Document:

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                                                                    EXHIBIT 10.3

                             MANAGEMENT AGREEMENT
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     This Management Agreement (as the same may be amended, modified or
supplemented from time to time, this "Agreement") is made and entered into as of
the 26 day of April, 2001 ("Effective Date") between Apple Suites Management,
Inc., a Virginia corporation, whose address is 306 East Main Street, Richmond,
Virginia 23219 ("Owner") and Promus Hotels, Inc., a Delaware corporation, whose
address is 755 Crossover Lane, Memphis, Tennessee 38117 ("Manager").

                                   ARTICLE 1

                                   THE HOTEL

     Section 1.01.  The Hotel.  The subject matter of this Agreement is the
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management of the "Hotel", as defined in the Homewood Suites License Agreement
attached hereto as Exhibit "A" (hereinafter collectively referred to as the
"License Agreement"), by Manager. The Hotel is owned in fee by Apple Suites,
Inc., a Virginia corporation ("Fee Owner") and leased to Owner pursuant to a
lease between Fee Owner and Owner with a commencement date of even date herewith
covering the Hotel (hereinafter the "Percentage Lease"). The License Agreement
shall exclusively govern Owner's right to use the Homewood Suites "System" (as
defined in the License Agreement) in the operation of the Hotel. Fee Owner shall
have no right to use the Homewood Suites "System" except as expressly set forth
in the License Agreement. Owner hereby expressly acknowledges that neither it
nor Fee Owner shall derive any rights in or to the use of the "Homewood Suites"
name or the Homewood Suites "System" from this Agreement.

                                   ARTICLE 2

                                     TERM

     Section 2.01.  Term.  The term shall commence on the Effective Date and
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continue for the term of years from the Effective Date set forth on Exhibit "B"
("Term").

                                   ARTICLE 3

                             MANAGER'S OBLIGATIONS

     Section 3.01.  Manager's Obligations. Manager shall, on behalf of Owner and
                    ---------------------
at Owner's expense, direct the operation of the Hotel pursuant to the terms of
this Agreement and the License Agreement. Manager shall be exclusively
responsible for directing the day-to-day activities of the Hotel and
establishing all policies and procedures relating to the management and
operation of the Hotel. Except as specifically otherwise provided, all cost(s)
and expense(s) incurred by Manager in association with
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the performance of the obligations hereinafter set forth shall be, regardless of
the designation of a portion thereof as Fee Ownership Costs (as herein defined),
operating costs and shall accordingly be paid from the Bank Account(s) as
hereinafter defined in Section 3.01(iv) below. Manager, during the Term, shall
have the following obligations:

     (i)  Costs of Fee Owner and Owner.  Pursuant to the terms of the Percentage
          ----------------------------
          Lease, Manager understands that Fee Owner has agreed to pay, among
          other things (i) land, building and personal property taxes and
          assessments applicable to the Hotel, (ii) premiums and charges for the
          casualty insurance coverages specified on Exhibit "D", (iii)
          expenditures for capital replacements, and (iv) expenditures for
          maintenance and repair of underground utilities and structural
          elements of the Hotel (collectively, "Fee Ownership Costs"). To the
          extent this Agreement obligates or authorizes Manager to pay any such
          Fee Ownership Costs, Manager shall pay such Fee Ownership Costs on
          behalf of Fee Owner to the extent of funds in the Bank Account(s) (as
          herein defined) in the order of priority set forth in Exhibit B or the
          Reserve Fund (as herein defined) and Fee Owner and Owner shall make
          such adjustments and payments to each other as may be necessary from
          time to time to take into account any such payments by Manager.
          Manager shall have no duty, obligation or liability to Fee Owner or
          Owner (i) to make any determination as to whether any expense required
          to be paid by Manager hereunder is a Fee Ownership Cost or a cost of
          Owner, (ii) to make any determination as to whether funds in the Bank
          Account(s) or the Reserve Fund belong to Fee Owner or Owner or (iii)
          to require that Fee Ownership Costs be paid from funds which can be
          identified as belonging to Fee Owner, or that other costs and expenses
          required to be paid by Owner be paid from funds which can be
          identified as belonging to Owner; it being the intent of the parties
          to this Agreement that (i) Owner and Fee Owner shall look only to each
          other and not to Manager with respect to moneys that may be owed one
          to the other as a consequence of Manager's performance under this
          Agreement and (ii) Manager need only look to Owner to pay operating
          costs, including, without limitation, those designated herein as Fee
          Ownership Costs;

     (ii) Personnel. Manager shall be the sole judge of the fitness and
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          qualification of all personnel working at the Hotel ("Hotel
          Personnel") and shall have the sole and absolute right to hire,
          supervise, order, instruct, discharge and determine the compensation,
          benefits and terms of employment of all Hotel Personnel. All Hotel
          Personnel shall be employees of Manager. Manager shall also have the
          right to use employees of Manager, Manager's parent and subsidiary and
          affiliated companies, not located at the Hotel to provide services to
          the Hotel ("Off-Site Personnel") and the right to have the general
          manager of the hotel serve as the regional manager for other hotels
          managed by Manager. All expenses, costs (including, but not limited
          to, salaries, benefits and severance pay), liabilities and claims
          which are related to Hotel Personnel and Off-Site

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          Personnel shall be operating costs; provided, however, with respect to
          any moving expenses for any Hotel Personnel who has not been an
          employee at the Hotel for at least twelve (12) months, only that
          portion of such moving expenses equal to Owner's Share (as hereinafter
          defined) shall constitute operating costs and the balance shall be
          paid by Manager and/or such employee. Manager shall also have the
          right to have Off-Site Personnel performing regional or area duties
          relating to the Hotel and other hotels managed by Manager lodged at
          the Hotel from time to time free of charge. "Owner's Share" shall mean
          a fraction having twelve (12) as its denominator and the number of
          months or part thereof such person has been one of the Hotel Personnel
          as its numerator. All expenses for Off-Site Personnel shall be
          included as a separate category or item of the Operating Budgets or
          shall otherwise be approved by Owner.

          Manager agrees that it will consult with Owner regarding the hiring,
          transferring, or terminating of the general manager and director of
          sales for the Hotel. Owner shall be afforded an opportunity to review
          the resumes of, and to interview, the candidates for these positions,
          all within a time frame established by Manager, which shall be
          reasonable under the circumstances in question. Manager and Owner
          shall consult with each other concerning such decisions and Manager
          agrees to give serious consideration to the views of Owner prior to
          Manager's making a final decision with respect to any such individual;

   (iii)  Hotel Policies. Manager shall determine the terms of guest admittance
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          to the Hotel, establish room rates, and use of rooms for commercial
          purposes;

   (iv)   Bank Accounts. Manager shall open and operate the Hotel's bank
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          accounts. All sums received from the operation of the Hotel and all
          items paid by Manager arising by virtue of Manager's operation of the
          Hotel shall pass through bank account(s) established by Manager in
          Owner's name at such banks as Manager and Owner shall mutually agree
          ("Bank Account(s)"); only Manager's designees shall be exclusively
          authorized to operate and draw from the Bank Account(s). Each fiscal
          month Manager, on behalf of Owner, shall disburse funds from the Bank
          Account(s) in the order of priority and to the extent available in
          accordance with the priority schedule set forth on Exhibit "B";

   (v)    Operating Budgets. Manager has submitted to Owner, for Owner's
          -----------------
          approval, a proposed operating budget for the ensuing full or partial
          fiscal year, as the case may be ("Operating Budget"). Hereafter,
          Manager shall, not less than forty-five (45) days prior to the
          commencement of each full fiscal year, submit to Owner, for Owner's
          approval, a proposed Operating Budget for the ensuing full or partial
          fiscal year, as the case may be. Each Operating Budget shall be
          accompanied by, and shall include, a business plan which shall
          describe business objectives and strategies for the period

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          covered by the Operating Budget. The business plan 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. Fee Owner shall have
          no right to approve any Operating Budget.

          Owner's approval of the Operating Budget shall not be unreasonably
          withheld and shall be deemed given unless a specific written objection
          thereto is delivered by Owner to Manager within fifteen (15) days
          after submission. Owner shall review the Operating Budget on a
          line-by-line basis. To be effective, any notice which disapproves a
          proposed Operating Budget must contain specific objections in
          reasonable detail to individual line items.

          If the initial Operating Budget contains disputed budget item(s), said
          item(s) shall be deemed adopted until Owner and Manager have resolved
          the item(s) objected to by Owner or the Accountant(s) (hereinafter
          defined in Section 10.02) have resolved the item(s) objected to by
          Owner. Thereafter, if Owner disapproves or raises objections to a
          proposed Operating Budget in the manner and within the time period
          provided therefor, and Owner and Manager are unable to resolve the
          disputed or objectionable matters submitted by Owner prior to the
          commencement of the applicable fiscal year, the undisputed portions of
          the proposed Operating Budget shall be deemed to be adopted and
          approved and the corresponding line item contained in the Operating
          Budget for the preceding fiscal year shall be adjusted as set forth
          herein and shall be substituted in lieu of the disputed items in the
          proposed Operating Budget. Those line items which are in dispute shall
          be determined by increasing the preceding fiscal year's corresponding
          line items by an amount determined by Manager which does not exceed
          the Consumer Price Index for All Urban Consumers published by the
          Bureau of Labor Statistics of the United States Department of Labor,
          U.S. City Average, all items (1984-1986=100) (the "CPI") for the
          fiscal year prior to the fiscal year with respect to which the
          adjustment to the line item is being calculated or any successor or
          replacement index thereto. The resulting Operating Budget obtained in
          accordance with the preceding sentence shall be deemed to be the
          Operating Budget in effect until such time as Manager and Owner have
          resolved the items objected to by Owner.

          Manager shall revise the Operating Budget from time to time, as
          necessary, to reflect any unpredicted significant changes, variables
          or events or to include significant, additional, unanticipated items
          of income or expense. Any such revision shall be submitted to Owner
          for approval, which approval shall not be unreasonably withheld,
          delayed or conditioned. Manager shall be permitted to reallocate part
          or all of the

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          amount budgeted with respect to any line item to another line item and
          to make such other modifications to the Operating Budget as Manager
          deems necessary, provided, however, that Manager may not reallocate
          from one Department to another without Owner's consent, which shall
          not be unreasonably withheld or delayed. The term "Department" shall
          mean and refer to those general divisional categories shown in the
          Operating Budget (e.g., Guest Services Department or Administration
          Department), but shall not mean or refer to subcategories (e.g., linen
          replacement or uniforms) appearing in a divisional category. In
          addition, in the event actual Adjusted Gross Revenues (as defined in
          Exhibit "C" hereto) for any calendar period are greater than those
          provided for in the Operating Budget, the amounts approved in the
          Operating Budget for suite maintenance, guest services, food and
          beverage, telephone, utilities, marketing and hotel repair and
          maintenance for any calendar month shall be automatically deemed to be
          increased to an amount that bears the same relationship (ratio) to the
          amounts budgeted for such items as actual Adjusted Gross Revenue for
          such month bears to the projected Adjusted Gross Revenue for such
          month. Owner acknowledges that the Operating Budget is intended only
          to be a reasonable estimate of the Hotel's income and expenses for the
          ensuing fiscal year. Manager shall not be deemed to have made any
          guarantee, warranty or representation whatsoever in connection with
          the Operating Budget;

    (vi)  Operating Statement. Manager shall prepare and furnish Owner, on or
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          before the twentieth (20th) day of the fiscal month immediately
          following the close of a fiscal month, with a detailed operating
          statement setting forth the results of the Hotel's operations. Within
          ninety (90) days after the end of each fiscal year, Manager shall
          furnish Owner with a detailed operating statement setting forth the
          results of the Hotel's operations for the fiscal year;

    (vii) Capital Budgets. Manager shall, not less than forty-five (45) days
          ---------------
          prior to the commencement of each fiscal year, submit to Owner, for
          Owner's approval, a recommended "Capital Budget" for the ensuing full
          or partial fiscal year, as the case may be, for furnishings,
          equipment, and ordinary Hotel capital replacement items as shall be
          required to operate the Hotel in accordance with the standards
          referred to in the License Agreement. Manager, to the extent it is
          able to do so without compromising compliance with the minimum
          standards required under the terms of the License Agreement, shall
          take into consideration, among other factors, the amount of funds
          available to pay for the proposed capital expenditures. Manager shall
          also identify for Owner those projects that are required to meet the
          minimum standards of the License Agreement and give priority to such
          items. Owner and Manager shall meet to discuss the proposed Capital
          Budget and Owner shall be required to make specific written objections
          to a proposed Capital Budget in the manner and within the same time
          periods specified in Section 3.01(v) with respect to an

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          Operating Budget. Owner agrees not to unreasonably withhold or delay
          its consent. If Owner does not approve the Capital Budget, Manager (i)
          with respect to Capital Improvements (as herein defined) required to
          meet the minimum standards of the License Agreement, will be entitled
          to spend such amounts as are necessary to meet such minimum standards
          and (ii) with respect to any other Capital Improvements, will only
          spend such amounts as are approved by Owner, acting reasonably,
          provided, however, that in any event Manager shall be entitled to
          spend up to five percent (5%) of Adjusted Gross Revenue for capital
          expenditures after the date hereof until the disputed Capital Budget
          item(s) have been resolved in accordance with Section 10.02.1(e).
          Manager, at Owner's expense, shall be responsible for supervising the
          design, installation and construction of alterations or additions to,
          or rebuilding or renovation of, the Hotel, including any additions to
          Hotel furnishings and equipment (collectively, "Capital
          Improvements"). Owner shall have the right to approve and inspect the
          installation and construction of Capital Improvements and any
          mortgagee having a first lien on Owner's leasehold estate in the Hotel
          ("Owner's Leasehold Mortgagee") or a first lien on Fee Owner's fee
          estate in the Hotel (the "Fee Owner's Mortgagee") shall also have any
          right of approval or inspection of the installation and construction
          of the Capital Improvements to the extent set forth in the mortgage,
          deed of trust or other loan documents (collectively, the "Mortgage
          Documents") (but only if and to the extent the Manager has been
          provided with copies of the Mortgage Documents). Fee Owner shall not
          have the right to approve any Capital Budget.

          After a Capital Budget has been adopted, it shall be subject to review
          and modification in the event unpredicted or unanticipated capital
          expenditures are required during any calendar year. Manager and Owner
          each agree not to unreasonably withhold or delay its consent to a
          proposed modification of a Capital Budget. Any amendment that is
          mutually agreed upon shall be set forth in writing and signed by both
          parties. It is acknowledged by Owner that capital expenditures
          required as a result of an emergency situation shall not reduce
          amounts available pursuant to the Capital Budget or otherwise
          hereunder, other than to the extent a Capital Budget item is subsumed
          within the capital expenditures required as a result of the occurrence
          of the emergency;

   (viii) General Maintenance Non-Capital Replacements. Manager shall supervise
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          the maintenance, repair and replacement of non-capital replacements;

   (ix)   Operating Equipment. Manager shall select and purchase all operating
          -------------------
          equipment for the Hotel such as linens, utensils, uniforms and other
          similar items, provided, however, that if Owner determines that it can
          purchase operating equipment of a quality at least equal to that which
          Manager generally uses at a price lower than the price obtained by

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          Manager, Manager shall purchase such operating equipment from the
          vendor designated by Owner;

   (x)    Operating Supplies. Manager shall select and purchase all operating
          ------------------
          supplies for the Hotel such as food, beverages, fuel, soap, cleansing
          items, stationery and other consumable items, provided, however, that
          if Owner determines that it can purchase operating supplies of a
          quality at least equal to that which Manager generally uses at a price
          lower than the price obtained by Manager, Manager shall purchase such
          operating supplies from the vendor designated by Owner;

   (xi)   Accounting Standards. Manager shall maintain the books and records
          --------------------
          reflecting the operations of the Hotel in accordance with the
          accounting practices of Manager in conformity with generally accepted
          accounting practices consistently applied and shall adopt and follow
          the fiscal accounting periods utilized by Manager in its normal course
          of business. The Hotel level generated accounting records reflecting
          detailed day-to-day transactions of the Hotel's operations, shall be
          kept by Manager at the Hotel or at Manager's regional offices or
          corporate headquarters, or at such other location as Manager shall
          reasonably determine. Manager shall receive a monthly fee for
          accounting services provided to the Hotel ("Accounting Fee"). The
          current Accounting Fee is set forth on Exhibit "B". The Accounting Fee
          shall be adjusted by Manager from time to time and set forth in the
          annual Operating Budget;

   (xii)  Marketing and Advertising. Manager shall advertise and promote the
          -------------------------
          Hotel in coordination with the sales and marketing programs of Manager
          and other Homewood Suites hotels. Manager may participate in sales and
          promotional campaigns and activities involving complimentary rooms.
          Manager, in marketing and advertising the Hotel, shall have the right
          to use marketing and advertising services of employees of Manager and
          its parent and affiliated companies not located at the Hotel. Manager
          may charge the Hotel for personnel and other costs and expenses
          incurred in providing such services; provided that (i) Manager's
          allocation of such costs and expenses among hotels, including the
          Hotel, shall be pro rated among all hotels owned or managed by Manager
          and (ii) the annual allocation of such costs and expenses to the Hotel
          shall not exceed $10,000.00. Such costs and expenses shall be
          reflected in the budgets and operating statements required to be
          prepared and submitted by Manager under this Agreement;

   (xiii) Permits and Licenses. Manager shall obtain and maintain the various
          --------------------
          permits and licenses required or permitted to be held in its name that
          are necessary to enable Manager to operate the Hotel in accordance
          with the terms of this Agreement and the License Agreement, provided,
          however, that Manager shall only hold liquor licenses and alcoholic
          beverage licenses if required by the laws of the jurisdiction in which
          the Hotel is

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          located. In addition, Manager shall upon request cooperate with and
          assist Owner in obtaining the various permits and licenses that are
          required to be held in the name of either or both of Owner and Fee
          Owner that are necessary to enable Manager to operate the Hotel.
          Manager, at Owner's cost and expense, shall use all reasonable
          efforts, to the extent within its control, to comply with the terms
          and conditions of all licenses and permits issued with respect to the
          Hotel and the business conducted at the Hotel, including, without
          limitation, the terms and conditions of the License Agreement;

  (xiv)   Owner Meetings. The Hotel's general manager shall meet with Owner's
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          Representative as hereinafter defined in Section 4.01(viii) quarterly
          to review and discuss the previous and future month's operating
          statement, cash flow, budget, capital expenditures, important
          personnel matters and the general concerns of Owner and Manager. In
          addition, a representative of Manager's corporate staff shall meet
          with Owner's Representative quarterly to review and discuss the
          previous and future quarter's operating statement, cash flow, budget,
          capital expenditures, important personnel matters and the general
          concerns of Owner and Manager. Except to the extent otherwise mutually
          agreed upon by Owner and Manager, the quarterly meetings described in
          this clause (xiv) shall be held at the Hotel;

  (xv)    Insurance. Manager shall procure and maintain throughout the Term the
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          insurance coverages set forth on Exhibit "D";

  (xvi)   Compliance with Law.  Manager, at Owner's cost and expense, shall
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          use all reasonable efforts to comply with all laws, ordinances,
          regulations and requirements of any federal, state or municipal
          government that are applicable to the use and operation of the Hotel,
          as well as with all orders and requirements of the local fire
          department, of which Manager has knowledge; provided, however, that
          Owner shall have the right to contest by proper legal proceedings, the
          validity of any such law, ordinance, rule, regulation, order, decision
          or requirement and may postpone compliance therewith to the extent and
          in the manner provided by law until final determination of any such
          proceedings. Manager promptly shall notify Owner in writing of all
          notices of legal requirements applicable to the Hotel that are
          received by Manager;

  (xvii)  Satisfaction of Obligations.  Manager agrees to pay, when due, all
          ---------------------------
          amounts due under any equipment leases and all other contracts and
          agreements relating to the operation or maintenance of the Hotel, and,
          if requested by Owner, any Mortgage Documents relating to the loan
          from Owner's Leasehold Mortgagee ("Owner's Mortgage Documents"), but
          solely from and to the extent that funds are available in the Bank
          Account(s), and to comply, at Owner's cost and expense, with all other
          covenants and obligations contained in the equipment leases and all
          utility contracts, concession agreements, and service and maintenance
          contracts,

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              and, if requested by Owner, Owner's Mortgage Documents to the
              extent that compliance therewith is within the reasonable control
              of Manager by reason of its management and operation of the Hotel
              pursuant to this Agreement; provided, however, Manager shall have
              no obligation to comply with any provisions in the Mortgage
              Documents that conflict with its rights and obligations under this
              Agreement. Manager shall have no obligation to perform or comply
              with any obligations of (i) Fee Owner or Owner under the
              Percentage Lease or (ii) Fee Owner under any Mortgage Documents
              relating to the loan from Fee Owner's Mortgagee (other than any
              right to approve or inspect Capital Improvements contemplated by
              Section 3.01(vii) above);

     (xviii)  Requests for Information.  Manager shall respond, with reasonable
              ------------------------
              promptness, to any information requests by Owner's Leasehold
              Mortgagee in accordance with Owner's Mortgage Documents, to the
              extent such information is required to be furnished by Manager to
              Owner pursuant to this Agreement. Any additional information or
              reports requested by Owner's Leasehold Mortgagee shall be provided
              by Manager only if Owner so directs Manager in writing and, to the
              extent such information or reports are not being prepared for
              Owner in the ordinary course of business pursuant to this
              Agreement, Owner agrees to pay the reasonable expenses of
              preparing such information and reports;

     (xix)    Tax and Insurance Accruals. If requested by Owner, Manager shall
              --------------------------
              accrue and set aside on a monthly basis funds from Adjusted Gross
              Revenues if available in the priority set forth on Exhibit B for
              the payment of real estate taxes and insurance premiums, and such
              accruals shall be deposited in a separate account and not
              commingled with other operating accounts for Hotel operations
              generally, provided, however, that to the extent such accruals
              exceed the amount necessary to pay the actual amount of real
              estate taxes and insurance premiums, such excess shall be
              available for operating costs, ownership costs, and the others
              items set forth on, and in the priority set forth on, Exhibit B.
              If such accruals do not exceed the actual amounts due in respect
              of real estate taxes and insurance premiums but Owner and Manager
              agree in writing, the tax and insurance accruals on deposit may be
              used from time to time to pay operating costs if Adjusted Gross
              Revenues are not otherwise sufficient to pay such operating costs.

                                   ARTICLE 4

                              OWNER'S OBLIGATIONS

     Section 4.01.  Owner's Obligations.  During the Term, Owner shall have the
                    -------------------
obligations set forth below:

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     (i)    License Agreement. Owner shall comply with all the terms and
            -----------------
            conditions of the License Agreement (specifically including, but not
            limited to, Licensee's obligation to pay the fees, charges and
            contributions set forth in paragraphs 3.c. and 7 of the License
            Agreement) and keep the License Agreement in full force and effect
            from the Effective Date through the remainder of the Term. Nothing
            in this Agreement shall be interpreted in a manner which would
            relieve Owner of any of its obligations under the License Agreement;

     (ii)   Licenses and Permits. Owner shall obtain and maintain, with
            --------------------
            Manager's assistance and cooperation, all governmental permissions,
            licenses and permits required to be held in Owner's and/or Fee
            Owner's name that are necessary to enable Manager to operate the
            Hotel in accordance with the terms of this Agreement and the License
            Agreement;

     (iii)  Insurance. Owner shall procure and maintain throughout the Term the
            ---------
            insurance coverages set forth on Exhibit "E";

     (iv)   Intentionally Omitted;

     (v)    Operating Funds. Owner shall provide all funds necessary to enable
            ---------------
            Manager to manage and operate the Hotel in accordance with the terms
            of this Agreement and the License Agreement, regardless of the
            designation of a portion of the operating costs as Fee Ownership
            Costs. Owner agrees to deliver to Manager for deposit into the Bank
            Account(s) on the Effective Date the amount specified on Exhibit "B"
            which amount shall be the "Minimum Balance" to be maintained by
            Owner during the first year of the Hotel's operation. The Minimum
            Balance thereafter shall be no less than the Hotel's operating costs
            for the preceding fiscal month. The Minimum Balance shall serve as
            working capital for the Hotel's operations. Owner agrees, upon
            Manager's written request, to immediately furnish Manager with
            sufficient funds to make up any deficiency in the Minimum Balance;

     (vi)   Capital Funds. Owner shall expend such amounts for renovation
            -------------
            programs, furnishings, equipment and ordinary Hotel capital
            replacement items as are required from time to time to (a) maintain
            the Hotel in good order and repair, (b) comply with the standards
            referred to in the License Agreement, and (c) comply with
            governmental regulations and orders. Owner shall cooperate fully
            with Manager in establishing appropriate procedures and timetables
            for Owner to undertake capital replacement projects.

            It is recognized that expenditures for capital replacements are
            incapable of precise calculation in advance. Therefore, five percent
            (5%) of Adjusted Gross Revenues each year shall be paid over in cash
            in each calendar month after the Effective Date into a Reserve Fund
            (as hereinafter

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          defined) to pay for capital replacements. In lieu of funding monthly
          into the Reserve Fund as contemplated above, Owner shall have the
          right, but not the obligation, to deposit into the Reserve Fund, on or
          about the commencement of each year, the full amount set forth in the
          Capital Budget. Manager shall establish a reserve for capital
          replacements on the books of account for the Hotel and the cash
          amounts required for such reserve shall be placed into an interest-
          bearing account (the "Reserve Fund") established in the Hotel's name
          at the bank at which the Bank Account(s) are established, with
          Manager's designees being the only authorized signatories on said
          account. All amounts on deposit in the Reserve Fund shall be Owner's.
          Any expenditures for capital replacements during any calendar year
          which have been included in an approved Capital Budget may be made
          without Owner's or Fee Owner's additional approval and, to the extent
          available, shall be made by Manager from the Reserve Fund (including
          accrued interest and unused accumulations from prior calendar years).
          Any amounts remaining in the Reserve Fund at the close of each
          calendar year shall be carried forward and retained in the Reserve
          Fund until fully used as herein provided. To the extent the Reserve
          Fund is insufficient at a particular time or to the extent the Reserve
          Fund plus anticipated contributions for the ensuing calendar year is
          less than the budgeted expenditures set forth in the approved Capital
          Budget for the ensuing calendar year then in either such event,
          Manager shall give Owner written notice thereof at least sixty (60)
          days before the anticipated date such funds will be needed. Owner
          shall supply the necessary funds by deposit to the Reserve Fund at
          least fifteen (15) days before the anticipated date such funds will be
          needed. All proceeds from the sale of capital items no longer needed
          for the operation of the Hotel shall be deposited to the Reserve Fund.
          Sale of such items shall be at the discretion of Manager, and
          conducted in a commercially reasonable manner. Manager shall not
          dispose of any capital item or group of capital items having a value
          in excess of ten thousand dollars ($10,000) without Owner's prior
          written consent unless the replacement of such capital item or group
          of capital items has been contemplated in the applicable Capital
          Budget. Manager also shall obtain the consent of Owner's Leasehold
          Mortgagee when required for any disposition of capital items otherwise
          prohibited under the terms of Owner's Mortgage Documents, provided,
          however, that to the extent a capital item is being replaced because
          the same is defective or obsolete or with an item of equal or greater
          value no such consent need be obtained from Owner's Leasehold
          Mortgagee. Upon termination of this Agreement for whatever reason or
          upon sale of the Hotel, Manager's right to expend any unused portion
          of the Reserve Fund shall terminate and the balance of the fund shall
          be paid over to Owner, less any sums then due Manager.

          To the extent any expenditure under this Section 4.01(vi) shall exceed
          twenty thousand dollars ($20,000), Manager shall first solicit bids
          from at least three different reputable and qualified third parties,
          and the lowest of

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            the bidders shall be selected unless acceptance of a higher bid has
            been approved by Owner in writing or unless Manager provides a
            reasonably detailed explanation for its selection of a bid higher
            than the lowest of the bidders;

    (vii)   Payments to Manager. Owner shall promptly pay to Manager all amounts
            -------------------
            due Manager under this Agreement;

    (viii)  Owner's Representative. Owner shall appoint a representative to
            ----------------------
            represent Owner in all matters relating to this Agreement and/or the
            Hotel ("Owner's Representative"). Owner's initial Owner's
            Representative shall be the individual named on Exhibit "B". Manager
            shall have the right to deal solely with the Owner's Representative
            on all such matters. Manager may rely upon statements and
            representations of Owner's Representative as being from and binding
            upon Owner. Owner may change its Owner's Representative from time to
            time by providing written notice to Manager in the manner provided
            for herein. Owner shall cause the Owner's Representative to attend
            all quarterly meetings referred to in Section 3.01(xiv);

    (ix)    Owner's Audits. Owner shall have the right to have its independent
            --------------
            accounting firm examine the books and records of the Hotel at any
            reasonable time upon forty-eight (48) hours notice to Manager;

    (x)     Right of Inspection and Review. Owner, Owner's Leasehold Mortgagee,
            ------------------------------
            Fee Owner and Fee Owner's Mortgagee and their respective
            accountants, attorneys, agents and other representatives and
            invitees, shall have the right to enter upon any part of the Hotel
            at all reasonable times during normal business hours and during the
            term of this Agreement upon reasonable prior notice to Manager for
            the purpose of examining or inspecting the Hotel, showing the Hotel
            to prospective purchasers or mortgagees, or auditing, examining or
            making extracts of books and records of the Hotel, or for any other
            purpose which Owner, in its reasonable discretion, shall deem
            necessary or advisable, but the same shall be done with as little
            disruption to the business of the Hotel as under the circumstances
            is reasonable; and

    (xi)    Quiet and Peaceable Operation. Owner shall ensure that Manager is
            -----------------------------
            able to peaceably and quietly operate the Hotel in accordance with
            the terms of this Agreement, free from molestation, eviction and
            disturbance by Owner or by any other person or persons claiming by,
            through or under Owner. Owner shall undertake and prosecute all
            reasonable and appropriate actions, judicial or otherwise, required
            to assure such quiet and peaceable operations by Manager.

                                       12
<PAGE>

                                   ARTICLE 5

                                MANAGEMENT FEE

     Section 5.01.  Management Fee. On the first day of each fiscal month after
                    --------------
the Effective Date, Manager is authorized by Owner to pay itself from the Bank
Account(s) the Management Fees calculated in the manner set forth on Exhibit
"C".

                                   ARTICLE 6

                             CLAIMS AND LIABILITY

     Section 6.01.  Claims and Liability. Owner and Manager mutually agree for
                    --------------------
the benefit of each other to look only to the appropriate insurance coverages in
effect pursuant to this Agreement in the event any demand, claim, action,
damage, loss, liability or expense occurs as a result of injury to person or
damage to property regardless whether any such demand, claim, action, damage,
loss, liability or expense is caused or contributed to, by or results from the
negligence of Owner or Manager or their subsidiaries, affiliates, employees,
directors, officers, agents or independent contractors and regardless whether
the injury to person or damage to property occurs in and about the Hotel or
elsewhere as a result of the performance of this Agreement. Nevertheless, in the
event the insurance proceeds are insufficient or there is no insurance coverage
to satisfy the demand, claim, action, loss, liability or expense and the same
did not arise out of the gross negligence or willful misconduct of Manager,
Owner agrees, at its expense, to indemnify and hold Manager and its
subsidiaries, affiliates, officers, directors, employees, agents or independent
contractors harmless to the extent of the excess liability.

     Section 6.02.  Survival. The provisions of this Article 6 shall survive any
                    --------
cancellation, termination or expiration of this Agreement and shall remain in
full force and effect until such time as the applicable statute of limitation
shall cut off all demands, claims, actions, damages, losses, liabilities or
expenses which are the subject of the provisions of this Article 6.

                                   ARTICLE 7

                        CLOSURE, EMERGENCIES AND DELAYS

     Section 7.01.  Events of Force Majeure. If at any time during the Term of
                    -----------------------
this Agreement it becomes necessary, in Manager's opinion, to cease operation of
the Hotel in order to protect the Hotel and/or the health, safety and welfare of
the guests and/or employees of the Hotel for reasons beyond the reasonable
control of Manager, such as, but not limited to, acts of war, insurrection,
civil strife and commotion, labor unrest, governmental regulations and orders,
shortage or lack of adequate supplies or lack of skilled or unskilled employees,
contagious illness, catastrophic events or acts of God, which shall not include
Manager's computer systems and software not being able to

                                       13
<PAGE>

accurately process date data and information, including, but not limited to,
calculating, comparing and sequencing from, into and between the twentieth
century, the year 2000 and the twenty-first century ("Force Majeure"), then in
such event or similar events Manager may close and cease operation of all or any
part of the Hotel, reopening and commencing operation when Manager deems that
such may be done without jeopardy to the Hotel, its guests and employees.

     Manager and Owner agree, except as otherwise provided herein, that the time
within which a party is required to perform an obligation and Manager's right to
manage the Hotel under this Agreement shall be extended for a period of time
equivalent to the period of delay caused by an event of Force Majeure.

     Section 7.02.  Emergencies.  If a condition of an emergency nature should
                    -----------
exist which requires that immediate repairs be made for the preservation and
protection of the Hotel, its guests or employees, or to assure the continued
operation of the Hotel, Manager is authorized to take all actions and to make
all expenditures necessary to repair and correct such condition, regardless
whether provisions have been made in the applicable budget for such emergency
expenditures. Expenditures made by Manager in connection with an emergency shall
be paid, in Manager's sole discretion, out of the Bank Account(s). Owner shall
immediately replenish such funds paid from the Bank Account(s). Manager shall
endeavor to communicate with Owner prior to making any expenditures to correct
an emergency condition, but in any event shall promptly notify Owner after the
emergency expenditures have been made.

                                   ARTICLE 8

                           CONDEMNATION AND CASUALTY

     Section 8.01.  Condemnation.  If the Hotel is taken in any eminent domain,
                    ------------
expropriation, condemnation, compulsory acquisition or similar proceeding by a
competent authority, this Agreement shall automatically terminate as of the date
of taking or condemnation. Any compensation for the taking or condemnation of
the physical facility comprising the Hotel shall be paid to Owner. Manager,
however, with the full cooperation of Owner, shall have the right to file a
claim with the appropriate authorities for the loss of Management Fee income for
the remainder of the Term and any extension thereof because of the condemnation
or taking. If only a portion of the Hotel is so taken and the taking does not
make it unreasonable or imprudent, in Manager's and Owner's opinion, to operate
the remainder as a hotel of the type immediately preceding such taking, this
Agreement shall not terminate. Any compensation shall be used, however, in whole
or in part, to render the Hotel a complete and satisfactory architectural unit
as a hotel of the same type and class as it was immediately preceding such
taking or condemnation.

     Section 8.02.  Casualty.  In the event of a fire or other casualty, Owner
                    --------
shall comply with the terms of the License Agreement and this Agreement shall
remain in full force and effect so long as the License Agreement remains in full
force and effect.

                                       14
<PAGE>

                                   ARTICLE 9

                              TERMINATION RIGHTS

     Section 9.01.  Bankruptcy and Dissolution. If either party is voluntarily
                    --------------------------
or involuntarily dissolved or declared bankrupt, insolvent, or commits an act of
bankruptcy, or if a company enters into liquidation whether compulsory or
voluntary otherwise than for the purpose of amalgamation or reconstruction, or
compounds with its creditors, or has a receiver appointed over all or any part
of its assets, or passes title in lieu of foreclosure, the other party may
terminate this Agreement immediately upon serving notice to the other party,
without liability on the part of the terminating party.

     Section 9.02.  Manager's Termination Right Upon the Termination of License
                    -----------------------------------------------------------
Agreement.  If the License Agreement is terminated for any reason, Manager may
---------
terminate this Agreement immediately upon serving notice to Owner, without
liability on the part of Manager. Upon such termination, unless specifically
provided otherwise herein, Manager shall be entitled to receive the Sale
Termination Fee calculated in the manner set forth on Exhibit "B".
Notwithstanding anything contained herein, Manager shall not be entitled to
receive the Sale Termination Fee if the License Agreement is terminated because
of Manager's failure to perform its obligations hereunder and Manager's failure
was not caused by the failure of Owner to perform its obligations hereunder.

     Section 9.03.  (a)  Owner's Default.  The following shall, at the election
                         ---------------
of Manager, constitute events of default by Owner under this Agreement (each
such event being referred to herein as an "Owner's Default"):

     (i)    The failure of Owner to pay any amount to Manager provided for
            herein for a period of ten (10) days after written notice by Manager
            of such failure to pay.

     (ii)   Failure of Owner to keep or perform any duty, obligation, covenant
            or agreement of Owner under this Agreement (other than the
            obligation to pay that is the subject of paragraph (i) above) and
            such failure continues for a period of thirty (30) days after
            receipt of written notice thereof from Manager; provided, however,
            if such failure cannot reasonably be remedied or corrected within
            such thirty (30) day period, then such thirty (30) day period shall
            be extended for such additional period as may be reasonably required
            to cure such default but only if Owner promptly commences to cure
            such default and continues thereafter with all due diligence to
            complete such a cure to the satisfaction of Manager.

     (iii)  The occurrence of a default under or other termination of the
            Percentage Lease.

     (iv)   Failure of Fee Owner to keep or perform any duty, obligation,
            covenant or agreement of Fee Owner under the "Comfort Letter" of
            even date herewith

                                       15
<PAGE>

          from Manager to Fee Owner agreed to and accepted by Fee Owner (the
          "Comfort Letter") relating to the Hotel and such failure continues for
          a period of thirty (30) days after receipt of written notice thereof
          from Manager; provided, however, if such failure cannot reasonably be
          remedied or corrected within such thirty (30) day period, then such
          thirty (30) day period shall be extended for such additional period as
          may be reasonably required to cure such default, but only if Fee Owner
          promptly commences to cure such default and continues thereafter with
          all due diligence to complete such a cure to the satisfaction of
          Manager.

     On the occurrence of any Owner's Default, Manager shall have the right to
terminate this Agreement by written notice to Owner, in addition to its rights
to seek damages or other remedies available to it at law or in equity.

     (b)  Manager Default.  The following shall, at the election of Owner,
          ---------------
constitute an event of default by Manager under this Agreement (such event being
referred to herein as the "Manager Default"): Failure of Manager to keep or
perform any duty, obligation, covenant or agreement of Manager under this
Agreement and such failure shall continue for a period of thirty (30) days after
receipt of written notice thereof from Owner; provided, however, if such failure
cannot reasonably be remedied or corrected within such thirty (30) day period,
then such thirty (30) day period shall be extended for such additional period as
may be reasonably required to cure such default provided that Manager promptly
commences to cure such default and continues thereafter with all due diligence
to complete such cure to the satisfaction of Owner. Upon the occurrence of the
Manager Default, Owner shall have the right to terminate this Agreement by
written notice to Manager, in addition to its right to seek damages or other
remedies available to it at law or in equity.

     Section 9.04.  Owner's -- Termination Rights. (a) Provided Owner is not in
                    -----------------------------
default under this Agreement at the time of delivery of the Termination Notice
(as defined herein) or on the Termination Date (as defined herein), Owner shall
have the right, after the tenth anniversary of the Effective Date, to terminate
this Agreement by giving written notice (a "Termination Notice") to Manager
setting forth an effective termination date which shall be the last day of a
month (the "Termination Date") and which shall be not less than six (6) months
nor more than twelve (12) months after the date of such Termination Notice and
shall in no event be prior to the tenth anniversary of the Effective Date. If
Owner terminates this Agreement pursuant to this Section 9.04(a), in addition to
payment of all other fees and reimbursable sums due to Manager on the
Termination Date, Manager shall have the right to receive the Cancellation
Termination Fee calculated in the manner set forth on Exhibit "B". Such
termination shall be effective so long as on or before the Termination Date
Owner pays to Manager the Cancellation Termination Fee and all amounts
determined by Owner and Manager, each acting reasonably and in good faith, to be
due and owing to Manager pursuant to the terms and provisions of this Agreement.

                                       16
<PAGE>

     (b)   (i)  Provided Owner is not in default under this Agreement, Owner
shall have the right to terminate this Agreement if, beginning in the first full
calendar year of Hotel operations, Manager fails to achieve, in any two
consecutive calendar years, a Gross Operating Profit (as herein defined) which
is at least eighty-five percent (85%) of the amount set forth in the respective
annual Operating Budget for Gross Operating Profit ("Budgeted GOP"); provided,
however, that, if within sixty (60) days of receipt of a notice from Owner that
Owner intends to terminate this Agreement pursuant to this Section 9.04(b)(i),
Manager pays in cash to Owner the difference between the achieved Gross
Operating Profit and eighty-five percent (85%) of the Budgeted GOP for the
second of the two consecutive calendar years in which shortfalls occurred, then
Owner shall not be entitled to terminate this Agreement. If Owner is entitled to
and elects to terminate this Agreement, Owner shall give written notice to
Manager within ninety (90) days following delivery to Owner of the annual
financial statements for the calendar year. If such notice is not provided by
Owner to Manager within such ninety (90) day period, Owner shall be deemed to
have waived its right hereunder to terminate this Agreement with respect to the
calendar year as to which the failure occurred. In the event Owner has the right
to terminate with respect to a calendar year but waives such right, Owner's
right to terminate shall carry forward and shall be applicable to the next
succeeding calendar year if Manager fails to achieve eighty-five percent (85%)
of Budgeted GOP for the next succeeding year, subject to Manager's right to cure
for such calendar year. For purposes of this section, the term "Gross Operating
Profit" shall mean the amount, if any, by which Adjusted Gross Revenues for any
calendar year exceed operating costs for such calendar year.

     (ii)  The provisions of clause (b)(i) above shall not apply in any calendar
year in which the operation of the Hotel, or the use of the Hotel's facilities,
are significantly disrupted by casualty loss, strike, eminent domain, or other
events of Force Majeure that are beyond the reasonable control of Manager, or
major repairs to or refurbishment of the Hotel. In the event Owner exercises the
right of termination contemplated in clause (b)(i) above, (a) Owner shall have
no obligation to pay any termination fee or other damages to Manager as a
consequence of such termination, except that Owner shall be liable to Manager
and shall pay immediately upon such termination all fees earned and other
amounts and expenses payable or reimbursable to Manager pursuant to this
Agreement and (b) the exercise of the right of termination shall only be valid
if on or prior to the termination date all sums outstanding under the
Acquisition Loan shall have been paid in full.

       Section 9.05.  Manager's Right to Terminate Upon Sale. If there is to be
                      --------------------------------------
a "Change in Ownership" as defined in the License Agreement and the new owner of
the Hotel has not received a Homewood Suites License Agreement for the operation
of the Hotel (for purposes of this Section 9.05, said agreement shall be
referred to as the "License Agreement"), Manager shall have the right upon
giving notice to Owner to terminate this Agreement on the date the Change of
Ownership occurs. If there is a Change of Ownership and the new owner of the
Hotel receives a License Agreement, but does not enter into an assumption
agreement, pursuant to which the new owner assumes all of Owner's obligations
hereunder, with Manager prior to the date the Change of Ownership occurs,
Manager shall have the right, upon giving notice to Owner, to

                                       17
<PAGE>

terminate this Agreement on the date the Change of Ownership occurs. If Manager
terminates this Agreement pursuant to this Section 9.05 (in addition to payment
of all other fees and reimbursable sums due to Manager to the date of
termination), Manager shall have the right to receive the Sale Termination Fee
calculated in the manner set forth on Exhibit "B". If a Change of Ownership
occurs, and the new owner obtains a License Agreement and the new owner and
Manager enter into an assumption agreement pursuant to which this Agreement
remains in full force and effect, Manager shall not receive a Termination Fee
and references in this Agreement to License Agreement shall be to the License
Agreement with such new owner.

     Section 9.06.  Delays.  Notwithstanding any other provision of this
                    ------
Agreement, if any event of the type described in Article 7 or 8 occurs after the
Effective Date and Manager is unable to operate the Hotel for a period of ninety
(90) days, Manager shall have the option to terminate this Agreement upon thirty
(30) days' prior written notice to Owner, without liability on the part of
Manager, its parent or their subsidiaries or affiliates.

     Section 9.07.  Employment Solicitation Restriction Upon Termination. Owner
                    ----------------------------------------------------
and its affiliates and subsidiaries and their successors hereby agree not to
solicit the employment of the Hotel general manager, assistant general manager
or director of sales at any time during the term of this Agreement without
Manager's prior written approval. Furthermore, Owner and its affiliates and
subsidiaries and successors agree not to employ the Hotel's general manager,
assistant general manager or director of sales for a period of twelve (12)
months after the termination or expiration of this Agreement, without Manager's
prior written approval.

     Section 9.08.  Transition Upon Termination.  Upon any termination of this
                    ---------------------------
Agreement, all fees and payments due to Manager as of the effective date of
termination, including all accrued and unpaid fees and reimbursable charges and
expenses, shall be paid to Manager within ten (10) days after delivery to Owner
of an itemized statement of such fees and payments. Manager shall be entitled to
exercise the right of setoff provided in Section 11.16 hereof with respect to
such fees, charges and expenses. Manager shall deliver to Owner, or such other
person or persons as Owner may designate, copies of all books and records of the
Hotel and all funds in the possession of Manager belonging to Owner or received
by Manager pursuant to the terms of this Agreement, and shall assign, transfer
or convey to such person or persons all service contracts and personal property
relating to or used in the operation and maintenance of the Hotel, except any
personal property which is owned by Manager. Manager also shall, for a period of
thirty (30) days after such expiration or termination, make itself available to
consult with and advise Owner or such other person or persons regarding the
operation and maintenance of the Hotel at a consultation fee to be agreed upon
between Manager and Owner.

                                       18
<PAGE>

                                  ARTICLE 10

                        APPLICABLE LAW AND ARBITRATION

     Section 10.01.  Applicable Law.  The interpretation, validity and
                     --------------
performance of this Agreement shall be governed by the procedural and
substantive laws of the state of Georgia and any and all disputes, except those
specifically referred to below, shall be brought and maintained within that
state. If any judicial authority holds or declares that the law of another
jurisdiction is applicable, this Agreement shall remain enforceable under the
laws of that jurisdiction.

     Section 10.02.  Arbitration of Financial Matters.
                     --------------------------------

          Subsection 10.02.1.  Matters to be Submitted to Arbitration.  In the
                               --------------------------------------
     case of a dispute with respect to any of the following matters, either
     party may submit such matter to arbitration which shall be conducted by the
     Accountants (as hereinafter defined in Subsection 10.02.2): (a) computation
     of the Management Fees; (b) reimbursements due to Manager under the
     provisions of Section 11.15; (c) any adjustment in the Minimum Balance
     under the provisions of Section 4.01(v); (d) any adjustment in dollar
     amounts of insurance coverages required to be maintained; and (e) any
     dispute concerning the approval of an Operating Budget.

          All disputes concerning the above matters shall be submitted to the
     Accountants. The decision of the Accountants with respect to any matters
     submitted to them under this Subsection 10.02.1 shall be binding on both
     parties hereto.

          Subsection 10.02.2.  The Accountants.  The "Accountants" shall be one
                               ---------------
     of three (3) firms of certified public accountants of recognized national
     standing in the hotel industry. Until otherwise agreed to by the parties,
     the three (3) firms shall be Arthur Andersen & Co., PriceWaterhouseCoopers,
     and Ernst & Young, notwithstanding any existing relationships which may
     exist between Owner and such accounting firms or Manager and such
     accounting firms. The party desiring to submit any matter to arbitration
     under Subsection 10.02.1 shall do so by written notice to the other party,
     which notice shall set forth the items to be arbitrated and such party's
     choice of one of the three (3) accounting firms. The party receiving such
     notice shall within fifteen (15) days after receipt of such notice either
     approve such choice, or designate one of the remaining two (2) firms by
     written notice back to the first party, and the first party shall within
     fifteen (15) days after receipt of such notice either approve such choice
     or disapprove the same. If both parties shall have approved one of the
     three (3) firms under the preceding sentence, then such firm shall be the
     "Accountants" for the purposes of arbitrating the dispute; if the parties
     are unable to agree on an accounting firm, then the third firm, which was
     not designated by either party, shall be the "Accountants" for such
     purpose. The Accountants shall be required to render a decision in
     accordance with the procedures described in Subsection 10.02.3 within
     fifteen

                                       19
<PAGE>

     (15) days after being notified of their selection. The fees and expenses of
     the Accountants will be paid by the non-prevailing party.

          Subsection 10.02.3.  Procedures.  In all arbitration proceedings
                               ----------
     submitted to the Accountants, the Accountants shall be required to agree
     upon and approve the substantive position advocated by Owner or Manager
     with respect to each disputed item. Any decision rendered by the
     Accountants that does not reflect the position advocated by Owner or
     Manager shall be beyond the scope of authority granted to the Accountants
     and, consequently, may be overturned by either party. All proceedings by
     the Accountants shall be conducted in accordance with the Uniform
     Arbitration Act, except to the extent the provisions of such act are
     modified by this Agreement or the mutual agreement of the parties. Unless
     otherwise agreed, all arbitration proceedings shall be conducted at the
     Hotel.

     Section 10.03.  Performance During Disputes. It is mutually agreed that
                     ---------------------------
during any kind of controversy, claim, disagreement or dispute, including a
dispute as to the validity of this Agreement, Manager shall remain in possession
of the Hotel as Manager; and Owner and Manager shall continue their performance
of the provisions of this Agreement and its exhibits. Manager shall be entitled
to injunctive relief from a civil court or other competent authority to maintain
possession in the event of a threatened eviction during any dispute,
controversy, claim or disagreement arising out of this Agreement.

                                  ARTICLE 11

                              GENERAL PROVISIONS

     Section 11.01.  Authorization. Owner and Manager represent and warrant to
                     -------------
each other that their respective corporations have full power and authority to
execute this Agreement and to be bound by and perform the terms hereof. On
request, each party shall furnish the other evidence of such authority.

     Section 11.02.  Relationship. Manager and Owner shall not be construed as
                     ------------
joint venturers or partners of each other by reason of this Agreement and
neither shall have the power to bind or obligate the other except as set forth
in this Agreement.

     Section 11.03.  Manager's Contractual Authority in the Performance of this
                     ----------------------------------------------------------
Agreement.  Manager is authorized to make, enter into and perform in the name of
---------
and for the account of Owner any contracts deemed necessary by Manager to
perform its obligations under this Agreement. In exercising its authority
hereunder, Manager shall be entitled to execute and enter into contracts without
the specific approval of Owner and Fee Owner so long as each such contract (i)
requires expenditures or otherwise establishes liability of twenty-five thousand
dollars ($25,000) or less and (ii) has a term (excluding options in favor of
                          ---
Manager and Owner to renew) of one (1) year or less or can be cancelled without
                                                    --
penalty upon sixty (60) days' notice or less, provided, however, that any
contract entered into pursuant to the last paragraph of Section 4.01(vi) shall
be governed by the provisions of said Section 4.01(vi). Any contract that does
not satisfy the

                                       20
<PAGE>

conditions set forth in the preceding sentence shall require the prior approval
in each instance of Owner, regardless whether such expenditure is authorized in
an applicable budget, unless the form of the contract proposed to be entered
into has been approved in advance by Owner. Owner agrees to promptly respond to
any request for approval and further agrees that its consent shall not be
unreasonably withheld or delayed. Manager shall be authorized to enter into
contracts with affiliates of Manager, but only so long as Owner shall have
approved in advance the cost of the service or product to be provided.

     Section 11.04.  Further Actions.  Owner and Manager agree to execute all
                     ---------------
contracts, agreements and documents and to take all actions necessary to comply
with the provisions of this Agreement and the intent hereof.

     Section 11.05.  Successors and Assigns. Owner's consent shall not be
                     ----------------------
required for Manager to assign any of its rights, interests or obligations as
Manager hereunder to any parent, subsidiary or affiliate of Manager or Promus
Hotel Corporation, provided that any such assignee agrees to be bound by the
terms and conditions of this Agreement and provided, further, that such assignee
has received an assignment of all or substantially all of the management
agreements entered into by Manager with respect to other Homewood Suites hotels.
The acquisition of Manager or its parent company by a third party shall not
constitute an assignment of this Agreement by Manager and this Agreement shall
remain in full force and effect between Owner and Manager. Except as herein
provided, Manager shall not assign any of its obligations hereunder without the
prior written consent of Owner, which shall not be unreasonably withheld or
delayed. Owner shall be deemed to have consented to such an assignment of this
Agreement if Owner has not notified Manager in writing to the contrary within
fifteen (15) days after Owner has received Manager's request for Owner's consent
to an assignment. Manager shall have the right to pledge or assign its right to
receive the Management Fees hereunder without the prior written consent of
Owner.

     Owner shall have the right to assign this Agreement to the person or entity
which has obtained (i) leasehold title to the Hotel in accordance with the
Comfort Letter and (ii) a Homewood Suites License Agreement for the Hotel.
Except as hereinabove provided, Owner shall not have the right to assign this
Agreement.

     Section 11.06.  Notices. All notices or other communications provided for
                     -------
in this Agreement shall be in writing and shall be either hand delivered,
delivered by certified mail, postage prepaid, return receipt requested,
delivered by an overnight delivery service, or delivered by facsimile machine
(with an executed original sent the same day by an overnight delivery service),
addressed as set forth on Exhibit "B". Notices shall be deemed delivered on the
date that is four (4) calendar days after the notice is deposited in the U.S.
mail (not counting the mailing date) if sent by certified mail, or, if hand
delivered, on the date the hand delivery is made, or if delivered by facsimile
machine, on the date the transmission is made. If given by an overnight delivery
service, the notice shall be deemed delivered on the next business day following
the date that the notice is deposited with the overnight delivery service. The
addresses given above may be changed by any party by notice given in the manner
provided herein.

                                       21
<PAGE>

     Section 11.07.  Documents. Owner shall furnish Manager copies of all
                     ---------
leases, title documents, property tax receipts and bills, insurance statements,
all financing documents (including notes and mortgages) relating to the Hotel
and such other documents pertaining to the Hotel as Manager shall request.

     Section 11.08.  Defense. Manager shall defend and/or settle any claim or
                     -------
legal action brought against Manager or Owner, individually, jointly or
severally in connection with the operation of the Hotel. Manager shall retain
and supervise legal counsel, accountants and such other professionals,
consultants and specialists as Manager deems appropriate to defend and/or settle
any such claim or cause of action. Owner shall have the right to participate
actively in the defense of any such claim or cause of action in which Owner is a
named defendant. Owner's approval shall be required with respect to any proposed
settlement of any claim or cause of action in which Owner is a named party or
that is not covered by insurance (excluding any deductible amount specified in
the applicable policy of insurance). Manager shall confer with Owner concerning
any settlement proposal that Manager is considering accepting, regardless of
whether Owner is a named party, but Owner's approval shall not be required if
Owner is not a named party and the settlement is covered by insurance. All
liabilities, costs, and expenses, including attorneys' fees and disbursements,
incurred in defending and/or settling any such claim or legal action which are
not covered by insurance shall be paid by Owner.

     Section 11.09.  Waivers. No failure or delay by Manager or Owner to insist
                     -------
upon the strict performance of any covenant, agreement, term or condition of
this Agreement, or to exercise any right or remedy consequent upon the breach
thereof, shall constitute a waiver of any such breach or any subsequent breach
of such covenant, agreement, term or condition. No covenant, agreement, term, or
condition of this Agreement and no breach thereof shall be waived, altered or
modified except by written instrument. No waiver of any breach shall affect or
alter this Agreement, but each and every covenant, agreement, term and condition
of this Agreement shall continue in full force and effect with respect to any
other then existing or subsequent breach thereof.

     Section 11.10.  Changes.  Any change to or modification of this Agreement,
                     -------
including, without limitation, any change in the application of this Agreement
to the Hotel, must be evidenced by a written document signed by both parties
hereto.

     Section 11.11.  Captions.  The captions for each Article and Section are
                     --------
intended for convenience only.

     Section 11.12.  Severability.  If any of the terms and provisions hereof
                     ------------
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any of the other terms or provisions hereof. If, however, any
material part of a party's rights under this Agreement shall be declared invalid
or unenforceable (specifically including Manager's right to receive its
Management Fees), the party whose rights have been declared invalid or
unenforceable shall have the option to terminate this Agreement upon thirty (30)
days' written notice to the other party, without liability on the part of the
terminating party.

                                       22
<PAGE>

     Section 11.13.  Interest. Any amount payable to Manager or Owner by the
                     --------
other which has not been paid when due shall accrue interest at the lesser of:
(a) the highest legal limit in the state in which the Hotel is located, (b) the
highest legal limit in the state of Georgia, or (c) two percentage points (2%)
over the published base rate of interest charged by Citibank, N.A., New York,
New York, to borrowers on ninety (90) day unsecured commercial loans, as the
same may be changed from time to time.

     Section 11.14.  Reimbursement.  The performance by Manager of its
                     -------------
responsibilities under this Agreement are conditioned upon Owner providing
sufficient funds to Manager on a timely basis to enable Manager to perform its
obligations hereunder. Nevertheless, Manager shall be entitled, at its option,
after first providing not less than ten (10) days' prior written notice to Owner
specifying the obligations to be satisfied and the amount of money to be
advanced, to advance funds or contribute property, on behalf of the Owner, to
satisfy obligations of Owner in connection with the Hotel and this Agreement.
Manager shall keep appropriate records to document all reimbursable expenses
paid by Manager, which records shall be made available for inspection by Owner
or its agents upon request. Owner agrees to reimburse Manager with interest upon
demand for money paid or property contributed by Manager to satisfy obligations
of Owner in connection with the Hotel and this Agreement. Interest shall be
calculated at the rate set forth in Section 11.13 from the date Owner was
obligated to remit the funds or contribute the property for the satisfaction of
such obligation to the date reimbursement is made.

     Section 11.15.  Travel and Out-of-Pocket Expenses. Manager shall be
                     ---------------------------------
reimbursed for all reasonable travel and out-of-pocket expenses of Manager's
employees reasonably incurred in the performance of this Agreement, provided,
however, that travel and out-of-pocket expenses of officers of Manager, its
parent and affiliates shall not be reimbursable by Owner. Manager shall have
sole discretion, which shall not be unreasonably exercised, to determine the
necessity for such travel or other expenses.

     Section 11.16.  Set off. Without prejudice to Manager's right to terminate
                     -------
this Agreement pursuant to the provisions of this Agreement, Manager may at any
time and without notice to Owner set off or transfer any sum or sums held by
Manager or other affiliate of Promus Hotels, Inc. to the order or on behalf of
Owner or Fee Owner or standing to the credit of Owner or Fee Owner in the Bank
Account(s) in or towards satisfaction of any of Owner's liabilities to Manager
in respect of all sums due to Manager under the terms of this Agreement.

     Section 11.17.  Third Party Beneficiary. This Agreement is exclusively for
                     -----------------------
the benefit of the parties hereto and it may not be enforced by any party other
than the parties to this Agreement and shall not give rise to liability to any
third party other than the authorized successors and assigns of the parties
hereto.

     Section 11.18.  Brokerage.  Manager and Owner represent and warrant to each
                     ---------
other that neither has sought the services of a broker, finder or agent in this
transaction, and neither has employed, nor authorized, any other person to act
in such capacity. Manager and Owner each hereby agrees to indemnify and hold the
other harmless from

                                       23
<PAGE>

and against any and all claims, loss, liability, damage or expenses (including
reasonable attorneys' fees) suffered or incurred by the other party as a result
of a claim brought by a person or entity engaged or claiming to be engaged as a
finder, broker or agent by the indemnifying party.

     Section 11.19.  Survival of Covenants. Any covenant, term or provision of
                     ---------------------
this Agreement which, in order to be effective, must survive the termination of
this Agreement, shall survive any such termination.

     Section 11.20.  Estoppel Certificate. Manager and Owner agree to furnish to
                     --------------------
the other party, from time to time upon request, an estoppel certificate in such
reasonable form as the requesting party may request stating whether there have
been any defaults under this Agreement known to the party furnishing the
estoppel certificate and such other information relating to the Hotel as may be
reasonably requested.

     Section 11.21.  Other Agreements. Except to the extent as may now or
                     ----------------
hereafter be specifically provided, nothing contained in this Agreement shall be
deemed to modify any other agreement between Owner and Manager with respect to
the Hotel or any other property. This Agreement, together with the Comfort
Letter, contains the entire agreement between Owner and Manager regarding the
management of the Hotel.

     Section 11.22.  Periods of Time. Whenever any determination is to be made
                     ---------------
or action is to be taken on a date specified in this Agreement, if such date
shall fall on a Saturday, Sunday or legal holiday under the laws of the states
of Tennessee and Virginia and/or the state in which the Hotel is located, then
in such event said date shall be extended to the next day which is not a
Saturday, Sunday or legal holiday.

     Section 11.23.  Preparation of Agreement. This Agreement shall not be
                     ------------------------
construed more strongly against either party regardless of who is responsible
for its preparation.

     Section 11.24.  Exhibits. All exhibits attached hereto are incorporated
                     --------
herein by reference and made a part hereof as if fully rewritten or reproduced
herein.

     Section 11.25.  Attorneys' Fees and Other Costs. The parties to this
                     -------------------------------
Agreement shall bear their own attorneys' fees in relation to negotiating and
drafting this Agreement. Should Owner or Manager engage in litigation to enforce
their respective rights pursuant to this Agreement, the prevailing party shall
have the right to indemnity by the non-prevailing party for an amount equal to
the prevailing party's reasonable attorneys' fees, court costs and expenses
arising therefrom.

     Section 11.26.  Agreement Not an Interest in Real Property. This Agreement
                     ------------------------------------------
is not, and shall not be deemed at any time to be or to create, an interest in
real estate or a lien or other encumbrance of any kind whatsoever against the
Hotel or the land on which it is erected.

     Section 11.27.  Counterparts. This Agreement may be executed in two (2) or
                     ------------
more counterparts, each of which shall be deemed an original.

                                       24
<PAGE>

     The parties have respectively caused this Agreement to be executed as of
the respective dates shown below.

                              OWNER:

/s/ Ginelle Guzmon            APPLE SUITES MANAGEMENT,
------------------            INC., a Virginia corporation
Witness:

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

                              Date:  April 4, 2001

                              MANAGER:

/s/ Dawn Badowski             PROMUS HOTELS, INC., a Delaware
-----------------             corporation
Witness:

                              By:  /s/ Rick Schultz
                                   -------------------
                              Name:  Rick Schultz
                              Title:  Senior Vice President

                              Date:  April 23, 2001

                                      25

<PAGE>

                                  EXHIBIT "A"

                               LICENSE AGREEMENT
                               -----------------

                                   [omitted]

                                      A-1
<PAGE>

                                  EXHIBIT "B"

                              DEAL SPECIFIC TERMS
                              -------------------

TERM:                              Fifteen (15) years from the Effective Date
----

INITIAL MINIMUM BALANCE
FOR THE BANK ACCOUNT(S) :          $75,000
------------------------

INITIAL OWNER'S REPRESENTATIVE:    Justin Knight
------------------------------

DISBURSEMENT PRIORITY SCHEDULE:
------------------------------

     Each fiscal month Manager, on behalf of Owner, shall disburse funds from
the Bank Account(s) in the following order of priority and to the extent
available:

     (a)  all fees, assessments and charges due and payable under the License
          Agreement when issued;

     (b)  the Management Fee

     (c)  all reimbursable expenses due Manager;

     (d)  all other Hotel operating costs (herein and in the Agreement referred
          to as "operating costs"), as such costs and expenses are defined under
          the accounting practices of Manager in conformity with generally
          accepted accounting practices consistently applied, specifically
          including, but not limited to, (i) the cost of operating equipment and
          operating supplies, wages, salaries and employee fringe benefits,
          advertising and promotional expenses, the cost of personnel training
          programs, utility and energy costs, operating licenses and permits,
          grounds and landscaping maintenance costs and equipment rentals
          approved by Manager as an operating cost; (ii) all expenditures made
          for maintenance and repairs to keep the Hotel in good condition and
          repair, specifically excluding expenditures for Capital Replacements;
          and (iii) premiums and charges on the insurance coverages specified in
          Exhibit "D" incurred after the Effective Date. There shall be excluded
          from the operating costs of the Hotel the following, which shall be
          ownership costs of the Hotel: (i) depreciation of the Hotel,
          furnishings, fixtures and equipment; (ii) rental pursuant to a ground
          lease, if any, or the Percentage Lease or any other lease payments;
          (iii) debt service (interest and principal) on any mortgage(s)
          encumbering Owner's leasehold interest in, and/or Fee Owner's fee
          interest in, the Hotel; (iv) property taxes and assessments; (v)
          expenditures for Capital Replacements; (vi) audit, legal

                                      B-1
<PAGE>

          and other professional or special fees; (vii) premiums for insurance
          coverages specified in Exhibit "E"; (viii) administrative and general
          expenses and disbursements of Owner, including compensation of
          employees of Owner; (ix) Federal, State and local Franchise and Income
          Taxes; (x) amortization of bond discounts and mortgage expenses; (xi)
          deposits into the Reserve Fund or amounts held pursuant to Section
          3.01(xix); and (xiii) such other costs or expenses which are normally
          treated as ownership costs under the accounting practices of Manager
          in conformity with generally accepted accounting practices
          consistently applied;

     (e)  the following ownership costs, disbursed in the following order of
          priority and to the extent available:

           (i) an amount (annualized) to satisfy land, building and personal
               property taxes and assessments;

          (ii) an amount (annualized) to satisfy the premiums for the insurance
               required to be obtained by Owner in accordance with Exhibit "E";

         (iii) the amount to be deposited in the Reserve Fund pursuant to
               Section 4.01(d); and

          (iv) any ground lease payments, but specifically excluding, except as
               specifically itemized above, any sums payable by Owner to Fee
               Owner pursuant to the Percentage Lease;

     (f)  any payments not specifically contemplated above which are required to
          be paid by Owner to Fee Owner pursuant to the Percentage Lease; and

     (g)  except as provided above, debt service upon any mortgage(s)
          encumbering the Hotel and any capital lease payments.

     After the disbursements set forth above, any excess funds remaining in the
Bank Account(s) over the Minimum Balance shall be distributed to Owner. If after
making the disbursements set forth above, there shall be a deficiency in the
Minimum Balance, Owner shall immediately provide such funds as may be required
to maintain the Minimum Balance in the Bank Account(s).

                                      B-2
<PAGE>

          NOTICES:

          Owner:                        Apple Suites Management, Inc.
          -----                         306 East Main Street
                                        Richmond, Virginia 23219
                                        Fax:  804/782-9302
                                        Attention:  Mr. Glade M. Knight

          Manager:                      Promus Hotels, Inc.
          -------                       755 Crossover Lane
                                        Memphis, Tennessee 38117
                                        Fax:  901/374-5050
                                        Attention:  Rick Schultz

                                             with a copy to:

                                        Hilton Hotels Corporation
                                        9336 Civic Center Drive
                                        Beverly Hills, CA 90210
                                        Fax:  310/205-8611
                                        Attention:  General Counsel

SALE TERMINATION FEE:
--------------------

     The "Sale Termination Fee" shall be: (i) if the termination of this
Agreement occurs before the first anniversary of the Effective Date, an amount
equal to the product of (x) five (5) times the (y) budgeted Management Fees for
the first year of the Term; (ii) if the termination of this Agreement occurs
during the period commencing on the first anniversary of the Effective Date
ending on the second anniversary of the Effective Date, an amount equal to the
product of (x) five (5) times (y) the aggregate of the Management Fees earned
during the preceding twelve (12) month period; (iii) if the termination of this
Agreement occurs after the second anniversary of the Effective Date but on or
before the tenth (10th) anniversary of the Effective Date, an amount equal to
the product of (x) three (3) times (y) the quotient of the aggregate of the
Management Fees earned during the preceding twenty-four (24) month period
divided by two (2); (iv) if the termination of this Agreement occurs after the
tenth (10th) anniversary of the Effective Date but on or before the fourteenth
(14th) anniversary of the Effective Date, an amount equal to the product of (x)
one and one-half (1.5) times (y) the aggregate of the Management Fees earned
during the preceding twenty-four month period divided by two (2); and (v) if the
termination of this Agreement occurs after the fourteenth (14th) anniversary of
the Effective Date, an amount equal to the product of (x) the aggregate of the
Management Fees earned during the preceding twenty-four (24) month period
divided by 24 times (y) the number of full calendar months remaining in the
Term.

                                      B-3
<PAGE>

CANCELLATION TERMINATION FEE:
----------------------------

     The "Cancellation Termination Fee" shall be: (i) if the termination of this
Agreement occurs after the tenth (10th) anniversary of the Effective Date but on
or before the fourteenth (14th) anniversary of the Effective Date, an amount
equal to the product of (x) two (2) times (y) the aggregate of the Management
Fees earned during the preceding twenty-four month period divided by two (2);
and (ii) if the termination of this Agreement occurs after the fourteenth (14th)
anniversary of the Effective Date, an amount equal to the product of (x) the
aggregate of the Management Fees earned during the preceding twenty-four (24)
month period divided by 24 times (y) the number of full calendar months
remaining in the Term.

ACCOUNTING FEE:  $1,000/month, as such amount may be increased annually in
--------------
accordance with increases in the CPI from __________, 2001.

                                      B-4
<PAGE>

                                  EXHIBIT "C"

                                MANAGEMENT FEES
                                ---------------

     The "Management Fee" shall mean and refer to a fee equal to the following:
(i) two percent (2%) of Adjusted Gross Revenues (as hereinafter defined) with
respect to each fiscal month during the first year of the term of this
Agreement, (ii) three percent (3%) of Adjusted Gross Revenues with respect to
each fiscal month during the second year of the term of this Agreement and (iii)
four percent (4%) of Adjusted Gross Revenues with respect to each fiscal month
during the remainder of the term of this Agreement.

     The term "Gross Revenues" shall be defined as all revenues and income of
any nature derived directly or indirectly from the Hotel or from the use or
operation thereof, whether on or off the Site, including total room sales, food
and beverage sales, if any, laundry, telephone, telegraph and telex revenues,
other income, rental or other payments from lessees, sublessees, licensees and
concessionaires (but not the gross receipts of such lessees, sublessees,
licensees or concessionaires) and the proceeds of business interruption, use,
occupancy or similar insurance.

     The term "Adjusted Gross Revenues" shall be defined as Gross Revenues less
the following revenues actually received by the Hotel and included in Gross
Revenues: (i) any gratuities or service charges added to a customer's bill; (ii)
any credits or refunds made to customers, guests or patrons; (iii) any sums and
credits received by Owner for lost or damaged merchandise; (iv) any sales taxes,
excise taxes, gross receipt taxes, admission taxes, entertainment taxes, tourist
taxes or charges; (v) any proceeds from the sale or other disposition of the
Hotel, furnishings and equipment or other capital assets; (vi) any fire and
extended coverage insurance proceeds; (vii) any condemnation awards; (viii) any
proceeds of financing or refinancing of the Hotel; and (ix) any interest on the
Bank Account(s).

                                     C-1-1
<PAGE>

                                  EXHIBIT "D"

                                   INSURANCE
                                   ---------

     In accordance with Section 3.01(xv), Manager shall, on behalf of Owner and
at Owner's expense, procure the insurance coverages hereinafter set forth and
ensure that they are in full force and effect as of the Effective Date and that
they remain in full force and effect throughout the Term of this Agreement. All
cost(s) and expense(s) incurred by Manager in procuring the following insurance
coverages shall be operating costs and shall be paid from the Bank Account(s):

Coverages:                                        Amounts of Insurance
---------                                         --------------------

     Comprehensive General Liability                   $10,000,000
     -------------------------------

       Including -
       Premises - Operations
       Products/Completed Operations
       Contractual
       Personal Injury
       Liquor Liability/Dram Shop (if applicable)
       Elevators and Escalators

     Automotive Liability                              $10,000,000
     --------------------
       Owned Vehicles
       Non-Owned Vehicles
       Uninsured Motorist where Required by Statute

     Automobile Physical Damage (Optional)
     --------------------------  --------

       Comprehensive                                   (To Value if insured)
       Collision

     Workers' Compensation                             Statutory
     ---------------------

     Employer's Liability                              $1,000,000
     --------------------

     Fidelity (Employee Dishonesty)                    As required
     --------

     Money and Securities                              As required
     --------------------

     All insurance coverages provided for under this Exhibit "D" shall be
effected by policies issued by insurance companies (i) that are authorized to do
business in the state in which the Hotel is located; and (ii) that are of good
reputation and of sound and

                                      D-1
<PAGE>

adequate financial responsibility, having a Bests Rating of B+ VI, or better, or
a comparable rating if Bests ceases to publish its ratings or materially changes
its rating standards or procedures.

     Manager shall deliver to Owner duly executed certificates of insurance with
respect to all of the policies of insurance procured, including existing,
additional and renewal policies.

     Each policy of insurance maintained in accordance with this Exhibit "D," to
the extent obtainable, shall specify that such policies shall not be cancelled
or materially changed without at least thirty (30) days' prior written notice to
Owner and Manager.

     Except as otherwise provided in the Agreement, Manager and Owner each
waives, releases and discharges the other from all claims or demands which each
may have or acquire against the other, or against each other's subsidiaries,
affiliates, directors, officers, agents, employees, independent contractors or
partners, with respect to any claims for any losses, damages, liabilities or
expenses (including attorneys' fees) incurred or sustained by either of them on
account of injury to persons or damage to property or business arising out of
the ownership, management, operation and maintenance of the Hotel, regardless
whether any such claim or demand may arise because of the fault of negligence of
the other party or its subsidiaries, affiliates, officers, employees, directors,
agents or independent contractors. Each policy of insurance maintained in
accordance with this Exhibit "D" shall contain a specific waiver of subrogation
reflecting the above with respect to insured claims.

     All policies of insurance provided for under this Exhibit "D" shall be
carried in the name of the Manager. Owner's interest and that of any other
applicable party will be included in the coverage by an additional insured
endorsement.

     All such policies of insurance shall be written on an "occurrence" basis,
with no  aggregate limitation.

     Either Manager or Owner, by notice to the other, shall have the right to
require that the minimum amount of insurance to be maintained with respect to
the Hotel under this Exhibit "D" be increased to make such insurance comparable
with prudent industry standards and to reflect increases in liability exposures,
taking into account the size and location of the Hotel.

     Owner hereby authorizes Manager to utilize the services of and/or place the
insurance set forth in this Exhibit "D" with (i) any subsidiary or affiliated
company of Promus Hotels, Inc. in the insurance business as Manager deems
appropriate; or (ii) a third party insurance carrier meeting the specifications
set forth above.

                                      D-2
<PAGE>

                                  EXHIBIT "E"

                                   INSURANCE
                                   ---------

     In accordance with Section 4.01(iii), Owner agrees, at its expense, to
procure and maintain the following insurance coverages, as reasonably adjusted
from time to time, throughout the Term of this Agreement:

Coverages:                          Amounts of Insurance
---------                           --------------------

     Builders Risk                  Completed value of the Hotel
     -------------

       All risk for term of the initial and any subsequent Hotel construction
       and renovation.

     Real and Personal Property     100% replacement value of building and
     --------------------------     contents

       Blanket Coverage

       Replacement Cost - all risk

       Boiler Machinery - written on a comprehensive form

     Business Interruption          Calculated yearly based on estimated Hotel
     ---------------------          revenues

       Blanket Coverage for the perils insured against under Real and Personal
       Property in this Exhibit "E". This coverage shall specifically cover
       Manager's loss of Management Fees. The business interruption insurance
       shall be for a twelve (12) month indemnity period.

     Owner's Protective Liability   $10,000,000
     ----------------------------

       All risks from Hotel construction and renovation projects costing more
       than $250,000.

     All insurance coverages provided for under this Exhibit "E" shall be
effected by policies issued by insurance companies (i) that are authorized to do
business in the state in which the Hotel is located; and (ii) that are of good
reputation and of sound and adequate financial responsibility, having a Bests
Rating of B+ VI, or better, or a comparable rating if Bests ceases to publish
its ratings or materially changes its rating standards or procedures.

     Owner shall deliver to Manager duplicate copies of either insurance
policies or certificates of insurance (at Manager's option) with respect to all
of the policies of insurance procured, including existing, additional and
renewal policies, and in the case of insurance nearing expiration, shall deliver
duplicate copies of the insurance policies or certificates of insurance with
respect to the renewal policies to Manager not less than thirty (30) days prior
to the respective dates of expiration.

                                      E-1
<PAGE>

     Each policy of insurance maintained in accordance with this Exhibit "E," to
the extent obtainable, shall specify that such policies shall not be cancelled
or materially changed without at least thirty (30) days' prior written notice to
Owner and Manager.

     Except as otherwise provided in this Agreement, Manager and Owner each
waives, releases and discharges the other from all claims or demands which each
may have or acquire against the other, or against each other's subsidiaries,
affiliates, directors, officers, agents, employees, independent contractors or
partners, with respect to any claims for any losses, damages, liabilities or
expenses (including attorneys' fees) incurred or sustained by either of them on
account of injury to persons or damage to property or business arising out of
the ownership, management, operation and maintenance of the Hotel, regardless
whether any such claim or demand may arise because of the fault of negligence of
the other party or its subsidiaries, affiliates, officers, employees, directors,
agents or independent contractors. Each policy of insurance maintained in
accordance with this Exhibit "E" shall contain a specific waiver of subrogation
reflecting the above with respect to insured claims.

     All policies of insurance provided for under this Exhibit "E" shall be
carried in the name of the Owner and Manager, and losses thereunder shall be
payable to the parties as their respective interests may appear. All liability
policies shall name the Owner and Manager, and in each case any of their
affiliated or subsidiary companies which they may specify, and their respective
directors, officers, agents, employees and partners as additional named
insureds.

     All such policies of insurance shall be written on an "occurrence" basis.

     Either Manager or Owner, by notice to the other, shall have the right to
require the minimum amount of insurance to be maintained with respect to the
Hotel under this Exhibit "E" be increased to make such insurance comparable with
prudent industry standards and to reflect increases in liability exposures,
taking into account the size and location of the Hotel.

                                      E-2<PAGE>

                                                                    EXHIBIT 10.4

                      AMENDMENT TO MANAGEMENT AGREEEMENT

     This First Amendment to Management Agreement ("Amendment") is made and
entered into as of May 10, 2001, by and between APPLE SUITES MANAGEMENT, INC., a
Virginia corporation ("Owner"), whose address is 306 East Main Street, Richmond,
Virginia, 23219 and PROMUS HOTELS, INC., a Delaware corporation ("Manager"),
whose address is 755 Crossover Lane, Memphis, Tennessee 38177.

                                  WITNESSETH:

     WHEREAS, Owner and Manager have entered into that certain Management
Agreement dated April 26, 2001 ("Management Agreement") for that certain
property known as the Homewood Suites-Atlanta Buckhead and more particularly
described in the Homewood Suites License Agreement attached as Exhibit "A" to
the Management Agreement;

     WHEREAS, Owner and Manager desire to amend the Management Agreement on the
terms and conditions set forth herein;

     WHEREAS, the Management Agreement, as amended hereby, shall continue in
full force and effect;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged by the parties hereto, Owner and Manager hereby agree as follows:

     1.   Amendment.  This Amendment modifies and amends the Management
          ---------
          Agreement. In the event of any conflict between any provision of this
          Amendment and any provision of the Management Agreement, this
          Amendment shall control. The Management Agreement, as hereby modified
          and amended, shall be referred to herein as the "Agreement." Any
          reference in the Management Agreement to the "Agreement" shall, from
          and after the date hereof, be deemed to refer to the Management
          Agreement as hereby modified and amended.

     2.   Term.  The Term (as defined in the Management Agreement) set forth in
          ----
          Exhibit "B" to the Management Agreement is hereby deleted in its
          entirety and replaced with the following: "Five (5) years from the
          Effective Date." The Agreement shall terminate on April 26, 2006,
          unless earlier terminated in accordance with the Agreement.

     3.   Manager's Termination Rights.  All references to "Sale Termination
          ----------------------------
          Fee" in Sections 9.02 and 9.05 of the Management Agreement are hereby
          deleted and replaced with "Early Termination Fee."
<PAGE>

     4.   Owner's Termination Rights.  Section 9.04(a) of the Management
          --------------------------
          Agreement is hereby deleted in its entirety and replaced with the
          following:

               Provided Owner is not in default under this Agreement at the time
               of delivery of the Termination Notice (as defined herein) or on
               the Termination Date (as defined herein), Owner shall have the
               right, after the first anniversary of the Effective Date, to
               terminate this Agreement by giving written notice (a "Termination
               Notice") to Manager setting forth an effective termination date
               which shall be the last day of a month (the "Termination Date")
               and which shall be not less than six (6) months nor more than
               twelve (12) months after the date of such Termination Notice and
               shall in no event be prior to the first anniversary of the
               Effective Date. If Owner terminates this Agreement pursuant to
               this Section 9.04(a), in addition to payment of all other fees
               and reimbursable sums due to Manager on the Termination Date,
               Manager shall have the right to receive the Early Termination Fee
               calculated in the manner set forth on Exhibit "B." Such
               termination shall be effective so long as on or before the
               Termination Date Owner pays to Manager the Early Termination Fee
               and all amounts determined by Owner and Manager, each acting
               reasonably and in good faith, to be due and owing to Manager
               pursuant to the terms and provisions of this Agreement.

     5.   Early Termination Fee.  The paragraphs entitled "Sale Termination
          ---------------------
          Fee" and "Cancellation Termination Fee" in Exhibit "B" are hereby
          deleted in their entirety and replaced with the following:

               Early Termination Fee.  The "Early Termination Fee" shall be as
               ---------------------
               follows: (i) $350,000 if the termination of this Agreement occurs
               pursuant to Sections 9.02 or 9.05 of this Agreement before the
               first anniversary of the Effective Date, (ii) $350,000 if the
               termination of this Agreement occurs during the period commencing
               on the first anniversary of the Effective Date and ending on the
               second anniversary of the Effective Date; (iii) $250,000 if the
               termination of this Agreement occurs after the second anniversary
               of the Effective Date but on or before the third anniversary of
               the Effective Date; (iv) $100,000 if the termination of this
               Agreement occurs after the third anniversary of the Effective
               Date but on or before the fourth anniversary of the Effective
               Date; and (v) $25,000 if the termination of this Agreement occurs
               after the fourth anniversary of the Effective Date.

     6.   Miscellaneous.
          -------------

               6.1  Counterparts.  This Amendment may be executed in
                    ------------
                    counterparts, each of which, when executed and delivered,
                    shall constitute an original, and all of which together
                    shall constitute one and the same agreement.

               6.2  Applicable Law.  This Amendment shall be construed under
                    --------------
                    the laws of the State of Georgia.
<PAGE>

     IN WITNESS WHEREOF, Owner and Manager have caused this Amendment to be
executed the day and year first above written.

                              OWNER:

/s/ Gus G. Remppies           APPLE SUITES MANAGEMENT,
-------------------
Witness:                      INC., a Virginia corporation

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

                              MANAGER:

/s/ Dawn Badowski             PROMUS HOTELS, INC., a Delaware
-----------------
Witness:                      corporation

                              By:  /s/ Rick Schultz
                                   ----------------
                              Name:  Rick Schultz
                              Title:  Senior Vice President

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