Cooperation Agreement Dated June 25, 2004

EXHIBIT 10.5.8


COOPERATION AGREEMENT


THIS COOPERATION AGREEMENT (this "AGREEMENT") is made as of the 25th day of June, 2004, by and between the Mortgage Borrowers listed on the signature page hereof (collectively, the "MORTGAGE BORROWERS"), Lodgian Mezzanine Fixed, LLC (the "MEZZANINE BORROWER"), and MERRILL LYNCH MORTGAGE LENDING, INC., in its capacity as both mortgage lender and mezzanine lender ("LENDER").


RECITALS:


A. The Mortgage Borrowers identified on Schedule 1 as the "Pool 1 Borrowers" (collectively, the "POOL 1 BORROWERS"), by that certain Promissory Note of even date herewith given to Lender ("MORTGAGE NOTE 1"), are indebted to Lender in the original principal sum of $63,801,000 ("MORTGAGE LOAN 1") as governed by that certain Loan and Security Agreement of even date herewith between the Pool 1 Borrowers and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, "MORTGAGE LOAN AGREEMENT 1").


B. The Mortgage Borrowers identified on Schedule 1 as the "Pool 2 Borrowers" (collectively, the "POOL 2 BORROWERS"), by that certain Promissory Note of even date herewith given to Lender ("MORTGAGE NOTE 2"), are indebted to Lender in the original principal sum of $67,864,000 ("MORTGAGE LOAN 2") as governed by that certain Loan and Security Agreement of even date herewith between the Pool 2 Borrowers and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, "MORTGAGE LOAN AGREEMENT 2").


C. The Mortgage Borrowers identified on Schedule 1 as the "Pool 3 Borrowers" (collectively, the "POOL 3 BORROWERS") by that certain Promissory Note of even date herewith given to Lender ("MORTGAGE NOTE 3"), are indebted to Lender in the original principal sum of $66,818,500 ("MORTGAGE LOAN 3") as governed by that certain Loan and Security Agreement of even date herewith between the Pool 3 Borrowers and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, "MORTGAGE LOAN AGREEMENT 3").


D. The Mortgage Borrowers identified on Schedule 1 as the "Pool 4 Borrowers" (collectively, the "POOL 4 BORROWERS"), by that certain Promissory Note of even date herewith given to Lender ("MORTGAGE NOTE 4", and together with Mortgage Note 1, Mortgage Note 2, and Mortgage Note 3, collectively, the "MORTGAGE NOTES"), are indebted to Lender in the original principal sum of $61,516,500 ("MORTGAGE LOAN 4", and together with Mortgage Loan 1, Mortgage Loan 2, and Mortgage Loan 3, collectively, the "MORTGAGE LOANS") as governed by that certain Loan and Security Agreement of even date herewith between the Pool 4 Borrowers and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, "MORTGAGE LOAN AGREEMENT 4", and together with Mortgage Loan Agreement 1, Mortgage Loan Agreement 2, and Mortgage Loan Agreement 3, collectively, the "MORTGAGE LOAN AGREEMENTS").


[Fixed Loan]


E. Mortgage Loan 1, Mortgage Loan 2, Mortgage Loan 3, and Mortgage Loan 4 are secured, in part, by Mortgages on the respective pools of Properties identified on Schedule 2 (each, a "POOL", and collectively, the "POOLS").


F. The Mezzanine Borrower, by that certain Mezzanine Note of even date herewith given to Lender (the "MEZZANINE NOTE"), is indebted to Lender in the aggregate principal sum of One Hundred and No/100 ($100.00) (the "MEZZANINE LOAN") as governed by that certain Mezzanine Loan Agreement of even date herewith between the Mezzanine Borrower and Lender (together with all extensions, renewals, modifications, substitutions and amendments thereof, the "MEZZANINE LOAN AGREEMENT").


G. Lender has required as a condition to making the Mortgage Loans and the Mezzanine Loan that the Mortgage Borrowers and the Mezzanine Borrower enter into this Agreement with Lender.


AGREEMENT


For ten ($10) dollars and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:


Section 1. Adjustment of Mortgage Loans and Mezzanine Loan/Loan Modification. Lender shall have the right in its sole discretion, at any time prior to the final Securitization of the last of the Mortgage Loans to be securitized, to cause any of the following to occur (each, a "LOAN MODIFICATION"):


(1) separately adjust the principal amount and applicable interest
rates of any of the Mortgage Loans and the Mezzanine Loan, provided
that (i) the aggregate principal amount of the Mortgage Loans and
the Mezzanine Loan immediately after such adjustment shall equal the
aggregate outstanding principal balance of the Mortgage Loans and
the Mezzanine Loan immediately prior to such adjustment, (ii) the
weighted average interest rate of the Mortgage Loans and the
Mezzanine Loan immediately after such adjustment shall equal the
weighted average interest rate which was applicable to the Mortgage
Loans and the Mezzanine Loan immediately prior to such adjustment,
(iii) the aggregate debt service payments on the Mortgage Loans and
the Mezzanine Loan immediately after such adjustment shall equal the
aggregate debt service payments which were due under the Mortgage
Loans and the Mezzanine Loan immediately prior to such adjustment,
and (iv) the other material terms and provisions of each of the
Mortgage Loans and the Mezzanine Loan shall remain unchanged and
none of the foregoing adjustments shall increase the obligations or
reduce the rights of the Mortgage Borrowers, the Mezzanine Borrower
or Guarantor in any material respect; and/or


(2) cause any of the Properties in any one or more of the Pools to
become Collateral for any other Pool.


2


Any Loan Modification shall be subject to the following:


(a) (i) If Lender elects to increase the principal amount of the Mezzanine Loan, the Mezzanine Borrower shall contribute to the Mortgage Borrowers such additional loan proceeds to be applied to repay, dollar for dollar, the Mortgage Notes (in an amount and as designated by Lender), and the Lender under the Mortgage Notes will accept such prepayment without penalty, premium or additional costs (except as provided herein) to the Mortgage Borrowers; (ii) If Lender elects to increase the principal amount of the Mortgage Loans, or any of them, and reduce the principal amount of the Mezzanine Loan, the Mortgage Borrowers shall distribute to the Mezzanine Borrower such additional loan proceeds to be applied to repay, dollar for dollar, the Mezzanine Note, and the Lender under the Mezzanine Note will accept such prepayment without penalty, premium or additional costs to the Mezzanine Borrower (except as provided herein); and (iii) If Lender elects to increase the principal amount of any of the Mortgage Loans and decrease the amount of any of the other Mortgage Loans, the applicable Mortgage Borrowers shall distribute to the Mezzanine Borrower such additional loan proceeds and the Mezzanine Borrower ...