Document:

EXHIBIT 10 (H)

                     PEAPACK-GLADSTONE FINANCIAL CORPORATION
                       2006 LONG-TERM STOCK INCENTIVE PLAN
                     (Adopted by Directors January 12, 2006)
                    (Adopted by Shareholders April 25, 2006)

1.    Purpose.  The purpose of the Plan is to provide  additional  incentive  to
      -------
      those officers,  key employees and independent  contractors of the Company
      and its Subsidiaries, and certain members of the Board of Directors of the
      Company  whose  substantial  contributions  are essential to the continued
      growth and success of the Company's  business in order to strengthen their
      commitment to the Company and its Subsidiaries, to motivate such officers,
      employees,   independent  contractors  and  Directors  to  faithfully  and
      diligently  perform  their  assigned  responsibilities  and to attract and
      retain  competent and dedicated  individuals  whose efforts will result in
      the long-term growth and profitability of the Company.  To accomplish such
      purposes,  the Plan  provides that the Company may grant  Incentive  Stock
      Options,  Nonqualified  Stock Options,  Restricted  Stock Awards and Stock
      Appreciation Rights.

2.    Definitions. For purposes of this Plan:
      ------------

      (a)   "Agreement"  means the written  agreement between the Company and an
            Optionee or Grantee  evidencing  the grant of an Option or Award and
            setting forth the terms and conditions thereof.

      (b)   "Award"  means a grant of  Restricted  Stock  or Stock  Appreciation
            Rights, or either or both of them.

      (c)   "Bank" means Peapack-Gladstone Bank, a Subsidiary.

      (d)   "Board" means the Board of Directors of the Company.

      (e)   "Cause"  means an  intentional  failure  to perform  stated  duties,
            breach of a fiduciary duty involving personal dishonesty, or willful
            violation  of any  law,  rule  or  regulation  (other  than  traffic
            violations  or similar  offenses) or final  cease-and-desist  order.
            Notwithstanding  anything else herein to the contrary,  in the event
            that an employee,  Director or independent  contractor is terminated
            or removed for Cause, or resigns at a time when Cause exists, or if,
            following termination,  resignation or removal it is determined that
            Cause  existed  at the  time of  such  termination,  resignation  or
            removal,  then any and all Options and Awards will  automatically be
            terminated  and void as of the date that Cause arose,  and no notice
            to that effect is required in order to effect that result.

      (f)   "Change in Capitalization" means any increase,  reduction, change or
            exchange of Shares for a different number or kind of shares or other
            securities   of  the  Company  by  reason  of  a   reclassification,
            recapitalization, merger, consolidation, reorganization, issuance of
            warrants or rights,  stock  dividend,  stock split or reverse  stock
            split,  combination  or  exchange of shares,  repurchase  of shares,
            change in corporate structure or otherwise.

      (g)   "Change  in  Control"  means  an event  of a  nature  that:  (1) any
            "person"  (as the term is used in  Sections  13(d)  and 14(d) of the
            Exchange Act) who is not now  presently but becomes the  "beneficial
            owner" (as defined in Rule 13d-3 under the Exchange  Act),  directly
            or indirectly, of securities of the Company representing 25% or more
            of the Company's  outstanding  securities  except for any securities
            purchased by any tax-qualified employee benefit plan of the Company;
            or (2)  individuals who constitute the Board on the date hereof (the
            "Incumbent  Board")  cease for any reason to  constitute  at least a
            majority  thereof,  provided  that any  person  becoming  a director
            subsequent to the date hereof whose  election was approved by a vote
            of at least three-quarters of the directors comprising the Incumbent
            Board,   or  whose   nomination   for  election  by  the   Company's
            stockholders was approved by the same Nominating  Committee  serving
            under an Incumbent Board, shall be, for purposes of this clause (2),
            considered as though he were a member of the Incumbent Board; or (3)
            consummation   of  regulatory   approval  to  implement  a  plan  of
            reorganization,  merger, consolidation, sale of all or substantially
            all the assets of the  Company or similar  transaction  in which the
            Company  is  not  the  resulting   entity  or  such  plan,   merger,
            consolidation,  sale or similar  transaction  occurs; or (4) a proxy
            statement  soliciting proxies from shareholders of the Company shall
            be distributed  by someone other than the current  management of the
            Company,  seeking stockholder  approval

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            of a plan of reorganization,  merger or consolidation of the Company
            or similar  transaction with one or more corporations as a result of
            which the outstanding shares of the class of securities then subject
            to the plan or transaction  are exchanged for or converted into cash
            or property or securities not issued by the Company; or (5) a tender
            offer  is  made  for 25% or more  of the  voting  securities  of the
            Company.

      (h)   "Code" means the Internal Revenue Code of 1986, as amended.

      (i)   "Committee"  means a committee  consisting solely of two (2) or more
            directors who are  Non-Employee  Directors (as defined in Rule 16b-3
            of the  Exchange  Act as it may be amended from time to time) of the
            Company and outside  directors as defined pursuant to Section 162(m)
            of the Code (as it may be amended  from time to time)  appointed  by
            the Board to  administer  the Plan and to perform the  functions set
            forth  herein.  Directors  appointed  by the Board to the  Committee
            shall have the authority to act notwithstanding the failure to be so
            qualified.

      (j)   "Company"  means  Peapack-Gladstone  Financial  Corporation,  a  New
            Jersey corporation.

      (k)   "Director" means a member of the Board who is not also serving as an
            employee of the Company.

      (l)   "Disability"  means the permanent  and total  inability by reason of
            mental or physical infirmity,  or both, of an employee,  independent
            contractor or Director to perform the work  customarily  assigned to
            him.  Additionally,  a medical  doctor  selected  or approved by the
            Board must advise the  Committee  that it is either not  possible to
            determine  when such  Disability  will  terminate or that it appears
            probable that such Disability will be permanent during the remainder
            of the individual's lifetime.

      (m)   "Eligible  Employee"  means any officer or other key employee of the
            Company or a Subsidiary  designated  by the Committee as eligible to
            receive  Options  or  Awards  subject  to the  conditions  set forth
            herein.

      (n)   "Escrow  Agent" means the escrow  agent under the Escrow  Agreement,
            designated by the Committee. The Bank may be appointed as the Escrow
            Agent.

      (o)   "Escrow  Agreement"  means an  agreement  between the  Company,  the
            Escrow Agent and a Grantee,  in the form specified by the Committee,
            under which shares of Restricted Stock awarded pursuant hereto shall
            be  held by the  Escrow  Agent  until  either  (a) the  restrictions
            relating to such shares  expire and the shares are  delivered to the
            Grantee or (b) the Company reacquires the shares pursuant hereto and
            the shares are delivered to the Company.

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

      (q)   "Fair  Market  Value"  means the fair market  value of the Shares as
            determined  by the  Committee  in  its  sole  discretion;  provided,
            however,  that (A) if the Shares are  admitted to  quotation  on the
            National  Association  of  Securities  Dealers  Automated  Quotation
            System ("NASDAQ") or other comparable quotation system and have been
            designated as a National Market System ("NMS") security, Fair Market
            Value on any date  shall be the last  sale  price  reported  for the
            Shares on such system on such date or on the last day preceding such
            date on which a sale was reported, (B) if the Shares are admitted to
            quotation  on NASDAQ and have not been  designated  a NMS  security,
            Fair  Market  Value on any date shall be the  average of the highest
            bid and lowest  asked  prices of the  Shares on such  system on such
            date,  or (C) if the  Shares are  admitted  to trading on a national
            securities exchange, Fair Market Value on any date shall be the last
            sale price  reported for the Shares on such exchange on such date or
            on the last date preceding such date on which a sale was reported.

      (r)   "Grantee" means a person to whom an Award has been granted under the
            Plan.

      (s)   "Incentive  Stock  Option"  means an Option  within  the  meaning of
            Section 422 of the Code.

      (t)   "Nonqualified  Stock  Option"  means  an  Option  which  is  not  an
            Incentive Stock Option.

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      (u)   "Option"  means an Incentive  Stock  Option,  a  Nonqualified  Stock
            Option, or either or both of them.

      (v)   "Optionee"  means a person to whom an Option has been granted  under
            the Plan.

      (w)   "Parent" means any  corporation in an unbroken chain of corporations
            ending with the Company,  if each of the corporations other than the
            Company  owns  stock  possessing  50% or more of the total  combined
            voting   power  of  all  classes  of  stock  of  one  of  the  other
            corporations in such chain.

      (x)   "Plan"  means  the  Peapack-Gladstone   Financial  Corporation  2006
            Long-Term  Stock  Incentive Plan as set forth in this instrument and
            as it may be amended from time to time.

      (y)   "Restricted Stock" means Shares issued or transferred to an Eligible
            Employee or Director which are subject to  restrictions  as provided
            in Section 8 hereof.

      (z)   "Retirement"  means the  retirement  from  active  employment  of an
            employee  or  officer,  but  only if such  person  meets  all of the
            following requirements: (i) he has a minimum combined total of years
            of service to the Company or any  Subsidiary  (excluding  service to
            any acquired  company) and age equal to eighty (80),  (ii) he is age
            sixty-two (62) or older,  and (iii) he provides six (6) months prior
            written notice to the Company of the retirement.  For Directors, the
            term  "Retirement"  shall mean the date on which the Director ceases
            to be a member of the Board after both  attaining age sixty (60) and
            completing at least ten (10) years of service on the Board.

      (aa)  "Shares"  means the  common  stock,  no par  value,  of the  Company
            (including  any new,  additional  or different  stock or  securities
            resulting from a Change in Capitalization).

      (ab)  "Stock  Appreciation  Right"  means a right to  receive  all or some
            portion of the  increase  in the value of shares of Common  Stock as
            provided in Section 7 hereof.

      (ac)  "Subsidiary"   means  any   corporation  in  an  unbroken  chain  of
            corporations,   beginning   with  the   Company,   if  each  of  the
            corporations  other than the last  corporation in the unbroken chain
            owns stock possessing 50% or more of the total combined voting power
            of all  classes  of stock in one of the other  corporations  in such
            chain.

      (ad)  "Successor  Corporation"  means  a  corporation,   or  a  parent  or
            subsidiary  thereof,  which  issues or  assumes a stock  option in a
            transaction to which Section 425(a) of the Code applies.

      (ae)  "Ten-Percent  Shareholder" means an eligible  Employee,  who, at the
            time an Incentive Stock Option is to be granted to him, owns (within
            the meaning of Section  422(b)(6) of the Code) stock possessing more
            than ten percent  (10%) of the total  combined  voting  power of all
            classes of stock of the Company, a Parent or a Subsidiary within the
            meaning of Section 422(b)(6) of the Code.

3.    Administration.
      ---------------

(a)   The Plan shall be  administered by the Committee which shall hold meetings
      at such times as may be  necessary  for the proper  administration  of the
      Plan. The Committee shall keep minutes of its meetings.  A majority of the
      Committee  shall  constitute  a quorum  and a  majority  of a  quorum  may
      authorize any action. Each member of the Committee shall be a Non-Employee
      Director  (as  defined  in Rule  16b-3  of the  Exchange  Act as it may be
      amended from time to time) and an outside  director as defined pursuant to
      Section  162(m) of the Code as it may be  amended  from  time to time.  No
      failure to be so  qualified  shall  invalidate  any Option or Award or any
      action or inaction  under the Plan.  No member of the  Committee  shall be
      personally liable for any action,  determination or interpretation made in
      good faith with  respect to the Plan,  the Options or the Awards,  and all
      members of the Committee  shall be fully  indemnified  by the Company with
      respect to any such action, determination or interpretation.

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<PAGE>

      Subject  to the  express  terms  and  conditions  set  forth  herein,  the
      Committee shall have the power from time to time:

      (1)   to determine  those  Eligible  Employees  to whom  Options  shall be
            granted  under the Plan and the number of  Incentive  Stock  Options
            and/or Nonqualified  Options to be granted to each eligible Employee
            and to  prescribe  the  terms  and  conditions  (which  need  not be
            identical) of each Option, including the purchase price per share of
            each Option;

      (2)   to select those  Eligible  Employees to whom Awards shall be granted
            under the Plan and to determine  the number of shares of  Restricted
            Stock and/or  Stock  Appreciation  Rights to be granted  pursuant to
            each Award,  the terms and  conditions of each Award,  including the
            restrictions  or  performance  criteria  relating  to such shares or
            rights,  the purchase price per share,  if any, of Restricted  Stock
            and whether  Stock  Appreciation  Rights will be granted alone or in
            conjunction with an Option;

      (3)   to  construe  and  interpret  the Plan and the  Options  and  Awards
            granted  thereunder  and to  establish,  amend and revoke  rules and
            regulations for the administration of the Plan,  including,  but not
            limited to,  correcting  any defect or supplying  any  omission,  or
            reconciling any  inconsistency  in the Plan or in any Agreement,  in
            the manner and to the extent it shall deem necessary or advisable to
            make the Plan fully effective,  and all decisions and determinations
            by the  Committee  in the  exercise of this power shall be final and
            binding  upon the Company or a  Subsidiary,  the  Optionees  and the
            Grantees, as the case may be;

      (4)   to determine  the duration and purposes for leaves of absence  which
            may be granted to an  Optionee  or Grantee  without  constituting  a
            termination of employment or service for purposes of the Plan;

      (5)   generally,  to exercise  such powers and to perform such acts as are
            deemed  necessary or advisable to promote the best  interests of the
            Company with respect to the Plan.

      Subject to the terms and conditions  set forth herein,  the Committee may,
      from  time to time,  recommend  the  grant of  Options  and  Awards to the
      Directors in such numbers and upon such terms as it deems appropriate, but
      all such grants must be approved by the Company's Board of Directors.

4.    Stock Subject to Plan.
      ----------------------

      (a)   The  maximum  number  of Shares  that may be  issued or  transferred
            pursuant to all Options and Awards  under this Plan is 400,000.  The
            maximum number of Shares that may be issued or transferred  pursuant
            to Options or Awards for  Incentive  Stock Options shall be 400,000.
            Upon a Change in  Capitalization  after the adoption of this Plan by
            the Board,  the Shares  shall be  adjusted to the number and kind of
            Shares of stock or other  securities  existing  after such Change in
            Capitalization.

      (b)   Whenever  any  outstanding  Option or portion  thereof  expires,  is
            cancelled or is otherwise  terminated (other than by exercise of the
            Option or any  related  Stock  Appreciation  Right),  the  shares of
            Common Stock allocable to the unexercised portion of such Option may
            again be the subject of Options and Awards hereunder.

      (c)   Whenever any Shares  subject to an Award or Option are resold to the
            Company,  or are forfeited  for any reason  pursuant to the terms of
            the Plan, such Shares may again be the subject of Options and Awards
            hereunder.

5.    Eligibility.  Subject to the  provisions of the Plan,  the Committee  (or,
      -----------
      with respect to Directors,  the Board) shall have full and final authority
      to select those Eligible  Employees and  independent  contractors who will
      receive Options and/or Awards,  but no person shall receive any Options or
      Awards unless he or she is an employee of the Company or a Subsidiary,  or
      a Director or independent  contractor,  at the time the Option or Award is
      granted.

6.    Stock Options.  The Committee  (or, with respect to Directors,  the Board)
      -------------
      may grant Options in accordance with the Plan, the terms and conditions of
      which shall be set forth in an Agreement. Each Option and Option Agreement
      shall be subject to the following conditions:

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<PAGE>

      (a)   Purchase  Price.  The  purchase  price or the  manner  in which  the
            purchase  price is to be  determined  for Shares  under each  Option
            shall be set  forth in the  Agreement,  provided  that the  purchase
            price per Share under each Incentive  Stock Option shall not be less
            than 100% of the Fair Market Value of a Share at the time the Option
            is granted (110% in the case of an Incentive Stock Option granted to
            a Ten-Percent  Shareholder) and each Nonqualified Stock Option shall
            not be less  than  100% of the Fair  Market  Value of a Share at the
            time the  Option  is  granted.  Incentive  Stock  Options  cannot be
            granted to Directors or independent contractors.

      (b)   Duration.  Options  granted  hereunder shall be for such term as the
            Committee  shall  determine,  provided  that (i) no Incentive  Stock
            Option shall be  exercisable  after the expiration of ten (10) years
            from  the  date it is  granted  (five  (5)  years  in the case of an
            Incentive  Stock Option  granted to a Ten-Percent  Shareholder)  and
            (ii) no  Nonqualified  Stock Option shall be  exercisable  after the
            expiration  of ten  (10)  years  and one (1) day from the date it is
            granted.

      (c)   Non-Transferability.   No   Option   granted   hereunder   shall  be
            transferable by the Optionee to whom granted  otherwise than by will
            or the  laws of  descent  and  distribution,  and an  Option  may be
            exercised  during the lifetime of such Optionee only by the Optionee
            or his  guardian or legal  representative.  The terms of such Option
            shall be binding upon the beneficiaries,  executors, administrators,
            heirs and successors of the Optionee.

      (d)   Stock Options;  Vesting. Subject to Section 6(h) hereof, each Option
            shall be exercisable in such installments  (which need not be equal)
            and at such times as may be designated by the Committee or the Board
            as set forth in the Option Agreement.  Unless otherwise  provided in
            the  Agreement,  to the extent  not  exercised,  installments  shall
            accumulate  and be  exercisable,  in whole  or in part,  at any time
            after becoming  exercisable,  but not later than the date the Option
            expires.  Upon the death,  Disability  or Retirement of an Optionee,
            all Options shall become  immediately  exercisable.  Notwithstanding
            the  foregoing,  the Committee  (or, with respect to Directors,  the
            Board) may  accelerate the  exercisability  of any Option or portion
            thereof at any time.

      (e)   Method of Exercise.  The exercise of an Option shall be made only by
            a written notice  delivered in person or by mail to the Secretary of
            the Company at the Company's principal executive office,  specifying
            the  number of Shares to be  purchased  and  accompanied  by payment
            therefore and otherwise in accordance with the Agreement pursuant to
            which the  Option was  granted.  The  purchase  price for any shares
            purchased  pursuant to the  exercise  of an Option  shall be paid in
            full upon such exercise in cash, by check,  or, at the discretion of
            the  Committee  and upon such terms and  conditions as the Committee
            shall approve,  by  transferring  Shares to the Company.  Any Shares
            transferred to the Company as payment of the purchase price under an
            Option  shall  be  valued  at  their  Fair  Market  Value on the day
            preceding  the date of exercise of such Option.  If requested by the
            Committee,  the Optionee shall deliver the Agreement  evidencing the
            Option and the Agreement  evidencing any related Stock  Appreciation
            Right to the  Secretary of the Company who shall  endorse  thereon a
            notation of such exercise and return such Agreement to the Optionee.

      (f)   Rights of Optionees.  No Optionee shall be deemed for any purpose to
            be the owner of any Shares  subject  to any Option  unless and until
            (i) the  Option  shall  have been  exercised  pursuant  to the terms
            thereof, (ii) the Company shall have issued and delivered the Shares
            to the  Optionee,  and (iii) the  Optionee's  name  shall  have been
            entered  as a  shareholder  of record  on the books of the  Company.
            Thereupon,  the Optionee shall have full voting,  dividend and other
            ownership rights with respect to such Shares.

      (g)   Termination of Employment.  In the event that an Optionee who is not
            a Director  ceases to be employed by the Company or any  Subsidiary,
            any  outstanding  Options held by such  Optionee  shall,  unless the
            Option   Agreement   evidencing  such  Option  provides   otherwise,
            terminate as follows:

            (1)   If the  Optionee's  termination  of  employment  is due to his
                  death or Disability, the Options shall become fully vested and
                  shall be  exercisable  for a period of three  years  following
                  such   termination   of  employment,   and  shall   thereafter
                  terminate;

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<PAGE>

            (2)   If the Optionee's termination of employment is by the Optionee
                  (other  than due to the  Optionee's  Retirement),  the  Option
                  shall terminate on the date of the termination of employment;

            (3)   If the  termination  of  employment  is due to the  Optionee's
                  Retirement,  the Option shall become fully vested and shall be
                  exercisable for 90 days (three years for an Option  designated
                  initially as a Nonqualified Stock Option); and

            (4)   If the  Optionee's  termination of employment is for any other
                  reason,  the Option (to the extent  exercisable at the time of
                  the Optionee's termination of employment) shall be exercisable
                  for a period of ninety (90) days following such termination of
                  employment,  and shall thereafter terminate,  except that with
                  respect to an Option  initially  designated as a  Nonqualified
                  Stock  Option,  if the  Optionee's  termination  of employment
                  occurs  within 12 months of a Change in  Control,  the  Option
                  shall be exercisable for three years following the termination
                  of employment.

Notwithstanding the foregoing,  the Committee may provide, either at the time an
Option is granted or  thereafter,  that the  Option may be  exercised  after the
periods  provided for in this Section  6(g),  but in no event beyond the term of
the Option.  Notwithstanding  anything to the contrary in this Section  6(g), no
Option shall be exercisable beyond the term of the Option.

      (h)   Termination  of Service for  Directors.  Upon the  termination  of a
            Director's  service  as a member of the Board for any  reason  other
            than Disability,  Change in Control or death, the Director's Options
            shall be exercisable  only as to those Shares which were immediately
            exercisable by the Director at the date of termination. In the event
            of the death,  Retirement or  Disability of a Director,  all Options
            held by the Director  shall  become  immediately  exercisable.  Upon
            termination  of the  Director's  service  due to or within 12 months
            after a Change in Control,  all Options held by the  Director  shall
            become immediately exercisable.  Options granted to a Director shall
            expire  and no longer be  exercisable  upon the  earlier  of (i) one
            hundred  twenty (120) months  following  the date of grant,  or (ii)
            three (3) years  following the date on which the Director  ceases to
            serve as a Director (for any reason other than Cause).

      (i)   Effect of Change in  Control.  In the event of a Change in  Control,
            all Options (other than Options granted to Directors) outstanding on
            the date of such  Change in Control  shall  become  immediately  and
            fully  exercisable.  Notwithstanding  anything  else  herein  to the
            contrary, in the event of a Change in Control, the Board in its sole
            discretion  has the  authority to terminate  any and all Options and
            Awards,  and to pay to the holder of the Options or Awards the value
            of such Options and Awards.

7.    Stock Appreciation  Rights.  The Committee may, in its discretion,  either
      --------------------------
      alone  or  in  connection  with  the  grant  of  an  Option,  grant  Stock
      Appreciation  Rights in accordance with the Plan, the terms and conditions
      of which shall be set forth in an Agreement. If granted in connection with
      an Option, a Stock  Appreciation Right shall cover the same shares covered
      by the  Option  (or such  lesser  number of shares  as the  Committee  may
      determine) and shall,  except as provided in this Section 7, be subject to
      the same terms and conditions as the related Option.

      (a)   Time of Grant. A Stock Appreciation Right may be granted:
            --------------

            (i)   at any time if unrelated to an Option; or

            (ii)  if related to an  Option,  either at the time of grant,  or at
                  any time thereafter during the term of the Option.

      (b)   Stock Appreciation Rights Related to an Option.
            -----------------------------------------------

            (1)   Payment. A Stock Appreciation Right granted in connection with
                  an Option shall entitle the holder  thereof,  upon exercise of
                  the  Stock  Appreciation  Right  or any  portion  thereof,  to
                  receive  payment  of an amount  computed  pursuant  to Section
                  7(b)(3).

            (2)   Exercise.  Subject to Section 7(f), a Stock Appreciation Right
                  granted in connection  with an Option shall be  exercisable at
                  such time or times  and only to the  extent  that the  related
                  Option is exercisable,  and will

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<PAGE>

                  not be  transferable  except to the extent the related  Option
                  may be  transferable.  A Stock  Appreciation  Right granted in
                  connection with an Incentive Stock Option shall be exercisable
                  only  if the  Fair  Market  Value  of a Share  on the  date of
                  exercise  exceeds the purchase price  specified in the related
                  Incentive Stock Option.

            (3)   Amount Payable.  Except as otherwise provided in Section 7(g),
                  upon the exercise of a Stock  Appreciation Right related to an
                  Option,  the  Grantee  shall be  entitled to receive an amount
                  determined  by  multiplying  (A) the excess of the Fair Market
                  Value  of a Share  on the  date  of  exercise  of  such  Stock
                  Appreciation Right over the per Share purchase price under the
                  related  Option,  by (B) the number of Shares as to which such
                  Stock Appreciation  Right is being exercised.  Notwithstanding
                  the  foregoing,  the  Committee  may limit in any  manner  the
                  amount payable with respect to any Stock Appreciation Right by
                  including  such a limit in the Agreement  evidencing the Stock
                  Appreciation Right at the time it is granted.

            (4)   Treatment  of Related  Options and Stock  Appreciation  Rights
                  Upon Exercise. Except as provided in Section 7(b)(v), (A) upon
                  the  exercise  of  a  Stock   Appreciation  Right  granted  in
                  connection  with an Option,  the Option  shall be cancelled to
                  the  extent  of the  number  of  Shares  as to which the Stock
                  Appreciation  Right is exercised  and (B) upon the exercise of
                  an Option  granted  in  connection  with a Stock  Appreciation
                  Right, the Stock  Appreciation Right shall be cancelled to the
                  extent of the  number  of  Shares  as to which  the  Option is
                  exercised.

            (5)   Simultaneous  Exercise of Stock Appreciation Right and Option.
                  The  Committee  may  provide,  either  at  the  time  a  Stock
                  Appreciation   Right  is   granted   in   connection   with  a
                  Nonqualified Stock Option or thereafter during the term of the
                  Stock Appreciation  Right, that, subject to Section 7(f), upon
                  exercise of such Option,  the Stock  Appreciation  Right shall
                  automatically  be deemed to be  exercised to the extent of the
                  number of Shares as to which the Option is exercised.  In such
                  event,  the  Grantee  shall be  entitled to receive the amount
                  described in Section  7(b)(3) or 7(g) hereof,  as the case may
                  be (or some  percentage  of such  amount if so provided in the
                  Agreement   evidencing  the  Stock  Appreciation   Right),  in
                  addition to the Shares  acquired  pursuant to the  exercise of
                  the Option. If a Stock  Appreciation  Right Agreement contains
                  an  automatic  exercise  provision  described  in this Section
                  7(b)(5)  and the  Option or any  portion  thereof  to which it
                  relates is  exercised  within six (6) months from the date the
                  Stock Appreciation  Right is granted,  such automatic exercise
                  provision shall not be effective with respect to that exercise
                  of the Option.  The  inclusion  in an  Agreement  evidencing a
                  Stock  Appreciation  Right of a  provision  described  in this
                  Section  7(b)(5)  may be in addition to and not in lieu of the
                  right to exercise  the Stock  Appreciation  Right as otherwise
                  provided herein and in the Agreement.

      (c)   Stock Appreciation  Rights Unrelated to an Option. The Committee may
            grant to Eligible  Employees and  independent  contractors  (and the
            Board may grant to Directors) Stock Appreciation Rights unrelated to
            Options.  Stock  Appreciation  Rights  unrelated  to  Options  shall
            contain such terms and conditions as to exercisability,  vesting and
            duration as the  Committee or the Board shall  determine,  but in no
            event shall they have a term of greater  than ten (10)  years.  Upon
            the  death,  Disability  or  Retirement  of  a  Grantee,  all  Stock
            Appreciation Rights shall become immediately  exercisable.  Upon the
            death or Disability of a Grantee, the Stock Appreciation Rights held
            by that Grantee  shall be  exercisable  for a period of one (1) year
            following  such  termination  of  employment  or service,  and shall
            thereafter  terminate.  Upon the Retirement of a Grantee,  the Stock
            Appreciation  Rights held by that Grantee shall be exercisable for a
            period of ninety  (90) days  following  such  Retirement,  and shall
            thereafter terminate.  Except as otherwise provided in Section 7(g),
            the amount payable upon exercise of such Stock  Appreciation  Rights
            shall be determined in accordance with Section 7(b)(3),  except that
            "Fair  Market Value of a Share on the date of the grant of the Stock
            Appreciation  Right" shall be substituted  for "purchase price under
            the related Option."

      (d)   Method of Exercise.  Stock Appreciation Rights shall be exercised by
            a Grantee only by a written notice delivered in person or by mail to
            the  Secretary of the Company at the Company's  principal  executive
            office,  specifying  the number of Shares with  respect to which the
            Stock  Appreciation  Right is being  exercised.  If requested by the
            Committee,  the Grantee shall deliver the Agreement  evidencing  the
            Stock   Appreciation   Right  being   exercised  and  the  Agreement
            evidencing  any related  Option to the  Secretary of the Company who
            shall  endorse  thereon a notation of such  exercise and return such
            Agreements to the Grantee.

                                       7
<PAGE>

      (e)   Form of Payment.  Payment of the amount  determined  under  Sections
            7(b)(3) or 7(c),  may be made solely in whole shares of Common Stock
            in a number  determined  at their Fair  Market  Value on the date of
            exercise of the Stock Appreciation Right or,  alternatively,  at the
            sole  discretion  of  the  Committee,   solely  in  cash,  or  in  a
            combination of cash and Shares as the Committee deems advisable.  In
            the event that a Stock  Appreciation  Right is exercised  within the
            sixty-day period  following a Change in Control,  any amount payable
            shall be  solely  in cash.  If the  Committee  decides  to make full
            payment in Shares,  and the amount  payable  results in a fractional
            Share,  payment  for the  fractional  Share  will  be made in  cash.
            Notwithstanding the foregoing, no payment in the form of cash may be
            made upon the  exercise of a Stock  Appreciation  Right  pursuant to
            Section 7(b)(3) or 7(c) to an officer of the Company or a Subsidiary
            who is subject  to Section  16(b) of the  Exchange  Act,  unless the
            exercise of such Stock  Appreciation Right is made during the period
            beginning  on the  third  business  day and  ending  on the  twelfth
            business day  following the date of release for  publication  of the
            Company's quarterly or annual statements of earnings.

      (f)   Restrictions.  No Stock  Appreciation  Right may be exercised before
            the date six (6) months after the date it is granted,  except in the
            event that the death or Disability of the Grantee  occurs before the
            expiration of the six-month period.

      (g)   Effect of Change in  Control.  In the event of a Change in  Control,
            subject to Section 7(f), all Stock Appreciation  Rights shall become
            immediately and fully exercisable.

8.    Restricted Stock. The Committee (or, with respect to Directors, the Board)
      ----------------
      may grant  Awards of  Restricted  Stock  which  shall be  evidenced  by an
      Agreement  between the  Company  and the  Grantee.  Each  Agreement  shall
      contain such restrictions,  terms and conditions as the Committee or Board
      may require and (without  limiting the generality of the  foregoing)  such
      Agreements  may  require  that an  appropriate  legend  be placed on Share
      certificates. Awards of Restricted Stock shall be subject to the following
      terms and provisions:

      (a)   Rights of Grantee.
            ------------------

            (1)   Shares  of  Restricted  Stock  granted  pursuant  to an  Award
                  hereunder  shall be issued in the name of the  Grantee as soon
                  as reasonably  practicable  after the Award is granted and the
                  purchase price, if any, is paid by the Grantee; provided, that
                  the Grantee has executed an Agreement evidencing the Award, an
                  Escrow Agreement, appropriate blank stock powers and any other
                  documents which the Committee, in its absolute discretion, may
                  require as a condition to the  issuance of such  Shares.  If a
                  Grantee  shall  fail to execute  the  Agreement  evidencing  a
                  Restricted  Stock Award,  an Escrow  Agreement or  appropriate
                  blank stock powers or shall fail to pay the purchase price, if
                  any,  for the  Restricted  Stock,  the Award shall be null and
                  void.  Shares  issued in  connection  with a Restricted  Stock
                  Award, together with the stock powers, shall be deposited with
                  the Escrow  Agent.  Except as  restricted  by the terms of the
                  Agreement,  upon the  delivery  of the  Shares  to the  Escrow
                  Agent,  the  Grantee  shall  have  all  of  the  rights  of  a
                  shareholder  with respect to such Shares,  including the right
                  to vote the shares and to  receive,  subject to Section  8(d),
                  all dividends or other distributions paid or made with respect
                  to the Shares.

            (2)   If a Grantee  receives  rights or warrants with respect to any
                  Shares which were  awarded to him as  Restricted  Stock,  such
                  rights  or  warrants  or any  Shares  or other  securities  he
                  acquires by the  exercise  of such  rights or warrants  may be
                  held, exercised,  sold or otherwise disposed of by the Grantee
                  free and clear of the restrictions and obligations provided by
                  this Plan.

      (b)   Non-Transferability.  Until  any  restrictions  upon the  Shares  of
            Restricted  Stock  awarded  to a Grantee  shall  have  lapsed in the
            manner set forth in Section  8(c),  such  Shares  shall not be sold,
            transferred  or  otherwise  disposed  of and shall not be pledged or
            otherwise hypothecated,  nor shall they be delivered to the Grantee.
            Upon the  termination  of  employment  of the  Grantee,  all of such
            Shares with respect to which  restrictions  have not lapsed shall be
            resold by the  Grantee to the  Company at the same price paid by the
            Grantee  for such  Shares or shall be  forfeited  and  automatically
            transferred  to and  reacquired  by the  Company  at no  cost to the
            Company  if no  purchase  price had been paid for such  Shares.  The
            Committee may also impose such other  restrictions and conditions on
            the Shares as it deems appropriate.

                                       8
<PAGE>

      (c)   Lapse of Restrictions.
            ----------------------

            (1)   Restrictions upon Shares of Restricted Stock awarded hereunder
                  shall  lapse  at  such  time  or  times  and  on  such  terms,
                  conditions and  satisfaction  of  performance  criteria as the
                  Committee  (or,  when  applicable,  the Board) may  determine;
                  provided,  however,  that the  restrictions  upon such  Shares
                  shall  lapse only if the  Grantee on the date of such lapse is
                  then and has continuously been an employee of the Company or a
                  Subsidiary  (or a member of the Board) from the date the Award
                  was granted, or unless the Committee sets a later date for the
                  lapse of such restrictions.

            (2)   In the event of a Change in Control, all restrictions upon any
                  Shares of  Restricted  Stock shall lapse  immediately  and all
                  such Shares shall become fully vested in the Grantee thereof.

            (3)   In the event of termination  of employment (or  termination of
                  service as a  Director)  as a result of death,  Disability  or
                  Retirement  of a  Grantee,  all  restrictions  upon  Shares of
                  Restricted  Stock  awarded  to such  Grantee  shall  thereupon
                  immediately  lapse.  The Committee or Board may also decide at
                  any time in its  absolute  discretion  and on such  terms  and
                  conditions  as it deems  appropriate,  to remove or modify the
                  restrictions   upon  Shares  of   Restricted   Stock   awarded
                  hereunder, unless the Committee or the Board sets a later date
                  for the lapse of such restrictions.

      (d)   Treatment  of  Dividends.  At the  time of an  Award  of  Shares  of
            Restricted  Stock,  the Committee may, in its discretion,  determine
            that the payment to the Grantee of dividends, or a specified portion
            thereof,  declared  or paid on  Shares  of  Restricted  Stock by the
            Company,  shall be  deferred  until the  earlier to occur of (i) the
            lapsing of the restrictions  imposed upon such Shares, in which case
            such  dividends  shall  be paid  over to the  Grantee,  or (ii)  the
            forfeiture of such Shares under  Section 8(b) hereof,  in which case
            such dividends shall be forfeited to the Company, and such dividends
            shall be held by the Company  for the  account of the Grantee  until
            such time. In the event of such deferral, interest shall be credited
            on the amount of such  dividends held by the Company for the account
            of the  Grantee  from  time to time at such  rate  per  annum as the
            Committee,  in its  discretion,  may determine.  Payment of deferred
            dividends,  together  with  interest  accrued  thereon as aforesaid,
            shall be made upon the earlier to occur of the events  specified  in
            (i) and (ii) of the immediately  preceding  sentence,  in the manner
            specified therein.

      (e)   Delivery of Shares.  When the restrictions  imposed hereunder and in
            the Plan expire or have been  cancelled  with respect to one or more
            shares of Restricted Stock, the Company shall notify the Grantee and
            the Escrow  Agent of same.  The Escrow  Agent  shall then return the
            certificate  covering the Shares of Restricted  Stock to the Company
            and upon receipt of such  certificate  the Company  shall deliver to
            the Grantee (or such Grantee's legal representative,  beneficiary or
            heir) a certificate for a number of shares of Common Stock,  without
            any legend or restrictions  (except those required by any federal or
            state  securities  laws),  equivalent  to the  number  of  Shares of
            Restricted Stock for which  restrictions have been cancelled or have
            expired.  A new  certificate  covering  Shares of  Restricted  Stock
            previously  awarded to the Grantee which remain  restricted shall be
            issued  to  the  Grantee  and  held  by the  Escrow  Agent  and  the
            Agreement, as it relates to such shares, shall remain in effect.

9.    Adjustment Upon Changes in Capitalization.
      ------------------------------------------

      (a)   In the  event of a Change in  Capitalization,  the  Committee  shall
            conclusively determine the appropriate  adjustments,  if any, to the
            maximum  number and class of shares of stock  with  respect to which
            Options  or Awards  may be  granted  under the Plan,  the number and
            class of shares as to which  Options  or  Awards  have been  granted
            under the Plan, and the purchase price therefore, if applicable.

      (b)   Any such  adjustment  in the Shares or other  securities  subject to
            outstanding  Incentive  Stock Options  (including any adjustments in
            the  purchase  price)  shall  be  made  in  such  manner  as  not to
            constitute  a  modification  as defined by Section  425(h)(3) of the
            Code and only to the extent otherwise  permitted by Sections 422 and
            425 of the Code.

                                       9
<PAGE>

      (c)   If, by reason of a Change in  Capitalization,  a Grantee of an Award
            shall be entitled to new, additional or different shares of stock or
            securities  (other than rights or warrants to purchase  securities),
            such new additional or different  shares shall  thereupon be subject
            to all of the  conditions,  restrictions  and  performance  criteria
            which were  applicable to the Shares or units  pursuant to the Award
            prior to such Change in Capitalization.

10.   Effect of Certain  Transactions.  In the event of (i) the  liquidation  or
      -------------------------------
      dissolution of the Company,  (ii) a merger or  consolidation  in which the
      Company is not the surviving  corporation or (iii) the sale or disposition
      of all or substantially  all of the Company's  assets,  provision shall be
      made in connection  with such  transaction  for the assumption of the Plan
      and the  Options  or Awards  theretofore  granted  under the Plan,  or the
      substitution  for such  Options or Awards of new  options or awards of the
      Successor  Corporation,  with appropriate  adjustment as to the number and
      kind of shares and the purchase price for shares thereunder.

11.   Release of Financial Information. A copy of the Company's annual report to
      --------------------------------
      shareholders  shall be delivered to each  Optionee and Grantee at the time
      such report is distributed to the Company's shareholders. Upon request the
      Company  shall  furnish to each  Optionee  and  Grantee a copy of its most
      recent annual report and each  quarterly  report and current  report filed
      under the Exchange Act, since the end of the Company's prior fiscal year.

12.   Termination and Amendment of the Plan. The Plan shall terminate on the day
      -------------------------------------
      preceding the tenth  anniversary  of its  effective  date and no Option or
      Award may be granted  thereafter.  The Board may sooner terminate or amend
      the Plan at any time,  and from  time to time;  provided,  however,  that,
      except as  provided  in Sections 9 and 10 hereof,  no  amendment  shall be
      effective unless approved by the shareholders of the Company in accordance
      with  applicable law and  regulations at an annual or special meeting held
      within  twelve  months  before  or  after  the  date of  adoption  of such
      amendment, where such amendment will:

      (a)   increase  the number of Shares as to which  Options or Awards may be
            granted under the Plan; or

      (b)   change the class of persons eligible to participate in the Plan.

      Except as otherwise  provided  herein,  rights and  obligations  under any
      Option or Award  granted  before  any  amendment  of the Plan shall not be
      altered or  impaired  by such  amendment,  except  with the consent of the
      Optionee or Grantee,  as the case may be. In addition,  no amendment shall
      be  effective  with  respect to any Option or SAR to the extent  that such
      amendment would be treated as a material  modification  under Section 409A
      of the Code.

13.   Non-Exclusivity  of the Plan.  The adoption of the Plan by the Board shall
      ----------------------------
      not be construed  as amending,  modifying  or  rescinding  any  previously
      approved incentive arrangement or as creating any limitations on the power
      of the Board to adopt such  other  incentive  arrangements  as it may deem
      desirable,  including,  without limitation,  the granting of stock options
      otherwise  than  under  the  Plan,  and such  arrangements  may be  either
      applicable generally or only in specific cases.

14.   Limitation of Liability.  As  illustrative of the limitations of liability
      -----------------------
      of the Company, but not intended to be exhaustive thereof,  nothing in the
      Plan shall be construed to:

      (a)   give any person  any right to be  granted  an Option or Award  other
            than at the sole discretion of the Committee or the Board;

      (b)   give any person any rights  whatsoever with respect to Shares except
            as specifically provided in the Plan;

      (c)   limit  in  any  way  the  right  of the  Company  to  terminate  the
            employment or service of any person at any time; or

      (d)   be evidence of any agreement or understanding, expressed or implied,
            that the Company will employ any person in any  particular  position
            at any particular rate of compensation or for any particular  period
            of time.

                                       10
<PAGE>

15.   Regulations and Other Approvals; Governing Law.
      -----------------------------------------------

      (a)   This Plan and the rights of all persons claiming  hereunder shall be
            construed and determined in accordance with the laws of the State of
            New Jersey  without  giving  effect to the choice of law  principles
            thereof,  except to the extent that such law is preempted by federal
            law.

      (b)   The obligation of the Company to sell or deliver Shares with respect
            to Options and Awards granted under the Plan shall be subject to all
            applicable  laws,  rules and  regulations,  including all applicable
            federal and state  securities  laws,  and the  obtaining of all such
            approvals  by  governmental  agencies as may be deemed  necessary or
            appropriate by the Committee.

      (c)   The Plan is intended to comply with Rule 16b-3 promulgated under the
            Exchange  Act and Section  162(m) of the Code (each as amended  from
            time to time) and the Committee  shall  interpret and administer the
            provisions  of the  Plan or any  Agreement  in a  manner  consistent
            therewith to the extent necessary.  Any provisions inconsistent with
            such Rule or Section shall be  inoperative  but shall not affect the
            validity of the Plan or any grants thereunder.

      (d)   Except as otherwise  provided in Section 12, the Board may make such
            changes as may be necessary or  appropriate to comply with the rules
            and  regulations  of  any  government  authority  or to  obtain  for
            Eligible  Employees granted Incentive Stock Options the tax benefits
            under  the  applicable   provisions  of  the  Code  and  regulations
            promulgated thereunder.

      (e)   Each Option and Award is subject to the requirement  that, if at any
            time the Committee determines, in its absolute discretion,  that the
            listing,  registration or qualification of Shares issuable  pursuant
            to the Plan is  required  by any  securities  exchange  or under any
            state or federal law, or the consent or approval of any governmental
            regulatory  body is necessary or desirable as a condition  of, or in
            connection  with,  the grant of an Option or the issuance of Shares,
            no Options  shall be granted or payment  made or Shares  issued,  in
            whole  or in  part,  unless  listing,  registration,  qualification,
            consent  or  approval  has been  effected  or  obtained  free of any
            conditions unacceptable to the Committee.

      (f)   In the event that the disposition of Shares acquired pursuant to the
            Plan is not covered by a then current  registration  statement under
            the Securities Act of 1933, as amended,  and is not otherwise exempt
            from such  registration,  such Shares  shall be  restricted  against
            transfer to the extent  required by the  Securities  Act of 1933, as
            amended,  or regulations  thereunder,  and the Committee may require
            any individual receiving Shares pursuant to the Plan, as a condition
            precedent to receipt of such Shares  (including  upon exercise of an
            Option),  to  represent  to the  Company in writing  that the Shares
            acquired by such individual are acquired for investment only and not
            with a view to distribution.

16.   Miscellaneous.
      --------------

      (a)   Multiple  Agreements.  The terms of each  Option or Award may differ
            from  other  Options  or Awards  granted  under the Plan at the same
            time, or at some other time.  The Committee may also grant more than
            one Option or Award to a given Eligible  Employee during the term of
            the Plan, either in addition to, or in substitution for, one or more
            Options or Awards previously granted to that Eligible Employee.  The
            grant of multiple Options and/or Awards may be evidenced by a single
            Agreement or multiple Agreements, as determined by the Committee.

      (b)   Withholding  of Taxes.  The  Company  shall have the right to deduct
            from any  distribution  of cash to any Optionee or Grantee an amount
            equal to the federal, state and local income taxes and other amounts
            required by law to be withheld  with respect to any Option or Award.
            Notwithstanding  anything to the contrary  contained  herein,  if an
            Optionee or Grantee is entitled to receive  Shares upon  exercise of
            an Option or pursuant to an Award,  the Company shall have the right
            to require such  Optionee or Grantee,  prior to the delivery of such
            Shares,  to pay to the Company the amount of any  federal,  state or
            local income taxes and other  amounts  which the Company is required
            by law to withhold.  The Agreement  evidencing  any Incentive  Stock
            Options  granted  under this Plan shall provide that if the Optionee
            makes a  disposition,  within the  meaning of Section  425(c) of the
            Code and regulations promulgated thereunder,  of any Share or Shares
            issued  to him  or her  pursuant  to  his  or

                                       11
<PAGE>

            her  exercise of the  Incentive  Stock  Option  within the  two-year
            period  commencing on the day after the date of grant of such Option
            or within the one-year  period  commencing on the day after the date
            of transfer of the Share or Shares to the  Optionee  pursuant to the
            exercise of such  Option,  he or she shall,  within ten (10) days of
            such disposition, notify the Company thereof and immediately deliver
            to the Company any amount of federal income tax withholding required
            by law.

      (c)   Designation of Beneficiary.  Each Optionee and Grantee may, with the
            consent of the  Committee,  designate a person or persons to receive
            in the event of  his/her  death,  any  Option or Award or any amount
            payable  pursuant  thereto,  to which he/she would then be entitled.
            Such  designation  will be made upon forms supplied by and delivered
            to the Company and may be revoked in writing.  If an Optionee  fails
            effectively to designate a beneficiary,  then his/her estate will be
            deemed to be the beneficiary.

17.   Effective  Date.  The effective  date of the Plan shall be the date of its
      ---------------
      adoption by the Board,  subject  only to the  approval by the  affirmative
      vote of a majority of the votes cast at a meeting of shareholders at which
      a quorum is present to be held within twelve (12) months of such adoption.
      No Options or Awards shall vest hereunder unless such Shareholder approval
      is obtained.

                                       12Exhibit 10.1

On February 7, 2006, the Compensation Committee of the Board of Directors (the
"Committee") of Equity Inns, Inc. (the "Company") approved 2005 performance
bonuses, 2006 annual salaries, 2006 bonus ranges and 2006 awards of restricted
common stock for each of the Company's executive officers. These grants and
awards are summarized in the following table:

<TABLE>
<CAPTION>
                                                                                          2006 Restricted Stock
                                                                                                  Awards
                                                                                        ---------------------------
                                        2005            2006              2006                           Fair
                                        Bonus       Annual Salary      Bonus Range      Shares      Market Value(1)
                                      --------      -------------     -------------     ------      ---------------
<S>                                   <C>           <C>               <C>               <C>         <C>

Howard A. Silver
 President and Chief Executive        $503,475         $450,000       $0 -- 900,000     59,041         $951,151
 Officer

J. Mitchell Collins
 Executive Vice President and
 Chief Financial Officer              $222,500         $285,000       $0 -- 342,000     28,044         $451,789

Phillip H. McNeill, Jr.
 Executive Vice President             $101,250         $225,000       $0 -- 225,000     16,236         $261,562
 of Development

Richard F. Mitchell
 Senior Vice President of Asset        $87,500         $225,000       $0 -- 225,000     16,236         $261,562
 Management

Edwin F. Ansbro
 Senior Vice President of Real         $87,500         $200,000       $0 -- 200,000     16,236         $261,562
 Estate

J. Ronald Cooper
 Vice President and Controller         $99,225         $185,000       $0 -- 185,000     13,333         $214,795
</TABLE>

(1) Fair market value on date of grant, based on the last reported sale price of
    the Company's common stock on the grant date.

Cash Bonuses

Bonus amounts will be determined by the Committee at the end of the 2006 fiscal
year. The Committee set goals upon which 2006 bonuses will be based for all
executive officers. The goals for the 2006 bonus awards generally will be based
on the Company's actual annual adjusted funds from operations (AFFO) (as defined
by the Company) as a percentage of the Company's AFFO budgeted targets and
certain acquisition, disposition, strategic, finance and general corporate goals
set by the Committee for each executive officer. Mr. Silver will have a target
bonus of 100% of his annual base salary and 75% of his bonus will be based on
achievement of the AFFO targets and 25% will be based on achievement of certain
individual and corporate goals. Mr. Collins will have a target bonus of 60% of
his annual base salary and 75% of his bonus will be based on achievement of the
AFFO targets and 25% will be based on achievement of certain individual and
corporate goals. Messrs. McNeill, Jr., Mitchell, Ansbro and Cooper will have a
target bonus of 50% of their annual base salary and 50% of each of their bonuses
will be based on achievement of the AFFO targets and 50% will be based on
achievement of certain individual and corporate goals. Additionally, executive
officers that accept shares of the Company's stock in lieu of cash will receive
a 25% premium to the above bonus targets.

2006 Restricted Stock Awards

The 2006 restricted stock awards will vest at the end of 2008. Vesting will
occur based on the Company's total shareholder return ("Total Return") for that
three-year period as a percentile of the National Association of Real Estate
Investment Trusts (NAREIT) Hotel Index (the "Index") for the same period. The
vesting schedule is based on a graded scale from the 40th percentile to the 75th
percentile of the Company's Total Return as compared to the total return of the
Index. If the Company has achieved a Total Return equal to the median percentile
of the total return of the Index, then 100% of the restricted shares listed
above will vest. If the Company has achieved a Total Return equal to or greater
than the 75th percentile of the total return of the Index, then 150% of the
restricted shares listed above will vest. None of the shares listed above will
vest if the Company has achieved a Total Return of less than the 40th percentile
of the total return of the Index or if the executive officer is no longer
employed by the Company at the end of 2008. These shares will also vest if there
is a change of control of the Company, as defined.

<PAGE>

2004 and 2005 Restricted Stock Awards

The Committee also agreed to modify certain vesting terms related to its 2004
and 2005 restricted stock grants. Before the modification, these grants were to
vest at the end of five and four year respective terms based on certain AFFO
targets and the Company's total shareholder return, as defined, as compared to
certain hotel REIT peers. For these grants, 60% of the grants will now vest
after three years based on AFFO and Total Return targets for the respective
cumulative period, 20% will now vest based on AFFO and Total Return targets in
the fourth year and the remaining 20% will now vest based on AFFO and Total
Return targets in the fifth year. No other modifications were made to the 2004
and 2005 grants. The changes affected grants to all executive officers of the
Company.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]