Document:

EXHIBIT 10.8

                           MASTER MANAGEMENT AGREEMENT

                                     between

                            ENN LEASING COMPANY, INC.

                                       and

                     CROSSROADS HOSPITALITY COMPANY, L.L.C.

                                 January 1, 2001

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                           MASTER MANAGEMENT AGREEMENT

         This Master Management Agreement  ("Agreement") is made this 1st day of
January, 2001 by and between ENN LEASING COMPANY, INC., a Tennessee corporation,
whose  principal  place of  business is 7700 Wolf River  Boulevard,  Germantown,
Tennessee  38138   (hereinafter   referred  to  as  "Lessee"),   and  CROSSROADS
HOSPITALITY  COMPANY,  L.L.C.,  a  Delaware  limited  liability  company,  whose
principal place of business is Foster Plaza Ten, 680 Andersen Drive, Pittsburgh,
Pennsylvania 15220 (hereinafter referred to as "Manager").

                                   RECITATIONS

         WHEREAS, Lessee is the lessee of certain hotels more fully described in
Exhibit A  attached  hereto  (individually,  a  "Hotel"  and  collectively,  the
"Hotels");

         WHEREAS, subject to the terms and provisions of this Agreement,  Lessee
desires to have Manager manage and operate the Hotels; and

         WHEREAS,  Manager is willing to perform  such  services as agent of and
for the account of the Lessee in accordance with the terms hereof.

         NOW  THEREFORE,  in  consideration  of the  foregoing  recitals and the
premises and the mutual covenants herein contained,  the parties hereto agree as
follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

         Section 1.1 Accounting Period shall mean each of twelve (12) accounting
periods of one (1) calendar month occurring each Fiscal Year.

         Section 1.2 Additional Incentive Fee. The term Additional Incentive Fee
as used in this  Agreement  shall  have the  meaning  set forth in  Section  9.2
hereof.

         Section 1.3 Base  Management  Fee. The term Base Management Fee as used
in this Agreement shall have the meaning set forth in Section 9.1 hereof.

         Section 1.4 Consumer Price Index: The term Consumer Price Index as used
in this Agreement shall mean the "Consumer Price Index"  published by the Bureau
of Labor Statistics of the United States Department of Labor, U.S. City Average,
All Items for Urban Consumers (1982-1984 = 100) (CPI-U).

         Section  1.5 Fiscal  Year.  The term  Fiscal Year shall mean a Calendar
Fiscal Year  starting on January 1 and ending on December 31 or portion  thereof
depending  upon the  Management  Commencement  Date (as  defined in Section  1.9
hereof) and the applicable Termination Date (as defined in Section 11.1 hereof).

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         Section 1.6 Gross Operating Revenues. The term Gross Operating Revenues
as used in this Agreement shall mean all receipts, revenues, income and proceeds
of sales of every kind  received  by Manager  directly  or  indirectly  from the
operation of the Hotels.  Gross  Operating  Revenues shall exclude all sales and
excise taxes and any similar  taxes  collected as direct taxes payable to taxing
authorities;  gratuities or service charges collected for payment to and paid to
employees;  credit or refunds to guests; proceeds of insurance,  save and except
for  proceeds  of  insurance  with  respect  to use and  occupancy  or  business
interruption  insurance;  proceeds of sales of real estate and/or FF&E; proceeds
of refinancings; and proceeds of condemnation.

         Section 1.7 Gross Operating  Profit.  The term "Gross Operating Profit"
as used in this  Agreement  shall mean the excess,  during each Fiscal Year (and
proportionately  for any period  less than a Fiscal  Year),  of Gross  Operating
Revenues over expenses and deductions incurred in the operation of the Hotels by
Manager in fulfilling  its duties  hereunder  during such period,  determined in
accordance with the accounting system  established by the Uniform System (except
as modified by this  Agreement).  In arriving  at Gross  Operating  Profit,  all
expenses shall be proper  deductions  from Gross Operating  Revenues  insofar as
they relate to the operation of the Hotels  including all Base Management  Fees,
license fees,  and direct  out-of-pocket  charges of employees of Manager or its
affiliates as well as corporate charges (as described below); provided, however,
in arriving at Gross  Operating  Profit,  there  shall be no  deduction  for any
Incentive  Fees, any Additional  Incentive  Fees, or any of the following  fixed
charges: property taxes, insurance, capital leases, reserve for replacements and
debt service and/or lease payments.

In accordance with Manager's past practices,  out-of-pocket  costs and corporate
charges include, but are not limited to the following:

         (a)  travel costs for corporate staff traveling specifically on behalf
              of or for the benefit of the Hotel;

         (b)  express  mail and regular postage for items sent  specifically to
              or on behalf of the Hotel,  which  would include  accounts payable
              checks, weekly invoices and accounting information to and from
              the  Hotel,  payroll  checks  and  reports  from ADP and other
              documents necessary for the efficient operation of the Hotel;

         (c)  telephone and fax costs specifically for the Hotel, tracked  on an
              individual  call  basis;

         (d)  costs of  photocopying  specifically for the Hotel, tracked
              electronically by copier code.

         In addition,  in accordance  with  Manager's  past  practices,  certain
corporate  charges  are billed on a  consolidated  or group  basis to all hotels
operated by Manager and are allocated to the  individual  Hotels.  These charges
include, but are not limited to:

         (a)  Smith Travel Research reports;

         (b)  Human Resource forms, including employment applications,
              pamphlets, newsletters,  employee  manuals and other  employment
              related forms;

         (c)  costs for envelopes and check stock for accounts payable allocated
              on an actual check processed basis;

         (d)  ADP payroll processing costs billed on a per active employee
              contract basis;

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         (e)  record storage charges for each Hotel, which is based on mandatory
              record retention schedules;

         (f)  prorated share of the costs for regional and national conferences
              attended by employee(s) of the Hotel.

         Section  1.8  Incentive  Fee.  The term  Incentive  Fee as used in this
Agreement shall have the meaning set forth in Section 9.2 hereof.

         Section  1.9  Management   Commencement   Date.  The  term   Management
Commencement  Date as used in this Agreement shall have the meaning set forth in
Section 2.2 hereof.

         Section 1.10 Operating  Funds. The term Operating Funds as used in this
Agreement shall have the meaning set forth in Section 6.2 hereof.

         Section 1.11 Ramp-Up  Hotels.  The term Ramp-Up  Hotels as used in this
Agreement shall mean the Chicago,  IL Homewood Suites, the Orlando,  FL Homewood
Suites, the Seattle, WA Homewood Suites and the Winston-Salem, NC Holiday Inn.
         Section 1.12 RevPAR.  The term RevPAR as used in this  Agreement  shall
mean revenue per available room.

         Section 1.13 Uniform  System.  The term Uniform  System as used in this
Agreement  shall mean the Uniform System of Accounts for Hotels,  "Ninth Revised
Edition",  1996,  as revised  and adopted by the Hotel  Association  of New York
City,  Inc., from time to time and as modified by applicable  provisions of this
Agreement.

         Other terms are defined in the Recitations  and the further  provisions
of this  Agreement,  and shall have the  respective  meanings  there ascribed to
them.

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                                   ARTICLE II

                            ENGAGEMENT OF MANAGER AND
                    COMMENCEMENT OF MANAGEMENT OF THE HOTELS

         Section  2.1  Engagement  of Manager to Manage  Hotels.  Lessee  hereby
appoints  Manager  as  Lessee's  exclusive  agent,  subject to the terms of this
Agreement, to supervise,  direct and control the management and operation of the
Hotels, and Manager hereby undertakes and agrees to perform, as the agent of and
for the  account of Lessee,  all of the  services  and to comply with all of the
provisions of this Agreement,  upon all of the terms and conditions  hereinafter
set forth.

         Section 2.2   Management Commencement Date and Pre-Commencement
Activities.

         A.       Manager shall assume management and operation of the Hotels at
12:01 A.M. on January 1, 2001 (the "Management Commencement Date").

                                   ARTICLE III

                             OPERATION OF THE HOTELS
                     AFTER THE MANAGEMENT COMMENCEMENT DATE

         Section  3.1  Authority  of  Manager.   On  and  after  the  Management
Commencement  Date,  the Manager shall have the exclusive  authority and duty to
direct, supervise,  manage and operate the Hotels in an efficient and economical
manner and to determine  the programs and policies to be followed in  connection
therewith,  all in  accordance  with the  provisions  of this  Agreement and the
approved  Annual  Business Plan (or the Annual Business Plan being used pursuant
to Section 8.2 hereof).  Subject to the  provisions of this  Agreement,  Manager
shall have the  discretion and absolute  control in all matters  relating to the
management and operation of the Hotels.  Without  limiting the generality of the
foregoing, Manager shall have the authority and duty to:

         A.       Subject to Section 3.3 hereof, recruit, employ, relocate, pay,
                  supervise, and discharge all employees and personnel necessary
                  for the operation of the Hotels. Included in the foregoing
                  shall be the determination of all personnel policies.

         B.       Establish  all  prices,   price  schedules,   rates  and  rate
                  schedules,  rents, lease charges,  and concession charges, all
                  within the parameters of the approved Annual Business Plan (or
                  the Annual  Business  Plan being used  pursuant to Section 8.2
                  hereof);  provided,  "trade-outs"  in excess  of one  thousand
                  dollars  ($1,000)  per hotel per  Accounting  Period  shall be
                  approved by Lessee.

         C.       Subject to Section 12.2(B) hereof,  administer leases, license
                  and concession  agreements for all public space at the Hotels,
                  including all stores,  office space and lobby space.  All such
                  leases,  licenses or concessions shall be in Lessee's name and
                  may be  executed  by Manager  on  Lessee's  behalf;  provided,
                  however, any such lease, license or concession for a term in

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                  excess of one (1) year shall be approved by Lessee, which
                  approval shall not be unreasonably withheld or delayed.

         D.       Negotiate  and enter into,  on behalf of the  Lessee,  service
                  contracts  and  licenses  required in the  ordinary  course of
                  business  in  operating  the  Hotels  provided,  however,  any
                  contract  for a term  in  excess  of one  (1)  year  shall  be
                  approved by Lessee,  which approval shall not be  unreasonably
                  withheld or delayed.

         Section 3.2 Employees.  Manager or an affiliate of Manager shall be the
employer of all  employees  in the Hotels.  Lessee's  and  Manager's  agents and
employees,  but  excluding  any  affiliates  of Manager who  provide  consulting
services to Manager in connection with the Hotels (e.g.,  Continental Design and
Supplies Company,  L.L.C.),  shall be acting as the agent of the Lessee. Manager
shall have complete authority over pay scales and all benefit plans,  subject to
Lessee's approval of the Annual Business Plan described in Article VIII hereof.

         Section 3.3 Key Hotel Management Personnel. With respect to the General
Manager  and the  Director  of Sales ( or the Sales  Manager,  if there is not a
Director of Sales position at a Hotel) of the Hotels (the "Key Hotel  Management
Personnel"), Lessee shall have the following rights:

         (A)      Lessee  shall have the right to approve the appointment of any
                  Key Hotel  Management  Personnel at a Hotel that occurs within
                  one (1) year prior to the applicable Scheduled Termination
                  Date of such Hotel (as defined in Section 11.1 hereof).

         (B)      Manager  shall provide to Lessee at least ten (10) days prior
                  notice of any transfers of Key Hotel Management Personnel from
                  a Hotel that will occur within six (6) months prior to the
                  applicable Scheduled  Termination  Date  of such  Hotel  (as
                  defined  in Section 11.1 hereof) and Manager  shall permit
                  Lessee to speak with any  such Key Hotel  Management Personnel
                  regarding possible  continued  employment at the Hotel
                  subsequent to the Scheduled Termination Date.

         (C)      Lessee shall have the right to  approve  all  transfers of Key
                  Hotel Management  Personnel  from a  Hotel  to  another  hotel
                  also managed  by  Manager  that  is in the  same  market,  if
                  such transferee  hotel is not owned by Lessee or an affiliate.
                  For the purposes of this Section  3.3(C),  "market" shall mean
                  (i) the Hotel's  current  competitive set as listed in the
                  Hotel's Smith  Travel  Research  Report  plus (ii) any new
                  competitor hotels that are or would be included in such
                  competitive set.

Notwithstanding the foregoing,  nothing in this Agreement shall prohibit Manager
from  terminating  or  disciplining  any  Key  Hotel  Management   Personnel  in
accordance  with  Manager's  employment   practices,   policies  and  procedures
consistently applied.

         Section 3.4 Purchases  from Manager's  Affiliates and National  Account
Vendors. Manager shall be permitted to utilize both Manager's affiliates and the
national  account vendors of Manager or Manager's  affiliates in contracting for
goods or services for the Hotels;  provided,  however, if Lessee demonstrates to
Manager  that  another  vendor will provide the same goods or services at a cost
which is more than ten percent (10%) below the cost of the goods or

<PAGE>

services obtained through Manager's affiliate or the national account vendor and
on equal terms and quality, Lessee may require Manager to purchase such goods or
services from such other vendor  following the  expiration or termination of the
then  existing  contract  for  such  goods  and  services.  Notwithstanding  the
foregoing, Lessee cannot require Manager to terminate any then existing contract
with a  third-party  vendor  for  goods  or  services  prior  to  its  scheduled
termination or expiration date. Attached hereto as Schedule 3.4 is a list of the
existing service or purchase contracts with national account vendors in place at
the Hotels,  which  contracts  cannot be terminated  without penalty upon thirty
(30) days or less notice to the vendor.

                                   ARTICLE IV

                        OPERATING EXPENSES PAID BY LESSEE

         Section  4.1  Expenses   Incurred  by  Manager  on  Behalf  of  Lessee.
Everything  done  by  Manager  in the  performance  of its  obligations  and all
expenses  incurred under this Agreement shall be for and on behalf of Lessee and
for its account.  All debts and liabilities arising in the course of business of
the Hotels are and shall be the obligations of Lessee,  and Manager shall not be
liable for any of such obligations by reason of its management,  supervision and
operation of the Hotels for Lessee.  Unless  expressly  stated  herein,  neither
Manager nor any of its  Affiliates  shall be obligated to advance any of its own
funds to or for the account of Lessee,  nor to incur any liability unless Lessee
shall have  furnished  Manager with funds  necessary for the  discharge  thereof
prior to incurring such liability.

                                    ARTICLE V

                              COMPLIANCE WITH LAWS

         Section  5.1   Compliance  by  Manager  and  Lessee  After   Management
Commencement  Date.  Manager shall make all  reasonable  efforts,  at expense of
Lessee,  to comply  with all laws,  rules,  regulations,  requirements,  orders,
notices,  determinations and ordinances of any governing  authority,  including,
without limitation,  the state and local liquor  authorities,  the Board of Fire
Underwriters and the requirements of any insurance companies covering any of the
risks  against which the Hotels are insured.  If the cost of compliance  exceeds
Two Thousand  Five  Hundred  Dollars  ($2,500) in any  instance,  Manager  shall
promptly notify Lessee, and Lessee shall promptly provide Manager with funds for
the payment of such costs.

         Section  5.2  Lessee's  Right to Contest or Postpone  Compliance.  With
respect to a  violation  of any such laws or rules,  the  Lessee  shall have the
right to contest  any of the  foregoing  and  postpone  compliance  pending  the
determination of such contest, if so permitted by law and not detrimental to the
operation  of the Hotels,  but in such event,  Lessee shall  indemnify  and hold
harmless  Manager from any loss,  cost,  damage or expense,  as a result thereof
(but  excluding  any loss,  cost,  damage or expense  resulting  from  Manager's
failure  to notify  Lessee of the need to  comply  with a law or rule,  of which
Lessee would not otherwise have notice).

         Section 5.3   Manager's Right to Terminate Agreement.  Notwithstanding
anything in this

<PAGE>

Agreement to the contrary but subject to Article XV hereof, if within sixty (60)
days of receiving Manager's written request Lessee fails to approve the changes,
repairs, alterations, improvements, renewals or replacements to the Hotels which
Manager  determines in its reasonable  judgment are necessary to (i) protect the
Hotels,  Lessee and/or Manager from innkeeper liability exposure; or (ii) ensure
material  compliance  with any applicable code  requirements  pertaining to life
safety  systems  requirements;  or (iii)  ensure  material  compliance  with any
application  state,  local,  or  federal  employment  law,  including,   without
limitation,   the   Americans   with   Disabilities   Act,   then  Manager  may,
notwithstanding  the  provisions of Section 11.4,  terminate  this Agreement any
time after such thirty (30) day period upon seven (7) days' written notice.

                                   ARTICLE VI

                        BANK ACCOUNTS AND OPERATING FUNDS

         Section 6.1 Bank  Accounts.  (a) All monies  received by Manager in the
operation of the Hotels  shall be  deposited  on a daily basis in  accounts,  in
Manager's  name,  as agent of  Lessee,  in the  bank or  trust  company  that is
convenient to the physical location of each Hotel, as recommended by Manager and
approved by Lessee (the "Local Depository  Accounts").  Whenever  possible,  the
choice of bank will be affiliated with Bank of America or other bank recommended
by Manager and approved by Lessee (the  "Master  Bank").  Each Local  Depository
Account will be swept to a zero balance  daily,  by automated  electronic  means
provided  by the  Master  Bank,  to a single  cash  concentration  account  (the
"Concentration  Account") at the Master Bank;  provided that,  Local  Depository
Accounts that are not included in the Master Bank's  network will be transferred
on Tuesday and Friday of each week  (unless such days are not banking  days,  in
which case the  transfers  shall occur on the next  business  day) by ACH drafts
initiated by the Manager. The Concentration  Account will be invested daily into
an investment vehicle recommended by the Manager and approved by the Lessee, and
investment  income  earned will be  credited to each Hotel  monthly on a prorata
basis.

         (b) The Manager will establish a master disbursement  account, a master
payroll  account and, as needed,  master GM accounts at the Master Bank, each of
which shall be a zero balance account (collectively,  the "ZBA Accounts"),  from
which the Manager shall pay all operating expenses of the Hotels and any fees or
compensation  of any kind due it pursuant to this  Agreement in accordance  with
the  provisions  of this  Agreement.  The ZBA Accounts  shall be funded from the
Concentration  Account  on a daily  basis as items are  presented  for  payment.
However,  for payments to vendors that require an electronic  method of payment,
Manager may remit payment to such vendors by ACH drafts drawn against the Master
Bank's depository accounts.

         (c) All  accounts  established  pursuant to this Article VI shall be in
Manager's  name,  as agent of the Lessee,  and the monies  therein  shall not be
mingled with Manager's other funds.  Withdrawals  from all accounts  established
pursuant to this Article VI shall be signed or initiated by  representatives  of
the Manager only, provided such representatives are bonded or otherwise insured.

         (d)  Manager agrees to comply with the reasonable requirements of
Lessee's lenders with respect to payments to lockbox accounts; provided that

<PAGE>

Manager shall not be required to pay to such  lockbox  accounts  its  management
Fees or amounts for which it is entitled to reimbursement.

         (e) Manager shall submit to the Lessee by the tenth (10th) calendar day
of each Accounting Period a consolidated report detailing, by Hotel, the flow of
cash into and out of the Concentration  Account,  including  investment  income,
cash deposits,  credit card deposits,  payroll  checks paid,  operating  expense
checks paid, ACH drafts paid,  wires  transmitted to Lessee and any other use of
cash.  This  report must also  reconcile  to the sum of the  individual  general
ledger cash balances of each Hotel,  provided that Lessee acknowledges that this
bank reconciliation will be provided one month in arrears.

         Section 6.2 Minimum Balance. During the Term of this Agreement,  Lessee
shall maintain cash in the Concentration  Account ("Operating Funds") sufficient
in amount to properly  operate the Hotels.  If at any time during the Term,  the
funds in the  Concentration  Account fall below the Minimum  Balance (as defined
below), Lessee shall deposit in the Concentration Account additional funds in an
amount  equal to the  difference  between  the  funds  therein  and the  Minimum
Balance.   The  minimum  balance  (the  "Minimum   Balance")   required  in  the
Concentration  Account  shall be an amount equal to (a) Fifty  Thousand  Dollars
($50,000) per Hotel for the  following  seven (7) Hotels:  Seattle,  WA Homewood
Suites,  Portland,  OR Residence Inn, Orlando,  FL Homewood Suites,  Chicago, IL
Homewood Suites,  Jacksonville,  FL Hampton Inn,  Jacksonville Beach, FL Comfort
Inn and Tucson,  AZ Residence Inn plus (b) Twenty Thousand Dollars ($20,000) per
Hotel for all other  Hotels.  On a daily basis,  the funds in the  Concentration
Account in excess of the Minimum  Balance will be transferred to the Lessee,  by
electronic wire, to arrive at Lessee's bank before 12 Noon Central CST.

                                   ARTICLE VII

                     BOOKS, RECORDS AND FINANCIAL STATEMENTS

         Section 7.1  Accounting  System.  Manager  shall keep full and adequate
books of account and other  records  reflecting  the results of operation of the
Hotels on an  accrual  basis,  all in  accordance  with the  Uniform  System and
consistent with Generally Accepted  Accounting  Principles.  Manager may perform
accounting services at Manager's  affiliate's corporate office or at the Hotels.
Manager reserves the right to contract,  at Lessee's  expense,  with a qualified
independent third party for payroll and other services to the extent that such a
contract would be cost  justified.  Except for such books and records as Manager
may elect to keep in its affiliate's corporate office or other suitable location
pursuant to the operation of centralized accounting services, Manager shall keep
the books of  account  and all other  records  relating  to, or  reflecting  the
operation  of, the Hotels at the Hotels  and,  in any event,  all such books and
records  (including  payroll  records)  shall be  available  to  Lessee  and its
representatives at all reasonable times for examination,  audit,  inspection and
transcription.  All of such books and  records  (other  than  payroll  records),
including, without limitation, books of accounts, guest records and front office
records,  at all times shall be the property of Lessee. Upon termination of this
Agreement,  all the books and records  (other  than  payroll  records)  shall be
turned over to Lessee to ensure the orderly continuation of the operation of the
Hotels,  but the books and records shall  thereafter be available to the Manager
at all reasonable times for inspection, audit, examination and transcription.

<PAGE>

         Section  7.2  Financial  Statements.  Manager  shall  deliver to Lessee
within  twenty (20) calendar  days after the end of each  Accounting  Period and
within  twenty-five  (25)  calendar  days after the end of each  fiscal year the
following:

         A.    Profit & Loss Statement by Department with Month-End and Year-to-
               Date Actual and Budget

         B.    Balance Sheet

         Any  disputes  as to  the  contents  of  any  such  statements  or  any
accounting matter hereunder,  shall be determined by PricewaterhouseCoopers  LLP
or such other  independent  auditor  mutually  agreed upon by Lessee and Manager
(the  AIndependent  Auditor@)  whose  decision  shall be final and conclusive on
Manager and Lessee.

<PAGE>

                                  ARTICLE VIII

                              ANNUAL BUSINESS PLAN

         Section 8.1  Preparation  of Annual  Business Plan. At least sixty (60)
days prior to the Management  Commencement  Date, Manager shall submit to Lessee
an Annual  Business  Plan for each Hotel for Fiscal  Year 2001.  Thereafter,  at
least sixty (60) days prior to the end of each Fiscal Year, Manager shall submit
an Annual  Business  Plan for each Hotel for the  succeeding  Fiscal  Year.  The
Annual Business Plan shall include:  an operating budget showing estimated Gross
Operating Revenues,  department profits, operating expenses, and Gross Operating
Profit for the forthcoming  Fiscal Year for the Hotel; and a marketing plan; all
in reasonable detail and, where appropriate,  with the basis for all assumptions
expressly  set forth.  Lessee shall review the Annual  Business  Plan and either
approve or notify  Manager of any  objections  to the  Annual  Business  Plan in
writing within thirty (30) days of its receipt thereof. Lessee's approval of the
Annual  Business  Plan shall not be  unreasonably  withheld or delayed.  Manager
acknowledges  that Lessee shall prepare each Hotel's annual capital  expenditure
budget and that such  budget  shall not be subject to the  approval  of Manager.
Lessee  recognizes,  however,  that  the  capital  expenditure  budget  and  the
implementation  of such  budget  will have a direct  impact  on the  operational
performance of the Hotels. As a result,  Lessee and Manager acknowledge that the
performance  standard of Section  11.2(B)(ii) of this Agreement,  as well as the
Incentive  Fee  and  Additional  Incentive  Fee  calculations,  may  need  to be
equitably  adjusted  upon  mutual  agreement  of the parties in order to reflect
material  deviations from the scope and schedule of a capital expenditure budget
approved by Lessee.

         Section 8.2 Annual Business Plan Disputes. If Manager and Lessee are
unable to agree  upon an Annual Business   Plan   or   any   details thereof,
until a new Annual Business Plan  is  agreed  to  Manager  shall operate  the
particular   Hotel  or Hotels in accordance  with the prior Fiscal Year's actual
results,  with the following adjustments:

         A.      The expenses provided therein shall be increased to be equal to
                 the  product of (1) the  expenses in the prior  Fiscal  Year's
                 actual  results  multiplied by (2) the CPI  Quotient.  As used
                 herein,  "CPI  Quotient"  shall mean (a) the Average  Consumer
                 Price Index for the twelve months ended on September 30 of the
                 most recently completed Fiscal Year divided by (b) the Average
                 Consumer  Price Index for the twelve months ended on September
                 30 of the prior  Fiscal  Year.  As used  herein,  the "Average
                 Consumer  Price  Index" for any period shall be the average of
                 the Consumer Price Index for all months during the period.

         B.      The RevPAR  provided  therein shall be increased over the
                 previous twelve (12) months' RevPAR,  based upon the applicable
                 Market Tract RevPAR growth  percentage for the previous  twelve
                 (12) months,  as published by Smith  Travel  Research,  for
                 revenue growth.

If Lessee and Manager  cannot agree upon an Annual  Business Plan or any details
thereof on or prior to  January  31st of a Fiscal  Year,  the  dispute  shall be
decided by  submission  to  arbitration  before one of the  following  three (3)
independent arbitrators (each, an "Independent Arbitrator"), each of which shall
be a hospitality industry expert:

<PAGE>

                  1.  Arthur Andersen LP
                  2.  Ernst & Young
                  3.  Pannell Kerr Foster

The dispute shall be submitted initially to the first Independent  Arbitrator on
the above list;  if the first  Independent  Arbitrator  is  unavailable  for any
reason it shall instead be submitted to the second Independent  Arbitrator;  and
if the second  Independent  Arbitrator  is  unavailable  for any reason it shall
instead be submitted to the third  Independent  Arbitrator.  In rendering his or
her decision,  the Independent Arbitrator shall take into account both the state
of the economy and the  conditions in the specific  market in which the Hotel in
question is located. The Independent Arbitrator shall render his or her decision
within  fourteen  (14) days  following the  submission of the dispute,  and such
decision shall be final and binding upon the parties. Arbitration expenses shall
not be an expense in determining Gross Operating Profit.

         Section  8.3  Deviations  from  Annual  Business  Plan.  Manager  shall
diligently  pursue all  feasible  measures to enable the Hotels to adhere to the
Annual Business Plan.  Notwithstanding anything herein to the contrary,  Manager
is not  warranting  or  guaranteeing  in any respect  that the actual  operating
results of the Hotels during the period covered by the Annual Business Plan will
not materially vary from the projections  described in the Annual Business Plan.
However, the Manager will provide explanations for all significant variances and
programs  put in place to correct or improve  situations  that  deviate from the
original plan.

                                   ARTICLE IX

                        MANAGER'S FEES AND REIMBURSEMENTS

         Section  9.1 Base  Management  Fee.  During  each Fiscal Year after the
Management Commencement Date (and for a fraction of any partial Fiscal Year), in
consideration of the services Manager is to render under this Agreement, Manager
will  be  paid a fee  ("Base  Management  Fee")  per  Hotel  at the  rate of the
following percentage of Gross Operating Revenues of such Hotel per Fiscal Year:

         Fiscal Year       Base Management Fee
         -----------       -------------------
         2001              One percent (1%) of Gross Operating Revenues
         2002              Two percent (2%) of Gross Operating Revenues
         2003              Two percent (2%) of Gross Operating Revenues
         2004              Two percent (2%) of Gross Operating Revenues
         2005              Two and one-half percent (2 .5%) of Gross Operating
                           Revenues

         The Base  Management Fee will be paid in installments by deducting such
fee from Gross  Operating  Revenues  of each Hotel  immediately  following  each
Accounting Period at the rate of the corresponding percentage of Gross Operating
Revenues for that Accounting  Period.  At the end of each Accounting  Period, an
adjustment will be made on a cumulative  year-to-date  basis, if necessary,  and
all sums due either the Manager or Lessee shall be paid immediately.

<PAGE>

         Section 9.2  Incentive Fees.

         A.      In addition to the Base Management Fee, during each Fiscal Year
                 after the  Management  Commencement  Date (and for any partial
                 Fiscal Year) in which Manager is to render services under this
                 Agreement,  for each Hotel in which the Gross Operating Profit
                 amount equals the Gross  Operating  Profit amount  budgeted in
                 such Hotel's  Annual  Business  Plan,  Manager will be paid an
                 incentive  fee  ("Incentive  Fee") with  respect to such Hotel
                 equal  to  one-half  percent  (.5%)  of  the  Gross  Operating
                 Revenues of such Hotel.

         B.      In addition to the Base Management Fee and the  Incentive  Fee,
                 during each Fiscal Year after the Management Commencement Date
                 (and for any  partial  Fiscal  Year) in  which  Manager  is to
                 render services under this Agreement,  for each Hotel in which
                 (i) the actual Gross Operating Profit amount equals or exceeds
                 the Gross  Operating  Profit  amount  budgeted in such Hotel's
                 Annual  Business  Plan  and (ii) the  actual  Gross  Operating
                 Revenues  equals  at least  ninety-nine  percent  (99%) of the
                 Gross  Operating  Revenues  budgeted  in such  Hotel's  Annual
                 Business  Plan,  Manager will be paid an additional  incentive
                 fee ("Additional Incentive Fee") with respect to such Hotel as
                 follows:  for each one percent  (1%) of actual  audited  Gross
                 Operating  Profit  amount  in  excess  of the  budgeted  Gross
                 Operating  Profit  amount,  Manager will be paid an Additional
                 Incentive Fee equal to one-tenth of one percent  (0.1%) of the
                 Gross  Operating  Revenues of such Hotel,  up to the following
                 maximum levels:

                  Fiscal Year       Maximum Additional Incentive Fee
                  -----------       --------------------------------
                  2001              One and one-half percent (1.5%) of Gross
                                        Operating Revenues
                  2002              One-half percent (0.5%) of Gross Operating
                                        Revenues
                  2003              One-half percent (0.5%) of Gross Operating
                                        Revenues
                  2004              One-half percent (0.5%) of Gross Operating
                                        Revenues
                  2005              One-half percent (0.5%) of Gross Operating
                                        Revenues

The  Incentive Fee and the  Additional  Incentive Fee will be payable to Manager
from Gross Operating Revenues of each applicable Hotel following the end of each
Fiscal  Year.  The  Manager  will  submit to the Lessee the  calculation  of the
Incentive  Fee and the  Additional  Incentive Fee along with the delivery of the
year-end  financial  statements  pursuant to Section 7.2, after which the Lessee
shall have ten (10) calendar days to advise the Manager of any disagreement with
such  calculation.  Following the Fiscal  Year-end audit  conducted by Lessee or
Lessee's  representatives  (at Lessee's  cost),  an  adjustment  will be made if
necessary, and all sums due either Manager or Lessee shall be paid immediately.

         Section 9.3 Accounting  Fee. In addition to the Base Management Fee and
the Incentive  Fee, the Manager shall be paid a fee for  centralized  accounting
services (the "Accounting  Fee") equal to $1,000 per Hotel per Accounting Period
during the Term of this  Agreement and for one (1)  Accounting  Period after the
applicable  termination  of  this  Agreement  with  respect  to  a  Hotel.  Such
centralized  accounting  services  consist of the processing of daily accounting
transactions  necessary for the preparation of the monthly financial statements,
including  general ledger,  accounts  payable,  payroll (in conjunction with the
payroll processing firm) and banking.

<PAGE>

                                    ARTICLE X

                                    INSURANCE

         Section 10.1 Insurance Coverage. Manager, at the direction and approval
of Lessee, shall provide and maintain,  at Lessee's cost and expense,  insurance
sufficient to furnish to Lessee and Manager  reasonable and adequate  protection
in the  management  and operation of the Hotels.  Such  insurance  shall provide
coverage  for  comprehensive   general  liability,   automobile,   garagekeepers
liability, excess/umbrella liability, property insurance and boiler & machinery,
all as more  particularly  set forth on the  attached  Exhibit B. All  insurance
shall be in the name of Lessee and  Manager as the  insureds  and shall  contain
riders and endorsements adequately protecting the interests of Manager as it may
appear including, without limitation,  provisions for at least twenty (20) days'
notice to Manager of cancellation  or of any material  change therein.  Prior to
the  Management  Commencement  Date and the  commencement  of each  Fiscal  Year
thereafter,  Manager  shall  furnish  Lessee with  certificates  evidencing  the
insurance  coverages  required  pursuant  to Exhibit B and with  evidence of the
payment of  premiums  therefor.  Lessee  agrees that it will  utilize  Manager's
insurance  program to satisfy the  requirements of this Section 10.1;  provided,
however,  if Lessee demonstrates to Manager that another insurer can provide the
same  insurance  coverages at a cost which is more than ten percent  (10%) below
the cost of the insurance  coverages  obtained  through  Manager and on at least
equal terms and  quality of  coverages,  Lessee may require  Manager to purchase
such insurance coverages from such other insurer in the future.  Notwithstanding
the  foregoing,  Lessee  cannot  require  Manager to terminate any then existing
insurance coverages prior to their scheduled  termination or expiration date. It
shall be the Manager's  obligation as the employer,  at the Lessee's expense, to
obtain Workers  Compensation,  Crime/Fidelity  Bond,  and  Employment  Practices
coverages  as set forth on  Exhibit  B. If Lessee  becomes  the  employer,  this
obligation shall become the responsibility of the Lessee, at its own expense.

         Section 10.2 Waiver of  Subrogation - Lessee  Assumes Risk of Adequacy.
Lessee shall have all policies of insurance  provide that the insurance  company
will have no right of subrogation  against either party hereto,  their agents or
employees.  Lessee  assumes  all risks in  connection  with the  adequacy of any
insurance or self-insurance program, and subject to the provisions of Article XV
hereof,  waives any claim against  Manager for any liability,  costs or expenses
arising  out  of any  uninsured  claim,  in  part  or in  full,  of  any  nature
whatsoever.

                                   ARTICLE XI

                        TERM OF AGREEMENT AND TERMINATION

         Section 11.1 Term. This Agreement  shall be for a period  commencing on
the date hereof and unless sooner  terminated  as  hereinafter  provided,  shall
continue with respect to each Hotel until the applicable  scheduled  termination
date (the "Scheduled  Termination  Date") set forth on Exhibit C attached hereto
(with respect to each Hotel, the "Term"). The term "Termination Date" as used in
this Agreement  shall mean the earlier of the applicable  Scheduled  Termination
Date or earlier termination as hereinafter provided.

<PAGE>

         Section  11.2  Early  Termination.  This  Agreement  can be  terminated
earlier with respect to any individual Hotel or Hotels as described below.  Upon
termination of this Agreement with respect to any individual  Hotel,  the rights
and  obligations  of the parties will cease with respect to such Hotel except as
to fees and  reimbursements  due the Manager and other claims of  liabilities of
either party which accrued or arose before termination.

         A.       Either Party can terminate this Agreement with respect to a
                  Hotel if:

                  (i)        the Hotel is damaged or destroyed by a casualty and
                             the damaged portion of the Hotel cannot be
                             reasonably repaired or restored within one (1) year
                             of the occurrence of the event; or

                  (ii)       the  entire  Hotel  is  taken  in  a   condemnation
                             proceeding  or a portion of the Hotel is taken such
                             that  either  party  determines  in its  reasonable
                             judgment  that the  Hotel  cannot  be  operated  at
                             levels  substantially  like those experienced prior
                             to the condemnation; or,

                  (iii)      the other party shall:  apply for or consent to the
                             appointment of a receiver, trustee or liquidator of
                             such party or of all or a substantial part of its
                             assets; file a voluntary petition in bankruptcy, or
                             admit in writing its inability to pay its debts as
                             they come due; make a general assignment for the
                             benefit of creditors; file a petition or an answer
                             seeking reorganization or arrangement with
                             creditors or to take advantage of any insolvency
                             law or file an answer admitting the material
                             allegations of a petition filed against it in any
                             bankruptcy, reorganization or insolvency
                             proceedings; or if an order, judgment or decree
                             shall be entered by any court of competent
                             jurisdiction, on the application of a creditor,
                             adjudicating it a bankrupt or insolvent or
                             approving a petition seeking reorganization of it
                             or appointing a receiver, trustee or liquidator of
                             it or of all or a substantial part of its assets,
                             and such order, judgment or decree shall continue
                             unstayed and in effect for any period of ninety
                             (90) consecutive days; or

         B.       The Lessee can terminate this Agreement with respect to a
                  Hotel if:

                  (i)        Manager  shall  fail to keep,  observe  or  perform
                             any material covenant, agreement, term or provision
                             of  this Agreement  with  respect to the Hotel and
                             such default  shall continue for a period of thirty
                             (30) days after notice thereof by Lessee to
                             Manager,  unless it is impossible for such breach
                             of non-compliance to be remedied or corrected
                             within such time due to no  fault of  Manager  in
                             which  event, Manager  shall remedy or correct such
                             breach of  non-compliance  as soon as reasonably
                             possible but in any event no later than ninety (90)
                             days after such written  notice  unless the cure or
                             remedy for such breach or non-compliance requires
                             construction, in which event, Lessee shall  proceed
                             with such construction as expeditiously as possible
                             and shall have a reasonable  period of time to
                             complete such work; or

                  (ii)       Manager fails to achieve at least eighty-five
                             percent (85%) of the annual budgeted Gross

<PAGE>

                             Gross Operating Profit for the Hotel as approved by
                             the Lessee as part of the Annual Business Plan for
                             any two (2) consecutive  Fiscal Years;  provided,
                             however,  Manager shall have the right, but not the
                             obligation,  to cure such failure by within sixty
                             (60) days  following  the end of the second of
                             such Fiscal Years  contributing to Gross Operating
                             Profit for such  second  Fiscal Year an amount
                             necessary  to cause Gross Operating Profit to equal
                             at least  eighty-five  percent (85%) of the  amount
                             of Gross  Operating  Profit  set  forth in the
                             Annual  Business  Plan for such second Fiscal Year,
                             in which event Lessee shall have no right to
                             terminate this Management Agreement with respect to
                             such Hotel; or

                  (iii)      the applicable franchise agreement for a  Hotel  is
                             terminated,  if such  termination  is solely due to
                             Manager's  failure to satisfy its obligations under
                             this  Agreement  (and not as a result  of  Lessee's
                             failure  to  satisfy  any of  Lessee's  obligations
                             under this Agreement or such franchise  agreement);
                             or

                  (iv)       With respect to any Hotel that is not a Ramp-Up
                             Hotel, Lessee or the owner of the Hotel sells the
                             Hotel to a bona fide unaffiliated third party and
                             either (a) Lessee pays to Manager a termination
                             payment equal to (x) the aggregate Gross Operating
                             Revenues for such Hotel during the immediately
                             preceding twelve (12) month period multiplied by
                             (y) the then applicable aggregate Base Management
                             Fee and Incentive Fee (but not Additional Incentive
                             Fee) percentages (based on the assumption that the
                             Hotel achieves the budgeted Gross Operating Profit
                             for the remainder of the Term applicable to such
                             Hotel); or (b) within sixty (60) days following
                             termination Lessee enters into a management
                             agreement with Manager for a replacement hotel or
                             hotels that are commercially reasonably acceptable
                             to Manager and have budgeted annual Gross Operating
                             Revenues no less than the actual annual Gross
                             Operating Revenues of the terminated Hotel
                             (provided that, if Lessee elects to replace
                             pursuant to this clause (b), for any period in
                             which a replacement management agreement is not yet
                             in place Lessee shall pay to Manager the fees which
                             Manager would have received for such period if the
                             termination had not occurred); or

                  (v)        With respect to any Ramp-Up Hotel, Lessee or the
                             owner of the Hotel sells the Hotel to a bona fide
                             unaffiliated third party and either (a) Lessee pays
                             to Manager a termination payment equal to (x) if
                             the sale occurs in 2001, the budgeted Gross
                             Operating Revenues for such Hotel for Fiscal Year
                             2001 (increased by three percent (3%) for each
                             succeeding Fiscal Year during the Term) multiplied
                             by the then applicable aggregate Base Management
                             Fee and Incentive Fee (but not Additional Incentive
                             Fee) percentages (based on the assumption that the
                             Hotel achieves the budgeted Gross Operating Profit
                             for the remainder of the Term applicable to such
                             Hotel) and (y) if the sale occurs in Fiscal Year
                             2002 or thereafter, the actual Gross Operating
                             Revenues for such Hotel for Fiscal Year 2001
                             (increased by three percent (3%) for each
                             succeeding Fiscal Year during the Term) multiplied
                             by the then applicable aggregate Base Management

<PAGE>

                             Fee and Incentive Fee (but not Additional Incentive
                             Fee) percentages  (based on the assumption that the
                             Hotel achieves the budgeted Gross Operating  Profit
                             for the  remainder of the Term  applicable  to such
                             Hotel);  or (b) within  sixty  (60) days  following
                             termination   Lessee   enters  into  a   management
                             agreement  with Manager for a replacement  hotel or
                             hotels that are commercially  reasonably acceptable
                             to Manager and have budgeted annual Gross Operating
                             Revenues  no less  than  the  actual  annual  Gross
                             Operating   Revenues   of  the   terminated   Hotel
                             (provided   that,   if  Lessee  elects  to  replace
                             pursuant  to this  clause  (b),  for any  period in
                             which a replacement management agreement is not yet
                             in place Lessee shall pay to Manager the fees which
                             Manager  would have received for such period if the
                             termination had not occurred);

                             For the  purposes of clauses  (iv) and (v), a "sale
                             of a Hotel to a bona fide unaffiliated third party"
                             shall  include  the  sale  of  greater  than  fifty
                             percent  (50%)  of  the  economic  and  controlling
                             interests  in the  Lessee or the owner of the Hotel
                             to a bona fide  unaffiliated  third  party.  Lessee
                             anticipates   that  the   number  of   terminations
                             pursuant to the foregoing clauses (iv) and (v) will
                             not exceed the following number per Fiscal Year:

                               Fiscal Year               Maximum Number of Sales
                               -----------               -----------------------
                                  2001                               6
                                  2002                               4
                                  2003                               3
                                  2004                               2
                                  2005                               1
                                                                    --

                                  Total                             16
                                                                    ==

                           Lessee shall not be  prohibited  from  exceeding  the
                           maximum  total of sixteen (16) of such  terminations;
                           provided, however, for each such termination prior to
                           December  31, 2005 in excess of the maximum  total of
                           sixteen (16), the termination fee calculated pursuant
                           to  clause  (iv)  or (v)  for  such  Hotel  shall  be
                           doubled.

         C.       The Manager can terminate with respect to a Hotel at any time
                  if:

                  (i)        Lessee fails to pay any amounts due to Manager with
                             respect to the Hotel,  followed by written notice
                             from Manager to the Lessee  and  failure of the
                             Lessee to remedy or correct same within thirty (30)
                             ays after receipt of such notice; or

                  (ii)       the Lessee fails to furnish required Operating
                             Funds with respect to the Hotel in accordance with
                             the provisions of Article VI hereof; or

                  (iii)      Lessee fails to make any other payment with respect
                             to the Hotel in  accordance  with the terms  hereof
                             when such payment is due and  payable,  followed by
                             written notice from Manager to the Lessee and

<PAGE>

                             failure of the Lessee to remedy or correct same
                             within thirty (30) days after receipt of such
                             notice; or

                  (iv)       there is a default  under the terms and  conditions
                             of any security  instruments executed in connection
                             with the Hotel,  which  default  has not been cured
                             within the applicable cure period for such default,
                             followed  by  written  notice  from  Manager to the
                             Lessee  and  failure  of the  Lessee  to  remedy or
                             correct same within  thirty (30) days after receipt
                             of such notice; or

                  (v)        Lessee fails to provide the funds to provide and
                             maintain the insurance policies with respect to the
                             Hotel called for in Article X; or

                  (vi)       any licenses for the sale of alcoholic beverages in
                             the Hotel, if applicable, or any other license or
                             permit necessary for the operation of the Hotel is
                             not issued on the Management Commencement Date and
                             thereafter maintained throughout the term of this
                             Agreement, followed by written notice from Manager
                             to the Lessee and failure of the Lessee to remedy
                             or correct same within thirty (30) days after
                             receipt of such notice (unless Lessee is diligently
                             pursuing such license or permit in good faith and
                             the lack of such license or permit does not
                             materially impair the operation of the Hotel); or

                  (vii)      there is a breach of, or non-compliance by the
                             Lessee with any other material term, condition or
                             covenant contained in this Agreement with respect
                             to the Hotel followed by written notice from
                             Manager to the Lessee and failure of the Lessee to
                             remedy or correct same within thirty (30) days
                             after receipt of such notice, unless it is
                             impossible for such breach of non-compliance to be
                             remedied or corrected within such time due to no
                             fault of Lessee, in which event, Lessee shall
                             remedy or correct such breach of non-compliance as
                             soon as reasonably possible but in any event no
                             later than ninety (90) days after such written
                             notice unless the cure or remedy for such breach or
                             non-compliance requires construction, in which
                             event, Lessee shall proceed with such construction
                             as expeditiously as possible and shall have a
                             reasonable period of time to complete such work.

         Section 11.3 Remedies on Default.  Notwithstanding the other provisions
of this  Article  XI,  the party  asserting  a default  hereunder  may,  without
prejudicing its rights to terminate this Agreement  pursuant to this Article XI,
seek  arbitration in accordance  with the provisions of Section 16.6 hereof,  or
any other legal or equitable remedy.

         Section 11.4  Termination Procedure.

         A.       If a termination occurs pursuant to Section 11.2(A), the party
                  electing  to  terminate  shall  give the other  party  written
                  notice of such election. On the date which is thirty (30) days
                  after  the  date of  such  notice,  Manager  shall  cease  all
                  activities at the Hotel and shall have no further  obligations
                  under this Agreement.

<PAGE>

         B.       If a termination occurs pursuant to Section 11.2(B)(i), Lessee
                  shall  give  Manager   written  notice  of  such  election  to
                  terminate.  On the date  which is ten (10) days after the date
                  of such  notice,  Manager  shall cease all  activities  at the
                  Hotel  and  shall  have  no  further  obligations  under  this
                  Agreement.

         C.       If a  termination  occurs  pursuant  to  Section  11.2(B)(ii),
                  Lessee shall give Manager  written  notice of such election to
                  terminate  within  ninety (90) days  following  the end of the
                  second  consecutive  Fiscal Year.  On the date which is thirty
                  (30) days after the date of such notice,  Manager  shall cease
                  all  activities  at  the  Hotel  and  shall  have  no  further
                  obligations under this Agreement.

         D.       If a  termination  occurs  pursuant  to Section  11.2(B)(iii),
                  Lessee  shall give Manager  written  notice of its election to
                  terminate  thereunder  within  ninety (90) days  following the
                  termination of the applicable franchise agreement. On the date
                  which is  thirty  (30)  days  after  the date of such  notice,
                  Manager shall cease all activities at the Hotel and shall have
                  no further obligations under this Agreement.

         E.       If a termination  occurs  pursuant to Section  11.2(B)(iv)  or
                  (v),  Lessee shall give Manager at least sixty (60) days prior
                  written  notice of such  election  to  terminate.  On the date
                  specified in such notice,  Manager shall cease all  activities
                  at the Hotel and shall have no further  obligations under this
                  Agreement.

         F.       If a termination  occurs pursuant to Section 11.2(C),  Manager
                  shall give to Lessee written notice of such election. Any time
                  thereafter,  Manager  may, on ten (10) days'  written  notice,
                  cease  all  activities  at the Hotel  and  thereafter  have no
                  further obligations under this Agreement.

         G.       After  the  notice is  given,  and  prior to the date  Manager
                  ceases activities at the Hotel,  Manager shall be paid any and
                  all fees or expenses  due it pursuant to this  Agreement,  and
                  Manager shall cooperate with Lessee in the orderly transfer of
                  management to Lessee or Lessee's designated agent.

         H.       Lessee  acknowledges  that Lessee is obligated to pay expenses
                  incurred on or before the date of termination  including those
                  that  must be paid by the  Manager  after its  termination  of
                  activities  at the  Hotel.  A  budget  will  be  prepared  for
                  Lessee's  approval  and an  accounting  will be made of  these
                  monies and surpluses will be sent to Lessee. Any deficits from
                  the Hotel's  Operating  Funds will be funded by Lessee  within
                  five (5) days of written request from Manager.

         Section 11.5  Non-Solicitation  of Employees.  During the period ending
one year from the termination or expiration of this Agreement, Lessee shall not,
directly  or  indirectly,  hire or solicit  for hire  (whether  as an  employee,
consultant  or  otherwise)  any  employees of Manager or an affiliate of Manager
employed or based out of Manager's Pittsburgh,  Pennsylvania or Orlando, Florida
offices,  without the prior written consent of Manager.  Nothing in this Section
11.5 is intended to restrict Lessee's rights under Section 3.3 hereof.

<PAGE>

                                   ARTICLE XII

                          REPRESENTATIONS AND COVENANTS

         Section 12.1  Lessee's Representations.  Lessee covenants, represents
and warrants as follows:

         A.       The Lessee is the lessee of the Hotels and has full power and
                  authority to enter into this Agreement;

         B.       Each Hotel is zoned for use as a hotel, motor hotel or resort,
                  and all necessary governmental and other permits and approvals
                  for such use and for the food and beverage (including the sale
                  and service of liquor, if applicable) operations of the Hotels
                  have been obtained and are in full force and effect; and

         C.       Throughout  the term of this  Agreement,  the Lessee will pay,
                  keep,  observe  and perform all  payments,  terms,  covenants,
                  conditions   and   obligations   under   any  lease  or  other
                  concession,  any deed of  trust,  mortgage  or other  security
                  agreement,  and any real estate taxes or assessments  covering
                  or affecting  the Hotels,  unless  compliance  with or payment
                  thereof is, in good faith,  being  contested  and  enforcement
                  thereof is stayed.

         Section 12.2  Manager's Representations.  A. During the Term of this
Agreement, the Manager shall qualify as an "eligible independent contractor" as
defined in Section 856(d)(9) of the Internal Revenue Code of 1986, as amended
(the "Code").  To that end, during the Term of this Agreement, the Manager:

         (i)      shall not permit wagering activities to be conducted at or in
                  connection with the Hotels;
         (ii)     shall not own,  directly or indirectly  (within the meaning of
                  Section 856(d)(5) of the Code), more than 35% of the shares of
                  Equity Inns, Inc.;
         (iii)    shall be actively engaged in the trade or business of
                  operating "qualified lodging facilities" (defined below) for
                  persons who are not "related persons" within the meaning of
                  Section 856(d)(9)(F) of the Code with respect to Equity Inns,
                  Inc. or the [Lessee] ("Unrelated Persons").  In order to meet
                  this requirement, the Manager agrees that it (i) shall derive
                  at least 10% of both its revenue and profit rom operating
                  "qualified lodging facilities" for Unrelated Persons and (ii)
                  shall comply with any regulations or other administrative
                  guidance under Section 856(d)(9) of the Code with respect to
                  the amount of hotel management business with Unrelated Persons
                  that is necessary to qualify as an "eligible independent
                  contractor" within the meaning of such Code section (so long
                  as the Lessee has advised the Manager in writing of such
                  regulations or other administrative guidance).

A "qualified  lodging  facility" is defined in Section  856(d)(9)(D) of the Code
and means a "lodging facility" (defined below),  unless wagering  activities are
conducted at or in connection with such facility by any person who is engaged in
the business of accepting wagers and who is legally authorized to engage in such
business at or in connection with such facility. A "lodging facility"

<PAGE>

is a hotel,  motel or other  establishment  more than  one-half of the  dwelling
units in which are used on a transient basis, and includes  customary  amenities
and facilities  operated as part of, or associated with, the lodging facility so
long as such amenities and  facilities  are customary for other  properties of a
comparable size and class owned by other owners unrelated to Equity Inns, Inc.

B. During the Term of this Agreement,  the Manager shall not sublet the Hotel or
enter into any  similar  arrangement  on any basis such that the rental or other
amounts to be paid by the sublessee thereunder would be based, in whole in part,
on either (i) the net income or profits  derived by the business  activities  of
the  sublessee or (ii) any other formula such that any portion of the rent would
fail to  qualify as "rents  from real  property"  within the  meaning of Section
856(d) of the Code, or any similar or successor provision thereto.

                                  ARTICLE XIII

                                   ASSIGNMENT

         Section  13.1  Assignment.  Neither  party shall  assign or transfer or
permit the  assignment or transfer of this  Agreement  without the prior written
consent of the other; provided,  however, that (a) Manager shall have the right,
without such consent,  to  irrevocably  and totally  assign its interest in this
Agreement  to any of its  Affiliates  or to an entity  under the control of then
current  senior  executives of Interstate  Hotels  Corporation,  an Affiliate of
Manager  and  (b)  Lessee  shall  have  the  right,  without  such  consent,  to
irrevocably  and totally  assign its  interest in this  Agreement  to any of its
Affiliates or to an entity under the control of then current  senior  executives
of Equity Inns,  Inc., an Affiliate of Manager.  Nothing  contained herein shall
prevent  the  transfer  of  this  Agreement  in  connection  with  a  merger  or
consolidation  of  substantially  all of the  assets  of  either  party or their
respective Affiliates.  In the event of consent by either party to an assignment
of this Agreement by the other, no further  assignment shall be made without the
express  consent in writing of such party,  unless such assignment may otherwise
be made  without  such  consent  pursuant  to the  terms of this  Agreement.  An
assignment by either Lessee or Manager of its interest in this  Agreement  shall
not  relieve  Lessee  or  Manager,  as the case may be,  from  their  respective
obligations  hereunder  unless the  assignee  accepts  full  responsibility  for
performance of the same.

                                   ARTICLE XIV

                                      TAXES

         Section  14.1 Real Estate and  Property  Taxes.  All real estate and ad
valorem  property  taxes,  assessments and similar charges on or relating to the
Hotels  during  the term of this  Agreement  shall be paid by Lessee  before any
fine,  penalty or  interest  is added  thereto or lien placed upon the Hotels or
this Agreement,  unless payment  thereof is, in good faith,  being contested and
enforcement thereof is stayed. Manager's  responsibilities  specifically exclude
the preparation, filing or contesting of these taxes.

<PAGE>

                                   ARTICLE XV

                   INDEMNIFICATION AND LIMITATION OF LIABILITY

         Section 15.1 Indemnification and Limitation of Liability.  Lessee shall
hold harmless, indemnify and, subject to Section 15.3 hereof, defend Manager and
its Affiliates and their respective agents, employees,  officers,  directors and
shareholders from and against all expenses incurred by Manager or its Affiliates
which,  in Manager's sole  judgment,  were or are necessary or desirable for the
operation of the Hotels in accordance with the terms of this Agreement,  and all
claims  (administrative or judicial),  damages,  losses and expenses (including,
but  not  limited  to,  attorneys'  fees  for  pre-trial,  trial  and  appellate
proceedings,  accounting fees,  appraisal fees and consulting and expert witness
fees) arising out of or resulting from Manager's  activities  performed pursuant
to this Agreement,  any franchise agreement, any past or future building code or
life/safety code  violations,  and injury to person(s) and damage to property or
business by reason of any cause whatsoever in and about the Hotels or elsewhere,
and  any  requirement  or  award  relating  to  course  of  employment,  working
conditions,  wages and/or  compensation of employees or former  employees at the
Hotels, unless any such injury or damage is caused by gross negligence,  willful
misconduct,  or  fraud  on the  part  of  Manager,  its  agents,  employees,  or
representatives.  Notwithstanding the foregoing, without Owner's prior approval,
Manager shall not settle any employment-related case in which the Owner would be
required to make a settlement payment in excess of $5,000.  Any  indemnification
shall apply regardless of whether or not said claim,  damage, loss or expense is
covered by insurance as herein provided  (however,  the indemnified  party shall
not be entitled to a duplicate recovery with respect to a claim, damage, loss or
expense).

         Section 15.2  Manager's  Indemnification.  Manager shall hold harmless,
indemnify and defend Lessee and its  Affiliates,  and their  respective  agents,
employees,  officers,  directors and shareholders,  from and against all claims,
damages, losses and expenses (including, but not limited to, attorneys' fees for
pre-trial,  trial and appellate  proceedings)  arising out of or resulting  from
Manager's gross negligence (including Manager's violation of a law as determined
pursuant  to a  final,  unappealable  order  issued  by  a  court  of  competent
jurisdiction), willful misconduct or fraud.

         Section 15.3 Indemnification Procedure. Upon the occurrence of an event
giving rise to indemnification,  the party seeking  indemnification shall notify
the other party  hereto and  provide  the other party  hereto with copies of any
documents  reflecting  the claim,  damage,  loss or expense.  The party  seeking
indemnification is entitled to engage such attorneys and other persons to defend
against  the  claim,  damage,  loss or  expense,  as it may  choose  subject  to
reasonable approval of the party providing indemnification.  The party providing
indemnification  shall pay the reasonable charges and expenses of such attorneys
and other  persons on a current  basis within  twenty (20) days of submission of
invoices or bills. If any claim, lawsuit or action  (administrative or judicial)
is  maintained  against  Manager,  Lessee or the  Hotels due to  allegations  or
actions  arising  prior  to the  Term,  Lessee  shall  bear  full  and  complete
responsibility  for  the  defense  of  the  Hotels,  the  Lessee,  the  Manager,
specifically  including all legal fees and necessary and attendant  expenses for
the vigorous  defense and  representation  of the  interests of the Manager (for
pre-trial,  trial and appellate proceedings),  the Hotels and the Lessee. Lessee
shall support and pay for all legal fees and representations necessary to remove
Manager from any claim, action (administrative or judicial),  or lawsuit covered
by this provision.

<PAGE>

         Section 15.4 No Successor Liability. Notwithstanding anything herein to
the contrary,  neither Manager nor its affiliates shall be liable as a successor
employer or entity for any  actions  Lessee or  Lessee's  predecessors  may have
taken in the  employer-employee  relationship  with  Lessee's  current or former
employees or employees of Lessee's  agents before the  commencement of the Term.
Specifically,  Manager shall not be liable or responsible in any manner for, and
Lessee shall indemnify and hold Manager harmless from, pending claims, lawsuits,
actions  (administrative  or  judicial),  or  unasserted  claims  arising out of
Lessee's  or Lessee's  predecessors'  ownership,  operation,  or  employment  of
employees of the Hotels.

         Section 15.5  Survival. The provisions of this Article XV shall survive
the termination of this Agreement.

                                   ARTICLE XVI

                                  MISCELLANEOUS

         Section  16.1  Severability.  In the  event  that any  portion  of this
Agreement  shall be  declared  invalid by order,  decree or judgment of a court,
this  Agreement  shall be  construed  as if such  portion had not been  inserted
herein  except  when such  construction  would  operate as an undue  hardship to
Manager or Lessee or constitute a substantial  deviation from the general intent
and purpose of said parties as reflected in this Agreement.

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

         Section 16.2 Agency.  The  relationship  of Lessee and Manager shall be
that of  principal  and agent.  Nothing  contained  in this  Agreement  shall be
construed  to  create a  partnership  or  joint  venture  between  them or their
successors  in  interest.  Neither  party shall  borrow money in the name of, or
pledge the credit of, the other.  Manager's agency established by this Agreement
may not be terminated by Lessee except in accordance with the terms hereof.

         Section 16.3 Consents. Except as herein otherwise provided, whenever in
this  Agreement  the consent or approval of Lessee or Manager is required,  such
consent or approval shall not be unreasonably  withheld or delayed. Such consent
or approval shall be in writing only and shall be duly executed by an authorized
officer or agent of the party granting such consent or approval.

         Section 16.4  Applicable Law.  This Agreement shall be construed under,
and governed in accordance with, the laws of the State of Tennessee.

         Section 16.5  Successors Bound.  This Agreement shall be binding upon
and inure to the benefit of Lessee, its successors and assigns, and shall be
binding and inure to the benefit of Manager and its permitted assigns.

<PAGE>

         Section  16.6  Arbitration.   In  the  event  a  dispute  should  arise
concerning  the  interpretation  or application of any of the provisions of this
Agreement,  the parties agree the dispute shall be submitted to  arbitration  of
the American Arbitration  Association,  except as modified by this Section 16.6.
The Arbitration  Tribunal shall be formed of three (3) Arbitrators each of which
shall have at least ten (10) years' experience in hotel operation, management or
ownership,  one (1) to be  appointed  by each  party and the  third  (3rd) to be
appointed by the American  Arbitration  Association.  The arbitration shall take
place  in  Pittsburgh,  Pennsylvania  and  shall  be  conducted  in the  English
language.  The  arbitration  award shall be final and  binding  upon the parties
hereto and  subject to no appeal,  and shall deal with the  question of costs of
arbitration and all matters related thereto.  Arbitration  expenses shall not be
an  expense in  determining  Gross  Operating  Profit.  Judgment  upon the award
rendered may be entered into any court having jurisdiction,  or applications may
be made to such court for an order of enforcement.

         Section 16.7  Incorporation of Recitals.  The recitals set forth in the
preamble of this  Agreement are hereby  incorporated  into this  Agreement as if
fully set forth herein.

         Section  16.8  Force  Majeure.  If act of God,  acts  of  war,  acts of
terrorism, civil disturbance,  labor strikes, governmental action, including the
revocation  of any  material  license  or  permit  necessary  for the  operation
contemplated  in this  Agreement  where such  revocation is not due to Manager's
fault,  or any other causes  beyond the control of Manager  shall,  in Manager's
reasonable opinion, have a significant adverse effect upon the operations of the
Hotels,  then Manager shall be entitled to terminate  this  Agreement upon sixty
(60) days' written notice from the date of such event;  provided,  however, such
termination  shall not be effective if the event giving rise to the  termination
has been cured to the reasonable  satisfaction of Manager within such sixty (60)
day period.

         Section 16.9 Notices.  Notices,  statements and other communications to
be given under the terms of this Agreement  shall be in writing and delivered by
hand  against  receipt or sent by  certified  or  registered  mail or by Federal
Express or other similar overnight mail service, return receipt requested:

To Lessee:                                  with copy to:
---------
ENN LEASING COMPANY, INC.                   HUNTON & WILLIAMS
7700 Wolf River Boulevard                   951 E. Byrd Street
Germantown, TN 38138                        Riverfront Plaza, East Tower
Attn:  Corporate Secretary                  Richmond, VA  23219-4074
Phone: (901)754-7774                        Attn:   David C. Wright
Fax:   (901)754-2374                        Phone:  (804)788-8638
                                            Fax:    (804)788-8218

<PAGE>

To Manager:                                 with copy to:
----------
CROSSROADS HOSPITALITY COMPANY,             CROSSROADS HOSPITALITY COMPANY,
L.L.C.                                      L.L.C.
Foster Plaza Ten, 680 Andersen Drive        Foster Plaza Ten, 680 Andersen Drive
Pittsburgh, PA  15220                       Pittsburgh, PA  15220
Attn:   President                           Attn:   General Counsel
Phone:  (412)937-0600                       Phone:  (412)937-0600
Fax:    (412)937-8055                       Fax:   (412)937-3265

or at such other address as from time to time  designated by the party receiving
the notice.

         Section 16.10 Entire  Agreement.  This  Agreement,  together with other
writings signed by the parties  expressly stated to be supplementing  hereto and
together  with any  instruments  to be executed and  delivered  pursuant to this
Agreement,  constitutes the entire agreement  between the parties and supersedes
all prior  understandings  and  writings,  and may be changed  only by a writing
signed by the parties hereto.

         Section 16.11  Time.  Time is of the essence with respect to this
Agreement.

         Section 16.12 Attorneys'  Fees. In the event of any litigation  arising
out of this  Agreement,  the  prevailing  party shall be entitled to  reasonable
costs and expenses, including without limitation, attorneys' fees.

         Section 16.13       Complimentary Rooms.

         A.       Without Lessee's approval, (1) complimentary rooms provided to
                  general  managers  at Hotels in  connection  with  relocations
                  shall  not  exceed  sixty  (60)  days per  relocation  and (2)
                  complimentary rooms provided to other manager-level  employees
                  at Hotels in  connection  with  relocations  shall not  exceed
                  thirty (30) days per relocation.

         B.       With  respect to the  Orlando,  Florida  Homewood  Suites (the
                  "Orlando  Hotel"),  the following  practices  shall apply with
                  respect to  complimentary  and reduced rate rooms  provided to
                  employees  or  business  associates  of Manager  or  Manager's
                  affiliates:

                  1.   rooms used for persons traveling for business purposes
                       related to Manager's Orlando, FL corporate office,
                       including, regional staff visits, relocation of corporate
                       staff, task force employees, employee interviews,
                       training classes and Manager's visits by business
                       associates: if the Orlando Hotel's occupancy is equal to
                       or less than 95%, Manager shall be entitled to charge the
                       rooms at Manager's employee rate; and if the Orlando
                       Hotel's occupancy is greater than 95%, Manager shall be
                       entitled to charge the rooms at the Orlando Hotel's
                       corporate rate;

                  2.   rooms for persons traveling for business purposes related
                       to the Orlando Hotel:  Manager shall be entitled to
                       provide complimentary rooms;

<PAGE>

                  3.   rooms for employees of Manager or Manager's affiliates
                       traveling for non-business purposes:  for corporate
                       associates, Manager shall be entitled to provide
                       complimentary rooms; and for hotel associates, Manager
                       shall be entitled to charge the rooms at Manager's
                       employee rate, each on a space available basis.

         Section 16.14.  Subordination.  This Agreement  shall be subordinate to
any  mortgage   encumbering  a  Hotel,  and  Manager  agrees  to  enter  into  a
lender-manager  agreement  with  respect to each Hotel,  which  agreement  shall
contain reasonable  lender-manager  provisions,  including,  without limitation,
Manager's  acknowledgment  that its real estate  interest in and to a Hotel,  if
any,  created by this Agreement is subordinate to any mortgage  encumbering such
Hotel,  including providing any purchaser of such Hotel at a foreclosure sale or
deed-in-lieu  of foreclosure  (including the lender) with the right to terminate
this Agreement with respect to such Hotel;  provided,  however, in no event will
Manager agree to subordinate or waive its right to receive fees,  reimbursements
or   indemnification   payments  under  the  this  Agreement  arising  prior  to
termination  (but (a) if this  Agreement  is  terminated  by the  lender or such
purchaser  with respect to such Hotel,  Manager shall not look to the lender for
payment of such fees,  reimbursements or indemnification  payments and Manager's
right to receive such fees,  reimbursements or indemnification payments shall be
subordinated  to the lender's rights and (b) if this Agreement is not terminated
by the lender or such  purchaser  with  respect to such  Hotel,  then such fees,
reimbursements  or  indemnification  payments  shall be payable by the lender or
such purchaser).

         Section  16.15  Counterparts.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an original,  but all of
which taken together shall constitute one and the same instrument.

         Section 16.16 Compliance with Franchise  Agreement.  During the Term of
this  Agreement and so long as a Hotel is licensed as a Marriott  International,
Inc. ("Marriott") product, the following provisions shall apply to such Hotel:

         A.       Subject to the provisions of this Agreement, Owner and Manager
                  acknowledge and agree that the Manager shall have the
                  authority for the day-to-day management of the Hotel;

         B.       Subject to the provision by Owner of sufficient funds to so
                  comply, the Manager will operate the Hotel during the Term of
                  this Agreement in strict compliance with the Marriott license
                  agreement (the "License Agreement");

         C.       Except in extraordinary circumstances,  such as theft or fraud
                  on the part of the  Manager  or  default  by Lessee  under the
                  License  Agreement  caused by the Manager for which the Lessee
                  needs to  promptly  remove the  Manager  from the Hotel,  this
                  Agreement  shall not be terminated by Lessee  without at least
                  thirty (30) days' prior written notice to Marriott;

<PAGE>

         D.       If there are conflicts between any provision(s) of this
                  Agreement and the License Agreement, the provision(s) of the
                  License Agreement shall control; and

         E.       Manager and Owner acknowledge that the License Agreement
                  permits Marriott to communicate directly with the Manager
                  regarding day-to-day operation of the Hotel.

                            [signature page follows]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers.

ATTEST:                          LESSEE:
                                 ENN LEASING COMPANY, INC., a
                                 Tennessee corporation

                                 By:
                                 Name:
                                 Title:

ATTEST:                          MANAGER:
                                 CROSSROADS HOSPITALITY COMPANY, L.L.C.

                                 By:
                                 Kevin P. Kilkeary
                                 President and Chief Operating Officer<PAGE>

                                                                  EXHIBIT (10.7)

                             AMENDED AND RESTATED
                             --------------------
                              THE ROWE COMPANIES
                              ------------------
           CASH-OR-DEFERRED NON-QUALIFIED EXECUTIVE RETIREMENT PLAN
           --------------------------------------------------------

                                 Introduction
                                 ------------

          By action of its Board of Directors, The Rowe Companies, a Nevada
corporation (the "Sponsor"), as the successor to Rowe Furniture Corporation, has
adopted The Rowe Companies Cash-or-Deferred Non-Qualified Executive Retirement
Plan (the "Plan"), dated as of November 30, 1994 and effective as of December 1,
1994, and as amended and restated in this document, effective as of March 28,
2000.

          By action of its Board of Directors on March 10, 1999, the Sponsor
adopted certain amendments to the Plan, the terms of which have been
incorporated into this document and which are effective as of the date of
execution of this document.  All references hereinafter to the "Plan" shall mean
this Amended and Restated The Rowe Companies Cash-or-Deferred Non-Qualified
Executive Retirement Plan.

1.  Definitions
    -----------

    (a) "Beneficiary" shall mean the person(s) entitled, pursuant to Section
5(b) of the Plan, to receive payments under the Plan at and after the death of
the Participant, including the person(s) designated by the Participant, the
Participant's estate or the estate of a deceased Beneficiary, all as more
particularly described in Section 5(b.) hereof.

    (b) "Board of Directors" shall mean the Board of Directors of the Sponsor.

    (c) "Committee" shall mean the administrative committee of the Plan,
as it may be constituted from time to time, the initial members of which shall
be the President and Treasurer of the Sponsor.
<PAGE>

    (d) "Corporation" shall mean The Rowe Companies, a Nevada corporation, and
its wholly owned subsidiaries, and any successor thereto by merger,
consolidation or otherwise which may agree to continue the Plan.

    (e) "Deferred Compensation" shall mean the portion of each base salary
payment, and bonus payment, exclusive of any other payments, which would have
been payable to the Participant in his capacity as an Executive while
participating in the Plan and which portion he or she has elected to defer under
the terms of an election to participate in the Plan.

    (f) "Effective Date" shall mean December 1, 1994.

    (g) "Executive" shall mean a salaried employee of the Corporation who is an
elected officer and a "highly compensated employee" as such term is defined at
Section 414(q) of the Internal Revenue Code of 1986, as amended.

    (h) "Participant" shall mean an Executive who is selected by the Committee
to participate in the Plan and who elects to participate in the Plan, as
provided in Section 3, below.

    (i) "Plan" shall mean The Rowe Companies Cash-or-Deferred Non-Qualified
Executive Retirement Plan, as described herein and as amended from time to time.

    (j) "Sponsor" shall mean The Rowe Companies, a Nevada corporation, and any
successor thereto by merger, consolidation or otherwise which may agree to
continue the Plan.

2.  Purpose
    -------

    The purpose of the Plan is to enable any Executive of the Corporation
designated by the Committee to defer receipt of compensation otherwise payable
for services as an Executive by so electing in accordance with the provisions of
the Plan, provided such election is made prior to the date such compensation is
earned by the Executive, and to receive deferred matching credits with respect
to such deferrals. An additional purpose of the Plan is to grant supplemental
deferred compensation to Participants in such amounts and at such time as
determined by the Board of Directors in its discretion.

3.  Participation in the Plan
    -------------------------

    (a) All Executives of the Sponsor shall be eligible to participate in the
Plan on the Effective Date. Any Executive of the Sponsor hired after the
Effective Date and any employee of the Sponsor
<PAGE>

who shall become an Executive after the Effective Date shall be eligible to
participate in the Plan on the date on which he or she performs his first paid
hour of service as an Executive of the Sponsor. Any Executive employed by
another Corporation may be selected by the Committee to participate in the Plan
and may elect to participate by filing a written notice to that effect with the
Committee. Such written notice shall be substantially in the form attached
hereto as Exhibit A and shall include the Executive's election as to the method
of payment to be used for the distribution of the Deferred Compensation Account,
as described in Section 5(a) of the Plan. An Executive's election to participate
shall be effective on the date the election is received by the Committee. An
election to participate filed by any person at a time when he or she does not
qualify as an Executive as defined in the Plan shall be void.

    (b) Participation in the Plan shall continue as to any Participant until
that person ceases to be an Executive. A Participant may terminate the election
to defer by notifying the Committee in writing, in which event the election to
defer shall terminate effective upon receipt of such notification of
termination. An Executive's termination of participation or election to defer
shall not cause acceleration or modification of the time or method of payment
elected by the Participant with respect to the balance of the Deferred
Compensation Account accrued as of the effective date of such termination (or
with respect to the investment earnings credited to such Account thereafter and
before the entire balance of such Account has been distributed). A Participant
may designate a different method and time of payment for future Deferred
Compensation amounts by filing a written request with the Committee provided
that such request will become effective upon its receipt by the Committee with
respect to compensation earned and payable thereafter. No such request shall
modify in any way the method of payment previously elected by the Participant
with respect to the balance of the Deferred Compensation Account attributable to
compensation deferred prior to such request.

    (c) Notwithstanding anything herein contained to the contrary, the Board of
Directors of the Corporation or a majority of the Committee may, in its sole
discretion, accelerate but not extend the method and time of payment for all or
part of such Participant's Deferred
<PAGE>

Compensation Account under the Plan to provide for payment of any part or all of
the balance of the Participant's Deferred Compensation Account in a lump sum or
in substantially equal annual installments over any period, not to exceed 10
years, by a written instrument signed by such majority of the Committee and
delivered to the Participant (or the Participant's Beneficiary). In addition,
notwithstanding anything herein to the contrary, in order for the Corporation to
preserve its federal income tax deduction with respect to annual total
compensation payable to a Participant in excess of $1,000,000.00, as such
federal income tax deduction may be limited by Section 162(m) of the Code, the
Corporation or the Committee shall be permitted, in its sole discretion and
regardless of the election of the Participant, to make a distribution in an
amount that will not cause the Participant's total compensatory payments from
the Corporation to exceed in any given year $1,000,000.00.

4.  Deferred Compensation Accounts
    ------------------------------

    (a) After the effective date of any election to participate properly filed
with the Committee by an Executive, the Corporation shall establish an Account
on its books in the name of the Executive (a "Deferred Compensation Account"),
which Account shall be credited with the following:

        (i)    Deferred Compensation;

        (ii)   Corporation matching contributions, as described below;

        (iii)  Supplemental credits, as described below; and

        (iv)   Interest credits, as described below.

Credits of Deferred Compensation shall be made to the Participant's Deferred
Compensation Account as of the end of each payroll period during which each such
salary payment would otherwise have been paid to the Participant.

    (b) In addition to the salary reductions permitted by the Plan, the
Corporation shall make a matching contribution to the Executive's Deferred
Compensation Account in accordance with the following percentages of base salary
deferrals:
<PAGE>

                                                    Corporation Matching
  Executive Deferral as a                             Contribution as a
    Percentage of Base                            Percentage of Executive
    ------------------                            -----------------------
       Salary                                             Deferral
       ------                                             --------

      1% - 3%                                                75%
      4% - 6%                                                25%
     Above 6%                                                0%

Credits of matching contributions shall be made concurrently with the credits of
the Deferred Compensation to which such matching contributions correspond.

    (c) In addition to the salary reductions permitted by the Plan and the
aforesaid matching contributions, the Corporation, in the sole discretion of the
Board of Directors, may credit a Participant's Deferred Compensation Account
with additional amounts, to be known as "supplemental credits."

    (d) A Participant's Deferred Compensation Account shall be credited
with interest credits or "equivalents" on a daily basis, as follows:

        (i)   Interest will be credited on each hypothetical account on a
daily basis in an amount that mirrors the return of certain hypothetical
investment options as approved by the Board of Directors at the election of the
participant.

        (ii)  Twice each year, a Participant may select a hypothetical
investment option or options as approved by the Board of Directors by which
interest credits or "equivalents" will be credited to the Participant's Deferred
Compensation Account by written notice delivered to the Committee no later than
December 1 and June 1 of each year, to be effective for the six months beginning
on such dates. The Committee shall provide each participant with a form of
written notice, which shall include the hypothetical investment options and the
annual yield of such hypothetical investment options as of the market close on
the last business day of the month prior to distribution of the form.

        (iii) When an Executive first becomes a Participant, he or she
shall have until the last day of the month in which he or she becomes a
Participant to select his hypothetical investment option or options, to be
effective until the next December 1 or June 1, whichever is earlier. If an
<PAGE>

Executive has not chosen a hypothetical investment option or options by the last
day of the month in which he or she becomes a Participant, contributions and
employer match will be invested in the most conservative investment option until
he or she has selected his hypothetical investment option or options. For an
Executive who is already a Participant as of the date of execution of this
document, the Participant shall have until the last day of the month in which
this document is executed to select his hypothetical investment option or
options, to be effective until the next December 1 or June 1, whichever is
earlier. If an Executive has not chosen a hypothetical investment option or
options by the last day of the month in which this document is executed,
contributions and employer match will be invested in the most conservative
investment option until he or she has selected his hypothetical investment
option or options.

        (iv)  If a Participant selects more than one hypothetical investment
option, he or she shall designate for each hypothetical investment option a
percentage of his Deferred Compensation Account to which that hypothetical
investment option's yield shall apply.  If the Participant fails to designate a
percentage for each hypothetical investment option, or if the percentages do not
total 100%, then the Committee will assume an equal allocation to the selected
hypothetical investment options.  In the event a Participant does not select a
hypothetical investment option or options by the applicable deadline, then (A)
the hypothetical investment option or options applied to his Deferred
Compensation Account for the prior six-month period (or portion thereof) shall
govern for the next six months, in the case where such Participant had
previously selected a hypothetical investment option, or (B) the Committee will
assume equal allocations of all of the hypothetical investment options, in the
case where such Participant has never timely selected a hypothetical investment
option or options.

        (v)   Once each year, the Board of Directors may change the choice of
hypothetical investment options by resolution adopted by a majority of the Board
of Directors at a validly-called meeting or by unanimous written consent. In the
event of such a change, the Committee shall notify each Participant in writing.
<PAGE>

    (e) Payment of a Participant's Deferred Compensation Account under the
Plan shall be the sole liability and obligation of the Corporation employing the
Executive during the respective period(s) of his participation in the Plan.  The
Deferred Compensation Account shall be for bookkeeping purposes only and no
assets shall be required to be segregated by the Corporation employing the
Executive from its general funds by reason of such Account.

5.  Distributions of Deferred Compensation Accounts
    -----------------------------------------------

    (a) At the time of election to participate in the Plan, a Participant shall
also make (as a part of the election to participate) an election as to the
method of payment of distributions of his Deferred Compensation Account. A
Participant may elect to receive distributions (i) in one lump sum payment or
(ii) in a number of substantially equal annual installments not to exceed 10.
The single lump sum payment or the first annual installment payment, as the case
may be, shall be made as soon as administratively feasible. Amounts held for
installment payments shall continue to be credited with investment earnings, as
specified in Section 4(d). Subsequent installments shall be made as soon as
administratively feasible if installment payments are to be made annually, until
the entire balance of such Participant's Deferred Compensation Account due to
that Participant has been paid.

    (b) If a Participant dies before full payment is made of such Participant's
Deferred Compensation Account, the unpaid balance of such Deferred Compensation
Account shall be paid to the surviving Beneficiary or Beneficiaries designated
in writing by the Participant and delivered to the Committee under the same
method of payment which applied or would have applied in the case of payments to
the Participant. The filing of a designation of Beneficiary shall be deemed
automatically to revoke any previously filed Beneficiary designation. If no
designation shall be in effect or no designated Beneficiary survives the
Participant, then the unpaid balance at the Participant's death shall be paid to
the estate of the Participant in one lump sum payment. Payment to the
Participant's estate or Beneficiary shall be made as soon as administratively
feasible. In the case of a Beneficiary who dies while receiving installment
payments, any installments payable after the Beneficiary's death shall be paid
to the deceased Beneficiary's estate; however, at the Committee's option, such
unpaid installment payments may be paid in one lump sum payment to the deceased
Beneficiary's estate.
<PAGE>

6.  Assignment and Payments Upon Incapacity
    ---------------------------------------

    (a) No right of any Participant or Beneficiary in the Plan to receipt of his
Deferred Compensation Account shall be assignable or subject to anticipation,
encumbrance, sale, pledge, alienation, execution, levy, attachment, charge or
any other form of transfer or encumbrance of any nature whatsoever except that a
Participant may name a Beneficiary or Beneficiaries in respect of the rights of
the Participant in the event of such Participant's death. Upon the occurrence of
any event deemed by the Corporation employing the Executive to be in violation,
attempted violation or to evidence any danger of violation of the prohibition on
transfers and encumbrances described in this paragraph, all as determined by the
Committee, the Corporation may withhold any and all payments under the Plan and
make such payments to anyone else deemed by the Corporation to be a natural
object of the bounty of the Participant or Beneficiary to whom such withheld
payments would otherwise have been made.

    (b) If the Committee shall find that any person to whom any payment is
payable under the Plan is unable to care for his or her affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee, or other
legal representative) may be paid to the spouse, a child, a parent, or a brother
or sister, or to any person deemed by the Committee to have incurred expenses
for such person otherwise entitled to payment, in such manner and proportions as
the Committee may determine. Any such payment shall be a complete discharge of
the liabilities of the Corporation to make such payment to the Participant.

7.  Amendment or Discontinuance of Plan
    -----------------------------------

    (a) The Board of Directors shall be vested with the sole power to amend
the Plan at any time and in any manner (whether in toto or with respect to
                                                -- ----
an individual Participant) in such respects as the Board of Directors may deem
advisable by an instrument in writing, which amendment shall be binding on all
parties, subject to the principles contained in Section 7(c).  Notice of any
such amendment shall be provided to all Participants.
<PAGE>

    (b) The Board of Directors reserves the right to discontinue the Plan,
on a prospective basis, by resolution adopted by a majority of the Board of
Directors at a meeting at which a quorum is present.  Such discontinuance shall
be subject to the principles contained in Section 7(c).

    (c) Notwithstanding the foregoing, no amendment or discontinuance of
the Plan shall, without the consent of the affected Participants, affect
elections of Participants made prior to such amendment or discontinuance or
affect their right to receive any Deferred Compensation payments attributable to
compensation deferred, matching contributions credited, interest equivalents
credited, or to supplemental credits awarded, prior to the effective date of
such amendment or discontinuance.

8.  Plan Not Funded
    ---------------

    (a) The Plan is not funded.  The Corporation shall not be required to
reserve, or otherwise set aside, physically or legally, any funds for the
payment of its obligations hereunder.  The obligations of the Corporation with
respect to the benefits payable hereunder shall be paid out of such
Corporation's general assets and shall not be secured by any form of trust,
escrow, evidence of indebtedness or otherwise.  No person having rights under
the Plan shall be deemed to have any property interest, legal or equitable, in
any specific asset of the Corporation, and, to the extent that any person
acquires any right to receive payments under the Plan, such right shall be no
greater than, nor shall it have preference or priority over, the rights of any
unsecured general creditor of the Corporation.

    (b) The Corporation shall have the right, but shall not be required,
to segregate funds in its financial records equal to the aggregate Deferred
Compensation Accounts of the Participants, and to invest such funds or to direct
the investment of such funds in order to produce an income return, but such
funds and the earnings thereon shall remain solely as an asset of the
Corporation.

9.  Establishment of Rabbi Trust
    ----------------------------

    The Sponsor has entered into the Trust Agreement for the Rowe Furniture
Corporation Cash-or-Deferred Non-Qualified Executive Retirement Plan (the "Rabbi
Trust"), dated March 28, 1995, with Crestar Bank, N.A., an unrelated, federally
chartered commercial bank (the "Trustee"), in essential conformity with the
principles set forth in IRS Revenue Procedure 92-64, or its successor.
Notwithstanding anything herein to the contrary, the Sponsor shall transfer to
the Trustee an amount
<PAGE>

of cash equal to the value of the Deferred Compensation Accounts of all
Participants in the Plan as of the date of such transfer upon the occurrence of
the first to occur of the following events: (i) the net worth of the
Corporation, as determined by the certified public accountants normally serving
the Corporation, shall fail to exceed $15,000,000.00; or (ii) the change of
control of the Corporation (a "Triggering Event"). For purposes of this Section
9, each of the events specified in the following clauses (i) through (iii) of
this Section 9 shall be deemed a "change of control": (i) any third person,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, shall become the beneficial owner of shares of the Corporation with
respect to which 25 % or more of the total number of votes for the election of
the Board of Directors may be cast, (ii) as a result of, or in connection with,
any cash tender offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Corporation shall cease to constitute a majority of the Board
of Directors or (iii) the shareholders of the Corporation shall approve an
agreement providing either for a transaction in which the Corporation will cease
to be an independent publicly owned entity or for a sale or other disposition of
au or substantially all the assets of the Corporation. The Corporation shall
transfer to the Rabbi Trust cash representing the Corporation's liability under
the Plan within fourteen days after the occurrence of a Triggering Event. The
Corporation shall thereafter transfer additional cash to the Rabbi Trust in an
amount equal to any additional liabilities incurred by the Corporation with
respect to the Participants hereunder.

10. Copies of Plan Available
    ------------------------

    Copies of the Plan and any and all amendments thereto shall be made
available to all members of the Board of Directors and Participants during
normal business hours at the office of the Secretary of the Sponsor.
<PAGE>

11. Plan Administration
    -------------------

    Unless otherwise expressly stated in the Plan, matters pertaining to
the Plan's interpretation, construction and administration shall be determined
by the Committee.

12. Binding on Successors
    ---------------------

    In the event that the Corporation (or any entity resulting from any
merger or consolidation referred to in this Paragraph or which shall be a
purchaser or transferee so referred to) shall at any time be merged or
consolidated into or with any other entity or entities or in the event that
substantially all of the assets of the Corporation or any such entity shall be
sold or otherwise transferred to another entity, the provisions of the Plan
shall be binding upon and shall inure to the benefit of the continuing entity in
(or the entity resulting from) such merger or consolidation or the entity to
which such assets shall be sold or transferred.  Except as provided in the
preceding sentence, the Plan shall not be assignable by the Corporation or by
any entity referred to in this Paragraph.  The obligations and rights of a
Participant under the Plan shall not be assignable, but, in the event of the
Participant's death, such obligations and rights shall be binding upon and inure
to the benefit of such Participant's designated Beneficiaries, heirs, executors
or administrators.

13. Continuation as Executive
    -------------------------

    The Plan or the payment of any benefits hereunder shall not be construed as
giving to any Executive any right to be retained as an employee of the
Corporation.

14. Hardship Withdrawals
    --------------------

    For serious financial reasons beyond the Participant's control, and which
would cause the Participant great hardship if early withdrawal were not
permitted, such Participant may apply to the Committee for withdrawals from the
Plan prior to termination of the Participant's service as an Executive of the
Corporation. If such application for withdrawal is approved by the Committee,
the withdrawal will be effective at the later of the dates specified in the
Participant's application or the date of approval by the Committee. The
Committee shall direct the Corporation to pay such amount attributable to the
balance in such Participant's Deferred Compensation Account(s) up to the amount
necessary to meet the financial emergency as stated in Participant's application
for withdrawal.
<PAGE>

Following withdrawal, the Participant's Election to Defer shall be terminated
and no new Election to Defer shall be accepted or approved by the Committee for
a period of no less than six (6) months following the date of withdrawal.
Serious financial reasons may include the following: bankruptcy or impending
bankruptcy, unexpected and unreimbursed expenses of a major or emergency nature
where withdrawal of the funds would be necessary to prevent great hardship to
the Participant. Withdrawals for foreseeable expenditures normally budgetable
shall not be permitted.

15. Participation by Members of Committee
    -------------------------------------

    No member of the Committee shall be precluded from becoming a Participant in
the Plan; however, such member shall not be entitled to vote or act upon
matters, or sign any documents, relating specifically to such member's own
participation under the Plan, except when such matters or documents relate to
benefits and administrative matters generally. If this disqualification results
in the lack of a quorum, then the Sponsor's Board of Directors shall appoint a
sufficient number of temporary members of the Committee who shall serve for the
sole purpose of determining such a question. Fifty percent of the members of the
Committee shall constitute a quorum.

16. Claims Procedure
    ----------------

    (a) Any claim for benefits or payments under the Plan by Participants
or Beneficiaries shall be made in writing and delivered to the Committee at the
principal office of the Sponsor.  If the Participant or Beneficiary believes he
or she has been denied any benefits or payment under the Plan, either in total
or in an amount less than the full benefit or payment the claimant would
normally be entitled to, the Committee shall advise the claimant in writing of
the amount of the benefit, or payment, if any, and the specific reasons for the
denial.  The Committee shall also furnish the claimant at that time with a
written notice containing:

        (i)   A specific reference to pertinent provisions of the Plan.

        (ii)  A description of any additional material or information necessary
              for the claimant to perfect his claim, if possible, and an
              explanation of why such material or information is needed.

        (iii) An explanation of the following claim review procedure.

    (b) Within sixty (60) days of receipt of the information described above,
the claimant shall, if further review is desired, file a written request for
reconsideration with the Committee. So long as the claimant's request for review
is pending (including such sixty (60) day period), the claimant or his or
<PAGE>

her duly authorized representative may review pertinent documents and may submit
issues and comments in writing to the Committee.

    (c) A final and binding decision shall be made by the Committee within sixty
(60) days of the filing by the claimant of the request for reconsideration;
provided, however, that if the Committee, in its discretion, feels that a
hearing with the claimant or his or her representative present is necessary or
desirable, this period shaft be extended an additional sixty (60) days.

    (d) The decision by the Committee shall be conveyed to the claimant in
writing and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific references to the
pertinent provisions of the Plan on which the decision is based.

    (e) The Committee shall use ordinary care and diligence in the performance
of its duties. The Committee shall be entitled to rely conclusively, and shall
be fully protected in any action or omission taken by it in good faith reliance,
upon the advice or opinions of any persons, firms or agents retained by it,
including, but not limited to, accountants, actuaries, counsel and other
specialists. Nothing contained herein shall preclude the Corporation from
indemnifying any member of the Committee for all actions under the Plan, or from
purchasing liability insurance to protect such persons serving thereon with
respect to their duties pursuant to the Plan.
<PAGE>

    IN WITNESS WHEREOF, the duly authorized officers of The Rowe Companies have
signed and sealed the Plan on behalf of The Rowe Companies, a Nevada
corporation, on this 28th day of March, 2000.

                                                   THE ROWE COMPANIES

ATTEST:

                                                   /s/ Gerald M. Birnbach
                                                   -----------------------------
/s/ Arthur H. Dunkin                               Gerald M. Birnbach, President
---------------------------
Arthur H. Dunkin, Secretary

[CORPORATE SEAL]
<PAGE>

                                  "EXHIBIT A"

                    NOTICE OF ELECTION TO DEFER EXECUTIVE'S
                    ---------------------------------------
                  COMPENSATION AND DESIGNATION OF BENEFICIARY
                  -------------------------------------------

TO:  The Administrative Committee of The Rowe Companies Cash-or-Deferred Non-
     Qualified Executive Retirement Plan

          I, the undersigned, an Executive of The Rowe Companies, a Nevada
corporation (the "Corporation"), or of one of its subsidiaries, hereby
acknowledge receipt of a copy of the Amended and Restated The Rowe Companies
Cash-or-Deferred Non-Qualified Executive Retirement Plan (the "Plan"), and
further acknowledge that my election to participate in the Plan contained
therein shall be subject in all respects to the provisions of the Plan, as
amended from time to time.

          Pursuant to the terms of the Plan, I hereby elect to defer receipt of
the future payment of the percentage of my salary as designated below, effective
as of the effective date of the Plan or, if later, as of the date of this
notice:

          ________    Percent of annual salary pro rated over calendar year.

Such election shall continue to be effective until I file written notice of
termination of this election with the Committee, unless I become ineligible at
an earlier date under the terms of the Plan.

          I also elect hereby that all amounts deferred under the Plan, together
with interest equivalents, if appropriate, credited thereon, shall be
distributed to me:

          (check appropriate form of payment)

          ______  In one single lump sum payment

                                      OR

          ______  In equal annual installments for  ______  years (specify
number not exceeding 10).

          The single lump sum payment or the first annual installment (if I have
so elected) shall be paid on or about the second day of the calendar quarter
immediately following the calendar quarter in which I cease to be an Executive,
and subsequent installments shall be paid on or about the second day of each
succeeding calendar year until the entire amount credited to my Deferred
Compensation Account shall have been paid, provided that I have chosen to take
annual installments.

          I hereby designate the following beneficiary (or beneficiaries or
contingent beneficiaries in the percentages set forth following their names) in
accordance with Section 5(b) of the Plan:
<PAGE>

(give name(s), addressees), relationships), social security number(s), and, if
applicable, percentage of interest).

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

                                                         EXECUTIVE
WITNESS:

                                               ____________________________
                                                        (Signature)

___________________

Date:  ____________

ACCEPTED:

                                               THE ROWE COMPANIES
ATTEST:

                                               ____________________________
___________________

Date:  ____________

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