##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM            TO
 COMMISSION FILE NO. 1-14537
 LODGIAN, INC.
  DELAWARE
    
    52-2093696(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)3445 PEACHTREE ROAD N.E., SUITE 700
ATLANTA, GA
    
    30326
(Zip Code)(Address of principal executive offices)
  Securities
registered pursuant to Section 12(b) of the Act
 TITLE OF EACH CLASS
    
    NAME OF EACH EXCHANGE ON WHICH
REGISTEREDCommon Stock, $.01 par value per share
    
    NYSE Amex Equities
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



Lodgian, Inc.
Form 10-K
For the Year Ended December 31, 2009
 Table of Contents
 PagePART I.Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    24Item 2. Properties
    
    
    24Item 3. Legal Proceedings
    
    
    24Item 4. Reserved
    
    
    24PART II.Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    26Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    54Item 8. Financial Statements and Supplementary Data
    
    
    56Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    56Item 9A. Controls and Procedures
    
    
    56Item 9B. Other Information
    
    
    58PART III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    58Item 11. Executive Compensation
    
    
    62Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    85Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    87Item 14. Principal Accountant Fees and Services
    
    
    88PART IV.Item 15. Exhibits and Financial Statement Schedules
    
    
    89Signatures
    
    
    90EX-21EX-23EX-31.1EX-31.2EX-32




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##### Table of Contents



PART I
 
 Item 1. BUSINESS
 When we use the terms Lodgian, we, our, and us, we mean Lodgian, Inc. and its subsidiaries.
 Our Company
   
    
    27 hotels that we wholly own and operate through subsidiaries; and
    
    one hotel that we operate in a joint venture in the form of a limited partnership, in
which a Lodgian subsidiary serves as the general partner, has a 51% voting interest and
exercises significant control.
   Our Operations
    1




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##### Table of Contents



Corporate History
     Planned Merger and Loan Amendment
    
    
    Effective immediately, the cash lockbox provisions of the loan were amended to provide
that excess cash flow from the mortgaged properties after debt service, reserves and
operating expenses, will not be retained by the lender in an excess cash flow reserve
account, but will instead be released to the borrowers on a monthly basis, even if the
properties do not meet a previously required financial covenant test.
    
    The deadline for Lodgians subsidiary which owns the Crowne Plaza Albany, New York, to
complete certain renovation work was extended to May 1, 2010.
    
    The allocated loan amounts for each of the properties securing the loan were readjusted.
 2




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##### Table of Contents




    
    Effective July 1, 2010, the margin over LIBOR used to determine the interest rate on the
loan will be increased from 1.50% to 4.25%.
    
    If the Merger Agreement is validly terminated for any reason other than as a result of a
breach by Purchaser of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that certain of Lodgians closing conditions set
forth in the Merger Agreement would not be met, Lodgians subsidiary borrowing entities on
the loan will be required, in their sole discretion, to either pay down the principal
balance of the loan by $5 million, or to cause the Holiday Inn Monroeville, Pennsylvania
property to be pledged as additional security for the loan. If the Holiday Inn Monroeville,
Pennsylvania property is pledged as additional security for the loan, it may be
subsequently released from the loan upon payment of a cash release price of $5 million.
 Franchise Affiliations
       3




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##### Table of Contents



Sales and Marketing
    Joint Ventures
   Competition and Seasonality
    The Lodging Industry
  4




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##### Table of Contents



Chain-Scale Segmentation
  
    
    Upper Upscale (Hilton and Marriott);
    
    Upscale (Courtyard by Marriott, Crowne Plaza, Four Points by Sheraton, Radisson,
Residence Inn by Marriott, SpringHill Suites by Marriott and Wyndham);
    
    Midscale with Food & Beverage (Holiday Inn); and
    
    Midscale without Food & Beverage (Fairfield Inn by Marriott and Holiday Inn Express);
  Properties
  Dispositions
  Number ofHotelsOwned and operated at December 31, 2007
    
    
    46Sold in 2008
    
    
    (5
    )Owned and operated at December 31, 2008
    
    
    41Sold in 2009
    
    
    (5
    )Deconsolidated in 2009
    
    
    (2
    )Owned and operated at December 31, 2009
    
    
    34
   5




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##### Table of Contents



Portfolio
  Year of Last MajorRoom Count
    
    
    
    
    
    
    
    
    Renovation orFranchisor/Hotel Name
    
    Held for Use
    
    
    Held for Sale
    
    
    Total
    
    
    Location
    
    ConstructionInterContinental Hotels Group PLC (IHG)Crowne Plaza Albany
    
    
    384
    
    
    
    
    
    
    
    384
    
    
    Albany, NY
    
    2001Crowne Plaza Melbourne
    
    
    270
    
    
    
    
    
    
    
    270
    
    
    Melbourne, FL
    
    2006Crowne Plaza Phoenix Airport
    
    
    295
    
    
    
    
    
    
    
    295
    
    
    Phoenix, AZ
    
    2004Crowne Plaza Pittsburgh
    
    
    193
    
    
    
    
    
    
    
    193
    
    
    Pittsburgh, PA
    
    2001Crowne Plaza Silver Spring
    
    
    231
    
    
    
    
    
    
    
    231
    
    
    Silver Spring, MD
    
    2005Crowne Plaza West Palm Beach (51% owned)
    
    
    219
    
    
    
    
    
    
    
    219
    
    
    West Palm Beach, FL
    
    2005Holiday Inn BWI Airport
    
    
    259
    
    
    
    
    
    
    
    259
    
    
    Baltimore, MD
    
    2009 - Guestrooms, Commercial space being renovatedHoliday Inn Hilton Head
    
    
    202
    
    
    
    
    
    
    
    202
    
    
    Hilton Head, SC
    
    2008Holiday Inn Meadowlands
    
    
    138
    
    
    
    
    
    
    
    138
    
    
    Pittsburgh, PA
    
    2005Holiday Inn Monroeville
    
    
    187
    
    
    
    
    
    
    
    187
    
    
    Monroeville, PA
    
    2005Holiday Inn Myrtle Beach
    
    
    133
    
    
    
    
    
    
    
    133
    
    
    Myrtle Beach, SC
    
    2006Holiday Inn Santa Fe
    
    
    130
    
    
    
    
    
    
    
    130
    
    
    Santa Fe, NM
    
    2003Holiday Inn Strongsville
    
    
    303
    
    
    
    
    
    
    
    303
    
    
    Cleveland, OH
    
    2005Holiday Inn Express Palm Desert
    
    
    
    
    
    
    129
    
    
    
    129
    
    
    Palm Desert, CA
    
    2003Total IHG Room Count
    
    
    2,944
    
    
    
    129
    
    
    
    3,073Total IHG Hotel Count
    
    
    13
    
    
    
    1
    
    
    
    14Marriott International Inc.Courtyard by Marriott Buckhead
    
    
    181
    
    
    
    
    
    
    
    181
    
    
    Atlanta, GA
    
    2008Courtyard by Marriott Lafayette
    
    
    90
    
    
    
    
    
    
    
    90
    
    
    Lafayette, LA
    
    2004Courtyard by Marriott Paducah
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    Paducah, KY
    
    2004Courtyard by Marriott Tulsa
    
    
    122
    
    
    
    
    
    
    
    122
    
    
    Tulsa, OK
    
    2004Marriott Denver Airport
    
    
    238
    
    
    
    
    
    
    
    238
    
    
    Denver, CO
    
    2008Residence Inn by Marriott Dedham
    
    
    81
    
    
    
    
    
    
    
    81
    
    
    Dedham, MA
    
    2004Residence Inn by Marriott Little Rock
    
    
    96
    
    
    
    
    
    
    
    96
    
    
    Little Rock, AR
    
    2004SpringHill Suites by Marriott Pinehurst
    
    
    107
    
    
    
    
    
    
    
    107
    
    
    Pinehurst, NC
    
    2007Total Marriott Room Count
    
    
    1,015
    
    
    
    
    
    
    
    1,015Total Marriott Hotel Count
    
    
    8
    
    
    
    
    
    
    
    8Hilton Hotels CorporationHilton Columbia
    
    
    152
    
    
    
    
    
    
    
    152
    
    
    Columbia, MD
    
    2003Hilton Fort Wayne
    
    
    244
    
    
    
    
    
    
    
    244
    
    
    Fort Wayne, IN
    
    Being RenovatedTotal Hilton Room Count
    
    
    396
    
    
    
    
    
    
    
    396Total Hilton Hotel Count
    
    
    2
    
    
    
    
    
    
    
    2Carlson CompaniesRadisson New Orleans Airport Plaza
    
    
    244
    
    
    
    
    
    
    
    244
    
    
    New Orleans, LA
    
    2005Radisson Phoenix
    
    
    159
    
    
    
    
    
    
    
    159
    
    
    Phoenix, AZ
    
    2005Total Carlson Room Count
    
    
    403
    
    
    
    
    
    
    
    403Total Carlson Hotel Count
    
    
    2
    
    
    
    
    
    
    
    2Starwood Hotels & Resorts Worldwide, Inc.Four Points by Sheraton Philadelphia
    
    
    190
    
    
    
    
    
    
    
    190
    
    
    Philadelphia, PA
    
    2008Total Starwood Room Count
    
    
    190
    
    
    
    
    
    
    
    190Total Starwood Hotel Count
    
    
    1
    
    
    
    
    
    
    
    1Wyndham Hotels and Resorts, LLCWyndham DFW Airport North
    
    
    282
    
    
    
    
    
    
    
    282
    
    
    Dallas, TX
    
    2008Total Wyndham Room Count
    
    
    282
    
    
    
    
    
    
    
    282Total Wyndham Hotel Count
    
    
    1
    
    
    
    
    
    
    
    1Grand Total Room Count
    
    
    5,230
    
    
    
    129
    
    
    
    5,359Grand Total Hotel Count
    
    
    27
    
    
    
    1
    
    
    
    28
 6




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##### Table of Contents



Hotel data by market segment and region
   Combined Continuing and Discontinued Operations  34 hotels
 2009
    
    
    2008
    
    
    2007Upper Upscale 

Number of properties
    
    
    3
    
    
    
    3
    
    
    
    3Number of rooms
    
    
    634
    
    
    
    634
    
    
    
    634Occupancy
    
    
    65.3
    %
    
    
    70.1
    %
    
    
    73.9
    %Average daily rate
    
    $
    114.44
    
    
    $
    126.36
    
    
    $
    124.78RevPAR
    
    $
    74.68
    
    
    $
    88.55
    
    
    $
    92.22Upscale 

Number of properties
    
    
    21
    
    
    
    21
    
    
    
    20Number of rooms
    
    
    3,806
    
    
    
    3,806
    
    
    
    3,616Occupancy
    
    
    64.8
    %
    
    
    71.4
    %
    
    
    68.9
    %Average daily rate
    
    $
    93.86
    
    
    $
    106.23
    
    
    $
    108.11RevPAR
    
    $
    60.82
    
    
    $
    75.83
    
    
    $
    74.50Midscale with Food & Beverage 

Number of properties
    
    
    8
    
    
    
    8
    
    
    
    9Number of rooms
    
    
    1,717
    
    
    
    1,717
    
    
    
    1,907Occupancy
    
    
    60.5
    %
    
    
    68.5
    %
    
    
    70.3
    %Average daily rate
    
    $
    96.77
    
    
    $
    99.15
    
    
    $
    101.65RevPAR
    
    $
    58.55
    
    
    $
    67.92
    
    
    $
    71.46Midscale without Food & Beverage 

Number of properties
    
    
    2
    
    
    
    2
    
    
    
    2Number of rooms
    
    
    244
    
    
    
    244
    
    
    
    244Occupancy
    
    
    45.8
    %
    
    
    52.4
    %
    
    
    58.0
    %Average daily rate
    
    $
    78.52
    
    
    $
    90.93
    
    
    $
    90.00RevPAR
    
    $
    36.00
    
    
    $
    47.69
    
    
    $
    52.24All Hotels 

Number of properties
    
    
    34
    
    
    
    34
    
    
    
    34Number of rooms
    
    
    6,401
    
    
    
    6,401
    
    
    
    6,401Occupancy
    
    
    63.0
    %
    
    
    69.8
    %
    
    
    69.4
    %Average daily rate
    
    $
    96.30
    
    
    $
    105.92
    
    
    $
    107.33RevPAR
    
    $
    60.64
    
    
    $
    73.89
    
    
    $
    74.49
 7




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##### Table of Contents



Continuing Operations  33 hotels
 2009
    
    2008
    
    2007Upper Upscale 

Number of properties
    
    
    3
    
    
    
    3
    
    
    
    3Number of rooms
    
    
    634
    
    
    
    634
    
    
    
    634Occupancy
    
    
    65.3
    %
    
    
    70.1
    %
    
    
    73.9
    %Average daily rate
    
    $
    114.44
    
    
    $
    126.36
    
    
    $
    124.78RevPAR
    
    $
    74.68
    
    
    $
    88.55
    
    
    $
    92.22Upscale 

Number of properties
    
    
    21
    
    
    
    21
    
    
    
    20Number of rooms
    
    
    3,806
    
    
    
    3,806
    
    
    
    3,616Occupancy
    
    
    64.8
    %
    
    
    71.4
    %
    
    
    68.9
    %Average daily rate
    
    $
    93.86
    
    
    $
    106.23
    
    
    $
    108.11RevPAR
    
    $
    60.82
    
    
    $
    75.83
    
    
    $
    74.50Midscale with Food & Beverage 
Number of properties
    
    
    8
    
    
    
    8
    
    
    
    9Number of rooms
    
    
    1,717
    
    
    
    1,717
    
    
    
    1,907Occupancy
    
    
    60.5
    %
    
    
    68.5
    %
    
    
    70.3
    %Average daily rate
    
    $
    96.77
    
    
    $
    99.15
    
    
    $
    101.65RevPAR
    
    $
    58.55
    
    
    $
    67.92
    
    
    $
    71.46Midscale without Food & Beverage 

Number of properties
    
    
    1
    
    
    
    1
    
    
    
    1Number of rooms
    
    
    115
    
    
    
    115
    
    
    
    115Occupancy
    
    
    32.2
    %
    
    
    43.7
    %
    
    
    45.8
    %Average daily rate
    
    $
    71.31
    
    
    $
    85.87
    
    
    $
    87.74RevPAR
    
    $
    22.94
    
    
    $
    37.55
    
    
    $
    40.20All Hotels 

Number of properties
    
    
    33
    
    
    
    33
    
    
    
    33Number of rooms
    
    
    6,272
    
    
    
    6,272
    
    
    
    6,272Occupancy
    
    
    63.1
    %
    
    
    70.0
    %
    
    
    69.4
    %Average daily rate
    
    $
    96.56
    
    
    $
    106.13
    
    
    $
    107.65RevPAR
    
    $
    60.90
    
    
    $
    74.24
    
    
    $
    74.72
 8




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##### Table of Contents




    
    Northeast: Massachusetts, Maryland, New Hampshire, New York, Ohio, Pennsylvania;
    
    Southeast: Florida, Georgia, Kentucky, Louisiana, North Carolina, South Carolina;
    
    Midwest: Arkansas, Indiana, Oklahoma, Texas; and
    
    West: Arizona, California, Colorado, New Mexico.
 Combined Continuing and Discontinued Operations  34 hotels
 2009
    
    2008
    
    2007Northeast Region 

Number of properties
    
    
    12
    
    
    
    12
    
    
    
    12Number of rooms
    
    
    2,598
    
    
    
    2,598
    
    
    
    2,598Occupancy
    
    
    61.8
    %
    
    
    67.6
    %
    
    
    69.1
    %Average daily rate
    
    $
    100.32
    
    
    $
    106.98
    
    
    $
    107.89RevPAR
    
    $
    61.97
    
    
    $
    72.35
    
    
    $
    74.56Southeast Region 

Number of properties
    
    
    10
    
    
    
    10
    
    
    
    10Number of rooms
    
    
    1,624
    
    
    
    1,624
    
    
    
    1,624Occupancy
    
    
    66.5
    %
    
    
    71.4
    %
    
    
    70.0
    %Average daily rate
    
    $
    95.78
    
    
    $
    108.69
    
    
    $
    112.31RevPAR
    
    $
    63.67
    
    
    $
    77.57
    
    
    $
    78.61Midwest Region 

Number of properties
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    1,228
    
    
    
    1,228
    
    
    
    1,228Occupancy
    
    
    57.1
    %
    
    
    68.2
    %
    
    
    62.5
    %Average daily rate
    
    $
    89.77
    
    
    $
    98.81
    
    
    $
    98.52RevPAR
    
    $
    51.25
    
    
    $
    67.38
    
    
    $
    61.61West Region 
Number of properties
    
    
    5
    
    
    
    5
    
    
    
    5Number of rooms
    
    
    951
    
    
    
    951
    
    
    
    951Occupancy
    
    
    67.8
    %
    
    
    74.8
    %
    
    
    78.0
    %Average daily rate
    
    $
    94.23
    
    
    $
    107.13
    
    
    $
    107.42RevPAR
    
    $
    63.91
    
    
    $
    80.18
    
    
    $
    83.79All Hotels 

Number of properties
    
    
    34
    
    
    
    34
    
    
    
    34Number of rooms
    
    
    6,401
    
    
    
    6,401
    
    
    
    6,401Occupancy
    
    
    63.0
    %
    
    
    69.8
    %
    
    
    69.4
    %Average daily rate
    
    $
    96.30
    
    
    $
    105.92
    
    
    $
    107.33RevPAR
    
    $
    60.64
    
    
    $
    73.89
    
    
    $
    74.49
 9




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##### Table of Contents



Continuing Operations  33 hotels
 2009
    
    2008
    
    2007Northeast Region 

Number of properties
    
    
    12
    
    
    
    12
    
    
    
    12Number of rooms
    
    
    2,598
    
    
    
    2,598
    
    
    
    2,598Occupancy
    
    
    61.8
    %
    
    
    67.6
    %
    
    
    69.1
    %Average daily rate
    
    $
    100.32
    
    
    $
    106.98
    
    
    $
    107.89RevPAR
    
    $
    61.97
    
    
    $
    72.35
    
    
    $
    74.56Southeast Region 

Number of properties
    
    
    10
    
    
    
    10
    
    
    
    10Number of rooms
    
    
    1,624
    
    
    
    1,624
    
    
    
    1,624Occupancy
    
    
    66.5
    %
    
    
    71.4
    %
    
    
    70.0
    %Average daily rate
    
    $
    95.78
    
    
    $
    108.69
    
    
    $
    112.31RevPAR
    
    $
    63.67
    
    
    $
    77.57
    
    
    $
    78.61Midwest Region 

Number of properties
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    1,228
    
    
    
    1,228
    
    
    
    1,228Occupancy
    
    
    57.1
    %
    
    
    68.2
    %
    
    
    62.5
    %Average daily rate
    
    $
    89.77
    
    
    $
    98.81
    
    
    $
    98.52RevPAR
    
    $
    51.25
    
    
    $
    67.38
    
    
    $
    61.61West Region 

Number of properties
    
    
    4
    
    
    
    4
    
    
    
    4Number of rooms
    
    
    822
    
    
    
    822
    
    
    
    822Occupancy
    
    
    69.4
    %
    
    
    77.1
    %
    
    
    79.4
    %Average daily rate
    
    $
    95.82
    
    
    $
    108.71
    
    
    $
    109.61RevPAR
    
    $
    66.46
    
    
    $
    83.85
    
    
    $
    87.03All Hotels 

Number of properties
    
    
    33
    
    
    
    33
    
    
    
    33Number of rooms
    
    
    6,272
    
    
    
    6,272
    
    
    
    6,272Occupancy
    
    
    63.1
    %
    
    
    70.0
    %
    
    
    69.4
    %Average daily rate
    
    $
    96.56
    
    
    $
    106.13
    
    
    $
    107.65RevPAR
    
    $
    60.90
    
    
    $
    74.24
    
    
    $
    74.72
 10




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##### Table of Contents



Hotel Encumbrances
  Insurance
  
    
    general liability;
    
    property damage and business interruption (including coverage for terrorism);
    
    flood;
    
    directors and officers liability;
    
    liquor liability;
    
    workers compensation;
    
    fiduciary liability; and
    
    business automobile.
   Regulation
     11




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Employees
  Legal Proceedings
   SEC Filings and Financial Information
    
 Item 1A. RISK FACTORS
  12




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##### Table of Contents




    
    Our ability to refinance or extend the portion of our mortgage indebtedness that is
scheduled to mature in 2010 and beyond;
    
    The effects of regional, national and international economic conditions;
    
    Competitive conditions in the lodging industry and increases in room supply;
    
    The effects of actual and threatened terrorist attacks and international conflicts in
the Middle East and elsewhere, and their impact on domestic and international travel;
    
    The effectiveness of changes in management and our ability to retain qualified
individuals to serve in senior management positions;
    
    Requirements of franchise agreements, including the right of franchisors to immediately
terminate their respective agreements if we breach certain provisions;
    
    Our ability to complete planned hotel dispositions;
    
    Seasonality of the hotel business;
    
    The effects of unpredictable weather events such as hurricanes;
    
    The financial condition of the airline industry and its impact on air travel;
    
    The effect that Internet reservation channels may have on the rates that we are able to
charge for hotel rooms;
    
    Increases in the cost of debt and our continued compliance with the terms of our loan
agreements;
    
    The effect of self-insured claims in excess of our reserves, or our ability to obtain
adequate property and liability insurance to protect against losses, or to obtain insurance
at reasonable rates;
    
    Potential litigation and/or governmental inquiries and investigations;
    
    Laws and regulations applicable to our business, including federal, state or local
hotel, resort, restaurant or land use regulations, employment, labor or disability laws and
regulations;
    
    A downturn in the economy due to several factors, including but not limited to, high
energy costs, natural gas and gasoline prices;
    
    The impact of continued disruptions in the credit markets and potential failures of
financial institutions on our ability to access capital, and
    
    The risks identified below under Risks Related to Our Business and Risks Related to
Our Common Stock.
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Risks Related to Our Business
 We may be unable to refinance, extend or repay our substantial mortgage indebtedness maturing in
2010 and beyond, as a result of, among other things, the current condition of the economy, the
resulting decline in the lodging industry and the challenging credit markets. If we were unable to
extend or refinance such indebtedness, or engage in a strategic
transaction, such as the proposed merger, one or more of our
subsidiaries or the Company as a whole may be forced to make a Chapter 11 bankruptcy filing to seek
protection from our creditors. Even if we were able to refinance or extend our indebtedness, a
substantial amount of indebtedness could limit our operational flexibility or otherwise adversely
affect our financial condition.
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The terms of our debt instruments place many restrictions on us, which reduce operational and
financial flexibility and create default risks.
      Increases in interest rates could have an adverse effect on our cash flow and interest expense.
  The value of our hotels and our ability to service our indebtedness is dependent upon the
successful operation and cash flows of our hotels. Our ability to generate cash depends on many
factors beyond our control and a cash shortfall could adversely affect our ability to fund our
operations, planned capital expenditures and other needs.
  
    
    Effects of the economic recession and the weakened conditions of the real estate
and banking industries;
    
    Changes in interest rates and changes in the availability, cost and terms of
credit;
 15




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##### Table of Contents




    
    Cyclical overbuilding in the lodging industry;
    
    Varying levels of demand for rooms and related services;
    
    Competition in our markets from other hotels, motels and recreational properties,
some of which may be owned or operated by companies having greater marketing and
financial resources than we have;
    
    Loss of franchise affiliations;
    
    Reductions in air travel or other adverse changes in travel patterns;
    
    Fluctuations in operating costs, including but not limited to, labor, food, and
energy costs;
    
    The need for renovations and the effectiveness of renovations or repositioning in
attracting customers;
    
    Changes in governmental laws and regulations that influence or determine wages or
required remedial expenditures;
    
    Natural disasters, including, but not limited to, hurricanes;
    
    Continued sale or surrender of hotels in our portfolio and resulting reduction in
cash flow from operations;
    
    Dependence on business and leisure travelers, who have been and continue to be
affected by the economic recession, threats of terrorism, or other outbreaks of
hostilities, and new laws to counter terrorism which result to some degree in a
reduction of foreign travelers visiting the U.S.; and
    
    The perception of the lodging industry and lodging companies in the debt and equity
markets.
 The economic recession and adverse economic conditions in the specific major metropolitan markets
in which we do substantial business could materially and adversely affect our business and results
of operations.
    We may not be able to meet the requirements imposed by our franchisors in our franchise agreements
and therefore could lose the right to operate one or more hotels under a national brand.
   16




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Provisions for liquidated damages in our franchise agreements could require us to pay material
amounts to our franchisors if we are forced to surrender properties to our lenders.
  Hotels typically require a higher level of capital expenditures, maintenance and repairs than other
building types due in part to property improvement requirements that may be imposed by franchisors.
The increasing age of our hotels could result in additional capital expenditures to remain
competitive. If we are not able to meet the requirements of our hotels appropriately, our business
and operating results will suffer.
   If we are not able to execute our strategic initiatives, we may not be able to improve our
financial performance.
  We have a history of significant losses and we may not be able to successfully improve our
performance to achieve profitability.
  17




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Force majeure events, including natural disasters, acts and threats of terrorism, the ongoing war
against terrorism, military conflicts and other factors have had and may continue to have a
negative effect on the lodging industry and our results of operations.
  Our expenses may remain constant or increase even if revenues decline.
  
    
    Rising interest rates;
    
    Tightening of credit available to the lodging industry on favorable terms, or at all;
    
    Rising energy costs, gasoline or heating fuel supply shortages;
    
    Rising insurance premiums;
    
    Rising property tax expenses;
    
    Increase in labor and related costs; and
    
    Changes in, and as a result, increases in the cost of compliance with new governmental
regulations, including those governing environmental, usage, zoning and tax matters.
 18




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##### Table of Contents



Losses may exceed our insurance coverage or estimated reserves, which could impair our results of
operations, financial condition and liquidity.
   
    
    the insurance coverages that we have obtained will fully protect us against insurable
losses (i.e., losses may exceed coverage limits); or,
    
    we will not incur losses from risks that are not insurable or that are not economically
insurable.
  Competition in the lodging industry could have a material adverse effect on our business and
results of operations.
  The lodging business is seasonal.
  We are exposed to potential risks of brand concentration.
  We have experienced significant changes in our senior management team and Board of Directors.
  Our success is dependent on recruiting and retaining high caliber key personnel.
  19




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The increasing use of third-party travel websites by consumers may adversely affect our
profitability.
  We will be unable to utilize all of our net operating loss carryforwards.
  Many aspects of our operations are subject to government regulations, and changes in these
regulations may adversely affect our results of operations and financial condition.
  Costs of compliance with environmental laws and regulations could adversely affect operating
results.
      20




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##### Table of Contents



We may make acquisitions or investments that are not successful and that adversely affect our
ongoing operations.
  
    
    Significant errors or miscalculations in identifying suitable acquisition or investment
candidates, performing appropriate due diligence, identifying potential liabilities and
negotiating favorable terms;
    
    Reducing our working capital and hindering our ability to expand or maintain our
business, including making capital expenditures and funding operations;
    
    The potential distraction of our management, diversion of our resources and disruption
of our business;
    
    Overpaying by competing for acquisition opportunities with resourceful competitors;
    
    Inaccurate forecasting of the financial impact of an acquisition or investment; and
    
    Failure to effectively integrate acquired companies or investments into our Company and
the resultant inability to achieve expected synergies.
 Risks Related to Our Common Stock
 Our stock price may be volatile, and consequently, investors may be unable to resell their common
stock at or above their purchase price.
  
    
    Actual or anticipated variations in our results of operations;
    
    Announcements of new services or products or significant price reductions by us
or our competitors;
    
    Market performance by our competitors;
    
    Future issuances of our common stock, or securities convertible into or
exchangeable or exercisable for our common stock, by us directly, or the perception
that such issuances are likely to occur;
    
    Sales of our common stock by stockholders or the perception that such sales may
occur in the future;
    
    The size of our market capitalization;
    
    Loss of our franchises;
    
    Default on our indebtedness and/or foreclosure of our properties;
    
    Concentration of ownership;
    
    The extent of institutional investor interest in us;
    
    Changes in financial estimates by securities analysts; and
    
    Domestic and international economic, legal and regulatory factors unrelated to
our performance.
 21




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##### Table of Contents



We may never pay dividends on our common stock, in which event our stockholders only return on
their investment, if any, will occur on their sale of our common stock.
  Our charter documents, employment contracts and Delaware law may impede attempts to replace or
remove our management or inhibit a takeover, which could adversely affect the value of our common
stock.
  
    
    Authorizing the issuance of preferred stock, the terms of which may be determined at the
sole discretion of the board of directors;
    
    Establishing advance notice requirements for nominations for election to the board of
directors or for proposing matters that can be acted on by stockholders at meetings; and
    
    Requiring all stockholder action to be taken at a duly called meeting, not by written
consent.
  The decline in our common stock price and the threat of delisting or a delisting of our common
stock could have materially adverse effects on our business.
  
    
    reducing the liquidity and market price of our common stock;
    
    reducing the number of investors willing to hold or acquire our common stock, thereby
further restricting our ability to obtain equity financing; and
    
    reducing our ability to retain, attract and motivate our directors, officers and
employees.
 Risks Related to the Planned Merger
 The closing of the Merger is subject to the satisfaction of customary closing conditions, including
the approval of the Merger by our stockholders.
  Failure to complete the Merger in a timely manner, or at all, could negatively impact the market
price of our common stock and our future financial results and liquidity.
   22




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The Merger could negatively impact our current and future business and financial results.
   The announcement of the Merger could have a negative impact on our ability to retain and, if
necessary, attract key employees, which could in turn have an unfavorable impact on our financial
results.
  Litigation has commenced against us in connection with the planned Merger.
   23




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##### Table of Contents



Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
  
 Item 3. LEGAL PROCEEDINGS
  
 Item 4.
RESERVED
 
 PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Historical Data
  2008High
    
    
    LowFirst Quarter
    
    $
    11.93
    
    
    $
    8.26Second Quarter
    
    $
    11.39
    
    
    $
    7.61Third Quarter
    
    $
    9.67
    
    
    $
    6.63Fourth Quarter
    
    $
    7.76
    
    
    $
    1.19
 2009High
    
    
    LowFirst Quarter
    
    $
    3.46
    
    
    $
    1.41Second Quarter
    
    $
    3.00
    
    
    $
    1.21Third Quarter
    
    $
    2.09
    
    
    $
    1.15Fourth Quarter
    
    $
    2.15
    
    
    $
    1.20
 2010High
    
    LowFirst Quarter (up to March 1, 2010)
    
    $
    2.59
    
    
    $
    1.40
   Stock Repurchase Programs
  24




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##### Table of Contents



Treasury Stock Repurchases
  Performance Graph
  COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
    25




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##### Table of Contents



12/04
    
    
    12/05
    
    
    12/06
    
    
    12/07
    
    
    12/08
    
    
    12/09Lodgian, Inc.
    
    
    100.00
    
    
    
    87.24
    
    
    
    110.57
    
    
    
    91.54
    
    
    
    17.32
    
    
    
    12.03Dow Jones Wilshire 5000
    
    
    100.00
    
    
    
    106.38
    
    
    
    123.16
    
    
    
    130.07
    
    
    
    81.64
    
    
    
    102.00Dow Jones US Hotels
    
    
    100.00
    
    
    
    109.15
    
    
    
    139.39
    
    
    
    118.17
    
    
    
    53.58
    
    
    
    91.83
 
 Item 6. SELECTED FINANCIAL DATA
 Selected Consolidated Financial Data
     2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005($ in thousands, except per share data)Income statement data:Revenues  continuing operations
    
    $
    188,544
    
    
    $
    228,194
    
    
    $
    229,875
    
    
    $
    214,832
    
    
    $
    175,235Revenues  discontinued operations
    
    
    16,367
    
    
    
    43,432
    
    
    
    88,274
    
    
    
    136,939
    
    
    
    164,992Revenues  continuing and discontinued operations
    
    
    204,911
    
    
    
    271,626
    
    
    
    318,149
    
    
    
    351,771
    
    
    
    340,227Loss  continuing operations
    
    
    (50,349
    )
    
    
    (8,014
    )
    
    
    (5,236
    )
    
    
    (5,767
    )
    
    
    8,541(Loss) income  discontinued operations
    
    
    (3,553
    )
    
    
    (3,970
    )
    
    
    (2,789
    )
    
    
    (9,409
    )
    
    
    3,760Net (loss) income
    
    
    (53,902
    )
    
    
    (11,984
    )
    
    
    (8,025
    )
    
    
    (15,176
    )
    
    
    12,301Net (loss) income attributable to common stock
    
    
    (52,365
    )
    
    
    (11,984
    )
    
    
    (8,446
    )
    
    
    (15,176
    )
    
    
    12,301Basic and diluted (loss) earnings per share attributable to common stock:Loss from continuing operations
    
    
    (2.29
    )
    
    
    (0.37
    )
    
    
    (0.24
    )
    
    
    (0.24
    )
    
    
    0.35(Loss) income from discontinued operations
    
    
    (0.17
    )
    
    
    (0.18
    )
    
    
    (0.11
    )
    
    
    (0.38
    )
    
    
    0.15Net (loss) income attributable to common stock
    
    
    (2.46
    )
    
    
    (0.55
    )
    
    
    (0.35
    )
    
    
    (0.62
    )
    
    
    0.50Basic and diluted weighted average shares
    
    
    21,315
    
    
    
    21,774
    
    
    
    24,292
    
    
    
    24,617
    
    
    
    24,576Balance sheet data (at period end):Total assets
    
    $
    452,963
    
    
    $
    555,414
    
    
    $
    624,730
    
    
    $
    699,158
    
    
    $
    726,685Assets held for sale
    
    
    6,406
    
    
    
    33,021
    
    
    
    8,009
    
    
    
    89,437
    
    
    
    14,866Long-term liabilities
    
    
    185,132
    
    
    
    194,800
    
    
    
    355,728
    
    
    
    292,301
    
    
    
    394,432Liabilities related to assets held for sale
    
    
    6,029
    
    
    
    16,167
    
    
    
    961
    
    
    
    68,351
    
    
    
    4,610Total liabilities
    
    
    319,698
    
    
    
    368,009
    
    
    
    404,142
    
    
    
    446,122
    
    
    
    466,424Total equity
    
    
    133,265
    
    
    
    187,405
    
    
    
    220,588
    
    
    
    242,114
    
    
    
    249,044
 
 Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 You should read the discussion below in conjunction with the consolidated financial statements and
accompanying notes. Also, the discussion which follows contains forward-looking statements which
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those discussed above
under the caption Risk Factors.
 Executive Summary
  26




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27




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##### Table of Contents



Planned Merger and Loan Amendment
   
    
    Effective immediately, the cash lockbox provisions of the loan were amended to provide
that excess cash flow from the mortgaged properties after debt service, reserves and
operating expenses, will not be retained by the lender in an excess cash flow reserve
account, but will instead be released to the borrowers on a monthly basis, even if the
properties do not meet a previously required financial covenant test.
    
    The deadline for Lodgians subsidiary which owns the Crowne Plaza Albany, New York, to
complete certain renovation work was extended to May 1, 2010.
    
    The allocated loan amounts for each of the properties securing the loan were readjusted.
    
    Effective July 1, 2010, the margin over LIBOR used to determine the interest rate on the
loan will be increased from 1.50% to 4.25%.
    
    If the Merger Agreement is validly terminated for any reason other than as a result of a
breach by Purchaser of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that certain of Lodgians closing conditions set
forth in the Merger Agreement would not be met, Lodgians subsidiary borrowing entities on
the loan will be required, in their sole discretion, to either pay down the principal
balance of the loan by $5 million, or to cause the Holiday Inn Monroeville, Pennsylvania
property to be pledged as additional security for the loan. If the Holiday Inn Monroeville,
Pennsylvania property is pledged as additional security for the loan, it may be
subsequently released from the loan upon payment of a cash release price of $5 million.
  28




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##### Table of Contents



Overview of Continuing Operations
  
    
    Revenues decreased $39.7 million, or 17.4%. Rooms revenues decreased $31.3 million, or
18.3%, as ADR fell 9.0% and occupancy decreased 9.9%. Food and beverage revenues decreased
$7.6 million, or 15.2%, driven largely by lower banquet revenues.
    
    As previously discussed, we conducted a portfolio analysis to strengthen our balance
sheet. As of December 31, 2009, we had surrendered control of two hotels to
court-appointed receivers. In 2009, we began negotiations with the servicer of Pool 3 to
surrender control of the six hotels that secure Pool 3 to a court-appointed receiver
because the cash flows
generated by these hotels were not sufficient to fund the debt service requirements. We were
required to perform a fair value assessment of the six hotels in 2009 in accordance with U.S.
GAAP and we concluded that the book value of the six hotels exceeded fair value and recorded
impairment charges totaling $27.8 million. In February 2010, we surrendered control of the
six hotels that secure Pool 3 to a court-appointed receiver.
    
    Excluding impairment, operating income decreased $20.1 million to a loss of $6.7
million. We realized the benefits of several cost containment initiatives as total
operating expenses excluding impairment decreased $19.6 million. However, these
initiatives did not fully offset the $39.7 million decline in revenues, since many of our
operating costs are fixed in nature.
 Overview of Discontinued Operations
  Property, Plant, and Equipment
    Critical Accounting Policies and Estimates
  29




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##### Table of Contents



Consolidation policy 
 Noncontrolling interest  Consolidation Noncontrolling Interest in Consolidate Financial statements  An Amendment of ARB No.
51
 Deferral policy 
 Asset impairment  Property, Plant, and
Equipment
  1.
    
    Management commits to a plan to sell the asset;2.
    
    The asset is available for immediate sale in its present condition;3.
    
    An active marketing plan to sell the asset has been initiated at a
reasonable price;4.
    
    The sale of the asset is probable within one year; and5.
    
    It is unlikely that significant changes to the plan to sell the asset
will be made.
  30




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Accrual of self-insured obligations 
 Income Statement Overview
  Revenues
  
    
    Rooms revenues  derived from guest room rentals;
    
    Food and beverage revenues   derived from hotel restaurants, room service, hotel
catering and meeting room rentals; and
    
    Other revenues  derived from guests long-distance telephone usage, laundry services,
parking services, in-room movie services, vending machine commissions, leasing of hotel
space and other miscellaneous revenues.
   
    
    Occupancy  computed by dividing total room nights sold by the total available room
nights. To obtain available room nights for a particular period, we multiply the number of
rooms in each hotel by the number of days the hotel was open;
    
    Average Daily Rate (ADR)  computed by dividing total room revenues by total room
nights sold; and
    
    Revenue per available room (RevPAR)  computed by dividing total room revenues for a
particular period by the total available room nights over the same period. Our calculation
of total room revenues and the number of available rooms is adjusted, as appropriate, for
the opening and closing of hotels in our portfolio. Our RevPAR can also be calculated by
multiplying our occupancy for a particular period by our average daily rate over the same
period.
 31




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##### Table of Contents



Operating expenses
  
    
    Direct operating expenses  these expenses tend to vary with available rooms and
occupancy. However, hotel level expenses contain significant elements of fixed costs and,
therefore, do not decline proportionately with revenues. Direct expenses are further
categorized as follows:
 o
    
    Rooms expenses  expenses incurred in generating room revenues;o
    
    Food and beverage expenses  expenses incurred in generating food and beverage revenues; ando
    
    Other direct expenses  expenses incurred in generating the revenue activities classified in other revenues.
 We use certain non-GAAP financial measures, which are measures of our historical financial
performance that are not calculated and presented in accordance with GAAP, within the meaning
of applicable SEC rules. For instance, we use the term direct operating contribution to mean
revenues less direct operating expenses as presented in the consolidated statement of
operations. We assess profitability by measuring changes in our direct operating contribution
and direct operating contribution percentage, which is direct operating contribution as a
percentage of the applicable revenue source. These measures assist us in
distinguishing whether increases or decreases in revenues and/or expenses are due to growth
or decline of operations or from other factors. We believe that direct operating
contribution, when combined with the presentation of GAAP operating income, revenues and
expenses, provide useful information to us.
    
    Other hotel operating expenses  these expenses include salaries for hotel management,
advertising and promotion, franchise fees, repairs and maintenance and utilities;
    
    Property and other taxes, insurance and leases  these expenses include equipment,
ground and building rentals, insurance, and property, franchise and other taxes;
    
    Corporate and other  these expenses include corporate salaries and benefits, legal,
accounting and other professional fees, directors fees, costs for office space and
information technology costs. Also included are costs related to compliance with
Sarbanes-Oxley legislation;
    
    Casualty (gains) losses, net   these expenses include hurricane and other repair costs
and charges related to the assets written off that were damaged, netted against any gains
realized on the final settlement of property damage claims;
    
    Depreciation and amortization  depreciation of fixed assets (primarily hotel assets)
and amortization of deferred franchise fees; and
    
    Impairment of long-lived assets  charges required to write down the carrying values of
long-lived assets to the fair values of assets where the estimated undiscounted cash flows
over the life of the asset were less than the carrying value of the asset. Also included
is the write-off of assets that were replaced and had remaining net book value.
 Non-operating items
  
    
    Interest expense includes interest incurred on our debt as well as amortization of
deferred loan costs and changes in the fair value of interest rate caps;
    
    Interest income; and
    
    Loss on debt extinguishment.
 Results of Operations  Continuing Operations
 Results of operations for the years ended December 31, 2009 and December 31, 2008
 32




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Revenues
 Continuing Operations
 For the Years Ended December 31,2009
    
    
    2008
    
    
    Increase (decrease)($ in thousands)Revenues:Rooms
    
    $
    139,501
    
    
    $
    170,752
    
    
    $
    (31,251
    )
    
    
    (18.3
    %)Food and beverage
    
    
    42,191
    
    
    
    49,741
    
    
    
    (7,550
    )
    
    
    (15.2
    %)Other
    
    
    6,852
    
    
    
    7,701
    
    
    
    (849
    )
    
    
    (11.0
    %)Total revenues
    
    $
    188,544
    
    
    $
    228,194
    
    
    $
    (39,650
    )
    
    
    (17.4
    %)Occupancy
    
    
    63.1
    %
    
    
    70.0
    %
    
    
    
    
    
    
    (9.9
    %)ADR
    
    $
    96.56
    
    
    $
    106.13
    
    
    $
    (9.57
    )
    
    
    (9.0
    %)RevPar
    
    $
    60.90
    
    
    $
    74.24
    
    
    $
    (13.34
    )
    
    
    (18.0
    %)
    Direct
operating expenses  Continuing Operations
 % of total revenues2009
    
    
    2008
    
    
    Increase (decrease)
    
    
    2009
    
    
    2008($ in thousands)Direct operating expenses:Rooms
    
    $
    39,438
    
    
    $
    44,330
    
    
    $
    (4,892
    )
    
    
    (11.0
    %)
    
    
    20.9
    %
    
    
    19.4
    %Food and beverage
    
    
    29,444
    
    
    
    34,293
    
    
    
    (4,849
    )
    
    
    (14.1
    %)
    
    
    15.6
    %
    
    
    15.0
    %Other
    
    
    4,730
    
    
    
    5,467
    
    
    
    (737
    )
    
    
    (13.5
    %)
    
    
    2.5
    %
    
    
    2.4
    %Total direct operating expenses
    
    $
    73,612
    
    
    $
    84,090
    
    
    $
    (10,478
    )
    
    
    (12.5
    %)
    
    
    39.0
    %
    
    
    36.9
    %Direct operating contribution (by revenue source):Rooms
    
    $
    100,063
    
    
    $
    126,422
    
    
    $
    (26,359
    )
    
    
    (20.9
    %)Food and beverage
    
    
    12,747
    
    
    
    15,448
    
    
    
    (2,701
    )
    
    
    (17.5
    %)Other
    
    
    2,122
    
    
    
    2,234
    
    
    
    (112
    )
    
    
    (5.0
    %)Total direct operating contribution
    
    $
    114,932
    
    
    $
    144,104
    
    
    $
    (29,172
    )
    
    
    (20.2
    %)Direct operating contribution % (by revenue source):Rooms
    
    
    71.7
    %
    
    
    74.0
    %Food and beverage
    
    
    30.2
    %
    
    
    31.1
    %Other
    
    
    31.0
    %
    
    
    29.0
    %Total direct operating contribution
    
    
    61.0
    %
    
    
    63.1
    %
 33




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34




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##### Table of Contents



Other
operating expenses  Continuing Operations
 % of total revenues2009
    
    
    2008
    
    
    Increase (decrease)
    
    
    2009
    
    
    2008($ in thousands)Other operating expenses:Other hotel operating costsGeneral and administrative
    
    $
    12,335
    
    
    $
    14,209
    
    
    $
    (1,874
    )
    
    
    (13.2
    %)
    
    
    6.5
    %
    
    
    6.2
    %Advertising and promotion
    
    
    9,328
    
    
    
    11,869
    
    
    
    (2,541
    )
    
    
    (21.4
    %)
    
    
    4.9
    %
    
    
    5.2
    %Franchise fees
    
    
    14,255
    
    
    
    16,372
    
    
    
    (2,117
    )
    
    
    (12.9
    %)
    
    
    7.6
    %
    
    
    7.2
    %Repairs and maintenance
    
    
    9,982
    
    
    
    11,064
    
    
    
    (1,082
    )
    
    
    (9.8
    %)
    
    
    5.3
    %
    
    
    4.8
    %Utilities
    
    
    11,051
    
    
    
    12,370
    
    
    
    (1,319
    )
    
    
    (10.7
    %)
    
    
    5.9
    %
    
    
    5.4
    %Other expenses
    
    
    58
    
    
    
    337
    
    
    
    (279
    )
    
    
    (82.8
    %)
    
    
    0.0
    %
    
    
    0.1
    %Other hotel operating costs
    
    
    57,009
    
    
    
    66,221
    
    
    $
    (9,212
    )
    
    
    (13.9
    %)
    
    
    30.2
    %
    
    
    29.0
    %Property and other taxes, insurance, and leases
    
    
    16,387
    
    
    
    15,769
    
    
    
    618
    
    
    
    3.9
    %
    
    
    8.7
    %
    
    
    6.9
    %Corporate and other
    
    
    14,769
    
    
    
    16,289
    
    
    
    (1,520
    )
    
    
    (9.3
    %)
    
    
    7.8
    %
    
    
    7.1
    %Casualty losses, net
    
    
    119
    
    
    
    1,095
    
    
    
    (976
    )
    
    
    (89.1
    %)
    
    
    0.1
    %
    
    
    0.5
    %Depreciation and amortization
    
    
    33,323
    
    
    
    31,306
    
    
    
    2,017
    
    
    
    6.4
    %
    
    
    17.7
    %
    
    
    13.7
    %Impairment of long-lived assets
    
    
    30,674
    
    
    
    4,512
    
    
    
    26,162
    
    
    
    579.8
    %
    
    
    16.3
    %
    
    
    2.0
    %Total other operating expenses
    
    $
    152,281
    
    
    $
    135,192
    
    
    $
    17,089
    
    
    
    12.6
    %
    
    
    80.8
    %
    
    
    59.2
    %Total operating expenses
    
    $
    225,893
    
    
    $
    219,282
    
    
    $
    6,611
    
    
    
    3.0
    %
    
    
    119.8
    %
    
    
    96.1
    %Operating income
    
    $
    (37,349
    )
    
    $
    8,912
    
    
    $
    (46,261
    )
    
    
    (519.1
    %)
    
    
    (19.8
    %)
    
    
    3.9
    %
    
    
    Hotel general and administrative costs decreased $1.9 million, or 13.2%, primarily
due to decreased payroll and travel costs. Despite the decrease in expense, as a
percent of revenues, hotel general and administrative expenses increased 30 basis points
in 2009 to 6.5%.
    
    Advertising and promotion costs decreased $2.5 million, or 21.4%, driven by a
reduction in labor costs of $1.4 million. In addition, we eliminated our in-house
reservation office in the fourth quarter of 2008 and outsourced that function to our
franchisors. This action resulted in a $0.7 million decrease in advertising expenses
compared to last year. The remaining $0.4 million was primarily the result of other
cost containment initiatives.
    
    Franchise fees decreased $2.1 million, or 12.9%, largely as a result of lower
revenues, but increased as a percentage of revenue due largely to the outsourcing of the
reservation function to our franchisors in the fourth quarter of 2008.
    
    Repairs and maintenance expenses decreased $1.1 million, or 9.8%, primarily as a
result of a reduction in labor costs of $0.3 million, decreased automotive and fuel
costs of $0.3 million and a reduction in repair and maintenance project spending of $0.2
million.
    
    Utilities costs decreased $1.3 million, or 10.7%. This decrease was driven largely
by lower consumption.
    
    Other expenses decreased $0.3 million, or 82.8%. In 2008, we incurred costs
associated with a hotel brand conversion. Such costs were not incurred at the same
level in 2009.
 35




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##### Table of Contents



Non-operating
income (expenses)  Continuing Operations
 For the Year Ended December 31,2009
    
    2008
    
    Increase (decrease)($ in thousands)Non-operating income (expenses):Interest income and other
    
    $
    110
    
    
    $
    1,054
    
    
    $
    (944
    )
    
    
    (89.6
    %)Interest expense
    
    
    (12,837
    )
    
    
    (17,900
    )
    
    
    (5,063
    )
    
    
    (28.3
    %)
   Results of operations for the years ended December 31, 2008 and December 31, 2007
 Revenues
 Continuing Operations
 For the Years Ended December 31,2008
    
    
    2007
    
    
    Increase (decrease)($ in thousands)Revenues:Rooms
    
    $
    170,752
    
    
    $
    171,396
    
    
    $
    (644
    )
    
    
    (0.4
    %)Food and beverage
    
    
    49,741
    
    
    
    51,232
    
    
    
    (1,491
    )
    
    
    (2.9
    %)Other
    
    
    7,701
    
    
    
    7,247
    
    
    
    454
    
    
    
    6.3
    %Total revenues
    
    $
    228,194
    
    
    $
    229,875
    
    
    $
    (1,681
    )
    
    
    (0.7
    %)Occupancy
    
    
    70.0
    %
    
    
    69.4
    %
    
    
    
    
    
    
    0.9
    %ADR
    
    $
    106.13
    
    
    $
    107.65
    
    
    $
    (1.52
    )
    
    
    (1.4
    %)RevPar
    
    $
    74.24
    
    
    $
    74.72
    
    
    $
    (0.48
    )
    
    
    (0.6
    %)
  36




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Direct operating expenses  Continuing Operations
 % of total revenuesFor the Years Ended December 31,
    
    
    
    
    
    
    
    
    
    
    For the Years Ended December 31,2008
    
    
    2007
    
    
    Increase (decrease)
    
    
    2008
    
    
    2007($ in thousands)Direct operating expenses:Rooms
    
    $
    44,330
    
    
    $
    42,566
    
    
    $
    1,764
    
    
    
    4.1
    %
    
    
    19.4
    %
    
    
    18.5
    %Food and beverage
    
    
    34,293
    
    
    
    34,762
    
    
    
    (469
    )
    
    
    (1.3
    %)
    
    
    15.0
    %
    
    
    15.1
    %Other
    
    
    5,467
    
    
    
    5,214
    
    
    
    253
    
    
    
    4.9
    %
    
    
    2.4
    %
    
    
    2.3
    %Total direct operating expenses
    
    $
    84,090
    
    
    $
    82,542
    
    
    $
    1,548
    
    
    
    1.9
    %
    
    
    36.9
    %
    
    
    35.9
    %Direct operating contribution (by revenue source):Rooms
    
    $
    126,422
    
    
    $
    128,830
    
    
    $
    (2,408
    )
    
    
    (1.9
    %)Food and beverage
    
    
    15,448
    
    
    
    16,470
    
    
    
    (1,022
    )
    
    
    (6.2
    %)Other
    
    
    2,234
    
    
    
    2,033
    
    
    
    201
    
    
    
    9.9
    %Total direct operating contribution
    
    $
    144,104
    
    
    $
    147,333
    
    
    $
    (3,229
    )
    
    
    (2.2
    %)Direct operating contribution % (by revenue source):Rooms
    
    
    74.0
    %
    
    
    75.2
    %Food and beverage
    
    
    31.1
    %
    
    
    32.1
    %Other
    
    
    29.0
    %
    
    
    28.1
    %Total direct operating contribution
    
    
    63.1
    %
    
    
    64.1
    %
    Other operating expenses  Continuing Operations
 37




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##### Table of Contents



% of total revenuesFor the Year Ended December 31,
    
    
    
    
    
    
    
    
    
    
    For the Year Ended December 31,2008
    
    
    2007
    
    
    Increase (decrease)
    
    
    2008
    
    
    2007($ in thousands)Other operating expenses:Other hotel operating costsGeneral and administrative
    
    $
    14,209
    
    
    $
    13,796
    
    
    $
    413
    
    
    
    3.0
    %
    
    
    6.2
    %
    
    
    6.0
    %Advertising and promotion
    
    
    11,869
    
    
    
    12,105
    
    
    
    (236
    )
    
    
    (1.9
    %)
    
    
    5.2
    %
    
    
    5.3
    %Franchise fees
    
    
    16,372
    
    
    
    16,157
    
    
    
    215
    
    
    
    1.3
    %
    
    
    7.2
    %
    
    
    7.0
    %Repairs and maintenance
    
    
    11,064
    
    
    
    10,331
    
    
    
    733
    
    
    
    7.1
    %
    
    
    4.8
    %
    
    
    4.5
    %Utilities
    
    
    12,370
    
    
    
    11,861
    
    
    
    509
    
    
    
    4.3
    %
    
    
    5.4
    %
    
    
    5.2
    %Other expenses
    
    
    337
    
    
    
    570
    
    
    
    (233
    )
    
    
    (40.9
    %)
    
    
    0.1
    %
    
    
    0.2
    %Other hotel operating costs
    
    
    66,221
    
    
    
    64,820
    
    
    $
    1,401
    
    
    
    2.2
    %
    
    
    29.0
    %
    
    
    28.2
    %Property and other taxes, insurance, and leases
    
    
    15,769
    
    
    
    16,770
    
    
    
    (1,001
    )
    
    
    (6.0
    %)
    
    
    6.9
    %
    
    
    7.3
    %Corporate and other
    
    
    16,289
    
    
    
    21,386
    
    
    
    (5,097
    )
    
    
    (23.8
    %)
    
    
    7.1
    %
    
    
    9.3
    %Casualty losses (gains), net
    
    
    1,095
    
    
    
    (1,867
    )
    
    
    2,962
    
    
    
    (158.7
    %)
    
    
    0.5
    %
    
    
    (0.8
    %)Restructuring
    
    
    
    
    
    
    1,232
    
    
    
    (1,232
    )
    
    
    (100.0
    %)
    
    
    0.0
    %
    
    
    0.5
    %Depreciation and amortization
    
    
    31,306
    
    
    
    27,736
    
    
    
    3,570
    
    
    
    12.9
    %
    
    
    13.7
    %
    
    
    12.1
    %Impairment of long-lived assets
    
    
    4,512
    
    
    
    1,154
    
    
    
    3,358
    
    
    
    291.0
    %
    
    
    2.0
    %
    
    
    0.5
    %Total other operating expenses
    
    $
    135,192
    
    
    $
    131,231
    
    
    $
    3,961
    
    
    
    3.0
    %
    
    
    59.2
    %
    
    
    57.1
    %Total operating expenses
    
    $
    219,282
    
    
    $
    213,773
    
    
    $
    5,509
    
    
    
    2.6
    %
    
    
    96.1
    %
    
    
    93.0
    %Operating income
    
    $
    8,912
    
    
    $
    16,102
    
    
    $
    (7,190
    )
    
    
    (44.7
    %)
    
    
    3.9
    %
    
    
    7.0
    %
  
    
    Hotel general and administrative costs increased $0.4 million. As a percent of
revenues, general and administrative expenses increased 20 basis points in 2008 to 6.2%.
The increase was due in large part to higher employee medical costs. In addition, we
benefited from sales tax credits and bad debt recoveries in 2007 that did not recur in
2008.
    
    Advertising and promotion costs decreased $0.2 million, or 1.9%, driven by cost
containment initiatives.
    
    Franchise fees increased $0.2 million, or 1.3%, but remained relatively constant as a
percentage of revenues.
    
    Repairs and maintenance expenses increased $0.7 million, or 7.1%, primarily as a
result of increased automotive maintenance costs and higher medical costs. As a
percentage of total revenues, repairs and maintenance costs increased 30 basis points
from 4.5% in 2007 to 4.8% in 2008.
    
    Utilities costs increased $0.5 million, or 4.3%. This increase was driven largely by
higher energy rates. As a percentage of total revenues, utilities costs increased 20
basis points to 5.4% in 2008.
    
    Other expenses decreased $0.2 million, or 40.9%. In 2007, we incurred costs
associated with a hotel brand conversion. Such costs were not incurred at the same
level in 2008.
   
    
    We realized $2.0 million in savings due to reductions in corporate staffing.
    
    $1.4 million in lower public company related costs such as audit fees, Sarbanes-Oxley
compliance costs and Director and Officer Insurance.
    
    In January 2007, we announced a review of strategic alternatives to enhance
shareholder value. During 2007, we incurred $1.5 million in related costs. Similar
costs were not incurred in 2008.
    
    $0.7 million reduction in corporate bonuses driven by operating performance being
lower than the established targets.
 38




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##### Table of Contents




    
    These decreases were partially offset by $1.1 million in costs associated with the
resignation of Mr. Edward Rohling, our former President and Chief Executive Officer in
2008.
     Non-operating income (expenses)  Continuing Operations
 For the Year Ended December 31,2008
    
    
    2007
    
    
    Increase (decrease)($ in thousands)Non-operating income (expenses):Interest income and other
    
    $
    1,054
    
    
    
    3,944
    
    
    $
    (2,890
    )
    
    
    (73.3
    %)Interest expense
    
    
    (17,900
    )
    
    
    (21,707
    )
    
    
    (3,807
    )
    
    
    (17.5
    %)Loss on debt extinguishment
    
    
    
    
    
    
    (3,330
    )
    
    
    (3,330
    )
    
    
    n/m
    Results of Operations  Discontinued Operations
  
    
    On March 4, 2009, we sold the Holiday Inn, a 130 room hotel located in East
Hartford, CT.
    
    On April 21, 2009, we sold the Holiday Inn Select, a 214 room hotel located
in Windsor, Ontario, Canada.
    
    On May 28, 2009, we sold the Holiday Inn, a 139 room hotel located in
Cromwell Bridge, MD.
    
    On October 21, 2009, we sold the Ramada Plaza, a 185 room hotel located in
Northfield, MI.
    
    On November 20, 2009, we sold the French Quarter Suites, a 105 room hotel
located in Memphis, TN.
  39




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##### Table of Contents




    
    On April 17, 2008, we sold the Holiday Inn, a 158 room hotel located in Frederick, MD.
    
    On May 13, 2008, we sold the former Holiday Inn, a 156 room hotel located in St. Paul,
MN.
    
    On August 14, 2008, we sold the former Holiday Inn, a 193 room hotel located in
Marietta, GA.
    
    On October 9, 2008, we sold the Holiday Inn, a 127 room hotel located in Glen Burnie,
MD.
    
    On December 16, 2008, we sold the Holiday Inn, a 217 room hotel located in Frisco, CO.
    
    
    On January 15, 2007, we sold the University Plaza, a 186 room hotel located in
Bloomington, IN.
    
    On March 9, 2007, we sold the Holiday Inn, a 130 room hotel located in Hamburg, NY.
    
    On June 13, 2007, we sold the following 16 hotels:
 o
    
    Holiday Inn, a 202 room hotel located in Sheffield, ALo
    
    Clarion, a 393 room hotel located in Louisville, KYo
    
    Crowne Plaza, a 275 room hotel located in Cedar Rapids, IAo
    
    Augusta West Inn, a 117 room hotel located in Augusta, GAo
    
    Holiday Inn, a 201 room hotel located in Greentree, PAo
    
    Holiday Inn, a 189 room hotel located in Lancaster East, PAo
    
    Holiday Inn, a 244 room hotel located in Lansing, MIo
    
    Holiday Inn, a 152 room hotel located in Pensacola, FLo
    
    Holiday Inn, a 228 room hotel located in Winter Haven, FLo
    
    Holiday Inn, a 100 room hotel located in York, PAo
    
    Holiday Inn Express, a 112 room hotel located in Dothan, ALo
    
    Holiday Inn Express, a 122 room hotel located in Pensacola, FLo
    
    Park Inn, a 126 room hotel located in Brunswick, GAo
    
    Quality Inn, a 102 room hotel located in Dothan, ALo
    
    Ramada Plaza, a 297 room hotel located in Macon, GAo
    
    Ramada Inn, a 197 room hotel located in North Charleston, SC
 40




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##### Table of Contents




    
    On July 12, 2007, we sold the Holiday Inn, a 159 room hotel located in Clarksburg, WV.
    
    On July 20, 2007, we sold the Holiday Inn, a 208 room hotel located in Fort Wayne, IN.
    
    On August 14, 2007, we sold the Holiday Inn, a 106 room hotel located in Fairmont, WV.
    
    On December 18, 2007, we sold the Holiday Inn, a 146 room hotel located in Jamestown, NY.
    
    On December 27, 2007, we sold the Vermont Maple Inn, a 117 room hotel located in
Burlington, VT.
   For the Years Ended December 31,2009
    
    
    2008
    
    
    2007($ in thousands)Total revenues
    
    $
    16,367
    
    
    $
    43,432
    
    
    $
    88,274Total expenses
    
    
    (16,966
    )
    
    
    (40,061
    )
    
    
    (79,398
    )Impairment of long-lived assets
    
    
    (13,897
    )
    
    
    (15,709
    )
    
    
    (10,379
    )Business interruption proceeds
    
    
    
    
    
    
    672
    
    
    
    571Interest income and other
    
    
    76
    
    
    
    29
    
    
    
    71Interest expense
    
    
    (1,723
    )
    
    
    (3,081
    )
    
    
    (5,986
    )Casualty (losses) gains, net
    
    
    (21
    )
    
    
    5,583
    
    
    
    2,658Gain on asset disposition
    
    
    1,823
    
    
    
    6,144
    
    
    
    3,956Gain on asset deconsolidation
    
    
    10,418
    
    
    
    
    
    
    
    Gain (loss) on extinguishment of debt
    
    
    174
    
    
    
    (948
    )
    
    
    (1,828
    )Benefit (provision) for income taxes
    
    
    196
    
    
    
    (31
    )
    
    
    (728
    )Loss from discontinued operations
    
    $
    (3,553
    )
    
    $
    (3,970
    )
    
    $
    (2,789
    )
   
    
    $4.5 million on the Crowne Plaza Worcester, MA to reflect the fair market value upon
the decision to surrender the hotel to the lender;
    
    $4.4 million on the Ramada Plaza Northfield, MI to reflect the selling price, net of
selling costs;
    
    $3.1 million on the Holiday Inn Phoenix West, AZ to reflect the fair market value
upon the decision to surrender the hotel to the lender;
    
    $0.8 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the
selling price, net of selling costs;
    
    $0.5 million on the closed French Quarter Suites Memphis, TN to reflect the selling
price, net of selling costs; and
    
    $0.6 million to record the disposal of replaced assets at various hotels.
  
    
    $6.7 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the then
current estimated selling price, net of selling costs;
    
    $4.8 million on the Crowne Plaza Worcester, MA to reflect the then current fair
market value;
 41




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##### Table of Contents




    
    $1.9 million on the Ramada Plaza Northfield, MI to reflect the then current estimated
selling price, net of selling costs;
    
    $1.7 million on the Holiday Inn East Hartford, CT to reflect the then current
estimated selling price, net of selling costs;
    
    $0.2 million on the closed French Quarter Suites Memphis, TN to reflect the then
current estimated selling price, net of selling costs;
    
    $0.1 million on the former Holiday Inn St. Paul, MN to record the final disposition
of the hotel; and
    
    $0.3 million to record the final disposition of the Holiday Inn Frederick, MD as well
as the disposal of replaced assets at various hotels;
  
    
    $3.3 million on the Ramada Plaza Northfield, MI to reflect the then estimated selling
price;
    
    $1.8 million on the Holiday Inn Frederick, MD to reflect the then estimated selling
price;
    
    $1.6 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the then
estimated selling price;
    
    $1.3 million on the Holiday Inn Clarksburg, WV to reflect the then estimated selling
price less costs to sell, and to record the final disposition of the hotel;
    
    $0.8 million on the Vermont Maple Inn Colchester, VT to reflect the then estimated
selling price less costs to sell, and to record the final disposition of the hotel;
    
    $0.6 million on the Holiday Inn Jamestown, NY to reflect the then estimated selling
price less costs to sell, and to record the final disposition of the hotel;
    
    $0.3 million on the Crowne Plaza Worcester, MA to reflect the then current fair
market value;
    
    $0.1 million on the University Plaza Bloomington, IN to record the final disposition
of the hotel; and
    
    $0.6 million to record the disposal of replaced assets at various hotels.
  Income Taxes
 Stock Compensation a revision of SFAS No. 123 Accounting
for Stock-Based Compensation
  42




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##### Table of Contents



Income Taxes Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
  Business Combinations Business
 Quarterly Results of Operations
  43




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##### Table of Contents



2009
    
    2008Fourth
    
    Third
    
    Second
    
    First
    
    Fourth
    
    Third
    
    Second
    
    FirstQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(unaudited in thousands, except per share data)Revenues:Rooms
    
    $
    29,864
    
    
    $
    36,686
    
    
    $
    38,053
    
    
    $
    34,898
    
    
    $
    36,857
    
    
    $
    45,014
    
    
    $
    47,183
    
    
    $
    41,698Food and beverage
    
    
    10,428
    
    
    
    9,930
    
    
    
    11,765
    
    
    
    10,068
    
    
    
    12,507
    
    
    
    11,752
    
    
    
    14,217
    
    
    
    11,265Other
    
    
    1,523
    
    
    
    1,911
    
    
    
    1,834
    
    
    
    1,584
    
    
    
    1,750
    
    
    
    2,042
    
    
    
    1,977
    
    
    
    1,93241,815
    
    
    
    48,527
    
    
    
    51,652
    
    
    
    46,550
    
    
    
    51,114
    
    
    
    58,808
    
    
    
    63,377
    
    
    
    54,895Direct operating expenses:Rooms
    
    
    9,231
    
    
    
    10,430
    
    
    
    10,222
    
    
    
    9,555
    
    
    
    10,470
    
    
    
    11,644
    
    
    
    11,594
    
    
    
    10,622Food and beverage
    
    
    7,223
    
    
    
    7,348
    
    
    
    7,760
    
    
    
    7,113
    
    
    
    8,365
    
    
    
    8,500
    
    
    
    9,174
    
    
    
    8,254Other
    
    
    1,049
    
    
    
    1,199
    
    
    
    1,254
    
    
    
    1,228
    
    
    
    1,252
    
    
    
    1,459
    
    
    
    1,445
    
    
    
    1,31117,503
    
    
    
    18,977
    
    
    
    19,236
    
    
    
    17,896
    
    
    
    20,087
    
    
    
    21,603
    
    
    
    22,213
    
    
    
    20,18724,312
    
    
    
    29,550
    
    
    
    32,416
    
    
    
    28,654
    
    
    
    31,027
    
    
    
    37,205
    
    
    
    41,164
    
    
    
    34,708Other operating expenses:Other hotel operating costs
    
    
    13,209
    
    
    
    14,911
    
    
    
    14,150
    
    
    
    14,739
    
    
    
    15,146
    
    
    
    17,404
    
    
    
    16,782
    
    
    
    16,889Property and other taxes, insurance and leases
    
    
    4,170
    
    
    
    3,951
    
    
    
    4,249
    
    
    
    4,017
    
    
    
    4,029
    
    
    
    4,034
    
    
    
    3,559
    
    
    
    4,147Corporate and other
    
    
    3,322
    
    
    
    4,288
    
    
    
    3,559
    
    
    
    3,600
    
    
    
    3,057
    
    
    
    4,368
    
    
    
    3,505
    
    
    
    5,359Casualty losses (gain), net
    
    
    1
    
    
    
    23
    
    
    
    14
    
    
    
    81
    
    
    
    1,151
    
    
    
    (56
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    8,174
    
    
    
    8,433
    
    
    
    8,505
    
    
    
    8,211
    
    
    
    8,119
    
    
    
    7,927
    
    
    
    7,891
    
    
    
    7,369Impairment of long-lived assets
    
    
    325
    
    
    
    29,488
    
    
    
    699
    
    
    
    162
    
    
    
    258
    
    
    
    1,371
    
    
    
    743
    
    
    
    2,140Other operating expenses
    
    
    29,201
    
    
    
    61,094
    
    
    
    31,176
    
    
    
    30,810
    
    
    
    31,760
    
    
    
    35,048
    
    
    
    32,480
    
    
    
    35,904Operating (loss) income
    
    
    (4,889
    )
    
    
    (31,544
    )
    
    
    1,240
    
    
    
    (2,156
    )
    
    
    (733
    )
    
    
    2,157
    
    
    
    8,684
    
    
    
    (1,196
    )Other income (expenses):Interest income and other
    
    
    12
    
    
    
    16
    
    
    
    37
    
    
    
    45
    
    
    
    146
    
    
    
    242
    
    
    
    276
    
    
    
    390Other interest expense
    
    
    (3,287
    )
    
    
    (2,949
    )
    
    
    (3,172
    )
    
    
    (3,429
    )
    
    
    (4,218
    )
    
    
    (4,438
    )
    
    
    (4,424
    )
    
    
    (4,820
    )(Loss) income before income taxes
    
    
    (8,164
    )
    
    
    (34,477
    )
    
    
    (1,895
    )
    
    
    (5,540
    )
    
    
    (4,805
    )
    
    
    (2,039
    )
    
    
    4,536
    
    
    
    (5,626
    )(Provision) benefit for income taxes  continuing operations
    
    
    (246
    )
    
    
    (9
    )
    
    
    47
    
    
    
    (65
    )
    
    
    (79
    )
    
    
    15
    
    
    
    (16
    )
    
    
    (Loss) income from continuing operations
    
    
    (8,410
    )
    
    
    (34,486
    )
    
    
    (1,848
    )
    
    
    (5,605
    )
    
    
    (4,884
    )
    
    
    (2,024
    )
    
    
    4,520
    
    
    
    (5,626
    )Discontinued operations:Income (loss) from discontinued operations before
income taxes
    
    
    5,693
    
    
    
    (2,461
    )
    
    
    (5,540
    )
    
    
    (1,441
    )
    
    
    131
    
    
    
    (4,171
    )
    
    
    1,758
    
    
    
    (1,657
    )Benefit (provision) for income taxes
    
    
    2
    
    
    
    157
    
    
    
    68
    
    
    
    (31
    )
    
    
    103
    
    
    
    12
    
    
    
    89
    
    
    
    (235
    )Income (loss) from discontinued operations
    
    
    5,695
    
    
    
    (2,304
    )
    
    
    (5,472
    )
    
    
    (1,472
    )
    
    
    234
    
    
    
    (4,159
    )
    
    
    1,847
    
    
    
    (1,892
    )Net (loss) income
    
    $
    (2,713
    )
    
    $
    (36,790
    )
    
    $
    (7,317
    )
    
    $
    (7,082
    )
    
    $
    (4,650
    )
    
    $
    (6,183
    )
    
    $
    6,367
    
    
    $
    (7,518
    )Less: Net loss attributable to noncontrolling interest
    
    
    446
    
    
    
    589
    
    
    
    342
    
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income attributable to common stock
    
    
    (2,267
    )
    
    
    (36,201
    )
    
    
    (6,975
    )
    
    
    (6,922
    )
    
    
    (4,650
    )
    
    
    (6,183
    )
    
    
    6,367
    
    
    
    (7,518
    )Net (loss) income from continuing operationsBasic and diluted
    
    $
    (0.11
    )
    
    $
    (1.70
    )
    
    $
    (0.33
    )
    
    $
    (0.32
    )
    
    $
    (0.22
    )
    
    $
    (0.29
    )
    
    $
    0.29
    
    
    $
    (0.33
    )
  Liquidity and Capital Resources
 Working Capital
    44




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##### Table of Contents




    
    Pool 1, with a balance of $34.5 million at December 31, 2009, is scheduled to mature on
July 1, 2010. We are pursuing opportunities to extend or refinance the loan.
    
    Pool 3, with a balance of $45.5 million at December 31, 2009, matured on October 1,
2009, following two short-term extensions. The extensions were intended to provide time
for us to reach an agreement with the special servicer to modify the loan. Since we were
unable to reach a modification agreement, we surrendered control of the six hotels that
secure Pool 3 to a court-appointed receiver in February 2010 as we determined that the cash
flow generated by the hotels that secure Pool 3 was not sufficient to fund the debt service
requirements. The Pool 3 loan is non-recourse, except in certain limited circumstances
(which we believe are remote) and are not cross-collateralized with any other mortgage
debt.
    
    A loan agreement with IXIS Real Estate Capital Inc. (IXIS) secured by the Holiday Inn
in Hilton Head Island, SC was originally scheduled to mature on December 9, 2007. However,
we exercised all three one-year extension options, which extended the maturity to December
9, 2010. The outstanding loan balance at December 31, 2009 was $18.3 million.
    
    A loan agreement with Wachovia secured by the SpringHill Suites Pinehurst, NC is
scheduled to mature on June 10, 2010. The outstanding loan balance at December 31, 2009
was $2.9 million. We are pursuing opportunities to extend or refinance the loan.
      45




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##### Table of Contents



Cash Flow
  Operating activities
  Investing activities
  46




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##### Table of Contents



Financing activities
   Debt and contractual obligations
  Debt Obligations
    
    
    MaturitiesDecember 31, 2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter($ in thousands)DEBT OBLIGATIONSMortgage Debt :Goldman Sachs (1)
    
    $
    130,000
    
    
    $
    
    
    
    $
    130,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Merrill Lynch Fixed Rate Pool 1
    
    
    34,471
    
    
    
    34,471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Merrill Lynch Fixed Rate Pool 3 (2)
    
    
    45,500
    
    
    
    45,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Merrill Lynch Fixed Rate Pool 4
    
    
    34,648
    
    
    
    914
    
    
    
    977
    
    
    
    32,757
    
    
    
    
    
    
    
    
    
    
    
    IXIS (3)
    
    
    20,679
    
    
    
    299
    
    
    
    20,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    IXIS  Holiday Inn Hilton Head, SC (4)
    
    
    18,294
    
    
    
    18,294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wachovia  Holiday Inn Express Palm Desert, CA
    
    
    5,645
    
    
    
    129
    
    
    
    5,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wachovia  SpringHill Suites by Marriott Pinehurst, NC
    
    
    2,920
    
    
    
    2,920
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total  Mortgage Debt
    
    
    292,157
    
    
    
    102,527
    
    
    
    156,873
    
    
    
    32,757
    
    
    
    
    
    
    
    
    
    
    
    Other Long-term Liabilities:Other Long-term Liabilities
    
    
    1,236
    
    
    
    218
    
    
    
    309
    
    
    
    126
    
    
    
    125
    
    
    
    125
    
    
    
    3331,236
    
    
    
    218
    
    
    
    309
    
    
    
    126
    
    
    
    125
    
    
    
    125
    
    
    
    333Total Debt Obligations
    
    
    293,393
    
    
    
    102,745
    
    
    
    157,182
    
    
    
    32,883
    
    
    
    125
    
    
    
    125
    
    
    
    333Less: Debt Obligations  Held for Sale
    
    
    5,645
    
    
    
    129
    
    
    
    5,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Debt Obligations  Held for Use
    
    $
    287,748
    
    
    $
    102,616
    
    
    $
    151,666
    
    
    $
    32,883
    
    
    $
    125
    
    
    $
    125
    
    
    $
    333OTHER OBLIGATIONSInterest Expense (5)
    
    
    14,822
    
    
    $
    7,321
    
    
    $
    4,699
    
    
    $
    2,802
    
    
    $
    
    
    
    $
    
    
    
    $
    Ground, Parking and Other Lease Obligations
    
    
    78,648
    
    
    
    3,352
    
    
    
    3,004
    
    
    
    2,882
    
    
    
    2,654
    
    
    
    2,198
    
    
    
    64,558Total Other Obligations
    
    
    93,470
    
    
    
    10,673
    
    
    
    7,703
    
    
    
    5,685
    
    
    
    2,654
    
    
    
    2,198
    
    
    
    64,558Less: Other Obligations  Held for Sale
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total Other Obligations  Held for Use
    
    $
    93,470
    
    
    $
    10,673
    
    
    $
    7,703
    
    
    $
    5,685
    
    
    $
    2,654
    
    
    $
    2,198
    
    
    $
    64,558TOTAL OBLIGATIONSTotal Debt and Other Obligations
    
    
    386,863
    
    
    
    113,418
    
    
    
    164,885
    
    
    
    38,568
    
    
    
    2,779
    
    
    
    2,323
    
    
    
    64,891Less: Debt and Other Obligations  Held for Sale
    
    
    5,645
    
    
    
    129
    
    
    
    5,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Debt and Other Obligations  Held for Use
    
    $
    381,218
    
    
    $
    113,289
    
    
    $
    159,369
    
    
    $
    38,568
    
    
    $
    2,779
    
    
    $
    2,323
    
    
    $
    64,891
 
 (1)
    
    As discussed in Debt and Contractual Obligations below, the Goldman Sachs loan matured in 2009, with the option to extend the loan for three additional one-year periods. The first extension option was exercised, which extended the maturity to May 1, 2010. Management has the intent and ability to exercise the second option, which would extend the maturity to May 2, 2011.(2)
    
    As discussed in Debt and Contractual Obligations below, this loan matured on October 1, 2009, following two short-term extensions. The Company surrendered control of the six hotels which secured this loan to a court-appointed receiver in February 2010.(3)
    
    As discussed in Debt and Contractual Obligations below, this loan matured in March 2008, with 3 available one-year extensions. The Company exercised all options, which extended the loan to March 2011.(4)
    
    As discussed in Debt and Contractual Obligations below, this loan matured in December 2007, with 3 available one-year extensions. The Company exercised all options, which extended the maturity to December 2010.(5)
    
    The computation of interest expense related to our variable rate debt assumes a LIBOR of 0.25% for all future periods.   47




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Debt and Contractual Obligations
        48




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49




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Summary of Long-term Debt
  December 31, 2009
    
    
    December 31, 2008Number
    
    Property, plant
    
    
    Long-term
    
    
    Long-termof Hotels
    
    and equipment, net
    
    
    obligations
    
    
    obligations
    
    
    Interest rates at December 31, 2009($ in thousands)Mortgage DebtGoldman Sachs (1)
    
    10
    
    $
    120,553
    
    
    $
    130,000
    
    
    $
    130,000
    
    
    LIBOR plus 1.50%; capped at 6.50%Merrill Lynch Fixed Rate Pool 1 (2)
    
    4
    
    
    63,405
    
    
    
    34,471
    
    
    
    39,372
    
    
    6.58%Merrill Lynch Fixed Rate Pool 3 (3)
    
    6
    
    
    45,799
    
    
    
    45,500
    
    
    
    53,031
    
    
    6.58%Merrill Lynch Fixed Rate Pool 4 (4)
    
    6
    
    
    78,604
    
    
    
    34,648
    
    
    
    35,984
    
    
    6.58%IXIS (5)
    
    3
    
    
    17,415
    
    
    
    20,679
    
    
    
    20,977
    
    
    LIBOR plus 2.95%; capped at 7.45%IXIS  Holiday Inn Hilton Head, SC
    
    1
    
    
    16,063
    
    
    
    18,294
    
    
    
    18,530
    
    
    LIBOR plus 2.90%; capped at 7.90%Wachovia  Holiday Inn Crowne Plaza Worcester, MA (6)
    
    
    
    
    
    
    
    
    
    
    
    
    16,501
    
    
    n/aWachovia  Holiday Inn Phoenix, AZ (7)
    
    
    
    
    
    
    
    
    
    
    
    
    9,478
    
    
    n/aWachovia  Holiday Inn Express Palm Desert, CA
    
    1
    
    
    5,306
    
    
    
    5,645
    
    
    
    5,767
    
    
    6.04%Wachovia  SpringHill Suites by Marriott Pinehurst, NC
    
    1
    
    
    5,623
    
    
    
    2,920
    
    
    
    2,988
    
    
    5.78%Total
    
    32
    
    
    352,768
    
    
    
    292,157
    
    
    
    332,628
    
    
    3.96%          (8)Long-term liabilities  otherTax notes issued pursuant to our Joint Plan of
Reorganization
    
    
    
    
    
    
    
    
    
    
    
    
    42Other
    
    
    
    
    
    
    
    
    1,236
    
    
    
    1,342
    
    
    
    
    
    
    1,236
    
    
    
    1,384Property, plant and equipment  Unencumbered
    
    
    
    
    35,201
    
    
    
    
    
    
    
    32
    
    
    387,969
    
    
    
    293,393
    
    
    
    334,012Held for sale
    
    (1)
    
    
    (5,306
    )
    
    
    (5,645
    )
    
    
    (14,257
    )Held for use (9)
    
    31
    
    $
    382,663
    
    
    $
    287,748
    
    
    $
    319,755
 
 (1)
    
    The hotels that secure this debt are: Crowne Plaza Albany, NY; Holiday Inn BWI Baltimore, MD;
Residence Inn Dedham, MA; Hilton Ft. Wayne, IN; Radisson Kenner, LA; Courtyard by Marriott
Lafayette, LA; Holiday Inn Meadow Lands Pittsburgh, PA; Holiday Inn Santa Fe, NM; Crowne Plaza
Silver Spring, MD; and Courtyard by Marriott Tulsa, OK.(2)
    
    The hotels that secure this debt are: Courtyard by Marriott Atlanta-Buckhead, GA; Marriott
Denver, CO; Four Points by Sheraton Philadelphia, PA; and Holiday Inn Strongsville, OH.(3)
    
    The
hotels that secure this debt are: Courtyard by Marriott Abilene, TX; Courtyard by Marriott
Bentonville, AR; Courtyard by Marriott Florence, KY; Holiday Inn Inner Harbor Baltimore, MD; Crowne
Plaza Houston, TX; and Fairfield Inn by Marriott Merrimack, NH. This loan matured on October 1,
2009, following two short-term extensions. The Company surrrendered control of the six hotels which
secured this loan to a court-appointed receiver in February 2010.(4)
    
    The hotels that secure this debt are: Hilton Columbia, MD; Wyndham DFW Dallas, TX; Residence
Inn by Marriott Little Rock, AR; Holiday Inn Myrtle Beach, SC; Courtyard by Marriott Paducah, KY;
and Crowne Plaza West Palm Beach, FL.(5)
    
    The hotels that secure this debt are: Crowne Plaza Phoenix, AZ; Radisson Phoenix, AZ; and
Crowne Plaza Pittsburgh, PA.(6)
    
    The Company surrendered control of the Crowne Plaza Worcester, MA in November 2009. The assets
and liabilities, including the related debt, were deconsolidated from the Companys balance sheet
upon surrender of control.(7)
    
    The Company surrendered control of the Holiday Inn Phoenix, AZ in July 2009. The assets and
liabilities, including the related debt, were deconsolidated from the Companys balance sheet upon
surrender of control.(8)
    
    The rate represents the annual effective weighted average cost of debt at December 31, 2009.(9)
    
    Long-term debt obligations at December 31, 2009 and December 31, 2008 include the current
portion of $102.6 million and $125.0 million, respectively. Franchise Agreements and Capital Expenditures
   50




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For the Years Ended       December 31,2009
    
    
    2008
    
    
    2007($ in thousands)Continuing operations
    
    $
    14,255
    
    
    $
    16,372
    
    
    $
    16,157Discontinued operations
    
    
    1,218
    
    
    
    3,214
    
    
    
    6,479$
    15,473
    
    
    $
    19,586
    
    
    $
    22,636
     Off Balance Sheet Arrangements
  New Accounting Pronouncements
 Recently Adopted Pronouncements
 The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles,
 Fair Value Measurements and
Disclosures Fair Value Measurements
  51




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Level
1
    
    Quoted prices for identical instruments in active markets at the measurement date.Level
2
    
    Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations in which all significant inputs and significant
value drivers are observable in active markets at the measurement date and for the anticipated term of the
instrument.Level
3
    
    Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable inputs that reflect the reporting entitys own assumptions about the assumptions
market participants would use in pricing the asset or liability developed based on the best information
available in the circumstances.
 Business
Combinations Business Combinations
 Consolidation Noncontrolling Interest in Consolidated Financial Statements
 An Amendment of ARB No. 51
  Twelve Months Ended December 31,2008
    
    
    2007($ in thousands, except
per share data)Loss from continuing operations
    
    $
    (8,014
    )
    
    $
    (5,236
    )Less: Net loss attributable to noncontrolling interest
    
    
    718
    
    
    
    620Loss from continuing operations attributable to common stock
    
    
    (7,296
    )
    
    
    (4,616
    )Loss from discontinued operations
    
    
    (3,970
    )
    
    
    (2,789
    )Net loss attributable to common stock
    
    $
    (11,266
    )
    
    $
    (7,405
    )DenominatorBasic and diluted weighted average shares
    
    
    21,774
    
    
    
    24,292Basic and diluted loss per common share:Loss from continuing operations attributable to common stock
    
    $
    (0.34
    )
    
    $
    (0.19
    )Loss from discontinued operations
    
    
    (0.18
    )
    
    
    (0.11
    )Net loss attributable to common stock
    
    $
    (0.52
    )
    
    $
    (0.30
    )
 52




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##### Table of Contents



Derivatives and
Hedging Disclosures about Derivative Instruments and Hedging
Activities, an amendment to SFAS No.
 Earnings per Share Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities .
 Derivatives and
Hedging Disclosures about Credit Derivatives and Certain
Guarantees  An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and
Clarification of the Effective Date of FASB Statement No. 161
 Business Combinations Accounting for Assets Acquired and Liabilities Assumed in
a Business Combination That Arise from Contingencies
 Fair Value Measurements
and Disclosures Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly
 Investments  Debt and
Equity Securities Recognition and
Presentation of Other-Than-Temporary Impairments
 Financial Instruments Interim Disclosures about Fair Value of
Financial Instruments
 53




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Subsequent Events Subsequent Events
 Recently Issued Pronouncements
 Transfers and Servicing Accounting for Transfers of Financial Assets
 Consolidation Amendments to FASB Interpretation No. 46(R)
 Value Measurements and Disclosures
 Revenue Recognition
 
 Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   54




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
    
    Effective immediately, the cash lockbox provisions of the loan were amended to provide
that excess cash flow from the mortgaged properties after debt service, reserves and
operating expenses, will not be retained by the lender in an excess cash flow reserve
account, but will instead be released to the borrowers on a monthly basis, even if the
properties do not meet a previously required financial covenant test.
    
    The deadline for Lodgians subsidiary which owns the Crowne Plaza Albany, New York, to
complete certain renovation work was extended to May 1, 2010.
    
    The allocated loan amounts for each of the properties securing the loan were readjusted.
    
    Effective July 1, 2010, the margin over LIBOR used to determine the interest rate on the
loan will be increased from 1.50% to 4.25%.
    
    If the Merger Agreement is validly terminated for any reason other than as a result of a
breach by Purchaser of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that certain of Lodgians closing conditions set
forth in the Merger Agreement would not be met, Lodgians subsidiary borrowing entities on
the loan will be required, in their sole discretion, to either pay down the principal
balance of the loan by $5 million, or to cause the Holiday Inn Monroeville, Pennsylvania
property to be pledged as additional security for the loan. If the Holiday Inn Monroeville,
Pennsylvania property is pledged as additional security for the loan, it may be
subsequently released from the loan upon payment of a cash release price of $5 million.
 Derivatives Accounting for Derivative Instruments and Hedging Activities
  55




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##### Table of Contents



Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure, Controls and Procedures.
  Changes in Internal Control Over Financial Reporting.
 Managements Report on Internal Control over Financial Reporting. Internal Control Integrated Framework,
 
 56




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57




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Item 9B.
    
    Other Information
  
 PART III
 
 Item 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Information About Directors and Executive Officers
  Name
    
    Age
    
    PositionW. Blair Allen (1)
    
    
    40
    
    
    DirectorJohn W. Allison
    
    
    63
    
    
    DirectorStewart J. Brown (2)(3)(4)
    
    
    62
    
    
    DirectorDaniel E. Ellis (1)
    
    
    41
    
    
    President, Chief Executive Officer, General Counsel,Secretary and DirectorPaul J. Garity (3)
    
    
    57
    
    
    DirectorMichael J. Grondahl (2)(3)
    
    
    41
    
    
    DirectorAlex R. Lieblong (1)(4)
    
    
    59
    
    
    DirectorMark S. Oei (1)(2)(4)
    
    
    41
    
    
    DirectorOther Executive Officers:James A. MacLennan
    
    
    50
    
    
    Executive Vice President and Chief Financial OfficerDonna B. Cohen
    
    
    38
    
    
    Vice President and ControllerJoseph F. Kelly
    
    
    53
    
    
    Vice President of Hotel Operations
 
 (1)
    
    Member of the Executive Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Audit Committee(4)
    
    Member of the Nominating Committee Biographical Information and Business Experience
 W. Blair Allen,
  John W. Allison,
 58




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##### Table of Contents



Stewart J. Brown,
  Daniel E. Ellis
  Paul J. Garity
  Michael J. Grondahl
  59




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##### Table of Contents



Alex R. Lieblong,
  Mark S. Oei
  Executive Officers
 James A. MacLennan
 Donna B. Cohen
 Joseph F. Kelly
 Section 16(A) Beneficial Ownership Reporting Compliance
  60




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##### Table of Contents



Code of Ethics
 www.lodgian.com
 Director Nominations
    Audit Committee
  
    
    Engaging independent auditors to audit our financial statements and perform
other services related to the audit, including determining the compensation to be paid
to the independent auditors;
    
    Reviewing the scope and results of the audit with the independent auditors;
    
    Preapproving all non-audit services provided to Lodgian by the independent
auditors;
    
    Periodically assessing the independence of Lodgians auditors;
    
    Reviewing and discussing with management and the independent auditors
Lodgians quarterly and annual financial statements, audit results and reports;
    
    Establishing guidelines for our internal audit function and periodically
reviewing the adequacy of our internal controls;
    
    Establishing clear policies for Lodgian to follow in hiring employees or
former employees of the independent auditors;
    
    Reviewing and periodically updating our Policy on Business Ethics;
    
    Considering changes in accounting practices;
    
    Reviewing any correspondence, report, complaint or concern that raises
issues regarding our financial statements or accounting policies and establishing
procedures for (1) the receipt, retention and treatment of such complaints, and (2) the
confidential, anonymous submission by employees of such concerns; and
    
    Reviewing and reassessing the adequacy of the Audit Committee Charter on an
annual basis.
 61




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##### Table of Contents



Item 11.
EXECUTIVE COMPENSATION
 Director Compensation
  
    
    $1,500 per in person Board of Director meeting
    
    $1,000 per in person Board Committee meeting
    
    $500 per telephonic Board or Board Committee meeting
    Fees Earned or Paid
    
    
    
    
    
    
    All OtherName
    
    in Cash ($)
    
    
    Stock Awards ($) (1)
    
    
    Compensation
    
    
    Total ($)Stewart J. Brown
    
    
    30,400
    
    
    
    11,900
    
    
    
    
    
    
    
    42,300Paul J. Garity
    
    
    31,200
    
    
    
    9,520
    
    
    
    
    
    
    
    40,720Michael J. Grondahl
    
    
    34,000
    
    
    
    11,900
    
    
    
    
    
    
    
    45,900John W. Allison
    
    
    26,800
    
    
    
    4,760
    
    
    
    
    
    
    
    31,560Alex R. Lieblong
    
    
    29,600
    
    
    
    4,760
    
    
    
    
    
    
    
    34,360Mark S. Oei (2)
    
    
    30,800
    
    
    
    
    
    
    
    
    
    
    
    30,800W. Blair Allen
    
    
    32,800
    
    
    
    4,760
    
    
    
    
    
    
    
    37,560
 
 (1)
    
    The amounts reported represent the grant date fair value of awards granted in 2009
computed in accordance with ASC 718 and is based upon the closing price on February 12,
2009 of $2.38 per share. See note 2 to our consolidated financial statements herein for
information regarding the assumptions underlying the valuation of these awards.(2)
    
    Mr. Oei declined the stock award as rules of his employer prohibit his acceptance of
such equity awards. 62




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##### Table of Contents



Compensation

    
    Total Grant -2009 Regular Grant

    
    Audit Committee

    
    Committee

    
    February 12, 2009

    
    Grant Date FairDirector
    
    (#)

    
    (#)

    
    (#)

    
    (#)

    
    Value (1)Stewart J. Brown
    
    
    2,000
    
    
    
    2,000
    
    
    
    1,000
    
    
    
    5,000
    
    
    $
    11,900Paul J. Garity
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    4,000
    
    
    $
    9,520Michael J. Grondahl
    
    
    2,000
    
    
    
    2,000
    
    
    
    1,000
    
    
    
    5,000
    
    
    $
    11,900John W. Allison
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    $
    4,760Alex R. Lieblong
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    $
    4,760Mark S. Oei (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    W. Blair Allen
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    $
    4,760Total Grant
    
    
    20,000
 
 (1)
    
    Based upon the closing price on February 12, 2009 of $2.38 per share.(2)
    
    Mr. Oei declined the stock award as rules of his employer prohibit his acceptance of
such equity awards.  EXECUTIVE COMPENSATION
 COMPENSATION DISCUSSION AND ANALYSIS
 Overview
   Named Executive Officers for 2009
  
    
    Daniel E. Ellis, President, Chief Executive Officer, General Counsel and
Secretary;
    
    Peter T. Cyrus, Former Interim President and Chief Executive Officer;
    
    James A. MacLennan, Executive Vice President and Chief Financial Officer;
 63




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##### Table of Contents




    
    Donna B. Cohen, Vice President and Controller;
    
    Joseph F. Kelly, Vice President of Hotel Operations
 Key Compensation Actions for 2009
  
    
    The Compensation Committee generally approved a 4% base salary increase for 2009 for
the NEOs, and approved larger increases only in connection with the promotion of the
NEO. Salaries have been frozen for 2010.
    
    The Compensation Committee set performance goals for cash incentive awards based on
metrics of net operating income, achievement of corporate overhead and market
penetration. The NEOs earned a payout under the market penetration performance goal.
However, at the request of Mr. Ellis, each of the NEOs agreed to forgo the incentive
award earned for 2009. Therefore, no amounts were paid in connection with achievement
of the performance goal.
    
    The Compensation Committee set performance goals for equity incentive awards based on
metrics of net operating income, achievement of corporate overhead, stock price
performance and an employment retention goal. The NEOs achieved a payout under the
corporate overhead performance goal and the employment retention goal. However, at the
request of Mr. Ellis, each of the NEOs agreed to waive their right to receive the equity
awards in exchange for a cash payment that was substantially less than the value of the
equity awards earned for 2009. The cash payments were made in early 2010.
    
    The Compensation Committee has suspended our cash and equity incentive program for
2010.
 Objectives and Philosophy of Compensation Program
 General
   
    
    attract and retain talented and experienced executive officers;
    
    motivate and reward executives whose knowledge, skills and performance are
critical to our success;
    
    align the interests of our executive officers and stockholders by motivating
our executive officers to increase stockholder value and rewarding executive officers
when stockholder value increases;
    
    provide a competitive compensation package through the integration of
pay-for-performance incentives, in which total compensation is determined by Company
results and the creation of stockholder value; and
    
    compensate our executives to manage our business to meet our long-term
objectives.
 Compensation Process
   64




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Compensation Consultant
   Market Comparison
   
    
    Bluegreen Corp.
    
    Great Wolf Resorts, Inc.
    
    Interstate Hotels & Resorts, Inc.
    
    Red Lion Hotels Corp.
    
    Silverleaf Resorts, Inc.
    
    Morgans Hotel Group Co.
 Base Salaries
  
    
    Cost-of-living and other local and geographic considerations;
    
    Consultation with other Lodgian executives;
    
    Hospitality industry and job-specific skills and knowledge;
    
    Historical and expected contributions to our performance; and
 65




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##### Table of Contents




    
    Level, complexity, breadth and difficulty of duties.
     Name
    
    January 2008
    
    
    January 2009
    
    
    Change (%)
    
    
    December 2009
    
    
    January 2010
    
    
    Change (%)Peter T. Cyrus
    
    $
    750,000
    
    
    $
    750,000
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AJames A. MacLennan
    
    
    325,000
    
    
    
    338,000
    
    
    
    4.0
    
    
    
    338,000
    
    
    
    338,000
    
    
    
    Daniel E. Ellis
    
    
    300,000
    
    
    
    312,000
    
    
    
    4.0
    
    
    
    400,000
    
    
    
    400,000
    
    
    
    Donna B. Cohen
    
    
    188,125
    
    
    
    195,650
    
    
    
    4.0
    
    
    
    195,650
    
    
    
    195,650
    
    
    
    Joseph F. Kelly
    
    
    167,018
    
    
    
    235,000
    
    
    
    40.1
    
    
    
    235,000
    
    
    
    235,000
    
    
    
    
 Incentive Compensation
  Purpose
  Stock Incentive Plan
   66




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Lodgian, Inc. Amended and Restated Executive Incentive Plan (Amended and Restated EIP or Revised
Plan)
   Equity Awards Earned for 2008 Pursuant to the Revised Plan
  Equity Award Earned by ComponentStock PriceTime-Vesting
    
    
    PerformanceNon-Performance-
    
    
    Versus
    
    
    
    
    
    
    
    
    
    
    Actual EquityName
    
    Based
    
    
    Peer Group
    
    
    NOI
    
    
    Overhead
    
    
    Award EarnedDaniel E. Ellis
    
    $
    40,600
    
    
    $
    23,655
    
    
    
    
    
    
    $
    70,963
    
    
    $
    135,218James A. MacLennan
    
    
    44,275
    
    
    
    25,796
    
    
    
    
    
    
    
    77,387
    
    
    
    147,458Donna B. Cohen
    
    
    14,587
    
    
    
    8,498
    
    
    
    
    
    
    
    25,495
    
    
    
    48,580Joseph F. Kelly
    
    
    12,775
    
    
    
    7,443
    
    
    
    
    
    
    
    22,329
    
    
    
    42,547
  New Executive Incentive Plan
   67




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##### Table of Contents



2009 Target Cash
    
    
    2009 Target EquityName (1)
    
    Incentive Award
    
    
    Incentive AwardDaniel E. Ellis
    
    $
    126,500
    
    
    $
    116,000James A. MacLennan
    
    
    140,000
    
    
    
    126,500Joseph F. Kelly
    
    
    85,000
    
    
    
    60,000Donna B. Cohen
    
    
    56,438
    
    
    
    41,675
 
 (1)
    
    Mr. Cyrus was not a participant in the New Executive Incentive Plan for fiscal 2009. Mechanics of the New Executive Incentive Plan
  1.
    
    The cash target awards for each participant under the plan are added
together to arrive at the target cash bonus pool. For 2009, the target cash bonus
pool was $624,018.2.
    
    After the close of each year, the target cash bonus pool is adjusted
depending upon actual corporate overhead as follows:
 Corporate Overhead Result
    
    Impact on Cash Bonus PoolIf actual corporate overhead
is less than budgeted overhead
    
    increase the target cash bonus pool by
16% of any amount under budgetIf actual corporate overhead
exceeds budgeted overhead by
5% or less
    
    reduce the target cash bonus pool pro
rata, with no reduction at 100% of
budgeted overhead and a 15% reduction at
105% of budgeted overheadIf actual corporate overhead
exceeds budgeted overhead by
more than 5% of budgeted
overhead but not more than 10%
of budgeted overhead
    
    reduce the target cash bonus pool pro
rata, with a 15% reduction at 105% of
budgeted overhead and a 25% reduction at
110% of budgeted overheadIf actual corporate overhead
exceeds budgeted overhead by
more than 10% of budgeted
overhead
    
    reduce the target cash bonus pool by 40%
  3.
    
    The NOI Bonus Pool is then determined based upon achievement of NOI
goals. The NOI Bonus Pool is determined as follows:
 If actual NOI is below 90% of Target NOI
    
    the Adjusted Bonus Pool is reduced to $0If actual NOI is between 90% and 100% of
Target NOI
    
    the Adjusted Bonus Pool is reduced pro
rata, with a $0 reduction at 100% of
target NOI and a $500,000 reduction at
90% of target NOIIf actual NOI equals 100% of Target NOI
    
    100% of Adjusted Bonus PoolIf actual NOI exceeds 100% of Target NOI
    
    the Adjusted Bonus Pool is increased by
16% of actual NOI in excess of target
NOI
 4.
    
    The Market Penetration Bonus Pool is then determined based upon achievement of
the Market Penetration goals as set forth below:
 If Market Penetration
exceeds 100 but is less than 101
    
    the Market Penetration Bonus Pool is $100,000If Market Penetration exceeds
101 but is less than 103
    
    the Market Penetration Bonus Pool is $200,000If Market Penetration exceeds
103 but is less than 105
    
    the Market Penetration Bonus Pool is $300,000If Market Penetration exceeds
105 but is less than 107
    
    the Market Penetration Bonus Pool is $400,000If Market Penetration exceeds 107
    
    the Market Penetration Bonus Pool is $500,000
 68




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5.
    
    The greater of the NOI Bonus Pool or the Market Penetration Bonus Pool is then
allocated to eligible employees in the same proportion as an employees Target Bonus
Award bears to the Target Bonus Pool. The allocation formula is as follows:
 NOI Bonus Pool or Market Penetration Bonus
    
    Individual Participants Target Cash Bonus AwardPool (as applicable) X
    
    Total Target Cash Bonus Pool
  1.
    
    Target equity awards are set by the Compensation Committee for each plan
participant.2.
    
    Each participants target equity award is divided into the following
categories:
 a.
    
    35% are time-vested equity awards that vest over two years
at the rate of 50% per year;b.
    
    21 2/3% are performance-based equity awards based upon the
performance of our stock price relative to our industry group;c.
    
    21 2/3% are performance-based equity awards based on our
achievement of a net operating income target; andd.
    
    21 2/3% are performance-based equity awards based upon our
achievement of corporate overhead goals.
 3.
    
    The stock price equity performance awards are calculated as follows:
 a.
    
    Determine the price performance (expressed as a percentage)
of our stock and each member of the industry group listed below based on the
increase or decrease in Average Stock Price (as defined below) at year end
over the Average Stock Price at the end of the prior year. Price performance
can be positive or negative.b.
    
    Average Stock Price is defined as the average of the
closing stock price during the 50-day period ending on the last day of the
year.c.
    
    Rank us and each industry group company in order of price
performance percentage.d.
    
    Determine the award multiplier applicable to us based on
our rank within the industry group. The award is determined by interpolation
assuming the award for achieving the highest price performance would be 43
1/3%, the award for median price performance would be 21 2/3% and the award
for achieving the lowest price performance would be 0%.
 4.
    
    The net operating income equity performance awards are calculated based
upon the following criteria:
 NOI Result
    
    Impact on NOI Equity Performance AwardsIf actual NOI is below 90% of target NOI
    
    no payout of the NOI equity performance target awardIf actual NOI is between 90% and 100% of
target NOI
    
    reduce the NOI equity performance target award pro
rata, with no reduction at 100% of target NOI and a
100% reduction at 90% of target NOIIf actual NOI equals 100% of target NOI
    
    pay 100% of NOI equity performance target awardIf actual NOI exceeds 100% of target NOI
    
    increase the NOI equity performance target award by
16% of actual NOI in excess of 100% of NOI target
 69




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5.
    
    The corporate overhead equity performance awards are calculated based upon the
following criteria:
 Corporate Overhead Result
    
    Impact on Corporate OverheadEquity Performance AwardsIf actual corporate overhead is
less than budgeted overhead
    
    increase the corporate overhead
equity performance target award
by 16% of any amount under budgetIf actual corporate overhead exceeds
budgeted overhead by 5% or less
    
    reduce the corporate overhead
equity performance target award
pro rata, with no reduction at
100% of budgeted overhead and a
15% reduction at 105% of budgeted
overheadIf actual corporate overhead exceeds
budgeted overhead by more than 5% of
budgeted overhead but not more than
10% of budgeted overhead
    
    reduce the corporate overhead
equity performance target award
pro rata, with a 15% reduction at
105% of budgeted overhead and a
25% reduction at 110% of budgeted
overheadIf actual corporate overhead exceeds
budgeted overhead by more than 10% of
budgeted overhead
    
    reduce the corporate overhead
equity performance target award
by 40%
 2009 Performance Measures under the New Executive Incentive Plan
       
    
    Bluegreen Corp.
    
    Great Wolf Resorts, Inc.
    
    Interstate Hotels & Resorts, Inc.
    
    Red Lion Hotels Corp.
    
    Silverleaf Resorts, Inc.
    
    Morgans Hotel Group Co.
    
    Choice Hotels International, Inc.
    
    Gaylord Entertainment Co.
 70




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##### Table of Contents




    
    Marriott International, Inc.
    
    Orient Express Hotels, Ltd.
    
    Starwood Hotels & Resorts Worldwide, Inc.
    
    Vail Resorts, Inc.
    
    Wyndham Worldwide Corp.
    
    InterContinental Hotels Group
    
    Ashford Hospitality Trust
    
    Felcor Lodging Trust, Inc.
    
    Diamond Rock Hospitality
   Payouts Earned for 2009 Pursuant to the New Executive Incentive Plan
 Cash Awards
    2009 Actual Cash AwardName
    
    2009 Target Cash Award
    
    
    EarnedDaniel E. Ellis
    
    $
    126,500
    
    
    $
    56,338James A. MacLennan
    
    
    140,000
    
    
    
    62,350Joseph F. Kelly
    
    
    85,000
    
    
    
    37,856Donna B. Cohen
    
    
    56,438
    
    
    
    25,135
 Equity Awards
  Equity Award Earned by ComponentStock Price2009 Target Equity







Performance versus











2009 Actual EquityName (1)
    
    Award
    
    
    Time-Vesting (2)
    
    
    peer group
    
    
    NOI
    
    
    Overhead
    
    
    Award EarnedDaniel E. Ellis
    
    $
    116,000
    
    
    $
    40,600
    
    
    
    
    
    
    
    
    
    
    $
    56,467
    
    
    $
    97,067James A. MacLennan
    
    
    126,500
    
    
    
    44,275
    
    
    
    
    
    
    
    
    
    
    
    61,578
    
    
    
    105,853Joseph F. Kelly
    
    
    60,000
    
    
    
    21,000
    
    
    
    
    
    
    
    
    
    
    
    29,209
    
    
    
    50,209Donna B. Cohen
    
    
    41,675
    
    
    
    14,586
    
    
    
    
    
    
    
    
    
    
    
    20,287
    
    
    
    34,873
 
 (1)
    
    Mr. Cyrus was not a participant in the Revised Plan for fiscal 2009 and resigned on
June 9, 2009.(2)
    
    Each participant earned 35% of his or her equity target as this portion of the
plan was non-performance based. Waiver of 2009 Cash and Equity Awards
  71




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##### Table of Contents



Cash Payment Made inValue of Equity Award
    
    
    Satisfaction of EquityName
    
    Earned
    
    
    AwardDaniel E. Ellis
    
    $
    97,067
    
    
    $
    35,000James A. MacLennan
    
    
    105,853
    
    
    
    25,000Joseph F. Kelly
    
    
    50,207
    
    
    
    20,000Donna B. Cohen
    
    
    34,873
    
    
    
    20,000
  Suspension of New Executive Incentive Plan for 2010
  Equity Award in Connection with Promotion to CEO
  Other Benefits and Perquisites
  72




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##### Table of Contents



Departures of Named Executive Officer During 2009
  Regulatory Considerations
    Role of our Executive Officers in Compensation Decisions
   Employment Agreements, Severance Benefits and Change in Control Provisions
     73




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##### Table of Contents



Securities Trading Policy
    Limitation of Liability and Indemnification of Officers and Directors
  Compensation Committee Interlocks and Insider Participation
  Compensation Policies and Practices and Risk Management
  
    
    Using multiple performance goals under incentive compensation plans, such as net
operating income targets, corporate overhead targets, market penetration thresholds and
stock price performance, which serves as a check-and-balance so as not to put inappropriate
emphasis solely on one measure of our performance;
    
    Setting performance goals under our annual incentive cash award plans that we believe
are reasonable in light of past performance and market conditions, and also permitting the
Compensation Committee to exercise certain discretion in making final award determinations
so as to take into account changing market conditions, allowing our executives to focus on
the long-term health of our Company rather than an all or nothing approach to achieving
short term goals;
    
    Using restricted stock for equity awards so as to encourage the growth of the companys
stock price and to recognize that restricted stock awards retain value even in a depressed
market so that executives are less likely to take unreasonable risks to get, or keep,
options in-the-money; and
    
    The time-based vesting over two or more years for our equity awards, as well as a
portion of equity based awards being conditioned upon satisfaction of performance goals,
ensuring that our executives interests align with those of our shareholders over the long
term.
 74




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##### Table of Contents



COMPENSATION COMMITTEE REPORT
   
 The foregoing report should not be deemed incorporated by reference by any general statement
incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we
specifically incorporate this information by reference, and shall not otherwise be deemed filed
under such Acts.
 75




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##### Table of Contents



2009 SUMMARY COMPENSATION TABLE
  Non-EquityIncentive Plan
    
    All OtherSalary
    
    Bonus
    
    Stock Awards
    
    Compensation
    
    CompensationName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($) (2)
    
    ($) (4)
    
    ($) (5)
    
    Total ($)Daniel E. Ellis
President, Chief
    
    
    2009
    
    
    
    357,815
    
    
    
    
    
    
    
    30,150
    
    
    
    35,000
    
    
    
    20,862
    
    
    
    443,827Executive
Officer, General Counsel & Secretary
    
    
    2008
    
    
    
    299,039
    
    
    
    12,000
    
    
    
    224,218
    
    
    
    
    
    
    
    16,827
    
    
    
    552,0842007
    
    
    
    275,000
    
    
    
    120,000
    
    
    
    128,400
    
    
    
    
    
    
    
    18,167
    
    
    
    541,567Peter T. Cyrus Former
Interim President and
Chief Executive Officer
    
    
    2009
    
    
    
    413,732
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400
    
    
    
    414,132(1)
    
    
    2008
    
    
    
    657,693
    
    
    
    
    
    
    
    17,360
    
    
    
    
    
    
    
    800
    
    
    
    675,853James A. MacLennan
Executive Vice
    
    
    2009
    
    
    
    338,168
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    17,465
    
    
    
    380,633President
and Chief Financial Officer
    
    
    2008
    
    
    
    324,038
    
    
    
    12,000
    
    
    
    236,457
    
    
    
    
    
    
    
    13,597
    
    
    
    586,0922007
    
    
    
    300,000
    
    
    
    120,000
    
    
    
    128,400
    
    
    
    
    
    
    
    14,162
    
    
    
    562,5622009
    
    
    
    195,356
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    8,433
    
    
    
    223,789Donna B. Cohen Vice
    
    
    2008
    
    
    
    187,621
    
    
    
    10,000
    
    
    
    75,279
    
    
    
    
    
    
    
    8,703
    
    
    
    281,603President and Controller
    
    
    2007
    
    
    
    175,000
    
    
    
    45,000
    
    
    
    38,520
    
    
    
    
    
    
    
    7,892
    
    
    
    266,412Joseph F. Kelly Vice
President of Hotel Operations
    
    
    2009
    
    
    
    235,332
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    19,172
    
    
    
    274,5042008
    
    
    
    167,018
    
    
    
    7,500
    
    
    
    69,246
    
    
    
    
    
    
    
    16,122
    
    
    
    259,886
 
 (1)
    
    Mr. Cyrus resigned on June 9, 2009.(2)
    
    The values of all stock awards above are reported in accordance with ASC 718 and
represent the grant date fair value of stock awards granted during the applicable year. See
note 2 to our consolidated financial statements herein for information regarding the
assumptions underlying the valuation of these awards. There was no maximum fair value for
stock awards. Please see Overview of the Revised Plan in the Compensation Discussion &
Analysis section for further discussion on plan details. Stock awards for 2007, 2008 and
2009 are described in further detail as follows: a.
    
    On January 26, 2007, Mr. Ellis was granted 10,000 shares of restricted
stock, which were valued at $12.84 per share. These shares vested equally over
three years beginning on January 26, 2008. On January 22, 2008, Mr. Ellis was
granted 10,000 shares of restricted stock, which were valued at $8.90 per share.
These shares vested equally over two years beginning on January 22, 2009. On
February 4, 2009, Mr. Ellis was granted 51,219 shares of restricted stock, which
were valued at $2.64 per share. These shares were awarded pursuant to the Lodgian,
Inc. Amended and Restated Executive Incentive Plan, based upon performance in 2008,
and vest over a two-year period. On June 11, 2009, Mr. Ellis was granted 15,000
shares of restricted stock, which were valued at $2.01 per share, in connection with
his appointment as our President & Chief Executive Officer.b.
    
    On January 26, 2007, Mr. MacLennan was granted 10,000 shares of
restricted stock, which were valued at $12.84 per share. These shares vested
equally over three years beginning on January 26, 2008. On January 22, 2008, Mr.
MacLennan was granted 10,000 shares of restricted stock, which were valued at $8.90
per share. These shares vested equally over two years beginning on January 22,
2009. On February 4, 2009, Mr. MacLennan was granted 55,855 shares of restricted
stock, which were valued at $2.64 per share. These shares were awarded pursuant to
the Lodgian, Inc. Amended and Restated Executive Incentive Plan, based upon
performance in 2008, and vest over a two-year period.c.
    
    On January 26, 2007, Ms. Cohen was granted 3,000 shares of restricted
stock, which were valued at $12.84 per share. These shares vested equally over
three years beginning on January 26, 2008. On January 22, 2008, Ms. Cohen was
granted 3,000 shares of restricted stock, which were valued at $8.90 per share.
These shares vested equally over two years beginning on January 22, 2009. On
February 4, 2009, Ms.
 76




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##### Table of Contents



Cohen was granted 18,401 shares of restricted stock, which
were valued at $2.64 per share. These shares were awarded pursuant to the Lodgian,
Inc. Amended and Restated Executive Incentive Plan, based upon performance in 2008,
and vest over a two-year period.d.
    
    On January 22, 2008, Mr. Kelly was granted 3,000 shares of restricted
stock, which were valued at $8.90 per share. These shares vested equally over two
years beginning on January 22, 2009. On February 4, 2009, Mr. Kelly was granted
16,116 shares of restricted stock, which were valued at $2.64 per share. These
 shares were awarded pursuant to the Lodgian, Inc. Amended and Restated Executive
Incentive Plan, based upon performance in 2008, and vest over a two-year period.
 (3)
    
    No stock options were awarded in 2007, 2008 and 2009.(4)
    
    Each of our NEOs, except for Mr. Cyrus, earned a cash bonus under the New Executive
Incentive Plan for 2009. However, each of our NEOs waived entitlement to their cash
bonuses. Please see Overview of the Revised Plan in the Compensation Discussion &
Analysis section for further discussion on the waiver of these cash bonuses. Each of our
NEOs, with the exception of Mr. Cyrus, earned an equity award under the Executive Incentive
Plan for 2009. However, each of our NEOs waived entitlement to their equity award in
exchange for a cash payment which was less than the value of the equity award that was
earned. These cash payments were made in January 2010. Please see Waiver of 2009 Cash
and Equity Awards in the Compensation Discussion & Analysis section for further discussion
on the waiver of these equity awards and the cash payments made in lieu of these awards.(5)
    
    All Other Compensation includes employer contributions for basic life insurance,
medical, dental, and long term disability premiums paid by us on the employees behalf as
well as 401(k) matching contributions paid by us, where applicable. All employees are
treated similarly under the following plans except for the Executive LTD: Name
    
    401(k) Match
    
    
    Medical
    
    
    Dental
    
    
    Exec LTD
    
    
    Basic Life
    
    
    TotalsPeter T. Cyrus
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    400
    
    
    
    
    
    
    $
    400James A. MacLennan
    
    $
    11,335
    
    
    $
    4,989
    
    
    
    
    
    
    $
    533
    
    
    $
    608
    
    
    $
    17,465Daniel E. Ellis
    
    $
    11,129
    
    
    $
    8,546
    
    
    
    
    
    
    $
    533
    
    
    $
    654
    
    
    $
    20,862Donna B. Cohen
    
    $
    7,913
    
    
    
    
    
    
    
    
    
    
    $
    520
    
    
    
    
    
    
    $
    8,433Joseph F. Kelly
    
    $
    9,670
    
    
    $
    8,546
    
    
    
    
    
    
    $
    533
    
    
    $
    423
    
    
    $
    19,172
 77




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GRANTS OF PLAN-BASED AWARDS FOR 2009
  All Other StockEstimated Possible Payouts Under Non-Equity
    
    
    Estimated Possible Payouts Under
    
    
    Awards: Number of
    
    
    Grant Date FairIncentive Plan Awards (1)
    
    
    Equity Incentive Plan Awards (1)
    
    
    Shares of Stock or
    
    
    Value of Stock andThreshold
    
    
    Target
    
    
    
    
    
    
    
    
    
    
    Target
    
    
    Maximum
    
    
    Units
    
    
    Option Awards (3)Name
    
    Grant Date
    
    
    ($)
    
    
    ($)
    
    
    Maximum ($)
    
    
    Threshold ($)
    
    
    ($)
    
    
    ($)
    
    
    (#) (2)
    
    
    ($)Peter T. Cyrus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Daniel E. Ellis
    
    
    
    
    
    
    
    
    
    
    126,500
    
    
    
    
    
    
    
    55,680
    
    
    
    116,000
    
    
    
    
    
    
    
    
    
    
    
    97,0672/4/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,219
    
    
    
    135,2186/11/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    30,150James A. MacLennan
    
    
    
    
    
    
    
    
    
    
    140,000
    
    
    
    
    
    
    
    60,720
    
    
    
    126,500
    
    
    
    
    
    
    
    
    
    
    
    105,8532/4/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,855
    
    
    
    147,457Donna B. Cohen
    
    
    
    
    
    
    
    
    
    
    56,438
    
    
    
    
    
    
    
    20,004
    
    
    
    41,675
    
    
    
    
    
    
    
    
    
    
    
    34,8732/4/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,401
    
    
    
    48,579Joseph F. Kelly
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    17,520
    
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    50,2072/4/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,116
    
    
    
    42,546
 
 (1)
    
    Participants under the New Executive Incentive Plan had an opportunity to earn both cash
and equity incentive awards. Cash awards were dependent upon our performance versus
predefined net operating income, market penetration and corporate overhead goals. There
was no minimum or threshold cash amount payable because we must have achieved 90% of our
target net operating income or certain predefined market penetration goals for cash awards
to be earned. There was also no maximum cash amount payable. Participants may have also
earned equity awards, the amount of which was dependent upon the same net operating income
and corporate overhead goals as set forth above relating to incentive cash compensation.
Additionally, the amount of equity incentive compensation depended upon our stock price
performance versus an industry group of companies. The threshold amount of each
participants equity award was 35% of target. This represents the portion of the equity
award that was earned solely based on remaining employed through the date when awards were
made under the plan. Each of our NEOs, with the exception of Mr. Cyrus, earned an equity
award under the Executive Incentive Plan for 2009. However, each of our NEOs waived
entitlement to their equity award in exchange for a cash payment which was less than the
value of the equity award that was earned. These cash payments were made in January 2010.
Please see Waiver of 2009 Cash and Equity Awards in the Compensation Discussion and
Analysis section for further discussion on the waiver of these equity awards and the cash
payments made in lieu of these awards. Stock awards made pursuant to the New Executive
Incentive Plan had a two year vesting period.(2)
    
    On February 2, 2009, the Compensation Committee reviewed our 2008 performance in
accordance with the plans guidelines and determined that each NEO participating in the
plan as of December 31, 2008 was entitled to an equity award valued as follows.a.       Daniel E. Ellis  $135,218b.       James A. MacLennan  $147,457c.       Donna B. Cohen  $48,579d.       Joseph F. Kelly  $42,546These shares were granted on February 4, 2009. In addition, Mr. Ellis received a restricted
stock grant of 15,000 shares on June 11, 2009 in connection with his appointment as our
President & Chief Executive Officer. The grant date fair value of these shares was based
upon the closing price of Lodgians common stock on the date of grant, which was $2.01 per
share.(3)
    
    The grant date fair value of the restricted stock awards made on
February 4, 2009 was determined by multiplying the number of shares granted by $2.64, which
was the closing price of our common stock on that date. 78




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OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR-END
  Option AwardsEquity IncentivePlan Awards; Number
    
    
    
    
    
    
    
    
    
    
    Stock AwardsNumber of
    
    
    Number of
    
    
    of Securities
    
    
    
    
    
    
    
    
    
    
    Number ofSecurities
    
    
    Securities
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Shares or
    
    
    Market Value ofUnderlying
    
    
    Underlying
    
    
    Unexercised
    
    
    
    
    
    
    
    
    
    
    Units of
    
    
    Shares or Units ofUnexercised Options
    
    
    Unexercised Options
    
    
    Unearned Options
    
    
    Option Exercise
    
    
    Option Expiration
    
    
    Stock That
    
    
    Stock That Have NotName
    
    (#) Exercisable
    
    
    (#) Unexercisable
    
    
    (#)
    
    
    Price ($)
    
    
    Date
    
    
    Have Not Vested (#)
    
    
    Vested ($)(5)Peter T. Cyrus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Daniel E. Ellis (1)
    
    
    8,333
    
    
    
    
    
    
    
    
    
    
    
    15.21
    
    
    
    9/5/2013
    
    
    
    
    
    
    
    27,500
    
    
    
    
    
    
    
    
    
    
    
    10.52
    
    
    
    6/25/2014
    
    
    
    
    
    
    
    27,500
    
    
    
    
    
    
    
    
    
    
    
    9.05
    
    
    
    5/9/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,553
    
    
    
    110,338James A. MacLennan (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,189
    
    
    
    95,000Donna B. Cohen (3)
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    10.31
    
    
    
    9/26/2015
    
    
    
    
    
    
    
    20,901
    
    
    
    30,933Joseph F. Kelly (4)
    
    
    833
    
    
    
    
    
    
    
    
    
    
    
    15.21
    
    
    
    9/5/2013834
    
    
    
    
    
    
    
    
    
    
    
    10.52
    
    
    
    6/25/20141,666
    
    
    
    
    
    
    
    
    
    
    
    9.05
    
    
    
    5/9/201517,866
    
    
    
    26,442
 
 (1)
    
    The exercise price of all of Mr. Ellis options was above the closing price of our common
stock on December 31, 2009, which was $1.48 per share. On January 26, 2007, Mr. Ellis was
granted 10,000 shares of restricted stock. One third of these shares vested on January 26,
2008 and an additional one-third vested on January 26, 2009. On January 22, 2008, Mr. Ellis
was granted an additional 10,000 shares of restricted stock vesting over a two year period and
one-half of these shares vested on January 22, 2009. Additionally, Mr. Ellis was granted
51,219 shares of restricted stock on February 4, 2009. None of these shares had vested as of
December 31, 2009. Mr. Ellis was also granted 15,000 shares of restricted stock on June 11,
2009 in connection with his appointment as President and Chief Executive Officer. None of
these shares had vested as of December 31, 2009.(2)
    
    On January 26, 2007, Mr. MacLennan was granted 10,000 shares of restricted stock. One third
of these shares vested on January 26, 2008 and an additional one-third vested on January 26,
2009. On January 22, 2008, Mr. MacLennan was granted an additional 10,000 shares of
restricted stock vesting over a two year period and one-half of these shares vested on January
22, 2009. Additionally, Mr. MacLennan was granted 55,855 shares of restricted stock on
February 4, 2009. None of these shares had vested as of December 31, 2009.(3)
    
    The exercise price of Ms. Cohens options was above the closing price of our common stock on
December 31, 2009, which was $1.48 per share. On January 26, 2007, Ms. Cohen was granted
3,000 shares of restricted stock. One third of these shares vested on January 26, 2008 and an
additional one-third vested on January 26, 2009. On January 22, 2008, Ms. Cohen was granted
an additional 3,000 shares of restricted stock vesting over a two year period and one-half of
these shares vested on January 22, 2009. Additionally, Ms. Cohen was granted 18,401 shares of
restricted stock on February 4, 2009. None of these shares had vested as of December 31,
2009.(4)
    
    The exercise price of all of Mr. Kellys options was above the closing price of our common
stock on December 31, 2009, which was $1.48 per share. On March 30, 2007, Mr. Kelly was
granted 750 shares of restricted stock. One third of these shares vested on March 30, 2008
and an additional one-third vested on March 30, 2009. On January 22, 2008, Mr. Kelly was
granted an additional 3,000 shares of restricted stock vesting over a two year period and
one-half of these shares vested on January 22, 2009. Additionally, Mr. Kelly was granted
16,116 shares of restricted stock on February 4, 2009. None of these shares had vested as of
December 31, 2009.(5)
    
    The market value of all unvested stock awards reported in the table above was derived by
multiplying the number of unvested shares by the closing price of our common stock on December
31, 2009, which was $1.48 per share. 79




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##### Table of Contents



OPTION EXERCISES AND STOCK VESTED IN 2009
  Option Awards
    
    
    Stock AwardsNumber of Shares
    
    
    
    
    
    
    Number of SharesAcquired on
    
    
    Value Realized on
    
    
    Acquired on Vesting
    
    
    Value Realized onName
    
    Exercise (#)
    
    
    Exercise ($)
    
    
    (#)
    
    
    Vesting ($)Peter T. Cyrus (1)
    
    
    
    
    
    
    
    
    
    
    666
    
    
    
    1,585Daniel E. Ellis (2)
    
    
    
    
    
    
    
    
    
    
    8,333
    
    
    
    16,649James A. MacLennan (3)
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    36,717Donna B. Cohen (4)
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    4,995Joseph F. Kelly (5)
    
    
    
    
    
    
    
    
    
    
    1,750
    
    
    
    3,705
 
 (1)
    
    Mr. Cyrus vested in 666 shares of restricted stock on February 12, 2009. The closing price of our common stock
on the vesting date was $2.38 per share.(2)
    
    Mr. Ellis vested in 5,000 shares of restricted stock on January 22, 2009. The closing price of our common stock on
the vesting date was $2.05 per share. Mr. Ellis also vested in 3,333 shares of restricted stock on January 26, 2009.
The closing price of our common stock on the vesting date was $1.92 per share.(3)
    
    Mr. MacLennan vested in 11,667 shares of restricted stock on March 1, 2009. The closing price of our common stock
on the vesting date was $1.72 per share. Mr. MacLennan also vested in 5,000 shares of restricted stock on January 22,
2009. The closing price of our common stock on the vesting date was $2.05 per share. Mr. MacLennan also vested in
3,333 shares of restricted stock on January 26, 2009. The closing price of our common stock on the vesting date was
$1.92 per share.(4)
    
    Ms. Cohen vested in 1,500 shares of restricted stock on January 22, 2009. The closing price of our common stock on
the vesting date was $2.05 per share. Ms. Cohen also vested in 1,000 shares of restricted stock on January 26, 2009.
The closing price of our common stock on the vesting date was $1.92 per share.(5)
    
    Mr. Kelly vested in 1,500 shares of restricted stock on January 22, 2009. The closing price of our common stock on
the vesting date was $2.05 per share. Mr. Kelly also vested in 250 shares of restricted stock on March 30, 2009. The
closing price of our common stock on the vesting date was $2.52 per share. 80




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Change-in-Control and Severance Payments
   
    
    Willful refusal to follow the lawful direction of the CEO and/or the person to
whom the employee reports or the employees material failure to perform his/her
duties (other than by reason of disability) in either case, only after the employee
has been given written notice by the CEO and/or the person to whom the employee
reports detailing the directives the employee has refused to follow or the duties
the employee has failed to perform and been given at least thirty (30) days to cure;
    
    Material and willful failure to comply with our policies as applied to employees,
only after the employee has been given written notice by the CEO and/or the person
to whom the employee reports detailing the policies with which the employee failed
to comply and been given at least thirty (30) days to cure;
    
    Engaging in any of the following conduct:
 1.
    
    an act of fraud or dishonesty that materially harms us or
our affiliates;2.
    
    a felony or any violation of any federal or state
securities law or the employee being enjoined from violating any federal or
state securities law or being determined to have violated any such law;3.
    
    gross negligence in connection with any of our properties
or activities and our subsidiaries and affiliates, and successors;4.
    
    repeated and intemperate use of alcohol or illegal drugs
after written notice from the CEO and/or the person to whom the employee
reports;5.
    
    material breach of any of the employees obligations under
the agreement (other than by reason of physical or mental illness, injury or
condition), but only after the employee has been given written notice of the
breach by the CEO and/or the person to whom the employee reports and has been
given at least thirty (30) days to cure;6.
    
    becoming barred or prohibited by the SEC from holding the
employees position with us.
  
    
    We, without the employees written consent,
 1.
    
    take any action which results in the material reduction of
the employees then current duties or responsibilities;2.
    
    reduce the benefits to which the employee is entitled to on
the effective date of the agreement, unless a similar reduction is made for
other executive employees;3.
    
    commit a material breach of the agreement; or4.
    
    require the employee to relocate more than fifty (50) miles
from the location of our home office on the effective date of the agreement
(with the exception of Mr. Kelly, who would be required to relocate more than
fifty (50) miles from the location of where he provides services to us on the
effective date of his employment agreement).
 In order for a resignation for Good Reason to become effective, the following
must occur:
 
    
    the employee must provide written notice to us of such action and
provide us with thirty (30) days to remedy such action (the Cure
Period);
    
    we fail to remedy such action within the Cure Period; and
 81




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
    
    the employee must resign within ten (10) days of the expiration of
the Cure Period.
 Good Reason shall not include any isolated, insubstantial or
inadvertent action that:
 
    
    is not taken in bad faith; and
    
    is remedied by the company within the Cure Period.
   
    
    when, any person (other than the company, any subsidiary of the company, any
employee benefit plan of the company or any subsidiary of the company, or any person
or entity organized, appointed or established by the company or any subsidiary of
the company for or pursuant to the terms of any such plan), alone or together with
its affiliates or associates, shall become the beneficial owner of 40 percent or
more of the then outstanding shares of common stock or the combined voting power of
the company;
    
    when, during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the company, and any
new director (other than a director who is a representative or nominee of an
acquiring person) whose election by the Board of Directors or nomination for
election by the companys stockholders was approved by a vote of at least a majority
of the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board of Directors;
    
    the consummation of a merger or consolidation of the company with any other
corporation, other than a merger or consolidation which would result in the voting
securities of the company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent of such surviving entity) at least
a majority of the combined voting power of the company, such surviving entity, or
the parent of such surviving entity outstanding immediately after such merger or
consolidation;
    
    the consummation of a plan of reorganization (other than a reorganization under
the United States Bankruptcy Code) or complete liquidation of the company or an
agreement for the sale or disposition by the company of all or substantially all of
the companys assets, other than a sale of all or substantially all of the companys
assets to a transferee, the majority of whose voting securities are held by the
company; or
    
    when the stockholders of the company approve an agreement for the sale or
disposition by the company of all of substantially all or the companys assets in a
transaction or series of transactions to an entity that is not owned, directly or
indirectly, by the companys common stock stockholders in substantially the same
proportions as the owners of the companys common stock before such transaction or
series of transactions.
 82




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TERMINATION OR CHANGE-IN-CONTROL PAYMENTS
  Before
    
    
    AfterChange-in-Control
    
    
    Changein-ControlTermination w/o
    
    
    Termination w/oCause or for Good
    
    
    Cause or for Good
    
    
VoluntaryName
    
    Benefit

    
    
    Reason
    
    
    Reason
    
    
    Termination

    
    
    Death

    
    
        Disability

    
    
        Change-in-ControlDaniel E. Ellis
    
    SeverancePayable UnderEmploymentAgreement (1)
    
    

    550,006
    
    
    
    1,100,012
    
    
    
    
    
    
    
    550,006
    
    
    
    550,006
    
    
    
    Acceleration ofStock Vesting (2)
    
    
    110,338
    
    
    
    110,338
    
    
    
    
    
    
    
    110,338
    
    
    
    110,338
    
    
    
    110,338Benefit Plans (3)
    
    
    13,998
    
    
    
    27,996
    
    
    
    
    
    
    
    13,998
    
    
    
    13,998Bonus Award underRevised  EIP(4)
    
    
    242,500
    
    
    
    
    
    
    
    
    
    
    
    242,500
    
    
    
    242,500Excise Tax Gross Up
    
    
    
    
    
    
    425,904
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    James A. MacLennan
    
    SeverancePayable UnderEmploymentAgreement (5)
    
    $
    488,006
    
    
    $
    976,012
    
    
    
    
    
    
    $
    488,006
    
    
    $
    488,006
    
    
    
    Acceleration ofStock Vesting (6)
    
    
    95,000
    
    
    
    95,000
    
    
    
    
    
    
    
    95,000
    
    
    
    95,000
    
    
    
    95,000Benefit Plans (7)
    
    
    8,481
    
    
    
    16,962
    
    
    
    
    
    
    
    8,481
    
    
    
    8,481
    
    
    
    Bonus Awardunder RevisedEIP(8)
    
    
    266,500
    
    
    
    
    
    
    
    
    
    
    
    266,500
    
    
    
    266,500
    
    
    
    Excise TaxGross Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Donna B. Cohen
    
    SeverancePayable UnderEmploymentAgreement (9)
    
    
    122,824
    
    
    
    245,647
    
    
    
    
    
    
    
    122,824
    
    
    
    122,824
    
    
    
    Acceleration ofStock Vesting (10)
    
    
    30,933
    
    
    
    30,933
    
    
    
    
    
    
    
    30,933
    
    
    
    30,933
    
    
    
    30,933Benefit Plans (11)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bonus Awardunder RevisedEIP(12)
    
    
    98,113
    
    
    
    
    
    
    
    
    
    
    
    98,113
    
    
    
    98,113
    
    
    
    Excise TaxGross Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Joseph F. Kelly
    
    SeverancePayable UnderEmploymentAgreement (13)
    
    
    156,667
    
    
    
    156,667
    
    
    
    
    
    
    
    156,667
    
    
    
    156,667
    
    
    
    Acceleration ofStock Vesting (14)
    
    
    26,442
    
    
    
    26,442
    
    
    
    
    
    
    
    26,442
    
    
    
    26,442
    
    
    
    26,442Benefit Plans (15)
    
    
    8,785
    
    
    
    8,785
    
    
    
    
    
    
    
    8,785
    
    
    
    8,785
    
    
    
    Bonus Awardunder RevisedEIP(16)
    
    
    145,000
    
    
    
    145,000
    
    
    
    
    
    
    
    145,000
    
    
    
    145,000
    
    
    
    Excise Tax Gross Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 1.
    
    Mr. Ellis severance benefit under his employment agreement equals his annual base salary
plus $150,006. His severance benefit is doubled in the event his employment terminates in
connection with a change-in-control.2.
    
    Assumes acceleration of all unvested equity awards based upon the closing price of our common
stock on December 31, 2009.3.
    
    Mr. Ellis is entitled to reimbursement of COBRA premiums for 12 months, except in the case of
a termination associated with a change-in-control, in which case he is entitled to
reimbursement of COBRA premiums for 24 months.4.
    
    Assumes cash and equity target awards are paid pursuant to the New Executive Incentive Plan
as actual awards are not calculable as of December 31, 2009. On January 6, 2010, Mr. Ellis
signed a release waiving his entitlement to his cash bonus earned under the New Executive
Incentive Plan for 2009. Additionally, on January 4, 2010, the Compensation Committee voted
to offer Mr. Ellis $35,000 in exchange for equity awards he earned under the New Executive
Incentive Plan for 2009. Mr. Ellis signed this release on January 6, 2010. The value of the
equity award waived by Mr. Ellis was ultimately determined to be $97,067.5.
    
    Mr. MacLennans severance benefit under his employment agreement equals his annual base
salary plus $150,006. His severance benefit is doubled in the event his employment terminates
in connection with a change-in-control.6.
    
    Assumes acceleration of all unvested equity awards based upon the closing price of our common
stock on December 31, 2009.7.
    
    Mr. MacLennan is entitled to reimbursement of COBRA premiums for 12 months, except in the
case of a termination associated with a change-in-control, in which case he is entitled to
reimbursement of COBRA premiums for 24 months. 83




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8.
    
    Assumes cash and equity target awards are paid pursuant to the New Executive Incentive Plan
as actual awards are not calculable as of December 31, 2009. On January 5, 2010, Mr.
MacLennan signed a release waiving his entitlement to his cash bonus earned under the New
Executive Incentive Plan for 2009. Additionally, on January 4, 2010, the Compensation
Committee voted to offer Mr. MacLennan $25,000 in exchange for equity awards he earned under
the New Executive Incentive Plan for 2009. Mr. MacLennan signed this release on January 5,
2010. The value of the equity award waived by Mr. MacLennan was ultimately determined to be
$105,853.9.
    
    Ms. Cohens severance benefit under her employment agreement equals 50% of her annual base
salary plus $25,001. Her severance benefit is doubled in the event her employment terminates
in connection with a change-in-control.10.
    
    Assumes acceleration of all unvested equity awards based upon the closing price of our common
stock on December 31, 2009.11.
    
    Ms. Cohen is entitled to reimbursement of COBRA premiums for 6 months, except in the case of
a termination associated with a change-in-control, in which case she is entitled to
reimbursement of COBRA for 12 months. However, no amounts are shown in this row for Ms. Cohen
as she does not currently participate in the Companys medical or dental plan.12.
    
    Assumes cash and equity target awards are paid pursuant to the New Executive Incentive Plan
as actual awards are not calculable as of December 31, 2009. On January 6, 2010, Mr. Cohen
signed a release waiving her entitlement to his cash bonus earned under the New Executive
Incentive Plan for 2009. Additionally, on January 4, 2010, the Compensation Committee voted
to offer Ms. Cohen $20,000 in exchange for equity awards she earned under the New Executive
Incentive Plan for 2009. Mr. Cohen signed this release on January 6, 2010. The value of the
equity award waived by Ms. Cohen was ultimately determined to be $34,873.13.
    
    Mr. Kellys severance benefit under his employment agreement equals two-thirds of his annual
base salary.14.
    
    Assumes acceleration of all unvested equity awards based upon the closing price of our common
stock on December 31, 2009.15.
    
    Mr. Kelly is entitled to reimbursement of COBRA premiums for 8 months.16.
    
    Assumes cash and equity target awards are paid pursuant to the New Executive Incentive Plan
as actual awards are not calculable as of December 31, 2009. On January 6, 2010, Mr. Kelly
signed a release waiving his entitlement to his cash bonus earned under the New Executive
Incentive Plan for 2009. Additionally, on January 4, 2010, the Compensation Committee voted
to offer Mr. Kelly $20,000 in exchange for equity awards he earned under the New Executive
Incentive Plan for 2009. Mr. Kelly signed this release on January 6, 2010. The value of the
equity award waived by Mr. Kelly was ultimately determined to be $50,207. Departures of Named Executive Officers During 2009
  84




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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Common Stock Beneficially OwnedName
    
    Number of Shares (1)
    
    
    Percentage of Class (1)Key Colony Fund, LP (2)
    
    
    3,022,353
    
    
    
    14.0Oaktree Capital Management, LP (3)
    
    
    2,788,864
    
    
    
    12.9Donald Smith & Co., Inc. (4)
    
    
    2,169,672
    
    
    
    10.0United Capital Corp. (5)
    
    
    2,129,798
    
    
    
    9.8Dimensional Fund Advisors, LP (6)
    
    
    2,034,983
    
    
    
    9.4BRE/HY Funding LLC (7)
    
    
    1,326,909
    
    
    
    6.1W. Blair Allen (8)
    
    
    48,500
    
    
    
    *John W. Allison (9)
    
    
    68,100
    
    
    
    *Stewart J. Brown (10)
    
    
    28,800
    
    
    
    *Donna B. Cohen (11)
    
    
    27,318
    
    
    
    *Peter T. Cyrus (12)
    
    
    
    
    
    
    *Daniel E. Ellis (13)
    
    
    131,442
    
    
    
    *Paul J. Garity (14)
    
    
    8,000
    
    
    
    *Michael J. Grondahl (15)
    
    
    13,000
    
    
    
    *Joseph F. Kelly (16)
    
    
    17,057
    
    
    
    *Alex R. Lieblong (2)
    
    
    3,022,353
    
    
    
    14.0James A. MacLennan
    
    
    81,398
    
    
    
    *Mark S. Oei (3)
    
    
    2,788,864
    
    
    
    12.9All directors and executive officers as a group (12 persons) (17)
    
    
    6,234,834
    
    
    
    28.8
 
 *
    
    Less than one percent.(1)
    
    Ownership percentages are based on 21,631,958 shares of common stock outstanding as
of March 1, 2010. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned by any person
or group who has or shares voting or investment power with respect to such shares and
includes any security that such person or persons has or have the right to acquire within
60 days of March 1, 2010. Unless otherwise indicated, the address for each person listed
in the table is our principal office.(2)
    
    Based solely on information obtained from Amendment No. 3 to Schedule 13D for Key
Colony Fund, LP, Key Colony Management, LLC, Lieblong & Associates, Inc., Alex R. Lieblong
and Michael J. Grondahl filed with the SEC on January 25, 2010. As a condition to
Purchaser and Merger Sub entering into the Merger Agreement, concurrently with the
execution of the Merger Agreement, Key Colony Fund LP entered into a Voting Agreement (the
Key Colony Voting Agreement) with Purchaser and Merger Sub. Pursuant to the Key Colony
Voting Agreement, Key Colony Fund LP agreed, among other things, to vote its shares of
common stock to adopt, approve and vote in favor of the Merger Agreement, the Merger and
the other transactions contemplated by the Merger Agreement and against any action or
agreement that would impede or delay the Merger. The shares of common stock include
3,004,853 shares owned by Key Colony Fund, LP, 8,500 shares owned by Lieblong &
Associates, Inc., and 9,000 shares held directly by Alex R. Lieblong. Key Colony
Management, LLC, Lieblong & Associates, Inc. and Alex R. Lieblong are affiliated with Key
Colony Fund, LP but disclaim beneficial ownership of any shares not directly owned. Mr.
Lieblong is a director of Lodgian. The business address for Key Colony Fund, LP and Alex
R. Lieblong is 10825 Financial Centre Parkway, Suite 100, Little Rock, AR 72211.(3)
    
    Based solely on information obtained from Amendment No. 6 to Schedule 13 D/A filed
with the SEC on January 26, 2010. As a condition to Purchaser and Merger Sub entering into
the Merger Agreement, concurrently with the execution of the Merger Agreement, OCM Fund
II, OCM Fund III and OCM Fund IIIA (collectively, the OCM Funds) entered into a Voting
Agreement (the OCM Voting Agreement) with Purchaser and Merger Sub. Pursuant to the OCM
Voting Agreement, the OCM Funds have agreed, among other things, to vote their shares of
common stock to adopt, approve and vote in favor of the Merger Agreement, the Merger and
the other transactions contemplated by the Merger 85




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Agreement and against any action or agreement that would impede or delay the Merger. The
shares of common stock include 2,512,726 shares owned by OCM Real Estate Opportunities
Fund II, L.P., which we refer to Form 10-K as (OCM Fund II), 267,855 shares owned by OCM
Real Estate Opportunities Fund III, L.P., which we refer to this Form 10-K as (OCM Fund
III) and 8,283 shares owned by OCM Real Estate Opportunities Fund IIIA, L.P., which we
refer to this Form 10-K as (OCM Fund IIIA). Oaktree is (x) the general partner of OCM
Fund II and (y) the managing member of OCM Real Estate Opportunities Fund III GP, LLC,
which is the general partner of OCM Fund III and OCM Fund IIIA. Accordingly, Oaktree may
be deemed to beneficially own the shares of common stock owned by OCM Fund II, OCM Fund III
and OCM Fund IIIA. Oaktree disclaims any such beneficial ownership. Mr. Oei is a Managing
Director of Oaktree Capital Management, LP. The business address for Oaktree and Mr. Oei
is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071.(4)
    
    Based solely on information obtained from an Amendment No. 1 to Schedule 13G filed
with the SEC on January 5, 2010. The business address of Donald Smith & Co., Inc. is 152
W. 57th Street, 22nd Floor, New York, NY 10019.(5)
    
    Based solely on information obtained from a Schedule 13D filed with the SEC on
January 22, 2009. The business address of United Capital Corp. is 9 Park Place, Great
Neck, NY 11021.(6)
    
    Based solely on information obtained from a Schedule 13G/A filed with the SEC on
February 8, 2010. The business address of Dimensional Fund Advisors LP is 1299 Ocean
Avenue, Santa Monica, CA 90401.(7)
    
    Based solely on information obtained from a Schedule 13D/A filed with the SEC on June
29, 2004. The business address of BRE/HY Funding LLC is 345 Park Avenue, 31st Floor,
New York, NY 10154.(8)
    
    Mr. Allens business address is P.O. Box 29, Little Rock, AR 72203.(9)
    
    Mr. Allisons business address is P.O. Box 1089, Little Rock, AR 72033.(10)
    
    This number includes 5,000 shares subject to exercisable options held by Mr. Brown.
Mr. Browns business address is c/o Booz Allen Hamilton, 8251 Greensboro Drive, McLean, VA
22101.(11)
    
    This number includes 5,000 shares subject to exercisable options held by Ms. Cohen.(12)
    
    Mr. Cyrus resigned as our Interim President and Chief Executive Officer on June 9,
2009. The Company is unaware of any shares held by Mr. Cyrus.(13)
    
    This number includes 50,000 shares subject to exercisable options.(14)
    
    Mr. Garitys business address is Real Estate Consulting Solutions, Inc., 880 Apollo
Street, El Segundo, CA 90245.(15)
    
    Mr. Grondahls business address is 45 South 7th Street, Suite 2000,
Minneapolis, MN 55402.(16)
    
    This number includes 2,500 shares subject to exercisable options.(17)
    
    This number includes 62,500 shares of common stock subject to exercisable options. Equity Compensation Plan Information
  86




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Number of securities to be
    
    
    Weighted-average exercise
    
    
    Number of securities remaining availableissued upon exercise of
    
    
    price of outstanding options,
    
    
    for future issuance under equityoutstanding options, warrants
    
    
    warrants and rights
    
    
    compensation plans (excluding securitiesand rights (1)
    
    

    
    
    

    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security holders
    
    
    168,245
    (1)
    
    
    10.65
    
    
    
    2,234,858
    (2)Equity compensations plans
not approved by security
holders
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    All of these awards have been granted under the Stock Incentive Plan.(2)
    
    After taking into account the outstanding options, the exercised options and the shares of nonvested common stock, we have
2,234,858 shares of common stock available for grant under the Stock Incentive Plan.  :
 Issued Under the StockIncentive PlanAvailable under the plan, less previously issued as of December 31, 2008
    
    
    2,499,921Nonvested stock issued February 4, 2009
    
    
    (286,503
    )Nonvested stock issued February 12, 2009
    
    
    (20,000
    )Nonvested stock issued June 11, 2009
    
    
    (15,000
    )Shares of nonvested stock withheld from awards to satisfy tax withholding obligations
    
    
    21,603Nonvested shares forfeited in 2009
    
    
    28,171Stock options forfeited in 2009
    
    
    6,666Available for issuance, December 31, 2009
    
    
    2,234,858
 Change in Control
   
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Transactions With Related Persons, Promoters And Certain Control Persons
 87




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Board of Directors and Committees
    
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
 88




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Audit Committee Approval
  Consideration of Non-Audit Services Provided by the Independent Auditors
  
 PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    (1) Our Consolidated Financial Statements are filed as a separate section
of this report commencing on page F-1:
 (2)
    
    Financial Statement Schedule:
  (3)
    
    Exhibits:
  89




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##### Table of Contents



SIGNATURES
  LODGIAN, INC.By:
    /s/  Daniel E. EllisDaniel E. EllisPresident and Chief Executive Officer  SIGNATURE
    
    TITLE/s/ Daniel E. Ellis
    
    President and Chief Executive OfficerDaniel E. Ellis
    
    (Principal Executive Officer)/s/ James A. MacLennan
    
    Executive Vice President and Chief Financial OfficerJames A. MacLennan
    
    (Principal Financial and Principal Accounting Officer)/s/ Stewart J. Brown
    
    Chairman of the Board of DirectorsStewart J. Brown/s/ W. Blair Allen
    
    DirectorW. Blair Allen/s/ John W. Allison
    
    DirectorJohn W. Allison/s/ Paul J. Garity
    
    DirectorPaul J. Garity/s/ Michael J. Grondahl
    
    DirectorMichael J. Grondahl/s/ Alex R. Lieblong
    
    DirectorAlex R. Lieblong/s/ Mark S. Oei
    
    DirectorMark S. Oei
 90




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and December 31, 2008
    
    
    F-3Consolidated Statements of Operations for the Years Ended December 31,
2009, December 31, 2008 and December 31, 2007
    
    
    F-4Consolidated Statements of Total Equity for the Years Ended December 31,
2009, December 31, 2008 and December 31,
2007
    
    
    F-5Consolidated Statements of Comprehensive Loss for the Years Ended
December 31, 2009, December 31, 2008 and December 31, 2007
    
    
    F-6Consolidated Statements of Cash Flows for the Years Ended December 31,
2009, December 31, 2008 and December 31, 2007
    
    
    F-7Notes to the Consolidated Financial Statements
    
    
    F-8
  F-1




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F-2




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LODGIAN,
INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    December 31, 2008($ in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    20,446
    
    
    $
    20,454Cash, restricted
    
    
    11,395
    
    
    
    8,179Accounts receivable (net of allowances: 2009 - $208; 2008 - $263)
    
    
    4,786
    
    
    
    7,115Inventories
    
    
    2,936
    
    
    
    2,983Prepaid expenses and other current assets
    
    
    12,016
    
    
    
    21,257Assets held for sale
    
    
    6,406
    
    
    
    33,021Total current assets
    
    
    57,985
    
    
    
    93,009Property and equipment, net
    
    
    382,663
    
    
    
    447,366Deposits for
capital expenditures
    
    
    6,162
    
    
    
    11,408Other assets
    
    
    6,153
    
    
    
    3,631$
    452,963
    
    
    $
    555,414LIABILITIES AND TOTAL EQUITYCurrent liabilities:Accounts payable
    
    $
    3,931
    
    
    $
    7,897Other accrued liabilities
    
    
    21,032
    
    
    
    22,897Advance deposits
    
    
    958
    
    
    
    1,293Current portion of long-term liabilities
    
    
    102,616
    
    
    
    124,955Liabilities related to assets held for sale
    
    
    6,029
    
    
    
    16,167Total current liabilities
    
    
    134,566
    
    
    
    173,209Long-term liabilities
    
    
    185,132
    
    
    
    194,800Total liabilities
    
    
    319,698
    
    
    
    368,009Commitments and contingencies (Note 13)Total equity:Common stock, $.01 par value, 60,000,000 shares authorized;
25,148,853 and 25,075,837 issued at December 31, 2009 and
December 31, 2008, respectively
    
    
    252
    
    
    
    251Additional paid-in capital
    
    
    331,779
    
    
    
    330,785Accumulated deficit
    
    
    (157,611
    )
    
    
    (105,246
    )Accumulated other comprehensive income
    
    
    74
    
    
    
    1,262Treasury stock, at cost, 3,827,603 and 3,806,000 shares at
December 31, 2009 and December 31, 2008, respectively
    
    
    (39,692
    )
    
    
    (39,647
    )Total equity attributable to common stock
    
    
    134,802
    
    
    
    187,405Noncontrolling interest
    
    
    (1,537
    )
    
    
    Total equity
    
    
    133,265
    
    
    
    187,405$
    452,963
    
    
    $
    555,414
  F-3




---



##### Table of Contents



LODGIAN,
INC. AND SUBSIDIARIES
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007($ in thousands, except per share data)Revenues:Rooms
    
    $
    139,501
    
    
    $
    170,752
    
    
    $
    171,396Food and beverage
    
    
    42,191
    
    
    
    49,741
    
    
    
    51,232Other
    
    
    6,852
    
    
    
    7,701
    
    
    
    7,247Total revenues
    
    
    188,544
    
    
    
    228,194
    
    
    
    229,875Direct operating expenses:Rooms
    
    
    39,438
    
    
    
    44,330
    
    
    
    42,566Food and beverage
    
    
    29,444
    
    
    
    34,293
    
    
    
    34,762Other
    
    
    4,730
    
    
    
    5,467
    
    
    
    5,214Total direct operating expenses
    
    
    73,612
    
    
    
    84,090
    
    
    
    82,542114,932
    
    
    
    144,104
    
    
    
    147,333Other operating expenses:Other hotel operating costs
    
    
    57,009
    
    
    
    66,221
    
    
    
    64,820Property and other taxes, insurance, and leases
    
    
    16,387
    
    
    
    15,769
    
    
    
    16,770Corporate and other
    
    
    14,769
    
    
    
    16,289
    
    
    
    21,386Casualty losses (gains), net
    
    
    119
    
    
    
    1,095
    
    
    
    (1,867
    )Restructuring
    
    
    
    
    
    
    
    
    
    
    1,232Depreciation and amortization
    
    
    33,323
    
    
    
    31,306
    
    
    
    27,736Impairment of long-lived assets
    
    
    30,674
    
    
    
    4,512
    
    
    
    1,154Total other operating expenses
    
    
    152,281
    
    
    
    135,192
    
    
    
    131,231Operating (loss) income
    
    
    (37,349
    )
    
    
    8,912
    
    
    
    16,102Other income (expenses):Interest income and other
    
    
    110
    
    
    
    1,054
    
    
    
    3,944Interest expense
    
    
    (12,837
    )
    
    
    (17,900
    )
    
    
    (21,707
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (3,330
    )Loss before income taxes and noncontrolling interest
    
    
    (50,076
    )
    
    
    (7,934
    )
    
    
    (4,991
    )Provision for income taxes  continuing operations
    
    
    (273
    )
    
    
    (80
    )
    
    
    (245
    )Loss from continuing operations
    
    
    (50,349
    )
    
    
    (8,014
    )
    
    
    (5,236
    )Discontinued operations:Loss from discontinued operations before income taxes
    
    
    (3,749
    )
    
    
    (3,939
    )
    
    
    (2,061
    )Benefit (provision) for income taxes  discontinued operations
    
    
    196
    
    
    
    (31
    )
    
    
    (728
    )Loss from discontinued operations
    
    
    (3,553
    )
    
    
    (3,970
    )
    
    
    (2,789
    )Net loss
    
    
    (53,902
    )
    
    
    (11,984
    )
    
    
    (8,025
    )Less: Net loss (income) attributable to noncontrolling interest
    
    
    1,537
    
    
    
    
    
    
    
    (421
    )Net loss attributable to common stock
    
    $
    (52,365
    )
    
    $
    (11,984
    )
    
    $
    (8,446
    )Basic and diluted net loss per share attributable to common stock
    
    $
    (2.46
    )
    
    $
    (0.55
    )
    
    $
    (0.35
    )
  F-4




---



##### Table of Contents



LODGIAN,
INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF TOTAL EQUITY
 Accumulated
    
    
    
    
    
    
    
    
    
    
    TotalAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    AttributableCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury Stock
    
    
    to Common
    
    
    Noncontrolling
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Interest
    
    
    Equity($ in thousands, except share data)Balance December 31, 2006
    
    
    24,860,321
    
    
    $
    249
    
    
    $
    327,634
    
    
    $
    (84,816
    )
    
    $
    2,088
    
    
    
    251,619
    
    
    $
    (3,041
    )
    
    $
    242,114
    
    
    $
    
    
    
    $
    242,114Amortization of unearned stock compensation
    
    
    
    
    
    
    
    
    
    
    1,387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,387
    
    
    
    
    
    
    
    1,387Issuance and vesting of nonvested shares
    
    
    85,587
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    64,086
    
    
    
    
    
    
    
    621
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    621
    
    
    
    
    
    
    
    621Repurchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,458,259
    
    
    
    (17,168
    )
    
    
    (17,168
    )
    
    
    
    
    
    
    (17,168
    )Other
    
    
    (1,373
    )
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    53Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,446
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,446
    )
    
    
    
    
    
    
    (8,446
    )Currency translation adjustments (related taxes estimated at
nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,027
    
    
    
    
    
    
    
    
    
    
    
    2,027
    
    
    
    
    
    
    
    2,027Balance, December 31, 2007
    
    
    25,008,621
    
    
    $
    250
    
    
    $
    329,694
    
    
    $
    (93,262
    )
    
    $
    4,115
    
    
    
    1,709,878
    
    
    $
    (20,209
    )
    
    $
    220,588
    
    
    $
    
    
    
    $
    220,588Amortization of unearned stock compensation
    
    
    
    
    
    
    
    
    
    
    1,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,069
    
    
    
    
    
    
    
    1,069Issuance and vesting of nonvested shares
    
    
    64,882
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    2,334
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Repurchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,096,122
    
    
    
    (19,438
    )
    
    
    (19,438
    )
    
    
    
    
    
    
    (19,438
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,984
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,984
    )
    
    
    
    
    
    
    (11,984
    )Currency translation adjustments (related taxes estimated at
nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,853
    )
    
    
    
    
    
    
    
    
    
    
    (2,853
    )
    
    
    
    
    
    
    (2,853
    )Balance, December 31, 2008
    
    
    25,075,837
    
    
    $
    251
    
    
    $
    330,785
    
    
    $
    (105,246
    )
    
    
    1,262
    
    
    $
    3,806,000
    
    
    $
    (39,647
    )
    
    $
    187,405
    
    
    $
    
    
    
    $
    187,405Amortization of unearned stock compensation
    
    
    
    
    
    
    
    
    
    
    995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    995
    
    
    
    
    
    
    
    995Issuance and vesting of nonvested shares
    
    
    73,016
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,603
    
    
    
    (45
    )
    
    
    (45
    )
    
    
    
    
    
    
    (45
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52,365
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52,365
    )
    
    
    (1,537
    )
    
    
    (53,902
    )Currency translation adjustments (related taxes estimated at
nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,188
    )
    
    
    
    
    
    
    
    
    
    
    (1,188
    )
    
    
    
    
    
    
    (1,188
    )Balance, December 31, 2009
    
    
    25,148,853
    
    
    $
    252
    
    
    $
    331,779
    
    
    $
    (157,611
    )
    
    $
    74
    
    
    
    3,827,603
    
    
    $
    (39,692
    )
    
    $
    134,802
    
    
    $
    (1,537
    )
    
    $
    133,265
  F-5




---



##### Table of Contents



LODGIAN,
INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 For the years ended December 31,2009
    
    
    2008
    
    
    2007($ in thousands)Net loss
    
    $
    (53,902
    )
    
    $
    (11,984
    )
    
    $
    (8,025
    )Currency translation adjustments (estimated taxes nil)
    
    
    (1,188
    )
    
    
    (2,853
    )
    
    
    2,027Less: reclassification adjustment for losses
included in net income (estimated taxes nil)
    
    
    1,156
    
    
    
    
    
    
    
    Comprehensive loss
    
    
    (53,934
    )
    
    
    (14,837
    )
    
    
    (5,998
    )Comprehensive loss attributable to noncontrolling interest
    
    
    1,537
    
    
    
    
    
    
    
    (421
    )Comprehensive loss attribuatable to common stock
    
    $
    (52,397
    )
    
    $
    (14,837
    )
    
    $
    (6,419
    )
  F-6




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##### Table of Contents



LODGIAN,
INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007($ in thousands)Operating activities:Net loss
    
    $
    (53,902
    )
    
    $
    (11,984
    )
    
    $
    (8,025
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    34,472
    
    
    
    31,950
    
    
    
    32,145Impairment of long-lived assets
    
    
    44,571
    
    
    
    20,220
    
    
    
    11,533Stock compensation expense
    
    
    995
    
    
    
    1,069
    
    
    
    1,387Casualty loss (gain), net
    
    
    140
    
    
    
    (4,488
    )
    
    
    (4,525
    )Gain on asset dispositions
    
    
    (1,823
    )
    
    
    (6,144
    )
    
    
    (3,956
    )(Gain) loss on extinguishment of debt
    
    
    (174
    )
    
    
    948
    
    
    
    5,158Gain on deconsolidation
    
    
    (10,418
    )
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    1,034
    
    
    
    1,493
    
    
    
    1,431Changes in operating assets and liabilities:Accounts receivable, net of allowances
    
    
    1,252
    
    
    
    1,037
    
    
    
    119Insurance receivable
    
    
    
    
    
    
    
    
    
    
    1,230Inventories
    
    
    (92
    )
    
    
    (322
    )
    
    
    (152
    )Prepaid expenses and other assets
    
    
    4,154
    
    
    
    (788
    )
    
    
    6,491Accounts payable
    
    
    637
    
    
    
    (862
    )
    
    
    (4,169
    )Other accrued liabilities
    
    
    (411
    )
    
    
    (4,454
    )
    
    
    (2,037
    )Advance deposits
    
    
    (258
    )
    
    
    (252
    )
    
    
    262Net cash provided by operating activities
    
    
    20,177
    
    
    
    27,423
    
    
    
    36,892Investing activities:Capital improvements
    
    
    (21,600
    )
    
    
    (47,184
    )
    
    
    (41,520
    )Proceeds from sale of assets, net of related selling costs and notes receivable from buyers
    
    
    14,607
    
    
    
    24,106
    
    
    
    77,961Acquisition of noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    (16,361
    )Withdrawals for capital expenditures
    
    
    5,074
    
    
    
    5,157
    
    
    
    4,926Insurance proceeds related to casualty claims, net
    
    
    
    
    
    
    4,092
    
    
    
    63Payments related to casualty damage, net
    
    
    (140
    )
    
    
    
    
    
    
    Net (increase) decrease in restricted cash
    
    
    (3,216
    )
    
    
    184
    
    
    
    5,428Other
    
    
    (85
    )
    
    
    72
    
    
    
    38Net cash (used in) provided by investing activities
    
    
    (5,360
    )
    
    
    (13,573
    )
    
    
    30,535Financing activities:Proceeds from issuance of long term debt
    
    
    
    
    
    
    
    
    
    
    130,000Proceeds from exercise of stock options
    
    
    
    
    
    
    23
    
    
    
    621Principal payments on long-term debt
    
    
    (14,935
    )
    
    
    (26,808
    )
    
    
    (169,424
    )Purchases of treasury stock
    
    
    (45
    )
    
    
    (19,907
    )
    
    
    (16,818
    )Payments of deferred financing costs
    
    
    (115
    )
    
    
    (12
    )
    
    
    (1,666
    )Defeasance proceeds (payments), net
    
    
    224
    
    
    
    (848
    )
    
    
    (4,206
    )Other
    
    
    
    
    
    
    
    
    
    
    (16
    )Net cash used in financing activities
    
    
    (14,871
    )
    
    
    (47,552
    )
    
    
    (61,509
    )Effect of exchange rate changes on cash
    
    
    46
    
    
    
    (233
    )
    
    
    283Net (decrease) increase in cash and cash equivalents
    
    
    (8
    )
    
    
    (33,935
    )
    
    
    6,201Cash and cash equivalents at beginning of year
    
    
    20,454
    
    
    
    54,389
    
    
    
    48,188Cash and cash equivalents at end of year
    
    $
    20,446
    
    
    $
    20,454
    
    
    $
    54,389Supplemental cash flow information:Cash paid during the year for:Interest, net of the amounts capitalized shown below
    
    $
    12,858
    
    
    $
    20,147
    
    
    $
    26,504Interest capitalized
    
    
    357
    
    
    
    323
    
    
    
    443Income tax payments, net of refunds
    
    
    60
    
    
    
    516
    
    
    
    1,485Supplemental disclosure of non-cash investing and financing activities:Treasury stock repurchases traded, but not settled
    
    
    
    
    
    
    
    
    
    
    469Purchases of property and equipment on account
    
    
    737
    
    
    
    6,156
    
    
    
    6,276Note receivable from buyers of sold hotels
    
    
    3,600
    
    
    
    
    
    
    
    
  F-7




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##### Table of Contents



LODGIAN, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 1. Summary of Significant Accounting Policies
 Description of Business
   
    
    27 hotels that are wholly owned and operated through subsidiaries; and
 
    
    one hotel that is operated in a joint venture in the form of a limited partnership,
in which a Lodgian subsidiary serves as the general partner, has a 51% voting interest and
exercises control.
  Planned Merger and Loan Amendment
    
    
    Effective immediately, the cash lockbox provisions of the loan were amended to provide
that excess cash flow from the mortgaged properties after debt service, reserves and
operating expenses, will not be retained by the lender in an excess cash flow reserve
account, but will instead be released to the borrowers on a monthly basis, even if the
properties do not meet a previously required financial covenant test.
 F-8




---



##### Table of Contents




    
    The deadline for Lodgians subsidiary which owns the Crowne Plaza Albany, New York, to
complete certain renovation work was extended to May 1, 2010.
 
    
    The allocated loan amounts for each of the properties securing the loan were readjusted.
 
    
    Effective July 1, 2010, the margin over LIBOR used to determine the interest rate on the
loan will be increased from 1.50% to 4.25%.
 
    
    If the Merger Agreement is validly terminated for any reason other than as a result of a
breach by Purchaser of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that certain of Lodgians closing conditions set
forth in the Merger Agreement would not be met, Lodgians subsidiary borrowing entities on
the loan will be required, in their sole discretion, to either pay down the principal
balance of the loan by $5 million, or to cause the Holiday Inn Monroeville, Pennsylvania
property to be pledged as additional security for the loan. If the Holiday Inn Monroeville,
Pennsylvania property is pledged as additional security for the loan, it may be
subsequently released from the loan upon payment of a cash release price of $5 million.
 Principles of Consolidation
   Basis of Presentation
  Inventories
   Noncontrolling Interest
 Consolidation
 F-9




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##### Table of Contents



Noncontrolling Interest in Consolidated Financial Statements  An Amendment of ARB No. 51
 Property and Equipment
    Assets Held for Sale and Discontinued Operations
 Property, Plant, and Equipment Accounting for
the Impairment or Disposal of Long-Lived Assets
 a)
    
    Management commits to a plan to sell the asset;
 b)
    
    The asset is available for immediate sale in its present condition;
 c)
    
    An active marketing plan to sell the asset has been initiated at a
reasonable price;
 d)
    
    The sale of the asset is probable within one year; and,
 e)
    
    It is unlikely that significant changes to the plan to sell the asset
will be made.
   Cash and Cash Equivalents
  F-10




---



##### Table of Contents



Restricted Cash
  Fair Values of Financial Instruments
   Concentration of Credit Risk
  Concentration of Market Risk
  Income Taxes
 Income Accounting for Income Taxes Accounting for Uncertainty in Income Taxes
 Earnings per Common and Common Equivalent Share
  Stock-Based Compensation
 Compensation  Stock Compensation
  F-11




---



##### Table of Contents



Revenue Recognition
  Foreign Currency Translation
 Foreign Currency Matters Foreign
Currency Translation
 Operating Segments
 Segment Reporting Disclosures about Segments of
an Enterprise and Related Information)
 Use of Estimates
  Self-insurance
  New Accounting Pronouncements
 Recently Adopted Pronouncements
 The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles,
 Fair Value Measurements and
Disclosures Fair Value Measurements
 F-12




---



##### Table of Contents



Level 1
    
    Quoted prices for identicalinstruments in active markets at the measurement date.Level 2
    
    Quoted prices for similarinstruments in active markets; quoted prices for identical
or similar instruments in markets that are not active; and model-derived valuations in which
all significant inputs and significant value drivers are observable in active markets at the
measurement date and for the anticipated term of the instrument.Level 3
    
    Valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservableinputs that reflect the reporting entitys own
assumptions about the assumptions market participants would use in pricing the asset or
liability developed based on the best information available in the circumstances.
  Business Combinations Business Combinations
 Consolidation Noncontrolling Interest in Consolidated Financial Statements
 An Amendment of ARB No. 51
  F-13




---



##### Table of Contents



Twelve Months Ended December 31,2008
    
    
    2007Loss from continuing operations
    
    $
    (8,014
    )
    
    $
    (5,236
    )Less: Net loss attributable to noncontrolling interest
    
    
    718
    
    
    
    620Loss from continuing operations attributable to common stock
    
    
    (7,296
    )
    
    
    (4,616
    )Loss from discontinued operations
    
    
    (3,970
    )
    
    
    (2,789
    )Net loss attributable to common stock
    
    $
    (11,266
    )
    
    $
    (7,405
    )DenominatorBasic and diluted weighted average shares
    
    
    21,774
    
    
    
    24,292Basic and diluted loss per common share:Loss from continuing operations attributable to common stock
    
    $
    (0.34
    )
    
    $
    (0.19
    )Loss from discontinued operations
    
    
    (0.18
    )
    
    
    (0.11
    )Net loss attributable to common stock
    
    $
    (0.52
    )
    
    $
    (0.30
    )
 Derivatives and
Hedging Disclosures about Derivative Instruments and Hedging
Activities, an amendment to SFAS No.
 Earnings per Share Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities .
 Derivatives and
Hedging Disclosures about Credit Derivatives and Certain
Guarantees  An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and
Clarification of the Effective Date of FASB Statement No. 161
 Business Combinations Accounting for Assets Acquired and Liabilities Assumed in
a Business Combination That Arise from Contingencies
 Fair Value Measurements
and Disclosures Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly
 F-14




---



##### Table of Contents



Investments  Debt and
Equity Securities Recognition and
Presentation of Other-Than-Temporary
Impairments
 Financial Instruments Interim Disclosures about Fair Value of
Financial Instruments
 Subsequent Events Subsequent Events
 Value Measurements and Disclosures
 Recently Issued Pronouncements
 Transfers and Servicing Accounting for Transfers of Financial Assets
 Consolidation Amendments to FASB Interpretation No. 46(R)
 F-15




---



##### Table of Contents



Revenue Recognition
 2. Stock-Based Compensation
   Issued Under the StockIncentive PlanAvailable under the plan, less previously issued as of December 31, 2008
    
    
    2,499,921Nonvested stock issued February 4, 2009
    
    
    (286,503
    )Nonvested stock issued February 12, 2009
    
    
    (20,000
    )Nonvested stock issued June 11, 2009
    
    
    (15,000
    )Shares of nonvested stock withheld from awards to satisfy tax withholding obligations
    
    
    21,603Nonvested shares forfeited in 2009
    
    
    28,171Stock options forfeited in 2009
    
    
    6,666Available for issuance, December 31, 2009
    
    
    2,234,858
 Stock Options
   F-16




---



##### Table of Contents



Weighted AverageStock Options
    
    
    Exercise PriceBalance, December 31, 2006
    
    
    356,313
    
    
    $
    10.60Exercised
    
    
    (64,086
    )
    
    
    9.69Forfeited
    
    
    (79,819
    )
    
    
    11.35Balance, December 31, 2007
    
    
    212,408
    
    
    $
    10.60Exercised
    
    
    (2,334
    )
    
    
    9.68Forfeited
    
    
    (35,163
    )
    
    
    10.32Balance, December 31, 2008
    
    
    174,911
    
    
    $
    10.66Forfeited
    
    
    (6,666
    )
    
    
    11.01Balance, December 31, 2009
    
    
    168,245
    
    
    $
    10.65
   Options outstanding and exercisableWeighted average
    
    
    Weightedremaining life
    
    
    averageRange of prices
    
    Number
    
    
    (in years)
    
    
    exercise price$7.83 to $9.39
    
    
    71,080
    
    
    
    5.4
    
    
    $
    9.05$9.40 to $10.96
    
    
    70,003
    
    
    
    4.6
    
    
    $
    10.51$10.97 to $15.66
    
    
    27,162
    
    
    
    3.7
    
    
    $
    15.21168,245
    
    
    
    4.8
    
    
    $
    10.65
 Nonvested Stock
     F-17




---



##### Table of Contents



WeightedAverageNonvested
    
    
    Grant DateStock
    
    
    Fair ValueBalance, December 31, 2006
    
    
    82,607
    
    
    $
    11.63Granted
    
    
    127,800
    
    
    
    12.96Forfeited
    
    
    (9,629
    )
    
    
    13.32Vested
    
    
    (85,587
    )
    
    
    11.72Balance, December 31, 2007
    
    
    115,191
    
    
    $
    12.89Granted
    
    
    100,500
    
    
    
    8.85Forfeited
    
    
    (17,335
    )
    
    
    9.94Vested
    
    
    (64,882
    )
    
    
    12.52Balance, December 31, 2008
    
    
    133,474
    
    
    $
    10.41Granted
    
    
    321,503
    
    
    
    2.59Forfeited
    
    
    (28,171
    )
    
    
    3.72Vested
    
    
    (73,016
    )
    
    
    10.28Balance, December 31, 2009
    
    
    353,790
    
    
    $
    3.87
   Compensation  Stock Compensation.
  Unrecognized
    
    
    Weighted-AverageCompensation
    
    
    AmortizationType of Award
    
    Expense
    
    
    Period (in years)Nonvested Stock
    
    $
    460
    
    
    
    1.04Revised Plan Nonvested Stock Awards
    
    
    363
    
    
    
    2.21Total
    
    $
    823
    
    
    
    1.56
  Year Ended December 31, 2009
    
    
    Year Ended December 31, 2008
    
    
    Year Ended December 31, 2007Compensation
    
    
    Income Tax
    
    
    Compensation
    
    
    Income Tax
    
    
    Compensation
    
    
    Income TaxType of Award
    
    Expense
    
    
    Benefit
    
    
    Expense
    
    
    Benefit
    
    
    Expense
    
    
    BenefitStock Options
    
    $
    
    
    
    $
    
    
    
    $
    (51
    )
    
    $
    (20
    )
    
    $
    174
    
    
    $
    68Nonvested Stock
    
    
    871
    
    
    
    338
    
    
    
    963
    
    
    
    374
    
    
    
    1,213
    
    
    
    471Revised Plan Nonvested Stock Awards
    
    
    124
    
    
    
    48
    
    
    
    157
    
    
    
    61
    
    
    
    
    
    
    
    Total
    
    $
    995
    
    
    $
    386
    
    
    $
    1,069
    
    
    $
    415
    
    
    $
    1,387
    
    
    $
    539
 F-18




---



##### Table of Contents



3. Discontinued Operations
 Dispositions
  
    
    On January 15, 2007, the Company sold the University Plaza, a 186 room hotel
located in Bloomington, IN.
 
    
    On March 9, 2007, the Company sold the Holiday Inn, a 130 room hotel located
in Hamburg, NY.
 
    
    On June 13, 2007, the Company sold the following 16 hotels:
 o
    
    Holiday Inn, a 202 room hotel located in Sheffield, ALo
    
    Clarion, a 393 room hotel located in Louisville, KYo
    
    Crowne Plaza, a 275 room hotel located in Cedar Rapids, IAo
    
    Augusta West Inn, a 117 room hotel located in Augusta, GAo
    
    Holiday Inn, a 201 room hotel located in Greentree, PAo
    
    Holiday Inn, a 189 room hotel located in Lancaster East, PAo
    
    Holiday Inn, a 244 room hotel located in Lansing, MIo
    
    Holiday Inn, a 152 room hotel located in Pensacola, FLo
    
    Holiday Inn, a 228 room hotel located in Winter Haven, FLo
    
    Holiday Inn, a 100 room hotel located in York, PAo
    
    Holiday Inn Express, a 112 room hotel located in Dothan, ALo
    
    Holiday Inn Express, a 122 room hotel located in Pensacola, FLo
    
    Park Inn, a 126 room hotel located in Brunswick, GAo
    
    Quality Inn, a 102 room hotel located in Dothan, ALo
    
    Ramada Plaza, a 297 room hotel located in Macon, GAo
    
    Ramada Inn, a 197 room hotel located in North Charleston, SC
 
    
    On July 12, 2007, the Company sold the Holiday Inn, a 159 room hotel located in Clarksburg, WV.
    
    On July 20, 2007, the Company sold the Holiday Inn, a 208 room hotel located in Fort Wayne, IN.
    
    On August 14, 2007, the Company sold the Holiday Inn, a 106 room hotel located in Fairmont, WV.
    
    On December 18, 2007, the Company sold the Holiday Inn, a 146 room hotel located in Jamestown, NY.
    
    On December 27, 2007, the Company sold the Vermont Maple Inn, a 117 room hotel located in Burlington, VT.
   
    
    On April 17, 2008, the Company sold the Holiday Inn, a 158 room hotel
located in Frederick, MD.
 
    
    On May 13, 2008, the Company sold the former Holiday Inn, a 156 room hotel
located in St. Paul, MN.
 
    
    On August 14, 2008, the Company sold the Holiday Inn, a 193 room hotel
located in Marietta, GA.
 
    
    On October 9, 2008, the Company sold the Holiday Inn, a 127 room hotel
located in Glen Burnie, MD.
 
    
    On December 16, 2008, the Company sold the Holiday Inn, a 217 room hotel
located in Frisco, CO.
   F-19




---



##### Table of Contents




    
    On March 4, 2009, the Company sold the Holiday Inn, a 130 room hotel located
in East Hartford, CT.
 
    
    On April 21, 2009, the Company sold the Holiday Inn Select, a 214 room hotel
located in Windsor, Ontario, Canada.
 
    
    On May 28, 2009, the Company sold the Holiday Inn, a 139 room hotel located
in Cromwell Bridge, MD.
 
    
    On October 21, 2009, the Company sold the Ramada Plaza, a 185 room hotel
located in Northfield, MI.
 
    
    On November 20, 2009, the Company sold the French Quarter Suites, a 105 room
hotel located in Memphis, TN.
   Assets Held for Sale and Discontinued Operations
 Property, Plant, and Equipment
 Property, Plant, and
Equipment
 
    
    $4.5 million on the Crowne Plaza Worcester, MA to reflect the fair market value upon
the decision to surrender the hotel to the lender;
 
    
    $4.4 million on the Ramada Plaza Northfield, MI to reflect the selling price, net of
selling costs;
 
    
    $3.1 million on the Holiday Inn Phoenix West, AZ to reflect the fair market value
upon the decision to surrender the hotel to the lender;
 
    
    $0.8 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the
selling price, net of selling costs;
 
    
    $0.5 million on the closed French Quarter Suites Memphis, TN to reflect the selling
price, net of selling costs; and
 
    
    $0.6 million to record the disposal of replaced assets at various hotels.
  F-20




---



##### Table of Contents




    
    $6.7 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the then
current estimated selling price, net of selling costs;
 
    
    $4.8 million on the Crowne Plaza Worcester, MA to reflect the then current fair
market value;
 
    
    $1.9 million on the Ramada Plaza Northfield, MI to reflect the then current estimated
selling price, net of selling costs;
 
    
    $1.7 million on the Holiday Inn East Hartford, CT to reflect the then current
estimated selling price, net of selling costs;
    
    $0.2 million on the closed French Quarter Suites Memphis, TN to reflect the then
current estimated selling price, net of selling costs;
 
    
    $0.1 million on the former Holiday Inn St. Paul, MN to record the final disposition
of the hotel; and
 
    
    $0.3 million to record the final disposition of the Holiday Inn Frederick, MD as well
as the disposal of replaced assets at various hotels.
  
    
    $3.3 million on the Ramada Plaza Northfield, MI to reflect the then estimated selling
price;
 
    
    $1.8 million on the Holiday Inn Frederick, MD to reflect the then estimated selling
price;
 
    
    $1.6 million on the Holiday Inn Select Windsor, Ontario, Canada to reflect the then
estimated selling price;
 
    
    $1.3 million on the Holiday Inn Clarksburg, WV to reflect the then estimated selling
price less costs to sell, and to record the final disposition of the hotel;
 
    
    $0.8 million on the Vermont Maple Inn Colchester, VT to reflect the then estimated
selling price less costs to sell, and to record the final disposition of the hotel;
 
    
    $0.6 million on the Holiday Inn Jamestown, NY to reflect the then estimated selling
price less costs to sell, and to record the final disposition of the hotel;
 
    
    $0.3 million on the Crowne Plaza Worcester, MA to reflect the then current fair
market value;
 
    
    $0.1 million on the University Plaza Bloomington, IN to record the final disposition
of the hotel; and
 
    
    $0.6 million to record the disposal of replaced assets at various hotels.
  
    
    Holiday Inn Express Palm Desert, CA
  F-21




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008Property and equipment, net
    
    $
    5,306
    
    
    $
    31,351Other assets
    
    
    1,100
    
    
    
    1,670Assets held for sale
    
    $
    6,406
    
    
    $
    33,021Other liabilities
    
    $
    513
    
    
    $
    6,886Long-term debt
    
    
    5,516
    
    
    
    9,281Liabilities related to assets held for sale
    
    $
    6,029
    
    
    $
    16,167
  For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Total revenues
    
    $
    16,367
    
    
    $
    43,432
    
    
    $
    88,274Total expenses
    
    
    (16,966
    )
    
    
    (40,061
    )
    
    
    (79,398
    )Impairment of long-lived assets
    
    
    (13,897
    )
    
    
    (15,709
    )
    
    
    (10,379
    )Business interruption proceeds
    
    
    
    
    
    
    672
    
    
    
    571Interest income and other
    
    
    76
    
    
    
    29
    
    
    
    71Interest expense
    
    
    (1,723
    )
    
    
    (3,081
    )
    
    
    (5,986
    )Casualty (losses) gains, net
    
    
    (21
    )
    
    
    5,583
    
    
    
    2,658Gain on asset disposition
    
    
    1,823
    
    
    
    6,144
    
    
    
    3,956Gain on asset deconsolidation
    
    
    10,418
    
    
    
    
    
    
    
    Gain (loss) on extinguishment of debt
    
    
    174
    
    
    
    (948
    )
    
    
    (1,828
    )Benefit (provision) for income taxes
    
    
    196
    
    
    
    (31
    )
    
    
    (728
    )Loss from discontinued operations
    
    $
    (3,553
    )
    
    $
    (3,970
    )
    
    $
    (2,789
    )
   4. Accounts Receivable
  December 31, 2009
    
    
    December 31, 2008Trade accounts receivable
    
    $
    4,162
    
    
    $
    6,142Allowance for doubtful accounts
    
    
    (208
    )
    
    
    (263
    )Tax receivable and other
    
    
    832
    
    
    
    1,236$
    4,786
    
    
    $
    7,115
 5. Prepaid Expenses and Other Current Assets
  F-22




---



##### Table of Contents



December 31, 2009
    
    
    December 31, 2008Deposits and other prepaid expenses
    
    $
    3,731
    
    
    $
    3,887Deposits for property taxes
    
    
    3,596
    
    
    
    5,220Prepaid insurance
    
    
    2,368
    
    
    
    2,534Lender-required insurance deposits
    
    
    1,961
    
    
    
    4,518Vendor deposits for capital purchases
    
    
    360
    
    
    
    5,098$
    12,016
    
    
    $
    21,257
  6. Property and Equipment, net
  Useful lives(years)
    
    
    December 31, 2009
    
    
    December 31, 2008Land
    
    
    
    
    
    $
    41,956
    
    
    $
    45,624Buildings and improvements
    
    
    10 - 40
    
    
    
    329,059
    
    
    
    368,697Property and equipment
    
    
    3 - 10
    
    
    
    158,031
    
    
    
    152,159China, glass and silverware
    
    
    
    
    
    
    2,016
    
    
    
    2,139531,062
    
    
    
    568,619Less accumulated depreciation
    
    
    
    
    
    
    (154,339
    )
    
    
    (128,784
    )Construction in progress
    
    
    
    
    
    
    5,940
    
    
    
    7,531$
    382,663
    
    
    $
    447,366
  
    
    $17.1 million on the Holiday Inn Inner Harbor, MD;
    
    $5.2 million on the Crowne Plaza Houston, TX;
    
    $2.5 million on the Fairfield Inn Merrimack, NH;
    
    $1.6 million on the Courtyard by Marriott Bentonville, AR;
    
    $1.2 million on the Courtyard by Marriott Florence, KY; and
    
    $0.1 million on the Courtyard by Marriott Abilene, TX.
   F-23




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##### Table of Contents



Fair Value Measurements at Reporting Date UsingSignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Total GainsDescription
    
    December 31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Real Estate Assets  Held for Use Hotels
    
    $
    46,154
    
    
    $
    
    
    
    $
    
    
    
    $
    46,154
    
    
    $
    (27,786
    )$
    46,154
    
    
    $
    
    
    
    $
    
    
    
    $
    46,154
    
    
    $
    (27,786
    )
    7. Other Assets
  December 31, 2009
    
    
    December 31, 2008Notes receivable
    
    $
    3,600
    
    
    $
    Deferred franchise fees
    
    
    1,188
    
    
    
    1,410Linen inventory
    
    
    743
    
    
    
    731Utility and other deposits
    
    
    351
    
    
    
    222Deferred financing costs
    
    
    271
    
    
    
    1,268$
    6,153
    
    
    $
    3,631
    Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    After 2015Deferred financing costs
    
    $
    271
    
    
    $
    271
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Deferred franchise fees
    
    
    1,188
    
    
    
    183
    
    
    
    165
    
    
    
    157
    
    
    
    137
    
    
    
    131
    
    
    
    121
    
    
    
    294$
    1,459
    
    
    $
    454
    
    
    $
    165
    
    
    $
    157
    
    
    $
    137
    
    
    $
    131
    
    
    $
    121
    
    
    $
    294
 8. Other Accrued Liabilities
  F-24




---



##### Table of Contents



December 31, 2009
    
    
    December 31, 2008Self-insurance loss accruals
    
    $
    8,938
    
    
    $
    10,385Property and sales taxes
    
    
    5,466
    
    
    
    5,533Salaries and related costs
    
    
    3,491
    
    
    
    3,954Accrued interest
    
    
    1,698
    
    
    
    1,174Accrued franchise fees
    
    
    657
    
    
    
    873Professional fees
    
    
    217
    
    
    
    390Accrued income taxes
    
    
    
    
    
    
    319Other
    
    
    565
    
    
    
    269$
    21,032
    
    
    $
    22,897
 9. Long-Term Liabilities
     F-25




---



##### Table of Contents



December
31, 2009
    
    
    December 31, 2008Number
    
    Property, plant
    
    
    Long-term
    
    
    Long-termof Hotels
    
    and equipment, net
    
    
    obligations
    
    
    obligations
    
    
    Interest rates at December 31, 2009($ in thousands)Mortgage DebtGoldman Sachs (1)
    
    10
    
    $
    120,553
    
    
    $
    130,000
    
    
    $
    130,000
    
    
    LIBOR plus 1.50%; capped at 6.50%Merrill Lynch Fixed Rate Pool 1 (2)
    
    4
    
    
    63,405
    
    
    
    34,471
    
    
    
    39,372
    
    
    6.58%Merrill Lynch Fixed Rate Pool 3 (3)
    
    6
    
    
    45,799
    
    
    
    45,500
    
    
    
    53,031
    
    
    6.58%Merrill Lynch Fixed Rate Pool 4 (4)
    
    6
    
    
    78,604
    
    
    
    34,648
    
    
    
    35,984
    
    
    6.58%IXIS (5)
    
    3
    
    
    17,415
    
    
    
    20,679
    
    
    
    20,977
    
    
    LIBOR plus 2.95%; capped at 7.45%IXIS  Holiday Inn Hilton Head, SC
    
    1
    
    
    16,063
    
    
    
    18,294
    
    
    
    18,530
    
    
    LIBOR plus 2.90%; capped at 7.90%Wachovia  Holiday Inn Crowne Plaza Worcester, MA (6)
    
    
    
    
    
    
    
    
    
    
    
    
    16,501
    
    
    n/aWachovia  Holiday Inn Phoenix, AZ (7)
    
    
    
    
    
    
    
    
    
    
    
    
    9,478
    
    
    n/aWachovia  Holiday Inn Express Palm Desert, CA
    
    1
    
    
    5,306
    
    
    
    5,645
    
    
    
    5,767
    
    
    6.04%Wachovia  SpringHill Suites by Marriott Pinehurst, NC
    
    1
    
    
    5,623
    
    
    
    2,920
    
    
    
    2,988
    
    
    5.78%Total
    
    32
    
    
    352,768
    
    
    
    292,157
    
    
    
    332,628
    
    
    3.96% (8)Long-term liabilities  otherTax notes issued pursuant to our Joint Plan of
Reorganization
    
    
    
    
    
    
    
    
    
    
    
    
    42Other
    
    
    
    
    
    
    
    
    1,236
    
    
    
    1,342
    
    
    
    
    
    
    1,236
    
    
    
    1,384Property, plant and equipment  Unencumbered
    
    
    
    
    35,201
    
    
    
    
    
    
    
    32
    
    
    387,969
    
    
    
    293,393
    
    
    
    334,012Held for sale
    
    (1)
    
    
    (5,306
    )
    
    
    (5,645
    )
    
    
    (14,257
    )Held for use (9)
    
    31
    
    $
    382,663
    
    
    $
    287,748
    
    
    $
    319,755
 
 (1)
    
    The hotels that secure this debt are: Crowne Plaza Albany, NY; Holiday Inn BWI Baltimore, MD;
Residence Inn Dedham, MA; Hilton Ft. Wayne, IN; Radisson Kenner, LA; Courtyard by Marriott
Lafayette, LA; Holiday Inn Meadow Lands Pittsburgh, PA; Holiday Inn Santa Fe, NM; Crowne Plaza
Silver Spring, MD; and Courtyard by Marriott Tulsa, OK.(2)
    
    The hotels that secure this debt are: Courtyard by Marriott Atlanta-Buckhead, GA; Marriott
Denver, CO; Four Points by Sheraton Philadelphia, PA; and Holiday Inn Strongsville, OH.(3)
    
    The
hotels that secure this debt are: Courtyard by Marriott Abilene, TX; Courtyard by Marriott
Bentonville, AR; Courtyard by Marriott Florence, KY; Holiday Inn Inner Harbor Baltimore, MD; Crowne
Plaza Houston, TX; and Fairfield Inn by Marriott Merrimack, NH. This loan matured on October 1,
2009, following two short-term extensions. The Company surrrendered control of the six hotels which
secured this loan to a court-appointed receiver in February 2010.(4)
    
    The hotels that secure this debt are: Hilton Columbia, MD; Wyndham DFW Dallas, TX; Residence
Inn by Marriott Little Rock, AR; Holiday Inn Myrtle Beach, SC; Courtyard by Marriott Paducah, KY;
and Crowne Plaza West Palm Beach, FL.(5)
    
    The hotels that secure this debt are: Crowne Plaza Phoenix, AZ; Radisson Phoenix, AZ; and
Crowne Plaza Pittsburgh, PA.(6)
    
    The Company surrendered control of the Crowne Plaza Worcester, MA in November 2009. The assets
and liabilities, including the related debt, were deconsolidated from the Companys balance sheet
upon surrender of control.(7)
    
    The Company surrendered control of the Holiday Inn Phoenix, AZ in July 2009. The assets and
liabilities, including the related debt, were deconsolidated from the Companys balance sheet upon
surrender of control.(8)
    
    The rate represents the annual effective weighted average cost of debt at December 31, 2009.(9)
    
    Long-term debt obligations at December 31, 2009 and December 31, 2008 include the current
portion of $102.6 million and $125.0 million, respectively.  Mortgage Debt
   F-26




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F-27




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##### Table of Contents




    
    Effective immediately, the cash lockbox provisions of the loan were amended to provide
that excess cash flow from the mortgaged properties after debt service, reserves and
operating expenses, will not be retained by the lender in an excess cash flow reserve
account, but will instead be released to the borrowers on a monthly basis, even if the
properties do not meet a previously required financial covenant test.
    
    The deadline for Lodgians subsidiary which owns the Crowne Plaza Albany, New York, to
complete certain renovation work was extended to May 1, 2010.
    
    The allocated loan amounts for each of the properties securing the loan were readjusted.
    
    Effective July 1, 2010, the margin over LIBOR used to determine the interest rate on the
loan will be increased from 1.50% to 4.25%.
    
    If the Merger Agreement is validly terminated for any reason other than as a result of a
breach by Purchaser of any of its representations, warranties, covenants or agreements
contained in the Merger Agreement such that certain of Lodgians closing conditions set
forth in the Merger Agreement would not be met, Lodgians subsidiary borrowing entities on
the loan will be required, in their sole discretion, to either pay down the principal
balance of the loan by $5 million, or to cause the Holiday Inn Monroeville, Pennsylvania
property to be pledged as additional security for the loan. If the Holiday Inn Monroeville,
Pennsylvania property is pledged as additional security for the loan, it may be
subsequently released from the loan upon payment of a cash release price of $5 million.
    F-28




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##### Table of Contents



Interest Rate Cap Agreements
 Derivatives Accounting for Derivative Instruments and Hedging Activities
  Future Loan Repayment Projections
  DebtObligationsDecember 31, 2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterMortgage Debt :Goldman Sachs (1)
    
    $
    130,000
    
    
    $
    
    
    
    $
    130,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Merrill Lynch Fixed Rate Pool 1
    
    
    34,471
    
    
    
    34,471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Merrill Lynch Fixed Rate Pool 3 (2)
    
    
    45,500
    
    
    
    45,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Merrill Lynch Fixed Rate Pool 4
    
    
    34,648
    
    
    
    914
    
    
    
    977
    
    
    
    32,757
    
    
    
    
    
    
    
    
    
    
    
    IXIS (3)
    
    
    20,679
    
    
    
    299
    
    
    
    20,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    IXIS  Holiday Inn Hilton Head, SC (4)
    
    
    18,294
    
    
    
    18,294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wachovia  Holiday Inn Express Palm Desert, CA
    
    
    5,645
    
    
    
    129
    
    
    
    5,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wachovia  SpringHill Suites by Marriott Pinehurst, NC
    
    
    2,920
    
    
    
    2,920
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total  Mortgage Debt
    
    
    292,157
    
    
    
    102,527
    
    
    
    156,873
    
    
    
    32,757
    
    
    
    
    
    
    
    
    
    
    
    Other Long-term Liabilities:Other Long-term Liabilities
    
    
    1,236
    
    
    
    218
    
    
    
    309
    
    
    
    126
    
    
    
    125
    
    
    
    125
    
    
    
    3331,236
    
    
    
    218
    
    
    
    309
    
    
    
    126
    
    
    
    125
    
    
    
    125
    
    
    
    333Total Debt Obligations
    
    
    293,393
    
    
    
    102,745
    
    
    
    157,182
    
    
    
    32,883
    
    
    
    125
    
    
    
    125
    
    
    
    333Less: Debt Obligations  Held for Sale
    
    
    5,645
    
    
    
    129
    
    
    
    5,516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Debt Obligations  Held for Use
    
    $
    287,748
    
    
    $
    102,616
    
    
    $
    151,666
    
    
    $
    32,883
    
    
    $
    125
    
    
    $
    125
    
    
    $
    333
 
 (1)
    
    As discussed in Note 9, the Goldman Sachs loan matured in 2009, with the option to extend the
loan for three additional one-year periods. The first extension option was exercised, which
extended the maturity to May 1, 2010. Management has the intent and ability to exercise the second
option, which would extend the maturity to May 2, 2011.(2)
    
    As discussed in Note 9, this loan matured on October 1, 2009, following two short-term
extensions. The Company surrendered control of the six hotels which secured this loan to a
court-appointed receiver in February 2010.(3)
    
    As discussed in Note 9, this loan matured in March 2008, with 3 available one-year extensions.
The Company exercised all options, which extended the loan to March 2011.(4)
    
    As discussed in Note 9, this loan matured in December 2007, with 3 available one-year
extensions. The Company exercised all options, which extended the maturity to December 2010. 10. Total Equity
 Treasury Stock
     F-29




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##### Table of Contents



Class B Warrants
  11. Income Taxes
  2009
    
    
    2008Current
    
    
    Deferred
    
    
    Total
    
    
    Current
    
    
    Deferred
    
    
    TotalFederal
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    State and Local
    
    
    273
    
    
    
    
    
    
    
    273
    
    
    
    72
    
    
    
    
    
    
    
    72Foreign
    
    
    (196
    )
    
    
    
    
    
    
    (196
    )
    
    
    39
    
    
    
    
    
    
    
    39$
    77
    
    
    $
    
    
    
    $
    77
    
    
    $
    111
    
    
    $
    
    
    
    $
    111Less: discontinued operations
    
    
    (196
    )
    
    
    
    
    
    
    (196
    )
    
    
    31
    
    
    
    
    
    
    
    31$
    273
    
    
    $
    
    
    
    $
    273
    
    
    $
    80
    
    
    $
    
    
    
    $
    80
  2009
    
    2008Total
    
    
    Current
    
    
    Non-Current
    
    
    Total
    
    
    Current
    
    
    Non-CurrentProperty and equipment
    
    $
    (17,822
    )
    
    $
    
    
    
    $
    (17,822
    )
    
    $
    (30,323
    )
    
    $
    
    
    
    $
    (30,323
    )Net operating loss carryforwards (NOLs)
    
    
    95,083
    
    
    
    
    
    
    
    95,083
    
    
    
    86,650
    
    
    
    
    
    
    
    86,650Legal and workers compensation reserves
    
    
    3,210
    
    
    
    3,210
    
    
    
    
    
    
    
    3,690
    
    
    
    3,690
    
    
    
    AMT and FICA credit carryforwards
    
    
    2,698
    
    
    
    
    
    
    
    2,698
    
    
    
    2,596
    
    
    
    
    
    
    
    2,596Other operating accruals
    
    
    959
    
    
    
    959
    
    
    
    
    
    
    
    1,163
    
    
    
    1,163
    
    
    
    Other
    
    
    736
    
    
    
    
    
    
    
    736
    
    
    
    334
    
    
    
    
    
    
    
    334Total
    
    $
    84,864
    
    
    $
    4,169
    
    
    $
    80,695
    
    
    $
    64,110
    
    
    $
    4,853
    
    
    $
    59,257Less valuation allowance
    
    
    (84,864
    )
    
    
    (4,169
    )
    
    
    (80,695
    )
    
    
    (64,110
    )
    
    
    (4,853
    )
    
    
    (59,257
    )$
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  2009
    
    
    2008Federal income tax (benefit) charge at statutory federal rate
    
    $
    (17,803
    )
    
    $
    (4,037
    )State income tax (benefit) charge, net
    
    
    (2,272
    )
    
    
    (577
    )Non-deductible items
    
    
    113
    
    
    
    182Foreign
    
    
    (196
    )
    
    
    39Change in valuation allowance
    
    
    20,235
    
    
    
    4,504$
    77
    
    
    $
    111Less discontinued operations
    
    
    (196
    )
    
    
    31Provision for income taxes
    
    $
    273
    
    
    $
    80
  F-30




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##### Table of Contents



Stock
Compensation a revision of SFAS No. 123 Accounting for
Stock-Based Compensation
  Income Taxes Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
  12. Earnings Per Share
  F-31




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Numerator:Loss from continuing operations
    
    $
    (50,349
    )
    
    $
    (8,014
    )
    
    $
    (5,236
    )Less: Net loss (income) attributable to noncontrolling interest
    
    
    1,537
    
    
    
    
    
    
    
    (421
    )Loss from continuing operations attributable to common stock
    
    
    (48,812
    )
    
    
    (8,014
    )
    
    
    (5,657
    )Loss from discontinued operations
    
    
    (3,553
    )
    
    
    (3,970
    )
    
    
    (2,789
    )Net loss attributable to common stock
    
    $
    (52,365
    )
    
    $
    (11,984
    )
    
    $
    (8,446
    )Denominator:Basic and diluted weighted average shares
    
    
    21,315
    
    
    
    21,774
    
    
    
    24,292Basic and diluted loss per common share:Loss from continuing operations attributable to common stock
    
    $
    (2.29
    )
    
    $
    (0.37
    )
    
    $
    (0.23
    )Loss from discontinued operations
    
    
    (0.17
    )
    
    
    (0.18
    )
    
    
    (0.11
    )Net loss attributable to common stock
    
    $
    (2.46
    )
    
    $
    (0.55
    )
    
    $
    (0.35
    )
    13. Commitments and Contingencies
 Franchise Agreements and Capital Expenditures
  For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Continuing operations
    
    $
    14,255
    
    
    $
    16,372
    
    
    $
    16,157Discontinued operations
    
    
    1,218
    
    
    
    3,214
    
    
    
    6,479$
    15,473
    
    
    $
    19,586
    
    
    $
    22,636
  F-32




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##### Table of Contents



Letters of Credit
  Self-insurance
   F-33




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##### Table of Contents



Casualty gains (losses), net and business interruption insurance
       Litigation
   Operating Leases
  F-34




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Continuing operations
    
    $
    3,585
    
    
    $
    3,239
    
    
    $
    3,002Discontinuing operations
    
    
    3
    
    
    
    255
    
    
    
    406Total operations
    
    $
    3,588
    
    
    $
    3,494
    
    
    $
    3,408
  2010
    
    $
    3,3502011
    
    
    3,0012012
    
    
    2,8792013
    
    
    2,6532014
    
    
    2,1982015 and thereafter
    
    
    64,558$
    78,639
 14. Employee Retirement Plans
  2009
    
    
    2008
    
    
    2007Continuing operations
    
    $
    129
    
    
    $
    131
    
    
    $
    142Discontinued operations
    
    
    
    
    
    
    1
    
    
    
    13$
    129
    
    
    $
    132
    
    
    $
    155
  2009
    
    
    2008
    
    
    2007Continuing operations
    
    $
    412
    
    
    $
    501
    
    
    $
    606Discontinued operations
    
    
    32
    
    
    
    64
    
    
    
    185$
    444
    
    
    $
    565
    
    
    $
    791
 15. Restructuring
  F-35




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16. Subsequent Events
   F-36




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of January 22, 2010, by an among Lodgian, Purchaser
and Merger Sub (Incorporated by reference to Exhibit 2.1 to the Companys Current Report on
Form 8-K (File No. 1-14537), filed with the Commission on January 22, 2010).3.1
    
    Certificate of Correction to the Second Amended and Restated Certificate of Incorporation and
Second Amended and Restated Certificate of Incorporation of Lodgian, Inc. (Incorporated by
reference to Exhibit 3.1 to Amendment No. 2 to the Companys Registration Statement on Form
S-1 (File No. 333-113410), filed on June 4, 2004).3.2
    
    Amended and Restated Bylaws of Lodgian, Inc. (Incorporated by reference to Exhibit 3.4 to the
Companys Annual Report on Form 10-K for the period ended December 31, 2003 (File No.
1-14537), filed on March 9, 2004).4.1
    
    Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to Amendment No.
2 to the Companys Registration Statement on Form S-1 (File No. 333-113410), filed on June 4,
2004).10.1
    
    Amended and Restated Executive Employment Agreement between Lodgian, Inc. and Daniel E.
Ellis, dated July 20, 2009 (Incorporated by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K (File No. 1-14537), filed with the Commission on July 23, 2009).10.2
    
    Amended and Restated Executive Employment Agreement between Lodgian, Inc. and James A.
MacLennan dated March 29, 2007 (Incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No.1-14537), filed with the Commission on March 30, 2007).10.3
    
    Amended and Restated Separation Pay Agreement between Lodgian, Inc. and Joseph Kelly dated
February 28, 2008 (Incorporated by reference to Exhibit 10.7 to the Companys Annual Report on
Form 10-K for the period ended December 31, 2008 (File No. 1-14537), filed with the Commission
on March 13, 2009).10.4
    
    Restricted Stock Award Agreement between Lodgian, Inc. and James A. MacLennan dated March 1,
2006 (Incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K
(File No. 1-14537), filed with the Commission on March 3, 2006).10.5
    
    Amended and Restated 2002 Stock Incentive Plan of Lodgian, Inc. (as amended through April 24,
2007 (Incorporated by reference to Exhibit 10.10 to the Companys Quarterly Report on Form
10-Q for the period ended June 30, 2007 (File No. 1-14537), filed with the Commission on
August 8, 2007).10.6
    
    Form of Incentive Stock Option Award Agreement (Incorporated by reference to Exhibit 10.37
to the Companys Annual Report for the period ended December 31, 2004 (File No. 1-14537),
filed with the Commission on March 23, 2005).10.7
    
    Lodgian, Inc. 401(k) Plan, As Amended and Restated Effective as of January 1, 2006
(Incorporated by reference to Exhibit 10.13 to the Companys Quarterly Report on Form 10-Q for
the period ended June 30, 2007 (File No. 1-14537), filed with the Commission on August 8,
2007).10.8
    
    Executive Employment Agreement between Donna B. Cohen and Lodgian, Inc. dated March 29, 2007
(Incorporated by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K (File
No. 1-14537), filed with the Commission on March 30, 2007).10.9
    
    Form of Lodgian, Inc. Executive Incentive Plan (Incorporated by reference to Exhibit 99.1 to
the Companys Current Report on Form 8-K (File No. 1-14537), filed with the Commission on
March 20, 2009).10.10
    
    Form of Restricted Stock Award Agreement for Employees (Incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K/A (File No. 1-14537), filed with the
Commission on March 6, 2007).10.11
    
    Form of Restricted Stock Award Agreement for Non-Employee Directors (Incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form 8-K/A (File No. 1-14537),
filed with the Commission on March 6, 2007).10.12
    
    Form of Indemnification Agreement between Lodgian, Inc. and its executive officers and
directors (Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form
8-K (File No. 1-14537), filed with the Commission on February 10, 2009.)




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##### Table of Contents



ExhibitNumber
    
    Description21
    
    Subsidiaries of Lodgian, Inc. **23
    
    Consent of Independent Registered Public Accounting Firm **31.1
    
    Sarbanes-Oxley Section 302 Certification by the CEO. **31.2
    
    Sarbanes-Oxley Section 302 Certification by the CFO. **32
    
    Sarbanes-Oxley Section 906 Certification by the CEO and CFO. **
 
 **
    
    Filed herewith.