Document:

EXHIBIT 10.102

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

                                 PROMISSORY NOTE

$2,500,000.00                                                  September 8, 2000

     FOR VALUE RECEIVED,  the undersigned,  APPLE SUITES SPE I, INC., a Virginia
corporation,  ("Maker"),  having an address at 9 North Third  Street,  Richmond,
Virginia  23219,  promises to pay to the order of FIRST UNION  NATIONAL  BANK, a
national  banking  association  ("Payee"),  at the  office of Payee at One First
Union Center, 301 South College Street, DC-6 (NC0166), Charlotte, North Carolina
28288-0166,  or at such other place as Payee may  designate  to Maker in writing
from time to time,  the principal  sum of Two Million Five Hundred  Thousand and
No/100 Dollars ($2,500,000.00),  together with interest on so much thereof as is
from time to time  outstanding  and unpaid,  from the date of the advance of the
principal  evidenced  hereby,  at the rate of nine  percent  (9%) per annum (the
"Note  Rate"),  together with all other amounts due hereunder or under the other
Loan Documents (as defined in the Security  Instrument),  in lawful money of the
United States of America,  which shall at the time of payment be legal tender in
payment of all debts and dues, public and private.

                        ARTICLE I. - TERMS AND CONDITIONS

     1.1. Computation of Interest. Interest shall be computed hereunder based on
a 360-day  year and based on the actual  number of days elapsed for any month in
which interest is being calculated. Interest shall accrue from the date on which
funds  are  advanced  hereunder  (regardless  of the  time of day)  through  and
including the day on which funds are credited pursuant to Section 1.2 hereof.

     1.2.  Payment  of  Principal  and  Interest.   Payments  in  federal  funds
immediately  available  at the place  designated  for payment  received by Payee
prior to 2:00 p.m.  local time at said place of payment on a business  day shall
be credited prior to close of business,  while other payments,  at the option of
Payee, may not be credited until immediately available to Payee in federal funds
at the place  designated for payment prior to 2:00 p.m. local time at said place
of payment on a business  day.  The term  "business  day" when used herein shall
mean a weekday,  Monday through Friday, except a legal holiday or a day on which
banking  institutions  in New York, New York are authorized by law to be closed.
Such  principal  and  interest  shall be  payable in equal  consecutive  monthly
installments of $20,979.91  each,  beginning on the first day of the second full
calendar month following the date of this Note (or on the first day of the first
full calendar month  following the date hereof,  in the event the advance of the
principal  amount  evidenced by this Note is the first day of a calendar  month)
(the "First  Payment  Date"),  and continuing on the first day of each and every
calendar  month  thereafter  through and  including  September 1, 2010 (each,  a
"Payment  Date").  On  October  1,  2010  (the  "Maturity  Date"),   the  entire
outstanding  principal  balance  hereof,  together  with all  accrued but unpaid
interest thereon, shall be due and payable in full.

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     1.3.  Application  of  Payments.  So  long  as  no  Event  of  Default  (as
hereinafter  defined)  exists  hereunder or under any other Loan Document,  each
such  monthly  installment  shall be applied  first,  to any  amounts  hereafter
advanced by Payee  hereunder or under any other Loan  Document,  second,  to any
late fees and other amounts  payable to Payee,  third, to the payment of accrued
interest and last to reduction of principal.

     1.4.  Payment of "Short  Interest".  If the advance of the principal amount
evidenced  by this Note is made on a date other than the first day of a calendar
month,  Maker shall pay to Payee  contemporaneously  with the  execution  hereof
interest  at the Note  Rate  for a period  from  the  date  hereof  through  and
including the last day of this calendar month.

     1.5. Prepayment; Defeasance.

          (a) This  Note may not be  prepaid,  in  whole or in part  (except  as
otherwise  specifically  provided herein),  at any time. In the event that Maker
wishes to have the Security Property (as hereinafter  defined) released from the
lien of the Security  Instrument (as hereinafter  defined),  Maker's sole option
shall be a Defeasance (as  hereinafter  defined) upon  satisfaction of the terms
and conditions  set forth in Section 1.5(d) hereof.  This Note may be prepaid in
whole but not in part without  premium or penalty on any Payment Date  occurring
within three (3) months prior to the Maturity Date  provided (i) written  notice
of such  prepayment  is received by Payee not more than ninety (90) days and not
less than thirty (30) days prior to the date of such  prepayment,  and (ii) such
prepayment  is  accompanied  by  all  interest  accrued  hereunder  through  and
including the date of such  prepayment and all other sums due hereunder or under
the other Loan  Documents.  If, upon any such permitted  prepayment on a Payment
Date occurring within three (3) months prior to the Maturity Date, the aforesaid
prior written notice has not been timely received by Payee, there shall be due a
prepayment  fee equal to, an amount equal to the lesser of (i) thirty (30) days'
interest computed at the Note Rate on the outstanding  principal balance of this
Note so prepaid and (ii) interest  computed at the Note Rate on the  outstanding
principal  balance of this Note so prepaid  that would have been payable for the
period from, and including,  the date of prepayment through the Maturity Date of
this Note as though such prepayment had not occurred.

          (b) If,  prior to the date which is two (2) years  after the  "startup
day," within the meaning of Section 860G(a) (9) of the Internal  Revenue Code of
1986, as amended from time to time or any successor  statute (the "Code"),  of a
"real estate  mortgage  investment  conduit" (a "REMIC"),  within the meaning of
Section 860D of the Code, that holds this Note (the "Lockout  Expiration Date"),
the indebtedness evidenced by this Note shall have been declared due and payable
by Payee  pursuant  to  Article  II hereof or the  provisions  of any other Loan
Document due to the existence of an Event of Default (as defined in the Security
Instrument) by Maker,  then, in addition to the  indebtedness  evidenced by this
Note being immediately due and payable, there shall also then be immediately due
and  payable  a sum  equal to the  interest  which  would  have  accrued  on the
principal  balance  of  this  Note  at the  Note  Rate  from  the  date  of such
acceleration to the Lock-out  Expiration Date, together with a prepayment fee in
an amount equal to the Yield Maintenance Premium (as hereinafter  defined) based
on  the  entire  indebtedness  on  the  date  of  such  acceleration.   If  such
acceleration is on or following the

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Lock-out  Expiration  Date,  the Yield  Maintenance  Premium  shall also then be
immediately   due  and  payable  as  though  Maker  were  prepaying  the  entire
indebtedness  on the  date of such  acceleration.  In  addition  to the  amounts
described in the two preceding sentences,  in the event of any such acceleration
or tender of payment of such  indebtedness  occurs or is made on or prior to the
first  (1st)  anniversary  of the date of this  Note,  there  shall also then be
immediately  due and payable an additional  prepayment fee of three percent (3%)
of the  principal  balance of this Note.  The term "Yield  Maintenance  Premium"
shall  mean an amount  equal to the  greater  of (A) two  percent  (2.0%) of the
principal  amount  being  prepaid,  and (B) the  present  value of a  series  of
payments each equal to the Payment  Differential  (as  hereinafter  defined) and
payable on each Payment Date over the  remaining  original term of this Note and
on the Maturity  Date,  discounted  at the  Reinvestment  Yield (as  hereinafter
defined) for the number of months remaining as of the date of such prepayment to
each such Payment Date and the Maturity  Date.  The term "Payment  Differential"
shall  mean an amount  equal to (i) the Note Rate less the  Reinvestment  Yield,
divided  by  (ii)  twelve  (12)  and  multiplied  by  (iii)  the  principal  sum
outstanding  under this Note after  application of the constant  monthly payment
due under this Note on the date of such  prepayment,  provided  that the Payment
Differential shall in no event be less than zero. The term "Reinvestment  Yield"
shall mean an amount  equal to the lesser of (i) the yield on the U.S.  Treasury
issue (primary issue) with a maturity date closest to the Maturity Date, or (ii)
the yield on the U.S.  Treasury issue  (primary  issue) with a term equal to the
remaining  average life of the  indebtedness  evidenced by this Note,  with each
such yield being based on the bid price for such issue as  published in the Wall
Street  Journal on the date that is fourteen (14) days prior to the date of such
prepayment  set forth in the notice of prepayment  (or, if such bid price is not
published on that date,  the next  preceding  date on which such bid price is so
published) and converted to a monthly  compounded  nominal  yield.  In the event
that  any  prepayment  fee is due  hereunder,  Payee  shall  deliver  to Maker a
statement setting forth the amount and determination of the prepayment fee, and,
provided  that Payee  shall have in good faith  applied  the  formula  described
above, Maker shall not have the right to challenge the calculation or the method
of calculation set forth in any such statement in the absence of manifest error,
which  calculation  may be made by Payee on any day during the fifteen  (15) day
period  preceding the date of such  prepayment.  Payee shall not be obligated or
required  to have  actually  reinvested  the  prepaid  principal  balance at the
Reinvestment Yield or otherwise as a condition to receiving the prepayment fee.

          (c) Partial  prepayments  of this Note shall not be permitted,  except
for partial  prepayments  resulting from Payee's  election to apply insurance or
condemnation  proceeds to reduce the outstanding  principal balance of this Note
as provided in the  Security  Instrument,  in which event no  prepayment  fee or
premium  shall be due  unless,  at the time of either  Payee's  receipt  of such
proceeds  or the  application  of such  proceeds  to the  outstanding  principal
balance of this Note, an Event of Default, or an event which, with notice or the
passage of time,  or both,  would  constitute  an Event of  Default,  shall have
occurred,  which  default  or Event of Default is  unrelated  to the  applicable
casualty  or  condemnation,  in which  event the  applicable  prepayment  fee or
premium  shall be due and payable  based upon the amount of the  prepayment.  No
notice of prepayment shall be required under the circumstances  specified in the
preceding  sentence.  No principal  amount  repaid may be  reborrowed.  Any such
partial  prepayments  of  principal  shall be applied  to the  unpaid  principal
balance evidenced hereby but such application shall not reduce the amount of the
fixed monthly installments required to be paid pursuant to Section 1.2 above

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until all principal is paid in full. Except as otherwise  expressly  provided in
this Section  1.5(c) and in Section 1.5(b) above,  the prepayment  fees provided
above shall be due, to the extent permitted by applicable law, under any and all
circumstances  where  all or any  portion  of this  Note is  paid  prior  to the
Maturity Date,  whether such prepayment is voluntary or involuntary,  including,
without  limitation,  if such  prepayment  results from Payee's  exercise of its
rights upon the occurrence and  continuances of an Event of Default by Maker and
acceleration  of the  Maturity  Date  of  this  Note  (irrespective  of  whether
foreclosure  proceedings have been  commenced),  and shall be in addition to any
other sums due hereunder or under any of the other Loan Documents.  No tender of
a prepayment of this Note with respect to which a prepayment fee is due shall be
effective  unless such  prepayment is accompanied  by the applicable  prepayment
fee.

          (d) (i) At any time after the Lockout Expiration Date, and provided no
Event of Default has  occurred and is  continuing  hereunder or under any of the
other Loan Documents,  at Maker's  option,  Payee shall cause the release of the
Security  Property from the lien of the Security  Instrument  and the other Loan
Documents   specifically   related  to  this  Note  (a  "Defeasance")  upon  the
satisfaction of the following conditions:

              (A) Maker  shall give not more than ninety (90) days' or less than
       sixty (60) days' prior written notice to Payee  specifying the date Maker
       intends for the Defeasance to be consummated (the "Release Date"),  which
       date shall be a Payment Date.

              (B) All accrued and unpaid  interest  and all other sums due under
       this Note and under the other Loan Documents specifically related to this
       Note up to and  including  the  Release  Date shall be paid in full on or
       prior to the Release Date.

              (C) Maker shall deliver to Payee on or prior to the Release Date:

              (1)    a  sum  of  money  in  immediately   available  funds  (the
                     "Defeasance  Deposit") equal to twenty-five  percent (125%)
                     of the outstanding  principal  balance of this Note plus an
                     amount,   if  any,  which  together  with  the  outstanding
                     principal  balance of this  Note,  shall be  sufficient  to
                     enable  Payee  to  purchase,   through  means  and  sources
                     customarily  employed  and  available  to  Payee,  for  the
                     account of Maker, direct,  non-callable  obligations of the
                     United  States of America that provide for payments  prior,
                     but as close as possible, to all successive monthly Payment
                     Dates  occurring after the Release Date and to the Maturity
                     Date, with each such payment being equal to or greater than
                     the amount of the  corresponding  installment  of principal
                     and/or  interest  required  to  be  paid  under  this  Note
                     (including,  but not  limited  to, all  amounts  due on the
                     Maturity  Date) for the  balance  of the term  hereof  (the
                     "Defeasance  Collateral"),  each  of  which  shall  be duly
                     endorsed  by the  holder  thereof as  directed  by Payee or
                     accompanied by a written

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<PAGE>

                     instrument of transfer in form and  substance  satisfactory
                     to  Payee  in  its  sole  discretion  (including,   without
                     limitation,  such  instruments  as may be  required  by the
                     depository  institution  holding  such  securities  or  the
                     issuer   thereof,   as  the  case  may  be,  to  effectuate
                     book-entry  transfers  and pledges  through the  book-entry
                     facilities  of such  institution)  in order to perfect upon
                     the  delivery  of the  Defeasance  Security  Agreement  (as
                     hereinafter  defined) the first priority  security interest
                     in  the   Defeasance   Collateral  in  favor  of  Payee  in
                     conformity  with all  applicable  state  and  federal  laws
                     governing granting of such security interests.

              (2)    A pledge  and  security  agreement,  in form and  substance
                     satisfactory  to Payee in its sole  discretion,  creating a
                     first priority  security  interest in favor of Payee in the
                     Defeasance    Collateral    (the    "Defeasance    Security
                     Agreement"),  which shall provide, among other things, that
                     any excess received by Payee from the Defeasance Collateral
                     over  the  amounts  payable  by  Maker  hereunder  shall be
                     refunded to Maker promptly after each monthly Payment Date.

              (3)    A  certificate  of  Maker   certifying   that  all  of  the
                     requirements   of  Maker  set  forth  in  this   subsection
                     1.5(d)(i) have been satisfied.

              (4)    An opinion of counsel for Maker in form and  substance  and
                     delivered by counsel  reasonably  satisfactory  to Payee in
                     its sole discretion stating, among other things, that Payee
                     has a perfected  first  priority  security  interest in the
                     Defeasance  Collateral  and  that the  Defeasance  Security
                     Agreement is enforceable  against Maker in accordance  with
                     its terms.

              (5)    Maker  and  any   guarantor   or   indemnitor   of  Maker's
                     obligations  under the Loan  Documents  for which Maker has
                     recourse  liability  executes  and  delivers  to Payee such
                     documents and agreements as Payee shall reasonably  require
                     to  evidence  and  effectuate  the   ratification  of  such
                     recourse liability and guaranty or indemnity, respectively;
                     provided  that Maker and each such  guarantor or indemnitor
                     shall be released and relieved from any of its  obligations
                     under this Note and the other Loan  Documents and under any
                     guaranty or indemnity agreement executed in connection with
                     the loan  evidenced  by this  Note  for any acts or  events
                     occurring or obligations  arising after a Defeasance  which
                     are not caused by or  arising  out of an any acts or events
                     occurring or obligations arising prior to or simultaneously
                     with a Defeasance.

              (6)    An opinion of counsel for Payee,  prepared and delivered by
                     Payee  or  its  servicer  at  Maker's  reasonable  expense,
                     stating that any

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                     REMIC holding the loan evidenced by this Note in connection
                     with any Secondary  Market  Transaction  (as defined in the
                     Security  Instrument)  will not fail to maintain its status
                     as a REMIC as a result of such Defeasance.

              (7)    Evidence from any Rating Agency (as defined in the Security
                     Instrument)  confirming that such Defeasance and release of
                     the  Security  Property  from  the  lien  of  the  Security
                     Instrument       and      the       cross-default       and
                     cross-collateralization  provisions of the  Contemporaneous
                     Mortgages  (as  defined  in the  Security  Instrument)  and
                     Contemporaneous  Assignments  (as  defined in the  Security
                     Instrument)   shall  not   result  in  a   requalification,
                     reduction, downgrade, or withdrawal of any rating initially
                     assigned  or  to  be   assigned   in  a  Secondary   Market
                     Transaction,  or if no such  rating  has  been  issued,  in
                     Payee's good faith judgment, such Defeasance shall not have
                     an  adverse  affect on the level of  rating  obtainable  in
                     connection with the loan evidenced hereby.

              (8)    Such other certificates,  documents or instruments as Payee
                     may reasonably require.

              (9)    Payment of all reasonable fees, costs, expenses and charges
                     incurred by Payee in connection  with the Defeasance of the
                     Security  Property  and  the  purchase  of  the  Defeasance
                     Collateral,  including,  without limitation, all reasonable
                     legal fees and costs and expenses  incurred by Payee or its
                     agents in connection with release of the Security Property,
                     review   of  the   proposed   Defeasance   Collateral   and
                     preparation  of  the  Defeasance   Security  Agreement  and
                     related  documentation,  any revenue,  documentary,  stamp,
                     intangible   or  other  taxes,   charges  or  fees  due  in
                     connection with  substitution of the Defeasance  Collateral
                     for the  Security  Property  shall be paid on or before the
                     Release Date.  Without  limiting  Maker's  obligations with
                     respect thereto, Payee shall be entitled to deduct all such
                     fees,  costs,  expenses  and  charges  from the  Defeasance
                     Deposit  to the  extent of any  portion  of the  Defeasance
                     Deposit which exceeds the amount  necessary to purchase the
                     Defeasance Collateral.

              (D) In  connection  with  the  Defeasance  Deposit,  Maker  hereby
       authorizes  and directs  Payee  using the means and  sources  customarily
       employed and available to Payee to use the Defeasance Deposit to purchase
       for the  account of Maker the  Defeasance  Collateral.  Furthermore,  the
       Defeasance  Collateral shall be arranged such that payments received from
       such Defeasance  Collateral shall be paid directly to Payee to be applied
       on account of the  indebtedness  of this Note. Any part of the Defeasance
       Deposit in excess of the amount necessary to purchase

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       the Defeasance Collateral and to pay the other and related costs Maker is
       obligated to pay under this Section 1.5 shall be refunded to Maker.

              (E) After  giving  effect,  and as a condition  precedent,  to the
       release of the Security  Property from the lien of the Deed of Trust, (x)
       the debt service  coverage  ratio,  as  determined by Payee in connection
       with its customary  underwriting practices and procedures with respect to
       the Other  Mortgaged  Properties (as defined in the Security  Instrument)
       which remain subject to the lien of the  Contemporaneous  Mortgages after
       the release of the Security  Property is not less than the greater of (1)
       the debt service coverage ratio for the Security  Property and all of the
       Other Mortgaged  Properties  immediately  prior to the release or (2) the
       debt  service  coverage  ratio of the  Security  Property  and all  Other
       Mortgaged  Properties at the time of closing of the loan evidenced hereby
       (but in no event less than  1.45:1),  and (y) the loan to value  ratio of
       the  Other   Mortgaged   Properties   which  remain   encumbered  by  the
       Contemporaneous  Mortgages after the release of the Security Property, as
       reasonably  determined by Payee based on an appraisal  prepared by an MAI
       appraiser satisfactory to Payee at Maker's cost (and when determining the
       value, talking into account any limitations in the Security Instrument or
       any  Contemporaneous  Mortgages on the  principal  amount  secured by the
       Security Instrument or any Contemporaneous Mortgage), is not greater than
       60%.

              (ii)  Upon   compliance   with  the   requirements  of  subsection
       1.5(d)(i),  the Security  Property shall be released from the lien of the
       Security  Instrument  and the other Loan  Documents,  including,  without
       limitation the  cross-default and  cross-collateralization  provisions of
       the Contemporaneous  Mortgages and Contemporaneous  Assignments,  and the
       Defeasance Collateral shall constitute collateral which shall secure this
       Note  and all  other  obligations  under  the Loan  Documents,  including
       without limitation the Contemporaneous  Notes (as defined in the Security
       Instrument),    the   Contemporaneous   Mortgages   and   Contemporaneous
       Assignments.  Payee  will,  at Maker's  reasonable  expense,  execute and
       deliver any agreements  reasonably requested by Maker to release the lien
       of the Security Instrument from the Security Property.

              (iii) Upon the release of the Security Property in accordance with
       this Section  1.5(d),  Maker shall assign all its  obligations and rights
       under this Note,  together with the pledged Defeasance  Collateral,  to a
       newly created  successor  entity which complies with the terms of Section
       1.33 of the Security Instrument designated by Maker and approved by Payee
       in its sole discretion. Such successor entity shall execute an assumption
       agreement  in form  and  substance  satisfactory  to  Payee  in its  sole
       discretion  pursuant to which it shall assume Maker's  obligations  under
       this Note and the Defeasance  Security  Agreement.  As conditions to such
       assignment and assumption, Maker shall (x) deliver to Payee an opinion of
       counsel in form and substance and  delivered by counsel  satisfactory  to
       Payee in its sole  discretion  stating,  among  other  things,  that such
       assumption  agreement is  enforceable  against  Maker and such  successor
       entity in accordance with its terms and that this Note and the Defeasance
       Security Agreement as so assumed,  are enforceable against such successor
       entity in accordance with their respective terms, and

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<PAGE>

       (y) pay all costs and expenses (including, but not limited to, reasonable
       legal  fees)  incurred  by Payee or its  agents in  connection  with such
       assignment and assumption (including,  without limitation,  the review of
       the proposed  transferee and the preparation of the assumption  agreement
       and related documentation). Upon such assumption, Maker shall be relieved
       of its obligations  hereunder,  under the other Loan Documents other than
       as  specified  in  Section  1.5(d)(C)(5)  above and under the  Defeasance
       Security Agreement.

              (iv) As consideration  for Payee's  agreement to modify the single
       asset provisions of Section 1.33 of the Security  Instrument,  and permit
       Maker  to own  all of the  Security  Property  and  the  Other  Mortgaged
       Properties,  in the event of a Defeasance in accordance with this Section
       1.5(d),  Maker must convey the Security Property to a different ownership
       entity (with neither the Security Property nor the proposed new ownership
       entity being owned by Maker).

     1.6. Security; Cross-Collateralization.  The indebtedness evidenced by this
Note and the obligations created hereby are secured by, among other things, that
certain  mortgage,  deed of trust or deed to secure debt and security  agreement
(the "Security  Instrument") from Maker for the benefit of Payee,  dated of even
date  herewith,  covering  property  located in Salt Lake County,  Utah, and the
Contemporaneous Mortgages and the Contemporaneous Assignments.  Some of the Loan
Documents  are to be filed  for  record  on or  about  the  date  hereof  in the
appropriate  public  records.  Maker  acknowledges  that Payee has made the loan
evidenced by this Note to Maker upon the security of its collective  interest in
the Security  Property and the Other  Mortgaged  Properties and in reliance upon
the aggregate of the Security Property and the Other Mortgaged  Properties taken
together  being of  greater  value as  collateral  security  than the sum of the
Security Property and Other Mortgaged Properties taken separately.  Maker agrees
that this Note and the Security Instrument are and will be  cross-collateralized
and  cross-defaulted   with  the  Contemporaneous   Notes,  the  Contemporaneous
Mortgages and Contemporaneous Assignments.

                              ARTICLE II. - DEFAULT

     2.1. Events of Default;  Cross-Default.  It is hereby expressly agreed that
should any default  occur in the payment of principal or interest as  stipulated
above  and such  payment  is not made  within  seven  (7) days of the date  such
payment is due  (provided  that no grace  period is provided  for the payment of
principal and interest due on the Maturity  Date),  or should any other Event of
Default occur and be continuing,  the indebtedness  evidenced hereby,  including
all sums advanced or accrued hereunder or under any other Loan Document, and all
unpaid  interest  accrued  thereon,  shall,  at the option of Payee and  without
notice to Maker, at once become due and payable and may be collected  forthwith,
whether or not there has been a prior demand for payment and  regardless  of the
stipulated date of maturity.

     2.2. Late  Charges.  In the event that any payment is not received by Payee
within  seven (7) days of the date when due,  then,  in  addition to any default
interest payments due hereunder,  Maker shall also pay to Payee a late charge in
an amount equal to five percent (5%) of the amount of such overdue payment.

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<PAGE>

     2.3.  Default  Interest  Rate.  So  long as any  Event  of  Default  exists
hereunder,  regardless of whether or not there has been an  acceleration  of the
indebtedness   evidenced  hereby,  and  at  all  times  after  maturity  of  the
indebtedness  evidenced hereby (whether by acceleration or otherwise),  interest
shall accrue on the  outstanding  principal  balance of this Note, from the date
due until the date  credited,  at a rate per annum equal to four percent (4%) in
excess of the Note  Rate,  or, if such  increased  rate of  interest  may not be
collected under  applicable  law, then at the maximum rate of interest,  if any,
which may be collected from Maker under  applicable  law (the "Default  Interest
Rate"), and such default interest shall be immediately due and payable.

     2.4.  Maker's  Agreements.  Maker  acknowledges  that it would be extremely
difficult or  impracticable to determine  Payee's actual damages  resulting from
any late  payment or default,  and such late  charges and default  interest  are
reasonable  estimates  of those  damages and do not  constitute  a penalty.  The
remedies of Payee in this Note or in the Loan Documents, or at law or in equity,
shall be cumulative and concurrent,  and may be pursued singly,  successively or
together, in Payee's discretion.

     2.5.  Maker to Pay Costs.  In the event that this Note, or any part hereof,
is collected by or through an attorney-at-law,  Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees.

     2.6.  Exculpation.  Notwithstanding  anything  in  this  Note  or the  Loan
Documents to the contrary,  but subject to the  qualifications  hereinbelow  set
forth, Payee agrees that:

              (a) Maker shall be liable upon the  indebtedness  evidenced hereby
and for the  other  obligations  arising  under the Loan  Documents  to the full
extent  (but  only to the  extent)  of the  security  provided  for in the  Loan
Documents,  the same being all  properties  (whether real or personal),  rights,
estates and interests now or at any time hereafter  securing the payment of this
Note and/or the other obligations of Maker under the Loan Documents  pursuant to
the terms thereof (collectively, the "Security Property");

          (b) if a default occurs in the timely and proper payment of all or any
part  of  such  indebtedness  evidenced  hereby  or in  the  timely  and  proper
performance  of the other  obligations  of Maker under the Loan  Documents,  any
judicial  proceedings  brought by Payee  against  Maker  shall be limited to the
preservation,  enforcement  and  foreclosure,  or any  thereof,  of  the  liens,
security titles, estates,  assignments,  rights and security interests now or at
any  time  hereafter  securing  the  payment  of  this  Note  and/or  the  other
obligations of Maker under the Loan Documents pursuant to the terms thereof, and
no  attachment,  execution or other writ of process  shall be sought,  issued or
levied upon any  assets,  properties  or funds of Maker other than the  Security
Property,  except with respect to the liability described below in this section;
and

          (c) in the event of a  foreclosure  of such  liens,  security  titles,
estates, assignments,  rights or security interests with respect to the Security
Property securing the payment of this Note and/or the other obligations of Maker
under the Loan Documents,  no judgment for any deficiency upon the  indebtedness
evidenced hereby shall be sought or obtained by Payee against Maker, except with
respect to the liability  described  below in this section;  provided,  however,
that, notwithstanding the foregoing provisions of this section, Maker shall be

                                       9
<PAGE>

fully and personally  liable and subject to legal action (i) for  misapplication
or  misappropriation  by Maker of proceeds paid under any insurance policies (or
paid to Maker as a result of any  other  claim or cause of  action  against  any
person or entity) by reason of damage, loss or destruction to all or any portion
of the Security  Property,  to the full extent of such  proceeds not  previously
delivered to Payee,  but which,  under the terms of the Loan  Documents,  should
have been delivered to Payee,  (ii) for  misapplication or  misappropriation  by
Maker of proceeds or awards  resulting from the  condemnation or other taking in
lieu of condemnation of all or any portion of the Security Property, to the full
extent of such proceeds or awards not previously  delivered to Payee, but which,
under the terms of the Loan  Documents,  should  have been  delivered  to Payee,
(iii) for  misapplication  or  misappropriation  by Maker of all tenant security
deposits  or other  refundable  deposits  paid to or held by Maker or any  other
person or entity under the control or direction of Maker,  if any, in connection
with leases of all or any portion of the Security Property which are not applied
in accordance with the terms of the applicable  lease or other  agreement,  (iv)
for misapplication or  misappropriation of rent and other payments received from
tenants  under leases of all or any portion of the Security  Property  paid more
than one (1)  month in  advance,  except  as  otherwise  expressly  provided  or
permitted in the Percentage Lease (as defined in the Security  Instrument),  (v)
for misapplication or  misappropriation by Maker of rents,  issues,  profits and
revenues of all or any portion of the Security Property received by Maker or any
other  person or  entity  under  the  control  or  direction  of Maker  that are
applicable  to a period after the  occurrence  and  continuance  of any Event of
Default or any event which,  with notice or the passage of time, or both,  would
constitute an Event of Default,  hereunder or under the Loan Documents which are
not  either   applied  to  the  ordinary  and  necessary   expenses  or  capital
expenditures  in connection  with owning and operating the Security  Property or
paid to Payee or otherwise as  contemplated  or permitted by the Loan Documents,
(vi) for waste  committed  on the  Security  Property,  damage  to the  Security
Property as a result of the intentional  misconduct or gross negligence of Maker
or any of its  officers,  general  partners  or  members,  as the  case  may be,
Indemnitor (as defined in the Indemnity Agreement (as hereinafter defined)),  or
any agent or employee of any such persons,  or any removal of any portion of the
Security  Property  not  repaired as required by the Loan  Documents  (except as
otherwise  provided in the Percentage  Lease),  in violation of the terms of the
Loan Documents, to the full extent of the losses or damages actually incurred by
Payee on account of such occurrence, (vii) for failure by Maker to pay any valid
taxes, assessments,  mechanic's liens,  materialmen's liens or other liens which
could  create  liens on any  portion of the  Security  Property  which  would be
superior to the lien or security  title of the Security  Instrument or the other
Loan Documents  except,  with respect to any such taxes or  assessments,  to the
extent that funds have been  deposited  with Payee  pursuant to the terms of the
Security Instrument specifically for the applicable taxes or assessments and not
applied by Payee to pay such taxes and  assessments,  (viii) for all obligations
and  indemnities of Maker under Section 1.31 of the Security  Instrument and the
Environmental Indemnity Agreement (as hereinafter defined) relating to hazardous
or  toxic  substances  or  radon  or  compliance  with  environmental  laws  and
regulations,  and (ix) for  fraud,  material  misrepresentation  or  failure  to
disclose a material  fact by Maker or any of its officers,  general  partners or
members,  as the case may be, Indemnitor or any agent,  employee or other person
authorized  to make  statements,  representations  or  disclosures  on behalf of
Maker, any officer,  general partner or member,  as the case may be, of Maker or
Indemnitor,  to the full extent of any losses,  damages  and  expenses  actually
incurred by Payee on account  thereof.  Nothing  contained in this section shall
(1) be deemed to be a release or impairment of the indebtedness evidenced

                                       10
<PAGE>

by this Note or the other  obligations  of Maker under the Loan Documents or the
lien of the Loan  Documents  upon the Security  Property,  or (2) preclude Payee
from  foreclosing  the Loan  Documents  in case of any Event of  Default or from
enforcing any of the other rights of Payee except as stated in this section,  or
(3)  limit or  impair  in any way  whatsoever  (A) the  Indemnity  and  Guaranty
Agreement  (the  "Indemnity  Agreement")  or  (B)  the  Environmental  Indemnity
Agreement (the "Environmental Indemnity Agreement"),  each of even date herewith
executed and delivered in  connection  with the  indebtedness  evidenced by this
Note or release,  relieve,  reduce,  waive or impair in any way whatsoever,  any
obligation  of  any  party  to the  Indemnity  Agreement  or  the  Environmental
Indemnity Agreement.

     Notwithstanding  anything  to the  contrary  in  this  Note,  the  Security
Instrument or any of the other Loan Documents, Payee shall not be deemed to have
waived any right which Payee may have under Section 506(a),  506(b),  1111(b) or
any other  provisions of the U.S.  Bankruptcy  Code to file a claim for the full
amount  of  the  indebtedness  evidenced  hereby  or  secured  by  the  Security
Instrument or any of the other Loan  Documents or to require that all collateral
shall  continue to secure all of the  indebtedness  owing to Payee in accordance
with this Note, the Security Instrument and the other Loan Documents.

                        ARTICLE III. - GENERAL CONDITIONS

     3.1.  No  Waiver;  Amendment.  No failure to  accelerate  the  indebtedness
evidenced hereby by reason of default hereunder, acceptance of a partial or past
due payment,  or indulgences granted from time to time shall be construed (i) as
a novation  of this Note or as a  reinstatement  of the  indebtedness  evidenced
hereby or as a waiver  of such  right of  acceleration  or of the right of Payee
thereafter to insist upon strict compliance with the terms of this Note, or (ii)
to prevent the exercise of such right of acceleration or any other right granted
hereunder  or by any  applicable  laws;  and Maker hereby  expressly  waives the
benefit  of any  statute  or rule of law or equity  now  provided,  or which may
hereafter be provided,  which would produce a result  contrary to or in conflict
with the foregoing. No extension of the time for the payment of this Note or any
installment  due  hereunder  made by agreement  with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the  original  liability  of Maker  under this Note,  either in
whole or in part, unless Payee agrees otherwise in writing. This Note may not be
changed orally,  but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.

     3.2.  Waivers.  Presentment  for  payment,  demand,  protest  and notice of
demand, protest and nonpayment and all other notices are hereby waived by Maker.
Maker hereby further waives and  renounces,  to the fullest extent  permitted by
law, all rights to the benefits of any  moratorium,  reinstatement,  marshaling,
forbearance, valuation, stay, extension, redemption, appraisement, exemption and
homestead now or hereafter  provided by the  Constitution and laws of the United
States of America and of each state thereof, both as to itself and in and to all
of its property,  real and personal,  against the  enforcement and collection of
the obligations evidenced by this Note or the other Loan Documents.

     3.3.  Limit of Validity.  The provisions of this Note and of all agreements
between Maker and Payee,  whether now existing or hereafter  arising and whether
written or oral,

                                       11
<PAGE>

including,  but not limited to, the Loan Documents, are hereby expressly limited
so that in no  contingency or event  whatsoever,  whether by reason of demand or
acceleration  of the  maturity  of this  Note or  otherwise,  shall  the  amount
contracted for, charged, taken, reserved, paid or agreed to be paid to Payee for
the  use,  forbearance  or  detention  of  the  money  loaned  under  this  Note
("Interest")  exceed the maximum amount  permissible  under  applicable law. If,
from any  circumstance  whatsoever,  performance or fulfillment of any provision
hereof  or of  any  agreement  between  Maker  and  Payee  shall,  at  the  time
performance or fulfillment of such provision  shall be due, exceed the limit for
Interest  prescribed  by  law or  otherwise  transcend  the  limit  of  validity
prescribed by applicable law, then,  ipso facto,  the obligation to be performed
or  fulfilled  shall be reduced to such  limit,  and if,  from any  circumstance
whatsoever,  Payee  shall ever  receive  anything  of value  deemed  Interest by
applicable law in excess of the maximum  lawful  amount,  an amount equal to any
excessive  Interest  shall be applied to the reduction of the principal  balance
owing under this Note in the inverse order of its maturity  (whether or not then
due) or, at the option of Payee,  be paid over to Maker,  and not to the payment
of  Interest.  All Interest  (including  any amounts or payments  judicially  or
otherwise under the law deemed to be Interest)  contracted for, charged,  taken,
reserved,  paid or agreed to be paid to Payee shall, to the extent  permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of this Note, including any extensions and renewals hereof until payment in
full of the principal balance of this Note so that the Interest thereon for such
full term will not exceed at any time the maximum amount permitted by applicable
law. Additionally, to the extent permitted by applicable law now or hereafter in
effect,  Payee may,  at its option  and from time to time,  implement  any other
method of computing the maximum  lawful rate under the law of the State in which
the Security Property is located or under other applicable law by giving notice,
if required,  to Maker as provided by applicable law now or hereafter in effect.
This Section 3.3 will control all agreements between Maker and Payee.

     3.4. Use of Funds. Maker hereby warrants, represents and covenants that the
funds disbursed hereunder shall be used for business purposes.

     3.5.  Unconditional  Payment.  Maker  is  and  shall  be  obligated  to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement,  postponement,  diminution or deduction and without any reduction for
counterclaim  or setoff.  In the event that at any time any payment  received by
Payee  hereunder  shall be deemed by a court of competent  jurisdiction  to have
been a  voidable  preference  or  fraudulent  conveyance  under any  bankruptcy,
insolvency or other debtor relief law, then the  obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Maker and shall not be discharged or satisfied with any prior payment thereof or
cancellation  of this  Note,  but shall  remain a valid and  binding  obligation
enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.

     3.6. Governing Law. THIS NOTE SHALL BE INTERPRETED,  CONSTRUED AND ENFORCED
ACCORDING TO THE LAWS OF THE STATE IN WHICH THE SECURITY PROPERTY IS LOCATED.

                                       12
<PAGE>

     3.7.  Waiver of Jury Trial.  MAKER,  TO THE FULL EXTENT  PERMITTED  BY LAW,
HEREBY  KNOWINGLY,  INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES 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  EVIDENCED BY THIS NOTE OR ANY CONDUCT,  ACT OR OMISSION OF
PAYEE  OR  MAKER,  OR ANY OF THEIR  RESPECTIVE  DIRECTORS,  OFFICERS,  PARTNERS,
MEMBERS,  EMPLOYEES,  AGENTS OR ATTORNEYS,  OR ANY OTHER PERSONS AFFILIATED WITH
PAYEE OR MAKER, IN EACH OR THE FOREGOING  CASES,  WHETHER  SOUNDING IN CONTRACT,
TORT OR OTHERWISE.

     3.8.  Secondary  Market.  Payee may sell,  transfer  and  deliver  the Loan
Documents  to  one or  more  investors  in the  secondary  mortgage  market.  In
connection  with such  sale,  Payee may  retain  or  assign  responsibility  for
servicing  the loan  evidenced by this 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.

     3.9. Dissemination of Information. If Payee determines at any time to sell,
transfer  or assign  this  Note,  the  Security  Instrument  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"),  Payee 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 (as defined in
the Security  Instrument) rating such Securities,  each prospective Investor and
each of the foregoing's  respective counsel, all documents and information which
Payee now has or may hereafter  acquire  relating to the debt  evidenced by this
Note and to Maker,  Indemnitor and the Security Property,  which shall have been
furnished by Maker or Indemnitor as Payee determines necessary or desirable.

                     ARTICLE IV. - MISCELLANEOUS PROVISIONS

     4.1. The terms and provisions hereof shall be binding upon and inure to the
benefit  of Maker  and  Payee  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 Note.  This Note 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.

     4.2. Maker's Tax Identification Number is [PENDING] .

             [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       13
<PAGE>

     IN  WITNESS  WHEREOF,  Maker has  executed  this Note as of the date  first
written above.

                                     MAKER:
                                     ------

                                     APPLE SUITES SPE I, INC.,
                                     a Virginia corporation

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

<PAGE>

                                ADDENDUM TO NOTE
                                     (Utah)

     BY INITIALING  BELOW,  MAKER EXPRESSLY  ACKNOWLEDGES AND UNDERSTANDS  THAT,
PURSUANT TO THE TERMS OF THIS NOTE, IT HAS AGREED THAT IT HAS NO RIGHT TO PREPAY
THIS NOTE PRIOR TO THE LOCKOUT  EXPIRATION  DATE AND THAT IT SHALL BE LIABLE FOR
THE PAYMENT OF ANY PREPAYMENT FEES OR PREMIUMS, INCLUDING YIELD MAINTENANCE, FOR
PREPAYMENT OF THIS NOTE UPON  ACCELERATION  OF THIS NOTE IN ACCORDANCE  WITH ITS
TERMS.  FURTHER,  BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDER
UTAH LAW TO PREPAY THIS NOTE AND EXPRESSLY  ACKNOWLEDGES  AND  UNDERSTANDS  THAT
PAYEE HAS MADE THE LOAN EVIDENCED BY THIS NOTE IN RELIANCE ON THE AGREEMENTS AND
WAIVER OF MAKER AND THAT PAYEE  WOULD NOT HAVE MADE THE LOAN  EVIDENCED  BY THIS
NOTE WITHOUT SUCH AGREEMENTS AND WAIVER OF MAKER.

                                                /s/ GMK
                                                ------------------------
                                                Maker's Initials

                                       2EXHIBIT 10.103

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

                        INDEMNITY AND GUARANTY AGREEMENT

         THIS INDEMNITY AND GUARANTY  AGREEMENT (this  "Agreement"),  made as of
September 8, 2000 by APPLE SUITES, INC., a Virginia corporation  ("Indemnitor"),
whose address is 9 North Third Street,  Richmond,  Virginia 23219, Attention: S.
J.  Olander,  in  favor  of  FIRST  UNION  NATIONAL  BANK,  a  national  banking
association  ("Lender"),  whose address is One First Union Center DC-6 (NC0166),
Charlotte, North Carolina 28288-0166,  Attention: William J. Cohane, Real Estate
Capital Markets Contract Finance.

                              W I T N E S S E T H:

         WHEREAS, Apple Suites SPE I, Inc., a Virginia corporation ("Borrower"),
has  obtained a loan (the  "Loan") in the  principal  amount of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00) from Lender; and

         WHEREAS,  the Loan is evidenced by a Promissory Note (the "Note") dated
of even date herewith,  executed by Borrower and payable to the order of Lender,
in the stated  principal  amount of Two Million Five Hundred Thousand and No/100
Dollars  ($2,500,000.00),  and is secured by a Deed of Trust, Security Agreement
and UCC Fixture  Filing dated of even date  herewith  (the "Deed of Trust") from
Borrower  for the benefit of Lender,  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, together with the buildings, structures and other improvements now or
hereafter   located  thereon  (the   "Property")  and  by  other  documents  and
instruments  described on Exhibit A hereto, as the same may from time to time be
amended,  consolidated,  renewed or  replaced,  being  collectively  referred to
herein as (the "Loan Documents"); and

         WHEREAS,  as a  condition  to making the Loan to  Borrower,  Lender has
required that Indemnitor indemnify Lender from and against and guarantee payment
to Lender of those items for which Borrower has recourse liability and for which
Lender has recourse against Borrower under the terms of Section 2.6 of the Note;
and

         WHEREAS,  Indemnitor is the sole shareholder of Borrower, the extension
of the Loan to Borrower is of substantial  benefit to Indemnitor and, therefore,
Indemnitor desires to indemnify Lender from and against and guarantee payment to
Lender of those  items for which  Borrower  is  personally  liable and for which
Lender has recourse against Borrower under the terms of the Note and the Deed of
Trust.

         NOW, THEREFORE,  to induce Lender to extend the Loan to Borrower and in
consideration  of the  foregoing  premises  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:

<PAGE>

         1. Indemnity and Guaranty.  Indemnitor  hereby  assumes  liability for,
hereby guarantees  payment to Lender of, hereby agrees to pay,  protect,  defend
and save Lender harmless from and against,  and hereby  indemnifies  Lender from
and against any and all liabilities,  obligations,  losses,  damages,  costs and
expenses (including, without limitation,  reasonable attorneys' fees), causes of
action,  suits,  claims,  demands  and  judgments  of any nature or  description
whatsoever  (collectively,  "Costs")  which may at any time be actually  imposed
upon, incurred by or awarded against Lender as a result of:

            (a) Misapplication or  misappropriation by Borrower of proceeds paid
under any insurance policies (or paid to Borrower as a result of any other claim
or cause of action  against  any person or entity) by reason of damage,  loss or
destruction  to all or any portion of the  Property,  to the full extent of such
proceeds not previously  delivered to Lender,  but which, under the terms of the
Loan Documents, should have been delivered to Lender;

            (b)  Misapplication or  misappropriation  by Borrower of proceeds or
awards  resulting from the  condemnation or other taking in lieu of condemnation
of all or any portion of the  Property  to the full  extent of such  proceeds or
awards not  previously  delivered to Lender,  but which,  under the terms of the
Loan Documents, should have been delivered to Lender;

            (c)  Misapplication  or  misappropriation  by Borrower of all tenant
security  deposits or other  refundable  deposits paid to or held by Borrower or
any other person or entity  under the control or direction of Borrower,  if any,
in connection  with leases of all or any portion of the Property,  which are not
applied in accordance with the terms of the applicable lease or other agreement;

            (d) Misapplication or misappropriation by Borrower of rent and other
payments  received  from  tenants  under  leases  of all or any  portion  of the
Property paid more than one (1) month in advance,  except as otherwise expressly
provided or permitted in the Percentage Lease (as defined in the Deed of Trust);

            (e) Misapplication or misappropriation by Borrower of rents, issues,
profits and revenues of all or any portion of the Property  received by Borrower
or any other person or entity  under the control or  direction of Borrower  that
are applicable to a period after the  occurrence and  continuance of an Event of
Default under the Loan Documents,  or any event which with notice or the passage
of time, or both,  would  constitute  an Event of Default,  which are not either
applied to the  ordinary  and  necessary  expenses  or capital  expenditures  in
connection with owning and operating the Property or paid to Lender or otherwise
as contemplated or permitted by the Loan Documents;

            (f) Waste committed on the Property,  or damage to the Property as a
result of the intentional  misconduct or gross  negligence of Borrower or any of
its officers,  general partners or members,  as the case may be, Indemnitor,  or
any agent or employee of any such persons,  or any removal of any portion of the
Property  not  repaired as required by the Loan  Documents  (except as otherwise
provided  in the  Percentage  Lease)  in  violation  of the  terms  of

                                       2
<PAGE>

the Loan  Documents,  to the full  extent  of the  losses  or  damages  actually
incurred by Lender on account of such occurrence;

            (g)  Failure  by  Borrower  to pay  any  valid  taxes,  assessments,
mechanic's liens, materialmen's liens or other liens which could create liens on
any  portion of the  Property  which  would be  superior to the lien or security
title of the Deed of Trust or the other Loan Documents  except,  with respect to
any such taxes or assessments, to the extent that funds have been deposited with
Lender  pursuant  to the  terms  of the  Deed  of  Trust  specifically  for  the
applicable  taxes or assessments and not applied by Lender to pay such taxes and
assessments;

            (h) All  obligations  and indemnities of Borrower under Section 1.31
of the Deed of Trust and the  Environmental  Indemnity  Agreement (as defined in
the Note) relating to hazardous or toxic  substances or radon or compliance with
environmental laws and regulations; and

            (i) Fraud,  material  misrepresentation  or  failure  to  disclose a
material fact by Borrower or any of its officers,  general  partners or members,
as the  case  may  be,  Indemnitor,  or any  agent,  employee  or  other  person
authorized  to make  statements,  representations  or  disclosures  on behalf of
Borrower,  any  officer,  general  partner  or  member,  as the case may be,  of
Borrower, or Indemnitor,  to the full extent of any losses, damages and expenses
actually incurred by Lender on account thereof.

         This is a guaranty of payment and  performance  and not of  collection.
The liability of Indemnitor for Costs under this  Agreement  shall be direct and
immediate and not  conditional  or  contingent  upon the pursuit of any remedies
against  Borrower or any other  person  (including,  without  limitation,  other
guarantors,  if any), nor against the collateral for the Loan. Indemnitor waives
any right to require  that an action be brought  against  Borrower  or any other
person or to require  that resort be made to any  collateral  for the Loan or to
any balance of any deposit  account or credit on the books of Lender in favor of
Borrower or any other person.  In the event, on account of the Bankruptcy Reform
Act of 1978,  as amended,  or any other debtor  relief law  (whether  statutory,
common  law,  case law or  otherwise)  of any  jurisdiction  whatsoever,  now or
hereafter  in  effect,  which may be or  become  applicable,  Borrower  shall be
relieved of or fail to incur any debt,  obligation  or  liability as provided in
the Loan  Documents,  Indemnitor  shall  nevertheless  be fully liable for Costs
hereunder. In the event of a default under the Loan Documents which is not cured
within  any  applicable  grace or cure  period,  Lender  shall have the right to
enforce  its  rights,  powers  and  remedies  (including,   without  limitation,
foreclosure of all or any portion of the collateral for the Loan)  thereunder or
hereunder, in any order, and all rights, powers and remedies available to Lender
in such event shall be non-exclusive and cumulative of all other rights,  powers
and remedies  provided  thereunder  or hereunder or by law or in equity.  If the
Costs  guaranteed  hereby  are  partially  paid or  discharged  by reason of the
exercise  of any of the  remedies  available  to Lender,  this  Agreement  shall
nevertheless remain in full force and effect, and Indemnitor shall remain liable
for all  remaining  Costs  guaranteed  hereby,  even  though  any  rights  which
Indemnitor  may have against  Borrower may be  destroyed  or  diminished  by the
exercise of any such remedy.

                                       3
<PAGE>

         2. Indemnification Procedures.

            (a) If any action shall be brought  against Lender based upon \ny of
the  Costs for  which  Lender is  indemnified  hereunder,  Lender  shall  notify
Indemnitor in writing  thereof and Indemnitor  shall promptly assume the defense
thereof,  including,  without  limitation,  the employment of counsel reasonably
acceptable to Lender and the negotiation of any settlement;  provided,  however,
that any failure of Lender to notify  Indemnitor of such matter shall not impair
or reduce the obligations of Indemnitor hereunder. In the event Indemnitor shall
fail to  discharge or  undertake  to defend  Lender  against any Costs for which
Lender is  indemnified  hereunder,  Lender may, at its sole option and election,
defend or settle such claim,  loss or  liability,  and,  upon  reasonable  prior
written  notice to  Indemnitor,  Lender shall have the right,  at the expense of
Indemnitor  (which  expense  shall be  included  in Costs),  to employ  separate
counsel in any such  action  and to  participate  in the  defense  thereof.  The
liability of Indemnitor to Lender hereunder shall be conclusively established by
such settlement  (absent  manifest  error),  provided such settlement is made in
good  faith,  the  amount  of such  liability  to  include  both the  settlement
consideration  and  the  costs  and  expenses,  including,  without  limitation,
reasonable  attorneys' fees and  disbursements,  actually  incurred by Lender in
effecting such settlement. In such event, such settlement  consideration,  costs
and  expenses  shall be included in Costs and  Indemnitor  shall pay the same as
hereinafter provided.

            (b)  Indemnitor  shall not,  without  the prior  written  consent of
Lender, such consent not to be unreasonably  withheld or delayed:  (i) settle or
compromise any action, suit,  proceeding or claim or consent to the entry of any
judgment that does not include as an unconditional  term thereof the delivery by
the claimant or plaintiff  to Lender of a full and complete  written  release of
Lender  (in  form,  scope  and  substance  satisfactory  to  Lender  in its sole
discretion)  from all liability in respect of such action,  suit,  proceeding or
claim and a dismissal with prejudice of such action, suit,  proceeding or claim;
or (ii) settle or compromise any action, suit, proceeding or claim in any manner
that may adversely  affect  Lender or obligate  Lender to pay any sum or perform
any obligation as reasonably determined by Lender.

            (c) All Costs shall be immediately  reimbursable  to Lender when and
as incurred  and,  in the event of any  litigation,  claim or other  proceeding,
without any requirement of waiting for the ultimate  outcome of such litigation,
claim or other proceeding,  and Indemnitor shall pay to Lender any and all Costs
within ten (10) days after  receipt of written  notice from Lender  itemizing in
reasonable  detail the amounts thereof  incurred to the date of such notice.  In
addition  to any  other  remedy  available  for the  failure  of  Indemnitor  to
periodically pay such Costs, such Costs, if not paid within said ten-day period,
shall bear interest at the Default Interest Rate (as defined in the Note).

            3.  Reinstatement of Obligations.  If at any time all or any part of
any payment made by  Indemnitor or received by Lender from  Indemnitor  under or
with  respect to this  Agreement  is or must be  rescinded  or returned  for any
reason whatsoever (including, but not limited to, the insolvency,  bankruptcy or
reorganization  of Indemnitor or Borrower),  then the  obligations of Indemnitor
hereunder shall, to the extent of the payment  rescinded or returned,  be deemed
to have continued in existence,  notwithstanding  such previous  payment made by
Indemnitor,  or receipt of payment by Lender,  and the obligations of Indemnitor
hereunder shall continue to be

                                       4
<PAGE>

effective  or be  reinstated,  as the case may be,  as to such  payment,  all as
though such previous payment by Indemnitor had never been made.

         4. Waivers by Indemnitor.  To the extent  permitted by law,  Indemnitor
hereby waives and agrees not to assert or take advantage of:

            (a) Any right to require Lender to proceed  against  Borrower or any
other person or to proceed against or exhaust any security held by Lender at any
time or to  pursue  any  other  remedy  in  Lender's  power or under  any  other
agreement before proceeding against Indemnitor hereunder;

            (b) Any defense that may arise by reason of the incapacity,  lack of
authority,  death or disability of any other person or persons or the failure of
Lender  to file or  enforce  a claim  against  the  estate  (in  administration,
bankruptcy or any other proceeding) of any other person or persons;

            (c) Except as expressly  provided  herein,  demand,  presentment for
payment, notice of nonpayment,  protest, notice of protest and all other notices
of any  kind,  or the  lack of any  thereof,  including,  without  limiting  the
generality of the foregoing,  notice of the existence,  creation or incurring of
any new or additional  indebtedness or obligation or of any action or non-action
on the part of  Borrower,  Lender,  any  endorser  or creditor of Borrower or of
Indemnitor or on the part of any other person whomsoever under this or any other
Loan Document held by Lender;

            (d) Any defense based upon an election of remedies by Lender;

            (e) Any right or claim or right to cause a marshalling of the assets
of Indemnitor;

            (f) Any principle or provision of law, statutory or otherwise, which
is or might be in conflict with the terms and provisions of this Agreement;

            (g) Any duty on the part of Lender to  disclose  to  Indemnitor  any
facts  Lender  may  now or  hereafter  know  about  Borrower  or  the  Property,
regardless  of  whether  Lender  has  reason  to  believe  that any  such  facts
materially  increase the risk beyond that which Indemnitor  intends to assume or
has  reason to  believe  that such  facts are  unknown  to  Indemnitor  or has a
reasonable  opportunity  to  communicate  such  facts  to  Indemnitor,  it being
understood and agreed that Indemnitor is fully responsible for being and keeping
informed  of the  financial  condition  of  Borrower,  of the  condition  of the
Property and of any and all circumstances bearing on the risk that liability may
be incurred by Indemnitor hereunder;

            (h) Any lack of notice of disposition or of manner of disposition of
any collateral for the Loan;

            (i) Any invalidity, irregularity or unenforceability, in whole or in
part, of any one or more of the Loan Documents;

                                       5
<PAGE>

            (j) Any  lack of  commercial  reasonableness  in  dealing  with  the
collateral for the Loan;

            (k)  Any  deficiencies  in  the  collateral  for  the  Loan  or  any
deficiency in the ability of Lender to collect or to obtain performance from any
persons or entities now or hereafter  liable for the payment and  performance of
any obligation hereby guaranteed;

            (l) An assertion  or claim that the  automatic  stay  provided by 11
U.S.C. ss.362 (arising upon the voluntary or involuntary  bankruptcy  proceeding
of  Borrower)  or any other  stay  provided  under any other  debtor  relief law
(whether  statutory,  common law,  case law or  otherwise)  of any  jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, shall
operate or be interpreted to stay, interdict,  condition,  reduce or inhibit the
ability  of  Lender to  enforce  any of its  rights,  whether  now or  hereafter
required,  which Lender may have against  Indemnitor or the  collateral  for the
Loan;

            (m) Any  modifications  of the Loan  Documents or any  obligation of
Borrower  relating  to the Loan by  operation  of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended,  or any other
debtor relief law (whether statutory,  common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

            (n)  Any  action,  occurrence,  event  or  matter  consented  to  by
Indemnitor  under  Section 6(h) hereof,  under any other  provision  hereof,  or
otherwise.

         5. Representation and Warranty. Indemnitor hereby represents,  warrants
and  covenants  that  Indemnitor's  net worth is,  and at all times  while  this
Agreement shall be in effect, shall be not less than $500,000,  as determined in
accordance with generally accepted accounting principles consistently applied.

         6. General Provisions.

            (a) Fully  Recourse.  All Costs  guaranteed  hereunder  are recourse
obligations  of  Indemnitor  and not  restricted  by any  limitation on recourse
liability set forth in any of the Loan Documents.

            (b)  Unsecured  Obligations.  Indemnitor  hereby  acknowledges  that
Lender's  appraisal of the Property is such that Lender is not willing to accept
the  consequences  of the inclusion of  Indemnitor's  indemnity set forth herein
among the obligations  secured by the Deed of Trust and the other Loan Documents
and that Lender would not make the Loan but for the unsecured recourse liability
undertaken by Indemnitor  herein.  Indemnitor  further hereby  acknowledges that
even  though  the  representations,   warranties,  covenants  or  agreements  of
Indemnitors  contained  herein  may be  identical  or  substantially  similar to
representations,  warranties,  covenants or  agreements of Borrower set forth in
the Note and secured by the Deed of Trust,  the obligations of Indemnitor  under
this  Agreement are not secured by the lien of the Deed of Trust or the security
interests or other collateral described in the Deed of Trust or the

                                       6
<PAGE>

other  Loan  Documents,  it being  the  intent  of  Lender  to  create  separate
obligations of Indemnitor  hereunder  which can be enforced  against  Indemnitor
without  regard to the existence of the Deed of Trust or other Loan Documents or
the liens or security interests created therein.

            (c)  Survival.  This  Agreement  shall be deemed to be continuing in
nature and shall remain in full force and effect and shall  survive the exercise
of any  remedy  by  Lender  under  the Deed of Trust  or any of the  other  Loan
Documents,  including,  without  limitation,  any  foreclosure  or  deed in lieu
thereof,  even if, as a part of such  remedy,  the Loan is paid or  satisfied in
full.

            (d) No Subrogation; No Recourse Against Lender.  Notwithstanding the
satisfaction by Indemnitor of any liability hereunder, Indemnitor shall not have
any right of subrogation, contribution, reimbursement or indemnity whatsoever or
any right of recourse  to or with  respect to the assets or property of Borrower
or to any collateral for the Loan. In connection with the foregoing,  Indemnitor
expressly  waives any and all rights of subrogation to Lender against  Borrower,
and  Indemnitor  hereby waives any rights to enforce any remedy which Lender may
have against  Borrower and any right to  participate  in any  collateral for the
Loan. In addition to and without in any way limiting the  foregoing,  Indemnitor
hereby  subordinates  any and all indebtedness of Borrower now or hereafter owed
to Indemnitor to all indebtedness of Borrower to Lender,  and agrees with Lender
that Indemnitor  shall not demand or accept any payment of principal or interest
from  Borrower,  shall not claim any offset or other  reduction of  Indemnitor's
obligations  hereunder  because of any such  indebtedness and shall not take any
action to obtain any of the collateral from the Loan. Further,  Indemnitor shall
not have any right of recourse against Lender by reason of any action Lender may
take or omit to take  under  the  provisions  of this  Agreement  or  under  the
provisions of any of the Loan Documents.

            (e) Reservation of Rights. Nothing contained in this Agreement shall
prevent  or in any way  diminish  or  interfere  with any  rights  or  remedies,
including, without limitation, the right to contribution,  which Lender may have
against  Borrower,  Indemnitor  or  any  other  party  under  the  Comprehensive
Environmental  Response,  Compensation  and Liability  Act of 1980  (codified at
Title 42 U.S.C. ss.9601 et seq.), as it may be amended from time to time, or any
other  applicable  federal,  state or local laws,  all such rights  being hereby
expressly reserved.

            (f) Financial  Statements.  Indemnitor  hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to comply with the provisions
of  Section  1.18(f)  of the Deed of Trust as  concerns  Indemnitor.  Indemnitor
hereby warrants and represents unto Lender that any and all financial data which
have  heretofore  been given or may hereafter be given to Lender with respect to
Indemnitor  did or will  at the  time of such  delivery  fairly  and  accurately
present the financial condition of Indemnitor.

            (g)  Rights  Cumulative;   Payments.   Lender's  rights  under  this
Agreement  shall be in addition to all rights of Lender under the Note, the Deed
of Trust and the other Loan  Documents.  FURTHER,  PAYMENTS  MADE BY  INDEMNITOR
UNDER THIS AGREEMENT SHALL NOT REDUCE IN ANY RESPECT BORROWER'S  OBLIGATIONS AND
LIABILITIES  UNDER THE NOTE,  THE DEED OF TRUST  AND THE  OTHER  LOAN

                                       7
<PAGE>

DOCUMENTS  EXCEPT WITH RESPECT TO, AND TO THE EXTENT OF,  BORROWER'S  OBLIGATION
AND LIABILITY FOR THE PAYMENT MADE BY INDEMNITOR.

            (h) No  Limitation  on  Liability.  Indemnitor  hereby  consents and
agrees that Lender may at any time and from time to time without further consent
from Indemnitor do any of the following events,  and the liability of Indemnitor
under this Agreement shall be unconditional  and absolute and shall in no way be
impaired or limited by any of the following  events,  whether  occurring with or
without  notice to Indemnitor or with or without  consideration  unless the same
shall  have the  effect  of  satisfying  Borrower's  obligations  under the Loan
Documents:  (i) any  extensions of time for  performance  required by any of the
Loan Documents or extension or renewal of the Note; (ii) any sale, assignment or
foreclosure of the Note, the Deed of Trust or any of the other Loan Documents or
any sale or transfer of the Property  (but subject to the  provisions of Section
1.5(d)(C)(5)  of the Note and Section  1.13(b)(10) of the Deed of Trust);  (iii)
any change in the composition of Borrower,  including,  without limitation,  the
withdrawal  or removal of  Indemnitor  from any  current or future  position  of
ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of
the  representations  and warranties made by Indemnitor herein or by Borrower in
any of the Loan Documents; (v) the release of Borrower or of any other person or
entity from performance or observance of any of the agreements, covenants, terms
or  conditions  contained  in any of the Loan  Documents  by  operation  of law,
Lender's  voluntary act or otherwise;  (vi) the release or substitution in whole
or in part of any security for the Loan;  (vii)  Lender's  failure to record the
Deed of Trust or to file any financing statement (or Lender's improper recording
or filing thereof) or to otherwise perfect,  protect,  secure or insure any lien
or security  interest given as security for the Loan; or (viii) the modification
of the  terms of any one or more of the Loan  Documents.  No such  action  which
Lender shall take or fail to take in connection  with the Loan  Documents or any
collateral  for the Loan,  nor any course of dealing with  Borrower or any other
person,  shall  limit,  impair or release  Indemnitor's  obligations  hereunder,
affect this  Agreement  in any way or afford  Indemnitor  any  recourse  against
Lender.  Nothing  contained in this Section shall be construed to require Lender
to take or refrain from taking any action referred to herein.

            (i)  Entire  Agreement;  Amendment;   Severability.  This  Agreement
contains the entire agreement between the parties  respecting the matters herein
set forth and supersedes all prior agreements,  whether written or oral, between
the parties respecting such matters. Any amendments or modifications  hereto, in
order to be effective, shall be in writing and executed by the parties hereto. A
determination  that any provision of this Agreement is  unenforceable or invalid
shall not affect the enforceability or validity of any other provision,  and any
determination  that the  application  of any provision of this  Agreement to any
person  or  circumstance  is  illegal  or  unenforceable  shall not  affect  the
enforceability  or  validity  of such  provision  as it may  apply to any  other
persons or circumstances.

            (j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH THE LAWS OF THE STATE IN WHICH  THE  PROPERTY  IS  LOCATED,
EXCEPT  TO THE  EXTENT  THAT THE  APPLICABILITY  OF 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.

                                       8
<PAGE>

            (k) Binding Effect; Waiver of Acceptance.  This Agreement shall bind
Indemnitor and its heirs, personal  representatives,  successors and assigns and
shall inure to the benefit of Lender and the officers, directors,  shareholders,
agents  and  employees  of Lender and their  respective  heirs,  successors  and
assigns.  Notwithstanding the foregoing,  Indemnitor shall not assign any of its
rights or obligations  under this Agreement without the prior written consent of
Lender,  which  consent  may be  withheld  by  Lender  in its  sole  discretion.
Indemnitor  hereby waives any acceptance of this  Agreement by Lender,  and this
Agreement shall immediately be binding upon Indemnitor.

            (l) Notice. All notices,  demands,  requests or other communications
to be sent by one party to the other  hereunder  or  required by law shall be in
writing and shall be deemed to have been validly  given or served by delivery of
the same in person to the intended  addressee,  or by  depositing  the same with
Federal Express or another  reputable  private courier service for next business
day  delivery to the  intended  addressee  at its address set forth on the first
page of this  Agreement or at such other  address as may be  designated  by such
party as herein  provided,  or by depositing the same in the United States mail,
postage  prepaid,  registered  or  certified  mail,  return  receipt  requested,
addressed to the  intended  addressee at its address set forth on the first page
of this Agreement or at such other address as may be designated by such party as
herein provided. All notices,  demands and requests shall be effective upon such
personal  delivery,  or one (1)  business  day after  being  deposited  with the
private courier  service,  or two (2) business days after being deposited in the
United  States mail as required  above.  Rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice was given
as herein  required  shall be  deemed to be  receipt  of the  notice,  demand or
request  sent.  By giving to the other party hereto at least  fifteen (15) days'
prior written  notice  thereof in accordance  with the  provisions  hereof,  the
parties hereto shall have the right from time to time to change their respective
addresses  and each shall have the right to  specify  as its  address  any other
address within the United States of America.

            (m) No Waiver;  Time of Essence;  Business  Day.  The failure of any
party hereto to enforce any right or remedy  hereunder,  or to promptly  enforce
any such right or remedy, shall not constitute a waiver thereof nor give rise to
any estoppel  against such party nor excuse any of the parties hereto from their
respective obligations hereunder.  Any waiver of such right or remedy must be in
writing  and  signed by the party to be bound.  This  Agreement  is  subject  to
enforcement  at law or in equity,  including  actions  for  damages or  specific
performance.  Time is of the essence  hereof.  The term  "business  day" as used
herein shall mean a weekday,  Monday through Friday, except a legal holiday or a
day on which banking institutions in New York, New York are authorized by law to
be closed.

            (n)  Captions  for  Convenience.  The  captions  and headings of the
sections and paragraphs of this Agreement are for  convenience of reference only
and shall not be construed in interpreting the provisions hereof.

            (o)  Reasonable  Attorney's  Fees.  In the event it is necessary for
Lender to retain the services of an attorney or any other  consultants  in order
to enforce this Agreement,  or any portion thereof,  Indemnitor agrees to pay to
Lender any and all costs and expenses,

                                       9
<PAGE>

including, without limitation, reasonable attorneys' fees, incurred by Lender as
a result thereof and such costs, fees and expenses shall be included in Costs.

            (p) Successive  Actions.  A separate right of action hereunder shall
arise  each  time  Lender  acquires  knowledge  of  any  matter  indemnified  or
guaranteed by Indemnitor under this Agreement.  Separate and successive  actions
may be brought hereunder to enforce any of the provisions hereof at any time and
from time to time. No action hereunder shall preclude any subsequent action, and
Indemnitor  hereby  waives and covenants not to assert any defense in the nature
of splitting of causes of action or merger of judgments.

            (q)  Reliance.  Lender  would not make the Loan to Borrower  without
this Agreement. Accordingly, Indemnitor intentionally and unconditionally enters
into the covenants and  agreements as set forth above and  understands  that, in
reliance upon and in  consideration  of such covenants and agreements,  the Loan
shall be made and,  as part and  parcel  thereof,  specific  monetary  and other
obligations  have been,  are being and shall be entered  into which would not be
made or entered into but for such reliance.

            (r)  Counterparts.  This  Agreement 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 Agreement may be detached from
any  counterpart  of this  Agreement  without  impairing the legal effect of any
signatures thereon and may be attached to another  counterpart of this Agreement
identical  in form  hereto  but  having  attached  to it one or more  additional
signature pages.

            (s) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

            (1)  INDEMNITOR,  TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY
      KNOWINGLY,  INTENTIONALLY  AND  VOLUNTARILY,  WITH AND UPON THE  ADVICE OF
      COMPETENT  COUNSEL,  (A) SUBMITS TO PERSONAL  JURISDICTION IN THE STATE IN
      WHICH THE PROPERTY IS LOCATED OVER ANY SUIT,  ACTION OR  PROCEEDING BY ANY
      PERSON  ARISING  FROM OR RELATING TO THIS  AGREEMENT,  (B) AGREES THAT ANY
      SUCH  ACTION,  SUIT OR  PROCEEDING  MAY BE BROUGHT IN ANY STATE OR FEDERAL
      COURT OF COMPETENT  JURISDICTION  SITTING IN THE COUNTY AND STATE IN WHICH
      THE PROPERTY IS LOCATED,  (C) SUBMITS TO THE  JURISDICTION OF SUCH COURTS,
      AND (D) TO THE FULLEST  EXTENT  PERMITTED BY LAW,  AGREES THAT  INDEMNITOR
      WILL NOT BRING ANY  ACTION,  SUIT OR  PROCEEDING  IN ANY OTHER  FORUM (BUT
      NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION,  SUIT
      OR PROCEEDING IN ANY OTHER FORUM).

            (2)  INDEMNITOR,  TO  THE  FULL  EXTENT  PERMITTED  BY  LAW,  HEREBY
      KNOWINGLY,  INTENTIONALLY  AND  VOLUNTARILY,  WITH AND UPON THE  ADVICE OF
      COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A
      TRIAL BY JURY IN ANY ACTION

                                       10
<PAGE>

      OR PROCEEDING  BASED UPON,  ARISING OUT OF, OR IN ANY WAY RELATING TO THIS
      AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR,  OR ANY
      OF THEIR DIRECTORS,  OFFICERS,  PARTNERS,  MEMBERS,  EMPLOYEES,  AGENTS OR
      ATTORNEYS,  OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR,  IN
      EACH  OF THE  FOREGOING  CASES,  WHETHER  SOUNDING  IN  CONTRACT,  TORT OR
      OTHERWISE.

            (t) Waiver by Indemnitor. Indemnitor covenants and agrees that, upon
the  commencement  of a voluntary or  involuntary  bankruptcy  proceeding  by or
against  Borrower,  Indemnitor  shall  not seek or cause  Borrower  or any other
person or entity to seek a supplemental stay or other relief, whether injunctive
or  otherwise,  pursuant  to 11  U.S.C.  ss.105 or any  other  provision  of the
Bankruptcy  Reform Act of 1978,  as  amended,  or any other  debtor  relief law,
(whether  statutory,  common law,  case law or  otherwise)  of any  jurisdiction
whatsoever,  now or hereafter in effect,  which may be or become applicable,  to
stay, interdict,  condition,  reduce or inhibit the ability of Lender to enforce
any rights of Lender against Indemnitor or the collateral for the Loan by virtue
of this Agreement or otherwise.

            (u) Secondary Market. Lender may sell, transfer and deliver the Loan
Documents  to  one or  more  investors  in the  secondary  mortgage  market.  In
connection  with such  sale,  Lender  may  retain or assign  responsibility  for
servicing  the Loan 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.

            (v)  Dissemination of Information.  If Lender determines at any time
to sell,  transfer  or  assign  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"),  Lender 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 (as defined in
the Deed of Trust) rating such Securities, each prospective Investor and each of
the foregoing's  respective counsel,  all documents and information which Lender
now has or may  hereafter  acquire  relating  to the Loan and to  Borrower,  any
Indemnitor and the Property, which shall have been furnished by Borrower, or any
Indemnitor as Lender determines necessary or desirable.

             [THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

                                       11
<PAGE>

         IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement as
of the day and year first written above.

                                                      INDEMNITOR:

                                                      APPLE SUITES, 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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