Change in Control and Termination Agreement


    
      

      

    

     

    
 

    Exhibit
      10.15

    


    CHANGE
      IN CONTROL AND TERMINATION AGREEMENT

     

    



    THIS
      AMENDED AND RESTATED CHANGE IN CONTROL AND TERMINATION
      AGREEMENT
      (the
“Agreement”), to be effective as of the 1st
      day of
      January 2007, is made and entered into by and between EQUITY INNS SERVICES,
      INC.
      (the “Company”), a corporation organized and existing under the laws of the
      State of Tennessee, EQUITY INNS, INC. (the “Parent”), a corporation organized
      and existing under the laws of the State of Tennessee, and Howard A. Silver,
      (the “Executive”). This amended and restated agreement supersedes all previous
      employment agreements with the Executive.

     

    R
      E C
      I T A L S:

     

    The
      Company provides management services to the Parent pursuant to a management
      services agreement dated as of December 30, 1994.

     

    The
      Company and the Parent acknowledge that Executive’s contributions to the past
      and future growth and success of the Company and the Parent have been and will
      continue to be substantial. As a wholly-owned subsidiary of a publicly held
      corporation, the Company recognizes that there exists a possibility of a Change
      in Control (as defined herein) of the Company or its Parent. The Company and
      the
      Parent also recognize that the possibility of such a Change in Control may
      contribute to uncertainty on the part of senior management and may result in
      the
      departure or distraction of senior management from their operating
      responsibilities.

     

    Outstanding
      management of the Company is always essential to advancing the best interests
      of
      the Company’s and the Parent’s shareholders. In the event of a threat or
      occurrence of a bid to acquire or change control of the Parent or to effect
      a
      business combination, it is particularly important that the Company’s and the
      Parent’s businesses be continued with a minimum of disruption. The Company and
      the Parent believe that the objective of securing and retaining outstanding
      management will be achieved if the Company’s key management employees are given
      assurances of employment security so they will not be distracted by personal
      uncertainties and risks created by such circumstances.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and obligations herein
      and
      the compensation the Parent and the Company, jointly and severally, agree herein
      to pay to the Executive, and of other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the Parent, the
      Company and the Executive agree as follows:

     

    ARTICLE
      1.  TERM;
      CERTAIN DEFINITIONS.
      

     

    1.1 Term.
      This
      Agreement is effective from the date of its execution by the Company (“Effective
      Date”) for a term of three years (the “Initial Term”). This Agreement
      automatically continues in effect from year to year after expiration of the
      Initial Term unless the Company notifies the Executive in writing ninety (90)
      days before any anniversary of the Effective Date following the Initial Term
      that the Agreement will terminate as of that anniversary date. Notwithstanding
      the foregoing, no notice of termination of this Agreement 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    under
      the
      preceding sentence shall be effective during an Employment Period as defined
      in
      section 2.1 below.

     

    1.2 Certain
      Definitions.
      As used
      in this Agreement:

     

    (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 Parent’s then outstanding
      securities entitled to vote generally in the election of the Parent’s Board; or
      (ii) the Company’s then outstanding securities entitled to vote generally in the
      election of the Company’s Board.

     

    (b) Annual
      Base Salary
      means
      the Executive’s gross annual salary before any taxes, deductions, exclusions or
      any deferrals or contributions under any plan or program of the Company or
      the
      Parent, but excluding bonuses, incentive compensation, employee benefits or
      any
      non-salary form of compensation (determined without regard to any reduction
      in
      Annual Base Salary that results in Executive’s voluntary termination with Good
      Reason, under sections 1.2(n) and 2.3). 

     

    (c) Associate,
      with
      respect to any Person, is defined in Rule 12b-2 under the Exchange Act;
provided,
      however,
      that an
      Associate shall not include the Parent or a majority-owned subsidiary of the
      Parent.

     

    (d) Bonus
      means
      the Executive’s bonus or other similar payment from the Company or the Parent,
      whether paid in cash or shares of the Parent’s common stock or otherwise, that
      is based on the performance of the Company, the Parent, or the Executive during
      a fiscal year or years, even if paid after the close of the fiscal year. The
      term “Bonus” shall include, without limitation, for 1996, restricted stock
      awards granted in 1996 in lieu of amounts paid under the bonus pool (which
      awards shall be deemed to have a value, solely for this purpose, equal to the
      Fair Market Value on the date of grant of all shares subject to the award,
      whether or not such shares were vested on the date of grant); and for 1997,
      amounts paid under the Company’s annual bonus pool. 

    


    (e) “Cause,”
      means (i) willful, deliberate and continued failure by the Executive (other
      than
      for reason of mental or physical illness or Disability) to perform his duties
      as
      established by the Company’s 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) a material breach by the
      Executive of his fiduciary duties of loyalty or care to the Company or the
      Parent; (iii) conviction of any crime (or upon entering a plea of guilty or
      nolo
      contendere to a charge of any crime) constituting a felony; (iv)
      misappropriation of funds or property; or (v) willful, flagrant, deliberate
      and
      repeated infractions of material published policies and regulations of the
      Company of which the Executive has actual knowledge. 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (f) Change
      in Control
      means
      (i) a Person is or becomes an Acquiring Person; (ii) holders of the securities
      of the Parent 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
      Parent, the closing of such an agreement) that involves the transfer of at
      least
      fifty percent (50%) of the Parent’s and its subsidiaries’ total assets on a
      consolidated basis, as reported in the Parent’s consolidated financial
      statements filed with the Securities and Exchange Commission; (iii) holders
      of
      the securities of the Parent entitled to vote thereon approve a transaction
      (or,
      if such approval is not required by applicable law and is not solicited by
      the
      Parent, the closing of such a transaction) pursuant to which the Parent will
      undergo a merger, consolidation, or statutory share exchange with a Person,
      regardless of whether the Parent 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 Parent carrying the
      right to vote in elections of persons to the Parent’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
      Parent’s voting securities carrying the right to vote in elections of persons to
      the Parent’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 Parent’s Board; (v) holders
      of the securities of the Parent entitled to vote thereon approve a plan of
      complete liquidation of the Parent or an agreement for the sale or liquidation
      by the Parent or its subsidiaries of substantially all of the assets of the
      Parent and its subsidiaries (or, if such approval is not required by applicable
      law and is not solicited by the Parent, the commencement of actions constituting
      such a plan or the closing of such an agreement); or (vi) the Parent’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 or the Parent has effectively occurred. The Parent’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 or the
      Parent.

     

    (g) Company’s
      Board
      means
      the Board of Directors of the Company.

     

    (h) Continuing
      Director
      means
      any member of the Parent’s Board, while a member of the Parent’s Board and (i)
      who was a member of the Parent’s Board on the date hereof or (ii) whose
      nomination for or election to the Parent’s Board was recommended or approved by
      a majority of the Continuing Directors.

     

    (i) Control
      Affiliate,
      with
      respect to any Person, means an affiliate as defined in Rule 12b-2 under the
      Exchange Act.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (j) Control
      Change Date
      means
      the date on which a Change in Control occurs. If a Change in Control occurs
      on
      account of a series of transactions, the “Control Change Date” is the date of
      the last of such transactions.

     

    (k) Disability
      means a
      complete physical or mental inability, confirmed by an independent licensed
      physician, to perform substantially all of the services required of an employee
      in Executive’s position with the Company immediately before Executive first
      became unable to perform those services, that continues for a period of two
      hundred forty (240) consecutive days, provided that the Company has given
      advance written notice to Executive of its determination of such Disability,
      and
      Executive has not resumed performance of such services within thirty (30) days
      of such notice.

     

    (l) Exchange
      Act
      means
      the Securities Exchange Act of 1934, as amended.

     

    (m) Fair
      Market Value
      has the
      same meaning given that term in the Parent’s 1994 Stock Incentive Plan, as
      amended and in effect from time to time.

     

    (n) Good
      Reason
      means
      the Executive’s resignation from the Company’s employment on account of one or
      more of the following events: 

     

    (i) the
      failure by the Parent’s Board or the Company’s Board (as applicable) to reelect
      the Executive to Executive’s current position with the Company and the Parent
      (as of the Control Change Date), provided the Executive elects to leave the
      Company’s or Parent’s employment within six (6) months of such failure to so
      reelect or reappoint the Executive;

     

    (ii)
      a
      material diminution by the Parent’s Board or the Company’s Board (as applicable)
      of the duties, functions and responsibilities of the Executive as the President
      and Chief Executive Officer of the Parent without his consent within six (6)
      months of such diminution of duties, responsibilities or functions; provided,
      however, that the Parent, the Company and the Executive agree that Good Reason
      will exist under this section 1.2(ii) solely because the Executive continues
      to
      have the same duties, functions and responsibilities as in effect immediately
      before the Change in Control but for an entity that does not have common stock
      or shares that are publicly traded.

    


    (iii)
      the
      failure of the Company or the Parent to permit the Executive to exercise such
      responsibilities as are consistent with the Executive’s position and are of such
      a nature as are usually associated with such offices of a corporation engaged
      in
      substantially the same business as the Company or the Parent;

     

    (iv) the
      Company’s or the Parent’s causing the Executive to relocate his employment more
      than fifty (50) miles from Memphis, Tennessee, without the consent of the
      Executive;

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (v) the
      Parent’s or the Company’s failure to make (or the Parent’s failure to cause the
      Company to make) a payment when due to the Executive;

     

    (vi) the
      Company’s reduction, during the Employment Period, of the Executive’s (A) Annual
      Base Salary, as such may be increased from time to time after the date of this
      Agreement; (B) Bonus, such that the aggregate threshold, target, or maximum
      Bonus projected for Executive for a fiscal year are lower than the greater
      of
      (1) the aggregate threshold, target, or maximum Bonus, respectively, projected
      for the Executive for the immediately preceding fiscal year or (2) the aggregate
      threshold, target, or maximum Bonus, respectively, projected most recently
      prior
      to the Employment Period for the Executive; (C) employee welfare, fringe or
      pension benefits, other than reductions determined to be necessary to comply
      with the Employee Retirement Income Security Act of 1974, as amended, or to
      retain the tax-qualified or tax-favored status of the benefit under the Code,
      which determination shall be made by the Parent’s Board in good faith or (D)
      incentive compensation (other than Bonus levels that are subject to restrictions
      on reductions under section 1.2(n)(vi)(B)) such that the aggregate threshold,
      target or maximum value is less than the average incentive compensation
      (including any restricted stock, options and similar awards) for the two year
      period preceding the Control Change Date. 

    


    (vii) the
      Company, the Company’s Board, the Parent or the Parent’s Board directs Executive
      to engage in unlawful or unethical conduct or conduct contrary to the Company’s
      or the Parent’s good business practices.

     

    (o) Parent’s
      Board
      means
      the Board of Directors of the Parent.

     

    (p) 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, the Parent or any Related Entity, and the term
      Person does not include any employee-benefit plan maintained by the Parent,
      the
      Company or any Related Entity, and any person or entity organized, appointed,
      or
      established by the Parent, the Company or any Related Entity for or pursuant
      to
      the terms of any such employee-benefit plan, unless the Parent’s Board or the
      Company’s Board determines that such an employee-benefit plan or such person or
      entity is a “Person”.

     

    (q) Potential
      Change in Control
      means
      that (i) the Parent’s Board approves a transaction or series of transactions
      that, if consummated, would result in a Change in Control; (ii) any Person,
      the
      Company, or the Parent makes a public announcement of its intention to take
      or
      consider taking actions that would result in a Change in Control; (iii) any
      Person initiates a tender offer which, if consummated, would result in a Change
      in Control; or (iv) the Parent’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 Potential 


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Change
      in
      Control of the Company or the Parent has effectively occurred. The Parent’s
      Board shall be entitled to exercise its sole and absolute discretion in adopting
      any such resolution pursuant to subparagraph (iv) above and in determining
      whether or not any such transaction(s) or event(s) might be deemed, individually
      or collectively, to constitute a Potential Change in Control of the Company
      or
      the Parent.

    


    (r) Related
      Entity
      means
      any entity that is part of a controlled group of corporations or is under common
      control with the Parent within the meaning of section 1563(a), 414(b) or 414(c)
      of the Internal Revenue Code of 1986, as amended (the “Code”).

     

    ARTICLE
      2. TERMINATION
      OF EMPLOYMENT.
      

     

    2.1 General.
      Executive is entitled to receive a Termination Payment according to the
      remaining provisions of this Article 2 if Executive’s employment with the
      Company terminates during the term of this Agreement and during an Employment
      Period (as defined below) because of an event described in either section 2.2
      or
      2.3. An Employment Period begins on the occurrence of any Potential Change
      in
      Control. An Employment Period also begins on the occurrence of a Control Change
      Date if, with respect to the Change in Control to which such Control Change
      Date
      relates, no Potential Change in Control occurred (or a Potential Change in
      Control did occur, but it was determined by the Parent’s Board to have been
      unwound, reversed or concluded (as provided in the following sentence)). If
      an
      Employment Period begins on the occurrence of a Potential Change in Control,
      it
      will end on the earlier of (i) the date (if any) that the events constituting
      the Potential Change in Control have been unwound, reversed or concluded such
      that the events are no longer expected to result in a Change in Control, as
      determined by the Parent’s Board in good faith, or (ii) eighteen (18) months
      following the Control Change Date to which the Potential Change of Control
      relates. If an Employment Period begins on a Control Change Date, it will end
      eighteen (18) months following the Control Change Date. If Executive’s
      employment terminates during an Employment Period and an event described in
      section 2.2 or 2.3 has not occurred, or Executive’s employment terminates as a
      result of his death or Disability, this Agreement terminates.

     

    2.2 Termination
      by the Company.
      Executive is entitled to receive a Termination Payment if Executive’s employment
      is terminated by the Company during an Employment Period without Cause. If
      the
      Company desires to discharge the Executive for Cause (the “Cause Exception”), it
      shall give notice to the Executive as provided in section 2.7 and the Executive
      shall have thirty (30) days after notice has been given to him in which to
      cure
      the reason for the Company’s exercise of the Cause Exception. If the reason for
      the Company’s exercise of the Cause Exception is timely cured by the Executive
      (as determined by a majority of the members of the Company’s Board following a
      hearing), the Company’s notice of discharge shall become null and
      void.

     

    2.3 Voluntary
      Termination.
      Executive is entitled to receive a Termination Payment if Executive voluntarily
      terminates employment during an Employment Period with Good Reason.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    2.4 Termination
      Payment.
      The
      Parent shall pay or shall cause the Company to pay a Termination Payment equal
      to three (3) times Executive’s Base Period Income (as determined under section
      2.5) in a single sum payment, net of any required tax withholding, in cash.
      Except as provided in the two following sentences, the Termination Payment
      to
      Executive shall be made not later than the thirtieth (30th)
      business day after Executive’s employment termination in accordance with section
      2.2 or 2.3 (the “Payment Date”). If Executive is a “specified employee” (as
      defined in section 409A of the Code), any portion of the Termination Payment
      that is subject to section 409A of the Code shall be paid in a single sum
      payment on the first business day of the seventh month beginning after the
      day
      of Executive’s employment termination in accordance with section 2.2 or 2.3. If
      the amount of the Termination Payment cannot be finally determined on or before
      the Payment Date, the Parent shall pay or shall cause the Company to pay on
      the
      Payment Date an estimate, as determined in good faith by the Company, of the
      minimum amount of the Termination Payment. Any portion of the Termination
      Payment that is not made on the Payment Date shall bear interest at a rate
      equal
      to one-hundred twenty (120) percent of the monthly compounded applicable federal
      rate, as in effect under section 1274(d) of the Code for the month in which
      the
      Payment Date occurs. In the event that the amount of the estimated payment
      exceeds the amount subsequently determined to have been due, such excess shall
      constitute a loan by the payor, payable on the fifth day after demand by the
      Parent or the Company, as applicable, with interest at the rate provided under
      section 1274(d) of the Code until paid. 

     

    2.5 Base
      Period Income.
      Base
      Period Income for the Executive equals the sum of (a) and (b), as determined
      below:

     

    
      	 	
              (a)

            	
              Average
                Annual Base Salary, determined as
                follows:

            


    

     

    (i)
      twelve times: (A) the monthly rate of Annual Base Salary to which the Executive
      is entitled on the day prior to his termination (the “Salary Measurement Date”);
      plus (B) the monthly rate of Annual Base Salary to which the Executive was
      entitled twelve months prior to the Salary Measurement Date, if Executive was
      employed by the Company or the Parent on that date; plus (C) the monthly rate
      of
      Annual Base Salary to which the Executive was entitled twenty-four months prior
      to the Salary Measurement Date, if Executive was employed by the Company or
      the
      Parent on that date (with Annual Base Salary determined in each case in
      accordance with section 1.2(b)); 

     

    (ii)
      divided by: (A) one, if Executive was not employed by the Company or the Parent
      twelve months prior to the Salary Measurement Date; (B) two, if Executive was
      employed by the Company or the Parent twelve months (but not twenty-four months)
      prior to the Salary Measurement Date; or (C) three, if Executive was employed
      by
      the Company twenty-four months prior to the Salary Measurement
      Date;

     

    plus

     

    
      	 	
              (b)
                

            	
              Average
                Bonus, determined as either (i) or (ii), as
                applicable:

            


    

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (i)
      if
      Executive was employed by the Company for at least one entire fiscal year,
      the
      sum of the Bonuses paid to or earned by the Executive for the three fiscal
      years
      (or, if less than three years, the fiscal years of the Executive’s employment
      with the Company), immediately preceding the year in which the Executive’s
      employment with the Company terminates, divided by the number of such fiscal
      years; provided that if the Executive was paid or earned a Bonus for any fiscal
      year that was pro rated based on partial year’s employment, such Bonus shall be
      annualized for purposes of calculating Base Period Income; or

     

    (ii)
      if
      Executive was employed by the Company for less than one entire fiscal year,
      his
“target” Bonus for the fiscal year in which his employment with the Company
      terminates shall be his Average Bonus for purposes of calculating Base Period
      Income; provided that if the “target” Bonus is pro rated based on a partial
      year’s employment, such “target” Bonus shall be annualized for purposes of
      calculating Base Period Income.

     

    Example.
      Assume a
      Potential Change in Control occurs (and thus an Employment Period begins) in
      December, 1998, and Executive’s employment is terminated without Cause in
      January, 1999. For purposes of calculating Executive’s Base Period Income,
      Executive’s Bonuses for the years 1996, 1997 and 1998 would be averaged. Assume
      that Executive received 7,500 shares of restricted stock in December, 1996
      in
      lieu of a payment under the bonus pool, and that the Fair Market Value of the
      shares on date the shares were issued was $13.50. Further assume that Executive
      received a payment under the bonus pool for 1997, taken part in cash ($150,000)
      and part in shares of Common Stock (7,500 shares, with a Fair Market Value
      on
      the date the shares were issued of $14.00 per share). Finally, assume that
      (i)
      Executive’s 1998 Bonus performance measures, as established by the Compensation
      Committee of the Parent’s Board, had a “corporate” and an “individual”
component, (ii) Executive’s Bonus would be $275,000, if the “target” Bonus was
      paid for both the corporate and individual components of the award, and (iii)
      the target Bonus was earned for both components of the award. 

     

    Executive’s
      average Bonus, for purposes of calculating his Base Period Income would be
      $210,416.67 ([$101,250 for 1996 + $255,000 ($150,000 + $105,000) for 1997 +
      $275,000 for 1998] / 3).

     

    2.6 Other
      Severance Benefits.
      In the
      event Executive is entitled to a Termination Payment under section 2.4, he
      shall
      also be entitled to the following benefits and other rights: 

     

    (a) Accrued
      but unpaid Annual Base Salary through the date that Executive’s employment
      terminates, which the Parent shall pay or cause the Company to pay no later
      than
      the Payment Date (as defined in section 2.4);

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (b) Payment
      of a Bonus for the fiscal year in which Executive’s employment terminates, pro
      rated based on the number of days of such year prior to the date of Executive’s
      termination, with such Bonus being calculated as a pro rated portion of the
      “target” Bonus projected for Executive for that year (determined without regard
      to any reduction that results in Executive’s termination with Good Reason),
      which the Parent shall pay or cause the Company to pay no later than the Payment
      Date;

     

    (c) Payment
      of any unpaid Bonus for any fiscal year prior to the year in which Executive’s
      employment terminates with any discretionary portion of the Bonus being paid
      at
“target” levels or higher for such year and any non-discretionary portion of the
      Bonus being paid based on actual levels of corporate achievement (each
      determined without regard to any reduction that results in Executive’s
      termination with Good Reason), which the Parent shall pay or cause the Company
      to pay no later than the Payment Date;

     

    (d) Forgiveness
      of all loans made to Executive by the Company or the Parent and outstanding
      as
      of the date of Executive’s termination of employment with the Company (other
      than the loan deemed made by the Company to Executive in accordance with the
      last sentence of section 2.4 or section 3.3);

     

    (e) Accelerated
      vesting, settlement, or exercisability of (i) awards outstanding under the
      Parent’s 1994 Stock Incentive Plan; (ii) compensatory awards granted with
      respect to the Parent’s capital stock under any other plan or outside of a plan
      (in each case, including without limitation restricted stock awards, performance
      shares and stock options); (iii) Executive’s balance under the Parent’s Deferred
      Compensation Plan; and (iv) benefits under any other non-tax-qualified plan
      of
      the Company or the Parent in which a portion of an award or benefit would be
      lost through termination of employment; provided that,
      in each
      case, such acceleration shall occur as of the date of Executive’s termination of
      employment (if such acceleration has not previously occurred);

     

    (f) A
      payment
      equal to the portion of Executive’s account balance under any defined
      contribution tax-qualified pension plan of the Company or the Parent forfeited
      as a result of failure to satisfy vesting requirements due to Executive’s
      termination of employment, which the Parent shall pay or cause the Company
      to
      pay no later than the Payment Date;

     

    (g) Continuation,
      for the longer of eighteen (18) months following the date of termination of
      employment, or the period mandated, in the case of group health plan coverage,
      by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
      of
      all of Executive’s insurance benefits (including without limitation medical,
      dental, and vision insurance benefits) and any other medical, dental or vision
      benefits (if not insured) on the same terms as in effect immediately prior
      to
      Executive’s termination (determined without regard to any reduction that results
      in Executive’s termination with Good Reason); provided that
      any such
      benefits in effect immediately prior to Executive’s termination shall



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    be
      made
      available to the Executive for the period stated above even if they must be
      secured by the Company or the Parent outside of any plan or group insurance
      policy; and

     

    (h) Any
      other
      benefits accrued by the Executive as of the date of his termination of
      employment, including without limitation accrued vacation, in accordance with
      the terms of the plan, agreement or other arrangement under which the benefit
      was established, which the Parent shall pay or cause the Company to pay no
      later
      than the Payment Date.

     

    If
      Executive is a “specified employee” (as defined in section 409A of the Code),
      any benefit payable under this section 2.6 that is subject to section 409A
      of
      the Code shall be paid on the first business day of the seventh month beginning
      after the date of Executive’s termination in accordance with section 2.2 or
      2.3.

     

    2.7 Notice
      of Termination.
      Any
      termination by the Company under the Cause Exception or by the Executive for
      Good Reason shall be communicated by Notice of Termination to the other party
      hereto. For purposes of sections 2.2, 2.3 and 2.4, a “Notice of Termination”
means a written notice which (i) indicates the specific termination provision
      in
      this Agreement relied upon, (ii) sets forth in reasonable detail the facts
      and
      circumstances claimed to provide a basis for termination of the Executive’s
      employment under the provision so indicated and (iii) if the termination date
      is
      other than the date of receipt of such notice, specifies the effective date
      of
      termination.

     

    ARTICLE
      3. TAX
      MATTERS.
      

     

    3.1 Indemnification.
      If the
      excise tax on “excess parachute payments,” as defined in section 280G of the
      Code, will be imposed on the Executive under Code section 4999 as a result
      of
      the Executive’s receipt of the Termination Payment or any other payment, benefit
      or compensation (without regard to the “Additional Amount” described below)
      which the Executive receives or has the right to receive from the Company or
      the
      Parent or any of their affiliates (the “Change in Control Benefits”), the
      Company and the Parent shall indemnify the Executive and hold him harmless
      against all claims, losses, damages, penalties, expenses, and excise taxes.
      To
      effect this indemnification, the Parent shall pay or cause the Company to pay
      to
      the Executive the “Additional Amount” described in this section 3.1. The
      Additional Amount shall be the amount that is sufficient to indemnify and hold
      the Executive harmless from the application of Code sections 280G and 4999,
      including the amount of (i) the excise tax that will be imposed on the Executive
      under section 4999 of the Code with respect to the Change in Control Benefits;
      (ii) the additional (A) excise tax under section 4999 of the Code, (B) hospital
      insurance tax under section 3111(b) of the Code and (C) federal, state and
      local
      income taxes for which the Executive is or will be liable on account of the
      payment of the amount described in item (i); and (iii) the further excise,
      hospital insurance and income taxes for which the Executive is or will be liable
      on account of the payment of the amount described in item (ii) and this item
      (iii) and any other indemnification payment under this section 3.1. The
      Additional Amount shall be calculated and paid to the Executive at the time
      that
      the Termination Payment is paid to the Executive. In calculating the Additional
      Amount, the highest marginal rates of federal and applicable state and local
      income taxes applicable to individuals and in effect for the year in


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    which
      the
      Change in Control occurs shall be used. Nothing in this paragraph shall give
      the
      Executive the right to receive indemnification from the Company or the Parent
      for federal, state or local income taxes or hospital insurance taxes payable
      solely as a result of the Executive’s receipt of (a) the Termination Payment, or
      (b) any additional payment, benefit or compensation other
      than
      additional compensation in the form of the excise tax payment specified in
      item
      (i), above. As specified in items (ii) and (iii), above, all income, hospital
      insurance and additional excise taxes resulting from additional compensation
      in
      the form of the excise tax payment specified in item (i), above, shall
      be paid
      to the Executive. 

     

    3.2 Example.
      The
      provisions of section 3.1 are illustrated by the following example:

     

    Assume
      that the Termination Payment and all other Change in Control Benefits result
      in
      a total federal, state and local income tax and hospital insurance tax liability
      of $180,000; and an excise tax liability under Code section 4999 of $70,000.
      Under such circumstances, the Executive is solely responsible for the $180,000
      income and hospital insurance tax liability; and the Parent must pay or cause
      the Company to pay to the Executive $70,000, plus an amount necessary to
      indemnify the Executive for all federal, state and local income taxes, hospital
      insurance taxes, and excise taxes that will result from the $70,000 payment
      to
      the Executive and from all further indemnification to the Executive of taxes
      attributable to the initial $70,000 payment.

     

    3.3 Estimated
      Payment.
      Notwithstanding the foregoing, if the Additional Amount cannot be finally
      determined on or before the Payment Date (as defined in section 2.4), the Parent
      shall pay or cause the Company to pay on the Payment Date an estimate, as
      determined in good faith by the Company, of the minimum amount of the Additional
      Amount. Any portion of the Additional Amount that is not made on the Payment
      Date shall bear interest at a rate equal to one-hundred twenty (120) percent
      of
      the monthly compounded applicable federal rate, as in effect under section
      1274(d) of the Code for the month in which the Payment Date occurs. In the
      event
      that the amount of the estimated payment exceeds the amount subsequently
      determined to have been due, such excess shall constitute a loan by the payor,
      payable on the fifth day after demand by the Parent or the Company, as
      applicable, with interest at the rate provided under section 1274(d) of the
      Code
      until paid. 

     

    ARTICLE
      4.  MITIGATION.
      The
      Executive shall not be required to mitigate damages or the amount of any payment
      provided for under this Agreement by seeking or accepting other employment
      or
      otherwise, and compensation earned from such employment or otherwise shall
      not
      reduce the amounts otherwise payable under this Agreement.

     

    ARTICLE
      5.  RESTRICTION
      ON CONDUCT OF EXECUTIVE.

     

    5.1 General.
      The
      Executive and the Company understand and agree that the purpose of the
      provisions of this Article 5 is to protect legitimate business interests of
      the
      Company and Parent, as more fully described below, and is not intended to impair
      or infringe upon the Executive’s right to work, earn a living, or acquire and
      possess property from the fruits of his labor. The Executive hereby acknowledges
      that the post-employment restrictions set forth in this Article 5 are reasonable
      and that they do not, and will not, unduly impair his ability to



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    earn
      a
      living after the termination of his employment with the Company. Therefore,
      subject to the limitations of reasonableness imposed by law upon restrictions
      set forth herein, Executive shall be subject to the restrictions set forth
      in
      this Article 5.

    


    5.2 Definitions.
      The
      following capitalized terms used in this Article 5 shall have the meanings
      assigned to them below, which definitions shall apply to both the singular
      and
      the plural forms of such terms:

     

    (a) Confidential
      Information
      means
      any confidential or proprietary information possessed by the Company, the Parent
      or a Related Entity, including without limitation, any confidential “know-how”,
      customer lists, details of client or consultant contracts, current and
      anticipated customer requirements, pricing policies, price lists, market
      studies, business plans, operational methods, marketing plans or strategies,
      product development techniques or plans, computer software programs (including
      object code and source code), data and documentation, data base technologies,
      systems, structures and architectures, inventions and ideas, past, current
      and
      planned research and development, acquisition plans, new personnel acquisition
      plans and any other information that would constitute a trade secret under
      common law or the laws of the State of Tennessee.

     

    (b) Determination
      Date
      means
      the date of termination of Executive’s employment with the Company for any
      reason whatsoever or any earlier date (during the Restricted Period) of an
      alleged breach of the Restrictive Covenants by the Executive.

     

    (c) Principal
      or Representative
      means a
      principal, owner, partner, shareholder, joint venturer, member, trustee,
      director, officer, manager, employee, agent, representative or
      consultant.

     

    (d) Protected
      Employees
      means
      employees of the Company, the Parent, or a Related Entity who were employed
      by
      the Company, the Parent or a Related Entity at any time within six (6) months
      prior to the Determination Date.

     

    (e) Restricted
      Period
      means
      the period of Executive’s employment with the Company plus a period extending
      two (2) years from the date of termination of employment.

     

    (f) Restrictive
      Covenants
      means
      the restrictive covenants contained in sections 5.3, 5.4, and 5.5
      hereof.

     

    5.3 Restriction
      on Disclosure and Use of Confidential Information.
      Executive understands and agrees that the Confidential Information constitutes
      a
      valuable asset of the Company and the Parent, and may not be converted to
      Executive’s own use. Accordingly, Executive hereby agrees that Executive shall
      not, directly or indirectly, at any time during the Restricted Period reveal,
      divulge or disclose to any Person not expressly authorized by the Company or
      the
      Parent any Confidential Information, and Executive shall not, directly or


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    indirectly,
      at any time during the Restricted Period use or make use of any Confidential
      Information in connection with any business activity other than that of the
      Company, the Parent or a Related Entity and, upon request by the Company or
      the
      Parent, shall return all copies of any Confidential Information then in the
      Executive’s possession as of the date of termination of his employment. The
      parties acknowledge and agree that this Agreement is not intended to be, and
      does not, alter either the Company’s rights or the Executive’s obligations under
      any state or federal statutory or common law regarding trade secrets and unfair
      trade practices.

     

    5.4 Nonsolicitation
      of Protected Employees.
      Executive understands and agrees that the relationship between the Company,
      the
      Parent, or a Related Entity and each of the Protected Employees constitutes
      a
      valuable asset of the Company or the Parent and may not be converted for
      Executive’s own use. Accordingly, Executive hereby agrees that during the
      Restricted Period, Executive shall not directly or indirectly on Executive’s own
      behalf or as a Principal or Representative of any Person solicit any Protected
      Employee to terminate his or her employment with the Company, the Parent, or
      a
      Related Entity.

     

    5.5 Noninterference
      with Company and Parent Opportunities.
      Executive understands and agrees that all hotel development opportunities with
      which he is involved during his employment with the Company constitute valuable
      assets of the Company and the Parent and may not be converted to Executive’s own
      use. Accordingly, Executive hereby agrees that during the Restricted Period,
      Executive shall not directly or indirectly on Executive’s own behalf or as a
      Principal or Representative of any Person, interfere with, solicit, pursue,
      or
      in any way make use of the Company’s or the Parent’s hotel development
      opportunities.

     

    5.6 Exceptions
      from Disclosure Restrictions.
      Anything herein to the contrary notwithstanding, Executive shall not be
      restricted from disclosing or using Confidential Information that: (i) is or
      becomes generally available to the public other than as a result of an
      unauthorized disclosure by Executive or his agent; (ii) becomes available to
      Executive other than through his employment by the Company and the Parent and
      in
      a manner that is not in contravention of applicable law from a source (other
      than the Company, the Parent, or a Related Entity or one of their officers,
      employees, agents or representatives) that is not bound by a confidential
      relationship with the Company, the Parent or a Related Entity or by a
      confidentiality or similar agreement; (iii) was known to the Executive on a
      non-confidential basis and not in contravention of applicable law or a
      confidentiality or other similar agreement before its disclosure to Executive
      by
      the Company, the Parent, or a Related Entity or one of their officers,
      employees, agents or representatives; or (iv) is required to be disclosed by
      law, court order or other legal process; provided, however, that in the event
      disclosure is required by law, Executive shall provide the Company with prompt
      notice of such requirement so that the Company or the Parent may seek an
      appropriate protective order prior to such required disclosure by
      Executive.

     

    5.7 Enforcement
      of Covenants.
      

     

    (a) Rights
      and Remedies upon Breach.
      In the
      event Executive breaches, or threatens to commit a breach of, any of the
      provisions of the Restrictive Covenants, the Company and the Parent shall each
      have the right and remedy to enjoin, preliminarily and permanently, Executive
      from violating or threatening to violate the Restrictive Covenants and to have
      the Restrictive 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Covenants
      specifically enforced by any court of competent jurisdiction, it being agreed
      that any breach or threatened breach of the Restrictive Covenants would cause
      irreparable injury to the Company and the Parent and that money damages would
      not provide an adequate remedy to the Company or the Parent. The rights referred
      to in the preceding sentence shall be independent of any others and severally
      enforceable, and shall be in addition to, and not in lieu of, any other rights
      and remedies available to the Company or the Parent at law or in
      equity.

     

    (b) Acknowledgement.
      The
      Executive acknowledges and agrees that the Restrictive Covenants are reasonable
      and valid in time and space and in all other respects, and that they will be
      interpreted in accordance with Article 10.  

     

    ARTICLE
      6. ATTORNEYS’
      FEES.
      In the
      event that the Executive incurs any attorneys’ fees in protecting or enforcing
      his rights under this Agreement, the Parent shall reimburse or cause the Company
      to reimburse the Executive for such reasonable attorneys’ fees and for any other
      reasonable expenses related thereto. Such reimbursement shall be made within
      thirty (30) days following final resolution of the dispute or occurrence giving
      rise to such fees and expenses.

     

    ARTICLE
      7. DECISIONS
      BY COMPANY OR PARENT; FACILITY OF PAYMENT.
      Any
      powers granted to the Company’s Board or the Parent’s Board (as applicable)
      hereunder may be exercised by a committee, appointed by either such Board,
      and
      such committee, if appointed, shall have general responsibility for the
      administration and interpretation of this Agreement. If such Board or committee
      shall find that any person to whom any amount is or was payable hereunder is
      unable to care for his affairs because of illness or accident, or has died,
      then
      such Board or committee, if it so elects, may direct that any payment due him
      or
      his estate (unless a prior claim therefore has been made by a duly appointed
      legal representative) or any part thereof be paid or applied for the benefit
      of
      such person or to or for the benefit of his spouse, children or other
      dependents, an institution maintaining or having custody of such person, any
      other person deemed by such Board or committee to be a proper recipient on
      behalf of such person otherwise entitled to payment, or any of them, in such
      manner and proportion as such Board or committee may deem proper. Any such
      payment shall be in complete discharge of the liability of the Company and
      the
      Parent therefor.

     

    ARTICLE
      8. INDEMNIFICATION.
      The
      Company shall indemnify the Executive during his employment and thereafter
      to
      the maximum extent permitted by applicable law for any and all liability of
      the
      Executive arising out of, or in connection with, his employment by the Company
      or the Parent or membership on the Company’s Board or the Parent’s Board (as
      applicable); provided, that in no event shall such indemnity of the Executive
      at
      any time during the period of his employment by the Company be less than the
      maximum indemnity provided by the Company or the Parent at any time during
      such
      period to any other officer or director under an indemnification insurance
      policy or the bylaws or charter of the Company or the Parent or by
      agreement.

     

    ARTICLE
      9. SOURCE
      OF PAYMENTS; NO TRUST.
      The
      obligations of the Parent and the Company to make payments hereunder shall
      constitute a joint and several liability of the Parent and the Company to the
      Executive. Such payments shall be made from the general 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    funds
      of
      the Parent or the Company or both, and neither the Parent nor the Company shall
      be required to establish or maintain any special or separate fund, or otherwise
      to segregate assets to assure that such payments shall be made, and neither
      the
      Executive nor his designated beneficiary shall have any interest in any
      particular asset of the Parent or the Company by reason of either entity’s
      obligations hereunder. Nothing contained in this Agreement shall create or
      be
      construed as creating a trust of any kind or any other fiduciary relationship
      between the Parent or the Company and the Executive or any other person. To
      the
      extent that any person acquires a right to receive payments from the Parent
      and
      the Company hereunder, such right shall be no greater than the right of an
      unsecured creditor of the Parent and the Company.

     

    ARTICLE
      10. SEVERABILITY.
      All
      agreements and covenants contained herein, including the Restrictive Covenants,
      as defined in Article V, are severable, and in the event any of them (or any
      portion thereof) shall be held to be invalid or unenforceable by any competent
      court, the remainder of this Agreement (including the remainder of the
      Restrictive Covenants if only a portion thereof is held invalid or
      unenforceable) shall not thereby be affected, shall be given full effect, and
      shall be interpreted as if such invalid agreements, Restrictive Covenants or
      other covenants (or portion or portions thereof) were not contained herein.
      

     

    ARTICLE
      11. ASSIGNMENT
      PROHIBITED.
      This
      Agreement is personal to each of the parties hereto, and none of the parties
      may
      assign nor delegate any of his or its rights or obligations
      hereunder.

     

    ARTICLE
      12. NO
      ATTACHMENT.
      Except
      as otherwise provided in this Agreement or required by applicable law, no right
      to receive payments under this Agreement shall be subject to anticipation,
      commutation, alienation, sale, assignment, encumbrance, charge, pledge or
      hypothecation or to execution, attachment, levy, or similar process or
      assignment by operation of law and any attempt, voluntary or involuntary, to
      effect any such action shall be null, void and of no effect.

     

    ARTICLE
      13. HEADINGS.
      The
      headings of articles, paragraphs and sections herein are included solely for
      convenience of reference and shall not control the meaning or interpretation
      of
      any of the provisions of this Agreement.

     

    ARTICLE
      14. GOVERNING
      LAW.
      The
      parties intend that this Agreement and the performance hereunder and all suits
      and special proceedings hereunder shall be construed in accordance with and
      under and pursuant to the laws of the State of Tennessee and that in any action,
      special proceeding or other proceeding that may be brought arising out of,
      in
      connection with, or by reason of this Agreement, the laws of the State of
      Tennessee shall be applicable and shall govern to the exclusion of the law
      of
      any other forum, without regard to the jurisdiction in which any action or
      special proceeding may be instituted.

     

    ARTICLE
      15. SUCCESSORS;
      BINDING AGREEMENT.
      

     

    15.1 Successors.
      The
      Company and the Parent will require any successor of all or substantially all
      of
      the business and/or assets of either of them (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to expressly assume and agree
      to
      perform this Agreement in the same manner and to the same extent that the
      Company or Parent would be 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    required
      to perform it if no such succession had taken place. Failure of the Company
      or
      Parent to obtain such assumption and agreement prior to the effectiveness of
      any
      such succession shall be a breach of this Agreement and shall entitle the
      Executive to compensation from the Company or the Parent in the same amount
      and
      on the same terms as the Executive would be entitled to hereunder if he
      terminated his employment for Good Reason following a Change in Control, except
      that for purposes of implementing the foregoing, the date on which any such
      succession becomes effective shall be deemed the date of Executive’s
      termination. As used in this Agreement, “Company” and “Parent” shall mean the
      Company and the Parent as herein before defined and any successor to the
      respective entity’s business and/or assets as aforesaid which assumes and agrees
      to perform this Agreement by operation of law, or otherwise.

     

    15.2 Binding
      Agreement.
      This
      agreement shall inure to the benefit of and be enforceable by the Executive’s
      personal or legal representative, executors, administrators, successors, heirs,
      distributees, devisees and legatees. If the Executive should die while any
      amount remains payable to him hereunder, all such amounts, unless otherwise
      provided herein, shall be paid in accordance with the terms of this Agreement
      to
      the Executive’s devisee, legatee or other designee or, if there is none, to the
      Executive’s estate.

     

    ARTICLE
      16. NO
      RESTRICTION ON EMPLOYMENT RIGHTS.
      Nothing
      in this Agreement shall confer on the Executive any right to continue in the
      employ of the Company or the Parent or shall interfere with or restrict in
      any
      way the rights of the Company or the Parent, which are hereby expressly
      reserved, to discharge the Executive at any time for any reason whatsoever,
      with
      or without Cause, subject to the requirements of this Agreement. Nothing in
      this
      Agreement shall restrict the right of the Executive to terminate his employment
      with the Company or the Parent at any time for any reason whatsoever, with
      or
      without Good Reason.

     

    ARTICLE
      17. COUNTERPARTS.
      This
      Agreement may be executed simultaneously in one or more counterparts, each
      of
      which shall be deemed an original but all of which together shall constitute
      one
      and the same instrument.

     

    ARTICLE
      18. ENTIRE
      AGREEMENT.
      This
      Agreement expresses the whole and entire agreement between the parties with
      reference to the employment of the Executive and, as of the effective date
      hereof, supersedes and replaces any prior employment agreement, understanding
      or
      arrangement (whether written or oral) between the Company or the Parent and
      the
      Executive. Each of the parties hereto has relied on his or its own judgment
      in
      entering into this Agreement.

     

    ARTICLE
      19. NOTICES.
      All
      notices, requests and other communications to any party under this Agreement
      shall be in writing and shall be given to such party at its address set forth
      below or such other address as such party may hereafter specify for the purpose
      by notice to the other party:

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


     

    (a) If
      to the
      Executive:

     

    Howard
      A.
      Silver

    7700
      Wolf
      River Boulevard

    Germantown,
      TN 38138

    


    (b) If
      to the
      Company

     

    Equity
      Inns Services, Inc.

    7700
      Wolf
      River Boulevard

    Germantown,
      TN 38138

    


    (c) If
      to the
      Parent:

     

    Equity
      Inns, Inc.

    7700
      Wolf
      River Boulevard

    Germantown,
      TN 38138

     

    Each
      such
      notice, request or other communication shall be effective (i) if given by mail,
      72 hours after such communication is deposited in the mails with first class
      postage prepaid, addressed as aforesaid or (ii) if given by any other means,
      when delivered at the address specified in this Article 19.

     

    ARTICLE
      20. MODIFICATION
      OF AGREEMENT.
      No
      waiver or modification of this Agreement or of any covenant, condition, or
      limitation herein contained shall be valid unless in writing and duly executed
      by the party to be charged therewith. No evidence of any waiver or modification
      shall be offered or received in evidence at any proceeding, arbitration, or
      litigation between the parties hereto arising out of or affecting this
      Agreement, or the rights or obligations of the parties hereunder, unless such
      waiver or modification is in writing, duly executed as aforesaid. The parties
      further agree that the provisions of this Article 20 may not be waived except
      as
      herein set forth.

     

    ARTICLE
      21. TAXES.
      To the
      extent required by applicable law, the Company or the Parent shall deduct and
      withhold all necessary Social Security and Hospital Insurance taxes and all
      necessary federal and state withholding taxes and any other similar sums
      required by law to be withheld from any payments made pursuant to the terms
      of
      this Agreement.

     

    ARTICLE
      22. RECITALS.
      The
      Recitals to this Agreement are incorporated herein and shall constitute an
      integral part of this Agreement.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the day and year
      first above written.

     

    EXECUTIVE:

     

    By:
      /s/
      Howard A. Silver

    [Name
      of
      Executive]

    


    


    


    


    EQUITY
      INNS SERVICES, INC.:

     

    By:
      /s/Howard
      A. Silver

     

    Title:
      Chief
      Executive Officer

     

    


    EQUITY
      INNS, INC.:

     

    By:
      /s/
      Howard A. Silver

     

    Title:
      Chief
      Executive Officer