Document:

<PAGE>

                                                                    Exhibit 10.3

                        PROPERTY ACQUISITION/DISPOSITION
                                    AGREEMENT

     THIS AGREEMENT is made and entered into as of the 30th day of April, 2001,
by and between Apple Hospitality Two, Inc., a Virginia corporation (hereinafter
referred to as "Owner"), and Apple Suites Realty Group, Inc., a Virginia
corporation (hereinafter referred to as "Agent").

                              W I T N E S S E T H :

     WHEREAS, Owner plans to conduct business as a "real estate investment
trust," and, in connection therewith, plans to, from time to time, acquire and
dispose of real property, including particularly corporate apartments and
upper-end, extended-stay hotel properties (hereinafter referred to individually
as a "Property" and collectively as the "Properties");

     WHEREAS, Owner desires to use the services of Agent as a broker in
connection with the acquisition and disposition of the Properties on the terms
set forth in this Agreement; and

     WHEREAS, Owner and Agent desire to enter into this Agreement for the
purposes herein contained.

     NOW, THEREFORE, in consideration of the promises herein contained, and for
other valuable consideration, receipt of which is hereby acknowledged, the
parties agree as follows:

     1. Engagement of Agent as Broker for the Properties. Owner hereby engages
Agent as a broker in connection with the purchase and sale of the Properties,
upon the conditions and for the term and compensation herein set forth. All or
any portion of the services being performed by Agent may be contracted or
subcontracted by Agent to another company, provided that such company agrees to
be bound by the terms of this Agreement.

     2. Term of Agreement; Renewal. This Agreement shall be valid for an initial
term of five (5) years ending April 30, 2006. Unless either party by written
notice sent to the other party at least sixty (60) days before the end of any
5-year term hereof elects not to renew this Agreement, this Agreement shall
renew automatically for successive terms of five (5) years on the same terms as
contained herein.

     3. Acceptance of Engagement. Agent hereby accepts its engagement as a
broker for the purchase and sale of the Properties and agrees to perform all
services necessary to effectuate such purchases and sales which are customarily
provided by commercial real estate brokers, and, without limitation, Agent
agrees:

<PAGE>

          a. To supervise, on behalf of Owner, the preparation of contracts of
purchase or sale for each Property, on such terms as are specified by Owner or
its duly authorized representatives, and all other documents related thereto or
required to effectuate such purchase or sale;

          b. To coordinate the activities of, and act as liaison between Owner
and, independent professionals connected with the purchase or sale of a
Property, including attorneys, appraisers, engineers, inspectors, lenders, if
any, and others;

          c. To assist Owner and its authorized representatives in satisfying
any conditions precedent to the purchase or sale of a Property, which shall
include contracting on behalf of Owner with any third parties whose services are
required to close any such purchase or sale;

          d. To represent Owner at the closing of the purchase or sale of a
Property, to coordinate the activities of professionals and other third persons
connected with such closing, and to supervise the compliance by Owner with all
requirements and customary actions associated with such purchase or sale,
including, without limitation, the obtaining of property title insurance, the
delivery and recordation of deeds and other instruments of conveyance, and the
delivery and recordation, as required, of any documents evidencing loans
obtained or made by Owner;

          e. Generally to act on behalf of Owner in connection with such
purchase or sale as a commercial real estate broker would customarily act with
respect to such transaction, including the provision of such additional services
as would normally be provided by such a person.

     4. Indemnification. Owner hereby agrees to indemnify and hold harmless
Agent against and in respect of any loss, cost or expense (including reasonable
investigative expenses and attorneys' fees), judgment, award, amount paid in
settlement, fine, penalty and liability of any and every kind incurred by or
asserted against Agent by reason of or in connection with the engagement of
Agent hereunder, the performance by Agent of the services described herein or
the occurrence or existence of any event or circumstance which results or is
alleged to have resulted in death or injury to any person or destruction of or
damage to any property and any suit, action or proceeding (whether threatened,
initiated or completed) by reason of the foregoing; provided, however, that no
such indemnification of Agent shall be made, and Agent shall indemnify and hold
Owner harmless against, and to the extent of, any loss that a court of competent
jurisdiction shall, by final adjudication, determine to have resulted from
willful misconduct, gross negligence or fraud by or on the part of Agent.

     5. Compensation of Agent. Owner shall pay to Agent a real estate commission
in connection with each purchase of a Property in an amount equal to two percent
(2%) of the gross purchase price of the Property (which does not include amounts
budgeted for repairs and improvements), in consideration of Agent (or any person
with whom Agent subcontracts or contracts hereunder) performing the services
provided for in this Agreement in connection with the purchase of the Property.
In consideration of Agent (or any person with whom Agent subcontracts or
contracts hereunder) performing the services provided for in this Agreement in

                                       2

<PAGE>

connection with the sale of a Property, Owner shall pay to Agent the following:
a real estate commission in connection with the sale of a Property in an amount
equal to two percent (2%) of the gross sales price of the Property, if, but only
if, the sales price of the Property exceeds the sum of (A) the Company's cost
for the Property (consisting of the original purchase price plus all capitalized
costs and expenditures connected with the Property), without any reduction for
depreciation, and (B) ten percent (10%) of such cost. If the sales price of the
Property does not equal such amount, Agent shall be entitled only to payment by
the Company of its "direct costs" incurred in marketing such property (where
"direct costs" refers to a reasonable allocation of all costs, [including
salaries of personnel, overhead and utilities]), allocable to services in
marketing such property. If the two percent (2%) real estate commission is
payable in connection with sale of a Property, Agent shall not also be paid the
reimbursement of its "direct costs" as described in the preceding sentence. If
the person from whom Owner purchases or to whom Owner sells a Property pays any
fee to Agent, such amount shall decrease the amount of Owner's obligation to
Agent. Furthermore, Agent shall not be entitled to any real estate commission in
connection with a sale of a Property by Owner to Agent or any Affiliate of Agent
(where "Affiliate" has the meaning specified in the Prospectus of Owner), but
Agent will, in such case, be entitled to payment by Owner of its direct costs in
such regard. The fees and expenses provided for herein shall be payable if Owner
sells a property, sells shares in Owner, effects a merger of Owner with another
entity, or undertakes any other transaction, the purpose or effect of which is,
in essence, to dispose of some or all Properties. In any case other than an
actual sale of Properties, Owner and Agent shall in good faith agree upon an
allocation of purchase price to each Property which is effectively disposed of.

     6. Power of Attorney. Owner hereby makes, constitutes and appoints Agent
its true and lawful attorney-in-fact, for it and in its name, place and stead
and for its use and benefit to sign, acknowledge and file all documents and
agreements (other than contracts for purchase or sale of a Property, promissory
notes, mortgages, deeds of trust or other documents or instruments which would
bind Owner to purchase or sell a Property, result or evidence the incurrence of
debt by Owner, or encumber a Property) necessary to perform or effect the duties
and obligations of Agent under the terms of this Agreement. The foregoing power
of attorney is a special power of attorney coupled with an interest. It shall
terminate when this Agreement terminates as provided herein.

     7. Relationship of Parties. The parties agree and acknowledge that Agent is
and shall operate as an independent contractor in performing its duties under
this Agreement, and shall not be deemed an employee of Owner.

     8. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and
may only be amended by a written instrument signed by the party against whom
enforcement is sought.

     9. Governing Law. This Agreement shall be construed in accordance with and
be governed by the laws of the Commonwealth of Virginia.

                                       3

<PAGE>

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

                                            OWNER:

                                            APPLE HOSPITALITY TWO, INC.,
                                               a Virginia corporation

                                            By:    /s/ Glade M. Knight
                                                   -----------------------------

                                            Title: President
                                                   -----------------------------

                                            AGENT:

                                            APPLE SUITES REALTY GROUP, INC.,
                                               a Virginia corporation

                                            By:    /s/ Glade M. Knight
                                                   -----------------------------

                                            Title: President
                                                   -----------------------------

                                       4<PAGE>

                                                                    Exhibit 10.4

                           APPLE HOSPITALITY TWO, INC.

                               2001 INCENTIVE PLAN

                                                        Effective April 30, 2001

<PAGE>

                           APPLE HOSPITALITY TWO, INC.

                               2001 INCENTIVE PLAN

     1. Purpose. The purpose of this Apple Hospitality Two, Inc. 2001 Incentive
Plan (the "Plan") is to further the long term stability and financial success of
Apple Hospitality Two, Inc. (the "Company") by attracting and retaining key
employees of the Company and its affiliates through the use of stock incentives.
It is believed that ownership of Company Stock will stimulate the efforts of
those employees of the Company and its affiliates upon whose judgment and
interest the Company is and will be largely dependent for the successful conduct
of its business. It is also believed that Incentive Awards granted to such
employees under this Plan will strengthen their desire to remain with the
Company and its affiliates and will further the identification of those
employees' interests with those of the Company's shareholders. The Plan is
intended to conform to the provisions of Securities and Exchange Commission Rule
16b-3.

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

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

          (b) "Applicable Withholding Taxes" means the aggregate amount of
     federal, state and local income and payroll taxes that the Employer is
     required to withhold in connection with any exercise of an Option or any
     lapse of restrictions on Restricted Stock.

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

          (d) "Change of Control" means:

                                       2

<PAGE>

               (i) The acquisition, other than from the Company, by any
          individual, entity or group (within the meaning of Section 13(d)(3) or
          14(d)(2) of the Act), of beneficial ownership (within the meaning of
          Rule 13d-3 promulgated under the Act) of 20% or more of either the
          then outstanding shares of common stock of the Company or the combined
          voting power of the then outstanding voting securities of the Company
          entitled to vote generally in the election of directors, but excluding
          for this purpose, any such acquisition by the Company or any of its
          subsidiaries, or any employee benefit plan (or related trust) of the
          Company or its subsidiaries, or any corporation with respect to which,
          following such acquisition, more than 50% of, respectively, the then
          outstanding shares of common stock of such corporation and the
          combined voting power of the then outstanding voting securities of
          such corporation entitled to vote generally in the election of
          directors is then beneficially owned, directly or indirectly, by the
          individuals and entities who were the beneficial owners, respectively,
          of the common stock and voting securities of the Company immediately
          prior to such acquisition in substantially the same proportion as
          their ownership, immediately prior to such acquisition, of the then
          outstanding shares of common stock of the Company or the combined
          voting power of the then outstanding voting securities of the Company
          entitled to vote generally in the election of directors, as the case
          may be; or

               (ii) Individuals who, as of the date hereof, constitute the Board
          (as of the date hereof the "Incumbent Board") cease for any reason to
          constitute at least a majority of the Board, provided that any
          individual becoming a director subsequent to the date hereof whose
          election or nomination for election by the

                                       3

<PAGE>

          Company's shareholders was approved by a vote of at least a majority
          of the directors comprising the Incumbent Board shall be considered as
          though such individual were a member of the Incumbent Board, but
          excluding, for this purpose, any such individual whose initial
          assumption of office is in connection with an actual or threatened
          election contest relating to the election of the Directors of the
          Company (as such terms are used in Rule 14a-11 of Regulation 14A
          promulgated under the Act); or

               (iii) Approval by the shareholders of the Company of a
          reorganization, merger or consolidation, in each case, with respect to
          which the individuals and entities who were the respective beneficial
          owners of the common stock and voting securities of the Company
          immediately prior to such reorganization, merger or consolidation do
          not, following such reorganization, merger or consolidation,
          beneficially own, directly or indirectly, more than 50% of,
          respectively, the then outstanding shares of common stock and the
          combined voting power of the then outstanding voting securities
          entitled to vote generally in the election of directors, as the case
          may be, of the corporation resulting from such reorganization, merger
          or consolidation, or a complete liquidation or dissolution of the
          Company or a sale or other disposition of all or substantially all of
          the assets of the Company.

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

          (f) "Committee" means the committee appointed by the Board as
     described under Section 13.

          (g) "Company" means Apple Hospitality Two, Inc., a Virginia
     corporation.

                                       4

<PAGE>

          (h) "Company Stock" means units of both common stock, no par value,
     and preferred stock. One unit of Company Stock is equal to one share of
     common stock and one share of preferred stock. If the par value of the
     common stock is changed, or in the event of a change in the capital
     structure of the Company (as provided in Section 12), the shares resulting
     from such a change shall be deemed to be Company Stock within the meaning
     of the Plan.

          (i) "Date of Grant" means the date on which an Incentive Award is
     granted by the Committee.

          (j) "Disability" or "Disabled" means a physical or mental condition
     that prevents the Participant from performing his customary duties with the
     Employer. The Committee shall determine whether a Disability exists on the
     basis of competent medical evidence, and such determination shall be
     conclusive.

          (k) "Employer" means the Company, Apple Suites Advisors, Inc., and
     Apple Suites Realty Group, Inc.

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

          (m) "Incentive Award" means, collectively, the award of an Option or
     Restricted Stock under the Plan.

                                       5

<PAGE>

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

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

          (p) "Minimum Offering" means the sale of the first $30,000,000 in
     shares of Company Stock pursuant to the Offering.

          (q) "Nonstatutory Stock Option" means an Option that does not meet the
     requirements of Code section 422, or, even if meeting the requirements of
     Code section 422, is not intended to be an incentive stock option and is so
     designated.

          (r) "Offering" means, collectively, (1) the sale of up to $200,000,000
     in shares of Company Stock to the public and the registration of such
     shares with the Securities and Exchange Commission, pursuant to the
     Company's Prospectus dated April 19, 2001, as amended (the "Initial
     Offering"), and (2) the sale of any additional shares of Company Stock to
     the public and the registration of such shares with the Securities and
     Exchange Commission, as authorized by resolutions of the Board from time to
     time, which sales occur before the expiration of five years from April 1,
     2001 (the "Additional Offerings").

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

          (t) "Participant" means any employee of the Employer who receives an
     Incentive Award under the Plan.

          (u) "Restricted Stock" means Company Stock awarded upon the terms and
     subject to the restrictions set forth in Section 6.

                                       6

<PAGE>

          (v) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
     Commission promulgated under the Act. A reference in the Plan to Rule 16b-3
     shall include a reference to any corresponding rule (or number
     redesignation) of any amendments to Rule 16b-3 enacted after the effective
     date of the Plan's adoption.

          (w) "Window Period" means the period beginning on the third business
     day and ending on the twelfth business day following the release for
     publication of quarterly or annual summary statements of the Company's
     sales and earnings. The release for publication shall be deemed to have
     occurred if the specified financial data (i) appears on a wire service,
     (ii) appears in a financial news service, (iii) appears in a newspaper of
     general circulation, or (iv) is otherwise made publicly available.

     3. General. The following types of Incentive Awards may be granted under
the Plan: Options and Restricted Stock. Options granted under the Plan shall be
Nonstatutory Stock Options.

     4. Stock. Subject to Section 12 of the Plan, there shall be reserved for
issuance under the Plan an aggregate of (1) 35,000 shares of Company Stock plus
(2) 4.625% of the number of shares of Company Stock sold in the Initial Offering
in excess of the Minimum Offering plus (3) 4.4% of the total number of shares of
Company Stock sold in the Additional Offerings, which shall be authorized, but
unissued shares. Shares allocable to Options or portions thereof granted under
the Plan that expire or otherwise terminate unexercised may again be subjected
to an Option under the Plan. The Committee is expressly authorized to make an
Incentive Award to a Participant conditioned upon the surrender for cancellation
of an option granted under an existing Incentive Award. For purposes of
determining the number of shares that are available for Incentive Awards under
the Plan, such number shall, to the extent

                                       7

<PAGE>

permissible under Rule 16b-3, include the number of shares surrendered by an
optionee or retained by the Company in payment of Applicable Withholding Taxes.

     5. Eligibility.

          (a) All present and future employees of the Employer who hold
     positions with management responsibilities with the Employer (or any parent
     or subsidiary of the Company, whether now existing or hereafter created or
     acquired) shall be eligible to receive Incentive Awards under the Plan. The
     Committee shall have the power and complete discretion, as provided in
     Section 13, to select eligible employees to receive Incentive Awards and to
     determine for each employee the terms and conditions, the nature of the
     award and the number of shares to be allocated to each employee as part of
     each Incentive Award.

          (b) The grant of an Incentive Award shall not obligate the Employer or
     any parent or subsidiary of the Company to pay an employee any particular
     amount of remuneration, to continue the employment of the employee after
     the grant or to make further grants to the employee at any time thereafter.

     6. Restricted Stock Awards.

          (a) Whenever the Committee deems it appropriate to grant Restricted
     Stock, notice shall be given to the Participant stating the number of
     shares of Restricted Stock granted and the terms and conditions to which
     the Restricted Stock is subject. This notice, when accepted in writing by
     the Participant shall become an award agreement between the Company and the
     Participant and certificates representing the shares shall be issued and
     delivered to the Participant. Restricted Stock may be awarded by the
     Committee in its discretion without cash consideration.

                                       8

<PAGE>

          (b) Restricted Stock issued pursuant to the Plan shall be subject to
     the following restrictions:

               (i) No shares of Restricted Stock may be sold, assigned,
          transferred or disposed of by an Insider within a six-month period
          beginning on the Date of Grant, and Restricted Stock may not be
          pledged, hypothecated or otherwise encumbered within a six-month
          period beginning on the Date of Grant if such action would be treated
          as a sale or disposition under Rule 16b-3.

               (ii) No shares of Restricted Stock may be sold, assigned,
          transferred, pledged, hypothecated, or otherwise encumbered or
          disposed of until the restrictions on such shares as set forth in the
          Participant's award agreement have lapsed or been removed pursuant to
          paragraph (d) or (e) below.

               (iii) If a Participant ceases to be employed by the Employer or a
          parent or subsidiary of the Company, the Participant shall forfeit to
          the Company any shares of Restricted Stock on which the restrictions
          have not lapsed or been removed pursuant to paragraph (d) or (e) below
          on the date such Participant shall cease to be so employed.

          (c) Upon the acceptance by a Participant of an award of Restricted
     Stock, such Participant shall, subject to the restrictions set forth in
     paragraph (b) above, have all the rights of a shareholder with respect to
     such shares of Restricted Stock, including, but not limited to, the right
     to vote such shares of Restricted Stock and the right to receive all
     dividends and other distributions paid thereon. Certificates representing
     Restricted Stock shall bear a legend referring to the restrictions set
     forth in the Plan and the Participant's award agreement.

                                       9

<PAGE>

          (d) The Committee shall establish as to each award of Restricted Stock
     the terms and conditions upon which the restrictions set forth in paragraph
     (b) above shall lapse. Such terms and conditions may include, without
     limitation, the lapsing of such restrictions as a result of the Disability,
     death or retirement of the Participant or the occurrence of a Change of
     Control.

          (e) Notwithstanding the provisions of paragraphs (b)(ii) and (iii)
     above, the Committee may at any time, in its sole discretion, accelerate
     the time at which any or all restrictions will lapse or remove any and all
     such restrictions.

          (f) Each Participant shall agree at the time his Restricted Stock is
     granted, and as a condition thereof, to pay to the Company, or make
     arrangements satisfactory to the Company regarding the payment to the
     Company of, Applicable Withholding Taxes. Until such amount has been paid
     or arrangements satisfactory to the Company have been made, no stock
     certificate free of a legend reflecting the restrictions set forth in
     paragraph (b) above shall be issued to such Participant.

     7. Stock Options.

          (a) Whenever the Committee deems it appropriate to grant Options,
     notice shall be given to the Participant stating the number of shares for
     which Options are granted, the Option price per share, and the conditions
     to which the grant and exercise of the Options are subject. This notice,
     when duly accepted in writing by the Participant, shall become a stock
     option agreement between the Company and the Participant.

          (b) The exercise price of shares of Company Stock covered by an Option
     shall be not less than 100% of the Fair Market Value of such shares on the
     Date of Grant.

                                       10

<PAGE>

          (c) Options may be exercised in whole or in part at such times as may
     be specified by the Committee in the Participant's stock option agreement;
     provided that, the exercise provisions for Options shall in all events not
     be more liberal than the following provisions:

               (i) No Option may be exercised after ten years from the Date of
          Grant.

               (ii) Except as otherwise provided in this paragraph, no Option
          may be exercised unless the Participant is employed by the Employer or
          a parent or subsidiary of the Company at the time of the exercise and
          has been so employed at all times since the Date of Grant. If a
          Participant's employment is terminated other than by reason of his
          Disability or death at a time when the Participant holds an Option
          that is exercisable (in whole or in part), the Participant may
          exercise any or all of the exercisable portion of the Option (to the
          extent exercisable on the date of termination) within 60 days after
          the Participant's termination of employment. If a Participant's
          employment is terminated by reason of his Disability at a time when
          the Participant holds an Option that is exercisable (in whole or in
          part), the Participant may exercise any or all of the exercisable
          portion of the Option (to the extent exercisable on the date of
          Disability) within 180 days after the Participant's termination of
          employment. If a Participant's employment is terminated by reason of
          his death at a time when the Participant holds an Option that is
          exercisable (in whole or in part), the Option may be exercised (to the
          extent exercisable on the date of death) within 180 days after the
          Participant's

                                       11

<PAGE>

          death by the person to whom the Participant's rights under the Option
          shall have passed by will or by the laws of descent and distribution.

          (d) Notwithstanding the foregoing, no Option shall be exercisable by
     an Insider within the first six months after it is granted (as determined
     under Rule 16b-3); provided that, this restriction shall not apply if the
     Participant becomes Disabled or dies during the six-month period.

          (e) The Committee may, in its discretion, grant Options that by their
     terms become fully exercisable upon a Change of Control, notwithstanding
     other conditions on exercisability in the stock option agreement.

     8. Method of Exercise of Options.

          (a) Options may be exercised by the Participant giving written notice
     of the exercise to the Company, stating the number of shares the
     Participant has elected to purchase under the Option. Such notice shall be
     effective only if accompanied by the exercise price in full in cash;
     provided that, if the terms of an Option so permit, the Participant may (i)
     deliver shares of Company Stock (valued at their Fair Market Value on the
     date of exercise) in satisfaction of all or any part of the exercise price,
     (ii) deliver a properly executed exercise notice together with irrevocable
     instructions to a broker to deliver promptly to the Company, from the sale
     or loan proceeds with respect to the sale of Company Stock or a loan
     secured by Company Stock, the amount necessary to pay the exercise price
     and, if required by the Committee, Applicable Withholding Taxes, or (iii)
     deliver an interest bearing promissory note, payable to the Company, in
     payment of all or part of the exercise price together with such collateral
     as may be required by the Committee at the time of exercise. The interest
     rate under any such promissory note shall

                                       12

<PAGE>

     be established by the Committee and shall be at least equal to the minimum
     interest rate required at the time to avoid imputed interest under the
     Code.

          (b) The Company may place on any certificate representing Company
     Stock issued upon the exercise of an Option any legend deemed desirable by
     the Company's counsel to comply with federal or state securities laws, and
     the Company may require a customary written indication of the Participant's
     investment intent. Until the Participant has made any required payment,
     including any Applicable Withholding Taxes, and has had issued a
     certificate for the shares of Company Stock acquired, he shall possess no
     shareholder rights with respect to the shares.

          (c) As an alternative to making a cash payment to the Company to
     satisfy Applicable Withholding Taxes, if the Option so provides, the
     Participant may, subject to the provisions set forth below, elect to (i)
     deliver shares of already owned Company Stock or (ii) have the Company
     retain that number of shares of Company Stock that would satisfy all or a
     specified portion of the Applicable Withholding Taxes. The Committee shall
     have sole discretion to approve or disapprove any such election. If the
     Participant is an Insider, the following provisions apply to elections to
     satisfy Applicable Withholding Taxes, to the extent required by Rule 16b-3:

               (i) The Participant's election to have the Company retain from
          the shares of Company Stock to be issued upon exercise of an Option
          the number of shares of Company Stock that would satisfy Applicable
          Withholding Taxes must be made at least six months after the Option
          was granted and either:

                    (x) during a Window Period; or

                                       13

<PAGE>

                    (y) at least six months before the amount of Applicable
          Withholding Taxes is calculated.

               (ii) The Participant's election must be irrevocable.

               (iii) Notwithstanding any of the foregoing provisions, the manner
          and timing of elections may be varied from those provided, and
          elections previously made as irrevocable may be revoked, if such
          variance or revocation is permissible under Rule 16b-3.

          (d) Notwithstanding anything herein to the contrary, Options shall
     always be granted and exercised in such a manner as to conform to the
     provisions of Rule 16b-3.

     9. Nontransferability of Options. Options by their terms shall not be
transferable except by will or by the laws of descent and distribution or, if
permitted by Rule 16b-3, pursuant to a qualified domestic relations order (as
defined in Code section 414(p)) ("QDRO") and shall be exercisable, during the
Participant's lifetime, only by the Participant or, if permitted by Rule 16b-3,
an alternate payee under a QDRO, or by his guardian, duly authorized
attorney-in-fact or other legal representative.

     10. Effective Date of the Plan. This Plan is effective on April 30, 2001,
having been approved by the shareholders of the Company on such date. Until the
requirements of any applicable state or federal securities laws have been met,
no Option shall be exercisable.

     11. Termination, Modification, Change. If not sooner terminated by the
Board, this Plan, as amended and restated, shall terminate at the close of
business on April 30, 2011. No Incentive Awards shall be made under the Plan
after its termination. The Board may terminate the Plan or may amend the Plan in
such respects as it shall deem advisable; provided that, if and to the extent
required by Rule 16b-3, no change shall be made that increases the total number
of

                                       14

<PAGE>

shares of Company Stock reserved for issuance pursuant to Incentive Awards
granted under the Plan (except pursuant to Section 12), materially modifies the
requirements as to eligibility for participation in the Plan, or materially
increases the benefits accruing to Participants under the Plan, unless such
change is authorized by the shareholders of the Company. Notwithstanding the
foregoing, the Board may unilaterally amend the Plan and Incentive Awards as it
deems appropriate to ensure compliance with Rule 16b-3. Except as provided in
the preceding sentence, a termination or amendment of the Plan shall not,
without the consent of the Participant, adversely affect the Participant's
rights under an Incentive Award previously granted to him.

     12. Change in Capital Structure.

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

                                       15

<PAGE>

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

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

     13. Administration of the Plan. The Plan shall be administered by the
Committee, which shall consist of not less than two members of the Board, who
shall be appointed by the Board. The Committee shall have general authority to
impose any limitation or condition upon an Incentive Award the Committee deems
appropriate to achieve the objectives of the Incentive Award and the Plan and,
without limitation and in addition to powers set forth elsewhere in the Plan,
shall have the following specific authority:

          (a) The Committee shall have the power and complete discretion to
     determine (i) which eligible employees shall receive Incentive Awards and
     the nature of each Incentive Award, (ii) the number of shares of Company
     Stock to be covered by each Incentive Award, (iii) the Fair Market Value of
     Company Stock, (iv) the time or times when an Incentive Award shall be
     granted, (v) whether an Incentive Award shall become vested over a period
     of time and when it shall be fully vested, (vi) when Options may be
     exercised, (vii) whether a Disability exists, (viii) the manner in which
     payment will be made upon the exercise of Options, (ix) conditions relating
     to the length of time before

                                       16

<PAGE>

     disposition of Company Stock received upon the exercise of Options is
     permitted, (x) whether to approve a Participant's elections under the Plan,
     (xi) notice provisions relating to the sale of Company Stock acquired under
     the Plan, and (xii) any additional requirements relating to Incentive
     Awards that the Committee deems appropriate. The Committee shall have the
     power to amend the terms of previously granted Incentive Awards so long as
     the terms as amended are consistent with the terms of the Plan and provided
     that the consent of the Participant is obtained with respect to any
     amendment that would be detrimental to him, except that such consent will
     not be required if such amendment is for the purpose of complying with Rule
     16b-3.

          (b) The Committee may adopt rules and regulations for carrying out the
     Plan. The interpretation and construction of any provision of the Plan by
     the Committee shall be final and conclusive. The Committee may consult with
     counsel, who may be counsel to the Company, and shall not incur any
     liability for any action taken in good faith in reliance upon the advice of
     counsel.

          (c) A majority of the members of the Committee shall constitute a
     quorum, and all actions of the Committee shall be taken by a majority of
     the members present. Any action may be taken by a written instrument signed
     by all of the members, and any action so taken shall be fully effective as
     if it had been taken at a meeting.

          (d) The Board from time to time may appoint members previously
     appointed and may fill vacancies, however caused, in the Committee. Insofar
     as it is necessary to satisfy the requirements of Section 16(b) of the Act,
     no member of the Committee shall be eligible to participate in the Plan or
     in any other plan of the Company or any parent or subsidiary of the Company
     that entitles participants to acquire stock, stock options or

                                       17

<PAGE>

     stock appreciation rights of the Company or any parent or subsidiary of the
     Company, and no person shall become a member of the Committee if, within
     the preceding one-year period, the person shall have been eligible to
     participate in such a plan (other than a "safe harbor plan" permitted under
     Rule 16b-3(c)(2)(i) and (ii)).

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

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

     IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
30th day of April, 2001.

                                                 APPLE HOSPITALITY TWO, INC.

                                                 By  /s/  Glade M. Knight
                                                     ---------------------------
                                                     Glade M. Knight
                                                     Chairman of the Board

                                       18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]