WINSTON HOTELS, INC. EXECUTIVE DEFERRED COMPENSATION PLAN

1.

Purpose

(a)

General . The purpose of the Plan is to attract, motivate, and retain top management employees of the Company by providing an opportunity and an incentive for each individual to defer the receipt of compensation otherwise payable currently and to accumulate earnings thereon on a tax-deferred basis.

(b)

Unfunded Plan . The Plan is intended to be an unfunded plan for purposes of the Employee Retirement Income Security Act of 1974, as amended, and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

(c)

Effective Date . The Plan, as amended and restated in this document, is effective January 1, 2005, and must be administered and interpreted in a manner that is consistent with the requirements of Section 409A of the Code.

2.

Definitions

The following capitalized terms used in the Plan shall have the respective meanings set forth in this Article:

(a)

Board . "Board" means the Board of Directors of the Company.

(b)

Bonus Deferral Election . "Bonus Deferral Election" means an election to defer payment of an annual bonus, if any, on the form(s) provided by the Committee subject to the requirements and terms of Article IV hereof.

(c)

Change in Control . "Change in Control" means a transaction or event or a series of transactions or events that constitutes a "change in control" as that term is defined for purposes of Section 409A of the Code.

(d)

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

(e)

Committee . "Committee" means the individuals appointed by the Board to administer the Plan and to perform the functions set forth herein.

(f)

Company . "Company" means Winston Hotels, Inc., a North Carolina corporation, or any successor entity thereto, including without limitation, the transferee of all or substantially all of the stock or assets of the Company.

(g)

Company Stock Account . "Company Stock Account" means the portion of the Deferred Account attributable to Stock Deferral Elections. Dividend Equivalents also may be credited to the Company Stock Account pursuant to a Participant’s election under Article VI. Amounts credited to the Company Stock Account shall be expressed in notional shares of Company common stock (including a fractional share) and shall be equitably adjusted as determined by the Committee to reflect stock dividends, stock splits, stock consolidations or other changes in the capitalization of the Company. A Participant will not have any rights as a shareholder of the Company with respect to amounts credited to the Company Stock Account.

(h)

Control Change Date . "Control Change Date" means the date on which a Change in Control occurs. If a Change in Control occurs as a result of a series of transactions or events, the Control Change Date is the date of the last transaction or event in the series.

(i)

Deferral Account . "Deferral Account" means the notional account established and maintained for each Participant in accordance with Article VI hereof, for bookkeeping purposes only, to measure the value of elective deferrals made under the Plan and the earnings thereon. The Deferral Account consists of two subaccounts, the Investment Account and the Company Stock Account. The Deferral Account and the Investment Account and the Company Stock Account shall record the amounts deferred and the gains and losses thereon on a Plan Year basis.

(j)

Deferral Election . "Deferral Election" means a Salary Deferral Election or a Bonus Deferral Election or a Stock Deferral Election as defined under this Article II.

(k)

Dividend Equivalent . "Dividend Equivalent" means the amount determined by multiplying (x) the value of the dividend paid on one share of Company common

stock and (y) the number of notional shares (including any fraction) of Company common stock credited to a Participant’s Company Stock Account on the record date for the dividend payment. Notwithstanding the preceding sentence, a Participant will not be entitled to a Dividend Equivalent if a dividend payable on the Company common stock is paid in the form of a Company security but in that event the Participant’s Company Stock Account shall be equitably adjusted as determined by the Committee to reflect the dividend.

(l)

Investment Account . "Investment Account" means the portion of the Deferral Account other than the Company Stock Account. Amounts credited to or charged against the Investment Account shall be expressed in dollars and cents.

(m)

Participant . "Participant" means any individual who is eligible to participate in the Plan as provided in Section 4.1 hereof.

(n)

Plan . "Plan" means the Winston Hotels, Inc. Executive Deferred Compensation Plan, as from time to time amended.

(o)

Plan Year . "Plan Year" means the period beginning on the effective date of the Plan and ending on December 31 and thereafter any calendar year.

(p)

Salary Deferral Election . "Salary Deferral Election" means an election to defer payment of base salary on the form(s) provided by the Committee subject to the requirements and terms of Article IV hereof.

(q)

Specified Employee . "Specified Employee" means a participant who is a "specified employee" as that term is defined for purposes of Section 409A of the Code.

(r)

Stock Award . "Stock Award" means a Stock Award granted under the Company’s Stock Incentive Plan. The term "Stock Award" also includes any similar award granted under a Company plan adopted after the Stock Incentive Plan.

(s)

Stock Deferral Election . "Stock Deferral Election" means an election to surrender a Stock Award, on the form(s) provided by the Committee subject to the requirements and terms of Article IV hereof. The Stock Deferral election includes the Participant’s direction under Section 6.5 with respect to the treatment of Dividend Equivalents.

(t)

Unforeseeable Emergency . "Unforeseeable Emergency" means an "unforeseeable emergency" as that term is defined for purposes of Section 409A of the Code.

3.

Administration

(a)

Committee . 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. Except as otherwise provided in the Plan, the Committee shall have full power to construe and interpret the Plan, establish and amend rules and

regulations for its administration, and perform all other acts relating to the Plan, including the delegation of administrative responsibilities that it believes reasonable and proper.

(b)

Duties . The Committee, or any person or entity designated by the Committee, shall be responsible for the administration of the Plan including but not limited to determination of eligibility, receiving Deferral Elections, designating investment choices, distributing benefits hereunder, maintaining Deferral Account balances, calculating hypothetical investment returns and any other duties concerning the day-to-day operation of the Plan.

(c)

Adjudication . Any decision made, or action taken, by the Committee or the Board arising out of, or in connection with, the interpretation and administration of the Plan, including but not limited to the adjudication of claims and payment of benefits hereunder, shall be final and conclusive.

(d)

Indemnification . No member of the Committee or its delegate shall be liable for any action, failure to act, determination or interpretation made in good faith with respect to this Plan or any transaction hereunder, except for liability arising from his/her own willful misfeasance, gross negligence or reckless disregard of his/her duties. The Company hereby agrees to indemnify each member of the Committee for all costs and expenses and, to the extent permitted by applicable law, any liability incurred in connection with defending against, responding to, negotiation for the settlement of or otherwise dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering this Plan or in authorizing, denying authorization to, or failing to authorize any transaction hereunder.

4.

Participation

(a)

Eligibility . Participation in the Plan shall be limited to any employee of the Company and its subsidiaries who is selected by the Board, in its sole discretion, to participate in the Plan.

(b)

Filing a Deferral Election .

A Salary Deferral Election, Bonus Deferral Election and a Stock Deferral Election shall be effective for a Plan Year if the Participant files the executed election or elections with the Committee on or before the December 31 immediately preceding the Plan Year in which the base salary, bonus or Stock Award is earned. For example, December 31, 2005, is the last date for making a Salary Deferral Election, Bonus Deferral Election or Stock Deferral Election under this Section 4.2 (a) for base salary, bonus or Stock Awards payable for services rendered in 2006.

Notwithstanding Section 4.2(a), a Bonus Deferral Election and a Stock Deferral Election may be made under this Section 4.2(b) if (i) the bonus or Stock Award is payable on account of the satisfaction of Company or individual performance criteria, (ii) the performance criteria are measured over a period of at least twelve

months and (iii) the performance criteria are established in writing before the ninety-first day of the performance measurement period. A Bonus Deferral Election and Stock Deferral Election under this Section 4.2(b) shall be effective for a Plan Year if the Participant files the executed election or elections with the Committee on a date when at least six months remain in the performance measurement period and when the satisfaction of the performance criteria is not substantially certain. For example, June 30, 2006, is the last