Document:

EXHIBIT 10.106

PREPARED BY AND UPON RECORDATION RETURN TO:           Tax Parcel No(s): ________

Kennedy Covington Lobdell & Hickman, L.L.P.
100 North Tryon Street, Suite 4200
Charlotte, North Carolina  28202-4006
Attn:  John Nicholas Suhr, Jr., Esq.

LOAN NO.: 26-5330848                                        SALT LAKE CITY, UTAH
                                                                 HOMEWOOD SUITES

                            APPLE SUITES SPE I, INC.,

                                   as Assignor

                                       to

                           FIRST UNION NATIONAL BANK,

                                   as Assignee

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

                     ASSIGNMENT OF LEASES, RENTS AND PROFITS

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

                             Date: September 8, 2000

<PAGE>

                     ASSIGNMENT OF LEASES, RENTS AND PROFITS

     THIS ASSIGNMENT OF LEASES, RENTS AND PROFITS (this "Assignment") made as of
September  8,  2000  by  APPLE  SUITES  SPE  I,  INC.,  a  Virginia  corporation
("Assignor"),  whose address is 9 North Third Street, Richmond,  Virginia 23219,
in  favor  of  FIRST  UNION  NATIONAL  BANK,  a  national  banking   association
("Assignee"),  whose address is One First Union Center DC-6 (NC0166), Charlotte,
North Carolina 28288, Attention:  William J. Cohane, Real Estate Capital Markets
Contract Finance.

                              W I T N E S S E T H:
                               - - - - - - - - - -

     THAT,  WHEREAS,  Assignor has executed  that certain  Promissory  Note (the
"Note")  dated of even date  herewith,  payable to the order of  Assignee in the
stated  principal amount of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00); and

     WHEREAS,  the Note is  secured  by that  certain  Deed of  Trust,  Security
Agreement  and UCC  Fixture  Filing  (the  "Deed of  Trust")  dated of even date
herewith,  from Assignor for the benefit of Assignee,  encumbering  that certain
real  property  situated  in the  County of Salt  Lake,  State of Utah,  as more
particularly  described on Exhibit A attached hereto and incorporated  herein by
this  reference,  and all  buildings  and other  improvements  now or  hereafter
located thereon  (collectively,  the "Improvements") (said real property and the
Improvements  are  hereinafter   sometimes   collectively  referred  to  as  the
"Property"); and

     WHEREAS,   Assignor  is  desirous  of  further  securing  to  Assignee  the
performance of the terms,  covenants and agreements  hereof and of the Note, the
Deed of Trust and each other  document  evidencing,  securing,  guaranteeing  or
otherwise  relating to the  indebtedness  evidenced by the Note,  excluding  the
Indemnity and Guaranty Agreement and the Environmental  Indemnity Agreement (the
Note,  the Deed of Trust and such other  documents  listed on Exhibit B attached
hereto,  which  documents are executed for the benefit of Assignee in connection
with the loan  evidenced by the Note,  as each of the foregoing may from time to
time be amended, consolidated,  renewed or replaced, being collectively referred
to herein as the "Loan Documents").

     NOW, THEREFORE, in consideration of the making of the loan evidenced by the
Note by Assignee to Assignor and for other good and valuable consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  Assignor does hereby
irrevocably,  absolutely and unconditionally  transfer, sell, assign, pledge and
convey to Assignee,  its  successors  and assigns,  all of the right,  title and
interest  of  Assignor  in and to (i)  all  leases,  licenses,  concessions  and
occupancy  agreements  of all or any  part  of the  Property  and  any  and  all
guarantees,   extensions,   renewals,  replacements  and  modifications  thereof
(collectively,  the  "Leases"),  including,  without  limitation,  that  certain
Amended and Restated  Hotel Lease  Agreement  dated  November 24, 1999,  between
Assignor,  as lessor,  and Apple Suites  Management,  Inc., as lessee,  with any
guaranty of the performance and payment  thereunder  (the  "Percentage  Lease"),
(ii) all rents,  royalties,  issues,  profits,  revenue,  income and credit card
receipts collected from guest rooms,  restaurants,  bars, meeting rooms, banquet
rooms and recreational facilities, parking charges, and

<PAGE>

other  benefits  from the  Property,  now or  hereafter  arising from the use or
enjoyment of all or any portion  thereof or rendering of services by Assignor or
any  operator  or manager of the hotel or the  commercial  space  located in the
Improvements  (including,  without  limitation,  from the  rental of any  office
space, retail space, guest rooms or other space, halls, stores and offices), and
(iii) all concession  fees and rentals,  health club  membership  fees, food and
beverage  wholesale and retail sales,  service charges,  vending machine sale or
from any lease,  license,  tenancy,  concession,  occupancy  agreement  or other
agreement pertaining thereto or arising from any of the Contracts (as defined in
the Mortgage) or any of the General Intangibles (as defined in the Mortgage) and
any other  items of  revenue,  receipts  or other  income as  identified  in the
Uniform  System of Accounts  for Hotels,  9th Edition as  published by the Hotel
Association  of New  York  City,  Inc.  (1996),  as from  time  to time  amended
(collectively  with the items  listed  in  clause  (ii),  the  "Rents")  and all
proceeds  from the sale or other  disposition  of the  Leases  and the  right to
receive  and apply the Rents to the  payment of the Debt (as defined in the Deed
of Trust),  and (iv) all cash or  securities  deposited in any security  deposit
account  to  secure  performance  by  the  tenants,  lessees  or  licensees,  as
applicable, of their obligations under any such leases, licenses, concessions or
occupancy  agreements,  whether said cash or securities are to be held until the
expiration  of the terms of said  leases,  licenses,  concessions  or  occupancy
agreements  or applied  to one or more of the  installments  of rent  coming due
prior to the expiration of said terms;

     TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns.

     IT IS  AGREED  that  this  Assignment  is made  upon the  following  terms,
covenants and conditions:

     1.  Assignor  represents,  warrants and covenants to and for the benefit of
Assignee: (a) that Assignor now is the absolute owner of the landlord's interest
in the  Percentage  Lease,  the only Lease by Assignor at the Property as of the
date  hereof,  with full right and title to assign the same and the Rents due or
to become  due  thereunder;  (b) that,  other  than  this  Assignment  and those
assignments,  if any, specifically  permitted in the Deed of Trust, there are no
other outstanding  assignments of the Percentage Lease or Assignor's interest in
the  Rents;  (c) that no Rents  have  been  anticipated,  discounted,  released,
waived,  compromised or otherwise  discharged under the Percentage Lease, except
for  prepayment  of rent of not more  than one (1)  month  prior to the  accrual
thereof,  unless otherwise permitted in the Percentage Lease; (d) that there are
no material  defaults now existing under the Percentage Lease by the landlord or
tenant,  and there exists no state of facts which,  with the giving of notice or
lapse of time or both,  would constitute a default under the Percentage Lease by
the landlord or tenant,  except as  disclosed  in writing to Assignee;  (e) that
Assignor has and shall duly and  punctually  observe and perform all  covenants,
conditions and agreements in the Percentage Lease on the part of the landlord to
be observed and performed  thereunder,  and (f) the Percentage  Lease is in full
force and effect and is the valid and binding  obligation  of Assignor,  and, to
the  knowledge of Assignor,  are the valid and binding  obligation of the tenant
thereto.

     2. Notwithstanding that this instrument is a present, absolute and executed
assignment  of the Rents and of the Leases and a present,  absolute and executed
grant of the powers herein  granted to Assignee,  Assignor is hereby  permitted,
and is hereby granted a revocable  license by Assignee,  to retain possession of
the Leases and to collect and retain the

                                       2
<PAGE>

Rents unless and until there shall be an Event of Default under this Assignment,
the Deed of Trust or the other Loan  Documents.  In the event of the  occurrence
and continuance of such Event of Default, the aforementioned  license granted to
Assignor shall automatically  terminate without notice to Assignor, and Assignee
may thereafter,  without taking  possession of the Property,  take possession of
the Leases and collect the Rents to the extent of Assignor's  interest  therein.
Further,  from and  after  such  termination,  Assignor  shall  be the  agent of
Assignee  in  collection  of the  Rents to the  extent  of  Assignor's  interest
therein,  and any  Rents  so  collected  by  Assignor  shall be held in trust by
Assignor for the sole and  exclusive  benefit of Assignee,  and Assignor  shall,
within  three (3)  business  days after  receipt  of any Rents,  pay the same to
Assignee to be applied by Assignee as hereinafter set forth.  Furthermore,  from
and  after  the  occurrence  and  continuance  of  such  Event  of  Default  and
termination  of the  aforementioned  license,  Assignee shall have the right and
authority,  without any notice  whatsoever to Assignor and without regard to the
adequacy of the security therefor, to: (a) manage and operate the Property, with
full power to employ agents to manage the same; (b) demand, collect, receive and
sue for the  Rents,  including  those past due and  unpaid;  and (c) do all acts
relating to such management,  operation, rental, leasing, repair improvement and
alteration  of the  Property  as Assignee in its sole  subjective  judgment  and
discretion shall  determine,  subject to rights of the tenant and operator under
the Percentage  Lease or under  agreements  not terminated  pursuant to the Loan
Documents.  Assignee may apply the Rents received by Assignee from the Property,
after deducting the costs of collection thereof, including,  without limitation,
reasonable  attorneys'  fees and a reasonable  management fee for any management
agent so employed,  against amounts expended for repairs,  upkeep,  maintenance,
service, fuel, utilities, taxes, assessments,  insurance premiums and such other
expenses as Assignee incurs in connection with the operation of the Property and
against interest,  principal, required escrow deposits and other sums which have
or which  may  become  due,  from  time to  time,  under  the  terms of the Loan
Documents,  in such order or  priority  as to any of the items so  mentioned  as
Assignee, in its sole subjective discretion, may determine.

     3. Without limiting the rights granted  hereinabove,  in the event Assignor
shall fail to make any  payment or to perform any act  required  under the terms
hereof and such failure shall not be cured within any  applicable  grace or cure
period, or if none, within thirty (30) days after receipt of written notice from
Assignee, then Assignee may, but shall not be obligated to, without prior notice
to or demand on Assignor,  and without  releasing  Assignor from any  obligation
hereof,  make or perform  the same in such manner and to such extent as Assignee
may deem  necessary  to protect the  security  hereof,  including  specifically,
without  limitation,  appearing  in  and  defending  any  action  or  proceeding
purporting  to affect the  security  hereof or the rights or powers of Assignee,
performing  or  discharging  any  obligation,  covenant or agreement of Assignor
under any of the  Leases,  and, in  exercising  any of such  powers,  paying all
necessary and reasonable costs and expenses, employing counsel and incurring and
paying reasonable  attorneys' fees. Any sum advanced or paid by Assignee for any
such  purpose,  including,  without  limitation,   reasonable  attorneys'  fees,
together with interest  thereon at the Default  Interest Rate (as defined in the
Note) from the date paid or advanced by Assignee until repaid by Assignor, shall
immediately  be due and  payable to  Assignee by Assignor on demand and shall be
secured by the Deed of Trust and by all of the other Loan Documents securing all
or any part of the indebtedness evidenced by the Note.

                                       3
<PAGE>

     4.  This  Assignment  shall not  operate  to place  responsibility  for the
control,  care, management or repair of the Property upon Assignee,  nor for the
performance of any of the terms and  conditions of any of the Leases,  nor shall
it operate to make Assignee responsible or liable for any waste committed on the
Property  by the  tenants,  guests or any other  party or for any  dangerous  or
defective  condition of the Property or for any  negligence  in the  management,
upkeep, repair or control of the Property.  Assignee shall not be liable for any
loss sustained by Assignor resulting from Assignee's failure to let the Property
or from any other act or omission of Assignee  in managing  the  Property.  This
Assignment  shall not be construed as making Assignee a mortgagee in possession.
Assignee is obligated to account to Assignor only for such Rents as are actually
collected or received by Assignee.

     5. Assignor shall and does hereby indemnify and hold Assignee harmless from
and against any and all liability,  loss,  claim,  demand or damage which may or
might be incurred by reason of this Assignment,  including,  without limitation,
claims or demands for security  deposits  from tenants or guests of space in the
Improvements  deposited with  Assignor,  and from and against any and all claims
and demands  whatsoever  which may be asserted against Assignee by reason of any
alleged  obligations or  undertakings on its part to perform or discharge any of
the terms,  covenants or  agreements  contained in any of the Leases,  excluding
Assignee's  gross negligence and willful  misconduct as finally  determined by a
court of competent  jurisdiction.  Should Assignee incur any liability by reason
of this  Assignment  or in  defense of any claim or demand for loss or damage as
provided  above,  the amount  thereof,  including,  without  limitation,  costs,
expenses and reasonable  attorneys' fees,  together with interest thereof at the
Default Interest Rate from the date paid or incurred by Assignee until repaid by
Assignor,  shall be  immediately  due and payable to  Assignee by Assignor  upon
demand  and shall be  secured  by the Deed of Trust and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Note.

     6. Assignor hereby  irrevocably  appoints Assignee as its  attorney-in-fact
which power of attorney is coupled with an interest by virtue of this Assignment
and is irrevocable so long as any sums are outstanding  under the loan evidenced
by the Note to, from and after the occurrence of an Event of Default by Assignor
hereunder or under any of the other Loan Documents, do, make or perform any act,
right  or  privilege  which  Assignee  shall  have  under or by  virtue  of this
Assignment.

     7. Assignor covenants and agrees that Assignor shall not, without the prior
written  consent of Assignee,  further pledge,  transfer,  mortgage or otherwise
encumber or assign the Leases or future  payments of Rents,  except as otherwise
expressly permitted by the terms of the Deed of Trust.

     8. Assignor  covenants and agrees that Assignor shall, at its sole cost and
expense,  appear in and defend any action or proceeding  arising under,  growing
out of, or in any manner connected with the Leases or the obligations, duties or
liabilities  of the  landlord or tenant  thereunder  to the extent  necessary to
preserve Assignee's material rights under the Leases, and if Assignor shall fail
to do so, Assignee,  at its option but without  obligation,  may do so. Assignor
shall pay on  demand  all  reasonable  costs and  expenses,  including,  without
limitation,  reasonable  attorneys' fees, which Assignee may incur in connection
with Assignee's appearance, voluntary

                                       4
<PAGE>

or otherwise,  in any such action or proceeding,  together with interest thereon
at the Default  Interest Rate from the date incurred by Assignee until repaid by
Assignor.

     9. At any time,  Assignee  may, at its option,  notify any tenants or other
parties of the existence of this Assignment.  Assignor does hereby  specifically
authorize,  instruct and direct each and every present and future tenant, lessee
and  licensee  of the whole or any part of the  Property  to pay all  unpaid and
future Rents owed to Assignor to Assignee  upon receipt of demand from  Assignee
to so pay the same, and Assignor hereby agrees that each such present and future
tenant,  lessee and licensee may rely upon such written  demand from Assignee to
so pay said Rents  without any inquiry  into  whether  there  exists an Event of
Default  hereunder  or under the other Loan  Documents  or whether  Assignee  is
otherwise  entitled to said Rents.  Assignor  hereby waives any right,  claim or
demand which  Assignor  may now or hereafter  have against any present or future
tenant,  lessee or licensee by reason of such payment of Rents to Assignee,  and
any  such  payment  shall  discharge  such  tenant's,   lessee's  or  licensee's
obligation to make such payment to Assignor.

     10.  Assignee  may  take or  release  any  security  for  the  indebtedness
evidenced by the Note, may release any party primarily or secondarily liable for
the  indebtedness  evidenced  by the Note,  may grant  extensions,  renewals  or
indulgences with respect to the indebtedness evidenced by the Note and may apply
any other security  therefor held by it to the  satisfaction of any indebtedness
evidenced by the Note without  prejudice to any of its rights hereunder or under
any of the Loan Documents.

     11. The  acceptance of this  Assignment  and the collection of the Rents as
herein provided shall be without prejudice to Assignee.  The exercise or failure
to exercise by Assignee of the rights granted Assignee in this  Assignment,  and
the  collection  of the Rents and the  application  thereof as herein  provided,
shall not be  considered a waiver by Assignee of any Event of Default  under the
Loan  Documents or prevent  foreclosure of any liens on the Property as a result
of the  occurrence  and  continuance  of an Event of  Default,  nor  shall  such
exercise make Assignee liable under any of the Leases, Assignee hereby expressly
reserving all of its rights and privileges under the Deed of Trust and the other
Loan Documents as fully as though this Assignment had not been entered into. The
rights of Assignee  hereunder  are  cumulative  and  concurrent,  may be pursued
separately,  successively  or together and may be exercised as often as occasion
therefor  shall arise,  it being agreed by Assignor that the exercise of any one
or more of the rights  provided for herein shall not be construed as a waiver of
any of the  other  rights  or  remedies  of  Assignee,  at law or in  equity  or
otherwise,   so  long  as  any  obligation  under  the  Loan  Documents  remains
unsatisfied.

     12. All rights of  Assignee  hereunder  shall  inure to the  benefit of its
successors  and assigns;  and shall pass to and may be exercised by any assignee
of Assignee.  All  obligations of Assignor shall bind its successors and assigns
and any  subsequent  owner  of the  Property.  Assignor  hereby  agrees  that if
Assignee  gives notice to Assignor of an  assignment  of said rights,  upon such
notice the  liability  of Assignor  to the  assignee  of the  Assignee  shall be
immediate and absolute.  Assignor will not set up any claim against  Assignee or
any  intervening  assignee as a defense,  counterclaim  or set-off to any action
brought by Assignee or any intervening assignee for any amounts due hereunder or
for  possession  of or the  exercise of rights with respect to the

                                       5
<PAGE>

Leases or the Rents.

     13. If any provision under this  Assignment or the  application  thereof to
any entity, person or circumstance shall be invalid, illegal or unenforceable to
any  extent,  the  remainder  of  this  Assignment  and the  application  of the
provisions  hereof to other  entities,  persons  or  circumstances  shall not be
affected thereby and shall be enforced to the fullest extent permitted by law.

     14. This  Assignment  may not be amended,  modified  or  otherwise  changed
except by a written instrument duly executed by Assignor and Assignee.

     15. This Assignment shall be in full force and effect continuously from the
date hereof to and until the Deed of Trust shall be released of record,  and the
release of the Deed of Trust shall,  for all purposes,  automatically  terminate
this  Assignment  and  render  this  Assignment  null and void and of no  effect
whatsoever.  This Assignment  shall continue and remain in full force and effect
during any period of foreclosure with respect to the Property.

     16. In case of a conflict  between any provision of this Assignment and any
provision of the other Loan Documents, the provisions of the Note or the Deed of
Trust, if they shall be the conflicting  other Loan Document,  shall prevail and
be controlling.

     17. All notices,  demands,  requests or other  communications to be sent by
one party to the other  hereunder  or  required by law shall be given and become
effective as provided in the Deed of Trust.

     18. THIS  ASSIGNMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE IN WHICH THE  PROPERTY IS  SITUATED,  EXCEPT TO THE EXTENT
THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH
CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.

     19.  Assignor,  to the full  extent  permitted  by law,  hereby  knowingly,
intentionally  and voluntarily,  with and upon the advice of competent  counsel,
waives,  relinquishes  and forever  foregoes the right to a trial by jury in any
action or proceeding  based upon,  arising out of, or in any way relating to the
debt or any conduct,  act or omission of Assignee or  Assignor,  or any of their
directors,  officers,  partners, members, employees, agents or attorneys, or any
other  persons  affiliated  with  Assignee or Assignor in each of the  foregoing
cases, whether sounding in contract, tort or otherwise.

     20. This Assignment may be executed in any number of counterparts,  each of
which shall be effective  only upon delivery and  thereafter  shall be deemed an
original, and all of which shall be taken to be one and the same instrument, for
the same effect as if all parties hereto had signed the same signature page. Any
signature page of this  Assignment may be detached from any  counterpart of this
Assignment  without impairing the legal effect of any signatures thereon and may
be attached to another  counterpart of this Assignment  identical in form hereto
but having attached to it one or more additional signature pages.

                                       6
<PAGE>

     21.  In  addition  to,  but not in lieu of,  any  other  rights  hereunder,
Assignee  shall  have the right to  institute  suit and obtain a  protective  or
mandatory  injunction  against  Assignor  to  enforce  the  observance,  of  the
agreements,  covenants,  terms and  conditions  contained  herein  following the
occurrence and continuance of an Event of Default.

     22.  Assignee  shall,  as a matter of absolute  right,  be  entitled,  upon
application  to a court  of  applicable  jurisdiction,  and  without  notice  to
Assignor,  to the  appointment  of a receiver to obtain and secure the rights of
Assignee  hereunder  and  the  benefits  intended  to be  provided  to  Assignee
hereunder.

     23. Assignee may sell, transfer and deliver the Note and the Loan Documents
to one or more investors in the secondary  mortgage  market.  In connection with
such sale,  Assignee may retain or assign  responsibility for servicing the loan
evidenced by the Note or may delegate some or all of such responsibility  and/or
obligations  to a servicer,  including,  but not limited to, any  subservicer or
master servicer, on behalf of the investors.

     24. If  Assignee  determines  at any time to sell,  transfer or assign this
Assignment, the Note, the Deed of Trust and the other Loan Documents, and any or
all servicing rights with respect thereto,  or to grant  participations  therein
(the  "Participations")  or issue mortgage  pass-through  certificates  or other
securities  evidencing  a  beneficial  interest  in a rated  or  unrated  public
offering or private placement (the  "Securities"),  Assignee may forward to each
purchaser,  transferee,  assignee,  servicer,  participant,  investor,  or their
respective  successors in such Participations  and/or Securities  (collectively,
the "Investor") or any Rating Agency rating such  Securities,  each  prospective
Investor and each of the  foregoing's  respective  counsel,  all  documents  and
information which Assignee now has or may hereafter acquire relating to the debt
evidenced by the Note and to Assignor,  any  guarantor,  any  indemnitor and the
Property,  which shall have been  furnished  by Assignor,  any  guarantor or any
indemnitor as Assignee determines necessary or desirable.

     25. Notwithstanding  anything to the contrary contained in this Assignment,
the  liability  of  Assignor  and its  officers,  directors,  general  partners,
managers, members and principals for the indebtedness secured hereby and for the
performance of the other agreements,  covenants and obligations contained herein
and in the Loan  Documents  shall be limited as set forth in Section  2.6 of the
Note.

             [THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

                                       7
<PAGE>

     IN WITNESS WHEREOF, Assignor has executed this Assignment as of the day and
year first written above.

                                    ASSIGNOR:

                                    APPLE SUITES SPE I, INC.,
                                    a Virginia corporation

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

<PAGE>

STATE/COMMONWEALTH OF VIRGINIA              )
                                            )  SS.
CITY/COUNTY OF RICHMOND                     )

     On the 6th day of September  2000,  personally  appeared before me Glade M.
Knight,  who being by me duly  sworn did say that he is the  President  of Apple
Suites SPE I, Inc., a Virginia corporation and that the foregoing instrument was
signed on behalf of said  corporation  by authority of a resolution of its Board
of Directors,  and said Glade M. Knight acknowledged to me that said corporation
executed the same.

/s/ Robin S. Broughton
---------------------------
Notary Public

My Commission Expires:  7/31/02

Residing at Richmond, VA

                                       2

<PAGE>

                                    EXHIBIT A

                                Legal Description

                                                    Tax Serial No(s): __________

                                    [OMITTED]

<PAGE>

                                    EXHIBIT B

                                 Loan Documents

     1.   Promissory  Note from Apple Suites SPE I, Inc. to First Union National
          Bank

     2.   Deed of Trust,  Security  Agreement and UCC Fixture  Filing from Apple
          Suites SPE I, Inc. to First Union National Bank

     3.   Security  Agreement  from  Apple  Suites  SPE I, Inc.  to First  Union
          National Bank

     4.   Indemnity  and Guaranty  Agreement  from Apple  Suites,  Inc. to First
          Union National Bank

     5.   Environmental  Indemnity  Agreement  from Apple Suites SPE I, Inc. and
          Apple Suites, Inc. to First Union National Bank

     6.   Assignment of Leases,  Rents and Profits from Apple Suites SPE I, Inc.
          to First Union National Bank

     7.   Assignment  of Contracts  and Permits from Apple Suites SPE I, Inc. to
          First Union National Bank

     8.   Consent and Agreement of Manager by Promus Hotels, Inc.

     9.   Disbursement Authorization by Apple Suites SPE I, Inc.

     10.  Receipt and Closing  Certificate by Apple Suites SPE I, Inc. and Apple
          Suites, Inc.

     11.  Form W-9 by Apple Suites SPE I, Inc.

     12.  Certificate Regarding  Organizational Documents by Apple Suites SPE I,
          Inc.

     13.  UCC-1 Fixture  filings by Apple Suites SPE I, Inc. (Utah  Secretary of
          State and Salt Lake County)

     14.  UCC-1 Financing  Statement by Apple Suites SPE I, Inc. (Virginia State
          Corporation Commission)EXHIBIT 10.107

LOAN NO.: 26-5330848                                        SALT LAKE CITY, UTAH
                                                                 HOMEWOOD SUITES

                               SECURITY AGREEMENT

     SECURITY  AGREEMENT  (this  "Agreement"),  made as of September 8, 2000, by
APPLE SUITES SPE I, INC., a Virginia corporation  ("Debtor"),  in favor of FIRST
UNION NATIONAL BANK, a national banking association,  its successors and assigns
("Secured Party").

                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS, concurrently herewith, Secured Party has extended to Debtor a loan
in the principal  amount of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00) (the "Loan"), which is evidenced by that certain Promissory Note
dated of even date herewith (the "Note"),  executed by Debtor and payable to the
order of Secured  Party in such  amount and is secured by,  among other  things,
that certain Deed of Trust,  Security Agreement and UCC Fixture Filing, dated of
even date herewith,  given by Debtor for the benefit of Secured Party (the "Deed
of Trust"),  encumbering  that certain real  property  situated in the County of
Salt  Lake,  State of Utah (the  "State"),  as more  particularly  described  on
Exhibit  A  attached   hereto  and   incorporated   herein  by  this   reference
(collectively, the "Premises"); and

     WHEREAS, as a condition to making the Loan, Secured Party has required that
Debtor  grant to  Secured  Party a  security  interest  with  respect to certain
property of Debtor, upon the terms and conditions as hereinafter set forth,

     NOW,  THEREFORE,  in consideration of the making of the Loan, the foregoing
premises  and for  other  good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, Debtor hereby covenants and agrees
for the benefit of Secured Party as follows:

     1.  COLLATERAL:  As  security  for the  prompt  and  complete  payment  and
performance when due (whether at stated maturity,  by acceleration or otherwise)
of all the Obligations  (as hereinafter  defined) and to induce Secured Party to
make the Loan,  Debtor  hereby  grants to Secured  Party a  continuing  security
interest in all of Debtor's right,  title and interest (if any) in, to and under
the following  property now or hereafter located on or relating to the Premises,
whether presently owned or hereafter acquired (exclusive of any of the foregoing
owned  or  leased  by  tenants  of  space in the  Premises,  including,  without
limitation,  the tenant under the  Percentage  Lease (as  hereinafter  defined))
(Debtor's  right,  title and interest in all such  property  being  referred to,
collectively, as the "Collateral"):

     (a)  all  structures,   buildings  and   improvements  of  every  kind  and
description now or at any time hereafter  located or placed on the Premises (the
"Improvements", the Premises and the Improvements being referred to as the "Real
Property");

<PAGE>

     (b) all furniture,  furnishings,  fixtures, goods, equipment,  inventory or
personal  property owned by Debtor and now or hereafter  located on, attached to
or used in and  about the  Improvements,  including,  but not  limited  to,  all
machines,  engines,  boilers,  dynamos,  elevators,  stokers,  tanks,  cabinets,
awnings,  screens,  shades,  blinds,  carpets,  draperies,  lawn mowers, and all
appliances,   plumbing,  heating,  air  conditioning,   lighting,   ventilating,
refrigerating,  disposal  and  incinerating  equipment,  and  all  fixtures  and
appurtenances  thereto,  and such other goods and chattels and personal property
owned by Debtor as are now and  hereafter  used or furnished  in  operating  the
Improvements, or the activities conducted therein (including, without limitation
beds, bureaus,  chiffoniers,  chests, chairs, desks, lamps, mirrors,  bookcases,
tables, rugs, carpeting,  drapes, draperies,  curtains, shades, venetian blinds,
screens, paintings,  hangings, pictures, divans, couches, luggage carts, luggage
racks,  stools,  sofas,  chinaware,   linens,  pillows,   blankets,   glassware,
foodcarts,  cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems bars, bar fixtures, liquor and other drink dispensers,  icemakers,
radios, television sets, intercom and paging equipment,  electric and electronic
equipment,  dictating equipment,  private telephone systems, facsimile machines,
medical equipment,  potted plants, heating, lighting and plumbing fixtures, fire
prevention and extinguishing  apparatus,  cooling an  air-conditioning  systems,
elevators,    escalators,   fittings,   plants,   apparatus,   stoves,   ranges,
refrigerators,  laundry machines,  tools, machinery,  engines,  dynamos, motors,
boilers,  incinerators,  switchboards,  conduits,  compressors,  vacuum cleaning
systems, floor cleaning, waxing and polishing equipment, call systems, brackets,
electrical signs,  bulbs,  bells, ash and fuel,  conveyors,  cabinets,  lockers,
shelving,  spotlighting equipment,  dishwashers,  garbage disposals, washers and
dryers),  other  customary  hotel  equipment  and  all  building  materials  and
equipment  hereafter situated on or about the Premises or Improvements,  and, to
the extent assignable,  all warranties and guaranties relating thereto,  and all
additions thereto and substitutions and replacements therefor;

     (c) all  easements,  rights-of-way,  strips  and  gores  of  land,  vaults,
streets,  ways,  alleys,  passages,  sewer rights,  and other  emblements now or
hereafter  located  on the  Premises  or under or above  the same or any part or
parcel  thereof,  and  all  estates,  rights,  titles,   interests,   tenements,
hereditaments and appurtenances,  reversions and remainders  whatsoever,  in any
way  belonging,  relating or  appertaining  to the Deed of Trust Property or any
part  thereof,  or  which  hereafter  shall  in any  way  belong,  relate  or be
appurtenant thereto, whether now owned or hereafter acquired by Debtor;

     (d) to the extent assignable,  all water,  ditches,  wells,  reservoirs and
drains and all water,  ditch,  well,  reservoir  and  drainage  rights which are
appurtenant  to,  located  on,  under or above  or used in  connection  with the
Premises  or the  Improvements,  or any  part  thereof,  together  (i)  with all
utilities,  utility  lines,  utility  commitments,   utility  capacity,  capital
recovery charges,  impact fees and other fees paid in connection with same, (ii)
reimbursements  or other  rights  pertaining  to  utility  or  utility  services
provided to the Premises and/or Improvements and (iii) the present or future use
or  availability  of waste water  capacity,  or other utility  facilities to the
extent same pertain to or benefit the Premises and/or  Improvements,  including,
without limitation,  all reservations of or commitments covering any such use in
the future whether now existing or hereafter created or acquired;

                                       2
<PAGE>

     (e) all minerals,  crops, timber,  trees,  shrubs,  flowers and landscaping
features now or hereafter located on, under or above the Premises;

     (f) all funds now or  hereafter  on deposit in the Impound  Account and the
Replacement Reserve (each as defined in the Deed of Trust);

     (g) (i) all leases,  licenses,  concessions and occupancy agreements of all
or any part of the  Premises  or the  Improvements  and any and all  guarantees,
extensions,  renewals, replacements and modifications thereof (collectively, the
"Leases"),  including,  without  limitation,  that certain  Amended and Restated
Hotel Lease Agreement dated November 24, 1999,  between Debtor,  as lessor,  and
Apple Suites Management,  Inc., as lessee,  with any guaranty of the performance
and payment thereunder (the "Percentage Lease"), and (ii) all rents,  royalties,
issues,  profits,  revenue,  income,  all  revenues  and  credit  card  receipts
collected from guest rooms, restaurants,  bars, meeting rooms, banquet rooms and
recreational facilities, parking charges, and other benefits (collectively,  the
"Rents"  or "Rents  and  Profits")  of the  Premises,  the  Improvements  or the
fixtures or equipment, now or hereafter arising from the use or enjoyment of all
or any portion  thereof or  rendering  of services by Debtor or any  operator or
manager  of the  hotel  or the  commercial  space  located  in the  Improvements
(including,  without  limitation,  from the rental of any office  space,  retail
space,  guest rooms or other space,  halls,  stores and offices),  and (iii) all
concession  fees and rentals,  health club  membership  fees,  food and beverage
wholesale and retail sales,  service  charges,  vending machine sale or from any
lease,  license,  tenancy,  concession,  occupancy  agreement or other agreement
pertaining thereto or arising from any of the Contracts (as hereinafter defined)
or any of the General  Intangibles (as hereinafter  defined) and any other items
of revenue,  receipts or other  income as  identified  in the Uniform  System of
Accounts for Hotels,  9th Edition as published by the Hotel  Association  of New
York City, Inc. (1996) and (iv) all cash or securities (the "Security Deposits')
deposited in any security  deposit account (the "Security  Deposit  Account") to
secure performance by the tenants, lessees or licensees, as applicable, of their
obligations   under  any  such  leases,   licenses,   concessions  or  occupancy
agreements,  whether said cash or securities are to be held until the expiration
of the terms of said leases,  licenses,  concessions or occupancy  agreements or
applied  to one or more of the  installments  of rent  coming  due  prior to the
expiration of said terms;

     (h) To the  extent  assignable  (i) all  contracts  and  agreements  now or
hereafter  entered  into or binding  upon  Debtor  relating  to the  management,
maintenance  or  operation  of any  part  of the  Premises  or the  Improvements
(collectively,  the  "Contracts")  and all  revenue,  income and other  benefits
thereof,   including,   without  limitation,   management  agreements,   service
contracts, maintenance contracts, equipment leases, personal property leases and
(ii) any  contracts or  documents  relating to  construction  on any part of the
Premises  or  the  Improvements  (including  plans,  drawings,  surveys,  tests,
reports, bonds and governmental approvals);

     (i) to the  extent  assignable,  all  present  and future  real  estate tax
refunds  and  monetary  deposits  given to any  public or private  utility  with
respect  to  utility  services  furnished  to any  part of the  Premises  or the
Improvements;

     (j) to the extent  assignable,  all  present  and future  funds,  accounts,
instruments,  accounts receivable,  documents, causes of action, claims, general
intangibles  (including,  without

                                       3
<PAGE>

limitation,  trademarks, trade names, service marks and symbols now or hereafter
used in connection with any part of the Premises or the Improvements,  all names
by which the Premises or the  Improvements  may be operated or known, all rights
to carry on business under such names,  and all rights,  interest and privileges
which  Debtor has or may have as developer  or  declarant  under any  covenants,
restrictions  or declarations  now or hereafter  relating to the Premises or the
Improvements)  and  all  notes  or  chattel  paper  relating  to the  ownership,
operation or maintenance of the Real Property (exclusive of any of the foregoing
owed  to  tenants  or any  other  third  parties)  (collectively,  the  "General
Intangibles");

     (k) to the extent assignable,  all water taps, sewer taps,  certificates of
occupancy, permits, licenses, franchises,  certificates, consents, approvals and
other rights and  privileges  now or hereafter  obtained in connection  with the
Premises  or  the  Improvements  and  all  present  and  future  warranties  and
guaranties  relating  to  the  Improvements  or  to  any  equipment,   fixtures,
furniture,  furnishings, personal property or components of any of the foregoing
now or hereafter located or installed on the Premises or the Improvements;

     (l) all building materials,  supplies and equipment now or hereafter placed
on the  Premises  or in the  Improvements  and,  to the extent  assignable,  all
architectural renderings,  models, drawings, plans, specifications,  studies and
data now or hereafter relating to the Premises or the Improvements;

     (m) to the extent  assignable,  all right,  title and interest of Debtor in
any insurance policies or binders now or hereafter relating to the Deed of Trust
Property, including any unearned premiums thereon;

     (n) all proceeds, products,  substitutions and accessions (including claims
and demands therefor) of the conversion, voluntary or involuntary, of any of the
foregoing  into  cash  or  liquidated  claims,  including,  without  limitation,
proceeds of insurance and condemnation awards; and

     (o) all  other or  greater  rights  and  interests  of every  nature in the
Premises or the  Improvements  and in the  possession  or use thereof and income
therefrom, whether now owned or hereafter acquired by Debtor.

     2.  USE OF  COLLATERAL:  The  Collateral  shall be used  only for  business
purposes.

     3.  OBLIGATIONS:  As  used  herein,  the  term  "Obligations"  shall  mean,
collectively, the following:

     (a) All obligations of Debtor or any indemnitor or guarantor under the Loan
to Secured Party,  direct or indirect,  absolute or contingent,  now existing or
hereafter  arising in connection with the Loan,  including,  but not limited to,
the payment,  performance and observance of any obligation, term or condition of
the documents described in Exhibit B (all of such documents and instruments,  as
the same may be amended, consolidated,  extended, renewed, modified, restated or
replaced from time to time, collectively, the "Loan Documents");

                                       4
<PAGE>

     (b) All  expenditures  made or  incurred  by Secured  Party to protect  and
maintain the Collateral and to enforce its rights under this Security Agreement,
as more fully set forth herein; and

     (c) Any and all future  advances made under the Note,  the Deed of Trust or
any of the other Loan Documents.

     4.  WARRANTIES  AND  REPRESENTATIONS:  Debtor  warrants and  represents  to
Secured Party that:

     (a) With respect to that portion of the  Collateral in which Debtor has any
right,  title or interest on the date  hereof,  such  ownership  or other right,
title or interest is free and clear of all liens,  security  interests,  adverse
claims and encumbrances  (other than the security  interest created hereby,  the
security  interest created by the Deed of Trust and those  subordinate  security
interests,  if any,  created in connection  with any junior  encumbrances on the
Property to which Secured Party shall have  consented in writing in its sole and
absolute discretion).

     (b)  No  financing  statement  covering  Debtor's  interest  in  any of the
Collateral is on file in any public office,  other than the financing  statement
evidencing the security interest created hereby.

     (c) The execution and delivery of this Security  Agreement will not violate
any law, agreement or document governing Debtor or to which Debtor is a party.

     (d) The  principal  place of  business  of Debtor  is 9 North  3rd  Street,
Richmond, VA 23219.

     5. COVENANTS OF DEBTOR:  Except as may otherwise be set forth in or allowed
under the terms of any of the other Loan Documents,  Debtor covenants and agrees
that  unless  and until  Secured  Party  expressly  agrees in writing to another
course of action:

     (a) The Collateral shall not be removed from the County of Salt Lake, State
of Utah, without the prior written consent of Secured Party.

     (b) Debtor shall not sell, pledge,  hypothecate,  transfer,  lease, assign,
abandon or  otherwise  dispose of its interest in any of the  Collateral  or any
interest  therein except (i) in connection with a transfer  expressly  permitted
under the Deed of Trust,  or (ii)  replacement of collateral in accordance  with
the  Deed  of  Trust  provided  that  simultaneously  therewith,  new  items  of
Collateral of a similar kind and of at least  equivalent  value are  substituted
therefor on which  Secured  Party will  immediately  have a valid first lien and
security interest.

     (c) Debtor (or the tenant under the Percentage  Lease,  as the case may be)
shall keep the Collateral in good condition and repair, subject to ordinary wear
and  tear,  properly  maintained  and  free of  liens,  security  interests  and
encumbrances (other than the security interest

                                       5
<PAGE>

created hereby,  the security  interest created by the Deed of Trust and subject
to Permitted Encumbrances (as defined in the Deed of Trust).

     (d) Debtor shall  promptly  notify  Secured Party of any default under this
Security Agreement.

     (e) Except as otherwise provided in the Deed of Trust, Debtor shall not use
the  Collateral in violation of any applicable  statute,  ordinance or insurance
policy.

     (f) Debtor shall defend Debtor's title, if any, the Collateral  against the
claims and demands of all persons and entities.

     (g) Except as otherwise  may be provided  for in the Deed of Trust,  Debtor
shall pay promptly and before delinquency all taxes and assessments with respect
to the Collateral and shall deliver to Secured  Party,  on demand,  a receipt or
other evidence satisfactory to Secured Party of the payment thereof.

     (h) Debtor shall, at any time upon demand of Secured Party,  exhibit to and
allow  inspection by Secured Party of the  Collateral  and shall,  promptly upon
request  from  Secured  Party,  deliver to Secured  Party an  accurate,  current
inventory of the  Collateral  in such detail as Secured  Party shall  reasonably
require.

     (i) Debtor  shall keep (or cause the tenant under the  Percentage  Lease to
keep) the Collateral insured as required in the Deed of Trust. The provisions of
the Deed of Trust shall apply with respect to application of insurance  proceeds
following any damage to the Collateral covered by insurance.

     (j) Provided Secured Party shall have given Debtor  reasonable prior notice
and an  opportunity to cure, and subject to the terms and conditions of the Deed
of Trust,  Secured Party, at its option,  may discharge taxes,  liens,  security
interests and other  encumbrances  against the  Collateral  (except for any such
liens,  security interests or encumbrances provided in or permitted by the terms
of the  Deed  of  Trust)  and  may  pay for  the  repair  of any  damage  to the
Collateral,  the maintenance and preservation  thereof and insurance  thereon if
not  otherwise  promptly  paid or  performed by Debtor.  Debtor shall  reimburse
Secured Party on demand for any payments as made,  plus interest  thereon at the
Default  Interest  Rate (as defined in the Note) from the date of such  payment.
Any such payments made by Secured Party,  together with interest thereon,  shall
be secured by the  Collateral  as  provided  herein and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Note.

     (k) From time to time Debtor shall execute  financing  statements and other
documents in form  satisfactory  to Secured Party (and pay the cost of filing or
recording  thereof in whatever public offices Secured Party deems necessary) and
perform such other acts as Secured Party may  reasonably  request to perfect and
maintain a valid security  interest in the Collateral,  including,  upon Secured
Party's  request,  transferring  to  Secured  Party  any  Collateral  in which a
security interest may be perfected only by taking possession thereof.

                                       6
<PAGE>

     (l) Debtor shall not move its principal  place of business or its books and
records relating to the Collateral  without first giving thirty (30) days' prior
written notice thereof to Secured Party.

     (m) Debtor shall not change its name or  otherwise do anything  which would
make the  information  set forth in the  financing  statements  relating  to the
Collateral  materially  misleading  without first giving thirty (30) days' prior
written notice thereof to Secured Party.

     6. EVENTS OF DEFAULT: An Event of Default (as defined in the Deed of Trust)
shall constitute an Event of Default under this Security Agreement.

An Event of Default under this Security  Agreement shall  constitute an Event of
Default under each of the other Loan Documents.

     7. RIGHTS AND REMEDIES:

     (a) Upon the  occurrence  of an Event of Default  hereunder,  Secured Party
may,  without  further  notice  or  demand,   declare  any  of  the  Obligations
immediately  due and  payable  and  this  Security  Agreement  in  default,  and
thereafter,  Secured  Party shall have the remedies of a secured party under the
Uniform  Commercial Code as then in effect in the State and all other rights and
remedies  at law or in equity  available  to  secured  creditors  in the  State,
including,  without  limitation,  the right to take possession of the Collateral
and any proceeds thereof.  To take possession,  Secured Party may enter upon any
premises  where the Collateral is kept and remove the Collateral or any proceeds
therefrom to the extent  permitted by  applicable  law. If notice is required by
law, ten (10) days' prior written notice given to Debtor (pursuant to the notice
provisions  contained  in the Deed of Trust) of the time and place of any public
sale of the  Collateral or of the time of or after which any private sale or any
other intended disposition of the Collateral is to be made shall be deemed to be
reasonable notice to Debtor. No such notice shall be necessary if the Collateral
is  perishable,  threatens  to  decline  speedily  in  value  or  is  of a  type
customarily  sold  on a  recognized  market.  Proceeds  of  any  sale  or  other
disposition  of the  Collateral  may be applied to the  Obligations  in whatever
order or priority Secured Party may subjectively determine.

     (b) During the time that Secured Party is in possession of the  Collateral,
and to the extent  permitted by law, Secured Party shall have the right to hold,
use, operate, manage and control all or any part of the Collateral,  to make all
such repairs,  replacements,  alterations and  improvements of the Collateral it
deems proper, and to demand, collect and retain all earnings, proceeds and other
sums due or to become due with respect to the  Collateral,  accounting  only for
the net earnings  arising from such use and charging  against receipts from such
use  all  costs,  expenses,  charges,  damage  or loss by  reason  of such  use.
Notwithstanding  the foregoing,  Secured Party shall be entitled  also,  without
further notice or demand and to the extent  permitted by law, to have a receiver
appointed to take charge of all or any part of the Collateral, exercising all of
the rights specified in the immediately preceding sentence.

     (c) Debtor  shall pay to Secured  Party on demand all  reasonable  expenses
(including,   without   limitation,   reasonable   attorneys'  fees,  costs  and
disbursements) actually incurred by

                                       7
<PAGE>

Secured Party incidental to taking, holding, preparing for sale, selling and the
like or otherwise  dealing with the Collateral,  or actually incurred by Secured
Party otherwise in enforcing any term or condition of this Security Agreement or
any other Loan Document,  together with interest thereon at the Default Interest
Rate (as  defined in the Note),  and all such  expenses  and  interest  shall be
secured  by the  Collateral  as  provided  herein  and by all of the other  Loan
Documents securing all or any part of the indebtedness evidenced by the Note.

     (d) Secured Party may require Debtor to assemble the Collateral and make it
available at a place Secured Party  designates  which is mutually  convenient to
allow Secured Party to take possession or dispose of the Collateral.

     (e) Any and all  statements  of fact or other  recitals made in any bill of
sale or assignment or other instrument evidencing any foreclosure sale hereunder
as to nonpayment of  indebtedness,  as to the  occurrence of any default,  as to
Secured Party having declared all of such indebtedness to be due and payable, or
as to notice of time,  place and terms of sale and of the  properties to be sold
having been duly given by Secured  Party shall be taken as prima facie  evidence
of the truth of the facts so stated and recited, absent manifest error.

     (f)  Secured  Party may  appoint  or  delegate  any one or more  persons or
entities as agent to perform any act or acts  necessary  or incident to any sale
of the Collateral  held by Secured  Party,  including the sending of notices and
the conduct of the sale, in the name and on behalf of Secured Party.

     (g) Any sale made  pursuant to the  provisions of this  paragraph  shall be
deemed to have been a public sale conducted in a commercially  reasonable manner
if held  contemporaneously  with the foreclosure sale as provided in the Deed of
Trust upon  giving the same notice  with  respect to the sale of the  Collateral
hereunder as is required by the Deed of Trust.

     8. GENERAL:

     (a) The terms and provisions  hereof shall be binding upon and inure to the
benefit of Debtor and Secured Party and their respective heirs, executors, legal
representatives,   successors,   successors-in-title  and  assigns,  whether  by
voluntary  action of the parties or by operation  of law. All personal  pronouns
used herein,  whether used in the masculine,  feminine or neuter  gender,  shall
include all other genders; the singular shall include the plural and vice versa.
Titles of articles and sections are for  convenience  only and in no way define,
limit, amplify or describe the scope or intent of any provisions hereof. Time is
of the essence with respect to all provisions of this Security  Agreement.  This
Security  Agreement and the other Loan Documents  contain the entire  agreements
between the parties hereto relating to the subject matter hereof and thereof and
all prior agreements  relative hereto and thereto which are not contained herein
or therein are terminated.

     (b) This  Security  Agreement  shall not be construed  to derogate  from or
impair the lien or  provisions of the Deed of Trust with respect to any property
described  therein which is real property  and/or  fixtures or which the parties
have agreed to treat as real property and/or

                                       8
<PAGE>

fixtures. The financing statement filed and the fixture filing recorded pursuant
to this Security  Agreement are, in part, for the protection of Secured Party if
any court  shall at any time hold that  notice of Secured  Party's  priority  of
interest in any  property  described  in the Deed of Trust must,  in order to be
effective against a particular class of Persons,  including, but not limited to,
the Federal  government or any  subdivision or entity  thereof,  be filed in the
Uniform Commercial Code records.

     (c) Debtor hereby  indemnifies  and holds harmless  Secured Party,  and its
employees, officers and agents, from and against any and all liabilities, claims
and obligations  which may be incurred,  asserted or imposed upon them or any of
them  as a  result  of or in  connection  with  any  use,  operation,  lease  or
consumption of any of the Collateral (except to the extent any such liabilities,
claims  or  obligations   are  finally   determined  by  a  court  of  competent
jurisdiction to have resulted from Secured  Party's willful  misconduct or gross
negligence) or as a result of Secured Party's  seeking to obtain  performance of
any of the Obligations.

     (d)  Without  affecting  any  obligations  of Debtor  under  this  Security
Agreement and without  prejudice to any of its rights  hereunder,  Secured Party
may, without notice or demand,  renew,  extend or grant indulgences with respect
to any of the Obligations,  take or release any other collateral as security for
any of the  Obligations,  or add or release any guarantor,  endorser,  surety or
other party to any of the Obligations.

     (e) Debtor  hereby  waives  diligence,  presentment,  protest,  demand and,
except as provided in the Loan  Documents  or as  required  by  applicable  law,
notice of every kind,  as well as the right to require  Secured Party to proceed
against  any  Person  liable  for  the  payment  or  performance  of  any of the
Obligations or to foreclose upon,  sell or otherwise  realize upon or collect or
apply any other property, real or personal,  securing any of the Obligations, as
a condition or prior to proceeding hereunder.

     (f) Unless the context  otherwise  requires,  or unless  otherwise  defined
herein,  all terms used herein which are defined in the Uniform  Commercial Code
as in effect in the State shall have the meanings therein stated.

     (g)  Notwithstanding  anything to the contrary contained in this Agreement,
the liability of Debtor and its officers, directors, general partners, managers,
members  and  principals  for  the  indebtedness  secured  hereby  and  for  the
performance of the other agreements,  covenants and obligations contained herein
and in the Loan  Documents  shall be limited as set forth in Section  2.6 of the
Note.

             [THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

                                       9
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement is executed  and  delivered as of the
first date set forth hereinabove.

                                     DEBTOR:

                                     APPLE SUITES SPE I, INC.,
                                     a Virginia corporation

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

<PAGE>

                                    EXHIBIT A

                                Legal Description

                                    [OMITTED]

<PAGE>

                                    EXHIBIT B

                                 Loan Documents

1.   Promissory Note from Apple Suites SPE I, Inc. to First Union National Bank

2.   Deed of Trust,  Security Agreement and UCC Fixture Filing from Apple Suites
     SPE I, Inc. to First Union National Bank

3.   Security  Agreement  from Apple Suites SPE I, Inc. to First Union  National
     Bank

4.   Indemnity and Guaranty  Agreement  from Apple  Suites,  Inc. to First Union
     National Bank

5.   Environmental  Indemnity  Agreement from Apple Suites SPE I, Inc. and Apple
     Suites, Inc. to First Union National Bank

6.   Assignment  of Leases,  Rents and Profits  from Apple Suites SPE I, Inc. to
     First Union National Bank

7.   Assignment  of Contracts and Permits from Apple Suites SPE I, Inc. to First
     Union National Bank

8.   Consent and Agreement of Manager by Promus Hotels, Inc.

9.   Disbursement Authorization by Apple Suites SPE I, Inc.

10.  Receipt  and  Closing  Certificate  by Apple  Suites SPE I, Inc.  and Apple
     Suites, Inc.

11.  Form W-9 by Apple Suites SPE I, Inc.

12.  Certificate Regarding Organizational Documents by Apple Suites SPE I, Inc.

13.  UCC-1 Fixture  filings by Apple Suites SPE I, Inc. (Utah Secretary of State
     and Salt Lake County)

14.  UCC-1  Financing  Statement  by Apple  Suites SPE I, Inc.  (Virginia  State
     Corporation Commission)

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