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                                                                    EXHIBIT 10.3

                               FIRST AMENDMENT TO
                       THE 1996 EQUITY PARTICIPATION PLAN
                                       OF
                         CANDLEWOOD HOTEL COMPANY, INC.

        This First Amendment to The 1996 Equity Participation Plan of Candlewood
Hotel Company, Inc. (the "Plan"), is adopted by Candlewood Hotel Company, Inc.,
a Delaware corporation (the "Company") effective as of May 18, 1998. RECITALS

                                    RECITALS

A.  The Plan was adopted by the Board of Directors of the Company on September
    30, 1996 and was approved by the stockholders of the Company on November 7,
    1996.

B.  On January 26, 1998, the Board of Directors of the Company approved the
    following amendment to the Plan:

                                   AMENDMENT

    1.  Section 2.1(a) of the Plan is hereby amended to read in its entirety as
        follows.


        "2.1 Shares Subject to Plan

        (a) The shares of stock subject to Options, awards of Restricted Stock,
Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be Common Stock, initially shares of
the Company's Common Stock, par value $.01 per share. The aggregate number of
such shares which may be issued upon exercise of such options or rights or upon
any such awards under the Plan shall not exceed 1,676,710. The shares of Common
Stock issuable upon exercise of such options or rights or upon any such awards
may be either previously authorized but unissued shares or treasury shares."

        The undersigned, Warren D. Fix, Chief Financial Officer, Executive Vice
President and Secretary of the Company, hereby certifies that the Stockholders
of the Company approved the foregoing First Amendment to the Plan effective as
of May 18, 1998.


                                      CANDLEWOOD HOTEL COMPANY, INC.,
                                      a Delaware corporation


                                      By: /s/ WARREN D. FIX
                                          --------------------------------------
                                          Warren D. Fix, Chief Financial Officer
                                          Executive Vice President and Secretary