SEPARATION AGREEMENT AND GENERAL RELEASE

Exhibit 10.12

SEPARATION AGREEMENT AND GENERAL RELEASE

     THIS SEPARATION AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and entered into by and among Mark D. Linch (“Employee”) and LODGIAN, INC. (“Lodgian” or “Company”) and any of its former or current employees, managers, supervisors, attorneys, agents, officers, directors, and affiliates, including parent companies, subsidiaries, employee benefits plans, and divisions (collectively, the “Releasees”).

      WHEREAS , Employee and the Releasees want to settle fully and finally all differences and potential disputes between them arising out of Employee’s employment or termination of employment on August 22, 2007, with the Releasees (the “Separation Date”);

      WHEREAS , Employee and the Company previously entered into an “Amended and Restated Executive Employment Agreement” (the “Employment Agreement”) dated March 29, 2007, which requires Employee to enter into this Agreement in order to receive certain separation benefits;

      NOW, THEREFORE, in consideration of the premises and mutual promises herein contained, it is agreed as follows:

     1.  Denial of Liability or Wrongful Conduct .

     This Agreement shall not in any way be construed as an admission by the Releasees that they have acted wrongfully with respect to Employee or any other person, or that Employee has any rights whatsoever against the Releasees. The Releasees specifically disclaim and deny any liability to, or wrongful acts against, Employee or any other person, on the part of themselves, their employees or their agents.

     2.  No Pending Claims .

     Employee represents that he has not filed, nor assigned to others the right to file, nor are there pending any complaints, charges or lawsuits against the Releasees with any governmental agency or any court, and that he will not file any claims against the Releasees with any governmental agency or any court at any time hereafter for actions taken up to and including the date on which this Agreement becomes effective arising out of Employee’s employment or termination of employment by Releasees.

     3.  Consideration .

     Provided the Employee satisfies the conditions of this Agreement (including returning all Company property as provided in Paragraph 9 below, and complying with all restrictive covenants of the Employment Agreement) and does not revoke this Agreement, the Company will:

	a.		Make lump-sum payment equal to 50% of Employee’s base salary in the total amount of $112,500, plus an additional sum of $37,501.50 (together, the “Lump Sum Payment”) less applicable withholdings and deductions; the Company shall also be entitled, and Employee hereby authorizes the Company to off-set any amounts owed by Employee to the Company from the Lump Sum Payment. The Lump Sum payment shall be paid no later than thirty (30) days following the expiration of any applicable revocation period.
	b.		The Company shall pay 100% of the Employee’s and his eligible dependents’ health care coverage under COBRA, for a period six (6) months. If the Employee obtains other healthcare coverage during this six (6) month period, the Employee will notify the Company in writing and the Company will discontinue these COBRA payments.
			Because the Employee is no longer employed, the Employee’s rights to any particular employee benefit will be governed by applicable law and the terms and provisions of the Company’s various employee benefit plans and arrangements. The Employee’s Separation Date will be the date use in determining benefits under all Company employee benefit plans.
	c.		Pay the Employee’s accrued, but unused vacation as of the employment termination date, less applicable withholdings and deductions. The Company and the Employee agree that the Employee has 136 hours of accrued, but unused vacation, which entitles the Employee to a cash payment of $ 14,711.12.
	d.		Not contest any claim by Employee for unemployment compensation related to Employee’s separation from employment with the Company.
	e.		Pay Employee’s actual business expenses incurred as part of the ordinary course of employment with the Company within 15 days after receipt of proper documentation.
	f.		The Company agrees that Section 7 of the Employment Agreement shall survive such that Employee will be entitled to the payments and other benefits provided for in said Section 7 of the Employment Agreement if a Change in Control, as defined in Exhibit A of the Employment Agreement, shall occur on or before October 20, 2007. Employee acknowledges that the right to receive any payments or other benefits as provided for in Section 7 of the Employment Agreement shall cease and the Company shall have no further obligation with regard to said provision after October 20, 2007.

     In addition to the foregoing, provided that Employee satisfies the conditions of this Agreement (including returning all Company property as provided in Paragraph 9 below, and complying with all restrictive covenants of the Separation Pay Agreement) and does not revoke this Agreement, the Company and Employee acknowledge and agree that, notwithstanding anything to the contrary in any applicable documents evidencing a grant of an award under the Lodgian, Inc. 2002 Stock Incentive Plan or any similar plan, any awards of options to purchase Company stock held by Employee shall be immediately exercisable in full, and all vesting restrictions upon any restricted stock held by Employee shall lapse.

     4.  General Release .

     As a material inducement to Employee to enter into this Agreement, Employee hereby irrevocably and unconditionally releases, acquits, and forever discharges Releasees from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, any claims for compensatory damages, special damages, punitive damages, or any other form of compensation from the Releasees or any of them, any covenant of good faith and fair dealing, or any tort, or any federal, state, or other governmental statute, regulation, or ordinance, including, without limitation (1) O.C.G.A. § 13-6-11; (2) O.C.G.A. § 13-1-11; (3) breach of any covenant of good faith and fair dealing; (4) breach of an expre