Document:

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                                                                    EXHIBIT 10.8

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UPON RECORDATION                       SPACE ABOVE THIS LINE FOR RECORDER'S USE
RETURN TO:

Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, New York 10019
Attn.: Mark A. Poole, Esq.

                                  GENERAL FORM
                                       OF
        DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
                                    AGREEMENT

                                       BY

                              [PROPERTY OWNER NAME]
                                   (Borrower)

                            TO AND FOR THE BENEFIT OF
                      MERRILL LYNCH MORTGAGE LENDING, INC.
                                    (Lender)

                           Dated: As of June __, 2004

                       Property Location: [PROPERTY NAME]
                                          [STREET ADDRESS]
                                          [COUNTY]
                                          [CITY,STATE]

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         THIS DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT (this "SECURITY DEED"), made as of June __, 2004, by [PROPERTY OWNER
NAME], having its principal place of business at c/o LODGIAN, INC., 3445
Peachtree Road, NE, Suite 700, Atlanta, Georgia 30326 ("BORROWER"), to and for
the benefit of MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation,
having its principal place of business at 4 World Financial Center, New York,
New York 10080 (together with its successors, transferees and assigns,
"Lender"). Capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in the Loan Agreement
(hereinafter defined).

                              W I T N E S S E T H:

         To secure the payment of a loan (the "LOAN") in the original principal
sum of [INSERT POOL LOAN AMOUNT] ($__________), lawful money of the United
States of America, being made from Lender to Borrower, and the other Borrowers
(together with Borrower, "BORROWERS") pursuant to the terms and conditions of a
certain Loan and Security Agreement, dated as of the date hereof (as amended or
modified, the "LOAN AGREEMENT"), among Borrowers and Lender, which is evidenced
by and is to be paid with interest according to a certain Promissory Note, dated
as of the date hereof and having a maturity date of June 31, 2006, as the same
may be extended pursuant to the Loan Agreement (as amended, modified, renewed or
restated, and together with any substitutes or replacements (by means of
multiple notes or otherwise) therefor, collectively, the "NOTE"), made by
Borrowers to Lender and all other sums due hereunder, under the other Loan
Documents and under the Note (said indebtedness and interest due under the Note
and all other sums due hereunder, under the Note and the other Loan Documents
being hereinafter collectively referred to as the "DEBT"), Borrower has deeded,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
warranted, pledged and assigned and by these presents does hereby deed, give,
grant, bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge and
assign unto Lender, the real property described in EXHIBIT A attached hereto
(the "PREMISES") and the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located thereon (the "IMPROVEMENTS");

         TOGETHER WITH: all right, title, interest and estate of Borrower now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements, and the property, rights,
interests and estates hereinafter described are collectively referred to herein
as the "PROPERTY"):

                  (a)      all easements, rights-of-way, strips and gores of
land, streets, ways, alleys, passages, sewer rights, water, water courses, water
rights and powers, air rights and development rights, all rights to oil, gas,
minerals, coal and other substances of any kind or character, and all estates,
rights, titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the bed of any
street, road, highway, alley or avenue, opened, vacated or proposed, in front of
or adjoining the Premises, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtsey and rights of
curtsey, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Premises and the Improvements and every
part and parcel thereof, with the appurtenances thereto;

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                  (b)      all machinery, furniture, furnishings, equipment,
computer software and hardware, fixtures (including, without limitation, all
heating, air conditioning, plumbing, lighting, communications and elevator
fixtures, inventory and articles of personal property and accessions thereof and
renewals, replacements thereof and substitutions therefor, if any (including,
but not limited to, beds, bureaus, chiffoniers, chests, chairs, desks, lamps,
mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains,
shades, venetian blinds, screens, paintings, hangings, pictures, divans,
couches, luggage carts, luggage racks, stools, sofas, chinaware, linens,
pillows, blankets, glassware, foodcarts, cookware, dry cleaning facilities,
dining room wagons, tools, keys or other entry systems, bars, bar fixtures,
liquor and other drink dispensers, icemakers, radios, television sets, intercom
and paging equipment, electric and electronic equipment, dictating equipment,
private telephone systems, medical equipment, potted plants, heating, lighting
and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, apparatus,
stoves, ranges, refrigerators, laundry machines, tools, machinery, engines,
dynamos, motors, boilers, incinerators, switchboards, conduits, compressors,
vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call
systems, brackets, electrical signs, bulbs, bells, ash and fuel, conveyors,
cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage
disposals, washers and dryers), other customary hotel equipment) and other
property of every kind and nature, whether tangible or intangible, whatsoever
owned by Borrower, or in which Borrower has or shall have an interest, now or
hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and
occupancy of the Premises and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation, enjoyment and occupancy of the Premises
and the Improvements (hereinafter collectively referred to as the "EQUIPMENT"),
including any leases of any of the foregoing, any deposits existing at any time
in connection with any of the foregoing, and the proceeds of any sale or
transfer of the foregoing, and the right, title and interest of Borrower in and
to any of the Equipment that may be subject to any "security interests" as
defined in the Uniform Commercial Code, as adopted and enacted by the State or
States where any of the Property is located (the "UNIFORM COMMERCIAL CODE"),
superior in lien to the lien of this Security Deed;

                  (c)      all awards or payments, including interest thereon,
that may heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including, without limitation, any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;

                  (d)      all leases, tenancies, licenses, subleases,
assignments and/or rental or occupancy agreements and other agreements or
arrangements (including, without limitation, any and all guarantees of any of
the foregoing) heretofore or hereafter entered into affecting the use, enjoyment
or occupancy of, or the conduct of any activity upon or in, the Premises and the
Improvements, including any extensions, renewals, modifications or amendments
thereof (collectively, the "LEASES") and all rents, rent equivalents, moneys
payable as damages or in lieu of rent or rent equivalents, royalties (including,
without limitation, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including,

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without limitation, security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other payment and
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Premises and the Improvements,
including, without limitation, all hotel receipts, revenues and credit card
receipts collected from guest rooms, restaurants, bars (including, without
limitation, service charges for employees and staff), mini-bars, meeting rooms,
banquet rooms, apartments, parking, and recreational facilities, health club
membership fees, food and beverage wholesale and retail sales, service charges,
convention services, special events, audio-visual services, boat cruises, travel
agency fees, telephone charges, laundry services, vending machines and
otherwise, all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the possession, use and occupancy of all or any portion of the Premises
and the Improvements or personalty located thereon, or rendering of services by
Borrower or any operator or manager of the hotel or the commercial space located
in the Improvements or acquired from others (including, without limitation, from
the rental of any office space, retail space, guest rooms or other space, halls,
stores, and offices, and deposits securing reservations of such space, and
charges for services such as room service, telecommunication and video,
electronic mail, internet connection and other communications and entertainment
services), license, lease, sublease and concession fees and rentals, and
proceeds, if any, from business interruption or other loss of income insurance
and any other items of revenue which would be included in operating revenues
under the Uniform System (as defined in the Loan Agreement) (the "RENTS"),
together with all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;

                  (e)      all proceeds of and any unearned premiums on any
insurance policies covering the Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;

                  (f)      all accounts, escrows, documents, instruments,
chattel paper, claims, deposits and general intangibles, as the foregoing terms
are defined in the Uniform Commercial Code, and all franchises, trade names
(including, without limitation, the right to operate the Property under the name
and/or hotel system known as [HOTEL BRAND]), trademarks, symbols, service marks,
books, records, plans, specifications, designs, drawings, permits, consents,
licenses, management agreements (including, without limitation, the Management
Agreement), franchise agreements, contract rights (including, without
limitation, any contract with any architect or engineer or with any other
provider of goods or services for or in connection with any construction,
repair, or other work upon the Property), approvals, actions, refunds of real
estate taxes and assessments (and any other governmental impositions related to
the Property), and causes of action that now or hereafter relate to, are derived
from or are used in connection with the Property, or the use, operation,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively referred to as the "INTANGIBLES");
and

                  (g)      any and all proceeds, products, offspring, rents and
profits from any of the foregoing, including, without limitation, those from
sale, exchange, transfer, collection, loss, damage, disposition, substitution or
replacement of any of the foregoing and any and all other

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security and collateral of any nature whatsoever, now or hereafter given for the
repayment of the Debt and the performance of Borrower's obligations under the
Loan Documents including, without limitation, the Impositions and Insurance
Reserve, the FF&E Reserve, the Loss Proceeds Account, the Deposit Account, the
Lock Box Account and the Sub-Accounts thereof (each as defined in that certain
Cash Management Agreement, dated as of the date hereof (as amended or modified
the "CASH MANAGEMENT AGREEMENT"), by and among Borrowers, Lender, Lodgian
Management Corp. and Wachovia Bank, National Association), and any other escrows
or reserves set forth in the Loan Documents.

         This Security Deed is a deed conveying legal title pursuant to the laws
of the State of Georgia governing deeds to secure debt and is also a security
agreement granting a present and continuing security interest and security title
in the portions of the Property constituting personal property or fixtures
pursuant to the Uniform Commercial Code, and it is not a mortgage.

         TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Lender, its successors
and assigns, in fee simple forever, and Borrower covenants that it is lawfully
seized and possessed of the Property in fee simple and has good right to convey
the same.

         WITH POWER OF SALE, to secure the payment to Lender of the Debt at the
time and in the manner provided for its payment in the Note and in this Security
Deed;

         PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Deed and shall well and truly
abide by and comply with each and every covenant and condition set forth herein,
in the Note and in the other Loan Documents in a timely manner, then this
Security Deed shall be cancelled and surrendered, and Lender will reconvey the
Property in the manner provided by law;

         AND Borrower represents and warrants to and covenants and agrees with
Lender as follows:

                                     PART I

                               GENERAL PROVISIONS

         1.       PAYMENT OF DEBT AND INCORPORATION OF COVENANTS, CONDITIONS AND
AGREEMENTS. Borrower shall pay the Debt at the time and in the manner provided
in the Note, in the Loan Agreement and in this Security Deed. All the covenants,
conditions and agreements contained in (a) the Note, (b) the Loan Agreement and
(c) the other Loan Documents are hereby made a part of this Security Deed to the
same extent and with the same force as if fully set forth herein.

         2.       WARRANTY OF TITLE. Borrower warrants that Borrower has good
and marketable title to the Property and has the full power, authority and right
to execute, deliver and perform its obligations under this Security Deed and to
deed, encumber, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge and assign the same and that Borrower possesses a fee estate in

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the Premises and the Improvements and that it owns the Property free and clear
of all liens, encumbrances and charges whatsoever except for the Permitted
Encumbrances and that this Security Deed is and will remain a valid and
enforceable first lien on and security interest in the Property, subject only to
said exceptions. Borrower represents and warrants that none of the Permitted
Encumbrances will, individually or in the aggregate, materially and adversely
affect (i) Borrower's ability to pay in full in a timely manner its obligations,
including, without limitation, the Debt, (ii) the use of the Property for the
use currently being made thereof, (iii) the operation of the Property for the
operation currently being made thereof, or (iv) the value of the Property.
Borrower shall forever warrant, defend and preserve such title and the validity
and priority of the lien of this Security Deed and shall forever warrant and
defend the same to Lender against the claims of all persons whomsoever.

         3.       INSURANCE. Borrower, at its sole cost and expense, shall
obtain and maintain during the entire term of this Security Deed (the "Term")
policies of insurance as required pursuant to Section 5.4 of the Loan Agreement,
and pay all premiums thereon (the "INSURANCE PREMIUMS").

         4.       PAYMENT OF IMPOSITIONS AND OTHER CHARGES. Subject to
Borrower's right to contest set forth in Section 5.3(B) of the Loan Agreement
and the provisions of Section 5 below, and pursuant to the provisions of the
Cash Management Agreement, Borrower shall cause to be paid all Impositions now
or hereafter levied or assessed or imposed against the Property or any part
thereof prior to the date the same shall become delinquent. Borrower shall
promptly pay for all utility services provided to the Property. Borrower shall
furnish to Lender or its designee receipts for the payment of the Impositions
prior to the date the same shall become delinquent (provided, however, that
Borrower shall not be required to furnish such receipts for payment of
Impositions in the event that such Impositions have been paid by Lender pursuant
to Section 5 hereof).

         5.       IMPOSITIONS AND INSURANCE RESERVE. Borrower shall make monthly
deposits into the Impositions and Insurance Reserve in accordance with, and to
the extent required under Section 6.3 of the Loan Agreement and under the Cash
Management Agreement.

         6.       CONDEMNATION. To the extent the terms of this Section 6 are
inconsistent with the terms of the Loan Agreement, the terms of the Loan
Agreement shall control.

                  (a)      Borrower shall promptly give Lender written notice of
any known actual or threatened commencement of any condemnation or eminent
domain proceeding affecting the Property or any portion thereof and shall
deliver to Lender copies of any and all papers served in connection with such
proceedings. Subject to the terms of Section 6(b) below, Lender is hereby
irrevocably appointed as Borrower's attorney-in-fact, coupled with an interest,
with exclusive power to collect, receive and retain any award or payment for
said condemnation or eminent domain and to make any compromise or settlement in
connection with such proceeding, subject to the provisions of this Security Deed
and the Loan Agreement. Notwithstanding any taking by any public or quasi public
authority through eminent domain or otherwise (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking),
Borrower shall continue to pay the Debt at the time and in the manner provided
for its payment in the Note, in this Security Deed and the other Loan Documents
and the Debt shall not be reduced until any

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award or payment therefor shall have been actually received after expenses of
collection and applied by Lender to the discharge of the Debt in accordance with
the terms hereof. In accordance with the terms hereof, Borrower shall cause the
award or payment made in any condemnation or eminent domain proceeding completed
after the date hereof, which is payable to Borrower, to be paid directly to
Lender. Lender may apply any such award or payment to the reduction or discharge
of the Debt whether or not then due and payable; such application to be made
without any Prepayment Consideration (as defined in the Loan Agreement),
provided that if Borrower receives any such award or payment, Borrower pays such
award or payment to Lender within one hundred twenty (120) days following the
date of Borrower's receipt thereof, except that if an Event of Default has
occurred and is continuing, then such application shall be subject to the
Prepayment Consideration computed in accordance with the Note. If the Property
is sold following an Event of Default, through foreclosure or otherwise, prior
to the receipt by Lender of such award or payment, Lender shall have the right,
whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive said award or payment, or a portion thereof
sufficient to pay the Debt.

                  (b)      Notwithstanding the foregoing, Lender shall not
exercise the foregoing rights and Borrower may prosecute any condemnation
proceeding and settle or compromise and collect any claim involving an award
and/or claim for damages of not more than the Restoration Threshold provided
that: (i) no Event of Default shall have occurred and be continuing, (ii) in
Lender's reasonable good faith judgment, such condemnation or taking does not
and will not materially restrict access to the Property or otherwise have a
Material Adverse Effect, and the Property remaining after such condemnation or
taking is capable of being restored to an economically viable whole of
substantially the same type which existed prior to the condemnation or taking or
in substantial compliance with all applicable laws, (iii) Borrower applies the
proceeds of such award to any reconstruction or repair of the Property necessary
as a result of such condemnation or taking, (iv) Borrower promptly commences and
diligently prosecutes such reconstruction or repair to completion in accordance
with all applicable laws and (v) the plans and specifications for such work
shall be subject to Lender's reasonable approval. Subject to the terms hereof,
Borrower authorizes Lender to apply such awards, payments, proceeds or damages,
after the deduction of Lender's reasonable expenses incurred in the collection
of such amounts, at Lender's option, to restoration or repair of the Property or
to payment of the sums secured by this Security Deed, whether or not then due,
in the order determined by Lender, with the balance, if any, to Borrower.
Application of any such award or payment to payment of the sums secured by this
Security Deed pursuant to the foregoing sentence shall be made without any
Prepayment Consideration, provided that if Borrower receives any such award or
payment, Borrower pays such award or payment to Lender within one hundred twenty
(120) days following Borrower's receipt thereof, except that if an Event of
Default has occurred and is continuing, then such application shall be subject
to the Prepayment Consideration computed in accordance with the Note. Subject to
the provisions of clauses (i) through (v) of this Section 6(b), Lender shall not
exercise Lender's option to apply such awards or damages to payment of the sums
secured by this Security Deed provided that each of the conditions (as
applicable) to the release of insurance proceeds for restoration or repair of
the Property under Section 5.5 of the Loan Agreement have been satisfied with
respect to such condemnation awards or damages. Any application of proceeds to
principal shall not extend or postpone the due date of the monthly installments
due hereunder, under the Note or under any of the Loan Documents or change the
amount of such installments. Borrower agrees to execute

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such further evidence of assignment of any awards, proceeds, damages or claims
arising in connection with such condemnation or taking as Lender may reasonably
require.

         7.       LEASES AND RENTS. To the extent the terms of this Section 7
are inconsistent with the terms of the Loan Agreement or the Assignment of
Leases and Rents, the terms of the Loan Agreement and the Assignment of Leases
and Rents shall control. Borrower does hereby absolutely and unconditionally
assign to Lender, all Borrower's right, title and interest in all current and
future Leases and Rents, it being intended by Borrower that this assignment
constitutes a present, absolute assignment and not an assignment for additional
security only. Such assignment to Lender shall not be construed to bind Lender
to the performance of any of the covenants, conditions or provisions contained
in any such Lease or otherwise impose any obligation upon Lender. Borrower
agrees to execute and deliver to Lender such additional instruments, in form and
substance reasonably satisfactory to Lender, as may hereafter be reasonably
requested by Lender to further evidence and confirm such assignment.
Notwithstanding the provisions of this Section 7, so long as no Event of Default
shall have occurred and be continuing under the Loan Documents, Borrower shall
have the sole but revocable right and license to act as landlord under the
Leases and to enforce the covenants of the Leases, provided, however, Borrower
acknowledges it has no right to collect or use Rents except in accordance with
the terms and conditions of Article VII of the Loan Agreement and the Cash
Management Agreement. Upon the occurrence and during the continuance of an Event
of Default, without the need for notice or demand, the license granted to
Borrower herein shall automatically be revoked. Lender is hereby granted and
assigned by Borrower the right, at its option, upon revocation of the license
granted herein, to enter upon the Property in person, by agent or by
court-appointed receiver to collect the Rents. Subject to the terms of the Loan
Agreement, any Rents collected after the revocation of the license shall be
applied by Lender in accordance with the Loan Agreement. Borrower expressly
understands that any and all proposed leases are included in the definition of
"LEASE" or "LEASES" as such terms may be used throughout this Security Deed, the
Note and the other Loan Documents.

         8.       OPERATION AND MAINTENANCE OF PROPERTY. Borrower shall cause
the Property to be operated and maintained in accordance with Section 5.5 of the
Loan Agreement.

         9.       TRANSFER OR ENCUMBRANCE OF THE PROPERTY.

                  (a)      Borrower acknowledges that Lender has examined and
relied on the creditworthiness and experience of Borrower in owning and
operating properties such as the Property in agreeing to make the Loan, and that
Lender will continue to rely on Borrower's ownership of the Property as a means
of maintaining the value of the Property as security for repayment of the Debt.
Borrower acknowledges that Lender has a valid interest in maintaining the value
of the Property so as to ensure that, should Borrower default in the repayment
of the Debt, Lender can recover the Debt by a sale of the Property. Except as
expressly permitted under this Security Deed, the Loan Agreement or under the
other Loan Documents, Borrower shall not cause or suffer to occur or exist,
directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, any sale, transfer, mortgage, pledge, lien or encumbrance (other than
Permitted Encumbrances) (collectively, "TRANSFERS") of (i) all or any part of
the Property or (ii) any direct or indirect beneficial ownership interest (in
whole or part) in Borrower, irrespective of the number of tiers of ownership,
without the prior written consent of Lender.

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                  (b)      The occurrence of any Transfer in violation of this
Section 9 shall constitute an Event of Default hereunder, whereupon Lender at
its option, without being required to demonstrate any actual impairment of its
security or any increased risk of default hereunder, may declare the Debt
immediately due and payable.

                  (c)      Lender's consent to one Transfer shall not be deemed
to be a waiver of Lender's right to require such consent to any future
occurrence of same. Any Transfer made in contravention of this paragraph shall
be null and void and of no force and effect.

                  (d)      Borrower agrees to bear and shall pay or reimburse
Lender on demand for all reasonable expenses (including, without limitation,
reasonable attorneys' fees and disbursements. title search costs and title
insurance endorsement premiums) incurred by Lender in connection with the
review, approval and documentation of any such Transfer which requires the
consent of Lender.

         10.      CHANGES IN LAWS REGARDING TAXATION. If any law is enacted or
adopted or amended after the date of this Security Deed which deducts the Debt
from the value of the Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on the Debt or Lender's interest in the
Property, Borrower will pay such tax, with interest and penalties thereon, if
any. In the event Lender is advised by counsel chosen by it that the payment of
such tax or interest and penalties by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury, then in any
such event, Lender shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable and, provided
no Event of Default exists, no Prepayment Consideration shall be due in
connection therewith.

         11.      NO CREDITS ON ACCOUNT OF THE DEBT. Borrower will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Property, or any part thereof, for real estate tax purposes by
reason of this Security Deed or the Debt. In the event such claim, credit or
deduction shall be required by law, Lender shall have the option, by written
notice of not less than ninety (90) days, to declare the Debt immediately due
and payable and, provided no Event of Default exists, no Prepayment
Consideration shall be due in connection therewith.

         12.      DOCUMENTARY STAMPS. If at any time the United States of
America, any State thereof or any subdivision of any such State shall require
revenue or other stamps to be affixed to the Note or this Security Deed, or
impose any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.

         13.      PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every material term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument (including all
instruments comprising the Permitted Encumbrances) affecting or pertaining to
the Property, and will not suffer or permit any default or event of default
(after giving effect to any applicable notice requirements and cure periods) to
exist under any of the foregoing.

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         14.      FURTHER ACTS; SECONDARY MARKET TRANSACTIONS.

                  (a)      Borrower will, at the sole cost and expense of
Borrower, and without expense to Lender, do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, mortgages, assignments,
notices of assignment, Uniform Commercial Code financing statements or
continuation statements, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby deeded,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged and assigned or intended now or hereafter so to be, or which Borrower
may be or may hereafter become bound to convey or assign to Lender, or for
carrying out the intention or facilitating the performance of the terms of this
Security Deed or for filing, registering or recording this Security Deed or for
facilitating the sale of the Loan and the Loan Documents as described in
subparagraph (b) below. Borrower, on demand, will deliver and hereby authorizes
Lender to file in the name of Borrower, one or more financing statements,
chattel mortgages or other instruments, to evidence more effectively the
security interest of Lender in the Property. Upon foreclosure or the appointment
of a receiver, Borrower will, at its sole cost and expense, and without expense
to Lender, cooperate fully and completely to effect the assignment or transfer
of any license, permit, agreement or any other right necessary or useful to the
operation of the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including, without limitation, such rights and remedies available to Lender
pursuant to this paragraph.

                  (b)      Subject to the terms and conditions set forth in the
Loan Agreement, Lender shall have the right to engage in one or more Secondary
Market Transactions (as defined in the Loan Agreement) and, in connection
therewith, Lender may transfer its obligations under this Security Deed, the
Loan Agreement and under the other Loan Documents (or may transfer the portion
thereof corresponding to the transferred portion of the Debt), and thereafter
Lender shall be relieved of any obligations hereunder and under the other Loan
Documents arising after the date of said transfer with respect to the
transferred interest.

         15.      RECORDING OF SECURITY DEED, ETC. Borrower forthwith upon the
execution and delivery of this Security Deed and thereafter, from time to time,
will cause this Security Deed, and any security instrument creating a lien or
security interest or evidencing the lien hereof upon the Property and each
instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or security interest
hereof upon, and the interest of Lender in, the Property. Borrower will pay all
filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Security Deed, any deed of
trust supplemental hereto, any security instrument with respect to the Property
and any instrument of further assurance, and all federal, state, county and
municipal, taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Security Deed, any deed of
trust supplemental hereto, any security instrument with respect to the Property
or any instrument of further assurance, except where prohibited by law so to do.
Borrower shall hold harmless and indemnify Lender, its successors and assigns,
against any liability incurred by reason of the imposition of any tax on the
making and recording of this Security Deed.

                                       9
<PAGE>

         16.      REPORTING REQUIREMENTS. Borrower agrees to give prompt notice
to Lender of the insolvency or bankruptcy filing of Borrower or the death,
insolvency or bankruptcy filing of any Guarantor.

         17.      EVENTS OF DEFAULT. The Debt shall become immediately due and
payable at the option of Lender upon the happening of any Event of Default. The
term "EVENT OF DEFAULT" as used in this Security Deed shall have the meaning
given such term in the Loan Agreement.

         18. RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Event of Default Lender may, but without any obligation to do
so and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make or do the same in such manner and to such
extent as Lender may deem necessary to protect the security hereof. Lender is
authorized to enter upon the Property for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Property or to
foreclose this Security Deed or collect the Debt, and the cost and expense
thereof (including reasonable attorneys' fees and disbursements to the extent
permitted by law), with interest at the Default Rate (as defined in the Loan
Agreement) for the period after notice from Lender that such cost or expense was
incurred to the date of payment to Lender, shall constitute a portion of the
Debt, shall be secured by this Security Deed and the other Loan Documents and
shall be due and payable to Lender upon demand.

         19.      REMEDIES.

                  (a)      Upon the occurrence and during the continuance of any
Event of Default, Lender may take such action, without notice or demand, as it
deems advisable to protect and enforce its rights against Borrower and in and to
the Property by Lender itself or otherwise, including, without limitation, the
following actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as Lender may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Lender:

                           (i)      declare the entire Debt to be immediately
due and payable;

                           (ii)     institute a proceeding or proceedings,
judicial or nonjudicial, by advertisement or otherwise, for the complete
foreclosure of this Security Deed in which case the Property or any interest
therein may be sold for cash or upon credit in one or more parcels or in several
interests or portions and in any order or manner;

                           (iii)    with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Security Deed for the portion of
the Debt then due and payable, subject to the continuing lien of this Security
Deed for the balance of the Debt not then due;

                           (iv)     sell for cash or upon credit the Property or
any part thereof and all estate, claim, demand, right, title and interest of
Borrower therein and rights of redemption thereof, pursuant to the power of sale
contained herein or otherwise, at one or more sales, as an entirety or in
parcels, at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law;

                                       10
<PAGE>

                           (v)      institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or agreement
contained herein, or in any of the other Loan Documents;

                           (vi)     recover judgment on the Note either before,
during or after any proceedings for the enforcement of this Security Deed,
subject to compliance with statutory sale confirmation procedures;

                           (vii)    apply for the appointment of a trustee,
receiver, liquidator or conservator of the Property, to the extent permitted by
applicable law, without notice and without regard for the adequacy of the
security for the Debt and without regard for the solvency of the Borrower, any
Guarantor or of any person, firm or other entity liable for the payment of the
Debt;

                           (viii)   enforce Lender's interest in the Leases and
Rents and enter into or upon the Property, either personally or by its agents,
nominees or attorneys and dispossess Borrower and its agents and servants
therefrom, and thereupon Lender may (A) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the
Property and conduct the business thereat; (B) complete any construction on the
Property in such manner and form as Lender deems advisable; (C) make
alterations, additions, renewals, replacements and improvements to or on the
Property; (D) exercise all rights and powers of Borrower with respect to the
Property, whether in the name of Borrower or otherwise, including, without
limitation, the right to make, cancel, enforce or modify Leases, obtain and
evict tenants, and demand, sue for, collect and receive all Rents; and (E) apply
the receipts from the Property to the payment of Debt, after deducting therefrom
all expenses (including reasonable attorneys' fees and disbursements) incurred
in connection with the aforesaid operations and all amounts necessary to pay the
taxes, assessments insurance and other charges in connection with the Property,
as well as just and reasonable compensation for the services of Lender, its
counsel, agents and employees; or

                           (ix)     pursue such other rights and remedies as may
be available at law or in equity or under the Uniform Commercial Code.

In the event of a sale, by foreclosure or otherwise, of less than all of the
Property, this Security Deed shall continue as a lien on the remaining portion
of the Property.

                  (b)      The proceeds of any sale made under or by virtue of
this paragraph, together with any other sums which then may be held by Lender
under this Security Deed, whether under the provisions of this paragraph or
otherwise, shall be applied by Lender to the payment of the Debt in such
priority and proportion as Lender in its sole discretion shall deem proper.

                  (c)      Lender may adjourn from time to time any sale by it
to be made under or by virtue of this Security Deed by announcement at the time
and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Lender, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.

                                       11
<PAGE>

                  (d)      Upon the completion of any sale or sales pursuant
hereto, Lender, or an officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property and
rights sold. Any sale or sales made under or by virtue of this paragraph,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, shall
operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Borrower in and to the properties
and rights so sold, and shall be a perpetual bar both at law and in equity
against Borrower and against any and all persons claiming or who may claim the
same, or any part thereof from, through or under Borrower.

                  (e)      Upon any sale made under or by virtue of this
paragraph, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Lender may bid for and acquire the Property or any part thereof and in
lieu of paying cash therefor may make settlement for the purchase price by
crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which Lender is
authorized to deduct under this Security Deed.

                  (f)      No recovery of any judgment by Lender and no levy of
an execution under any judgment upon the Property or upon any other property of
Borrower shall affect in any manner or to any extent the lien of this Security
Deed upon the Property or any part thereof, or any liens, rights, powers or
remedies of Lender hereunder, but such liens, rights, powers and remedies of
Lender shall continue unimpaired as before.

                  (g)      Lender may terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided in
this paragraph at any time before the conclusion thereof, as determined in
Lender's sole discretion and without prejudice to Lender.

                  (h)      Lender may resort to any remedies and the security
given by the Note, this Security Deed or the other Loan Documents in whole or in
part, and in such portions and in such order as determined in Lender's sole
discretion. No such action shall in any way be considered a waiver of any
rights, benefits or remedies evidenced or provided by the Note, this Security
Deed or any of the other Loan Documents. The failure of Lender to exercise any
right, remedy or option provided in the Note, this Security Deed or any of the
other Loan Documents shall not be deemed a waiver of such right, remedy or
option or of any covenant or obligation secured by the Note, this Security Deed
or the other Loan Documents. No acceptance by Lender of any payment after the
occurrence of any Event of Default and no payment by Lender of any obligation
for which Borrower is liable hereunder shall be deemed to waive or cure any
Event of Default with respect to Borrower, or Borrower's liability to pay such
obligation. No sale of all or any portion of the Property, no forbearance on the
part of Lender, and no extension of time for the payment of the whole or any
portion of the Debt or any other indulgence given by Lender to Borrower, shall
operate to release or in any manner affect the interest of Lender in the
remaining Property or the liability of Borrower to pay the Debt. No waiver by
Lender shall be effective unless it is in writing and then only to the extent
specifically stated. All reasonable costs and expenses of Lender in exercising
its rights and remedies under this paragraph (including

                                       12
<PAGE>

reasonable attorneys' fees actually incurred and disbursements to the extent
permitted by law), shall be paid by Borrower immediately upon notice from
Lender, with interest at the Default Rate for the period after notice from
Lender and such costs and expenses shall constitute a portion of the Debt and
shall be secured by this Security Deed.

                  (i) The interests and rights of Lender under the Note, this
Security Deed or in any of the other Loan Documents shall not be impaired by any
indulgence, including (i) any renewal, extension or modification which Lender
may grant with respect to any of the Debt, (ii) any surrender, compromise,
release, renewal, extension, exchange or substitution which Lender may grant
with respect to the Property or any portion thereof; or (iii) any release or
indulgence granted to any maker, endorser, Guarantor or surety of any of the
Debt.

         20.      RIGHT OF ENTRY. In addition to any other rights or remedies
granted under this Security Deed, Lender and its agents shall have the right to
enter and inspect the Property at any reasonable time during the Term. The
reasonable cost of such inspections or audits shall be borne by Borrower should
Lender determine that an Event of Default exists, including the cost of all
follow up or additional investigations or inquiries deemed reasonably necessary
by Lender. The reasonable cost of such inspections, if not paid for by Borrower
within ten (10) Business Days of demand thereof, may be added to the principal
balance of the sums due under the Note and this Security Deed and shall bear
interest thereafter until paid at the Default Rate.

         21.      SECURITY AGREEMENT. This conveyance is intended to operate and
is to be construed as a deed passing the title to the Property to Lender and is
made under those provisions of the existing laws of the State of Georgia
relating to deeds to secure debt (including, e.g., O.C.G.A. Section 44-14-60),
and not as a mortgage, and this Security Deed also constitutes a "security
agreement" within the meaning of the Uniform Commercial Code, and the Property
includes both real and personal property and all other rights and interest,
whether tangible or intangible in nature, of the Borrower in the Property. The
Borrower by executing and delivering this Security Deed has granted to the
Lender, to secure the payment to Lender of the Debt at the time and in the
manner provided for its payment in the Note and in this Security Deed, a
security interest in the Property to the full extent the Property may be subject
to the Uniform Commercial Code (said portion of the Property so subject to the
Uniform Commercial Code being called in this paragraph the "COLLATERAL").
Borrower hereby agrees with Lender to execute and deliver to Lender, in form and
substance reasonably satisfactory to Lender, such financing statements and such
further assurances as Lender may from time to time, reasonably consider
necessary to create, perfect, and preserve Lender's security interest herein
granted. To the extent permitted by law, this Security Deed shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code as
to all or any items of the Collateral that are or are to become fixtures under
the Uniform Commercial Code. Information concerning the security interest herein
granted may be obtained from the parties at the addresses of the parties set
forth in the first paragraph of this Security Deed. If an Event of Default shall
occur, Lender, in addition to any other rights and remedies which it may have,
shall have and may exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Lender after the
occurrence and during the continuance of an Event of Default,

                                       13
<PAGE>

Borrower shall at its expense assemble the Collateral and make it available to
Lender at a convenient place reasonably acceptable to Lender. Borrower shall pay
to Lender within ten (10) Business Days of demand therefor any and all expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by
Lender in protecting the interest in the Collateral and in enforcing the rights
hereunder with respect to the Collateral. Any notice of sale, disposition or
other intended action by Lender with respect to the Collateral sent to Borrower
in accordance with the provisions hereof at least ten (10) Business Days prior
to such action, shall constitute commercially reasonable notice to Borrower. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Lender to the payment of the Debt in such priority and proportions as
Lender in its sole discretion shall deem proper. In the event of any change in
name, identity or structure of any Borrower, such Borrower shall notify Lender
thereof and promptly after Lender's request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Lender's lien upon and security interest in the Collateral, and shall pay all
reasonable expenses and fees in connection with the filing and recording
thereof. If Lender shall require the filing or recording of additional Uniform
Commercial Code forms or continuation statements, Borrower shall, promptly after
request, execute, file and record such Uniform Commercial Code forms or
continuation statements as Lender shall deem reasonably necessary, and shall pay
all reasonable expenses and fees in connection with the filing and recording
thereof, it being understood and agreed, however, that no such additional
documents shall increase Borrower's obligations or decrease Borrower's rights
under the Note, this Security Deed and any of the other Loan Documents. Borrower
hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an
interest, to file with the appropriate public office on its behalf any financing
or other statements signed only by Lender, as secured party, in connection with
the Collateral covered by this Security Deed.

         22.      ACTIONS AND PROCEEDINGS. Lender has the right to appear in and
defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of Borrower, which
Lender, in its reasonable discretion, decides should be brought to protect their
interest in the Property. Lender shall, at its option, be subrogated to the lien
of any deed of trust or other security instrument discharged in whole or in part
by the Debt, and any such subrogation rights shall constitute additional
security for the payment of the Debt.

         23.      RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.

         24.      MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the
extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Deed on behalf of Borrower, and on behalf of each
and every person acquiring any interest in or title to the Property subsequent
to the date of this Security Deed and

                                       14
<PAGE>

on behalf of all persons to the extent permitted by applicable law. Lender shall
not be under any obligation to marshal any assets in favor of any Person or in
payment of any of the Debt.

         25.      HANDICAPPED ACCESS.

                  (a)      Borrower agrees that the Property shall at all times
comply, with the requirements of the Americans with Disabilities Act of 1990,
the Fair Housing Amendments Act of 1988, if applicable, all state and local laws
and ordinances related to handicapped access and all rules, regulations, and
orders issued pursuant thereto including, without limitation, the Americans with
Disabilities Act Accessibility Guidelines for Buildings and Facilities
(collectively "ACCESS LAWS").

                  (b)      Without limiting the foregoing, Borrower shall cause
any alterations to the Property to comply with all applicable Access Laws. The
foregoing shall apply to tenant improvements constructed by Borrower or by any
of its tenants. Lender may condition any such approval upon receipt of a
certificate of Access Law compliance from an architect, engineer, or other
person acceptable to Lender.

                  (c)      Borrower agrees to give prompt notice to Lender of
the receipt by Borrower of any material complaints related to violation of any
Access Laws and of the commencement of any proceedings or investigations which
relate to compliance with applicable Access Laws.

         26.      INDEMNIFICATION. In addition to any other indemnifications
provided herein or in the other Loan Documents, Borrower shall protect, defend,
indemnify and save harmless Lender and its successors and assigns (including,
without limitation, the trustee and/or the trust under any trust agreement
executed in connection with any Secondary Market Transaction backed in whole or
in part by the Loan and any other person which may hereafter be the holder of
the Note or any interest therein), and the officers, directors, stockholders,
partners, members, employees, agents, and Affiliates of Lender and such
successors and assigns (each an "INDEMNIFIED PARTY") from and against all
liabilities, obligations, claims, demands, damages, penalties, causes of action,
losses, fines, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements), imposed upon or incurred by or asserted
against any Indemnified Party by reason of: (a) ownership of this Security Deed,
the Property or any interest therein or receipt of any Rents; (b) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (c) any use,
nonuse or condition in, on or about the Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (d) any failure on the part of Borrower to perform or comply with any
of the terms of this Security Deed; (e) performance of any labor or services or
the furnishing of any materials or other property in respect of the Property or
any part thereof; (f) any failure of the Premises or the Improvements to comply
with any applicable law, statute, code, ordinance, rule or regulation including,
without limitation, any Access Laws; (g) any default by Borrower under this
Security Deed, the Loan Agreement or any of the other Loan Documents; (h) any
actions taken by any Indemnified Party in the enforcement of this Security Deed
and other Loan Documents in accordance with their respective terms; (i) any
representation or warranty made in the Note, this Security Deed or any of the
other Loan Documents being false

                                       15
<PAGE>

or misleading in any material respect as of the date such representation or
warranty was made; (j) any claim by brokers, finders or similar persons claiming
to be entitled to a commission in connection with any Lease or other transaction
involving the Property or any part thereof under any legal requirement or any
liability asserted against Lender with respect thereto; and (k) the claims of
any lessee of any or any portion of the Property or any person acting through or
under any lessee or otherwise arising under or as a consequence of any Lease
(collectively, the "INDEMNIFIED LIABILITIES"), provided that Borrower shall not
have an obligation to an Indemnified Party hereunder with respect to the
Indemnified Liabilities arising from the fraud, gross negligence or willful
misconduct of such Indemnified Party as determined by a court of competent
jurisdiction. Any amounts payable to Lender by reason of the application of this
paragraph shall be secured by this Security Deed and shall become immediately
due and payable and shall bear interest at the Default Rate from the date loss
or damage is sustained by Lender until paid. The obligations and liabilities of
Borrower under this paragraph shall survive the termination, satisfaction, or
assignment of this Security Deed and the exercise by Lender of any of its rights
or remedies hereunder, including, but not limited to, the acquisition of the
Property by foreclosure or a conveyance in lieu of foreclosure.

         27.      NOTICES. Any notice, demand, statement, request or consent
made hereunder shall be in writing, addressed to the intended recipient at its
address set forth in the Loan Agreement, and shall be made and deemed given in
accordance with the terms of the Loan Agreement.

         28.      AUTHORITY. (a) Borrower (and the undersigned representative of
Borrower, if any) represent and warrant that it (or they, as the case may be)
has full power, authority and right to execute, deliver and perform its
obligations pursuant to this Security Deed, and to deed, give, grant, bargain,
sell, alien, enfeoff, convey, confirm, warrant, pledge and assign the Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Security Deed on Borrower's part to be performed; and (b) Borrower represents
and warrants that Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the
related Treasury Department regulations, including temporary regulations.

         29.      NON-WAIVER. The failure of Lender to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Security Deed. Any consent or approval by Lender in any single instance
shall not be deemed or construed to be Lender's consent or approval in any like
matter arising at a subsequent date. Borrower shall not be relieved of
Borrower's obligations hereunder by reason of (a) the failure of Lender to
comply with any request of Borrower or any Guarantor to take any action to
foreclose this Security Deed or otherwise enforce any of the provisions hereof
or of the Note, or the other Loan Documents, (b) the release, regardless of
consideration, of the whole or any part of the Property, or of any person liable
for the Debt or any portion thereof, or (c) any agreement or stipulation by
Lender extending the time of payment or otherwise modifying or supplementing the
terms of the Note, this Security Deed or any of the other Loan Documents. Lender
may resort for the payment of the Debt to any other security held by Lender in
such order and manner as Lender, in its sole discretion, may elect. Lender may
take action to recover the Debt, or any portion thereof, or to enforce any
covenant hereof without prejudice to the right of Lender thereafter to
foreclosure this Security Deed. The rights and remedies of Lender under this
Security Deed shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of

                                       16
<PAGE>

Lender shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision. Lender shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every right and remedy now or hereafter afforded at law or in equity.

         30.      NO ORAL CHANGE. This Security Deed, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

         31.      LIABILITY. Subject to the provisions hereof requiring Lender's
consent to any transfer of the Property, this Security Deed shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns forever.

         32.      INAPPLICABLE PROVISIONS. If any term, covenant or condition of
the Note or this Security Deed is held to be invalid, illegal or unenforceable
in any respect, the Note and this Security Deed shall be construed without such
provision.

         33.      HEADINGS, ETC. The headings and captions of various paragraphs
of this Security Deed are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

         34.      DUPLICATE ORIGINALS. This Security Deed may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to be an original.

         35.      DEFINITIONS. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Security Deed may be used interchangeably in singular or plural form and the
word "BORROWER" shall mean "each Borrower and any subsequent owner or owners of
the Property or any part thereof or any interest therein," the word "LENDER"
shall mean "Lender and any subsequent holder of the Note," the word "NOTE" shall
mean "the Note and any other evidence of indebtedness secured by this Security
Deed," the word "PERSON" shall include an individual, corporation, partnership,
trust, unincorporated association, government, governmental authority, and any
other entity, and the words "PROPERTY" shall include any portion of the Property
and any interest therein and the words "ATTORNEYS' FEES" shall include any and
all reasonable attorneys' fees, paralegal and law clerk fees, including, without
limitation, fees at the pre-trial, trial and appellate levels actually incurred
or paid by Lender in protecting its interest in the Property and Collateral and
enforcing its rights hereunder, but shall not mean statutory attorneys' fees
pursuant to O.C.G.A. Section 13-1-11. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.

         36.      HOMESTEAD. Borrower hereby waives and renounces all homestead
and exemption rights provided by the Constitution and the laws of the United
States and of any state, in and to the Property as against the collection of the
Debt, or any part hereof.

                                       17
<PAGE>

         37.      ASSIGNMENTS. Lender shall have the right to assign or transfer
its rights under this Security Deed without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded Lender under this
Security Deed.

         38.      WAIVER OF JURY TRIAL. EACH OF BORROWER AND LENDER HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE, THIS SECURITY DEED, OR THE OTHER
LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. EACH OF BORROWER AND LENDER IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OTHER PARTY.

         39.      INTENTIONALLY OMITTED.

         40.      INTENTIONALLY OMITTED.

         41.      LIMITATIONS ON RECOURSE PROVISIONS. The obligations of
Borrower hereunder are subject to limitations on recourse as provided in Article
XII of the Loan Agreement.

         42.      MISCELLANEOUS.

                  (a)      Intentionally Omitted.

                  (b)      The Loan Documents contain the entire agreement
between Borrower and Lender relating to or connected with the Loan. Any other
agreements relating to or connected with the Loan not expressly set forth in the
Loan Documents are null and void and superseded in their entirety by the
provisions of the Loan Documents.

                  (c)      Borrower represents and warrants to Lender that, to
Borrower's knowledge, there has not been committed by Borrower or any other
person in occupancy of or involved with the operation or use of the Property any
act or omission affording the federal government or any state or local
government the right of forfeiture as against the Property or any part thereof
or any monies paid in performance of Borrower's obligations under the Note or
under any of the other Loan Documents. Borrower hereby covenants and agrees not
to commit, intentionally permit or suffer to exist any act, omission or
circumstance affording such right of forfeiture. In furtherance thereof,
Borrower hereby indemnifies Lender and agrees to defend and hold Lender harmless
from and against any loss, damage or injury by reason of the breach of the
covenants and agreements or the representations and warranties set forth in this
paragraph. Without limiting the generality of the foregoing, the filing of
formal charges or the commencement of proceedings against Borrower or all or any
part of the Property under any federal or state law for which forfeiture of the
Property or any part thereof or of any monies paid in performance of Borrower's
obligations under the Loan Documents is a potential result, shall,

                                       18
<PAGE>

at the election of Lender, constitute an Event of Default hereunder without
notice or opportunity to cure.

                  (d)      Borrower acknowledges that, with respect to the Loan,
Borrower is relying solely on its own judgement and advisors in entering into
the Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or affiliate of Lender.
Borrower acknowledges that Lender engages in the business of real estate
financings and other real estate transactions and investments which may be
viewed as adverse to or competitive with the business of the Borrower or its
affiliates. Borrower acknowledges that it is represented by competent counsel
and has consulted counsel before executing the Loan Documents.

                  (e)      Intentionally Omitted.

                  (f)      This Security Deed and the obligations arising
hereunder shall be governed by and construed in accordance with the laws of the
State of New York and any applicable laws of the United States of America,
except that at all times the provisions for the creation, perfection and
enforcement of the liens and the security interests created pursuant to this
Security Deed shall be governed by the laws of the State where the Premises are
located.

         43.      FUTURE ADVANCES. This Security Deed secures "FUTURE ADVANCES,"
as hereinafter defined. Any portion of the Debt which is incurred after the
execution of this Security Deed pursuant to any instrument referring to this
Security Deed, or which is evidenced by any instrument stating that said
indebtedness is secured by this Security Deed, shall be defined as a "FUTURE
ADVANCE," including, without limitation, indebtedness incurred or advanced by
Lender to Borrower or pursuant to the Loan Documents. It is agreed that the Loan
Documents are intended to secure all of the debts and obligations referred to in
the Loan Documents, some of which will be obligatory future advances, and all
advances under the Loan Documents will be for commercial purposes. This
Paragraph shall serve as notice to any subsequent holder of a lien, encumbrance,
security title or other claim in and to the Property that Lender claims the
priority of the lien of this Security Deed for all such Future Advances, as well
as for all other obligations secured hereby. This Paragraph shall also be notice
that Lender reserves the right, upon agreement thereto with Borrower, to modify,
extend, consolidate, and renew the Debt, or any portions thereof, and the rate
of interest charged thereon, without affecting the priority of the lien created
by this Security Deed.

         44.      CROSS-COLLATERALIZATION. The mortgages, deeds to secure debt
and deeds of trust (other than this Security Deed) listed on EXHIBIT B attached
hereto and made a part hereof, as any of same may be amended, modified or
supplemented from time to time, are collectively referred to for purposes of
this Section 44 as the "OTHER SECURITY INSTRUMENTS." This Security Deed, as it
may be amended, modified or supplemented from time to time, together with the
Security Instruments, are collectively referred to for purposes of this Section
44 as the "SECURITY INSTRUMENTS." The Debt is secured by, among other things,
the Security Instruments, which encumber real and personal property in the
States set forth on EXHIBIT B, as more particularly described in each of the
Security Instruments. The Debt may be accelerated as provided in the Loan
Documents. Upon the occurrence and during the continuance of an Event of
Default, Lender may, at its option, accelerate the Debt and foreclose upon any
one or more of the Security

                                       19
<PAGE>

Instruments or resort to any one or more of its other rights and remedies under
any or all of the Security Instruments and the other Loan Documents. Except as
otherwise provided herein, all of the real and personal property conveyed and/or
encumbered by the Security Instruments are security for the Debt without
allocation of any one or more of the parcels or portions thereof to any portion
of the Debt. Lender may allocate the proceeds that it receives upon the exercise
of its rights and remedies, including foreclosure, to payment of the Debt as
Lender in its sole discretion may determine to be advisable pursuant to the
terms of the Loan Documents. Lender may proceed, at the same or different times,
to foreclose the Security Instruments or any one or more of them, by any
proceedings appropriate in the state where any of the real property encumbered
by one or more of the Security Instruments lies, including private sale if
permitted, and no event of enforcement taking place in any state, including
without limiting the generality of the foregoing, any pending foreclosure,
judgment or decree of foreclosure, foreclosure sale, rents received, possession
taken, deficiency judgment or decrees, or judgment taken on the Debt, shall in
any way stay, preclude or bar enforcement of the Security Instruments or any of
them in any other state, and Lender may pursue any or all of its remedies to the
maximum extent permitted by applicable law pursuant to the terms of the Loan
Documents until all of the Debt and all other obligations now or hereafter
secured by any or all of the Security Instruments have been paid or discharged
in full. Additionally, and without limitation of any other provision of this
Security Deed, if this Security Deed is foreclosed and the Property is sold (or
any part thereof) pursuant to foreclosure or other proceedings, and if the
proceeds of such sale (after application of such proceeds as provided in this
Security Deed and the other Loan Documents) are not sufficient to pay the total
sum of the Debt then outstanding and any other amounts provided for by
applicable law (the "BALANCE OWED"), then, to the extent permitted by law, the
Debt shall not be satisfied to the extent of the Balance Owed, but such Debt
shall continue in existence and continue to be evidenced and secured by the Loan
Documents and the Security Instruments. Subject to the requirements of
applicable law, if Lender shall acquire the Property as a result of any
foreclosure or other sale (whether by bidding all or any portion of the Debt or
otherwise), the proceeds of such sale, to the extent permitted by law, shall not
be deemed to include (and Borrower shall not be entitled to any benefit or
credit on account of) proceeds of any subsequent sale of the Property by Lender.
Without limitation of any other provision hereof, Borrower further agrees that
if any of the Other Security Instruments are foreclosed and sale is made of any
of the property subject to any Other Security Instruments, and if the proceeds
of such sale (after application of such proceeds as provided for herein and
after deducting all accrued and general and special taxes and assessments) are
not sufficient to pay the Debt and any other amounts provided for by applicable
law, then, to the extent permitted by law, the Debt then outstanding shall not
be satisfied to the extent of the Balance Owed, but such Debt shall continue in
existence and continue to be evidenced and secured by the Loan Documents and the
Security Instruments existing immediately prior to any such foreclosure, except
such Security Instruments foreclosed upon. No release of personal liability, if
any, of any Person whatsoever and no release of any portion of the property now
or hereafter subject to the lien of any of the Security Instruments shall have
any effect whatsoever by way of impairment or disturbance of the lien or
priority of any other of the Security Instruments or the unreleased properties
encumbered by any of the Security Instruments, to the extent permitted by law.
Any foreclosure or other appropriate remedy brought in any of the states
aforesaid may be brought and prosecuted as to any part of the security, wherever
located, without regard to the fact that foreclosure proceedings or other
remedies have or have not been instituted elsewhere on any other property
subject to the lien of

                                       20
<PAGE>

the Security Instruments. Neither Borrower nor any Person claiming by, through
or under Borrower shall have any right to marshal the assets, all such rights
being hereby expressly waived as to Borrower and all Persons claiming by,
through or under Borrower, Debt, without limitation, junior lienors. Each of
Borrower and all endorsers, guarantors and sureties of the Debt, hereby waives
any and all rights arising because of payment or performance by Borrower of any
Debt (a) against any Person by way of subrogation of the rights of Lender or (b)
against any Person obligated to pay or perform the Debt or other obligations
secured by the Other Security Instruments by way of contribution, reimbursement
or otherwise.

         45.      SPECIAL STATE PROVISIONS.

                  (a)      Borrower represents and warrants to Lender that
neither all of the Property nor any part thereof is to be used as a dwelling
place by Borrower at the time this Security Deed is entered into and,
accordingly, the notice requirements of O.C.G.A. Section 44-14-162.2 shall not
be applicable to any exercise of the power of sale contained in this Security
Deed.

                  (b)      The interest of Lender under this Security Deed and
the liability and obligation of Borrower for the payment of the Debt arise from
a "commercial transaction" within the meaning of O.C.G.A. Section 44-14-260(1).
Accordingly, pursuant to O.C.G.A. Section 44-14-263, Borrower waives any and all
rights which Borrower may have to notice prior to seizure by Lender following an
Event of Default of any interest in personal property of Borrower which
constitutes part of the Property, whether such seizure is by writ of possession
or otherwise.

                  (c)      BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT BORROWER
MAY HAVE UNDER THE CONSTITUTION OF THE STATE OF GEORGIA OR THE CONSTITUTION OF
THE UNITED STATES OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED TO LENDER BY THIS SECURITY DEED, AND
WAIVES BORROWER'S RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE UNDER
POWER DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECURITY DEED
ON THE GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT PRIOR
NOTICE OR JUDICIAL HEARING OR BOTH. BORROWER FURTHER HEREBY EXPRESSLY WAIVES ALL
HOMESTEAD EXEMPTION RIGHTS, IF ANY, WHICH BORROWER MAY HAVE PURSUANT TO THE
CONSTITUTION OF THE UNITED STATES, THE STATE OF GEORGIA OR ANY OTHER STATE OF
THE UNITED STATES, IN AND TO THE PROPERTY AS AGAINST THE COLLECTION OF THE
OBLIGATION, OR ANY PART THEREOF. ALL WAIVERS BY BORROWER IN THIS SUBSECTION HAVE
BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY BY BORROWER, AFTER BORROWER
HAS BEEN AFFORDED AN OPPORTUNITY TO BE INFORMED BY COUNSEL OR BORROWER'S CHOICE
AS TO POSSIBLE ALTERNATIVE RIGHTS. BORROWER'S EXECUTION OF THIS SECURITY DEED
SHALL BE CONCLUSIVE EVIDENCE OF THE WAIVER AND THAT SUCH WAIVER HAS BEEN
VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY MADE.

                  (d)      Rights of Lender Upon Event of Default. If an Event
of Default shall have occurred, then the entire Debt and any other indebtedness
of the Borrower to the Lender shall, at

                                       21
<PAGE>

the option of Lender, immediately become due and payable without notice or
demand, time being of the essence, and Lender, at its option, may do any one or
more of the following (and, if more than one, either concurrently or
independently, and in such order as Lender may determine in its discretion), all
without regard to the adequacy or value of the security for the Debt and any
other indebtedness of the Borrower to the Lender:

                           (i)      Enter upon and take possession of the
         Premises without the appointment of a receiver, or an application
         therefor; at its option, operate the Premises; at its option, exclude
         Borrower and its agents and employees wholly therefrom; at its option,
         employ a managing agent of the Premises; and at its option, exercise
         any one or more of the rights and powers of Borrower to the same extent
         as Borrower could, either in its own name, or in the name of Borrower;
         and, with or without taking possession of the Premises, receive the
         rents, incomes, issues, profits and revenues of the Premises.

                           (ii)     Apply, as a matter of strict right, without
         notice and without regard to the solvency of any party bound for its
         payment, for the appointment of a receiver to take possession of and to
         operate the Premises and to collect and apply the incomes, rents,
         issues, profits and revenues thereof.

                           (iii)    Pay, perform or observe any term, covenant
         or condition of this Security Deed and any of the other Loan Documents
         and all reasonable payments made or reasonable costs or expenses
         incurred by Lender in connection therewith shall be secured hereby and
         shall be, without demand, immediately repaid by Borrower to Lender with
         interest thereon at the Default Rate. The necessity for any such
         actions and of the amounts to be paid shall be determined by Lender in
         its discretion. Lender is hereby empowered to enter and to authorize
         others to enter upon the Premises or any part thereof for the purpose
         of performing or observing any such defaulted term, covenant or
         condition without thereby becoming liable to Borrower or any person in
         possession holding under Borrower. Borrower hereby acknowledges and
         agrees that the remedies set forth in this clause (iii) shall be
         exercisable by Lender, and any and all reasonable payments made or
         reasonable costs or expenses incurred by Lender in connection therewith
         shall be secured hereby and shall be, without demand, immediately
         repaid by Borrower with interest thereon at the Default Rate,
         notwithstanding the fact that such remedies were exercised and such
         payments made and costs incurred by Lender after the filing by Borrower
         of a voluntary case or the filing against Borrower of an involuntary
         case pursuant to or within the meaning of the Bankruptcy Code, Title 11
         U.S.C., or after any similar action pursuant to 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 Borrower, Lender, the Debt and any other
         indebtedness of the Borrower to the Lender or any of the Loan
         Documents.

                           (iv)     Sell the Premises or any part of the
         Premises at one or more public sale or sales at the usual place for
         conducting sales in the county in which the Premises or any part of the
         Premises is situated, to the highest bidder for cash, in order to
         satisfy the Debt and/or pay any other indebtedness of the Borrower to
         the Lender, and all expenses of sale and of all proceedings in
         connection therewith, including reasonable attorneys' fees, after
         advertising the time, place and terms of sale once a week for four (4)
         weeks

                                       22
<PAGE>

         immediately preceding such sale (but without regard to the number of
         days) in a newspaper in which sheriff's sales are advertised in said
         county, all other notice being hereby waived by Borrower. At any such
         public sale, Lender may execute and deliver to the purchaser a
         conveyance of the Premises or any part of the Premises in fee simple,
         with full warranties of title, and to this end Borrower hereby
         constitutes and appoints Lender the agent and attorney-in-fact of
         Borrower to make such sale and conveyance, and thereby to divest
         Borrower of all right, title and equity that Borrower may have in and
         to the Premises and to vest the same in the purchaser or purchasers at
         such sale or sales, and all the acts and doings of said agent and
         attorney-in-fact are hereby ratified and confirmed, and any recitals in
         said conveyance or conveyances as to facts essential to a valid sale
         shall be binding upon Borrower. The aforesaid power of sale and agency
         hereby granted are coupled with an interest and are irrevocable by
         death or otherwise, and shall not be exhausted by one exercise thereof
         but may be exercised until full satisfaction of the Debt and full
         payment of any other indebtedness of the Borrower to the Lender. In the
         event of any sale under this Security Deed by virtue of the exercise of
         the powers herein granted, or pursuant to any order in any judicial
         proceeding or otherwise, the Premises may be sold as an entirety or in
         separate parcels and in such manner or order as Lender in its
         discretion may elect, and if Lender so elects, Lender may sell the
         personal property covered by this Security Deed concurrently with the
         real property covered hereby or at one or more separate sales in any
         manner permitted by the Uniform Commercial Code, and one or more
         exercises of the powers herein granted shall not extinguish nor exhaust
         such powers, until the entire Premises are sold or the Debt are fully
         satisfied and any other indebtedness of the Borrower to the Lender is
         paid in full. Lender may, at its option, sell the Premises subject to
         the rights of any tenants of the Premises, and the failure to make any
         such tenants parties to any foreclosure proceedings and to foreclose
         their rights will not be asserted by Borrower to be a defense to any
         proceedings instituted by Lender to satisfy the Debt and/or collect any
         other indebtedness of the Borrower to the Lender. If the Debt and any
         other indebtedness of the Borrower to the Lender is now or hereafter
         further secured by any chattel mortgages, pledges, contracts of
         guaranty, assignments of lease or other security instruments, Lender
         may at its option exhaust the remedies granted under any of said
         security either concurrently or independently, and in such order as
         Lender may determine in its discretion. Upon any foreclosure sale,
         Lender may bid for and purchase the Premises and shall be entitled to
         apply all or any part of the Debt and any other indebtedness of the
         Borrower to the Lender as a credit to the purchase price. In the event
         of any such foreclosure sale by Lender, Borrower shall be deemed a
         tenant holding over and shall forthwith deliver possession to the
         purchaser or purchasers at such sale or be summarily dispossessed
         according to provisions of law applicable to tenants holding over. In
         case Lender shall have proceeded to enforce any right, power or remedy
         under this Security Deed by foreclosure, entry or otherwise or in the
         event Lender commences advertising of the intended exercise of the sale
         under power provided hereunder, and such proceeding or advertisement
         shall have been withdrawn, discontinued or abandoned for any reason,
         then in every such case (i) Borrower and Lender shall be restored to
         their former positions and rights, (ii) all rights, powers and remedies
         of Lender shall continue as if no such proceeding had been taken, (iii)
         each and every Event of Default declared or occurring prior or
         subsequent to such withdrawal, discontinuance or abandonment shall

                                       23
<PAGE>

         be deemed to be a continuing Event of Default, and (iv) neither this
         Security Deed, nor the Guaranty, nor the Debt or any other indebtedness
         of the Borrower to the Lender, nor any other Loan Document shall be or
         shall be deemed to have been reinstated or otherwise affected by such
         withdrawal, discontinuance or abandonment; and Borrower hereby
         expressly waives the benefit of any statute or rule of law now
         provided, or which may hereafter be provided, which would produce a
         result contrary to or in conflict with this sentence.

                           (v)      Proceed by a suit or suits in law or in
         equity or by any other appropriate proceeding or remedy (i) to enforce
         the Debt, payment of any other indebtedness of the Borrower to the
         Lender, the performance of any term, covenant, condition or agreement
         of this Security Deed or any of the other Loan Documents or any other
         right or (ii) to pursue any other remedy available to Lender.

                           (vi)     Lender may apply any moneys and proceeds
         received by Lender as a result of the exercise by Lender of any right
         conferred under this Section 45 in such order as Lender in its
         discretion may elect against (i) all reasonable costs and expenses,
         including reasonable attorneys' fees, incurred in connection with the
         operation of the Premises, the performance of Borrower's obligations
         under the Leases and the collection of the rents thereunder; (ii) all
         reasonable costs and expenses, including reasonable attorneys' fees,
         incurred in the satisfaction of the Debt or in the collection of any or
         all other indebtedness of the Borrower to the Lender, including those
         incurred in seeking to realize on or to protect or preserve Lender's
         interest in any other collateral securing any or all of the Debt and/or
         any other indebtedness of the Borrower to the Lender; (iii) any or all
         unpaid principal on the Debt and any other indebtedness of the Borrower
         to the Lender; (iv) any other amounts owing under the Loan Documents;
         and (v) accrued interest and charges on any or all of the foregoing.
         The remainder, if any, shall be paid to Borrower or any person or
         entity lawfully entitled thereto.

                                       24
<PAGE>

                  IN WITNESS WHEREOF, Borrower has executed this instrument the
day and year first above written.

                                        BORROWER:

Signed, sealed and delivered            [PROPERTY OWNER NAME]
in the presence of:

____________________________            By: __________________________________
Unofficial Witness                          Name:
                                            Title:

____________________________
Notary Public
My Commission Expires:______

                                        LENDER:

Signed, sealed and delivered            MERRILL LYNCH MORTGAGE
in the presence of:                     LENDING, INC., a Delaware corporation

____________________________            By: __________________________________
Witness                                     Name:  ___________________________
                                            Title: ___________________________

_________________________________
Notary Public (Affix seal and
commission expiration date)

<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

                                      A-1
<PAGE>

                                    EXHIBIT B

  [SCHEDULE OF ALL OTHER DEEDS OF TRUST, DEEDS TO SECURE DEBT AND MORTGAGES IN
                                   LOAN POOL]

                                      B-1<PAGE>
                                                                   EXHIBIT 10.9

                       PREFERRED SHARE EXCHANGE AGREEMENT

         THIS PREFERRED SHARE EXCHANGE AGREEMENT (this "Agreement") is entered
into as of June 22, 2004, by and among Lodgian, Inc., a Delaware corporation
(the "Company"), and the record and/or beneficial stockholders of the Company
identified on Annex I (each a "Stockholder" and collectively the
"Stockholders").

                                    RECITALS

         WHEREAS, the Company has entered into a Purchase Agreement (the
"Purchase Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), Citigroup Global Markets Inc.
("Citigroup"), Banc of America Securities LLC, Legg Mason Wood Walker,
Incorporated and Raymond James & Associates, Inc., as representatives of the
underwriters (the "Underwriters"), providing for the public offering (the
"Offering") of shares (the "Securities") of the Company's common stock, par
value $0.01 per share (the "Common Stock");

         WHEREAS, the Company has filed a registration statement on Form S-1
with the United States Securities and Exchange Commission for the purpose of
effectuating the Offering (the "Registration Statement") and from a portion of
the proceeds of the Offering, shares of the Company's Series A Preferred Stock,
par value of $0.01 per share ("Preferred Stock") will be redeemed for cash; and

         WHEREAS, the Stockholders deem it necessary and desirable to forego
receiving cash for a portion of their shares of Preferred Stock and to maintain
a portion of their investment in the Company, presently represented by shares
of Preferred Stock, in the form of shares of Common Stock.

                                   AGREEMENT

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

         1.       DEFINITIONS. Each capitalized term used herein and not
otherwise defined shall have the meaning given to it in the Registration
Statement.

         2.       EXCHANGE OF STOCK. Immediately following the closing of the
Offering, each of the Stockholders agrees to transfer and exchange, or use
reasonable efforts to cause its custodian, if applicable, to transfer and
exchange, with the Company the number of shares of Preferred Stock owned of
record or beneficially by such Stockholders, as specifically set forth opposite
each such Stockholder's name on Annex I (as to each Stockholder, the "Exchange
Shares") and Company agrees to issue to the Stockholders, or to their
custodian, as directed by the applicable Stockholder, that number of shares of
Common Stock specified opposite each such Stockholder's name on Annex I (as to
each Stockholder, the "Shares") in amounts determined as provided on Annex I.

         3.       CLOSING; DELIVERABLES.

         3.1      Closing. The exchange of the Shares shall take place at the
offices of Sidley Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New
York 10019, at a closing (the "Closing") on the day of and immediately
following the closing of the Offering on the Closing Date, as defined in the
Purchase Agreement.

         3.2      Transactions and Documents at Closing. Upon signing this
Agreement, each Stockholder has

<PAGE>
surrendered, or shall deliver an irrevocable instruction to its custodian, as
applicable, directing it to deliver, its Exchange Shares, together with an
executed stock power, to be held in escrow by Wachovia Bank, N.A. ("Wachovia"),
transfer agent for the Company, until completion of the Offering. Immediately
following the closing of the Offering, Wachovia shall release the Exchange
Shares from escrow to the Company and the Company shall issue and deliver to
each Stockholder, or to their custodian, as directed by the applicable
Stockholder, a certificate for the Shares specified on Annex I. If the Purchase
Agreement is terminated or the closing of the Offering does not occur prior to
July 31, 2004, Wachovia shall release the Exchange Shares to the applicable
Stockholders or their custodian, if applicable.

         4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Stockholder as follows:

         4.1      Validity. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles.

         4.2      Common Stock. At the time of the Closing and after giving
effect to the transactions contemplated by this Agreement, the authorized
Common Stock of the Company will be as described in the Registration Statement.
All of the outstanding shares of Common Stock are, and at the Closing will be,
validly issued and outstanding, fully paid and non-assessable.

         5.       REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF STOCKHOLDER.

         5.1      Validity. Each Stockholder represents and warrants to the
Company on its own behalf, and not on behalf of the other Stockholders, that
this Agreement has been duly executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles.

         5.2      Stock Legends. Each Stockholder agrees, on its own behalf and
not on behalf of the other Stockholders, that if such Stockholder is presently
an affiliate (as that term is defined in SEC Rule 144 under the Securities Act
of 1933) or if the Exchange Shares are "restricted securities" (as defined in
Rule 144), the Exchange Shares shall bear legends in substantially the
following terms:

         (i)      THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING EXCHANGED IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION

         REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO SECTION 3(A)(9)
THEREOF.

         (ii)     THE SHARES ARE SUBJECT TO RESTRICTION ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT PURSUANT TO REGISTRATION OR EXEMPTION FROM SUCH REGISTRATION.
THE SHARES WILL BEAR A LEGEND TO SUCH EFFECT. STOCKHOLDER FURTHER UNDERSTANDS
THAT THE EXEMPTION FROM REGISTRATION AFFORDED BY RULE 144 UNDER THE SECURITIES
ACT DEPENDS ON THE SATISFACTION OF VARIOUS CONDITIONS AND THAT, IF APPLICABLE,
RULE 144 AFFORDS THE BASIS OF SALES OF THE SHARES IN LIMITED AMOUNTS UNDER
CERTAIN CONDITIONS.

                                       2
<PAGE>
         (iii)    THE SHARES BEING EXCHANGED HEREUNDER HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY
OR ADEQUACY OF THIS OFFERING.

         6.       MISCELLANEOUS.

         6.1      Further Assurances. From time to time after Closing, the
Stockholders and the Company, without charge, shall perform such other acts,
and shall execute and acknowledge and shall furnish such other instruments,
documents, materials and information, as the other party may reasonably request
in order to confirm the consummation of the transaction provided for in this
Agreement.

         6.2      Notices. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent (i) by first class certified mail,
postage prepaid, (ii) by a nationally recognized overnight courier service or
(iii) by telecopy, in each case addressed to such party at the address or
telecopy number set forth below or such other address or telecopy number as may
hereafter be designed in writing by the addressee to the addressor listing all
parties:

                  If to the Company:   Lodgian, Inc.
                                       3445 Peachtree Road, N.E.
                                       Suite 700
                                       Atlanta, Georgia 30326
                                       Attn: General Counsel
                                       Fax: (404) 364-0088

                  If to a Stockholder: At the address set forth on Annex I

or, in any case, at such other address or addresses as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of mailing, on the fifth business day following the
date of such mailing, (iii) in the case of courier service, on the next
business day following the date of such transmission and (iv) in the case of
telecopy, upon confirmed receipt.

         6.3      Entire Agreement; Modifications. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and may not be amended or modified nor any provisions waived except in a
writing signed by the Company and Stockholder.

         6.4      Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party hereto.

         6.5      Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures of
the undersigned parties will have the same force and effect as original
signatures.

         6.6      Severability. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
or legality of the remainder of this Agreement.

                                       3
<PAGE>
         6.7      Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the state of New York excluding choice-of-law principles of the law of such
state that would require the application of the laws of a jurisdiction other
than the state of New York.

                                       4
<PAGE>
         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                COMPANY:

                                LODGIAN, INC.

                                By: /s/ Daniel E. Ellis
                                    -------------------------------------------
                                    Name: Daniel E. Ellis
                                    Title: Senior Vice President and General
                                           Counsel

                                STOCKHOLDERS:

                                OCM REAL ESTATE OPPORTUNITIES FUND II, L.P.

                                By: Oaktree Capital Management, LLC, its
                                    General Partner

                                By: /s/ Philip Hofmann
                                    -------------------------------------------
                                    Name: Philip Hofmann
                                    Title: Managing Director

                                By: /s/ Marc Porosoff
                                    -------------------------------------------
                                    Name: Marc Porosoff
                                    Title: Senior Vice President, Legal

                                OCM REAL ESTATE OPPORTUNITIES FUND III, L.P.

                                By: OCM Real Estate Opportunities Fund III GP,
                                    LLC, its general partner

                                    By: Oaktree Capital Management, LLC, its
                                        managing member

                                    By: /s/ Philip Hofmann
                                        ---------------------------------------
                                        Name: Philip Hofmann
                                        Title: Managing Director

                                     By: /s/ Marc Porosoff
                                         --------------------------------------
                                         Name: Marc Porosoff
                                         Title: Senior Vice President, Legal

                                       5
<PAGE>
                                OCM REAL ESTATE OPPORTUNITIES FUND IIIA, L.P.

                                By: OCM Real Estate Opportunities Fund III GP,
                                    LLC, its general partner

                                    By: Oaktree Capital Management, LLC, its
                                        managing member

                                    By: /s/ Philip Hofmann
                                        ---------------------------------------
                                        Name: Philip Hofmann
                                        Title: Managing Director

                                     By: /s/ Marc Porosoff
                                         --------------------------------------
                                         Name: Marc Porosoff
                                         Title: Senior Vice President, Legal

                                BRE/HY FUNDING L.L.C.

                                By: /s/ Dennis J. McDonagh
                                    -------------------------------------------
                                    Name: Dennis J. McDonagh
                                    Title: Vice President

                                MERRILL LYNCH, PIERCE, FENNER & SMITH
                                INCORPORATED

                                By: /s/ Michael Nash
                                    -------------------------------------------
                                    Name: Michael Nash
                                    Title:

                                       6
<PAGE>
                                    ANNEX I

                                  STOCKHOLDERS

<TABLE>
<CAPTION>
                                                       PRE-EXCHANGE       PRE-EXCHANGE        POST-EXCHANGE       POST-EXCHANGE
                                                     NUMBER OF SHARES   VALUE OF SHARES         NUMBER OF        VALUE OF SHARES
                                                      OF PREFERRED       OF PREFERRED           SHARES OF           OF COMMON
STOCKHOLDER NAME AND ADDRESS                              STOCK            STOCK (1)           COMMON STOCK         STOCK (2)
----------------------------                         ----------------   ---------------       -------------      ---------------
<S>                                                  <C>                <C>                   <C>                <C>

Merrill Lynch, Pierce, Fenner & Smith
Incorporated                                             236,933          $ 6,608,902              629,420          $ 6,608,902
4 World Financial Center
North Tower, 12th Floor
New York, New York 10080

OCM Real Estate Opportunities Fund II, L.P.              747,789          $20,858,488            1,986,523          $20,858,488
333 South Grand Avenue
28th Floor
Los Angeles, California 90071

OCM Real Estate Opportunities Fund III, L.P.             100,829          $ 2,812,479              267,855          $ 2,812,479
333 South Grand Avenue
28th Floor
Los Angeles, California 90071

OCM Real Estate Opportunities Fund IIIA, L.P.              3,118          $    86,972                8,283          $    86,972
333 South Grand Avenue
28th Floor
Los Angeles, California 90071

BRE/HY Funding L.L.C                                     394,889          $11,014,855            1,049,034          $11,014,855
345 Park Avenue
31st Floor
New York, New York 10154
</TABLE>

(1)      Each share of Preferred Stock is valued at 104% of the sum of its
         liquidation value plus accrued and unpaid dividends as of the date of
         the Preferred Share Exchange.

(2)      Each share of Common Stock is valued at the public offering price of
         the Securities set forth in Schedule B to the Purchase Agreement.

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