaining to the Leased Property of
any insurance board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the Leased Property and
Lessee's Personal Property.

                (c)   Subject to the provisions of Articles 14, 15, 18 and 21,
Lessee covenants and agrees that during the Term it will (1) operate
continuously the Leased Property as a hotel facility, (2) keep in full force and
effect and comply with all the provisions of the Management Agreement, (3) not
terminate or amend the Management Agreement without the consent of Lessor (which
shall not be unreasonably withheld or delayed), (4) maintain appropriate
certifications and Licenses for such use and (5) seek to maximize the Gross
Revenues generated therefrom consistent with sound business practices.

                                       29

<PAGE>

                (d)   Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Hotel, nor shall Lessee cause or permit
any nuisance thereon.

                (e)   Lessee shall neither suffer nor permit the Leased Property
or any portion thereof, or Lessee's Personal Property, to be used in such a
manner as (1) might reasonably tend to impair Lessor's (or Lessee's, as the case
may be) title thereto or to any portion thereof, or (2) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Leased Property or any portion thereof,
except as necessary in the ordinary and prudent operation of the Hotel on the
Leased Property.

         7.3.   Lessor to Grant Easements, Etc. Lessor will, from time to time,
so long as no Event of Default has occurred and is continuing, at the request of
Lessee and at Lessee's cost and expense (but subject to the approval of Lessor,
which approval shall not be unreasonably withheld or delayed and Lessor's
Mortgagee), (a) grant easements and other rights in the nature of easements with
respect to the Leased Property to third parties, (b) release existing easements
or other rights in the nature of easements which are for the benefit of the
Leased Property, (c) dedicate or transfer unimproved portions of the Leased
Property for road, highway or other public purposes, (d) execute petitions to
have the Leased Property annexed to any municipal corporation or utility
district, (e) execute amendments to any covenants and restrictions affecting the
Leased Property and (f) execute and deliver to any Person any instrument
appropriate to confirm or effect such grants, releases, dedications, transfers,
petitions and amendments (to the extent of its interests in the Leased
Property), but only upon delivery to Lessor of an Officer's Certificate stating
that such grant, release, dedication, transfer, petition or amendment does not
interfere with the proper conduct of the business of Lessee on the Leased
Property and does not materially reduce the value of the Leased Property.

                                   ARTICLE 8
              LESSEE'S COMPLIANCE WITH LAW; ENVIRONMENTAL COVENANTS

         8.1.   Compliance with Legal and Insurance Requirements, Etc. Subject
to Subsection 8.3(b) below and Section 12.2 (relating to permitted contests),
Lessee, at its expense, will promptly (a) comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property (excluding any repair
or restoration of any portion of the Leased Property required to be made by
Lessor pursuant to Subsection 9.1(b) below, which repair shall be made by
Lessor), and (b) procure, maintain and comply with all appropriate Licenses and
other authorizations required for any use of the Leased Property and Lessee's
Personal Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof.

         8.2.   Legal Requirement Covenants.

                (a)   Subject to Subsection 8.3(b) and Subsection 9.1(b) below,
Lessee covenants and agrees that the Leased Property and Lessee's Personal
Property shall not be used for any unlawful purpose, and that Lessee shall not
permit or suffer to exist any unlawful use of the Leased Property by others.
Lessee shall acquire and maintain all appropriate licenses, certifications,
permits and other authorizations and approvals needed to operate the Leased
Property in its

                                       30

<PAGE>

customary manner for the Primary Intended Use, and any other lawful use
conducted on the Leased Property as may be permitted from time to time
hereunder. Lessee further covenants and agrees that Lessee's use of the Leased
Property and maintenance, alteration, and operation of the same, and all parts
thereof, shall at all times conform to all Legal Requirements, unless the same
are finally determined by a court of competent jurisdiction to be unlawful (and
Lessee shall cause all sub-tenants, invitees or others within its control so to
comply with all Legal Requirements). Lessee may, however, upon prior Notice to
Lessor, contest the legality or applicability of any such Legal Requirement or
any licensure or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights hereunder, and
at Lessee's sole expense. If by the terms of any such Legal Requirement
compliance therewith pending the prosecution of any such proceeding may legally
be delayed without the occurrence of any charge or liability of any kind, or the
filing of any lien, against the Hotel or Lessee's leasehold interest therein and
without subjecting Lessee or Lessor to any liability, civil or criminal, for
failure so to comply therewith, Lessee may delay compliance therewith until the
final determination of such proceeding. If any lien, charge or civil or criminal
liability would be incurred by reason of any such delay, Lessee, on the prior
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed, may nonetheless contest as aforesaid and delay as aforesaid provided
that such delay would not subject Lessor to criminal liability and Lessee both
(a) furnishes to Lessor security reasonably satisfactory to Lessor against any
loss or injury by reason of such contest or delay and (b) prosecutes the contest
with due diligence and in good faith.

                (b)   As between Lessor and Lessee, Lessee is solely responsible
for all liabilities or obligations of any kind with respect to employees at the
Leased Property during the Term. Without limiting the generality of the
foregoing sentence, Lessee is solely responsible for any required compliance
with the Worker Adjustment, Retraining and Notification Act of 1988 (the "WARN
Act") or any similar state law applicable to the Leased Property; any required
compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"); and all alleged and actual obligations and claims arising
from or relating to any employment agreement, collective bargaining agreement or
employee benefit plans, any grievances, arbitration's, or unfair labor practice
charges, and relating to compliance with any applicable state or federal labor
employment law, including but not limited to all laws pertaining to
discrimination, workers' compensation, unemployment compensation, occupational
safety and health, unfair labor practices, family and medical leave, and wages,
hours or employee benefits. Lessee agrees to indemnify and defend and hold
harmless Lessor from and against any claims relating to any of the foregoing
matters. Lessee further agrees to reimburse Lessor for any and all losses,
damages, costs, expenses, liabilities and obligations of any kind, including
without limitation reasonable attorney's fees and other legal costs and
expenses, incurred by Lessor in connection with any of the foregoing matters.

                (c)   Notwithstanding the Lessee's obligations under Section 8.1
to obtain and maintain all permits and licenses required for the use of the
Leased Property, and without limiting any obligations of Lessee hereunder, if
(i) applicable law requires that the owner (rather than a lessee) of a hotel be
the licensee under the required liquor license for the Hotel or (ii) the former
owner of the Hotel is holding the liquor license and continuing to exercise
management and supervision of the liquor services at the Hotel pending transfer
of the license to Lessor or Lessee, the Lessee shall indemnify and hold Lessor
harmless from any liability, damages or claims (a) arising in connection with
liquor operations at the Hotel during such period of time following the

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Commencement Date, except to the extent caused by Lessor's gross negligence or
willful misconduct or (b) made by or through the former owner with respect to
liquor operations at the Hotel following the Commencement Date.

         8.3.   Environmental Covenants. Lessor and Lessee (in addition to, and
not in diminution of, Lessee's covenants and undertakings in Sections 8.1 and
8.2 hereof) covenant and agree as follows:

                (a)   At all times hereafter until the later of (i) such time as
all liabilities, duties or obligations of Lessee to Lessor under the Lease have
been satisfied in full and (ii) such time as Lessee completely vacates the
Leased Property and surrenders possession of the same to Lessor, Lessee shall
fully comply with all Environmental Laws applicable to the Leased Property and
the operations thereon. Lessee agrees to give Lessor prompt Notice of (1) all
Environmental Liabilities; (2) all pending, threatened or anticipated
Proceedings, and all notices, demands, requests or investigations, relating to
any Environmental Liability or relating to the issuance, revocation or change in
any Environmental Authorization required for operation of the Leased Property;
(3) all Releases at, on, in, under or in any way affecting the Leased Property,
or any Release known by Lessee at, on, in or under any property adjacent to the
Leased Property; and (4) all facts, events or conditions that could reasonably
lead to the occurrence of any of the above-referenced matters.

                (b)   Lessor hereby agrees to defend, indemnify and save
harmless any and all Lessee Indemnified Parties from and against any and all
Environmental Liabilities other than (i) Environmental Liabilities resulting
from conditions disclosed in any environmental audit obtained by Lessor and
provided to Lessee prior to the execution of this Lease (the "Environmental
Audit"), and (ii) Environmental Liabilities which were caused by the acts or
negligent failures to act of Lessee.

                (c)   Lessee hereby agrees to defend, indemnify and save
harmless any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities which were (i) resulting from conditions disclosed in
the Environmental Audit, and (ii) caused by the acts or negligent failures to
act of Lessee.

                (d)   If any Proceeding is brought against any Indemnified Party
in respect of an Environmental Liability with respect to which such Indemnified
Party may claim indemnification under either Subsection 8.3(b) or (c), the
Indemnifying Party, upon request, shall at its sole expense resist and defend
such Proceeding, or cause the same to be resisted and defended by counsel
designated by the Indemnified Party and approved by the Indemnifying Party,
which approval shall not be unreasonably withheld or delayed; provided, however,
that such approval shall not be required in the case of defense by counsel
designated by any insurance company undertaking such defense pursuant to any
applicable policy of insurance. Each Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel will be at the sole expense
of such Indemnified Party unless such counsel has been approved by the
Indemnifying Party, which approval shall not be unreasonably withheld or
delayed. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding made without its consent, which shall not be unreasonably
withheld or delayed, but if

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<PAGE>

settled with the consent of the Indemnifying Party, or if settled without its
consent (if its consent shall be unreasonably withheld or delayed), or if there
be a final, nonappealable judgment for an adversary party in any such
Proceeding, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Parties from and against any liabilities and loss incurred by such
Indemnified Parties by reason of such settlement or judgement.

                (e)   At any time any Indemnified Party has reason to believe
circumstances exist which could reasonably result in an Environmental Liability,
upon reasonable prior Notice to Lessee and Manager stating such Indemnified
Party's basis for such belief, an Indemnified Party shall be given immediate
access to the Leased Property (including, but not limited to, the right to enter
upon, investigate, drill wells, take soil borings, excavate, monitor, test, cap
and use available land for the testing of remedial technologies), Lessee's
employees, and to all relevant documents and records regarding the matter as to
which a responsibility, liability or obligation is asserted or which is the
subject of any Proceeding; provided that such access may he conditioned or
restricted as may be reasonably necessary to ensure compliance with law and the
safety of personnel and facilities or to protect confidential or privileged
information. All Indemnified Parties requesting such immediate access and
cooperation shall endeavor to coordinate such efforts to result in as minimal
interruption of the operation of the Leased Property as practicable.

                (f)   The indemnification rights and obligations provided for in
this Article 8 shall be in addition to any indemnification rights and
obligations provided for elsewhere in this Lease.

                (g)   The indemnification rights and obligations provided for in
this Article 8 shall survive the termination of this Lease.

         For purposes of this Section 8.3, all amounts for which any Indemnified
Party seeks indemnification shall be computed net of (a) any actual income tax
benefit resulting therefrom to such Indemnified Party, (b) any insurance
proceeds received (net of tax effects) with respect thereto, and (c) any amounts
recovered (net of tax effects) from any third parties based on claims the
Indemnified Party has against such third parties which reduce the damages that
would otherwise be sustained; provided that in all cases, the timing of the
receipt or realization of insurance proceeds or income tax benefits or
recoveries from third parties shall be taken into account in determining the
amount of reduction of damages. Each Indemnified Party agrees to use its
reasonable efforts to pursue, or assign to Lessee or Lessor, as the case may be,
any claims or rights it may have against any third party which would materially
reduce the amount of damages otherwise incurred by such Indemnified Party.

         Notwithstanding anything to the contrary contained in this Lease, if
Lessor shall become entitled to the possession of the Leased Property by virtue
of the termination of the Lease or repossession of the Leased Property, then
Lessor may assign its indemnification rights under this Section 8.3 (but not any
other rights under this Section 8.3) to any Person to whom Lessor subsequently
transfers the Leased Property, subject to the following conditions and
limitations, each of which shall be deemed to be incorporated into the terms of
such assignment, whether or not specifically referred to therein:

                                       33

<PAGE>

                       (i)    The indemnification rights referred to in this
                section may be assigned only if a known Environmental Liability
                then exists or if a Proceeding is then pending or, to the
                knowledge of Lessee or Lessor, then threatened with respect to
                the Leased Property;

                       (ii)   Such indemnification rights shall be limited to
                Environmental Liabilities relating to or specifically affecting
                the Leased Property; and

                       (iii)  Any assignment of such indemnification rights
                shall be limited to the immediate transferee of Lessor, and
                shall not extend to any such transferee's successors or assigns.

                                   ARTICLE 9
             MAINTENANCE AND REPAIRS; ENCROACHMENTS AND RESTRICTIONS

         9.1.   Maintenance and Repairs.

                (a)   Lessee, at its sole expense, will keep the Leased
Property, and all private roadways, sidewalks and curbs appurtenant thereto that
are under Lessee's control, including windows and plate glass, mechanical,
electrical and plumbing systems and equipment (including conduit and ductware),
and non-load bearing interior walls, and parking lot surfaces, in good order and
repair, except (i) for ordinary wear and tear (whether or not the need for such
repairs occurred as a result of Lessee's use, any prior use, the elements or the
age of the Leased Property, or any portion thereof) and (ii) to the extent of
damage caused by Lessor's gross negligence or willful misconduct or that of its
employees or agents, and, except as otherwise provided in Subsection 9.1(b),
Article 14 or Article 15, with reasonable promptness, make all necessary and
appropriate repairs replacements, and improvements thereto of every kind and
nature, whether interior or exterior ordinary or extraordinary, foreseen or
unforeseen or arising by reason of a condition existing prior to the
commencement of the Term of this Lease (concealed or otherwise), or required by
any governmental agency having jurisdiction over the Leased Property, except as
to the structural elements of the Leased Improvements. Lessee, however, shall be
permitted to prosecute claims against Lessor's predecessors in title for breach
of any representation or warranty or for any latent defects in the Leased
Property to be maintained by Lessee unless Lessor is already diligently pursuing
such a claim. All repairs shall, to the extent reasonably achievable, be at
least equivalent in quality to the original work. Lessee will not take or omit
to take any action, the taking or omission of which might materially impair the
value or the usefulness of the Leased Property or any part thereof for its
Primary Intended Use.

                (b)   Notwithstanding Lessee's obligations under Subsection
9.1(a) above, except to the extent of damage caused by Lessee's negligence or
willful misconduct or that of its employees or agents, Lessor shall be required
to bear the cost of maintaining any underground utilities and the structural
elements of the Leased Improvements, including exterior walls and the roof of
the Hotel (but excluding windows and plate glass, mechanical, electrical and
plumbing systems and equipment, including conduit and ductware, and non-load
bearing walls, and parking lot surfaces). Except as set forth in the preceding
sentence and in Section 10.5, Lessor shall not under any circumstances be
required to build or rebuild any improvement on the Leased Property,

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<PAGE>

or to make any repairs, replacements, alterations, restorations or renewals of
any nature or description to the Leased Property, whether ordinary or
extraordinary, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto, in connection with this Lease, or to maintain the Leased
Property in any way. Lessee hereby waives, to the extent permitted by law, the
right to make repairs at the expense of Lessor, pursuant to any law in effect at
the time of the execution of this Lease or hereafter enacted, except following
default by Lessor under this Lease, to the extent of repairs (for which Lessor
is obligated hereunder) required to be made in order for the Hotel, and Lessee's
use thereof, to comply with Lessee's obligations under the Management Agreement.
Lessor shall have the right to give, record and post, as appropriate, notices of
nonresponsibility under any mechanic's lien laws now or hereafter existing.

                (c)   Nothing contained in this Lease and no action or inaction
by Lessor shall be construed as (1) constituting the request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the Leased Property or any part thereof, or (2)
giving Lessee any right, power or permission to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against Lessor
in respect thereof or to make any agreement that may create, or in any way be
the basis for any right, title, interest, lien, claim or other encumbrance upon
the estate of Lessor in the Leased Property, or any portion thereof.

         9.2.   Encroachments, Restrictions, Etc. Lessor represents and warrants
that the Leased Improvements do not materially encroach upon any property,
street or right-of-way adjacent to the Leased Property, or violate the
agreements or conditions contained in any lawful restrictive covenant or other
agreement affecting the Leased Property, or any part thereof, or impair the
rights of others under any easement or right-of-way to which the Leased Property
is subject. Except to the extent that such representation and warranty is
breached by Lessor, if any of the Leased Improvements, at any time hereafter,
materially encroach upon any property, street or right-of-way adjacent to the
Leased Property, or violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or impair the rights of others under any easement or right-of-way
to which the Leased Property is subject, then promptly upon the request of
Lessor or at the behest of any Person affected by any such encroachment,
violation or impairment, Lessee shall, at its expense, subject to its right to
contest the existence of any encroachment, violation or impairment and in such
case, in the event of an adverse final determination, either (a) obtain valid
and effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation or impairment, whether the same
shall affect Lessor or Lessee or (b) make such changes in the Leased
Improvements, and take such other actions, as Lessee in the good faith exercise
of its judgment deems reasonably practicable to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation, impairment or encroachment. Any such alteration shall be made in
conformity with the applicable requirements of Article 10. Lessee's obligations
under this Section 9.2 shall be in addition to and shall in no way

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<PAGE>

discharge or diminish any obligation of any insurer under any policy of title or
other insurance held by Lessor.

                                   ARTICLE 10
                   ALTERATIONS AND IMPROVEMENTS; FF&E RESERVE

         10.1.  Alterations. After receiving approval of Lessor, which approval
shall not be unreasonably withheld or delayed, Lessee shall have the right to
make such additions, modifications or improvements to the Leased Property from
time to time as Lessee deems desirable for its permitted uses and purposes,
provided that such action will not significantly alter the character or purposes
or significantly detract from the value or operating efficiency thereof and will
not significantly impair the revenue-producing capability of the Leased Property
or adversely affect the ability of Lessee to comply with the provisions of this
Lease. The cost of such additions, modifications or improvements to the Leased
Property shall be paid by Lessee, and all such additions, modifications and
improvements shall, without payment by Lessor at any time, be included under the
terms of this Lease and upon expiration or earlier termination of this Lease
shall pass to and become the property of Lessor.

         10.2.  Salvage. All materials which are scrapped or removed in
connection with the making of repairs required by Articles 9 or 10 shall be or
become the property of Lessor or Lessee depending on which party is paying for
or providing the financing for such work.

         10.3.  Joint Use Agreements. If Lessee constructs additional
improvements that are connected to the Leased Property or share maintenance
facilities, HVAC, electrical, plumbing or other systems, utilities, parking or
other amenities, the parties shall enter into a mutually agreeable
cross-easement or joint use agreement, the form of which has been approved in
advance by Lessor, to make available necessary services and facilities in
connection with such additional improvements, to protect each of their
respective interests in the properties affected, and to provide for separate
ownership, use, and/or financing of such improvements.

         10.4.  [Reserved].

         10.5.  Furniture, Fixture and Equipment Allowance. Lessor shall be
obligated to pay Lessee, when and as required to meet the requirements of the
Management Agreement for a reserve for periodic repair, replacement or
refurbishing of furniture, fixtures and equipment that constitute Leased
Property, an amount equal up to six percent (6%) of Suite Revenues monthly. Upon
written request by Lessee to Lessor stating the specific use to be made and the
reasonable approval thereof by Lessor (or as otherwise required by the Manager
under the Management Agreement), such reserve funds (and additional funds of
Lessor, if necessary) shall be made available by Lessor for use by Lessee for
replacement or refurbishing of furniture, fixtures and equipment that constitute
Leased Property in connection with the Primary Intended Use; provided, however,
that no amounts made available under this Article shall be used to purchase
property (other than "real property" within the meaning of Treasury Regulations
Section 1.856-3(d)), to the extent that doing so would cause Lessor to recognize
income other than "rents from real property" as defined in Section 856(d) of the
Code. Lessor's obligation shall be cumulative, but not compounded, and any
amounts that have accrued hereunder shall be payable in future periods for such
uses and in accordance with the

                                       36

<PAGE>

procedure set forth herein. Lessee shall have no interest in any accrued
obligation of Lessor hereunder after the termination of this Lease.

                                   ARTICLE 11
                      COMPLIANCE WITH MANAGEMENT AGREEMENT

         11.1.  Compliance with Management Agreement. To the extent any of the
provisions of the Management Agreement impose a greater obligation on Lessee
than the corresponding provisions of the Lease, then Lessee shall be obligated
to comply with, and to take all reasonable actions necessary to prevent breaches
or defaults under, the provisions of the Management Agreement. It is the intent
of the parties hereto that Lessee shall comply in every respect with the
provisions of the Management Agreement so as to avoid any material default
thereunder during the term of this Lease. Lessee shall not terminate, extend or
enter into any material modification of the Management Agreement without in each
instance first obtaining Lessor's prior written consent, which shall not be
unreasonably withheld. Lessor and Lessee agree to cooperate with each other in
the event it becomes necessary to obtain a franchise extension or modification
(or, at Lessor's option, a new franchise) for the Leased Property, and in any
transfer of the Management Agreement to Lessor or any designee of Lessor or any
successor to Lessee upon the termination of this Lease. In the event of
expiration or termination of a Management Agreement, for whatever reason, Lessor
will have the right, in the exercise of its sole discretion, to approve any new
Management Agreement for the Hotel.

                                   ARTICLE 12
                          PERMITTED LIENS AND CONTESTS

         12.1.  Liens. Subject to the provisions of Section 12.2 relating to
permitted contests, Lessee will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, encumbrance,
attachment, title retention agreement or claim upon the Leased Property or any
attachment, levy, claim or encumbrance in respect of the Rent, not including,
however, (a) this Lease, (b) the matters included as exceptions in the title
policy insuring Lessor's interest in the Leased Property, (c) restrictions,
liens and other encumbrances which are consented to in writing by Lessor or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes upon Lessor or the Leased Property which Lessee is not
required to pay hereunder, (e) subleases permitted by Article 20 hereof, (f)
liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Section 12.2, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due
provided that (1) the payment of such sums shall not be postponed under any
related contract for more than sixty (60) days after the completion of the
action giving rise to such lien and such reserve or other appropriate provisions
as shall be required by law or generally accepted accounting principles shall
have been made therefor or (2) any such liens are in the process of being
contested as permitted by Section 12.2 hereof, and (h) any liens which are the
responsibility of Lessor pursuant to the provisions of Article 22 of this Lease.

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<PAGE>

         12.2.  Permitted Contests. Lessee shall have the right to contest the
amount or validity of any Imposition to be paid by Lessee or any Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim ("Claims") not otherwise permitted by Section 12.1, by
appropriate legal proceedings in good faith and with due diligence (but this
shall not be deemed or construed in any way to relieve, modify or extend
Lessee's covenants to pay or its covenants to cause to be paid any such charges
at the time and in the manner as in this Section provided), on condition,
however, that such legal proceedings shall not operate to relieve Lessee from
its obligations hereunder and shall not cause the sale or risk the loss of any
portion of the Leased Property, or any part thereof, or cause Lessor or Lessee
to be in default under any mortgage, deed of trust, security deed or other
agreement encumbering the Leased Property or any interest therein. Upon the
request of Lessor, Lessee shall either (a) provide a bond or other assurance
reasonably satisfactory to Lessor that all Claims which may be assessed against
the Leased Property together with interest and penalties, if any, thereon will
be paid, or (b) deposit within the time otherwise required for payment with a
bank or trust company as trustee upon terms reasonably satisfactory to Lessor,
as security for the payment of such Claims, money in an amount sufficient to pay
the same, together with interest and penalties in connection therewith, as to
all Claims which may be assessed against or become a Claim on the Leased
Property, or any part thereof, in said legal proceedings. Lessee shall furnish
Lessor and any lender of Lessor with reasonable evidence of such deposit within
five (5) days of the same. Lessor agrees to join in any such proceedings if the
same be required legally to prosecute such contest of the validity of such
Claims; provided, however, that Lessor shall not thereby be subjected to any
liability or loss for the payment of any costs or expenses in connection with
any proceedings brought by Lessee; and Lessee covenants to indemnify and save
harmless Lessor from any such liabilities, losses, costs or expenses. Lessee
shall be entitled to any refund of any Claims and such charges and penalties or
interest thereon which have been paid by Lessee or paid by Lessor and for which
Lessor has been fully reimbursed. In the event that Lessee fails to pay any
Claims when due or to provide the security therefor as provided in this Section
and diligently to prosecute any contest of the same, Lessor may, upon ten (10)
days' advance Notice to Lessee, and Lessee's failure to correct the same within
such ten (10) day period, pay such charges together with any interest and
penalties and the same shall be repayable by Lessee to Lessor as Additional
Charges at the next Payment Date provided for in this Lease; provided, however,
that should Lessor reasonably determine that the giving of such Notice would
risk loss to the Leased Property or cause damage to Lessor, then Lessor shall
give such Notice as is practical under the circumstances. Lessor reserves the
right to contest any of the Claims at its expense not pursued by Lessee. Lessor
and Lessee agree to cooperate in coordinating the contest of any Claims.

                                   ARTICLE 13
                             INSURANCE REQUIREMENTS

         13.1.  General Insurance Requirements. During the Term of this Lease,
Lessor and Lessee shall at all times keep the Leased Property insured with the
kinds and amounts of insurance described below, or such other insurance
coverage(s) as may be required by the Management Agreement. This insurance shall
be written by companies authorized to issue insurance in the State. The policies
must name Lessor and Mortgagee and/or Lessee, as applicable, as the insured or
as an additional named insured, as the case may be. Losses shall be payable to
Lessor or Lessee as provided in this Lease. Any loss adjustment shall require
the written consent of Lessor and

                                       38

<PAGE>

Lessee, each acting reasonably and in good faith. Evidence of insurance shall be
deposited with Lessor. The policies on the Leased Property, including the Leased
Improvements, Fixtures and Lessee's Personal Property, shall include the
following:

                (a)   Lessor shall obtain and maintain, at its own expense:

                      (i)    Building insurance on the "Special Form" (formerly
                "All Risk" form) (including earthquake and flood in reasonable
                amounts as determined by Lessor) in an amount not less than 100%
                of the then full replacement cost thereof (as defined in Section
                13.2) or such other amount which is acceptable to Lessor and
                Lessee, and personal property insurance (on other than Lessee's
                Personal Property) on the "Special Form" in the full amount of
                the replacement cost thereof;

                      (ii)   Insurance for loss or damage (direct and indirect)
                from steam boilers, pressure vessels or similar apparatus, now
                or hereafter installed in the Hotel, in the minimum amount of
                $5,000,000 or in such greater amounts as are then customary; and

                      (iii)  Loss of income insurance on the "Special Form", in
                the amount of one year of Base Rent and Additional Charges (to
                the extent quantifiable) for the benefit of Lessor.

                (b)   Lessee shall obtain and maintain, at its own expense:

                      (i)    Personal property insurance on Lessee's Personal
                Property on the "Special Form" in the full amount of the
                replacement cost thereof;

                      (ii)   Comprehensive general liability insurance, with
                amounts not less than $10,000,000 covering each of the
                following: bodily injury, death, or property damage liability
                per occurrence, personal and advertising injury, general
                aggregate, products and completed operations, with respect to
                Lessor, and "all risk legal liability" (including liquor law or
                "dram shop" liability, if liquor or alcoholic beverages are
                served on the Leased Property) with respect to Lessor and
                Lessee;

                      (iii)  Insurance covering such other hazards and in such
                amounts as may be customary for comparable properties in the
                area of the Leased Property and is available from insurance
                companies, insurance pools or other appropriate companies
                authorized to do business in the State at rates which are
                economically practicable in relation to the risks covered, as
                may be reasonably requested by Lessor;

                      (iv)   Fidelity bonds with limits and deductibles as may
                be reasonably requested by Lessor, covering Lessee's employees
                in job classifications normally bonded under prudent hotel
                management practices in the United States or otherwise required
                by law;

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<PAGE>

                      (v)    Worker's compensation insurance coverage for all
                persons, if any, employed by Lessee on the Leased Premises, to
                the extent necessary to protect Lessor and the Leased Property
                against Lessee's worker's compensation claims, such worker's
                compensation insurance to be in accordance with the requirements
                of applicable local, state and federal law;

                      (vi)   Vehicle liability insurance for owned, non-owned,
                and hired vehicles, in the amount of $5,000,000; and

                      (vii)  Such other insurance as Lessor may reasonably
                request for facilities such as the Leased Property and the
                operation thereof.

         13.2.  Replacement Cost. The term "full replacement cost" as used
herein shall mean the actual replacement cost of the Leased Property requiring
replacement from time to time including an increased cost of construction
endorsement, if available, and the cost of debris removal. In the event either
party believes that full replacement cost (the then-replacement cost less such
exclusions) has increased or decreased at any time during the Lease Term, it
shall have the right to have such full replacement cost re-determined.

         13.3.  Waiver of Subrogation. All insurance policies carried by Lessor
or Lessee covering the Leased Property, the Fixtures, the Hotel or Lessee's
Personal Property, including, without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such waiver clause or endorsement so long as the same are
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to do
so.

         13.4.  Form Satisfactory, Etc.

                (a)   All of the policies of insurance referred to in this
Article 13 to be maintained by Lessee shall be written in a form, with
deductibles and by insurance companies satisfactory to Lessor. Lessee shall pay
all of the premiums therefor, and deliver such policies or certificates thereof
to Lessor prior to their effective date (and, with respect to any renewal
policy, thirty (30) days prior to the expiration of the existing policy), and in
the event of the failure of Lessee either to effect such insurance as herein
called for or to pay the premiums therefor, or to deliver such policies or
certificates thereof to Lessor at the times required, Lessor shall be entitled,
but shall have no obligation, to effect such insurance and pay the premiums
therefor, and Lessee shall reimburse Lessor for any premium or premiums paid by
Lessor for the coverages required of Lessee under this Article 13 upon written
demand therefor, and Lessee's failure to repay the same within thirty (30) days
after Notice of such failure from Lessor shall constitute an Event of Default
within the meaning of Section 16.1. Each insurer mentioned in this Article 13
shall agree, by endorsement to the policy or policies issued by it, or by
independent instrument furnished to Lessor, that it will give to Lessor thirty
(30) days' written notice before the policy or policies in question shall be
materially altered, allowed to expire or canceled.

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<PAGE>

                (b)   All of the policies of insurance referred to in this
Article 13 to be maintained by Lessor shall be written in a form, with
deductibles and by insurance companies satisfactory to Lessee. Lessor shall pay
all of the premiums therefor, and deliver such policies or certificates thereof
to Lessee prior to their effective date (and, with respect to any renewal
policy, thirty (30) days prior to the expiration of the existing policy), and in
the event of the failure of Lessor either to effect such insurance as herein
called for or to pay the premiums therefor, or to deliver such policies or
certificates thereof to Lessee at the times required, Lessee shall be entitled,
but shall have no obligation, to effect such insurance and pay the premiums
therefor, and Lessor shall reimburse Lessee for any premium or premiums paid by
Lessee for the coverages required under this Section upon written demand
therefor. Each insurer mentioned in this Article 13 shall agree, by endorsement
to the policy or policies issued by it, or by independent instrument furnished
to Lessee, that it will give to Lessee thirty (30) days' written notice before
the policy or policies in question shall be materially altered, allowed to
expire or canceled.

         13.5.  Increase in Limits. If either Lessor or Lessee at any time deems
the limits of the personal injury or property damage under the comprehensive
public liability insurance then carried to be either excessive or insufficient,
Lessor and Lessee shall endeavor in good faith to agree on the proper and
reasonable limits for such insurance to be carried and such insurance shall
thereafter be carried with the limits thus agreed on until further change
pursuant to the provisions of this Article 13.

         13.6.  Blanket Policy. Notwithstanding anything to the contrary
contained in this Article 13. Lessee or Lessor may bring the insurance provided
for herein within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee (or Manager) or Lessor; provided,
however, that the coverage afforded to Lessor and Lessee will not be reduced or
diminished or otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance, and provided further that the
requirements of this Article 13 are otherwise satisfied.

         13.7.  No Separate Insurance. Lessee shall not, on Lessee's own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished, or increase the amount of
any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor, are included therein as
additional insured, and the loss is payable under such additional separate
insurance in the same manner as losses are payable under this Lease. Lessee
shall immediately notify Lessor of any such separate insurance that Lessee has
obtained or of the increase of any of the amounts of the then existing
insurance.

         13.8.  Reports On Insurance Claims. Lessee shall promptly investigate
and make a complete and timely written report to the appropriate insurance
company as to all accidents, claims for damage relating to the ownership,
operation, and maintenance of the Hotel, any damage or destruction to the Hotel
and the estimated cost of repair thereof and shall prepare any and all reports
required by any insurance company in connection therewith. All such reports
shall be timely filed with the insurance company as required under the terms of
the insurance policy involved, and a final copy of such report shall be
furnished to Lessor. Lessee shall be authorized to

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<PAGE>

adjust, settle, or compromise any insurance loss, or to execute proofs of such
loss, in the aggregate amount of $25,000 or less, with respect to any single
casualty or other event.

                                   ARTICLE 14
                   CASUALTY INSURANCE PROCEEDS; RECONSTRUCTION

         14.1.  Insurance Proceeds. Subject to the provisions of Section 14.4,
all proceeds payable by reason of any loss or damage to the Leased Property, or
any portion thereof, insured under any policy of insurance required by Article
13 of this Lease, shall be paid to Lessor and held in trust by Lessor in an
interest-bearing account, shall be made available, if applicable, for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and, if applicable, shall be paid
out by Lessor from time to time for the reasonable costs of such reconstruction
or repair upon satisfaction of reasonable terms and conditions specified by
Lessor. Any excess proceeds of insurance (and accrued interest) remaining after
the completion of the restoration or reconstruction of the Leased Property, as
hereinafter set forth, shall be paid to Lessee. If neither Lessor nor Lessee is
required or elects to repair and restore, and the Lease is terminated without
purchase by Lessee as described in Section 14.2, all such insurance proceeds
shall be retained by Lessor. All salvage resulting from any risk covered by
insurance shall belong to Lessor.

         14.2.  Reconstruction in the Event of Damage or Destruction Covered by
Insurance.

                (a)  Except as provided in Section 14.6 and subject to the right
of the Mortgagee, if during the Term the Leased Property is totally or partially
destroyed by a risk covered by the insurance described in Article 13 and the
Hotel thereby is rendered Unsuitable for its Primary Intended Use, Lessee shall,
at Lessee's option, either (1) restore the Hotel to substantially the same
condition as existed immediately before the damage or destruction and otherwise
in accordance with the terms of the Lease, or (2) offer to acquire the Leased
Property from Lessor for a purchase price equal to the Rejectable Offer Price of
the Leased Property. If Lessee restores the Hotel, the insurance proceeds shall
be paid out by Lessor from time to time for the reasonable costs of such
restoration upon satisfaction of reasonable terms and conditions, and any excess
proceeds remaining after such restoration shall be paid to Lessee. If Lessee
acquires the Leased Property, Lessee shall receive the insurance proceeds. If
Lessor does not accept Lessee's offer so to purchase the Leased Property within
ninety (90) days, Lessee may withdraw its offer to purchase the Leased Property
and, if so withdrawn, Lessee may terminate the Lease with respect to the Leased
Property without further liability hereunder and Lessor shall be entitled to
retain all insurance proceeds.

                (b)  Except as provided in Section 14.6, if during the Term the
Leased Property is partially destroyed by a risk covered by the insurance
described in Article 13, but the Hotel is not thereby rendered Unsuitable for
its Primary Intended Use, Lessee shall restore the Hotel to substantially the
same condition as existed immediately before the damage or destruction and
otherwise in accordance with the terms of the Lease. Such damage or destruction
shall not terminate this Lease; provided, however, that if Lessee cannot within
a reasonable time obtain all necessary government approvals, including building
permits, licenses and conditional use permits, after diligent efforts to do so,
to perform all required repair and restoration work and to operate the Hotel for
its Primary Intended Use in substantially the same manner as that existing
immediately

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<PAGE>

prior to such damage or destruction and otherwise in accordance with the terms
of the Lease, Lessee may offer to purchase the Leased Property for a purchase
price equal to the Rejectable Offer Price of the Leased Property, determined
without regard to such damage or destruction if insurance proceeds are available
to restore the Hotel. If Lessee makes such offer and Lessor does not accept the
same, Lessee shall withdraw such offer, in which event this Lease shall remain
in full force and effect and Lessee shall immediately proceed to restore the
Hotel to substantially the same condition as existed immediately before such
damage or destruction and otherwise in accordance with the terms of the Lease.
If Lessee restores the Hotel, the insurance proceeds shall be paid out by Lessor
from time to time for the reasonable costs of such restoration upon satisfaction
of reasonable terms and conditions specified by Lessor, and any excess proceeds
remaining after such restoration shall be paid to Lessee.

                (c)   If the cost of the repair or restoration exceeds the
amount of proceeds received by Lessor from the insurance it maintains as
required under Article 13, Lessee shall be obligated to contribute any excess
amounts needed to restore the Hotel. Such difference shall be paid by Lessee to
Lessor promptly after Lessee receives Lessor's written invoice therefor, to be
held in trust in an interest-bearing account, together with any other insurance
proceeds, for application to the cost of repair and restoration.

                (d)   If Lessor accepts Lessee's offer to purchase the Leased
Property under this Article, this Lease shall terminate as to the Leased
Property upon payment of the purchase price, and Lessor shall remit to Lessee
all insurance proceeds pertaining to the Leased Property being held in trust by
Lessor.

         14.3.  Reconstruction in the Event of Damage or Destruction Not Covered
by Insurance. Except as provided in Section 14.6, if during the Term the Hotel
is totally or materially destroyed by a risk not covered by the insurance
described in Article 13, whether or not such damage or destruction renders the
Hotel Unsuitable for its Primary Intended Use, Lessee at its option shall
either, (a) at Lessee's sole cost and expense, restore the Hotel to
substantially the same condition it was in immediately before such damage or
destruction and such damage or destruction shall not terminate this Lease, or
(b) offer to purchase the Leased Property for a purchase price equal to the
Rejectable Offer Price of the Leased Property without regard to such damage or
destruction. If such damage or destruction is not material, Lessee shall restore
the Hotel to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of the Lease.
If Lessor does not accept Lessee's offer so to purchase the Leased Property
within ninety (90) days, Lessee may withdraw its offer to purchase the Leased
Property and, if so withdrawn, Lessee may terminate the Lease with respect to
the Leased Property without further liability hereunder.

         14.4.  Lessee's Property. All insurance proceeds payable by reason of
any loss of or damage to any of Lessee's Personal Property shall be paid to
Lessee; provided, however, no such payments shall diminish or reduce the
insurance payments otherwise payable to or for the benefit of Lessor hereunder.

         14.5.  Abatement of Rent. Any damage or destruction due to casualty
notwithstanding, this Lease shall remain in full force and effect and Lessee's
obligation to make rental payments and

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<PAGE>

to pay all other charges required by this Lease shall remain unabated during the
first three (3) months of any period required for the applicable repair and
restoration. Thereafter, Base Rent shall be equitably abated.

         14.6.  Damage Near End of Term. Notwithstanding any provisions of
Section 14.2 or 14.3 appearing to the contrary, if damage to or destruction of
the Hotel rendering it unsuitable for its Primary Intended Use occurs during the
last twenty-four (24) months of the Term, then Lessor or Lessee shall have the
right to terminate this Lease by giving Notice, respectively, to Lessee or
Lessor within thirty (30) days after the date of damage or destruction,
whereupon all accrued Rent shall be paid immediately, and this Lease shall
automatically terminate five (5) days after the date of such Notice.

         14.7.  Waiver. Lessee hereby waives any statutory rights of termination
that may arise by reason of any damage or destruction of the Hotel that Lessor
is obligated to restore or may restore under any of the provisions of this
Lease.

                                   ARTICLE 15
                         CONDEMNATION; AWARD ALLOCATION

         15.1.  Definitions.

                (a)   "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.

                (b)   "Condemnation" means a Taking resulting from (1) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.

                (c)   "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.

                (d)   "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.

         15.2.  Parties' Rights and Obligations. If during the Term there is any
Condemnation of all or any part of the Leased Property or any interest in this
Lease, the rights and obligations of Lessor and Lessee shall be determined by
this Article 15.

         15.3.  Total Taking If title to the fee of the whole of the Leased
Property is condemned by any Condemnor, this Lease shall cease and terminate as
of the Date of Taking by the Condemnor. If title to the fee of less than the
whole of the Leased Property is so taken or condemned, which nevertheless
renders the Leased Property Unsuitable or Uneconomic for its Primary Intended
Use, Lessee and Lessor shall each have the option, by Notice to the other, at
any time prior to the Date of Taking, to terminate this Lease as of the Date of
Taking. Upon such date, if such Notice has been given, this Lease shall
thereupon cease and terminate. All Base Rent, Percentage Rent and

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<PAGE>

Additional Charges paid or payable by Lessee hereunder shall be apportioned as
of the Date of Taking, and Lessee shall promptly pay Lessor such amounts.

         15.4.  Allocation of Award. The total Award made with respect to the
Leased Property or for loss of rent, or for Lessor's loss of business beyond the
Term, shall be solely the property of and payable to Lessor. Any Award made for
loss of Lessee's business during the remaining Term, if any, for the taking of
Lessee's Personal Property, or for removal and relocation expenses of Lessee in
any such proceedings shall be the sole property of and payable to Lessee. In any
Condemnation proceedings Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective expense; provided, however, Lessee shall
not initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to Lessor.

         15.5.  Partial Taking. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is not Unsuitable for its Primary
Intended Use, and not Uneconomic for its Primary Intended Use, or if Lessee or
Lessor is entitled but neither elects to terminate this Lease as provided in
Section 15.3, Lessee at its cost shall with all reasonable dispatch restore the
untaken portion of any Leased Improvements so that such Leased Improvements
constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existing immediately prior to the Condemnation. Lessor shall
contribute to the cost of restoration that part of its Award specifically
allocated to such restoration, if any, together with severance and other damages
awarded for the taken Leased Improvements; provided, however, that the amount of
such contribution shall not exceed such cost. In the event of such a partial
Taking, this Lease shall not terminate, but the Base Rent shall be abated in the
manner and to the extent that is fair, just and equitable to both Lessee and
Lessor, taking into consideration, among other relevant factors, the number of
usable rooms, the amount of square footage, or the revenues affected by such
partial Taking. If Lessor and Lessee are unable to agree upon the amount of such
abatement within thirty (30) days after such partial Taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.

         15.6.  Temporary Taking. If the whole or any part of the Leased
Property (other than the fee) or of Lessee's interest under this Lease is
condemned by any Condemnor for its temporary use or occupancy (which shall mean
a period not to exceed two years), this Lease shall not terminate by reason
thereof, and Lessee shall continue to pay, in the manner and at the terms herein
specified, the full amounts of Base Rent and Additional Charges. In addition,
Lessee shall pay Percentage Rent at a rate equal to the average Percentage Rent
during the last three (3) preceding Fiscal Years (or if three (3) Fiscal Years
shall not have elapsed, the average during the preceding Fiscal Years). Except
only to the extent that Lessee may be prevented from so doing pursuant to the
terms of the order of the Condemnor, Lessee shall continue to perform and
observe all of the other terms, covenants, conditions and obligations hereof on
the part of Lessee to be performed and observed, as though such Condemnation had
not occurred. In the event of any Condemnation as in this Section 15.6
described, the entire amount of any Award made for such Condemnation allocable
to the Term of this Lease, whether paid by way of damages, rent or otherwise,
shall be paid to Lessee. Lessee covenants that upon the termination of any such
period of temporary use or occupancy it will, at its sole cost and expense
(subject to Lessor's contribution as set forth below), restore the Leased
Property as nearly as may be reasonably possible to the condition in which the
same was immediately prior to such Condemnation, unless such period of temporary
use or occupancy

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<PAGE>

extends beyond the expiration of the Term, in which case Lessee shall not be
required to make such restoration. If restoration is required hereunder, Lessor
shall contribute to the cost of such restoration that portion of its entire
Award that is specifically allocated to such restoration in the judgment or
order of the court, if any, and Lessee shall fund the balance of such costs in a
manner reasonably satisfactory to Lessor.

                                   ARTICLE 16
                      DEFAULT BY LESSEE; LESSOR'S REMEDIES

         16.1.  Events of Default. If any one or more of the following events
(individually, an "Event of Default") occurs:

                (a)   if an Event of Default occurs under any other lease
between Lessor or any Affiliate of Lessor and Lessee or any Affiliate of Lessee;
or

                (b)   if Lessee fails to make payment of the Base Rent within
ten (10) days after the same becomes due and payable; or

                (c)   if Lessee fails to make payment of Percentage Rent when
the same becomes due and payable and such condition continues for a period of
thirty (30) days after the end of the applicable quarter; or

                (d)   if Lessee fails to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within a period of thirty (30) days after receipt by Lessee of Notice thereof
from Lessor, unless such failure cannot with due diligence be cured within a
period of thirty (30) days, in which case it shall not be deemed an Event of
Default if Lessee proceeds promptly and with due diligence to cure the failure
and diligently completes the curing thereof provided, however, in no event shall
such cure period extend beyond ninety (90) days after such Notice; or

                (e)   if Lessee shall file a petition in bankruptcy or
reorganization for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
shall make an assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due, or if a petition or
answer proposing the adjudication of Lessee as a bankrupt or its reorganization
pursuant to any federal or state bankruptcy law or any similar federal or state
law shall be filed in any court and Lessee shall be adjudicated a bankrupt and
such adjudication shall not be vacated or set aside or stayed within sixty (60)
days after the entry of an order in respect thereof, or if a receiver of Lessee
or of the whole or substantially all of the assets of Lessee shall be appointed
in any proceeding brought by Lessee or if any such receiver, trustee or
liquidator shall be appointed in any proceeding brought against Lessee and shall
not be vacated or set aside or stayed within sixty (60) days after such
appointment; or

                (f)   if Lessee is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, in any manner, permits
the sale or divestiture of substantially all of its assets; or

                                       46

<PAGE>

                (g)   if, except as expressly permitted herein, the estate or
interest of Lessee in the Leased Property or any part thereof is voluntarily or
involuntarily transferred, assigned, conveyed, levied upon or attached in any
proceeding (unless Lessee is contesting such lien or attachment in good faith in
accordance with Section 12.2 hereof) or there is a Change of Control of Lessee;
or

                (h)   if, except as a result of damage, destruction or a partial
or complete Condemnation as contemplated by this Lease, Lessee voluntarily
ceases operations on the Leased Property for a period in excess of thirty (30)
days; or

                (i)   if an event of default has been declared by the Manager
under the Management Agreement with respect to the Hotel as a result of any
action or failure to act by Lessee or any Person with whom Lessee contracts for
management services at the Hotel, and such default is not cured by the earlier
of (A) ten (10) days following notice from Lessor or (B) such earlier date as is
required for Lessee to avoid termination of the Management Agreement by the
Manager;

then, and in any such event, Lessor may exercise one or more remedies available
to it herein or at law or in equity, including but not limited to its right to
terminate this Lease by giving Lessee not less than ten (10) days' Notice of
such termination.

                If litigation is commenced with respect to any alleged default
under this Lease, the prevailing party in such litigation shall receive, in
addition to its damages incurred, such sum as the court shall determine as its
reasonable attorneys' fees, and all costs and expenses incurred in connection
therewith.

                No Event of Default (other than a failure to make a payment of
money) shall be deemed to exist under clause (d) during any time the curing
thereof is prevented by an Unavoidable Delay, provided that upon the cessation
of such Unavoidable Delay, Lessee remedies such default or Event of Default
without further delay.

         16.2.  Surrender. If an Event of Default occurs (and the event giving
rise to such Event of Default has not been cured within the curative period
relating thereto as set forth in Section 16.1) and is continuing, whether or not
this Lease has been terminated pursuant to Section 16.1, Lessee shall, if
requested by Lessor so to do, immediately surrender to Lessor the Leased
Property including, without limitation, any and all books, records, files,
licenses, permits and keys relating thereto, and quit the same and Lessor may
enter upon and repossess the Leased Property by summary proceedings, ejectment
or otherwise, and may remove Lessee and all other Persons and any and all
personal property from the Leased Property, subject to rights of any hotel
guests and to any requirement of law. Lessee hereby waives any and all
requirements of applicable laws for service of notice to re-enter the Leased
Property. Lessor shall be under no obligation to, but may if it so chooses,
relet the Leased Property or otherwise mitigate Lessor's damages.

         16.3.  Damages. Neither (a) the termination of this Lease, (b) the
repossession of the Leased Property, (c) the failure of Lessor to relet the
Leased Property, nor (d) the reletting of all or any portion thereof, shall
relieve Lessee of its liability and obligations hereunder, all of which shall

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<PAGE>

survive any such termination, repossession or reletting. In the event of any
such termination, Lessee shall forthwith pay to Lessor all Rent due and payable
with respect to the Leased Property to and including the date of such
termination.

                Lessee shall forthwith pay to Lessor, at Lessor's option, as and
for liquidated and agreed current damages for Lessee's default, either:

                      (i)   Without termination of Lessee's right to possession
                of the Leased Property, each installment of Rent (including
                Percentage Rent as determined below) and other sums payable by
                Lessee to Lessor under the Lease as the same becomes due and
                payable, which Rent and other sums shall bear interest at the
                Overdue Rate, and Lessor may enforce, by action or otherwise,
                any other term or covenant of this Lease; or

                      (ii)  the sum of:

                            (A)  the unpaid Rent which had been earned at the
                time of termination, repossession or reletting, and

                            (B)  the worth at the time of termination,
                repossession or reletting of the amount by which the unpaid Rent
                for the balance of the Term after the time of termination,
                repossession or reletting, exceeds the amount of such rental
                loss that Lessee proves could be reasonably avoided and as
                reduced for rentals received after the time of termination,
                repossession or reletting, if and to the extent required by
                applicable law, and

                            (C)  any other amount necessary to compensate Lessor
                for all the detriment proximately caused by Lessee's failure to
                perform its obligations under this Lease or which in the
                ordinary course of things, would be likely to result therefrom.

                The worth at the time of termination, repossession or reletting
of the amount referred to in subparagraph (B) is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of New York at the time
of award plus one percent (1%). Percentage Rent for the purposes of this Section
16.3 shall be a sum equal to (i) the average of the annual amounts of the
Percentage Rent for the three (3) Fiscal Years immediately preceding the Fiscal
Year in which the termination, re-entry or repossession takes place, or (ii) if
three (3) Fiscal Years shall not have elapsed, the average of the Percentage
Rent during the preceding Fiscal Years during which the Lease was in effect, or
(iii) if one Fiscal Year has not elapsed, the amount derived by annualizing the
Percentage Rent from the effective date of this Lease.

         16.4.  Waiver. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (a) any right to a
trial by jury in the event of summary proceedings to enforce the remedies set
forth in this Article 16, and (b) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt and Lessor waives
any right to "pierce the corporate veil" of Lessee other than to the extent
funds shall have been

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<PAGE>

fraudulently paid by Lessee to any Affiliate of Lessee following a default
resulting in an Event of Default.

     16.5. Application of Funds. Any payments received by Lessor under any of
the provisions of this Lease during the existence or continuance of any Event of
Default shall be applied to Lessee's obligations in the order that Lessor may
determine or as may be prescribed by the laws of the State.

     16.6. Lessor's Right to Cure Lessee's Default. If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease,
including, without limitation, Lessee's failure to comply with the terms of any
Management Agreement, and fails to cure the same within the relevant time
periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation of Lessee, and without waiving or releasing any obligation or
default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Lessee,
and may, to the extent permitted by law, enter upon the Leased Property for such
purpose and, subject to Section 16.4, take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessors,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.

                                   ARTICLE 17
                      DEFAULT BY LESSOR; LESSEE'S REMEDIES

     17.1. Breach by Lessor. It shall be a breach of this Lease if Lessor fails
to observe or perform any term, covenant or condition of this Lease on its part
to be performed and such failure continues for a period of thirty (30) days
after Notice thereof from Lessee, unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Lessor, within such thirty (30) day period,
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof; provided, however, that such default shall be
cured by Lessor in any event prior to the date on which the default becomes an
event of default under the terms of the Management Agreement for the Hotel. The
time within which Lessor shall be obligated to cure any such failure also shall
be subject to extension of time due to the occurrence of any Unavoidable Delay.
If Lessor fails to cure any such breach within the grace period described above,
Lessee, without waiving or releasing any obligations hereunder, and in addition
to all other remedies available to Lessee at law or in equity, may purchase the
Leased Property from Lessor for a purchase price equal to the then Fair Market
Value. If Lessee elects to purchase the Leased Property it shall deliver a
Notice thereof to Lessor specifying a settlement date to occur not less than
ninety (90) days subsequent to the date of such Notice on which it shall
purchase the Leased Property, and the same shall be thereupon conveyed in
accordance with the provisions of Section 17.3; provided, however, that Lessor
shall pay the cost of Lessee's title insurance and all closing costs associated
with such purchase by Lessee following default by Lessor.

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<PAGE>

     17.2. Lessee's Right to Cure. Subject to the provisions of Section 17.1, if
Lessor breaches any covenant to be performed by it under this Lease, Lessee,
after Notice to and demand upon Lessor, without waiving or releasing any
obligation hereunder, and in addition to all other remedies available to Lessee,
may (but shall be under no obligation at any time thereafter to) make such
payment or perform such act for the account and at the expense of Lessor. All
sums so paid by Lessee and all costs and expenses (including, without
limitation, reasonable attorneys' fees) so incurred, together with interest
thereon at the Overdue Rate from the date on which such sums or expenses are
paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand or,
following entry of a final, nonappealable judgment against Lessor for such sums,
may be offset by Lessee against the Base Rent and/or Percentage Rent payments
next accruing or coming due. The rights of Lessee hereunder to cure and to
secure payment from Lessor in accordance with this Section 17.2 shall survive
the termination of this Lease with respect to the Leased Property.

     17.3. Provisions Relating to Purchase of the Leased Property by Lessee. If
Lessee purchases the Leased Property from Lessor pursuant to any of the terms of
this Lease, Lessor shall, upon receipt from Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
Lessee an appropriate limited or special warranty deed or other conveyance
conveying the entire interest of Lessor in and to the Leased Property to Lessee
free and clear of all encumbrances other than (a) those that Lessee has agreed
hereunder to pay or discharge, (b) those mortgage liens to the extent assignable
and assumable, if any, that Lessee has agreed in writing to accept and to take
title subject to, (c) those liens and encumbrances subject to which the Leased
Property was conveyed to Lessor, to the extent not released in connection with
the transactions contemplated by this Lease, (d) encumbrances, easements,
licenses or rights of way required to be imposed on the Leased Property under
Section 7.3, and (e) any other encumbrances permitted to be imposed on the
Leased Property under the provisions of Article 22 that are assumable at no cost
to Lessee or to which Lessee may take subject without cost to Lessee. The
difference between the applicable purchase price and the total of the
encumbrances assumed or taken subject to shall be paid in cash to Lessor or as
Lessor may direct, in federal or other immediately available funds, except as
otherwise mutually agreed by Lessor and Lessee. All expenses of such conveyance,
including, without limitation, the cost of title examination or title insurance,
if desired by Lessee, Lessee's attorneys' fees incurred in connection with such
conveyance and release, and one-half of any transfer taxes and recording fees,
shall be paid by Lessee. Lessor shall pay one-half of any transfer taxes and
recording fees and its attorney's fees.

                                   ARTICLE 18
                                 INDEMNIFICATION

     18.1. Indemnification.

           (a) Notwithstanding the existence of any insurance, and without
regard to the policy limits of any such insurance or self-insurance, but subject
to Section 13.3 and Section 8.3, Lessee will protect, indemnify, hold harmless
and defend Lessor from and against all liabilities, losses, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses), to the extent permitted by
law,

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imposed upon or incurred by or asserted against Lessor Indemnified Parties by
reason of: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining sidewalks,
including without limitation any claims under liquor liability, "dram shop" or
similar laws, (b) any use, misuse, non-use, condition, management, maintenance
or repair by Lessee or any of its agents, employees or invitees of the Leased
Property or Lessee's Personal Property during the Term or any litigation,
proceeding or claim by governmental entities or other third parties to which a
Lessor Indemnified Party is made a party or participant related to such use,
misuse, non-use, condition, management, maintenance, or repair thereof by Lessee
or any of its agents, employees or invitees, including any failure of lessee or
any of its agents, employees or invitees to perform any obligations under this
Lease or imposed by applicable law (other than arising out of Condemnation
proceedings), (c) any Impositions that are the obligations of Lessee pursuant to
the applicable provisions of this Lease, (d) any failure on the part of Lessee
to perform or comply with any of the terms of this Lease, and (e) the
non-performance of any of the terms and provisions of any and all existing and
future subleases of the Leased Property to be performed by the landlord
thereunder.

           (b) Notwithstanding the existence of any insurance, and without
regard to the policy limits of any such insurance or self-insurance, but subject
to Section 13.3 and Section 8.3, Lessor shall indemnify, save harmless and
defend Lessee Indemnified Parties from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses imposed upon or
incurred by or asserted against Lessee Indemnified Parties as a result of (a)
the gross negligence or willful misconduct of Lessor arising in connection with
this Lease or (b) any failure on the part of Lessor to perform or comply with
any of the terms of this Lease. Any amounts that become payable by an
Indemnifying Party under this Section shall be paid within ten (10) days after
liability therefor on the part of the Indemnifying Party is determined by
litigation or otherwise, and if not timely paid, shall bear a late charge (to
the extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. An Indemnifying Party, at its expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against the Indemnified Party. The Indemnified Party, at its
expense, shall be entitled to participate in any such claim, action, or
proceeding, and the Indemnifying Party may not compromise or otherwise dispose
of the same without the consent of the Indemnified Party, which may not be
unreasonably withheld or delayed. Nothing herein shall be construed as
indemnifying a Lessor Indemnified Party against its own (or Lessor's) grossly
negligent acts or omissions or willful misconduct.

           (c) Lessee's or Lessor's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.

                                   ARTICLE 19
                       REIT REQUIREMENTS AND RESTRICTIONS

     19.1. Personal Property Limitation. Anything contained in this Lease to the
contrary notwithstanding, the average of the adjusted tax bases of the items of
personal property that are leased to Lessee under this Lease at the beginning
and at the end of any Fiscal Year shall not exceed fifteen percent (15%) of the
average of the aggregate adjusted tax bases of the Leased Property at the
beginning and at the end of such Fiscal Year. This Section 19.1 is intended to

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<PAGE>

ensure that the Rent qualifies as "rents from real property," within the meaning
of Section 856(d) of the Code, or any similar or successor provisions thereto,
and shall be interpreted in a manner consistent with such intent.

     19.2. Sublease Rent Limitation. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublet the Leased Property on any
basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee, or (b) any other formula such that any
portion of the Rent would fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto.

     19.3. Sublease Tenant Limitation. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublease the Leased Property to any
Person in which Lessor owns, directly or indirectly, a ten percent (10%) or more
interest, within the meaning of Section 856(d)(2)(B) of the Code, or any similar
or successor provisions thereto.

     19.4. Lessee Ownership Limitations.

           (a) Anything contained in this Lease to the contrary notwithstanding,
neither Lessee nor an Affiliate of Lessee shall acquire, directly or indirectly,
a ten percent (10%) or more interest in Lessor within the meaning of Section
856(d)(2)(B) of the Code, or any similar or successor provision thereto.

           (b) Lessee shall not own, operate, manage or have any interest in any
hotel or motel property in which Lessor or an Affiliate of Lessor does not have
an interest, pursuant to this Lease or another lease, agreement or arrangement
with Lessor or an Affiliate of Lessor. Lessor agrees to notify Lessee promptly
of the location of any hotel or motel property in which Lessor or an Affiliate
of Lessor has an interest.

     19.5. Lessee Officer and Employee Limitation. If a Person serves as both
(a) a director of Lessee (or any Person who furnishes or renders services to the
tenants of the Leased Property, or manages or operates the Leased Property) and
(b) an officer (or employee) of the Lessor that Person shall not receive any
compensation for serving as a director of Lessee (or any Person who furnishes or
renders services to the tenants of the Leased Property, or manages or operates
the Leased Property). Furthermore, if a Person serves as both (a) a director of
the Lessor and (b) an officer (or employee) of Lessee (or any Person who
furnishes or renders services to the tenants of the Leased Property, or manages
or operates the Leased Property), that Person shall not receive any compensation
for serving as a director of the Lessor. No Person, other than Glade M. Knight,
shall serve as an officer (or employee) of both Lessor and Lessee.

     19.6. Payments to Affiliates of Lessee. During the Term, Lessee shall not
pay, or become obligated to pay, any fees to any Affiliate of Lessee in
connection with the Hotel, other than fees that are subordinated to the payments
that are required to be made to Lessor pursuant to this Lease.

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<PAGE>

                                   ARTICLE 20
                            SUBLETTING AND ASSIGNMENT

     20.1. Subletting and Assignment. Subject to the provisions of Article 19
and Section 20.2 and any other express conditions or limitations set forth
herein, Lessee may, but only with the consent of Lessor (which shall not be
unreasonably withheld or delayed), (a) assign this Lease or sublet all or any
part of the Leased Property to an Affiliate of Lessee, or (b) sublet any retail
or restaurant portion of the Leased Improvements in the normal course of the
Primary Intended Use; provided that any subletting to any party other than an
Affiliate of Lessee shall not individually as to any one such subletting, or in
the aggregate, materially diminish the actual or potential Percentage Rent
payable under this Lease. In the case of a subletting, the sublessee shall
comply with the provisions of Section 20.2, and in the case of an assignment,
the assignee shall assume in writing and agree to keep and perform all of the
terms of this Lease on the part of Lessee to be kept and performed and shall be,
and become, jointly and severally liable with Lessee for the performance
thereof. Notwithstanding the above, Lessee may assign the Lease to an Affiliate
without the consent of Lessor; provided that any such assignee assumes in
writing and agrees to keep and perform all of the terms of the Lease on the part
of Lessee to be kept and performed and shall be and become jointly and severally
liable with Lessee for the performance thereof. In case of either an assignment
or subletting made during the Term, Lessee shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Lessee hereunder. An original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor.

     20.2. Attornment. Lessee shall insert in each sublease permitted under
Section 20.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) if this Lease terminates before the expiration of such
sublease, the sublessee thereunder will, at Lessor's option, attorn to Lessor
and waive any right the sublessee may have to terminate the sublease or to
surrender possession thereunder as a result of the termination of this Lease,
and (c) if the sublessee receives a Notice from Lessor or Lessor's assignees, if
any, stating that an uncured Event of Default exists under this Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such Notice, or as such party may direct.
All rentals received from the sublessee by Lessor or Lessor's assignees, if any,
as the case may be, shall be credited against the amounts owing by Lessee under
this Lease.

     20.3. Conveyance by Lessor. Lessor may assign this Lease to any purchaser
of the Leased Property and/or to secure indebtedness. If Lessor or any successor
owner of the Leased Property conveys the Leased Property in accordance with the
terms hereof other than as security for a debt, and the grantee or transferee of
the Leased Property expressly assumes all obligations of Lessor hereunder
arising or accruing from and after the date of such conveyance or transfer,
Lessor or such successor owner, as the case may be, shall thereupon be released
from all future liabilities and obligations of Lessor under this Lease arising
or accruing from and after the date of such

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<PAGE>

conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.

                                   ARTICLE 21
                          QUIET ENJOYMENT; RISK OF LOSS

     21.1. Quiet Enjoyment. So long as Lessee pays all Rent as the same becomes
due and complies with all of the terms of this Lease and performs its
obligations hereunder, in each case within the applicable grace periods, if any,
Lessee shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Lessor or anyone claiming
by, through or under Lessor, but subject to all liens and encumbrances subject
to which the Leased Property was conveyed to Lessor, to the extent not released
in connection with the transactions contemplated by this Lease, or hereafter
consented to by Lessee or provided for herein. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Section.

     21.2. Risk of Loss. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than those caused by Lessor and those claiming from, through or under
Lessor) is assumed by Lessee, and, in the absence of gross negligence, willful
misconduct or breach of this Lease by Lessor pursuant to Section 17.1, Lessor
shall in no event be answerable or accountable therefor, nor shall any of the
events mentioned in this Section entitle Lessee to any abatement of Rent except
as specifically provided in this Lease.

                                   ARTICLE 22
                    LESSOR MORTGAGES; SUBORDINATION OF LEASE

     22.1. Lessor May Grant Liens. Without the consent of Lessee, Lessor may,
subject to the terms and conditions set forth below in this Section 22.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Upon the request of
Lessor, Lessee shall subordinate this Lease to the lien of a new mortgage on the
Leased Property.

     22.2. Subordination of Lease. This Lease and Lessee's interest hereunder
shall at all times be subject and subordinate to the lien and security title of
any deeds to secure debt, deeds of trust, mortgages, or other Encumbrances
heretofore or hereafter granted by Lessor or which otherwise encumber or affect
the Leased Property and to any and all advances to be made thereunder and to all
renewals, modifications, consolidations, replacements, substitutions, and
extensions thereof (all of which are herein called the "Mortgage"); provided,
however, that with respect to any Mortgage hereafter granted (but not with
respect to any existing Mortgage), such subordination is conditioned upon
delivery to Lessee of a non-disturbance agreement in form and substance
reasonably satisfactory to Lessee and the holder of any Mortgage which provides
that, so long as Lessee is not then in default hereunder beyond any applicable
notice and cure period, Lessee shall not be

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<PAGE>

disturbed in its possession of the Leased Property hereunder following a
foreclosure of such Mortgage (or delivery of a deed-in-lieu-of-foreclosure) and
that the holder of such Mortgage or the purchaser at a foreclosure sale (or
grantee under such deed-in-lieu-of-foreclosure) shall perform all obligations of
Lessor under this Lease first arising from and after the date of such
foreclosure sale (or deed in lieu thereof). In confirmation of such
subordination, however, Lessee shall, at Lessor's request, promptly execute,
acknowledge and deliver any instrument which may be required to evidence
subordination to any Mortgage and to the holder thereof. In the event of
Lessee's failure to deliver such subordination and if the Mortgage does not
change any term of the Lease, Lessor may, in addition to any other remedies for
breach of covenant hereunder, execute, acknowledge, and deliver the instrument
as the agent or attorney-in-fact of Lessee, and Lessee hereby irrevocably
constitutes Lessor its attorney-in-fact for such purpose, Lessee acknowledging
that the appointment is coupled with an interest and is irrevocable.

                                   ARTICLE 23
         ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS; INSPECTION RIGHTS

     23.1. Estoppel Certificates; Financial Statements.

           (a) At any time and from time to time upon not less than ten (10)
days Notice by Lessor, Lessee will furnish to Lessor an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, whether to the
knowledge of Lessee there is any existing default or Event of Default exists
thereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this Section may
be relied upon by Lessor, any lender and any prospective purchaser of the Leased
Property.

           (b) Lessee will furnish the following statements to Lessor:

               (i)   with reasonable promptness, such information respecting the
           financial condition and affairs of Lessee including audited financial
           statements prepared by the same certified independent accounting firm
           that prepares the returns for Lessor or such other accounting firm as
           may be approved by Lessor, as Lessor may request from time to time;
           and

               (ii)  the most recent Consolidated Financials of Lessee within
           forty-five (45) days after each quarter of any Fiscal Year (or, in
           the case of the final quarter in any Fiscal Year, the most recent
           audited Consolidated Financials of Lessee within ninety (90) days);
           and

               (iii) on or about the 20th day of each month, a detailed profit
           and loss statement for the Leased Property for the preceding month, a
           balance sheet for the Leased Property as of the end of the preceding
           month, and a detailed accounting of revenues for the Leased Property
           for the preceding month, each in form acceptable to Lessor.

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<PAGE>

Lessee will permit the inclusion of such statements in any filings required to
be made by Lessor under the Securities Act of 1933 and the Securities Exchange
Act of 1934.

           (c) At any time and from time to time upon not less than ten (10)
days Notice by Lessee, Lessor will furnish to Lessee or to any Person designated
by Lessee an estoppel certificate certifying that this Lease is unmodified and
in full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications), the date to which Rent has been
paid, whether to the knowledge of Lessor there is any existing default or Event
of Default on Lessee's part hereunder, and such other information as may be
reasonably requested by Lessee.

           (d) Lessee shall at all times be Solvent. Furthermore, as of the date
of this Agreement, Lessee agrees to establish and maintain, in a form
satisfactory to Lessor, a funding commitment in an amount equal to $2,000,000
upon which Lessee may draw upon to pay to Lessor Base Rent, Percentage Rent and
Additional Charges. Repayment of the funding commitment shall be subordinated to
all payments of Base Rent, Percentage Rent and additional charges under all
Leases between Lessor and Lessee.

     23.2. Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives as frequently as reasonably requested by Lessor to
inspect the Leased Property and Lessee's accounts and records pertaining thereto
and make copies thereof, during usual business hours upon reasonable advance
Notice, subject only to any business confidentiality requirements reasonably
requested by Lessee.

                                   ARTICLE 24
                                   APPRAISERS

     24.1. Appraisers. If it becomes necessary to determine the Fair Market
Value or Fair Market Rental of the Leased Property for any purpose of this
Lease, the party required or permitted to give Notice of such required
determination shall include in the Notice the name of a Person selected to act
as appraiser on its behalf. Within ten (10) days after Notice, Lessor (or
Lessee, as the case may be) shall by Notice to Lessee (or Lessor, as the case
may be) appoint a second Person as appraiser on its behalf. The appraisers thus
appointed, each of whom must be a member of the American Institute of Real
Estate Appraisers (or any successor organization thereto) with at least five (5)
years' experience in the State appraising property similar to the Leased
Property, shall, within forty-five (45) days after the date of the Notice
appointing the first appraiser, proceed to appraise the Leased Property to
determine the Fair Market Value or Fair Market Rental thereof as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date); provided, however, that if only one appraiser
shall have been so appointed, then the determination of such appraiser shall be
final and binding upon the parties. To the extent consistent with sound
appraisal practice as then existing at the time of any such appraisal, such
appraisal shall be made on a basis consistent with the basis on which the Leased
Property was appraised for purposes of determining its Fair Market Value at the
time the Leased Property was acquired by Lessor. If two (2) appraisers are
appointed and if the difference between the amounts so determined does not
exceed five percent (5%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to fifty percent (50%) of
the sum of the amounts so determined. If the difference between the amounts so
determined exceeds five

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<PAGE>

percent (5%) of the lesser of such amounts, then such two appraisers shall have
twenty (20) days to appoint a third appraiser. If no such appraiser shall have
been appointed within such twenty (20) days or within ninety (90) days of the
original request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers or by such court shall be instructed to
determine the Fair Market Value or Fair Market Rental within forty-five (45)
days after appointment of such appraiser. The determination of the appraiser
which differs most in the terms of dollar amount from the determinations of the
other two appraisers shall be excluded, and fifty percent (50%) of the sum of
the remaining two determinations shall be final and binding upon Lessor and
Lessee as the Fair Market Value or Fair Market Rental of the Leased Property, as
the case may be. This provision for determining by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the third appraiser and one-half of all
other costs and expenses incurred in connection with each appraisal.

                                   ARTICLE 25
                  ARBITRATION AND DISPUTE RESOLUTION PROCEDURES

        25.1.   Arbitration. Except as set forth in Section 25.2, in each case
specified in this Lease in which it shall become necessary to resort to
arbitration, such arbitration shall be determined as provided in this Section
25.1. The party desiring such arbitration shall give Notice to that effect to
the other party, and an arbitrator shall be selected by mutual agreement of the
parties, or if they cannot agree within thirty (30) days of such notice, by
appointment made by the American Arbitration Association ("AAA") from among the
members of its panels who are qualified and who have experience in resolving
matters of a nature similar to the matter to be resolved by arbitration.

        25.2.   Alternative Arbitration. In each case specified in this Lease
for a matter to be submitted to arbitration pursuant to the provisions of this
Section 25.2, Lessor and Lessee will agree upon a nationally recognized
accounting firm with a hospitality division of which neither party nor their
Affiliates of Lessor is a significant client to serve as arbitrator of such
dispute within fifteen (15) days after written demand for arbitration is
received or sent by either party. In the event the parties fail to make such
designation within such fifteen (15) day period, Lessor shall be entitled to
designate any nationally recognized accounting firm with a hospitality division
of which Lessor or an Affiliate of Lessor is not a significant client to serve
as arbitrator of such dispute within fifteen (15) days after the parties fail to
timely make such designation. In the event Lessor fails to make such designation
within such fifteen (15) day period, Lessee shall be entitled to designate any
nationally recognized accounting firm with hospitality division of which Lessee
or an Affiliate of Lessee is not a significant client to serve as arbitrator of
such dispute within fifteen (15) days after the parties fail to timely make such
designation. In the event no nationally recognized accounting firm satisfying
such qualifications is available and willing to serve as arbitrator, the
arbitrator shall instead be administered as set forth in Section 25.1.

        25.3.   Arbitration Procedure. In any arbitration commenced pursuant to
Sections 25.1 or 25.2, a single arbitrator shall be designated and shall resolve
the dispute. The arbitrator's decision

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<PAGE>

shall be binding on all parties, shall not be subject to further review or
appeal except as otherwise allowed by applicable law and may be filed in and
enforced by a court of competent jurisdiction. Upon the failure of either party
(the "non-complying party") to comply with his decision, the arbitrator shall be
empowered, at the request of the other party, to order such compliance by the
non-complying party and to supervise or arrange for the supervision of the
non-complying party's obligation to comply with the arbitrator's decision, all
at the expense of the non-complying party. To the maximum extent practicable,
the arbitrator and the parties, and the AAA if applicable, shall take any action
necessary to insure that the arbitration shall be concluded within ninety (90)
days of the filing of such dispute. The fees and expenses of the arbitrator
shall be shared equally by Lessor and Lessee except as otherwise specified above
in this Section 25.3. Unless otherwise agreed in writing by the parties or
required by the arbitrator or AAA, if applicable, arbitration proceedings
hereunder shall be conducted in the State. Notwithstanding formal rules of
evidence, each party may submit such evidence as each party deems appropriate to
support its position and the arbitrator shall have access to and right to
examine all books and records of Lessee and Lessor regarding the Hotel during
the arbitration.

                                   ARTICLE 26
                                     NOTICES

        26.1.   Notices. All notices, demands, requests, consents approvals and
other communications ("Notice" or "Notices") hereunder shall be in writing and
hand-delivered, sent by FedEx or other nationally recognized overnight courier
service, or mailed (by registered or certified mail, return receipt requested
and postage prepaid), if to Lessor at 10 South Third Street, Richmond, Virginia
23219, Attn: Glade M. Knight and if to Lessee at 10 South Third Street,
Richmond, Virginia 23219, Attn: Glade M. Knight or to such other address or
addresses as either party may hereafter designate. Personally delivered Notice
shall be effective upon receipt, and Notice given by overnight courier service
or by mail shall be complete at the time of deposit with the courier service or
in the U.S. Mail system, respectively, but any prescribed period of Notice and
any right or duty to do any act or make any response within any prescribed
period or on a date certain after the service of such Notice given by overnight
courier service shall be extended one (1) day and by mail shall be extended five
(5) days.

                                   ARTICLE 27
                                  MISCELLANEOUS

        27.1.   No Waiver. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.

        27.2.   Remedies Cumulative. To the extent permitted by law and unless
otherwise provided herein to the contrary, each legal, equitable or contractual
right, power and remedy of Lessor or Lessee now or hereafter provided either in
this Lease or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power and remedy and the

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<PAGE>

exercise or beginning of the exercise by Lessor or Lessee of any one or more of
such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor or Lessee of any or all of such other rights,
powers and remedies.

        27.3.   Waiver of Trial by Jury. LESSOR AND LESSEE EACH WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN THE
EVENT OF A PROCEEDING WITH RESPECT TO THIS LEASE, INCLUDING, WITHOUT LIMITATION,
SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN ARTICLE 16.

        27.4.   Acceptance of Surrender. No surrender to Lessor of this Lease or
of the Leased Property or any part thereof, or of any interest therein, shall be
valid or effective unless agreed to and accepted in writing by Lessor and no act
by Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.

        27.5.   No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly: (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.

        27.6.   Waiver of Presentment, Etc. Lessee waives all presentments,
demands for payment and for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance and waives
all notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.

        27.7.   Action for Damages. Except as otherwise expressly provided
herein, in any suit or other claim brought by either party seeking damages
against the other party for breach of its obligations under this Lease, the
party against whom such claim is made shall be liable to the other party only
for actual damages and not for consequential, punitive or exemplary damages.

        27.8.   Lease Assumption in Bankruptcy Proceeding. If an Event of
Default occurs and Lessee has filed or has had filed against it a petition in
bankruptcy or for reorganization or other relief pursuant to the federal
bankruptcy code, Lessee shall promptly move the court presiding over the
proceeding to assume this Lease pursuant to 11 U.S.C. ss.365, without seeking an
extension of the time to file said motion.

        27.9.   Enforceability. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other
application of such term or provisions shall not be affected thereby. If any
late charges or any interest rate provided for in any provision of this Lease
are based upon a rate in excess of the maximum rate permitted by applicable law,
the parties agree that such charges shall be fixed at the maximum permissible
rate. Neither this Lease nor any provision hereof may be changed, waived,
discharged or terminated except by a written instrument in recordable form
signed by Lessor and Lessee. All the terms and

                                       59

<PAGE>

provisions of this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
headings in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. This Lease shall be governed by and
construed in accordance with the laws of the State, but not including its
conflicts of laws rules.

        27.10.  Memorandum of Lease. Lessor and Lessee shall promptly, upon the
request of either party, enter into a short form memorandum of this Lease, in
form suitable for recording under the laws of the State in which reference to
this Lease, and all options contained herein, shall be made. Lessee shall pay
all costs and expenses of recording such memorandum of this Lease.

                                       60

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.

                                "LESSOR"

                                MARRIOTT RESIDENCE II INN LIMITED
                                PARTNERSHIP

                                BY AHT RES II GP, INC., its sole general partner

                                By:  /s/ Glade M. Knight
                                     -----------------------------
                                Name:   Glade M. Knight
                                Title:  President and Manager

                                "LESSEE"

                                AHM RES II LIMITED PARTNERSHIP

                                BY AHM RES II GP, INC., its sole general partner

                                By:  Glade M. Knight
                                     -----------------------------
                                Name:   Glade M. Knight
                                Title:  President

<PAGE>

                            EXHIBITS A-1 through A-22

                               LEGAL DESCRIPTIONS

                                   [omitted]

<PAGE>

                                 SCHEDULE 2.1(a)

                               COMMENCEMENT DATES

         Birmingham Residence Inn - Alabama

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(b)

                               COMMENCEMENT DATES

         Arcadia Residence Inn - California

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(c)

                               COMMENCEMENT DATES

         Irvine Residence Inn - California

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(d)

                               COMMENCEMENT DATES

         Placentia Residence Inn - California

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(e)

                               COMMENCEMENT DATES

         Boca Raton Residence Inn - Florida

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(f)

                               COMMENCEMENT DATES

         Jacksonville Residence Inn - Florida

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(g)

                               COMMENCEMENT DATES

         Pensacola Residence Inn - Florida

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(h)

                               COMMENCEMENT DATES

         Petersburg Residence Inn - Florida

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(i)

                               COMMENCEMENT DATES

         Chicago - Deerfield Residence Inn - Illinois

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(j)

                               COMMENCEMENT DATES

         Boston - North Residence Inn - Massachusetts

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(k)

                               COMMENCEMENT DATES

         Kalamazoo Residence Inn - Michigan

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(l)

                               COMMENCEMENT DATES

         Jackson Residence Inn - Mississippi

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(m)

                               COMMENCEMENT DATES

         Las Vegas Residence Inn - Nevada

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(n)

                               COMMENCEMENT DATES

         Santa Fe Residence Inn - New Mexico

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(o)

                               COMMENCEMENT DATES

         Charlotte Residence Inn - North Carolina

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(p)

                               COMMENCEMENT DATES

         Greensboro Residence Inn - North Carolina

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(q)

                               COMMENCEMENT DATES

         Akron Residence Inn - Ohio

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(r)

                               COMMENCEMENT DATES

         Valley Forge Residence Inn - Pennsylvania

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(s)

                               COMMENCEMENT DATES

         Columbia Residence Inn - South Carolina

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(t)

                               COMMENCEMENT DATES

         Spartanburg Residence Inn - South Carolina

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(u)

                               COMMENCEMENT DATES

         Memphis - East Residence Inn - Tennessee

         August 10, 2002

<PAGE>

                                 SCHEDULE 2.1(v)

                               COMMENCEMENT DATES

         Lubbock Residence Inn - Texas

         August 10, 2002

<PAGE>

                                SCHEDULE 3.1(a)-1

                                   BASE RENTS

     Birmingham Residence Inn - Alabama

                                        $316,156 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-2

                                   BASE RENTS

     Arcadia Residence Inn - California

                                        $688,043 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-3

                                   BASE RENTS

     Irvine Residence Inn - California

                                        $589,173 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-4

                                   BASE RENTS

     Placentia Residence Inn - California

                                        $408,844 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-5

                                   BASE RENTS

     Boca Raton Residence Inn - Florida

                                        $198,601 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-6

                                   BASE RENTS

     Jacksonville Residence Inn - Florida

                                        $237,783 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-7

                                   BASE RENTS

     Pensacola Residence Inn - Florida

                                        $155,443 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-8

                                   BASE RENTS

     Petersburg Residence Inn - Florida

                                        $292,444 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(a)-9

                                   BASE RENTS

     Chicago - Deerfield Residence Inn - Illinois

                                        $600,616 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-10

                                   BASE RENTS

     Boston - North Residence Inn - Massachusetts

                                        $596,380 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-11

                                   BASE RENTS

     Kalamazoo Residence Inn - Michigan

                                        $386,328 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-12

                                   BASE RENTS

     Jackson Residence Inn - Mississippi

                                        $213,019 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-13

                                   BASE RENTS

     Las Vegas Residence Inn - Nevada

                                        $817,099 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-14

                                   BASE RENTS

     Santa Fe Residence Inn - New Mexico

                                        $541,064 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-15

                                   BASE RENTS

     Charlotte Residence Inn - North Carolina

                                        $141,851 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-16

                                   BASE RENTS

     Greensboro Residence Inn - North Carolina

                                        $313,185 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-17

                                   BASE RENTS

     Akron Residence Inn - Ohio

                                        $332,826 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-18

                                   BASE RENTS

     Valley Forge Residence Inn - Pennsylvania

                                        $410,346 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-19

                                   BASE RENTS

     Columbia Residence Inn - South Carolina

                                        $375,747 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-20

                                   BASE RENTS

     Spartanburg Residence Inn - South Carolina

                                        $100,509 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-21

                                   BASE RENTS

     Memphis - East Residence Inn - Tennessee

                                        $214,415 (prorated for fiscal year 2002)

<PAGE>

                               SCHEDULE 3.1(a)-22

                                   BASE RENTS

     Lubbock Residence Inn - Texas

                                        $302,030 (prorated for fiscal year 2002)

<PAGE>

                                SCHEDULE 3.1(b)-1
                            SUITE REVENUE BREAKPOINT

      Birmingham Residence Inn
      Alabama

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
   Quarters     2002      2003       2004       2005       2006       2007       2008       2009       2010       2011       2012
   --------     ----      ----       ----       ----       ----       ----       ----       ----       ----       ----       ----
<S>                    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
1st Quarter            $  425,065 $  433,567 $  442,238 $  451,083 $  460,104 $  469,307 $  478,693 $  488,267 $  498,032 $  507,993

2nd Quarter            $  850,131 $  867,133 $  884,476 $  902,166 $  920,209 $  938,613 $  957,385 $  976,533 $  996,064 $1,015,985

3rd Quarter   $592,853 $1,275,196 $1,300,700 $1,326,714 $1,353,248 $1,380,313 $1,407,920 $1,436,078 $1,464,800 $1,494,096 $1,523,978

4th Quarter   $815,255 $1,700,262 $1,734,267 $1,768,952 $1,804,331 $1,840,418 $1,877,226 $1,914,771 $1,953,066 $1,992,128 $2,031,970
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-2
                            SUITE REVENUE BREAKPOINT

       Arcadia Residence Inn
       California

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters        2002      2003       2004       2005       2006       2007      2008       2009       2010      2011      2012
    --------        ----      ----       ----       ----       ----       ----      ----       ----       ----      ----      ----
<S>                         <C>        <C>        <C>        <C>        <C>       <C>        <C>        <C>       <C>       <C>
1st Quarter                 $125,768   $128,284   $130,849   $133,466   $136,136  $138,858   $141,636   $144,468  $147,358  $150,305

2nd Quarter                 $251,537   $256,567   $261,699   $266,933   $272,271  $277,717   $283,271   $288,936  $294,715  $300,609

3rd Quarter       $175,068  $377,305   $384,851   $392,548   $400,399   $408,407  $416,575   $424,907   $433,405  $442,073  $450,914

4th Quarter       $240,743  $503,073   $513,135   $523,397   $533,865   $544,543  $555,433   $566,542   $577,873  $589,430  $601,219
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-3
                            SUITE REVENUE BREAKPOINT

       Irvine Residence Inn
       California

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters        2002      2003      2004      2005      2006      2007      2008      2009       2010       2011         2012
    --------        ----      ----      ----      ----      ----      ----      ----      ----       ----       ----
<S>                         <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>         <C>           <C>
1st Quarter                 $218,931  $223,309  $227,776  $232,331  $236,978  $241,717  $246,552  $  251,483  $  256,512  $  261,643

2nd Quarter                 $437,862  $446,619  $455,551  $464,662  $473,956  $483,435  $493,103  $  502,965  $  513,025  $  523,285

3rd Quarter       $293,135  $656,793  $669,928  $683,327  $696,994  $710,933  $725,152  $739,655  $  754,448  $  769,537  $  784,928

4th Quarter       $403,101  $875,723  $893,238  $911,103  $929,325  $947,911  $966,869  $986,207  $1,005,931  $1,026,050  $1,046,571
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-4
                            SUITE REVENUE BREAKPOINT

      Placentia Residence Inn
      California

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters    2002      2003       2004       2005       2006       2007       2008       2009       2010       2011       2012
    --------    ----      ----       ----       ----       ----       ----       ----       ----       ----       ----       ----
<S>                    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
1st Quarter            $  288,528 $  294,299 $  300,185 $  306,188 $  312,312 $  318,558 $  324,929 $  331,428 $  338,057 $  344,818

2nd Quarter            $  577,056 $  588,597 $  600,369 $  612,377 $  624,624 $  637,117 $  649,859 $  662,856 $  676,113 $  689,635

3rd Quarter   $399,689 $  865,584 $  882,896 $  900,554 $  918,565 $  936,936 $  955,675 $  974,788 $  994,284 $1,014,170 $1,034,453

4th Quarter   $549,628 $1,154,112 $1,177,194 $1,200,738 $1,224,753 $1,249,248 $1,274,233 $1,299,718 $1,325,712 $1,352,226 $1,379,271
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-5
                            SUITE REVENUE BREAKPOINT

         Boca Raton Residence Inn
         Florida

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
  Quarters      2002        2003        2004        2005        2006        2007        2008        2009        2010
  --------      ----        ----        ----        ----        ----        ----        ----        ----        ----
<S>          <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
1st Quarter              $  427,683  $  436,237  $  444,962  $  453,861  $  462,938  $  472,197  $  481,641  $  491,274

2nd Quarter              $  855,367  $  872,474  $  889,924  $  907,722  $  925,877  $  944,394  $  963,282  $  982,548

3rd Quarter  $  736,094  $1,283,050  $1,308,711  $1,334,885  $1,361,583  $1,388,815  $1,416,591  $1,444,923  $1,473,821

4th Quarter  $1,012,230  $1,710,734  $1,744,948  $1,779,847  $1,815,444  $1,851,753  $1,888,788  $1,926,564  $1,965,095
-----------------------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------
 Quarters       2011         2012
 --------       ----         ----
<S>          <C>         <C>
1st Quarter  $  501,099   $  511,121

2nd Quarter  $1,002,199   $1,022,243

3rd Quarter  $1,503,298   $1,533,364

4th Quarter  $2,004,397   $2,044,485
-------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-6
                            SUITE REVENUE BREAKPOINT

         Jacksonville Residence Inn
         Florida

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
  Quarters     2002         2003        2004        2005         2006       2007        2008         2009       2010
  --------     ----         ----        ----        ----         ----       ----        ----         ----       ----
<S>                      <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
1st Quarter              $  390,954  $  398,773  $  406,749  $  414,884  $  423,181  $  431,645  $  440,278  $  449,083

2nd Quarter              $  781,908  $  797,546  $  813,497  $  829,767  $  846,363  $  863,290  $  880,556  $  898,167

3rd Quarter  $534,909    $1,172,862  $1,196,320  $1,220,246  $1,244,651  $1,269,544  $1,294,935  $1,320,833  $1,347,250

4th Quarter  $735,573    $1,563,816  $1,595,093  $1,626,995  $1,659,535  $1,692,725  $1,726,580  $1,761,111  $1,796,334
-----------------------------------------------------------------------------------------------------------------------

<CAPTION>
-----------------------------------
  Quarters      2011        2012
  --------      ----        ----
<S>          <C>         <C>
1st Quarter  $  458,065  $  467,226

2nd Quarter  $  916,130  $  934,453

3rd Quarter  $1,374,195  $1,401,679

4th Quarter  $1,832,260  $1,868,905
-----------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-7
                            SUITE REVENUE BREAKPOINT

         Pensacola Residence Inn
         Florida

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
   Quarters        2002           2003          2004          2005        2006         2007          2008          2009
   --------        ----           ----          ----          ----        ----         ----          ----          ----
<S>                            <C>           <C>          <C>          <C>           <C>           <C>          <C>
1st Quarter                    $  250,816    $  255,832   $  260,949   $  266,168    $  271,491    $  276,921   $  282,459

2nd Quarter                    $  501,632    $  511,664   $  521,898   $  532,336    $  542,982    $  553,842   $  564,919

3rd Quarter        $337,024    $  752,448    $  767,497   $  782,846   $  798,503    $  814,473    $  830,763   $  847,378

4th Quarter        $463,455    $1,003,263    $1,023,329   $1,043,795   $1,064,671    $1,085,965    $1,107,684   $1,129,838
------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------------------------
  Quarters        2010            2011          2012
  --------        ----            ----          ----
<S>             <C>            <C>          <C>
1st Quarter     $  288,109     $  293,871   $  299,748

2nd Quarter     $  576,217     $  587,741   $  599,496

3rd Quarter     $  864,326     $  881,612   $  899,244

4th Quarter     $1,152,434     $1,175,483   $1,198,993
-------------------------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-8
                            SUITE REVENUE BREAKPOINT

         Petersburg Residence Inn
         Florida

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
   Quarters      2002       2003        2004        2005        2006         2007       2008        2009          2010
   --------      ----       ----        ----        ----        ----         ----       ----        ----          ----
<S>            <C>        <C>        <C>         <C>          <C>         <C>         <C>         <C>          <C>
1st Quarter               $249,776   $  254,772  $  259,867   $  265,065  $  270,366  $  275,773  $  281,289   $  286,914

2nd Quarter               $499,553   $  509,544  $  519,734   $  530,129  $  540,732  $  551,546  $  562,577   $  573,829

3rd Quarter    $405,829   $749,329   $  764,315  $  779,602   $  795,194  $  811,098  $  827,320  $  843,866   $  860,743

4th Quarter    $558,070   $999,105   $1,019,087  $1,039,469   $1,060,258  $1,081,464  $1,103,093  $1,125,155   $1,147,658
-------------------------------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------
   Quarters      2011         2012
   --------      ----         ----
<S>            <C>          <C>
1st Quarter    $  292,653   $  298,506

2nd Quarter    $  585,305   $  597,012

3rd Quarter    $  877,958   $  895,517

4th Quarter    $1,170,611   $1,194,023
--------------------------------------
</TABLE>

<PAGE>

                                SCHEDULE 3.1(b)-9
                            SUITE REVENUE BREAKPOINT

         Chicago - Deerfield Residence Inn
         Illinois
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
      Quarters           2002         2003          2004          2005          2006         2007          2008          2009
      --------           ----         ----          ----          ----          ----         ----          ----          ----
<S>                     <C>           <C>          <C>           <C>          <C>           <C>           <C>          <C>
1st Quarter                            $248,268    $  253,234    $  258,299   $  263,465    $  268,734    $  274,108   $  279,591

2nd Quarter                            $496,537    $  506,468    $  516,597   $  526,929    $  537,468    $  548,217   $  559,181

3rd Quarter              $331,815      $744,805    $  759,702    $  774,896   $  790,394    $  806,201    $  822,325   $  838,772

4th Quarter              $456,291      $993,074    $1,012,935    $1,033,194   $1,053,858    $1,074,935    $1,096,434   $1,118,363
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
---------------------------------------------------------
      Quarters      2010          2011          2012
      --------      ----          ----          ----
<S>                <C>           <C>          <C>
1st Quarter        $  285,182    $  290,886   $  296,704

2nd Quarter        $  570,365    $  581,772   $  593,408

3rd Quarter        $  855,547    $  872,658   $  890,111

4th Quarter        $1,140,730    $1,163,544   $1,186,815
---------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-10
                            SUITE REVENUE BREAKPOINT

         Boston - North Residence Inn
         Massachusetts

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
      Quarters           2002         2003          2004          2005          2006         2007          2008          2009
      --------           ----         ----          ----          ----          ----         ----          ----          ----
<S>                      <C>          <C>           <C>          <C>          <C>           <C>           <C>          <C>

1st Quarter              $      0      $242,729      $247,583    $  252,535   $  257,586    $  262,737    $  267,992   $  273,352

2nd Quarter              $      0      $485,457      $495,166    $  505,070   $  515,171    $  525,475    $  535,984   $  546,704

3rd Quarter              $266,364      $728,186      $742,750    $  757,605   $  772,757    $  788,212    $  803,976   $  820,056

4th Quarter              $366,287      $970,915      $990,333    $1,010,140   $1,030,342    $1,050,949    $1,071,968   $1,093,408
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------------------
      Quarters           2010          2011          2012
      --------           ----          ----          ----
<S>                     <C>           <C>          <C>
 1st Quarter            $  278,819    $  284,395   $  290,083

 2nd Quarter            $  557,638    $  568,791   $  580,166

 3rd Quarter            $  836,457    $  853,186   $  870,250

 4th Quarter            $1,115,276    $1,137,581   $1,160,333
---------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-11
                            SUITE REVENUE BREAKPOINT

         Kalamazoo Residence Inn
         Michigan

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
      Quarters           2002         2003          2004          2005          2006         2007          2008          2009
      --------           ----         ----          ----          ----          ----         ----          ----          ----
<S>                      <C>          <C>           <C>           <C>           <C>          <C>           <C>           <C>
1st Quarter              $      0      $201,260      $205,286      $209,391     $213,579      $217,851      $222,208     $226,652

2nd Quarter              $      0      $402,521      $410,571      $418,783     $427,158      $435,701      $444,415     $453,304

3rd Quarter              $261,913      $603,781      $615,857      $628,174     $640,737      $653,552      $666,623     $679,956

4th Quarter              $360,166      $805,041      $821,142      $837,565     $854,316      $871,403      $888,831     $906,607
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-----------------------------------------------------
      Quarters      2010         2011        2012
      --------      ----         ----        ----
<S>                  <C>         <C>        <C>
1st Quarter          $231,185    $235,809   $240,525

2nd Quarter          $462,370    $471,617   $481,050

3rd Quarter          $693,555    $707,426   $721,574

4th Quarter          $924,740    $943,234   $962,099
-----------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-12
                            SUITE REVENUE BREAKPOINT

         Jackson Residence Inn
         Mississippi

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
      Quarters           2002         2003          2004          2005          2006         2007          2008          2009
      --------           ----         ----          ----          ----          ----         ----          ----          ----
<S>                     <C>          <C>           <C>           <C>          <C>           <C>           <C>          <C>
1st Quarter                          $  514,922    $  525,220    $  535,725   $  546,439    $  557,368    $  568,515   $  579,886

2nd Quarter                          $1,029,844    $1,050,440    $1,071,449   $1,092,878    $1,114,736    $1,137,030   $1,159,771

3rd Quarter              $693,958    $1,544,765    $1,575,661    $1,607,174   $1,639,317    $1,672,104    $1,705,546   $1,739,657

4th Quarter              $954,288    $2,059,687    $2,100,881    $2,142,898   $2,185,756    $2,229,472    $2,274,061   $2,319,542
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------------------
      Quarters         2010           2011          2012
      --------         ----           ----          ----
<S>                   <C>            <C>           <C>
1st Quarter           $  591,483     $  603,313    $  615,379

2nd Quarter           $1,182,967     $1,206,626    $1,230,758

3rd Quarter           $1,774,450     $1,809,939    $1,846,138

4th Quarter           $2,365,933     $2,413,252    $2,461,517
--------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-13
                            SUITE REVENUE BREAKPOINT

         Las Vegas Residence Inn
         Nevada
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
     Quarters           2002          2003          2004         2005          2006         2007
     --------           ----          ----          ----         ----          ----         ----
<S>                      <C>         <C>          <C>           <C>          <C>           <C>
1st Quarter                          $  386,281   $  394,006    $  401,886   $  409,924    $  418,123

2nd Quarter                          $  772,561   $  788,013    %  803,773   $  819,848    $  836,245

3rd Quarter              $693,655    $1,158,842   $1,182,019    $1,205,659   $1,229,772    $1,254,368

4th Quarter              $953,872    $1,545,123   $1,576,025    $1,607,546   $1,639,696    $1,672,490
-------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------------------------------------------------------------
     Quarters                2008         2009          2010         2011          2012
     --------                ----         ----          ----         ----          ----
<S>                      <C>           <C>          <C>           <C>          <C>
1st Quarter              $  426,485    $  435,015   $  443,715    $  452,589   $  461,641

2nd Quarter              $  852,970    $  870,030   $  887,430    $  905,179   $  923,282

3rd Quarter              $1,279,455    $1,305,044   $1,331,145    $1,357,768   $1,384,923

4th Quarter              $1,705,940    $1,740,059   $1,774,860    $1,810,357   $1,846,565
-------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-14
                            SUITE REVENUE BREAKPOINT

         Santa Fe Residence Inn
         New Mexico

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
     Quarters           2002          2003          2004         2005          2006         2007
     --------           ----          ----          ----         ----          ----         ----
<S>                      <C>         <C>          <C>           <C>          <C>           <C>
1st Quarter                          $  306,036   $  312,156    $  318,399   $  324,767    $  331,263

2nd Quarter                          $  612,071   $  624,313    $  636,799   $  649,535    $  662,526

3rd Quarter              $394,783    $  918,107   $  936,469    $  955,198   $  974,302    $  993,788

4th Quarter              $542,880    $1,224,142   $1,248,625    $1,273,598   $1,299,070    $1,325,051
------------------------------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------------------
     Quarters              2008         2009          2010         2011          2012
     --------              ----         ----          ----         ----          ----
<S>                      <C>           <C>          <C>           <C>          <C>
1st Quarter              $  337,888    $  344,646   $  351,539    $  358,569   $  365,741

2nd Quarter              $  675,776    $  689,292   $  703,077    $  717,139   $  731,482

3rd Quarter              $1,013,664    $1,033,937   $1,054,616    $1,075,708   $1,097,223

4th Quarter              $1,351,552    $1,378,583   $1,406,155    $1,434,278   $1,462,963
------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-15
                            SUITE REVENUE BREAKPOINT

         Charlotte Residence Inn
         North Carolina

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
      Quarters           2002         2003          2004          2005          2006         2007
      --------           ----         ----          ----          ----          ----         ----
<S>                      <C>         <C>           <C>           <C>          <C>           <C>
1st Quarter                          $  309,768    $  315,964    $  322,283   $  328,729    $  335,303

2nd Quarter                          $  619,537    $  631,928    $  644,566   $  657,458    $  670,607

3rd Quarter              $427,585    $  929,305    $  947,891    $  966,849   $  986,186    $1,005,910

4th Quarter              $587,988    $1,239,074    $1,263,855    $1,289,132   $1,314,915    $1,341,213
-------------------------------------------------------------------------------------------------------

<CAPTION>
---------------------------------------------------------------------------------------------
      Quarters            2008          2009         2010           2011           2012
      --------            ----          ----         ----           ----           ----
<S>                      <C>          <C>           <C>             <C>           <C>
1st Quarter              $  342,009   $  348,850    $  355,827      $  362,943    $  370,202

2nd Quarter              $  684,019   $  697,699    $  711,653      $  725,886    $  740,404

3rd Quarter              $1,026,028   $1,046,549    $1,067,480      $1,088,829    $1,110,606

4th Quarter              $1,368,038   $1,395,398    $1,423,306      $1,451,772    $1,480,808
---------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-16
                            SUITE REVENUE BREAKPOINT

         Greensboro Residence Inn
         North Carolina

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
      Quarters             2002         2003          2004          2005          2006         2007
      --------             ----         ----          ----          ----          ----         ----
<S>                      <C>         <C>           <C>           <C>          <C>           <C>
1st Quarter                          $  383,164    $  390,827    $  398,644   $  406,617    $  414,749

2nd Quarter                          $  766,328    $  781,654    $  797,288   $  813,233    $  829,498

3rd Quarter              $532,166    $1,149,492    $1,172,482    $1,195,931   $1,219,850    $1,244,247

4th Quarter              $731,801    $1,532,656    $1,563,309    $1,594,575   $1,626,467    $1,658,996
--------------------------------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------------------
      Quarters               2008         2009         2010          2011          2012
      --------               ----         ----         ----          ----          ----
<S>                      <C>          <C>           <C>           <C>          <C>
1st Quarter              $  423,044   $  431,505    $  440,135    $  448,938   $  457,916

2nd Quarter              $  846,088   $  863,010    $  880,270    $  897,875   $  915,833

3rd Quarter              $1,269,132   $1,294,515    $1,320,405    $1,346,813   $1,373,749

4th Quarter              $1,692,176   $1,726,019    $1,760,540    $1,795,751   $1,831,666
------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-17
                            SUITE REVENUE BREAKPOINT

       Akron Residence Inn
       Ohio

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters   2002       2003       2004       2005       2006      2007       2008        2009      2010       2011        2012
    --------   ----       ----       ----       ----       ----      ----       ----        ----      ----       ----        ----
<S>          <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
1st Quarter            $  319,835 $  326,231 $  332,756 $  339,411 $  346,199 $  353,123 $  360,186 $  367,389 $  374,737 $  382,232

2nd Quarter            $  639,669 $  652,463 $  665,512 $  678,822 $  692,399 $  706,247 $  720,371 $  734,779 $  749,475 $  764,464

3rd Quarter  $441,735  $  959,504 $  978,694 $  998,268 $1,018,233 $1,038,598 $1,059,370 $1,080,557 $1,102,168 $1,124,212 $1,146,696

4th Quarter  $607,446  $1,279,339 $1,304,925 $1,331,024 $1,357,644 $1,384,797 $1,412,493 $1,440,743 $1,469,558 $1,498,949 $1,528,928
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-18
                            SUITE REVENUE BREAKPOINT

         Valley Forge Residence Inn
         Pennsylvania

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters      2002       2003       2004       2005       2006       2007       2008       2009     2010      2011       2012
    --------      ----       ----       ----       ----       ----       ----       ----       ----     ----      ----       ----
<S>             <C>        <C>        <C>        <C>        <C>        <C>        <C>       <C>       <C>       <C>        <C>
1st Quarter     $      0   $173,189   $176,653   $180,186   $183,790   $187,466   $191,215  $195,039  $198,940  $202,919   $206,977

2nd Quarter     $      0   $346,378   $353,306   $360,372   $367,579   $374,931   $382,430  $390,078  $397,880  $405,837   $413,954

3rd Quarter     $249,702   $519,567   $529,959   $540,558   $551,369   $562,397   $573,644  $585,117  $596,820  $608,756   $620,931

4th Quarter     $343,375   $692,757   $706,612   $720,744   $735,159   $749,862   $764,859  $780,156  $795,760  $811,675   $827,908
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-19
                            SUITE REVENUE BREAKPOINT

         Columbia Residence Inn
         South Carolina

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters    2002      2003       2004       2005       2006       2007       2008       2009       2010       2011       2012
    --------    ----      ----       ----       ----       ----       ----       ----       ----       ----       ----       ----
<S>                    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
1st Quarter            $  310,867 $  317,085 $  323,426 $  329,895 $  336,493 $  343,222 $  350,087 $  357,089 $  364,230 $  371,515

2nd Quarter            $  621,734 $  634,169 $  646,852 $  659,789 $  672,985 $  686,445 $  700,174 $  714,177 $  728,461 $  743,030

3rd Quarter   $443,713 $  932,602 $  951,254 $  970,279 $  989,684 $1,009,478 $1,029,667 $1,050,261 $1,071,266 $1,092,691 $1,114,545

4th Quarter   $610,166 $1,243,469 $1,268,338 $1,293,705 $1,319,579 $1,345,970 $1,372,890 $1,400,348 $1,428,355 $1,456,922 $1,486,060
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-20
                            SUITE REVENUE BREAKPOINT

     Spartanburg Residence Inn
     South Carolina

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
    Quarters  2002     2003       2004       2005       2006       2007       2008       2009       2010       2011       2012
    --------  ----     ----       ----       ----       ----       ----       ----       ----       ----       ----       ----
<S>          <C>      <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
1st Quarter           $  373,632 $  381,104 $  388,726 $  396,501 $  404,431 $  412,520 $  420,770 $  429,185 $  437,769 $  446,524

2nd Quarter           $  747,263 $  762,209 $  777,453 $  793,002 $  808,862 $  825,039 $  841,540 $  858,371 $  875,538 $  893,049

3rd Quarter  $510,998 $1,120,895 $1,143,313 $1,166,179 $1,189,503 $1,213,293 $1,237,559 $1,262,310 $1,287,556 $1,313,307 $1,339,573

4th Quarter  $702,693 $1,494,527 $1,524,417 $1,554,905 $1,586,004 $1,617,724 $1,650,078 $1,683,080 $1,716,741 $1,751,076 $1,786,098
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-21

                            SUITE REVENUE BREAKPOINT

         Memphis - East Residence Inn
         Tennessee

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
   Quarters                2002          2003          2004         2005          2006         2007          2008         2009
   --------                ----          ----          ----         ----          ----         ----          ----         ----
<S>                      <C>          <C>          <C>          <C>          <C>           <C>          <C>           <C>
1st Quarter                            $444,740     $453,635      $462,707     $471,962      $481,401     $491,029      $500,849

2nd Quarter                            $889,480     $907,269      $925,415     $943,923      $962,802     $982,058    $1,001,699

3rd Quarter              $583,953    $1,334,220   $1,360,904    $1,388,122   $1,415,885    $1,444,202   $1,473,086    $1,502,548

4th Quarter              $803,016    $1,778,960   $1,814,539    $1,850,830   $1,887,846    $1,925,603   $1,964,115    $2,003,397
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
----------------------------------------------------------
   Quarters           2010         2011          2012
   --------           ----         ----          ----
<S>                <C>          <C>           <C>
1st Quarter          $510,866     $521,084      $531,505

2nd Quarter        $1,021,733   $1,042,167    $1,063,011

3rd Quarter        $1,532,599   $1,563,251    $1,594,516

4th Quarter        $2,043,465   $2,084,335    $2,126,021
----------------------------------------------------------
</TABLE>

<PAGE>

                               SCHEDULE 3.1(b)-22

                            SUITE REVENUE BREAKPOINT

         Lubbock Residence Inn
         Texas

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
   Quarters            2002          2003          2004         2005          2006         2007          2008         2009
   --------            ----          ----          ----         ----          ----         ----          ----         ----
<S>                  <C>         <C>          <C>           <C>          <C>           <C>          <C>           <C>
1st Quarter                        $265,987     $271,307      $276,733     $282,267      $287,913     $293,671      $299,544

2nd Quarter                        $531,974     $542,613      $553,466     $564,535      $575,826     $587,342      $599,089

3rd Quarter          $332,197      $797,961     $813,920      $830,198     $846,802      $863,738     $881,013      $898,633

4th Quarter          $456,816    $1,063,948   $1,085,227    $1,106,931   $1,129,070    $1,151,651   $1,174,684    $1,198,178
-------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
---------------------------------------------------
   Quarters       2010         2011          2012
   --------       ----         ----          ----
<S>          <C>           <C>          <C>
1st Quarter    $305,535      $311,646     $317,879

2nd Quarter    $611,071      $623,292     $635,758

3rd Quarter    $916,606      $934,938     $953,637

4th Quarter  $1,222,142    $1,246,584   $1,271,516
---------------------------------------------------
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]