<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 7, 1999
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
EQUITY INNS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 01-12073 62-1550848
- ---------------------------- --------------------- -------------------
(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
7700 Wolf River Boulevard
Germantown, Tennessee 38138
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(901) 754-7774
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
The 1999 annual meeting of shareholders (the "Annual Meeting") of
Equity Inns, Inc. (the "Company") was held on May 7, 1999. At the Annual
Meeting, the Company's shareholders of record on March 16, 1999 were asked to
take action on each of three proposals: (1) to elect two Class I directors
(Raymond E. Schultz and Howard A. Silver), two Class II directors (James A.
Thomas III and William W. Deupree, Jr.) and one Class III director (Donald H.
Dempsey), to serve on the Board of Directors until the Company's annual meeting
of shareholders in 2000 (Class III), 2001 (Class I) and 2002 (Class II) or until
their successors have been duly elected and qualified ("Proposal One"); (2) to
consider and vote upon a proposal to amend the Company's 1994 Stock Incentive
Plan (the "1994 Plan") to, among other things, increase the number of shares
that may be issued as awards under the 1994 Plan, remove certain limitations on
vesting and exercisability of awards and reflect certain securities laws changes
("Proposal Two"); and (3) to consider and vote on a proposal to approve an
amendment to the Non-Employee Directors' Stock Option Plan (the "Directors'
Plan") to, among other things, add new option and stock awards, reflect certain
securities laws changes and provide accelerated vesting and exercisability of
awards in certain circumstances ("Proposal Three").
Both Proposals Two and Three were approved by the Company's Board of
Directors as of February 26, 1999, and each of the nominees for Class I, II and
III for directors were nominated by the Board of Directors on such date.
A total of 33,470,961 shares, or approximately 89.9% of the Company's
outstanding shares of Common Stock entitled to vote at the Annual Meeting, was
present in person or by proxy at the Annual Meeting.
With respect to Proposal One, a plurality of the votes cast in favor of
each nominee was required for the election of each nominee as director. Each of
Messrs. Schultz, Silver, Thomas, Deupree and Dempsey received the required
plurality of the votes, and each was elected as a director.
With respect to Proposals Two and Three, the approval of each proposal
required the votes cast in favor of the proposal to exceed the votes cast in
opposition to the proposal. Both Proposals Two and Three received the required
approval of the shareholders.
The breakdown of the votes cast by the shareholders on each proposal
was as follows:
<TABLE>
<CAPTION>
Withheld/ Broker
For Against Abstain Non-Votes Total
---------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Proposal One
(i) Mr. Schultz (Class I) 32,945,030 525,931 N/A N/A 33,470,961
(ii) Mr. Silver (Class I) 32,938,958 532,003 N/A N/A 33,470,961
(iii) Mr. Thomas (Class II) 32,907,097 563,864 N/A N/A 33,470,961
(iv) Mr. Deupree (Class II 32,941,335 529,626 N/A N/A 33,470,961
(v) Mr. Dempsey (Class III) 32,940,081 530,880 N/A N/A 33,470,961
Proposal Two 30,822,726 2,251,884 396,351 N/A 33,470,961
Proposal Three 29,352,742 3,674,662 443,557 N/A 33,470,961
</TABLE>
<PAGE>
ITEM 7. EXHIBITS.
<TABLE>
<CAPTION>
Item No. Description
- -------- -----------
<S> <C>
10.1 Amended and Restated Equity Inns, Inc. 1994 Stock Incentive Plan
10.2 Amended and Restated Equity Inns, Inc. Non-Employee Directors' Stock
Option Plan
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY INNS, INC.
May 21, 1999 /s/ Donald H. Dempsey
- ------------ -------------------------------------
Donald H. Dempsey
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
Item No. Description
- -------- -----------
<S> <C>
10.1 Amended and Restated Equity Inns, Inc. 1994 Stock Incentive Plan
10.2 Amended and Restated Equity Inns, Inc. Non-Employee Directors' Stock
Option Plan
</TABLE>
EQUITY INNS, INC.
AMENDED AND RESTATED
DIRECTORS' COMPENSATION PLAN
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
DIRECTORS' COMPENSATION PLAN
ARTICLE I
DEFINITIONS
1.01. Acquiring Person
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 Board; or (ii) Services' then outstanding securities entitled to vote
generally in the election of the board of directors of Services.
1.02. Affiliate
Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.03. Agreement
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an Option granted to such Participant.
1.04. Associate
Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act. An Associate does not
include the Company or a majority-owned subsidiary of the Company.
1.05. Board
Board means the Board of Directors of the Company.
1.06. Change in Control
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
1
<PAGE>
an agreement) that involves the transfer of at least fifty percent (50%) of the
Company's 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 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 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 of
substantially all of the Company's assets (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 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 Services or of the Company has effectively
occurred. The Board shall be entitled to exercise its sole and absolute
discretion in exercising its judgment and in the adoption of such resolution,
whether or not any such transaction(s) or event(s) might be deemed, individually
or collectively, to satisfy any of the criteria set forth in subparagraphs (i)
through (v) above.
1.07. Code
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.08. Committee
Committee means the committee appointed by the Board to administer the
Plan.
1.09. Common Stock
Common Stock means the common stock of the Company.
1.10. Company
Company means Equity Inns, Inc.
1.11. Continuing Director
Continuing Director means any member of the Board, while a member of
the Board and (i) who was a member of the Board on March 1, 1999 or (ii) whose
nomination for or election to the Board was recommended or approved by a
majority of the Continuing Directors.
2
<PAGE>
1.12. Control Affiliate
Control Affiliate with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
1.13. Control Change Date
Control Change Date means the date on which a Change in Control occurs.
If a Change in Control occurs on account of a series of transactions, the
"Control Change Date" is the date of the last of such transactions.
1.14. Fair Market Value
Fair Market Value means, on any given date, the reported "closing"
price of a share of Common Stock in the New York over-the-counter market as
reported by the National Association of Securities Dealers, Inc. The preceding
sentence to the contrary notwithstanding, if the Common Stock is listed upon an
established stock exchange or exchanges, the Fair Market Value on any given date
shall be the highest closing price of the Common Stock on such exchange or
exchanges. If, on any given date, no share of Common Stock is traded on the New
York over-the-counter market or on an established stock exchange, then Fair
Market Value shall be determined with reference to the next preceding day that
the Common Stock was so traded.
1.15. Meeting Fees
Meeting Fees means the cash compensation payable to the Participant
based upon his or her attendance at Board meetings and meetings of committees of
the Board.
1.16. Option
Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.17. Participant
Participant means an individual who, on the applicable date of grant of
an Option or Stock Award or the applicable Stock Purchase Election date under
Article VII, is a member of the Board and is not an employee of the Company or
an Affiliate.
1.18. Person
Person means any human being, firm, corporation, partnership, or other
entity. "Person" also includes any human being, firm, corporation, partnership,
or other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange
Act. The term "Person" does not include the Company, the Parent or any Related
Entity, and the term Person does not include any employee-benefit plan
3
<PAGE>
maintained by the Company, Services, or any Related Entity, and any person or
entity organized, appointed, or established by the Company, Services or any
Related Entity for or pursuant to the terms of any such employee-benefit plan,
unless the Board or Services' board or directors determines that such an
employee-benefit plan or such person or entity is a "Person".
1.19. Plan
Plan means the Equity Inns, Inc. Amended and Restated Directors'
Compensation Plan.
1.20. Related Entity
Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the meaning of
section 1563(a), 414(b) or 414(c) of the Internal Revenue Code of 1986, as
amended.
1.21. Retainer Fees
Retainer Fees means the cash compensation fixed and payable to the
Participant by the Company without regard to attendance at meetings.
1.22. Services
Services means Equity Inns Services, Inc.
1.23. Stock Award
Stock Award means an award of Common Stock granted to a Participant
under Article V.
1.24. Stock Purchase Election
Stock Purchase Election means a Participant's election to receive all
or part of his or her Meeting Fees or Retainer Fees, or both, in the form of
Common Stock in accordance with the Stock Purchase Program.
1.25. Stock Purchase Election Form
Stock Purchase Election Form means a valid initial Stock Purchase
Program election form or a modified Stock Purchase Program election form (in the
forms approved by the Committee) properly completed and signed.
1.26. Stock Purchase Program
Stock Purchase Program means the provisions of the Plan that allow
Participants to acquire Common Stock with all or part of their Retainer Fees or
Meeting Fees, or both.
4
<PAGE>
ARTICLE II
PURPOSES
The Plan is intended to promote a greater identity of interest between
the non-employee directors of the Company and the Company's shareholders, and to
assist the Company in attracting and retaining non-employee directors by
affording Participants an opportunity to share in the future success of the
Company and its Affiliates. The Plan is intended to permit the grant of Options
and Stock Awards and to allow Participants to elect to receive their Retainer
Fees and Meeting Fees in the form of Common Stock. The proceeds received by the
Company from the sale of Common Stock pursuant to this Plan shall be used for
general corporate purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have complete authority to interpret all provisions of this Plan; to prescribe
the form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of this Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee or in connection with the administration
of this Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement, Option, or Stock Award. All expenses of administering this Plan shall
be borne by the Company.
ARTICLE IV
OPTIONS
4.01. Grant of Options
(a) Subject to Section 4.07, each Participant shall be granted an
Option for 1,000 shares of Common Stock at the first meeting of the Board
following the annual meeting of the Company's shareholders at which this Plan is
approved in accordance with Article XII. Thereafter during the term of this
Plan, subject to Section 4.07, each Participant shall be granted an Option for
1,000 shares of Common Stock at the first meeting of the Board following each
annual meeting of the Company's shareholders.
(b) Subject to Section 4.07, each of Messrs. Thomas, Duepree, and
McLeary shall be granted an Option for 5,000 shares of Common Stock on August
10, 1998; and Mr. Schultz shall be granted an Option for 5,000 shares of Common
Stock on December 10, 1998.
(c) All Options shall be evidenced by Agreements that shall be subject
to the applicable provisions of this Plan and to such other provisions as the
Committee may adopt.
5
<PAGE>
4.02. Option Price
The price per share for Common Stock purchased on the exercise of an
Option shall be the Fair Market Value on the date that the Option is granted.
4.03. Maximum Option Period
The maximum period during which an Option may be exercised shall be ten
years from the date of grant. In the event of the Participant's death, the
Option may be exercised, to the extent then exercisable under Section 4.04(a) or
(b), as applicable, by the Participant's estate or by such person or persons who
succeed to the Participant's rights by will or the laws of descent and
distribution following the Participant's death until the expiration of the
Option period.
4.04. Exercise
(a) Subject to the provisions of Article VII, an Option granted under
Section 4.01(a) may be exercised in whole at any time or in part from time to
time on and after the date of grant. An Option granted under Section 4.01(b)
shall become exercisable for one-fifth of the shares subject to such Option on
each of the first through fifth anniversaries of the date of grant if the
Participant is a member of the Board on the applicable anniversary. Once an
Option has become exercisable, it may be exercised whether or not a Participant
is a member of the Board at such time or times of exercise. An Option may be
exercised with respect to any number of whole shares less than the full number
for which the Option could be exercised. A partial exercise of an Option shall
not affect the right to exercise the Option from time to time in accordance with
this Plan and the applicable Agreement with respect to the remaining shares
subject to the Option.
(b) Notwithstanding the foregoing, a Participant's Option shall become
exercisable in whole or in part upon the Participant's ceasing to serve on the
Board due to death or disability. A Participant's Option shall become
exercisable in whole or in part on a Control Change Date if the Participant is a
member of the Board on the day before such date.
4.05. Payment of Option Price
Payment of the Option price shall be made in a single sum, in cash.
4.06. Shareholder Rights
No Participant shall have any rights as a shareholder with respect to
shares subject to his or her Option until the date of exercise of such Option.
4.07. Stock Subject to Options
Upon the exercise of any Option, the Company may deliver to the
Participant (or the Participant's broker if the Participant so directs), shares
from its previously authorized but unissued Common Stock. The maximum aggregate
number of shares of Common Stock that may be issued
6
<PAGE>
pursuant to the exercise of Options under this Plan is fifty thousand (50,000),
subject to adjustment as provided in Article VI.
ARTICLE V
STOCK AWARDS
5.01. Awards
Each of Messrs. Thomas, Duepree, and McLeary shall be granted a Stock
Award for 5,000 shares of Common Stock on August 10, 1998; and Mr. Schultz shall
be granted a Stock Award for 5,000 shares of Common Stock on December 10, 1998.
All Stock Awards shall be evidenced Agreements that shall be subject to the
applicable provisions of this Plan and to such other provisions as the Committee
may adopt.
5.02. Vesting
(a) Each Stock Award granted under Section 5.01 shall become
transferable and nonforfeitable with respect to one thousand (1,000) shares of
Common Stock as of the first Board meeting following the Company's 1999 annual
meeting of shareholders, if the Participant is then a member of the Board, and
shall become transferable and nonforfeitable with respect to an additional one
thousand (1,000) shares of Common Stock on each of the first through fourth
anniversaries of the date of grant, if the Participant is a member of the Board
on the applicable anniversary.
(b) Notwithstanding the foregoing, all shares subject to a
Participant's Stock Award shall become transferable and nonforfeitable upon the
Participant's ceasing to serve on the Board due to death or disability. All
shares subject to a Participant's Stock Award shall become transferable and
nonforfeitable on a Control Change Date if the Participant is a member of the
Board on the day before such date.
5.03. Shareholder Rights
Prior to their forfeiture (in accordance with the applicable Agreement
and while the shares of Common Stock granted pursuant to the Stock Award may be
forfeited or are nontransferable), a Participant will have all rights of a
shareholder with respect to a Stock Award, including the right to receive
dividends and vote the shares; provided, however, that during such period (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of shares granted pursuant to a Stock Award, (ii) the Company shall
retain custody of the certificates evidencing shares granted pursuant to a Stock
Award, and (iii) the Participant will deliver to the Company a stock power,
endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares granted under the
Stock Award are transferable and are no longer forfeitable.
7
<PAGE>
5.04. Stock Subject to Awards
Upon the grant of Stock Awards in accordance with this Article V, the
Company may issue Common Stock from its authorized but unissued Common Stock.
ARTICLE VI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The number of shares for which Options and Stock Awards may be granted
under Articles IV and V, the maximum aggregate number of shares that may be
issued pursuant to the exercise of Options and the terms of outstanding Options,
Stock Awards and Stock Purchase Elections and purchases shall be adjusted as the
Committee shall determine to be equitably required in the event that (a) the
Company (i) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (ii) engages in a transaction to which Section
424 of the Code applies or (b) there occurs any other event which in the
judgment of the Committee necessitates such action. Any determination made under
this Article VI by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
outstanding Options or Stock Awards, Options or Stock Awards to be granted in
the future, Stock Purchase Elections and purchases, or the maximum aggregate
number of shares that may be issued pursuant to the exercise of Options or as
Stock Awards.
ARTICLE VII
STOCK PURCHASE PROGRAM
7.01. Common Stock Purchase
A Participant may elect to receive all or part of his or her Retainer
Fees or Meeting Fees, or both, in the form of Common Stock in lieu of receiving
those fees in cash.
7.02. Stock Purchase Election
Stock Purchase Elections will be effective with respect to fees earned
and payable on and after the election date. If a Participant elects to take part
or all of his or her fees in Common Stock, the value of the Common Stock will
equal 125% of the amount of the fees otherwise payable to the Participant in
cash, determined under Section 7.04. All Stock Purchase Elections must be
approved by the Board prior to the date the fees subject to the election would
otherwise be paid in cash. A Participant's election to take part or all of his
8
<PAGE>
or her Retainer Fees in Common Stock must be made prior to the first month of
the quarter for which cash fees would be payable absent the election. An
election relating to a Retainer Fee shall be in integral multiples of twenty-
five percent (25%) of the Retainer Fee. An election to take part or all the
Meeting Fees for any meeting in Common Stock must be made prior to the first day
of the month in which the applicable meeting is held. An election relating to
Meeting Fees shall be in integral multiples of twenty-five percent (25%) of the
Meeting Fees for a given meeting.
7.03. Stock Purchase Modification
A Stock Purchase Election Form shall remain in effect for all future
Retainer Fees and Meeting Fees until a new Stock Purchase Election is made by
the Participant in accordance with Section 7.02. Subject to procedures adopted
by the Committee not inconsistent with the Plan, a Participant is permitted to
(a) increase or decrease the fees that will be applied to purchase Common Stock
and (b) cease purchases of Common Stock. Any such change will be effective (a)
with respect to Meeting Fees for any meeting only if the change is made before
the first day of the month in which the meeting is held, and (b) with respect to
Retainer Fees, only if the change is made before the first day of the quarter
for which such Retainer Fees are payable.
7.04. Common Stock Issuance
Common Stock purchased under this Article VII shall be issued as of the
date that the Retainer Fees or Meeting Fees, or both, as applicable, would have
been payable in cash but for the Participant's Stock Purchase Election. The
number of shares issued will be determined by dividing 125% of the portion of
fees otherwise payable in cash by the Fair Market Value of the Common Stock on
the day preceding the date of payment. A fractional share of Common Stock shall
not be issued but instead the Participant shall receive a cash payment of the
Retainer Fees or Meeting Fees, as applicable, that cannot be applied to purchase
a whole share. Upon the purchase of Common Stock pursuant to the Stock Purchase
Program, the Company may issue Common Stock from its authorized but unissued
Common Stock.
ARTICLE VIII
INDEMNIFICATION
A Participant shall be entitled to a payment under this Article VIII if
(a) any benefit, payment, accelerated exercisability or vesting or other right
under this Plan constitutes a "parachute payment" (as defined in Code Section
280G(b)(2)(A), but without regard to Code Section 280G(b)(2)(A)(ii)), with
respect to such Participant and (b) the Participant incurs a liability under
Code Section 4999. The amount payable to a Participant described in the
preceding sentence shall be the amount required to indemnify the Participant and
hold him harmless from the application of Code Sections 280G and 4999. To effect
this indemnification, the Company must pay such Participant an amount sufficient
to pay the excise tax imposed on Participant under Code Section 4999 with
respect to benefits, payments, accelerated exercisability and vesting and other
rights under this Plan and any other plan or agreement, and any income, self-
9
<PAGE>
employment, hospitalization, excise or other taxes attributable to the
indemnification payment. The benefit payable under this Article VIII shall be
paid not later than twenty days after the date (or extended filing date) on
which the tax return reflecting liability for the Code section 4999 excise tax
is required to be filed with the Internal Revenue Service.
ARTICLE IX
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued and no
certificates for shares of Common Stock shall be delivered, except in compliance
with all applicable federal and state laws and regulations, any listing
agreement to which the Company is a party, and the rules of all domestic stock
exchanges on which the Company's shares may be listed. The Company shall have
the right to rely on an opinion of its counsel as to such compliance. Any stock
certificate issued to evidence Common Stock for which an Option is exercised or
subject to a Stock Award or that is acquired under the Stock Purchase Program
may bear such legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations. No Option shall
be exercisable, no Common Stock shall be issued and no certificate for shares
shall be delivered until the Company has obtained such consent or approval as
the Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE X
GENERAL PROVISIONS
10.01. Effect on Service
Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof) shall confer upon any
Participant any right to continue service as a member of the Board.
10.02. Unfunded Plan
The Plan shall be unfunded and the Company shall not be required to
segregate any asset that may at any time be represented by grants under this
Plan. Any liability of the Company to any person with respect to any grant under
this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Company or its Affiliates.
10.03. Rules of Construction
Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
10
<PAGE>
10.04. Nontransferability
A Participant may not transfer or assign any rights he or she has under
this Plan other than by will or the laws of descent and distribution. During the
lifetime of the Participant to whom an Option is granted, the Option may be
exercised only by the Participant. No right or interest of a Participant under
this Plan shall be liable for, or subject to, any lien, obligation, or liability
of such Participant.
ARTICLE XI
AMENDMENT AND TERMINATION
The Board may amend or terminate this Plan at any time and from time to
time. Neither an amendment nor the termination of this Plan shall, without a
Participant's consent, adversely affect any rights of such Participant under any
Option or Stock Award outstanding or, subject to the last sentence of Article
XII, Stock Purchase Election in effect at the time of such amendment or
termination.
ARTICLE XII
DURATION OF PLAN
No Option or Stock Award may be granted under this Plan after the first
meeting of the Board following the annual meeting of the Company's shareholders
in 2008. Options and Stock Awards granted before that date shall remain valid in
accordance with their terms. No Stock Purchase Election may be made with respect
to Retainer Fees or Meeting Fees payable after the first meeting of the Board
following the annual meeting of the Company's shareholders in 2008; provided,
however, that the Board may sooner terminate the Stock Purchase Program.
ARTICLE XIII
EFFECTIVE DATE OF PLAN
Options and Stock Awards may be granted under this Plan upon its
adoption by the Board, but no Option or Stock Award will be effective or
exercisable and no Common Stock may be issued pursuant to a Stock Purchase
Election unless the Plan is approved (at a duly held shareholders' meeting at
which a quorum is present) by a majority of the votes cast by the Company's
shareholders, voting either in person or by proxy, or by unanimous consent of
the Company's shareholders. Notwithstanding the foregoing, no Options granted
under Section 4.01(b) and no Stock Awards granted under Article V shall be
exercisable or effective unless the amendments to the Plan presented to the
Company's shareholders at the Company's 1999 annual meeting of shareholders are
approved in the manner described in the preceding sentence.
11
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE I DEFINITIONS 6
1.01. Acquiring Person 6
1.02. Administrator 6
1.03. Affiliate 6
1.04. Agreement 6
1.05. Associate 6
1.06. Board 6
1.07. Change in Control 7
1.08. Code 7
1.09. Committee 8
1.10. Common Stock 8
1.11. Company 8
1.12. Continuing Director 8
1.13. Control Affiliate 8
1.14. Control Change Date 8
1.15. Corresponding SAR 8
1.16. Deferred Stock Benefit 8
1.17. Exchange Act 9
1.18. Fair Market Value 9
1.19. Incentive Award 9
1.20. Initial Value 9
1.21. Option 9
1.22. Participant 10
1.23. Performance Shares 10
1.24. Person 10
1.25. Plan 10
1.26. Related Entity 10
1.27. SAR 10
1.28. Services 11
1.29. Stock Award 11
ARTICLE II PURPOSES 11
ARTICLE III ADMINISTRATION 12
-2-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE IV ELIGIBILITY13
ARTICLE V COMMON STOCK SUBJECT TO PLAN13
5.01. Common Stock Issued 13
5.02. Aggregate Limit 13
5.03. Reallocation of shares 14
ARTICLE VI OPTIONS 14
6.01. Award 14
6.02. Option Price 15
6.03. Maximum Option Period 15
6.04. Nontransferability 15
6.05. Transferable Options 15
6.06. Employee Status 16
6.07. Exercise 16
6.08. Payment 16
6.09. Change in Control 17
6.10. Shareholder Rights 17
6.11. Disposition of shares 17
6.12. Deferred Stock Benefits 17
ARTICLE VII SARS 17
7.01. Award 17
7.02. Maximum SAR Period 18
7.03. Nontransferability 18
7.04. Transferable SARs 18
7.05. Exercise 19
7.06. Change in Control 19
7.07. Employee Status 19
7.08. Settlement 19
7.09. Shareholder Rights 20
ARTICLE VIII STOCK AWARDS 20
-3-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
8.01. Award 20
8.02. Vesting 20
8.03. Performance Objectives 20
8.04. Employee Status 21
8.05. Change in Control 21
8.06. Shareholder Rights 21
8.07. Deferred Stock Benefits 21
ARTICLE IX PERFORMANCE SHARE AWARDS 22
9.01. Award 22
9.02. Earning the Award 22
9.03. Payment 22
9.04. Shareholder Rights 23
9.05. Nontransferability 23
9.06. Transferable Performance Shares 23
9.07. Employee Status 23
9.08. Change in Control 23
ARTICLE X INCENTIVE AWARDS 24
10.01. Award 24
10.02. Terms and Conditions 24
10.03. Nontransferability 24
10.04. Transferable Incentive Awards 25
10.05. Employee Status 25
10.06. Change in Control 25
10.07. Shareholder Rights 25
ARTICLE XI INDEMNIFICATION 25
ARTICLE XII ADJUSTMENT UPON CHANGE IN COMMON STOCK 26
ARTICLE XIII COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES 27
-4-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE XIV GENERAL PROVISIONS 28
14.01. Effect on Employment and Service 28
14.02. Unfunded Plan 28
14.03. Rules of Construction 28
ARTICLE XV AMENDMENT 28
ARTICLE XVI DURATION OF PLAN 29
ARTICLE XVII EFFECTIVE DATE OF PLAN 29
-5-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01. Acquiring Person
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 Board; or (ii) Services' then
outstanding securities entitled to vote generally in the election of the
Board of Directors of Services.
1.02. Administrator
Administrator means the Committee and any delegate of the Committee
that is appointed in accordance with Article III.
1.03. Affiliate
Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.04. Agreement
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Stock Award, an award of Performance Shares,
an Incentive Award or an Option or SAR granted to such Participant.
1.05. Associate
Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act. An Associate does
not include the Company or a majority-owned subsidiary of the Company.
-6-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
1.06. Board
Board means the Board of Directors of the Company.
1.07. Change in Control
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 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 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 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 of substantially all of the Company's assets (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 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 Services or of the Company has effectively occurred. The
Board shall be entitled to exercise its sole and absolute discretion in
exercising its judgment and in the adoption of such resolution, whether
or not any such transaction(s) or event(s) might be deemed, individually
or collectively, to satisfy any of the criteria set forth in
subparagraphs (i) through (v) above.
-7-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
1.08. Code
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.09. Committee
Committee means the Compensation Committee of the Board.
1.10. Common Stock
Common Stock means the common stock of the Company.
1.11. Company
Company means Equity Inns, Inc.
1.12. Continuing Director
Continuing Director means any member of the Board, while a member of
the Board and (i) who was a member of the Board on March 1, 1999 or (ii)
whose nomination for or election to the Board was recommended or
approved by a majority of the Continuing Directors.
1.13. Control Affiliate
Control Affiliate with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
1.14. Control Change Date
Control Change Date means the date on which a Change in Control occurs.
If a Change in Control occurs on account of a series of transactions,
the "Control Change Date" is the date of the last of such transactions.
1.15. Corresponding SAR
Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to
the Company, unexercised, of that portion of the Option to which the SAR
relates.
-8-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
1.16. Deferred Stock Benefit
Deferred Stock Benefit means a benefit earned by a Participant pursuant
to a deferral election with respect to an option that is not an
incentive stock option or a Stock Award granted under this Plan, if such
elections are permitted by the Administrator, which shall be payable in
shares of Common Stock, on the terms specified by the Administrator.
1.17. Exchange Act
Exchange Act means the Securities Exchange Act of 1934, as amended as
of January 1, 1990.
1.18. Fair Market Value
Fair Market Value means, on any given date, the reported "closing"
price of a share of Common Stock in the New York over-the-counter market
as reported by the National Association of Securities Dealers, Inc. The
preceding sentence to the contrary notwithstanding, if the Common Stock
is listed upon an established stock exchange or exchanges, the Fair
Market Value on any given date shall be the highest closing price of the
Common Stock on such exchange or exchanges. If, on any given date, no
share of Common Stock is traded on the New York over-the-counter market
or on an established stock exchange, then Fair Market Value shall be
determined with reference to the next preceding day that the Common
Stock was so traded.
1.19. Incentive Award
Incentive Award means an award which, subject to such terms and
conditions as may be prescribed by the Administrator, entitles the
Participant to receive a cash payment from the Company or an Affiliate.
1.20. Initial Value
Initial Value means, with respect to a corresponding SAR, the option
price per share of the related Option and, with respect to a SAR granted
-9-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
independently of an Option, the Fair Market Value of one share of Common
stock on the date of grant.
1.21. Option
Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.22. Participant
Participant means an employee of the Company or an Affiliate, including
an employee who is a member of the Board, who satisfies the requirements
of Article IV and is selected by the Administrator to receive an award
of Performance Shares, a Stock Award, an Option, an SAR, an Incentive
Award or a combination thereof.
1.23. Performance Shares
Performance Shares means an award, in the amount determined by the
Administrator, stated with reference to a specified number of shares of
Common Stock, that in accordance with the terms of an Agreement entitles
the holder to receive a cash payment or shares of Common Stock or a
combination thereof.
1.24. Person
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, Services or any Related Entity, and the term Person does not
include any employee-benefit plan maintained by the Company, Services,
or any Related Entity, and any person or entity organized, appointed, or
established by the Company, Services or any Related Entity for or
pursuant to the terms of any such employee-benefit plan, unless the
Board or Services' Board determines that such an employee-benefit plan
or such person or entity is a "Person".
1.25. Plan
Plan means the Equity Inns, Inc. Amended and Restated 1994 Stock
Incentive Plan.
-10-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
1.26. Related Entity
Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the
meaning of Sections 1563(a), 414(b) or 414(c) of the Code.
1.27. SAR
SAR means a stock appreciation right that in accordance with the terms
of an Agreement entitles the holder to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the
amount determined by the Administrator and specified in an Agreement. In
the absence of such a determination, the holder shall be entitled to
receive, with respect to each share of Common Stock encompassed by the
exercise of such SAR, the excess of the Fair Market Value on the date of
exercise over the Initial Value. References to "SARs" include both
Corresponding SARs and SARs granted independently of Options, unless the
context requires otherwise.
1.28. Services
Services means Equity Inns Services, Inc.
1.29. Stock Award
Stock Award means shares of Common Stock awarded to a Participant under
Article VIII.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by
enabling such persons to participate in the future success of the
Company and its Affiliates and to associate their interests with those
of the Company and its shareholders. The Plan is intended to permit the
grant of both Options qualifying under Section 422 of the Code
("incentive stock options") and Options not so qualifying, and the grant
-11-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
of SARs, Stock Awards, Performance Shares and Incentive Awards, and the
deferral of income with respect to Options and Stock Awards in
accordance with the Plan and procedures that may be established by the
Administrator. No Option that is intended to be an incentive stock
option shall be invalid for failure to qualify as an incentive stock
option. The proceeds received by the Company from the sale of shares of
Common Stock pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares,
Incentive Awards, Options and SARs upon such terms (not inconsistent
with the provisions of this Plan), as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those
contained in this Plan), on the exercisability of all or any part of an
Option or SAR or on the transferability or forfeitability of a Stock
Award, an award of Performance Shares or an Incentive Award.
Notwithstanding any such conditions, the Administrator may, in its
discretion, (i) accelerate the time at which any Option or SAR may be
exercised, or the time at which a Stock Award may become transferable or
nonforfeitable or the time at which an Incentive Award or award of
Performance Shares may be settled or (ii) suspend the forfeiture of any
award made under this Plan. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements and documents relating to the deferral
of income with respect to Options and Stock Awards; to adopt, amend, and
rescind rules and regulations pertaining to the administration of the
Plan; and to make all other determinations necessary or advisable for
the administration of this Plan. The express grant in the Plan of any
specific power to the Administrator shall not be construed as limiting
any power or authority of the Administrator. Any decision made, or
action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any
act done in good faith with respect to this Plan or any Agreement,
Option, SAR, Stock Award, Incentive Award or award of Performance
Shares. All expenses of administering this Plan shall be borne by the
Company.
-12-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with
respect to grants and awards to individuals who are not subject to the
reporting and other provisions of Section 16 of the Exchange Act. The
Committee may revoke or amend the terms of a delegation at any time but
such action shall not invalidate any prior actions of the Committee's
delegate or delegates that were consistent with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan), is eligible
to participate in this Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or
can be expected to contribute significantly to the profits or growth of
the Company or an Affiliate. Directors of the Company who are employees
of the Company or an Affiliate may be selected to participate in this
Plan.
ARTICLE V
COMMON STOCK SUBJECT TO PLAN
5.01. Common Stock Issued
Upon the award of Common Stock pursuant to a Stock Award or in
settlement of an award of Performance Shares, the Company may issue
Common Stock from its authorized but unissued Common Stock. Upon the
exercise of any Option or SAR, the Company may deliver to the
Participant (or the Participant's broker if the Participant so directs),
shares of Common Stock from its authorized but unissued Common Stock. On
the distribution of Deferred Stock Benefits, the Company may issue
shares of Common Stock from its authorized but unissued Common Stock
5.02. Aggregate Limit
The maximum aggregate number of shares of Common Stock that may be
issued under this Plan pursuant to the exercise of SARs and Options and
the grant of Stock Awards, the settlement of Performance Shares and the
distribution of Deferred Stock Benefits is 4,000,000 shares. The maximum
aggregate number of shares of Common Stock that may be issued under this
Plan as Stock Awards (or as the portion of a
-13-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
Deferred Stock Benefit that represents forfeited shares of Common Stock
subject to such awards) and in settlement of Performance Shares is
1,100,000 shares. The maximum aggregate number of shares of Common Stock
that may be issued under this Plan and the maximum number of shares of
Common Stock that may be issued as Stock Awards (and Deferred Stock
Benefits that represent forfeited shares of Common Stock subject to such
awards) and in settlement of Performance Shares shall be subject to
adjustment as provided in Article XII. Shares of Common Stock issued in
settlement of a Deferred Stock Benefit, and the shares of Common Stock
subject to the Option or Stock Award or portion thereof with respect to
which such Deferred Stock Benefit was elected, shall be counted toward
the foregoing limits only once (even in the case of shares subject to a
Stock Award that are canceled in connection with a Deferred Stock
Benefit election).
5.03. Reallocation of Shares
If an Option is terminated, in whole or in part, for any reason other
than its exercise (including an exercise that results in a Deferred
Stock Benefit) or the exercise of a Corresponding SAR that is settled
with shares of Common Stock, the number of shares allocated to the
Option or portion thereof may be reallocated to other Options, SARs,
Performance Shares, and Stock Awards to be granted, and to Deferred
Stock Benefits to be distributed, under this Plan. If an SAR is
terminated, in whole or in part, for any reason other than its exercise
that is settled with shares of Common Stock or the exercise of a related
Option, the number of shares of Common Stock allocated to the SAR or
portion thereof may be reallocated to other Options, SARs, Performance
Shares, and Stock Awards to be granted, and Deferred Stock Benefits to
be distributed, under this Plan. If an award of Performance Shares is
terminated, in whole or in part, for any reason other than its
settlement with shares of Common Stock, the number of shares allocated
to the Performance Share award or portion thereof may be reallocated to
other Options, SARs, Performance Shares and Stock Awards to be granted,
and Deferred Stock Benefits to be distributed, under this Plan. If a
Stock Award is forfeited, in whole or in part, for any reason (other
than a cancellation that results in a Deferred Stock Benefit), the
number of shares of Common Stock allocated to the Stock Award or portion
thereof may be reallocated to other Options, SARs, Performance Shares
and Stock Awards to be granted, and Deferred Stock Benefits to be
distributed, under this Plan. If a Deferred Stock Benefit is forfeited,
in whole or in part, the number of shares of Common Stock allocated to
the Deferred Stock Benefit or portion thereof may be reallocated to
other Options, SARs, Performance Shares and Stock Awards to be granted,
and to the other Deferred Stock Benefits to be distributed, under the
Plan.
-14-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE VI
OPTIONS
6.01. Award
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option is to be granted and will
specify the number of shares of Common Stock covered by such awards;
provided, however, that no Participant may be granted Options in any
calendar year covering more than 750,000 shares. Notwithstanding the
foregoing, a newly-hired individual may be granted Options for up to
1,000,000 shares in a calendar year. A Participant's status as a
newly-hired individual shall be determined, and the foregoing limits
shall be implemented, by the Administrator in its discretion.
6.02. Option Price
The price per share for shares of Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the
date of grant, but shall not be less than the Fair Market Value on the
date the Option is granted.
6.03. Maximum Option Period
The maximum period in which an Option may be exercised shall be
determined by the Administrator on the date of grant, except that no
Option that is an incentive stock option shall be exercisable after the
expiration of ten years from the date such Option was granted. The terms
of any Option that is an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
6.04. Nontransferability
Except as provided in Section 6.05, each Option granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any transfer of an Option (by the
Participant or his transferee), the Option and any Corresponding SAR
that relates to such Option must be transferred to the same person or
persons or entity or entities. Except as provided in Section 6.05,
during the lifetime of the Participant to whom the Option is granted,
the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation, or liability of such Participant.
-15-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
6.05. Transferable Options
Section 6.04 to the contrary notwithstanding, if the Agreement
provides, an Option that is not an incentive stock option may be
transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family
members or a partnership in which such family members are the only
partners, on such terms and conditions as may be permitted under
Securities Exchange Commission Rule 16b-3 as in effect from time to
time. The holder of an Option transferred pursuant to this Section shall
be bound by the same terms and conditions that governed the Option
during the period that it was held by the Participant; provided,
however, that such transferee may not transfer the Option except by will
or the laws of descent and distribution. In the event of any transfer of
an Option (by the Participant or his transferee), the Option and any
Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities.
6.06. Employee Status
For purposes of determining the applicability of Section 422 of the
Code (relating to incentive stock options), or in the event that the
terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of
employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of
continuous employment.
6.07. Exercise
Subject to the provisions of this Plan and the applicable Agreement, an
Option may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive stock
options (granted under the Plan and all plans of the Company and its
Affiliates) may not be first exercisable in a calendar year for shares
of Common Stock having a Fair Market Value (determined as of the date an
Option is granted) exceeding $100,000. An Option granted under this Plan
may be exercised with respect to any number of whole shares less than
the full number for which the Option could be exercised. A partial
exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the Option.
The exercise of an Option shall result in the termination of any
-16-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
Corresponding SAR to the extent of the number of shares with respect to
which the Option is exercised.
6.08. Payment
Subject to rules established by the Administrator and unless otherwise
provided in an Agreement, payment of all or part of the Option price may
be made in cash, a cash equivalent acceptable to the Administrator, or
with shares of Common Stock. If shares of Common Stock are used to pay
all or part of the Option price, the sum of the cash and cash equivalent
and the Fair Market Value (determined as of the day preceding the date
of exercise) of the shares surrendered must not be less than the Option
price of the shares for which the Option is being exercised.
6.09. Change in Control
Section 6.07 to the contrary notwithstanding, each outstanding Option
shall be fully exercisable (in whole or in part at the discretion of the
holder) on and after a Control Change Date.
6.10. Shareholder Rights
No Participant shall have any rights as a shareholder with respect to
shares subject to his Option until the date of exercise of such Option.
6.11. Disposition of Shares
A Participant shall notify the Company of any sale or other disposition
of shares acquired pursuant to an Option that was an incentive stock
option if such sale or disposition occurs (i) within two years of the
grant of an Option or (ii) within one year of the issuance of shares to
the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.
6.12. Deferred Stock Benefits
If permitted by the Administrator, and in accordance with any
procedures so established, a Participant may elect to defer all or part
of the gain attributable to the exercise of an Option that is not an
incentive stock option and thereby elect a Deferred Stock Benefit. The
terms and conditions of such an election and the Deferred Stock Benefit
shall be determined by the Administrator.
-17-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE VII
SARS
7.01. Award
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom SARs are to be granted and will
specify the number of shares of Common Stock covered by such awards;
provided, however, that no Participant may be granted SARs in any
calendar year covering more than 750,000 shares of Common Stock.
Notwithstanding the foregoing, a newly-hired Participant may be granted
SARs for up to 1,000,000 shares in a calendar year. A Participant's
status as a newly-hired individual shall be determined, and the
foregoing limits shall be implemented, by the Administrator in its
discretion. For purposes of the foregoing limits, an Option and
Corresponding SAR shall be treated as a single award. In addition no
Participant may be granted Corresponding SARs (under all incentive stock
option plans of the Company and its Affiliates) that are related to
incentive stock options which are first exercisable in any calendar year
for shares of Common Stock having an aggregate Fair Market Value
(determined as of the date the related Option is granted) that exceeds
$100,000.
7.02. Maximum SAR Period
The term of each SAR shall be determined by the Administrator on the
date of grant, except that no Corresponding SAR that is related to an
incentive stock option shall have a term of more than ten years from the
date such related Option was granted. The terms of any Corresponding SAR
that is related to an incentive stock option may provide that it has a
term that is less than such maximum period.
7.03. Nontransferability
Except as provided in Section 7.04, each SAR granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any such transfer, a Corresponding SAR and
the related Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the
SAR is granted, the SAR may be exercised only by the Participant. No
right or interest of a Participant in any SAR shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
-18-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
7.04. Transferable SARs
Section 7.03 to the contrary notwithstanding, if the Agreement
provides, an SAR, other than a Corresponding SAR that is related to an
incentive stock option, may be transferred by a Participant to the
Participant's children, grandchildren, spouse, one or more trusts for
the benefit of such family members or a partnership in which such family
members are the only partners, on such terms and conditions as may be
permitted under Securities Exchange Commission Rule 16b-3 as in effect
from time to time. The holder of an SAR transferred pursuant to this
Section shall be bound by the same terms and conditions that governed
the SAR during the period that it was held by the Participant; provided,
however, that such transferee may not transfer the SAR except by will or
the laws of descent and distribution. In the event of any transfer of a
Corresponding SAR (by the Participant or his transferee), the
Corresponding SAR and the related Option must be transferred to the same
person or person or entity or entities.
7.05. Exercise
Subject to the provisions of this Plan and the applicable Agreement, an
SAR may be exercised in whole at any time or in part from time to time
at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that a Corresponding
SAR that is related to an incentive stock option may be exercised only
to the extent that the related Option is exercisable and only when the
Fair Market Value exceeds the option price of the related Option. An SAR
granted under this Plan may be exercised with respect to any number of
whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to
exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the
SAR. The exercise of a Corresponding SAR shall result in the termination
of the related Option to the extent of the number of shares with respect
to which the SAR is exercised.
7.06. Change in Control
Section 7.05 to the contrary notwithstanding, each outstanding SAR
shall be fully exercisable (in whole or in part at the discretion of the
holder) on and after a Control Change Date.
-19-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
7.07. Employee Status
If the terms of any SAR provide that it may be exercised only during
employment or within a specified period of time after termination of
employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary
disability or other reasons shall not be deemed interruptions of
continuous employment.
7.08. Settlement
At the Administrator's discretion, the amount payable as a result of
the exercise of an SAR may be settled in cash, shares of Common Stock,
or a combination of cash and Common Stock. No fractional share will be
deliverable upon the exercise of an SAR but a cash payment will be made
in lieu thereof.
7.09. Shareholder Rights
No Participant shall, as a result of receiving an SAR, have any rights
as a shareholder of the Company or any Affiliate until the date that the
SAR is exercised and then only to the extent that the SAR is settled by
the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.01. Award
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom a Stock Award is to be made and will
specify the number of shares covered by such awards; provided, however,
that no Participant may receive Stock Awards in any calendar year for
more than 187,500 shares. Notwithstanding the foregoing, a newly-hired
individual may be granted Stock Awards for up to 250,000 shares of
Common Stock in a calendar year. A Participant's status as a newly-hired
individual shall be determined, and the foregoing limits shall be
implemented, by the Administrator in its discretion.
-20-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
8.02. Vesting
The Administrator, on the date of the award, may prescribe that a
Participant's rights in a Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be
set forth in the Agreement.
8.03. Performance Objectives
In accordance with Section 8.02, the Administrator may prescribe that
Stock Awards will become vested or transferable or both based on
objectives stated with respect to the Company's return on equity, total
earnings, earnings growth, return on capital, Fair Market Value, Common
Stock price appreciation, funds from operations per share, funds from
operations growth, total assets, peer shareholder returns, increase in
revenue per available room, or such other measures as may be selected by
the Administrator. If the Administrator, on the date of award,
prescribes that a Stock Award shall become nonforfeitable and
transferable only upon the attainment of performance objectives, the
shares subject to such Stock Award shall become nonforfeitable and
transferable only to the extent that the Administrator certifies that
such objectives have been achieved.
8.04. Employee Status
In the event that the terms of any Stock Award provide that shares may
become transferable and nonforfeitable thereunder only after completion
of a specified period of employment, the Administrator may decide in
each case to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
8.05. Change in Control
Sections 8.02, 8.03 and 8.04 to the contrary notwithstanding, each
outstanding Stock Award shall be transferable and nonforfeitable on and
after a Control Change Date.
8.06. Shareholder Rights
Prior to their forfeiture (in accordance with the applicable Agreement
and while the shares of Common Stock granted pursuant to the Stock Award
may be forfeited or
-21-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
are nontransferable), a Participant will have all rights of a
shareholder with respect to a Stock Award, including the right to
receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares granted pursuant to a Stock
Award, (ii) the Company shall retain custody of the certificates
evidencing shares granted pursuant to a Stock Award, and (iii) the
Participant will deliver to the Company a stock power, endorsed in
blank, with respect to each Stock Award. The limitations set forth in
the preceding sentence shall not apply after the shares granted under
the Stock Award are transferable and are no longer forfeitable.
8.07. Deferred Stock Benefits
If permitted by the Administrator, and in accordance with any
procedures so established, a Participant may elect to forfeit all or a
portion of a Stock Award and receive a Deferred Stock Benefit in lieu of
such forfeited Stock Award or portion thereof. The terms and conditions
of such an election and the Deferred Stock Benefit shall be determined
by the Administrator.
ARTICLE IX
PERFORMANCE SHARE AWARDS
9.01. Award
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an award of Performance Shares is to
be made and will specify the number of shares covered by such awards;
provided, however, that no Participant may receive an award of
Performance Shares in any calendar year for more than 187,500 shares of
Common Stock. Notwithstanding the foregoing, a newly-hired individual
may receive Performance Shares for up to 250,000 shares of Common Stock.
A Participant's status as a newly-hired individual shall be determined,
and the foregoing limits shall be implemented, by the Administrator in
its discretion.
9.02. Earning the Award
The Administrator, on the date of the grant of an award, shall
prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive payment pursuant
to the award of Performance Shares, only upon the
-22-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
satisfaction of performance objectives and such other criteria as may be
prescribed by the Administrator during a performance measurement period
of at least one year. The performance objectives may be stated with
respect to the Company's return on equity, total earnings, earnings
growth, return on capital, Fair Market Value, Common Stock price
appreciation, funds from operations per share, funds from operations
growth, total assets, peer shareholder returns, increase in revenue per
available room, or such other measures as may be selected by the
Administrator. No payments will be made with respect to Performance
Shares unless, and then only to the extent that, the Administrator
certifies that such objectives have been achieved.
9.03. Payment
In the discretion of the Administrator, the amount payable when an
award of Performance Shares is earned may be settled in cash, by the
issuance of shares of Common Stock, or a combination thereof. A
fractional share of Common Stock shall not be deliverable when an award
of Performance Shares is earned, but a cash payment will be made in lieu
thereof.
9.04. Shareholder Rights
No Participant shall, as a result of receiving an award of Performance
Shares, have any rights as a shareholder until and to the extent that
the award of Performance Shares is earned and settled in shares of
Common Stock. After an award of Performance Shares is earned and settled
in shares, a Participant will have all the rights of a shareholder as
described in Section 8.06.
9.05. Nontransferability
Except as provided in Section 9.06, Performance Shares granted under
this Plan shall be nontransferable except by will or by the laws of
descent and distribution. No right or interest of a Participant in any
Performance Shares shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
9.06. Transferable Performance Shares
Section 9.05 to the contrary notwithstanding, if the Agreement
provides, an award of Performance Shares may be transferred by a
Participant to the Participant's children, grandchildren, spouse, one or
more trusts for the benefit of such family members or a partnership in
-23-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
which such family members are the only partners, on such terms and
conditions as may be permitted under Securities and Exchange Commission
Rule 16b-3 as in effect from time to time. The holder of Performance
Shares transferred pursuant to this Section shall be bound by the same
terms and conditions that governed the Performance Shares during the
period that they were held by the Participant; provided, however that
such transferee may not transfer Performance Shares except by will
or the laws of descent and distribution.
9.07. Employee Status
In the event that the terms of any Performance Share award provide that
no payment will be made unless the Participant completes a stated period
of employment, the Administrator may decide to what extent leaves of
absence for government or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of
continuous employment.
9.08. Change in Control
Sections 9.02 to the contrary notwithstanding, on and after a Control
Change Date, each outstanding Performance Share award shall be earned as
of a Control Change Date. To the extent the Agreement provides that the
Performance Share award will be settled with shares of Common Stock,
such shares shall be nonforfeitable and transferable as of the Control
Change Date.
ARTICLE X
INCENTIVE AWARDS
10.01. Award
The Administrator shall designate Participants to whom Incentive Awards
are made. All Incentive Awards shall be finally determined exclusively
by the Administrator under the procedures established by the
Administrator; provided, however, that no Participant may receive an
Incentive Award payment in any calendar year that exceeds $750,000.
10.02. Terms and Conditions
The Administrator, at the time an Incentive Award is made, shall specify
the terms and conditions which govern the award. Such terms and
-24-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
conditions shall prescribe that the Incentive Award shall be earned only
upon, and to the extent that, performance objectives are satisfied.
The performance objectives may be stated with respect to the Company's
return on equity, total earnings, earnings growth, return on capital,
Fair Market Value, Common Stock price appreciation, funds from
operations per share, funds from operations growth, total assets, peer
shareholder returns, increase in revenue per available room, or such
other measures as may be selected by the Administrator. Such terms and
conditions also may include other limitations on the payment of
Incentive Awards including, by way of example and not of limitation,
requirements that the Participant complete a specified period of
employment with the Company or an Affiliate. The Administrator, at the
time an Incentive Award is made, shall also specify when amounts shall
be payable under the Incentive Award and whether amounts shall be
payable in the event of the Participant's death, disability, or
retirement.
10.03. Nontransferability
Except as provided in Section 10.04, Incentive Awards granted under
this Plan shall be nontransferable except by will or by the laws of
descent and distribution. No right or interest of a Participant in an
Incentive Award shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
10.04. Transferable Incentive Awards
Section 10.03 to the contrary notwithstanding, if provided in an
Agreement, an Incentive Award may be transferred by a Participant to the
Participant's children, grandchildren, spouse, one or more trusts for
the benefit of such family members or to a partnership in which such
family members are the only partners, on such terms and conditions as
may be permitted by Securities Exchange Commission Rule 16b-3 as in
effect from time to time. The holder of an Incentive Award transferred
pursuant to this Section shall be bound by the same terms and conditions
that governed the Incentive Award during the period that it was held by
the Participant; provided, however, that such transferee may not
transfer the Incentive Award except by will or the laws of descent and
distribution.
10.05. Employee Status
If the terms of an Incentive Award provide that a payment will be made
-25-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
thereunder only if the Participant completes a stated period of
employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary
disability or other reasons shall not be deemed interruptions of
continuous employment.
10.06. Change in Control
Section 10.02 to the contrary notwithstanding, any Incentive Award
shall be earned in its entirety as of a Control Change Date.
10.07. Shareholder Rights
No Participant shall, as a result of receiving an Incentive Award, have
any rights as a shareholder of the Company or any Affiliate on account
of such award.
ARTICLE XI
INDEMNIFICATION
A Participant shall be entitled to a payment under this Article XI if
(a) any benefit, payment, accelerated exercisability or vesting or other
right under this Plan constitutes a "parachute payment" (as defined in
Code Section 280G(b)(2)(A), but without regard to Code Section
280G(b)(2)(A)(ii)), with respect to such Participant and (b) the
Participant incurs a liability under Code Section 4999. The amount
payable to a Participant described in the preceding sentence shall be
the amount required to indemnify the Participant and hold him harmless
from the application of Code Sections 280G and 4999. To effect this
indemnification, the Company must pay such Participant an amount
sufficient to pay the excise tax imposed on Participant under Code
Section 4999 with respect to benefits, payments, accelerated
exercisability and vesting and other rights under this Plan and any
other plan or agreement, and any income, employment, hospitalization,
excise or other taxes attributable to the indemnification payment. The
benefit payable under this Article XI shall be calculated and paid not
later than the earlier of (i) the date any "Termination Payment," as
defined in the Change in Control and Termination Agreement (if any)
between the Participant and the Company, is due, or (ii) twenty days
after the date (or extended filing date) on which the tax return
reflecting liability for the Code section 4999 excise tax is required to
be filed with the Internal Revenue Service. Furthermore, a benefit may
be payable under this Article whether or not any benefit has yet become
or ever becomes payable under any Change in Control and Termination
-26-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
Agreement between the Participant and the Company. To the extent such
Change in Control and Termination Agreement or any other plan or
agreement also requires that a Participant be indemnified and held
harmless from the application of Code Sections 280G and 4999, any
such indemnification and the amount required to be paid to a Participant
under this Article XI shall be coordinated so that such indemnification
is paid only once and the Company's obligation under this Article XI
shall be satisfied to the extent of any such other payment (and vice
versa).
ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs, Performance
Shares and Stock Awards may be granted and the maximum number of shares
that may be distributed as Deferred Stock Benefits; the terms of
outstanding Stock Awards, Options, Performance Shares, Incentive Awards,
and SARs and undistributed Deferred Stock Benefits; and the per
individual limitations on the number of shares of Common Stock for which
Options, SARs, Performance Shares, and Stock Awards may be granted shall
be adjusted as the Committee shall determine to be equitably required in
the event that (i) the Company (a) effects one or more stock dividends,
stock split-ups, subdivisions or consolidations of shares or (b) engages
in a transaction to which Section 424 of the Code applies or (ii) there
occurs any other event which, in the judgment of the Committee
necessitates such action. Any determination made under this Article XII
by the Committee shall be final and conclusive.
The issuance by the Company of stock of any class, or securities
convertible into stock of any class, for cash or property, or for labor
or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of stock or
obligations of the Company convertible into such stock or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the maximum number of shares as to which
Options, SARs, Performance Shares and Stock Awards may be granted or the
maximum number of shares that may be distributed as Deferred Stock
Benefits; the per individual limitations on the number of shares for
which Options, SARs, Performance Shares and Stock Awards may be granted;
or the terms of outstanding Stock Awards, Options, Performance Shares,
Incentive Awards or SARs or undistributed Deferred Stock Benefits.
-27-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
The Committee may make Stock Awards and may grant Options, SARs,
Performance Shares, and Incentive Awards in substitution for performance
shares, phantom shares, stock awards, stock options, stock appreciation
rights, or similar awards held by an individual who becomes an employee
of the Company or an Affiliate in connection with a transaction
described in the first paragraph of this Article XII. Notwithstanding
any provision of the Plan (other than the limitation of Section 5.02),
the terms of such substituted Stock Awards or Option, SAR, Performance
Shares or Incentive Award grants shall be as the Committee, in its
discretion, determines is appropriate.
ARTICLE XIII
COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
No Option or SAR shall be exercisable, no shares of Common Stock shall
be issued, no certificates for shares of Common Stock shall be
delivered, and no payment shall be made under this Plan except in
compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements), any
listing agreement to which the Company is a party, and the rules of all
domestic stock exchanges on which the Company's shares may be listed.
The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any stock certificate issued to evidence shares of
Common Stock when a Stock Award is granted, a Performance Share is
settled, a Deferred Stock Benefit is distributed or for which an Option
or SAR is exercised may bear such legends and statements as the
Administrator may deem advisable to assure compliance with federal and
state laws and regulations. No Option or SAR shall be exercisable, no
Stock Award or Performance Share shall be granted, no shares of Common
Stock shall be issued, no certificate for shares of Common Stock shall
be delivered, and no payment shall be made under this Plan until the
Company has obtained such consent or approval as the Administrator may
deem advisable from regulatory bodies having jurisdiction over such
matters.
ARTICLE XIV
GENERAL PROVISIONS
14.01. Effect on Employment and Service
Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof), shall confer
upon any individual any right to continue in the employ or service of
-28-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
the Company or an Affiliate or in any way affect any right and power of
the Company or an Affiliate to terminate the employment or service of
any individual at any time with or without assigning a reason therefor.
14.02. Unfunded Plan
The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any
time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be
based solely upon any contractual obligations that may be created
pursuant to this Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of
the Company.
14.03. Rules of Construction
Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
ARTICLE XV
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder
approval is obtained if the amendment increases the aggregate number of
shares of Common Stock that may be issued under the Plan. No amendment
shall, without a Participant's consent, adversely affect any rights of
such Participant under any Stock Award, Performance Share Award, Option,
SAR, or Incentive Award outstanding, or Deferred Stock Benefit that is
undistributed, at the time such amendment is made.
ARTICLE XVI
DURATION OF PLAN
No Stock Award, Performance Share Award, Option, SAR, or Incentive
Award may be granted under this Plan after December 31, 2008. Stock
Awards, Performance Share awards, Options, SARs, and Incentive Awards
granted before that date, and Deferred Stock Benefits elected by a
Participant before that date, shall remain valid in accordance with
their terms.
-29-
<PAGE>
EQUITY INNS, INC.
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
ARTICLE XVII
EFFECTIVE DATE OF PLAN
Options, SARs, Stock Awards, Performance Shares and Incentive Awards
may be granted under this Plan upon its adoption by the Board; provided
that, unless amendments to this Plan presented to the Company's
shareholders at the Company's 1999 annual meeting of shareholders are
approved by a majority of the votes cast by the Company's shareholders,
voting either in person or by proxy, at a duly held shareholders'
meeting at which a quorum is present, no Stock Award granted after
December 31, 1999 shall be effective to the extent its grant would cause
the maximum aggregate number of shares issuable as Stock Awards and in
settlement of Performance Shares hereunder to exceed 350,000.
-30-