2007 Stock Award Agreement


    
      

      

    

     

    

      Exhibit
        10.4

      


      EQUITY
        INNS, INC.

      


      2007
        Stock Award Agreement

      


      THIS
        AGREEMENT, dated as of the 3rd
        day of
        January, 2007, between EQUITY INNS, INC., a Tennessee corporation (the
“Company”) and J. Mitchell Collins (the “Participant”), is made pursuant and
        subject to the provisions of the Equity Inns, Inc. 1994 Stock Incentive Plan
        (the “Plan”), a copy of which has been made available to the Participant. All
        terms used herein that are defined in the Plan have the same meaning given
        them
        in the Plan.

       

      1.  Award.
        Pursuant to the Plan, the Company, effective as of January
        3, 2007, (the “Date of Grant”) granted to Participant, subject to the terms and
        conditions of the Plan and subject further to the terms and conditions of
        this
        Agreement a Stock Award covering 30,667 shares of Common Stock. 

       

      2.  Performance
        Objectives.
        Subject
        to the terms of this Agreement, the Participant’s interest in the Stock Award
        shall vest and become transferable in accordance with paragraphs 3, 4 and
        5 and
        Exhibit I based on the Company’s Compounded Annual Growth Rate TSR for the
        applicable measurement period relative to the Compounded Annual Growth Rate
        TSR
        for the applicable measurement period for the companies (other than the Company)
        listed in the NAREIT Hotel Index.

       

      3.  Vesting.
        The
        Participant’s interest in the Stock Award shall vest and become transferable in
        three equal installments by applying Exhibit I to one-third of the shares
        of the
        Stock Award (the “Target Shares”), for each of the First, Second and Third
        Measurement Periods as described below.

       

      a. The
        First
        Measurement Period, for 10,223 shares, is the period of three consecutive
        fiscal
        years (of the Company and the other companies listed in the NAREIT Hotel
        Index)
        ending in 2007. If the Participant remains in the continuous employ of the
        Company or an affiliate from the Date of Grant until January 5, 2008, the
        number
        of shares of Common Stock that will vest and become transferable is equal
        to the
        product of (x)
        the
        number of Target Shares times (y)
        the
        Applicable Percentage determined under Exhibit I. If the Applicable Percentage
        is greater than 100%, then the Participant shall receive, as soon as practicable
        after January 5, 2008, an additional Stock Award (which shall be immediately
        vested and transferable), for the number of shares of Common Stock equal
        to
(x)
        the
        number of shares determined under the preceding sentence minus (y)
        the
        number of Target Shares. If the Applicable Percentage is less than 100%,
        then
        the Participant shall forfeit the number of Target Shares equal to (x)
        the
        number of Target Shares minus (y)
        the
        number of shares determined under the second preceding sentence.

      


      b. The
        Second Measurement Period, for 10,222 shares, is the period of three consecutive
        fiscal years (of the Company and the other companies listed in the NAREIT
        Hotel
        Index) ending in 2008. If the Participant remains in the continuous employ
        of
        the Company or an affiliate from the Date of Grant until January 5, 2009,
        the
        number of shares of Common Stock that will vest and become transferable is
        equal
        to the product of (x)
        the
        number of Target Shares 


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      times
        (y)
        the
        Applicable Percentage determined under Exhibit I. If the Applicable Percentage
        is greater than 100%, then the Participant shall receive, as soon as practicable
        after January 5, 2009, an additional Stock Award (which shall be immediately
        vested and transferable), for the number of shares of Common Stock equal
        to
(x)
        the
        number of shares determined under the preceding sentence minus (y)
        the
        number of Target Shares. If the Applicable Percentage is less than 100%,
        then
        the Participant shall forfeit the number of Target Shares equal to (x)
        the
        number of Target Shares minus (y)
        the
        number of shares determined under the second preceding sentence.

      


      c. The
        Third
        Measurement Period, for 10,222 shares, is the period of three consecutive
        fiscal
        years (of the Company and the other companies listed in the NAREIT Hotel
        Index)
        ending in 2009. If the Participant remains in the continuous employ of the
        Company or an affiliate from the Date of Grant until January 5, 2010, the
        number
        of shares of Common Stock that will vest and become transferable is equal
        to the
        product of (x)
        the
        number of Target Shares times (y)
        the
        Applicable Percentage determined under Exhibit I. If the Applicable Percentage
        is greater than 100%, then the Participant shall receive, as soon as practicable
        after January 5, 2010, an additional Stock Award (which shall be immediately
        vested and transferable), for the number of shares of Common Stock equal
        to
(x)
        the
        number of shares determined under the preceding sentence minus (y)
        the
        number of Target Shares. If the Applicable Percentage is less than 100%,
        then
        the Participant shall forfeit the number of Target Shares equal to (x)
        the
        number of Target Shares minus (y)
        the
        number of shares determined under the second preceding sentence.

      


      4.  Retirement.
        This
        paragraph applies if the Participant remains in the continuous employ of
        the
        Company or an affiliate from the Date of Grant until the date that the
        Participant’s employment ends on account of Retirement after 2007. In that
        event, the provisions of paragraph 3 shall be applied as if the Participant
        continued employment with the Company and the Stock Award shall vest and
        become
        transferable or shall be forfeited in accordance with paragraph 3. 

       

      5.  Death,
        Disability, Termination Without Cause.
        This
        paragraph applies if the Participant remains in the continuous employ of
        the
        Company or an affiliate from the Date of Grant until the date that the
        Participant’s employment ends, before January 5, 2010, on account of the
        Participant’s death or Disability or the termination of the Participant by the
        Company or an affiliate for reasons other than Cause.

       

      a.  If
        the
        Participant’s employment ends before January 1, 2008, all of the shares subject
        to the Stock Award shall be forfeited and the Participant shall have no further
        rights under this Agreement.

       

      b.  If
        the
        Participant’s employment ends on or after January 1, 2008, and the Participant
        completed at least seven Years of Service with the Company or an affiliate,
        the
        provisions of paragraph 3 shall be applied as if the Participant continued
        employment with the Company and the Stock Award shall vest and become
        transferable or shall be forfeited in accordance with paragraph 3. 

       

      c.  If
        the
        Participant’s employment ends on or after January 1, 2008, and the Participant
        completed less than seven Years of Service with the Company or an affiliate,
        the


       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      provisions
        of paragraph 3 shall be applied as if the Participant continued employment
        with
        the Company and the Stock Award and the appropriate number of unvested shares
        determined in accordance with paragraph 3 shall be multiplied by a fraction,
        the
        numerator of which is the number of whole months the Participant was employed
        by
        the Company or an affiliate on and after January 1, 2007, and the
        denominator of which is thirty-six. The number of shares determined in
        accordance with the preceding sentence shall vest and become transferable
        and
        any Target Shares in excess of that number, if any, shall be
        forfeited.

       

      6.  Change
        in Control.
        This
        paragraph applies if the Participant remains in the continuous employ of
        the
        Company or an affiliate from the Date of Grant until the date that is six
        months
        before a Change in Control. In that event, (x)
        Target
        Shares for a measurement period that ended on or before the date of the Change
        in Control shall vest and become transferable or shall be forfeited as provided
        in paragraph 3 and (y)
        Target
        Shares for a measurement period that ends after the date of the Change in
        Control shall vest and become transferable as of the date of the Change in
        Control with an assumed Applicable Percentage of 100%.

       

      7.  Forfeiture.
        Except
        as
        provided in paragraphs 4, 5 and 6, shares of Common Stock subject to this
        Stock
        Award that have not previously become vested and transferable shall be forfeited
        (and the Participant shall have no further rights under this Agreement) if
        the
        Participant’s employment with the Company and its affiliates ends before January
        5, 2010.

       

      8.  Definitions.
        For
        purposes of this Agreement, the following terms shall have the definitions
        set
        forth below.

       

      a.  “Acquiring
        Person” means that a Person, considered alone or together with all control
        affiliates and associates of that Person, is or becomes directly or indirectly
        the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
        securities representing at least twenty percent (20%) of (i) the Company’s then
        outstanding securities entitled to vote generally in the election of the
        Company’s Board; or (ii) the Company’s then outstanding securities entitled to
        vote generally in the election of the Company’s Board.

       

      b.  “Compounded
        Annual Growth Rate” means the constant growth rate of TSR that yields the same
        compounded TSR for a given period as calculated by the Committee or a consultant
        engaged by the Committee or Company to make such calculation.

       

      c.  “Cause”
        means the Participant’s (i) willful and continued failure to perform the
        Participant’s duties as established by the Board, or fraud or dishonesty in
        connection with such duties, in either case, if such conduct has a materially
        detrimental effect on the business operations of the Company; (ii) material
        breach of the fiduciary duties of loyalty or care to the Company or an
        Affiliate; (iii) conviction of any crime (or upon entering a plea of guilty
        or
        nolo contendere to a charge of any crime) constituting a felony; or (iv)
        willful, flagrant, deliberate and repeated infractions of material published
        policies and regulations of the Company of which the Participant has actual
        knowledge.

       

      d. “Change
        in Control” means (i) a Person is or becomes an Acquiring Person; (ii) holders
        of the securities of the Company entitled to vote thereon approve any agreement
        with a Person (or, if such approval is not required by applicable law and
        is not
        solicited by the Company, the closing of such an agreement) that involves
        the
        transfer of at least fifty percent 

       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      (50%)
        of
        the Company’s and its subsidiaries’ total assets on a consolidated basis, as
        reported in the Company’s consolidated financial statements filed with the
        Securities and Exchange Commission; (iii) holders of the securities of the
        Company entitled to vote thereon approve a transaction (or, if such approval
        is
        not required by applicable law and is not solicited by the Company, the closing
        of such a transaction) pursuant to which the Company will undergo a merger,
        consolidation, or statutory share exchange with a Person, regardless of whether
        the Company is intended to be the surviving or resulting entity after the
        merger, consolidation, or statutory share exchange, other than
        a
        transaction that results in the voting securities of the Company carrying
        the
        right to vote in elections of persons to the Company’s Board outstanding
        immediately prior to the closing of the transaction continuing to represent
        (either by remaining outstanding or by being converted into voting securities
        of
        the surviving entity) at least 66 2/3% (sixty-six and two-thirds percent)
        of the
        Company’s voting securities carrying the right to vote in elections of persons
        to the Company’s Board, or such securities of such surviving entity, outstanding
        immediately after the closing of such transaction; (iv) the Continuing Directors
        cease for any reason to constitute a majority of the Company’s Board; (v)
        holders of the securities of the Company entitled to vote thereon approve
        a plan
        of complete liquidation of the Company or an agreement for the sale or
        liquidation by the Company or its subsidiaries of substantially all of the
        assets of the Company and its subsidiaries (or, if such approval is not required
        by applicable law and is not solicited by the Company, the commencement of
        actions constituting such a plan or the closing of such an agreement); or
        (vi)
        the Company’s Board adopts a resolution to the effect that, in its judgment, as
        a consequence of any one or more transactions or events or series of
        transactions or events, a Change in Control of the Company has effectively
        occurred. The Company’s Board shall be entitled to exercise its sole and
        absolute discretion in adopting any such resolution pursuant to subparagraph
        (vi) above and in determining whether or not any such transaction(s) or event(s)
        might be deemed, individually or collectively, to constitute a Change in
        Control
        of the Company.

       

      e.  “Disability”
        means a permanent and total disability as defined in Section 22(e)(3) of
        the
        Code.

       

      f.  “Retirement”
        means a voluntary termination of employment with the Company and its affiliates
        on or after attaining age sixty.

       

      g. “Person”
        means any human being, firm, corporation, partnership, or other entity. “Person”
also includes any human being, firm, corporation, partnership, or other entity
        as defined in sections 13(d)(3) and 14(d)(2) of the Exchange Act. The term
        “Person” does not include the Company and the term Person does not include any
        employee-benefit plan maintained by the Company or any related entity, and
        any
        person or entity organized, appointed, or established by the Company or any
        related entity for or pursuant to the terms of any such employee-benefit
        plan,
        unless the Company’s Board determines that such an employee-benefit plan or such
        person or entity is a “Person”.

      


      h.  “TSR”
        means the percentage increase or decrease in the fair market value of the
        Common
        Stock or the common stock of another company listed on the NAREIT Hotel Index,
        taking into account the value of dividends paid on each share and assuming
        that
        the dividends are invested in Common Stock or common stock of such other
        company, as applicable, on the dividend payment date. For each vesting period,
        the calculation shall be based on the returns for 


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      the
        last
        three fiscal years, including the most recently completed fiscal year. For
        example, the 2007 measurement period will include the returns for 2005, 2006
        and
        2007; the 2008 measurement period will include the returns for 2006, 2007
        and
        2008, etc. The fair market value of the Common Stock and the common stock
        of
        each other company listed on the NAREIT Hotel Index shall be determined on
        the
        basis of the 30-day average closing price of the Common Stock or other company’s
        common stock, as applicable, prior to the beginning and ending measurement
        dates
        for each vesting period.

      


      i. “Year
        of
        Service” means the Participant’s most recent period of continuous employment
        with the Company or its affiliates/the Participant’s total period of employment
        with the Company or its affiliates. A period of employment of twelve months
        shall equal one Year of Service. A fractional Year of Service shall be
        disregarded for purposes of this Agreement.

      


      9.  Custody
        of Certificates.
        The
        Company shall retain custody of the certificates evidencing this Stock Award
        until the Committee certifies that the shares have become vested and
        transferable. The Company shall deliver the certificates evidencing the shares
        subject to this Stock Award promptly after the Committee certifies that the
        requirements of this Agreement have been satisfied.

       

      10.  Stock
        Power.With
        respect to any shares that are forfeited in accordance with this Agreement,
        the
        Participant hereby appoints the Company’s Chief Executive Officer and the
        Company’s Chief Operating Officer as his attorney to transfer any such forfeited
        shares on the books of the Company with full power of substitution in the
        premises. Such persons shall use the authority granted under this paragraph
        10
        to cancel any shares that are forfeited under this Agreement.

       

      11.  Shareholder
        Rights.
        Subject
        to the provisions of the Plan and this Agreement, the Participant shall have
        all
        the rights of a shareholder of the Company with respect to the shares subject
        to
        this Stock Award, including the right to vote such shares and receive dividends
        thereon, from the Date of Grant until a forfeiture of the shares under this
        Agreement.

       

      12.  Change
        in Capital Structure.
        The
        terms of this Agreement, including the number of shares subject to this Stock
        Award, shall be adjusted as the Board determines is equitably required in
        the
        event the Company effects one or more stock dividends, stock split-sups,
        subdivisions or consolidations of shares or other similar changes in
        capitalization.

       

      13.  No
        Right to Continued Employment.
        This
        Stock Award does not confer upon the Participant any right with respect to
        continuance of employment with the Company or an Affiliate and does not
        interfere with the right of the Company or an Affiliate to terminate the
        Participant’s employment.

       

      14.  Conflicts.
        In the
        event of any conflict between the provisions of the Plan as in effect on
        the
        Date of Grant and the provisions of this Agreement, the provisions of the
        Plan
        shall govern. All references herein to the Plan mean the Plan as in effect
        on
        the date hereof.

       

      15.  Participant
        Bound by Plan.
        The
        Participant hereby acknowledges that a copy of the Plan has been made available
        to him and agrees to be bound by all the terms and provisions
        thereof.

       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      


      16.  Binding
        Effect.
        Subject
        to the limitations stated above and in the Plan, this Agreement shall be
        binding
        upon and inure to the benefit of the legatees, distributees and personal
        representatives of the Participant and the successors of the
        Company.

       

      17.  Governing
        Law.
        This
        Agreement shall be governed by the laws of the Commonwealth of
        Virginia.

       

      IN
        WITNESS WHEREOF, the Company has caused this Agreement to be signed by a
        duly
        authorized officer, and the Participant has affixed his signature
        hereto.

       

      


      
        	
                EQUITY
                  INNS, INC.

              	 	
                [PARTICIPANT]

              
	 	 	 
	
                By:

              	
                /s/
                  Howard A. Silver

              	 	
                /s/
                  J. Mitchell Collins

              


      

      


      



      Exhibit
        I

      


      
        	
                Performance
                  Percentile Ranking

              
	
                Performance
                  Percentile Achieved1 

              	
                 

              	
                Applicable
                  Percentage

                (Percentage
                  of Target

                Shares
                  That Vest and

                Become
                  Transferable)

              
	
                75th
                  & Above

              	
                 

              	
                150%

              	
                 

              
	
                74th

              	 	
                148%

              	
                 

              
	
                73th

              	 	
                146%

              	
                 

              
	
                72th

              	 	
                144%

              	
                 

              
	
                71th

              	 	
                142%

              	
                 

              
	
                70th

              	
                 

              	
                140%

              	
                 

              
	
                69th

              	 	
                138%

              	
                 

              
	
                68th

              	 	
                136%

              	
                 

              
	
                67th

              	 	
                134%

              	
                 

              
	
                66th

              	 	
                132%

              	
                 

              
	
                65th

              	
                 

              	
                130%

              	
                 

              
	
                64th

              	 	
                128%

              	
                 

              
	
                63th

              	 	
                126%

              	
                 

              
	
                62th

              	 	
                124%

              	
                 

              
	
                61th

              	 	
                122%

              	
                 

              
	
                60th

              	
                 

              	
                120%

              	
                 

              
	
                59th

              	 	
                118%

              	
                 

              
	
                58th

              	 	
                116%

              	
                 

              
	
                57th

              	 	
                114%

              	
                 

              
	
                56th

              	 	
                112%

              	
                 

              
	
                55th

              	
                 

              	
                110%

              	
                 

              
	
                54th

              	 	
                108%

              	
                 

              
	
                53th

              	 	
                106%

              	
                 

              
	
                52th

              	 	
                104%

              	
                 

              
	
                51th

              	 	
                102%

              	
                 

              
	
                50th
                  (Median)

              	
                 

              	
                100%

              	
                 

              
	
                49th

              	 	
                95%

              	
                 

              
	
                48th

              	 	
                90%

              	
                 

              
	
                47th

              	 	
                85%

              	
                 

              
	
                46th

              	 	
                80%

              	
                 

              
	
                45th

              	
                 

              	
                75%

              	
                 

              
	
                44th

              	 	
                70%

              	
                 

              
	
                43th

              	 	
                65%

              	
                 

              
	
                42th

              	 	
                60%

              	
                 

              
	
                41th

              	 	
                55%

              	
                 

              
	
                40th

              	
                 

              	
                50%

              	
                 

              
	
                Below
                  40th

              	
                 

              	
                0%

              	
                 

              


      

      
        

          

        

      

      
        
          1The
            “Performance Percentile Achieved” shall be determined by the Company’s
            Compounded Annual Growth Rate TSR relative to the Compounded Annual Growth
            Rate
            TSR for the other companies listed on the NAREIT Hotel Index for the
            applicable
            measurement period described in paragraph 3 of the Agreement. Fractional
            percentile rankings shall be rounded down to the next whole percentile,
e.g.,
            a
            ranking in the 60.65 percentile shall be rounded to the 60th
            percentile (with the result that 120% of the shares subject to the Stock
            Award
            will become vested and
            transferable).