Document:

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                           PURCHASE AND SALE AGREEMENT

                                  by and among

          CANDLEWOOD HOTEL COMPANY, INC. AND CERTAIN OF ITS AFFILIATES,
                                   as Sellers,

                                       and

                          HOSPITALITY PROPERTIES TRUST,
                                  as Purchaser

                           ---------------------------

                                 April 11, 2002

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                               TABLE OF CONTENTS

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SECTION 1.  DEFINITIONS......................................................................2

        1.1  Agreement.......................................................................2
        1.2  Agreement to Lease..............................................................3
        1.3  Allocable Purchase Price........................................................3
        1.4  Assets..........................................................................3
        1.5  Business Day....................................................................3
        1.6  Candlewood......................................................................3
        1.7  Candlewood Parties..............................................................3
        1.8  Closing.........................................................................3
        1.9  Closing Date....................................................................3
        1.10  Contracts......................................................................3
        1.11  Defective Property.............................................................4
        1.12  Documents......................................................................4
        1.13  FF&E...........................................................................4
        1.14  Hotel..........................................................................4
        1.15  Improvements...................................................................4
        1.16  Intangible Property............................................................4
        1.17  Opening Date...................................................................4
        1.18  Permitted Encumbrances.........................................................4
        1.19  Plans and Specifications.......................................................5
        1.20  Properties.....................................................................5
        1.21  Purchase Price.................................................................5
        1.22  Purchaser......................................................................5
        1.23  Real Property..................................................................5
        1.24  Retained Funds.................................................................5
        1.25  Review Period..................................................................5
        1.26  Second Amended Lease...........................................................5
        1.27  Sellers........................................................................6
        1.28  Surveys........................................................................6
        1.29  Tenant.........................................................................6
        1.30  Tenant Leases..................................................................6
        1.31  Title Commitments..............................................................6
        1.32  Title Company..................................................................6
SECTION 2.  PURCHASE AND SALE; DILIGENCE.....................................................6

        2.1  Purchase and Sale...............................................................6
        2.2  Diligence Inspections...........................................................6
        2.3  Defective Properties............................................................7
        2.4  Title Matters...................................................................8
        2.5  Survey Matters..................................................................9
SECTION 3.  PURCHASE AND SALE...............................................................10

        3.1  Closing........................................................................10
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                               TABLE OF CONTENTS

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        3.2  Purchase Price.................................................................10
SECTION 4.  CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE...................................11

        4.1  Closing Documents..............................................................11
        4.2  Condition of Properties........................................................12
        4.3  Title Policies and Surveys.....................................................12
        4.4  Opinions of Counsel............................................................13
SECTION 5.  CONDITIONS TO CANDLEWOOD PARTIES' OBLIGATION TO CLOSE...........................13

        5.1  Purchase Price.................................................................13
        5.2  Closing Documents..............................................................13
        5.3  Opinion of Counsel.............................................................13
SECTION 6.  REPRESENTATIONS AND WARRANTIES OF CANDLEWOOD PARTIES............................14

        6.1  Status and Authority of the Candlewood Parties.................................14
        6.2  Action of the Candlewood Parties...............................................14
        6.3  No Violations of Agreements....................................................14
        6.4  Litigation.....................................................................14
        6.5  Existing Leases, Agreements, Etc...............................................15
        6.6  Disclosure.....................................................................15
        6.7  Utilities, Etc.................................................................15
        6.8  Compliance With Law............................................................15
        6.9  Taxes..........................................................................16
        6.10  Not A Foreign Person..........................................................16
        6.11  Hazardous Substances..........................................................16
        6.12  Insurance.....................................................................16
        6.13  Ownership of Sellers..........................................................17
        6.14  Substantial Completion........................................................17
        6.15  Condition of Properties.......................................................17
SECTION 7.  REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................................18

        7.1  Status and Authority of the Purchaser..........................................18
        7.2  Action of the Purchaser........................................................18
        7.3  No Violations of Agreements....................................................19
        7.4  Litigation.....................................................................19
SECTION 8.  COVENANTS OF THE CANDLEWOOD PARTIES.............................................19

        8.1  Compliance with Laws, Etc......................................................19
        8.2  Approval of Agreements.........................................................20
        8.3  Notice of Material Changes or Untrue Representations...........................20
        8.4  Financial Information..........................................................20
SECTION 9.  APPORTIONMENTS..................................................................20
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                               TABLE OF CONTENTS

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        9.1  Real Property Apportionments...................................................20
        9.2  Closing Costs..................................................................21
SECTION 10.  DEFAULT........................................................................21

        10.1  Default by the Candlewood Parties.............................................21
        10.2  Default by the Purchaser......................................................21
SECTION 11.  MISCELLANEOUS..................................................................22

        11.1  Agreement to Indemnify........................................................22
        11.2  Brokerage Commissions.........................................................23
        11.3  Publicity.....................................................................23
        11.4  Notices.......................................................................24
        11.5  Waivers, Etc..................................................................25
        11.6  Assignment; Successors and Assigns............................................25
        11.7  Severability..................................................................26
        11.8  Counterparts, Etc.............................................................26
        11.9  Governing Law.................................................................26
        11.10  Performance on Business Days.................................................27
        11.11  Attorneys' Fees..............................................................27
        11.12  Section and Other Headings...................................................27
        11.13  Nonliability of Trustees.....................................................27
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Schedule A       -     The Properties; Allocable Purchase Prices
Schedule B-1-_   -     Legal Descriptions
Schedule C       -     Form of Surveyor's Certificate
Schedule D       -     Form of Seller's Certificate
Schedule E       -     List of Plans and Specifications
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                           PURCHASE AND SALE AGREEMENT

        THIS PURCHASE AND SALE AGREEMENT is made as of the 11th day of April,
2002, by and among (i) CANDLEWOOD HOTEL COMPANY, INC. ("Candlewood"), a Delaware
corporation, (ii) the entities listed as "sellers" on the signature pages of
this Agreement (each, individually, a "Seller" and collectively, the "Sellers")
and (iii) HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust
("Purchaser").

                                   WITNESSETH:

        WHEREAS, the Sellers are the owners of all the Properties (all
capitalized terms used and not otherwise defined herein having the meanings
ascribed to such terms in Section 1); and

        WHEREAS, the Purchaser desires to purchase the Properties, as more fully
set forth below; and

        WHEREAS, the Sellers are willing to sell all of the Properties to the
Purchaser, subject to and upon the terms and conditions hereinafter set forth;
and

        WHEREAS, Candlewood owns, directly or indirectly, all of the outstanding
capital stock of the Sellers and the transactions contemplated by this Agreement
are of direct and material benefit to Candlewood;

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, the Candlewood Parties and
the Purchaser hereby agree as follows:

SECTION 1. DEFINITIONS

        Capitalized terms used in this Agreement shall have the meanings set
forth below or in the Section of this Agreement referred to below:

        1.1 "AGREEMENT" shall mean this Purchase and Sale Agreement, together
with Schedules A through E attached hereto, as it and they may be amended from
time to time as herein provided.

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        1.2 "AGREEMENT TO LEASE" shall mean that certain Agreement to Lease,
dated as of November 19, 1997, by and between the Purchaser and Candlewood, as
it may be amended, restated, supplemented or otherwise modified from time to
time.

        1.3 "ALLOCABLE PURCHASE PRICE" shall mean, with respect to each
Property, the amount set forth in Schedule A opposite the name of such Property,
it being understood and agreed that the aggregate amount of the Allocable
Purchase Prices of the Properties shall be One Hundred Forty-Five Million
Dollars ($145,000,000).

        1.4 "ASSETS" shall mean, with respect to any Hotel, collectively, all of
the Real Property, the FF&E, the Contracts, the Documents, the Improvements, the
Intangible Property and the Tenant Leases owned by any of the Sellers in
connection with or relating to such Hotel.

        1.5 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of New York are authorized by law or executive action to close.

        1.6 "CANDLEWOOD" shall have the meaning given such term in the first
paragraph of this Agreement.

        1.7 "CANDLEWOOD PARTIES" shall mean, collectively, Candlewood and the
Sellers.

        1.8 "CLOSING" shall have the meaning given such term in Section 3.1.

        1.9 "CLOSING DATE" shall have the meaning given such term in Section
3.1.

        1.10 "CONTRACTS" shall mean, with respect to any Property, all hotel
licensing agreements and other service contracts, equipment leases, booking
agreements and other arrangements or agreements to which any of the Sellers is a
party affecting the ownership, repair, maintenance, management, leasing or
operation of such Property, to the extent the Sellers' interest therein is
assignable or transferable; provided, however, that the term "Contracts" shall
not include those certain management agreements, dated as of various dates,
between any Seller and Candlewood with respect to such Seller's respective
Properties, which management agreements shall be terminated with respect to such
affected Properties on or prior to the Closing Date.

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        1.11 "DEFECTIVE PROPERTY" shall have the meaning given such term in
Section 2.3(a).

        1.12 "DOCUMENTS" shall mean, with respect to any Property, all books,
records and files relating to the leasing, maintenance, management or operation
of such Property.

        1.13 "FF&E" shall mean, with respect to any Property, all appliances,
machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings
and articles of tangible personal property of every kind and nature whatsoever
(other than motor vehicles) owned by any of the Sellers and located in or at, or
used in connection with the ownership, operation or maintenance of such
Property.

        1.14 "HOTEL" shall mean each hotel located at the properties identified
on Schedule A, the legal descriptions of which are set forth on Schedules B-1
through B-21.

        1.15 "IMPROVEMENTS" shall mean, with respect to any Property, all
buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property with
respect to such Property.

        1.16 "INTANGIBLE PROPERTY" shall mean, with respect to any Property, all
transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, the Contracts, telephone exchange numbers identified
with such Property held by any of the Sellers and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character with respect to such Property held by any of the Sellers.

        1.17 "OPENING DATE" shall mean, with respect to any Property, the date
as of which all Improvements located at such Property, including, without
limitation, all guest rooms and/or suites, shall be open for business to the
public as a Candlewood hotel, in accordance with applicable brand standards.

        1.18 "PERMITTED ENCUMBRANCES" shall mean, with respect to any Property,
(a) liens for taxes, assessments and governmental charges with respect to such
Property not yet due and payable or due and payable but not yet delinquent; (b)
applicable zoning regulations and ordinances provided the same do not prohibit
or impair in any material respect use of such Property as an extended stay hotel
as currently operated and constructed; (c)

                                      -4-
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such other nonmonetary encumbrances as do not, in the Purchaser's reasonable
opinion, impair marketability and do not materially interfere with the use of
such Property as a fully functioning Candlewood hotel; (d) UCC Financing
Statements which would be permitted pursuant to the terms of Section 21.9 of the
Second Amended Lease; and (e) such other nonmonetary encumbrances with respect
to such Property which are not objected to by the Purchaser in accordance with
Sections 2.4 and 2.5.

        1.19 "PLANS AND SPECIFICATIONS" shall mean, with respect to each
Property, the plans and specifications identified on Schedule E with respect to
such Property.

        1.20 "PROPERTIES" shall mean, collectively, all of the Assets relating
to the properties identified on Schedule A, the legal descriptions of which are
set forth in Schedules B-1 through B-21.

        1.21 "PURCHASE PRICE" shall mean the sum of the Allocable Purchase
Prices, but in no event more than One Hundred Forty-Five Million Dollars
($145,000,000).

        1.22 "PURCHASER" shall have the meaning given such term in the first
paragraph of this Agreement.

        1.23 "REAL PROPERTY" shall mean, with respect to any Property, the real
property described in the applicable Schedule B-1 through B-21, together with
all easements, rights of way, privileges, licenses and appurtenances which the
Sellers may own with respect thereto.

        1.24 "RETAINED FUNDS" shall mean the sum of Sixteen Million Dollars
($16,000,000).

        1.25 "REVIEW PERIOD" shall mean the period commencing on the date of
this Agreement and expiring on the first to occur of the date thirty (30) days
after the date of this Agreement and the Closing Date.

        1.26 "SECOND AMENDED LEASE" shall mean the second amended and restated
lease to be entered into between the Purchaser or its subsidiary, as landlord,
and the Tenant, as tenant, with respect to the Properties and the other
properties described in the Agreement to Lease, as amended, modified or
supplemented from time to time.

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        1.27 "SELLERS" shall have the meaning given such term in the first
paragraph of this Agreement.

        1.28 "SURVEYS" shall have the meaning given such term in Section 2.5.

        1.29 "TENANT" shall have the meaning given such term in the Agreement to
Lease.

        1.30 "TENANT LEASES" shall mean, with respect to any Property, all
leases, rental agreements or other agreements (other than agreements for letting
of rooms or other facilities to hotel guests) (including all amendments or
modifications thereto) which entitle any person to have rights with respect to
the use or occupancy of any portion of such Property.

        1.31 "TITLE COMMITMENTS" shall have the meaning given such term in
Section 2.4.

        1.32 "TITLE COMPANY" shall mean First American Title Insurance Company,
or such other title insurance company as shall have been selected by the
Purchaser and approved by the Sellers, which approval shall not be unreasonably
withheld, delayed or conditioned.

SECTION 2. PURCHASE AND SALE; DILIGENCE

        2.1 PURCHASE AND SALE. In consideration of the mutual covenants herein
contained, the Purchaser hereby agrees to purchase from the Sellers and
Candlewood hereby agrees to cause the Sellers to sell and the Sellers hereby
agree to sell to the Purchaser, all of the Sellers' right, title and interest in
and to the Properties for the Purchase Price, subject to and in accordance with
the terms and conditions of this Agreement.

        2.2 DILIGENCE INSPECTIONS. For the Review Period and, thereafter, until
Closing, the Sellers shall permit the Purchaser and its representatives to
inspect the Properties and the Improvements (including, without limitation, all
roofs, electric, mechanical and structural elements, and HVAC systems therein),
to perform due diligence, soil analysis and environmental investigations, to
examine the books of account and records of the Sellers with respect to the
Properties, including, without limitation, all leases and agreements affecting
the Properties, and make copies thereof, at such reasonable times as the
Purchaser or its representatives may request by notice to the Sellers (which
notice may be oral). To

                                      -6-
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the extent that, in connection with such investigations, the Purchaser, its
agents, representatives or contractors, damages or disturbs any of the Real
Property, the Improvements or FF&E located thereon, the Purchaser shall, at its
expense, return the same to substantially the same condition which existed
immediately prior to such damage or disturbance. Neither the Purchaser nor any
of its agents, representatives or contractors shall have any right whatsoever to
alter the condition of any Property, or portion thereof, without the prior
written consent of the Sellers, which consent shall not be unreasonably
withheld, delayed or conditioned. The Purchaser shall indemnify, defend and hold
harmless the Sellers from and against any and all expense, loss or damage which
the Sellers may incur as a result of any act or omission of the Purchaser or its
representatives, agents or contractors in connection with such examinations and
inspections, other than to the extent that any expense, loss or damage arises
from any negligence or misconduct of the Sellers. The provisions of this Section
2.2 shall survive the termination of this Agreement and the Closing.

        2.3 DEFECTIVE PROPERTIES. (a) In the event that (i) the Purchaser
reasonably determines that a Property has structural, environmental or other
structural defects or conditions such that (x) expenditures equal to or greater
than three percent (3%) of the Allocable Purchase Price of such Property are
required in order to bring such Property into a reasonably satisfactory
condition in accordance with prevailing standards, as the case may be, for like
hotels, or (y) the calculation with respect to such Property of net operating
income varies by three percent (3%) or more of that set forth in the financial
data provided by the Candlewood Parties to the Purchaser prior to the date
hereof (any such Property being hereinafter referred to as a "Defective
Property"), and (ii) the Purchaser gives written notice thereof to the
Candlewood Parties no later than the expiration of the Review Period (time being
of the essence with respect to the giving of such notice), identifying the
Defective Property or Defective Properties and the specific defects with respect
thereto, the Candlewood Parties shall, subject to paragraph (c) below, be
required to permit the Purchaser to acquire all of the Properties other than
such Defective Property or Defective Properties.

        (b) If, prior to the Closing, (i) any Property suffers a casualty or
condemnation which would cause such Property or Properties to become a Defective
Property, (ii) such Property is not, prior to the Closing, restored to a
condition substantially

                                      -7-
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the same as the condition thereof immediately prior to such casualty or
condemnation, and (iii) the Purchaser provides written notice of same to the
Candlewood Parties no later than the Closing Date, time being of the essence,
the Candlewood Parties shall, subject to paragraph (c) below, be required to
permit the Purchaser to acquire all of the Properties other than such Defective
Property or Properties. Promptly upon learning of the same, the Candlewood
Parties covenant and agree to provide the Purchaser with prompt written notice
of any casualty or condemnation affecting any Property.

        (c) If the Purchaser timely identifies any Defective Property and the
Purchaser and the Candlewood Parties shall, acting reasonably and in good faith
be unable or unwilling to agree that (x) the Candlewood Parties shall, at their
sole cost, remedy the applicable defect prior to the Closing (in which event the
Candlewood Parties shall have the right to adjourn the Closing Date for up to
ninety (90) days for such purpose), (y) the Purchaser shall, notwithstanding
such defect, acquire the Defective Property subject to a reduction in the
Allocable Purchase Price of the Defective Property sufficient to compensate the
Purchaser for such defect (in which event the Seller shall retain all available
insurance or condemnation proceeds) or (z) on the substitution of another
property owned by the Candlewood Parties for such Defective Property, this
Agreement shall, at the Purchaser's option, terminate with respect to such
Defective Property and the Purchase Price shall be reduced by the Allocable
Purchase Price of such Defective Property.

        2.4 TITLE MATTERS. Prior to the execution of this Agreement, the
Candlewood Parties have ordered from the Title Company and directed the Title
Company promptly to deliver to the Purchaser a preliminary title commitment, for
an ALTA extended owner's policy of title insurance with respect to each of the
Properties, together with complete and legible copies of all instruments and
documents referred to as exceptions to title (collectively, the "Title
Commitments").

        Prior to the expiration of the Review Period, the Purchaser shall give
the Candlewood Parties notice of any title exceptions (other than Permitted
Encumbrances) which adversely affect any Property in any material respect and as
to which the Purchaser reasonably objects. If, for any reason, the Candlewood
Parties are unable or unwilling to take such actions as may be required to cause
such exceptions to be removed from the Title

                                      -8-
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Commitments, the Candlewood Parties shall give the Purchaser notice thereof; it
being understood and agreed that the failure of the Candlewood Parties to give
such notice within ten (10) Business Days after the Purchaser's notice of
objection shall be deemed an election by the Candlewood Parties not to remedy
such matters. If the Candlewood Parties shall be unable or unwilling to remove
any title defects to which the Purchaser has reasonably objected, the Purchaser
may elect (i) to terminate this Agreement with respect to the affected Property,
in which event, the Purchase Price shall be reduced by the Allocable Purchase
Price of the affected Properties and this Agreement shall be of no further force
and effect with respect to the affected Properties or (ii) to consummate the
transactions contemplated hereby, notwithstanding such title defect, without any
abatement or reduction in the Purchase Price on account thereof. The Purchaser
shall make any such election by written notice to the Candlewood Parties given
on or prior to the fifth Business Day after the Candlewood Parties' notice of
their unwillingness or inability to cure such defect. Failure of the Purchaser
to give such notice shall be deemed an election by the Purchaser to proceed in
accordance with clause (ii) above and such exception shall be deemed a Permitted
Encumbrance.

        2.5 SURVEY MATTERS. Prior to the execution of this Agreement, the
Candlewood Parties have arranged for the preparation of an ALTA survey with
respect to each of the Properties (the "Surveys") by a licensed surveyor in the
jurisdiction in which each such Property is located, which (i) contains an
accurate legal description of the applicable Property, (ii) shows the exact
location, dimension and description (including applicable recording information)
of all utilities, easements, encroachments and other physical matters affecting
such Property, the number of striped parking spaces located thereon and all
applicable building set-back lines, (iii) states whether the applicable Property
is located within a 100-year flood plain and (iv) includes a certification in
the form set forth in Schedule C, or such other form as may be acceptable to the
Purchaser, addressed to the Purchaser, the Title Company and any other persons
requested by the Purchaser or designated by the Candlewood Parties.

        Within ten (10) Business Days after receipt of the Surveys, the
Purchaser shall give the Candlewood Parties notice of any matters shown thereon
(other than Permitted Encumbrances) which adversely affect any such Property in
any material respect and as to which the Purchaser reasonably objects. If, for
any

                                      -9-
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reason, the Candlewood Parties are unwilling or unable to take such actions as
may be required to remedy the objectionable matters, the Candlewood Parties
shall give the Purchaser prompt notice thereof; it being understood and agreed
that the failure of the Candlewood Parties to give such notice within ten (10)
Business Days after the Purchaser's notice of objection shall be deemed an
election by the Candlewood Parties not to remedy such matters. If the Candlewood
Parties shall be unwilling or unable to remove any survey defect to which the
Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this
Agreement with respect to the affected Property, in which event, the Purchase
Price shall be reduced by the Allocable Purchase Price of the affected
Properties and this Agreement shall terminate and be of no further force or
effect with respect to the affected Properties or (ii) to consummate the
transactions contemplated hereby, notwithstanding such defect, without any
abatement or reduction in the Purchase Price on account thereof. The Purchaser
shall make any such election by written notice to the Candlewood Parties given
on or prior to the fifth Business Day after the Candlewood Parties' notice of
their inability to cure such defect and time shall be of the essence with
respect to the giving of such notice. Failure of the Purchaser to give such
notice shall be deemed an election by the Purchaser to proceed in accordance
with clause (ii) above and such matter shall be deemed a Permitted Encumbrance.

SECTION 3. PURCHASE AND SALE

        3.1 CLOSING. The purchase and sale of the Properties shall be
consummated at a closing (the "Closing") to be held at the offices of Sullivan &
Worcester LLP, One Post Office Square, Boston, Massachusetts, or at such other
location as the Sellers and the Purchaser may agree, at 10:00 a.m. local time,
on a date (the "Closing Date") which is the later to occur of (i) April 11,
2002, and (ii) the date as of which all conditions precedent to the Closing
herein set forth have either been satisfied or waived by the party in whose
favor such conditions run. In the event that the Closing shall not have occurred
on or before _________ __, 2002, provided that no action for specific
performance shall have been commenced by the Purchaser to enforce this
Agreement, any party shall, provided such party shall not be in default
hereunder, have the right, by the giving of written notice, to terminate this
Agreement.

        3.2 PURCHASE PRICE. The Purchase Price shall be payable as follows:

                                      -10-
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        (a) At the Closing, the Purchase Price, less the amount of the Retained
Funds, shall be payable by wire transfer of immediately available funds on the
Closing Date to an account or accounts to be designated by the Sellers prior to
the Closing; and

        (b) Except as otherwise provided in the Second Amended Lease, the
Retained Funds with respect to each Property shall be payable by wire transfer
of immediately available funds upon the expiration or sooner termination of the
Second Amended Lease, in accordance with the terms of the Second Amended Lease,
to an account or accounts to be designated by the Sellers prior to such date.

SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE

        The obligation of the Purchaser to acquire each of the Properties on the
Closing Date shall be subject to the satisfaction of the following conditions
precedent on and as of such Closing Date:

        4.1 CLOSING DOCUMENTS. The Candlewood Parties shall have delivered to
the Purchaser:

        (a) A good and sufficient warranty deed with covenants against grantor's
acts, or its local equivalent, in proper statutory form for recording, duly
executed and acknowledged by the Sellers, conveying good and marketable title to
each of the Properties, free from all liens and encumbrances other than the
Permitted Encumbrances;

        (b) A bill of sale and assignment agreement, in form and substance
reasonably satisfactory to the Sellers and the Purchaser, duly executed and
acknowledged by the Sellers, with respect to all of the Sellers' right, title
and interest in, to and under the FF&E, the Contracts, the Documents, the
Intangible Property and the Tenant Leases with respect to each of the Properties
and the Sellers' rights under all builder's warranties with respect to each of
the Properties;

        (c) A copy of the final duly issued certificate of occupancy for each
Property;

        (d) A Sellers' closing certificate in the form attached hereto as
Schedule D;

                                      -11-
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        (e) A duly executed copy of the Second Amended Lease, or applicable
amendment thereto, all of the Incidental Documents (as such term is defined in
the Second Amended Lease) and all other documents and sums required to be
delivered by the Candlewood Parties and/or the Tenant pursuant to the Agreement
to Lease;

         (f) Certified copies of all charter documents, applicable corporate
resolutions and certificates of incumbency with respect to the applicable
Candlewood Parties and the Tenant; and

        (g) Such other conveyance documents, certificates, deeds, affidavits and
other instruments as the Purchaser or the Title Company may reasonably require
to effectuate the transactions contemplated by this Agreement.

        4.2 CONDITION OF PROPERTIES.

        (a) No material default or event which with the giving of notice and/or
lapse of time could constitute a material default shall have occurred and be
continuing under any material agreement benefiting or affecting any of the
Properties in any respect;

        (b) No action shall be pending or threatened for the condemnation or
taking by power of eminent domain of all or any material portion of any of the
Properties which would render such Property a Defective Property;

        (c) All material licenses, permits and other authorizations necessary
for the current use, occupancy and operation of each of the Properties shall be
in full force and effect;

        (d) The Purchaser shall have received an engineer's report with respect
to each Property, in form and substance reasonably satisfactory to the
Purchaser; and

        (e) No Default or Event of Default (as defined therein) shall have
occurred and be continuing under the Second Amended Lease.

        4.3 TITLE POLICIES AND SURVEYS. (a) The Title Company shall be prepared,
subject only to payment of the applicable premium and endorsement fees and
delivery of all conveyance documents in recordable form, to issue title
insurance policies to the Purchaser with respect to each of the Properties, in
form

                                      -12-
<PAGE>

and substance reasonably satisfactory to the Purchaser in accordance with
Section 2.4, together with such affirmative coverages as the Purchaser may
reasonably require and shall have been determined by the Title Company as
available prior to the expiration of the Review Period.

        (a) The Purchaser shall have received an as-built survey with respect to
each of the Properties, such survey to be consistent with the requirements of
Section 2.5.

        4.4 OPINIONS OF COUNSEL. (a) The Purchaser shall have received a written
opinion from counsel to the Candlewood Parties, which counsel shall be
reasonably acceptable to the Purchaser, in form and substance reasonably
satisfactory to the Purchaser, regarding the organization and authority of the
Candlewood Parties and the Tenant, the enforceability of this Agreement, the
Second Amended Lease and the Incidental Documents (as defined in the Second
Amended Lease) and such other matters with respect to the transactions
contemplated by this Agreement as the Purchaser may reasonably require.

        (a) The Purchaser shall have received a zoning report from Planning and
Zoning Resource Corporation, in form and substance reasonably satisfactory to
the Purchaser, regarding the compliance of the Properties with respect to
zoning, licensing and such other matters as the Purchaser may reasonably
require.

SECTION 5. CONDITIONS TO CANDLEWOOD PARTIES' OBLIGATION TO CLOSE

        The obligation of the Candlewood Parties to convey the Properties on the
Closing Date to the Purchaser is subject to the satisfaction of the following
conditions precedent on and as of the Closing Date:

        5.1 PURCHASE PRICE. The Purchaser shall deliver to the Candlewood
Parties the Purchase Price as provided in Section 3.2.

        5.2 CLOSING DOCUMENTS. The Purchaser shall have delivered to the
Sellers:

        (a) Duly executed and acknowledged counterparts of the documents
described in Section 4.1, where applicable; and

                                      -13-
<PAGE>

        (b) Certified copies of all charter documents, applicable resolutions
and certificates of incumbency with respect to the Purchaser.

        5.3 OPINION OF COUNSEL. The Candlewood Parties shall have received a
written opinion from Sullivan & Worcester LLP, counsel to the Purchaser, in form
and substance reasonably satisfactory to the Candlewood Parties, regarding the
organization and authority of the Purchaser and such other matters with respect
to the transactions contemplated by this Agreement as the Candlewood Parties may
reasonably require.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF CANDLEWOOD PARTIES

        To induce the Purchaser to enter into this Agreement, each of
Candlewood, with respect to all Properties, and, each Seller, with respect to
its Property, represent and warrant to the Purchaser as follows:

        6.1 STATUS AND AUTHORITY OF THE CANDLEWOOD PARTIES. It is a corporation
or limited liability company duly organized, validly existing and in good
standing under the laws of its state of incorporation or formation, and has all
requisite power and authority under the laws of such state and its respective
charter documents to enter into and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. It has duly qualified to
transact business in each jurisdiction in which the nature of the business
conducted by it requires such qualification, except where failure to do so could
not reasonably be expected to have a material adverse effect.

        6.2 ACTION OF THE CANDLEWOOD PARTIES. It has taken all necessary action
to authorize the execution, delivery and performance of this Agreement, and upon
the execution and delivery of any document to be delivered by it on or prior to
the Closing Date, such document shall constitute its valid and binding
obligation and agreement, enforceable against such Candlewood Party in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors.

        6.3 NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or
performance of this Agreement, nor compliance with the terms and provisions
hereof, will result in any breach of

                                      -14-
<PAGE>

the terms, conditions or provisions of, or conflict with or constitute a default
under, or result in the creation of any lien, charge or encumbrance upon any of
the Properties pursuant to the terms of any indenture, mortgage, deed of trust,
note, evidence of indebtedness or any other agreement or instrument by which it
is bound.

        6.4 LITIGATION. It has received no written notice of and, to its
knowledge, no action or proceeding is pending or threatened and no investigation
looking toward such an action or proceeding has begun, which (a) questions the
validity of this Agreement or any action taken or to be taken pursuant hereto,
(b) will result in any material adverse change in the business, operation,
affairs or condition of any of the Properties, (c) will result in or subject any
of the Properties to a material liability, or (d) involves condemnation or
eminent domain proceedings against any material part of any of the Properties.

        6.5 EXISTING LEASES, AGREEMENTS, ETC. Other than any agreements provided
to the Purchaser not less than ten (10) days prior to the expiration of the
Review Period, there are no other material agreements affecting any of the
Properties which will be binding on the Purchaser subsequent to the Closing Date
which the Purchaser cannot terminate on thirty (30) days notice without payment
of premium or penalty.

        6.6 DISCLOSURE. To its knowledge, there is no fact or condition which
materially and adversely affects the business or condition of any of the
Properties which has not been set forth in this Agreement or in the other
documents, certificates or statements furnished to the Purchaser in connection
with the transactions contemplated hereby.

        6.7 UTILITIES, ETC. To its knowledge, all utilities and services
necessary for the use and operation of each of the Properties (including,
without limitation, road access, gas, water, electricity and telephone) are
available thereto and are of sufficient capacity to meet adequately all needs
and requirements necessary for the current use and operation of each of the
Properties. To its knowledge, no fact, condition or proceeding exists which
would result in the termination or material impairment of the furnishing of such
utilities to any of the Properties.

        6.8 COMPLIANCE WITH LAW. To its knowledge, except as disclosed to the
Purchaser in writing not less than ten (10)

                                      -15-
<PAGE>

days' prior to the expiration of the Review Period, including in any engineering
report, (i) each of the Properties and the current use and operation thereof do
not violate any material federal, state, municipal and other governmental
statutes, ordinances, by-laws, rules, regulations or any other legal
requirements, including, without limitation, those relating to construction,
occupancy, zoning, adequacy of parking, environmental protection, occupational
health and safety and fire safety applicable thereto; and (ii) at the time of
the Closing there will be in effect all material licenses, permits and other
authorizations necessary for the current use, occupancy and operation thereof.
Except as disclosed to the Purchaser in writing not less than ten (10) days'
prior to the expiration of the Review Period, none of the Candlewood Parties has
received written notice of any threatened request, application, proceeding,
plan, study or effort which would materially adversely affect the present use or
zoning of any of the Properties or which would modify or realign any adjacent
street or highway in a material and adverse way.

        6.9 TAXES. To its knowledge, other than the amounts disclosed by tax
bills, no taxes or special assessments of any kind (special, bond or otherwise)
are or have been levied with respect to any of the Properties, or any portion
thereof, which are outstanding or unpaid, other than amounts not yet due and
payable or, if due and payable, not yet delinquent.

        6.10 NOT A FOREIGN PERSON. It is not a "foreign person" within the
meaning of Section 1445 of the United States Internal Revenue Code of 1986, as
amended, and the treasury regulations promulgated thereunder.

        6.11 HAZARDOUS SUBSTANCES. Except as disclosed to the Purchaser or as
described in any environmental report delivered to the Purchaser prior to the
expiration of the Review Period, to its knowledge, neither it nor any tenant or
other occupant or user of any of the Properties, or any portion thereof, has
stored or disposed of (or engaged in the business of storing or disposing of) or
has released or caused the release of any hazardous waste, contaminants, oil,
radioactive or other material on any of the Properties, or any portion thereof,
the removal of which is required or the maintenance of which is prohibited or
penalized by any applicable Federal, state or local statutes, laws, ordinances,
rules or regulations, and, to each of the Candlewood Party's knowledge, except
as disclosed to the Purchaser or as described in any environmental report

                                      -16-
<PAGE>

delivered to the Purchaser prior to the expiration of the Review Period, each of
the Properties is free from any such hazardous waste, contaminants, oil,
radioactive and other materials, except any such materials maintained in
accordance with applicable law.

        6.12 INSURANCE. It has not received written notice from any insurance
carrier of defects or inadequacies in any of the Properties which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.

        6.13 OWNERSHIP OF SELLERS. Candlewood is the sole owner, directly or
indirectly, of all of the issued and outstanding beneficial interests in the
Sellers and the transactions contemplated by this Agreement are of direct
material benefit to Candlewood.

        6.14 SUBSTANTIAL COMPLETION. Physical completion of the Improvements on
each of the Properties has occurred, including, without limitation, physical
completion of a hotel of the brand and consisting of the number of rooms set
forth on Schedule A, consistent with the Plans and Specifications therefor, free
of all liens and encumbrances (other than Permitted Encumbrances) such that the
Opening Date of each of the Properties shall have occurred and the Improvements
may be used for their intended use.

        6.15 CONDITION OF PROPERTIES. To its knowledge, each of the Properties
is in good working order and repair, mechanically and structurally sound, free
from material defects in materials and workmanship, except that Seller has
received notice of a voluntary sprinkler head recall and has provided a copy of
such notice to Purchaser.

        The representations and warranties made in this Agreement by the
Candlewood Parties are made as of the date hereof and shall be deemed remade by
the Candlewood Parties as of the Closing Date with the same force and effect as
if made on, and as of, such date; provided, however, that, the Candlewood
Parties shall have the right prior to the Closing Date to modify the
representations and warranties by notice to the Purchaser and, in such event,
the Purchaser shall have the rights provided in Section 2.3. All representations
and warranties made in this Agreement by the Candlewood Parties shall survive
the Closing for a period of one year thereafter.

                                      -17-
<PAGE>

        Except as otherwise expressly provided in this Agreement or any
documents to be delivered to the Purchaser at the Closing, the Candlewood
Parties disclaim the making of any representations or warranties, express or
implied, regarding the Properties or matters affecting the Properties, whether
made by the Candlewood Parties, on the Candlewood Parties' behalf or otherwise,
including, without limitation, the physical condition of the Properties, title
to or the boundaries of the Real Property, pest control matters, soil
conditions, the presence, existence or absence of hazardous wastes, toxic
substances or other environmental matters, compliance with building, health,
safety, land use and zoning laws, regulations and orders, structural and other
engineering characteristics, traffic patterns, market data, economic conditions
or projections, and any other information pertaining to the Properties or the
market and physical environments in which they are located. The Purchaser
acknowledges (i) that the Purchaser has entered into this Agreement with the
intention of making and relying upon its own investigation or that of third
parties with respect to the physical, environmental, economic and legal
condition of each Property and (ii) that the Purchaser is not relying upon any
statements, representations or warranties of any kind, other than those
specifically set forth in this Agreement or in any document to be delivered to
the Purchaser at any Closing, made by the Candlewood Parties or anyone acting on
the Candlewood Parties' behalf. The Purchaser further acknowledges that it has
not received from or on behalf of the Candlewood Parties any accounting, tax,
legal, architectural, engineering, property management or other advice with
respect to this transaction and is relying solely upon the advice of third party
accounting, tax, legal, architectural, engineering, property management and
other advisors. Subject to the provisions of this Agreement, the Purchaser shall
purchase the Properties in their "as is" condition on the Closing Date.

SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER

        To induce the Candlewood Parties to enter in this Agreement, the
Purchaser represents and warrants to the Candlewood Parties as follows:

        7.1 STATUS AND AUTHORITY OF THE PURCHASER. The Purchaser is a Maryland
real estate investment trust duly organized, validly existing and in trust good
standing under the laws of the State of Maryland, and has all requisite power
and authority under the laws of such state and under its charter documents to

                                      -18-
<PAGE>

enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The Purchaser has duly qualified and is in
good standing as a trust or unincorporated business association in each
jurisdiction in which the nature of the business conducted by it requires such
qualification, except where the failure to do so could not reasonably be
expected to have a material adverse effect.

        7.2 ACTION OF THE PURCHASER. The Purchaser has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by the
Purchaser on or prior to the Closing Date such document shall constitute the
valid and binding obligation and agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors.

        7.3 NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or
performance of this Agreement by the Purchaser, nor compliance with the terms
and provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note,
evidence of indebtedness or any other agreement or instrument by which the
Purchaser is bound.

        7.4 LITIGATION. No investigation, action or proceeding is pending and,
to the Purchaser's knowledge, no action or proceeding is threatened and no
investigation looking toward such an action or proceeding has begun, which
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto.

        The representations and warranties made in this Agreement by the
Purchaser shall be continuing and shall be deemed remade by the Purchaser as of
the Closing Date with the same force and effect as if made on, and as of, such
date. The Purchaser's liability with respect to all representations and
warranties made in this Agreement by the Purchaser shall survive the Closing for
a period of one (1) year thereafter.

                                      -19-
<PAGE>

SECTION 8. COVENANTS OF THE CANDLEWOOD PARTIES

        Candlewood, with respect to all Properties, and each Seller, with
respect to each of its Properties, hereby covenant with the Purchaser between
the date of this Agreement and the Closing Date as follows:

        8.1 COMPLIANCE WITH LAWS, ETC. To comply or to cause compliance with in
all material respects with (i) all applicable laws, regulations and other
requirements from time to time of every governmental body having jurisdiction of
the Properties or the use or occupancy of the Improvements located on the Real
Property and (ii) all terms, covenants and conditions of all instruments of
record and other agreements affecting the Properties.

        8.2 APPROVAL OF AGREEMENTS. Except as otherwise authorized by this
Agreement or in the ordinary course of business, not to enter into, modify,
amend or terminate any other agreement with respect to any Property which would
encumber or be binding upon such Property from and after the Closing Date
without in each instance obtaining the prior written consent of the Purchaser,
which consent shall not be unreasonably withheld, delayed or conditioned.

        8.3 NOTICE OF MATERIAL CHANGES OR UNTRUE REPRESENTATIONS. Upon learning
of any material change in any condition with respect to any of the Properties or
of any event or circumstance which makes any representation or warranty of the
Candlewood Parties to the Purchaser under this Agreement untrue or misleading in
any material respect, promptly to notify the Purchaser thereof (the Purchaser
agreeing, on learning of any such fact or condition, promptly to notify the
Candlewood Parties thereof).

        8.4 FINANCIAL INFORMATION. To provide to the Purchaser, promptly upon
request at the Candlewood Parties' sole cost and expense, such audited and
unaudited financial and other information and certifications of the Candlewood
Parties with respect to the Candlewood Parties and the Properties as the
Purchaser may from time to time reasonably request in order to comply with any
applicable securities laws and/or any rules, regulations or requirements of the
Securities and Exchange Commission and, if required or requested, to permit the
Purchaser to incorporate by reference any information included in filings made
by Candlewood with the Securities and Exchange

                                      -20-
<PAGE>

Commission. Notwithstanding the foregoing, the Candlewood Parties shall not be
required to provide, pursuant to this Agreement, audited financial information
with respect to individual Properties, unless the Purchaser shall pay for the
cost thereof.

SECTION 9. APPORTIONMENTS

        9.1 REAL PROPERTY APPORTIONMENTS. Representatives of the Purchaser and
the Candlewood Parties shall perform any and all of the adjustments and
apportionments which are appropriate and usual for a transaction of this nature
and taking into account the simultaneous execution of the Second Amended Lease.
The adjustments hereunder shall be calculated or paid in an amount based upon a
fair and reasonable estimated accounting performed and agreed to by
representatives of the Candlewood Parties and the Purchaser at or prior to the
Closing. Subsequent final adjustments and payments shall be made in cash or
other immediately available funds as soon as practicable after the Closing Date
and in any event within ninety (90) days after the Closing Date, based upon an
agreed accounting performed by representatives of the Candlewood Parties and the
Purchaser. In the event the parties have not agreed with respect to the
adjustments required to be made pursuant to this Section 9.1 within such
ninety-day period, upon application by either party, Ernst & Young, LLP or other
certified public accountants reasonably acceptable to the Purchaser and the
Candlewood Parties shall determine any such adjustments which have not
theretofore been agreed to between the Candlewood Parties and the Purchaser. The
charges of such accountant shall be borne by the Candlewood Parties.

        9.2 CLOSING COSTS. The Candlewood Parties shall pay all costs and
expenses associated with the transactions contemplated hereby, including,
without limitation, recording costs, title insurance premiums, the costs and
expenses of preparing engineering and environmental reports, market studies and
appraisals and the reasonable costs and expenses of legal counsel retained by
the Purchaser.

        The obligations of the parties under this Section 9 shall survive the
Closing.

SECTION 10. DEFAULT

        10.1 DEFAULT BY THE CANDLEWOOD PARTIES. If the Candlewood Parties shall
have made any representation or warranty herein

                                      -21-
<PAGE>

which shall be untrue or misleading in any material respect, or if the
Candlewood Parties shall fail to perform any of the material covenants and
agreements contained herein to be performed by the Candlewood Parties and such
failure continues for a period of ten (10) days after notice thereof from the
Purchaser or if the Tenant shall default in its obligations under the Agreement
to Lease and such default shall continue beyond the expiration of any applicable
cure period, the Purchaser may terminate this Agreement and/or the Purchaser may
pursue any and all remedies available to it at law or in equity, including, but
not limited to, a suit for specific performance or other equitable relief.

        10.2 DEFAULT BY THE PURCHASER. If the Purchaser shall have made any
representation or warranty herein which shall be untrue or misleading in any
material respect, or if the Purchaser shall fail to perform any of the covenants
and agreements contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from the Candlewood
Parties or if the Purchaser shall default in its obligations under the Agreement
to Lease and such default shall continue beyond the expiration of any applicable
cure period, the Candlewood Parties may, as its sole and exclusive remedy at law
and in equity, terminate this Agreement. In the event that the Candlewood
Parties shall so terminate this Agreement, the Purchaser shall thereupon pay to
the Candlewood Parties, as liquidated damages and not as a penalty, the sum of
Two Hundred Fifty Thousand Dollars ($250,000) plus all expenses incurred by the
Candlewood Parties in connection with the transactions contemplated hereby,
whereupon, the Purchaser shall have no further monetary or, except as expressly
provided herein, nonmonetary obligations hereunder.

SECTION 11. MISCELLANEOUS

        11.1 AGREEMENT TO INDEMNIFY. (a) Subject to any express provisions of
this Agreement to the contrary, (i) the Candlewood Parties shall indemnify and
hold harmless the Purchaser from and against any and all obligations, claims,
losses, damages, liabilities, and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and disbursements) arising out of
(x) events, contractual obligations, acts or omissions of the Candlewood Parties
that occurred in connection with the ownership or operation of any Property
prior to the Closing or (y) any damage to property of others or injury to or
death of any person or any claims for any debts or obligations

                                      -22-
<PAGE>

occurring on or about or in connection with any Property or any portion thereof
at any time or times prior to the Closing, and (ii) the Purchaser shall
indemnify and hold harmless the Candlewood Parties from and against any and all
obligations, claims, losses, damages, liabilities and expenses (including,
without limitation, reasonable attorneys' and accountants' fees and
disbursements) arising out of (x) events, contractual obligations, acts or
omissions of Purchaser that occur in connection with the ownership or operation
of any Property on or after the Closing, or (y) any damage to property of others
or injury to or death of any person or any claims for any debts or obligations
occurring on or about any Property or any portion thereof at any time or times
after the Closing.

        (b) Whenever it is provided in this Agreement that an obligation of the
Candlewood Parties will be assumed by the Purchaser on or after the Closing, the
Purchaser shall be deemed to have also agreed to indemnify and hold harmless the
Candlewood Parties and their respective successors and assigns from and against
all claims, losses, damages, liabilities, costs, and expenses (including,
without limitation, reasonable attorneys' and accountants' fees and expenses)
arising from any failure of the Purchaser to perform the obligation so assumed
on or after the Closing.

        (c) Whenever either party shall learn through the filing of a claim or
the commencement of a proceeding or otherwise of the existence of any liability
for which the other party is or may be responsible under this Agreement, the
party learning of such liability shall notify the other party promptly and
furnish such copies of documents (and make originals thereof available) and such
other information as such party may have that may be used or useful in the
defense of such claims and shall afford said other party full opportunity to
defend the same in the name of such party and shall generally cooperate with
said other party in the defense of any such claim.

        (d) The provisions of this Section 11.1 shall survive the Closing and
the termination of this Agreement.

        11.2 BROKERAGE COMMISSIONS. Each of the parties hereto represents to the
other parties that it dealt with no broker, finder or like agent in connection
with this Agreement or the transactions contemplated hereby. The Candlewood
Parties shall be solely responsible for and shall indemnify and hold harmless
the Purchaser and its respective legal representatives, heirs,

                                      -23-
<PAGE>

successors and assigns from and against any loss, liability or expense,
including, reasonable attorneys' fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Agreement or the
transactions contemplated hereby made by any broker, finder or like agent other
than such loss, liability or expense arising from the Purchaser's breach of its
representation made in this Section 11.2. The provisions of this Section 11.2
shall survive the Closing and any termination of this Agreement.

        11.3 PUBLICITY. The parties agree that no party shall, with respect to
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated to any third party without the consent of the other
parties, which consent shall not be unreasonably withheld, delayed or
conditioned, except as required by law or unless such action is taken based on
advice of counsel given in good faith. No party, or its employees shall trade in
the securities of any parent or affiliate of the Sellers or of the Purchaser
until a public announcement of the transactions contemplated by this Agreement
has been made. No party shall record this Agreement or any notice thereof,
except as required by law or unless such action is taken based on advice of
counsel given in good faith.

        11.4 NOTICES. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).

        (b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which

                                      -24-
<PAGE>

is not a Business Day, the day of receipt or required delivery shall
automatically be extended to the next Business Day.

        (c)    All such notices shall be addressed,

        if to the Candlewood Parties to:

               Candlewood Hotel Company, Inc.
               8621 E. 21st Street North, Suite 200
               Wichita, Kansas  67206
               Attn:  Mr. Tim Johnson
               [Telecopier No. (316) 631-1382]

         with a copy to:

               Latham & Watkins
               233 South Wacker Drive, Suite 5800
               Chicago, Illinois  60606
               Attn:  Kenneth Crews, Esq.
               [Telecopier No. (312) 993-9767]

        If to the Purchaser, to:

               Hospitality Properties Trust
               400 Centre Street
               Newton, Massachusetts  02458
               Attn:  Mr. John G. Murray
               [Telecopier No. (617) 969-5730]

        with a copy to:

               Sullivan & Worcester LLP
               One Post Office Square
               Boston, Massachusetts  02109
               Attn:  Nancy S. Grodberg, Esq.
               [Telecopier No. (617) 338-2880]

        (d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.

        11.5 WAIVERS, ETC. Any waiver of any term or condition of this
Agreement, or of the breach of any covenant, representation

                                      -25-
<PAGE>

or warranty contained herein, in any one instance, shall not operate as or be
deemed to be or construed as a further or continuing waiver of any other breach
of such term, condition, covenant, representation or warranty or any other term,
condition, covenant, representation or warranty, nor shall any failure at any
time or times to enforce or require performance of any provision hereof operate
as a waiver of or affect in any manner such party's right at a later time to
enforce or require performance of such provision or any other provision hereof.
This Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected, except by an instrument in writing executed by
or on behalf of the party against whom enforcement of any amendment, waiver,
change, modification, consent or discharge is sought.

        11.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement and all rights
and obligations hereunder shall not be assignable by any party without the
written consent of the other parties, except that (x) Purchaser may assign this
Agreement to any entity wholly owned, directly or indirectly, by the Purchaser
(provided, however, that, in the event this Agreement shall be assigned to any
entity wholly owned, directly or indirectly, by the Purchaser, Hospitality
Properties Trust shall remain liable for the obligation of the "Purchaser"
hereunder) and (y) after the Closing, the Sellers may assign its surviving
rights, if any, under this Agreement to the Tenant. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns. This
Agreement is not intended and shall not be construed to create any rights in or
to be enforceable in any part by any other persons.

        11.7 SEVERABILITY. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed

                                      -26-
<PAGE>

and construed in any such jurisdiction or case as if such invalid, inoperative
or unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.

        11.8 COUNTERPARTS, ETC. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof.

        11.9 GOVERNING LAW. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts which
are to be performed entirely within Massachusetts, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than The Commonwealth of Massachusetts; or
(vii) any combination of the foregoing.

        To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
The Commonwealth of Massachusetts as is provided by law; and the parties consent
to the jurisdiction of said court or courts located in The Commonwealth of
Massachusetts and to service of process by registered mail, return receipt
requested, or by any other manner provided by law.

        11.10 PERFORMANCE ON BUSINESS DAYS. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time

                                      -27-
<PAGE>
for payment or performance shall automatically be extended to the first Business
Day following such date.

        11.11 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.

        11.12 SECTION AND OTHER HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

        11.13 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PURCHASER. ALL PERSONS
DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

                                      -28-
<PAGE>
        IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.

                                  CANDLEWOOD PARTIES:

                                  CANDLEWOOD HOTEL COMPANY, INC.

                                  By: /s/ Tim Johnson
                                      ------------------------------------------
                                      Tim Johnson
                                      Vice President-Treasurer and
                                      Assistant Secretary

                                  CANDLEWOOD ANAHEIM, CA-WEST, LLC, a
                                  Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY, INC., a Delaware
                                      corporation, its sole member

                                      By: /s/ Tim Johnson
                                          --------------------------------------
                                          Tim Johnson
                                          Vice President-Treasurer
                                          and Assistant Secretary

                                  CANDLEWOOD IRVINE, CA-SPECTRUM WEST, LLC, a
                                  Delaware limited liability company

                                  By:  CANDLEWOOD HOTEL COMPANY, INC., a
                                       Delaware corporation, its sole member

                                       By: /s/ Tim Johnson
                                           -------------------------------------
                                           Tim Johnson
                                           Vice President-Treasurer
                                           and Assistant Secretary

<PAGE>

                                  CANDLEWOOD CLEARWATER, FL, LLC, a Delaware
                                  limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD MIAMI, FL-INTL. PKWY., LLC, a
                                  Delaware limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

                                  CANDLEWOOD ORLANDO, FL-ALTAMONTE SPRINGS, LLC,
                                  a Delaware limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

<PAGE>

                                  CANDLEWOOD ATLANTA GA-GWINNETT, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD CHICAGO IL-LIBERTYVILLE, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD CHICAGO, IL-WARRENVILLE, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

<PAGE>

                                  CANDLEWOOD CHICAGO, IL-O'HARE, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD CHICAGO, IL-SCHAUMBURG, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ /Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD CHICAGO, IL-WAUKEGAN, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

<PAGE>
                                  CANDLEWOOD DETROIT, MI-ANN ARBOR, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD ST. LOUIS, MO, LLC, a Delaware
                                  limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD COLUMBUS, OH-AIRPORT, LLC, a
                                  Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

<PAGE>
                                  CANDLEWOOD CLEVELAND, OH-NONRTH OLMSTED, LLC,
                                  a Delaware limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD OKLAHOMA CITY, OK, LLC, a Delaware
                                  limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

                                  CANDLEWOOD KNOXVILLE, TN, LLC, a Delaware
                                  limited liability company

                                  By:   CANDLEWOOD HOTEL COMPANY, INC., a
                                        Delaware corporation, its sole member

                                        By: /s/ Tim Johnson
                                            ------------------------------------
                                            Tim Johnson
                                            Vice President-Treasurer
                                            and Assistant Secretary

<PAGE>
                                  CANDLEWOOD DALLAS, TX-GALLERIA, LLC, a
                                  Delaware limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

                                  CANDLEWOOD ARLINGTON, TX, LLC, a Delaware
                                  limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

                                  CANDLEWOOD DALLAS, TX-NORTH DALLAS, LLC, a
                                  Delaware limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

<PAGE>
                                  CANDLEWOOD HOUSTON, TX-LOOP LLC, a Delaware
                                  limited liability company

                                  By:    CANDLEWOOD HOTEL COMPANY, INC., a
                                         Delaware corporation, its sole member

                                         By: /s/ Tim Johnson
                                             -----------------------------------
                                             Tim Johnson
                                             Vice President-Treasurer
                                             and Assistant Secretary

                                  PURCHASER:

                                    HOSPITALITY PROPERTIES TRUST

                                    By: /s/ John G. Murray
                                        ----------------------------------------
                                            John G. Murray
                                            President

<PAGE>
                                   SCHEDULE A

                                 THE PROPERTIES

<TABLE>
<CAPTION>
LOCATION                                    ALLOCABLE PURCHASE PRICE
--------                                    ------------------------
<S>                                         <C>
Anaheim (Garden Grove), CA                  $ 7,360,913
Irvine, CA                                  $ 7,419,847
Clearwater (St. Petersburg), FL             $ 4,845,256
Miami (Miami Airport), FL                   $ 8,141,708
Orlando (Altamonte Springs), FL             $ 6,232,617
Atlanta (Duluth), GA                        $ 6,956,784
Chicago (Libertyville), IL                  $ 6,676,434
Chicago (O'Hare/Schiller Park), IL          $13,684,303
Chicago (Schaumberg), IL                    $ 7,317,082
Chicago (Warrenville), IL                   $ 7,891,020
Chicago (Waukegan), IL                      $ 6,598,754
Detroit (Ann Arbor), MI                     $ 6,336,026
St. Louis (Earth City), MO                  $ 5,970,352
Cleveland (North Olmstead), OH              $ 7,242,485
Columbus Airport (Gahanna), OH              $ 5,864,876
Oklahoma City, OK                           $ 6,137,969
Knoxville, TN                               $ 4,088,943
Dallas (Arlington), TX                      $ 6,145,706
Dallas (Galleria), TX                       $ 7,167,609
Dallas (North Richardson), TX               $ 6,637,487
Houston, TX                                 $ 6,283,829
</TABLE>

<PAGE>
                            SCHEDULE B-1 THROUGH B-21

                        LEGAL DESCRIPTIONS OF PROPERTIES

                             [See attached copies.]

<PAGE>
                                   SCHEDULE C

                         FORM OF SURVEYOR'S CERTIFICATE

                             SURVEYOR'S CERTIFICATE

TO:     Hospitality Properties Trust
        and its assignees or nominees
        400 Centre Street
        Newton, MA  02458

RE: Survey Entitled "_______________________________________"
     dated _________ ___, 2001, prepared by

        The undersigned hereby certifies that the above-referenced survey was
prepared from an actual on-the-ground instrument survey of the subject premises;
that the same accurately shows the location of the boundaries of the subject
premises and the location of all streets, highways, alleys and public ways
crossing or abutting said premises; that the dimensions of the improvements and
the locations thereof with respect to the boundaries are accurately shown as the
same were situated on ___________ ___, 2001; that there are no encroachments by
improvements appurtenant to adjoining premises upon the subject premises, nor
from the subject premises, unless shown thereon; that all buildings and
structures, if any, lie wholly within all applicable building restriction lines,
if any, and do not violate any restriction or other recorded agreements set
forth in the title insurance commitment for the subject premises dated
__________ __, 2001, issued to you by _________ Title Insurance Company,
Commitment No. _______ (the "Title Policy"); that all easements and rights of
way which are appurtenant to or burden the subject premises and (i) are referred
to in the Title Commitment or (ii) are apparent from a visual inspection are
delineated thereon, and are located other than through the existing building
shown hereon; that all parking spaces, if any, are delineated thereon; and that,
except as otherwise shown thereon, the subject premises are not located (x)
within any flood hazard or flood way area or district as designed by Federal,
state or municipal authority or (y) within any area subject to regulation by
Federal, state or municipal authority as inland or coastal wetlands, beach,
estuary or the like.

<PAGE>
        Access to and egress from the subject premises and the improvements and
structures thereon to ________ Street, a public way, are provided by the means
indicated thereon. Municipal water, storm sewer facilities and telephone, gas
and electric services of public utilities are available in the locations
indicated thereon.

        The undersigned hereby certifies that the square footage of each parcel
delineated on the above-referenced survey is as set forth thereon, that all such
parcels are contiguous without any strips, gaps or gores existing between any of
said parcels, and that said parcels, when combined, form and create one complete
and uninterrupted parcel without any strips, gaps or gores.

        This survey is made in accordance with the "Minimum Standard Detail
Requirements for Land Title Surveys" jointly established and adopted by ALTA and
ACSM in 1999.

Dated: _________ ___, 2001   ___________________________
                                                   Registered Land Surveyor
                                                   __________#_______________

[Surveyor's Seal]

<PAGE>
                                   SCHEDULE D

                          FORM OF SELLERS' CERTIFICATE

                               CLOSING CERTIFICATE

        Reference is made to the Purchase and Sale Agreement, dated __________
(the "Purchase Agreement"). Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement.

        In connection with the consummation of the transactions contemplated by
the Purchase and Sale Agreement with respect to the properties described on
Exhibit A, the undersigned hereby certifies as follows:

        1. That the Improvements on each of the Properties include the number of
rooms as set forth in Exhibit A;

        3. That the Opening Date of each of the Properties is listed on Exhibit
A; and

        4. That the Properties are being operated as a ____________ hotel as set
forth in Exhibit A.

        Executed under seal as of this ____ day of __________, 2001.

                                            --------------------------

                                            By:
                                               -------------------------
                                                   Its (Vice) President

<PAGE>
                                    EXHIBIT A

<TABLE>
<CAPTION>
                                    NO. OF
PROPERTY              BRAND         ROOMS          OPENING DATE
<S>                   <C>           <C>            <C>
</TABLE>

<PAGE>
                                   SCHEDULE E

                        LIST OF PLANS AND SPECIFICATIONS

                             [See attached copies.]<PAGE>
                   SECOND AMENDED AND RESTATED LEASE AGREEMENT

                           Dated as of April 11, 2002

                                 by and between

                            HPT CW PROPERTIES TRUST,
                                  AS LANDLORD,

                                       AND

                         CANDLEWOOD LEASING NO. 1, INC.,
                                    AS TENANT

<PAGE>
                               Table of Contents

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
ARTICLE 1     DEFINITIONS....................................................................2
        1.1   Accounting Period..............................................................2
        1.2   Additional Charges.............................................................2
        1.3   Additional Leased Property.....................................................3
        1.4   Additional Rent................................................................3
        1.5   Affiliated Person..............................................................3
        1.6   Agreement......................................................................3
        1.7   Amended Lease..................................................................3
        1.8   Applicable Laws................................................................3
        1.9   Applicable Percentage..........................................................4
        1.10  Award..........................................................................4
        1.11  Base Total Hotel Sales.........................................................4
        1.12  Base Year......................................................................5
        1.13  Business Day...................................................................5
        1.14  Candlewood.....................................................................5
        1.15  Capital Addition...............................................................5
        1.16  Capital Expenditure............................................................5
        1.17  Change in Control..............................................................5
        1.18  Claim..........................................................................6
        1.19  Code...........................................................................6
        1.20  Commencement Date..............................................................6
        1.21  Condemnation...................................................................7
        1.22  Condemnor......................................................................7
        1.23  Consolidated Financials........................................................7
        1.24  Date of Taking.................................................................7
        1.25  Default........................................................................7
        1.26  Designated Areas One...........................................................7
        1.27  Designated Areas Two...........................................................7
        1.28  Disbursement Rate..............................................................8
        1.29  Distribution...................................................................8
        1.30  Easement Agreement.............................................................8
        1.31  Encumbrance....................................................................8
        1.32  Entity.........................................................................8
        1.33  Environment....................................................................8
        1.34  Environmental Obligation.......................................................8
        1.35  Environmental Notice...........................................................8
        1.36  Event of Default...............................................................8
        1.37  Excess Total Hotel Sales.......................................................8
        1.38  Extended Terms.................................................................9
        1.39  FF&E Estimate..................................................................9
        1.40  FF&E Pledge....................................................................9
        1.41  FF&E Reserve...................................................................9
        1.42  Financial Officer's Certificate................................................9
</TABLE>

                                       i
<PAGE>
                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
        1.43  First Lease.....................................................................9
        1.44  Fiscal Year.....................................................................9
        1.45  Fixed Term......................................................................9
        1.46  Fixtures........................................................................9
        1.47  GAAP...........................................................................10
        1.48  Government Agencies............................................................10
        1.49  Guaranty.......................................................................10
        1.50  Hazardous Substances...........................................................10
        1.51  Hotel..........................................................................11
        1.52  Hotel Mortgage.................................................................11
        1.53  Hotel Mortgagee................................................................11
        1.54  HPT CW I Leased Property.......................................................11
        1.55  HPT CW II Leased Property......................................................11
        1.56  Immediate Family...............................................................11
        1.57  Impositions....................................................................11
        1.58  Incidental Documents...........................................................13
        1.59  Indebtedness...................................................................13
        1.60  Insurance Requirements.........................................................13
        1.61  Interest Rate..................................................................13
        1.62  Land...........................................................................13
        1.63  Landlord.......................................................................13
        1.64  Landlord Default...............................................................13
        1.65  Landlord Liens.................................................................13
        1.66  Lease Year.....................................................................13
        1.67  Leased Improvements............................................................14
        1.68  Leased Intangible Property.....................................................14
        1.69  Leased Personal Property.......................................................14
        1.70  Leased Property................................................................14
        1.71  Legal Requirements.............................................................14
        1.72  Lien...........................................................................14
        1.73  Management Agreement...........................................................15
        1.74  Manager........................................................................15
        1.75  Minimum Rent...................................................................15
        1.76  Net Worth......................................................................15
        1.77  New Leased Property............................................................15
        1.78  Notice.........................................................................15
        1.79  Officer's Certificate..........................................................15
        1.80  Opening Date...................................................................15
        1.81  Original Leases................................................................15
        1.82  Original Leased Property.......................................................15
        1.83  Overdue Rate...................................................................16
        1.84  Parent.........................................................................16
        1.85  Permitted Encumbrances.........................................................16
        1.86  Permitted Liens................................................................16
</TABLE>

                                       ii

<PAGE>
                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
        1.87   Permitted Use.................................................................16
        1.88   Person........................................................................16
        1.89   Property......................................................................16
        1.90   Purchase Documents............................................................16
        1.91   Records.......................................................................17
        1.92   Rent..........................................................................17
        1.93   Retained Funds................................................................17
        1.94   SEC...........................................................................17
        1.95   Second Lease..................................................................17
        1.96   Security Agreement............................................................17
        1.97   State.........................................................................17
        1.98   Stock Pledge Agreement........................................................17
        1.99   Subordinated Creditor.........................................................18
        1.100  Subordination Agreement.......................................................18
        1.101  Subsidiary....................................................................18
        1.102  Successor Landlord............................................................18
        1.103  Tenant........................................................................18
        1.104  Tenant's Personal Property....................................................18
        1.105  Term..........................................................................18
        1.106  Total Hotel Sales.............................................................19
        1.107  Uniform System of Accounts....................................................19
        1.108  Unsuitable for Its Permitted Use..............................................19
        1.109  Work..........................................................................20
ARTICLE 2             LEASED PROPERTY AND TERM...............................................20
        2.1  Leased Property.................................................................20
        2.2  Condition of Leased Property....................................................21
        2.3  Fixed Term......................................................................22
        2.4  Extended Term...................................................................22
ARTICLE 3             RENT...................................................................23
        3.1  Rent............................................................................23
               3.1.1      Minimum Rent.......................................................23
               3.1.2      Additional Rent....................................................24
               3.1.3      Additional Charges.................................................27
        3.2  Late Payment of Rent, Etc.......................................................29
        3.3  Net Lease.......................................................................30
        3.4  No Termination, Abatement, Etc..................................................30
        3.5  Retained Funds..................................................................31
ARTICLE 4             USE OF THE LEASED PROPERTY.............................................32
        4.1  Permitted Use...................................................................32
               4.1.1      Permitted Use......................................................32
               4.1.2      Necessary Approvals................................................33
               4.1.3      Lawful Use, Etc....................................................33
        4.2  Compliance with Legal/Insurance Requirements, Etc...............................34
</TABLE>

                                     iii

<PAGE>
                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
        4.3  Environmental Matters...........................................................34
               4.3.1      Restriction on Use, Etc............................................34
               4.3.2      Indemnification of Landlord........................................35
               4.3.3      Survival...........................................................36
ARTICLE 5             MAINTENANCE AND REPAIRS................................................37
        5.1  Maintenance and Repair..........................................................37
               5.1.1      Tenant's General Obligations.......................................37
               5.1.2      FF&E Reserve.......................................................37
               5.1.3      Landlord's Obligations.............................................39
               5.1.4      Nonresponsibility of Landlord, Etc.................................40
        5.2  Tenant's Personal Property......................................................41
        5.3  Yield Up........................................................................41
        5.4  Management Agreement............................................................42
ARTICLE 6             IMPROVEMENTS, ETC......................................................43
        6.1  Improvements to the Leased Property.............................................43
        6.2  Salvage.........................................................................44
ARTICLE 7             LIENS..................................................................44
        7.1  Liens...........................................................................44
        7.2  Landlord's Lien.................................................................44
ARTICLE 8             PERMITTED CONTESTS.....................................................45
ARTICLE 9             INSURANCE AND INDEMNIFICATION..........................................46
        9.1  General Insurance Requirements..................................................46
        9.2  Replacement Cost................................................................47
        9.3  Waiver of Subrogation...........................................................48
        9.4  Form Satisfactory, Etc..........................................................48
        9.5  Blanket Policy..................................................................49
        9.6  No Separate Insurance...........................................................49
        9.7  Indemnification of Landlord.....................................................49
ARTICLE 10            CASUALTY...............................................................51
        10.1  Insurance Proceeds.............................................................51
        10.2  Damage or Destruction..........................................................51
               10.2.1     Damage or Destruction of Leased Property...........................51
               10.2.2     Partial Damage or Destruction......................................52
               10.2.3     Insufficient Insurance Proceeds....................................52
               10.2.4     Disbursement of Proceeds...........................................52
        10.3  Damage Near End of Term........................................................54
        10.4  Tenant's Property..............................................................54
        10.5  Restoration of Tenant's Property...............................................54
        10.6  No Abatement of Rent...........................................................54
        10.7  Waiver.........................................................................55
ARTICLE 11            CONDEMNATION...........................................................55
        11.1  Total Condemnation, Etc........................................................55
</TABLE>

                                       iv

<PAGE>
                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
        11.2  Partial Condemnation...........................................................55
        11.3  Abatement of Rent..............................................................57
        11.4  Temporary Condemnation.........................................................57
        11.5  Condemnation Near End of Term..................................................57
        11.6  Allocation of Award............................................................57
ARTICLE 12            DEFAULTS AND REMEDIES..................................................58
        12.1  Events of Default..............................................................58
        12.2  Remedies.......................................................................61
        12.3  Tenant's Waiver................................................................63
        12.4  Application of Funds...........................................................63
        12.5  Landlord's Right to Cure Tenant's Default......................................63
ARTICLE 13            HOLDING OVER...........................................................64
ARTICLE 14            LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT........................64
        14.1  Landlord Notice Obligation.....................................................64
        14.2  Landlord's Default.............................................................64
        14.3  Indemnification of Tenant......................................................65
ARTICLE 15            PURCHASE RIGHTS........................................................66
ARTICLE 16            SUBLETTING AND ASSIGNMENT..............................................66
        16.1  Subletting and Assignment......................................................67
        16.2  Required Sublease Provisions...................................................68
        16.3  Permitted Sublease.............................................................69
        16.4  Sublease Limitation............................................................69
ARTICLE 17            ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.........................70
        17.1  Estoppel Certificates..........................................................70
        17.2  Financial Statements...........................................................70
ARTICLE 18            LANDLORD'S RIGHT TO INSPECT............................................71
ARTICLE 19            EASEMENTS..............................................................72
        19.1  Grant of Easements.............................................................72
        19.2  Exercise of Rights by Tenant...................................................72
        19.3  Permitted Encumbrances.........................................................72
ARTICLE 20            HOTEL MORTGAGES........................................................73
        20.1  Landlord May Grant Liens.......................................................73
        20.2  Subordination of Lease.........................................................73
        20.3  Notice to Mortgagee and Superior Landlord......................................75
ARTICLE 21            ADDITIONAL COVENANTS OF TENANT.........................................75
        21.1  Prompt Payment of Indebtedness.................................................75
        21.2  Conduct of Business............................................................76
        21.3  Maintenance of Accounts and Records............................................76
        21.4  Notice of Litigation, Etc......................................................76
        21.5  Notice of Discontinuance of Operation..........................................76
        21.6  Indebtedness of Tenant.........................................................77
        21.7  Financial Condition of Tenant..................................................78
</TABLE>

                                       v

<PAGE>
                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
        21.8   Distributions, Payments to Affiliated Persons, Etc............................78
        21.9   Prohibited Transactions.......................................................78
        21.10  Liens and Encumbrances........................................................78
        21.11  Merger; Sale of Assets; Etc...................................................79
ARTICLE 22     MISCELLANEOUS.................................................................79
        22.1   Limitation on Payment of Rent.................................................79
        22.2   No Waiver.....................................................................79
        22.3   Remedies Cumulative...........................................................80
        22.4   Severability..................................................................80
        22.5   Acceptance of Surrender.......................................................80
        22.6   No Merger of Title............................................................80
        22.7   Conveyance by Landlord........................................................81
        22.8   Quiet Enjoyment...............................................................81
        22.9   Memorandum of Lease...........................................................82
        22.10  Notices.......................................................................82
        22.11  Trade Area Restriction........................................................83
        22.12  Construction..................................................................85
        22.13  Counterparts; Headings........................................................85
        22.14  Applicable Law, Etc...........................................................86
        22.15  Right to Make Agreement.......................................................86
        22.16  Attorneys' Fees...............................................................87
        22.17  Nonrecourse...................................................................87
        22.18  Nonliability of Trustees......................................................87
</TABLE>

EXHIBITS
A-1 through A-57- The Land
B-1 through B-2 - Restricted Trade Area
C - Allocation of Minimum Rent

                                       vi
<PAGE>
                   SECOND AMENDED AND RESTATED LEASE AGREEMENT

        THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT is entered into as of
this 11th day of April, 2002, by and between HPT CW PROPERTIES TRUST, a Maryland
real estate investment trust, as landlord ("Landlord"), and CANDLEWOOD LEASING
NO. 1, INC., a Delaware corporation, as tenant ("Tenant").

                              W I T N E S S E T H :

        WHEREAS, pursuant to a Lease Agreement, dated as of December 24, 1997
(as amended, the "First Lease") between Landlord, as lessor, and Tenant, as
lessee, Landlord agreed to lease seventeen (17) hotel properties to Tenant
(collectively, the "HPT CW I Leased Property"); and

        WHEREAS, pursuant to a Lease Agreement, dated as of May 20, 1998 (as
amended, the "Second Lease" and, together with the First Lease, collectively,
the "Original Leases") between HPT CW II Properties Trust ("HPT CW II"), as
lessor, and Candlewood Leasing No. 2, Inc. ("Candlewood 2"), as lessee, HPT CW
II agreed to lease seventeen (17) hotel properties (collectively, the "HPT CW II
Leased Property" and, together with the HPT CW I Leased Property, collectively,
the "Original Leased Property") to Candlewood 2; and

        WHEREAS, HPT CW II has merged into Landlord and, in connection
therewith, transferred to Landlord HPT CW II's entire right, title and interest
in and to the HPT CW II Leased Property; and

        WHEREAS, Candlewood 2 has merged into Tenant and, in connection
therewith, transferred to Tenant Candlewood 2's entire right, title and interest
in and to the HPT CW II Leased Property; and

        WHEREAS, on August 10, 2001, Landlord acquired two (2) additional hotel
properties located in Mt. Laurel, New Jersey and Las Vegas, Nevada
(collectively, the "Additional Leased Property"); and

        WHEREAS, pursuant to an Amended and Restated Lease Agreement, dated as
of August 10, 2001 (the "Amended Lease"), Landlord and Tenant amended and
restated the Original Leases to consolidate the Original Leases into a single
lease and to

<PAGE>
include the Additional Leased Property among the Leased Property demised
thereby; and

        WHEREAS, simultaneously herewith, Landlord is acquiring twenty-one (21)
additional hotel properties (collectively, the "New Leased Property"); and

        WHEREAS, as a result of the foregoing, Landlord owns fee simple title to
the Leased Property (this and other capitalized terms used and not otherwise
defined herein having the meanings ascribed to such terms in Article 1)
described in Exhibit A-1 through A-57; and

        WHEREAS, Landlord and Tenant wish to amend and restate the Amended Lease
to include the New Leased Property among the Leased Property demised thereby,
subject to, and upon, the terms and conditions contained herein; and

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

        For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Article shall have the meanings assigned to them in this Article and include the
plural as well as the singular, (ii) all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with GAAP, (iii)
all references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.

        1.1 "ACCOUNTING PERIOD" shall mean each calendar month.

        1.2 "ADDITIONAL CHARGES" shall have the meaning given such term in
Section 3.1.3.

                                      -2-
<PAGE>
        1.3 "ADDITIONAL LEASED PROPERTY" shall have the meaning given such term
in the preambles to this Agreement.

        1.4 "ADDITIONAL RENT" shall have the meaning given such term in Section
3.1.2(a).

        1.5 "AFFILIATED PERSON" shall mean, with respect to any Person, (a) in
the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited liability
company, any member of such company, (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons referred to in the preceding clauses (a) and (b), (d) any
other Person who is an officer, director, trustee or employee of, or partner in
or member of, such Person or any Person referred to in the preceding clauses
(a), (b) and (c), and (e) any other Person who is a member of the Immediate
Family of such Person or of any Person referred to in the preceding clauses (a)
through (d).

        1.6 "AGREEMENT" shall mean this Second Amended and Restated Lease
Agreement, including Exhibits A, B and C hereto, as it and they may be amended
from time to time as herein provided.

        1.7 "AMENDED LEASE" shall have the meaning given such term in the
preambles to this Agreement.

        1.8 "APPLICABLE LAWS" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, actions and
policies from time to time in existence, of all courts of competent jurisdiction
and Government Agencies, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health or the Environment, including, without limitation, all
valid and lawful requirements of courts and other Government Agencies pertaining
to reporting, licensing, permitting, investigation, remediation and removal of
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or emissions, discharges, releases or
threatened releases of Hazardous Substances, chemical substances, pesticides,
petroleum or petroleum products, pollutants, contaminants or hazardous or

                                      -3-
<PAGE>
toxic substances, materials or wastes whether solid, liquid or gaseous in
nature, into the Environment, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, underground improvements (including, without limitation,
treatment or storage tanks, or water, gas or oil wells), or pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature.

        1.9 "APPLICABLE PERCENTAGE" shall mean (a) with respect to each Original
Leased Property, five percent (5%); (b) with respect to each Additional Leased
Property, (i) three percent (3%) with respect to the 2001 Fiscal Year; (ii) four
percent (4%) with respect to the 2002 Fiscal Year; and (c) thereafter, five
percent (5%); and (c) with respect to each New Leased Property, five percent
(5%).

        1.10 "AWARD" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of any of the
Leased Property (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert witness
fees, incurred by Landlord, in connection with obtaining any such award).

        1.11 "BASE TOTAL HOTEL SALES" shall mean, with respect to any Property,
Total Hotel Sales at such Property for the Base Year; provided, however, that in
the event that, with respect to any Lease Year, or portion thereof, for any
reason (including, without limitation, a casualty or Condemnation) there shall
be a reduction of five percent (5%) or more in the number of rooms at any Hotel
or a change in the services provided at any Hotel (including, without
limitation, if applicable, the closing of restaurants or the discontinuation of
food or beverage services) from the number of rooms or the services provided
during the Base Year, in determining Additional Rent payable with respect to
such Lease Year, Base Total Hotel Sales with respect to the affected Property
shall be reduced as follows: (a) in the event of the termination of this
Agreement with respect to any Property pursuant to Article 10, 11 or 12, all
Total Hotel Sales attributable to such Property during the Base Year shall be
subtracted from Base Total Hotel Sales, appropriately prorated based on time
elapsed if such termination occurs on a date other than the first day of any
Fiscal Year; (b) in the event of a complete closing of a Hotel, all Total Hotel
Sales attributable

                                      -4-
<PAGE>
to such Hotel during the Base Year shall be subtracted from Base Total Hotel
Sales throughout the period of such closing; (c) in the event of a partial
closing of a Hotel affecting five percent (5%) or more of the guest rooms in
such Hotel, Total Hotel Sales attributable to guest room occupancy or guest room
services at such Hotel during the Base Year shall be ratably allocated among all
guest rooms in service at such Hotel during the Base Year and all such Total
Hotel Sales attributable to rooms no longer in service shall be subtracted from
Base Total Hotel Sales throughout the period of such closing; (d) in the event
of a closing of a restaurant, all Total Hotel Sales attributable to such
restaurant during the Base Year shall be subtracted from Base Total Hotel Sales
throughout the period of such closing; and (e) in the event of any other change
in circumstances affecting any Hotel, Base Total Hotel Sales shall be equitably
adjusted in such manner as Landlord and Tenant shall reasonably agree.

        1.12 "BASE YEAR" shall mean, (a) with respect to any Property other than
a New Leased Property, the period commencing on the first anniversary of the
first full day of the first full calendar month following the Opening Date of
the Hotel located at such Property and expiring on the day preceding the second
anniversary of such Opening Date and (b) with respect to any New Leased
Property, the 2002 Fiscal Year.

        1.13 "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of New York are authorized by law or executive action to close.

        1.14 "CANDLEWOOD" shall mean Candlewood Hotel Company, Inc., a Delaware
corporation, its successors and assigns.

        1.15 "CAPITAL ADDITION" shall mean any renovation, repair or improvement
to the Leased Property (or portion thereof), the cost of which constitutes a
Capital Expenditure.

        1.16 "CAPITAL EXPENDITURE" shall mean any expenditure treated as capital
in nature in accordance with GAAP.

        1.17 "CHANGE IN CONTROL" shall mean: (a) except for changes in the
ownership of Candlewood that do not constitute a Change in Control under clauses
(b) through (f) of this definition, the direct or indirect acquisition by a
Person or

                                      -5-
<PAGE>
group of Persons acting in concert (a "Group") of any beneficial or voting
ownership of any class of equity of Tenant, including any ownership rights to
acquire beneficial or voting interests whether expressed as rights, options,
warrants, convertible securities or otherwise; (b) the direct or indirect
acquisition by a Person or Group of stock representing a majority of voting
interests of Candlewood, including any rights to acquire any voting interests
whether expressed as rights, options, warrants, convertible securities or
otherwise, provided that the direct or indirect acquisition of Candlewood equity
by a Person who currently owns preferred shares of Candlewood pursuant to the
terms of the Certificate of Designation for such preferred shares filed with the
Delaware Secretary of State (a "Preferred Certificate of Designation") shall not
be considered a Change in Control; (c) the acquisition by contract or otherwise
by a Person or Group of the power to direct the management and policies of
Tenant or Candlewood, provided that the continuation of the Voting Agreement and
the exercise of rights thereunder shall not be considered a Change in Control;
(d) the merger of Tenant or Candlewood with another Person, provided that a
merger of Candlewood which results in a continuing Entity which is majority
owned by a majority of all of the shareholders of Candlewood immediately before
the merger shall not be considered a Change in Control (unless the same would
constitute a Change in Control pursuant to the preceding clause (b) of this
definition), and provided further that a merger of Tenant or Candlewood with an
Entity which is wholly owned, directly or indirectly, by Candlewood shall not be
considered a Change in Control; (e) any sale, series of sales or similar
conveyances of a majority of the assets of Tenant or of Candlewood; and (f) any
amendment, modification or change to the terms of the Preferred Certificates of
Designation or the Voting Agreement which is not approved by Landlord in its
discretion.

        1.18 "CLAIM" shall have the meaning given such term in Article 8.

        1.19 "CODE" shall mean the Internal Revenue Code of 1986 and, to the
extent applicable, the Treasury Regulations promulgated thereunder, each as from
time to time amended.

        1.20 "COMMENCEMENT DATE" shall mean (a) with respect to each Original
Leased Property, the date on which the terms of its Original Lease commenced,
(b) with respect to each

                                      -6-
<PAGE>
Additional Leased Property, August 10, 2001, and (c) with respect to each New
Leased Property, the date of this Agreement.

        1.21 "CONDEMNATION" shall mean, with respect to any Property, (a) the
exercise of any governmental power with respect to such Property, whether by
legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b)
a voluntary sale or transfer of such Property by Landlord to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending, or (c) a taking or voluntary conveyance of all or part of such
Property, or any interest therein, or right accruing thereto or use thereof, as
the result or in settlement of any condemnation or other eminent domain
proceeding affecting such Property, whether or not the same shall have actually
been commenced.

        1.22 "CONDEMNOR" shall mean any public or quasi-public Person, having
the power of Condemnation.

        1.23 "CONSOLIDATED FINANCIALS" shall mean, for any Fiscal Year or other
accounting period of Candlewood, annual audited and quarterly unaudited
financial statements of Candlewood prepared on a consolidated basis, including
Candlewood's consolidated balance sheet and the related statements of income and
cash flows, all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal Year,
and prepared in accordance with GAAP throughout the periods reflected.

        1.24 "DATE OF TAKING" shall mean, with respect to any Property, the date
the Condemnor has the right to possession of such Property, or any portion
thereof, in connection with a Condemnation.

        1.25 "DEFAULT" shall mean any event or condition which with the giving
of notice and/or lapse of time would ripen into an Event of Default.

        1.26 "DESIGNATED AREAS ONE" shall have the meaning given such term in
Section 22.11.

        1.27 "DESIGNATED AREAS TWO" shall have the meaning given such term in
Section 22.11.

                                      -7-
<PAGE>
        1.28 "DISBURSEMENT RATE" shall mean an annual rate of interest, as of
the date of determination, equal to the greater of (i) the Interest Rate and
(ii) the per annum rate for fifteen (15) year U.S. Treasury Obligations as
published in The Wall Street Journal plus three hundred fifty (350) basis
points.

        1.29 "DISTRIBUTION" shall mean (a) any declaration or payment of any
dividend (except dividends payable in common stock of Tenant) on or in respect
of any shares of any class of capital stock of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of
capital stock of a corporation, (c) any other distribution on or in respect of
any shares of any class of capital stock of a corporation or (d) any return of
capital to shareholders.

        1.30 "EASEMENT AGREEMENT" shall mean any conditions, covenants and
restrictions, easements, declarations, licenses and other agreements which are
Permitted Encumbrances and such other agreements as may be granted in accordance
with Section 19.1.

        1.31 "ENCUMBRANCE" shall have the meaning given such term in Section
20.1.

        1.32 "ENTITY" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency, authority or
political subdivision thereof or any other entity.

        1.33 "ENVIRONMENT" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.

        1.34 "ENVIRONMENTAL OBLIGATION" shall have the meaning given such term
in Section 4.3.1.

        1.35 "ENVIRONMENTAL NOTICE" shall have the meaning given such term in
Section 4.3.1.

        1.36 "EVENT OF DEFAULT" shall have the meaning given such term in
Section 12.1.

        1.37 "EXCESS TOTAL HOTEL SALES" shall mean, with respect to any
Property, with respect to any Lease Year, or portion

                                      -8-
<PAGE>
thereof, the amount of Total Hotel Sales for such Property for such Lease Year,
or portion thereof, in excess of Base Total Hotel Sales for such Property for
the equivalent period during the Base Year.

        1.38 "EXTENDED TERMS" shall have the meaning given such term in Section
2.4.

        1.39 "FF&E ESTIMATE" shall have the meaning given such term in Section
5.1.2(c).

        1.40 "FF&E PLEDGE" shall mean the Second Amended and Restated Assignment
and Security Agreement, dated as of the date hereof, made by Tenant for the
benefit of Landlord.

        1.41 "FF&E RESERVE" shall have the meaning given such term in Section
5.1.2(a).

        1.42 "FINANCIAL OFFICER'S CERTIFICATE" shall mean, as to any Person, a
certificate of the chief executive officer, chief financial officer or chief
accounting officer (or such officers' authorized designee) of such Person, duly
authorized, accompanying the financial statements required to be delivered by
such Person pursuant to Section 17.2, in which such officer shall certify (a)
that such statements have been properly prepared in accordance with GAAP and are
true, correct and complete in all material respects and fairly present the
consolidated financial condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby, and
(b), in the event that the certifying party is an officer of Tenant and the
certificate is being given in such capacity, certify that no Event of Default
has occurred and is continuing hereunder.

        1.43 "FIRST LEASE" shall have the meaning given such term in the
preambles to this Agreement.

        1.44 "FISCAL YEAR" shall mean the calendar year.

        1.45 "FIXED TERM" shall have the meaning given such term in Section 2.3.

        1.46 "FIXTURES" shall have the meaning given such term in Section
2.1(d).

                                      -9-
<PAGE>
        1.47 "GAAP" shall mean generally accepted accounting principles
consistently applied.

        1.48 "GOVERNMENT AGENCIES" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or any State or any county or any political subdivision of any of the foregoing,
whether now or hereafter in existence, having jurisdiction over Tenant or the
Leased Property or any portion thereof or any Hotel operated thereon.

        1.49 "GROUP" shall have the meaning given such term in Section 1.17.

        1.50 "GUARANTY" shall mean the Second Amended and Restated Guaranty
Agreement, dated the date hereof, made by Candlewood for the benefit of Landlord
and Hospitality Properties Trust.

        1.51 "HAZARDOUS SUBSTANCES" shall mean any substance:

                (a) the presence of which requires or may hereafter require
        notification, investigation or remediation under any Applicable Laws; or

                (b) which is or becomes defined as a "hazardous waste",
        "hazardous material" or "hazardous substance" or "pollutant" or
        "contaminant" under any Applicable Laws, including, without limitation,
        the Comprehensive Environmental Response, Compensation and Liability Act
        (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act (42
        U.S.C. section 6901 et seq.) and the regulations promulgated thereunder;
        or

                (c) which is toxic, explosive, corrosive, flammable, infectious,
        radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
        becomes regulated under any Applicable Laws; or

                (d) the presence of which on the Leased Property, or any portion
        thereof, causes or materially threatens to cause an unlawful nuisance
        upon the Leased Property, or any portion thereof, or to adjacent
        properties or poses or

                                      -10-
<PAGE>
        materially threatens to pose a hazard to the Leased Property, or any
        portion thereof, or to the health or safety of persons on or about the
        Leased Property, or any portion thereof; or

                (e) without limitation, which contains gasoline, diesel fuel or
        other petroleum hydrocarbons or volatile organic compounds; or

                (f) without limitation, which contains polychlorinated biphenyls
        (PCBs) or asbestos or urea formaldehyde foam insulation; or

                (g) without limitation, which contains or emits radioactive
        particles, waves or material; or

                (h) without limitation, constitutes materials which are now or
        may hereafter be subject to regulation pursuant to the Material Waste
        Tracking Act of 1988.

        1.52 "HOTEL" shall mean, with respect to any Property, the hotel being
operated on such Property.

        1.53 "HOTEL MORTGAGE" shall mean any Encumbrance placed upon the Leased
Property in accordance with Article 20.

        1.54 "HOTEL MORTGAGEE" shall mean the holder of any Hotel Mortgage.

        1.55 "HPT CW I LEASED PROPERTY" shall have the meaning given such term
in the preambles to this Agreement.

        1.56 "HPT CW II LEASED PROPERTY" shall have the meaning given such term
in the preambles to this Agreement.

        1.57 "IMMEDIATE FAMILY" shall mean, with respect to any individual, such
individual's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law,
sisters-in-law, nephews and nieces.

        1.58 "IMPOSITIONS" shall mean collectively, all taxes (including,
without limitation, all taxes imposed under the laws of any State, as such laws
may be amended from time to time, and all ad valorem, sales and use, or similar
taxes as the same relate to or are imposed upon Landlord, Tenant or the business

                                      -11-
<PAGE>
conducted upon the Leased Property), assessments (including, without limitation,
all assessments for public improvements or benefit, whether or not commenced or
completed prior to the date hereof), water, sewer or other rents and charges,
excises, tax levies, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), and all other governmental charges,
in each case whether general or special, ordinary or extraordinary, or foreseen
or unforeseen, of every character in respect of the Leased Property or the
business conducted thereon by Tenant (including all interest and penalties
thereon due to any failure in payment by Tenant), which at any time prior to,
during or in respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Landlord's interest in the Leased Property, (b)
the Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Leased Property or the leasing or use of the Leased Property or any part
thereof by Tenant; provided, however, that nothing contained herein shall be
construed to require Tenant to pay and the term "Impositions" shall not include
(i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of
Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax
payable in connection with a Hotel Mortgage) or other tax imposed with respect
to the sale, exchange or other disposition by Landlord of the Leased Property or
the proceeds thereof, (iv) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Landlord, (v) any interest or penalties imposed on Landlord as a result of the
failure of Landlord to file any return or report timely and in the form
prescribed by law or to pay any tax or imposition, except to the extent such
failure is a result of a breach by Tenant of its obligations pursuant to Section
3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord
not being considered a "United States person" as defined in Section 7701(a)(30)
of the Code, (vii) any impositions that are enacted or adopted by their express
terms as a substitute for any tax that would not have been payable by Tenant
pursuant to the terms of this Agreement or (viii) any impositions imposed as a
result of a breach of covenant or representation by Landlord in any agreement
governing Landlord's conduct or operation or as a result of the negligence or
willful misconduct of Landlord.

                                      -12-
<PAGE>
        1.59 "INCIDENTAL DOCUMENTS" shall mean the Guaranty, the Security
Agreement, the Stock Pledge Agreement and the FF&E Pledge.

        1.60 "INDEBTEDNESS" shall mean all obligations, contingent or otherwise,
which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.

        1.61 "INSURANCE REQUIREMENTS" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any such
policy and all orders, rules and regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon Landlord, Tenant or the Leased Property.

        1.62 "INTEREST RATE" shall mean ten percent (10%) per annum.

        1.63 "LAND" shall have the meaning given such term in Section 2.1(a).

        1.64 "LANDLORD" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.

        1.65 "LANDLORD DEFAULT" shall have the meaning given such term in
Section 14.2.

        1.66 "LANDLORD LIENS" shall mean liens on or against the Leased Property
or any payment of Rent (a) which result from any act of, or any claim against,
Landlord or any owner of a direct or indirect interest in the Leased Property,
or which result from any violation by Landlord of any terms of this Agreement or
the Purchase Documents, or (b) which result from liens in favor of any taxing
authority by reason of any tax owed by Landlord or any fee owner of a direct or
indirect interest in the Leased Property; provided, however, that "Landlord
Lien" shall not include any lien resulting from any tax for which Tenant is
obligated to pay or indemnify Landlord against until such time as Tenant shall
have already paid to or on behalf of Landlord the tax or the required indemnity
with respect to the same.

        1.67 "LEASE YEAR" shall mean any Fiscal Year or portion thereof during
the Term.

                                      -13-
<PAGE>
        1.68 "LEASED IMPROVEMENTS" shall have the meaning given such term in
Section 2.1(b).

        1.69 "LEASED INTANGIBLE PROPERTY" shall mean all hotel licensing
agreements and other service contracts, equipment leases, booking agreements and
other arrangements or agreements affecting the ownership, repair, maintenance,
management, leasing or operation of the Leased Property to which Landlord is a
party; all books, records and files relating to the leasing, maintenance,
management or operation of the Leased Property belonging to Landlord; all
transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, rights to deposits, trade names, service marks,
telephone exchange numbers identified with the Leased Property, and all other
transferable intangible property, miscellaneous rights, benefits and privileges
of any kind or character belonging to Landlord with respect to the Leased
Property other than liquor licenses.

        1.70 "LEASED PERSONAL PROPERTY" shall have the meaning given such term
in Section 2.1(e).

        1.71 "LEASED PROPERTY" shall have the meaning given such term in Section
2.1.

        1.72 "LEGAL REQUIREMENTS" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Property or
the maintenance, construction, alteration or operation thereof, whether now or
hereafter enacted or in existence, including, without limitation, (a) all
permits, licenses, authorizations, certificates and regulations necessary to
operate any Property for its Permitted Use, and (b) all covenants, agreements,
restrictions and encumbrances contained in any instruments at any time in force
affecting any Property, including those which may (i) require material repairs,
modifications or alterations in or to any Property or (ii) in any way materially
and adversely affect the use and enjoyment thereof, but excluding any
requirements arising as a result of Landlord's status as a real estate
investment trust.

        1.73 "LIEN" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or

                                      -14-
<PAGE>
charge of any kind, or any transfer of property or assets for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors.

        1.74 "MANAGEMENT AGREEMENT" shall mean any management, franchise,
operating, branding or flagging agreement entered into by Tenant with respect to
all or any portion of the Leased Property, together with all amendments,
modifications and supplements thereto.

        1.75 "MANAGER" shall mean any manager under a Management Agreement.

        1.76 "MINIMUM RENT" shall mean Three Million Seven Hundred Ninety-Two
Thousand Two Hundred Seventy-Three Dollars ($3,792,273) per Accounting Period.

        1.77 "NET WORTH" shall mean the excess of total assets over total
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP; provided, however, that for purposes of this definition,
the shares of Series A Cumulative Preferred Stock and Series B Cumulative
Convertible Preferred Stock of Candlewood which are issued and outstanding as of
the date hereof shall not constitute liabilities.

        1.78 "NEW LEASED PROPERTY" shall have the meaning given such term in the
preambles to this Agreement.

        1.79 "NOTICE" shall mean a notice given in accordance with Section
22.10.

        1.80 "OFFICER'S CERTIFICATE" shall mean a certificate signed by an
officer or other duly authorized individual of the certifying Entity duly
authorized by the board of directors or other governing body of the certifying
Entity.

        1.81 "OPENING DATE" shall, with respect to any Property, have the
meaning given such term in the Purchase Documents with respect to such Property.

        1.82 "ORIGINAL LEASES" shall have the meaning given such term in the
preambles to this Agreement.

        1.83 "ORIGINAL LEASED PROPERTY" shall have the meaning given such term
in the preambles to this Agreement.

                                      -15-
<PAGE>
        1.84 "OVERDUE RATE" shall mean, on any date, a per annum rate of
interest equal to the lesser of fifteen percent (15%) and the maximum rate then
permitted under applicable law.

        1.85 "PARENT" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, fifty percent (50%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.

        1.86 "PERMITTED ENCUMBRANCES" shall mean, with respect to any Property,
all rights, restrictions, and easements of record set forth on Schedule B to the
applicable owner's or leasehold title insurance policy issued to Landlord in
connection with the transactions contemplated by the Purchase Documents with
respect to such Property, plus any other encumbrances as may be "Permitted
Encumbrances" under the Purchase Documents or as may have been consented to in
writing by Landlord and Tenant from time to time.

        1.87 "PERMITTED LIENS" shall mean any Liens granted in accordance with
Section 21.10(a).

        1.88 "PERMITTED USE" shall mean, with respect to any Property, any use
of such Property permitted pursuant to Section 4.1.1.

        1.89 "PERSON" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.

        1.90 "PROPERTY" shall have the meaning given such term in Section 2.1.

        1.91 "PURCHASE DOCUMENTS" shall mean, collectively, (a) the Purchase and
Sale Agreement, dated as of November 19, 1997, by and among Hospitality
Properties Trust, Candlewood and certain of Candlewood's Subsidiaries and the
Agreement to Lease, dated as of November 19, 1997, by and among Hospitality
Properties Trust and Candlewood, as they may have been or hereafter be amended,
restated, supplemented or otherwise modified from time to time, (b) the Purchase
and Sale Agreement, dated as of May 14, 1998, by and among Hospitality
Properties

                                      -16-
<PAGE>
Trust, Candlewood and certain of Candlewood's Subsidiaries and the Agreement to
Lease, dated as of May 14, 1998, by and among Hospitality Properties Trust and
Candlewood, as they may have been or hereafter be amended, restated,
supplemented or otherwise modified from time to time, (c) the Purchase and Sale
Agreement, dated as of August 10, 2001, by and among Hospitality Properties
Trust, Candlewood and certain of Candlewood's Subsidiaries, as it may have been
or hereafter be amended, restated, supplemented or otherwise modified from time
to time, and (d) the Purchase and Sale Agreement, dated as of the date hereof,
by and among Hospitality Properties Trust, Candlewood and certain of
Candlewood's Subsidiaries, as it may have been or hereafter be amended,
restated, supplemented or otherwise modified from time to time.

        1.92 "RECORDS" shall have the meaning given such term in Section 7.2.

        1.93 "RENT" shall mean, collectively, the Minimum Rent, Additional Rent
and Additional Charges.

        1.94 "RETAINED FUNDS" shall mean a cash amount equal to Forty-Six
Million Eighty-Five Thousand Seven Hundred Fifty Dollars ($46,085,750).

        1.95 "SEC" shall mean the Securities and Exchange Commission.

        1.96 "SECOND LEASE" shall have the meaning given such term in the
preambles to this Agreement.

        1.97 "SECURITY AGREEMENT" shall mean the Second Amended and Restated
Security Agreement, dated as of the date hereof, made by Tenant for the benefit
of Landlord, as it may be amended, restated, supplemented or otherwise modified
from time to time.

        1.98 "STATE" shall mean, with respect to any Property, the state,
commonwealth or district in which the such Property is located.

        1.99 "STOCK PLEDGE AGREEMENT" shall mean the Second Amended and Restated
Stock Pledge Agreement, dated as of the date hereof, made by Candlewood to
Landlord with respect to the

                                      -17-
<PAGE>
stock of Tenant, as it may be amended, restated, supplemented or otherwise
modified from time to time.

        1.100 "SUBORDINATED CREDITOR" shall mean any creditor of Tenant which is
a party to a Subordination Agreement in favor of Landlord.

        1.101 "SUBORDINATION AGREEMENT" shall mean any agreement (and any
amendments thereto) executed by a Subordinated Creditor pursuant to which the
payment and performance of Tenant's obligations to such Subordinated Creditor
are subordinated to the payment and performance of Tenant's obligations to
Landlord under this Agreement.

        1.102 "SUBSIDIARY" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).

        1.103 "SUCCESSOR LANDLORD" shall have the meaning given such term in
Section 20.2.

        1.104 "TENANT" shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.

        1.105 "TENANT'S PERSONAL PROPERTY" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other tangible personal property of
Tenant, if any, acquired by Tenant on and after the date hereof and located at
the Leased Property or used in Tenant's business at the Leased Property and all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, other than any items included within the
definition of Fixtures or Leased Personal Property.

        1.106 "TERM" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of Section
2.4, unless sooner terminated pursuant to the provisions of this Agreement.

                                      -18-
<PAGE>
        1.107 "TOTAL HOTEL SALES" shall mean, with respect to any Property, for
each Fiscal Year during the Term, all revenues and receipts of every kind
derived by Tenant from operating such Property and parts thereof, including, but
not limited to: income (from both cash and credit transactions), after
deductions for bad debts, and discounts for prompt or cash payments and refunds,
from rental of rooms, stores, offices, meeting, exhibit or sales space of every
kind; license, lease and concession fees and rentals (not including gross
receipts of licensees, lessees and concessionaires); income from vending
machines; health club membership fees; food and beverage sales; wholesale and
retail sales of merchandise (other than proceeds from the sale of furnishings,
fixture and equipment no longer necessary to the operation of the Hotel located
thereon, which shall be deposited in the FF&E Reserve); service charges, to the
extent not distributed to the employees at the Hotel located thereon as
gratuities; and proceeds, if any, from business interruption or other loss of
income insurance; provided, however, that Total Hotel Sales shall not include
the following: gratuities to or collected on behalf of Hotel employees; federal,
state or municipal excise, sales, use, occupancy or similar taxes collected
directly from patrons or guests or included as part of the sales price of any
goods or services; insurance proceeds (other than proceeds from business
interruption or other loss of income insurance); Award proceeds (other than for
a temporary Condemnation); any proceeds from any sale of such Property or from
the refinancing of any debt encumbering such Property; proceeds from the
disposition of furnishings, fixture and equipment no longer necessary for the
operation of the Hotel located thereon; interest which accrues on amounts
deposited in the FF&E Reserve; and any security deposits and other advance
deposits, until and unless the same are forfeited to Tenant or applied for the
purpose for which they were collected; and interest income from any bank account
or investment of Tenant.

        1.108 "UNIFORM SYSTEM OF ACCOUNTS" shall mean A Uniform System of
Accounts for Hotels, Eighth Revised Edition, 1986, as published by the Hotel
Association of New York City, as the same may be further revised from time to
time.

        1.109 "UNSUITABLE FOR ITS PERMITTED USE" shall mean, with respect to
such Hotel, a state or condition of such Hotel such that (a) following any
damage or destruction involving a Hotel, such Hotel cannot be operated in the
good faith judgment of

                                      -19-
<PAGE>
Tenant on a commercially practicable basis for its Permitted Use and it cannot
reasonably be expected to be restored to substantially the same condition as
existed immediately before such damage or destruction, and as otherwise required
by Section 10.2.4, within twelve (12) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance is available to cover Rent and other costs related to the applicable
Property following such damage or destruction, or (b) as the result of a partial
taking by Condemnation, such Hotel cannot be operated, in the good faith
judgment of Tenant, on a commercially practicable basis for its Permitted Use.

        1.110 "VOTING AGREEMENT" shall mean that certain Amended and Restated
Stockholders Agreement, dated as of July 10, 1998, by and among Candlewood,
Doubletree Corporation, the Warren D. Fix Family Partnership, L.P., and Jack
DeBoer, on behalf of himself and certain family trusts, and the purchasers of
the Series A and Series B Preferred Shares as the same may be amended from time
to time (but only with the approval of Landlord as provided herein).

        1.111 "WORK" shall have the meaning given such term in Section 10.2.4.

                                    ARTICLE 2

                            LEASED PROPERTY AND TERM

        2.1 LEASED PROPERTY. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following (each
of items (a) through (g) below which, as of the Commencement Date, relates to
any single Hotel, a "Property" and, collectively, the "Leased Property"):

                (a) those certain tracts, pieces and parcels of land, as more
        particularly described in Exhibit A-1 through A-57, attached hereto and
        made a part hereof (the "Land");

                (b) all buildings, structures and other improvements of every
        kind including, but not limited to, alleyways and connecting tunnels,
        sidewalks, utility pipes, conduits and lines (on-site and off-site),
        parking areas and roadways

                                      -20-
<PAGE>
        appurtenant to such buildings and structures presently situated upon the
        Land (collectively, the "Leased Improvements");

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

                (d) all equipment, machinery, fixtures, and other items of
        property, now or hereafter permanently affixed to or incorporated into
        the Leased Improvements, including, without limitation, all furnaces,
        boilers, heaters, electrical equipment, heating, plumbing, lighting,
        ventilating, refrigerating, incineration, air and water pollution
        control, waste disposal, air-cooling and air-conditioning systems and
        apparatus, sprinkler systems and fire and theft protection equipment,
        all of which, to the maximum extent permitted by law, are hereby deemed
        by the parties hereto to constitute real estate, together with all
        replacements, modifications, alterations and additions thereto, but
        specifically excluding all items included within the category of
        Tenant's Personal Property (collectively, the "Fixtures");

                (e) all machinery, equipment, furniture, furnishings, moveable
        walls or partitions, computers or trade fixtures or other personal
        property of any kind or description used or useful in Tenant's business
        on or in the Leased Improvements, and located on or in the Leased
        Improvements, and all modifications, replacements, alterations and
        additions to such personal property, except items, if any, included
        within the category of Fixtures, but specifically excluding all items
        included within the category of Tenant's Personal Property
        (collectively, the "Leased Personal Property");

                (f) all of the Leased Intangible Property; and

                (g) any and all leases of space in the Leased Improvements.

        2.2 CONDITION OF LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and Tenant accepts the Leased
Property in its "as is" condition, subject to the rights of parties in
possession, the existing state of title, including all covenants, conditions,

                                      -21-
<PAGE>
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Leased Property, all applicable
Legal Requirements, the lien of any financing instruments, mortgages and deeds
of trust existing prior to the Commencement Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an inspection
of the Leased Property and the record title thereto or by an accurate survey
thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF
THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR
EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law,
however, Landlord hereby assigns to Tenant all of Landlord's rights to proceed
against any predecessor in title for breaches of warranties or representations
or for latent defects in the Leased Property. Landlord shall fully cooperate
with Tenant in the prosecution of any such claims, in Landlord's or Tenant's
name, all at Tenant's sole cost and expense. Tenant shall indemnify, defend, and
hold harmless Landlord from and against any loss, cost, damage or liability
(including reasonable attorneys' fees) incurred by Landlord in connection with
such cooperation.

        2.3 FIXED TERM. The initial term of this Agreement (the "Fixed Term")
shall commence on the Commencement Date and shall expire December 31, 2018.

        2.4 EXTENDED TERM. Provided that no Event of Default shall have occurred
and be continuing, the Term shall be automatically extended for three (3)
consecutive renewal terms of fifteen (15) years each (collectively, the
"Extended Terms"), unless Tenant shall give Landlord Notice, not later than
eighteen (18) months prior to the scheduled expiration of the then current Term
of this Agreement (Fixed or Extended, as the case may be), that Tenant elects
not so to extend the term of this Agreement.

                                      -22-
<PAGE>
        Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall give Notice that it elects
not to extend the Term in accordance with this Section 2.4, Landlord may
terminate this Agreement at any time during the remainder of the then current
Term of this Agreement (Fixed or Extended, as the case may be), by giving Tenant
thirty (30) days Notice of Landlord's election to so terminate. If Landlord does
not so terminate and Tenant has given Notice that it elects not to extend the
Term in accordance with this Section 2.4, then this Agreement shall
automatically terminate at the end of the Term then in effect and Tenant shall
have no further option to extend the Term of this Agreement. Otherwise, the
extension of this Agreement shall be automatically effected without the
execution of any additional documents; it being understood and agreed, however,
that Tenant and Landlord shall execute such documents and agreements as either
party shall reasonably require to evidence the same.

                                    ARTICLE 3

                                      RENT

        3.1 RENT. Tenant shall pay, in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
without offset, abatement, demand or deduction (unless otherwise expressly
provided in this Agreement), Minimum Rent and Additional Rent to Landlord and
Additional Charges to the party to whom such Additional Charges are payable,
during the Term. All payments to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord in
its sole discretion. Rent for any partial Accounting Period shall be prorated on
a per diem basis.

                3.1.1 MINIMUM RENT.

                (a) PAYMENTS. Minimum Rent shall be paid in advance on the first
        Business Day of each Accounting Period; provided, however, that the
        first payment of Minimum Rent shall be payable on the Commencement Date
        (and, if

                                      -23-

<PAGE>
        applicable, such payment shall be prorated as provided in the last
        sentence of the first paragraph of Section 3.1).

                (b) ADJUSTMENTS OF MINIMUM RENT FOLLOWING DISBURSEMENTS UNDER
        SECTIONS 5.1.3(b), 10.2.3 AND 11.2. Effective on the date of each
        disbursement to pay for the cost of any repairs, maintenance,
        renovations or replacements pursuant to Sections 5.1.3(b), 10.2.3 or
        11.2, the annual Minimum Rent shall be increased by a per annum amount
        equal to the Disbursement Rate times the amount so disbursed. If any
        such disbursement is made during any month on a day other than the first
        Business Day of an Accounting Period, Tenant shall pay to Landlord on
        the first Business Day of the immediately following Accounting Period
        (in addition to the amount of Minimum Rent payable with respect to such
        Accounting Period, as adjusted pursuant to this paragraph (b)) the
        amount by which Minimum Rent for the preceding Accounting Period, as
        adjusted for such disbursement on a per diem basis, exceeded the amount
        of Minimum Rent paid by Tenant for such preceding Accounting Period.

                (c) ADJUSTMENTS OF MINIMUM RENT FOLLOWING PARTIAL LEASE
        TERMINATION. If this Agreement shall terminate with respect to any
        Property but less than all of the Leased Property, Minimum Rent shall be
        reduced by the affected Property's allocable share of Minimum Rent as
        set forth in Exhibit C.

                3.1.2 ADDITIONAL RENT.

                (a) AMOUNT. Tenant shall pay additional rent ("Additional Rent")
        with respect to each Lease Year subsequent to the Base Year, in an
        amount, not less than zero, equal to ten percent (10%) of Excess Total
        Hotel Sales with respect to each Property.

                (b) ACCOUNTING PERIOD INSTALLMENTS. Installments of Additional
        Rent for each Lease Year or portion thereof shall be calculated and paid
        with respect to each Accounting Period in arrears on the first Business
        Day of each Accounting Period, based on Total Hotel Sales for the
        preceding year, together with an Officer's Certificate setting forth the
        calculation of Additional Rent due and payable for such Accounting
        Period.

                                      -24-
<PAGE>
                (c) RECONCILIATION OF ADDITIONAL RENT. On or before April 30 of
        the calendar year immediately following the Base Year for any Property,
        Tenant shall deliver to Landlord an Officer's Certificate setting forth
        Total Hotel Sales for such Property for the Base Year, together with an
        audit thereof by Ernst & Young, LLP or another firm of independent
        certified public accountants proposed by Tenant and approved by Landlord
        (which approval shall not be unreasonably withheld, delayed or
        conditioned). On or before April 30, of each year thereafter, Tenant
        shall deliver to Landlord an Officer's Certificate setting forth the
        Total Hotel Sales for such Property for the preceding Lease Year and the
        Additional Rent payable with respect to such Lease Year with respect to
        such Property, together with an audit thereof, by Ernst & Young, LLP or
        another firm of independent certified public accountants proposed by
        Tenant and approved by Landlord (which approval shall not be
        unreasonably withheld, delayed or conditioned).

                If the annual Additional Rent for such preceding Lease Year as
        shown in the Officer's Certificate exceeds the amount previously paid
        with respect thereto by Tenant, Tenant shall pay such excess to Landlord
        at such time as the Officer's Certificate is delivered, together with
        interest at the Interest Rate, which interest shall accrue from the
        close of such preceding Lease Year until the date that such certificate
        is required to be delivered and, thereafter, such interest shall accrue
        at the Overdue Rate, until the amount of such difference shall be paid
        or otherwise discharged. If the annual Additional Rent for such
        preceding Lease Year as shown in the Officer's Certificate is less than
        the amount previously paid with respect thereto by Tenant, provided that
        no Event of Default shall have occurred and be continuing, Landlord
        shall grant Tenant a credit against the Rent next coming due in the
        amount of such difference, together with interest at the Interest Rate,
        which interest shall accrue from the date of payment by Tenant until the
        date such credit is applied or paid, as the case may be. If such credit
        cannot be made because the Term has expired prior to application in full
        thereof, provided no Event of Default has occurred and is continuing,
        Landlord shall pay the unapplied balance of such credit to Tenant,
        together with interest at the Interest Rate, which interest shall accrue

                                      -25-
<PAGE>
        from the date of payment by Tenant until the date of payment by
        Landlord.

                (d) CONFIRMATION OF ADDITIONAL RENT. Tenant shall utilize, or
        cause to be utilized, an accounting system for the Leased Property in
        accordance with its usual and customary practices and in accordance with
        GAAP, which will accurately record all Total Hotel Sales and Tenant
        shall retain, for at least three (3) years after the expiration of each
        Lease Year, reasonably adequate records conforming to such accounting
        system showing all Total Hotel Sales for such Lease Year. Landlord, at
        its own expense, except as provided hereinbelow, shall have the right,
        exercisable by Notice to Tenant within one (1) year after receipt of the
        applicable Officer's Certificate, by its accountants or representatives,
        to audit the information set forth in the Officer's Certificate referred
        to in subparagraph (c) above and, in connection with such audits, to
        examine Tenant's books and records with respect thereto (including
        supporting data and sales and excise tax returns). If any such audit
        discloses a deficiency in the payment of Additional Rent and, either
        Tenant agrees with the result of such audit or the matter is otherwise
        compromised with Landlord, Tenant shall forthwith pay to Landlord the
        amount of the deficiency, as finally agreed or determined, together with
        interest at the Interest Rate, from the date such payment should have
        been made to the date of payment thereof. If such deficiency, as agreed
        upon or compromised as aforesaid, is more than five percent (5%) of
        Additional Rent paid by Tenant for such Lease Year and, as a result,
        Landlord did not receive at least ninety-five percent (95%) of the
        Additional Rent payable with respect to such Lease Year, Tenant shall
        pay the reasonable cost of such audit and examination. If any such audit
        discloses that Tenant paid more Additional Rent for any Lease Year than
        was due hereunder, and either Landlord agrees with the result of such
        audit or the matter is otherwise determined, provided no Event of
        Default has occurred and is continuing, Landlord shall grant Tenant a
        credit equal to the amount of such overpayment against the Rent next
        coming due in the amount of such difference, as finally agreed or
        determined, together with interest at the Interest Rate, which interest
        shall accrue from the time of payment by Tenant until the date such
        credit is applied or paid, as the case may be. If such a credit cannot
        be made because the Term has

                                      -26-
<PAGE>
        expired before the credit can be applied in full, provided no Event of
        Default has occurred and is continuing, Landlord shall pay the unapplied
        balance of such credit to Tenant, together with interest at the Interest
        Rate, which interest shall accrue from the date of payment by Tenant
        until the date of payment from Landlord.

                Any proprietary information obtained by Landlord with respect to
        Tenant pursuant to the provisions of this Agreement shall be treated as
        confidential, except that such information may be used, subject to
        appropriate confidentiality safeguards, in any litigation between the
        parties and except further that Landlord may disclose such information
        to its prospective lenders, provided that Landlord shall direct and
        obtain the agreement of such lenders to maintain such information as
        confidential. The obligations of Tenant and Landlord contained in this
        Section 3.1.2 shall survive the expiration or earlier termination of
        this Agreement.

               3.1.3 ADDITIONAL CHARGES. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay to the appropriate parties
and discharge as and when due and payable the following (collectively,
"Additional Charges"):

                (a) IMPOSITIONS. Subject to Article 8 relating to permitted
        contests, Tenant shall pay, or cause to be paid, all Impositions before
        any fine, penalty, interest or cost (other than any opportunity cost as
        a result of a failure to take advantage of any discount for early
        payment) may be added for non-payment, such payments to be made directly
        to the taxing authorities where feasible, and shall promptly, upon
        request, furnish to Landlord copies of official receipts or other
        reasonably satisfactory proof evidencing such payments. If any such
        Imposition may, at the option of the taxpayer, lawfully be paid in
        installments (whether or not interest shall accrue on the unpaid balance
        of such Imposition), Tenant may exercise the option to pay the same (and
        any accrued interest on the unpaid balance of such Imposition) in
        installments and, in such event, shall pay such installments during the
        Term as the same become due and before any fine, penalty, premium,
        further interest or cost may be added thereto. Landlord, at its expense,
        shall, to the extent required or permitted by Applicable Law, prepare
        and file all tax returns and pay all taxes due

                                      -27-
<PAGE>
        in respect of Landlord's net income, gross receipts, sales and use,
        single business, transaction privilege, rent, ad valorem, franchise
        taxes and taxes on its capital stock, and Tenant, at its expense, shall,
        to the extent required or permitted by Applicable Laws and regulations,
        prepare and file all other tax returns and reports in respect of any
        Imposition as may be required by Government Agencies. Provided no Event
        of Default shall have occurred and be continuing, if any refund shall be
        due from any taxing authority in respect of any Imposition paid by
        Tenant, the same shall be paid over to or retained by Tenant. Landlord
        and Tenant shall, upon request of the other, provide such data as is
        maintained by the party to whom the request is made with respect to the
        Leased Property as may be necessary to prepare any required returns and
        reports. In the event Government Agencies classify any property covered
        by this Agreement as personal property, Tenant shall file all personal
        property tax returns in such jurisdictions where it may legally so file.
        Each party shall, to the extent it possesses the same, provide the
        other, upon request, with cost and depreciation records necessary for
        filing returns for any property so classified as personal property.
        Where Landlord is legally required to file personal property tax returns
        for property covered by this Agreement, Landlord shall provide Tenant
        with copies of assessment notices in sufficient time for Tenant to file
        a protest. All Impositions assessed against such personal property shall
        be (irrespective of whether Landlord or Tenant shall file the relevant
        return) paid by Tenant not later than the last date on which the same
        may be made without interest or penalty, subject to the provisions of
        Article 8.

                Landlord shall give prompt Notice to Tenant of all Impositions
        payable by Tenant hereunder of which Landlord at any time has knowledge;
        provided, however, that Landlord's failure to give any such notice shall
        in no way diminish Tenant's obligation hereunder to pay such
        Impositions, unless such failure continues for more than ninety (90)
        days after the date Landlord learned of such Imposition.

                (b) UTILITY CHARGES. Tenant shall pay or cause to be paid all
        charges for electricity, power, gas, oil, water

                                      -28-
<PAGE>
        and other utilities used in connection with the Leased Property.

                (c) INSURANCE PREMIUMS. Tenant shall pay or cause to be paid all
        premiums for the insurance coverage required to be maintained pursuant
        to Article 9.

                (d) OTHER CHARGES. Tenant shall pay or cause to be paid all
        other amounts, liabilities and obligations, including, without
        limitation, ground rents, if any, and all amounts payable under any
        equipment leases and all agreements to indemnify Landlord under Sections
        4.3.2 and 9.7.

                (e) REIMBURSEMENT FOR ADDITIONAL CHARGES. If Tenant pays or
        causes to be paid property taxes or similar or other Additional Charges
        attributable to periods after the end of the Term, whether upon
        expiration or sooner termination of this Agreement (other than
        termination by reason of an Event of Default), Tenant may, within a
        reasonable time after the end of the Term, provide Notice to Landlord of
        its estimate of such amounts. Landlord shall promptly reimburse Tenant
        for all payments of such taxes and other similar Additional Charges that
        are attributable to any period after the Term of this Agreement.

        3.2 LATE PAYMENT OF RENT, ETC. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Landlord) shall not be paid within ten (10) days
after its due date, Tenant shall pay Landlord, on demand, as Additional Charges,
a late charge (to the extent permitted by law) computed at the Overdue Rate on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that Tenant pays any Additional Charges
directly to Landlord or any Hotel Mortgagee pursuant to any requirement of this
Agreement, Tenant shall be relieved of its obligation to pay such Additional
Charges to the Entity to which they would otherwise be due. If any payments due
from Landlord to Tenant shall not be paid within ten (10) days after its due
date, Landlord shall pay to Tenant, on demand, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such installment
from the due date of such installment to the date of payment thereof.

                                      -29-
<PAGE>
        In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every fine,
penalty, interest and cost which is added for non-payment or late payment of
such items. Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the case of non-payment of the Additional Charges as in the case of
non-payment of the Minimum Rent and Additional Rent.

        3.3 NET LEASE. The Rent shall be absolutely net to Landlord so that this
Agreement shall yield to Landlord the full amount of the installments or amounts
of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide otherwise, including those provisions for
adjustment or abatement of such Rent.

        3.4 NO TERMINATION, ABATEMENT, ETC Except as otherwise specifically
provided in this Agreement, each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by this Agreement in accordance with its
terms and shall not take any action without the consent of the other to modify,
surrender or terminate this Agreement. In addition, except as otherwise
expressly provided in this Agreement, Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off against
the Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise affected by reason of (a) any damage to or destruction of the Leased
Property or any portion thereof from whatever cause or any Condemnation, (b) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any portion thereof, or the interference with such use by
any Person or by reason of eviction by paramount title; (c) any claim which
Tenant may have against Landlord by reason of any default (other than a monetary
default) or breach of any warranty by Landlord under this Agreement or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties; (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord; or (e) for any
other cause whether similar or dissimilar to any of the foregoing (other than a
monetary default by Landlord); provided, however, that the foregoing shall not
apply or be construed to restrict Tenant's rights in the event of any act or
omission by Landlord constituting

                                      -30-
<PAGE>
negligence or willful misconduct. Except as otherwise specifically provided in
this Agreement, Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law (a) to
modify, surrender or terminate this Agreement or quit or surrender the Leased
Property or any portion thereof, or (b) which would entitle Tenant to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
or other obligations to be performed by Tenant hereunder. The obligations of
Tenant hereunder shall be separate and independent covenants and agreements, and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement. In any instance where,
after the occurrence of an Event of Default, Landlord retains funds which, but
for the occurrence of such Event of Default, would be payable to Tenant,
Landlord shall refund such funds to Tenant to the extent the amount thereof
exceeds the amount necessary to compensate Landlord for any cost, loss or damage
incurred in connection with such Event of Default.

        3.5 RETAINED FUNDS. Pursuant to the Purchase Documents, Landlord is
holding the Retained Funds as security for the faithful observance and
performance by Tenant of all the terms, covenants and conditions of this
Agreement by Tenant to be observed and performed. The Retained Funds shall not
be mortgaged, assigned, transferred or otherwise encumbered by Tenant or any of
its Affiliated Persons without the prior written consent of Landlord and any
such act on the part of Tenant or any of its Affiliated Persons without first
having obtained Landlord's consent shall be without force and effect and shall
not be binding upon Landlord.

        If an Event of Default shall occur and be continuing, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have on
account thereof, appropriate and apply the entire Retained Funds or so much
thereof as may be necessary to compensate Landlord toward the payment of Rent or
other sums or loss or damage sustained by Landlord due to such breach on the
part of Tenant. It is understood and agreed that the Retained Funds are not to
be considered as prepaid rent, nor shall damages be limited to the amount of the
Retained Funds. Provided no Event of Default shall have occurred and be
continuing, any unapplied balance of the Retained Funds shall be paid to Tenant
or its Affiliated Persons at the end of the Term

                                      -31-
<PAGE>
or, in the event of any early termination of this Agreement with respect to any
Property, such portion thereof as is allocable to such Property (as reasonably
determined by Landlord) upon such termination. Landlord shall have no obligation
to pay interest on the Retained Funds and shall have the right to commingle the
same with Landlord's other funds. If Landlord conveys Landlord's interest under
this Agreement, the Retained Funds, or any part thereof not previously applied,
shall be turned over by Landlord to Landlord's grantee, and, if so turned over,
Tenant shall look solely to such grantee for proper application of the Retained
Funds in accordance with the terms of this Section 3.5 and the return thereof in
accordance herewith; provided, however, that Landlord shall not be released from
liability with respect to any Retained Funds so turned over unless such grantee
shall have a Net Worth equal to or greater than the lesser of (i) ten (10) times
the amount of such Retained Funds so turned over or (ii) One Hundred Million
Dollars ($100,000,000). If such grantee shall not satisfy the aforesaid Net
Worth requirement, Landlord shall, in a guaranty in form and substance
reasonably satisfactory to Tenant, guarantee payment of the amount of the
Retained Funds so turned over in accordance with this Agreement and the Purchase
Documents. The holder of a mortgage on the Leased Property shall not be
responsible to Tenant for the return or application of the Retained Funds, if it
succeeds to the position of Landlord hereunder, unless the Retained Funds shall
have been received in hand by such holder.

        In the event of bankruptcy or other creditor-debtor proceedings against
Tenant, the Retained Funds shall be deemed to be applied first to the payment of
Rent and other charges due Landlord for all periods prior to the filing of such
proceedings.

                                    ARTICLE 4

                           USE OF THE LEASED PROPERTY

        4.1 PERMITTED USE.

                4.1.1 PERMITTED USE. (a) Tenant shall, at all times during the
        Term, subject to temporary periods for the repair of damage caused by
        casualty or Condemnation, continuously use and operate each Property as
        an extended stay hotel and any uses incidental thereto. Tenant shall not
        use or permit to be used any Property or any portion

                                      -32-
<PAGE>
        thereof for any other use without the prior written consent of Landlord,
        which approval shall not be unreasonably withheld, delayed or
        conditioned. Tenant shall not change the brand of the Hotels without
        Landlord's prior written consent, which consent shall not be
        unreasonably withheld, delayed or conditioned, it being agreed that, on
        the Commencement Date, the Hotels shall be operated under the
        "Candlewood Hotel" brand. No use shall be made or permitted to be made
        of any Property and no acts shall be done thereon which will cause the
        cancellation of any insurance policy covering such Property or any part
        thereof that is required hereunder (unless another adequate policy is
        available), nor shall Tenant sell or otherwise provide or permit to be
        kept, used or sold in or about any Property any article which may be
        prohibited by law or by the standard form of fire insurance policies, or
        any other insurance policies required to be carried hereunder, or fire
        underwriter's regulations. Tenant shall, at its sole cost, comply with
        all Insurance Requirements.

                (b) In the event that, in the reasonable determination of
        Tenant, it shall no longer be economically practical to operate any
        Property as a Candlewood hotel, Tenant shall give Landlord Notice
        thereof, which Notice shall set forth in reasonable detail the reasons
        therefor. Thereafter, Landlord and Tenant shall negotiate in good faith
        to agree on an alternative use for the Property or a replacement
        property therefor (in which event the affected Property shall be
        transferred to Tenant's designee), appropriate adjustments to the
        Additional Rent and other related matters; provided, however, in no such
        event shall the Minimum Rent be reduced or abated.

               4.1.2 NECESSARY APPROVALS. Tenant shall proceed with all due
diligence and exercise reasonable efforts to obtain and maintain all approvals
necessary to use and operate, for its Permitted Use, each Property and the Hotel
located thereon under applicable law.

               4.1.3 LAWFUL USE, ETC. Tenant shall not use or suffer or permit
the use of the Leased Property or Tenant's Personal Property, if any, for any
unlawful purpose. Tenant shall not, and shall direct the Manager not to, commit
or suffer to be committed any waste on any Property, or in any Hotel, nor shall
Tenant cause or permit any unlawful nuisance thereon or

                                      -33-
<PAGE>
therein. Tenant shall not, and shall direct the Manager not to, suffer nor
permit the Leased Property, or any portion thereof, to be used in such a manner
as (i) may materially and adversely impair Landlord's title thereto or to any
portion thereof, or (ii) may reasonably allow a claim or claims for adverse
usage or adverse possession by the public, as such, or of implied dedication of
the Leased Property or any portion thereof.

        4.2 COMPLIANCE WITH LEGAL/INSURANCE REQUIREMENTS, ETC. Subject to the
provisions of Article 8 and Section 5.1.3(b), Tenant, at its sole expense, shall
(i) comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair, alteration and restoration
of the Leased Property and with the terms and conditions of any sublease
affecting the Leased Property, (ii) perform all obligations of the landlord
under any sublease affecting the Leased Property and (iii) procure, maintain and
comply with all material licenses, and other authorizations and agreements
required for any use of the Leased Property and Tenant's Personal Property, if
any, then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.

        4.3 ENVIRONMENTAL MATTERS.

               4.3.1 RESTRICTION ON USE, ETC. During the Term and any other time
that Tenant shall be in possession of the Leased Property, Tenant shall not
store, spill upon, dispose of or transfer to or from the Leased Property any
Hazardous Substance, except in compliance with all Applicable Laws. During the
Term and any other time that Tenant shall be in possession of the Leased
Property, Tenant shall maintain (and shall direct the Manager to maintain) the
Leased Property at all times free of any Hazardous Substance (except in
compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of
notice or knowledge and shall direct the Manager upon receipt of notice or
knowledge promptly to, notify Landlord in writing of any material change in the
nature or extent of Hazardous Substances at the Leased Property, (b) transmit to
Landlord a copy of any report which is required to be filed with respect to the
Leased Property pursuant to SARA Title III or any other Applicable Law, (c)
transmit to Landlord copies of any citations, orders, notices or other
governmental communications received by Tenant or its agents or representatives
with respect thereto (collectively, "Environmental Notice"), which

                                      -34-
<PAGE>
Environmental Notice requires a written response or any action to be taken
and/or if such Environmental Notice gives notice of and/or presents a material
risk of any material violation of any Applicable Law and/or presents a material
risk of any material cost, expense, loss or damage (an "Environmental
Obligation"), (d), subject to the provisions of Article 8, observe and comply
with all Applicable Laws relating to the use, maintenance and disposal of
Hazardous Substances and all orders or directives from any official, court or
agency of competent jurisdiction relating to the use or maintenance or requiring
the removal, treatment, containment or other disposition thereof, and (e)
subject to the provisions of Article 8, pay or otherwise dispose of any fine,
charge or Imposition related thereto.

        If, at any time prior to the termination of this Agreement, Hazardous
Substances (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's right to contest the same
in accordance with Article 8, Tenant shall take all actions and incur any and
all expenses, as are required by any Government Agency and by Applicable Law,
(i) to clean up and remove from and about the Leased Property all Hazardous
Substances thereon, (ii) to contain and prevent any further release or threat of
release of Hazardous Substances on or about the Leased Property and (iii) to use
good faith efforts to eliminate any further release or threat of release of
Hazardous Substances on or about the Leased Property.

               4.3.2 INDEMNIFICATION OF LANDLORD. Tenant shall protect,
indemnify and hold harmless Landlord and each Hotel Mortgagee, their trustees,
officers, agents, employees and beneficiaries, and any of their respective
successors or assigns with respect to this Agreement (collectively, the
"Indemnitees" and, individually, an "Indemnitee") for, from and against any and
all debts, liens, claims, causes of action, administrative orders or notices,
costs, fines, penalties or expenses (including, without limitation, reasonable
attorney's fees and expenses) imposed upon, incurred by or asserted against any
Indemnitee resulting from, either directly or indirectly, the presence during
the Term (or any other time Tenant shall be in possession of the Leased
Property) in, upon or under the soil or ground water of the Leased Property or
any properties surrounding the Leased Property of any Hazardous Substances in
violation of any Applicable Law, provided that any of the foregoing arises by
reason of any failure by Tenant or any

                                      -35-
<PAGE>
Person claiming by, through or under Tenant to perform or comply with any of the
terms of this Section 4.3, except to the extent the same arise from the acts or
omissions of Landlord or any other Indemnitee or during any period that Landlord
or a Person designated by Landlord (other than Tenant) is in possession of the
Leased Property. Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a result of the
presence prior to the expiration or sooner termination of the Term and the
surrender of the Leased Property to Landlord in accordance with the terms of
this Agreement of Hazardous Substances in, upon or under the soil or ground
water of the Leased Property in violation of any Applicable Law. Upon Notice
from Landlord and any other of the Indemnitees, Tenant shall undertake the
defense, at Tenant's sole cost and expense, of any indemnification duties set
forth herein, in which event, Tenant shall not be liable for payment of any
duplicative attorneys' fees incurred by any Indemnitee.

        Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) reasonably incurred by Landlord and arising from a failure of
Tenant to observe and perform the requirements of this Section 4.3, which
amounts shall bear interest from the date ten (10) Business Days after written
demand therefor is given to Tenant until paid by Tenant to Landlord at the
Overdue Rate.

               4.3.3 SURVIVAL. The provisions of this Section 4.3 shall survive
the expiration or sooner termination of this Agreement.

                                      -36-
<PAGE>
                                    ARTICLE 5

                             MAINTENANCE AND REPAIRS

        5.1 MAINTENANCE AND REPAIR.

               5.1.1 TENANT'S GENERAL OBLIGATIONS. Tenant shall, at its sole
cost and expense (except as expressly provided in Section 5.1.3(b)), keep the
Leased Property and all private roadways, sidewalks and curbs appurtenant
thereto (and Tenant's Personal Property) in good order and repair, reasonable
wear and tear excepted (whether or not the need for such repairs occurs as a
result of Tenant's use, any prior use, the elements or the age of the Leased
Property or Tenant's Personal Property or any portion thereof), and shall
promptly make all necessary and appropriate repairs and replacements thereto of
every kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term (concealed
or otherwise). All repairs shall be made in a good, workmanlike manner,
consistent with industry standards for like hotels in like locales, in
accordance with all applicable federal, state and local statutes, ordinances,
codes, rules and regulations relating to any such work. Tenant shall not take or
omit to take any action, the taking or omission of which would materially and
adversely impair the value or the usefulness of the Leased Property or any
material part thereof for its Permitted Use. Tenant's obligations under this
Section 5.1.1 shall be limited in the event of any casualty or Condemnation as
set forth in Sections 10.2 and 11.2 and also as set forth in Section 5.1.3(b)
and Tenant's obligations with respect to Hazardous Substances are as set forth
in Section 4.3.

               5.1.2 FF&E RESERVE.

               (a) Upon execution of this Agreement, Tenant has established a
        reserve account (the "FF&E Reserve") in a bank designated by Tenant and
        approved by Landlord. The purpose of the FF&E Reserve is to cover the
        cost of:

        (i)     Replacements and renewals to any Hotel's furnishings, fixtures
                and equipment;

                                      -37-
<PAGE>
        (ii)    Certain routine repairs and maintenance to any Hotel building
                which are normally capitalized under GAAP such as exterior and
                interior repainting, resurfacing building walls, floors, roofs
                and parking areas, and replacing folding walls and the like; and

        (iii)   Major repairs, alterations, improvements, renewals or
                replacements to any Hotel's buildings' structure, roof, or
                exterior facade, or to its mechanical, electrical, heating,
                ventilating, air conditioning, plumbing or vertical
                transportation systems.

                 Tenant agrees that it will, from time to time, execute such
        reasonable documentation as may be requested by Landlord and any Hotel
        Mortgagee to assist Landlord and such Hotel Mortgagee in establishing or
        perfecting the Hotel Mortgagee's security interest in Landlord's
        residual interest in the funds which are in the FF&E Reserve; provided,
        however, that no such documentation shall contain any amendment to or
        modification of any of the provisions of this Agreement. It is
        acknowledged and agreed that, during the Term, funds in the FF&E Reserve
        are the property of Tenant.

                (b) Throughout the Term, Tenant shall transfer (within ten (10)
        Business Days after the end of each Accounting Period during the Term)
        into the FF&E Reserve an amount equal to the Applicable Percentage of
        Total Hotel Sales for such Accounting Period. Together with the
        documentation provided to Landlord pursuant to Section 3.1.2(c), Tenant
        shall deliver to Landlord an Officer's Certificate setting forth the
        total amount of deposits made to and expenditures from the FF&E Reserve
        for the preceding Fiscal Year, together with a reconciliation of such
        expenditures with the applicable FF&E Estimate.

                (c) With respect to each Lease Year, Tenant shall prepare an
        estimate (the "FF&E Estimate") of FF&E Reserve expenditures necessary
        during the ensuing Fiscal Year, and shall submit such FF&E Estimate to
        Landlord, on or before December 1 of the preceding Lease Year, for its
        review and approval, which approval shall not be unreasonably withheld,
        delayed or conditioned. In the event that Landlord shall fail to respond
        within thirty (30) days

                                      -38-
<PAGE>
        after receipt of the FF&E Estimate, such FF&E Estimate shall be deemed
        approved by Landlord. All expenditures from the FF&E Reserve shall be
        (as to both the amount of each such expenditure and the timing thereof)
        both reasonable and necessary, given the objective that the Hotels will
        be maintained and operated to a standard comparable to competitive
        hotels. All amounts from the FF&E Reserve shall be paid to Persons who
        are not Affiliated Persons of Tenant without mark-up or allocated
        internal costs by Tenant or its Affiliated Persons.

               (d) Tenant shall, consistent with the FF&E Estimate approved by
        Landlord, from time to time make expenditures from the FF&E Reserve as
        it deems necessary provided that Tenant shall not materially deviate
        from the FF&E Estimate approved by Landlord without the prior approval
        of Landlord, which approval shall not be unreasonably withheld, delayed
        or conditioned, except in the case of emergency where immediate action
        is necessary to prevent imminent harm to person or property.

               (e) Upon the expiration or sooner termination of this Agreement,
        funds in the FF&E Reserve and all property purchased with funds from the
        FF&E Reserve during the Term shall be paid, granted and assigned to
        Landlord as Additional Charges.

               (f) Notwithstanding anything to the contrary set forth in this
        Agreement, no portion of the FF&E Reserve may be used for "punch-list"
        or other initial construction items, the cost of which shall be the sole
        responsibility of Tenant and its Affiliated Persons.

               5.1.3 LANDLORD'S OBLIGATIONS.

                (a) Except as otherwise expressly provided in this Agreement,
        Landlord shall not, under any circumstances, be required to build or
        rebuild any improvement on the Leased Property, or to make any repairs,
        replacements, alterations, restorations or renewals of any nature or
        description to the Leased Property, whether ordinary or extraordinary,
        structural or nonstructural, foreseen or unforeseen, or to make any
        expenditure whatsoever with respect thereto, or to maintain the Leased
        Property in any way. Except as otherwise expressly provided in this

                                      -39-
<PAGE>
        Agreement, Tenant hereby waives, to the maximum extent permitted by law,
        the right to make repairs at the expense of Landlord pursuant to any law
        in effect on the date hereof or hereafter enacted. Landlord shall have
        the right to give, record and post, as appropriate, notices of
        nonresponsibility under any mechanic's lien laws now or hereafter
        existing.

                (b) If, at any time, funds in the FF&E Reserve shall be
        insufficient for necessary and permitted expenditures thereof or,
        pursuant to the terms of this Agreement, Tenant is required to make any
        expenditures in connection with any repair, maintenance or renovation
        with respect to the Leased Property and the amount of such disbursements
        or expenditures exceeds the amount on deposit in the FF&E Reserve or
        such repair, maintenance or renovation is not a permitted expenditure
        from the FF&E Reserve as described in Section 5.1.2(a)(i), (ii) and
        (iii), Tenant may, at its election, give Landlord Notice thereof, which
        Notice shall set forth, in reasonable detail, the nature of the required
        repair, renovation or replacement, the estimated cost thereof and such
        other information with respect thereto as Landlord may reasonably
        require. Provided that no Event of Default shall have occurred and be
        continuing and Tenant shall otherwise comply with the applicable
        provisions of Article 6, Landlord shall, within ten (10) Business Days
        after such Notice, subject to and in accordance with the applicable
        provisions of Article 6, disburse such required funds to Tenant (or, if
        Tenant shall so elect, directly to any other Person performing the
        required work) and, upon such disbursement, the Minimum Rent shall be
        adjusted as provided in Section 3.1.1(b); provided, however, that, in
        the event that Landlord shall elect not to disburse any funds pursuant
        to this Section 5.1.3(b), Tenant's sole recourse shall be to elect not
        to make the applicable repair, maintenance or renovation, and such
        failure shall, except as otherwise provided in Section 5.1.2(f), not be
        deemed a Default or Event of Default. Tenant shall include a good faith
        projection of funds required pursuant to this Section 5.1.3(b) in the
        FF&E Estimate.

               5.1.4 NONRESPONSIBILITY OF LANDLORD, ETC. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with respect to the Leased Property, or any part thereof, are hereby
charged with notice

                                      -40-
<PAGE>
that liens on the Leased Property or on Landlord's interest therein are
expressly prohibited and that they must look solely to Tenant to secure payment
for any work done or material furnished by Tenant or for any other purpose
during the term of this Agreement.

        Nothing contained in this Agreement shall be deemed or construed in any
way as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or materialmen
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the Leased Property or any part
thereof or as giving Tenant any right, power or authority to contract for or
permit the rendering of any services or the furnishing of any materials that
would give rise to the filing of any lien against the Leased Property or any
part thereof nor to subject Landlord's estate in the Leased Property or any part
thereof to liability under any mechanic's lien law of any State in any way, it
being expressly understood Landlord's estate shall not be subject to any such
liability.

        5.2 TENANT'S PERSONAL PROPERTY. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary in
order to operate in compliance with applicable material Legal Requirements and
Insurance Requirements and otherwise in accordance with customary practice in
the industry for the Permitted Use, and all of such Tenant's Personal Property
shall, upon the expiration or earlier termination of this Agreement, become the
property of Landlord. If, from and after the Commencement Date, Tenant acquires
an interest in any item of tangible personal property (other than motor
vehicles) on, or in connection with, the Leased Property which belongs to anyone
other than Tenant, Tenant shall require the agreements permitting such use to
provide that Landlord or its designee may assume Tenant's rights and obligations
under such agreement upon the termination of this Agreement and the assumption
of management or operation of the Hotel by Landlord or its designee.

        5.3 YIELD UP. Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in
substantially the same condition in which the Leased Property was in on the
Commencement Date, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Agreement,

                                      -41-
<PAGE>
reasonable wear and tear excepted (and casualty damage and Condemnation, in the
event that this Agreement is terminated following a casualty or Condemnation in
accordance with Article 10 or Article 11 excepted), and except for repairs
Tenant elects not to make pursuant to Section 5.1.3(b).

        In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good faith
efforts to transfer to and cooperate with Landlord or Landlord's nominee in
connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental Entities which may be
necessary for the use and operation of the Hotel as then operated. If requested
by Landlord, Tenant will direct the Manager to continue, or if there is no
Manager, Tenant shall continue to manage one or more of the Hotels after the
expiration of the Term and for up to one (1) year, on such reasonable terms
(which shall include a market rate management fee, customary royalty for
non-exclusive license to use the trademarks then being used at the Leased
Property and an agreement to reimburse the Manager or Tenant, as the case may
be, for its reasonable out-of-pocket costs and expenses, and reasonable
administrative costs), as Landlord shall reasonably request.

        5.4 MANAGEMENT AGREEMENT. Tenant shall not, without Landlord's prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned), enter into, or amend or modify the provisions of any Management
Agreement. Any Management Agreement shall be subordinate to this Agreement and
shall provide, inter alia, that all amounts due from Tenant to the Manager shall
be subordinate to all amounts due from Tenant to Landlord (provided that, as
long as no Event of Default has occurred and is continuing, Tenant may pay all
amounts due to a Manager pursuant to a Management Agreement) and for termination
thereof, at Landlord's option, upon the termination of this Agreement. Tenant
shall not take any action, grant any consent or permit any action under any
Management Agreement which might have a material adverse effect on Landlord,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, delayed or conditioned.

                                      -42-
<PAGE>
                                    ARTICLE 6

                               IMPROVEMENTS, ETC.

        6.1 IMPROVEMENTS TO THE LEASED PROPERTY. Tenant shall not make,
construct or install any Capital Additions (other than Capital Additions of the
type described in Section 5.1.2(a)(ii) or 5.1.2(a)(iii) and approved pursuant to
Section 5.1.2(c)) without, in each instance, obtaining Landlord's prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned provided that (a) construction or installation of the same would not
adversely affect or violate any material Legal Requirement or Insurance
Requirement applicable to the Leased Property and (b) Landlord shall have
received an Officer's Certificate certifying as to the satisfaction of the
conditions set out in clause (a) above; provided, however, that no such consent
shall be required in the event immediate action is required to prevent imminent
harm to person or property. Prior to commencing construction of any Capital
Addition, Tenant shall submit to Landlord, in writing, a proposal setting forth,
in reasonable detail, any such proposed improvement and shall provide to
Landlord such plans and specifications, and such permits, licenses, contracts
and such other information concerning the same as Landlord may reasonably
request. Landlord shall have thirty (30) days to review all materials submitted
to Landlord in connection with any such proposal. Failure of Landlord to respond
to Tenant's proposal within such 30-day period shall be deemed approval thereof.
Without limiting the generality of the foregoing, such proposal shall indicate
the approximate projected cost of constructing such proposed improvement and the
use or uses to which it will be put. No Capital Addition shall be made which
would tie in or connect any Leased Improvements with any other improvements on
property adjacent to the Leased Property (and not part of the Land) including,
without limitation, tie-ins of buildings or other structures or utilities.
Except as permitted herein, Tenant shall not finance the cost of any
construction of such improvement by the granting of a lien on or security
interest in the Leased Property or such improvement, or Tenant's interest
therein, without the prior written consent of Landlord, which consent may be
withheld by Landlord in Landlord's sole discretion. Any such improvements shall,
upon the expiration or sooner termination of this Agreement, remain or pass to
and become the property of Landlord, free and clear of all encumbrances other
than Permitted Encumbrances.

                                      -43-
<PAGE>
        6.2 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions or non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
such work.

                                    ARTICLE 7

                                      LIENS

        7.1 LIENS. Subject to Article 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or Tenant's leasehold interest therein or any
attachment, levy, claim or encumbrance in respect of the Rent, other than (a)
Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, (c) liens for those taxes of Landlord which
Tenant is not required to pay hereunder, (d) subleases permitted by Article 16,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet due and payable, or (ii) are
being contested in accordance with Article 8, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable or are for sums that are being contested in
accordance with Article 8, (g) any Hotel Mortgages or other liens which are the
responsibility of Landlord pursuant to the provisions of Article 20 and (h)
Landlord Liens and any other voluntary liens created by Landlord.

        7.2 LANDLORD'S LIEN. In addition to any statutory landlord's lien and in
order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord, to the maximum extent permitted by Applicable Law, a security interest
in and an express contractual lien upon Tenant's Personal Property (except motor
vehicles and liquor licenses and permits), and Tenant's interest in all ledger
sheets, files, records, documents and instruments (including, without
limitation, computer programs, tapes and related electronic data processing)
relating to the operation of the Hotels (the "Records") and all proceeds
therefrom, subject to any Permitted Encumbrances; and such Tenant's Personal

                                      -44-
<PAGE>
Property shall not be removed from the Leased Property at any time when an Event
of Default has occurred and is continuing.

        Upon Landlord's request, Tenant shall execute and deliver any financing
statements necessary to perfect the security interest of Landlord in Tenant's
Personal Property and the proceeds thereof in accordance with the provisions of
the applicable laws of the State. During the continuance of an Event of Default,
Tenant hereby grants Landlord an irrevocable limited power of attorney, coupled
with an interest, to execute all such financing statements in Tenant's name,
place and stead. The security interest herein granted is in addition to any
statutory lien for the Rent.

                                    ARTICLE 8

                               PERMITTED CONTESTS

        Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims") as
to the Leased Property, by appropriate legal proceedings, conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving, modifying or extending Tenant's obligation to pay any
Claims as finally determined, (b) such contest shall not cause Landlord or
Tenant to be in default under any mortgage or deed of trust encumbering the
Leased Property (Landlord agreeing that any such mortgage or deed of trust shall
permit Tenant to exercise the rights granted pursuant to this Article 8) or any
interest therein or result in or reasonably be expected to result in a lien
attaching to the Leased Property (unless Tenant shall provide Landlord with a
bond or other assurance reasonably acceptable to Landlord with respect to any
such lien), (c) no part of the Leased Property nor any Rent therefrom shall be
in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant
shall indemnify and hold harmless Landlord from and against any cost, claim,
damage, penalty or reasonable expense, including reasonable attorneys' fees,
incurred by Landlord in connection therewith or as a result thereof. Landlord
agrees to join in any such proceedings if required legally to prosecute such
contest, provided that Landlord shall not thereby be subjected to any liability
therefor (including, without limitation, for the payment of any costs or
expenses in connection therewith) unless

                                      -45-
<PAGE>
Tenant agrees by agreement in form and substance reasonably satisfactory to
Landlord, to assume and indemnify Landlord with respect to the same. Tenant
shall be entitled to any refund of any Claims and such charges and penalties or
interest thereon which have been paid by Tenant or paid by Landlord to the
extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail
(x) to pay or cause to be paid any Claims when finally determined, (y) to
provide reasonable security therefor or (z) to prosecute or cause to be
prosecuted any such contest diligently and in good faith, Landlord may, upon
reasonable notice to Tenant (which notice shall not be required if Landlord
shall reasonably determine that the same is not practicable), pay such charges,
together with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.

                                    ARTICLE 9

                          INSURANCE AND INDEMNIFICATION

        9.1 GENERAL INSURANCE REQUIREMENTS. Tenant shall, at all times during
the Term and at any other time Tenant shall be in possession of the Leased
Property, keep the Leased Property and all property located therein or thereon,
insured against the risks and in the amounts as follows and shall maintain, with
respect to each Property, the following insurance:

               (a) "All-risk" property insurance, including insurance against
        loss or damage by fire, vandalism and malicious mischief, earthquake,
        explosion of steam boilers, pressure vessels or other similar apparatus,
        now or hereafter installed in the Hotel located at such Property, with
        the usual extended coverage endorsements, in an amount equal to one
        hundred percent (100%) of the then full Replacement Cost thereof (as
        defined in Section 9.2);

               (b) Business interruption insurance covering risk of loss during
        the lesser of the first twelve (12) months of reconstruction or the
        actual reconstruction period necessitated by the occurrence of any of
        the hazards described in subparagraph (a) above, in such amounts as may
        be customary for comparable properties in the area and in an amount
        sufficient to prevent Landlord or Tenant from becoming a co-insurer;

                                      -46-
<PAGE>
               (c) Comprehensive general liability insurance, including bodily
        injury and property damage in a form reasonably satisfactory to Landlord
        (and including, without limitation, broad form contractual liability,
        independent contractor's hazard and completed operations coverage) in an
        amount not less than One Million Dollars ($1,000,000) per occurrence,
        Two Million Dollars ($2,000,000) in the aggregate and umbrella coverage
        of all such claims in an amount not less than Seventy-Five Million
        Dollars ($75,000,000);

               (d) Flood (if such Property is located in whole or in part within
        an area identified as an area having special flood hazards and in which
        flood insurance has been made available under the National Flood
        Insurance Act of 1968, as amended, or the Flood Disaster Protection Act
        of 1973, as amended (or any successor acts thereto)) in such amounts as
        may be customary for comparable properties in the area;

               (e) Worker's compensation insurance coverage if required by
        applicable law for all persons employed by Tenant on such Property with
        statutory limits and otherwise with limits of and provisions in
        accordance with the requirements of applicable local, State and federal
        law, and employer's liability insurance as is customarily carried by
        similar employers; and

               (f) Such additional insurance as may be reasonably required, from
        time to time, by Landlord or any Hotel Mortgagee and which is
        customarily carried by comparable lodging properties in the area.

        9.2 REPLACEMENT COST. "REPLACEMENT COST" as used herein, shall mean the
estimated replacement cost of the property, including estimated increases in
construction costs as determined annually by Landlord and Tenant, requiring
replacement from time to time, less exclusions provided in the standard form of
fire insurance policy. In the event either party believes that the then full
Replacement Cost has increased or decreased at any time during the Term, such
party, at its own cost, shall have the right to have such full Replacement Cost
redetermined by an independent accredited appraiser approved by the other, which
approval shall not be unreasonably withheld or delayed. The party desiring to
have the full Replacement Cost so redetermined shall forthwith, on receipt of
such

                                      -47-
<PAGE>
determination by such appraiser, give Notice thereof to the other. The
determination of such appraiser shall be final and binding on the parties hereto
until any subsequent determination under this Section 9.2, and Tenant shall
forthwith conform the amount of the insurance carried to the amount so
determined by the appraiser.

        9.3 WAIVER OF SUBROGATION. Landlord and Tenant agree that (insofar as
and to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in any State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a result
of this provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.

        9.4 FORM SATISFACTORY, ETC. All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for, nonassessable and
be issued by insurance carriers authorized to do business in the State, having a
general policy holder's rating of no less than A in Best's latest rating guide.
All such policies described in Sections 9.1(a) through (d) shall include no
deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) (with the
exception of insurance described in Section 9.1(a) providing coverage for
windstorm which may have a deductible not exceeding five percent (5%) of the
policy amount for such insurance or such lesser amount as may be usual and
customary in the insurance industry for like properties) and, with the exception
of the insurance described in Sections 9.1(e), shall name Landlord and any Hotel
Mortgagee as additional insureds, as their interests may appear. All loss
adjustments shall be payable as provided in Article 10, except that losses under
Sections 9.1(c) and (e) shall be payable directly to the party entitled thereto.
Tenant shall cause all insurance premiums to be paid and shall deliver policies
or certificates thereof to Landlord prior to their effective date (and, with
respect to any renewal policy, prior to the expiration of the existing policy).
All such policies shall

                                      -48-
<PAGE>
provide Landlord (and any Hotel Mortgagee if required by the same) thirty (30)
days prior written notice of any material change or cancellation of such policy.
In the event Tenant shall fail to effect such insurance as herein required, to
pay the premiums therefor or to deliver such policies or certificates to
Landlord or any Hotel Mortgagee at the times required, Landlord shall have the
right, upon Notice to Tenant, but not the obligation, to acquire such insurance
and pay the premiums therefor, which amounts shall be payable to Landlord, upon
demand, as Additional Charges, together with interest accrued thereon at the
Overdue Rate from the date such payment is made until (but excluding) the date
repaid.

        9.5 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this Article 9, Tenant's obligation to maintain the insurance herein required
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant, provided, that (a) the coverage
thereby afforded will not be reduced or diminished from that which would exist
under a separate policy meeting all other requirements of this Agreement, and
(b) the requirements of this Article 9 are otherwise satisfied. Without limiting
the foregoing, the amounts of insurance that are required to be maintained
pursuant to Section 9.1 shall be on a Hotel by Hotel basis, and shall not be
subject to an aggregate limit, except for flood, earthquake and umbrella
coverages.

        9.6 NO SEPARATE INSURANCE. Tenant shall not take out separate insurance,
concurrent in form or contributing in the event of loss with that required by
this Article 9, or increase the amount of any existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of such insurance, including Landlord and all
Hotel Mortgagees, are included therein as additional insureds and the loss is
payable under such insurance in the same manner as losses are payable under this
Agreement. In the event Tenant shall take out any such separate insurance or
increase any of the amounts of the then existing insurance, Tenant shall give
Landlord prompt Notice thereof.

        9.7 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and

                                      -49-
<PAGE>
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and reasonable expenses (including, without limitation, reasonable
attorneys' fees), to the maximum extent permitted by law, imposed upon or
incurred by or asserted against Landlord by reason of the following, except to
the extent caused by Landlord's negligence on willful misconduct or a Landlord
Default: (a) any accident, injury to or death of persons or loss of or damage to
property occurring on or about the Leased Property or adjoining sidewalks or
rights of way, (b) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant or anyone claiming under Tenant of
the Leased Property or Tenant's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Landlord is
made a party or participant relating to the Leased Property or Tenant's Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any Impositions
that are the obligations of Tenant to pay pursuant to the applicable provisions
of this Agreement, and (d) any failure on the part of Tenant or anyone claiming
under Tenant to perform or comply with any of the terms of this Agreement.
Tenant, at its expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Landlord (and shall not be
responsible for any duplicative attorneys' fees incurred by Landlord) or may
compromise or otherwise dispose of the same, with Landlord's prior written
consent (which consent may not be unreasonably withheld, delayed or
conditioned). The obligations of Tenant under this Section 9.7 are in addition
to the obligations set forth in Section 4.3 and shall survive the termination of
this Agreement.

                                      -50-
<PAGE>
                                   ARTICLE 10

                                    CASUALTY

        10.1 INSURANCE PROCEEDS. Except as provided in the last clause of this
sentence, all proceeds payable by reason of any loss or damage to any Property,
or any portion thereof, and insured under any policy of insurance required by
Article 9 (other than the proceeds of any business interruption insurance) shall
be paid directly to Landlord (subject to the provisions of Section 10.2) and all
loss adjustments with respect to losses payable to Landlord shall require the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned; provided, however, that, so long as no Event
of Default shall have occurred and be continuing, all such proceeds less than or
equal to Five Hundred Thousand Dollars ($500,000) shall be paid directly to
Tenant and such losses may be adjusted without Landlord's consent. If Tenant is
required to reconstruct or repair any Property as provided herein, such proceeds
shall be paid out by Landlord from time to time for the reasonable costs of
reconstruction or repair of such Property necessitated by such damage or
destruction, subject to and in accordance with the provisions of Section 10.2.4.
Provided no Default or Event of Default has occurred and is continuing, any
excess proceeds of insurance remaining after the completion of the restoration
shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are
applicable, the insurance proceeds shall be retained by the party entitled
thereto pursuant to Section 10.2.1.

        10.2 DAMAGE OR DESTRUCTION.

               10.2.1 DAMAGE OR DESTRUCTION OF LEASED PROPERTY. If, during the
Term, any Property shall be totally or partially destroyed and the Hotel located
thereon is thereby rendered Unsuitable for Its Permitted Use, Tenant may, by the
giving of Notice thereof to Landlord, within ninety (90) days after the date of
casualty, terminate this Agreement with respect to such Property, in which
event, Landlord shall be entitled to retain the insurance proceeds payable on
account of such damage, except that Landlord shall pay to Tenant any net
proceeds in excess of the replacement cost of such Property reasonably allocable
to the value of Tenant's leasehold, Tenant's Personal Property and Capital
Additions paid for by Tenant.

                                      -51-
<PAGE>
               10.2.2 PARTIAL DAMAGE OR DESTRUCTION. If, during the Term, any
Property shall be totally or partially destroyed but the Hotel is not rendered
Unsuitable for Its Permitted Use, Tenant shall promptly restore such Hotel as
provided in Section 10.2.4 unless this Agreement is terminated as to such Hotel
as provided in Section 10.2.3.

               10.2.3 INSUFFICIENT INSURANCE PROCEEDS. If this Agreement is not
otherwise terminated pursuant to this Article 10 and the cost of the repair or
restoration of the applicable Property exceeds the amount of insurance proceeds
received by Landlord and Tenant pursuant to Section 9(a), (c), (d) or, if
applicable, (f), Tenant shall give Landlord Notice thereof which notice shall
set forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that, if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice to Tenant, given within sixty
(60) days after Tenant's notice of the deficiency, to elect to make available
for application to the cost of repair or restoration the amount of such
deficiency; provided, however, in such event, upon any disbursement by Landlord
thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In
the event that neither Landlord nor Tenant shall elect to make such deficiency
available for restoration, either Landlord or Tenant may terminate this
Agreement with respect to the affected Property by Notice to the other,
whereupon, this Agreement shall terminate and insurance proceeds shall be
distributed as provided in Section 10.2.1. It is expressly understood and
agreed, however, that, notwithstanding anything in this Agreement to the
contrary, Tenant shall be strictly liable and solely responsible for the amount
of any deductible and shall, upon any insurable loss, pay over the amount of
such deductible to Landlord at the time and in the manner herein provided for
payment of the applicable proceeds to Landlord.

               10.2.4 DISBURSEMENT OF PROCEEDS. In the event Tenant is required
to restore any Property pursuant to Section 10.2 and this Agreement is not
terminated as to such Property pursuant to this Article 10, Tenant shall
commence promptly and continue diligently to perform the repair and restoration
of

                                      -52-
<PAGE>
such Property (hereinafter called the "Work"), so as to restore such Property in
material compliance with all Legal Requirements and so that such Property shall
be, to the extent practicable, substantially equivalent in value and general
utility to its general utility and value immediately prior to such damage or
destruction. Subject to the terms hereof, Landlord shall advance the insurance
proceeds and any additional amounts payable by Landlord pursuant to Section
10.2.3 or otherwise deposited with Landlord to Tenant regularly during the
repair and restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than monthly
within ten (10) Business Days after Tenant submits to Landlord a written
requisition and substantiation therefor on AIA Forms G702 and G703 (or on such
other form or forms as may be reasonably acceptable to Landlord). Landlord may,
at its option, condition advancement of such insurance proceeds and other
amounts on (i) the absence of any Event of Default, (ii) its approval of plans
and specifications of an architect satisfactory to Landlord (which approval
shall not be unreasonably withheld, delayed or conditioned), (iii) general
contractors' estimates, (iv) architect's certificates, (v) conditional lien
waivers of general contractors, if available, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is required,
(vii), if Tenant has elected to advance deficiency funds pursuant to Section
10.2.3, Tenant depositing the amount thereof with Landlord and (viii) such other
certificates as Landlord may, from time to time, reasonably require.

        Landlord's obligation to disburse insurance proceeds under this Article
10 during the last two (2) years of the Term (including any automatic renewals
thereof) shall be subject to the release of such proceeds by any Hotel Mortgagee
to Landlord. If any Hotel Mortgagee shall be unwilling to disburse insurance
proceeds in accordance with the terms of this Agreement, Tenant shall have the
right, by the giving of Notice thereof to Landlord within ten (10) Business Days
after Tenant learns of such unwillingness, to treat such Property as rendered
Unsuitable for its Permitted Use for purposes of Section 10.2.1. Tenant's
obligation to restore the applicable Property pursuant to this Article 10 shall
be subject to the release of available insurance proceeds by the applicable
Hotel Mortgagee to Landlord or directly to Tenant.

                                      -53-
<PAGE>
        10.3 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
10.1 or 10.2 to the contrary, if damage to or destruction of any Property occurs
during the last two (2) years of the Term (including any automatic Extended
Terms) and if such damage or destruction cannot reasonably be expected to be
fully repaired and restored prior to the date that is twelve (12) months prior
to the end of the Term, the provisions of Section 10.2.1 shall apply as if such
Property had been totally or partially destroyed and the Hotel thereon rendered
Unsuitable for its Permitted Use.

        10.4 TENANT'S PROPERTY. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's Personal Property shall be paid to Tenant
and, to the extent necessary to repair or replace Tenant's Personal Property in
accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay
the cost of repairing or replacing damaged Tenant's Personal Property.

        10.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required to restore
any Property as hereinabove provided and this Agreement is not terminated as to
such Property pursuant to the terms of Article 10, Tenant shall either (a)
restore all alterations and improvements made by Tenant and Tenant's Personal
Property, or (b) replace such alterations and improvements and Tenant's Personal
Property with improvements or items of the same or better quality and utility in
the operation of such Property. If Tenant is not required to restore and does
not, in fact, restore, Tenant shall pay over to Landlord the amount, if any, of
insurance proceeds received by Tenant with respect to any of Tenant's Personal
Property which was purchased with funds from the FF&E Reserve.

        10.6 NO ABATEMENT OF RENT. Except as expressly provided herein, this
Agreement shall remain in full force and effect and Tenant's obligation to make
all payments of Rent and to pay all other charges as and when required under
this Agreement shall remain unabated during the Term notwithstanding any damage
involving the Leased Property (provided that Landlord shall credit against such
payments any amounts paid to Landlord as a consequence of such damage under any
business interruption insurance obtained by Tenant hereunder). The provisions of
this Article 10 shall be considered an express agreement governing any cause of
damage or destruction to the Leased Property and, to the maximum extent
permitted by law, no local or State

                                      -54-
<PAGE>
statute, laws, rules, regulation or ordinance in effect during the Term which
provide for such a contingency shall have any application in such case.

        10.7 WAIVER. Tenant hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of the Leased Property,
or any portion thereof.

                                   ARTICLE 11

                                  CONDEMNATION

        11.1 TOTAL CONDEMNATION, ETC. If either (i) the whole of any Property
shall be taken by Condemnation or (ii) a Condemnation of less than the whole of
any Property renders any Property Unsuitable for Its Permitted Use, this
Agreement shall terminate with respect to such Property, Tenant and Landlord
shall seek the Award for their interests in the applicable Property as provided
in Section 11.6 and, as the effective date of taking, the Minimum Rent payable
hereunder shall be reduced by such Property's allocable share thereof as set
forth in Exhibit C.

        11.2 PARTIAL CONDEMNATION. In the event of a Condemnation of less than
the whole of any Property such that such Property is still suitable for its
Permitted Use, Tenant shall commence promptly and continue diligently to restore
the untaken portion of the applicable Leased Improvements so that such Leased
Improvements shall constitute a complete architectural unit of the same general
character and condition (as nearly as may be possible under the circumstances)
as such Leased Improvements existing immediately prior to such Condemnation, in
material compliance with all Legal Requirements, subject to and unless this
Agreement is terminated pursuant to the provisions of this Section 11.2. If the
cost of the repair or restoration of the affected Property exceeds the amount of
the Award, Tenant shall give Landlord Notice thereof which notice shall set
forth in reasonable detail the nature of such deficiency and whether Tenant
shall pay and assume the amount of such deficiency (Tenant having no obligation
to do so, except that if Tenant shall elect to make such funds available, the
same shall become an irrevocable obligation of Tenant pursuant to this
Agreement). In the event Tenant shall elect not to pay and assume the amount of
such deficiency, Landlord shall have the right (but not the obligation),
exercisable at Landlord's sole election by Notice

                                      -55-
<PAGE>
to Tenant given within sixty (60) days after Tenant's Notice of the deficiency,
to elect to make available for application to the cost of repair or restoration
the amount of such deficiency; provided, however, in such event, upon any
disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided
in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect
to make such deficiency available for restoration, either Landlord or Tenant may
terminate this Agreement with respect to the affected Property and the entire
Award shall be allocated as set forth in Section 11.6.

        Subject to the terms hereof, Landlord shall contribute to the cost of
restoration that part of the Award necessary to complete such repair or
restoration, together with severance and other damages awarded for the taken
Leased Improvements and any other amounts deposited with or payable by Landlord,
to Tenant regularly during the restoration period so as to permit payment for
the cost of such repair or restoration. Landlord may, at its option, condition
advancement of such Award and other amounts on (i) the absence of any Event of
Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld,
delayed or conditioned), (iii) general contractors' estimates, (iv) architect's
certificates, (v) conditional lien waivers of general contractors, if available,
(vi) evidence of approval by all governmental authorities and other regulatory
bodies whose approval is required, (vii), if Tenant has elected to advance
deficiency funds pursuant to the preceding paragraph, Tenant depositing the
amount thereof with Landlord and (viii) such other certificates as Landlord may,
from time to time, reasonably require. Landlord's obligation under this Section
11.2 to disburse the Award and such other amounts shall be subject to (x) the
collection thereof by Landlord and (y) during the last two (2) years of the Term
(including any exercised renewals thereof), the release of such Award by the
applicable Hotel Mortgagee. If any Hotel Mortgagee shall be unwilling to
disburse Award proceeds in accordance with the terms of this Agreement, Tenant
shall have the right, by the giving of Notice thereof to Landlord within ten
(10) Business Days after Tenant learns of such unwillingness, to treat such
Property as rendered Unsuitable for its Permitted Use for purposes of Section
11.1. Tenant's obligation to restore the Leased Property shall be subject to the
release of the Award by the applicable Hotel Mortgagee to Landlord or directly
to Tenant.

                                      -56-
<PAGE>
        11.3 ABATEMENT OF RENT. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property, or any portion
thereof. The provisions of this Article 11 shall be considered an express
agreement governing any Condemnation involving the Leased Property and, to the
maximum extent permitted by law, no local or State statute, law, rule,
regulation or ordinance in effect during the Term which provides for such a
contingency shall have any application in such case.

        11.4 TEMPORARY CONDEMNATION. In the event of any temporary Condemnation
of any Property or Tenant's interest therein, this Agreement shall continue in
full force and effect and Tenant shall continue to pay, in the manner and on the
terms herein specified, the full amount of the Rent. Tenant shall continue to
perform and observe all of the other terms and conditions of this Agreement on
the part of the Tenant to be performed and observed. Provided no Event of
Default has occurred and is continuing, the entire amount of any Award made for
such temporary Condemnation allocable to the Term, whether paid by way of
damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon
the termination of any such period of temporary Condemnation, at its sole cost
and expense, restore the Leased Property to the condition that existed
immediately prior to such Condemnation, in material compliance with all
applicable Legal Requirements, unless such period of temporary Condemnation
shall extend beyond the expiration of the Term, in which event Tenant shall not
be required to make such restoration.

        11.5 CONDEMNATION NEAR END OF TERM. Notwithstanding any provisions of
Sections 11.2 or 11.3 to the contrary, if Condemnation of any Property occurs
during the last two (2) years of the Term (including any automatic Extended
Terms) and if restoration cannot reasonably be expected to be completed prior to
the date that is twelve (12) months prior to the end of the Term, the provisions
of Section 11.1 shall apply as if such Property had been totally or partially
taken and the Hotel thereon rendered Unsuitable for its Permitted Use.

        11.6 ALLOCATION OF AWARD. Except as provided in Section 11.4 and the
second sentence of this Section 11.6, the total

                                      -57-
<PAGE>
Award shall be solely the property of and payable to Landlord. Any portion of
the Award made for the taking of Tenant's leasehold interest in the Leased
Property, loss of business during the remainder of the Term, the taking of
Tenant's Personal Property (other than any such property purchased with the FF&E
Reserve), the taking of Capital Additions paid for by Tenant and Tenant's
removal and relocation expenses shall be the sole property of and payable to
Tenant. In any Condemnation proceedings, Landlord and Tenant shall each seek its
own Award in conformity herewith, at its own expense.

                                   ARTICLE 12

                              DEFAULTS AND REMEDIES

        12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:

                (a) should Tenant fail to make any payment of the Rent or any
        other sum (including, but not limited to, funding of the FF&E Reserve)
        payable hereunder when due; or

                (b) should Tenant fail to continuously use and operate any
        Property as an extended stay hotel in accordance with the terms and
        conditions of Article 4 for (i) thirty (30) or more consecutive days or
        (ii) ninety (90) or more days in any twelve (12) month period; or

                (c) should Tenant fail to maintain the insurance coverages
        required under Article 9 and such failure shall continue for ten (10)
        Business Days after Notice thereof (except that no Notice shall be
        required if any such insurance coverages shall have lapsed); or

                (d) should Tenant default in the due observance or performance
        of any of the terms, covenants or agreements contained herein to be
        performed or observed by it (other than as specified in clauses (a) and
        (b) above) and such default shall continue for a period of thirty (30)
        days after Notice thereof from Landlord to Tenant; provided, however,
        that if such default is susceptible of cure but such cure cannot be
        accomplished with due diligence within such period of time and if, in
        addition, Tenant commences to cure or cause to be cured such default
        within thirty

                                      -58-
<PAGE>
        (30) days after Notice thereof from Landlord and thereafter prosecutes
        the curing of such default with all due diligence, such period of time
        shall be extended to such period of time (not to exceed an additional
        ninety (90) days in the aggregate) as may be necessary to cure such
        default with all due diligence; or

                (e) should any obligation of Tenant in respect of any
        Indebtedness for money borrowed or for any material property or
        services, or any guaranty relating thereto, be declared to be or become
        due and payable prior to the stated maturity thereof, or should there
        occur and be continuing with respect to any such Indebtedness any event
        of default under any instrument or agreement evidencing or securing the
        same, the effect of which is to permit the holder or holders of such
        instrument or agreement or a trustee, agent or other representative on
        behalf of such holder or holders, to cause such any such obligations to
        become due prior to its stated maturity; or

                (f) should an event of default by Candlewood or Tenant or any
        Affiliated Person as to Candlewood or Tenant occur and be continuing
        beyond the expiration of any applicable cure period under any of the
        Incidental Documents or by the Candlewood Parties (as defined therein)
        under the Purchase Documents, including, without limitation, an event of
        default under Section 3.6 of the Guaranty; or

                (g) should any material representation or warranty made by
        Tenant or the Candlewood Parties (as defined in the Purchase Documents)
        under or in connection with this Agreement or any Incidental Document or
        the Purchase Documents, or in any document, certificate or agreement
        delivered in connection herewith or therewith, prove to have been false
        or misleading in any material respect on the date when made or deemed
        made and the same shall continue for five (5) Business Days after Notice
        thereof from Landlord; or

                (h) should Tenant generally not be paying its debts as they
        become due or should Tenant make a general assignment for the benefit of
        creditors; or

                                      -59-
<PAGE>
                (i) should any petition be filed by or against Tenant under the
        Federal bankruptcy laws, or should any other proceeding be instituted by
        or against Tenant seeking to adjudicate Tenant a bankrupt or insolvent,
        or seeking liquidation, reorganization, arrangement, adjustment or
        composition of Tenant's debts under any law relating to bankruptcy,
        insolvency or reorganization or relief of debtors, or seeking the entry
        of an order for relief or the appointment of a receiver, trustee,
        custodian or other similar official for Tenant or for any substantial
        part of the property of Tenant and such proceeding is not dismissed
        within one hundred eighty (180) days after institution thereof; or

                (j) should Tenant cause or institute any proceeding for its
        dissolution or termination; or

                (k) should the estate or interest of Tenant in the Leased
        Property or any part thereof be levied upon or attached in any
        proceeding and the same shall not be vacated or discharged within the
        later of (x) ninety (90) days after commencement thereof, unless the
        amount in dispute is less than $250,000, in which case Tenant shall give
        notice to Landlord of the dispute but Tenant may defend in any suitable
        way, and (y) two hundred seventy (270) days after receipt by Tenant of
        Notice thereof from Landlord (unless Tenant shall be contesting such
        lien or attachment in good faith in accordance with Article 8); or

                (l) should Tenant at any time cease to be a wholly owned, direct
        or indirect, Subsidiary of Candlewood; or

                (m) should there occur any Change in Control, except as
        otherwise permitted by Article 16;

then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to any or all of the
Leased Property by giving Notice thereof to Tenant and upon the expiration of
the time, if any, fixed in such Notice, this Agreement shall terminate with
respect to all or the designated portion of the Leased Property and all rights
of Tenant under this Agreement with respect thereto shall cease. Landlord shall
have and may exercise all rights and remedies available at law and in equity to
Landlord as a result of Tenant's breach of this Agreement.

                                      -60-
<PAGE>
        Upon the occurrence of an Event of Default, Landlord may, in addition to
any other remedies provided herein, enter upon the Leased Property or any
portion thereof and take possession of any and all of Tenant's Personal
Property, if any, and the Records, without liability for trespass or conversion
(Tenant hereby waiving any right to notice or hearing prior to such taking of
possession by Landlord) and sell the same at public or private sale, after
giving Tenant reasonable Notice of the time and place of any public or private
sale, at which sale Landlord or its assigns may purchase all or any portion of
Tenant's Personal Property, if any, unless otherwise prohibited by law. Unless
otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale. The
proceeds from any such disposition, less all expenses incurred in connection
with the taking of possession, holding and selling of such property (including,
reasonable attorneys' fees) shall be applied as a credit against the
indebtedness which is secured by the security interest granted in Section 7.2.
Any surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.

        12.2 REMEDIES. None of (a) the termination of this Agreement pursuant to
Section 12.1, (b) the repossession of the Leased Property or any portion
thereof, (c) the failure of Landlord to re-let the Leased Property or any
portion thereof, nor (d) the reletting of all or any of portion of the Leased
Property, shall relieve Tenant of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or re-letting. In the
event of any such termination, Tenant shall forthwith pay to Landlord all Rent
due and payable with respect to the Leased Property through and including the
date of such termination. Thereafter, Tenant, until the end of what would have
been the Term of this Agreement in the absence of such termination, and whether
or not the Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent (Additional Rent to be reasonably calculated by Landlord based on
historical Total Hotel Sales) and other charges which would be payable hereunder
for the remainder of the Term had such termination not occurred, less the net
proceeds, if any, of any re-letting of the Leased Property, after deducting all
reasonable expenses in connection

                                      -61-
<PAGE>
with such reletting, including, without limitation, all repossession costs,
brokerage commissions, legal expenses, attorneys' fees, advertising, expenses of
employees, alteration costs and expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on which
the Minimum Rent would have been payable hereunder if this Agreement had not
been so terminated with respect to such of the Leased Property.

        At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord an
amount equal to the present value (discounted at the Interest Rate) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding twelve
calendar months, or if less than twelve calendar months have expired since the
Commencement Date, the payments required for such lesser period projected to an
annual amount) for what would be the then unexpired term of this Agreement if
the same remained in effect, over the fair market rental for the same period.
Nothing contained in this Agreement shall, however, limit or prejudice the right
of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.

        In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet the Leased Property
or any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms which may at Landlord's option, be equal to, less than or exceed
the period which would otherwise have constituted the balance of the Term and
may grant concessions or free rent to the extent that Landlord considers
advisable and necessary to relet the same, and (b) may make such reasonable
alterations, repairs and decorations in the Leased Property or any portion
thereof as Landlord, in its sole and absolute discretion, considers advisable
and necessary for the purpose of reletting the Leased

                                      -62-
<PAGE>
Property; and the making of such alterations, repairs and decorations shall not
operate or be construed to release Tenant from liability hereunder as aforesaid.
Subject to the last sentence of this paragraph and as long as Landlord uses
reasonable efforts to mitigate its damages as provided in such sentence,
Landlord shall in no event be liable in any way whatsoever for any failure to
relet all or any portion of the Leased Property, or, in the event that the
Leased Property is relet, for failure to collect the rent under such reletting.
To the maximum extent permitted by law, Tenant hereby expressly waives any and
all rights of redemption granted under any present or future laws in the event
of Tenant being evicted or dispossessed, or in the event of Landlord obtaining
possession of the Leased Property, by reason of the occurrence and continuation
of an Event of Default hereunder. Landlord covenants and agrees, in the event of
any termination of this Agreement as a result of an Event of Default, to use
reasonable efforts to mitigate its damages.

        12.3 TENANT'S WAIVER. IF THIS AGREEMENT IS TERMINATED PURSUANT TO
SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT
TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES
SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN
FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

        12.4 APPLICATION OF FUNDS. Any payments received by Landlord under any
of the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
due obligations under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State. Any balance shall be paid to
Tenant.

        12.5 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If an Event of Default
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time thereafter, make such payment
or perform such act for the account and at the expense of Tenant, and may, to
the maximum extent permitted by law, enter upon the Leased

                                      -63-
<PAGE>
Property or any portion thereof for such purpose and take all such action
thereon as, in Landlord's sole and absolute discretion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of Tenant. All
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in connection therewith, together with
interest thereon (to the extent permitted by law) at the Overdue Rate from the
date such sums are paid by Landlord until repaid, shall be paid by Tenant to
Landlord, on demand.

                                   ARTICLE 13

                                  HOLDING OVER

        Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate equal
to two (2) times the Minimum Rent and other charges herein provided (prorated on
a daily basis). Tenant shall also pay to Landlord all damages (direct or
indirect) sustained by reason of any such holding over. Otherwise, such holding
over shall be on the terms and conditions set forth in this Agreement, to the
extent applicable. Nothing contained herein shall constitute the consent,
express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Agreement.

                                   ARTICLE 14

                 LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT

        14.1 LANDLORD NOTICE OBLIGATION. Notwithstanding anything to the
contrary contained herein, Landlord shall give prompt Notice to Tenant of any
matters affecting the Leased Property of which Landlord receives written notice
or actual knowledge and, to the extent Tenant otherwise has no notice or actual
knowledge thereof, Landlord shall be liable for any liabilities arising from the
failure to deliver such Notice to Tenant.

        14.2 LANDLORD'S DEFAULT. If Landlord shall default in the performance or
observance of any of its covenants or obligations set forth in this Agreement or
any obligation of Landlord, if any, under any agreement affecting the Leased
Property, the performance of which is not Tenant's obligation pursuant to this
Agreement, and any such default shall continue for a period of

                                      -64-
<PAGE>
five (5) Business Days after Notice thereof with respect to monetary defaults
and twenty (20) Business Days after Notice thereof with respect to non-monetary
defaults from Tenant to Landlord and any applicable Hotel Mortgagee, or such
additional period as may be reasonably required to correct the same, provided
Landlord is proceeding with due diligence to correct the same, Tenant may
declare the occurrence of a "Landlord Default" by a second Notice to Landlord
and to such Hotel Mortgagee. Thereafter, Tenant may forthwith cure the same and,
subject to the provisions of the following paragraph, invoice Landlord for costs
and expenses (including reasonable attorneys' fees and court costs) incurred by
Tenant in curing the same, together with interest thereon (to the extent
permitted by law) from the date Landlord receives Tenant's invoice until paid,
at the Overdue Rate, and/or offset such amounts against Additional Rent due and
payable hereunder; provided, however, that, from and after the bankruptcy of
Landlord, Tenant may offset such amounts against Minimum Rent and/or Additional
Rent payable hereunder. Tenant shall have no right to terminate this Agreement
for any default by Landlord hereunder and no right, for any such default, to
offset or counterclaim against any Rent or other charges due hereunder, as set
forth in the preceding sentence.

        If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof; provided, however, that in the event of any such adverse determination,
Landlord shall pay to Tenant interest on any disputed funds at the Interest
Rate, from the date demand for such funds was made by Tenant until the date of
final adverse determination and, thereafter, at the Overdue Rate until paid. If
Tenant and Landlord shall fail, in good faith, to resolve any such dispute
within ten (10) days after Landlord's Notice of dispute, either may submit the
matter for resolution to a court of competent jurisdiction.

        14.3 INDEMNIFICATION OF TENANT. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Landlord shall protect, indemnify and hold harmless Tenant for,
from and against all liabilities, obligations, claims, damages,

                                      -65-
<PAGE>
penalties, causes of action, costs and reasonable expenses (including, without
limitation, reasonable attorneys' fees), to the maximum extent permitted by law,
imposed upon or incurred by or asserted against Tenant by reason of the
following, except to the extent caused by Tenant's negligence, willful
misconduct or Default: (a) any Impositions that are the obligations of Landlord
to pay pursuant to the applicable provisions of this Agreement, and (b) any
failure on the part of Landlord or anyone claiming under Landlord to perform or
comply with any of the terms of this Agreement. Landlord, at its expense, shall
contest, resist and defend any such claim, action or proceeding asserted or
instituted against Tenant (and shall not be responsible for any duplicative
attorneys' fees incurred by Tenant) or may compromise or otherwise dispose of
the same, with Tenant's prior written consent (which consent may not be
unreasonably withheld, delayed or conditioned). The obligations of Landlord
under this Section 14.3 shall survive termination of this Agreement.

                                   ARTICLE 15

                                 PURCHASE RIGHTS

        Landlord shall have the option to purchase Tenant's Personal Property,
at the expiration or termination of this Agreement, for an amount equal to the
then net market value thereof (current replacement cost as determined by
agreement of the parties or, in the absence of such agreement, appraisal),
subject to, and with appropriate price adjustments for, all equipment leases,
conditional sale contracts, UCC-1 financing statements and other encumbrances to
which such Personal Property is subject (except that any such property purchased
with the FF&E Reserve shall be transferred to Landlord as provided in Section
5.1.2(e)). Upon the expiration or sooner termination of this Agreement, Tenant
shall use its reasonable efforts to transfer and assign to Landlord or its
designee, or assist Landlord or its designee in obtaining, any contracts,
licenses, and certificates required for the then operation of the Leased
Property.

                                   ARTICLE 16

                            SUBLETTING AND ASSIGNMENT

                                      -66-
<PAGE>
        16.1 SUBLETTING AND ASSIGNMENT. Except as provided in Section 16.3,
Tenant shall not, without Landlord's prior written consent (which consent may be
given or withheld in Landlord's sole and absolute discretion), assign, mortgage,
pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease
(which term shall be deemed to include the granting of concessions, licenses and
the like but shall not be deemed to include the lodging of hotel guests
consistent with the Permitted Use), all or any part of the Leased Property or
suffer or permit this Agreement or the leasehold estate created hereby or any
other rights arising under this Agreement to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily, involuntarily or by operation of law, or permit the use or
operation of the Leased Property by anyone other than Tenant, or the Leased
Property to be offered or advertised for assignment or subletting; provided,
however, that an assignment to a wholly owned subsidiary (direct or indirect) of
Candlewood shall be permitted without the consent of, but upon Notice to,
Landlord. For purposes of this Section 16.1, an assignment of this Agreement
shall be deemed to include, without limitation, any direct or indirect Change in
Control of Tenant or Candlewood.

        If this Agreement is assigned or if the Leased Property or any part
thereof are sublet (or occupied by anybody other than Tenant and their
respective employees or hotel guests) Landlord may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net amount
collected to the Rent herein reserved, but no such collection shall be deemed a
waiver of the provisions set forth in the first paragraph of this Section 16.1,
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
Tenant of its covenants, agreements or obligations contained in this Agreement.

        No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder (unless Landlord and Tenant expressly
otherwise agree that Tenant shall be released from all obligations hereunder),
and no consent to any subletting or assignment in a particular instance shall be
deemed to be a waiver of the prohibition set forth in this Section 16.1. No
assignment, subletting or occupancy shall affect any Permitted Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in

                                      -67-
<PAGE>
contravention of this Section 16.1 shall be voidable at Landlord's option.

        16.2 REQUIRED SUBLEASE PROVISIONS. Any sublease of all or any portion of
the Leased Property entered into on or after the date hereof shall provide (a)
that it is subject and subordinate to this Agreement and to the matters to which
this Agreement is or shall be subject or subordinate; (b) that in the event of
termination of this Agreement or reentry or dispossession of Tenant by Landlord
under this Agreement, Landlord may, at its option, terminate such sublease or
take over all of the right, title and interest of Tenant, as sublessor under
such sublease, and such subtenant shall, at Landlord's option, attorn to
Landlord pursuant to the then executory provisions of such sublease, except that
neither Landlord nor any Hotel Mortgagee, as holder of a mortgage or as Landlord
under this Agreement, if such mortgagee succeeds to that position, shall (i) be
liable for any act or omission of Tenant under such sublease, (ii) be subject to
any credit, counterclaim, offset or defense which theretofore accrued to such
subtenant against Tenant, (iii) be bound by any previous modification of such
sublease not consented to in writing by Landlord or by any previous prepayment
of more than one (1) month's rent, (iv) be bound by any covenant of Tenant to
undertake or complete any construction of the Leased Property or any portion
thereof, (v) be required to account for any Retained Funds of the subtenant
other than any Retained Funds actually delivered to Landlord by Tenant, (vi) be
bound by any obligation to make any payment to such subtenant or grant any
credits, except for services, repairs, maintenance and restoration provided for
under the sublease that are performed after the date of such attornment, (vii)
be responsible for any monies owing by Tenant to the credit of such subtenant
unless actually delivered to Landlord by Tenant, or (viii) be required to remove
any Person occupying any portion of the Leased Property; and (c), in the event
that such subtenant receives a written Notice from Landlord or any Hotel
Mortgagee stating that an Event of Default has occurred and is continuing, such
subtenant shall thereafter be obligated to pay all rentals accruing under such
sublease directly to the party giving such Notice or as such party may direct.
All rentals received from such subtenant by Landlord or the Hotel Mortgagee, as
the case may be, shall be credited against the amounts owing by Tenant under
this Agreement and such sublease shall provide that the subtenant thereunder
shall, at the request of Landlord, execute a suitable instrument in confirmation
of such agreement to

                                      -68-
<PAGE>
attorn. An original counterpart of each such sublease and assignment and
assumption, duly executed by Tenant and such subtenant or assignee, as the case
may be, in form and substance reasonably satisfactory to Landlord, shall be
delivered promptly to Landlord and (a) in the case of an assignment, the
assignee shall assume in writing and agree to keep and perform all of the terms
of this Agreement on the part of Tenant to be kept and performed and shall be,
and become, jointly and severally liable with Tenant for the performance thereof
and (b) in case of either an assignment or subletting, Tenant shall remain
primarily liable, as principal rather than as surety, for the prompt payment of
the Rent and for the performance and observance of all of the covenants and
conditions to be performed by Tenant hereunder.

        The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.

        16.3 PERMITTED SUBLEASE. Notwithstanding the foregoing, including,
without limitation, Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or limitations set forth herein, Tenant may, in
each instance after Notice to Landlord, sublease space at any Property for
newsstand, car rental agency, business services office, gift shop, parking
garage, health club, restaurant, bar or commissary purposes or other concessions
in furtherance of the Permitted Use, so long as such subleases do not demise, in
the aggregate, in excess of two thousand (2,000) square feet per Property or, in
the case of a restaurant or bar, four thousand (4,000) square feet per Property,
will not violate or affect any Legal Requirement or Insurance Requirement, and
Tenant shall provide such additional insurance coverage applicable to the
activities to be conducted in such subleased space as Landlord and any Hotel
Mortgagee may reasonably require.

        16.4 SUBLEASE LIMITATION. For so long as Landlord or any Affiliated
Person as to Landlord shall seek to qualify as a real estate investment trust,
anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by any sublessee thereunder would be based, in whole or in part, on the net
income or profits derived by the business activities of such sublessee, any
other formula such that any portion of such sublease rental would fail to
qualify as "rents from real

                                      -69-
<PAGE>
property" within the meaning of Section 856(d) of the Code, or any similar or
successor provision thereto or would otherwise disqualify Landlord for treatment
as a real estate investment trust.

                                   ARTICLE 17

                 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

        17.1 ESTOPPEL CERTIFICATES. At any time and from time to time, but not
more than a reasonable amount of times per year, upon not less than ten (10)
Business Days prior Notice by either party, the party receiving such Notice
shall furnish to the other an Officer's Certificate certifying that this
Agreement is unmodified and in full force and effect (or that this Agreement is
in full force and effect as modified and setting forth the modifications), the
date to which the Rent has been paid, that no Default or an Event of Default has
occurred and is continuing or, if a Default or an Event of Default shall exist,
specifying in reasonable detail the nature thereof, and the steps being taken to
remedy the same, and such additional information as the requesting party may
reasonably request. Any such certificate furnished pursuant to this Section 17.1
may be relied upon by the requesting party, its lenders and any prospective
purchaser or mortgagee of the Leased Property or the leasehold estate created
hereby.

        17.2 FINANCIAL STATEMENTS. Tenant shall furnish or cause Candlewood to
furnish, as applicable, the following statements to Landlord:

                (a) within forty-five (45) days after each of the first three
        fiscal quarters of any Fiscal Year, the most recent Consolidated
        Financials, accompanied by the Financial Officer's Certificate;

                (b) within ninety (90) days after the end of each Fiscal Year,
        the most recent Consolidated Financials and financials of Tenant for
        such year, certified by an independent certified public accountant
        reasonably satisfactory to Landlord and accompanied by a Financial
        Officer's Certificate;

                                      -70-
<PAGE>
               (c) within forty-five (45) days after the end of each month, an
        unaudited operating statement and statement of capital expenditures
        prepared on a Hotel by Hotel basis and a combined basis, including
        occupancy percentages and average rate, accompanied by a Financial
        Officer's Certificate;

               (d) at any time and from time to time upon not less than twenty
        (20) days Notice from Landlord or such additional period as may be
        reasonable under the circumstances, any Consolidated Financials, Tenant
        financials or any other audited or unaudited financial reporting
        information required to be filed by Landlord with any securities and
        exchange commission, the SEC or any successor agency, or any other
        governmental authority, or required pursuant to any order issued by any
        court, governmental authority or arbitrator in any litigation to which
        Landlord is a party, for purposes of compliance therewith; provided,
        however, that, except as to calculations pertaining to Total Hotel
        Sales, Tenant shall not be required to provide audited financials with
        respect to individual Hotels unless Landlord shall agree to pay for the
        cost thereof; and

               (e) promptly, upon Notice from Landlord, such other information
        concerning the business, financial condition and affairs of Tenant and
        Candlewood as Landlord reasonably may request from time to time.

        Landlord may at any time, and from time to time, provide any Hotel
Mortgagee with copies of any of the foregoing statements, subject to Landlord
obtaining the agreement of such Hotel Mortgagee to maintain such statements and
the information therein as confidential.

                                   ARTICLE 18

                           LANDLORD'S RIGHT TO INSPECT

        Tenant shall permit Landlord and its authorized representatives to
inspect the Leased Property during usual business hours upon not less than
forty-eight (48) hours' notice and to make such repairs as Landlord is permitted
or required to make pursuant to the terms of this Agreement, provided that any
inspection or repair by Landlord or its representatives will not

                                      -71-
<PAGE>
unreasonably interfere with Tenant's use and operation of the Leased Property
and further provided that in the event of an emergency, as determined by
Landlord in its reasonable discretion, prior Notice shall not be necessary.

                                   ARTICLE 19

                                    EASEMENTS

        19.1 GRANT OF EASEMENTS. Provided no Event of Default has occurred and
is continuing, Landlord will join in granting and, if necessary, modifying or
abandoning such rights-of-way, easements and other interests as may be
reasonably requested by Tenant for ingress and egress, and electric, telephone,
gas, water, sewer and other utilities so long as:

               (a) the instrument creating, modifying or abandoning any such
        easement, right-of-way or other interest is satisfactory to and approved
        by Landlord (which approval shall not be unreasonably withheld, delayed
        or conditioned); and

               (b) Landlord receives an Officer's Certificate from Tenant
        stating (i) that such grant, modification or abandonment is not
        detrimental to the proper conduct of business on such Property, (ii) the
        consideration, if any, being paid for such grant, modification or
        abandonment (which consideration shall be paid by Tenant), (iii) that
        such grant, modification or abandonment does not impair the use or value
        of such Property for the Permitted Use, and (iv) that, for as long as
        this Agreement shall be in effect, Tenant will perform all obligations,
        if any, of Landlord under any such instrument.

        19.2 EXERCISE OF RIGHTS BY TENANT. So long as no Event of Default has
occurred and is continuing, Tenant shall have the right to exercise all rights
of Landlord under the Easement Agreements and, in connection therewith, Landlord
shall execute and promptly return to Tenant such documents as Tenant shall
reasonably request. Tenant shall perform all obligations of Landlord under the
Easement Agreements.

        19.3 PERMITTED ENCUMBRANCES. Any agreements entered into in accordance
with Section 19.1 shall be deemed a Permitted Encumbrance.

                                      -72-
<PAGE>
                                   ARTICLE 20

                                 HOTEL MORTGAGES

        20.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord
may, subject to the terms and conditions set forth in this Section 20.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon the Leased
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Notwithstanding anything
to the contrary set forth in Section 20.2, any such Encumbrance shall include
the right to prepay (whether or not subject to a prepayment penalty) and shall
provide (subject to Section 20.2) that it is subject to the rights of Tenant
under this Agreement.

        20.2 SUBORDINATION OF LEASE. Subject to Section 20.1 and this Section
20.2, this Agreement and any and all rights of Tenant hereunder, are and shall
be subject and subordinate to any ground or master lease, and all renewals,
extensions, modifications and replacements thereof, and to all mortgages and
deeds of trust, which may now or hereafter affect the Leased Property or any
improvements thereon and/or any of such leases, whether or not such mortgages or
deeds of trust shall also cover other lands and/or buildings and/or leases, to
each and every advance made or hereafter to be made under such mortgages and
deeds of trust, and to all renewals, modifications, replacements and extensions
of such leases and such mortgages and deeds of trust and all consolidations of
such mortgages and deeds of trust. This section shall be self-operative and no
further instrument of subordination shall be required provided that Tenant has
received a nondisturbance and attornment agreement from each Superior Mortgagee
(as defined below), consistent with the provisions of this Section 20.2 and
otherwise in form and substance reasonably satisfactory to Tenant. In
confirmation of such subordination, Tenant shall promptly execute, acknowledge
and deliver any instrument that Landlord, the lessor under any such lease or the
holder of any such mortgage or the trustee or beneficiary of any deed of trust
or any of their respective successors in interest may reasonably request to
evidence such subordination. Any lease to which this Agreement is, at the time
referred to, subject and subordinate is herein called "Superior Lease" and the
lessor of a Superior Lease or its successor in interest at the time referred to
is herein called

                                      -73-
<PAGE>
"Superior Landlord" and any mortgage or deed of trust to which this Agreement
is, at the time referred to, subject and subordinate is herein called "Superior
Mortgage" and the holder, trustee or beneficiary of a Superior Mortgage is
herein called "Superior Mortgagee".

        If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement (any such person, "Successor Landlord"),
whether through possession or foreclosure action or delivery of a new lease or
deed, or otherwise, such Successor Landlord shall recognize Tenant's rights
under this Agreement as herein provided and Tenant shall attorn to and recognize
the Successor Landlord as Tenant's landlord under this Agreement and Tenant
shall promptly execute and deliver any instrument that such Successor Landlord
may reasonably request to evidence such attornment (provided that such
instrument does not alter the terms of this Agreement), whereupon, this
Agreement shall continue in full force and effect as a direct lease between the
Successor Landlord and Tenant upon all of the terms, conditions and covenants as
are set forth in this Agreement, except that the Successor Landlord (unless
formerly the landlord under this Agreement or its nominee or designee) shall not
be (a) liable in any way to Tenant for any act or omission, neglect or default
on the part of any prior Landlord under this Agreement, (b) responsible for any
monies owing by or on deposit with any prior Landlord to the credit of Tenant
(except to the extent actually paid or delivered to the Successor Landlord), (c)
subject to any counterclaim or setoff which theretofore accrued to Tenant
against any prior Landlord, (d) bound by any modification of this Agreement
subsequent to such Superior Lease or Mortgage, or by any previous prepayment of
Rent for more than one (1) month in advance of the date due hereunder, which was
not approved in writing by the Superior Landlord or the Superior Mortgagee
thereto, (e) liable to Tenant beyond the Successor Landlord's interest in the
Leased Property and the rents, income, receipts, revenues, issues and profits
issuing from the Leased Property, (f) responsible for the performance of any
work to be done by the Landlord under this Agreement to render the Leased
Property ready for occupancy by Tenant, or (g) required to remove any Person
occupying the Leased Property or any part thereof, except if such person claims
by, through or under the Successor Landlord. Tenant agrees at any time and from
time to time to execute a suitable instrument in confirmation of Tenant's

                                      -74-
<PAGE>
agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an
instrument of nondisturbance and attornment from each such Superior Mortgagee
and Superior Landlord in form and substance reasonably satisfactory to Tenant.
Nothing contained in this Section 20.2 shall relieve Landlord from any liability
to Tenant under this Agreement following the exercise of remedies by a Superior
Mortgagee.

        20.3 NOTICE TO MORTGAGEE AND SUPERIOR LANDLORD. Subsequent to the
receipt by Tenant of Notice from Landlord as to the identity of any Hotel
Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee,
which includes the Leased Property as part of the demised premises and which
complies with Section 20.1 and 20.2 (which Notice shall be accompanied by a copy
of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a
default by Landlord under this Agreement shall be effective with respect to a
Hotel Mortgagee or Superior Landlord unless and until a copy of the same is
given to such Hotel Mortgagee or Superior Landlord at the address set forth in
the above described Notice, and the curing of any of Landlord's defaults within
the applicable notice and cure periods set forth in Section 14.2 by such Hotel
Mortgagee or Superior Landlord shall be treated as performance by Landlord.

                                   ARTICLE 21

                         ADDITIONAL COVENANTS OF TENANT

        21.1 PROMPT PAYMENT OF INDEBTEDNESS. Tenant shall (a) pay or cause to be
paid when due all payments of principal of and premium and interest on Tenant's
Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor and
rents with respect to the Leased Property, (c) pay or cause to be paid when due
all trade payables and (d) pay or cause to be paid when due all other of
Tenant's Indebtedness upon which it is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with Article 8
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.

                                      -75-
<PAGE>
        21.2 CONDUCT OF BUSINESS. Tenant shall not engage in any business other
than the leasing and operation of the Leased Property (including any incidental
or ancillary business relating thereto) and shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect and in
good standing its corporate existence and its rights and licenses necessary to
conduct such business.

        21.3 MAINTENANCE OF ACCOUNTS AND RECORDS. Tenant shall keep true records
and books of account of Tenant in which full, true and correct entries will be
made of dealings and transactions in relation to the business and affairs of
Tenant in accordance with GAAP. Tenant shall apply accounting principles in the
preparation of the financial statements of Tenant which, in the judgment of and
the opinion of its independent public accountants, are in accordance with GAAP,
where applicable, except for changes approved by such independent public
accountants. Tenant shall provide to Landlord either in a footnote to the
financial statements delivered under Section 17.2 which relate to the period in
which such change occurs, or in separate schedules to such financial statements,
information sufficient to show the effect of any such changes on such financial
statements.

        21.4 NOTICE OF LITIGATION, ETC. Tenant shall give prompt Notice to
Landlord of any litigation or any administrative proceeding to which it may
hereafter become a party of which Tenant has notice or actual knowledge which
involves a potential liability equal to or greater than Two Hundred Fifty
Thousand Dollars ($250,000) or which may otherwise result in any material
adverse change in the business, operations, property, prospects, results of
operation or condition, financial or other, of Tenant. Forthwith upon Tenant
obtaining knowledge of any Default, Event of Default or any default or event of
default under any agreement relating to Indebtedness for money borrowed in an
aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars
($250,000), or any event or condition that would be required to be disclosed in
a current report filed by Tenant on Form 8-K or in Part II of a quarterly report
on Form 10-Q if Tenant were required to file such reports under the Securities
Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to
Landlord specifying the nature and period of existence thereof and what action
Tenant has taken or is taking or proposes to take with respect thereto.

                                      -76-
<PAGE>
        21.5 NOTICE OF DISCONTINUANCE OF OPERATION. Tenant shall give immediate
Notice to Landlord if Tenant shall fail to continuously use and operate any
Property as an extended stay hotel in accordance with the terms and conditions
of Article 4 and such failure shall continue (i) for fifteen (15) consecutive
days or (ii) for sixty (60) days in any twelve (12) month period.

        21.6 INDEBTEDNESS OF TENANT. Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or indirectly
upon, any Indebtedness except the following:

                (a) Indebtedness of Tenant to Landlord;

                (b) Indebtedness of Tenant for Impositions, to the extent that
        payment thereof shall not at the time be required to be made in
        accordance with the provisions of Article 8;

                (c) Indebtedness of Tenant in respect of judgments or awards (i)
        which have been in force for less than the applicable appeal period and
        in respect of which execution thereof shall have been stayed pending
        such appeal or review, or (ii) which are fully covered by insurance
        payable to Tenant, or (iii) which are for an amount not in excess of
        $250,000 in the aggregate at any one time outstanding and (x) which have
        been in force for not longer than the applicable appeal period, so long
        as execution is not levied thereunder or (y) in respect of which an
        appeal or proceedings for review shall at the time be prosecuted in good
        faith in accordance with the provisions of Article 8, and in respect of
        which execution thereof shall have been stayed pending such appeal or
        review;

                (d) unsecured borrowings of Tenant from its Affiliated Persons
        which are by their terms expressly subordinate pursuant to a
        Subordination Agreement to the payment and performance of Tenant's
        obligations under this Agreement; or

                (e) Indebtedness for purchase money financing in accordance with
        Section 21.10(a) and other operating liabilities incurred in the
        ordinary course of Tenant's business.

                                      -77-
<PAGE>
        21.7 FINANCIAL CONDITION OF TENANT. Tenant shall at all times maintain
Net Worth (except as provided in the last clause of this sentence) in an amount
at least equal to the aggregate of one year's Minimum Rent payable pursuant to
this Agreement; it being expressly understood and agreed that the right to
receive the Retained Funds, if assigned to Tenant, may for such purpose be
counted as equity at the full amount thereof and that accrued and unpaid
subordinated amounts due from Tenant to its Affiliated Persons may be included
in Net Worth.

        21.8 DISTRIBUTIONS, PAYMENTS TO AFFILIATED PERSONS, ETC. Tenant shall
not declare, order, pay or make, directly or indirectly, any Distributions or
any payment to any Affiliated Person of Tenant (including payments in the
ordinary course of business and payments pursuant to Management Agreements with
any such Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after giving
effect thereto, any Event of Default shall have occurred and be continuing.
Otherwise, as long as no Event of Default shall have occurred and be continuing,
Tenant may make Distributions and payments to Affiliated Persons (other than
from the FF&E Reserve which shall be governed by Section 5.1.2) without
restriction.

        21.9 PROHIBITED TRANSACTIONS. Tenant shall not permit to exist or enter
into any agreement or arrangement whereby it engages in a transaction of any
kind with any Affiliated Person as to Tenant, except on terms and conditions
which are commercially reasonable.

        21.10 LIENS AND ENCUMBRANCES. Except as permitted by Section 7.1 and
Section 21.6, Tenant shall not create or incur or suffer to be created or
incurred or to exist any Lien on this Agreement or any of Tenant's assets,
properties, rights or income, or any of its interest therein, now or at any time
hereafter owned, other than:

                (a) Security interests securing the purchase price of equipment
        or personal property whether acquired before or after the Commencement
        Date; provided, however, that (i) such Lien shall at all times be
        confined solely to the asset in question and (ii) the aggregate
        principal amount of Indebtedness secured by any such Lien shall not
        exceed the cost of acquisition or construction of the property subject
        thereto;

                                      -78-
<PAGE>
                (b) Permitted Encumbrances; and

                (c) As permitted pursuant to Section 21.6.

        21.11 ASSETS AND PERSONAL PROPERTY. Without Landlord's prior written
consent (which consent may be given or withheld in Landlord's sole discretion),
Tenant shall not (i) lease (as lessor or sublessor), transfer, convey or
otherwise dispose of, or abandon, all or a majority of its assets or (ii) sell,
lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon,
any personal property or fixtures or any real property; provided, however, that,
notwithstanding the provisions of clause (ii) preceding, Tenant may dispose of
equipment or fixtures which have become inadequate, obsolete, worn-out,
unsuitable, undesirable or unnecessary, provided substitute equipment or
fixtures having equal or greater value and utility (but not necessarily having
the same function) have been provided.

                                   ARTICLE 22

                                  MISCELLANEOUS

        22.1 LIMITATION ON PAYMENT OF RENT. All agreements between Landlord and
Tenant herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the
Rent or any other amounts payable to Landlord under this Agreement exceed the
maximum permissible under applicable law, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of
any provision of this Agreement, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law, or
if from any circumstances Landlord should ever receive as fulfillment of such
provision such an excessive amount, then, ipso facto, the amount which would be
excessive shall be applied to the reduction of the installment(s) of Minimum
Rent next due and not to the payment of such excessive amount. This provision
shall control every other provision of this Agreement and any other agreements
between Landlord and Tenant.

        22.2 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach

                                      -79-
<PAGE>
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. To the maximum extent permitted by law, no waiver of any
breach shall affect or alter this Agreement, which shall continue in full force
and effect with respect to any other then existing or subsequent breach.

        22.3 REMEDIES CUMULATIVE. To the maximum extent permitted by law, each
legal, equitable or contractual right, power and remedy of Landlord or Tenant,
now or hereafter provided either in this Agreement or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Landlord
of any or all of such other rights, powers and remedies.

        22.4 SEVERABILITY. Any clause, sentence, paragraph, section or provision
of this Agreement held by a court of competent jurisdiction to be invalid,
illegal or ineffective shall not impair, invalidate or nullify the remainder of
this Agreement, but rather the effect thereof shall be confined to the clause,
sentence, paragraph, section or provision so held to be invalid, illegal or
ineffective, and this Agreement shall be construed as if such invalid, illegal
or ineffective provisions had never been contained therein.

        22.5 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Agreement
or of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Landlord and
no act by Landlord or any representative or agent of Landlord, other than such a
written acceptance by Landlord, shall constitute an acceptance of any such
surrender.

        22.6 NO MERGER OF TITLE. It is expressly acknowledged and agreed that it
is the intent of the parties that there shall be no merger of this Agreement or
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in the Leased Property.

                                      -80-
<PAGE>
        22.7 CONVEYANCE BY LANDLORD. If Landlord or any successor owner of all
or any portion of the Leased Property shall convey all or any portion of the
Leased Property in accordance with the terms hereof other than as security for a
debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Landlord under this Agreement with respect to
such of the Leased Property arising or accruing from and after the date of such
conveyance or other transfer and all such future liabilities and obligations
shall thereupon be binding upon the new owner; provided, however, that Landlord
shall not be released from liability with respect to any Retained Funds
transferred in connection with such a conveyance unless such successor shall
have a Net Worth equal to or greater than the lesser of (i) ten (10) times the
amount of the Retained Funds so transferred or (ii) One Hundred Million Dollars
($100,000,000). If such successor shall not satisfy the aforesaid Net Worth
requirement, Landlord shall, in a guaranty in form and substance reasonably
satisfactory to Tenant, guaranty payment of the amount of the Retained Funds so
transferred in accordance with this Agreement and the Purchase Documents.

        22.8 QUIET ENJOYMENT. Tenant shall peaceably and quietly have, hold and
enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a)
any Encumbrance permitted under Article 20 or otherwise permitted to be created
by Landlord hereunder provided that the holder of such Encumbrance has, to the
extent appropriate, executed a nondisturbance agreement pursuant to Section 20.2
or a subordination agreement in form and substance reasonably acceptable to
Tenant, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord
that are either not yet due or which are being contested in good faith and by
proper proceedings, provided the same do not materially interfere with Tenant's
ability to operate the Hotels and (d) liens that have been consented to in
writing by Tenant. Except as otherwise provided in this Agreement, no failure by
Landlord to comply with the foregoing covenant shall give Tenant any right to
cancel or terminate this Agreement or abate, reduce or make a deduction from or
offset against the Rent or any other sum payable under this Agreement (except as
expressly provided in

                                      -81-
<PAGE>
Section 14.2), or to fail to perform any other obligation of Tenant hereunder.

        22.9 MEMORANDUM OF LEASE. Neither Landlord nor Tenant shall record this
Agreement. However, Landlord and Tenant shall promptly, upon the request of the
other, enter into a short form memorandum of this Agreement, in form suitable
for recording under the laws of the State in which reference to this Agreement,
and all options contained herein, shall be made. Tenant shall pay all costs and
expenses of recording such memorandum.

        22.10 NOTICES.

                (a) Any and all notices, demands, consents, approvals, offers,
        elections and other communications required or permitted under this
        Agreement shall be deemed adequately given if in writing and the same
        shall be delivered either in hand, by telecopier with written
        acknowledgment of receipt, or by mail or Federal Express or similar
        expedited commercial carrier, addressed to the recipient of the notice,
        postpaid and registered or certified with return receipt requested (if
        by mail), or with all freight charges prepaid (if by Federal Express or
        similar carrier).

                (b) All notices required or permitted to be sent hereunder shall
        be deemed to have been given for all purposes of this Agreement upon the
        date of acknowledged receipt, in the case of a notice by telecopier,
        and, in all other cases, upon the date of receipt or refusal, except
        that whenever under this Agreement a notice is either received on a day
        which is not a Business Day or is required to be delivered on or before
        a specific day which is not a Business Day, the day of receipt or
        required delivery shall automatically be extended to the next Business
        Day.

                (c) All such notices shall be addressed,

        if to Landlord:

                 c/o Hospitality Properties Trust
                 400 Centre Street
                 Newton, Massachusetts  02458

                                      -82-
<PAGE>
                 Attn:  Mr. John G. Murray
                 [Telecopier No. (617) 969-5730]

        with a copy to:

                 Sullivan & Worcester LLP
                 One Post Office Square
                 Boston, Massachusetts  02109
                 Attn:  Nancy S. Grodberg, Esq.
                 [Telecopier No. (617) 338-2880]

        if to Tenant to:

                 Candlewood Leasing Number 1, Inc.
                 8621 E. 21st Street North, Suite 200
                 Wichita, Kansas  67206
                 Attn:  Mr. Tim Johnson
                 [Telecopier No. (316) 631-1382]

        with a copy to:

                 Latham & Watkins
                 233 South Wacker Drive, Suite 5800
                 Chicago, Illinois 60606
                 Attn:  Kenneth Crews, Esq.
                 [Telecopier No. (312) 993-9767]

               (d) By notice given as herein provided, the parties hereto and
        their respective successors and assigns shall have the right from time
        to time and at any time during the term of this Agreement to change
        their respective addresses effective upon receipt by the other parties
        of such notice and each shall have the right to specify as its address
        any other address within the United States of America.

        22.11 TRADE AREA RESTRICTION. With respect to the HPT CW I Leased
Property and the New Leased Property, neither Tenant, Candlewood nor any of
their Affiliated Persons shall own, build, franchise, manage or operate a hotel
of the same brand as the Hotels within the designated areas on Exhibit B-1 (the
"Designated Areas One"), at any time during the Term.

        With respect to the HPT CW II Leased Property and the Additional Leased
Property, during the period expiring on the Burn-Off Date (as defined below),
none of Tenant, Candlewood or any of their Affiliated Persons shall own, build,
franchise,

                                      -83-
<PAGE>
manage or operate a hotel of the same brand as the Hotels within the designated
areas on Exhibit B-2 (the "Designated Areas Two").

        Notwithstanding the foregoing, after the Burn-Off Date, provided no
Default or Event of Default shall have occurred and be continuing, Candlewood or
any Affiliated Persons of Candlewood may own, build, franchise, manage or
operate a hotel of the same brand as the Hotels within a Designated Area Two,
provided that Candlewood shall give Landlord prior written notice thereof, which
notice shall set forth in reasonable detail the location and aggregate
acquisition costs of the proposed hotel (the "Proposed Hotel") and address such
other matters with respect thereto as Landlord may reasonably request. Landlord
or its Affiliated Persons shall have the right, by notice given, within
forty-five (45) days after Landlord receives all requested information with
respect to the Proposed Hotel, to elect to acquire the Proposed Hotel on terms
substantially similar to those set forth in the Purchase Agreement and to lease
the same to Tenant or another Affiliated Person of Candlewood on terms
substantially similar to those set forth in this Agreement (and, if Landlord
shall so elect, this Agreement shall be amended to include the Proposed Hotel
among the properties demised hereunder). If Landlord or any of its Affiliated
Persons shall fail to give such notice of election prior to the expiration of
such 45-day period and, provided the Burn-Off Date shall have occurred and no
Default or Event of Default shall have occurred and be continuing, Candlewood or
its Affiliated Persons may build, franchise, manage or operate the Proposed
Hotel on substantially the same terms and conditions as set forth in the
information with respect thereto provided to Landlord.

        For purposes of this Section 22.11, the Burn-Off Date shall mean the
later to occur of (i) with respect to a Property, the date which is the fifth
anniversary of the Commencement Date of such Property and (ii) the date as of
which (x) Candlewood has one hundred (100) or more hotels of the same brand as
the Hotels under management or (y) Cash Flow (as defined below) on a cumulative
basis for a period of twelve (12) full consecutive Accounting Periods with
respect to the Hotel in which Designated Area Two the Proposed Hotel is situated
equals or exceeds Minimum Rent by one hundred percent (100%) or more with
respect to such period, and Landlord shall receive a schedule evidencing the
foregoing, in form and substance reasonably satisfactory to

                                      -84-
<PAGE>
Landlord prepared by a, so-called, "Big-Five" accounting firm or such other
certified public accountants as are approved by Landlord (such approval not to
be unreasonably withheld, delayed or conditioned).

        As used herein, "CASH FLOW" shall mean the net income before federal and
state income tax (or loss) of Tenant in connection with the operation of the
applicable Hotel, calculated in accordance with GAAP for the applicable period,
adjusted by adding back (a) all extraordinary expense items, (b) depreciation
and amortization, (c) interest expense on Indebtedness permitted under this
Agreement, (d) Minimum Rent and Additional Rent, (e) base management fees,
incentive management fees, trade name fees, franchise fees, royalty fees and
central marketing fees paid to the Manager to the extent subordinate to payment
of rent pursuant to this Agreement from and after the occurrence of an Event of
Default, and further adjusted by deducting (f) required contributions to the
FF&E Reserve and (g) all extraordinary income items.

        22.12 CONSTRUCTION. Anything contained in this Agreement to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination or expiration of this Agreement with
respect to the Leased Property shall survive such termination or expiration. In
no event shall Landlord be liable for any consequential damages suffered by
Tenant as the result of a breach of this Agreement by Landlord. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party to be charged.
All the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Each term or provision of this Agreement to be performed by Tenant
shall be construed as an independent covenant and condition. Time is of the
essence with respect to the provisions of this Agreement. Except as otherwise
set forth in this Agreement, any obligations of Tenant (including without
limitation, any monetary, repair and indemnification obligations) and Landlord
shall survive the expiration or sooner termination of this Agreement.

        22.13 COUNTERPARTS; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of

                                      -85-
<PAGE>
the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.

        22.14 APPLICABLE LAW, ETC. This Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of The Commonwealth
of Massachusetts applicable to contracts between residents of Massachusetts
which are to be performed entirely within Massachusetts, regardless of (i) where
this Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than Massachusetts; or (vii) any combination of
the foregoing. Notwithstanding the foregoing, the laws of the State shall apply
to the perfection and priority of liens upon and the disposition of any
Property.

        To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
The Commonwealth of Massachusetts as is provided by law; and the parties consent
to the jurisdiction of said court or courts located in Massachusetts and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.

        22.15 RIGHT TO MAKE AGREEMENT. Each party warrants, with respect to
itself, that neither the execution of this Agreement, nor the consummation of
any transaction contemplated hereby, shall violate any provision of any law, or
any judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken, or at the time of the

                                      -86-
<PAGE>
transaction involved shall not have been given or taken. Each party covenants
that it has and will continue to have throughout the term of this Agreement and
any extensions thereof, the full right to enter into this Agreement and perform
its obligations hereunder.

        22.16 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.

        22.17 NONRECOURSE. Nothing contained in this Agreement shall be
construed to impose any liabilities or obligations on Tenant's shareholders,
officers, directors, agents or employees (or any shareholders, officers,
directors, agents or employees of any of the foregoing) for the performance of
the obligations of Landlord or Tenant hereunder.

        22.18 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HPT CW PROPERTIES TRUST" REFERS
TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, LANDLORD. ALL PERSONS
DEALING WITH LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR
THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

        23.19 AMENDMENT AND RESTATEMENT. This Agreement amends, restates and
replaces in its entirety that certain Amended and Restated Lease Agreement,
dated as of August 10, 2001, as the same may have been amended from time to
time, by and between Landlord and Tenant.

                                      -87-
<PAGE>
        IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.

                                    LANDLORD:

                                    HPT CW PROPERTIES TRUST, a Maryland real
                                    estate investment trust

                                    By: /s/ John G. Murray
                                        ----------------------------------------
                                        John G. Murray
                                        President

                                    TENANT:

                                    CANDLEWOOD LEASING NO. 1, INC., a Delaware
                                    corporation

                                    By: /s/ Tim Johnson
                                        ----------------------------------------
                                        Tim Johnson
                                        Vice President, Treasurer
                                        and Assistant Secretary

Candlewood Hotel Company, Inc. hereby acknowledges and agrees to be bound by the
provisions of Section 22.11 of the foregoing Second Amended and Restated Lease
Agreement.

                                    CANDLEWOOD HOTEL COMPANY, INC.,
                                    a Delaware corporation

                                    By: /s/ Tim Johnson
                                        ----------------------------------------
                                        Tim Johnson
                                        Vice President, Treasurer
                                        and Assistant Secretary

                                    Date:  April 11, 2002

<PAGE>
                            EXHIBIT A-1 THROUGH A-57

                                    THE LAND

                             [See attached copies.]
<PAGE>
                                   EXHIBIT B-1

                              DESIGNATED AREAS ONE

<TABLE>
<CAPTION>
Property                                                  Area
--------                                                  ----
<S>                                                <C>
Wichita (Northeast), KS                            Area bordered by Highway
                                                   254 to the north, Highway 54 to
                                                   the south, Andover Road to the
                                                   east, and Interstate 135 to the west.

Omaha, NE                                          Five mile radius of the site, excluding
                                                   area south of North Center Road (Route 38).

Denver (Englewood), CO                             Area bordered by Highway 225
                                                   to the north, Highway 470 to the
                                                   south, Route 83 to the east, and
                                                   South Quebec to the east
                                                   generally, until it
                                                   intersects Route 88, then
                                                   Interstate 25 to the
                                                   northwest.
Louisville
(Jeffersontown), KY                                Area bordered by US
                                                   Highway 60 to the north,
                                                   Route 155 to the south,
                                                   Interstate 265 to the east,
                                                   and a four mile radius to the
                                                   west.

Cincinnati (Blue Ash), OH                          Area bordered by Interstate
                                                   275 to the north, Cross
                                                   Country Road to the south,
                                                   Route 22 to the east, and
                                                   Mill Creek to the west, until
                                                   it intersects with Route 126,
                                                   then Route 126 to Interstate
                                                   75. (I-75 to the SW boundary
</TABLE>

<PAGE>
<TABLE>
<S>                                                <C>
                                                   from Route 126 to Cross County Road.)

Birmingham, AL                                     Four mile radius of the
                                                   site generally, excluding
                                                   Interstate 459 to the
                                                   northwest.

Norfolk/Hampton, VA                                Five mile radius of the
                                                   site generally, but stopping
                                                   at Route 258 to the south.

Wichita West, KS                                   Five mile radius of
                                                   the site generally, but
                                                   stopping at the Arkansas
                                                   River to the east.

Philadelphia (Horsham), PA                         Three mile radius of the site
                                                   generally, but stopping at
                                                   Route 263 to the east, which
                                                   changes to Easton Road to the
                                                   far south.

Los Angeles (Lake Forest), CA                      Three mile radius of the site
                                                   generally, but stopping at
                                                   Interstate 5 to the west and
                                                   El Tora Road to the east.

Southfield, MI                                     Area bordered by West 12 Mile
                                                   Road to the north, Route 102
                                                   to the south, Coolidge
                                                   Highway to the east, and 5
                                                   mile radius to the west.

Salt Lake City (North Temple), UT                  Area bordered by five mile
                                                   radius to the north and west
                                                   but stopping at Interstate 15
                                                   to the east and Route 201 to
                                                   the south.

Salt Lake City (Ft. Union), UT                     Area bordered by Route 266 to
                                                   the north, Route 209 to the
</TABLE>

                                      B-2
<PAGE>
<TABLE>
<S>                                                <C>
                                                   south, Interstate 215 to the east,
                                                   and Interstate 15 to the west.

Phoenix, AZ                                        Four mile radius of the site
                                                   generally, excluding area
                                                   north of West Greenway Road.

Houston (Town & Country), TX                       Four mile radius to the north
                                                   and west, but stopping at
                                                   Westheimer Road to the south
                                                   and Bingle Road to the east.

Austin, TX                                         Four mile radius.

Baltimore, MD                                      Three mile radius.

Anaheim (Garden Grove), CA                         3 mile radius, but west of Interstate 5
                                                   and south of Chapman Road

Irvine, CA                                         3 mile radius

Clearwater (St. Petersburg), FL                    4 mile radius

Miami (Miami Airport), FL                          3 mile radius

Orlando (Altamonte Springs), FL                    3 mile radius

Atlanta (Duluth), GA                               4 mile radius

Chicago (Libertyville), IL                         4 mile radius

Chicago (O'Hare/Schiller Park), IL                 3 mile radius, but south of Interstate 90

Chicago (Schaumberg), IL                           3 mile radius

Chicago (Warrenville), IL                          4 mile radius

Chicago (Waukegan), IL                             4 mile radius
</TABLE>

                                      B-3
<PAGE>
<TABLE>
<S>                                                <C>
Detroit (Ann Arbor), MI                            5 mile radius but south of new (north
                                                   spur) Interstate 94

St. Louis (Earth City), MO                         3 mile radius

Cleveland (North Olmstead), OH                     5 mile radius, but south of Highway 20

Columbus Airport (Gahanna), OH                     5 mile radius

Oklahoma City, OK                                  5 mile radius

Knoxville, TN                                      5 mile radius

Dallas (Arlington), TX                             5 mile radius

Dallas (Galleria), TX                              3 mile radius

Dallas (North Richardson), TX                      4 mile radius

Houston, TX                                        3 mile radius
</TABLE>

                                      B-4
<PAGE>
                                   EXHIBIT B-2

                              DESIGNATED AREAS TWO

<TABLE>
<CAPTION>
Property                                                  Area
--------                                                  ----
<S>                                                <C>
Mt. Laurel, NJ                                     5 mile radius

Las Vegas, NV                                      2 mile radius

Huntsville, AL                                     5 mile radius

Houston, TX (Bay Area)                             5 mile radius

Jacksonville, FL                                   3 mile radius

Phoenix,  AZ (Tempe)                               Sky Harbor Blvd to Highway 202
                                                   to the North, East Warner Road
                                                   to the South, a three mile
                                                   radius to the Southwest,
                                                   Highway 17 to Highway 10 to
                                                   the Northwest, and South
                                                   Price Road to the East

Detroit (Warren), MI                               Area bordered by Metropolitan Pkwy. to the
                                                   North, Interstate 696 to the South,
                                                   Interstate 75 to the West, Utica Road to
                                                   the Northeast and Rte. 97 to the Southeast

Pittsburgh, PA                                     Area bordered to the North by a line 4.5
                                                   miles in length extending from Hwy. 60 to
                                                   Hwy. 51 exactly 5 miles north of the site,
                                                   Hwy. 22 to the South, Hwy. 30 to the
                                                   Southwest, Moon Clinton Rd. to the
                                                   Northwest, Hwy. 60 to the West, and
                                                   Interstate 79 to the East
</TABLE>

                                      B-5
<PAGE>
<TABLE>
<S>                                                <C>
Des Moines, IA                                     4 mile radius

Austin, TX                                         4 mile radius

Irving, TX                                         Area bordered by Interstate
                                                   635 to the North, Interstate
                                                   35 to Highway 12 to the East,
                                                   Highway 114 to the Southwest,
                                                   a 3 mile radius to the
                                                   Southwest and Valley View
                                                   Lane to the Northwest

Charlotte, NC                                      4 mile radius

Nashville (Brentwood), TN                          5 mile radius

Houston (Westchase), TX                            4 mile radius

Albuquerque, NM                                    4 mile radius

Somerset, NJ                                       3 mile radius

Richfield, MN                                      3 mile radius

Boston/Braintree, MA                               Area bordered by a 3 mile radius to the
                                                   North and South, Route 28 to the junction
                                                   point of Interstate 93 and following
                                                   Interstate 93 to the east junction with
                                                   Highway 24 to the West and Interstate 93
                                                   to Highway 3 to the East

Denver, CO (Lakewood)                              Area bordered by Interstate 70 to the
                                                   North, Highway 285 to the
                                                   South, a three mile radius to
                                                   the Northwest, Highway 470 to
                                                   the Southwest, and Route 88
                                                   to Highway 287 to the East
</TABLE>

                                       B-6
<PAGE>
                                    EXHIBIT C

                                 ALLOCABLE RENTS

<TABLE>
<CAPTION>
Property                                                       Rent Per Accounting Period
--------                                                       --------------------------
<S>                                                            <C>
Louisville (Jefferstown), KY                                            $ 41,497
Cincinnati (Blue Ash), OH                                               $ 39,223
Phoenix, AZ                                                             $ 54,081
Wichita West, KS                                                        $ 43,645
Birmingham, AL                                                          $ 57,098
Salt Lake - Ft. Union, UT                                               $ 58,606
Southfield, MI                                                          $ 75,253
Lake Forest (LA), CA                                                    $ 73,588
Philadelphia (Horsham), PA                                              $ 60,820
Salt Lake - North Temple, UT                                            $ 61,888
Denver (Englewood), CO                                                  $ 53,498
Wichita Northeast, KS                                                   $ 39,372
Omaha, NE                                                               $ 52,323
Houston (Town & Country), TX                                            $ 66,769
Hampton, VA                                                             $ 55,673
Austin, TX                                                              $ 84,375
Baltimore, MD                                                           $ 89,063
Mt. Laurel, NJ                                                          $ 53,625
Las Vegas, NV                                                           $210,834
Huntsville, AL                                                          $ 58,333
Houston (Clear Lake), TX                                                $ 59,167
Jacksonville, FL                                                        $ 60,833
Phoenix (Tempe), AZ                                                     $ 70,833
Detroit (Warren), MI                                                    $ 72,500
Pittsburgh, PA                                                          $ 69,167
Des Moines, IA                                                          $ 53,334
Austin (Stonelake), TX                                                  $ 79,167
Irving (Las Colinas), TX                                                $ 75,833
Charlotte, NC                                                           $ 65,833
Nashville (Brentwood), TN                                               $ 66,667
Houston (Westchase), TX                                                 $ 65,834
Albuquerque, NM                                                         $ 70,833
Somerset, NJ                                                            $ 70,000
Richfield, MN                                                           $ 86,875
Boston/Braintree, MA                                                    $ 95,000
Denver (Lakewood), CO                                                   $ 67,500
Anaheim (Garden Grove), CA                                              $ 67,687
Irvine, CA                                                              $ 68,229
Clearwater (St. Petersburg), FL                                         $ 44,554
Miami (Miami Airport), FL                                               $ 74,866
Orlando (Altamonte Springs), FL                                         $ 57,311
Atlanta (Duluth), GA                                                    $ 63,970
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Property                                                       Rent Per Accounting Period
--------                                                       --------------------------
<S>                                                            <C>
Chicago (Libertyville), IL                                              $ 61,393
Chicago (O'Hare/Schiller Park), IL                                      $125,833
Chicago (Schaumberg), IL                                                $ 67,284
Chicago (Warrenville), IL                                               $ 72,561
Chicago (Waukegan), IL                                                  $ 60,678
Detroit (Ann Arbor), MI                                                 $ 58,262
St. Louis (Earth City), MO                                              $ 54,900
Cleveland (North Olmstead), OH                                          $ 66,598
Columbus Airport (Gahanna), OH                                          $ 53,930
Oklahoma City, OK                                                       $ 56,441
Knoxville, TN                                                           $ 37,600
Dallas (Arlington), TX                                                  $ 56,512
Dallas (Galleria), TX                                                   $ 65,909
Dallas (North Richardson), TX                                           $ 61,034
Houston, TX                                                             $ 57,782
</TABLE>

                                      C-2

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