2007 Stock Award Agreement


    
      

      

    

     

    
 

    Exhibit
      10.6

    


    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 Richard F. Mitchell (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 18,136 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 6,046 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 6,045 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 6,045 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/
                Richard F. Mitchell

            


    

    


    



    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).